The Rising Influence of Rising Affluence

[DewDiligence]

CAT had a bad quarter due to sharp reductions in sales of heavy equipment, which is somewhat bullish for commodity prices insofar as supply can’t materially expand without large capital expenditures from the mining companies:

http://finance.yahoo.com/news/caterpillar-2q-profit-falls-43-122721848.html

The world's largest maker of construction and mining equipment posted a 43 percent slide in earnings and cut its profit and revenue outlook for the year.

… Profits fell in each of Caterpillar's big divisions. Operating profit fell 61 percent to $550 million in resource industries, which includes mining. It was down 47 percent to $362 million for construction equipment, and down 3 percent to $955 million in power systems, which makes items including large electrical generators and locomotive engines.

… Caterpillar…cut its full-year profit outlook from about $7 per share to $6.50. And revenue is now expected to come in between $56 billion and $58 billion, down from previous guidance of $57 billion to $61 billion.

CAT’s 2010 acquisition of BUCY is not looking too smart right now.