Honda (NYSE: HMC) closed at $22.40 Thursday. HMC overall option implied volatility of 92 is above its 26-week average of 42 according to Track Data, suggesting larger price movement.

Toyota Motor (NYSE: TM) closed at 67.09 Thursday. TM overall option implied volatility of 70 is above its 26-week average of 39 according to Track Data, suggesting larger price movement.

Tata Motors (NYSE: TTM), an Indian car manufacturer, closed at $4.50 Thursday. TTM overall option implied volatility of 84 is above its 26-week average of 61 according to Track Data, suggesting larger price movement.

Nissan (NSADQ: NSANY) closed at $8.57 Thursday. NSANY overall option implied volatility of 76 is above its 26-week average of 49 according to Track Data, suggesting larger price movement.

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

MAJOR PAPERS:

• The banking unit of National City Corporation (NYSE: NCC) recently entered into a "memorandum of understanding" with federal regulators, the Wall Street Journal reported. The banking unit has bad loans, and the agreement basically means that the bank is on probation, as the government pressures financial institutions.
• The Wall Street Journal also reported that Justice Department criminal prosecutors and its U.S. attorney's office in Brooklyn, NY are investigating American International Group Inc (NYSE: AIG) to see if they overstated the value of contracts tied to subprime mortgages.

OTHER PAPERS:

• Lehman Brothers Holdings Inc (NYSE: LEH) is thinking of releasing its Q2 results a week earlier than planned, and announcing a capital raising plan at the same time, according to the New York Post, in order to reduce negative speculation about its future.
• The Economic Times reported that Indian auto companies Tata Motors Limited (NYSE: TTM) and Mahindra and Mahindra may be interested in acquiring Hummer from General Motors Corporation (NYSE: GM).

If you're thinking of buying a Jaguar and Land Rover, you'll be purchasing an Indian car. Tata Motors has closed its $1.7 billion acquisition for these assets from Ford Motor Company (NYSE: F), which can certainly use the cash (the firm recently announced it won't hit profitability in 2009).

Actually, Ford purchased Jaguar in 1989 for $2.5 billion and acquired Land Rover in 2000 for $2.7 billion. In other words, the deals didn't work out so well.

Of course, Tata thinks it will have better luck. After all, the firm is picking up strong brands -- at a reasonable valuation. What's more, the acquisition will jumpstart Tata's entry onto the global stage.

Although, there are definitely challenges. No doubt, it's not easy to deal with the commodities inflation, such as with steel and aluminum.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Sterlite Industries India Ltd. (NYSE: SLT), which is already the largest copper and zinc producer in India, is getting bigger. That is, the company has agreed to purchase Asarco LLC (based in the U.S.) for about $2.6 billion. With the deal, Sterlite will get an estimated five million tons of copper reserves.

Basically, it's easier to mine for copper on Wall Street (with acquisitions) instead of digging into the ground. As a result, there were four suitors for Asarco (which, by the way, is in bankruptcy and is dealing with complex environmental liabilities).

Furthermore, with the surge in copper prices, there is definitely enough firepower to get deals done -- at high valuations.

This deal also points to another interesting theme: the aggressive M&A of Indian firms. For example, Tata Motors recently purchased Jaguar and Land Rover from Ford (NYSE: F). There was also Tata Steel's $12 billion acquisition of Corus Group.

And, it's a good bet we'll see a lot more deal-making. Simply put, India needs to snag more natural resources to facilitate its torrid growth rate.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Ford Motor Co. (NYSE: F) is cutting production at its Volvo unit, according to The Wall Street Journal. The move, which could affect one-third of workers -- some 700 -- is seen as an attempt to cut the costs and losses at the upscale Swedish brand.

The question everyone is asking is whether this move is done in preparation for a sale. According to "people familiar with the matter" who discussed such things with the Journal, CEO Alan Mulally is interested in putting Volvo, whose sales have been declining, on the block. Of course, to analysts, Mulally sang a different tune last month, saying the priority is improve the Swedish auto maker operations "dramatically."

