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Caterpillar sees a huge boost in AI sales as tariffs drag
Caterpillar’s fourth-quarter performance reflected the global economy. Sales were boosted by a surge in artificial intelligence spending, even though the equipment giant warned investors that they would be hit with tariffs of up to $2 billion over the next year. The largest construction equipment company in the world reported that quarterly sales of its power and energy division, which manufactures generators, increased by more than 20%. Caterpillar, along with other industrial giants, has relied on AI in order to boost investor sentiment. Its shares have gained 60% in the past year, which is roughly four times as much as the S&P500. The AI boom has surpassed Caterpillar’s mainstay construction division as the largest Caterpillar business segment by sales. On a recent earnings call, CEO Joe Creed stated that "prime power" systems are in high demand. These large generators provide constant, round-the-clock energy. Data-centers need more on-site electricity to keep up with their rapid growth. Caterpillar shares, which are widely considered a bellwether of the global industrial economy, rose by about 4.4% at the start of trading. TARIFF HEADWINDS The company estimated tariff-related costs to be $2.6 billion by 2026. It said that the absolute value of tariffs in place last year was $1.8 Billion. Last year, President Donald Trump's tariffs were a major factor in the price hikes and forecasts of industrial firms. Although many U.S. companies have told investors that tariffs this year are "manageable", early earnings season commentary indicates profit margins under pressure. "Better-than-expected sales ?across business segments were hindered by tariff headwinds, limiting the margin expansion for the quarter," said Jefferies analyst Stephen Volkmann. Volkmann said that he expected the headwinds will persist until 2026. Caterpillar has outlined two scenarios for the annual operating profit margin. This is a continuation of a trend that was seen last year. The company's target operating profit margin will be at the lower end of its range if tariffs are included. Caterpillar announced a revised operating profit margin of 15% to 19% by 2024. This will increase to 21% to 25 % by 2030 depending on sales levels. It earned adjusted profit per share at $5.16, up from $5.14 in the same quarter last year. Revenue increased to $19.1 billion, up from $16.2 billion. According to LSEG data, analysts had on average expected the company would report a profit per share of $4.68 and revenue of $17.86 Billion. Wall Street anticipates that the construction segment will return to growth by 2026. This is due to stronger dealer orders and stabilised non-residential building activity.
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Tesla to spend $20 billion on capital expenditures in a bid to move beyond human-driven vehicles
Tesla plans to double its capital expenditures to an all-time high of $20 billion this year, but only a small portion of that will be spent on the company's traditional business of selling cars to humans. According to comments made by executives on Wednesday's earnings conference, the company, which lost last year's global EV sales crown in China to BYD's BYD, will instead invest in yet-unproven businesses such as fully autonomous cars and humanoid robotics. Elon Musk, Tesla's CEO, announced that the company would stop producing its Model X SUVs and Model S sedans. Instead, it will use the space in its California factory for its Optimus robots. Musk also said in a separate post on his social networking site X that the robots would be produced in a higher volume at?Tesla’s Texas Gigafactory. He said, "This will be a big capex-year." "We are making huge investments for a future that will be epic." Vaibhav Tania, chief financial officer, said that the majority of the'record' investment would be used to build production lines for the Cybercab - a fully-autonomous vehicle without a wheel or pedals -, the Tesla semi-truck (long-promised), Optimus robots, and plants for lithium and battery production. Tesla's sales are still largely reliant upon human-driven EVs, but it is valued far higher than any other automaker. This puts it in a league with major tech firms. Investors' belief that Musk can deliver on his lofty promises to deliver robotaxis and robotoid robots, backed up by the company’s investment in AI, is a major factor. Microsoft, Alphabet, and Meta Platforms (parent company of Facebook) are also planning to increase capital expenditures this year. These companies will invest heavily in data centers and hardware in order to support AI models and customer demand. Scott Acheychek is the chief operating officer at REX Financial. REX Financial manages ETFs that have exposure to Tesla. He argues that Tesla's automobile business is?no more the main focus. He said that the "bigger story" is "the business model transition underway", as Tesla focuses more on autonomous driving. Tesla shares fell 1% at the opening of trading on Thursday. 'NECESSARY SPENDING' Andrew Rocco is a stock strategist for Zacks Investment Research. He said that he viewed $20 billion in spending as "necessary." Musk said that the spending plan gives him confidence in Musk's "sometimes erratic timelines." The $20 billion capital expenditure is significantly higher than the $11.3 billion recorded in 2024, which was the previous record. Taneja stated on the call that Tesla had more than $44 Billion in cash and investments that it could use to fund its investments. He said that this year's spending would not be the last. The company may look to pay for investments by borrowing more money or using other methods. Musk claimed that Tesla's spending on certain projects was not done for fun but "out of desperate need". Can other people please, for God's sake, in the name and spirit of all that is sacred, build this stuff? Musk was referring to the spending on cathode- and lithium-refining. "It is very difficult to build these things."
