Analyst upgrades:

• Goldman upgraded Baidu (NASDAQ: BIDU) to Buy from Neutral and added shares to its Conviction Buy List. The analyst expects Baidu to benefit from growth in paid search in China, where growth is expected to be 30% annually.
  
• Friedman Billings upgraded shares of Corporate Office Properties (NYSE: OFC) to Outperform from Market Perform to reflect the company's exposure to the "sound" Washington, D.C., market and "favorable" liquidity position.
  
• Soleil upgraded Sunoco (NYSE: SUN) to Buy from Hold and raised its target to $45 from $38 on the strength of the company's non-refining segment.
• Mosaic (NYSE: MOS), Potash (NYSE: POT), Intrepid Potash (NYSE: IPI) and Terra Industries (NYSE: TRA) were upgraded to Buy from Neutral at Merrill Lynch.
  
• Kroger (NYSE: KR) was upgraded to Neutral from Underweight at JP Morgan.

Analyst downgrades:

• Jefferies downgraded shares of Bronco Drilling (NASDAQ: BRNC) to Underperform from Hold and lowered its target to $4.50 from $7.50 on valuation and their expectations for a rig decline in U.S. drilling activity.
  
• Morgan Stanley cut Credit Suisse (NYSE: CS) to Equal Weight from Overweight into reporting season on concerns of further impairment charges.
  
• Deutsche Bank downgraded Ericsson (NASDAQ: ERIC) to Sell from Hold to reflect challenges in the handset market.
• Alcatel-Lucent (NYSE: ALU) was lowered to Sell from Hold at WestLB.
  
• BT Group (NYSE: BT) was slashed at JP Morgan to Underweight from Neutral.
  
• Sovereign Bancorp (NYSE: SOV) was downgraded to Market Perform from Outperform at Keefe Bruyette.

Analyst initiations:

Analyst upgrades:

• Citigroup upgraded shares of Sovereign Bancorp (NYSE: SOV) to Buy from Hold on their belief Sovereign will merge with Banco Santander (NYSE: STD) according to the terms on their October 13 agreement.
  
• Jefferies upgraded Whole Foods (NASDAQ: WFMI) to Hold from Underperform on valuation as they believe the capital infusion from Leonard Green limits downside risk. The company's target was raised to $11 from $9.50.
  
• Banc of America upgraded Max Capital (NASDAQ: MXGL) to Buy from Neutral on valuation, the company's strategic changes to lower earnings volatility and their belief it is well positioned to benefit from an improved P&C marketplace.
• Qimonda (NYSE: QI) was upgraded to Neutral from Underperform at Cowen.
  
• Health Net (NYSE: HNT) was raised to Neutral from Sell at Goldman.
  
• Parkway Properties (NYSE: PKY) was lifted to Market Perform from Underperform at Wachovia.

Analyst downgrades:

Until today, Sovereign Bancorp (NYSE: SOV) was the largest surviving savings and loan in the U.S. But Spain's Banco Santander SA brought that to an end by offering $1.9 billion for roughly 75% of Sovereign's shares; Santander already owned about a quarter of the American bank.

The terms of the deal were quite favorable for the Spanish bank. Santander's original minority stake cost over $2 billion. But Sovereign has lost over 80% of its value in the last year, and this dramatic decline allowed Santander to pick up the rest of the bank at a pretty good discount.

That decline did not go unnoticed by former Sovereign CEO Jay Sidhu, who blasted the policies of his successors in an interview with the Philadelphia Business Journal. He charged that the activist investors who engineered his departure in 2006 are responsible for the bank's decline and unfavorable acquisition. He cited Ralph Whitworth of Relational Investors in particular, saying that Whitworth's "strategy was totally dead wrong." In particular, Sidhu charged, Whitworth made changes in the bank's risk management procedures that ultimately led to the bank's decline: "Every single action taken under his leadership of the risk management committee destroyed value. You need a long-term view with prudent risk-management strategies and not the short-term view of a hedge fund manager."

