MORNING COFFEE

Producer Price Index Jumps.  Just one day after the Fed said that their inflation expectations “remained stable” the Labor Department released the most recent PPI data.  On a seasonally adjusted basis the PPI jumped +1.6% in February as food costs experienced the biggest one-month rise since 1974.  The Core rate, which excludes the volatile food and energy categories, rose a smaller +0.2%. Economists had estimated the PPI to come in at just +0.6% and the core rate to come in at +0.2%. Over the last year producer prices have risen +5.6%, although the core rate has gone up at a much slower pace of +1.8%. The difference between the PPI and core rate indicate that companies are not passing all the cost increases to consumers, but this could change as company profits get squeezed.

Upgrades

Frontier Communications (FTR): Stifel Nicolaus raised their rating from Hold to Buy and placed a target price of $9.00 on the company.

Coverage Initiated

United Rentals (URI): KeyBanc Capital Markets initiated coverage with a Buy rating and target price of $42.00.

Coverage Reiterated/Price Target Changed

Northrop Grumman (NOC): RBC Capital Markets reiterated their Sector Perform rating and lowered their target price from $75.00 to $70.00.

Liberty Media (LINTA): Wunderlich reiterated their Buy rating and raised their target price from $18.50 to $22.00.

Earning Reports

Federal Signal (FSS): Reported EPS of $0.02 missing estimates by -$0.06.

General Steel (GSI): Reported EPS of $0.04 beating estimates by +$0.01.

·         Futures at 7:00: Dow -0.2%. S&P -0.3%. Nasdaq -0.1%. Crude +1.5% to $98.63. Gold +0.4% to $1398.80.

·         Europe: London -0.9%. Paris -0.9%. Frankfurt -0.3%.

·         Asia: Japan +5.7% to 9094. Hong Kong +0.1% to 22701. China +1.2% to 2931. India +1.1% to 18359.