MORNING COFFEE

Jobless Claims Disappoints Wall Street. Initial jobless claims disappointed Wall Street once again.  The Labor Department this morning announced that for the week ending Sept 15 382,000 new people applied for unemployment benefits, the previous week’s numbers were upwardly revised to 385,000.  Economists had been looking for initial claims of only 375,000.  This comes as Bank of America (BAC) announced plans to slash 16,000 jobs by the year-end. The bank will also close 200 branches on top of the 178 it shut in 2011, citing the weak economy. Pre-market: 9.15 -0.14 (-1.51%) http://www.dol.gov/opa/media/press/eta/ui/current.htm

Nike and CVS Announce Large Buyback Programs. Nike (NKE) announced that once it completes its current $5 billion repurchase program in FQ2 2013 it will have a new share repurchase program to replace it.  The new 4 yr program intends to repurchase $8 billion worth of class B shares. Additionally, CVS Caremark (CVS) said it would buy back up to $6 billion in shares. The CVS announcement comes at a time that CVS's stock is trading at record highs. NKE Pre-market: 98.29 +0.63 (0.65%)

Upgrades

Taubman Centers (TCO): KeyBanc raised their rating from Underweight to Hold. Pre-market: 79.88 +0.03 (0.04%)

Owens Corning (OC): Macquarie raised their rating from Neutral to Outperform and placed a target price of $38.00 on the company. Pre-market: 33.90 +0.03 (0.09%)

DreamWorks Anamation SKG (DWA): Janney Capital raised their rating from Sell to Neutral and raised their target price from $14.50 to $19.00.

Adobe Systems (ADBE): RBC Capital raised their rating from Sector Perform to Outperform and raised their rating from $34.00 to $40.00. Pre-market: 33.50 +0.38 (1.15%)

Downgrades

Goldman Sachs (GS): UBS lowered their rating from Buy to Neutral and placed a target price of $125.00 on the company. Pre-market: 117.46 -1.56 (-1.31%)

Morgan Stanley (MS): UBS lowered their rating from Buy to Neutral and placed a target price of $19.00 on the company. Pre-market: 17.22 -0.35 (-1.99%)

Citigroup (C): UBS lowered their rating from Buy to Neutral and placed a target price of $36.00 on the company. Pre-market: 33.70 -0.48 (-1.40%)

St. Jude Medical (STJ): Mizuho lowered their rating from Buy to Neutral and placed a target price of $45.00 on the company.

Halliburton (HAL): CLSA lowered their rating from Outperform to Underperform and placed a target price of $38.00 on the company. Pre-market: 35.90 -0.51 (-1.40%)

U.S. Steel (X): Nomura lowered their rating from Buy to Neutral and placed a target price of $20.00 on the company. Pre-market: 20.30 -0.56 (-2.68%)

Coach (COH): Credit Suisse lowered their rating from Outperform to Neutral and placed a target price of $63.00 on the company. Pre-market: 59.00 -0.99 (-1.65%)

Coverage Initiated

Patterson Companies (PDCO): WallachBeth initiated coverage with a Buy rating and target price of $40.00. After Hours: 34.43 +0.24 (0.71%)

Coverage Reiterated/Price Target Changed

CVS Caremark (CVS): Mizuho reiterated their Buy rating and raised their target price from $50.00 to $53.00.

Earning Reports

Adobe Systems (ADBE): Reported EPS of $0.58 in-line with estimates. Pre-market: 33.50 +0.38 (1.15%)

Bed Bath & Beyond (BBBY): reported EPS of $0.98 missing estimates by -$0.04. Pre-market: 65.36 -3.43 (-4.99%)

CarMax (KMX): Reported EPS of $0.49 missing estimates by -$0.01. Pre-market: 32.50 +0.53 (1.66%)

ConAgra (CAG): Reported EPS of $0.44 beating estimates by +$0.09. Pre-market: 27.00 +1.35 (5.26%)

Rite Aid (RAD): Reported EPS of -$0.05 beating estimates by +$0.03. Pre-market: 1.33 +0.02 (1.53%)

Markets: 
Futures at 8:15: Dow -0.28%. S&P -0.37%. Nasdaq -0.30%. Crude -0.23% to $91.77. Gold -0.42% to $1764.10.

Europe: London -0.71%. Paris -0.86%. Frankfurt -0.49%. 

Asia: Japan -1.57%. Hong Kong -1.20%. China -2.08%. India -0.79%. 

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%. 

MORNING COFFEE

Protests Spread In China. The protests that started over the weekend against Japan and led to riots have been spreading.  The protests occurring in over 100 Chinese cities are over disputed uninhabited islands that are rich with natural gas and oil deposits. Attacks against Japanese businesses have caused some Japanese companies to idle their factories in an attempt to protect their workers. The dispute has put the two countries' $340 billion trade relationship at risk.

Upgrades

General Motors (GM): Buckingham raised their rating from Neutral to Buy. Pre-market: 24.21 +0.41 (1.72%)

BMC Software (BMC): ThinkEquity raised their rating from Hold to Buy and raised their target price from $37.00 to $50.00.

TASER International (TASR): JPMorgan raised their rating from Neutral to Overweight and raised their target price from $6.00 to $7.50.

Downgrades

Silicon Labs (SLAB): Miller Tabak lowered their rating from Buy to Neutral and placed a target price of $43.00 on the company.

Panera Bread Co. (PNRA): Miller Tabak lowered their rating from Buy to Neutral and placed a target price of $172.00 on the company.

Phillips 66 (PSX): Credit Suisse lowered their rating from Outperform to Neutral and raised their target price from $46.00 to $53.00. Pre-market: 45.74 -0.40 (-0.87%)

Marathon Petroleum (MPC): Credit Suisse lowered their rating from Outperform to Neutral and raised their target price from $63.00 to $65.00.

