Weekly Scoreboard*

Indices
S&P 500 1,360.02 -.05%
DJIA 12,307.35 +.80%
NASDAQ 2,454.50 -.81%
Russell 2000 733.61 -.92%
Wilshire 5000 13,813.22 -.28%
Russell 1000 Growth 585.01 +.10%
Russell 1000 Value 724.24 -.50%
Morgan Stanley Consumer 691.19 +.50%
Morgan Stanley Cyclical 944.37 +.24%
Morgan Stanley Technology 596.01 -1.15%
Transports 5,148.82 -1.94%
Utilities 524.05 +2.48%
MSCI Emerging Markets 140.70 -4.17%

Sentiment/Internals
NYSE Cumulative A/D Line 53,308 -10.1%
Bloomberg New Highs-Lows Index -507
Bloomberg Crude Oil % Bulls 21.0 -27.6%
CFTC Oil Large Speculative Longs 218,484 +.97%
Total Put/Call .91 -18.75%
OEX Put/Call 1.17 -9.3%
ISE Sentiment 130.0 +7.26%
NYSE Arms .68 -70.88%
Volatility(VIX) 21.22 -10.70%
G7 Currency Volatility (VXY) 10.66 +3.39%
Smart Money Flow Index 8,393.67 -4.33%
AAII % Bulls 31.25 -28.13%
AAII % Bears 53.57 +40.83%

Futures Spot Prices
Crude Oil 134.69 -2.52%
Reformulated Gasoline 346.43 -1.86%
Natural Gas 12.63 -.39%
Heating Oil 383.80 -3.23%
Gold 872.10 -2.78%
Base Metals 236.22 -.61%
Copper 359.10 -1.14%
Agriculture 470.28 +10.97%

Economy
10-year US Treasury Yield 4.26% +35 basis points
10-year TIPS Spread 2.52% +2 basis points
TED Spread .85 -1 basis point
N. Amer. Investment Grade Credit Default Swap Index 109.24 -1.15%
Emerging Markets Credit Default Swap Index 230.44 +1.36%
Citi US Economic Surprise Index +6.70 +226.42%
Fed Fund Futures 20.0% chance of 25 hike, 80.0% chance of no move on 6/25
Iraqi 2028 Govt Bonds 74.25 -.77%
4-Wk MA of Jobless Claims 371,500 +.7%
Average 30-year Mortgage Rate 6.32% +23 basis points
Weekly Mortgage Applications 557,100 +10.91%
Weekly Retail Sales +2.1%
Nationwide Gas $4.07/gallon +.08/gallon.
US Cooling Demand Next 7 Days 2.0% above normal
ECRI Weekly Leading Economic Index 132.50 +.08%
US Dollar Index 74.09 +2.43%
Baltic Dry Index 10,142 -13.23%
CRB Index 445.87 +.99%

Best Performing Style
Large-cap Growth +.10%

Worst Performing Style
Small-cap Value -1.3%

Leading Sectors
Restaurants +2.91%
Utilities +2.48%
Software +2.39%
Retail +2.22%
Medical Equipment +.87%

Lagging Sectors
Banks -4.30%
HMOs -4.88%
Gaming -5.20%
Gold -6.6%
Airlines -8.06%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Finish at Session Highs, Boosted by I-Banking, Airline, Retail, Construction, Technology Shares

Evening Review
Market Summary
Top 20 Biz Stories
Today’s Movers
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
Commodity Movers
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers
After-hours Real-Time Stock Bid/Ask
After-hours Stock Quote
After-hours Stock Chart
In Play

Stocks Surging into Final Hour on Short-Covering, Less Economic Pessimism, Bargain-Hunting, Falling Energy Prices

