MORNING COFFEE

China Raises Bank Reserve Requirements.  China announced that it was ordering banks to set aside more deposits as reserves for the second time in a month.  The move is an attempt to slow the growing economy and stop a potential bubble, after loan growth accelerated and property prices surged.

Motorola To Become Two Companies.  Motorola (MOT) announced that it will split into two independent, publicly traded companies in the first quarter of 2011. One company will include the mobile devices unit, while the other will focus on Motorola's successful enterprise networking.  Current shareholders will receive a share in each new company.

Judge Wants More Information On BofA. Judge Jed Rakoff said yesterday that he needs more information on why shareholders weren't informed of Merrill Lynch's problems ahead of the merger.  He also wants to know whether anyone pushed for disclosure of Merrill's problems or of its planned $3.6 billion bonus payout before he approves a $150million settlement between Bank of America (BAC) and the SEC.

Berkshire Joins S&P 500. Berkshire Hathaway (BRK.A / BRK.B) will be added to the S&P 500 today. As a result, index funds could spend as much as $14 billion buying Berkshire shares. Additionally, Berkshire is set to complete its acquisition of Burlington Northern Santa Fe (BNI) today.

Jobs Are Gone Forever.  Around a quarter of the 8.4 million jobs lost since the recession began are permanently gone and will need to be replaced by new work in growing industries, according to a survey given to economists. Respondents expect 2010 economic growth to register around +3%, but unemployment will only have dropped to -9.4% by year-end from last month's -9.7%.

Initial jobless claims. Initial jobless claims fell -43,000 to -440,000 versus economist estimates of -468,000.  Continuing claims fell -79,000 to 4,538,000.

Alcon (ACL): Reported Q4 EPS of $1.61 beating estimates by +$0.10, on revenue of $1.7 billion.

Cephalon (CEPH): Reported Q4 EPS of $1.62 beating estimates by +$0.04, on revenue of $575 million.

Upgrades

Research In Motion (RIMM): RBC Capital Mkts raised their rating from Outperform to Top Pick and set a target price of $120.00.

Expedia (EXPE): Kaufman Bros raised their rating from Hold to Buy and set a target price of $28.00.

Downgrades

Blue Nile (NILE): Benchmark lowered their rating from Hold to Sell and changed their target price from $60.00 to $35.00

Coverage Initiated

Procter & Gamble (PG): Credit Suisse initiated coverage with an Outperform rating and a target price of $74.00.

Colgate-Palmolive (CL): Credit Suisse initiated coverage with a Neutral rating and a target price of $87.00.

Clorox (CLX): Credit Suisse initiated coverage with a Neutral rating and a target price of $65.00.

Coverage Reiterated/Price Target Changed

Apple (AAPL): Needham reiterated their Buy rating and changed their target price from $235.00 to $280.00.

·         Futures: Dow -0.61% to 10048. S&P -0.65% to 1070. Nasdaq -0.76%. Crude flat at $80.33. Gold -0.26% to $1170.90.

·         Asia, Nikkei +1.3% to 10092. Hang Seng -0.1% to 20269. Shanghai +1.1% to 3018. BSE +1.4% to 16153.

·         Europe at midday, London -0.5% to 5138. Paris -0.1% to 3614. Frankfurt +0.1% to 5509.