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US sources claim that the US has moved away from critical minerals price floors
Multiple sources have confirmed that the Trump administration has backed away from its plans to guarantee a price floor for U.S. Critical Minerals Projects, as a tacit acknowledgement of a lack in congressional funding and complexity of setting market prices, according to?. This shift comes at a time when a U.S. Senate Committee is reviewing a price ceiling extended to MP Materials in the past year. It marks a reversal of commitments made to the industry. Washington could also be set apart from other G7 countries discussing joint price support measures or similar measures to boost production of critical minerals that are used for electric vehicles, semiconductors and defense systems. Three attendees said that at a closed door meeting hosted by a Washington think tank this month, two senior Trump officials informed U.S. mineral executives that they would have to prove financial independence from government price support for their projects. Audrey Robertson, Assistant Secretary of the U.S. Department of Energy and Head of its Office of Critical Minerals and Energy Innovation told the executives that Audrey Robertson was not there to support them. "Don't expect that from us." A U.S. official said on Thursday that the administration may use its new power to negotiate individual price floors with businesses. Tariffs under Section 232 Imposing a market-wide floor price on certain minerals could achieve a similar goal. In premarket trading, shares of U.S. listed miners that produce critical minerals dropped between 3% to 8% on Thursday. Trilogy Metals fell 3.3%, MP Materials dropped 4.7% and Critical Metals and NioCorp Developments both lost more than 5%. Ramaco Resources dropped 6.4%, and USA Rare Earth fell?nearly 9 percent. Rare Australian Earth Shares Slide The price floor set by the MP is not affected. Robertson was joined in the International Trade Administration by Joshua Kroon. He is the deputy assistant secretary for textiles and consumer goods as well as materials, metals, and critical minerals at the Department of Commerce. Sources claim that Kroon and Robertson said at the meeting Washington was no longer able to offer floor prices. In a written statement, the Energy Department said that the story had been "false" and that it relied on sources who were either misinformed or intentionally misleading. The statement didn't elaborate on the errors that the department claimed to have found. The Energy Department did not respond immediately to a request for more information. MP Materials didn't respond to an emailed comment request, but after this story was published on Twitter said that there had not been any changes to its contract and the government obligations surrounding it. It said that any implication the U.S. government has changed its mind about MP Materials's contract is false. I did not suggest any part of the MP's agreement was at risk. The report today is inaccurate, false, and contradictory with the facts. The company said that it follows a pattern speculative, misleading reporting which "has mischaracterized government policies and caused unnecessary confusion on the market". Kroon and Robertson have not responded to any requests for comments. After the publication of the article, shares in Australian listed rare earths companies fell, and at one stage, those of Lynas Rare Earths - the largest company outside China - were down by more than 10%. A spokesperson for Lynas said that the company was benefiting by the U.S. decision, which has boosted rare earths prices. Price protection is important for producers who are currently in business, because it addresses the market's dysfunction immediately. She said that other policy instruments were available and had been used for early-stage