MORNING COFFEE

Apple to Buy Sony? Yesterday there were rumors that Apple (APPL) may purchase Sony (SNE).  But the rumors didn’t affect Sony’s Shares which were up only +1.0% in trading.  Many analysts questioned the logic since Apple expertise is its products and brand which doesn’t fit with Sony’s business lines.  Apple has $51 billion in cash that its sitting on and many are questioning what Apple will do with all that cash.

Upgrades

Motorola (MOT): MKM Partners raised their rating from Neutral to Buy and raised their target price from $7.00 to $10.00.

Check Point Software (CHKP): HSBC Securities MKM Partners raised their rating from Neutral to Overweight and raised their target price from $41.00 to $49.00.

Downgrades

Abbott Labs (ABT): Argus lowered their rating from Buy to Hold.

Coverage Initiated

Texas Industries (TXI): Jefferies initiated coverage with a Buy rating and target price of $43.00.

Coverage Reiterated/Price Target Changed 

National Oilwell Varco (NOV): RBC Capital Markets reiterated their Outperform rating and raised their target price from $55.00 to $70.00.

Kimberly-Clark (KMB): RBC Capital Markets reiterated their Outperform rating and lowered their target price from $70.00 to $68.00.

Fiserv (FISV): RBC Capital Markets reiterated their Sector Perform rating and raised their target price from $51.00 to $57.00.

Broadcom (BRCM): RBC Capital Markets reiterated their Outperform rating and raised their target price from $43.00 to $45.00.

Broadcom (BRCM): FBR Capital reiterated their Outperform rating and raised their target price from $42.00 to $45.00.

Under Armour (UA): FBR Capital reiterated their Market Perform rating and raised their target price from $42.00 to $50.00.

Earnings

Brinker International (EAT): Reported FQ1 EPS of $0.21 beating estimates by +$0.06 on revenue of $655 million.

Elan (ELN): Reported Q3 EPS of -$0.07 missing estimates by -$0.02 on revenue of $281 million.

SAP AG (SAP): Reported Q3 EPS of $0.57 missing estimates by -$0.04 on revenue of $4.1 billion.

AFLAC (AFL): Reported Q3 EPS of $1.46 beating estimates by +$0.13 on revenue of $5.4 billion.

Broadcom (BRCM): Reported Q3 EPS of $0.60 beating estimates by +$0.05 on revenue of $1.8 billion.

Fiserv (FISV): Reported Q3 EPS of $1.04 beating estimates by +$0.04 on revenue of $1 billion.

Western Union (WU): Reported Q3 EPS of $0.37 beating estimates by +$0.02 on revenue of $1.3 billion. 

Mylan Laboratories (MYL): Reported Q3 EPS of $0.43 beating estimates by +$0.01 on revenue of $1.4 billion. 

Whirlpool (WHR): Reported Q3 EPS of $1.02 beating estimates by +$0.14 revenue of $4.5 billion.

AFLAC (AFL): Reported EPS of $1.46 beating estimates by +$0.07.

Taubman Centers (TCO): Reported EPS of -$0.56 missing estimates -$0.78.

·         Futures: Dow -0.2%. S&P -0.3%. Nasdaq -0.15%. Crude -0.9% to $81.83. Gold -0.4% to $1333.80.

·         Asia: Japan +0.1% to 9387. Hong Kong -1.9% to 23165. China -1.5% to 2997. India -1.1% to 20005.

·         Europe: London -0.5%. Paris -0.2%. Frankfurt +0.1%.

MORNING COFFEE

Companies Protest Google’s Purchase of ITA. Online travel companies, including Expedia (EXPD) and Kayak.com, are opposing Google's (GOOG) planned $700 million purchase of travel software firm ITA. The online travel companies have started FairSearch.org with the aim to convince the Justice Department that the deal should be blocked, since they believe that it would give Google too much influence in the travel sector.  Additionally they are lobbying Congress saying the deal if allowed would end up "bringing consumers higher prices and less choice."

