MORNING COFFEE

Microsoft Announces New Tablet.  In a hastily announced press conference yesterday, Microsoft announced that they would produce their first tablet computer line called Surface.

The device will run Microsoft’s new Windows 8 operating system and be 9.3mm thick, weigh 1.5 lbs, have a 10.6" display, and will come with Office built-in. The tablet will also have a cover that acts as a keyboard with a touchpad. 

This will be a test for the company that has lost ground against both Apple (AAPL) and Google (GOOG) in the tablet and mobile phone wars.  It’s also a risky move, since this will be the first time Microsoft will compete directly against other PC / tablet manufactures that plan on using Windows 8 in their devices.

Upgrades

Watson Pharmaceuticals (WPI): Goldman Sachs raised their rating from Buy to Conviction Buy and placed a target price of $87.00 on the company.

Baxter International (BAX): Goldman Sachs raised their rating from Buy to Conviction Buy and placed a target price of $64.00 on the company.

Nokia Corp (NOK): Avian raised their rating from Neutral to Positive.

Oracle (ORCL): CLSA raised their rating from Underperform to Outperform and placed a target price of $32.00 on the company.

Coverage Initiated

Motorola Solutions (MSI): Northcoast initiated coverage with a Buy rating and target price of $58.00.

Expeditors International (EXPD): Avondale initiated coverage with a Market Perform rating and target price of $42.00.

Forward Air (FWRD): Avondale initiated coverage with a Market Perform rating and target price of $35.00.

Downgrades

Expedia (EXPE): Piper Jaffray lowered their rating from Overweight to Neutral and maintained their target price of $53.00 on the company.

Volvo (VOLVY): HSBC Securities lowered their rating from Overweight to Neutral.

Brinker International (EAT): Raymond James lowered their rating from Strong Buy to Outperform and placed a target price of $35.00 on the company.

Earning Reports

Oracle (ORCL): Reported EPS of $0.82 beating estimates by +$0.04.

FedEx (FDX): Reported EPS of $1.99 beating estimates by +$0.05.

Walgreen’s (WAG): Reported EPS of $0.62 missing estimates by -$0.01.

Markets: 
Futures at 7:29: Dow +0.19%. S&P +0.38%. Nasdaq +0.50%. Crude +0.45% to $83.62. Gold +0.25% to $1630.50. 

Europe: London +6.27%. Paris +0.63%. Frankfurt +0.92%. 

Asia: Japan -0.75%. Hong Kong -0.06%. China -0.66%. India +0.92%. 

MORNING COFFEE

Greek Rally Short Lived. Over the weekend the world waited as Greek citizens went to the poles.  In the end, Greece's New Democracy party won 129 seats in the 300-seat parliament.  Now they need to attempt to form a coalition.  After the election the two pro-bailout parties hold 162 seats, providing a majority of 24 over the anti-austerity and anti-bailout party, that many feared would cause Greece to leave the EU if they gained a majority.

Markets initially rose on the news, but the party was short lived as yields on Spain's 10-year bonds rose +24 bps to an unsustainable 7.11%.  The jump in yields was caused by a report that showed that non-performing loans held by the Spain's banks hit an 18-year high of 8.72% in April. In Italy yields are up +10.6 bps to 6.03%.

Upgrades

International Game Technology (IGT): CLSA raised their rating from Outperform to Buy and raised their target price from $18.00 to $18.40.

St Jude Medical (STJ): Lazard Capital raised their rating from Neutral to Buy. Pre-market: 35.99 +0.44 (1.24%)

KeyCorp (KEY): Evercore raised their rating from Underweight to Equal Weight.

Regions Financial (RF): Evercore raised their rating from Equal Weight to Overweight.

EOG Resources (EOG): UBS raised their rating from Neutral to Buy and raised their target price from $115.00 to $120.00.

Coverage Initiated

Fastenal Co. (FAST): Longbow initiated coverage with a Neutral rating.

eBay Inc. (EBAY): Keefe Bruyette initiated coverage with an Outperform rating and target price of $50.00. Pre-market: 40.86 +0.19 (0.47%)

Downgrades

Noble Corp (NE): Raymond James lowered their rating from Strong Buy to Outperform and lowered their target price from $46.00 to $40.00.

