MORNING COFFEE

Bill Gross Sells All Govt. Bond Holdings. Pimco bond fund manager Bill Gross confirmed that he has sold all of his U.S. government holdings, including Treasuries, in the Total Return Fund. Pimco’s Total Return Fund manages $237 billion in investors funds making it the largest bond fund in the U.S. The sale is in response to QE2 and his belief that bonds yields will rise causing bond prices to fall.

Microsoft Sold 10 Million Kinects. Microsoft (MSFT) reported that it has sold 10 million Kinects just four months after its launch.  The accessory for the Xbox is a direct answer to Nintendo Wii’s successful use of motion controllers.  Kinects is the first pure gesture-control technology while both Wii and PlayStation use hand-held controllers.   Kinect's success should boost Microsoft's earnings.  The company forecasted in January that revenue in its entertainment and devices division will rise 50% in Q1 2011 after a increase of 55% to $3.7B in Q4 2010.

Upgrades

Hyatt Hotels (H): Robert W. Baird raised their rating from Neutral to Outperform and placed a target price of $54.00 on the company.

Hospitality Props (HPT): Robert W. Baird raised their rating from Neutral to Outperform and raised their target price from $23.00 to $26.00.

Downgrades

Raymond James (RJF): Ticonderoga lowered their rating from Buy to Neutral and placed a target price of $40.00 on the company.

Coverage Reiterated/Price Target Changed

Honeywell (HON): FBR Capital reiterated their Market Perform rating and lowered their target price from $59.00 to $61.00.

Marathon Oil (MRO): Oppenheimer reiterated their Outperform rating and raised their target price from $52.00 to $62.00.

Coldwater Creek (CWTR): FBR Capital reiterated their Market Perform rating and lowered their target price from $3.50 to $2.50.

Earning Reports

Smithfield Foods (SFD): Reported FQ3 EPS of $0.84 beating estimates by +$0.18 on revenue of $3.19 billion, beating estimates by +$0.03 billion.

H&R Block (HRB): Reported FQ3 EPS of $0.14 beating estimates by +$0.14 on revenue of $852 million, in-line with estimates.

Jackson Hewitt (JTX): Reported EPS of $0.19 missing estimates by -$0.12.

·         Futures at 7:00: Dow -0.4%. S&P -0.5%. Nasdaq -0.7%. Crude -0.7% to $103.68. Gold -0.6% to $1421.40.

·         Europe: London -1.1%. Paris -0.7%. Frankfurt -1.0%.

·         Asia: Japan -1.5% to 10434. Hong Kong -0.8% to 23615. China -1.5% to 2958. India -0.8% to 18328.