MORNING COFFEE

More European Debt Worries. Economists are increasingly becoming concerned about the economic health of Hungary, Romania, and Serbia.  All three countries have been unable to sell their government debt at auction on several occasions.  The three countries turned to the IMF in 2009 for a bailout and have enacted austerity programs.

Upgrades

Synovus (SNV): Wunderlich raised their rating from Hold to Buy and placed a target price of $3.50 on the company.

NetLogic (NETL): The Benchmark Company raised their rating from Hold to Buy and placed a target price of $35.00 on the company.

Downgrades

Discovery (DISCA): Caris & Company lowered their rating from Above Average to Average.

NiSource (NI): KeyBanc Capital Markets lowered their rating from Buy to Hold.

Coverage Initiated

Waters (WAT): Auriga U.S.A initiated coverage with a Buy rating and target price of $75.00.

Coverage Reiterated/Price Target Changed

Priceline.com (PCLN): Caris & Company reiterated their Buy rating and raised their target price from $300.00 to $348.00.

National Semi (NSM): RBC Capital Markets reiterated their Sector Perform rating and lowered their target price from $17.00 to $15.00.

BP (BP): The Benchmark Company reiterated their Buy rating and raised their target price from $41.00 to $46.00.

·         Futures: Dow -0.5%. S&P -0.6%. Nasdaq -0.4%. Crude -2.25% to $72.92. Gold -0.3% to $1247.50.

·         Asia: Japan -0.8% to 9226. Hong Kong +0.2% to 21402. China +0.1% to 2698. India +0.5% to 18645.

·         Europe: London -0.9%. Paris -1.1%. Frankfurt -0.8%.

MIDDAY LUNCH

Dow 10392.00  +71.90, Nasdaq 2219.57  +19.56,S&P 1098.68  +8.58 

All three indices are trading higher, but have hit some resistance and are now trading below today’s highs.

Stocks started offer to the plus side after the Nonfarm payrolls report for August fell -54,000, which was less than the -120,000 that economist had expected. The unemployment rate came in at 9.6%, up from 9.5%.

Shares of McDonalds (MCD) hit a 52 week high today, when the company’s shares hit $75.35.

In today’s trading the top two sectors are currently up over +1%. Consumer Cyclical are up +1.53% with Mattel (MAT) 19.91 +1.45%, +7.85%. Capital Goods stocks are up +1.28%.  The most actively traded in the sector is Caterpillar (CAT) 70.33 +1.79, +2.61%.

MORNING COFFEE

HP Buys 3Par. Hewlett-Packard (HPQ) won the bidding war for with Dell (DELL) over 3Par (PAR).  HP’s winning bid was $2.4 billion, or $33/share.  Dell (DELL) said it would not increase their bid to match HP’s.  Analysts now expect Dell to build its own storage portfolio and several possible acquisition targets rose on the news.

Burger King Sold.  Burger King (BKC) has agreed to accept an offer from 3G capital to purchase the company.  The 3G offer of $4 billion or $24/share, including the assumption of debt, is the largest leveraged buyout of a fast-food chain ever. The deal represents a 46% premium to the company's share price before acquisition rumors began.

Upgrades

Digital River (DRIV): Wedbush raised their rating from Neutral to Outperform and raised their target price from $28.00 to $36.00.

Coverage Initiated

W.R. Grace (GRA): KeyBanc Capital Markets initiated coverage with a Buy and target price of $36.00.

Coverage Reiterated/Price Target Changed

Family Dollar (FDO): RBC Capital Markets reiterated their Sector Perform rating and raised their target price from $39.00 to $43.00.

3Par (PAR): RBC Capital Markets reiterated their Outperform rating and raised their target price from $27.00 to $33.00.

Micron (MU): Stifel Nicolaus reiterated their Buy rating and lowered their target price from $21.00 to $17.00.

Ulta Salon (ULTA): Oppenheimer reiterated their Outperform rating and raised their target price from $28.00 to $30.00.

Earning Reports

Ulta Salon (ALTR): Reported EPS of +$0.22 beating estimates by +$0.04.

H&R Block (HRB): Reported FQ1 EPS of -$0.36 beating estimates by +$0.05 on revenue of $275 million.

Campbell Soup (CPB): Reported EPS of +$0.30 in line with estimates.

·         Futures: Dow +0.1%. S&P +0.1%. Nasdaq +0.2%. Crude -0.35% to $74.76. Gold +0.1% to $1254.90.

·         Asia: Japan +0.6% to 9114. Hong Kong +0.5% to 20972. China 0.0% at 2655. India -0.1% to 18221.

·         Europe: London +0.5%. Paris +0.7%. Frankfurt +0.4%.

MORNING COFFEE

Eli Lilly Wins Appeal. 

Eli Lilly (LLY) won in appeals court yesterday when the court upheld a prior decision preventing Teva (TEVA) from manufacturing and selling a generic version of Evista.

