Wednesday Watch

Late-Night News
Asian indices are higher as the stocks of exporters gain in the region. Fantom Co.'s golf balls, equipped with radio transmitters for tracking, perform on par with products from Nike Inc. and rivals, Silicon Strategies reported. Taiwan's new premier won't push for controversial proposals, such as dropping references to China in the island's official name, China Times reported. Comcast Corp. and Time Warner Inc. may make a joint bid for Adelphia Communications Corp.'s cable assets after ruling out separate bids for other parts of the company, the Financial Times said. A new US tax law that encourages companies to repatriate profits from abroad has helped to send the US dollar to a two-month high against the euro, the Wall Street Journal reported. In a recent survey, PricewaterhouseCoopers LLP found that 91% of 1,391 CEOs around the globe were "very" or "somewhat" confident about the next 12 months. Pricewaterhouse called the figure "astonishing." Global economic growth will probably reach 4.2% this year following a 5% increase in 2004, which was the best since 1976, Bloomberg reported. McDonald's Corp. must face a suit by New York teenagers who claim the company hid the health risks of Chicken McNuggets and other foods and made them obese, an appeals court ruled. Merrill Lynch will soon agree to set up a venture with Huaan Securities, a representative from the Chinese brokerage said. Rambus Inc. filed a patent infringement lawsuit against Hynix Semiconductor, Infineon Technologies AG and two other companies, Bloomberg said. SAP AG forecast license revenue will increase 10-12% this year as it wins more business in the US and focuses on taking customers from Oracle Corp., Bloomberg reported. Indonesia's National Information Agency said the number of dead and missing from the Dec. 26 earthquake and tsunami increased to 229,593, Bloomberg reported. SK Telecom of South Korea will form a $400 million joint venture with Earthlink to offer mobile phone services in the US, the NY Times reported.

Late Recommendations
Goldman Sachs reiterated Outperform on SYK, ZION, DD, BLS, SLB, XRX and Underperform on CR, SLG, TLAB, PBG, AAII.

Night Trading
Asian Indices are unch. to +1.0% on average.
S&P 500 indicated +.17%.
NASDAQ 100 indicated +.33%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Analyst Actions
Macro Calls
CNBC Guest Schedule

Earnings of Note
Company/Estimate
MO/1.06
BDK/1.57
CHIR/.10
COP/3.07
DBD/.89
DRIV/.35
ET/.22
LLY/.73
EK/.65
GCI/1.47
GD/1.63
HSY/.66
IMCL/.38
JDSU/-.01
SBC/.33
SIRI/-.16
SBUX/.34
VRSN/.20
WBSN/.31

Splits
CPO 2-for-1

Economic Data
None of note.

BOTTOM LINE: I expect US equities to open modestly higher in the morning on optimism over earnings reports and gains in Asia. I will closely monitor the quality of any rally before increasing market exposure. I still believe it is likely weakness will resurface ahead of the weekend. The Portfolio is market neutral heading into tomorrow.

Tuesday Close

Indices
S&P 500 1,168.41 +.40%
Dow 10,461.56 +.90%
NASDAQ 2,019.95 +.56%
Russell 2000 606.50 +.33%
DJ Wilshire 5000 11,474.14+.33%
S&P Barra Growth 562.80 +.66%
S&P Barra Value 601.31 +.15%
Morgan Stanley Consumer 582.71 +.71%
Morgan Stanley Cyclical 745.59 +.84%
Morgan Stanley Technology 458.82 +.55%
Transports 3,530.25 +2.18%
Utilities 331.79 -.77%
Put/Call .80 +9.59%
NYSE Arms .84 -33.86%
Volatility(VIX) 14.06 -4.03%
ISE Sentiment 128.00 -14.09%
US Dollar 83.99 +.90%
CRB 286.52 +.22%

Futures Spot Prices
Crude Oil 49.53 -.22%
Unleaded Gasoline 134.00 -.33%
Natural Gas 6.38 -.28%
Heating Oil 142.50 +.01%
Gold 421.90 -.05%
Base Metals 119.49 -1.21%
Copper 142.75 -.10%
10-year US Treasury Yield 4.19% +1.75%

Leading Sectors
Airlines +4.63%
Semis +1.78%
Drugs +1.15%

Lagging Sectors
Utilities -.77%
Boxmakers -.84%
Telecom -1.09%

After-hours Movers
INSP +17.0% after beating 4Q estimates and raising 1Q/05 guidance.
SGTL +13.5% after reporting strong 4Q results and giving positive 1Q guidance.
STK +9.94% after beating 4Q estimates.
CPWR +14.99% after substantially beating 3Q estimates.
ERTS +4.8% after beating 3Q estimates, reiterating 05 guidance and buying 19.9% of Ubisoft Entertainment.
CSGS +4.34% after beating 4Q estimates and raising 1Q outlook.
FLEX +4.5% after beating 3Q estimates and raising 4Q/05 guidance.
CYMI +6.18% after substantially beating 4Q estimates and giving positive 1Q outlook.
SNDK -5.78% after LEXR lowered guidance.
FLSH -5.02% on LEXR news.

