Zacks.com releases the latest Analyst Interview. Today’s interview is with senior analyst Mario Ricchio, who talks about Caterpillar (NYSE: CAT).
A synopsis of today’s Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.
What effect, if any, do you expect the global economy to have on the machinery group as a whole?
We are extremely concerned about the global economy and the negative feedback loop on cyclical industries such as Machinery.
Let’s start with the United States, where we were pessimistic and remain so. There is very little positive news on the domestic economy other than the recent decline in oil prices. The residential real estate market is in a severe downturn and the commercial construction market is right behind it. It looks like Sam Zell nailed the top of the cycle by selling Equity Office Properties to private equity.
We expect U.S commercial construction activity to slow dramatically amid a weaker labor market, reduced discretionary spending, increased retail vacancy rates, and tighter credit conditions. The decline in U.S construction spending is expected to negatively impact the companies in our coverage, such as Caterpillar (NYSE: CAT).
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