This charge has a familiar ring. Short term profits replaced long run viability -- something that happened throughout the banking industry. And Sidhu knows what he's talking about. In 20 years, he took Sovereign from an IPO worth $12 million to a banking giant worth $12 billion in 2006. Too bad the Sidhus of the world lost out to the Whitworths; we're certainly paying for those losses now.

TheStreet.com's Jim Cramer says the safety theme will come back if only because these companies' earnings will be good in six months.

Editor's note: Jim Cramer will present his 2009 stock outlook for the first time at TheStreet.com Investment Conference on Saturday, Oct. 25. Click for details.

Now they come after the Procter & Gambles (NYSE: PG) (Cramer's Take) and the General Mills (NYSE: GIS) (Cramer's Take) and the like, betting that the action will be better in the cyclicals with all of this money being printed worldwide.

Commodities are also coming back because of reflation. And we have to feel that many of the infra and ag names are finally sold out by the hedge fund redemptions.

Here I am speaking of a Freeport McMoRan (NYSE: FCX) (Cramer's Take), with its good yield and a belief that the hedge funds are at last done.

I don't buy it. I like a balanced portfolio, but I want to buy the GIS/PG all the way down because we are going into a recession, not going out of one. These companies pay dividends, raise dividends and have great commodity tailwinds.

Colgate's (NYSE: CL) (Cramer's Take) down a lot too, and I am liking that one.

TheStreet.com's Jim Cramer says the end-of-day bounce was just shorts afraid of a worldwide rate cut.

The shorts must have just gone on "ease watch." You can tell what that is. Some devastating news will come out, say, about once-proud Royal Bank of Scotland (NYSE: RBS) (Cramer's Take), some ratings downgrade, and boom, Britain is hit for a full percentage point decline. Then, as if by magic, it rallies almost back to unchanged as the shorts don't want to be hung before worldwide rate cuts.

I always thought this behavior was curious because I don't know of a short-seller who thinks that intervention even matters, or says it doesn't matter, for that matter!

In fact, though I think it can matter not so much to our country, it does matter to those countries in Europe that really would be doing well if money weren't so tight. Our markets lost a ready source of cash and business when Europe went away, particularly upon the disappearance of China from the world's economies.

Now, of all of the new measures I like hearing, the commercial paper intervention is intriguing as the government substitutes itself for buyers for this important funding. But again, I come back to the notion that we can't really be two sides of everything, can we?

Analyst upgrades:

• Deutsche Bank upgraded shares of UBS (NYSE: UBS) to Buy from Hold following the company's Q3 update as they believe the quarter marks a turning point.
• Merill raised BP Plc (NYSE: BP) and Total SA (NYSE: TOT) to Neutral from Underperform.
• DISH Network (NASDAQ: DISH) was lifted to Hold from Sell at Soleil.
  
• Friedman Billings upgraded Sovereign Bancorp (NYSE: SOV) to Market Perform from Underperform as they believe the company's deposits are showing stability despite the massive sell-off.
  
• Kaufman Bros. raised Longtop Financial (NYSE: LFT) to Buy from Hold on valuation as they believe Chinese software service stocks now reflect the investment risks.
• Lear (NYSE: LEA) was upgraded to Hold from Sell at Citigroup.

Analyst downgrades:

• Morgan Stanley downgraded eBay (NASDAQ: EBAY) to Equal Weight from Overweight citing checks that indicate deteriorating trends are worst than expected.
  
• Juniper (NASDAQ: JNPR) and Pediatrix Medical (NYSE: PDX) were downgraded to Market Perform from Outperform at Morgan Keegan.
  
• Merrill cut StatoilHydro (NYSE: STO) to Underperform from Neutral.
  
• HSBC (NYSE: HBC) was lowered to Market Perform from Outperform at Keefe Bruyette.

TheStreet.com's Jim Cramer says our problems are so widespread, he sees lots more IndyMacs before we're out.

You don't need me to tell you it's awful out there. You don't need me to tell you that there's no quick fix for any of these things. But what might help you understand why it feels so bad this time is that I have never, in my career, seen so many companies go off track at the same time. This is one unbelievable moment, and it is made more horrible by the day as companies' stocks just get pummeled, causing people to then question the very viability of the companies involved.

