MORNING COFFEE

The SEC Investigates Merrill Lynch.  Reported say that the SEC is taking a look at a $1.5 billion CDO created for a hedge fund manager.  The CDO was created for the hedge fund Magnetar and they are questioning whether Merrill told investors that Magnetar helped select the assets included in the CDO and then bet against those same assets. Additionally, the SEC is looking into whether Merrill also mispriced those assets in the CDO.

Upgrades

Western Digital (WDC): Standpoint Research raised their rating from Hold to Buy.

Coverage Initiated

Medtronic (MDT): Brean Murray initiated coverage with a Buy rating and target price of $44.00.

Johnson & Johnson (JNJ): Brean Murray initiated coverage with a Buy rating and target price of $77.00.

Abbott Labs (ABT): Brean Murray initiated coverage with a Hold rating.

St. Jude Medical (STJ): Brean Murray initiated coverage with a Hold rating.

Boston Scientific (BSX): Brean Murray initiated coverage with a Hold rating.

Baxter (BAX): Brean Murray initiated coverage with a Buy rating and target price of $68.00.

Kellogg (K): Jefferies initiated coverage with an Underperform rating and target price of $47.00.

Coverage Reiterated/Price Target Changed

Herbalife (HLF):  Argus reiterated their Buy rating and raised their target price from $61.00 to $63.00.

Scotts Miracle-Gro (SMG): RBC Capital Markets reiterated their Sector Perform rating and lowered their target price from $61.00 to $50.00.

Earning Reports

Korn Ferry (KFY): Reported EPS of $0.43 beating estimates by +$0.11.

·         Futures at 7:00: Dow -0.5%. S&P -0.5%. Nasdaq -0.5%. Crude -0.6% to $98.78. Gold -0.3% to $1520.10

·         Asia: Japan +0.3% to 9574. Hong Kong -0.7% to 22344. China -0.9% to 2705. India -1.0% to 18132.

·         Europe: London -0.2%. Paris -0.4%. Frankfurt -0.4%.