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Caterpillar Inc. (NYSE:CAT) stock news and links

News

Today’s close: Down 1.68%

Sellers came back to town Monday as Caterpillar drifted lower all day amid fretting over falling oil prices and a general wait-and-see outlook on Bank Rescue Plan No. 14,472, to be unveiled Tuesday. Full quote at Yahoo Finance.

Indexes were essentially flat: Dow, down 0.12%; Nasdaq, 0.01%; S&P 500, up 1.28 (0.15%). Wrapup at Market Watch.

Caterpillar’s volume of 9 million shares was considerably below average, revealing little conviction in today’s selling, which seemed mostly like profit-taking after last week’s late boost. The whole world’s waiting to see what Congressional Cavalry is cooking up. That could drive the action till Obama inks his signature on the stimulus package.

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Tom Mangan posted at 1:13 pm February 9th, 2009 |

News

Obama coming to Caterpillar on Thursday

A Wall Street Journal blog post says the prez is coming to Peoria on Thursday:

Obama will hold a live televised press conference tonight at the White House, and travel to Fort Myers, Fla., on Tuesday for another townhall meeting. Spokesman Robert Gibbs said today that Obama will add a stop on Thursday to Peoria, Ill., to visit Caterpillar Inc.

Turns out the Peoria Journal Star is on the story.

Great quote from Obama insider David Axelrod at Huffington Post:

One thing that we learned over two years,” Axelrod added, “is that there’s a whole different conversation in Washington than there is out here. If I had listened to the conversation in Washington during the campaign for president, I would have jumped off a building about a year and a half ago.”

I seem to recall that very same conversation saying Obama had no earthly chance to become president. So maybe he’s on to something.

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Tom Mangan posted at 10:59 am February 9th, 2009 |

Economy

Commodities bottoming?

Mining Weekly notes a Barclays Capital commodities analyst told a convention in South Africa that the first quarter of 2009 is likely to see the worst of the current downturn, but that things should pick up by the end of the year.

Norrish expected the first quarter to prove the bottom of the price cycle, and expected growth to improve in the second half of the year.

However, conditions were unlikely to be in play for a sustained recovery until late 2009.

Norrish listed three factors that encouraged the belief that the commodity sector would begin to improve later this year. These included the fact that Chinese business confidence was bottoming out, dry-bulk rates were moving up and the decline in US home loan applications has stalled.

In addition, he argued that China’s spending package would support economic growth and increased demand for metals, particularly copper, aluminum and zinc.

In the mining sector, commodity prices have to recover before Caterpillar’s “replacement cycle” argument kicks in: lots of operators have old Cat equipment that needs to be replaced, but the only way it’s affordable is if the metals and minerals bring in significantly more than they cost to produce.

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Tom Mangan posted at 8:40 am February 9th, 2009 |

Cat people

Caterpillar insiders buying up shares

A site called Gurufocus notes several stock share purchases by Caterpillar brass:

Director Daniel M Dickinson bought 3,037 shares of CAT stock last Friday … Director Peter A Magowan bought 15,000 shares total January through February …

Generally, insider buying picks up around market bottoms. Historically, Caterpillar has bottomed around $30 a share, so these are not unreasonable bets. Mind you these are exceptionally wealthy individuals (Magowan owns the San Francisco Giants) so they’re gambling with bucks they can afford to lose.

(Thanks to Alert Reader G. for tipping me to these buys).

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Tom Mangan posted at 8:16 am February 9th, 2009 |

Jobs

More Caterpillar layoffs in the wind?

Merle Widmer at Peoria Watch says he’s hearing that more people will get the heave-ho today; this gibes with some rumors I was told last week, namely that trimming the white-collar ranks would start in earnest this week.

Presumably these are among the non-production jobs mentioned in the most recent earnings report rather than evidence that things are getting even worse. Caterpillar expects this round of cuts to happen by the end of March.

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Tom Mangan posted at 7:35 am February 9th, 2009 |

News

6,000 gallons of oil sludge spills into river from Caterpillar plant in Joliet, Illinois

The local paper in Joliet has the most complete report (besting the grownups at the Chicago Tribune, no less) on Sunday’s spill, which happened when an open-air storage tank for used oil overflowed because of a pump malfunction. The oil sludge spill contaminated three miles of the Des Plaines river.

How much damage the spill could potentially create is unknown.

The first step in such a spill is to contain it, said John Lesnak, environmental protection specialist in surface water section at the Illinois Environmental Protection Agency.

Trying to contain the sludge is just what the Coast Guard was doing, with help from the Channahon and Rockdale Fire Departments, Joliet police Lt. Jeff Allbert said. They are surrounding the contaminated water with a floating wall, Mitchell said.

That wall, also called a boom, is a floating absorbent ring that floats on the water.

“If (the contaminant is) floating, they just corral it with these booms, these floating rings, and then they go in with a sweeper and they just slurp it up,” Lesnak said. “The idea is they contain it with the booms so it doesn’t spread and then they clean it up.”

That was the plan, according to Mitchell, who said after the booms collect the spill, two vacuum trucks on the scene would suck up the sludge.

While officials said there was not harm to humans nor any evidence of fish or waterfowl harm, Mitchell did point out that if there was an animals within the three-mile radius, it could be in trouble.

For those who’ve never worked in a factory or machine shop: oil lubricates cutting surfaces and various manufacturing processes. Basically you pour oil over something to keep drill bits and other cutting things from overheating (also, reducing friction keeps cutting tools sharper longer). The oil then flows down into a catch-basin of some sort and gets recycled.

