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There’s a scene in the unimpeachably brilliant film “The Mummy Returns” when legionnaire Brendan Fraser is trying to outrun the rising sun in order to prevent the death of his little boy. As he nears safety, the speed of light (which is no slouch, speed-wise) begins to catch up with him. It gets closer and closer until he finally leaps into safety.

The North American box office is, in its own way, exactly at the moment before Fraser leaps to safety. After weeks and weeks of 2008 returns that bested their year-ago equivalent, recent weakness have prompted the edge over last year to narrow. Soon, 2007 will overtake the current year, which may be unable to widen its premium before leaping to safety. What was for a while a solid 14% lead over last year has narrowed to a much smaller 4.3%.

One could point to this past weekend as the culprit for when the year-to-date results lost a lot of ground. The top 10 films made $85.2 million, down a steep 24.5% from the $112.9 million made in the equivalent week of 2007. This weekend makes nearly eight consecutive weekends that were lower than their 2007 counterpart. (The current year beat 2007 two weeks ago, but only by 0.6%.)

The top film over the weekend was the card-counting drama “21,” which let the chips fall where they may and was dealt $23.7 million in its first hand. Though there were spades of critics who didn’t heart the film and tried to club it to death, the film should continue to get diamonds from the audience for a while and could even go double-for-nothing next week.

The two other new films this weekend didn’t perform as strongly. MGM’s spoof comedy “Superhero Movie” was defeated by the arch-nemesis of audience indifference, and arrived in third place with a less-than-heroic $9.5 million. Meanwhile, Paramount’s Iraq War drama “Stop-Loss” pulled in $4.5 million in its first battle, good enough for eighth place. The results for Stop-Loss are incredibly surprising, since in the past year, the only movies about war in the Middle East that have performed badly have been “In the Valley of Elah,” “Lions for Lambs,” “Rendition,” “Redacted,” and to a lesser extent, “Charlie Wilson’s War.”

Fox’s “Horton Hears a Who,” which was the top film two weeks running, was edged to second place in its third weekend. The film made $17.4 million, giving it a solid $117.3 million total. Deutsche Bank called the results healthy “even for a family film.”

Next week sees the release of Fox’s kid adventure “Nim’s Island,” Universal’s football comedy “Leatherheads” and Dreamwork’s horror film “The Ruins.” Given the way box office results have been going, ruins won’t be the only scary thing next week.

Rick’s Cabaret has been on a hot streak, but things could be getting even hotter now that a Texas judge stripped away a tax levied against adult entertainment clubs, saying it was unconstitutional. The so-called “Pole Tax,” a $5 per customer charge used to pay for low-income health care and services for sexual assault victims, was struck down by the court on the grounds that it taxed expression that was “politically unpopular, [but] nevertheless protected by the First Amendment.” Indeed.

This first ruling could stand as precedent for other states, some of which are working to legislate similar taxes. Texas was the first to pass the law, which has been in effect since Jan. 1. To combat it, Rick’s upped its drink prices and cover charges.

Merriman Curhan, which covers Rick’s, said the news would be perceived as a positive by investors, who “viewed these proposals as something that could potentially hurt strip club admissions and revenue.”

Ironically, the tax may end up being a positive for the company, which hasn’t seen a negative impact on admissions or a “significant pushback” from patrons since the tax and higher prices went into effect. “We would be very surprised if management reduced all cover charges or drink prices back to their original levels,” Merriman said. “With this in mind, we believe Rick’s Cabaret could experience higher operating margins in future quarter than we have modeled.”

The firm doubted that the tax was having much of an impact in the first place. “If a potential strip club customer can afford to spend $XXX at a strip club on a Friday night, is he/she really going to reconsider the night out if it’s now going to host him/her $XXX+ $5?”

Though it didn’t expect the tax to derail Rick’s down the line, Merriman said the ruling could boost the company’s second-quarter results. Because all the $5 per customer charges were placed in escrow until the ruling was decided, and the ruling came before the end of the quarter, the firm said it wouldn’t be surprised if the company released the escrow funds into its second-quarter revenue and earnings at 100% margin. “We estimate this could boost second-quarter earnings by 6 cents to 8 cents a share,” the firm wrote.

Though it didn’t raise its second-quarter outlook of 30 cents a share, Merriman said the boost gave it “increasing comfort” in its estimate.

It’s been raining write-downs and credit problems on Wall Street as of late, leaving many investors in search of a warm, dry brokerage to shield them from the storm. According to Sanford C. Bernstein & Co., the safest shelter is Morgan Stanley.