projects. Reg Spencer, an analyst at Canaccord in Sydney, believes that the steep fall for shares related to rare earths was exaggerated. The comments were in line with his interpretation of White House policy, which is that the White House does not intend to support every rare earths project by using a floor price mechanism. Projects will be developed according to their merits," said he. The U.S. continues to support the development of a critical minerals supply chain in ex-China. He added that they may use different methods. Change in tact The current administration's stance contrasts with a closed-door July meeting, in which two officials told separate minerals executives in private that a price floor extended to MP Materials a few days earlier was "not an isolated event" and that they were working on other price support projects. Since then, the Administration has acquired equity in Lithium Americas and other companies, including USA Rare Earth, Trilogy Metals and USA Rare Earth. The government did not offer any price floors to these companies, which raised questions about its commitment to this financial tool. U.S. mining companies and processing firms have sought price floors and government backstops in order to compete with China. Industry executives claim that China's state producers can cut prices to punish competitors, undermine projects and discourage private investment. The White House has declined to confirm whether it intends to set new price floors. However, it said that it would continue to pursue tax cuts, deregulation and targeted investments in high-priority sectors "while being good taxpayer dollars." Price floors are criticized by critics who warn that they expose U.S. tax payers to financial risk, forcing the government to subsidise minerals when prices drop. This could result in long-term liabilities for taxpayers if prices continue to fall. Legal experts warn that guaranteeing minimum price could be challenged under U.S. budget, procurement and trade laws. This is especially true if such support is perceived as a market distortion, or if it lacks explicit congressional approval. Washington can still take other measures to support mineral projects and stabilize prices. These include stockpiling and equity investments, as well as local content stipulations. Price floors have been considered by other countries including Australia. MP DEAL IN THE SPOTLIGHT MP Materials' investment raised concerns from administration officials and Congress members that funding of a price-floor of at least $10 per kg for 2 types of rare Earths was not authorized by Congress. Two additional sources who were familiar with the discussion confirmed this. Since the MP investment, the economics have changed in the mineral markets. USA Rare Earth announced this week that it plans to purchase the same types of rare Earths on the open markets for $125 per kilogram. The MP investment included a guarantee purchase agreement. This caused confusion about whether Washington would guarantee price floors for others. Sources said that as the Trump administration looked at other equity investments it could make after MP, they realized it didn't have the authority from Congress to fund a floor price. According to two sources, this realization was partly sparked by an inquiry made by members of the Senate Armed Services Committee. They asked Pentagon staff to meet last year in order to explain the reasons why MP Materials received support for a price floor and the strategy the administration had adopted to invest in the minerals sector. A staffer of the committee confirmed that the request for a meeting was made, but refused to comment further. Reporting by Ernest Scheyder, Jarrett Renshaw. Melanie Burton and Vallari Srivastava contributed additional reporting from Melbourne and Bengaluru, respectively; editing by Veronica Brown and Lisa Shumaker.
