MORNING COFFEE

Greece Bailout Coming? German officials admitted they were considering a “firewall” to prevent Greece's debt crisis from spiraling out of control. Reports say European governments had agreed “in principle” to help Greece through loan guarantees, while others rejected those reports as "unfounded." Additionally, the European Investment Bank has ruled out its involvement in a bailout.  Also direct EU aid has been eliminated as a possibility and the European Commission vetoed suggestions of IMF involvement.

Goldman Helped Hide Debt. Der Spiegel has reported that Goldman Sachs (GS) may have played a role in helping Greece hide its true debt levels.  In 2002, a heavily indebted Greece reached a deal with Goldman for cross-currency swaps.  The swaps allowed government debt issued in foreign currencies to be swapped for euro debt for a certain amount of time and then exchanged back to the original currencies. Greece and Goldman "devised a special kind of swap with fictional exchange rates," creating additional credit of up to $1 billion for Greece.

Honda Recall. Honda (HMC) announced a recall of 437,763 vehicles worldwide because of defective airbags that can rupture and send shards towards a driver in an accident. The move is in addition to a recall of 646,000 cars less than two weeks ago for a faulty window switch that caused one of its cars to become engulfed in flames, leading to a fatality.

S&P Warns BofA and Citi. S&P warned yesterday that it might downgrade Bank of America (BAC) and Citigroup (C) from their single-A credit ratings and revised their outlook on the firms to negative from stable. The ratings firm is concerned about the proposed overhaul of U.S. financial rules.

Mortgages Are Underwater. One in five (20%) U.S. mortgages were underwater in the fourth quarter, real estate website Zillow.com reported.  Home values are continuing to fall, marking the 12th consecutive quarter of year-over-year declines. "The prevalence of markets in or near a double-dip situation shows that we are not yet at the bottom, in terms of home values," said Stan Humphries, Zillow chief economist.  This is bad news for foreclosures, since people owing more than their home is worth are more likely to just stop paying and walk away.

Baidu.com (BIDU): Reported Q4 EPS of $1.80 beating estimates by +$0.12, on revenue of $185 million. The company sees Q1 sales of $176 million-181million vs. $170 million. Shares are up +8.9% premarket.

Walt Disney (DIS): Reported FQ1 EPS of $0.44 beating estimates by +$0.06 on revenue of $9.74 billion.

Upgrades

Adobe Systems (ADBE): Jefferies & Co upgraded their rating from Hold to Buy and have a target price of $40.00.

·         Futures: Dow +0.2% to 10024. S&P +0.21% to 1069. Nasdaq +0.24%. Crude flat at $80.17. Gold -0.3% to $1170.90.

·         Asia, Nikkei +0.3% to 9964. Hang Seng +0.7% to 19922. Shanghai +1.1% to 2983. BSE -0.8% to 15922.

·         Europe at midday, London +1.3% to 5176. Paris +1.4% to 3662. Frankfurt +1.4% to 5577.