How long can this last? Not only is the CBOE Volatility Index (VIX) down to its lowest levels since May, but the Trin has been below 1 for almost the entire 3 trading days of the current month. A Trin below 1 indicates that more volume is going to stocks on the upside versus stocks on the upside; in other words, upside momentum.
Infastructure plan? President Obama's proposal to rebuild 150,000 miles of roads and lay and maintain 4,000 miles of railways, and a new air traffic system — a $50 billion investment over the next 6 years — is getting some chatter among traders this morning.
The good news: there are many existing transportation programs that are facing significant funding shortfalls; this will help. The building and materials stocks will like this: stocks like Cemex are up.
The bad news: it requires Congressional approval, so the timing is very uncertain and the Street believes the government botched the last attempt to boost infrastructure spending. The proposal does contain an infrastructure bank that would allow for private investment, which theoretically would be a better way to fund these operations that tax-funded systems.
1) Big week for corporate bond issuance. Bond traders tell me that we could get additional supply tonight from Home Depot, Dell, and others.
2) Air Products raised its bid for rival industrial gas producer Airgas by 3 percent to $5.5 billion. Airgas shareholders would now get $65.50 per share if the deal is approved by the Airgas board, which has deemed prior offers "grossly inadequate."
3) Coca-Cola Enterprises raised its full-year earnings guidance to $1.78-$1.82 vs. $1.81 consensus on strength in Europe. Long term, the bottler sees revenue growth of 4 percent-6 percent and earnings growth in the "high single digit range." The company also announced it expects its $12 billion sale to Coca-Cola will be completed in the fourth quarter.
4) Barclays falls 6 percent on the announcement that CEO John Varley will retire in the first quarter of next year. As expected, replacing him will be its current head of investment banking, Robert Diamond, who will take the helm as CEO on March 31. Diamond, who has been with the British bank for 14 years, is largely responsible for turning Barclays into an investment banking heavyweight in recent years.
5) AMR reported August traffic rose 3 percent as a jump in traffic along its Latin America (up 9 percent) and trans-Pacific (up 21 percent) routes helped offset fairly flat domestic traffic (up 0.6 percent).
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