Correlation Is Not Causation But...

Tyler Durden's picture

As FedEx rained on the market's parade modestly today (with its biggest drop in 18 months and heaviest volume since Jun 2010), it is the 'crash' in Caterpillar's sales that should be more worrisome. Just as the economies of the world are supposed to be getting ready to re-surge and expectations are set for a second half renaissance, it seems that in reality, corporations that build stuff, mine stuff, and move stuff are not buying in anticipation. As the following chart suggests, perhaps CAT is yet another canary in the global economic decline coalmine?


Cat - Canary - get it?


Chart: Bloomberg

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slaughterer's picture

PMs are totally goin' a nowhere.  No use in owning them anymore. 

FieldingMellish's picture

Absolutely. Much better putting your money in the bank where it is safe... oh wait.

Doubleguns's picture

Put your PM's in your mattress. Thats the safest thing you can do right now.


Oh yea, and keep your guns loaded.

FieldingMellish's picture

Silver bullets? What kills squid?

MisterMousePotato's picture

Now we live in a world where causation, too, is not correlation.

El Viejo's picture

Is China behind this. No seriously.

Kitler's picture

Apparently digging holes and then filling them in seemed like a good business to be in in 2009-2012 for some reason.

Today not so much.

TCL's picture

The Keynesians'll think we're not digging deep enough.  Otherwise, CAT would be making more sales.

TBT or not TBT's picture

People were sinking their fiat into earthmoving equipment as an inflation hedge, not to move dirt and rocks around. Silly ZHers.

Stoploss's picture

We don't need CAT.


We got Mine Craft.




Ham-bone's picture

anybody notice the 2pm flash smash of silver on the release of the Fed ($0.40)...only to be bid entirely back up in the same minute...interesting looking wick.  Somebody was waiting to smash and somebodies were waiting to play catch???

swissaustrian's picture

Stop hunting at 1600 (gold) and 28.4 (silver) followed by short covering.

Downtoolong's picture

It's called market testing. But it's not manipulation because the CFTC and Comex agreed with us about that and besides, no one has a big enough army of lawyers to prove it.


Ham-bone's picture

Can someone see if this flash smash had volume behind it???  Love to know if a single piece of actual metal exchanged hands at the $28.40 price...seems only paper shuffling in nano seconds?  thinking I need to find a physical seller willing to lock in a bid and execute on that...anybody aware of someone willing to do this?  I'd love to have a significant bid waiting for that final smash to $26.25

25 days "trading" in a closing range of $0.80...

swissaustrian's picture

Yes the smash had massive volume behind it, most of the trades were probably above the spike low, though.

Sudden Debt's picture

they increase in value when they tone and create a patina.
waiting wainting :)

it's really dealtime right now! they coins you find on ebay with a severe discount is super!

I bought 4 dragon 2000 lunar coins for 245$ this weekend! A year ago they sold for 170 a piece!

McMolotov's picture

SuperBen can save us.

The worst trader's picture

Apparently this all bullish, but why does my money keep evaporating?

slackrabbit's picture

I love my copper short ...

Cdad's picture

All is well...remain calm...the chart of the collapse of CAT sales is simply an opportunity for global growth.  Yes, you see...when revenues are collapsing, the opportunity for a reversal of said sales collapse is to hand.  Just like stawk charts, the folks at Cat will experience a sudden sales reversion to the mean, and in response, the globe will experience a spurt of growth.  Everything is cool, and Tyler is being very undude here.

After all, when the canary dies, you have an opportunity to buy another canary, also fueling the next leg of global canary sales boom.  If you damn doomers would just learn to understand that moving earth, shipping things, manufacturing all very old school.  Instead, just look for the reversion while Ben Bernanke reloads the cash canon, and buy the fucking collapse [BTFC].

In my next segment, I'll show you how to turn €15.8 billion into €130 billion by Tuesday of next week...all without ever lifting a shovel or operating a machine press.  It's easy.  If you want in on this, just email old Cdad, and send a money order for $29.99 to get my handy how to guide.

Mark123's picture

Do I have to wait till next Tuesday?  I would like to make $100 billion this week.

Cdad's picture

Whoa...slow down there big fella.  If you want to make $100 billion this week, it is a bit more tricky.  After all, as far as I know, there are not many angry and armed ex Russian KGB agents roaming the streets of America...know what I mean?  However, where there's a will there's a way...and the how-to guide on making one hundred billion US dollars before Tuesday next week is available at just $99.99.  

McMolotov's picture

"Your ideas are intriguing to me and I wish to subscribe to your newsletter."

forwardho's picture

cdad, while there might not be many angry and armed ex KGB agents here in the good old U.S.A. just wait till they try to give the helpful Narco trafficers a haircut on their newly cleaned stash.

Long chainsaws and black garbage bags.

Suddenly those 401s look awful tempting.

Cdad's picture

401k's are destined to become 199ks in 'Merica.  That writing is on the wall.  You don't need to believe me.  Just do a search on "planned negative interest rates" in the US.  Folks should be able to figure it out from there.

toys for tits's picture


Very funny.

At next earnings, Cat will probably take another 'one time charge' related to the Chinese subsidiary ERA Mining Machinery and its subsidiary Siwei due to fraud.

