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Caterpillar Misfires

Ring the alarm.

It’s not just Apple anymore:

“Sales in Asia/Pacific declined due to lower demand in China, partially offset by higher demand in a few other countries in the region,” the company said in its earnings press release. “Unfavorable currency impacts also contributed to the sales decline.”

It might not be the end of the world, but Caterpillar is a barometer of global growth. CAT sells construction and mining equipment all over the globe and if they are seeing slower growth, specially in China, then you should pay attention. Some will tell you 2018 was a good year for CAT, but that’s in the past. What matters is the future and the future is uncertain. Growth expectations for 2019 have been revised, which is why the stock dropped nine percent today. Now the stock is beginning to enter bargain territory, but the problem with this line of thinking is timing. What if the market tanks? What if trade talks don’t go anywhere? Then you’re catching a falling knife.

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