MORNING COFFEE

Fitch Warns On U.S. Debt Rating. Yesterday the Congressional super committee came up with a super failure by not agreeing on $1.2 trillion in budget cuts. The announcement prompted Fitch to reiterate its warning that the failure would probably lead to "a revision of the U.S.'s rating outlook to negative." S&P and Moody's said they are currently maintaining their ratings on the U.S. debt since $1.5 trillion in automatic spending cuts have been triggered.

Bank Regulators Warn BofA of Enforcement Action. Bank regulators have warned Bank of America (BAC) that it could face a public enforcement action unless it makes more progress on strengthening its books. Regulators are pointing to the MOU from 2009 which identified governance, risk and liquidity management as problems that had to be fixed. An enforcement action would put the bank under greater scrutiny and additional restrictions by regulators. Pre-market: 5.39 -0.10 (-1.82%)

Upgrades

News Corp (NWSA): Susquehanna raised their rating from Neutral to Positive and placed a target price of $20.00 on the company.

Coverage Initiated

Tesla Motors (TSLA): Wunderlich initiated coverage with a Hold rating and target price of $30.00.

Xilinx (XLNX): Lazard Capital initiated coverage with a Neutral rating.

Altera (ALTR): Lazard Capital initiated coverage with a Buy rating and target price of $45.00.

Deere & Co (DE): CLSA initiated coverage with a Buy rating and target price of $90.00. Pre-market: 72.45 -0.23 (-0.32%)

Microsoft (MSFT): ThinkEquity initiated coverage with a Hold rating and target price of $26.00. Pre-market: 24.91 -0.09 (-0.36%)

Downgrades

Amgen (AMGN): BMO Capital lowered their rating from Outperform to Market Perform and lowered their target price from $73.00 to $58.00. Pre-market: 54.75 -0.22 (-0.40%)

Earning Reports

Chico’s FAS (CHS): Reported EPS of $0.18 missing estimates by -$0.02.

Cracker Barrel (CBRL): Reported EPS of $1.09 beating estimates by +$0.05. Pre-market: 45.99 +0.06 (0.13%)

Hormel Foods (HRL): Reported EPS of $0.43 beating estimates by +$0.01.

Medtronic (MDT): Reported EPS of $0.84 beating estimates by +$0.02. Pre-market: 34.45 +1.18 (3.55%)

Markets: 
Futures at 8:21: Dow -0.15%. S&P -0.21%. Nasdaq -0.26%. Crude -1.21% to $97.45. Gold +0.86% to $1692.70. 

Europe: London +0.01%. Paris 0.00%. Frankfurt -0.28%. 

Asia: Japan -0.40% to 8315. Hong Kong +0.14% to 18252. China -0.10% to 2413. India +0.75% to 16065. 

MORNING COFFEE

Super Failure. The Congressional “super committee” and come up with a super failure after months of negations produce $1.2 trillion in deficit cuts by Wednesday's deadline. Reports say that Democrats were proposing massive tax hikes and very little cuts to entitlement programs, while republicans offer smaller tax hikes combined with larger cuts to entitlement programs. With no deal even close to being made, the mandatory cuts with take effect.  The cuts will come in the form of entailment programs and the military.  Economists are now saying that the U.S. debt rating may be downgraded again.

Upgrades

Wal-Mart (WMT): JP Morgan raised their rating from Neutral to Overweight and placed a target price of $64.00 on the company. Pre-market: 57.00 -0.23 (-0.40%)

Hershey Foods (HSY): Ticonderoga raised their rating from Neutral to Buy and placed a target price of $66.00 on the company.

Morgan Stanley (MS): Collins Stewart raised their rating from Hold to Buy and placed a target price of $21.00 on the company. Pre-market: 13.90 -0.31 (-2.18%)

Downgrades

Progressive Corp (PGR):  FBR Capital lowered their rating from Outperform to Market Perform and lowered their target price from $22.00 to $19.00.

Target Corp. (TGT): JP Morgan lowered their rating from Overweight to Neutral and placed a target price of $58.00 on the company. Pre-market: 51.85 -1.15 (-2.17%)

Research In Motion (RIMM): JMP Securities lowered their rating from Market Perform to Underperform and placed a target price of $12.00 on the company. Pre-market: 17.60 -0.59 (-3.24%)

Earning Reports

Tyson Foods (TSN): Reported EPS of $0.26 missing estimates by -$0.05.

Markets: 
Futures at 8:39: Dow -1.16%. S&P -1.27%. Nasdaq -0.83%. Crude -1.21% to $97.45. Gold -0.92% to $1709.00.  

 

Europe: London -1.59%. Paris -2.09%. Frankfurt -2.03%. 

Asia: Japan -0.32% to 8348. Hong Kong -1.44% to 18226. China -0.06% to 2415. India -2.60% to 15946. 

