Monday, June 21, 2004

Mid-day Update

S&P 500 1,136.11 +.10%
NASDAQ 1,9990.84 +.21%

Leading Sectors
Nanotechnology +2.90%
Utilities +1.02%
Semis +.91%

Lagging Sectors
Oil Service -.68%
Telecom -.78%
HMO's -1.17%

Crude Oil 37.80 -3.08%
Natural Gas 6.33 -3.07%
Gold 394.20 -.38%
Base Metals 109.83 +.46%
U.S. Dollar 89.28 +.22%
10-Yr. T-note Yield 4.68% -.55%
VIX 15.03 +.27%
Put/Call .68 -17.07%
NYSE Arms 1.02 +27.50%

Market Movers
BFD +26.0% after announcing its acquisition by Banknorth for $195 million.
NVEC +30.9% after saying the U.S. Patent and Trademark Office issued the company a patent for an innovation type of MRAM.
OXM +18.78% after saying it agreed to buy Ben Sherman Ltd. for $146 million in cash.
TASR +17.58% after increasing it annual revenue growth forecast from 100% to 150% for 04.
SOTR +13.62% after agreeing to be acquired by Wachovia for $14.3 billion.
CPG +11.7% after agreeing to be acquired by Simon Property Group for $3.5 billion in cash and stock.
BBBB +10.7% on continuing strength after IPO.
IMDC +6.55% after settling a patent lawsuit with Ethicon Endo-Surgery for $17.3 million.
EASI +5.28% after saying it is in full-scale production of its armored cab design for the U.S. Army's Family of Medium Tactical Vehicles.
MIL +5.27% after positive Barron's mention.
LABS -8.58% after saying it plans to sell $90 million in convertible debt.
CYBX -4.67% on profit-taking.
ASKJ -5.1% on insider selling.
SOHU -7.33% on crackdown by Chinese government on online content and YHOO entering Chinese search market.

Economic Data
None of note.

Goldman Sachs reiterated Outperform on SLR, PAYX, KO, PEP, STZ and ATYT. Goldman reiterated Underperform on PBG and RKY. Citi SmithBarney said to Buy MOT, target $25. Citi says their recent Semi Purchasing Manager survey was better than expectations and has positive implications for LLTC, MXIM, INTC, AMD and NSM. Citi reiterated Sell on MU, target $12. ARXX raised to Buy at Deutsche Bank, target $16.

Mid-day News
U.S. stocks are quietly higher today as investors continue to fear making big bets ahead of several market-moving events over the next couple of weeks. Iran seized three British navy vessels that reportedly entered the country's territorial waters, Agence France-Presse said. U.S. officials have been spending about $2.5 billion in Iraqi oil revenue on programs such as police cars and uniforms, as well as repairing schools, the NY Times reported. Abiomed, the maker of the experimental artificial heart, expects to become profitable by March 31 and to have annual revenue of $500 million by 2011, the Boston Globe reported. The leaders of the largest labor unions in the U.S. are considering reducing the number of unions to 15 from 65 to better focus their organizing and bargaining efforts, the LA Times reported. The AFL-CIO is undertaking its earliest and largest "get-out-the-vote" campaign ever for Democratic presidential contender John Kerry, the Washington Post reported. Geely Group this year plans to become the first Chinese automaker to sell cars in the U.S., Automotive News reported. Wal-Mart said June's sales are rising around the low end of its recent forecast, Bloomberg reported. Motorola expects to raise as much as $2.73 billion in an IPO of its Freescale Semiconductor unit, Bloomberg said. A privately funded and constructed spaceship was launched today from California's Mojave Desert on a mission to become the first non-governmental craft to leave the Earth's atmosphere, Bloomberg reported. The U.S. SEC is moving ahead with plans to bring hedge funds under greater government oversight over the opposition of most of the $800 billion industry, Bloomberg reported. Crude oil futures are falling as Iraq resumed partial exports through one of two pipelines shut after an attack early last week, Bloomberg said.

BOTTOM LINE: The Portfolio is having a very good day today as my security and telecom equipment longs are rising and short Chinese ADRs are falling. I added a few new technology longs this morning, bringing the Portfolio to 100% net long market exposure. The fundamentals are improving today on an acceleration in merger activity, falling energy prices and declining interest rates. I expect U.S. stocks to rise modestly into the close on short-covering.

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