MAJOR PAPERS:

• A former Royal Bank of Canada (NYSE: RY) trader alleged that some employees "miss-marked" bonds to increase profits at the New York office's investment banking unit, the Wall Street Journal reported.
• The WSJ also reported that private-equity firm J.C. Flowers & Co is in talks with UK lender Northern Rock, but has not confirmed it will launch a bid for the troubled firm wrapped up in the subprime meltdown.

• The New York Times reported Merrill Lynch & Co Inc (NYSE: MER) CEO Stanley O'Neal contacted Wachovia Corporation (NYSE: WB) CEO G. Kennedy Thompson last week to discuss the possibility of a merger between the companies, according to inside sources; Merrill's board has reportedly started considering candidates to replace him.
• The Times also reported that designer Tommy Hilfiger agreed to sell his biggest clothing line exclusively at Macy's Inc (NYSE: M). Under the agreement, Mr. Hilfiger would remove his clothing lines from stores like The Bon-Ton Stores Inc (NASDAQ: BONT) and Dillard's Inc (NYSE: DDS).

You have to admire the courage of senior management teams who agree to present at financial conferences, especially when the president of the company is unloading stock, and the best spin the CFO can put on the numbers is that they aren't as bad as they used to be. Such is the case with G-III Apparel Group, Ltd. (Nasdaq: GIII), which manufactures and distributes higher end coats and jackets under label for Calvin Klein, Guess?, Tommy Hilfiger and others, as well as licensed sportswear. G-III licenses jackets for the NHL, NBA, MLB, and dozens of major colleges and universities. They control a brand portfolio to envy. So why is it that the best the company can do is not lose as much money as quickly?

To its credit, G-III has narrowed its losses in 3Q 2007 by almost 60%, down to about $0.05 per share, compared with $0.14 per share a year ago. Net sales for the recent quarter were up 21% to $84 million. CEO Morris Goldfarb was so pleased with the posted loss that was well below what was expected that he has raised FY2007 guidance to $0.90-$0.95 per diluted share based on a $10 million increase in sales to $510 million.

This positive spin does not at all address the problems facing G-III. Are its costs not yet under control? Are its licensing deals structured in such a way that it is difficult to turn a profit? It manufactures team jackets for most major American sports leagues. Surely some of them must be widely popular with sports fans. Yet even CEO Goldfarb admits that sportswear is not yet a "meaningful" contributor to the bottom line. Investors should hope he accelerates his search for meaning and soon.