Caterpillar On Deck Next

Caterpillar On Deck Next
January 05 04:26 2019

In a letter to Apple Shareholders, Tim Cook had the following to say about the iPhone Sales slowdown:

China’s economy began to slow in the second half of 2018. The government-reported GDP growth during the September quarter was the second lowest in the last 25 years. We believe the economic environment in China has been further impacted by rising trade tensions with the United States.

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Both FedEx and Apple said things were OK back in the 3rd quarter of 2018 only to say things were getting bad in recent weeks. 

Caterpillar is the world’s largest equipment maker.

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Caterpillar gets 8% of its revenue from China. China is the worlds largest market for construction equipment by unit sales.  Ongoing trade tensions between the U.S. and China and the inevitable slowing economic growth in both economies is causing Wall Street to reevaluate their price targets for all companies, including Caterpillar. 

Earning pre-announcements is a way to ensure that no one acts on information the rest of the investor community doesn’t have and to fend off litigation due to companies not reveling the bad news ahead of time.

It was why Apple pre-announced that they would miss their revenue estimates for the quarter.  It was why FedEx announced a change in its leadership back in December (because that individual wasn’t getting the job done) before announcing earnings two weeks later.  So, I’m surprised Caterpillar hasn’t pre-announced yet, not only due to the bad news from Apple, but also due to China’s PMI for December with a reading of 49.7 from 50.2 in November, marking the first contraction since mid-2017.


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I love Caterpillar, it’s a bellwether of the global economy because of its role as a supplier of key industrial equipment and its broad exposure to global markets.  It’s also why I think they are due to pre-announce within the next 1-2 weeks before announcing their earnings on January 28th. And once price can break the October lows at $112, there is nothing stopping price from going down to the weekly demand at $78.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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rollandthomas
rollandthomas

I'm a retail investor like most of you and learning everyday, but I have been educated and trained to identified the Smart Money on the charts to pick up whatever crumbs they leave behind.

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