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Procter & Gamble (NYSE: PG) is recently up 26 cents to $61.09. PG is expected to report Q4 EPS in early August.

PG announced on June 30 that Derek Jeter, of the New York Yankees, will join Tiger Woods, Roger Federer and Thierry Henry as Gillette Champion ambassadors.

PG call option volume of 5,770 contracts compares to put volume of 38,520 contracts. PG August option implied volatility of 23 is above its 26-week average of 20 according to Track Data, suggesting price movement.

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

MAJOR PAPERS:

• The Wall Street Journal reported that is is not yet certain whether Merrill Lynch & Co Inc (NYSE: MER) will need to raise money. If it does, selling common stock could be expensive due to a 12-month protection the bank offered the investors that bought $12B in common and preferred shares earlier this year and selling assets like its interest in Bloomberg may present a different problem.
• The Wall Street Journal also reported that investigators from the European Union are probing deeper into the pharmaceutical industry in an effort to determine whether drug companies have used unfair tactics to increase prices and block competition. Investigators have reportedly ask for views on direct-to-pharmacy distribution channels, which Pfizer Inc (NYSE: PFE) and AstraZeneca Plc (NYSE: AZN) recently established in Britain.
• After Anheuser-Busch Companies Inc (NYSE: BUD) said it would reject InBev's $46B bid as "financially inadequate," InBev said it would launch a hostile bid. According to court documents, the Financial Times reported that InBev is preparing to launch a proxy battle seeking the removal of Anheuser's entire board.
• The Financial Times also reported that soaring energy prices are forcing U.S. consumer goods company The Procter & Gamble Company (NYSE: PG) to rethink how it distributes products. The company may consider shifting manufacturing sites closer to consumers in order to lower its transport bill.

Well-known maker of peanut-butter and jelly products J.M. Smucker (NYSE: SJM) reported earnings for Q4 and the full fiscal year on Thursday. The market didn't like the report in the least. The stock closed down well over 8% at the end of yesterday's session.

Here's what happened. For the fourth quarter, net sales increased 20%, but that was little consolation to the bottom line, which dropped 11%, as earnings per diluted share came in at $0.67 versus $0.75 in the year-ago period. The top line also was the beneficiary of some inorganic growth based on acquisitions. If you adjust for certain items, bringing the earnings up to $0.73 per diluted share, the decrease in the bottom line improves to 3%, but a decline in this case is still a decline. Plus, earnings expectations were not met. The company came in five pennies shy of Wall Street's wishes, according to estimates posted at earnings.com.

For the fiscal year, J.M Smucker's top line increased 18%, also due in part to acquisitions. On both a reported and an adjusted basis, earnings per diluted share jumped 9% to $3.00. Margins really suffered during the quarter and the year. Input costs are inflating, and they're becoming difficult to manage.

Many of us would be happy to benefit from a quiet retirement without facing concerns of losing all of our hard earned money. Fortune 40 gives us a helping hand by suggesting some big names to invest in that could offer us the results that we are looking for.

One such company is Abbott Laboratories (NYSE: ABT), whose earnings surged 35% during its last quarter, helped by its famous anti-inflammatory drug Humira and HIV treatment Kaletra. Looking ahead to the company's performance, CEO Miles White is planing to keep his main attention on its medical devices unit which is seen as a key element against strong competition.

Fortune 40 also looks at beverage maker The Coca-Cola Company (NYSE: KO), which benefits from strong international gains able to beat recent weakness in U.S. In addition, it looks like the company's acquisition of Glacéau and its VitaminWater brand offer it a good support to outperform on the market.

Retire Rich: Best Stocks to Retire On
FORTUNE's trademark long-term portfolio can help put you on the road to a secure future. They include Abbott Labs, Coca-Cola, Procter & Gamble, Cisco, 3M, Walgreen, Cascade, Novaratis and Vodafone to name a few of the 40 stocks on FORTUNE's list.
Fortune 40: Best stocks to retire on - FORTUNE

Shoppers Beware: Products Shrink, But Prices Remain the Same
There's a reason why the tub of ice cream you bought last week looks a tad smaller than ones you bought last summer. It is. Many major ice cream makers, hit by higher dairy costs, have shrunk their standard containers to 1.5 quarts from 1.75 quarts, about 1 cup less. As packaged goods makers' costs rise, they eventually have just two choices: raise prices or put less stuff in the package. While most are trying a price boost first, a growing number are shrinking the contents of their packages -- from Frito Lay's chips to Dial soap to Dreyer's ice cream. Other shrinking products include Hellmann's mayo down to 30 oz. from 32 oz., Cheerios & Wheaties have shrunk 1.5oz., Bounty papertowels down to 60 from 52 towels and more.
Shoppers beware: Products shrink but prices stay the same - USATODAY.com

In the United States when one company wants to inflict pain on a competitor it commonly uses the law as its weapon of choice, enlisting an army of lawyers to bludgeon the rival with legal actions. Right or wrong one company can tie the other up in court for years, and if the competitor is smaller and weaker, put it out of business or inflict great hardship.

