MORNING COFFEE

California Debt Crisis Worse Than Expected. The State Budget Crisis Task Force has just said that California’s debt crisis is much worse than previously stated.  When California Governor Jerry Brown took office last year he said that the state was facing a "wall of debt." At that time he said the debt stood at $28 billion. Now the State Budget Crisis Task Force announced that the true debt is actually at a staggering $167 billion to $335 billion. The new figures include many of off-book items such as pledges to provide pensions to public workers, healthcare for retirees, and $40 billon to improve drinking water.  The rating agency Moody’s said in a report that that the growing fiscal distress in many California cities is putting bondholders at risk.  Three cities have already filed for bankruptcy and it appears as if Atwater, CA will be next. Moody’s also said that it also will examine the outlook for municipal bonds in other troubled states. Analysts believe that Michigan and Nevada may be examined next.

Upgrades

ConAgra Foods (CAG): UBS raised their rating from Hold to Buy and raised their target price from $27.00 to $31.00.

Downgrades

Charles Schwab (SCHW): Evercore lowered their rating from Equal Weight to Underweight. Pre-market: 13.44 0.00 (0.00%)

E*Trade Financial (ETFC): Evercore lowered their rating from Equal Weight to Underweight. Pre-market: 9.15 -0.07 (-0.76%)

Cooper Tire (CTB): KeyBanc Capital Markets lowered their rating from Buy to Hold.

Goodyear Tire (GT): KeyBanc Capital Markets lowered their rating from Buy to Hold. Pre-market: 13.20 -0.18 (-1.35%)

Coverage Initiated

Google (GOOG): Cantor Fitzgerald initiated coverage with a Buy rating and target price of $830.00. Pre-market: 732.49 +4.37 (0.60%)

Automatic Data Processing (ADP): BMO Capital initiated coverage with an Outperform and target price of $67.00. After Hours: 58.64 0.00 (0.00%)

Burger King Worldwide (BKW): UBS initiated coverage with a Neutral rating and target price of $15.50.

Blue Nile (NILE): Deutsche Bank initiated coverage with a Buy rating and target price of $53.00.

AOL (AOL): Blue Nile (NILE): Deutsche Bank initiated coverage with a Buy rating and target price of $40.00.

Yahoo! Inc. (YHOO): Cantor Fitzgerald initiated coverage with a Hold rating and target price of $16.00.  Pre-market: 15.63 -0.16 (-1.01%)

Paychex (PAYX): BMO Capital initiated coverage with an Market Perform and target price of $34.00. After Hours: 34.47 0.00 (0.00%)

Priceline.com (PCLN): Cantor Fitzgerald initiated coverage with a Buy rating and target price of $740.00.  After Hours: 633.45 -0.32 (-0.05%)

Expedia (EXPE): Cantor Fitzgerald initiated coverage with a Buy rating and target price of $64.00.  Pre-market: 58.02 +0.93 (1.63%)

ORBITZ (OWW): Cantor Fitzgerald initiated coverage with a Hold rating and target price of $3.00.  

Shutterfly (SFLY): Cantor Fitzgerald initiated coverage with a Hold rating and target price of $33.00.  

Earning Reports

Cintas (CTAS): Reported EPS of $0.60 beating estimates by +$0.02. After Hours: 41.70 +0.51 (1.24%)

Oracle (ORCL): Reported EPS of $0.53 in-line with estimates. Pre-market: 32.36 +0.10 (0.31%)

Darden Restaurants (DRI): Reported EPS of $0.85 beating estimates by +$0.01. Pre-market: 55.00 +0.28 (0.51%)

Markets: 
Futures at 7:13: Dow +0.30%. S&P +0.28%. Nasdaq +0.28%. Crude +0.62% to $92.99. Gold +0.28% to $1775.10.

Europe: London +0.02%. Paris +0.37. Frankfurt +0.87%. 

Asia: Japan +0.25%. Hong Kong +0.70%. China +0.09%. India +2.20%.