Another earnings season is upon us. Caterpillar (CAT), the bellwether for the global economy, just warned.
In its announcement on Thursday, Caterpillar noted that 2015 would be its third straight year of sales declines. With sales also expected to decline in 2016 to around $48 billion, the company could be looking at its first four-year stretch of sales drops in its 90-year history.
At this juncture Caterpillar’s stock price is down close to 50% from a year ago. The primary question is…..is this just Caterpillar’s problem, due to mismanagement, or is the global economy really falling apart? Plus, will that be evident in Q-3 earnings or will the corporates be able to squeeze out another miracle with the help of accounting and share buybacks?
Well, I think we are about to find out. However, either way you twist it, this is not a good sign. With Shiller’s Adjusted S&P P/E being the third highest in history, right behind 2000 and 1929 tops, this warning shot doesn’t bode well for the overall stock market.
