John Mugarian's Dynamic Growth

Now that COP is close to digesting its purchase of Burington, the stock is attracting attention again. Also note the price target for Marathon (MRO) has been upped to $87, and Exxon (XOM) is still way below MS price target of $78. Here is the latest from Doug Terreson at Morgan Stanley:

MORGAN STANLEY RESEARCH

CONOCOPHILLIPS (COP.N): RESUMING COVERAGE: OVERWEIGHT, PX TGT $80 - April 03, 2006

What's Changed
Rating: NA to Overweight
Price Target: NA to $80.00

ConocoPhillips Has Major Momentum:
Normalized profits projected to rise by 8-10% annually during 2006-2008, with normalized returns on capital near 15%. Raising normalized EPS from $6.10/sh. to $6.20/sh.

Burlington Resources Transaction Positive: The transaction appears modestly dilutive/accretive to our earnings/cash flow projections. Strategically, ConocoPhillips becomes a likely winner in Russia's giant Shtokman project, the largest undeveloped natural gas field in world. Announcement next week.

Financial Flexibility Enhanced: Debt/capitalization is 20%, headed to 14%, with surplus cash flow likely to retire 40-50% of BR acquisition capital by year-end 2007.

ConocoPhillips Price Target Is $80/share: Using our mid-cycle EPS forecast of $6.20/share and an 75% relative earnings multiple, we attain our $80/share price target.

Historic Valuation Opportunity Present in COP? COP has rarely been this in-expensive, in relation to its industry, or the S&P 500, on a variety of measures, during the past decade. Integrated Oils MRO (O, PT $87) and XOM (O, PT $78) represent our other top picks in the industry.

Maintain Attractive View on Integrated Oils/R&M: Integrated Oils appear 15% undervalued based on normalized returns on capital. Independent R&M represents the best value per unit of return in Energy.

Stock Rating: Overweight
Industry View: Attractive
ModelWare EPS actual: (Dec 2004) USD 6.12; (Dec 2005) USD 10.47
ModelWare EPS estimate: (Dec 2006) USD 9.15; (Dec 2007) USD 8.75
Consensus EPS actual: (Dec 2004) USD 5.79; (Dec 2005) USD 9.35
Consensus EPS estimate: (Dec 2006) USD 9.69; (Dec 2007) USD 8.91
Share Price: USD 63.15 (Mar 31, 2006)
Target Price: USD 80.00
Market Cap (mm): USD 89,434

By now, you have all seen the nest egg ad from A.G. Edwards. Here is something to keep in mind when you池e dealing with ANY broker, regardless of the company. Read this article from the February 24, 2003 issue of Businessweek.

I was an A.G. Edwards broker in for 9 years, and it is a fine company. But, if you must do business with a full commissioned firm, you need to thoroughly evaluate the person you are dealing with, and the monitoring process each firm has in place on their advisors. Start with my "10 Questions to Ask any Broker" located in the "Reports" section of the website. I think you'll save yourself a lot a pain down the road.

Most of the brokerage firm's have done a great job with their image repair process, but I am a firm believer that the small investor should not do business with a firm that engages in Investment Banking.

With the cyclical bull now 42 months old, and today the tired old bovine began to show its age. Sure, after April 15th the market may muster may catch it痴 breath for one more attempt to the upside, but today's early action was a classic case of "suck'em in, and sell'em off".

I never have been a fan of perma-bear advisors, but from time to time even perma-bears will eventually be right, Case in point if Martin Weiss, editor of the "Safe Money Report".

I have been beating the drum about the real estate bubble for some time now, and Weiss' Safe Money Report recently stated that "The Housing Boom of 2005 is turning into the housing bust of 2006".

You do not have to be an expert to figure these things out. All you have to do is pay attention to things happening around you. Like the NASDAQ bubble of 2000, you couldn't find anyone around who wasn't bragging about the fortune's they were making in tech stocks. When you walked through the business section of a Barnes & Noble, all you saw were get rich books on day trading and the stock market.

Today is no different. A few months ago, investors were bragging about the appreciated value of their homes, and the bookstore shelves are packed with get rich ideas about real estate. These are all obvious signs of a bubble. Those who tend to ignore the signs are usually wrapped up in the hype surrounding the obvious.

The Safe Money Report said, 典hat listings on Realtor.com have tripled since June. Sellers are growing desperate, and prices are beginning to decline. The nationwide inventory of unsold existing homes is the worst in 18 years, and the backlogs of new empty condos are piling up like dead birds in a pandemic. The inventories of homes are up 15 times more than sales".