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Biotech longs, Medical longs and Internet longs. I covered some of my (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 75% net long. The tone of the market is positive as the advance/decline line is higher, almost every sector is rising and volume is above average. Investor anxiety is slightly above average. Today’s overall market action is bullish. The VIX is falling 6.5% and remains above average at 21.80. The ISE Sentiment Index is below average at 121.0 and the total put/call is slightly above average at .92. Finally, the NYSE Arms has been running about average most of the day and is currently .87. The Shanghai Composite fell another 3.0% last night and is now down 53.2% from its record October high and is down 45.5% just this year. It is noteworthy that Brazil’s Bovespa, everyone’s favorite emerging stock market, was unable to rally today, despite sharp gains in US stocks this morning. On the positive side, the Euro Financial Sector Credit Default Swap Index is falling 4.2% today to 76.41 basis points. This is up from a low of 52.66 on May 5^th, but still down from 129.46 basis points on March 20^th. The 10-year swap spread is down 6.7% this week to 69.0 basis points over Treasuries. The Broker/Dealer Index(XBD) is jumping 4.5% and the Bank Index(BKX) is rapidly trimming meaningful morning losses. Lehman Brothers(LEH), the source of much recent angst, is soaring 13.4% today. The US Dollar Index is breaking out of its trading range, rising .42% to 74.15, that has been in place since February. The next level of resistance appears to be around the 200-day moving average at 75.16. I still think the US dollar has substantial upside from current levels over the intermediate-term. This should help to puncture the commodities bubble. Growth stocks are especially strong today, substantially outperforming the broad market and value stocks. Mid-cap growth remains this year’s best performing style and is now down 2.2% ytd. Given the recent parabolic surge in short interest, action in the financial sector and spike in bearish sentiment, I suspect this rally has some legs, as long as commodities behave. Nikkei futures indicate an +207 open in Japan and DAX futures indicate an +1 open in Germany on Monday. I expect US stocks to trade mixed-to-higher into the close from current levels on falling energy prices, less economic pessimism, bargain-hunting and short-covering.

Today's Headlines

Bloomberg:
- US financial markets have shown a “pronounced turnaround” since March, former Federal Reserve Chairman Alan Greenspan said today. The worse is over for the credit crisis, or will be soon, and there’s now a “reduced possibility” of a deep recession, Greenspan said.
- BlackRock Inc.(BLK), the largest publicly traded fund manager in the US, bought Lehman Brothers(LEH) shares this week and remains optimistic about the company’s prospects, a BlackRock executive said.
- The US dollar headed for its biggest weekly gain in more than three years against the euro on speculation officials from the G-8 meeting over the weekend will signal they favor a stronger US currency.
- The rally that drove oil to a record $139.12 a barrel last week surpassed the gains in the Internet stocks that preceded the dot-com crash in 2000. Crude rose 697% since trading at $17.45 a barrel on the New York Mercantile Exchange in November 2001, and reached 28 record highs this year. The last time a similar pattern was seen in equities was eight years ago, when Internet-related stocks sent the Nasdaq Composite Index up 640% to its highest level ever, according to data compiled by Bloomberg and Bespoke Investment Group. The Nasdaq tumbled 78% form its March 2000 peak. “There’s nothing different between this mania, the dot-com mania, the real estate mania, the Dow Jones mania of the 1920s, the South Sea bubble and the Dutch tulip-bulb mania,” said Stephen Schork, of the Schork Group, whose firms advises OPEC, Wall Street firms and oil companies on the outlook for energy prices. “History repeats itself over and over again,” he said. Investors, including pension funds, added about $250 billion to commodity index trading strategies since 2003. Commodity index traders account for about 40% of the open interest, or outstanding contracts, in the 12 agricultural commodities for which the CFTC reports data, according to Bianco Research. Investors plowed $199 billion into mutual funds dedicated to US equities during the 10-month stretch leading up to the bursting of the stock market bubble in 2000, including $36.5 billion in February of that year.
- The UK will demand disclosure of short selling in rights offerings and may restrict investors from borrowing the stocks after plunging share prices hampered banks’ attempts to increase capital.
- Google Inc.(GOOG) will get a profit boost of 15 cents a share next year from the advertising agreement struck with Yahoo!(YHOO) yesterday, Merrill Lynch(MER) said.
- Bruce McCain, head of investment strategy at Key Private Bank, which oversees $30 billion says US stock market to improve in fall. (video)
- Senators Dianne Feinstein and Ted Stevens introduced legislation that aims to limit speculation in oil markets and deflate record prices. “It is becoming clear that rampant speculation in energy markets by institutional investors may be driving up the price of oil and gas,” Feinstein said. “It’s time to level the playing field, and require position limits for all speculators.” The legislation would require the CFTC to review trading practices of institutional investors, such as pension funds and endowments, and impose limits on how much those investors can hold in a given market.
- Lead fell in London, heading for a fourth week of losses in London, after stockpiles of the metal jumped the most in seven months. “The fundamentals are clearly fairly poor and getting worse day-by-day” Dan Smith, an analyst at Standard Chartered Plc, said.
- Ireland vetoed the European Union’s new governing treaty, casting a pall over efforts to forge a more united Europe.
- Crude oil fell as Saudi Arabian Oil Minister Ali al-Naimi said record prices are “unjustified” and the state oil company signaled it may soon start pumping from a new field.
- General Electric(GE), whose shares neared a five-year low today partly on concern it may need to pump cash into its finance units, repeated that no outside infusion is needed to keep its AAA credit rating.
- India’s inflation accelerated to a seven-year high on soaring commodities and energy prices, stock speculation the central bank will increase interest rates next month. Wholesale prices jumped 8.75% in the week to May 31, after gaining 8.24% in the previous week, the government said.