ENSCO PLC (ESV): Raymond James lowered their rating from Strong Buy to Outperform and lowered their target price from $65.00 to $56.00. Pre-market: 43.50 -0.35 (-0.80%)

City National Corp (CYN): Evercore lowered their rating from Overweight to Equal Weight.

Tractor Supply (TSCO): KeyBanc lowered their rating from Buy to Hold.

Celgene (CELG): RBC Capital lowered their rating from Outperform to Sector Perform and lowered their target price from $74.00 to $72.00.

Markets: 
Futures at 7:19: Dow -0.27%. S&P -0.37%. Nasdaq -0.04%. Crude -0.88% to $83.29. Gold -0.26% to $1623.90. 

Europe: London +0.28%. Paris -0.10%. Frankfurt +0.61%. 

Asia: Japan +1.77%. Hong Kong +1.01%. China +0.40%. India -1.44%. 

MORNING COFFEE

Market Futures Higher Prior to Greek Elections.  U.S. stock futures are higher as the whole world holds its breath prior to the Greek elections on Sunday.  In what may be called Europe’s Lehman Brothers moment, a negative outcome could cause Greece to withdrawal from the EU and send Europe into chaos.  To prevent this from occurring World Central banks are preparing for coordinated action to provide liquidity if needed.   In a move sure to upset U.S. voters, word has it the U.S. tax payers will also be helping out with Europe’s bailout.  The massive bailout could put off any contagion, but would not solve the debt problem. 

It appears that it’s now a no win situation.  If Europe implodes the effect will certainly hurt the world economy and some are even saying it would cause a worldwide depression.  If the elections go well and more austerity measures are put into place it would also slow down the economy.  In a nutshell neither option is going to stimulate world economies.

Upgrades

International Game Technology (IGT): Bank of America / Merrill Lynch raised their rating from Underperform to Neutral and raised their target price from $14.00 to $16.00. Pre-market: 15.27 +0.15 (0.99%)

Oracle (ORCL): ThinkEquity raised their rating from Hold to Buy and raised their target price from $28.00 to $32.00. Pre-market: 27.09 +0.18 (0.67%)

Coverage Initiated

Kinder Morgan (KMI): Goldman Sachs initiated a Buy rating and target price of $37.00 on the company. After Hours: 31.41 -0.06 (-0.18%)

Agilent Technologies (A): Citigroup initiated a Buy rating and target price of $46.00 on the company.

Downgrades

Exelon Corp (EXC): Atlantic Equities lowered their rating from Overweight to Neutral and lowered their target price from $59.00 to $37.00. After Hours: 37.65 -0.14 (-0.38%)

Nokia (NOK): Credit Suisse lowered their rating from Outperform to Neutral and lowered their target price from $4.50 to $2.00. Pre-market: 2.41 +0.06 (2.55%)

Nokia (NOK): Oppenheimer lowered their rating from Perform to Underperform. Pre-market: 2.41 +0.06 (2.55%)

Nokia (NOK): Citigroup lowered their rating from Neutral to Sell. Pre-market: 2.41 +0.06 (2.55%)

Markets: 
Futures at 7:08: Dow +0.45%. S&P +0.20%. Nasdaq +0.39%. Crude +0.46% to $84.33. Gold +0.31% to $1624.70. 

Europe: London +0.40%. Paris +1.60%. Frankfurt +1.36%. 

Asia: Japan +0.01% to 8569. Hong Kong +2.26% to 19234. China +0.47% to 2307. India +1.63% to 16950. 

MORNING COFFEE

Spanish and Italian Bond Yields Jump. The Yield on the Spanish 10-year bond rose 18 bps to hit a record high of 6.97%.  Additionally a report released shows that Spanish banks borrowed a record €324.6B in May from the ECB, which was much more then the €319.9B borrowed in April.  Now analysts are questioning if the recently agreed upon bank bailout of €100B will be enough.

In Italy yields increased on their €4.5B 3 year bond auction. The government's target range for the auction was €2.75B-4.5B, but yields rose from 3.91% in mid-May to 5.3%.  The 10 year bond yield is also higher in the secondary, up 1 bps at 6.23%.

Currently the 10 year yields in the EU are as follows: Greece 29.45%, Ireland 7.21%, Italy 6.24%, Portugal 10.87%, and Spain 6.97%.

Stockton, CA May Default. Yesterday the rating agency Moody’s warned that the city of Stockton is likely to default on some of its debt obligations. The troubled city has a July 1 deadline with creditors to avoid bankruptcy.

