While negative earnings guidance has knocked the share price
of Caterpillar (
) down, this doesn't necessarily bode poorly for mining
stocks, which if anything, are looking attractive right now.
Full transcript and video
Shares of Caterpillar are down this morning after the
construction and mining heavyweight cut its earnings forecast for
2015 due to concerns about the global economy, and specifically,
capital expenditure from commodity producers.
So what does CAT's warning mean for global investors more
generally? Let's go Trading The Globe. Tim Seymour joins us,
managing director of Triogem Asset Management and founder of
emergingmoney.com. Tim, what does it mean?
Good morning Simon. Well, they're pointing squarely at China.
If you look at what Caterpillar said in 2012, it is different
than 2011 when they said the world is awash in demand; they were
concerned about meeting capacity.
Yesterday they were really saying, and pointing squarely at
dealers in China and even in Latin America, where they think
there's an inventory overhang they need to work through. The
bottom line here is that they are saying the world is moderately
better, that we're going to see somewhat tempered but real global
growth. I think to go out and sell miners here on the back of
what Caterpillar says is... cautious.
If you listen to what Rio Tinto or sorry
) said a couple weeks ago in regard to new investment and capex,
I think they said the same story. Structurally if you look over
the next five to ten years, we may be in a different place. In
the short-term here and now, there's a very good trade on the
miners. If anything, I might be fading a Deere (
), but looking to buy people like Teck Cominco, (
) which has got exposure across not only iron ore and coal,
but gold and copper.
The plays on the miners that have been really beaten up, if
you look at the global growth story, are the ones you want to pay
attention to, because at the end of the day, China has announced
major infrastructure projects. I talked to guys in Brazil
yesterday who said that Dilma's [Rousseff, Brazilian prime
minister] policies on stimulating infrastructure growth is having
an impact on demand. So the industrialists and the mining and
material guys down there say it's far from dead.
Tim Seymour, thank you. You can catch more global trades from
Tim every weeknight on Fast Money and Tuesdays here on Squawk On