As Kirk Kerkorian's Tracinda Corp. continues to build its stake int he company, he may also have a thing or two to say on the matter.

For now, Volvo is cutting where it makes larger, less popular vehicles, and it plans to make fewer cars overall. But can this make Volvo more profitable for Ford, or at least more attractive to buyers? There are costs associated with producing a smaller number of vehicles, but with Volvo reporting 22,000 fewer vehicles sold during the first quarter, cutting production makes sense. Another matter Ford has to consider is the massive losses it suffered lately just from the kronor-dollar exchange rate.

Reading the newspaper, there are times when I wonder if certain companies are actually trying to fail. Recently, the Ford Motor Company (NYSE: F) announced plans to sell its Jaguar and Land Rover brands to Tata, an Indian car company. While Ford paid $5.2 billion for the two companies ($2.5 billion for Jaguar in 1989 and $2.7 billion for Land Rover in 2000), it has sold them for a combined $1.7 billion, less than a third of the purchase price.

I don't really have anything against Ford. I once owned a Mustang convertible, which was a lot of fun to drive. Better yet, it was not that hard to work on, which proved helpful given its tendency toward constant technical problems. However, Ford's corporate governance has never been all that hot. I'm sure that there's a perfectly reasonable explanation for the fact that Ford hasn't been able to make money off of either of these impressive brands, but I wonder why the company spent money picking up luxury marques when it was on somewhat shaky footing. Now that they've gotten rid of these two great companies, I hope that Ford will focus on the problems with its main car lines and the fact that they are gas-guzzling, poorly-designed, and prone to technical problems.

Of course, if that fails, they can always try buying Fiat and then reselling it to an Ethiopian manufacturer.

Shares of Ford Motor Co. (NYSE: F), which are down about 11% this year, are trading close to a 52-week low. Anyone with a pulse knows why: the auto industry stinks.

But let's look at this from another vantage point. At $5.98, all of the bad news may have been factored into the stock price. The company is cutting costs by selling Jaguar and Land Rover to India's Tata Motors for $2.3 billion. While it is a fraction of the price it paid for the luxury automakers, Ford is lucky to have found a buyer at all. The money will at least help put a dent in the $15.3 billion in losses the automaker has incurred over the past two years.

This is a good deal for shareholders since Ford will continue to supply parts to Jaguar and Land Rover and provide financing services for their dealers for up to 12 months.

"Jaguar and Land Rover are terrific brands," said Ford CEO Alan Mulally in a press release. "We are confident that they are leaving our fold with the products, plan and team to continue to thrive under Tata's stewardship. Now, it is time for Ford to concentrate on integrating the Ford brand globally, as we implement our plan to create a strong Ford Motor Company that delivers profitable growth for all."

Under Mullaly, the company is headed in the right direction. Several new models including the Ford Flex do look promising, and Ford seems serious about stemming the losses in North America. I am not suggesting that the company is near solving its many serious problems. But even the tiniest bit of progress will boost the stock from its current levels.

For investors with an iron constitution, this stock may be worth a look. The faint of heart need not apply.

Freelance writer Jonathan Berr edits the blog Ketchup and Eggs.

MAJOR PAPERS:

• The Wall Street Journal reported that private loans under the Federal Family Education Loan, or FEEL, program have begun to give way to the federal direct loan program, as private lenders run into subsidy cuts and problems raising capital. To date about 60 colleges and universities have made the switch.
• Carl Icahn, a 6.3% Motorola Inc (NYSE: MOT) shareholder, has sued the company to get board of director documents, turning away offers of two board seats, the Wall Street Journal reported. Icahn wants information about the company's unprofitable handset business.
• Ford Motor Company (NYSE: F) is expected Wednesday to announce an agreement to sell its Jaguar and Land Rover units to India's Tata Motors Limited (NYSE: TTM) for about $2B, the Financial Times reported.