Detailed Market Summary
Market Wrap CNBC Video(bottom right)
Futures Recap
NASDAQ 100 After-hours Indicator
Real-time/After-hours Stock Quote

Afternoon Recommendations
Goldman Sachs reiterated Outperform on EBAY, YHOO and GOOG.

After-hours News
US stocks finished higher today, spurred by positive consumer confidence and earnings reports. After the close, France should not introduce US-style class action lawsuits as they could harm its economy further and transfer money from good companies to lawyers, the Financial Times reported, citing US Chamber of Commerce President Thomas Donohue. Matthew Rose, CEO of Burlington Northern Santa Fe Corp., said he expects increased trade with Asia to drive growth at the second-biggest US railroad, CNBC reported. The US and UK will begin transferring control of large parts of Iraq to the nation’s security forces after the Jan. 30 national elections, the Financial Times reported, citing Tony Blair. Democrats in the US Senate lined up today to criticize President Bush’s national security adviser, Condoleezza Rice, ahead of the Republican-led body’s expected confirmation of her tomorrow as secretary of state, Bloomberg reported. The US FBI said today that a reported terrorist threat to Boston has “no credibility,” and it canceled its request for help from the public, Bloomberg said. China and Russia rejected a new US bid to impose UN sanctions on Sudan for failing to end assaults on villagers in Darfur, Bloomberg reported. Royal Dutch/Shell Group cut oil production in Nigeria by 35,000 barrels a day after protesters blocked access to two pumping stations in Abia state, Agence France-Presse reported. NY City fire officials said an arsonist caused a subway blaze Jan. 23 that shut down service on one line and crippled another, causing damage that transit systems managers said could take five years to fix, Bloomberg reported. China will assess first-quarter reports before deciding whether to rein in its accelerating economy with tougher investment curbs or higher interest rates, Bloomberg reported.

BOTTOM LINE: The Portfolio finished unchanged today as gains in my software shorts were offset by losses in my oil service shorts. I did not trade in the afternoon, thus leaving the Portfolio market neutral. The tone of the market weakened throughout the day as the advance/decline line fell, finishing near its daily lows. Volume was lighter, measures of investor anxiety were mixed and a number of sectors declined. Today’s action leads me to believe a sustainable rally has not yet begun.

Mid-day Report

Indices
S&P 500 1,174.14 +.89%
Dow 10,509.00 +1.35%
NASDAQ 2,031.31 +1.13%
Russell 2000 608.29 +.62%
DJ Wilshire 5000 11,524.81 +.77%
S&P Barra Growth 565.48 +1.14%
S&P Barra Value 604.20 +.63%
Morgan Stanley Consumer 584.73 +1.05%
Morgan Stanley Cyclical 750.38+1.49%
Morgan Stanley Technology 461.85 +1.22%
Transports 3,547.03 +2.67%
Utilities 334.15 -.07%
Put/Call .80 +9.59%
NYSE Arms .74 -41.73%
Volatility(VIX) 13.96 -4.71%
ISE Sentiment 151.00 +1.34%
US Dollar 84.00 +.90%
CRB 285.34 -.19%

Futures Spot Prices
Crude Oil 48.80 -.02%
Unleaded Gasoline 132.00 +1.62%
Natural Gas 6.32 -2.41%
Heating Oil 140.65 +.24%
Gold 421.70 -1.26%
Base Metals 119.49 -1.21%
Copper 142.90 -.07%
10-year US Treasury Yield 4.19% +1.75%