Presumably this left-over oil is what was stored in the tank that overflowed.

I read somewhere that 6,000 gallons is about how much a tanker truck carries.

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Tom Mangan posted at 7:13 am February 9th, 2009 |

News

Today’s close: up 5.28%

Caterpillar notched its first positive week of 2009 with a 7.8 percent pop from last Friday’s close of 30.85. There was no sane explanation for the three-day buying binge that got us here (today’s lame excuse: terrible unemployment numbers will hasten passage of the federal stimulus package. Right.). Full quote at Yahoo Finance.

Major indexes closed in the green too: Dow, up 2.70%; Nasdaq, up 2.94%; S&P 500, up 2.69%. Wrap-up at Market Watch.

Volume in Cat shares of 16 million was down a bit from yesterday, but still well above average. Three days in the green on high volume suggests a lot of confidence in Cat’s prospects (though I can’t help wondering how much short-covering had to do with these big booster steps), and today’s close is well above yesterday’s $32 resistance level. Next week will be the test.

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Tom Mangan posted at 1:17 pm February 6th, 2009 |

Cat people

Caterpillar CEO to join Obama’s economic advisory board

President Obama’s assembling his economic dream team:

The group also will include Jeffrey Immelt, chairman of General Electric, and Jim Owens, the chairman of Caterpillar Inc., which announced last week the layoff of 20,000 jobs. William Donaldson, a former Securities and Exchange Commission chairman, will also serve on the board, along with Roger Ferguson, the president of T.I.A.A.-CREF, and Martin Feldstein, a Harvard University professor, who was the chief economic adviser to President Ronald Reagan.

The group also includes two leading labor officials: Richard Trumka of the A.F.L.-C.I.O. and Anna Burger of the Service Employees International Union. The board, which will meet for two years, will be guided by Austan Goolsbee, an economic adviser to the president.

Strikes me you’d have trouble getting this group to agree on whether today is actually Friday, but it does give the impression of something being done.

A reader comments: “Looks like having Ray LaHood in a cabinet position is already paying off Cat with Jim Owens’ appointment to the Board of Economic Advisors.”

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Tom Mangan posted at 8:46 am February 6th, 2009 |

News

Cat sells bonds worth $3 billion

Bloomberg says Caterpillar’s sale yesterday of $3 billion in bonds will help it pay for debt coming due this year.

The $3 billion of bonds the Peoria, Illinois-based Caterpillar sold yesterday in three issues will bolster the $7.3 billion of committed credit facilities and $2.7 billion of cash the company can use to meet its maturities this year, said Bruce Clark, a corporate debt analyst with Moody’s in New York.

“It’s very constructive,” Clark said in a telephone interview yesterday. “It goes a long way toward addressing the liquidity shortfall.”

Cat’s stock is in raging-bull mode today, apparently for the simple reason that it was able to find buyers for these bonds.

The bond sales included $1.65 billion of five-year, 6.125 percent notes and $1 billion of 10-year, 7.15 percent debt, both of which were priced to yield 425 basis points more than Treasuries of similar maturity. The company also sold $350 million of three-year, 5.75 percent securities at a spread of 437.5 basis points. A basis point is 0.01 percentage point.

The spread is the risk premium Cat has to offer to entice bond buyers. Cat paid a bit less this time than it did for bonds sold in December, but still more than last September (apparently before all hell broke loose).

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Tom Mangan posted at 8:27 am February 6th, 2009 |

Machinery

I could get hooked on Heavy Equipment Forums

Something about stopping in on Heavy Equipment Forums makes me feel like a skinny kid surrounded by Real Men Who Do Real Work, but then I’m reminded that most new machinery has joysticks and power steering and the whole idea of machines is to avoid manual labor.

One issue that has some equipment people up in arms is the new California emissions controls, which won’t be such a big deal for very large operators who go through a lot of machinery and constantly have to upgrade. Medium to small contractors with only a few tractors will have to make the same engine upgrades as the big guys, which could put them out of business, as this post notes:

Now we have a situation where ALL machines that get used over 100 hours per year need to be replaced of retrofitted. The large companies that replace their machines regularly already do this, so it is of minimal concern to them. The mid size contractor who typically buys a used machine is now bearing the brunt of this cost, as now he needs a new machine whether he has work for it for 5,000 hrs per year, od 200 hrs per year.

The very small user, the property owner or owner operator with one machine is not affected as much, as there are exemptions for them. Although the opportunities for the owner operator will get limited as more jobs require tier 3 or newer machines or you can’t work there.
The average sitework contractor is bearing the brunt of this reegulation, because most of them do not do a volume of work to justify the payments on brand new iron, and if they do, they likely fall in the larger first catagory.

For a contractor doing small to mid sized jobs, the only way he can get the work is by using older, less expensive iron, as the jobs are not of a long enough duration to pay off a new piece, and if it does not work for just a short while, it will choke you with the payments.

The real kicker here is that when all the studies were done, they found that just the federal rules on the manufacturers would get the emissions to the same place by normal fleet retirement only a few years later than this massive retrofit and replacement they have enacted. I think it was 3 or 4 years to get to THE SAME PLACE!!

Now we have been forced down a road that will break the backs of many small to mid sized companies, as they will not be able to finance the amount of new equipment and retrofits that the law says we need just to operate.

Rest of the thread’s here.

And this one is fun: newbie asks which tractor he needs to build a fishing pond on his farm.

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Tom Mangan posted at 11:18 pm February 5th, 2009 |