Caterpillar (CAT) has recently surged to new highs on an EPS beat and an increase in guidance. I can see cause to be concerned however that CAT may be nearing a top as China slows and construction takes a hit. Deere (DE), on the other hand, is more tethered to global agricultural demand and agricultural commodity performance than just construction. Yet Deere seems to be pretty strongly correlated with CAT given that they both produce industrial equipment. As CAT has moved to new heights, one would have expected Deere to do so as well. However, Deere has traded back since year highs in mid-April of 99.80. I think there is something wrong with this picture and that the relative underperformance of DE will be corrected at Deere earnings on May 10th.
Not only did Caterpillar have a strong showing at earnings, but more importantly, Titan Machinery (TITN) and AGCO (AGCO)
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