MORNING COFFEE

Possible Toyota Corolla Recall. U.S. regulators began investigating the power steering on Toyota's (TM) Corolla, prompting Toyota to say it may recall the world's top-selling car. With the addition of the Corolla 15 of Toyota’s 20 models are currently under a safety investigation or recall.

PepsiCo Merger Approved. Shareholders of both Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) approved a merger with PepsiCo (PEP), with 81% and 86.5% of voters in favor of the $7.8 billion deal. The merger consolidates PepsiCo's control over North American sales.

Blockbuster Downgraded.  S&P downgraded Blockbuster (BBI) CCC yesterday, calling the company "vulnerable to default. S&P assigned the company a negative outlook, indicating another rating cut is possible in the next 12-18 months, on their view that "performance will remain very challenged and our concern that Blockbuster will not be able to transform its business model over the near term, as we had expected."

Barrick Gold (ABX): Reported Q4 EPS of $0.61 beating estimates by +$0.04 on revenue of $2.3 billion which was in-line with estimates.

Applied Materials (AMAT): Reported FQ1 EPS of $0.13 which was in-line with estimates on revenue of $1.85 billion.  The company sees Q2 EPS of $0.17 vs. $0.15. 

Hewlett-Packard (HPQ): Reported FQ1 EPS of $1.10 beating estimates by +$0.04 on revenue of $31.2 billion vs. $30 billion.  The company also raised its 2010 EPS outlook to $4.37 and sees Q2 EPS of $1.03, on revenue of $29.4 billion. CEO Mark Hurd said "The strength of our portfolio, leaner cost structure and accelerating market momentum give us the confidence to raise our full-year outlook." 

Upgrades

Deere (DE): JP Morgan upgraded their rating from Neutral to  Overweight and raised their target price from $52.00 to $65.00.

Coverage Reiterated/Price Target Changed

Deere (DE): Credit Suisse reiterated their rating of Outperform and raised their target price from $60.00 to $70.00.

Hewlett-Packard (HPQ): Credit Suisse reiterated their rating of Outperform and raised their target price from $60.00 to $65.00.

·         Futures: Dow -0.09% to 10287. S&P -0.16% to 1098. Nasdaq +0.1%. Crude flat at $81.20. Gold -0.26% to $1170.90.

·         Asia, Nikkei +0.3% to 10336. Hang Seng -0.5% to 20422. Shanghai +1.1% to 3018. BSE -0.6% to 16328.

·         Europe at midday, London +0.5% to 5303. Paris +0.3% to 3737. Frankfurt +0.3% to 5664.