MORNING COFFEE

China Threatens War. Last week China’s most senior military leader in a public statement ordered military forces to prepare for combat, and deployed Chinese warships near the disputed Senkakus and Diaoyu islands.  Now a senior Chinese government advisor, Jin Baisong, has called for an attack on Japan's bond market to cause a funding crisis in Japan and a trade war.  Reports also say that China has plans in place to cut off rare earth metals to Japan, which are needed in the manufacturing of electronics. The move would be an attempt to persuade Japan to back down over the disputed Senkaku and Diaoyu islands.  The islands are believed to have vast untapped gas and oil reserves. The Philippines and Vietnam are also in disputes with China over islands.  China is also claiming the Spratly Islands, Scarborough Shoal and the entire Eastern/West Philippine/South China Sea.   Analysts believe that China’s claims to the islands are a clear violation of maritime law and the United Nations Convention on the Law of the Sea. International laws establish a country’s right to make continental shelf claims, based on an Exclusive Economic Zone of 200 miles off a country’s coastline. China has no right to make these claims regarding 90 percent of the South China Sea.

Upgrades

Golar LNG (GLNG): Wells Fargo raised their rating from Market Perform to Outperform and raised their target range from $32.00-$34.00 to $35.00-$37.00.

Progressive Corp. (PGR): Evercore raised their rating from Underweight to Equal Weight.

Chiquita Brands (CQB): BB&T raised their rating from Hold to Buy.

Fresh Del Monte Produce (FDP): BB&T raised their rating from Hold to Buy.

Monsanto (MON): Goldman Sachs raised their rating from Buy to Conviction Buy and placed a target price of $110.00 on the company. Pre-market: 90.80 +1.74 (1.95%)

Downgrades

Charles Schwab (SCHW): Goldman Sachs lowered their rating from Buy to Neutral and lowered their target price from $15.00 to $14.00. Pre-market: 13.73 -0.21 (-1.51%)

Mattel (MAT): Needham lowered their rating from Buy to Hold. After Hours: 35.99 0.00 (0.00%)

Hasbro (HAS): Needham lowered their rating from Buy to Hold. After Hours: 38.69 +0.02 (0.04%)

BB&T Corp (BBT): Bernstein lowered their rating from Outperform to Market Perform and maintained their target price of $37.00. Pre-market: 33.26 -0.20 (-0.60%)

Huntington Bancshares (HBAN): Bernstein lowered their rating from Outperform to Market Perform and placed a target price of $37.00 on the company. Pre-market: 6.97 -0.08 (-1.06%)

Waste Management (WM): JPMorgan lowered their rating from Neutral to Underweight and lowered their target price from $34.50 to $34.00. Pre-market: 33.69 -0.25 (-0.74%)

Northern Trust (NTRS): Credit Suisse lowered their rating from Neutral to Underperform and placed a target price of $40.00 on the company. After Hours: 48.52 0.00 (0.00%)

GlaxoSmithKline (GLX): BNP Paribas lowered their rating from Outperform to Underperform. Pre-market: 46.71 -0.40 (-0.85%)

Coverage Initiated

Baxter International (BAX): BMO Capital initiated coverage with an Outperform rating and target price of $70.00 on the company.

Coverage Reiterated/Price Target Changed

Qualcomm (QCOM): FBR Capital reiterated their Outperform rating and raised their target price from $70.00 to $72.00. Pre-market: 64.90 -0.18 (-0.28%)

Earning Reports

AutoZone (AZO): Reported EPS of $8.46 beating estimates by +$0.06. Pre-market: 339.98 -17.86 (-4.99%)

Cracker Barrel (CBRL): Reported EPS of $1.47 beating estimates by +$0.17. Pre-market: 63.58 -0.04 (-0.06%)

General Mills (GIS): Reported EPS of $0.66 beating estimates by +$0.03. Pre-market: 39.53 +0.22 (0.56%)

Markets: 
Futures at 7:30: Dow +0.19%. S&P +0.12%. Nasdaq +0.18%. Crude -0.88% to $94.44. Gold +0.31% to $1776.60.

Europe: London +0.14%. Paris +0.43%. Frankfurt +0.28%. 

Asia: Japan +1.19%. Hong Kong +1.16%. China +0.40%. India -0.25%.