Here are some highlights from last week's earnings coverage from BloggingStocks:

• Best Buy Inc. (NYSE: BBY) was downgraded by one analyst ahead of next week's Q2 earnings report.
• Campbell Soup Co. (NYSE: CPB) better-than-expected Q4 and full-year profit failed to impact the share price.
• FedEx Corp. (NYSE: FDX) boosted its Q1 earnings guidance ahead of next week's quarterly report.
• JoS. A. Bank Clothiers Inc. (NASDAQ: JOSB) saw its Q2 earnings jump higher than expected.
• Korn/Ferry International (NYSE: KFY) swung to a Q1 net loss as revenue plunged despite cost cuts.
• lululemon athletica inc. (NASDAQ: LULU) strong Q2 numbers topped estimates and drove shares higher.

Investors and analysts may be wondering whether the market rally is really over, and whether this signals more trouble ahead for the economy. Well, the Federal Reserve is scheduled to release its next Beige Book report of economic conditions on Wednesday, offering a glimpse of where things stand. The Beige Book report in July suggested that, in some of the 12 Fed districts, the economy appeared to be stabilizing, suggesting that the recession may have reached its bottom, but offering little sign of a recovery. Retail activity remained weak and employment numbers were not good. Yet the minutes of the FOMC August meeting seemed a bit more optimistic about the economy.

In addition to the Beige Book report, the TIPP Economic Optimism Index is scheduled to be released Tuesday, and the University of Michigan Consumer Sentiment Index comes out Friday. So by the end of the week, we could have a good gauge of the mood about the U.S. economy.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• American Capital Agency Corp. (NASDAQ: AGNC) earnings prospects earned it an analyst's upgrade.
• Broadpoint Securities Group Inc. (NASDAQ: BPSG) earnings prospects improved with recent acquisitions.
• Clorox Co. (NYSE: CLX) was upgraded on the belief that its fiscal year outlook is too conservative.
• Deutsche Bank (NYSE: DB) earnings prospects resulted in an upgrade from JPMorgan.
• Lululemon Athletica Inc. (NASDAQ: LULU) Q1 profit and same-store sales fell and it offered a weak outlook.
• Movado Group Inc. (NYSE: MOV) bested Q1 expectations and forecast a considerable profit for the full year.

Athletic apparel company Lululemon Athletica Inc. (NASDAQ: LULU) struck a pose in the earnings confessional today, announcing revenue and earnings per share for the fiscal first quarter.

Net revenue jumped 6% to $81.7 million, while same-store sales slipped 8% lower. Profit, meanwhile, fell to $6.5 million, or nine cents per share, down from 12 cents in the year-earlier period but one penny ahead of analysts' estimates.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Analogic Corp. (NASDAQ: ALOG) Q1 earnings plunged well below expectations due to costs.
• CKE Restaurants Inc. (NYSE: CKR) solid Q3 earnings were in line with analysts expectations.
• Costco Wholesale Corp. (NASDAQ: COST) beat Q1 expectations and same-stores sales increased.
• Dow Chemical Co. (NYSE: DOW) lowered its guidance and announced layoffs and factory closings.
• Eastman Kodak Co. (NYSE: EK) withdrew its guidance due in part to weak consumer spending.
• Electronic Arts Inc. (NASDAQ: ERTS) lowered its outlook due to weaker-than-expected holiday sales.
• Eli Lilly & Co. (NYSE: LLY) offered a full-year profit forecast that missed analysts' expectations.
• FedEx Corp. (NYSE: FDX) lowered its earnings guidance and announced price increases.
• FuelCell Energy Inc. (NASDAQ: FCEL) reported a deeper-than-expected loss but topped sales estimates.
• H&R Block Inc. (NYSE: HRB) Q2 net loss was in line with expectations but revenue fell short.
• Hartford Financial Services Group (NYSE: HIG) raised its full-year forecast, doubling the share price.
• Hooker Furniture Corp. (NASDAQ: HOFT) shares sold off following disappointing Q3 results and outlook.
• Krispy Kreme Doughnuts Inc. (NYSE: KKD) reported a deeper-than-expected Q3 loss on increased costs.

In last week's preview we took a peek at expectations for Campbell Soup earnings, but now the company is scheduled to report fiscal fourth quarter results this coming Thursday. With Krispy Kreme also among the handful of companies scheduled to report this week, we may yet see whether consumers are turning to comfort foods in these uncertain times.

Campbell Soup Co. (NYSE: CPB), the world's biggest soup maker, is still expected by analysts surveyed by Thomson Financial to post net income of 25 cents per share (up 44.0% from a year ago) on revenue of $1.7 billion (up 7.4%). The Camden, N.J.-based company has just missed earnings estimates in the past few quarters. Its long-term EPS growth forecast is 7.9%, which is less than the industry average, but about the same as rivals Kraft Foods (NYSE: KFT) and HJ Heinz (NYSE: HNZ). The analysts' consensus recommendation is currently to buy Campbell.