Here along the Gulf Coast, investors are fleeing in fear of another terrible hurricane season. The MLS listings in our area are up almost five fold from a year ago.

The Risk Premium in the market place is the amount of "excess return" investors require for holding risk investments like stocks versus risk free investments like Treasury Bonds or cd's. For years, the benchmark risk premium that investors have grown to expect is 7% over the yield of a a risk free investment like a one year cd.

Here are some recent comments by Jeffrey Saut, Investment Strategist at Raymond James. Saut highlights some comments by Alan Greenspan who spoke at a Pimco investment conference.

For the past few months we have heard market experts tell us that business spending will pick up the slack if consumer spending slows down. That's not what the "Core" Durable Goods Orders are saying.

Durable Goods are items that have an intending lifespan of three years or more. Orders for Durable Goods in February increased 2.6%, the fourth increase in the past 5 months. Over the last 12 months, total orders were up 7.8%. But, when you look inside the numbers, you get a totally different view.

The 7.8% increase over the last 12 months were propelled by a 104% increase in defense orders, and 52% in non-defense aircraft orders. Since transportation orders are cyclical, they are also not sustainable.

The numbers to focus on are new orders for non-defense capital goods, and when we do this, we see that Durable Goods orders for February actually fell. This number may actually imply that business spend in the months ahead may not be as robust as the experts are suggesting.

After two Fed governors said that economic growth outlook is "quite healthy" and domestic inflation expectations remain well contained, the dollar began to sell-off. Its seems that currency traders are concerned that a Fed pause will be premature since inflation continues to be a problem as witnessed by new highs in the metals, commodities, and energy markets.

Now that interest rates are approaching the upper end of the neutral zone (accommodative, neutral, restrictive), sooner or latter the pubic needs to realize that in order to effectively fight inflationary pressures, rates need to rise further, and the U.S. economy may have to be thrown into recession to halt the rampant run in commodity prices

Consumers are beginning to feel some pain.

We seem to be in a situation of catch 22, "pay me now, or pay me latter", but someone will eventually get paid. We will either accept the consequences of a recession, or incur more inflation.

Shares of Boston Scientific (BSX- $21.89) are selling off in sympathy with St. Jude Medical (STJ-$36.15 down -$5.15) after the company cut its sales and earnings outlook.

An analyst at Stanford Financial Group, said "St. Jude was too optimistic about gaining market share from rival Guidant after the company's string of product recalls and warnings." In the days ahead, Guidant will become part of BSX.

INSIDERS BUYING

Insider buying has been very active at BSX. This sounds like a buying opportunity to me.

Here are Peter Lee's most recent technical comments on the market. I have summarized the comments to get to the meat and avoid the fat.

APRIL SHOWERS BRING MAY FLOWERS

"So with the arrival of spring will this also bring about a renewed rally in the U.S. financial markets? Well if the past few days are any indication of the future it appears that the U.S. stock market is off to a good start. But the question then becomes will it be sustainable given the choppy macro environment and the maturing cyclical bull cycle. At any rate, 2006 has unfolded quite differently than what many investors had expected. To the surprise of many high beta and growth areas of the marketplace was the best place to be situated during the first quarter. In fact, the stellar outperformers were heavily concentrated in emerging markets, small caps, mid-caps, telecom and commodities.

Just wait, you're about to get even madder. Americans are fuming over the high price of gasoline. A report put out by the Energy Information Administration (EIA) yesterday said that prices may go even higher.

Here is the article.

For many months, the government has been telling us there is not an inflation problem. That's not what the gold prices are saying. Even silver prices have hit a 22 year high. I've often said that the economic reports we receive are re-worked and massaged in such a way that we shouldn't waste our time reading them.

Read Article.

I will be traveling to Atlanta to watch my 14 year old son play baseball. Yesterday, his team really got a treat as 5 time American League All-Star, Travis Fryman was invited to run practice. He really did a great job.

Baseball was, and is still, a big part of my life. I was a Catcher in college, and spent 5 years coaching at LSU, Kentucky, and a few other places. My biggest fear however, is going from a coaching mentality, to a parent痴 mentality, when watching my son play. Since many parents think their kids are better athlete's than they really are (I call this the American Idol Syndrome). This being said, I caught a glimpse of the parent mentality when they clocked my son's fastball at 83-84 mph. Not bad for 14.

