In my little world, I expect consistency. Do me a favor, will ya? Please remind me how nutty that is. Yet, even as I ask for that rebuke, I still find myself unable to delete that corrupted file from my mental directory. For example, after Caterpillar reported earnings this morning, I expected the market would be consistent, meaning, that it would gather steam and push forward because of Caterpillar’s earnings. After all, when Apple reported blowout earnings, the NASDAQ rose in response. I expected that and the market did not disappoint. Consistency.
Mind you, Apple is a stellar company, and it is a bellwether for U.S. and global economic activity, but when it comes to assessing global economic activity regarding structural growth, there is no bellwether more watched than Caterpillar. The company tentacles stretch across the breadth of the U.S., over the vast oceans into all countries across the globe, especially countries such as China that are expanding infrastructure at a blistering pace.
Caterpillar Inc. reported a 58% rise in quarterly earnings on Thursday that blew away Wall Street expectations and it projected strong growth for 2012 despite global economic uncertainly.
And for a brief moment this morning, the market behaved with consistency. All three indices rose with strength on the Caterpillar news, and then something happened on the way up. Another headline came out and the next thing you know, the skittish market stepped on the brakes and shifted into reverse. I understand that any one of the many dangerous variables out there could cause an immediate backslide in the market, and perhaps it is just coincidental, but the statistic that came out just before the market slide seems so ominous.
New-Home Purchases Fall, 2011 Worst Ever for Sales
OMG, the “worst ever” sounds really, really bad. Hmmm … I wonder … How bad is that statistic? True, it does signal a continuing problem with the construction industry, a large source of employment in the U.S., and it does suggest a continuing problem with U.S real estate market, and it does point to a consumer less interested in buying the more expensive new homes. Yet, one cannot look at the fundamental problem in the real estate market – inventory is too high and prices are falling – and not see less new homes purchased means less new homes built, which means less homes added to the existing inventory. How is that bad? Just saying …
Across the Atlantic, the world’s top corporate brass, political leaders, and some notable names in government are hobnobbing in Switzerland at the World Economic Forum (WEF). In fact, Angela Merkel spoke there about the ongoing fiscal issues in Europe.
As I watch interviews with the Captains of Industry and those who hold sway over government economic policy, I clearly see the prevailing sentiment is that Europe has to solve its problems, at least enough to inspire a return of confidence in both the financial sector and the economy. As I hear the words, I detect a strong current of pressure from those whose dollars number in the many trillions and whose influence is powerful. Yes, it is clear to me, those who have so much to lose are not happy with the politics that act as a barrier to achieving a solution. True, the process of righting the mega-ship is a tough, grueling, and long process, but time is running out and the message is clear – get it done!
Trade in the day – Invest in your life …