Hip, Canadian apparel retailer Lululemon Athletica Inc. (NASDAQ: LULU) is also anticipated to be a big earnings gainer when it reports this week. Net income is expected to come in at 13 cents per share (up 46.2% from a year ago) on revenue of $88.2 million (up 50.3%). Lululemon met expectations when it reported 12 cents per share in the previous quarter. Its long-term EPS growth forecast is a healthy 40.2%, which is better than the industry average and that of rival Under Armour Inc. (NYSE: UA). The analysts' consensus recommendation is currently to buy Lululemon.

Here's a peek at what analysts surveyed by Thomson Financial are expecting from companies scheduled to report quarterly results in the first week of June, 2008.

The following companies are expected to post earnings growth, compared to the same period in the previous year:

• Take-Two Interactive (NASDAQ: TTWO) up 136.6% (from a loss) to $1.12 per share, on $499.1 million in revenue
• Lululemon Athletica Inc. (NASDAQ: LULU) up 58.3% to 12 cents per share, on $71.8 million in revenue
• Vimpelcom Communications (NYSE: VIP) up 54.2% to 59 cents per share, on $2.1 billion in revenue
• Focus Media Ltd. (NASDAQ: FMCN) up 36.4% to 33 cents per share, on $161.3 million in revenue
• Ciena Corp. (NASDAQ: CIEN) up 29.7% to 37 cents per share, on $238.4 million in revenue
• Greif Inc. (NYSE: GEF) up 24.1% to 87 cents per share, on $839.9 million in revenue
• Vail Resorts Inc. (NYSE: MTN) up 18.4% to $2.44 per share, on $474.8 million in revenue
• Guess? Inc. (NYSE: GES) up 17.4% to 46 cents per share, on $451.6 million in revenue
• Del Monte Foods Co. (NYSE: DLM) up 15.4% to 26 cents per share, on $1.0 billion in revenue
• Cooper Companies Inc. (NYSE: COO) up 14.6% to 48 cents per share, on $256.7 million in revenue
• Jackson Hewitt Tax Service Inc. (NYSE: JTX) up 1.9% to $2.08 per share, on $161.6 million in revenue

Lululemon Athletica, Inc. (NASDAQ-LULU), a yoga-inspired athletic apparel company, is scheduled to report Q1 EPS on June 2:

LULU call option volume of 1,935 contracts compared to put volume of 2,577 contracts. LULU June call option implied volatility was at 80; put implied volatility was at 90; above its 26-week average of 73 according to Track Data, suggesting large price movement. Puts are priced higher than calls because LULU is difficult to borrow.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

MOST NOTEWORTHY: Lululemon, National City and Devon Energy were today's noteworthy upgrades:

• Thomas Weisel upgraded shares of Lululemon (NASDAQ:LULU) to Overweight from Market Weight as they believe the company's momentum continues following the strong results; the firm maintains a $43 target on shares.
  
• Bear upgraded National City (NYSE:NCC) to Outperform from Underperform citing favorable risk/reward following reports is is considering a transaction with KeyCorp (NYSE:KEY).
  
• JP Morgan raised Devon Energy (NYSE:DVN) to Overweight from Neutral citing solid organic growth with high rates of returns.

OTHER UPGRADES:

• Micron (NYSE:MU) was upgraded at Goldman to Neutral from Sell.
  
• Merrill raised eBay (NASDAQ:EBAY) to Buy from Neutral.
  
• Oppenheimer upgraded to Outperform from Perform Marathon Oil (NYSE:MRO).

MOST NOTEWORTHY: DiamondRock Hospitality, Pzena Investment and Vodafone were today's noteworthy upgrades:

• DiamondRock Hospitality (NYSE: DRH) was upgraded to Outperform from Neutral at Baird, citing the newly-announced 4.8M repurchase plan, strong balance sheet and valuation.
  
• Keefe Bruyette upgraded shares of Pzena Investment (NYSE: PZN) to Market Perform from Underperform after the company announced February ending AUM.
  
• Goldman added Vodafone (NYSE: VOD) to its Conviction Buy List following the recent weakness as they expect the company to benefit from growth in wireless data.

OTHER UPGRADES:

• UBS raised Weyerhaeuser (NYSE: WY) to Buy from Neutral.
  
• Credit Suisse upgraded MedCath (NASDAQ: MDTH) and Lululemon (NASDAQ: LULU) to Outperform from Neutral.
  
• Goldman added Cardinal Health (NYSE: CAH) to its Conviction Buy List.

One of the first things you learn in economics is that incentives matter -- and that if you get the incentives wrong, the results can be, well, interesting. Exhibit A: the subprime mess.

In an interesting column in this weekend's Wall Street Journal, Herb Greenberg writes (subscription required) about Lululemon (NASDAQ: LULU), where the terms surrounding options grants put top executives in a position to serve the private equity backers rather than other minority shareholders who bought the shares during or after the IPO -- at a much higher price.

