MAJOR PAPERS:

• Rick Wagoner, the CEO of General Motors Corporation (NYSE: GM), hit out against allegations that the auto maker may soon file for bankruptcy and said he believes the company's financial position will "remain robust" for the rest of the year. Wagoner also said, the Wall Street Journal reported, that the company has no plans to sell or reduce more of its brands.
• An independent Yahoo! Inc (NASDAQ: YHOO) would be better for the world, Google Inc (NASDAQ: GOOG) CEO Eric Schmidt said and the Financial Times reported. Yahoo! will be able to create more competition in the search market and other advertising markets if it stays independent, Schmidt contended.

OTHER PAPERS:

• According to people briefed on the plan, the New York Times reported that senior Bush administration officials are weighing a plan to have the government take over either Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, or Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac -- or both -- and place them in a conservatorship if their problems continue or worsen.
• The New York Times also reported that people briefed on the matter said Anheuser-Busch Companies Inc (NYSE: BUD) is in active talks to sell itself to InBev in a friendly deal, despite previous hostility to the idea. One person said InBev indicated it may be willing to pay more than the $65 per share originally offered.

MAJOR PAPERS:

• In part two of a series to help explain the reasons why The Bear Stearns Companies Inc (NYSE: BSC) collapsed, the Wall Street Journal said that executives believed they were about to turn a corner, but fear and rumors sent lenders, trading partners and clients running.
• The Wall Street Journal also reported that a host of factors could derail InBev NV from bidding for Anheuser-Busch Companies Inc (NYSE: BUD), including the cultural differences between the two, protests by politicians over foreign ownership of a U.S. company during an election year and possible unrest from Anheuser distributors and employees.
• Following the recent indictment of one of the bank's former senior executives, the Financial Times reported that UBS AG (NYSE: UBS) told members of its former private banking team not to travel to America. The restrictions suggest UBS is concerned investigations by the SEC may widen.

WEB SITES:

• The latest set of photos that supposedly show parts of Apple Inc's (NASDAQ: AAPL) 3G iPhone, released by Dutch website iPhoneclub.nl, look identical to the previously released pictures that were supposedly photos of the 3G iPhone, Engadget reported.

With New Year's in a few days, everyone is busy making their resolutions. The most popular of all New Year's resolutions is the need to lose weight. So with that in mind, here are two stocks that could benefit from weight-loss resolutions.

Nike (NYSE: NKE) engages in the design, development, and marketing of footwear, apparel, equipment, and accessory products worldwide. You can't start your exercise program without going out and buying a pair of shoes, and a sweat suit. The stock is trading just off their all time high and with a P/E of about 19 the stock look attractive. With '08 being an Olympic year, Nike is sure to benefit from all the exposure. With its recent 19.9% purchase of the UK Umbro, Nike looks to grow its European business, which has been growing strongly anyway. Expect Nike to continue moving higher in '08.

Anheuser-Busch (NYSE:BUD), noting the growing premium/boutique beer market share, is taking a new tack in its 2008 marketing. It will emphasize the quality of ingredients and brewing techniques in its core brands, Budweiser and Michelob. The strategy is an attempt to give them some of the cachet that has pushed sales of imports, such as those of its equity partners Grupo Modelo and Tsingtao.

According to the Wall Street Journal (subscription), the company will drop about $30 million on this campaign, while also increasing spending on more of the youth-oriented, humor-infused messages that promote Bud Light.

BUD is reacting to two challenges: declining/flat sales of its mainstream suds, and the competition posed by the recently announced partnership of SABMiller and Molson Coors (NYSE:TAP) to mutually market their products in the U.S. Anheuser-Busch successfully raised prices on its products in 2007, but I wouldn't expect such a move in 2008, in light of this competition.

In a campaign designed to elevate public perception of the quality of a brand, the danger lies in also elevating the public perception of the brand's cost. Too often, companies fail to find the right balance that persuades the public that they are getting a bargain, better quality for the same price. Or, in the words of a current Miller High Life campaign I feel is one of the best I've ever seen, "A tasty beer at a tasty price."

