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Global Slowdown Weighs On Earnings

Thank heavens, we are almost finished with earnings from financial companies, and starting Monday we will see earnings from many industrials and energy companies.

Caterpillar reports Monday.

Its competitor Komatsu warned today, noting a big drop in demand from emerging markets. One analyst at Sterne Agee said crane demand in Dubai "has evaporated."

In theory, the stimulus package should be a big help to Caterpillar and other capital goods companies, but the global slowdown has trumped the stimulus package: We've seen weak commodity demand, and poor housing and commercial real estate hurt sales for machinery.

As a result, expect a big drop in sales (20 percent or so) and expect Cat to say that earnings will be back-end loaded into the second half of 2009, when the stimulus will provide some help, and the global economy may look a little stronger.

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