TIPS Have Negative Yield. Yesterday the Treasury offered $10 billion 5 year Treasury Inflation Protection Securities (TIPS) with a negative yield of -0.55%.  This is the first time ever that these securities that hedge against future inflation have had a negative yield.

Buffett Selects Future CIO? Warren Buffett has hired 39 year old Todd Combs, from a small hedge fund in Connecticut called Castle Point Capital.  Mr. Combs will manage a significant portion of Berkshire Hathaway’s (BRKA/BRKB) $100 billion portfolio. Buffett said Combs is "not going to take over the whole investment function as long as I'm around." Two other candidates, including Li Lu, have taken themselves out of the running for the job.

Upgrades

Freeport-McMoRan (FCX): Argus raised their rating from Hold to Buy and placed a target price of $113.00 on the company.

Men's Wearhouse (MW): Stifel Nicolaus raised their rating from Hold to Buy and placed a target price of $32.00 on the company.

Downgrades

Men's Wearhouse (MW): Wedbush lowered their rating from Outperform to Neutral and placed a target price of $27.00 on the company.

Guess? (GES): Wedbush lowered their rating from Outperform to Neutral and placed a target price of $46.00 on the company.

Blue Nile (NILE): MKM Partners lowered their rating from Buy to Neutral and lowered their target price from $57.00 to $42.00.

Coverage Initiated

Medco Health Solutions (MHS): RBC Capital Markets initiated coverage with an Outperform rating and target price of $68.00.

Express Scripts (ESRX): RBC Capital Markets initiated coverage with an Outperform rating and target price of $57.00.

CVS Caremark (CVS): RBC Capital Markets initiated coverage with a Sector Perform rating and target price of $34.00.

Coverage Reiterated/Price Target Changed

SAP AG (SAP): Wedbush reiterated their Underperform rating and raised their target price from $44.00 to $49.00.

Texas Instruments (TXN): Stifel Nicolaus reiterated their Buy rating and raised their target price from $29.00 to $34.00.

Texas Instruments (TXN): Auriga U.S.A reiterated their Sell rating and raised their target price from $22.00 to $24.00.

Wells Fargo (WFC): Oppenheimer reiterated their Outperform rating and raised their target price from $36.00 to $42.00.

JPMorgan Chase (JPM): Oppenheimer reiterated their Outperform rating and raised their target price from $51.00 to $60.00.

Citigroup (C): Oppenheimer reiterated their Outperform rating and raised their target price from $4.45 to $5.20.

Verizon (VZ): Hilliard Lyons reiterated their Buy rating and raised their target price from $32.00 to $34.00.

Earnings

CIT Group (CIT): Reported Q3 EPS of $0.66 beating estimates by +$0.17.

Coach (COH): Reported Q3 EPS of $0.63 beating estimates by +$0.08 on revenue of $912 million. 

DuPont (DD): Reported Q3 EPS of $0.40 beating estimates by +$0.06 on revenue of $7 billion. 

Wyndham (WYN): Reported Q3 EPS of $0.68 beating estimates by +$0.05 on revenue of $1.1 billion. 

Amgen (AMGN): Reported Q3 EPS of $1.36 beating estimates by +$0.09 on revenue of $3.8 billion.

Synovus Financial (SNV): Reported Q3 EPS of -$0.25 missing estimates by -$0.03.

Texas Instruments (TXN): Reported Q3 EPS of $0.71 beating estimates by +$0.02 on revenue of $3.7 billion.

·         Futures: Dow 0.0%. S&P 0.0%. Nasdaq 0.0%. Crude 0.0% at $82.50. Gold -0.1% to $1337.

·         Asia: Japan -0.3% to 9377. Hong Kong -0.1% to 23601. China -0.3% to 3042. India -0.4% to 20221.

·         Europe: London -0.7%. Paris -0.5%. Frankfurt -0.1%.

