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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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Wed, 03/20/2013 - 17:47 | 3354238 slaughterer
slaughterer's picture

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

Wed, 03/20/2013 - 17:48 | 3354247 FieldingMellish
FieldingMellish's picture

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

Wed, 03/20/2013 - 17:53 | 3354270 Doubleguns
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.

Wed, 03/20/2013 - 17:57 | 3354293 FieldingMellish
FieldingMellish's picture

Silver bullets? What kills squid?

Wed, 03/20/2013 - 18:31 | 3354430 MisterMousePotato
MisterMousePotato's picture

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

Wed, 03/20/2013 - 18:34 | 3354452 El Viejo
El Viejo's picture

Is China behind this. No seriously.

Wed, 03/20/2013 - 19:30 | 3354656 Kitler
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.

Wed, 03/20/2013 - 20:39 | 3354870 TCL
TCL's picture

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

Wed, 03/20/2013 - 23:31 | 3355584 TBT or not TBT
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.

Wed, 03/20/2013 - 19:19 | 3354625 Stoploss
Stoploss's picture

We don't need CAT.

 

We got Mine Craft.

 

Bitchezzz.

 

Wed, 03/20/2013 - 17:55 | 3354280 Ham-bone
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???

Wed, 03/20/2013 - 17:58 | 3354299 swissaustrian
swissaustrian's picture

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

Wed, 03/20/2013 - 17:59 | 3354300 Downtoolong
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.

Blythe

Wed, 03/20/2013 - 18:29 | 3354321 Ham-bone
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...

Wed, 03/20/2013 - 18:56 | 3354548 swissaustrian
swissaustrian's picture

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

Wed, 03/20/2013 - 17:58 | 3354301 Sudden Debt
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!

Wed, 03/20/2013 - 17:48 | 3354244 McMolotov
McMolotov's picture

SuperBen can save us.

Wed, 03/20/2013 - 17:50 | 3354258 The worst trader
The worst trader's picture

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

Wed, 03/20/2013 - 17:53 | 3354271 slackrabbit
slackrabbit's picture

I love my copper short ...

Wed, 03/20/2013 - 17:57 | 3354286 Cdad
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 goods...etc...is 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.

Wed, 03/20/2013 - 17:59 | 3354308 Mark123
Mark123's picture

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

Wed, 03/20/2013 - 18:07 | 3354343 Cdad
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.  

Wed, 03/20/2013 - 18:14 | 3354362 McMolotov
McMolotov's picture

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

http://www.youtube.com/watch?v=wlMwc1c0HRQ

Wed, 03/20/2013 - 20:25 | 3354825 Cdad
Cdad's picture

lulz....jigglin'....

Wed, 03/20/2013 - 18:20 | 3354386 forwardho
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.

Wed, 03/20/2013 - 20:26 | 3354827 Cdad
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.

Wed, 03/20/2013 - 18:03 | 3354323 toys for tits
toys for tits's picture

+100

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.

Wed, 03/20/2013 - 18:08 | 3354345 Going Loco
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)

Wed, 03/20/2013 - 18:18 | 3354361 slackrabbit
slackrabbit's picture

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

http://youtu.be/npjOSLCR2hE

Wed, 03/20/2013 - 23:34 | 3355597 TBT or not TBT
TBT or not TBT's picture

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

Wed, 03/20/2013 - 17:57 | 3354295 Mark123
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.

Wed, 03/20/2013 - 18:55 | 3354543 groundedkiwi
groundedkiwi's picture

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

Wed, 03/20/2013 - 20:58 | 3354951 ceilidh_trail
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.

Wed, 03/20/2013 - 18:05 | 3354333 ekm
ekm's picture

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

Wed, 03/20/2013 - 18:11 | 3354352 Going Loco
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.

Wed, 03/20/2013 - 18:17 | 3354374 Dubious Maximus
Dubious Maximus's picture

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

Wed, 03/20/2013 - 18:20 | 3354382 Godaddy
Godaddy's picture

Cat - Canary - get it?

 

priceless!

Wed, 03/20/2013 - 18:31 | 3354423 dobermangang
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.

Wed, 03/20/2013 - 19:51 | 3354732 realtick
realtick's picture

nice chart

Wed, 03/20/2013 - 19:56 | 3354742 Dewey Cheatum Howe
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.

http://www.huffingtonpost.com/2013/03/19/wall-street-deregulation-_n_291...

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

http://agriculture.house.gov/sites/republicans.agriculture.house.gov/fil...

 

 

Thu, 03/21/2013 - 10:08 | 3356809 SKY85hawk
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.

Wed, 03/20/2013 - 20:14 | 3354796 OldPhart
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 sales...it'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.

Wed, 03/20/2013 - 20:35 | 3354856 Billy Shears
Billy Shears's picture

I'm a zit!  Get it? 

Wed, 03/20/2013 - 20:44 | 3354888 Herkimer Jerkimer
Herkimer Jerkimer's picture

'

'

'

Looks like Tweety finally got the CAT.

 

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

•j•
V-V

Wed, 03/20/2013 - 20:55 | 3354936 DeadFred
DeadFred's picture

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

Thu, 03/21/2013 - 01:35 | 3354981 are we there yet
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?

Wed, 03/20/2013 - 21:35 | 3355090 Wakanda
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

Wed, 03/20/2013 - 22:43 | 3355392 Stuck on Zero
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.

 

 

Wed, 03/20/2013 - 23:23 | 3355557 autofixer
autofixer's picture

Should we expect a dead CAT bounce? 

 

Thu, 03/21/2013 - 04:02 | 3356019 dunce
dunce's picture

Normally i ignore most charts because they are usually not predictive, but this one is scary. The last time both traces went to zero was the last bust. I have been following Australian miners because they supply China, and they have been shutting down expansion and reducing regular operations. Brazil is cutting back as well. The euro debacle seems like a slow grind down that is hard to be alarmed about. Our stock market indexes are based on hockey stick data, but i think the only thing supporting the real market was China. America was the engine that pulled the world, but we are just another flopping fish on the bank with no leader. A country with no leader can not lead the world.

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