In a flat beer market, BUD's increased spending might just be enough to keep from sliding back, not a result likely to bump the stock price from its doldrums of the past 12 months.

[Photo drrt]

MOST NOTEWORTHY: The U.S. beverage sector, ImClone, Starwood Hotels and Marriott International were today's noteworthy upgrades:

• Goldman Sachs upgraded the U.S. beverage sector, including Coca-Cola (NYSE: KO), Molson Coors Brewing Company (NYSE: TAP), Anheuser Busch Companies (NYSE: BUD), PepsiAmericas Inc (NYSE: PAS) and Coca-Cola Enterprises (NYSE: CCE) to Attractive from Neutral. The firm cited expectations for a stronger 2008, benign commodity cost outlook, better than expected US beer demand, and valuations. Goldman upgraded shares of PepsiCo Inc (NYSE: PEP) to Buy from Neutral citing valuation and improving industry fundamentals.
  
• Bear Stearns upgraded ImClone (NASDAQ: IMCL) to Outperform from Peer Perform citing positive Flex trial results and the new market opportunity for Erbitux.
• Thomas Weisel upgraded Starwood Hotels (NYSE: HOT) and Marriott International (NYSE: MAR) to Market Weight from Underweight based on healthy August trends, credit market may ease concerns over supply growth, and valuations.

OTHER UPGRADES:

• Thornburg Mortgage (NYSE: TMA) was upgraded to Buy from Neutral at UBS.
• Western Digital Corp (NYSE: WDC) was upgraded to Outperform from Peer Perform at Bear Stearns.
• KeyBanc raised Ruby Tuesday (NYSE: RT) to Hold from Underweight.
• Take-Two Interactive Software (NASDAQ: TTWO) was upped to Buy from Hold at Gabelli.

MAJOR PAPERS:

• General Electric Company (NYSE: GE) is near a deal to sell its plastics division to Saudi Basic Industries for $11B, reported the Wall Street Journal (subscription required).
• Anheuser-Busch Companies Inc (NYSE: BUD) has stopped making its Spykes malt beverage amid poor sales and criticism that it was marketing to underage drinkers, reported the Wall Street Journal.

OTHER PAPERS:

• According to the Telegraph, citing Cadbury-Schweppes ADS (NYSE: CSG), two rival private-equity groups are preparing to bid for the U.S. beverages arm of the company, with bids in the GBP8B range.
• The Times of India reported that Citigroup Inc (NYSE: C) is putting its captive business process outsourcing arm, which could be worth between $1B-$1.5B, on the block.
• BusinessWeek's "Inside Wall Street" column focused on OfficeMax Incorporated (NYSE: OMX), Verichip Corporation (NASDAQ: CHIP) and Morton's Restaurant Group (NYSE: MRT):
  
• Office Max may be a target for Staples Inc (NASDAQ: SPLS) or Office Depot Inc (NYSE: ODP).
  
• Verichip, a maker of RFID chips, is starting to get attention on Wall Street.
  
• Morton's is being helped by boardroom business being conducted at the upscale steakhouse.

MAJOR PAPERS:

• According to the Wall Street Journal (subscription required), Viacom (NYSE: VIA) may announce a licensing deal with new Internet service Joost.
• Also in this morning's Journal, Airbus owner EADS surprised investors and employees yesterday by postponing a long-awaited announcement of Airbus's big makeover plan, called Power8.
• And in more airline news in the Journal, JetBlue (NASDAQ: JBLU) is planning to overhaul its procedures after a storm caused the company to cancel a thousand flights and strand thousands of travelers.
• According to the Financial Times (subscription required), rumors have spread that Anheuser-Busch (NYSE: BUD) and InBev are in serious talks.

OTHER PAPERS:

• The Sunday Edition of the U.K. Times reported that JP Morgan (NYSE: JPM) will formally kick off a GBP 7B auction of DaimlerChrysler's (NYSE: DCX) Chrysler unit as early as this week.
• According to French paper La Tribune, STMicroelectronics (NYSE: STM) will supply multimedia microprocessors to Nokia (NOK) for its mobile telephones.

