MAJOR PAPERS:

• Following the collapse of The Bear Stearns Companies Inc (NYSE: BSC), the industry is rampant with rumors wondering about the financial well being of scores of other institutions, according to a Wall Street Journal report called "The Credit Crisis Hits Wall Street". True or not, its giving fits to the companies, regulators, and investors.
• Skyrocketing fuel prices and a weakened economy are taking their toll on the airline industry, reported the Wall Street Journal. Additionally, the proposed Delta Air Lines Inc (NYSE: DAL) merger with Northwest Airlines Corporation (NYSE: NWA) has lost its momentum as airline pilots cannot agree on a structured seniority system.

OTHER PAPERS:

• According to people close to the situation, the New York Times reported that before the end of the month, Citigroup Incorporated (NYSE: C) is planning to lay off another 2,000 investment bankers and traders.
• The Detroit News reported that Ford Motor Company (NYSE: F) appears to have fallen short of its goals in the latest, and possibly last, round of company-wide buyouts for hourly workers.

MAJOR PAPERS:

• To help stabilize the housing market, the Wall Street Journal reported that the Bush Administration is planning to help create fresh funding for mortgages. The plan, which still requires final approval, is said to ease an excess-capital requirement for government sponsored organizations Federal National Mortgage Association (NYSE: FNM), or Fannie Mae, Federal Home Loan Mortgage Corporation (NYSE: FRE), or Freddie Mac, and the Federal Housing Administration.
• The Wall Street Journal also reported that a merger between Northwest Airlines Corporation (NYSE: NWA) and Delta Air Lines Inc (NYSE: DAL) may be derailed after Delta pilots notified executives they remain unable to reach an agreement with Northwest pilots on how to integrate pilot ranks should the two combine.
• The Financial Times reported that BAE Systems Plc (OTC: BAESY) won a $715M order to supply nearly 1,500 mine-resistant vehicles from the U.S. government.

OTHER PAPERS:

• The Chinese government has locked out Australian mining giants BHP Billiton Limited (NYSE: BHP) and Rio Tinto Plc (NYSE: RTP) from selling iron ore into its daily spot market, the Sydney Morning Herald reported. Mining sources said that the decision may have already cost Australia up to $300M in export profits.

Look for the stalled Delta Air Lines (NYSE: DAL) / Northwest Airline (NYSE: NWA) deal talks to regain momentum and the merger to be announced in the week ahead, an analyst confidently told BloggingStocks Thursday.

Independent stock analyst C. Leonard Bauer, formerly of Prudential, said the Delta / Northwest talks may be stalled by the inability of the companies' pilots unions to reach an agreement on seniority lists, but that traditional, formidable hurdle will not stop this deal from coming to fruition due to its "strong marriage fundamentals."

Attractive fundamentals

Bauer said three fundamentals will drive the deal: absence of overlapping city pairs, economies of scale and passenger demand.

"First, there's the overall flight route fit. Delta and Northwest have only 10 or 12 cities pairs that overlap, so from a destination coverage standpoint, the deal is very attractive," Bauer said. "Second, the new company will have massive economies of scale and will be a force in the new global market. This will be a profitable airline."

MAJOR PAPERS:

• A memo sent by Delta Air Lines Inc (NYSE: DAL) to the company's employees regarding Delta's merger talks with Northwest Airlines Corporation (NYSE: NWA) stated that that no "potential transaction meets all [of Delta's] principles." The memo, the Wall Street Journal reported, is seen as a sign that merger talks between Delta and Northwest have stalled.
• A group of 14 hospitals and the Securities Industry and Financial Markets Association, a Wall Street trade group, asked the SEC to buy back the debt they had issued, the Wall Street Journal also reported.
• German lender HSH Nordbank has filed a lawsuit against UBS AG (NYSE: UBS) for allegedly maneuvering to saddle the German bank with troubled securities. HSH Nordbank contends that UBS sold it $500M in complex investments, which a UBS hedge fund later used as a receptacle for troubled subprime-mortgage securities, according to the Wall Street Journal.

WEB SITES:

• According to FAO Newsroom, world fertilizer production is expected to outstrip demand over the next five years and will support higher levels of food and biofuel production.

MAJOR PAPERS:

• The Wall Street Journal reported that KKR Financial Holdings LLC (NYSE: KFN), a unit of Kohlberg Kravis Roberts, revived concerns of a credit crunch after it asked for a restructuring of billions of dollars in short-term debt.

OTHER PAPERS:

• According to sources, the Chicago Tribune reported that Deutsche Lufthansa AG (OTC: DLAKY) could look to take an equity stake in a merger between Continental Airlines Inc (NYSE: CAL) and UAL Corporation's (NASDAQ: UAUA) United Airlines.
• The Associated Press reported that the pilots' unions of Delta Air Lines Inc (NYSE: DAL) and Northwest Airlines Corporation (NYSE: NWA) are unable to agree on how seniority for the companies' pilots would work under a combined carrier. The impasse puts the deal in "serious jeopardy," inside sources reported.