“Morgan Stanley is the best-positioned firm to weather the difficult fixed income market conditions that we expect will continue through the remainder of 2008,” Bernstein said in a note to clients. As a result, the firm rates Morgan Stanley shares at outperform with a $65 price target, the only outperform rating in Bernstein’s large-cap broker coverage.

Senior Bernstein analyst Brad Hintz said Morgan Stanley Chairman John Mack has empowered his management team to shift direction and reposition the firm to weather a prolonged tough credit environment that has plagued the market since August. Hintz noted that unlike Morgan Stanley’s major competitors, the brokerage is reducing its balance sheet exposure, shedding troubled assets and reducing its leverage ratios.

“Based on the normalized business mix of brokers, Morgan Stanley is the right firm to own during this uncertain point in the cycle,” Hintz continued. The analyst said Morgan Stanley is less exposed to fixed income, commodity and currency net revenue than Lehman Brothers and Goldman Sachs and has less capital-intensive revenue than either of the two firms. Bernstein also said Morgan Stanley is more exposed to client asset price net revenue than Lehman or Goldman and less exposed to decline in private equity investment revenue than either Goldman or Merrill Lynch.

“Bernstein believes the diversification of Morgan Stanley - which constrained the firm’s performance during the 2005 to 2006 trading boom - makes Morgan Stanley less exposed to the institutional downturn and market turmoil still ahead,” Hintz said. He noted that Morgan Stanley, along with Merrill Lynch, has the strongest liquidity position among the large-cap brokerage firms, leaving Morgan Stanley well positioned to address any incremental pressures to its funding base and allowing Bernstein to recommend the stock as a “reasonable holding in this difficult and volatile fixed income market environment.”

It looks like the merger and acquisition party is over.

After four years of tremendous deal flow at record-breaking levels, U.S. M&A activity is on track to see its first annual decline since 2002, according to a recent report from Thomson Financial Proprietary Research.

This has only happened five times since 1990. But with merger volume off to a slow start this year, and the credit squeeze continuing to weigh on deal making activity, the research report said 2008 will likely see a year-over-year decline in M&A volume.

“At the close of last year when we put forth our 2008 predictions for the pace of M&A activity, our contention was that deal volume in terms of dollar proceeds would likely be flat from 2007 results ($1.49 trillion),” the Lab Thomson report said. “That forecast, while recognizing the slowdown in deal activity that started in third quarter 2007, was based in part on active participation by sovereign wealth funds, a flurry of consolidations in the financial sector and a rebound in private equity acquisitions during the course of 2008.”

However, using data pulled from the Securities Data Co. ’s Platinum merger database, the report found that first quarter 2008 deal volumes have “slumped significantly” from the year-ago period. “First quarter 2008 is poised to rank as the slowest quarter since the third quarter of 2004 and slowest first-quarter since 2003.”

As result, U.S. merger volumes are estimated to reach only about $1 trillion in 2008.

Still, Thomson Research said you shouldn’t take down all your party decorations, as merger activity may pick up later in the year. “Looking at the second half of 2008, an improving credit market along with a significant level of available funds for private equity to put to use will likely boost the environment for M&A gains,” the report said.

In 2007 American farmers planted an astonishing 93.6 million acres of corn - just shy of the 1944 record of 95.5 million acres - more than what they planned in early March of that year. With “ethanol” making its way into the mainstream lexicon, the rush was on to plant as much corn as the crop market would bear.

When the latest Department of Agriculture farmer planting survey is released before the market opens Monday, expect a reaction in stocks, no matter what the numbers say.

Describing the survey results as closely watched is an understatement. The volume of corn to be planted has implications for fertilizer demand, ethanol producers, cereal makers and by extension, even farm equipment makers such as Deere & Co.

The corn acreage number will be “critical,” said Citigroup’s David Driscoll, “as the market continues to measure whether the nation can continue to produce enough corn to satisfy both food and fuel demand.” He estimates prospective plantings of 87 million acres (the consensus) or more, which would be neutral for ethanol and food producers. Anything near 85 million acres or less would drive up corn prices, potentially denting ethanol and food stocks.

The official USDA forecast in February predicted 90 million acres of corn, but the consensus has fallen since then.

UBS analysts are forecasting a figure closer to 85 million acres. “Given the significant investor activity in the ag sector and the current historically high prices of ag commodities, we would expect larger than normal interest in the acreage forecasts,” analysts there wrote in Friday research note. “If overall acreage for all the major crops disappoints, there could be a rally in all he commodities, as demand expectations have remained high.”

