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A day after a congressional panel finishes work on legislation to reign in ‘too-big-to-fail’ institutions, it looks like supersized banks won’t be required to break up soon, but that they will have dozens of incentives driving them to become smaller.

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Smith International, Inc. (NYSE: SII) was today upgraded by Citi from Hold to Buy at a price target of $35. State Street Corporation (NYSE: STT) is now trading at $27.87, 3.76% up on 22 million shares.

Pulte Homes, Inc. (NYSE: PHM) climbed 4.59% to $10.04 on 5.72 million shares in the morning trading hours. Today Citigroup upgraded Pulte Homes to Buy from Hold and raises their price target to $12 from $11.

Fidelity National Information Services (NYSE: FIS) increased 4.27% to $23.55 after RBC Capital Markets upgraded FISfrom Sector Perform to Outperform. So far this year, FIS is up over 44%.

Aruba Networks, Inc. (NASDAQ: ARUN) was today upgraded by Barclays Capital from Equal weight to overweight. Now ARUN is up 4.11% at $9.88 on 1.1 million shares. The 52 week trading range for ARUN is $1.85 - $9.99.

Omega Healthcare Investors, Inc. (NYSE: OHI) was upgraded from market Perform to market Outperform by JMP Securities with a price target of $22.00. OSUR is now trading at $18.60, 2.71% up on 960K shares.

Zimmer Holdings, Inc. (NYSE: ZMH) was also upgraded today from Neutral to Buy by UBS and also raises their price target to $64 from $59. ZMH is now up 2% at $57.89 on 952K shares. MRX has made a new 52 week high at $57.98 today.

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State Street Corporation (NYSE: STT) was today upgraded by HSBC Securities from Neutral to Overweight at a price target of $51. State Street Corporation (NYSE: STT) is now trading at $41.82, 2.78% up on 1.42 million shares. So far in 2009, STT is up only 6.50%.

CMS Energy Corporation (NYSE: CMS) climbed 1.92% to $14.84 on 1.65 million shares in the morning trading hours. Today BMO Capital Markets upgraded CMS Energy to Outperform from Market Perform at a price target of $17.

SINA Corporation (USA) (NASDAQ: SINA) increased 9.52% to $46.99 after Deutsche Securities upgraded SINA from Hold to Buy at a price target of $52. SINA has also made a new 52 week high at $47.95 today after breaking its previous 52 week high.

Illinois Tool Works Inc. (NYSE: ITW) was today upgraded by UBS from Neutral to Buy. Now ITW is down 0.78% at $50.63 on 846K shares. The 52 week trading range for ITW is $25.60 - $51.16.

OraSure Technologies, Inc. (NASDAQ: OSUR) was upgraded from Hold to Buy by Needham at price target of $5.50. OSUR is now trading at $4.37, 4.05% up on 172K shares. OSUR has gained around 35% in the last six months.

Medicis Pharmaceutical Corporation (NYSE: MRX) was also upgraded today to Neutral from Underweight by Piper Jaffray. MRX is now up 1.12% at $24.37 on 205K shares. MRX has made a new 52 week high at $24.63 today. In the last six months, MRX gained over 60%.

The U.S. Treasury’s pay czar, who oversees compensation for the highest-paid employees at the firms that received U.S. taxpayer assistance, said on Thursday that he is concerned that pay cuts could obstruct the ability of these firms to retain and attract top talent. However, the pay czar would be open to requests to hire new [...]

(AIG) U.S. Treasury’s Pay Czar to Allow Competitive Pay

The U.S. Treasury’s pay czar, who oversees compensation for the highest-paid employees at the firms that received U.S. taxpayer assistance, said on Thursday that he is concerned that pay cuts could obstruct the ability of these firms to retain and attract top talent. However, the pay czar would be open to requests ...

The U.S. Treasury's pay czar, who oversees compensation for the highest-paid employees at the firms that received U.S. taxpayer assistance, said on Thursday that he is concerned that pay cuts could obstruct the ability of these firms to retain and attract top talent. However, the pay czar would be open to requests to hire new executives at competitive industry rates.

The pay czar, Kenneth Feinberg, decides compensation packages for the highest-paid employees at the seven firms that have received substantial support from the Troubled Asset Relief Program (TARP). The pay restrictions were imposed on these firms to enable them to repay government money by controlling excessive pay.