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Silver breaks $120; gold has best month in 50 years
On Thursday, gold extended its record-breaking rally and was on course to?have?its best month performance since 1973 as investors flocked to the metal of safety. Silver also hit a new record, surpassing $120/oz. Gold spot was 2.1% higher, at $5.514.03 per ounce as of 8:52 am. After touching $5,594.82 earlier in the day (1352 GMT), spot gold was 2.1% higher at $5,514.03 an ounce by 8:52 a.m. Gold is up over 28% this month. U.S. Gold Futures for February Delivery were up 3.8% to $5,508.40. Gold demand is increasing, from crypto money to central banks. "Precious metals have been in the spotlight and investors are always looking for high returns," stated GoldSilver Central's managing director Brian Lan. The CEO of the crypto-group Tether announced on Wednesday that it would allocate between 10%-15% its investment portfolio to gold. Meanwhile, SPDR Gold Trust saw its holdings reach a 4-year high. U.S. president Donald Trump pressed Iran on Wednesday to negotiate a nuke deal while Tehran threatened to retaliate against the U.S. and its allies. This added to geopolitical uncertainties. Investors awaited Trump’s announcement about a new central bank chairman to replace Jerome Powell, who's term ends in may. The U.S. Federal Reserve kept rates the same on Wednesday. The markets expect the central bank to reduce rates next in June. Silver spot was up 2.3% at $119.24 per ounce, after hitting $120.44. The price of silver has risen by nearly 64% this year due to supply shortages and momentum buying. Silver, platinum, and palladium are relatively small markets compared to gold or the S&P 500. This makes them susceptible to speculative flows that have caused prices to be "totally disconnected" from where there is robust physical demand, said Guy Wolf. The spot price of platinum rose 3.2%, to $2.782.54 per ounce. It had previously reached a record-high $2.918.80 an ounce on Monday. Palladium also increased 0.2%, to $2.077.83.
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India is looking to increase its coking coal imports.
Vikram Dutt is the top official in the coal ministry of India. He said that India has a significant opportunity to import more coal from the United States, as it expands its steelmaking capability. Dutt stated that India had bilateral discussions with officials of the U.S. Department of Energy in advance of the India Energy Week event currently underway. About 85% of the world's second largest?crude-steel producer?s coking coal requirements are imported, and more than half comes from Australia. New Delhi is trying to diversify its supplies. About 10% of India's coal imports are currently imported from the U.S. India's coal is not suitable for steel production due to its high ash content. Kyle Haustveit of the U.S. Department of Energy said that the United States "actively tries" to support and increase its coal industry. Haustveit stated, "We are here to meet with the Indian Government to ensure that we're partnering through innovation and technology transfers." Haustveit and Dutt did not indicate how much India might increase its coking coal imports. Indian and U.S. government officials are also holding talks on a possible bilateral trade agreement, after last year's talks fell apart due to a breakdown of communication between the two countries. Sethuraman N.R., Kirsten Donovan (Editing)
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Solway restarts Guatemala nickel plant following price surge
Solway Investment Group, a Swiss company, plans to restart nickel operations in Guatemala within months. This is after a dramatic?rise of the nickel price, and the removal of sanctions by the United States. Analysts estimate that the amounts involved represent a tiny fraction of the global nickel supply, which is estimated to be around four million tons in this year. Industry sources claim that the plan indicates that the prices are high enough to allow some smelters to re-start profitable production after prices fell to three-year lows at the end of 2024. Nickel, which is also used in the production of electric vehicle batteries, reached a 19-month high on Monday at $19 160 per metric ton, according to London's Metal Exchange. Nickel prices have risen by?nearly 20 percent since Indonesia, the world's largest nickel producer, announced late last year that it would reduce its nickel mining quotas. Solway's Guatemalan operation includes the PRONICO plant with a production capacity of 25, 000 metric tons nickel ferronickel per year and CGN mine, which can extract up to 2, 2 million tons nickel ore. Solway stated that the anticipated timeline for re-starting CGN will be around April or May 2026. This is in line with the restart of PRONICO. Solway shut down PRONICO and CGN in November 2022 after the U.S. imposed sanctions on its 'Guatemalan subsidiaries. The U.S. lifted them in January 2024. According to an industry source, ferronickel trades at a discount of $2,000 per ton to the LME nickel price. Solway, which owns its mine in Guatemala would have to pay around $12,000 per ton to produce the ferronickel. (Reporting and editing by Barbara Lewis; reporting by Pratima Deai)
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Cyclic Materials invests $82 Million in a new US rare earth recycling facility
Cyclic Materials announced on Thursday that it would invest over $82 million in South Carolina to build a rare earth?recycling facility. This will expand?U.S. The company will invest more than $82 million to build a rare-earth?recycling campus in South Carolina, the company?said on Thursday. This investment will expand?U.S. U.S. production of rare Earths has been limited. Rare earths are a group of 17 elements that are critical to the manufacture of magnets for a wide range of products, such as cell phones, fighter planes, electric vehicles, and medical kits. China is currently the largest rare-earth processor in the world. Cyclic stated that the?campus is initially able to produce around 600 tonnes of mixed rare earth oxides (MREO) a yearly, with a plan to expand to 1,800 tonnes. The ecosystem in South Carolina is really well connected, said CEO Ahmad Ghahreman. He added that Cyclic has "quite a lot" of production planned tied to?offtake contracts. The facility will use a Canadian company's process to separate MREOs and recover them from products that are usually not recycled. This will create a North American-based supply of rare-earth metals. Cyclic stated that the project will begin operating in 2028. (Reporting from Katha Kalia and Ernest Scheyder, both in Houston; editing by Jonathan Ananda).
