Is the CAT Out of the Bag on the Global Economy?

Talk about a a catastrophe.

A slight miss on earningsand investors battered shares of Caterpillar to the tune of 7%, the largest single day decline since the fourth quarter of 2008.

**FILE** Rows of heavy Caterpillar equipment sits ready for shipment at the Caterpillar plant in Decatur, Ill.,in this April 20, 2007 file photo. For American companies with operations that stretch overseas, the slumping dollar has become a fiscal life preserver amid slower domestic economic growth and waning sales. (AP Photo/Seth Perlman, file)
Seth Perlman
**FILE** Rows of heavy Caterpillar equipment sits ready for shipment at the Caterpillar plant in Decatur, Ill.,in this April 20, 2007 file photo. For American companies with operations that stretch overseas, the slumping dollar has become a fiscal life preserver amid slower domestic economic growth and waning sales. (AP Photo/Seth Perlman, file)

"Isolated incident," said Joe Lavorgna, Deutsche Bank's chief economist. "What the results indicate to me is that Japan had a much bigger impact of the global macro chain. The second half recovery remains intact for the U.S."

Still, while that might be the case, if you are an investor in Caterpillar stock, a reversal of fortune might be a ways off, especially considering the slowdown in China.

"Look, what they're saying is things are slow here, and they're slowing in China," said Mike Khouw, head of U.S equity derivatives trading at Cantor Fitzgerald. "That's a bad recipe."

Caterpillar calls were active today, with August 105- and 115-strike calls seeing heavy action, but according to several dealers, those calls were sold, not bought, indicating that options traders don't see Caterpillar stock moving any higher, anytime soon.

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