Mid-day Scoreboard

Indices
S&P 500 1,172.86 -.65%
DJIA 10,414.35 -.85%
NASDAQ 1,985.92 -.66%
Russell 2000 609.62 -.89%
DJ Wilshire 5000 11,561.19 -.65%
S&P Barra Growth 565.07 -.71%
S&P Barra Value 602.95 -.70%
Morgan Stanley Consumer 572.37 -.95%
Morgan Stanley Cyclical 742.49 -.60%
Morgan Stanley Technology 453.29 -.47%
Transports 3,686.43 -.79%
Utilities 358.71 +.09%
Put/Call 1.0 +36.99%
NYSE Arms 1.79 +44.98%
Volatility(VIX) 14.09 +.50%
ISE Sentiment 107.00 -17.05%
US Dollar 84.43 +.44%
CRB 310.47 -.99%

Futures Spot Prices
Crude Oil 57.05 +2.98%
Unleaded Gasoline 171.50 +3.12%
Natural Gas 7.80 +1.92%
Heating Oil 165.90 +2.65%
Gold 430.428.30 -.65%
Base Metals 127.93 -1.84%
Copper 148.35 -1.26%
10-year US Treasury Yield 4.47% -.17%

Leading Sectors
Energy +1.75%
Iron/Steel +1.38%
Homebuilders +.28%

Lagging Sectors
Retail -1.75%
Airlines -2.41%
Insurance -3.47%

BOTTOM LINE: US stocks are lower mid-day on worries over slowing economic growth, corporate scandals and higher energy prices. The Portfolio is higher on gains in my Chinese ADR shorts, Base Metal shorts, Homebuilding longs and Software longs. I exited some Tech longs this morning as they hit stop-losses and added a few new shorts, thus bringing the Portfolio’s market exposure to Market Neutral. One of my new shorts is SNHY and I am using a $33.5 stop-loss on this position. The tone of the market is negative as the advance/decline line is lower, almost every sector is declining and volume is above recent levels. Consumer-related stocks are underperforming, while Energy-related shares are outperforming and measures of investor anxiety are higher. Today’s overall market action is negative considering another decline in long-term interest rates, the market’s oversold state and rising US dollar. Measures of investor anxiety continue to approach levels normally associated with meaningful bottoms. I still believe the lows for the year will be made over the coming weeks, making for a much more positive second half in equities. I expect US stocks to trade mixed into the close as falling long-term interest rates offset higher energy prices.

Today's Headlines

Bloomberg:
- US companies sold more shares in IPOs in the first quarter than in any similar period for the past five years, as economic growth fueled stock sales and reduced demand for convertible bonds and agency debt.
- Cardinal Health, the No. 2 US drug distributor, said full-year profit may miss its forecast by as much as 10 cents a share, partly because of reduced revenue from stockpiled drugs.
- Traders trimmed bets the Fed will lift the benchmark interest rate target by bigger increments in coming months as a government report today showed US companies added fewer jobs than expected.
- Toyota Motor said US sales of its Toyota, Lexus and Scion brands rose 17% in March.
- Ford Motor said its US sales of cars and trucks fell 1.7% on declining demand for sport-utility vehicles.
- The US dollar rose almost a cent against the euro after an industry report showed prices paid by US manufacturers jumped last month and services industries expanded at a faster pace.
- Crude oil is nearing a record and gasoline surged to an all-time high on speculation that rising demand my outpace US refinery production during peak demand this summer.
- Best Buy said profit this year will be below some analyst estimates.

Wall Street Journal:
- US regulators are investigating American International Group for possible further improper transactions with reinsurers.
- US lawmakers are proposing more incentives to drugmakers to develop medications to combat bioterrorism threats such as anthrax and small pox.
- Dana Corp. is close to signing a $100 million contract to outsource its human resources department to IBM.
- Microsoft filed 117 lawsuits against online sites to curb Internet scams that persuade users to give personal information.
- Medicare yesterday started a Web-based database to provide objective ratings on the quality of hospital care.

Fox News:
- Pope John Paul II has died.

New York Times:
- Chinese consumers are buying few cars from US and European manufacturers because of government restrictions on car fleet purchases and rising fuel prices.
- Intel Corp. President Otellini told a government panel on taxes that the world’s largest computer-chip maker might build its next $3 billion semiconductor plant outside the US because of high taxes.

AP:
- The Massachusetts House of Representatives approved a bill allowing embryonic stem cell research, with a majority large enough to override an expected veto by Governor Mitt Romney.

Detroit News:
- The FBI began an investigation into Delphi Corp.’s accounting practices after the auto-parts maker warned of earnings restatements.

NY Daily News:
- Fox News Chief Executive Roger Ailes said a proposed business news channel is on hold.

Chicago Sun-Times:
- Illinois Governor Rod Blagojevich proposed doubling the number of slot machines and table games allowed in the state to help generate an additional $300 million to fund schools.

Links of Interest

Market Internals
Movers & Shakers
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon
Real-time Intraday Chart/Quote

Economic Releases

- The Unemployment Rate for March fell to 5.2% versus estimates of a 5.3% rate and a 5.4% rate in February.
- Average Hourly Earnings for March rose .3% versus estimates of a .2% increase and a .1% gain in February.
- The Change in Non-farm Payrolls for March was 110K versus estimates of 213K and 243K in February.
- The Change in Manufacturing Payrolls for March was -8K versus estimates of 8K and 15K in February.
- The Final Univ. of Mich. Consumer Confidence reading for March fell to 92.6 versus estimates of 92.7 and a prior estimate of 92.9.
- Construction Spending for February rose .4% versus estimates of a .6% gain and a .6% rise in January.
- ISM Non-Manufacturing for March rose to 63.1 versus estimates of 59.0 and a reading of 59.8 in February.
- ISM Manufacturing for March fell to 55.2 versus estimates of 55.0 and a reading of 55.3 in February.
- ISM Prices Paid for March rose to 73.0 versus estimates of 66.0 and a reading of 65.5 in February.

