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For Caterpillar, It's The Second Great Depression
While everyone by now knows that the only reason CAT has been able to beat consensus earnings in the last several quarters is due to an unprecedented surge in stock buybacks, documented in great detail here in prior articles...
... the one thing that most do not appreciate, probably because nobody is willing to cover the ugly truth behind the headline numbers, is just how profound the secular collapse in CAT's business model has become.
Because according to the latest CAT retail sales data, Caterpillar has now reported an unprecedented 28 months of declining global retail sales, with the month of March seeing a 16% Y/Y collapse in China (after a 20% plunge in 2014 and a 24% plunge the year before), while Latin America has seen a 34% Y/Y crash, after a 21% drop the year before.
Or as far as the industrial and heavy equipment bellwether is concerned, the emerging markets (or BRICS) are in an unprecedented economic collapse.
And just to put the 28 months of declining retail sales in context, during the Great Financial Crisis, CAT suffered "only" 19 months of consecutive declines. As of March 2015, this number is now 28!
Or as a more truthful Tim Geithner would have said, "Welcome to the second Great Depression, Caterpillar!"
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Sales? Revenues? What has that got to do with earnings?
It is all about the Supply Demand of the stock. Buybacks reduce supply. Look at other corps doing buybacks. 2nd only to the "Most Shorted" squeeze play.
Investors trading paper because they have no where else to go?
This is safety?
You could earn 16% interest in a Russian bank account.
this is how obsolete corporations die. kinda like a black hole evaporating, as postulated by hawking.
reality's revenge against the citizen's united decision and the possibility of omnipotent, infinite life span unhuman entities.
Cramer always told me to look to CAT for future market conditions.
BO BOO BOOOO BOOO YEAHHHH!
For once I agree with that asshat. CAT preceded the broader market during the 2008 crash.
CAT as a corporation isn't obsolete, it's management is. Any competent management would be braced for the winds of fate to change direction but the bonus system and the loud whine of the Wall St. crowd allows only bad decisions to be made. The price of the stock has become more important than the true value of the company and CAT isn't even close to being the worst offender.....
isn't that the case with management at every firm? they're bloated pay "EXECUTIVES" with little to no experience in the day to day. They don't deal with problems--that's the grunt employee's job.
Good grief--some asshole calls corporate and complains about an employee because she's TOO happy and friendly. What does corporate do? Call the manager and demand to have her fired because a "CUSTOMER" complained. WTF?
That is the sad state of management. Highly overpaid. Highly incompetent. Egos out of control. Sense of entitlement.
agreed. you beat me to the punch.
i was about to edit my post to read (non-financialized) obsolete corporations, intending to capture the true irony of companies dying because wall st. has been enabled as the driver of the economy, instead of the production of things of value. cat plays the game of course, and i'm not against the company per se, but this wall st. led view of the world will eventually gut every company that produces things of value, as that value is manipulated into .01% pockets for doing NOTHING outside of gaming the system.
The killer is the buybacks. No matter how low the interest rate, the loans must be paid back. I expect over the next year or so as the economy continues to deteriorate, that starting with retail, payments will be missed, then loans defaulted. The thing is "to big to fail" does not work when everything fails at once......
financial rape and material rationing for the plebes perfected.
and of course they'll figure out a way to 'save' all the connected companies 'foolish' enough to take this path, by pushing the failing debt up through the financial system, until its again systemically critical, and the bailout cycle transfers yet another generations wealth away from us and toward them.
guess they learned their lessong about how not to get caught pocketing their gains and socializing their losses after the S&L crisis of the '80's. their bailout business model is tried, tested, and proven to keep them out of jail by shifting the problem debt upward into unaccountable institutions.
We're shovel ready, still.
Carpet fibers on the shoes & all...?
So, let's see, the Dow has been from (around) 18020 to 17860 to 18016 to 17900 to 18000 today.
That's 560 points in one day.
Which way now?
DavidC
If Kramer were spracking off on TV and was presented with this data he would simply say that this is indeed a recovery for them, as the loss of business was not as deep as the previous period of loss. He is an excellent snake oil spin master.
ask that brown kid playing with the trading software at the Fed
CAT performance was (and still is) considered a great indicator for the real economy. These numbers are very telling of the true state of businesses inside US and also outside...
"CAT performance was (and still is) considered a great indicator for the real economy. These numbers are very telling of the true state of businesses inside US and also outside..."
Is this the real economy? Could this perhaps be an unintended consequence of manipulating and suppressing PM pricing contributing to the demise of the mining industry?
There is more than mining reflected in CAT's numbers: construction, infrastructure, oil & gas...