MOST NOTEWORTHY: The U.S. Beverage Sector topped today's list of upgrades.

• Bernstein upgraded the U.S. Beverage Sector to Marketweight from Underweight because the group is trading closer to fair value.
  
• Bernstein upgraded Anheuser-Busch Cos (NYSE: BUD) to Market Perform from Underperform with a $54 target; the firm expects upside to earnings and valuation support.
  
• Pepsi Bottling Group (NYSE: PBG) was upgraded to Outperform from Market Perform with a $38 target; the firm believes negative earnings revisions from their third-quarter miss are over and 2007 guidance looks conservative.

OTHER UPGRADES:

• UBS upgraded Cooper Companies (NYSE: COO) to Neutral from Reduce to reflect the possibility of a takeout; they feel likely acquirers are Essilor or Alcon (ACL).

• Wachovia upgraded Volcom Inc (NASDAQ: VLCM) to Outperform from Market Perform; the firm's analysis indicate Volcom's brand remains strong, footwear is off to a good start and outerwear is not an area of exposure.

• Lehman Bros. upgraded shares of Vodafone Group ADR (NYSE: VOD) to Overweight from Equal Weight.

• Citigroup upgraded Nintendo ltd ADS (OTC: NTDOY) to Buy from Hold.

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

With Eddie Lampert's Sears Holdings (NYSE: SHLD) being pressured to bring in the profits after the recent merger with Kmart, will the company report stellar earnings and revenues next Thursday when its Q3 numbers are due?

Whatever they may be, rumor has it on The Street today that Sears Holdings Corp. may be interested in acquiring Pleasanton, CA-based Safeway, Inc. (NYSE:SWY) in a merger of department stores and grocery retailers. Say what?

Although financier Lampert is known for purchasing assets he feels are undervalued, a merger between Sears and Safeway would be on odd case study indeed to dissect. Analysts on the Street indicated that a deal like this could be worth $20 billion.

Lampert even went as far as to say "Our strong financial position and cash flow generation provide us with the flexibility to capitalize on a wide range of market opportunities as they arise ... we are prepared to invest substantial amounts of capital if we identify other attractive investment opportunities." Hmm, that smells rather generic but also suspicious. In addition to a possible buyout of Safeway, the Chicago Sun Times reported yesterday that Sears could also be considering San Francisco-based Gap, Inc. (NYSE:GPS), Home Depot Inc. (NYSE:HD) and Anheuser Busch Cos. (NYSE:BUD).

With the grocery business having notoriously thin margins, most likely any company except Safeway would be a better bet. But Sears and Home Depot? Okay, let me close my eyes and imagine that for a second.

I have wondered out loud about Google many times, if you have been following my blog posts. In my 10 Reasons I think Google is going down number ten was the Sheldon equivalency test; what could you buy instead? This is a very important basis for valuation. You would do this when deciding between auto insurance policies, beers, or laundry detergent, so why not a stock purchase? It is all about the allocation of capital resources, price and value.

In my example at the time I used the combined value of Anheuser Busch (BUD) $35B + Federal Express (FDX) $34.5B + Starbucks (SBUX) $28B + Harley Davidson (HDI) $14.5B + Black & Decker (BKD) $6.5B and Intuitive Surgical (ISRG) $3.5B which were equal in value to Google's capitalization of $122B. As I am writing this, Google is presently valued at $127.5B, so we could add a seventh company, perhaps Cummin's (CMI) at 5.5B or maybe another growth stock American Eagle Outfitters (AEOS) at $5.3B. Buying AEOS would even leave us $200M to buy our own hotel resort in Hawaii or the Bahamas ... now that's "tight," as my 10-year-old likes to exclaim.

I am not trying to be glib here; just wondering what y'all been think'n 'bout. Seems to me if you offered Google management these seven companies plus the resort hotel free and clear in an even trade and they did not take it, they would be quite poor managers, or "resource allocators."