The thing I really like about TRUE athletic mentalities is the way they confront questionable issues head-on. Of course, professional sports today is having their character questioned, and rightly so.

I guess I am still "old school", and I like it that way.

When you're dealing with Wall Street, you need to have an "old school" mentality because these mis-information providers only care about themselves.

Today, we get more of the same. The Labor Department released another questionable employment report. I'm sure it will be more of the same. Until they begin to include jobs lost from outsourcing, we should tell them to "talk to the hand."

Anyway, I'm off to Atlanta. On Monday, I'm sure I'll have plenty to say about the high gas prices I paid along the way. Well, somebody has got to make the Rockefeller Family richer.

We made our short trip to Atlanta, and I can tell you, the consumer is very angry. On our team alone, everybody was complaining about the high cost of fuel.

We live in a conservative part of the south, and I heard several comments that were not very kind toward the current administration. Mind you, these are people who are conservative Republican's. In fact, one person likened the Republican's to a bunch of "country club elitists" who are sitting back laughing while the little guy suffers.

Unfortunately for the American public, the Democrats are so far to the left, and so crazed in their thinking that the mainstream public cannot relate to them either.

It will be interesting to watch how high the consumers "pain threshold" is. My guess is it is at a tipping point now, and when the November elections roll around, you will see enough protest votes to shift the power in congress.

There is a wildcard to keep in mind however. Just prior to the 2004 Presidential Election, oil prices "magically" dropped, and then climbed higher when President Bush was re-elected. Coincidence, or was this by design?

OIL ETF NOW TRADING

The much talked about US Oil ETF (USO) began trading today. With all of the hype I expect investors to jump in and buy at what could be a short term top. It never fails, and I love to watch the timing of Wall Street as they make there moves when a product is red hot, or temporarily out of favor.

Since oil is "red hot", they come out with a product they know investors are itching to buy. In the case with Google, investors were bailing out, and after a 140 point drop, the stock is added to the S&P 500. It must be nice to be on the inside.

So, this being said, would I buy the Oil ETF (USO) now? No, and I may be wrong, but I am inclided to wait for a $5-10 pullback before I get interested in USO.

Gas prices have been rising but there is very little information as to why. I just got word that the environmental standards that were relaxed for six months after Hurricane Katrina have been re-imposed.

We have heard that refineries had to shut down for maintenance, but no one mentioned why. Oil inventories are still high, so we know that higher prices were not due to the supply of crude. Also, the U.S. is shifting away from MTBE and toward ethanol, and refineries have to shut down to reformulate.

Another problem is finding ethanol. Since ethanol is made from corn, there are no inexpensive ways to transport the product, and prices will probably continue rising as the summer driving season approaches.

Dow Jones Real-Time News for InvestorsSM
12:59 p.m. 04/10/2006


NEW YORK (Dow Jones)--Abbott Laboratories' (ABT) $4.1 billion purchase of Guidant Corp.'s (GDT) vascular intervention and endovascular business will benefit Abbott because the deal includes the entire division, said Abbott Chairman and Chief Executive Miles White.

-By Alex Davidson, Dow Jones Newswires

This morning aluminum maker Alcoa beating earnings estimates by .51 cents on a 24% rise in aluminum prices (reported by CNBC).

Those who say that inflation is under control are simply lying. Of course, if you remove inflationary items from the CPI and PPI, then you're removing the most important items in the index.

The CPI measures prices of a fixed basket of goods: Food, Transportation, Utilities, Clothing, Medical Care, Entertainment and other items.

The PPI is broken down into components by commodity, industry sector and the stage of processing. The PPI tracks Food, Metals, Lumber, Oil and Gas, and many other commodities. But, and here's the kicker, economists also look at the PPI excluding food and energy which they call the "core". Core inflation is what is constantly being focused on.

The only thing I know about a "core" is you can't eat it. Throw the core inflation rate out, and you're looking at a 5-6% inflation rate.

Ed Elfenbein runs the blog, Crossing Wall Street. I have known Ed since my newsletter days at Phillips Publishing. Ed is a great guy, and he just posted this piece on Ken Lay. I thought you would enjoy it.

Not all corporate executives are crooks. Overpaid, yes! Crooks, no.

Its is amazing however how executives are compensated with multiple millions in stock grants and options. The stock market is, and has always been, their cash register. Anytime they need cash, they just ring the register.

