Morning Update

"Very specific and personal misfortune awaits those who presume to believe that the future is revealed to them." - John Kenneth Galbraith

Morning News of Note:

• SBUX: New Grind At Starbucks, a Blend of Coffee And Music Creates a Potent Mix Chain Boosts Sales and Careers As It Co-Produces, Offers Selected CDs in Its Stores Retailer Pulls Discs in Protest When Concord Records Inc. President Glen Barros was deciding whether to sign an Italian pop singer named Zucchero to a U.S. record deal this spring, his deliberations included an unusual consideration: Would Starbucks Corp. help finance and distribute the singer's next CD? More than once, Mr. Barros says, he has consulted Starbucks executives when pondering a musical act -- effectively giving them final say on whether to sign an artist. "If they'll be our partner," he says, "we'll do it." (Full Story) WSJ
• YHOO: Turnover at Yahoo Slows Media Group's Los Angeles Move Plans to give a stiff shot of Hollywood glamour to Yahoo Inc.'s media and entertainment offerings have instead given the Internet company a case of the hiccups, as several division heads have decided either to leave Yahoo or opted against relocating to new Los Angeles-area offices. Of eight media division general managers, three heading Yahoo's finance, sports, and movies and television units have decided to leave the Sunnyvale, Calif., company, Yahoo said. Three other division heads have declined to move to Southern California from Silicon Valley and so are leaving their current posts, taking other jobs at the company. (Full Story) WSJ
• INTC: Chip Shot Investors have long viewed Intel as a bellwether for the technology sector. Today's earnings results from the chip maker look likely to ring some bells. The company is well past last year's woes, when it misjudged demand, and now looks to be keeping inventories trim. At the same time, sales have improved. (Full Story) WSJ
• HPQ: Hewlett-Packard Plans to Cut 14,500 Jobs Personal-computer maker Hewlett-Packard Co. on Tuesday said it will cut 14,500 jobs, about 10 percent of its full-time staff, as part of a restructuring plan designed to save $1.9 billion annually and boost business performance. The job cuts will occur over the next six quarters, the Palo Alto-based company said. (Full Story) NY Times
• Interest Rates: Fed Seeks Clues to Stop Increases as Rates Approach `Neutral' The Federal Reserve is entering a new phase in its drive to bring interest rates back up to normal: While the central bank will continue to push rates higher, policy makers also will watch for signs that it may be time to stop. Former Fed Governor Laurence Meyer says the Fed is approaching the ``lower boundary'' of the so-called ``neutral'' zone where it hopes to leave the benchmark overnight lending rate -- a point at which monetary policy neither slows economic growth nor stimulates it, intensifying inflationary pressures. (Full Story) Bloomberg

Market Comments: The market opens up this morning after strong earnings reports last night from IBM and this morning from JNJ. Yesterday's pullback came on very light volume, so it doesn't imply any serious distribution at this point. More likely, it is just light profit taking that will help the market work off this overbought condition.

Tonight, we will hear from AMGN and INTC (and a host of others), which are bellweathers for their respective industries. Both stocks have moved up quite a bit leading up to these reports, so the action of the stocks in response to the earnings announcements should be telling.

long AMGN, INTC