WEB SITES:

• Electronics retailer Sharper Image Corporation (NASDAQ: SHRP) has filed for bankruptcy, citing declining sales and profitability, Bloomberg reported.

With the news of impending M&A in the airline industry, based on my flight yesterday with Delta Air Lines Inc. (NYSE: DAL), the merger should be with Yellow Cab.

I was on a flight from JFK to Seattle, and the plane had finished boarding 10 minutes prior to takeoff when a flight attendant got on the PA system and thanked everyone for boarding so quickly but said they would have a delay anyway since the pilots had yet to arrive to the plane. Well to make a long story short we took off an hour late because the pilots, who were staying at a hotel in midtown Manhattan, weren't picked up by Delta transportation, and then when finally picked up they hit traffic and came really late.

Forget about merging with another carrier. How about buying a cab company so that you can get your pilot's to the plane on time?

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer has no positions in any stock mentioned as of 2/8/08.

MAJOR PAPERS:

• Within two weeks a merger between Delta Air Lines Inc (NYSE: DAL) and Northwest Airlines Corporation (NYSE: NWA) is expected to be announced. Not far behind may be one between UAL Corporation's (NASDAQ: UAUA) United Airlines and Continental Airlines Inc (NYSE: CAL), the Wall Street Journal reported.

WEB SITES:

• Bloomberg reported that Berkshire Hathaway Inc (NYSE: BRK.A) Chairman Warren Buffett forecast that the dollar's value is likely to decline if policies remain unchanged and said he believes a credit crunch is not under way.
• Tech Crunch reported that either Google Inc (NASDAQ: GOOG) or News Corp's (NYSE: NWS.A) MySpace is likely to announces a social space acquisition in the near-future. According to industry sources, the acquisition could be in the $1B-$1.5B range and may involve Bebo.

At some point last year did you find yourself stuck in a noisy, overcrowded airport terminal for hours on end waiting for your flight to take off? If so, you were by no means alone. According to the Transportation Department, last year was the second worst year in history for delayed domestic flights.

Splitting my time between America and Europe, I find myself on a lot of airplanes during the year, and luckily I only had one sizable delay on my domestic connections. While I found it rather irritating at the time, looking back on it I feel lucky that it happened only once. That is far better than the national average, which showed that 26% of all domestic flights were delayed during the year.

Granted, national averages have only been recorded going back to 1995, but last year ranked as the second worst year on record, with 2000 coming in slightly worse with 27.4% of flights seeing delays.

What reasons are we given for the excessive flight delays?

Among the tumult in the markets today and the rash of quarterly reports, health care products manufacturer Johnson & Johnson (NYSE: JNJ) reported a solid quarter, and UAL Corp. (NASDAQ: UAUA), parent of United Airlines, reported that it had narrowed its loss.

Johnson & Johnson's profit increased almost 10 percent in the fourth quarter as revenues soared, despite decreasing sales for two key product lines. Net income was $2.37 billion, or 82 cents per share, up from $2.17 billion, or 74 cents per share, a year earlier. (Excluding one-time items, net income would have been 88 cents per share.) Revenues reached $15.96 billion (mostly coming from overseas), up 16.6 percent from $13.7 billion in the same quarter a year ago. Analysts surveyed by Thomson Financial had expected earnings of 86 cents per share, excluding one-time items, on revenues of $15.4 billion. For the full year, the company reported net income of $10.6 billion, or $3.63 per share, down slightly from $11.05 billion, or $3.73 per share, in 2006. J&J said it expects earnings per share for 2008 to total $4.39 to $4.44, excluding one-time items, which was in line with analysts' expectations. Shares fell 1.54 percent Tuesday, to close at $65.27.

UAL reported a less-than-expected $53 million loss for the fourth quarter on a sharp increase in the price of fuel and bad weather over the holidays. The net loss for the final three months of 2007 was 47 cents a share, better than the loss of $61 million, or 55 cents a share, in the same quarter a year ago. Revenue was $5.03 billion, up 9.7 percent from $4.59 billion a year ago, partly due to higher fares. Analysts polled by Thomson Financial had expected a loss of 89 cents per share and revenue of $4.95 billion. Despite its first loss since the first quarter of 2007, the company still posted net income of $403 million for the full year -- its first annual profit since 2000. Shares closed down 3.25 percent Tuesday, at $31.87.

CEO Glenn Tilton was mum about merger talks rumored to be under way with Delta Air Lines (NYSE: DAL).

Visit AOL Money & Finance for more earnings coverage.

Earlier this month, rumors hit the market that United Airlines (NYSE: UAUA) and Delta Air Lines (NYSE: DAL) were considering a possible merger. Shortly afterward, Delta officially denied the rumors, but not surprisingly, United Airlines CEO Glen Tilton did not deny that they were considering merger options, as many industry analysts believe that United is the perfect company for a possible merger.

