Mergers and acquisitions aren't delivering the fees that investment bankers used to enjoy, but fortunately, the money's coming from elsewhere. Data from Thomson Reuters reports a 29% increase in capital markets and M&A fees for the first time in more than a year. Share sales (e.g., rights offerings) were where dealmakers found the action. In the shrinking M&A space, Morgan Stanley (NYSE: MS) has taken the lead spot.

Since there are fewer banks in the marketplace than there were a year ago -- and they have less money -- the capital is starting to come from elsewhere. Because they aren't lending at their previous pace, companies are issuing bonds and equity to replenish their coffers. Pfizer (NYSE: PFE), for example, raked in more than $23 billion from the bond market to fund its acquisition of Wyeth (NYSE: WYE), and Roche nabbed Genentech with the help of a $30 billion debt issuance.

This post is by a Minyanville contributor:

MOST NOTEWORTHY:

• Bear Stearns upgraded MGM Mirage (NYSE: MGM) to Outperform from Peer Perform following Kirk Kerkorian's intentions to purchase the Bellagio and City Center and also pursue strategic alternatives for the rest of the company.

• Matrix raised KLA-Tencor (NASDAQ: KLAC) to Buy from Hold, believing that growing demand for memory chips used in computers is leading to increasing revenues and profits.

• Cowen upgrade shares of Raytheon (NYSE: RTN) to Outperform from Neutral based on cash deployment potential from the RAC sale, pension EPS tailwind, foreign sales cycle, and strong execution.

• Wachovia upgraded shares of Archstone-Smith Trust (NYSE: ASN) and Apartment Investment and Management Co (NYSE: AIV) to Outperform from Market Perform and Equity Residential (NYSE: EQR) and UDR, Inc (NYSE: UDR) to Market Perform from Underperform...

• AG Edwards upgraded Marathon Oil Corp (NYSE: MRO) and Royal Dutch Shell (NYSE: RSA.A) to Buy from Hold.

• Stifel raised Citrix Systems, Inc (NASDAQ: CTXS) to Buy from Hold.

• RBC Capital raised Kilroy Realty Corp (NYSE: KRC), Boston Properties, Inc (NYSE: BXP) and Maquire Properties, Inc (NYSE: MPG) to Sector Perform from Underperform.

I like millionaires, I always have and I always will. A report by TNS research has revealed that American millionaire households have increased in number over the last four consecutive years to an astonishing 9.3 million, give or take a few. That's an awful lot of millionaires if you ask me. What does the climbing head count among the well-to-do mean to Joe Average? Well, if you can get beyond the jealousy and resentment long enough to see the forest through the trees, you'll find that it means a lot to us.

Millionaires tend to move a lot of money, which is the life blood of our economy. They buy large homes and furnish them with expensive decor. They own nice cars, often several, give them the best of care, and house them in well-lit, heated garages. Millionaires buy into businesses in pursuit of growing their fortunes. They invest in speculative business ventures and back inventors with good (and not so good) ideas. Millionaires hire people to assist in the routine and mundane tasks in life. Cleaning the pool, cutting the lawn and shopping for groceries are a few of the tasks that can be delegated by throwing a few dollars at them. Millionaires can throw those dollars around and they tend to do just that. "There's more where that came from," chuckle, chuckle, snort. Of course some of the wealthy tend to be very tight-fisted but they're generally easy to pick out. They live lonely lives in snobbish repose, worried that the world shall snatch an extra dollar from them.

If you want to find out where the millionaires are, this CNN Money report is a fine place to get started. It lists the top ten counties where millionaires reside. Note that it's a bit California-heavy. Some other states with counties that boast the highest number of millionaires across the country include Illinois, Arizona, Texas, New York and Florida. The list goes on and reveals the fact that more Americans have become dollar-savvy. But what does this mean, bottom line, for our country? In some ways it depends on your perspective. Some folks will tell you that it's an indication that the wealth gap has widened. I laugh at that assertion and claim instead that it means our horizons of opportunity have broadened. I also believe that it's a culmination effect of our maturing 1960's baby boom. There are an awful lot of people out there who have striven long and hard to prove that the American Dream has been more than an unsubstantiated stance on manifest destiny. Today's millionaires are the result of prolonged and intense focus on the principles of true success. This stuff doesn't just happen by itself.