But home sales are booming according to the manipulators?
and don't leave out their houses, I hear they have pay for sex inside them.
D9 in the coal mine.
Not to worry, the Fed will place an order for tens of thousands of bulldozers, front end loaders, and backhoes in order to move the freshly printed money. Sales skyrocket. The "recovery" continues...
I freelance over th? internet and earn about 80-85$ an hour. I was without a job for 7 months but last month my paycheck with big fat bonus was $15000 just working on my computer from my home for 5-6 hours. Here's what i have been doing... www.globe-report.com
But but but what about the RECOVERY and POSITIVE GDP numbers? Oh yes, that's right, financial MSM is in a parallel universe.
https://www.youtube.com/watch?v=0B4UpmgGJ3o
Why do Democrats want to think the economy is doing great even though it isn't?
The illusion must continue while the black messiah is in office.
Hey, if JC Penney can continue to operate and stay in business despite making no profit, why can't Catepillar?
It's the new market! No sales, no profits, no cash flow but still humming along. God Bless America
How about Amazon? NEVER made a profit and still one of the most wanted stocks by many.
Nothing to see here folks, move along.
It will get better next quarter, we promise. The recovery is just around the corner,.... corner.... corner.......
The Beatings WILL Continue till Moral Improves.
This is what you get when you have money in Politics Banks & Corporations with Unlimited Power, Corporations with more power that whole countries, a Strong Central Government assuming the mantle of a Superpower and a Standing Army positioned around the entire globe.
Or something close to that.
And that is what you get when the population doesn't study the Founding Documents and learn to think about things other than Circuses and Butter.
And in Colonialism we learned that powers recruit soldiers and police from local populations in order to co-opt their power and create the illusion of not being governed.
How has the power of USA's Intellectuals and Smart People be CO-OPTED by those in power and control???
- Put them in Debt
- Coerce them, or Blackmail them
- Spy on them
- Infiltrate their groups, CO-OPT their Political Groups
- Cause Cost of living to rise, so them must compete and be Loyal to large Organizations which don't tolerate free speech, reckless videos or blogs online, protestors, activists
- Capture Media
- Capture Government
- Capture Education & Printed Media, create Quasi Science
- Teach Loyalty, Patriotism to the State, Patriotism for all Wars, Loyalty to the Group/Network/Club
makes you wonder why TPTB aren't currying favor with the patriots in this country that 'get it' (many or most of whom are also VERY 2ndA friendly).
their hubris makes them more than a little stupid, which will one day cost all of us dearly...
Jefferson, Paris Aug. 30. 1787.
the tree of liberty must be refreshed from time to time with the blood of patriots & tyrants. it is it’s natural manure.
Why would anyone BUILD anything, when they can simply borrow money and buy stocks???
Moar stock buybacks with 0% money!
Moar IPOs of companies losing money.
Moar QEs.
Moar debt.
Keep stocks going up is the Federal Reserve's wealth transfer economic plan.
We need a violent war. Rebuilding after the war will employee everyone.
employee everyone (who is left alive).
It's the broken window theory, or the alien invasion theory, that Krugman loves so much. So, you think CAT sales will spike in Ukraine? They're going to need lots of broken windows, lots of window dressing, to fix those numbers.
And about all these stock buybacks - at some point, you run into the limits of the public shares, after which you'd create liquidity problems in trading your stock. This is definitely a trick with a pretty short lifespan. It'll be interesting to see when they hit that point. But all the corporates are playing along, like good little doggies.
interesting point about liquidity - goosing share price and EPS with buybacks financed with 0% credit, which will have to be paid back by debt rollover or out of cashflow.
for the companies doing this with cash reserves, its saying something about the lack of faith that new capital investments, especially for a company as 'creative' as AAPL, who see more benefit in financiialization than investing in their own future product offerings. fewer shares are likely to be more volatile in the future, just another example of current management kicking the can down the road - somebody else's problem in the future.
familiar refrain... i remember when everyone complained that wall st's time horizon focusing on quarterlies performance was short sighted - now the focus seems to be about 5 minutes into the future. eat, drink and be merry, for tomorrow... lets not think about that...
Why dont they go to work digging some resevoirs in California....???
Those will come in handy storing the dust blowing out of the empty cities...
Or as mass graves.
Pshaw everybody knows Catapillar digs the green shoots.
Chrysalis would be a good name for a post bankruptcy Caterpillar.
People don't need to build anything anymore. Just make an app, and get fake likes on Facebook. Just remember how many people in Africa "likes" the State Department.