The airline, which took flight in 1930, filed for bankruptcy following the 2001 terrorist attacks and has appeared to be preparing for a sale ever since emerging from its bankruptcy proceedings. United came out of bankruptcy last year, but the company is still up to its eyeballs in debt, and boasts a miserable 2% profit margin over the past year.

When looking at United a couple of factors jump out at you pointing to the notion that the company feels a merger is the best avenue to explore:

Delta Air (NYSE: DAL) is recently up $0.53 to $20.53. On November 14, Pardus Capital Management, an activist hedge fund, sent a letter to DAL recommending DAL merger with UAL Corp (NASDAQ: UAUA). WTI Crude oil is down 0.51% $93.61 according to Bloomberg. DAL December option implied volatility of 74 is above its 24-week average of 50 according to Track Data, suggesting larger price risk.

AMR (NYSE: AMR) is recently up $1.04 to $24.36. AMR the world's largest airline, has been frequently mentioned as a merger partner over the last seven months. AMR December option implied volatility of 62 is above its 26-week average of 52 according to Track Data, suggesting larger risk.

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

It's been said that if the U.S. state of Georgia were an independent nation, it would have the 18th largest economy in world. The "Empire State of the South" ranked tenth in U.S. in per capita personal income in 2005, and has one of the fastest growing populations in the U.S. -- about a million additional people between 2000 and 2005. Its diverse industrial output ranges from peaches and peanuts, to textiles, food processing, and aircraft manufacturing, to publishing and tourism. Georgia is home to such corporate giants as Coca-Cola Co. (NYSE: KO); Delta Air Lines Inc. (NYSE: DAL); Home Depot Inc. (NYSE: HD); UPS (NYSE: UPS); Newell Rubbermaid Inc. (NYSE: NWL), and Equifax Inc. (NYSE: EFX).

It's also home to Acuity Brands Inc. (NYSE: AYI) and Global Payments Inc. (NYSE: GPN), both of which represented Georgia on the Forbes 2007 list of 100 best mid cap stocks. I examine two other Peach State companies -- RPC Inc. (NYSE: RES) and Radiant Systems Inc. (NASDAQ: RADS) -- in a separate Investing in Georgia post.

According to The Arizona Republic, Delta Air Lines (NYSE:DAL) required an Arizona woman traveling with her one-year-old twin daughters Emma and Taylor, who are conjoined at the chest, to buy a separate ticket for each of the infants. When asked to rationalize its merciless decision, a Delta representative said that each twin needed her own oxygen mask. This is, in fact, not necessarily true, since the twins share a single heart .

That's one more than the Delta representatives showed.
via Gadling

In another insult to we hoi polloi, Delta has set up a 3,500 square foot display in New York to allow visitors to check out the sumptuous layout of its new international BusinessElite class seat. Also on display are its new all-leather coach seats and upscale menu items. Free Coke and coffee are also available.

Delta Air Lines Inc. (NYSE: DAL) has selected Richard H. Anderson to replace its retiring CEO, a move that analysts believe will pave the way for potential mergers with other airlines. Deals could happen within the next year, as such ventures may have a harder time getting approval if Republicans lose control of the White House in 2008. Analysts specifically named Northwest Airlines (NYSE: NWA) as a merger candidate with Delta, since the new CEO was formerly in charge at NWA.

After hitting a one year high of $21.95 in April, the stock has been suffering lately, hitting a year low of $14.94 earlier this month. This morning, DAL opened at $18.15. So far today the stock has hit a low of $17.74 and a high of $18.65. As of 10:55, DAL is trading at $18.10, up $0.39 (2.2%). The chart for DAL looks bearish but improving, and S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $15 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk and leverage returns. For this particular trade, we will make a 8.7% return in just 2 months as long as DAL is above $15 at October expiration. Delta would have to fall by more than 17% before we would start to lose money.

DAL hasn't been below $15 by more than a few cents since it emerged from bankruptcy and has shown support around $15 recently. This trade could be risky if crude oil prices soar again, but even if that happens, this trade could be protected by its support right around $15.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Brent neither owns nor controls positions in DAL or NWA.

Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.

David Fried, editor of the Buyback Letter, chose Big Lots Inc. (NYSE: BIG) as his favorite stock for 2007, which rose 39% as of 6/1/07. Please see his original recommendation and his current opinion on Big Lots.

Fried's new pick is SkyWest, Inc. (NASDAQ: SKYW). He explains, "SkyWest, the nation's largest independently owned regional airline, is a contract carrier for United Airlines, Delta Air Lines and, most recently, Midwest Airlines.

"Nimbler than the big legacy carriers and not burdened by their bloated labor costs, SkyWest has a steady earnings stream, good cash flow, and an attractive P/E of 11. Its reputation as an efficient, low-cost operator and as the best-managed regional airline in the business was enhanced with the 2005 acquisition of Atlantic Southeast Airlines, which made SkyWest a player on the national stage.

"Since the mid-1970s, SkyWest has grown from a company with annual revenue of under $1 million to a publicly held company with annual revenues of more than $1 billion and almost 15,000 employees. SkyWest is set for continued long-term growth.