Going Loco's picture

I'll tell you what's wrong with it, my lad. 'E's dead, that's what's wrong with it!

No, no, 'e's uh,...he's resting.

Look, matey, I know a dead canary when I see one, and I'm looking at one right now.

No no he's not dead, he's, he's restin'!

(and so on)

slackrabbit's picture

Que obligatory Monty Python Dead Parrot sketch with Mike Palin as the sell side analyst for Cat...

TBT or not TBT's picture

Can I double short canaries? There ought to be an ETF.

Mark123's picture

Must be a good time to buy CAT.  This is what I learned by following the market.


Buy every stock that is cratering, and then ride the wave and become rich!  Simple enough really.

groundedkiwi's picture

Do your due diligence first. Maybe Cat are just losing their sales to competitors.

ceilidh_trail's picture

Weeeelllll, gaaaaawllllly! I'm gonna get the boys on this one. Thanks for the tip! Puhleeeze don't tell anyone about this until I'm all in! Thanks in advance, robottrader and harry wanger ltd.

ekm's picture

If most of left over income is going for food and gasoline, there's not much left buy anything else.

Going Loco's picture

If most of left over income is going for food and gasoline, there's not much left buy anything else.

Oh cmon. Surely you can afford at least one dozer?

No? Skinflint, that's what you are.

Dubious Maximus's picture

the cat is out of the hat, that's that

Godaddy's picture

Cat - Canary - get it?



dobermangang's picture

The only things that are selling well now are guns, ammo, booze, lotto scratch offs and thanks to Cyprus and the EU bank robbers... home safes.  The $5.00 ready pepperoni pizza at my local Little Caesar's are selling very well too.

Dewey Cheatum Howe's picture

And if the banking system and now the multinationals have their way they will be able to use risky derivatives without any assets backing them to expand growth.

Wall Street Deregulation Garners Bipartisan Support Despite Devastating JPMorgan Report


WASHINGTON -- A bipartisan cadre of House lawmakers will move on legislation to deregulate Wall Street derivatives Wednesday, less than a week after Sen. Carl Levin (D-Mich.) released a devastating report on the multibillion-dollar derivatives debacle at JPMorgan Chase.

"The road to hell is paved with these bills," said Rep. Alan Grayson (D-Fla.), an advocate of financial reform.


And relevance to this article and probably the driver of this legislation proposed here.

A staffer for Rep. Gwen Moore (D-Ill.) said that her bill was designed not to pad banking profits, but to relieve regulatory burdens on other companies that do business with banks. "You have these huge corporations -- I'm just gonna use Caterpillar because I guess you know they're in our district. They do business in Russia and Canada. They do mining and sell huge pieces of equipment that take years to construct ... and they need to hedge those risks," said the staffer.

Moore's bill would allow a company like Caterpillar to trade derivatives with its offshore affiliates -- firms that it owns in other countries -- without posting money to a third party guaranteeing that it can make the trade.

Exempting such trades from oversight could also help foster tax avoidance, however, since companies have used sham derivatives transactions to dodge the Internal Revenue Service. Such activity is usually illegal, but the IRS has been short on resources to investigate and combat it. Requiring companies to post monetary guarantees creates an upfront cost to sham transactions that may serve as a deterrent.


You financial people might want to take some time to read what is in this bill here



SKY85hawk's picture

? There is/was regulation of derivatives?

Why then is everyone scared of rehypothecated collateral?

Why do 'they' talk about 26x1 leverage?

What happened to a trading exchange?


If this is done, it s/b done with reactivation of Glass-Stegall.

OldPhart's picture

We just purchased (earlier today) an $800k loader for one of our mines.  It's not because we anticipate growth and surging's because we've physically beat the old one to shit.  R&M costs have been running at least $60k a month for the last several months.

The new loader will not be a Cat.

Billy Shears's picture

I'm a zit!  Get it? 

Herkimer Jerkimer's picture




Looks like Tweety finally got the CAT.


And can somebody tell me how to insert pictures in here!


DeadFred's picture

Pay Tyler enough to get on the list or prove yourself worthy in some way. In other words, most can't.

are we there yet's picture

As I understand it you have to be a ZH contributor.  If you are a newbie, ZH is centered around a limited number of select insightful contributors that write anonimously under the pen name of Tyler Durden (a literary image). This anonymous format fosters freedom by the authors in a way as to avoid being suppressed or pressured by external entities.  We as dialog responders to the ZH articles collectively magnify the truth or inaccuracies of the contributors, as well as point out irony, humor, or vent our feelings. The contributors may or may not use their real names. THis way of thinking allows ZH to give more truthful and timely news (mostly about the economy) than the heavily controlled public media provides. Does this help your question?

Wakanda's picture

If the bulldozer parked outside the Cyprus bank is the beginning of a meme, CAT should bounce right back as folks scheme new and innovative ways to withdraw money from reluctant banks.

Hydraulics FiSHeS

Stuck on Zero's picture

CAT could make a lot of sales and profits by switching their business plan from moving dirt to moving bullshit.



autofixer's picture

Should we expect a dead CAT bounce?