Caterpillar Slashes Forecast

Morning Miners!

It is 6:54am, the coffee is hot and today's news is not. I don't listen to bankers much anymore but when Caterpillar speaks, the ole Colonel listens. The Big Cat just reported earnings and the outlook is not encouraging:

"Caterpillar expects the global economy to contract 1.3% and remain in recession for most of the year, amid continued tight credit. Though the rate of decline appears to be moderating, the company expects further drops, despite government stimulus plans that are expected to boost construction spending later this year." (WSJ, 4/21/2009)

Recently there has been talk that the so-called reflation trade in commodities coupled with global infrastructure spending would keep companies like Caterpillar floating high on the recession tide. Maybe not.

As we discussed yesterday, copper futures appear to be approaching stall speed and they are an important indicator of global recovery. The sudden downturn in oil prices is another "tell" that we might be in for a longer grind then some expected.

Enough talk, let's walk the walk:

Oil dropped over $1.29 in early trading to $44.59 (May contract). I usually quote the more active June number ($47.39), but the experts seem to believe today's front-month contact is the more foreboding signal of things to come in the oil patch.

The dollar ("Dixie" or .DXY) is pulling back a bit, down 0.15% to 86.536. The commodity index (.CRB) is down 0.23% to 215.74.

Gold is continuing its rally now that "Fear" has returned to the markets, up $2 to $889.5 (June contract); Silver is still over $12 but barely at $12.10; Copper continues its slide, down $.0635 to $2.04; Molybdenum still bebops below $8.

The DOW is down 31 points to 7,811.06; the S&P 500, down 1.8 points to 830.59. Miners are sloppy except for General Moly which has slowed its descent:

Barrick (ABX) $28.58 down 1.69%
Newmont (NEM) $38.56 down 1.28%
General Moly (GMO) $1.47 up 1.38%
Quadra (QUA.T) C$5.50 down 0.36%
Freeport McMoran (FCX) $39.17 up 0.15% (a bellwether mining stock spanning gold, copper & molybdenum)

Steel is doing better today after a downdraft yesterday (good news for General Moly):

Nucor (NUE) 41.9875 up 0.69% - domestic steel manufacturing
ArcelorMittal (MT) 25.31 up 0.64% - global steel producer

Cheers,

Colonel Possum