Last week, the battle between private-equity borrowers and lenders in the debt market that began to unfold in the middle of July hit the equity market in full force.

"Covenant light" loan packages that greatly reduced the terms borrowers had to meet became the norm in the beginning of 2007. However, lenders have now revolted. Major money center bankers are now stuck with $150 billion to $200 billion of loans that they have committed to for their private equity clients.

Borrowers, the Blackstones of the world, are reminding the banks that they committed to the loans, so they have to deal with them. The lenders, the institutions who buy the debt from the banks, are saying they are no longer going to be lenient with their lending terms. It appears this stalemate is going to last into the fall.

For equity investors, the unfortunate reality is that equity markets will remain volatile until this pipeline, which needs to be financed, is worked through. This huge pipeline can be viewed in terms of a widget company having too many widgets, meaning pricing will remain volatile until this excess inventory is worked off.

It looks to be time to pick stocks you want to own for the long term and the price points you want to own them at, stepping up to the plate while everyone else is panicking.

MOST NOTEWORTHY: Netflix Inc (NFLX) was the most notable downgrade on the first trading session of the week.

• Roth Capital downgraded Netflix Inc (NASDAQ: NFLX) to Sell from Hold, on the belief that the competitive threat of Blockbuster (NYSE: BBI) will not likely diminish in the near-term.

OTHER DOWNGRADES:

• Deutsche Telekom ADS (NYSE: DT) was downgraded to Sell from Hold at Citigroup following the company's profit warning.

• LECG Corp (NASDAQ: XPRT) was downgraded by William Blair to Underperform from Outperform following the company's disappointing guidance.

• Symantec Corp (NASDAQ: SYMC) was downgraded to Source of Funds from Accumulate at ThinkEquity.

• Stephens downgraded Covenant Transport Inc (NASDAQ: CVTI) to Equal Weight from Overweight based on the timing of a turnaround.

• Bear Stearns downgraded shares of MGM Mirage (NYSE: MGM) to Peer Perform from Outperform citing valuation.

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

MOST NOTEWORTHY: The trucking sector, PepsiCo (PEP) and Electronic Arts (ERTS) were the most notable upgrades today.

• Wachovia upgraded the trucking sector to Market Weight from Underweight, as they believe the negative sentiment towards the group is starting to bottom, also noting that trucking stocks tend to rally before fundamentals fully bottom. Wachovia upgraded Con-Way Inc (NYSE: CNW) and Covenant Transport 'A' NASDAQ: CVTI) to Outperform from Market Perform, and Arkansas Best (NASDAQ: ABFS), Heartland Express Inc (NASDAQ: HTLD), Werner Enterprises (NASDAQ: WERN), US Xpress Enterprises 'A' (NASDAQ: XPRSA) to Market Perform from Underperform.

• JP Morgan added PepsiCo (NYSE: PEP) to their Focus List, as the firm believes the recent pullback due to concerns over commodities costs and margins is overdone.

• Janco upgraded Electronic Arts (NASDAQ: ERTS) to Buy from Hold with a $69 target, citing valuation.

OTHER UPGRADES:

• Amgen Inc (NASDAQ: AMGN) was upgraded to Outperform from Peer Perform with a $77 target at Bear Stearns; the firm views Amgen's risk/reward as favorable as the most reasonable of CERA's launch scenarios, owned by Roche Holdings AG (OTC: RHHBY), are priced into valuation, and sees significant upside if CERA does not launch.

• Caris upgraded LSI Logic (NYSE: LSI) to Buy from Above Average with a $12 target; they believe investors are underestimating the synergies involved with the Agere Systems (NYSE: AGR) deal. The broker sees upside to earnings estimates and raised their target of LSI Logic to $12 from $11.

• Merrill Lynch upgraded shares of ImClone Systems (NASDAQ: IMCL) to Neutral from Sell, and sees a short-term trading opportunity due to the overly negative sentiment into the upcoming sales figures. The broker thinks Imclone could meet its Erbitux sales estimates despite weak prescription data.

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