This is some new form of cannibalism, never heard of anything feeding on itself quite like this lol.... eat till you expose the bottom, then eat through it..
Aren't there some holes to dig and fill back up again here at home...?
So the CAT miss combinded with the bigger crude numbers, offsets the existing home sales numbers, and the DoW reverses it's losses and moves 50 points into the green. Welcome to the NYSE Casino.
MOAR Shovel Ready Bullshit is needed and fast.
I warned Oberhellman to step down and replace governance at CAT with a younger more business savy cohort of contemporary analysts before CAT was foisted into Chapter 11. Frankly, if Oberhellman does not step down and sell off CAT pronto, he will lose his shirt.
once the TTP is approved then the metrics will all of a sudden be corrected for past reporting - they are building the case for passing the bill
the steel industry is in major collapse as well, across the board except for stainless and supply to automotive
Before Cat's downturn, reports surfaced that the computer information, collected by the Cat as it worked the farmer's field, was being shared.
News reports said the information the machine collected was not just going to the farmer's computer--to access and use the information-- but that it was also going to some unknown destination.
If I were a farmer I would not purchase another Cat. Why give some unknown entity informaion on how to farm my land?
Fulton adds a couple of issues to the list. “There continues to be concern over privacy. [We need to] better educate farmers about who owns the data, what it means when your data is transferred to the cloud,” he says.
http://data-informed.com/precision-agriculture-deere-gets-farm-data-trac...
It’s official: John Deere and General Motors want to eviscerate the notion of ownership. Sure, we pay for their vehicles. But we don’t own them. Not according to their corporate lawyers, anyway.
In a particularly spectacular display of corporate delusion, John Deere—the world’s largest agricultural machinery maker —told the Copyright Office that farmers don’t own their tractors. Because computer code snakes through the DNA of modern tractors, farmers receive “an implied license for the life of the vehicle to operate the vehicle.”
It’s John Deere’s tractor, folks. You’re just driving it.
http://www.wired.com/2015/04/dmca-ownership-john-deere/
CAT is another Iillinois shit company just like McDonalds. They may be down state but they are still illinois corrupt shit just like Obola.
President Obama (under heavy guard) needs to visit another CAT plant and congratulate the line workers for not building those tractors.
I have said many times- why aren't we creating real jobs coast to coast by rebuilding American highways, bridges and infrasctructure... jumpstart Catepillar clean up the joint a little bit at the same time... hell, we could even finish the monorail!
The most advanced nation should lead in these areas... can't wait for the revolt to start.
Monorail. Don't you remember what the monorail did to Brockway, Ogdenville, and North Haverbrook?
you forgot Shelbyville...
https://www.youtube.com/watch?v=xhpO_WcR_jE
Simple.
Print moar demand.
The downside to stock repurchases is the drag of debt on earnings after the buybacks stop. No increases to annual earning means value of asset needs adjusted downward. Stock market and bond market in precarious situation with interest rates at low point, and government bonds being harder to find. The rubber band is almost fully stretched--watch out!
Im curious how well a CAT D10 would hold up against an MRAP...there are other uses for these vehicles
Organized militias are an untapped market for heavy equipment that can be modified to counter DC's monopoly on armored vehicles.
Harley revenues are down, probably because of Indian
Is it possible companies such as Kumatsu, Leibherr and such are taking business from Caterpillar. I have been out of heavy eqpt over 30 years but I wouldn't be surprised China has heavy equipment that sells for cheaper than Cat.
The above is one scenario, the other is there is no business out there to compete for.
Indian? No one has extra money to buy Harley's crap. Too many old guys buy them and end up getting in an accident and getting killed. It happens all the time.
That's my retirement plan
There is an intrinsic link between Harley and CAT. Just drive by any CAT employee parking lot and you'll see what I mean. Also, China is building cheap tractors using CAT parts. They have been making parts for CAT for a while, and for every 5 parts they send out the front door to CAT, they send 5 out the back door to the Chinese tractor companies. Same parts.
Cherry picker:
Cat has long made products in China- mostly parts made under the "Cat Classic" name. Though Cat claims they are all made to the same "Cat" standard, I can tell you from experience that the metallurgy in all Chinese stuff is inferior, including Cat. China is still a culture of "so I fucked you... so what... you shouldn't have let me do it".
Reminds me of a Japanese manufacturer who moved their plant to China, " Oh, but we have Japanese inspectors in the Chinese plants." So I said, " and do you have inspectors in all the Chinese suppliers plants. in the steel mills?" Of course not.
When Mao made every little village make pig iron, it didn't take long for the peasants to fill it with silica and all other sorts of infernal shit.
