MORNING COFFEE

Wal-Mart In Talks With Massmart.  Reports say that Wal-Mart (WMT) is in talks to buy South Africa's Massmart for $4.2 billion.  An executive said "By Wal-Mart standards this is a pretty chunky deal, and shows our commitment to the market." The deal would help Wal-Mart's emerging markets strategy and reduce its dependency on U.S. sales.

Southwest To Buy AirTran.  Southwest Airlines (LUV) announced they will buy AirTran (AAI) for $1.4 billion or $7.69 per share.  The purchase opens up routs in Atlanta, Washington D.C., increases their presence in key markets like New York and Boston.

Upgrades

Franklin Resources (BEN): FBR Capital raised their rating from Market Perform to Outperform and raised their target price from $105.00 to $127.00.

Downgrades

Fortune Brands (FO): Davenport lowered their rating from Buy to Neutral.

Nike (NKE): Argus lowered their rating from Buy to Hold.

ValueClick (VCLK): Merriman lowered their rating from Buy to Neutral.

Coverage Reiterated/Price Target Change

Walgreens (WAG): Caris & Company reiterated their Above Average rating and lowered their target price from $36.00 to $34.00.

Finish Line (FINL): Wedbush reiterated their Outperform rating and lowered their target price from $21.00 to $20.00.

·         Futures: S&P +0.11%. 10-yr +0.17%. Euro -0.16% vs. dollar. Crude +0.43% to $76.82. Gold +0.13% to $1299.80.

·         Asia: Japan +1.4%. Hong Kong +1.0%. China +1.4%. India +0.4%.

·         Europe: London 0.0%. Paris +0.1%. Frankfurt +0.1%.