Auto Sale Fall. Auto sales fell -21% in August from  year ago numbers. Chrysler’s sales increased +7%. Ford (F) sales were fell -11%, GM's sales were down -25%, and Toyota's (TM) fell -34%.

Upgrades

Zumiez (ZUMZ): Caris & Company raised their rating from Above Average to Buy and placed a target price of $25.00 on the company.

Rio Tinto PLC (RTP): RBC Capital Markets raised their rating from Sector Perform to Outperform.

Coverage Initiated

Exelon (EXC): RBC Capital Markets initiated coverage with an Outperform rating and target price of $59.00.

Zimmer Holdings (ZMH): Stifel Nicolaus initiated coverage with a Buy rating and target price of $58.00.

Stryker (SYK): Stifel Nicolaus initiated coverage with a Hold rating and target price of $50.00.

Medtronic (MDT): Stifel Nicolaus initiated coverage with a Hold rating and target price of $37.00.

St. Jude Medical (STJ): Stifel Nicolaus initiated coverage with a Hold rating and target price of $36.00.

Clearwire (CLWR): Kaufman Bros initiated coverage with a Buy rating and target price of $8.50.

Coverage Reiterated/Price Target Changed

Collective Brands (PSS): Caris & Company reiterated their Above Average rating and lowered their target price from $29.00 to $16.00.

Joy Global (JOYG): RBC Capital Markets reiterated their Outperform rating and raised their target price from $72.00 to $77.00.

Earning Reports

Collective Brands (PSS): Reported EPS of -$0.32 missing estimates by -$0.77.  Shares are -5.89% lower in the pre-market.

Movado Group (MOV): Reported EPS of -$0.04 missing estimates by -$0.03.

·         Futures: Dow -0.2%. S&P -0.2%. Nasdaq -0.1%. Crude -0.2% to $73.77. Gold 0.0% at $1247.90.

·         Asia: Japan +1.5% to 9063. Hong Kong +1.2% to 20869. China +1.3% to 2656. India +0.2% to 18238.

·         Europe: London -0.1%. Paris -0.1%. Frankfurt -0.3%.

MIDDAY LUNCH

Dow 10261.68  +246.96, Nasdaq 2173.75  +59.72, S&P 1078.70  +29.37 

All ten major sectors are higher today, additionally all 30 stocks on the Dow are trading higher.

The strength in stocks today has caused selling in Treasuries.  The ten year Treasury Note is now yielding 2.60%.

In economic data today the ADP report for private sector jobs fell -10,000 while economist were looking for a gain of +13,000 jobs.

The ISM Index beat estimates by a wide margin coming in at 56.3 versus the estimate of 52.9.

Additionally, gains today can be attributed to better than expected economic growth in China, India and Australia.

Capital goods stocks are trading +3.59% higher, with Cummins  (CMI) 79.89 +5.48, +7.36% and Caterpillar (CAT) 68.02 +2.86, +4.39% higher on heavy volume.

Conglomerates are also leading the market today up +3.43%.  Leading the group on heavy volume are General Electric (GE) 15.00 +0.52, +3.59%, 3M (MMM) 80.50 +1.95, +2.48% and United Technologies (UTX) 67.32 +2.11, +3.24%.

MORNING COFFEE

Burger King For Sale. 

Burger King (BKC) has been reported to be in talks to sell the company.  The number two hamburger restaurant has a market cap of $2.3 billion.  One company reported to be interested in the purchase is 3i Group.  Burger King is up +16.66% in pre-market trading.

Employment Data Misses Estimates.  

ADP Employer Services reported that the private sector cut jobs by -10,000 in August.  Economist had been looking for a +13,000 increase in jobs.  This is a significant decline from July’s revised reading of +37,000.

FOMC Minutes Released. 

The FOMC released the minutes from the August meeting yesterday.  The minutes indicated that GDP growth was worse than most members anticipated. Additionally, the labor market was worse than expected.  Some noted that they believe the downturn in housing prices seems over. 

Coverage Initiated

Buffalo Wild Wings (BWLD): Morgan Joseph initiated coverage with a Buy rating and target price of $56.00.

AnnTaylor (ANN): MKM Partners initiated coverage with a Buy rating and target price of $21.00.

Coverage Resumed

Cree (CREE): Kaufman Bros resumed coverage with a Hold rating and target price of $58.00.

Earning Reports

Joy Global (JOYG): Reported FQ3 EPS of $1.13 beating estimates by +$0.10 on revenue of $850 million.

HJ Heinz (HNZ): Reported FQ1 EPS of $0.75 beating estimates by +$0.02.

·         Futures: Dow +1.0%. S&P +1.19%. Nasdaq +1.37%. Crude +0.95% to $72.6. Gold +0.3% to $1254.

·         Asia: Japan +1.17% to 8927. Hong Kong +0.43% to 20624. China -0.6% to 2623. India +1.31% to 18206.

·         Europe: London +1.5%. Paris +1.63%. Frankfurt +1.18%.