Cliffs Natural Resources (CLF) is a leading mining and natural resources company in the U.S., and is also the largest producer of iron ore pellets in North America. It competes with other international mining and natural resources companies like Vale, BHP Billiton (BHP) and Rio Tinto (RTP).

Cliffs' North American Iron Ore division accounts for more than two-thirds of the company's total revenue, and around 60% of Cliffs' stock value, by our estimates. Long-term contracts with customers like ArcelorMittal (MT), Algoma and Severstal ensure substantial sales of the firm's mineral produce.

Cliffs Natural Resources (CLF) holds the distinction of being the largest producer of iron ore pellets in North America. It is also a major supplier of direct-shipping lump and fines iron ore out of Australia and is also a significant producer of metallurgical coal. It competes with other international mining and natural resources companies like Vale (VALE), BHP Billiton (BHP) and the Rio Tinto (RIO) group.

We maintain a $103 price estimate for Cliffs Natural Resources stock, roughly 8% ahead of market price.

"Cliffs Natural (CLF), a mining firm producing iron ore, has shown a technical price breakout from a 5-week, cup-and-handle base," says technical Leo Fasciocco.

The breakout specialist and editor of Ticker Tape Digest explains, "The move carries the stock to a 52-week high. CLF's 12-month performance chart shows the stock appreciating 90% versus a 20% gain for the S&P 500 index.

U.S. stock futures are higher this morning as investors await the Federal Reserve's report on present economic conditions. Portuguese government debt sold bonds worth €1.25 billion ($1.62 billion) in an auction. Futures on the Dow Jones Industrial Average surged 56 points to 11,672.00 and S&P 500 futures gained 6.90 points to 1,277.30. Nasdaq 100 futures rose 11.75 points to 2,297.25.

U.S. stocks closed higher yesterday, with the blue-chip Dow index gaining 34.43 points, or 0.30%.

U.S. data on December import prices will be released at 8:30 a.m. ET. The Fed is scheduled to release its Beige Book on present economic conditions at 2 p.m. ET.

A new method of setting the price on iron ore for export is upsetting Chinese and European steel makers and auto manufacturers, but that same pricing scheme is most likely going to benefit U.S. steelmakers such as AK Steel (AKS), Nucor (NUE) and U.S. Steel (X).

In the past, iron ore pricing was largely set on an annual basis, with the first negotiated ore contracts of the season setting the price for the duration of that season. However, this year, the three largest iron ore miners, BHP Billiton (BHP), Rio Tinto (RTP) and Vale SA (VALE), have decided that they will seek quarterly renegotiation of ore contract pricing. This will allow those companies to take better advantage of increases in iron ore demand and spikes in spot prices.

Analyst Upgrades

• Citigroup upgraded Freeport McMoRan (FCX) to buy from hold to reflect valuation, as well as its increased forecasts for copper and aluminum. The firm raised its price target on shares to $95 from $85.
• Citigroup also upgraded Alcoa (AA) to buy from hold and reiterated a buy rating on Cliffs Natural (CLF).
• William Blair upgraded WESCO International (WCC) to outperform from market perform. The upgrade reflects the firm's belief that WESCO's sales trends will become increasingly positive from easy comparisons over the next 12 months.
• RBC Capital upgraded Thomson Reuters (TRI) to top pick from outperform. The firm sees attractive returns over the next 12 to 18 months as the company's headwinds subside, and it raised its target price on shares to $43 from $41.
• Motorola (MOT) was upgraded to hold from sell at Societe Generale.
• American Express (AXP) was upgraded to buy from neutral at BofA/Merrill.
• Schnitzer Steel (SCHN) was upgraded to buy from neutral at UBS.