This is why it is so important that you research everything you buy. I still believe Wall Street bankers protect their investment banking business by being very kind to the companies who provide them business. This is why you will see these words on the bottom of most research reports:

(Name of Firm) does seek to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.

Now, if you see these words on the research reports of the firm you are doing business with, why on gods green earth would you let them handle your account?

The cat's out of the bag, inflation is alive and well. The question however, is when will Wall Street admit it. My guess is when its too late for investors to get out of the way.

The reason for today's sell-off is....INFLATION. Here is a recent article from Yahoo Finance

See if any of these charts signal inflationary pressures:

Crude Oil

Gasoline

Gold

Silver

Copper

Its continues to be a slow week on Wall Street ahead of the holiday weekend. Thursday marks the begining of Passover, and Good Friday starts on the 14th.

Insiders have already cashed in, and buying is virtually non-existent.

Here are the buy/ sell totals for the past 7 days:

4-3-06 B46 S160
4-4-06 B40 S153
4-5-06 B65 S225
4-6-06 B60 S248
4-10-06 B32 S147
4-11-06 B39 S139
4-12-06 B37 S119

After looking at these totals, don't you think that insiders know something the average investor does not. Gasoline prices are near post Hurricane peaks, and the inventory numbers are signaling higher prices down the road.

I really do not like the idea of America's economic future being determined by foreign debt holders. I have wrote about this potential problem numerous times, and it seems that my biggest concerns could be happening before our very eyes.

There is plenty of reason's why we should be concerned. Our longer term rates could jump significantly if China and Japan continue to sell our debt. Here is a good article as to why we have seen a spike up in rates.

Yesterday, shares of heart device maker Boston Scientific (BSX) rallied 3% to $22.01. This morning investors woke up to news of that the Centers for Medicare and Medicaid Services (CMS) has proposed a cut back in payments o various cardiovascular-surgical cases.

While we expect some wider price swings in devices makers such as BSX, STJ, and MDT, the proposed changes are not likely to be implemented as proposed. Since the CMS will now begin engaging in debates on the proposed changes, the final version of the proposal will likely be watered down once the final version is implemented.

Investors often like to shoot before they aim, and we will probably see the severity of the proposal move to a friendlier middle ground.

BSX insiders are buying.

The stock market was closed today due to Good Friday, and I hope everyone has a great holiday weekend. The stock market had a low volume week, and this is mainly due to traders leaving their posts for the Easter and Passover holiday.

High energy prices are beginning to get the attention of many on Wall Street. Some fear that higher energy prices will begin to talk its toll on the consumer, and this has been my belief all along. I don't think there is any doubt that the consumer is as angry as a hornet every time they go to fill up their vehicles. I find it amusing that the Bush Administration announced this week that they were going to get more vocal over the high energy prices.

I say amusing because the mid-term elections are a little more than 6 months away, and if they have any power at all over oil trading, they will do everything in their power to briefly talk prices down. I don't find this the least bit amusing, but this is what the May 2006 Crude Oil contract has done since it began trading under an oil friendly White House.

The sad part of this situation is the limited choices that American's actually have. Do they really want the Democrats to run the country? My guess would be no. But, if consumers continue to get taken to the cleaners on a daily basis, even Venezuelan President Hugo Ch疱ez could win if he were allowed to run. Here's a scary thought, how about Hillary on 2008? Sounds impossible, but if consumers are angry enough, anything is possible. Talk about someone who is unqualified. She must have really pulled a rabbit out of a hat to be elected to the Senate in a district where she had no roots, and no previous track record or experience. Something is fishy about this.

Here is the latest from Arthur Hill at TD Trader (tdtrader.com):

DOW OVERSOLD AND AT SUPPORT
The decline in the Dow Industrials over the last few weeks looks like a bull flag. This downward sloping flag is a potentially bullish pattern that requires confirmation with an upside breakout. Notice that the Dow formed a similar falling flag in late February and early March. The breakout at 11100 in early March confirmed this flag and led to a new reaction high. For the current flag, a break above 11250 would confirm the pattern and signal a continuation higher. The upside target would be the upper channel trendline or to the 11500-11600 area.

See Chart

I really like the people at Raymond James. I surely hope that they do not sellout one day to one of the big investment banks. Lets hope they don't.

Here are Jeff Saut's latest market comments. I think you'll find his insights on par with ours. Jeff is more diplomatic than I am, but he does not buy the Government reports on the economy any more than I do.

