MORNING COFFEE

China To The Rescue Of Italy? Yesterday Italy confirmed reports that it had a meeting with Chinese officials about a strategic investment in Italy.  China had no comment leading analysts to believe any talks are preliminary.  Italy's debt-to-GDP ratio is second in the Eurozone only to Greece's.  Additionally German Chancellor Angela Merkel said the top priority is to avoid an uncontrolled insolvency, because that wouldn't just hit Greece” and “would very quickly face a domino effect."

The seriousness of the possibility of a domino effect has Treasury Secretary Geithner making an unexpected trip to Poland this week.   This is the first time a U.S. Treasury Secretary will attend a Eurozone FM meeting.

The fear of default has hurt bank shares worldwide.  In one month French banks are down another -14% and Spanish banks -8%. Some banks have fared far worse: SocGen (SCGLY) -37%, BNP Paribas (BNPQY) -20%, and Credit Agricole (CRARY) -30% Royal Bank of Scotland (RBS) -22%, Goldman Sachs  (GS) -12%,  UBS (UBS) -20%.

Earning Reports

Best Buy (BBY): Reported EPS of $0.47 missing estimates by -$0.05. Pre-market: 24.85 -0.11 (-0.44%)

Cracker Barrel (CBRL): Reported EPS of $1.00 beating estimates by +$0.01. Pre-market: 39.26 -0.60 (-1.51%)

Upgrades

Fifth Third (FITB): RBC Capital Markets raised their rating from Sector Perform to Outperform and maintained their target price of $15.00 on the company. Pre-market: 9.85 -0.08 (-0.81%)

JPMorgan Chase (JPM): Stifel Nicolaus raised their rating from Hold to Buy and placed a target price of $66.00 on the company. Pre-market: 32.84 +0.42 (1.30%)

Downgrades

FedEx (FDX): RBC Capital Markets lowered their rating from Outperform to Sector Perform and lowered their target price from $105.00 to $78.00. Pre-market: 73.25 -0.38 (-0.52%)

NetLogic (NETL): Stifel Nicolaus lowered their rating from Buy to Hold. Pre-market: 48.12 0.00 (0.00%)

NetLogic (NETL): Sterne Agee lowered their rating from Buy to Neutral. Pre-market: 48.12 0.00 (0.00%)

NetLogic (NETL): Needham lowered their rating from Buy to Hold. Pre-market: 48.12 0.00 (0.00%)

Coverage Initiated

Herbalife (HLF): Caris initiated coverage with a Buy rating and target price of $75.00. Pre-market: 52.86 +0.52 (0.99%)

KKR (KKR): Ticonderoga initiated coverage with a Neutral rating.

Blackstone (BX): Ticonderoga initiated coverage with a Buy rating and target price of $17.00

Texas Instruments (TXN): Wedbush initiated coverage with an Outperform rating. Pre-market: 26.49 +0.21 (0.80%)

Markets:
Futures at 8:54: Dow -0.05%. S&P -0.18%. Nasdaq +0.19% Crude +1.85% to $89.76. Gold +0.95% to $1830.60.

Europe: London +0.57%. Paris +0.43%. Frankfurt +1.39%.

Asia: Japan +0.95%. Hong Kong closed. China -1.06%. India -0.21%.