MORNING COFFEE

Debt Contagion Spreading. Despite attempts from the ECB to assist Italy, the Italian 10-year bond yields have climbed past 7%.  7% is the rate in which other countries have sought a bailout. The debt worries appear to be spreading, as Spanish yields are also moving up today.  The contagion is also spreading to more high-rated countries such as Austria and Holland.

Another Massive Bailout Coming? According to the Wall Street Journal the Federal Housing Administration or FHA has a 50% chance of needing a government bailout next year.  The rising number of mortgage defaults and falling home prices have caused the agency's reserves to drop to just $2.6 billion. 

Upgrades

Porsche Automobil Holdings (POAHY): Exane BNP Paribas raised their rating from Neutral to Outperform.

Downgrades

Advance Auto Parts (AAP): Argus lowered their rating from Buy to Hold. Pre-market: 68.06 -0.92 (-1.33%)

Amgen (AMGN): Piper Jeffray lowered their rating from Overweight to Neutral. Pre-market: 56.81 -0.52 (-0.91%)

Kellogg (K): Bernstein lowered their rating from Outperform to Market Perform and lowered their target price from $62.00 to$55.00. Pre-market: 49.48 -0.17 (-0.34%)

Western Digital (WDC): Needham lowered their rating from Buy to Hold. Pre-market: 25.50 -0.84 (-3.19%)

Earning Reports

Covidien (COV): Reported EPS of $1.08 beating estimates by +$0.03.

Dick’s Sporting Goods (DKS): Reported EPS of $0.32 beating estimates by +$0.05. Pre-market: 41.50 +1.92 (4.85%)

Home Depot (HD): Reported EPS of $0.60 beating estimates by +$0.02. Pre-market: 38.73 +0.48 (1.25%)

Wal-Mart (WMT): Reported EPS of $0.97 missing estimates by -$0.01. Pre-market: 58.00 -0.89 (-1.51%)

Markets: 
Futures at 8:52: Dow -0.60%. S&P -0.74%. Nasdaq -0.41%. Crude -0.11% to $98.05. Gold -0.40% to $1771.30. 

Europe: London -0.22%. Paris -1.66%. Frankfurt -1.12%. 

Asia: Japan -0.72% to 8542. Hong Kong -0.82% to 19348. China +0.04% at 2530. India -1.38% to 16883.