It’s been yet another week of new highs, and while those highs are coming in baby steps, that’s perfectly fine. It’s healthy that the market can hit records while consolidating at the same time. Moreover, I like that the internals are getting better and hinting at a strong leg higher.

I expect more highs to come. The slow and steady moves in the major averages are still nothing to sneeze at in what is historically the worst month for stocks, but they also don’t tell the whole story. To get a better idea of what’s going on in the global economy, there are two stocks in particular I like to follow closely. Let’s take a look at each and discuss what they’re telling us.

CAT Represents Growth in Construction

The first is Caterpillar (CAT), which is the leading construction equipment maker in the world. In the most recent quarter, construction sales grew 11%, with solid growth in Asia Pacific (+44%), Latin America (+31%) and North America (+3%).

There was a time in the initial throes of the Great Recession that CAT was a proxy mostly for Chinese spending, which outpaced and was more effective than U.S. stimulus. Remember, China built the world’s largest high-speed rail system and giant ghost cities from scratch. But even as Caterpillar pares its workforce, there is a reluctance to remove foreign workers from fast-growing economies. Here is how it stands now:

  • United States: 48,500, down 2.3% year-over-year
  • Foreign: 62,700, down 0.9% year-over-year

This stock is up 33% so far this year, and while the dividend yield has come down as the shares have moved higher, it’s still an attractive 2.6%. Plus, CAT recently caught an upgrade from UBS, which lifted its rating to “buy” from “neutral” and noted the amazing growth for the company. While there is no doubt this is a typical Wall Street late-to-the-party upgrade, there is still tremendous upside potential here.

I’ve been pounding the table on CAT for years, and I now see the stock headed up to $135 over the long term.

BA is a Key Player in Defense and Travel

Boeing (BA) is another great proxy for the global economy with already 70% of its commercial business outside of the United States. That number will only grow over the next two decades as management sees deliveries of 41,000 planes worth $6.1 trillion.

Like Caterpillar, BA’s commercial airplane demand is driven mostly by China and the rest of Asia. Keep in mind that in 1996, American cities had 14 of the top 20 busiest airports in the world and now that number is down to four.

Boeing also benefits from the drumbeat of war that could see Japan shift from its passive constitution to confront an imperialistic China and bombastic North Korea. As turmoil in the region and around the world escalates, defense stocks only continue to rally.

The bottom line here is that there are a lot of influences to this rally, and most are just gaining momentum and strength.