Mid-day Update

S&P 500 1,120.43 -.08%
NASDAQ 1,986.24 +.09%

Leading Sectors
Broadcasting +3.86%
Oil Service +1.75%
Semis +1.55%

Lagging Sectors
Drugs -.68%
Iron/Steel -.99%
Airlines -1.05%

Other
Crude Oil 39.65 +.61%
Natural Gas 6.45 -1.87%
Gold 394.90 -.30%
Base Metals 108.81 +.60%
U.S. Dollar 88.97 +.34%
10-Yr. T-note Yield 4.64% +1.07%
VIX 15.55 +1.77%
Put/Call 1.01 +8.60%
NYSE Arms 1.13 +39.51%

Market Movers
UTSI +8.83% after announcing it will be added to the S&P 400 Index.
NVLS +5.4% after raising 2Q forecast substantially.
DITC +22.5% after beating 4Q estimates and raising 1Q guidance.
CAE +15.82% after beating 1Q estimates substantially.
NAP +11.31% after saying NCC is trying to sell its majority stake in the company.
BCSI -26.3% after missing 4Q estimates and lowering 1Q forecast.
OXM -6.18% after lowering 1Q and 04 forecasts.
ACDO -5.4% on speculation that Medi-Cal reimbursement cuts for blood factor will negatively impact earnings.

Economic Data
Personal Income for April +.6% versus expectations of +.5% and +.4% in March.
Personal Spending for April +.3% versus expectations of +.2% and +.5% in March.
PCE Deflator (Y-O-Y) for April +1.9% versus expectations of +1.8% and +1.5% in March.
U. of Mich. Consumer Confidence Final May reading 90.2 versus estimates of 94.2 and 94.2 prior.
Chicago Purchasing Manager report for May was 68.0 versus estimates of 62.0 and 63.9 in April.

Recommendations
BUD raised to Overweight at Morgan Stanley, target $60. BG rated Outperform at CSFB, target $46. Goldman Sachs reiterated Outperform on AUO, target $26.12. Goldman reiterated Buy on DELL, target $42. Goldman continues to believe there is meaningful upside in newspaper operating margins over the next few quarters, favorites are GCI, TRB and KRI. Goldman said to Buy SRE ahead of analyst meeting on June 2-3. Goldman reiterated Outperform on CDL. Citi SmithBarney reiterated Buy on KRB, target $31. Citi reiterated Buy on CCL, target $52. Citi reiterated Buy on PCG, target $34. Goldman reiterated Underperform on FGP. Legg Mason said SINT should benefit from a LMT win of the $15 billion homeland security contract that should be awarded any day as it is one of LMT's top 4 outsourcers.

Mid-day News
U.S. stocks are quietly mixed mid-day as investors decline to make big bets ahead of the holiday weekend. The Chicago Purchasing Managers' Index rose to a 16-year high in May, Bloomberg said. Consumer Sentiment fell more-than-expected in May as rising gas prices and violence in Iraq dominated headlines, drowning out other very positive developments, Bloomberg reported. Personal Incomes in April rose the most since the stock market bubble burst in 2000, Bloomberg reported. Internet sales of dolls that immortalize political figures such as President Bush and Senator Kerry are boosting sales of action figures in general, the Wall Street Journal reported. U.S. President Bush's planned visit to Rome next week carries "serious threats," Italian Interior Minister Pisanu told Agence France-Presse. Nascar has held preliminary talks with New York City economic development officials on building a speedway on Staten Island, the NY Times reported. The Iraqi Governing Council unanimously endorsed Iyad Allawi to become Iraq's new prime minister, the AP reported. Gillette has signed a 3-year contract with British soccer star David Beckham, the Boston Herald reported. Cable tv networks are expected to beat the seven broadcast networks during the May "sweeps" period and capture a greater share of the audience this season, Broadcasting and Cable reported. EchoStar Communications said yesterday it will add 1,000 full- and part-time jobs in Tulsa, Oklahoma, the Denver Post reported. El Paso said a reorganization in the first quarter cut annual expenses by $40 million to $50 million, helping the company to exceed expectations for cash flow and debt reduction, Bloomberg reported.

BOTTOM LINE: The Portfolio is up slightly today on strength in my semiconductor, telecom equipment and broadcasting long positions. I have not traded today and the Portfolio is still 125% net long. The Chicago Purchasing Manager report was extremely positive. The decline in consumer confidence is a function of the media's intense focus on negativity as there are many positive stories going unreported. I expect consumer confidence to improve throughout the year as employment growth continues, energy prices stabilize, Iraq improves and corporate spending accelerates. I expect U.S. stocks to move slightly higher into the close this afternoon and then resume this week's rally on Tuesday, barring any significant terrorist attack over the holiday weekend.