Leading Sectors
Airlines +5.66%
Iron/Steel +2.09%
Semis +2.0%

Lagging Sectors
Foods -.29%
Telecom -.29%
Boxmakers -.84%

Market Movers
BEV +24.5% after saying that a group representing 8.1% of shares outstanding is interested in buying it for about $1.41 billion.
SIMG -24.04% after missing 4Q estimates and announcing the resignation of CEO Laub after less than 3 months on the job.
SLAB +15.6% after beating 4Q estimates, raising 1Q guidance and multiple upgrades.
ENR +14.53% after substantially beating 1Q estimates.
OSK +13.7% after substantially beating 1Q estimates and raising 05 outlook.
TZOO +8.58% on bounce from recent sell-off.
AVY +6.31% after beating 4Q estimates and raising guidance range for 1Q/05.
CRDN +10.7% on strong 4Q results.
X +5.93% after substantially beating 4Q estimates, making positive comments on 05 outlook and Bear Stearns upgrade to Outperform.
BNI +4.9% after beating 4Q estimates and raising 1Q guidance.
IMN +6.42% after meeting 4Q estimates and raising 05 guidance.
SNDA +6.29% on bounce from recent sell-off and strong Chinese GDP report.
FILE -11.5% after missing 4Q estimates and Friedman, Billings downgrade to Market Perform.
CAI -11.3% after meeting 2Q estimates, but lowering 3Q/4Q outlook and Jeffries downgrade to Hold.
SLE -7.01% after meeting 2Q estimates and lowering 3Q guidance.
PLMO -5.94% after saying CEO Bradley will resign.
MON -5.19% on Lehman Brothers downgrade to Underweight.
JDAS +8.91% after substantially beating 4Q estimates.
NFLX +8.5% after beating 4Q estimates and raising 1Q outlook.

Market Internals
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon
Market Pulse Video(bottom right)

Economic Data
Consumer Confidence for January rose to 103.4 versus estimates of 101.0 and 102.7 in December.
Existing Home Sales for December fell to 6.69M versus estimates of 6.80M and 6.92M in November.

Recommendations
-Goldman Sachs: Reiterated Outperform on X, MO, TRI, HMA, BLS, EMC and SLB. Reiterated Underperform on SGP, PBG, AKS and UIS.
-Citi SmithBarney: Raised YHOO to Buy, target $43 Raised MERQ to Buy, target $54.
-CSFB: Rated KMA Outperform, target $13. Rated IBI Outperform, target $21. Raised PPC to Outperform, target $30.
-JP Morgan: Raised VRNT to Overweight. Cut POT to Underweight.
-Morgan Stanley: Raised DRQ to Overweight, target $40. Raised ETN to Overweight, target $75. Rated AEA Underweight, target $17. Rated BXC Overweight, target $16.
-UBS: Raised RIMM to Buy, target $95.
-Legg Mason: Rated TJX Buy, target $32. Rated JOSB Buy, target $36. Rated MW Buy, target $40. Rated URBN Buy, target $50. Rated GPS Buy, target $26. Rated AEOS Buy, target $60. Raised PNFP to Buy, target $26.
-Thomas Weisel: Raised OPWV to Outperform.
-Banc of America: Rated SE Buy, target $28.
-Bear Stearns: Raised X to Outperform, target $63.
-Merrill Lynch: Rated IACI Buy, target $31. Rated HLF Buy, target $20.
-Prudential: Raised SAFC to Overweight, target $53.

Mid-day News
US stocks are sharply higher mid-day on better-than-expected economic data and earnings reports. US shopping mall vacancies declined to the lowest level in three-and-a-half years as retailers added space, the Wall Street Journal reported. Gillette has begun an aggressive campaign to advise consumers that “super heavy duty” AA batteries go dead faster than more expensive alkaline batteries, the Wall Street Journal reported. The US Congress is closer to passage of a bill limiting the growth of class-action lawsuits, which would shift many suits to federal courts and remove a legal tactic, the Wall Street Journal reported. The Social Security system is being strained by earlier retirements and longer life spans, USA Today reported. The Cleveland Clinic Foundation wants to revise rules governing how its scientist and physicians work with device makers and drugmakers, to ease conflicts of interest, the NY Times reported. OAO Yukos Oil stopped shipping crude abroad through pipelines starting Jan. 1 as the company struggled to maintain supplies to its refineries, Bloomberg said. Iraq’s Jan. 30 vote is the first step toward the gradual departure of coalition forces, interim Iraqi Prime Minister Allawi said. General Motors bonds may extend their rally after Lehman Brothers Holdings added a third ratings company to its calculation of creditworthiness, Bloomberg said. The National Association of Securities Dealers plans to sell $137.7 million of Nasdaq Stock Market shares, cutting its stake in the largest market place for exchange-listed companies by about a third, Bloomberg reported. Nickel, the best performer on the London Metal Exchange since 2003, may record its first annual drop in four years as buyers such as Wal-Mart and Ikea use cheaper alternatives in products ranging from coffee tables to desks and mirrors, Bloomberg reported. The US budget deficit will narrow to $368 billion this year from $412 billion last year, the US Congressional Budget Office said. Michael Leavitt won the endorsement of the US Senate Finance Committee as secretary of Health and Human Services on a voice vote, Bloomberg reported. The German government lowered its forecast for 05 economic growth for the third time in nine months, Bloomberg said. Goldman Sachs and Morgan Stanley agreed to an $80 million settlement with regulators over claims the firms improperly induced investors to buy shares of IPOs in 1999 and 2000, Bloomberg reported. US sales of previously owned houses fell 3.3% in December as the supply dropped to a record low. Sales for all of 2004 reached an all-time high, Bloomberg reported. US consumer confidence unexpectedly rose in January to a six-month high after the economy added more jobs and incomes grew, raising the odds that spending will spur the economy, Bloomberg said. US Treasury notes are falling, ending the longest rally for the 10-year security since August, after the Conference Board’s consumer sentiment index for January unexpectedly rose, Bloomberg said. The US Dollar is gaining against the euro and rose the most in three weeks versus the yen after the consumer confidence index climbed to the highest in six months, Bloomberg said.