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Russell: The Trump-China metals rally goes beyond gold and silver
Gold and silver have been making headlines for their massive rise in recent months, but industrial metals are also performing well. The fundamentals of copper, aluminium, and nickel have been a strong factor in the recent gains. These metals are at record highs or multiple-year highs, even though they do not appear to be sufficient for these rallies. Base metals are showing strength for a number of reasons, the majority of which relate to Chinese import demand and easing exports. Metals may also be benefiting from the same speculative dynamics that drive gold and silver. This is a desire for real assets in the face of investor uncertainty about the policies of U.S. president Donald Trump. Prices in other major currencies are also surging. Spot gold reached a new record high of $5400.91 per ounce on Wednesday. It has increased by 39% from its previous low of $3886.02 an ounce, on October 28. Silver's surge has been even more impressive. It rose 158% between the low of $45.51 per ounce on October 28 and the high of $117.41 an ounce on Wednesday. This is just a little bit short of the record-breaking $117.69 on January 26. Silver also has benefited from the concern that China's licensing rules for exports could lead to a decrease in shipments. Only 44 companies are allowed to export this metal next year. China has not yet imposed any restrictions on the export of silver, despite the fact that it exported 5,100 metric tons last year - the highest amount since 2008. Silver is used in solar panels, and it's possible that China would prioritize domestic consumption over exports. ALUMINIUM SUPPLY China's reduced aluminium exports has a?significant impact on the global aluminum markets. Customs data shows that exports of aluminium products and unwrought aluminum fell 8% from 2025 to 6,13 million tonnes. Aluminium prices have been rising since April due to the loss of supply from the largest producer in the world. Aluminium has increased 16.1% since the lowest price of $2,805 per ton in November. On Wednesday, aluminium closed at $3,257, its highest closing level since April 2022. London futures have seen a 24% increase from the low of $10 580 per ton that was reached on November 5, to the closing price of $13,086.50, which is slightly below the January 14 record high of 13,407 a ton. China is importing more copper in recent years, particularly during the second half 2025. Arrivals of 437,000 tonnes in December were up 2.3% compared to the previous month. The rally in copper last year was largely based on the fear that Trump would impose tariffs on imports. However, those fears?easened after duties were only imposed on certain copper products. Nickel, another industrial metal, has also seen impressive gains over the past few months. It rose 27.5%, from a low price of $14,330 per ton in November to a high of $18,270 last Wednesday. This is close to a 21-month peak of $19160 in January. Markets must decide whether gains in copper and aluminium, as well as in?nickel, can be justified based on fundamentals of supply and demand and the outlook through 2026 or if they are driven by speculation. In 2026, most analysts believe that copper and aluminum will be fairly balanced markets in terms of supply?and-demand. Nickel is expected to remain oversupplied. The recent rally in industrial metals is likely to be a result of precious metals riding on the coattails. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of a columnist, who is also an author.
