p.s. A friend of mine counters, how about the inflation from higher import costs as the dollar falls? Alright, I’ll give you the continue falling of the dollar (initially, until investors, both domestic and foreign, start putting money back into the U.S.). Still, who are we importing the most from? China. Why are we so worried about the quality of Chinese imports? Because we get so much from them. The U.S. is the world’s biggest consumer, and thus China’s biggest customer. China has to export to the U.S. If need be, they’ll adjust their Yuan currency and maybe some trade restrictions as well. Yes, they can do that fast and effectively. Just another benefit of being communist, its unlike the U.S. free markets where there are as many moving pieces as there are large and small business and difficult to turn around on a dime.

For the record, I believe the Fed should/must cut 50 basis points, reinvigorate the rest of the economy to compensate for the coming mortgage resets in February that will cause even more trouble. This, I believe will give foreigners more confidence to come back to the U.S. to invest, buying dollars to do so, and thus stabilizing the dollar. The dollar isn’t getting manhandled by lower rates but simply, who the heck in their right minds would need dollars? If they don’t need dollars to invest in the U.S…they’ll dump the dollar to buy other currencies where they are actively investing. Am I just pulling this stuff out of my, well, you know. Not really, check out these stats:

“Including ETF activity, Equity funds report net cash outflows totaling -$2.223 billion in the week ended 10/24/07 with Domestic funds reporting net outflows of -$2.504 billion and Non-domestic funds reporting net inflows of $281 million” ~AMG Data Services for week of 10/24/07

I’m not biased because I’m long equities (at least I don’t think so!). I can go to 100% cash in a few clicks of my mouse. What I’m keying off of is how many companies were crying on their Q3 conference calls (as much as CEO’s, CFO’s, and directors can cry on telecons). Hiding, under the kitchen sink (those who haven’t thrown it out like Citi), rolled up in the fetal position, crying, begging for mercy. That’s how it looks going forward for these companies, and its not just the banking and housing sector anymore. Retail, manufacturing, steel, logistics. All crying. They’ve tossed out the baby (with the bath water). They’ve thrown out the kitchen sink (now that there’s no baby or bath water in there…yes they had to wash the baby in the sink because they couldn’t afford a bathtub). They are going to lose their shirt and pants soon if things don’t change. I judge Ben Bernanke’s intelligence by the quality of his baldness- it’d good quality baldness. Says his brain is so powerful the radiation burned off his hair. Let’s see what you got Uncle Ben.

(yes, this is my favorite Big Ben photo. I call it “Gansta Ben”)

Manitowoc reports earnings after the bell on Fed Wednesday (so MTW’s earnings might not even matter with Big Ben in the spotlight). Still, I’d like to share that the vibes I got from a few other companies suggests Manitowoc is still running straight and hot and should break to the upside on good earnings. Terex, who also has a decent Crane business, I thought reported decent numbers. Though Terex missed estimates and the stock took a smackdown from $82.9 before earnings to $74.90 on Friday’s close, much of the disappointment came from issues with other business segments, similar to those problems Caterpillar faced. Terex’s Crane business appeared to be one of the strongest segments:

“Net sales for the Terex Cranes segment for the third quarter of 2007 increased $97.6 million, or 22.8%, to $526.6 million versus the third quarter of 2006. Excluding the impact of foreign currency exchange movement, net sales increased approximately 16%. Global demand for the large crawler and mobile telescopic crane products remained at record levels, while the North American market was strong in the rough terrain and larger truck crane product categories. Sales of boom trucks and smaller truck cranes were down as compared to the prior year as a result of softer North American demand for these smaller cranes. This has freed up capacity at the Waverly, Iowa facility to increase production of higher capacity, higher margin rough terrain cranes which remain in high demand. The production issues of a stressed supply chain and capacity limitations in terms of welding and assembly space continued to extend lead times for deliveries and temper net sales growth. Of note, the first twin-boom Terex® Demag CC8800, the world’s largest lattice boom crawler crane with a lifting capacity of 3,200 tons, is scheduled to ship in the fourth quarter for delivery to a customer in the United Arab Emirates.” ~Terex Q3 Earnings Press Release

From United Technologies’ earnings call, we know U.S. commercial construction remains steady for the first half of ‘08. Also, multinational machinery, industrial, oil service, and construction companies are all reporting record business outside of the U.S. All these trends remain favorable for Manitowoc’s business. As with all machinery companies, the risk this quarter may be the high material costs. However, those costs have stabilized for base metals as well as various grades of steel, which should provide for better cost environment going forward (listen to the Precision Castparts conference call on this. PCP is a heavy user of all types of metals). Also, some machinery companies had supply chain issues. Manitowoc has been ramping up production capacity which, combined with its simpler business model with focus mainly on Cranes, hopefully won’t be a problem. These are the things I’m listening for on the call, leave me a note if you have any other positives/negatives to watch for. Hope they don’t run out of Ben Bernanke costumes for Wednesday, no one I’d rather be for Halloween this year!

My previous overview of Manitowoc: Crane Demand “Lifts” Manitowoc’s Potential

** Disclosure: I own positions in MTW, CAT, PCP** 

Spectacular documentary I saw tonight on National Geographic. Part of the MegaMovers series. Don’t worry, its not one of those old school black&white slideshows you saw in school. A must watch for anyone trying to learn about the oil and oil service industry as it showcases the various planning, logistics, and technologies/ships required to build a natural gas field in the Gulf of Mexico. If you have any oil service stock, whether it be Schlumberger (SLB), TransOcean (RIG), Baker Hughes (BHI), or XTO Energy (XTO), you can’t miss this. This is part of going beyond the basics of financials/technicals and actually understanding the business. Here’s the program summary:

Deep Sea Drillers [TV-G Ratings N/A] (airs Friday, October 26, 12AM, Saturday, October 27, 1PM)

“In an attempt to tap some of the most inaccessible natural gas on the planet, five vessels are building an 1,800 square mile gas network in the Gulf of Mexico. This record breaking project costing more than $2 billion dollars could produce enough gas tonearly 5 million U.S. households. View 1 miles below the oceans surface to witness this project in action and see how the worlds largest pipe laying ship, which carries 22,000 tons of pipes or the equivalent weight of more than 1,000 jet planes.”

Program website: Deep Sea Drillers[TV-G Ratings N/A]

**Disclosure: author is long RIG**