An across-the-board agricultural commodity rally could boost agricultural-related stocks such as Monsanto, which recently boosted its profit outlook on its seed business, DuPont and fertilizer producers.

The USDA release will also list the expected plantings as of March 1 for corn, wheat, oats, soybeans and other crops.

If anything comes of the Senate probe into the Fed-backed JPMorgan-Bear Stearns tie-up, it’s a higher price-tag on the deal, according to Sanford C. Bernstein analyst Brad Hintz.

Asked about the likely outcome of the investigation, Hintz told Thomson Financial News, “None. Come on, it’s a congressional investigation.”

The one other possible result could be that the price of the deal rises, the former Lehman Brothers chief financial officer said, because the current offer of $10 a share undervalues the troubled investment firm. Hintz has valued Bear Stearns at around $7 billion “in an unpressured environment.”

Now that the Fed is giving brokers access to the discount window, some on Wall Street may be speculating that Bear holders can use that as a bridge to negotiate a better deal, he said. But at the time the deal was struck, Bear was in no position to negotiate better terms.

“The fact the Bear stockholders were able to get what they did is very good,” Hintz said. “When Drexel failed, it got nothing.” Drexel Burnham Lambert Inc. was a major investment bank that failed in 1990 amid felony securities fraud charges relating to its heavy investment in junk bonds. At its height, it was the fifth-largest investment bank in the United States.

In exchange for the headaches related to buying Bear, JPMorgan gets Bear’s prime brokerage, high-net-worth and asset management operations, which Hintz sees as credible businesses for JPMorgan. The former executive countered arguments that the buy will saddle JPMorgan with a floundering mortgage business. “You can argue that the mortgage market won’t be as large,” Hintz said. “But you can’t make the argument that the mortgage market won’t exist. There will be something that will be the equivalent of Alt-A and securitizations.”

And although there are problems in Bear Stearns’ hedge fund business, “its clients will sleep soundly,” once it’s in JPMorgan’s hands, Hintz said.

If consummated, the deal “certainly is a feather in [the] cap for Jamie [Dimon] and a personal disaster for employees of Bear,” Hintz said. Pointing to the Fed’s rescue of Continental Illinois, Hintz noted that some may later ask why the Fed didn’t get some equity in the deal if it turns out to be as “wonderful” for JPMorgan as the Continental Illinois purchase turned out to be for the Fed.

In 1984, the Fed rescued Continental Illinois, the seventh-largest bank in the U.S. by deposits at the time. When no buyers could be found for the bank, and the government feared a failure would cause a crisis that would cripple the entire banking system, the Fed removed the bank’s executives and bought most of the its equity. It sold the last of its stake in the bank in 1991.

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Wall Street is on track Friday to rebound from a two-day pullback as investors await key personal income and spending data.
News that United Technologies Corp. has acquired a 3.5% stake in Diebold Inc. also will supply an early focus.

According to spread bettors IG Index, the Dow Jones industrial average is expected to open up 91 points at 12,393. S&P 500 futures were up 9.20 points at 1,339, while Nasdaq 100 futures climbed 13.25 points to 1,805.25. On Thursday, Wall Street sank in volatile trading after the government confirmed that the last quarter of 2007 did indeed suffer a sharp economic slowdown.

The Dow industrials fell 120.40 points, or 0.97%, to 12,302.46, the Nasdaq composite index lost 43.53, or 1.87%, to 2,280.83, and the S&P 500 index declined 15.37, or 1.15%, to 1,325.76. The yield on the benchmark 10-year Treasury note rose to 3.52% from 3.46% late Wednesday, and light, sweet crude rose $1.68 to $107.58 a barrel on the New York Mercantile Exchange.

ECONOMIC DATA:

• Personal income for February, 8:30 a.m. ET, 0.3% estimate
• Consumer spending for February, 8:30 a.m. ET, 0.1% estimate
• Reuters/University of Michigan (final) consumer sentiment index for March, 10 a.m. ET, 70.0 estimate

AFTER-HOURS ACTION:

After the closing bell Thursday, Bear Stearns Cos. Chairman James Cayne disclosed that he sold his entire stake in the investment bank for $61 million as it appears closer to a takeover by JPMorgan Chase & Co. Apollo Group posted a fiscal second-quarter loss of $32 million because of a charge related to a class action lawsuit. Accenture Ltd. said profit surged 37% in its fiscal second quarter, and Red Hat Inc. said its fourth-quarter profit rose 7%.

Private Equity briefing with Bob Keiser

Merger Moment with Rich Peterson