Caterpillar Cuts Forecast

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July 24 (Bloomberg) -- Dominic Chu reports on the latest markets news on Bloomberg Television's "Lunch Money." (Source: Bloomberg)

Options.

Caterpillar.

That will be an important one to watch.

We have seen 1002000 total contracts traded versus 38,000 on average over the last 20 days.

The most of option today is the august $85 put option.

Take a look at what is happening.

Julie hyman has more on caterpillar.

This is an interesting story because we have talked about this company all the time and how it is an economic bellwether for activity all over the world.

This time, in asia released it out on the downside.

That is behind the increased options activity in the stock as well.

Shares are going down today.

Caterpillar says the negative activity in the asia-pacific.

We have a slower growth rate in china, but particularly, the downfall is coming from australia.

So many mining companies are based there.

In number one exporter of iron ore, and so if they see slowing demand for mining, that is not good news for caterpillar and its equipment business.

That seemed to be what is happening.

If you look at the revenue breakdown last year, resource industries, mining equipment, which the company has been increasing as a share of its total business, was the largest share of its overall revenue portion.

So if you have witnessed there, that is a problem.

What does this translate to for the quarter?

Sales were down 16%. for the full year they're cutting their earnings per share forecast by 7% and cutting the upper end of its forecast by 5%. that says that commodities are coming down, asia-pacific demand has been coming down, and caterpillar is feeling the pinch.

You talk about big mining companies like rio tinto, bhp billiton, they are the biggest customers for caterpillar.

It is a signal for what is happening in the markets.

Thank you for that, and julie hyman.

That does it for on the markets.

This text has been automatically generated. It may not be 100% accurate.

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