Here's the article.

I am not a chess fan, but when I heard about the retirement package of Exxon's outgoing CEO, Lee Raymond, I couldn't help but think of a better analogy than this one. In our society, there are Kings, and there are Pawns.

In chess, I am told that the side with the normal King will win every King-and-Pawn endgame. I really don't know what this means (and don't care to know), but it has become very clear that Wall Street and their CEO buddies are the Kings, and the rest of us are Pawns.

Now, I am not going to blame just Lee Raymond, GE's Jack Welch has a retirement package that would make most plumbers or teachers throw up as well. But as consumers pay $200 million dollars a day more in fuel costs than they did this time last year, how in the world can Exxon justify paying Lee Raymond a retirement package of $400,000,000.

If we are to accept the fact that world oil demand is responsible for the high cost of oil, then Raymond had absolutely nothing to do with Exxon's enormous $36 billion in profits. In fact, the company's profits were driven by market forces and not the great management skills of its CEO.

Here is an excellent article by Doug Gillespie from Gillespie Research. Today's article is "Sell Stocks" Revisited - Apr. 19, 2006.

Here's a comment from Doug this morning prior to the release of the CPI numbers:

Economy: In a couple hours, the Labor Department will complete this month's rendition of "why don't you believe our inflation data," when it releases consumer price data for March. The consensus estimate looks for an increase from last month's +0.1% (overall and core), but does it really matter? Which leads me to a novel idea. Why not see if the bureaucrats at the Labor Department are confident enough with their numbers that they will agree to reimburse you for the difference between your inflation rate and what they say it is?

Don't you love it ?

Doug discusses the overall market and the Feds decision to no longer permit the reporting of M3. M3 is a broad measure of money and is an estimate of the entire supply of money within the economy. Thanks to the easy money polices of the Fed, M3 has ballooned which may be one of the reasons for the inflation we are experiencing today.

Precious metals, commodities, and energy prices have signaled that our economy is experiencing inflation on a massive scale.

So much for the no inflation theory. Here's the latest from MarketWatch:

Gold futures up almost $13, end at highest level since 1980

SAN FRANCISCO (MarketWatch) -- June gold jumped $12.70, or 2%, to close at $636 an ounce in New York. That marked the highest front-month futures contract close since late 1980. May silver climbed 73.7 cents, or 5.4%, to end at $14.522 an ounce after reaching a 23-year high of $14.58 earlier. But May copper fell by 1.15 cents to close at $2.9595 a pound, following a record high of $2.985.

My wife has joined the stock picking contest taking place on CNBC. I only gave her 2 stocks, Conoco-Phillips (COP) and Anheuser Busch (BUD).

While BUD may take some time to turnaround, it is a great value at current levels.

I asked her what else she bought, and she mentioned Viacom (VIA). When I asked why, she said because they are shaping and molding the hearts and minds of the nation痴 youth through their sexually explicit programming, and nobody is doing anything to stop it.

In fact, MTV is a favorite among the nation痴 young people, and while some parents have blocked these stations in their homes, many others are allowing their children to watch its sexually explicit programs. In many cases, parents are a big part of the problem.

If you have been wondering why Apple Computer (AAPL) has done so well, I-POD sales have soar due to the popularity of music downloads and MTV.

If you don稚 think parents are a problem, all you have to do is watch the show 鉄uper Nanny� on ABC. 鉄uper Nanny� is not an isolated case of parents who cannot or will not control and discipline their children. The problem is widespread. Better still, watch an episode of "Wife Swap", if "Super Nanny" doesn't get your attention, this show certainly will.

In our area, and in other places around the country, parents have been caught providing alcohol for underage kids holding parties at their own homes. The rational for this destructive behavior is "well, they're going to do it anyway, if they do it at my home at least my kids will not have to drive home after the party."

How selfish can you be, what about the kids that do have to drive home, or others on the road.

So, what does this have to do with the economy and markets?

If you had a company, wanted to save money, and wanted to find better quality help than what was currently available to you in the U.S., wouldn't you look for help outside our borders too? If so, this would translate into higher unemployment, and lower paying jobs here at home.

I realize this is an oversimplification of what is currently going on, and the only issue for U.S. corporations may be saving labor costs, but could one of the other issues be work ethic and quality? It痴 just a thought.

Several buttons were pushed, and dials were turned today as (U.S. Fed Chairman) China's President Hu Jintao met with President Bush today in Washington. Wouldn't you love to be a fly on the wall during the closed door meeting?