In Russia, they seem to be skipping the middle man -- not engaging the lawyers, but going straight to the government. According to the most recent issue of Business Week, companies are paying public officials to raid the offices of business rivals and subject them to criminal investigations.

Some 8,000 companies a year are targets of lawsuits or investigations at the behest of rivals seeking to put them out of business or take them over, the Russian Chamber of Commerce & Industry says. Russians call this process reiderstvo, or raiding.

In most cases, the raids are conducted by something similar to our SWAT teams, removing documents and computers and soon after bringing charges of tax evasion, fraud and conspiracy. It is reported that the police, civil servants and court system all play along for a price.

Folgers has created some great brand messages, including the classic, "The best part of waking up is Folgers in your cup."

Well, this morning, we got another message. P&G (NYSE: PG) will merge the Folgers unit into the operations of The J. M. Smucker Company (NYSE: SJM). The deal comes to about $3 billion.

P&G, which has owned Folgers for more than 45 years, has been actively shopping the deal. All in all, the transaction looks smart. It's an all-stock arrangement and, as a result, is tax-free to all parties. Smucker will also issue a $5 per share special dividend.

J.M. Smuckers (NYSE: SJM) closed at $53.75 Tuesday.

The WSJ is reporting SJM is near a deal to buy Folgers from Proctor & Gamble (NYSE: PG) in an all stock transaction.

Deutsche Bank says: "From an economic standpoint for SJM, we calculate the deal would be about $0.25 per share dilutive on an annual basis."

SJM over all option implied volatility of 27 is near its 26-week average according to Track Data, suggesting non-directional risk.

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

MAJOR PAPERS:

• In a move to help cut expenses and save on fuel prices, UAL Corporation (NASDAQ: UAUA), parent of United Airlines, will reduce its 460 airplane fleet by 70 jets. Not yet known is how may jobs will be affected, the Wall Street Journal reported.
• In an all stock deal, J.M. Smucker Co. (NYSE: SJM) is expected to buy Folgers coffee from The Proctor & Gamble Company (NYSE: PG) for an estimated $2B, according to the Wall Street Journal. Folgers, the best selling ground coffee in the U.S., has annual sales of about $1.6B.
• The Financial Times reported that Lehman Brothers Holdings Inc (NYSE: LEH) lost $500M-$700M on some of its hedging positions in Q2, which have contributed to a larger than expected loss that could result in the bank raising more capital by selling a stake to an outside investor. Lehman has begun negotiations with potential investors, including asset managers and Asian banks, sources said.

OTHER PAPERS:

• According to sources, the Rocky Mountain News reported that troubled home builder Beazer Homes USA Inc (NYSE: BZH) is pulling out of Colorado. Beazer, which is being investigated for mortgage fraud by several government agencies, has built homes in the suburbs of Denver and in Colorado Springs.

I love coupons; who doesn't? They are, arguably, one of the most important marketing tools used by companies such as Procter & Gamble (NYSE: PG), Colgate-Palmolive (NYSE: CL), and General Mills (NYSE: GIS). I also love coupon distribution on the web, so I'm hoping a new technology reported on by BusinessWeek really takes off.

A company called Coupons, Inc. has developed a system dubbed Brandcaster. It essentially follows Google's (NASDAQ: GOOG) model of monetization. Depending on where you are on the web and what you are looking at, the Brandcaster will determine if a coupon may be applicable to you. It will then try to get you to access the coupon and print it up. Web sites who use the application will be given a cut of revenues generated from successful coupon printings. So, speaking hypothetically, if I'm on a site that's dedicated to video games, maybe this Brandcaster thing will someday tell me that I can print up a coupon allowing me to get $5 off a new software title.

If this is promoted properly, and if the value to consumer companies can be adequately communicated, then I think Coupons, Inc. has a hit on its hands. Like I say, people love coupons, and I think they are more likely to act on printing out a coupon then they are to, say, buy a product immediately online through a banner ad. I see this kind of advertising as being more effective over the long-term than other kinds of ads.

