Caterpillar and other major corporations are getting optimistic about the global economy. Increasing demand for things like steel and construction equipment may be indicating increased economic activity. Cat is taking a cautious view of the future though, perhaps not ready to go all in on an economic boom. Andrew Tangel and Josh Zumbrun write for the WSJ:
Caterpillar Inc. CAT 5.88% signaled cautious optimism about global growth, offering fresh evidence that many markets are in rebound mode after a years long slump.
The world’s largest heavy-machinery maker, an economic bellwether, in its second-quarter earnings report Tuesday highlighted growing demand in China’s construction sector and a revitalization of the mining industry. The company boosted its earnings outlook for the year, despite sluggish infrastructure spending in the U.S. and weakness in Brazil and the Middle East. …
DuPont Co. and United States Steel Corp. also topped expectations, due to improved demand for products ranging from soybean seeds to flat-rolled steel.
“This is the first time since the Great Recession ended that we’re seeing a synchronized global recovery and that’s what the markets are keying on right now,” said Scott Anderson, chief economist at Bank of the West. “In some past years, whenever the U.S. was doing well, Europe wasn’t and vice versa. Now everyone seems to be more on the same page.”…
A weakening dollar could further boost profits at multinational corporations and, in turn, lift the stock market through the second half.
Sales of construction equipment in North America, Caterpillar’s largest market, rose 3% in the second quarter. But U.S. government spending on roads, bridges and other infrastructure was lackluster, executives said.
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Dick Young
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