MORNING COFFEE

S&P Warns U.S. of Downgrade. Standard & Poor's has just become the second rating agency to warn that they may downgrade the U.S. debt rating from AAA.  The last time in history that the U.S. did not have an AAA rating was 1917.  S&P said that there is a 50% chance it will cut the rating within three months, noting an “increasing” chance of default.  S&P also indicated that even with an increase in the debt ceiling they may still cut the debt rating if the out of control spending is not addressed.

Downgrades

ConocoPhillips (COP): Howard Weil lowered their rating from Market Outperform to Market Perform. Pre-market: 77.16 +1.55 (2.05%)

FLIR Systems (FLIR): Morgan Keegan lowered their rating from Outperform to Market Perform and lowered their target price from $39.00 to $29.00. Pre-market: 28.40 -3.71 (-11.55%)

Coverage Resumed

Google (GOOG): Needham resumed coverage with a Buy rating and target price of $725.00. Pre-market: 602.00 +73.06 (13.81%)

Coverage Reiterated/Price Target Changed

Google (GOOG): RBC Capital Markets reiterated their Outperform rating and raised their target price from $680.00 to $790.00. Pre-market: 602.00 +73.06 (13.81%)

Google (GOOG): Oppenheimer reiterated their Outperform rating and raised their target price from $650.00 to $690.00. Pre-market: 602.00 +73.06 (13.81%)

Google (GOOG): Collins Stewart reiterated their Outperform rating and raised their target price from $680.00 to $725.00. Pre-market: 602.00 +73.06 (13.81%)

ConocoPhillips (COP): Oppenheimer reiterated their Outperform rating and raised their target price from $82.00 to $90.00. Pre-market: 77.16 +1.55 (2.05%)

Tiffany & Co (TIF): Oppenheimer reiterated their Outperform rating and raised their target price from $80.00 to $100.00. Pre-market: 82.95 +1.48 (1.82%)

YUM! Brands (YUM): RBC Capital Markets reiterated their Outperform rating and raised their target price from $59.00 to $65.00. Pre-market: 56.53 +0.16 (0.28%)

Earning Reports

Google (GOOG): Reported Q2 EPS of $8.74 beating estimates by +$0.88 on revenue of $6.92 billion. Pre-market: 602.00 +73.06 (13.81%)

Citigroup (C): Reported EPS of $1.09 beating estimates by +0.13. Pre-market: 40.23 +1.21 (3.10%)

Genuine Parts (GPC): Reported EPS of $0.96 beating estimates by +0.07. Pre-market: 56.30 +1.18 (2.14%)

Mattel (MAT): Reported Q2 EPS of $0.23 beating estimates by +$0.07 on revenue of $1.16 billion. Pre-market: 28.25 +1.46 (5.45%)

·         Futures at 9:00: Dow +0.28%. S&P +0.37%. Nasdaq +0.58%. Crude +0.44% at $96.11. Gold -0.42% to $1582.80.

·         Europe: London +0.19%. Paris -0.20%. Frankfurt +0.40%.

·         Asia: Japan +0.37% to 9974. Hong Kong -0.30% to 21875. China+0.35% to 2820. India -0.30% to 18562.