MORNING COFFEE

Germany is preparing for EU defaults. Reports from Europe say that Germany is preparing for defaults and bankruptcy of large EU countries. The news came from a leaked document from the country's foreign ministry. EU officials are also planning for a European Monetary Fund that would take countries into receivership and run their economies.

Upgrades

Hewlett-Packard (HPQ): Sterne Agee raised their rating from Neutral to Buy and placed a target price of $34.00 on the company.

Coverage Initiated

Coca-Cola (KO): Jefferies initiated coverage with a Buy rating.

PepsiCo (PEP): Jefferies initiated coverage with a Hold rating.

Cree (CREE): Goldman Sachs initiated coverage with a Buy rating and a target price of $40.00 on the company.

Earning Reports

Dole Food (DOLE): Reported EPS of -$0.17 missing estimates by -$0.09.

Foot Locker (FL): Reported EPS of $0.43 beating estimates by +$0.04.

Salesforce.com (CRM): Reported EPS of $0.34 beating estimates by +$0.03.

HJ Heinz (HNZ): Reported EPS of $0.81 beating estimates by +$0.01.

Markets: 
Futures at 7:00: Dow +0.6%. S&P +0.7%. Nasdaq +0.5%. Crude +0.3% to $99.09. Gold +0.5% to $1728.20. 

Europe: London -0.7%. Paris -0.3%. Frankfurt -0.2%. 

Asia: Japan -1.2% to 8375. Hong Kong -1.7% to 18491. China -1.9% to 2417. India -0.6% to 16372. 

MORNING COFFEE

Fitch Warns About U.S. Bank Exposure to EU. Yesterday the rating agency Fitch said that U.S. Banks face a “serious risk” to their credit worthiness if the EU debt crisis spreads beyond Greece, Ireland, Italy, Portugal and Spain. The news sent bank and financial stocks lower. Morgan Stanley (MS) Close 14.66 -1.27 (-7.79%), BofA (BAC): Close 5.90 -0.23 (-3.75%), Citigroup (C) Close 28.86 -1.16 (4.14%)

Spanish Yields Hit 7%. The eurozone debt contagion seems to be spreading out of control despite all attempts to control it by the ECB.  Spain is the latest casualty, as their yields passed 7%.   Wall Street already is very concerned about recent developments in Greece and Italy, now they have Spain thrown on top of the mess.  Additionally, because of bank exposure concerns to Italy and Spain, French yields costs are also rising.

Upgrades

Micron Technology (MU): MKM Partners raised their rating from Hold to Buy. Pre-market: 6.87 +0.13 (1.93%)

Downgrades

NetApp (NTAP): Collins Stewart lowered their rating from Buy to Neutral and lowered their target price from $52.00 to $40.00. Pre-market: 37.23 -3.51 (-8.62%)

Abercrombie & Fitch (ANF): ISI Group lowered their rating from Buy to Hold. After Hours: 47.94 -0.16 (-0.33%)

Coverage Initiated

Intercontinental Hotels Group (IHG): HSBC Securities initiated coverage with a Neutral rating. Pre-market: 16.71 -0.35 (-2.05%)

Royal Caribbean (RCL): HSBC Securities initiated coverage with a Neutral rating and target price of $30.00. Pre-market: 25.89 -0.18 (-0.69%)

Carnival (CCL): HSBC Securities initiated coverage with a Neutral rating and target price of $34.00. Pre-market: 31.13 -0.70 (-2.20%)

Verizon (VZ): Jefferies initiated coverage with a Buy rating and target price of $45.00. Pre-market: 36.55 -0.10 (-0.27%)         

AT&T (T): Jefferies initiated coverage with a Hold rating and target price of $33.00. After Hours: 28.77 -0.01 (-0.03%)

Under Armour (UA): Auriga initiated coverage with a Hold rating and target price of $82.00. After Hours: 81.00 +0.15 (0.19%)

Earning Reports

Applied Materials (AMAT): Reported EPS of $0.21 beating estimates by +$0.01. Pre-market: 12.18 -0.29 (-2.33%)

PETsMART (PETM): Reported EPS of $0.50 beating estimates by +$0.02. After Hours: 47.35 -0.31 (-0.65%)

J.M. Smucker (SJM): Reported EPS of $1.29 missing estimates by -$0.10. After Hours: 73.15 -0.03 (-0.04%)

Sears Holdings (SHLD): Reported EPS of -$2.57 missing estimates by -$0.33. Pre-market: 65.45 -2.85 (-4.17%)

Markets: 
Futures at 7:00: Dow -0.6%. S&P -0.75%. Nasdaq -0.6%. Crude -0.9% to $101.69. Gold -1.0% to $1757.10. 

Europe: London -2.5%. Paris -1.8%. Frankfurt -2.0%. 

Asia: Japan +0.2% to 8480. Hong Kong -0.8% to 18817. China -0.2% to 2463. India -1.9% to 16462.