The iconic corporate behemoth thrives on bad times. While its earnings get chopped along with everyone else’s in an economic downturn, behind the numbers this typically beloved colossus is busy repositioning itself at the expense of smaller, weaker competitors. Fortified with rock solid finances, superior management, a winning business model, brand loyalty that can border on adoration - to wit, Harley-Davidson and John Deere - any behemoth worthy of icon status is a voracious bottom feeder.
The recent Global Financial Apocalypse dredged the iconic behemoth investment theme to the surface once again. When the ensuing depression ended, it was thought, these guys would be emerging fatter and healthier than ever. The added multinational touch was new this time, sprung from a spate of political insanity hitherto unseen in America. First, there was the spectacularly irresponsible Republican fiscal agenda, fighting wars on tax cuts, leaving the nation with a deficit the symbolic size of Mount Rushmore. Concurrently came the remarkably clueless Democratic push to manipulate the nation’s financial institutions into lending money to people without any money. It became tough to see how any large company could go much of anywhere only doing business in this beaten, punchdrunk country.
Caterpillar reported second quarter 2012 results before the market opened today. In the earnings release, Chairman and CEO Doug Oberhelman indicated why the argument for investing in multinationals has been going the iconic multinational behemoth’s way for almost three years now.
“Economic activity and our business in Latin America, the Middle East, Africa, CIS and greater Asia are robust …. While we expect moderate U.S. economic growth, we believe a lack of confidence in the business climate is the major impediment to a stronger recovery and job creation. Lack of clarity on a U.S. deficit reduction plan, trade policy, regulation, much needed tax reform and the absence of a long-term plan to improve the country’s deteriorating infrastructure do not create an environment that provides our customers with the confidence to invest. We’re confident that as a country we’ll eventually get it right, and we’re positioning Caterpillar to be ready when we do.”
No one could’ve put it any better.
