Beware of dodgy headlines. Beware of soft estimates.  As earnings season forges onward, nervous investors are latching onto any morsel of good news they can find - even if it’s artificial.

Take Caterpillar (NYSE: CAT), for example. With a history dating back to 1925, the company is now the top manufacturer of construction, mining, and forestry equipment, plus industrial turbines and engines for machinery and power generation systems. Whether it’s construction, agriculture, energy, marine, or infrastructure, Caterpillar’s presence is splashed across several sectors.

It’s no surprise, therefore, that its quarterly numbers are always keenly anticipated and thoroughly scrutinized - not just because it’s one of America’s leading firms, but because it’s also a key indicator of economic health.

And its latest batch of results don’t bode well…

Caterpillar’s Second Quarter Crawl

Back in April, my colleague Karim Rahemtulla noted the importance of Caterpillar’s performance as a barometer for the wider economy.

It came as the company

...

Dollar-Euro parity? Crude at $12 a barrel? 15% unemployment? J. Christoph Amberger presents the Today’s Financial News top predictions for 2009…

A month ago, I asked my colleagues at TFN to think about the year ahead… the events that will shape the year both politically and financially. In short, to come up with realistic “Predictions for 2009″. As history is fast-forwarding, some of these events have already taken place. Others look increasingly probable… and not half as far out as they appeared just a month ago.

Here they are, in no particular order

*** Dollar hits parity against euro by June 2009.

*** Oil bottoms at $12 per barrel by April 2009.

*** Gold falls to $500 as Indian economy crashes and Dubai abandons spending spree.

*** Russian troops wearing Gazprom uniforms invade Ukraine to “protect” natural gas pipeline. The Russian stock market collapses. Three European energy stocks soar. (Yes, there’s

...

In the currency market, the dollar edged lower against the euro. Late Monday, the euro was trading at $1.275 vs. $1.2712 on Friday. China’s state-run news agency, Xinhua, said that the government’s stimulus program will “will loosen credit conditions, cut taxes and embark on a massive infrastructure spending program in a wide-ranging effort to offset adverse global economic conditions by boosting domestic demand.”

The only question was how quickly the money would hit the streets, and Jing Ulrich, J.P. Morgan Chase, said that, “With a healthy fiscal surplus and low government debt, China appears to have considerable resources to ramp up its fiscal spending in a short period of time.”

Weekend news of the Chinese package had lifted equity markets around the world and revived risk appetite, but only momentarily in the U.S. as domestic stock markets ended the day down and the buck—which has been a primary destination for

...

China’s $585 billion spending package is equivalent to the U.S. spending nearly $3 trillion in fiscal stimulus. Massive? You bet it is! Inflationary? Absolutely! A boost to the entire global economy? YES! -- LarryChina unveils stimulus package as growth slowsProgram will spend more than $585 billion to jump-start economyNovember 10, 2008 (MarketWatch) -- China unveiled on Sunday what it described as a "massive" economic stimulus package in an effort to reverse slowing economic growth in the world's most populous country.China's state-run news agency, Xinhua, said that the program will "will loosen credit conditions, cut taxes and embark on a massive infrastructure spending program in a wide-ranging effort to offset adverse global economic conditions by boosting domestic demand."The package is valued at about 4 trillion yuan ($586 billion), to be spent over the next two years.Resource stocks on fire as

...

China’s State Council approved a massive $862 billion stimulus package of capital spending and measure to boost consumer spending.

Massive infrastructure spending on roads, railways, airports and the power grid Land reform for rural farmers to increase incomes Social welfare projects such as affordable housing and environmental protection. Increase in bank lending limits Reduction of the value added tax

To put this amount into perspective, it dwarfs the $100 billion we spent on last summer’s tax rebates.

China's stimulus package amounts to nearly 15% of annual economic output spread over barely two years. Another yardstick of its scale: In the Asian financial crisis of 1998, China responded with a package worth just 1.2% of gross domestic product.

 

The Chinese government announced that it will spend $146.5 billion ($1 trillion RMB) over the next three years on Sichuan earthquake reconstruction. Plus, China increased its budget on infrastructure --- roads, bridges, ports, etc --- from 2 trillion to 5 trillion RMB over the next five years. Somebody is going to get very rich from that massive infrastructure spending.