Abbott Labs (ABT): Leerink lowered their rating from Outperform to Market Perform and placed a target range of $65.00-$70.00. Pre-market: 68.77 -0.35 (-0.51%)

Alcoa (AA): Jefferies lowered their rating from Buy to Hold and maintained their target price of $11.00 on the company. Pre-market: 9.47 -0.11 (-1.15%)

Coverage Initiated

Watson Pharmaceuticals (WPI): Guggenheim initiated coverage with a Buy rating and target price of $100.00.

Teva Pharmaceuticals (TEVA): Guggenheim initiated coverage with a Neutral rating and target price of $45.00.

National Oilwell (NOV): William Blair Guggenheim initiated coverage with an Outperform rating.

Earning Reports

FedEx (FDX): Reported EPS of $1.45 beating estimates by +$0.05. Pre-market: 87.30 -1.98 (-2.22%)

Markets: 
Futures at 7:26: Dow -0.09%. S&P -0.19%. Nasdaq -0.11%. Crude -1.00% to $95.65. Gold -0.60% to $1759.80.

Europe: London -0.64%. Paris -0.74%. Frankfurt -0.75%. 

Asia: Japan -0.39%. Hong Kong -0.27%. China -0.91%. India -0.25%. 

MORNING COFFEE

Demonstrations Erupt In China. The Middle East is not the only place where violence is erupting in the streets.  In China a mob of protester took to the streets demonstrating against Japan and setting Japanese related businesses on fire. Both Toyota (TM) and Honda (HMC) said arsonists had set fire to their stores in the eastern port city of Qingdao. Additionally, Canon (CAJ) and Panasonic (PC) have announced that they will halt some China-based production due to employee safety concerns. In the U.S the Occupy Wall Street movement is expected to demonstrate in New York.

Upgrades

Moody’s (MCO): The Benchmark Company raised their rating from Hold to Buy and raised their target price from $43.00 to $51.00.

Downgrades

Hasbro (HAS): Stifel Nicolaus lowered their rating from Buy to Hold.

Discover Financial Services (DFS): Stifel Nicolaus lowered their rating from Buy to Hold.

Under Armour (UA): Argus lowered their rating from Buy to Hold and placed a target price of $60.00 on the company. Pre-market: 59.50 -0.53 (-0.88%)

Intel (INTC): Longbow lowered their rating from Buy to Neutral. Pre-market: 23.27 -0.10 (-0.43%)

International Paper (IP): Longbow lowered their rating from Buy to Neutral.

United States Steel (X): JPMorgan lowered their rating from Overweight to Neutral and lowered their target price from $43.00 to $29.00. Pre-market: 21.65 -0.70 (-3.13%)

Wells Fargo & Co. (WFC): Stifel Nicolaus lowered their rating from Buy to Hold. Pre-market: 35.80 -0.33 (-0.91%)

Coverage Initiated

Netflix (NFLX): Macquarie initiated covrage with an Underperform rating. Pre-market: 59.75 -0.77 (-1.27%)

Earning Reports

LDK Solar (LDK): Reported EPS of -$2.00 missing estimates by -$0.57. Pre-market: 1.19 -0.05 (-4.03%)

Markets:

Futures at 7:05: Dow -0.09%. S&P -0.30%. Nasdaq -0.11%. Crude -0.24% to $98.76. Gold -0.08% to $1771.00.

Europe: London -0.30%. Paris -0.65%. Frankfurt -0.32%. 

Asia: Japan closed. Hong Kong +0.14%. China -2.14%. India +0.42%. 

MORNING COFFEE

World Markets Rally.  Global markets continue to rally after the Federal Reserve announced that they would buy $40 billion of mortgage-backed securities a month until unemployment improves. The Fed is also printing $85 billion a month in new dollars. The news immediately sent the dollar lower and hurt the Treasury market and sent commodity prices higher.  The Feds QE3 asset purchase program is open-ended, which means it could last for a long time.  The question remains will QE3 work, or will there be a QE4 in the future?

Downgrades

Comerica (CMA): Stifel Nicolaus lowered their rating from Hold to Sell. Pre-market: 32.77 -0.33 (-1.00%)

Verizon (VZ): Stifel Nicolaus lowered their rating from Buy to Hold. Pre-market: 45.43 -0.15 (-0.33%)

AT&T (T): Stifel Nicolaus lowered their rating from Buy to Hold. Pre-market: 38.05 -0.10 (-0.26%)

Western Digital (WDC): FBN Securities lowered their rating from Outperform to Sector Perform and maintained their target price of $45.00. Pre-market: 43.60 +1.02 (2.40%)

Synaptics (SYNA): Lazard Capital lowered their rating from Buy to Neutral. Pre-market: 26.31 -0.49 (-1.83%)

Viacom (VIAB): Evercore lowered their rating from Overweight to Equal Weight. Pre-market: 51.75 -0.51 (-0.98%)

Coverge Initiated

Autodesk (ADSK): Wedbush initiated coverage with a Neutral rating and target price of $36.00.

Laboratory Corp (LH): Credit Suisse initiated coverage with a Neutral rating and target price of $95.00.

Cognizant Technology (CTSH): Credit Suisse initiated coverage with a Neutral rating and placed a target price of $75.00 on the company.

Markets: 
Futures at 6:45: Dow +0.44%. S&P +0.32%. Nasdaq +0.35%. Crude +1.22% to $99.48. Gold +0.02% to $1772.20.

Europe: London +1.32%. Paris +1.80%. Frankfurt +1.16%. 

Asia: Japan +1.83%. Hong Kong +2.90%. China +0.64%. India +2.46%. 

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%.