• Deutsche Bank upgraded Spartech (NYSE: SEH) to Buy from Hold as it sees further upside following the company's "strong" Q2 results. The firm raised its target on shares to $10 from $2.50.
• Oppenheimer upgraded Clorox (NYSE: CLX) to Outperform from Underperform. The firm believes the company's FY10 outlook is conservative, providing room for upside, and that the valuation is compelling at current levels. Opco set a $70 price target on the stock.
• Goldman upgraded Steel Dynamics (NASDAQ: STLD) to Buy from Neutral and raised its target to $20 from $16, citing reduced balance sheet concerns following the capital raise. Note that AK Steel (NYSE: AKS) was downgraded to Neutral from Buy.
• PG&E (NYSE: PCG) was upgraded to Buy from Hold at Citigroup.
• Pool Corp. (NASDAQ: POOL) was upgraded to Outperform from Market Perform at William Blair.
• Liberty Property Trust (NYSE: LRY) was upgraded to Outperform from Market Perform at Wachovia.

Analyst upgrades:

• Morgan Stanley upgraded shares of Apple (NASDAQ: AAPL) to Overweight from Equal Weight on expectations of continued iPhone growth. The firm raised its target on the stock to $180 from $105.
• FBR Capital upgraded Bank of America (NYSE: BAC) to Market Perform from Underperform as it sees limited downside with half of the company's capital plan completed. The firm keeps a $12 target on the stock.
• Jefferies upgraded Cash America (NYSE: CSH) to Buy from Hold to reflect a strengthened balance sheet following the capital raise and easing regulatory risk. The firm raised its target price to $30 from $22.
• Ericsson (NASDAQ: ERIC) was upgraded to Outperform from Market Perform at Bernstein.
• MB Financial (NASDAQ: MBFI) was raised to Outperform from Neutral at Baird.
• Pinnacle West (NYSE: PNW) was upgraded at Credit Suisse to Outperform from Neutral.

• Citigroup upgraded Phillips-Van Heusen (NYSE: PVH) to Buy from Hold following the company's Q1 results as it believes management is executing well in the current environment and that the company could meet the high end of guidance. The firm raised its price target to $24 from $19.
  
• Friedman Billings upgraded Cliffs Natural (NYSE: CLF) to Outperform from Market Perform as it believes capacity utilization has stabilized and CLF's valuation is attractive at current levels. The firm raised its price target to $27 from $23.
  
• Thomas Weisel believes demand at Microchip's industrial (NASDAQ: MCHP) customers has troughed and that market share loss concerns are unwarranted. The firm upgraded shares to Overweight from Market Weight and raised its target to $27 from $19.
• CBS Corp (NYSE: CBS) was upgraded to Neutral from Sell at Goldman.
  
• U-Store It Trust (NYSE: YSI) was raised to Outperform from Neutral at Baird.
  
• Ener1 (NASDAQ: HEV) was lifted at Banc of America/Merrill to Buy from Neutral.

• Oppenheimer upgraded AmerisourceBergen (NYSE:ABC) to Outperform from Perform on the company's strong branded drug price inflation, potential for greater than expected buybacks, and their belief that prescription volume growth will stabilize after Q1. The firm raised their target to $45 from $36.
  
• Baird upgraded Ecolab (NYSE:ECL) to Outperform from Neutral based on valuation following reaffirmed guidance.
  
• Goldman removed shares of Dollar Tree (NASDAQ:DLTR) from its Conviction Sell List and upgraded it to Neutral from Sell based on valuation.
• Teppco Partners (NYSE:TPP) was upgraded to Outperform from Market Perform at Wachovia.
  
• Barrick Gold (NYSE:ABX) was raised to Buy from Hold at Canaccord.
  
• Coca Cola Femsa (NYSE: KOF)) was upgraded at Morgan Stanley to Overweight from Equal Weight.

• RBC Capital downgraded Apple (NASDAQ:AAPL) shares to Underperform from Sector Perform and lowered their target to $70 from $125 following the announcement that CEO Steve Jobs is taking a medical leave of absence. The analyst expects shares to be pressured by reduced earnings growth expectations and near-term leadership uncertainty.
  
• Barclays downgraded Motorola (NYSE:MOT) to Equal Weight from Overweight as they do not expect handset recovery for at least 6 to 9 months.
  
• Banc of America/Merrill downgraded Shire (NASDAQ:SHPGY) to Underperform from Buy based on earnings risk from the upcoming generic launch of Adderall XR.
• Royal Caribbean (NYSE:RCL) was added to Goldman's Conviction Sell List.
  