Sorry about the Fed Chairman snipe, but I can't help myself when I know a country like China holds are huge amount of our long term debt, and could sell that debt at any time and send our economy into a tailspin.

In any event, stocks put on an impressive performance early, which was eventually met by profit taking, and sideways trading the rest of the day. The market seems focused on the eventuality of the feds final tightening. Once this is done, we will see the final rally in this cyclical bull rally.

Like I have said many times, our price targets remain 1350-1400 on the S&P, 11,700 for the Dow, and 2400-2500 on the NASDAQ.

As the "Stock Traders Almanac" has pointed out numerous times, " In the last six years only March 2003 encountered a major low point for stocks just prior to the invasion of Iraq. March 2000 and 2002 were officially bull market tops for the S&P 500, and in March 2001, the NASDAQ collapsed 18.2% from the 7th to the 29th.

So, how will the market react come May? You will probably see more of the same. The typical "Sell in May, and go away" will probably ignore the seasonal myth until the fall. We may in fact witness a top in the market, as well as a meaningful bottom, during the last 6 months of the year. This translates into a sharp decline similar to what we saw in 1987 rather than a long drawn decline that tortures an investor for several months.

With the massive amount of information available to investors, the Wall Street Gang is dealing with a more educated small investor. The only way the "Gang" can gain a strategic advantage over the small investor is to use the element of surprise.

As an example, the seasonal patterns of the market have not been a reliable indicator of the future directions in the market for quite some time. Why? The "Gang" knows that the small investor is more educated, and these investors know about the seasonal tendencies as well. This is probably why the markets have not been following their normal seasonal patterns.

In years past, seasonal tendencies were techniques used by the big boys. Not anymore. In order to suck the small investor in before pulling the rug out from under them, the "big boys" have to find a more stealthy approach.

We have sold Nestle' from the IA portfolio to raise cash, and make room for a new pick down the road. For now, we will just hold on to the cash.

I have told you for quite some time that I didn't believe a word of what the government statistics were telling us about inflation. Here is another great piece by Jeff Saut.

Read article.

When I was a kid, there was a TV game show called "To Tell the Truth". The show featured a row of contestants sitting across from a row of three people, one of whom was the "real" person and the other two being imposters. The contestants had to ask yes-or-no questions of the three and whoever figured out who the "real" person was won the show.

It seems that the information we are receiving from the government (economic reports), the news media, politicians, and the financial markets, are nothing more than a highly sophisticated version of 典o Tell the Truth". The only difference of course is the original version was only a game. The new version is reality, and deals with the investment futures of millions of investors.

We are all aware of the inflation problems facing our nation, but no one in the government or Wall Street are leveling with the American people. When you are dealing with mis-information from the press, Wall Street, and questionable economic reports, what are investors to do?

Take for example of the recent rumors that the White House was paying off a columnist to write a favorable column about a sensitive issue. I'm sure this is has taken place in other administrations as well, but my goodness, what a sleezy way to do business.

Attempting and succeeding in misleading the public is taking place all over the country. My wife recently went with a friend to her husband痴 new dental office. The new sign outside of his office said "family and cosmetic dentistry". Inside the waiting room were pictures of restorative dental work. As my wife looked at the pictures she said boy these teeth look great, your husband did this? The dentist痴 wife said no, we bought those pictures. Uh, you've got to be kidding!

Last week, GM's CEO, Richard Wagoner tried put a positive spin on the company痴 progress of cutting its workforce, and turnaround prospects. Unless GM can make vehicles with the same quality as Toyota, that save consumers money at the pump, and shed their huge legacy costs, the company will continue to lose market share to foreign manufacturers. It痴 that simple. Come on Richard, tell the truth. You're just delaying what everybody already knows.

After getting hammered over the weekend by the media, talk show hosts, and politicians, over high energy prices, President Bush ordered the EPA to once again suspend the federal clean-burning gasoline rules this summer. In addition, the President ordered a temporary halt of shipments to the Strategic Petroleum Reserves until fall. It remains to be seen if 'fall" means before the mid-term elections or after.

In reaction to the announcement, Crude Oil and Unleaded Gasoline prices began to "magically" soften, or at least stop going up. If, and how far energy prices fall from here is anybody's guess. My guess is prices may recede a little more, but with hurricane season is right around the corner, prices will probably firm up a little quicker than most would think.