Bottom Line: The Portfolio is slightly higher mid-day on gains in my oil service and software shorts. I have not traded and the Portfolio remains market neutral. The tone of the market is better today. The fact that consumer confidence rose in the face of higher gas prices, increased violence in Iraq, domestic terrorism worries and falling stock prices is a big positive. The decline in the supply of houses for re-sale to an all-time low is also a positive for that sector and the economy. I would use any weakness in the homebuilding stocks related to a temporary spike in interest rates to accumulate shares. On the negative side, today’s rally is not very broad-based and volume is lighter than I would like. As well, measures of investor anxiety are mostly lower again. I expect US stocks to trade mixed-to-weaker into the close on rising energy prices and interest rates.

Tuesday Watch

Late-Night News
Asian indices are mixed as strength in commodity-related shares is being offset by weakness in tech stocks in the region. Bill Gates will donate $750 million to help children in developing countries receive access to life-saving vaccines and immunizations, the London-based Times said. China's economy expanded 9.5% last year, Xinhua News Agency reported. SEC Chairman Donaldson may today signal that the US will ease listing rules for international companies who want to avoid the costs involved in meeting corporate governance rules, the Financial Times said. The European Union is preparing to lift its 15-year-old arms embargo against China and replace it with a code of conduct that regulates all weapons sales, the AP reported, citing UK Foreign Secretary Jack Straw. Equipping 6,800 US commercial airplanes with antimissile defense systems would cost $11 billion, plus $2.1 billion a year in operating expenses, the NY Times reported. Hedge funds are beginning to play a more assertive role in shaping mergers and acquisitions, especially in Europe, the Wall Street Journal reported.

Late Recommendations
Goldman Sachs reiterated Outperform on MO, TPX, MDT, X, AMGN and Underperform on CR.

Night Trading
Asian Indices are -.75%. to +.25% on average.
S&P 500 indicated +.14%.
NASDAQ 100 indicated +.13%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Analyst Actions
Macro Calls
CNBC Guest Schedule

Earnings of Note
Company/Estimate
ADTN/.17
AKS/.66
ABC/.63
AV/.18
BLS/.41
EAT/.45
BNI/.78
CTX/1.88
COH/.68
CA/.19
GLW/.12
EMC/.12
ERTS/1.18
FLEX/.19
INSP/.40
JNJ/.64
MER/1.11
MRK/.50
SLB/.56
TXN/.26

Splits
None of note.

Economic Data
Consumer Confidence for January estimated to fall to 101.0 versus 102.3 in December.
Existing Home Sales for December estimated to decline to 6.8M versus 6.94M in November.

BOTTOM LINE: I expect US equities to open mixed-to-higher in the morning on a bounce after today's sell-off. However, stocks will likely weaken again later in the day on continuing worries over slowing global growth, violence in Iraq and earnings. The Portfolio is market neutral heading into tomorrow.

