MORNING COFFEE

Is Anyone Listening? The markets have just blown off a recent warning from Moody’s (MCO) after the rating agency threatened to downgrade our AAA credit rating.  S&P has already lowered our rating to AA+ from AAA and has a negative outlook. This was the first time the U.S. government was given a rating below AAA. Moody’s said "specific policies that produce a stabilization and then downward trend in the ratio of federal debt" has not been seen and needs to be address. Fortunately the U.S. has not yet seen an increase in or borrowing cost due to the European debt crisis.  The EU situation has cause foreign money to flow into our bond market keeping yields low.  But with the U.S. debt clock now above $16 trillion and no plan to address our debt issue, more rating downgrades could be on the way.

Downgrades

Darden Restaurants (DRI): Robert W. Baird lowered their rating from Outperform to Neutral and placed a target price of $58.00 on the company. Pre-market: 53.96 -0.62 (-1.14%)

Nestle (NSRGY): HSBC Securities lowered their rating from Overweight to Neutral.

Northrop Grumman (NOC): UBS lowered their rating from Neutral to Sell and lowered their target price from $64.00 to $63.00.

T. Rowe Price (TROW): Credit Suisse lowered their rating from Outperform to Neutral and maintained their target price of $66.00 on the company.

Nike (NKE): Citigroup lowered their rating from Buy to Neutral and lowered their target price from $101.00 to $98.00. Pre-market: 99.06 -1.78 (-1.77%)

Coverage Initiated

Coach (COH): Citigroup initiated coverage with a Neutral rating and target price of $67.00. Pre-market: 61.00 +0.10 (0.16%)

Tiffany (TIF): Citigroup initiated coverage with a Buy rating and target price of $80.00.

TJX Cos. (TJX): Citigroup initiated coverage with a Buy rating and target price of $55.00.

Coverage Reiterated/Price Target Changed

Apple (AAPL): FBR Capital reiterated their Outperform rating and raised their target price from $675.00 to $725.00. Pre-market: 675.90 +6.11 (0.91%)

Intel (INTC): Sterne Agee reiterated their Neutral rating and lowered their target price from $24.00 to $22.00. Pre-market: 23.04 -0.15 (-0.65%)

Earning Reports

Pall (PLL): Reported EPS of $0.99 beating estimates by +$0.23. Pre-market: 62.00 +3.83 (6.58%)

Pier 1 Imports (PIR): Reported EPS of $0.19 in-line with estimates. Pre-market: 19.90 +0.35 (1.79%)

Markets: 
Futures at 8:12: Dow -0.16%. S&P -0.20%. Nasdaq -0.21%. Crude +0.29% to $97.27. Gold -0.02% at $1733.40.

Europe: London +0.08%. Paris -0.89%. Frankfurt -0.33%. 

Asia: Japan +0.39%. Hong Kong -0.14%. China -0.76%. India +0.12%.