What's going on?

Hats off to Caterpillar: the US machinery maker reported better-than-expected third-quarter earnings on Wednesday, even as its sales and profits collapsed.

What does this mean?

Caterpillar�s earnings fell 54% in the third quarter compared to the same time last year. That�s a pretty staggering drop, but credit where credit�s due: it�s an improvement on the company�s 70% second-quarter decline.

Caterpillar�s worth paying attention to because it�s an economic �bellwether� � that is, it�s a good way to gauge overall activity. Its machinery, after all, is more likely to be in high demand when the going�s good. But between the ongoing pandemic and the uncertainty around the US-China trade war, the going�isn�t�good. That�s why customers are holding off on buying Caterpillar�s gear. And while the manufacturer did point out that demand for its smaller machines was improving, its outlook for the future wasn�t enough to get investors to climb aboard.

Why should I care?

For markets: Building bridges.

There isn�t much the US presidential candidates agree on, but they�ve both argued they�ll make improvements to the country�s infrastructure � everything from roads to railways. Investors see that as a sign that American industrial companies like Caterpillar could see a bump in demand after the US election � a possibility that’s pushed their stocks higher over the last few weeks.

The bigger picture: Speaking of the election…

The closer we get to Election Day � and the louder the political chatter � the less influence company updates will have on stock prices. As for after Election Day, it mightn’t much matter who�s in the White House: the three-month period until Inauguration Day has generally been uneventful for the stock market, and share prices tend to rise in an election year no matter which party wins. Then again, who knows? This isn�t exactly a normal year