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Caterpillar Earnings and US PCE Data Previews – 26th January 2024

Intermediate

Caterpillar Earnings

Caterpillar Inc., a global leader in manufacturing construction and mining equipment, engines, and industrial gas turbines, holds significant importance in the financial landscape. Renowned for its iconic yellow machinery, Caterpillar is a key player in the machinery and equipment sector, providing essential tools for construction, resource extraction, and infrastructure development worldwide. 

Caterpillar

Why are Caterpillar Earnings Important?

As a multinational corporation with a vast product portfolio, Caterpillar’s financial performance is closely monitored as it serves as a barometer for the health of the US and, by extension, the global construction industry. Given its expansive reach and diversified operations, Caterpillar’s earnings reports offer valuable insights into economic trends, infrastructure investments, and overall business sentiment. Analysts often view Caterpillar’s financial results as an indicator of the broader economic health, making its earnings releases a closely watched event by investors, economists, and industry experts alike.

What to Expect from the Caterpillar Release

As the eagerly anticipated earnings release date on 26th January approaches for Caterpillar Inc., market participants are closely monitoring the performance expectations for this industry heavyweight. With a current market capitalization of $151.96 billion, Caterpillar holds a significant position in the manufacturing of construction and mining equipment globally. 

In the upcoming fourth quarter, analysts project an earnings per share (EPS) of $4.76, accompanied by an expected revenue of $17.03 billion. Comparing this with the preceding quarter, where Caterpillar outperformed forecasts with an EPS of $5.52 (exceeding expectations by an impressive 15.18%) and revenue of $16.81 billion against an expected $16.56 billion, the company’s financial health remains a focal point for investors. The Q4 results will likely provide crucial insights into Caterpillar’s resilience within the construction and mining equipment sector and its ability to navigate market challenges.

US PCE Data

US Personal Consumption Expenditures (PCE) Data plays a crucial role in assessing the nation’s inflationary landscape, serving as a key economic indicator. It measures the average change in prices paid by consumers for goods and services, providing a comprehensive view of inflation trends and the release will be detailed on economic calendars.

Why is US PCE Data Important?

The Federal Reserve considers PCE Data its preferred measure over the Consumer Price Index (CPI), a sentiment underscored by Fed Chair Jerome Powell. The preference for PCE is rooted in its broader scope, capturing a more comprehensive basket of goods and services. Unlike CPI, PCE tends to show inflation trends that are less influenced by short-term price changes, offering a more stable reflection of underlying inflationary pressures. 

Analysts, investors, and policymakers keenly await the release of PCE Data due to its ability to offer profound insights into consumer behaviour and spending patterns, giving them an opportunity to trade the news. The information derived from PCE reports becomes instrumental in guiding economic decisions, especially in the context of monetary policy formulation. As the Federal Reserve is committed to achieving its inflation target, the routine release of PCE Data takes on heightened significance, influencing market sentiment and shaping expectations. In essence, the Fed’s reliance on PCE as a primary gauge of inflation underscores its importance in the economic landscape, making each release a momentous event in the financial calendar.

What to Expect from the US PCE Data Release

As the eagerly awaited US Personal Consumption Expenditures (PCE) Data looms, market expectations are centred around key metrics for December. Set to release at 13:30 GMT on Friday 26th January, forecasts indicate a consensus expectation of 0.2% for PCE Month-on-Month (MoM), signalling a positive shift from the -0.1% recorded in the previous month. Core PCE MoM is also anticipated to rise to 0.2%, surpassing the 0.1% registered in the last reporting period. Year-on-Year (YoY) expectations for PCE stand at 2.6%, maintaining parity with the previous month, while Core PCE YoY is projected to be at 3.0%, a slight decrease from the 3.2% reported earlier. Additionally, consensus estimates for Personal Income MoM in December are set at 0.3%, down marginally from the 0.4% seen in the last month. Personal Spending is also under scrutiny, with a consensus forecast of 0.4%, reflecting an improvement from the 0.2% recorded in the previous month.

US Core PCE MoM
US Core PCE MoM

The hawkish sentiments expressed by several Fed officials, including the centrist Raphael Bostic, suggest the potential for a more assertive policy decision next week compared to the tone conveyed in December. The market will be closely monitoring these indicators for insights into the inflation landscape and potential policy shifts.

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued

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