Diamonds and Dogs

7/24/19

UPS (UPS) is looking good. UPS is up 8%, its best one-day gain in a decade, to a four month high following better than expected earnings. UPS beat by 3 cents as sales rose 3.4% to $18.05 billion, ahead of estimates. The company also said their next-day air service took business from its rivals' two-day offerings. UPS didn't raise guidance, but the fact they affirmed its full-year earnings outlook helped assuage fears that continued trade uncertainty and a slowing global economy in the face of increased costs, and the threat of increasing competition, wouldn't drag on future results.

Caterpillar (CAT) taking a hit. The industrial equipment maker is down 4% to a two month low after missing earnings and sales guidance. Caterpillar also lowered guidance for the full year due to a combination of weak sales in China and higher production and restructuring costs. Caterpillar is a proxy for global economic activity and the tariff war between the United States and trade partners including China has sapped business confidence, dampening economic activity. The International Monetary Fund on Tuesday lowered its forecast for global growth this year and next, its fourth downgrade since October. Not a good sign for Caterpillar. Let's hope for a year-end trade deal with China.