First, obviously, are Fannie Mae (NYSE: FNM) (Cramer's Take) and Freddie Mac (NYSE: FRE) (Cramer's Take). We don't know what will happen, but we do know that their futures are much darker than their pasts. Their best hope: a Democrat becomes president and shows the usual love to both. But as investments, they are pretty much perma-losers going forward. The losses are that heavy. Yes, it is true that two years from now they will be better, but will the government let them limp through to that? View them as calls on a Democratic win.

We all know that Citigroup (NYSE: C) (Cramer's Take), Wachovia (NYSE: WB) (Cramer's Take), Washington Mutual (NYSE: WM) (Cramer's Take) and National City (NYSE: NCC) (Cramer's Take) are in trouble. Bank of America (NYSE: BAC) (Cramer's Take) says it isn't in trouble, but obviously the market doesn't believe management because the stock failed to rally when it said its dividend was safe. Any short-selling hedge fund could hire 30 actors and have them line up at a Washington Mutual or two and get a bank run going. Then we would have to hear about a "hasty" Treasury department plan to bail out WM. Hasty? How can these guys not see it coming?

TheStreet.com's Jim Cramer says that rather than merging, these banks will have to raise money through dilutive offerings.

The big difference between 1990s bank implosion and this one is that nobody at other banks sees any value in owning the ones that are faltering.

Key (NYSE: KEY) (Cramer's Take) is the latest example. Key's everywhere, it is grandfathered to be in every state. You would think there was some bank out there that would want it. Nope. No one. So they have to do this down round that destroys the common. Nobody wants Sovereign (NYSE: SOV) (Cramer's Take) either. Or Nat City (NYSE: NCC) (Cramer's Take). Or Washington Mutual (NYSE: WM) (Cramer's Take). The latter's really interesting now that Hudson City (NYSE: HCBK) (Cramer's Take) has passed it in market size because it says that all of those branches and all of that deposit base just doesn't mean anything. Or worse, the losses are so bad that unless the Fed takes the losses and puts them on its balance sheet, there can be no consolidation.

Yet consolidation is the only way to go. Now, we are much more laissez-faire then we were in 1990. The administration then felt engaged to move quickly to set up mergers instead of the charade of down rounds. I call them charades because none of them yet has produced a return for anyone who has put the money up.

MOST NOTEWORTHY: Tesoro, Yingli Green Energy and Ensco were today's noteworthy upgrades:

• Deutsche Bank upgraded shares of Tesoro (NYSE: TSO) to Hold from Sell as they believe bankruptcy is not a "major danger" after meeting with management and that recent raise in indebtedness was due to rising working capital requirements combined with negative gasoline cracks.
  
• Citigroup raised Yingli Green Energy (NYSE: YGE) to Buy from Hold following the recent weakness to reflect the company's margin improvement and better visibility into 2009.
  
• Calyon upgraded shares of Ensco (NYSE: ESV) to Add from Neutral as they believe the company's increasing exposure to the deepwater market will drive earnings growth. The firm raised their target to $85 from $74.

OTHER UPGRADES:

• Petrohawk Energy (NYSE: HK) was upgraded at Lehman to Overweight from Equal Weight.
  
• Keefe Bruyette raised Sovereign Bancorp (NYSE: SOV) to Outperform from Market Perform.
  
• Tractor Supply Co (NASDAQ: TSCO) was raised to Buy from Neutral at UBS.

National home prices tumbled by 7.7% in the first quarter in a recent survey. While retail sales did fall -0.2% overall in the month of April, the ex-autos numbers were actually positive by +0.5%. Below are the unofficial closing levels for major averages:

• DJIA 12,833.97 (-42.34; -0.33%)
• S&P500 1,403.42 (-0.16; -0.01%)
• NASDAQ 2,495.34 (+6.85; +0.28%)
• 10YR-TBond 3.909% (+0.134%)
• TOP 10 ANALYST CALLS

Clear Channel Communications Inc. (NYSE: CCU) was up again on news of a settlement between the buyers and the banks for the $20 billion delayed buyout by Bain Capital and THL Partners. The court was adjourned until 2 pm today to allow settlement talks to continue. Shares were up 4% to $34.24 at the end of the day.