The seven firms, whose top 25 earners received an average 50% lower pay last month by the order of the pay czar, are American International Group (AIG), Citigroup (C), Bank of America (BAC), Chrysler Financial, Chrysler Group LLC, General Motors and GMAC Inc.

Though all seven firms that are subject to such scrutiny have expressed concerns about the impact of pay limits, none of them has appealed to the pay czar.

American International Group’s CEO, Robert Benmosche, had expressed concerns over the compensation restrictions and was considering stepping down, according to the recent media reports. However, Benmosche said on Wednesday to the employees that he plans to stay on. According to Benmosche, the pay restriction on highest-earning employees will make it difficult for the company to repay the taxpayer bailouts as it will be difficult to retain key personnel.

On the other hand, the move could be very sensitive for Bank of America, which is searching for a new CEO to replace Ken Lewis.

However, the pay czar said that he would measure his success in determining appropriate pay levels for the bailout-out firms by their repayment of taxpayer money.

Some large financial firms that have already repaid government funds are JPMorgan Chase & Company (JPM), Morgan Stanley (MS), Bank of New York Mellon Corporation (BK), Goldman Sachs (GS), U.S. Bancorp (USB), American Express Company (AXP), BB&T Corporation (BBT) and State Street Corporation (STT). However, for many other firms, the full repayment of TARP money is unlikely for a long time, as they face very difficult situations.
Read the full analyst report on "AIG"
Read the full analyst report on "C"
Read the full analyst report on "BAC"
Read the full analyst report on "GJM"
Read the full analyst report on "JPM"
Read the full analyst report on "MS"
Read the full analyst report on "BK"
Read the full analyst report on "GS"
Read the full analyst report on "USB"
Read the full analyst report on "AXP"
Read the full analyst report on "BBT"
Read the full analyst report on "STT"
Zacks Investment Research

Today’s tickers: BAC, MCD, ADM, XRT, CVS, STT, PFE, CVS, FSYS & AEO

BAC - Bank of America Corp. – One investor banked profits today by unraveling a massive bearish credit spread established back on October 28, 2009. The trader’s decision to take profits ahead of expiration could be a bullish sign for BAC. Shares are trading up 2% near the end of the trading day to stand at $15.00. The investor originally sold approximately 130,000 calls at the November 16 strike for an average premium of 49 cents apiece, spread against the purchase of the same number of calls at the higher November 17.5 strike for 15 cents each. The trader received a net credit of 34 cents per contract on the transaction. Today, the investor left money on the table by closing out ahead of expiration. It appears he sold the upper strike calls for 4 pennies and bought back the lower strike calls for 19 cents apiece. Net profits received for unraveling the spread amount to 19 cents per contract for a total of $2.47 million. One might interpret such a decision as a bullish signal for BAC because the trader decided to walk away with 19 cents – half of the maximum profit potential of 34 cents. The investor would only have been able to retain the full 34 cents if shares traded beneath $16.00 through expiration day in November.

MCD - McDonald’s Corp. – A bullish risk reversal in the January 2010 contract significantly reduced the price paid by one investor establishing an optimistic stance on the fast-food chain. Shares of MCD are trading 1.5% higher today to $61.20 despite yesterday’s downgrade to ‘hold’ by analysts at EVA Dimensions. The investor sold 13,000 put options at the January 60 strike for an average premium of 1.91 apiece to partially offset the cost of purchasing 13,000 in-the-money calls at the same strike for 2.51 each. The net cost of the reversal amounts to 60 cents per contract.

ADM - Archer Daniels Midland Co. – Food products company, Archer Daniels Midland, jumped onto our ‘most active by options volume’ market scanner this afternoon due to bullish activity in the March 2010 contract. Shares edged 0.5% higher to $32.37 during the trading session after the firm revealed better-than-expected first-quarter profits of 77 cents per share. One investor sold out-of-the-money put options to partially finance the purchase of a bull call spread. The call spread…

Today's tickers: XRT, CVS, STT, PFE, CVS, FSYS & AEO[More...]

Schaeffer's analyst Morgan Searcy takes a look at news on the Street before the market open.

Schaeffer's analyst Elizabeth Harrow takes a look at the major news of the day on Wall Street.

Schaeffer's Senior Equities Analyst Joseph Hargett takes a look at news on the Street before the market open.

Schaeffer's analyst Elizabeth Harrow takes a look at the major news of the day on Wall Street.

Schaeffer's Laura Houser takes a look at activity on the Street after the market close