When was the last time you heard there could be a $20 billion industrial deal in the works? When was the last time that anyone felt you couldn't short the cyclicals with reckless abandon because of Chinese, Indian and Brazilian tightening and U.S. and European weakening?
I can't recall a time.
Yet that's what's happening today with rumors rife that United Technologies (UTX:NYSE) is about to buy Textron (TXT) or Tyco (TYC) or Rockwell Collins (ROC) or Goodrich (GR) or any number of a host of companies that could fit in the giant conglomerate's diversified portfolio.
I find even the notion that anyone believes it can happen to be quite intriguing. These kinds of deals used to be the mainstay, the staple of Monday mornings, where you pretty much expected a combination as businesses sought to capitalize on tremendous emerging-market growth.
These days, though, you expect to hear more stories like those from Cooper Industries (CBE), a really strong manufacturer that preannounced slower earnings growth, citing residential and commercial, or Nucor (NUE), which once again this week said business just isn't as good as was to be expected.
Perhaps some believe that business simply isn't that bad around the globe. We got strong auto sales out of Europe in the month of August. We have had executive after executive on "Mad Money" saying Asia remains strong. United Technologies itself, the rumored acquirer, came out just last week and said earnings estimates will be made, joining Eaton (ETN), which has a substantial European business, in saying, "What the heck is everyone so worried about?"
The answer had been, "Everything," but especially Europe and our own deteriorating growth picture. Maybe those worries are slowly dissipating? Maybe people feel that at this time next year we might be on the verge of dealing with a more pro-business president? Maybe stock prices are so low that some companies just want to take advantage of this opportunity?
No matter. The animal spirits kicked in today for the rumored industrial takeouts. The fact that they could even have any credence shows you that some are feeling much better about the much-scorned smokestack companies.