Morning Buy/Sell Recommendations

Goldman Sachs:
- Reiterated Outperform on DELL.
- Upgraded COF to Outperform.
- Upgraded FMD to Outperform.

Smith Barney:
- Said to Buy CELG, target $41.
- Reiterated Buy on FRE, target $80.

CSFB:
- Reiterated Outperform on CHK, DVN.
- Raised FO to Outperform, target $90.
- Raised ADS to Outperform, target $50.

Merrill Lynch:
- Lowered Retail sector to Underweight.
- Raised TKC to Buy.

Raymond James:
- Raised COGN to Strong Buy, target $56.50.
- Reiterated Strong Buy on RIG, target $61.50.
- Reiterated Strong Buy on ATW, target $93.
- Reiterated Strong Buy on JBL, target $39.

Banc of America:
- Upgraded FTI to Buy, target $39.
- Upgraded BHI to Buy, target $52.

UBS:
- Raised COGN to Buy, target $50.
- Raised KSU to Buy, target $26.
- Raised WCC to Buy, target $38.

Deutsche Bank:
- Raised ACN to Buy, target $28.
- Raised OXY to Buy, target $80.
- Rated APA Buy, target $71.
- Rated APC Buy, target $84.
- Rated BR Buy, target $54.
- Rated CHK Buy, target $26.
- Rated EOG Buy, target $53.
- Rated MUR Buy, target $110.
- Rated NFX Buy, target $83.
- Rated NBL Buy, target $82.
- Rated XTO Buy, target $37.
- Rated EAC Buy, target $69.
- Rated EPL Buy, target $29.
- Rated RRC Buy, target $28.

Bear Stearns:
- Raised MKTX to Outperform, target $14.

JP Morgan:
- Said Aluminum prices, now near a 10-year high, will fall in 2006 and stay lower for the rest of the decade as China boosts production.
- Rasied CYMI to Overweight.
- Cut VISG to Underweight.

Piper Jaffray:
- Rated GYI Outperform, target $78.
- Reiterated Buy on CY, target $18.

Friday Watch

Late-Night Headlines
Bloomberg:
- Confidence among Japan's large manufactures fell in March to its lowest in a year, the central bank's Tankan survey showed, reflecting concern a recovery in Asia's largest economy won't last.

Wall Street Journal:
- A US Defense Department panel approved full production of Lockheed Martin's F/A-22 stealth fighter airplane.
- Dell Inc. won't sell computers with the stripped-down version of Microsoft's Windows program.
- A Berkshire Hathaway Inc. insurance unit has undone a transaction handled by Ajit Jain, an associate of CEO Warren Buffett, after Jain and the unit were sued by a liquidator of the firm involved, citing people familiar with the situation.
- European telecom companies are investing some of their yearly generated $71.3 billion in cash to expand and strike deals.

CNN:
- Former US National Security Adviser during the Clinton administration, Sandy Berger, has agreed to plead guilty tomorrow in federal court for removing documents from the National Archive.

Financial Times:
- The European Union should forge ahead with plans to lift a 15-year-old arms embargo on China, citing German Chancellor Gerhard Schroeder.

Economic Times:
- India may allow overseas investors to own 100% of biotechnology companies in the country.

Shanghai Securities News:
- The time is right for China to adjust its exchange rate policy and a move may happen at any time.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on CAL.
- Reiterated Underperform on SMP and SLG.

Business Week:
- Acacia Research's(ACTG) Acacia Technology business may see revenue rise to $100 million a year if it prevails in patent-infringement lawsuits.
- The shares of wedding services Web site operator The Knot Inc.(KNOT) may rise on expectations of higher revenue and earnings because of more vendor advertisements and lower costs.
- Shares of MetLife Inc.(MET), the biggest US life insurer, are worth buying because the stock trades below others in the same industry group.

Night Trading
Asian Indices are -.25% to +.75% on average.
S&P 500 indicated +.03%.
NASDAQ 100 indicated +.17%.

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
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
BBY/1.55
DLP/.47
RDA/.04

Splits
COG 3-for-2
CBI 2-for-1
SM 2-for-1

Economic Releases
8:30 EST:
- The Unemployment Rate for March is estimated to fall to 5.3% versus 5.4% in February.
- Average Hourly Earnings for March are estimated to rise .2% versus 0.0% in February.
- The Change in Non-farm Payrolls for March is estimated to fall to 213K versus 262K in February.
- The Change in Manufacturing Payrolls for March is estimated to fall to 8K versus 20K in February.

9:45 EST:
- Final Univ. of Mich. Consumer Confidence for March is estimated to fall to 92.7 versus a prior estimate of 92.9.

10:00 EST:
- Construction Spending for February is estimated to rise .6% versus a .7% increase in January.
- ISM Manufacturing for March is estimated to fall to 55.0 versus a reading of 55.3 in February.
- ISM Prices Paid for March is estimated to rise to 66.0 versus a reading of 65.5 in February.

Afternoon:
- Total Vehicle Sales for March are estimated to rise to 16.7M versus 16.3M in February.
- Domestic Vehicle Sales for March are estimated to rise to 13.2M versus 13.0M in February.

BOTTOM LINE: Asian indices are higher, led by commodity-related shares in the region. I expect US equities to open mixed in the morning and rise later in the day on lower long-term interest rates. However, if the economic data is stronger than I expect, rates will rise which may send stocks lower. The Portfolio is 50% net long heading into tomorrow.