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Recap
By Steve Romasko
Reoccurring themes tend to be the norm for the market, as the entire month of January was largely motivated by poor economic data, earnings guidance (or lack thereof), and the indecision of the government on how best to handle the financial crisis and economic policy. This week followed the same pattern, marking the worst month of January on record—closing down 8.6%
The market was given a surplus of earnings data to mull over this week as the heart of 4Q earnings season is upon us. The lack of appropriate guidance ahead of estimates, and the consistent results coming in below expectations provided an indication that estimates may be too high. This was most evident in Dow component, Caterpillar (CAT), as the industrial giant missed earnings—reporting $1.08 EPS compared to consensus $1.31; guidance was also far off-pace, as they issued rather vigilant guidance of $2.50 EPS for FY09, well below analysts’ guesstimate of $4.50—With 60% of its revenue generated abroad, the careful guidance reflects their concern on the continually deteriorating global economy and its effects on infrastructure spending.
