Once again, the ‘Generals’ stepped up yesterday and made up for the rest of the market.

Those big green squares and rectangles saved the day despite the mavens trying to herd the masses into the so-called rotation trade.

U.S. Consumer Confidence rebounded, which only added to the sense of opportunity.

Speaking of ‘Generals,’ here’s Alphabet’s (GOOG/GOOGL) mega-cap earnings this week:

The NASDAQ-100 (NDX) popped in after-hours trading.

Today’s Session

The intense reactions to earnings continue, which are more severe for those who miss or guide lower. This morning, several economic data releases were also released.

ADP jobs came in substantially above consensus while advanced GDP came in at 2.8% against the consensus of 2.9%.

At the intersection of both is Caterpillar (CAT).

Caterpillar missed revenue and earnings, and while management had many reasons, one thing stands out big time.

We are not building in America.

A prime example is estimates for the third quarter's GDP.

Structures continue their long retreat.

Residential investment property is expected to swoon significantly.

Consumption came in significantly higher than the consensus.  The slim gains in intellectual property (IP) were a surprise.  Meanwhile, government spending continues to skew the overall number and health of the US economy.

US GDP	Weights	1H04 Average	GS	Atlanta Fed	Actual
Real GDP	100.0	2.3	3.0	2.8	2.8
Consumer	67.8	2.4	3.5	3.6	3.7
Business Fixed	13.8	4.2	6.4	6.1	1.3
Equipment	5.2	5.1	13.3	11.3	11.1
Structures	3.2	3.2	-1.3	-0.8	-4.0
IP	5.5	4.1	4.5	5.4	0.6
Residential	4.1	5.5	-4.6	-8.9	-5.1
Government	17.0	2.4	0.5	2.1	5.0

The CAT Connection

Caterpillar saw North American construction revenue at $3,629,000,000, -11.0% from a year earlier.

Within the segment, energy was higher and driven by data center buildings and, to a lesser extent, turbines, not oil and gas.

• Power Generation $2.0 billion +26%
• Oil & Gas $1.6 billion -1.0%

The government is picking winners in data centers, and while there is a defense argument, the economic benefits are large enough for the private sector to provide growth. The government should use tax policy to compete with other nations.

Other News

• Super Micro Computer, Inc. (SMCI) is getting crushed after accounting firm EY walks away.
• Eli Lilly and Company (LLY) is getting smoked as its inventory is overweight with those miracle weight loss drugs.

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