Friday, June 18, 2004

Friday Watch

Earnings of Note

CTSH 2-for-1

Economic Data
Current Account Balance for 1Q estimated at -$141.0B versus -$127.5B in 4Q.

Goldman Sachs reaffirmed Attractive view on the Drug Wholesalers and Outperform rating on MCK. Goldman reiterated Outperform on SLR and TRB. Goldman reiterated bullish stance on aluminum stocks, favorite is AA. Goldman said JBL issues are company-specific. Goldman also said that they would increase exposure to copper stocks ahead of strong 2Q earnings reports, favorites are FCX and PD. TKO may benefit from overseas demand for its Internet-access technology, Business Week said.

Late-Night News
Asian indices are lower on rising energy prices, concerns over slowing growth in China and U.S. Fed rate hikes. Foamex Intl.(FMXI) may sell stakes of the company to two chemical makers, Business Week reported. Wal-Mart may reduce shelf space for home entertainment products, hurting producers such as HIT Entertainment, the London-based Times said. Boeing, facing discrimination lawsuits by female workers, may have engaged in a systematic campaign to hide evidence and take advantage of attorney-client privilege, Business Week reported. Vice President Cheney told CNBC that there "clearly was a relationship" between Iraq and al-Qaeda and "the evidence is overwhelming." He also said the evidence involves a whole series of high-level contacts between Osam bin Laden and Iraqi intelligence officials going back to the early 90's. Iraq's interim government may impose martial law when it takes over power on June 30 to help stabilize the country, the Financial Times reported. President Bush and Senator Kerry would have two moderated debates, beginning Sept. 30, and one town-hall style meeting, according to plans released by the Commission on Presidential Debates, Bloomberg said. Almost 90,000 Afghans are registering each day for September's presidential and national assembly elections, the UN said. Dell President Rollins plans to cut computer-printer prices in half and shave as much as 20% from the cost of printer supplies as he challenges Hewlett-Packard in its most-profitable market, Bloomberg reported.

Late-Night Trading
Asian Indices -2.25% to -1.75% on average.
S&P 500 indicated -.34%.
NASDAQ 100 indicated -.58%.

BOTTOM LINE: I expect U.S. stocks to open lower in the morning on weakness in Asia and rising oil prices. The Portfolio is 50% net long heading into tomorrow. I believe the current weakness in technology shares is unwarranted. Earnings estimates are too low for many technology stocks for the second half of the year and I expect their outperformance to begin in the third quarter. INTC, DELL, MSFT, CSCO, YHOO, MOT, QCOM, IBM, VRTS, EMC, AMAT, TXN, ACN, BRCM, IBM and ADP all having improving fundamentals and will likely beat earnings expectations for the second half. While a few of these tech market leaders have excessive valuations, many do not.

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