The U.S. stock market's choppy, volatile pattern continues. Technically, the Dow's rally from the February 2008 and March 2008 market lows around 11,800 to the 13,100-range is displaying signs that it may have been a false rally: the rally failed at the 200-day moving average and closed Thursday, for the second straight day, below the 50-day moving average.

Further, the fundamental story does not look good, either: $130 per barrel oil, a housing market showing no signs of recovery and the specter of scant job creation for at least the next two or three months does not exactly represent the strongest magnets to attract new money to the market.

On February 4, 2008, I provided five defensive stocks worthy of consideration. Listed below is a progress report, with revised recommendations for each.

Procter & Gamble (NYSE: PG) - a diversified consumer products giant, extraordinaire.
February 4, 2008 price: $66. Sell / Stop Loss: $47.
May 22, 2008 price: $65.62. Revised recommendation: I'd continue to hold PG here if I owned it, definitely buy it if I didn't. Revised Sell / Stop Loss: $47.

Cola-Cola (NYSE: KO) - because no one ever went broke, holding Coke.
February 4, 2008 price: $59. Sell / Stop Loss: $43.
May 22, 2008 price: $58.27. Revised recommendation: I'd continue to hold KO here if I owned it, definitely buy it if I didn't. Revised Sell / Stop Loss: $47.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

In the world of diapers, try as other brands might to gain a foothold, it is really a Pampers vs. Huggies world.

Pampers, made by Procter & Gamble (NYSE: PG) has been the market share winner for decades and is P&G's top global brand. But Huggies, made by Kimberly-Clark (NYSE: KMB) has made significant inroads thanks to frequent discounts.

Consumer Reports estimates parents will spend between $1,500 and $2,000 on disposable diapers before their child is potty trained. With that kind of investment, many parents have strong views about which brand is best. Leakage control and rash prevention are the main criteria. Consumer reports rates Pampers (both its Cruisers and Baby Dry brands) higher than Huggies, mainly due to Pampers' superior leakage prevention.

Baby blogs also seem to favor Pampers over Huggies. And in my experience, I do think of Pampers as the "premium" and was surprised that when I actually checked price tags in my local drug store this week, found that they were priced exactly the same.

For my diaper dollar, I don't see much of a difference between the two. I'm all for changing the baby more often and buying a cheaper diaper. If you really put the diapers to the test with, say an eight-hour day at the playground without a change, you might find a difference. But my priority is to spend as little time and money diaper shopping as possible. Costco stocks Huggies in bulk, so that's what we have now.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

When it comes to multi-bladed disposable razors, how many blades is enough? In the long-standing rivalry between the two biggest brands of disposable razors, the current answer seems to be five. For now.

The Gillette company, which in 2005 became part of Procter & Gamble (NYSE: PG), invented the safety razor in 1895, as well as the first razor marketed to women in 1916. They started the current arms race in multi-bladed disposable razors by introducing a twin-blade razor in 1971, and then the triple-bladed Mach 3 in 1998. Schick responded with the four-blade Quattro in 2003, then in 2005, Gillette introduced the five-blade Fusion. Of course, each of these models includes a version for women, and versions with various bells and whistles.

St. Louis-based Energizer Holdings (NYSE: ENR), a U.S. manufacturer of batteries, purchased the Schick brand of razors from Pfizer (NYSE: PFE) in 2003. Outside the North America and Australia, the same products are sold under the Wilkinson Sword brand. Either way, Schick remains a distant second to Gillette in global sales, though some analysts saw patent infringement lawsuits filed against Schick by Gillette as evidence that Gillette recognized a potential threat. Combined, these two brands account for nearly all razor sales in America.

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

Behold the humble potato chip, snack food of the ages. Claimed to have been invented in 1853 in the road house kitchen of Native American George Crum, the potato chip traveled through American snack history in a class of it's own. That is, until in the early 1960s, when it was discovered that you could grind potatoes into a slurry and then press them back into a consumable form.

I sat down one day with a bag of potato chips from Lay's and with a can of Pringles. Lay's are made by Frito-Lay, a property of PepsiCo Inc. ( NYSE: PEP). Pringles are made by Procter & Gamble Co. (NYSE: PG). I wanted to compare the two in order to assess their similarities and differences. What I found were two very different snacking sensations although both are derived from the same source. The Lay's ingredient list is simple. They're made with potatoes, oil, and salt, with no preservatives added. The Pringles ingredient list begins with the same potatoes, oil, and salt, but the product also contains at least traces of wheat starch and rice flour in addition to a couple common food chemicals.