Wall Street Journal:
- The NYSE is planning to unveil a series of proposed new rules Friday in an effort to turn around its falling market share.
- The rising cost of shipping everything from industrial-pump parts to lawn-mower batteries to living-room sofas is forcing some manufacturers to bring production back to North America and freeze plans to send work overseas.

NY Times:
- Media Charged With Sexism in Clinton Coverage. Angered by what they consider sexist news coverage of Senator Hillary Rodham Clinton’s bid for the Democratic presidential nomination, many women and erstwhile Clinton supporters are proposing boycotts of the cable networks, putting up videos on a “Media Hall of Sham,” starting a national conversation about sexism and pushing Mrs. Clinton’s rival, Senator Barack Obama, to address the matter.
- Companies traditionally get loans from banks, but with so many lenders stretched and with credit so tight these days, businesses are turning to what might seem like an unlikely source for cash: hedge funds.

CNBC.com:
- Hedge Fund Bubble to Burst? (video)

Financial Times:
- UK retail market ‘worst since early 1990s’
- Argentine debt surge raises specter of default.

Shanghai Securities News:
- China’s currency regulator may boost controls on trade credit to stem capital inflows that bet on yuan gains.

Middle East Economic Survey:
- Saudi Arabia is likely to propose a “sizable” increase in oil production at a June 22 meeting with consumers to lower prices. Current oil prices threaten the global economy and hurt the long-term interests of oil producers, Ibrahim al-Muhanna, an adviser to Saudi Arabian Oil Minister Ali al-Naimi, said. The “majority” of additional production would come from Saudi Arabia’s 500,000 barrel-a-day Khursaniyah oil field, which is expected to come on stream soon.

Bear Radar

Style Underperformer:

Large-cap Value +.11%

Sector Underperformers:

Banksirlind (-2.65%), REITs (-.45%) and Insurance (-.37%)

Stocks Falling on Unusual Volume:

FITB, WB, ONB, PAS, KO, GEOI, YHOO, REXX, UBSI, SBNY, CCH and TCB

Stocks With Unusual Put Option Activity:

1) IGT 2) NTRI 3) ADS 4) ADM 5) FITB

CPI Rises More Than Estimates, Confidence Still Depressed

- The Consumer Price Index for May rose .6% versus estimates of a .5% gain and a .2% increase in April.

- The CPI Ex Food & Energy for May rose .2% versus estimates of a .2% increase and a .1% gain in April.

- Preliminary Univ. of Mich. Consumer Confidence for June fell to 56.7 versus estimates of 59.0 and 59.8 in May.

BOTTOM LINE: US consumer prices rose more than forecast in May as Americans paid more for fuel, Bloomberg reported. However, core prices remained tame, rising .2%. Energy expenses jumped 4.4% after being unch. the prior month. Gasoline prices rose 5.7% and fuel oil costs soared 10%. Food prices, which account for about a fifth of the CPI, rose .3%, compared with a .9% jump in April. Prices for new vehicles, clothing and prescription drugs all fell in May. The Consumer Price Index is now rising at a 4.2% rate year-over-year, modestly above the 20-year average of 3.1%, but well below the 6.3% rate seen in October 1990 and also below the 4.7% rate seen in September 2005. The Core CPI is rising at a 2.3% rate year-over-year, modestly below the 20-year average of 2.9% and well below the 5.6% rate seen in February 1991 and below the 2.9% rate in September 2006. I still expect inflation gauges to decelerate meaningfully from current levels over the intermediate-term.

Confidence among US consumers fell to the lowest level since 1980 in June, hurt by record gasoline prices, Bloomberg reported. The Expectations component fell to 49 versus 51.1 in May. The Current Conditions component fell to 68.7 from 73.3 the prior month. Consumer Confidence has a strong negative correlation with the price of gas. I still expect confidence to improve dramatically over the intermediate-term as the commodity bubble bursts. The 10-year TIPS spread, a good gauge of inflation expectations, is stable at 2.52% on today’s reports. The 10-year yield is falling 3 basis points and the US Dollar Index is rallying .3% on today’s reports.