Monday Close

S&P 500 1,163.75 -.35%
NASDAQ 2,008.70 -1.26%

Leading Sectors
Energy +.82%
Utilities +.80%
Oil Service +.71%

Lagging Sectors
Biotech -2.09%
Internet -2.21%
Airlines -4.49%

Other
Crude Oil 48.88 +.14%
Natural Gas 6.52 +.76%
Gold 427.40 +.07%
Base Metals 120.95 -.08%
U.S. Dollar 83.24 -.02%
10-Yr. T-note Yield 4.12% -.42%.
VIX 14.65 +2.02%
Put/Call .73 -12.05%
NYSE Arms 1.27 -23.95%
ISE Sentiment 149.00 -4.49%

After-hours Movers
NFLX +15.17% after beating 4Q estimates and raising 1Q outlook.
SLAB +21.01% after beating 4Q estimates and raising 1Q guidance.
PLMO -10.79% after saying CEO Bradley will resign.
JDAS +12.95% after substantially beating 4Q estimates.
CAI -4.98% after meeting 2Q estimates, but lowering 3Q/4Q outlook.
FILE -11.67% after missing 4Q estimates.

Recommendations
Goldman Sachs reiterated Outperform on DDR, RE, SBC, BLS, MERQ and STN.

After-hours News
U.S. stocks finished lower today, led by technology and small-cap shares. After the close, as many as half of New York City’s workers in the 1990’s were foreign-born, with Latin America replacing Europe as the dominant source, according to a study issued today. Lehman Brothers Holdings’ talks to buy London-based hedge fund GLG Partners LP have been delayed by tax issues and an investigation into alleged insider trading, the Financial Times reported. The assets of the largest 1,000 US pension funds rose 10.6% in the 12 months ended Sept. 300, the second consecutive year of double-digit gains, as US and foreign stocks bolstered fund performance, Pensions & Investments reported. Delphi Corp. Chairman and CEO Battenberg said high inventories and increasing costs of pensions and health care are weighing on the auto parts industry, CNBC reported. Citigroup traders may face a criminal investigation by German prosecutors that they manipulated the government bond futures market in that country, the Financial Times reported. The production value of Taiwan’s semiconductor industry is expected to grow 14.8% this year, outpacing the predicted 1.2% global growth, the Commercial Times reported. China’s advertising market grew 32% to $18.9 billion in 2004, the Asian Wall Street Journal reported. US Senate Republican leaders said they’ll debate legislation limiting rewards for class-action lawsuits before acting on the creation of private Social Security accounts, Bloomberg reported. Krispy Kreme Doughnuts will pay new CEO Cooper $760/hour, Bloomberg said. US antitrust enforcers are reviewing plans by Gannett Co., the largest US newspaper publisher, to buy the publisher of weekly newspapers near three cities where Gannett publishes dailies, Bloomberg reported. ATI Technologies will place new order for mobile phone chips with Taiwan Semiconductor Manufacturing, the Commercial Times reported.

BOTTOM LINE: The Portfolio finished slightly higher today on gains in my software and auto parts shorts. I took profits in a couple of semiconductor shorts and added OIH short in the afternoon, thus leaving the Portfolio market neutral. I am using a stop-loss of $90.25 on this new position. In what has become a very bad habit, the market finished at its lows for the day, volume increased and market internals were very weak. Measures of investor anxiety were mixed on the day which is also a negative. I continue to expect a tradable bottom in the major indices towards the latter part of the week. I also believe crude oil will top this week and begin heading lower next week after the Iraqi elections on worries over increasing supply, a stabilizing US dollar and slower global demand.

Mid-day Report

S&P 500 1,171.95 +.35%
NASDAQ 2,030.13 -.20%

Leading Sectors
Energy +1.48%
Oil Service +1.46%
Utilities +1.26%

Lagging Sectors
Boxmakers -.84%
Internet -.90%
Airlines -2.83%

Other
Crude Oil 48.60 +.14%
Natural Gas 6.44 +3.21%
Gold 427.20 +.07%
Base Metals 120.95 -.08%
U.S. Dollar 83.32 +.07%
10-Yr. T-note Yield 4.14% unch.
VIX 14.29 -.49%
Put/Call .77 -7.23%
NYSE Arms .98 -41.32%
ISE Sentiment 145.00 -7.05%

Market Movers
RIMM -5.62% after Barron’s reported the company faces increasing competition from cell-phone makers that offer camera capabilities and other functions.
ADSK -13.28% after Banc of America cut it to Sell.
COCO +12.3% after saying the SEC ended an informal inquiry without recommending action.
MERQ +12.81% after boosting 4Q estimates.
INCX +9.03% on Roth Capital upgrade to Buy.
LM +5.03% after beating 3Q estimates substantially.
CPO +4.38% on Deutsche Bank upgrade to Buy.
TZOO -19.65% after missing 4Q estimates.
CCMP -10.22% after Lehman downgrade to Equalweight.
CME -4.02% on continued profit-taking.
DECK -5.0% on continued profit-taking.