• Starent Networks (NASDAQ:STAR) and Ceragon Networks (NASDAQ:CRNT) were downgraded to Equal Weight from Overweight at Barclays.
  
• Casella Waste (NASDAQ:CWST) was lowered at JP Morgan to Neutral from Overweight.

• Citigroup initiated Cliffs Natural (NYSE:CLF) with a Buy rating and $43 target. The firm believes the company's multi-tier North American contract sales arrangements should allow it weather the volatility in the spot and seaborne markets and the firm expects volumes to improve in Q2.
  
• ING started Arcelor Mittal (NYSE:MT) with a Sell rating and believes the economic slowdown will have a greater than expected impact on the steel industry.
  
• Friedman Billings believes weakness in M&T Bank's (NYSE:MTB) regional economy could hinder the company's growth prospects and the firm is concerned about the bank's concentration in commercial and industrial loans. The firm has an Underperform rating and $30 target on the stock.
• S&T Bancorp (NASDAQ:STBA) was initiated with a Market Perform rating at Keefe Bruyette.
  
• RBC Capital initiated Norfolk Southern (NYSE:NSC) with a Sector Perform rating and $61 target.

• Jefferies upgraded shares of Abercrombie & Fitch (NYSE: ANF) to Hold from Underperform on valuation. The stock has gone down 40% since they initiated coverage on September 19. The firm maintains a $29 target.
  
• Citigroup upgraded EOG Resources (NYSE: EOG), Quicksilver (NYSE: KWK) and Southwestern Energy (NYSE: SWN) to Buy from Hold on their belief U.S. natural gas-focused E&P companies have near-term upside.
  
• Barclays upgraded Whole Foods (NASDAQ: WFMI) to Equal Weight from Underweight citing the $425M private equity investment, which reduces liquidity risk, and its reduced cost structure.
• Brandywine Realty (NYSE: BDN) and AvalonBay (NYSE: AVB) were upgraded to Neutral from Underperform at Merrill Lynch.
  
• tw telecom (NASDAQ: TWTC) was upgraded to Neutral from Underweight at JP Morgan.
  
• AmeriCredit (NYSE: ACF) was upgraded to Market Perform from Underperform at Friedman Billings.

• Jefferies downgraded Macquarie Infrastructure (NYSE: MIC) to Hold from Buy to reflect the company's sensitivity to the economic slowdown and funding risk. The firm lowered their target to $9 from $40 after the company announced a dividend reduction.
  
• Sanofi-Aventis (NYSE: SNY) was cut to Sell from Neutral at UBS due to the company's exposure to potential generic competition and a lack of new products.
  
• Friedman Billings downgraded Cleveland Cliffs (NYSE: CLF) to Market Perform from Outperform and lowered their target to $42 from $50 to reflect the risk of further production cuts.
• Credit Suisse lowered Acme Packet (NASDAQ: APKT) to Neutral from Outperform.
  
• Delta Petroleum (NASDAQ: DPTR) was downgraded at Deutsche Bank to Sell from Hold.
  
• Siemens (NYSE: SI) was downgraded to Sell from Buy at UBS.

• Goldman initiated Bristol-Myers (NYSE: BMY) with a Buy rating and $27 target as they believe it is making progress in becoming a mid-sized specialty biopharmaceutical company. The firm expects the company to be active in M&A and to spin-off or divest its slow-growth or fast-growing assets, such as virology and oncology.
  
• Goldman believes Pfizer (NYSE: PFE) needs a "radical transformation" and restructuring that includes a break up, spin and merger in order to outperform over the next several years. Shares were assumed with a Sell rating and $19 target.
  
• Johnson & Johnson (NYSE: JNJ) was initiated with a Neutral rating and $65 target at Banc of America. The firm prefers to be on the sidelines given uncertainties surrounding 2009 revenue growth and the potential for negative rhetoric out of Washington on pharma costs.
• Acorda (NASDAQ: ACOR) was started at RBC Capital with an Outperform rating and $30 target.
  
• Cavium Networks (NASDAQ: CAVM) and NetLogic (NASDAQ: NETL) were initiated with Neutral ratings at Cowen.
  
