MORNING COFFEE

Merkel Says EU Changes Will Take Years. German Chancellor Angela Merkel warned that Europeans face a long “marathon” to restore the EU’s credibility.  She also called for rapid EU treaty changes that would remedy the root causes of the euro zone's debt crisis, but said "resolving the sovereign debt crisis is a process, and this process will take years."  The long-term approach would include tighter fiscal integration in the Euro area, and tougher budget discipline.  She also quickly dismissed quick fixes such as massive Fed-style money printing by the European Central Bank or issuing joint euro zone bonds.

Upgrades

Cracker Barrel (CBRL): Morgan Keegan raised their rating from Market Perform to Outperform and raised their target price from $45.00 to $58.00.

Lowes Cos. (LOW): Goldman Sachs raised their rating from Neutral to Buy and raised their target price from $26.00 to $28.00. Pre-market: 24.32 +0.45 (1.89%)

Downgrades

Franklin Resources (BEN): Ticonderoga lowered their rating from Buy to Neutral. Pre-market: 99.50 +0.31 (0.31%)

TE Connectivity (TEL): Macquarie lowered their rating from Outperform to Neutral. Pre-market: 31.45 +0.17 (0.54%)

PPG Industries (PPG): Goldman Sachs lowered their rating from Buy to Neutral and placed a target price of $97.00 on the company. Pre-market: 86.77 +0.22 (0.25%)

Coverage Initiated

Xylem (XYL): KeyBanc Capital Markets initiated coverage with a Buy rating and target price of $28.00.

Steven Madden (SHOO): Canaccord Genuity initiated coverage with a Buy rating and target price of $47.00.

Urban Outfitters (URBN): Wells Fargo initiated coverage with a Market Perform rating and target range of $25-$27.00.

Earning Reports

H & R Block (HRB): Reported EPS of -$0.38 missing estimates by -$0.03.

Ulta Salon (ULTA): Reported EPS of $0.42 beating estimates by +$0.04.

Zumiez (ZUMZ): Reported EPS of $0.45 beating estimates by +$0.04. Pre-market: 25.72 +2.35 (10.06%)

Big Lots (BIG): Reported EPS of -$0.06 missing estimates by -$0.15. Pre-market: 36.60 -3.13 (-7.88%)

Markets: 
Futures at 7:00: Dow +0.93%. S&P +1.05%. Nasdaq +1.0%. Crude +0.38% to $100.58. Gold +0.87% to $1755.70. 

Europe: London +1.41%. Paris +1.97%. Frankfurt +1.50%. 

Asia: Japan +0.54% to 8644. Hong Kong +0.20% to 19040. China -1.10% to 2361. India +2.20% to 16847.