MORNING COFFEE

U.S. Government Hits Debt Ceiling Again. The Treasury Department expects to hit the government's $12.4 trillion debt ceiling by the end of February.  This comes after the government just rose the debt ceiling just weeks ago in an attempt to get us through the year.  Congress is now working again to raise the limit by $1.9 trillion. A government official said a new ceiling of $14.3 trillion (the equivalent of around $45,000 for every American) would allow borrowing to continue into 2011.

Medtronic Wires Questioned. Some hospitals are reporting failure rates for Medtronic's (MDT) fracture-prone defibrillator wires that are significantly higher than the rates publicly disclosed by the company. Medtronic had pulled the devices off the market in 2007, but approximately 150,000 of the original wires remain implanted in U.S. patients.

Toyota Post a Profit. Toyota (TM) posted a net profit of ¥153B ($1.68 billion) in FQ3, and expects net income of ¥80B ($880 million) in the year ending March 31, a marked improvement from earlier forecasts of a ¥200B loss. Costs and lost sales from its recalls will total $2 billion for the fiscal year. Toyota also said it may possibly have to recall its Prius hybrid after the Japanese government ordered an investigation of its braking system. additionally, U.S. Transportation Secretary Ray LaHood testified in Congress yesterday that individuals with a recall-affected Toyota should "stop driving it."

Starwood Hotels (HOT): Reported Q4 EPS of $0.51 which beat estimates by +$0.29 on revenue of $1.2 billion.

Cisco Systems (CSCO):  Reported FQ2 EPS of $0.40 beating estimates by +$0.05 on revenue of $9.8 billion. "We saw dramatic across the board acceleration and sequential improvement in our business in almost all areas," says CEO John Chambers. The company plans to add 2,000-3,000 to the workforce and expects Q3 sales up +23-26%.

Visa (V): Reported FQ1 EPS of $1.02 beating estimates by +$0.11 on revenue of $2 billion. The company expects full-year net sales growth of +11-15% and annual EPS growth of more than +20% through 2011.

Earnings to be reported today include: Allergan (AGN) Clorox (CLX),  Kellogg (K), MasterCard (MA)

Upgrades

BP PLC (BP): HSBC Securities upgraded their rating from Neutral to Buy.

Downgrades

Verizon (VZ): Credit Suisse lowered their rating from Outperform to Neutral and lowered their target price from $32.00 to $30.00.

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·         Europe at midday, London -0.7%. Paris -0.7%. Frankfurt -0.5%.