MIDDAY LUNCH

Dow 11176.57  +44.01, Nasdaq 2491.78  +12.39,S&P 1186.78  +3.70 

Stocks started the day off strong but have fallen off their session highs as sellers entered the market.

Of the ten major sectors all are sporting gains except Financials which are in the red.  Shares of Wilmington Trust Corp. (WL) 7.75 -1.01, -11.53% are getting hammered after the Fridays big gains on takeover rumors.  Bank of America (BAC) 11.18 -0.26, -2.27% shares are lower after the company said of the 1% of foreclosures reviewed they found errors in their paperwork.

Basic Materials are leading the market with a +1.52% gain.  Dow Chemical Co. (DOW) 31.50 +1.30, +4.30% and Monsanto (MON) 59.41 +2.26, +3.95% are among the most active leading the sector higher.

In economic data existing home sales for September increased +10% month-over-month to an annualized rate of 4.53 million units.  Economists were looking for an annualized rate of only 4.25 million units.   The 10% month-over-month climb is among the strongest on record.

MORNING COFFEE

BofA Finds Errors In Foreclosure Paperwork. Bank of America (BAC) has reported that they have found errors in the foreclosure paperwork it began examining last week. The bank said that the errors have been minor so far, including misspellings of borrowers' names and wrong addresses.  These errors were found while reviewing less than 1% of the foreclosure files.  Some are questioning what kind of other errors will be found in the remaining 99% of the banks foreclosure files.

Downgrades

J. Crew (JCG):  MKM Partners lowered their rating from Buy to Neutral and lowered their target price from $41.00 to $35.00.

Home Depot (HD): FBR Capital lowered their rating from Outperform to Market Perform.

Microsoft (MSFT): FBR Capital lowered their rating from Outperform to Market Perform and lowered their target price from $32.00 to $27.00.

Coverage Reiterated/Price Target Changed 

Verizon (VZ): RBC Capital Markets reiterated their Outperform rating and raised their target price from $33.00 to $35.00.

Novellus (NVLS): RBC Capital Markets reiterated their Top Pick rating and lowered their target price from $36.00 to $34.00.

Honeywell (HON): RBC Capital Markets reiterated their Sector Perform rating and raised their target price from $45.00 to $50.00.

Fossil (FOSL): Brean Murray reiterated their Buy rating and raised their target price from $54.00 to $64.00.

Earning Reports

Bank of Hawaii (BOH): Reported EPS of $0.91 beating estimates by +$0.12.

Boyd Gaming (BYD): Reported EPS of -$0.02 missing estimates by -$0.07.

RadioShack (RSH): Reported EPS of $0.37 beating estimates by +$0.02.

·         Futures: Dow +0.6%. S&P +0.7%. Nasdaq +0.55%. Crude +0.9% to $82.46. Gold +1.4% to $1344.20.

·         In Asia, Japan -0.3% to 9401. Hong Kong +0.5% to 23628. China+2.6% to 3051. India +0.7% to 20303.

·         In Europe: London +0.7%. Paris +0.5%. Frankfurt +0.7%.

MORNING COFFEE

Goldman May Payback Buffett. Reports say that Goldman Sachs (GS) is considering paying back the $5 billion investment that Warren Buffett's Berkshire Hathaway (BRKA/BRKB) made during the financial meltdown. Buffett’s investment into Goldman came with a cost, dividend payments of 10% a year on Berkshire's "perpetual" preferred shares and curbs on insider selling. If approved by the Fed, Goldman could redeem Berkshire's preferred shares for $5.5 billion, plus a charge of $1.6 billion.

Beige Book remains mixed. The Fed's Beige Book was released and shows that economic activity "continued to rise, albeit at a modest pace." Manufacturing continued to expand and  retail spending was flat to moderately positive.  Additionally, loan demand saw some increase.  On the negative side housing "remained weak," commercial real estate conditions were "subdued," and inventories remain "elevated or rising." Employment remains weak as  hiring "remained limited" and companies are "reluctant" to add to permanent payrolls.

