Bleak outlook for construction and heavy equipment
ENR.com reports that industrial firms are writing off 2009 and hoping for better days next year.
“I think any kind of turnaround is going to be slow,” says Rich Carlson, vice president of Minnesota-based Carlson Tractor and Equipment Co. His company had a poor 2008, and 2009 is not looking so good, either. “I think the hope is that it doesn’t get any worse,” he adds.
Gerry Couch, president of King of Prussia, Pa.-based Modern Equipment Sales and Rental, is supportive of the proposed stimulus package but has questions about how it will be implemented. “I do believe [the stimulus] will make a difference, but not in 2009,” he says.
Meanwhile, Bloomberg foresees an ugly Monday when Caterpillar reports its earnings. Between the lines you can read a suggestion that Cat’s GDP forecast from the third quarter was a bit optimistic.
Caterpillar Chief Executive Officer Jim Owens, who holds a Ph.D in economics from North Carolina State University, suggested he may update the company’s economic forecast next week that he gave in October. Owens gave a tentative estimate of less than 2.5 percent gross domestic product growth for 2009, according to the company’s third-quarter earnings release.
“The first two quarters are going to be rough,” said Bill Batcheller, who helps manage $650 million in assets, including Deere and Caterpillar shares, at Butler Wick & Co. in Youngstown, Ohio.
“Still, if Caterpillar sticks with the 2.5 percent estimate they gave for GDP growth, that implies they expect a really strong second half,” Batcheller said.
It’s going to be fun Monday: either Cat surprises to the upside and squashes all the short sellers, or surprises to the downside and squashes everybody else. Or a third option: Cat successfully manages Wall Street’s expectations better than those poor blighters at CNH, whose stock got blasted by over a third yesterday, and not much happens and we keep muddling along. The latter will be the least sexy of the bunch, but might be preferable to the whiplash collars the other results induce.