So, please don't be tempted to give into feelings of unfairness. Don't waste your time wondering, "Why them and not me?" Some times it's a simple flip of the cards that determines the outcomes of success, but most often, it's the result of blood-and-guts determination. Let the climbing number of millionaires serve as inspiration to you. Realize that financial security is still well within your grasp. Then, learn their ways, associate with them when you can and truly believe that success knows no boundaries of background, gender, race or class. Roll up your sleeves, pull down your cap and get yourself to the business of leaving self pity for the next guy. You have no time to feel sorry for yourself when you're busy staking out your spot on next years millionaire list.

Oh, and about that money you spend on lottery tickets... a passbook account gives better returns by far.

My wife and I were at our local Wells Fargo (NYSE: WFC) branch today and we signed some important papers. The documents we put our names to probably represent the single best investment we have made in our time together. Utilizing a portion of a rather handsome income tax return and some carefully thought out timing, we as a couple today reduced our consumer debt load by approximately 25%.

Being in debt has always made my skin crawl, though I fully understand the reasons why we do it. If you want a nice house and a fine automobile or two, the chances are that the only way you can pull it off is by borrowing the funds to make it possible. That doesn't change the fact though that I hate being in debt, and whenever the opportunities present themselves I do what I reasonably can to reduce my debt level.

Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.

Volatility Index S&P 500 Options-VIX down .22 to 10.09.

Cisco Systems Inc. (NASDAQ:CSCO) -- option volume heavy as February implied volatility bid up on hedges into EPS. Cisco, the largest vendor of data networking equipment and the leading global supplier of internet-working solutions is expected to report EPS on 2/6. Goldman Sachs says "we believe there is a high likelihood of Cisco beating our and the Street's estimates of $8.28 billion/$0.31. We expect management to reaffirm positive longer-term trends in emerging markets, new technologies, and the impact of video networks as key drivers of sustained double-digit top-line growth." Cisco call option volume of 73,135 contracts compares to put volume of 46,830 contracts. Cisco February option implied volatility of 42 is above its 26-week average of 28 according to Track Data, suggesting larger near term price risks.

Nabors Industries Ltd. (NYSE:NBR) -- option implied volatility and volume increases as NBR rallies. Nabors is an owner and operator of almost 600 land drilling, approximately 791 land workover/well-servicing rigs and 43 offshore platform rigs worldwide. Nabors will report EPS on 2/7. Nabors is recently up .80 to $31.02 on unconfirmed LBO chatter. Nabors call option volume of 26,680 contracts compares to put volume of 2,895 contracts. Nabors March option implied volatility is at 38. Nabors February option implied volatility of 53 is above a level of 43 from twenty-minutes ago and above its 26-week average of 33 according to Track Data, suggesting increasing price fluctuations.

Option volume leaders today were: Cisco (CSCO), Google Inc. (NASDAQ: GOOG), Equity Office Properties (NYSE:EOP), NYSE Group Inc. (NYSE: NYX) and Amazon.com Inc. (NASDAQ: AMZN).

Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.

Volatility Index S&P 500 Options-VIX down .14 to 10.28.

Amazon.com Inc. (NASDAQ:AMZN) - puts more active than calls as prices increase on purchase for Hedges. Amazon was trading up .71 to $38.38 around 2 p.m.. Amazon is expected to report EPS of $0.22 after the close. Lazard has a Hold rating on Amazon said on 1/31/07, "At current price levels, we believe the stock largely discounts strong growth, operating margins expansion, and improving free cash flow generation." Amazon call option volume of 43,043 contracts compares to put volume of 60,717 contracts. Amazon February option implied volatility of 58 is above its 26-week average of 39 according to Track Data, suggesting larger price fluctuations.

