Diamonds and Dogs
Tale of Two CitiesTale of Two Cities
Caterpillar (CAT) is a great example of the conflicting information that has economists and market players heading in two different directions. On the one hand, CAT reports earnings last week and blows away estimates as the positive news propels the large equipment manufacturer to new recent highs. That is the good. Several days later though, the company announces it will be permanently trimming 2500 laid-off workers. That is the bad. What might be good for stocks (weak dollar, easy comparisons, etc) may still be bad for the economy. Stocks are rising in the face of a jobless recovery, so the gains we are seeing may or may not translate to a stronger economy at home. Don't confuse brains for a weak dollar and how significant a weak dollar can be for short term earnings at the large, multi-nationals. That may also explain why stocks of US only companies cannot get any head way. To make significant gains from here, the US economy needs to come back to life, and we haven't seen it yet.