Is Europe's Euro Crisis a Mirror of the US Dollar Dilemma? Mike Dolan
Europe is eager to see the euro play a larger role in the world's finance, but becomes anxious when the success of the currency pushes it higher. If indeed the dollar is heading for another prolonged slide, then the bloc is faced with the opposite of the dilemma Washington is trying so hard to overcome.
The pivotal transatlantic rate briefly rose above $1.20 for the first four years as the dollar plummeted around the globe. This move raised alarms at the European Central Bank, as well as in European industry. However, it also boosted euro-based portfolios of investments and could have drawn in much needed foreign and domestic capital.
The euro has gained strength since Donald Trump returned to the White House in 2017. The broad trade-weighted index of the ECB has risen more than 7% to new record highs in this time, mainly due to the 16% increase against the dollar. However, it also grew more than 10% against China's yuan or Japan's yen.
It is clear that there are tensions in the air.
After the euro surged through $1.20, ECB officials – who had signaled for months that they are happy with the current generally neutral interest rate level – began to mutter again about the need to counter "excessive euro strength".
They are concerned that a sudden and outsized euro increase would hit Europe's industrial producers as well as risk a significant undershoot to the ECB target of 2% inflation, which has now been met. The central bank would use its first weapon to re-instate?interest rate easing or threaten it.
Martin Kocher, Austria's central banking boss, said he would respond if the euro rose further. Francois Villeroy De Galhau, the Bank of France head of finance department stated that the ECB "closely?monitored the appreciation of euro."
Euro money markets briefly priced in a 25% probability of another ECB reduction by midyear, which brought euro/dollar below $1.20.
The upside is that the move in the exchange rate reflects and encourages a reversal to the bias towards U.S. investment of the last decade, a bias which was most evident among euro zone investors.
If the euro strength is a factor in ECB lending, then it will help to cushion the hefty?European Government borrowing. Energy that is cheaper in dollars softens business losses.
But?europe's economies must have trillions of euro to finance defense, green energy and innovative technology. This challenge is even more acute now that Washington is pushing the region toward "strategic independence" in business, military and trade policies.
Christine Lagarde, President of the ECB, has pushed for the euro to be used as a global reserve asset during the turbulent year that followed. The euro still trails the dollar in terms of world reserve holdings and external usage.
It's not easy to get that without having to deal with the exchange rate pain.
In this regard, Europe's possible conundrum mirrors Washington's. The Trump administration appears to be happy to undo years of dollar appreciation in the name of a global reset of trade and a reindustrialization drive.
The exceptional performance of the U.S. economy and asset markets was both a cause and an effect of years of dollar gains. It will be difficult to deflate just the currency portion of trade gains without tearing the rug out from under the entire edifice and possibly denting the dollar’s dominant role.
Citi strategists warned on Wednesday that pursuing a low dollar could harm foreign?Treasury's demand, especially for short-term debt where there is less hedging, but Treasury is increasing the amount of new debt it issues.
They added that "rapid depreciation can also lead to higher prices," a problem for the Fed as well as the administration.
Societe Generale agreed with this view and argued that debt is the most vulnerable part of U.S. investment to foreign investors, not equity. The dollar slump and trade shock of last year coincided with the drop of America's share in global non-resident investment. However, its share in foreign equity flows rose. Scott Bessent, Treasury Secretary, reaffirmed on Wednesday that "we have a strong dollar" policy, despite Trump's call for currency movements to be "great".
Bessent, among others, have repeatedly pointed out that a "strong dollar" in the broadest meaning is not its value in the currency market, but its reserve status. Bessent claims that a strong dollar is a natural result of good economic policies, but he is the one who decides what "good" policies are in the marketplace.
Washington's dance with exchange rate semantics, however, is not all that different from Europe. How can you embrace the "global Euro" without embracing the exchange rate appreciation associated with its success. These are the opinions of the columnist, author.
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(source: Reuters)