Neurochem Inc.'s (NASDAQ:NRMX) May option implied volatility keeps Climbing into Spring Risks. Neurochem issued a press release this morning indicating results from the first phase 3 study of NRMX's Alzhemed for the treatment of Alzheimer's disease is expected in the spring of 2007. Neurochem and partner Johnson & Johnson (NYSE:JNJ) have a PDUFA date for Kiacta for AA Amyloidosis on 4/16/07. Neurochem call option volume of 4,859 contracts compares to put volume of 5,129 contracts. Neurochem May call option implied volatility is at 152; puts are above 211 according to Track Data, indicating large price fluctuations. NRMX puts are expensive because Neurochem is difficult to borrow.

Option volume leaders today were: Altria Group Inc. (NYSE:MO), Google Inc. (NASDAQ:GOOG), Equity Office Properties Trust (NYSE:EOP), Bristol Meyers Squibb Co. (NYSE:BMY) and Sepracor Inc. (NASDAQ:SEPR).

Why do they call billionaire Sam Zell the "Grave Dancer"? It's simple. Sam Zell is in the habit of taking dying cash cows and reviving them. He's been well-rewarded for his efforts, and justly so. You just have to respect a man who is willing to grab up a limp handed property interest and make it viable again. Second only to our federal government, Sam Zell via EOP, could be considered the single largest property holder in the United States.

Sam Zell is chairman of Equity Office Properties (NYSE:EOP) This real estate investment trust owns and manages more than 600 office buildings in about 16 states. EOP focuses on metropolitan areas as its target regions for acquisitions. Equity Office was founded by Sam Zell in 1976 in the form of a real estate management and acquisition organization. The company was taken public in July 1997.

Equity Office has continued to grow in size through acquisitions. Since 1997 EOP has added to their stable; Beacon Properties Corporation, Cornerstone Properties and the Spieker Properties Inc. among others.

On Nov. 19, 2006, Equity Office Properties Trust announced a merger agreement that states they shall be acquired by Blackstone Real Estate Partners, in a transaction valued at over $35 billion. Blackstone agreed that, after the merger, it will liquidate the surviving corporation in the merger into a Blackstone affiliate.

EOP stated in a press release: "In the liquidation, each holder of a share of the 5.25% Series B Cumulative Preferred Stock will receive $50.00 per share in cash plus any then accumulated but unpaid dividends, and each holder of a share of the 7.75% Series G Cumulative Redeemable Preferred Stock will receive $25.00 per share in cash plus any then accumulated but unpaid dividends."

The Blackstone Group, founded in 1985, is focused on investing in office buildings, hotels and other commercial properties.

As the Private Equity deal juggernaut continues at a record pace, the Justice Department continues to send out letters in their probe of PE competitive behavior. The Wall Street Journal reported today that Merrill Lynch & Co., Inc. (NYSE:MER) has joined this inauspicious list. Other letters in the same form, I am sure, will be received by other players. Any Justice Department investigation is bad news and a distraction, and I am sure there is concern throughout the PE industry.

The question at hand is whether PE firms, in pursuing the "club" deals (many firms getting together to pursue a large target, like a bunch of hunters combining to wrestle an elephant) are "colluding" to bring down prices for the assets they are pursuing, thereby undertaking anti-competitive and thus illegal behavior. The Journal speculates that the Hertz transaction is under particular scrutiny. This was not only a large club deal but one where the buyers made a lot of money VERY quickly. To the Justice Department, I am sure, the fact that big bucks were made in short order MUST mean illegal activity. The Federal Government seems to frown upon large scale success, and therefore must investigate.

I have not seen any of these love letters and can only speculate about the investigation, but the facts of life in Private Equity do not support a case for collusion.