Tuesday, March 30, 2004

Tuesday Watch

Earnings Announcements

AMG 3-for-2
APH 2-for-1
XTEX 2-for-1

Economic Data
None of note.

Goldman Sachs says it sees a brighter outlook for IT spending as capital expenditure estimates among tech's 3 key end markets(financials, communications and manufacturing) have been moving higher. GS says EMC, DELL, IBM, BRCD, HPQ, LXK, NTAP and VRTSE will benefit. GS reiterated Outperform on DHR. Lehman Brothers recommended investors lower the duration of U.S. bond portfolios amid "ubiquitous" signs of rising interest rates, including faster inflation and employment growth that is poised to accelerate.

Late-Night News
Asian stocks are mostly higher, led by strength in Hong Kong shares on strong earnings reports. Japan sold about a third less yen in the second half of the past month compared with the previous two weeks because an improving economy made it harder to justify a weaker yen, JP Morgan said. The SEC is investigating whether some businesses have been awarding employees stock options before announcing information that boosts the shares, the Wall Street Journal reported. U.S. companies' politically controversial practice of sending technology industry work outside the country results in the creation of twice as many jobs in the U.S. and some wage increases, the Wall Street Journal said. PepsiCo(PEP) boosted its annual dividend by 44% after saying its quarterly and annual profit will be at the high end of forecasts. AT&T will allow New Jersey and Texas customers to make phone calls over the internet starting today, the WSJ reported. U.S. restaurants are beginning to rebound with the largest chains reporting sales growth of up to 6% in January and February, the WSJ reported.

Late-Night Trading
Asian Indices -.25% to +1.75%.
S&P 500 indicated -.12%.
NASDAQ indicated -.24%.

BOTTOM LINE: The Portfolio is 125% net long and I will use any strength in the next few days to reduce market exposure ahead of Friday's employment report. A rise in the yield of the 10-yr. T-note through 4.21% from its current level of 3.87% would break its short-term downtrend. This will likely happen on a much better-than-expected employment report. However, I expect an in-line to slightly better-than-expected report which shouldn't result in a significant rise in rates.

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