OTHER PAPERS:

• According to the Business Review, New York State Senator Charles Schumer is planning to 'reveal details' of a conversation he had with the CEO of Advanced Micro Devices Inc (NYSE: AMD) on March 21 about the company's plans to build a $3.2B computer chip plant in Saratoga County.

MAJOR PAPERS:

• Nokia Corporation (NYSE: NOK), Samsung Electronics and LG Electronics have said no to buying Motorola Inc's (NYSE: MOT) handset business, and potential Chinese interest is not there. The perception now, according to the Wall Street Journal's "Heard on the Street," is that Motorola's problems may be to difficult to fix.
• The Financial Times reported that the Los Angeles city attorney launched a wide-ranging legal action on Thursday against Health Net Inc (NYSE: HNT), one of California's biggest health insurance providers, accusing the company of defrauding customers by setting illegal policy cancellation targets for its sales agents.

OTHER PAPERS:

• According to sources, the Economic Times reported that Tata Motors Limited (NYSE: TTM) may be looking to spin off Jaguar into a separate entity once the acquisition of the brand from Ford Motor Company (NYSE: F) is complete.
• The U.S. government has approved the first virtual fence, built by The Boeing Company (NYSE: BA), along the U.S.-Mexico border in Arizona, the Associated Press reported. Along the 28 mile stretch of border, radar and surveillance cameras will be used to try to catch people entering the country illegally.

Toyota's (NYSE: TM) net grew 7.5% in the last quarter, but it indicated that it may not be quite so fortunate in the current period.

According to Reuters, the improvement was due to "speedy sales growth in China, Russia and other emerging markets." The big car company said it was still worried about the US economy.

The figures from the Japanese company show the difficulties that all of the global automotive firms face now. They are seeing double-digit sales increases in emerging markets, but in their largest market, the US, sales could be extremely poor this year.

Even that analysis masks the real long-term threat to Toyota's growth. In most emerging markets, there are already large automotive firms. Those include Shanghai Automotive in China and Tata Motors (NYSE: TTM) in India. These companies are not going to let big overseas operators simply come into their countries and take large pieces of the market.

The US economy may be the short-term enemy to Toyota, but competition in emerging markets is likely to be its challenge for the next decade.

Douglas A. McIntyre is an editor at 247wallst.com.

MAJOR PAPERS:

• The Wall Street Journal reported that the FBI has opened criminal inquiries as part of an investigation over subprime mortgage issues. The probe into 14 companies will focus on accounting fraud, insider trading and securitization of loans.
• The Wall Street Journal also reported that Merck and Co Inc's (NYSE: MRK) osteoporosis treatment Fosamax is facing increasing scrutiny and lawsuits, as a growing number of patients allege the drug causes a condition called ONJ.
• According to a Federal judge, antitrust supervision of Microsoft Corporation (NASDAQ: MSFT) should be extended for two years longer than originally planned, until November 2009, the Financial Times said. The supervision was imposed as part of its landmark settlement in 2002, when Microsoft was accused of failing to produce an adequate licensing arrangement for certain protocols essential for rivals to work their own products through the Windows operating system.

OTHER PAPERS:

• The Economic Times reported that Ford Motor Company (NYSE: F) has decided not to retain any stakes in its Jaguar and Land Rover divisions after selling them to India's Tata Motors Limited (NYSE: TTM), according to sources.

GM (NYSE: GM) does not like to be trumped. Last week, India's Tata Motors (NYSE: TTM) launched a car that costs about $2,500. It is geared to consumers who only have money to drive motorcycles now. The vehicle may sell well in India, but Tata understands that it could be exported to other emerging markets like Russia and China.

GM does not need any more competition in emerging countries. With its sales flat to down in the U.S. market, the company says its goal is to have 75% of its sales from outside America in just a few years. To do that, GM will need cars to fit the markets, not just versions of GM cars that it can build and sell abroad.

According to The Wall Street Journal, "GM's Asia-Pacific chief is working on developing a car for emerging markets that could play in the sub-$4,000 price range, as the company looks to compete with auto makers that are already building cheaper cars."