In the case of Lululemon, CEO Robert Meers saw some of his options vest based on when the private equity backers cashed out. According to Greenberg, "The vested amount would immediately leap to as much as 40% if private-equity investors sold; the actual amount was based on a sliding scale tied to how much they actually made."

Options that vest based on some sort of performance are great. But I'm skeptical of options that vest based on when private equity backers who paid a tiny fraction of what other investors paid for their stake in the company cash out.

I'm wary of companies taken public by private equity firms in general. The buyout shops are masters of the art of "buy cheap and sell dear," and "buying dear" tends to be a great way to lose money in the stock market.

Berkshire Hathaway (NYSE: BRK.A) vice chairman Charlie Munger once said that "It's a finite and very competitive world. All large aggregations of capital eventually find it hell on earth to grow and thus find a lower rate of return ... The one thing we've always guaranteed is that the future will be a lot worse than the past."

An apparel company with a red hot product line and booming growth would appear to be a prime target for Munger's wisdom, and the wolves appear to be circling around Lululemon's (NASDAQ: LULU) high-margin business.

According to the Globe & Mail, companies including Roots, La Senza, Nike and, most recently, Calvin Klein, are all trying their hand at high-performance yoga clothing. The piece quotes Robert Gibson, head of research at Octagon Capital Corp.: "Look out, Lululemon. Everyone is getting into the act." Lululemon's success "has made everyone realize there is money to be made in 'performance' clothing. Anyone who can will get into the act. ... More competition is not a good thing."

Whether Lululemon has the chops to stay ahead of very savvy, well-funded competitors remains to be seen. But this is probably the biggest risk factor that the company's shareholders need to be on the lookout for.

Fellow writer Zac Bissonnette highlighted the interesting (but somewhat controversial) story in American Apparel (AMEX: APP) about a week ago. He did a good job of explaining the company itself as well as the perverted CEO.

Although I think the questions surrounding the CEO's "lifestyle" are pertinent, I think they should be overlooked in favor of getting a piece of this high growth name at such an opportunistic time to buy. In short, I think the stock makes sense after a recent pullback.

Fundamentally, American Apparel appears very confusing at first. The older generation of readers is probably very baffled as to why a company that sells light-colored, tight fitting clothes is in the middle of a humongous growth cycle, understandably so. However, I'm more aiming this post towards those members of the younger generation who know just how powerful this concept is.

High-flying apparel retailer Lululemon Athletica (NASDAQ: LULU) is coming under scrutiny of late. First, the New York Times reported on questionable products claims, and then Herb Greenberg took a hard look at CEO Bob Meers' resume claims, warning that "If you haven't guessed, this company is now firmly on my radar."

Brenda Buow of the Globe and Mail takes a look at the company: its rapid growth, unique products, and unique corporate culture that incorporates New Age concepts like the Law of Attraction. The main challenge for Lululemon seems to be converting its huge success in Canada into the U.S. market -- a move that many companies have failed at.

To be sure, there's a lot to like about Lululemon; the clothing is wildly popular and the company appears to be carving out a strong niche.

But what about the bear arguments? Many Lululemon shareholders have dismissed the red flags Herb Greenberg has raise about resumes as immaterial. And they're absolutely right: Whether Meers left Reebok in 1998 or 1999 will have no effect on Lululemon's future growth.

But with a fast-growth company, management integrity is of paramount importance -- material importance. There appear to be good reasons to doubt Meers' integrity, and his apparent deflection of Greenberg's questions is another red flag.

MAJOR PAPERS:

• Citigroup Incorporated (NYSE: C) recently received an unexpected call from a "prominent investment banker" inquiring about a merger with Bank of America Corporation (NYSE: BAC); it was rejected outright, and Citi instead turned to the Abu Dhabi Investment Authority, a part of the Abu Dhabi government, for a $7.5B cash infusion, the Wall Street Journal reported.
• As ethanol demands forced up food prices, and with questions about its capacity to be a significant oil substitute, demand has slowed, according to the Wall Street Journal, which doesn't help the prospects of newly public companies such as VeraSun Energy Corporation (NYSE: VSE) and Pacific Ethanol Inc (NASDAQ: PEIX).
• The Financial Times reported that the SRM hedge fund increased its stake in British bank Northern Rock to 8.5% yesterday, probably in order to block Virgin Group from taking over the lender. SRM and RAB Capital, with a combined stake in Northern Rock of more than 15%, are backing a rival bid for the bank by British private equity fund Oilvant.

OTHER PAPERS:

• A federal agency has subpoenaed Countrywide Financial Corporation (NYSE: CFC), in an attempt to determine whether the company abused the bankruptcy system in two Florida foreclosure cases, according to the New York Times.

WEB SITES:

• MarketWatch's Herb Greenberg believes Lululemon Athletica Inc (NASDAQ: LULU) CEO Bob Meers may have "exaggerated a bit" about his job history. While it's true Mr. Meers was employed by Reebok International, he was not president and CEO of the brand for the length of time he stated, nor was he the president of the Rockport shoe and Greg Norman brands.