Whether today's announcement is a little too late is left for the pundits to debate.

As I have mention in previous journal posts, I am in the process of launching a web based financial newsletter called John Mugarian's Dynamic Growth.

Dynamic Growth allows investors to take advantage of the tremendous profit-making opportunities in no-load sector funds and exchange traded funds (ETF's).

In our initial backtest (June 2001 through September 2005) , Dynamic Growth's top 5 and top10 no-load beat the Russell 3000 by more than 4-1. We generated these returns by using a one of a kind system for picking funds.

The idea for Dynamic Growth began when I asked the research team at Navellier & Associates to apply their impressive stock picking system to No-Load Sector Funds & ETF's. After running our back-tests, we were stunned by the incredible performance!

Each and every month, we use Navellier & Associates exclusive database to indentify the best sectors, and we re-evaluate and back-test every sector to make sure we are only in the best performing no-load funds. Of course the results speak for themselves.

The top 10 sectors for April are on the next page, and here are some answers to questions you may have.

Shares of Anheuser Busch (BUD) are up almost 5% this morning after the company reported higher-than-expected earnings. The stock is currently trading at $44.67, up $2.04.

The company said "first-quarter net sales rose to $3.76 billion from $3.56 billion a year earlier. Total beer volume rose 10.9 percent, with volume in the company's key U.S. market rising 4.6 percent."

Sometimes it pays to be patient.

Here we go again. Boston Scientific (BSX) was co-founded by John E. Abele and Peter M. Nicholas in 1979.

One of the younger Nicholas boys happens to be a Director with the company, and he purchased 10,000 shares a few days ago at $22.17. I have been watching the Nicholas clan for quite some time, and they are rarely wrong in regards to the timing of their purchases.

As you are probably aware, BSX has merged with Guidant, and Abbott Labs (ABT) helped fund the purchase. In addition, ABT is buying more than $1 billion in BSX stock.

Its time to lock and load.

I am amazed that the Feds announcement to cease publicizing M3 reports did not get the headlines it deserved. Then it hit me, the financial press quickly figured out that the "little people" would not understand it anyway, so why report on it. This makes sense.

Now for astute investors who really understand what is going on, it痴 a different story. Unfortunately, that leaves us, and the professional investors who are in the know. "Joe Six Pack" on the other hand, could care less.

Here's what the Fed said, 徹n March 23, 2006, the Board of Governors of the Federal Reserve System ceased publication of the M3 monetary aggregate. The board also ceased publishing the following components: large denomination time deposits, repurchase agreements and Eurodollars.�

I realize that this is really boring stuff, but here we go;

So what is M3? You need to understand money supply to understand its importance.

M3 refers to the broadest category of money in circulation. This includes;

1) M1 which is the sum of currency, or paper dollars, that can be spent immediately by the public.
2) M2 is M1 plus assets that have been invested for the short term, including money market mutual funds and other financial transactions.
3) So M3 is M2 plus all long-term deposits, including institutional money market accounts.

Once you understand this you can move to the next step which is Inflation. We can break inflation into two broad categories.

1) Money Supply Growth Inflation- We rarely if ever hear about this type of inflation.
2) Price Inflation- This is the type of inflation they try to get us to focus on.

So, by no longer reporting M3, Money Supply Growth Inflation can be hidden, and Price Inflation can become the main focus. Oh how convenient.

MORGAN STANLEY RESEARCH

CONOCOPHILLIPS (COP.N): EARNINGS STRONG; MAINTAIN OVERWEIGHT

Strong 1Q Results: COP's Q1 2006 EPS of $2.34/share was in line consensus expectations. We are maintaining our 2006, 2007 and mid-cycle EPS estimates at $9.15/share, $8.75/share and $6.20/share, respectively.

E&P Results Strong: Results in E&P exceeded expectations as higher production combined with rising prices for petroleum to more than offset higher costs. Results in R&M were below expectations due to turnarounds, but offset by stronger results in Midstream and Chemicals.

COP, MRO and XOM Favorites: Integrated Oils COP (O, PT $80), MRO (O, PT $87) and XOM (O, PT $78) represent our top picks in the sector.

Maintain Attractive View on Integrated Oils and R&M: Integrated Oils appear 15% undervalued based on normalized returns on capital. Independent R&M represents the best value per unit of return in Energy.

Now that oil prices have calmed down a bit (still high), we are entering a phase we have got to call "Hey whose got the power?" I think there is a song with this title, but I am not referring to the song.