Even the chinese copy cats that make junk crappier than Cat can't sell their junk to US customers.
The 2009 hole looks like it was dug out with a backhoe while the recent 2 year decrease looks like it was pushed out with a bulldozer....
the backhoe depression V.S. the bulldozer recession, tonight only on the WWW.
So I'm guessing CAT will become the biggest construction equipment leasing company in the world. (https://finance.cat.com)
Does CAT do channel stuffing like the auto makers ?
I thought they used CAT equipment to move the piles of dollars, Euro, Yen. etc ?
Catipillar is a company that mirrors the global economy. With record low sales and revenue their stock is up today as the con game continues!
Rachel Corrie's Revenge is at hand.
I guess the Israeli House Plow market is saturated. They only need so many D-9s.
This is more meaningful than US employment statistics, housing starts, China rail and electricity stats, or the Baltic Dry Index. This is the real world, with no government fixing, and even after years of channel stuffing.
This is the end of the world.
When you're buying a CAT with anything other than US$ you can't really afford the CAT - it's as simple as that!
Who own's your CAT?? Who owns your JD tractor? Who owns your car?
http://www.wired.com/2015/04/dmca-ownership-john-deere/
It’s official: John Deere and General Motors want to eviscerate the notion of ownership. Sure, we pay for their vehicles. But we don’t own them. Not according to their corporate lawyers, anyway.
In a particularly spectacular display of corporate delusion, John Deere—the world’s largest agricultural machinery maker —told the Copyright Office that farmers don’t own their tractors. Because computer code snakes through the DNA of modern tractors, farmers receive “an implied license for the life of the vehicle to operate the vehicle.”
It’s John Deere’s tractor, folks. You’re just driving it.
Drive old vehicles pre 2004 if you can - around that time the secret tracker / controller boxes started getting put into all the vehicles
My 2000 F150 will be the last truck I ever buy
How about a merger between Caterpillar and McDonald.
On Sale Now, the McCat! buy one get one free.
If the EPA is going to continue with their plan to shut down 28,000 MW of coal fire power Cat may as well close up shop. They want everyone on "clean" fraked NG. Enjoy cheap gas while it lasts, can't believe this isn't a bigger issue. Here is a map of planned closures.
http://www.mining.com/wp-content/uploads/2013/12/SNL-Financial.jpg
Their sales will pick up again,once the FEMA work camps break ground in 2016..
Peoria, Illinois will look like a miniature Detroit if this keeps up. How they persuaded CAT from picking up and moving manufacturing to MEX or China, I do not know. Nowhere am I so reminded of this nation's decline, than in Central Illinois. The front doors of your local Steak & Shake and Jimmy Dean's (pure pork sausage) were sporting NO HANDGUNS ALLOWED signs, last time I was there. Remember, during the last months of the Roaring Twenties the roaring was happening pretty much only in New York. The farmers were already in the Depression. History rhymes.
Does CAT make shovels?
It's time to bury this company.
Sell it to China?
They will buy anything American.
Using US treasuries as collateral.
Depression? Did somebody say Depression?
When is a bank run not a bank run......when you can still get a little bit of your cash.
When is a soup line not a soup line.....when you have food stamps.
Very Robust! Good for a 4% rise in CAT stawks.
The world suffers will satanic cunts like yellen bid the market - all in the name of stability - all in the name of pulverizing the masses.
This is frightening and demonstrates just how close we are to the total collapse of the global economy and civilization as we know it
2008 on steroids crack heroin speed and meth is imminent
And one further comment, can you imagine what would happen to Cat if QE were not available for them to prop up that share price?
QE is not about enriching billionaires. That is just one of the side-effects.
Without QE the global economy collapses and the billionaires eat bark and grass along with you.
Thanks Bernanke for the 6+ year extension on life that he gave you
I drove around Tucson last week. I saw a huge parking lot where the military stores planes in the arid air that they can strip parts from or put back into service should the need arise. I also saw a big desert lot full of CAT equipment sitting there. Don't know if it was new and awaiting a home but there sure was a lot of it. Sad to think the economy can't use these amazing pieces of equipment.
CAT is missing out on the biggest building boom in history, the one in China. Construction of homes, highways, subway systems, schools, hospitals, factories, etc are booming. CAT machines are few and far between . Japan and Korea dominate the market. In my travels around China I see Komatsu, Hyundai, Hitachi, Daewoo/Doosan, Sany, Zoomlion, Longking,XCMG,LiuGong,Sumitomo, Volvo, Shantui, and Chery. CAT has a partnership with a Chinese company, but that isn't helping.