Economic Data
None of note.

Recommendations
-Goldman Sachs: Reiterated Outperform on CVD, DTV, SBC, BLS, IPP, SPP. Reiterated Underperform on . Rated WYNN and LVS Outperform.
-Citi SmithBarney: Rated WOLF to Buy, target $26. Rated CONR Buy, target $26. Raised FIC to Buy, target $43. Cut APU to Sell, target $26.
-Banc of America: Lowered ADSK to Sell, target $25. Downgraded OKE to Sell, target $23.
-JP Morgan: Added FNM to Focus List, target $80. Raised EAT to Overweight. Rated LVS Overweight.
-UBS: Downgraded UHS to Reduce, target $35.
-Deutsche Bank: Raised ISIL to Buy, taget $17. Raised CPO to Buy, target $62.
-CIBC: Rated CONR, target $26. Raised MCD to Sector Outperform.
-CSFB: Rated CSCO Outperform, target $22.50.
-Morgan Stanley: Raised ATHR to Overweight, target $15.
-Legg Mason: Raised CTSH to Buy, target $47.
-Merrill Lynch: Rated SIRI Buy, target $7.50. Raised LIZ to Buy.

Mid-day News
U.S. stocks are mixed mid-day as gains in energy-related stocks are being offset by weakness in the technology sector. Walt Disney Co. still needs to address problems at the company’s ABC television network before it can successfully confront rivals including Fox television, the Wall Street Journal said. Mexico and the country’s powerful drug lords are heading for a major confrontation, the Wall Street Journal reported. EchoStar Communications won’t make major gains on its rival DirectTV Group by acquiring Cablevision Systems’ satellite unit for $200 million, the Wall Street Journal reported. General Motors, Motorola and Campbell Soup are among the companies increasing their spending on “event marketing” at the Super Bowl, the Wall Street Journal reported. US watchdogs are paying closer attention to hedge funds, which were for years lightly regulated on the assumption that the wealthy they catered to could handle the risk, the Wall Street Journal reported. Take-Two Interactive Software reached a game-software licensing accord with the union representing Major League Baseball players, the Wall Street Journal reported. Research In Motion’s bid to overturn a US patent-infringement ruling against it received support from EarthLink, the NY Times reported. The US Air Force and Navy may have to turn away thousands of potential recruits, even as the Army and Marine Corps are having difficulty meeting their annual recruiting goals, USA Today reported. Iran’s nuclear program is close to a “point of no return,” where the Islamic state won’t need any outside help in enriching uranium to build an atomic weapon, Israel’s spy agency chief said, the Jerusalem Post reported. The California Institute for Regenerative Medicine, the new stem-cell research facility, will consider putting its headquarters in either San Francisco or San Diego, the San Francisco Chronicle reported. Fidelity Investments is losing customers in Canada and struggling to compete with domestic banks that have made the nation’s investment market among the fastest-growing anywhere, Bloomberg said. Police can use drug-sniffing dogs to check vehicles stopped for traffic offenses, even without reason to suspect the presence of illegal narcotics, the US Supreme Court ruled. ImClone Systems agreed to pay $75 million to settle a class-action shareholder lawsuit from 2002 accusing the company of making false or misleading statements about prospects for its Erbitux colon-cancer drug, Bloomberg reported. Microsoft said it won’t appeal a European court antitrust decision that requires it to immediately begin licensing protocols to rivals and selling a stripped-down version of its Windows operating system, Bloomberg said. Monsanto agreed to buy Seminis for $1 billion in cash from Fox Paine & Co. and minority investors to gain the largest maker of vegetable and fruit seeds, Bloomberg reported. American Express said profit rose 17% last quarter as rising consumer confidence boosted card use, Bloomberg reported.

Bottom Line: The Portfolio is unchanged mid-day as gains in my auto parts and software shorts are offsetting losses in my commodity-related shorts. I have not traded today and the Portfolio is still market neutral. The tone of the market is weaker today, notwithstanding the mixed performance by the major indices. The advance/decline line is poor and volume is decent. As well, most measures of investor anxiety are falling. On the positive side, bonds are holding recent gains and crude oil finding stiff resistance at $49-$49.50/bbl. I expect US stocks to trade mixed-to-weaker into the close.