Attachments: 02-27-2012 - EOTM - Dire Straits.pdf Eye on the Market, February 27, 2012 [the attached PDF is much easier to read this week, particularly if you are interested in the energy science implications of last week’s press release from the House Minority Leader] Topics: oil markets and Iran Most of this week’s note deals with oil prices and Iran, but I did want to point out a trend that is illustrative of how things are going globally. One of the strongest aspects of the US recovery has been the rebound in business spending on equipment and software. As highlighted by our friends at Hamiltonian Associates, sales by Caterpillar’s dealer network are a proxy for global trends. Caterpillar’s US sales are leading the pack for the first time in a while, Asia is moderating, and Europe trails with a distinctly negative trend. We expect a recovery in US payrolls this year, and eventually, in labor incomes. The US recovery may be weak by historical standards, but expectations are pretty low (2.2% growth in 2012). We expect the US to exceed expectations, and for Europe ex-Germany to disappoint them. Absent a blow-up in Iran, this view seems like it’s on track.