Upgrades

Nike (NKE): McAdams Wright Ragen raised their rating from Sell to Hold. Pre-market: 103.00 +0.78 (0.76%)

Brinker International (EAT): Argus raised their rating from Hold to Buy and placed a target price of $37.00 on the company. Pre-market: 30.47 +0.19 (0.63%)

Zillow Inc (Z): Pacific Crest raised their rating from Sector Perform to Outperform and placed a target price of $40.00 on the company.

Moog Intl (MOG.A): RBC Capital raised their rating from Sector Perform to Outperform and placed a target price of $50.00 on the company.

Best Buy (BBY): Citigroup raised their rating from Sell to Neutral and raised their target price from $18.00 to $21.00. After Hours: 19.50 +0.10 (0.52%)

Coverage Initiated

Tesla (TSLA): Lazard Capital initiated coverage with a Buy rating and target price of $42.00. Pre-market: 29.77 0.00 (0.00%)

Downgrades

Human Genome (HGSI): JMP Securities lowered their rating from Outperform to Market Perform. Pre-market: 13.26 0.00 (0.00%)

Taiwan Semiconductor (TSM): BNP Paribas lowered their rating from Buy to Hold. After Hours: 13.58 +0.03 (0.23%)

Adobe Systems (ADBE): Jefferies lowered their rating from Buy to Hold and lowered their target price from $38.00 to $32.00. Pre-market: 31.52 -0.27 (-0.85%)

Earning Reports

Pier 1 Imports (PIR): Reported EPS of $0.16 in-line with estimates. After Hours: 15.67 +0.09 (0.58%)

Smithfield Foods (SFD): Reported EPS of $0.43 missing estimates by -$0.11. Pre-market: 18.73 -0.84 (-4.29%)

Winnebago Inds (WGO): Reported EPS of $0.13 beating estimates by $0.01. After Hours: 8.75 -0.24 (-2.67%)

Markets: 
Futures at 7:25: Dow +0.23%. S&P +0.17%. Nasdaq +0.22%. Crude -0.06% at $82.57. Gold +0.06% to $1620.30. 

Europe: London -0.68%. Paris -0.46%. Frankfurt -0.57%. 

Asia: Japan -0.22%. Hong Kong -1.15%. China -0.99%. India -1.20%. 

MORNING COFFEE

American’s Net Worth Goes Up In Smoke. According to the Federal Reserve, in a report done every 3 years, Americans saw their net worth along with their dreams go up in smoke.  The report details a shocking decline in the average net worth of U.S. households from 2007 to 2010. According to the report, American families saw their net worth drop 40% in three-years from $126,400 to $77,300.

The middle class appears to have been hit the hardest along with the poor.  The decline in their net worth basically has wiped out nearly 20 years of saving, putting their net worth on par worth levels not seen since the early 1990’s.

The report also shows that 11% of Americans were at least 60 days late paying a bill, up from 7% in 2007. Just as depressing was the fact that families with debts greater than 40% of their income stayed the same.

Not only are Americans facing significant debts, income have also fallen.  According to the report median income fell nearly 8%, from about $50,000 in 2007 to $45,800 in 2010.

Additionally with a huge wave of baby boomer about to retire, Americans retirement accounts fell in value 7% to only $44,000.  Leaving many wondering how and if they will ever be able to retire.

Upgrades

Johnson & Johnson (JNJ): Raymond James raised their rating from Market Perform to Outperform and placed a target price of $72.00 on the company. Pre-market: 63.88 +0.80 (1.27%)

Johnson & Johnson (JNJ): Jefferies raised their rating from Hold to Buy and raised their target price from $68.00 to $72.00. Pre-market: 63.88 +0.80 (1.27%)

Johnson & Johnson (JNJ): JPMorgan raised their rating from Hold to Buy and raised their target price from $69.00 to $74.00. Pre-market: 63.88 +0.80 (1.27%)

Hershey Co. (HSY): Goldman Sachs raised their rating from Buy to Conviction Buy and placed a target price of $76.00 on the company.