The plan may look good, but only if GM can find facilities and a workforce that is cheap enough to build a super-low-cost vehicle at a profit. With wages rising in China and India due to increased demand for products from these countries, the job may be difficult.

GM may want to be in the $4,000 car business, but it is not clear that it is a business which GM can afford.

Douglas A. McIntyre is an editor at 247wallst.com.

As if Detroit didn't have enough to worry about, Tata Motors (NYSE: TTM) has unveiled its long-awaited super-cheap car at the Auto Expo in New Delhi. Called the Nano, it's tiny and kind of cute, in a smooshed jelly bean kind of way. Its most attractive feature, though, is its price. For a mere 100,000 rupees, the equivalent of roughly $2,500, you can drive home in the world's least expensive car (assuming you live in India, of course).

According to AutoBlog, here's what you get for your 100,000 rupees: a two cylinder gasoline engine producing a whopping 30 horsepower, a four-speed manual transmission, room for five (very small) people, brakes of some kind, and, best of all, 54 miles per gallon of gas. You don't get a radio or power steering or a second windshield wiper, but did you really expect to? Even so, the car is reasonably safe and efficient by Indian standards, and Tata claims that it meets all environmental and safety regulations in India.

It's hard not to be impressed by the Nano, and by the potential of Tata Motors. Tata is already the largest auto manufacturer in India. Millions of Tata vehicles are already on the roads, and with the Nano, we can expect to see millions more. Tata also sells cars and trucks all over Asia and has a growing presence in the Middle East and Latin America. If you want to place a bet on the future of the global auto industry, you could do worse than buying some Tata stock. Just as General Motors (NYSE: GM) and Ford (NYSE: F) provided basic transport in the world's fastest growing economy early 20th century, Tata is poised to sell millions of basic cars in the fastest growing part of the world in the 21st century.

According to Business Week, Ford (NYSE: F) brands Jaguar and Land Rover have captured the interest of Indian private conglomerate Tata Group, owners of Tata Motors (NYSE: TTM). India's largest car manufacturer is reported considering a bid for the legendary British brands, hoping to market them internationally and reduce its dependence on domestic sales. The well-heeled Tata Group includes Tata Steel, the world's fifth largest steel company, which recently concluded a $12 billion takeover of Britian's Corus Steel.


Tata Group owns 96 companies, employs over two million people and has a market cap of over $50 billion. Tata Motors has been building cars since 1945, with revenues of $5.5 billion in 2006. In 2004, it acquired Daewoo Commercial Vehicle Company, and owns a stake in Spanish bus manufacturer Hispano Carrocera. The company has stated its intent to bring to market a $2,500 car to emerging markets by next year.

Buying Jaguar and Land Rover would do more for Tata than give it international access; it could lend the company the credibility to gain immediate acceptance in the burgeoning vehicle market worldwide.

Ford Motor Company (NYSE: F) is currently taking bids on parts of its Premier Automotive Group, which includes Jaguar, Land Rover and Volvo. (Another Premier brand, Aston Martin, was sold to investors in March for roughly $900 million.) There has been speculation that the Indian automaker Tata Motors (NYSE: TTM) may be interested in the two British luxury brands, but so far Ford has denied that it is selling Volvo. Ford's denials have been fairly weak, however, and it stands to reason that given Ford's rather desperate need for cash, it would sell the Swedish car maker -- the only profitable part of the Premier Automotive Group -- if the price were right.

It's pretty clear that Ford is in trouble, having mortgaged its plants and property -- and even its hallowed name -- to raise cash to support current operations. As Kevin Shult wrote last week, Ford is a symbol of the hard times facing American automakers, which are stuck offering large, heavy, inefficient vehicles to consumers who now want something better. There's plenty of blame to go around for the problems in Detroit. While many analysts focus on labor costs, especially retiree health care, I would argue that poor management, weak investment, and mediocre design and engineering are at least as important. And that's where Volvo can play an important role in helping Ford recover.