Upgrades

Agrium (AGU): Stifel Nicolaus raised their rating from Hold to Buy and placed a target price of $100.00 on the company.

Netflix (NFLX): Oppenheimer raised their rating from Underperform to Outperform and raised their target price from $110.00 to $200.00.

Downgrades

Seagate Tech (STX): Robert W. Baird lowered their rating from Outperform to Neutral.

BlackRock (BLK): Ticonderoga lowered their rating from Buy to Neutral.

Coverage Reiterated/Price Target Changed

Boeing (BA): RBC Capital Markets reiterated their Outperform rating and raised their target price from $75.00 to $81.00.

Seagate Tech (STX): RBC Capital Markets reiterated their Sector Perform rating and raised their target price from $13.00 to $15.00.

Seagate Tech (STX): Stifel Nicolaus reiterated their Buy rating and lowered their target price from $20.00 to $17.00.

Genzyme (GENZ): RBC Capital Markets reiterated their Sector Perform rating and raised their target price from $61.00 to $75.00.

eBay (EBAY): RBC Capital Markets reiterated their Outperform rating and raised their target price from $28.00 to $30.00.

eBay (EBAY): Stifel Nicolaus reiterated their Buy rating and raised their target price from $30.00 to $32.00.

Morgan Stanley (MS): FBR Capital reiterated their Outperform rating and lowered their target price from $35.00 to $32.00.

Wells Fargo (WFC): Oppenheimer reiterated their Outperform rating and lowered their target price from $37.00 to $36.00.

Earnings

Air Products and Chemicals (APD): Reported FQ4 EPS of $1.35 beating estimates by +$0.03 on revenue of $2.35B 

BB&T (BBT): Reported Q3 EPS of $0.30 beating estimates by +$0.04.

Eli Lilly (LLY): Reported Q3 EPS of $1.21 beating estimates by +$0.06 on revenue of $5.65 billion.

Fifth Third Bancorp (FITB): Q3 EPS of $0.22 beating estimates by +$0.05. 

PNC Financial (PNC): Reported Q3 EPS of $2.07 beating estimates by +$0.71 on revenue of $3.6 billion.

SunTrust Banks (STI): Reported Q3 EPS of $0.17 beating estimates by +$0.18 on revenue of $2.31 billion.

eBay (EBAY): Reported Q3 EPS of $0.40 beating estimates by +$0.03 on revenue of $2.25 billion. Sees Q4 EPS of $0.45-0.48 vs. $0.44. 

E TRADE Financial (ETFC): Reported Q3 EPS of $0.03 in-line on revenue of $489 million. vs. $317M.

Intersil (ISIL): Reported Q3 EPS of $0.28 beating estimates by +$0.07 on revenue of $219 million. 

Netflix (NFLX): Reported Q3 EPS of $0.70 missing estimates by-$0.01 on revenue of $553 million. 

Noble (NE): Reported Q3 EPS of $0.39 beating estimates by +$0.01 on revenue of $613 million.

Robert Half International (RHI): Reported Q3 EPS of $0.14 beating estimates by +$0.01 on revenue of $817 million.

Seagate Technology (STX): Reported FQ1 EPS of $0.37 missing estimates by-$0.08 on revenue of $2.7 billion. 

Textron (TXT): Reported Q3 EPS of $0.13 beating estimates by +$0.05 on revenue of $2.48 billion.

Xilinx (XLNX): Reported FQ2 EPS of $0.65 in-line on revenue of $620 million.

·         Futures: Dow +0.4%. S&P +0.45%. Nasdaq +0.6%. Crude -0.3% to $82.29. Gold +0.1% to $1345.90.

·         Asia: Japan -0.1% to 9376. Hong Kong +0.4% to 23649. China -0.7% to 2984. India +1.9% to 20261.

·         Europe: London +0.7%. Paris +0.8%. Frankfurt +0.8%.