E*Trade Financial (ETFC): BGB Securities raised their rating from Sell to Hold and raised their target price from $7.50 to $8.50. Pre-market: 7.91 -0.05 (-0.63%)

Navistar International (NAV): JPMorgan raised their rating from Underweight to Neutral and placed a target price of $30.00 on the company. Pre-market: 27.28 +0.13 (0.48%)

Downgrades

Expedia (EXPE): Lazard Capital lowered their rating from Buy to Neutral. Pre-market: 47.85 -0.88 (-1.81%)

Royal Bank of Scotland (RBS): Credit Suisse lowered their rating from Neutral to Underperform. Pre-market: 6.90 -0.08 (-1.15%)

Deutsche Bank (DB): Suisse lowered their rating from Neutral to Underperform. Pre-market: 34.85 -0.58 (-1.64%)

Coverage Initiated

United Health Group (UNH): JPMorgan initiated coverage with an Overweight rating and target price of $72.00.

LogMeIn (LOGM): Oppenheimer initiated coverage with an Outperform rating and target price of $40.00.

Aetna (AET): JPMorgan initiated coverage with a Neutral rating and target price of $44.00.

Oceaneering Intl (OII): Pritchard initiated coverage with a Buy rating and target price of $86.00.

Markets: 
Futures at 8:43: Dow -0.30%. S&P -0.51%. Nasdaq -0.36%. Crude -1.13% to $82.35. Gold +0.46% to $1621.30. 

Europe: London -0.34%. Paris -0.71%. Frankfurt -0.83%. 

Asia: Japan +0.60%. Hong Kong +0.82%. China +1.27%. India +0.11%. 

MORNING COFFEE

Spanish Government May Need Bailout. The eurozone crisis seems to be deepening just days after Spain asked for an EU bailout to save its banking system.  The bailout of the banking system will add an addition $125 billion (€100B) to Spain’s already huge debt problem and will increase government debt by around 10% of GDP.  Some economists are now saying that there is a 50% chance that the country itself will need a bailout.  Spanish yields are now at 6.62% just shy of its all time high of 6.72%. The cost of insuring Spanish debt has also risen today to an all time high. 

The turmoil also spread to Italy, the eurozone's third largest economy, where bond yields jumped to 6.15%.  Italy is scheduled to auction up to €4.5 billion of three-year and seven-year bonds Thursday which will test the markets appetite for Italian debt. The cost of insuring Italian debt is also higher today.  

The eurozone debt crisis also moved to today’s Dutch government bond auction.  The Dutch State Treasury Agency sold only €1.65 billion of 2033 Dutch State Loans.  The country had scheduled an auction target range of €1.5 billion to €2.5 billion.

Earning Reports

FactSet (FDS): Reported EPS of $1.05 beating estimates by +$0.01. Pre-market: 100.25 -4.32 (-4.13%)

Upgrades

Dr. Pepper Snapple (DPS): Wells Fargo raised their rating from Market Perform to Outperform and raised their target range from $36.00-$38.00 to $45.00-$47.00.

Boeing (BA): Bernstein raised their rating from Market Perform to Outperform and raised their target price from $85.00 to $92.00 on the company.

Coverage Initiated

KKR & Co (KKR): Argus initiated coverage with a Buy rating and target price of $16.00.

Carlyle Group (CG): Citigroup initiated coverage with a Buy rating and target price of $29.00.

Carlyle Group (CG): Keefe Bruyette initiated coverage with an Outperform rating and target price of $26.00.

Carlyle Group (CG): Credit Suisse initiated coverage with an Outperform rating and target price of $37.00.

Carlyle Group (CG): JPMorgan initiated coverage with an Overweight rating and target price of $26.00.

Carlyle Group (CG): UBS initiated coverage with an Buy rating and target price of $25.00.

Carlyle Group (CG): Deutsche Bank initiated coverage with a Hold rating and target price of $22.00.

Carlyle Group (CG): Goldman Sachs initiated coverage with a Neutral rating and target price of $22.00.

Colombia Sportswear (COLM): Longbow initiated coverage with a Neutral rating.

Markets: 
Futures at 6:08: Dow +0.62%. S&P +0.44%. Nasdaq +0.58%. Crude -0.21% to $82.54. Gold -0.26% to $1592.70. 

Europe: London +0.36%. Paris +0.40%. Frankfurt +0.51%. 

Asia: Japan -1.02%. Hong Kong -0.43%. China -0.70%. India +1.17%. 

3rd Annual Bowling With The Stars

Former USC star and NFL player Darnell Bing to host Charity 3rd Annual Bowling with the Stars charity event to raise money for Down Syndrome.

Teddy Williams conducts football camp

Teddy Williams conducts football camp