Cat quarterly: what the analysts are saying

At Caterpillar’s quarterly earnings report this morning CEO Doug Oberhelman said:

“The good news is this doesn’t feel like 2008. Interest rates are low, central banks are prepared to inject more liquidity if needed, and housing is coming off lows, not a peak, and seems to be improving.”

The Peoria, Illinois based company reported profits up 67 percent, revenue up 22 percent, and earnings per share of $9.60, which bested the predicted $9.54.

Pessimists will no doubt nit pick at these details and Cat has lowered its forecast for the rest of the year. The economy in Europe is questionable, China’s soaring growth is coming in for a what everybody hopes is a soft landing and the housing rebound is grossly overstated.

But there’s a upside too that the analysts aren’t mentioning. Construction related work in the shale oil and natural gas industry is going to boom long and hard in the U.S. for years to come. Mining is still a critical part of the world economy. And while the U.S. recovery seems to have hit a plateau, it couldn’t get much worse. And there seems a groundswell afoot to reign in Wall Street and the banker/gangsters, and once that happens, growth and confidence in the U.S. economy will come back.

Two other recent posts, similar in nature,but coming from opposite ends of the Internet also point to a fundamental change in the U.S. economy that’s going to favor big industrial, old school companies like Cat and Deere.

Over at the Seeking Alpha website Dana Blankenhorn writes about what’s left in the U.S. economy post recession. Financial engineering is dead. Who wants to invest in the banks after they’ve sucker punched their own customers and torpedoed the economy. Apple and all the tech stocks have probably hit a plateau. But Cat and Boeing both showed upsides. 

If Blankenhorn’s short post doesn’t convince you try this longer piece about the resurgence in farming in the U.S. by Chrystia Freeland.  The quick take on Freeland’s article is that people are always going to need food. And you can also extrapolate that they will also need water, electricity, decent roads, fuel and shelter. Those things will never go away, but the shiny baubles Apple produces, the toxic deals Wall Street puts together for it’s customers (i.e. suckers), the trash and pseudo news pumped out by television? Who needs those? And how hard would it be to live without them?

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