It's a fairly quiet day in analyst land as far as the most active stocks are concerned, despite there being many movers today. Here is a brief snapshot of some of the key calls today:

Abbott Labs (NYSE: ABT) started as Buy at UBS.

DRS Tech (NYSE: DRS) cut to Neutral at UBS; cut to market perform at FBR.

FreightCar America (NASDAQ: RAIL) Raised to Buy from Hold at Jefferies; new price target $42.00 from $35.00.

Sovereign Bancorp (NYSE: SOV) Raised To Market Perform at KBW.

You can also see the full top ten individual calls right here.

Jon Ogg produces and edits the "10 Stocks Under $10" weekly newsletter for 247WallSt.com.

MOST NOTEWORTHY: Commercial Metals (CMC), KKR Financial (KFN), Career Education (CECO), Ann Taylor (ANN) and Intel (INTC) were today's noteworthy upgrades:

• CIBC upgraded Commercial Metals (NYSE: CMC) to Sector Outperformer from Sector Performer based on valuation.

• KKR Financial (NYSE: KFN) was raised to Outperform from Market Perform at Friedman Billings, following managements detailed conference call and managements prudent and rapid actions to address the sale of its Rambus (RMBS) portfolio.

• Bear Stearns upgraded Career Education (NASDAQ: CECO) to Outperform from Peer Perform based on valuation.

• Ann Taylor (NYSE: ANN) was upgraded to Outperform from Market Perform at Piper Jaffray due to the upside at the company's LOFT division and the firm's belief that there is upside to their 2008/2009 estimates for Ann Taylor.

• Credit Suisse upgraded shares of Intel (NASDAQ: INTC) to Outperform from Underperform based on expected margin expansion, a more benign competitive environment in the MPU sector, better positioning vs. AMD (AMD) at the high-end, and strong demand trends...

OTHER UPGRADES:

• Citigroup upgraded Sovereign Bancorp (NYSE: SOV) to Buy from Hold.

• Network Appliances (NASDAQ: NTAP) was upgraded to Buy from Neutral at Merrill Lynch and Caris raised shares to Buy from Above Average.

• JP Morgan added Continental (NYSE: CAL) to its Focus List. Punk upgraded Washington Mutual (WM) to Buy from Market Perform.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Apple Inc (AAPL) and Lam Research (LRCX) were today's most notable downgrades:

• Apple Inc (NASDAQ: AAPL) was downgraded by two firms today:
  
• JP Morgan downgraded Apple Inc to Neutral from Overweight as they believe outperformance will be difficult given the Mac shipment miss in the first quarter; the broker also noted they have had an Overweight rating since October 2004 and the stock has appreciated strongly in that time.
• JMP Securities also downgraded shares of Apple to Outperform from Strong Buy, citing valuation.

• Lam Research (NASDAQ: LRCX) was downgraded by both Bear Stearns and CIBC:
• Bear Stearns downgraded Lam Research to Peer Perform from Outperform to reflect shipment delays in the quarter, as they believe delays typically serve as a good leading indicator for deteriorating environments.
  
• CIBC downgraded Lam Research to Sector Performer from Outperformer, with a $46 target. CIBC said management's 2007 outlook confirmed their 2007 thesis for a 10%-20% stock correction based on a retrenchment in DRAM orders.

OTHER DOWNGRADES:

• Merrill Lynch downgraded shares of Sovereign Bancorp (NYSE: SOV) to Sell from Neutral, with a$21 target, after the company named Joe Campanelli its permanent CEO. Merrill believes Sovereign now has a reduced chance of a takeover to go along with deteriorating fundamentals.

• Goldman Sachs downgraded Progressive Corp (NYSE: PGR) to Sell from Neutral.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).