What I am referring to is this;

Does the White House and the Republican's have enough power to repair their oily reputations before the mid-term elections? Can they do it? The answer is simple, "Hey who痴 got the power?"

The Republican competition is not the Democrats however, its hurricane season. If we have a hurricane season similar or worse than last year, and energy prices do not spike, I will truly be impressed.

I do not like politics, and I will not argue politics, and based on some of my comments you might guess I am a non- republican. Since I do not want you to label me as being biased, I will tell you I am not a democrat, and I am fiscally and socially conservative. All I really care about is honesty, decency, and integrity. In addition, I really liked Ronald Reagan. For the most part, I am not seeing much honesty, decency, and integrity in politics, business, Wall Street, or in everyday life.

The mild sell-off that we have seen among our favorite oil stocks are once again reaching attractive buy ranges according to their relative strength measures. So far, the RSI has been a very helpful tool in trading energy stocks.

Today, Federal Reserve Chairman Ben S. Bernanke said the fed may pause at some point to see what impact the recent rate increases have had on the economy. Bank stocks loved the comments, the dollar hated them.

Things could get real interesting, real soon.

The subject of one North American currency surfaced shortly after the passage of NAFTA in the early 1990's. The originators of NAFTA expelled the rumors of a single currency as a nothing more than conspiracy theory. The reaction to someone who mentions something that is underhanded or sneaky is immediately labeled a conspiracy nut. Since no one wants to be labeled as a paranoid kook, the subject is usually dropped like a hot potato.

Granted, many theories are far fetched, but some are not.

I find it odd that Ross Perot was labeled a kook when he said that NAFTA would result in the loss of millions of American jobs, after he used the term "giant sucking sound". Well, after the architects of NAFTA label his comments as being nothing more than a conspiracy theory, the so called "theory" has become a reality.

Comments by Ross Perot regarding NAFTA, jobs, immigration, and the decline of the dollar.

Here is an interesting piece by Chris DeLong, Brad DeLong, and Sherman Robinson, Titled, NAFTA and Jobs: Remember the "Giant Sucking Sound"?

Morgan Stanley has raised the estimates of two IA portfolio stocks, Exxon (XOM) and Marathon (MRO). Here are a few comments by Morgan Stanley;

EXXON MOBIL CORPORATION (XOM)

"Exxon Mobil posted Q1 2006 earnings of $1.37/share, which compares to MS projections of $1.40/share. Unusual items involving litigation, asset actions and an abnormal tax rate penalized results by almost $0.20/share during the period. We are raising our 2006 earnings estimates following the results."

"Strong Results in E&P and R&M: Results in E&P and R&M were at record levels for the first quarter with strong profits in US R&M leading the way. Chemical profits were strong, but in line with expectations as were below the line expenses."

"Share Repurchase Program Increased 20%: The company repurchased $5.0 billion in equity while paying dividends of $2.0 billion in Q1 2006. Share repurchases to increase to $6.0 billion in Q2 2006. With cash of $37 billion and free cash flow projected near $20 billion in 2006, support for the stock is ahead."

Yesterday, shares of healthcare insurer Aetna (AET) announced strong earnings, but also revealed that two executives left and took a computer that had key information pertaining to their customers with them. The stock dropped 20% in one day, and the company's Chairman John W. Rowe said he would be retiring.

Take a look at the option prices that were exercised by Aetna insiders, then look at the price they sold the stock. This is unbelievable.

Today, the stock is trading around $38.47.

Here's a quote from the movie "Wall Street" where Michael Douglas plays corporate raider Gordon Gecko:

"The most valuable commodity I know of is information."

"I don't throw darts at a board. I bet on sure things. Read Sun-tzu, The Art of War. Every battle is won before it is ever fought."

GAS PRICES

The opportunists were out in full force this week as Democrats and Republican's began an old fashion version of finger pointing. If they were really sincere about what they were saying, they would have started a year earlier.

Now, just as the oil companies are close to completing there implementation to ethanol blended gasoline, President Bush announced he wants the EPA to consider waiving clean air rules, and go back to the refining system we had post Katrina. It痴 going to be interesting to see if this actually hinders the refining process since many refiners are in the last stages of the ethanol conversion.

In addition, the President ordered a halt to adding oil to the Strategic Petroleum Reserves, but geopolitical turmoil in Iran is causing oil prices to remain high.