• Edwards Lifesciences (NYSE: EW) was assumed with a Buy rating and $61 target at Piper Jaffray.

While other earnings may have disappointed last week, the news was good for oil giant ConocoPhilips (NYSE: COP). In what some took as a good sign for big oil, the Houston-based company reported that third quarter net income surged 41% year over year to $3.39 per share, and that revenue also surged 52% to $70 billion. We'll see whether the good news extends to other petroleum giants scheduled to report quarterly results this week.

Analysts surveyed by Thomson Financial are looking for BP (NYSE: BP) profits to have grown 43.2% in the most recent quarter to $2.34 per share on revenue of $109.7 billion, and Chevron Corp. (NYSE: CVX) to post earnings up 39.4% to $3.25 per share on revenue of $86.8 billion. Marathon Oil Corp. (NYSE: MRO), ExxonMobil Corp. (NYSE: XOM), and Royal Dutch Shell (NYSE: RDS.A) likewise are expected to report higher net income of $2.33 per share (sales of $23.4 billion), $2.40 per share (sales of $131.4 billion), and $2.65 per share, respectively. Even Valero Energy Corp. (NYSE: VLO) is expected to post earnings slightly higher to $1.46 per share (sales of $36.4 billion), despite the effects of Hurricane Ike. Among these companies, only BP and Valero beat earnings expectations in the previous quarter. Not surprisingly, analysts on average recommend buying all except Valero, and shares of all of these companies have recently hit 52-week lows.

MAJOR PAPERS:

• According to people familiar with the matter, the Wall Street Journal reported that Federal Hole Loan Mortgage Corporation (NYSE: FRE) --Freddie Mac -- is considering raising capital by selling up to $10B in new shares to investors. The sources believe this effort may have the potential to avoid a full-blown government rescue.
• The Wall Street Journal also reported that, amid U.S. investigations into allegations it helped American clients evade taxes, UBS AG (NYSE: UBS) said some Swiss-based private bankers will stop offering American clients Swiss bank accounts and other services.
• Starbucks Corporation (NASDAQ: SBUX) will close store in 44 states plus the District of Columbia, including 88 closures in California, 59 in Florida and 57 in Texas, the Wall Street Journal reported.

• After Cleveland Cliffs Inc (NYSE: CLF) bought Alpha Natural Resources Inc (NYSE: ANR), there may be many more acquisitions in the coal industry, Bloomberg said.
• Reuters noted that, according to a person with knowledge of the plans, Yahoo! Inc (NASDAQ: YHOO) could renew talks over News Corporation's (NYSE: NWS) Web properties if Microsoft Corporation (NASDAQ: MSFT) gets in the way of discussions with Time Warner Inc's (NYSE: TWX) AOL. Yahoo! is in contact with News Corp. about the assets, but the search engine's talks with Time Warner about AOL are more advanced, the source added.
  

MOST NOTEWORTHY: Cleveland Cliffs, Synthesis Energy and Bookham Tech were today's noteworthy initiations:

• KeyBanc believes the pullback in Cleveland Cliffs (NYSE: CLF) shares is an attractive entry point given acceleration of North American Iron Ore pellet contract pricing and increased pellet production into 2009. Shares were assumed with a Buy rating and $180 target.
  
• Stanford believes the Synthesis Energy's (NASDAQ: SYMX) U-GAS technology offers several advantages, including the ability to use waste/low grade coal and operational cost savings and intitiated shares with a Buy rating and $12 target.
  
• Morgan Keegan started Bookham Tech (NASDAQ: BKHM) with an Outperform rating and said the company continues to benefit from a expanding customer base, timing of new product introductions, and new products.

OTHER INITIATIONS:

• Arris (NASDAQ: ARRS), Garmin (NASDAQ: GRMN) and Harmonic (NASDAQ: HLIT) were initiated at RBC Capital with Sector Perform ratings.
  
• Citigroup assumed Delphi Financial (NYSE: DFG) with a Hold rating and $23 target.
  
• VanceInfo (NYSE: VIT) was initiated with an Outperform rating and $12 target at Oppenheimer.