MORNING COFFEE

Ahmadinejad Says Iran Is Now a Nuclear State.  Mahmoud Ahmadinejad reiterated to hundreds of thousands of cheering hardliner Iranians on the anniversary of the 1979 overthrow of the Shah and foundation of the Islamic republic, that the country was now a "nuclear state."  In a statement he said that Iran has produced its first batch of uranium enriched to a higher level, saying his country will not be bullied by the West into curtailing its nuclear program a day after the U.S. imposed new sanctions.  On this anniversary thousands of reformers are also protesting the government and demanding freedom and change.

Air Product Announces Hostile Bid. Air Products and Chemicals (APD) announced a hostile tender offer for Airgas (ARG) after its bid was rejected earlier this week. The offer is for all outstanding common shares for $60/share in cash. The SEC is also reportedly investigating unusual activity in Airgas call options that occurred just before Air Products and Chemicals announced a $5.1 billion bid for the company.

The EU Discusses Greece. European Union leaders will meet today and discuss a framework for a Greek rescue package. A possibility is to provide Greece with loan guarantees as long as Prime Minister George Papandreou quiets street protests and further cuts the country's budget deficit.

More TARP Losses. The Treasury announced the loss of its $2.3 billion investment in CIT Group (CIT) yesterday. Despite the loss, the Treasury expects the cost of TARP to continue to fall and expects to turn a profit on aid provided directly to the banking sector. PNC (PNC) announced yesterday that it had completed its TARP repayment by redeeming $7.6 billion of preferred government shares.

Government May Sell Stake In Citigroup. The government is said to be considering the sale of a $2.2 billion investment in Citigroup's (C) junior debt in order to lock in a profit from the firm's bailout.

U.S. Trade Balance. The December's trade balance was -$40.2 billion versus the expected -$36.8 billion. Exports rose +3.3% to $142.7 billion and imports rose +4.8% to $182.9 billion.

Marriott International (MAR): Reported Q4 EPS of $0.32 beating estimates by +$0.06, on revenue of $3.3 billion.

Activision (ATVI): Reported Q4 EPS of $0.49 beating earnings by +$0.05, on revenue of $2.5 billion. The company also sees Q1 EPS of $0.02 vs. $0.08 and sees 2010 EPS of $0.70 vs. $0.73.

Upgrades

3M (MMM): Bernstein upgraded their rating from Market Perform to Outperform.

Downgrades

Silicon Labs (SLAB): Roth Capital lowered their rating from buy to Hold and changed their target price from $50.00 to $46.00.

·         Futures: Dow +0.44% to 10029. S&P +0.52% to 1069. Nasdaq +0.44%.

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·         Europe at midday, London +0.8% to 5175. Paris +0.4% to 3650. Frankfurt +0.1% to 5542.