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For Caterpillar, The Second Great Depression Has Never Been Worse
When one strips away all the "double seasonal adjustments", all the non-GAAP masking tape, all the pro-forma addbacks, all the constant brainwashing propaganda where if one excludes all the bad things are great, and certainly the $22 trillion in central bank liquidity injections to keep crony capitalism as we know it alive in what is now a 7-year-old attempt to restore the post-crash confidence (which is failing thanks to the $57 trillion in debt added since then) what is one left with?
Well, the monthly retail sales of Caterpillar is a good place to start. Because far from confirming a "recovery" or ever stagnation, one look at the ongoing destruction in end demand for products of this industrial and heavy-machinery bellwether confirms nothing short of the second great depression.
And while in the past few months there had been some hope that the US was indeed decoupling from the rest of the world following a 5% Y/Y increase in retail sales in April, the tumble in May to just 1% for North America indicates that contrary to hopes that the US may pull the rest of the world up from its epic slump, it is the rest of the world (where China just posted a 17% drop in demand, while Latin America cratered by -50%) that is succeeding in dragging the US down into an upcoming global recession.
Actually did we say recession? That was the 19 month period following the Great Financial Crisis. The current interval, in which CAT retail sales have dropped for an unprecedented 30 months in a row (!) at an average monthly pace of -10% suggests that, when stripping away all the endless veneer and propaganda, there is nothing short of a Second Great Depression just below the surface.
Source: Caterpillar
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I've been down so long it looks like up to me.
New common core math says that it must be a steep decline to be called recession, not a slow painful death. The third part of the chart doesn't go down far enough.
Cold weather. It's becasue there has been cold weather somewhere.
I don't see why this is such a big deal. You can't eat Caterpillars.
Where is all so many shovel ready job save or create!? But in Sochi, you are come work for Boris. Please to bring rubber boot and thick leather glove. Boris is provide shovel and volt meter. You are pay extra if experience for stripper.
This is winning in Obama's eCONomy.
CAT has been for a long, long time the canary of the real economy...
Canary is too small, removal of bone is manual tedious. Cat is not so bad, but please to remember, first shave before eat.
Have a go at your cat Boris. I'll stick with my canary...
Bla bla bla. Here is a real world example of how shitty things are. Two of our neighbours will be yanking their kids from prvate school for the upcoming year. Good families. My wife has coffee with the women every week. I asked her if their decsion was based on transferring to homeschooling. Nope.
In absence of property tax, you could easily send your kids to private school and save enough for college. (There would also be plenty left over to pay a private company for "muh roads"). When will property owners get sick of this theft?
Ahhh... But then you won't have government school administrators and government teachers driving Mercedes and owning vacation homes.
One of the worst government education systems in the country, Washington D.C., for the 2009-10 school year, Census Bureau data show DC spent a total of $29,409 per pupil.
After they graduate from the D.C. government school system many of them will learn to read.
After they graduate from the D.C. government school system many of them will learn to read.
But all will have GS jobs
"In absence of property tax, you could easily send your kids to private school and save enough for college."
Do you live in New Jersey? Where I'm from, absence of property tax puts less than $2k in my pocket annually. Can't fund private skool and college with that. The median tax on the median home value in my state is less than $1,600/year. No, not Alabama; their median tax is about 1/4 of that.
My property tax comes to roughly $10,000/year. Then add in the rain tax, flush tax, tax tax, and on and on...
Imagine trying to retire having to pay your corrupt leftist gubmint $10,000 per year so that they don't take your home and sell it, throwing you out on the street. In general this is what the "compassionate" leftist jurisdictions do. When it comes to paying their gubmint union voter's salaries and benefits they would rather that you be on homeless than cut gubmint pay/benefits to be comparable with the private sector.
The federal government fucks the state .The state fucks the city .The city fucks the property owners. The riddle is solved.
My $8K property tax bill wouldn't even cover one semester of private school for one child.
I'd be curious to hear what their reasoning is ..
Thanks cog dis !!!!!!! (Please break your lock and key!)
At least CAT has their pension fund obligations paid up. Right?
Pension what? The old fucks are fucked. The middle of the pack to be paying for the old fucks are fucked. You fucks are fucked. Better just call Websters and eliminate the word pension from the dictionary.
No no .. everyone misheard them ... they meant they have a pnechant for funds .... what is this pension you speak of? Sounds like something invented to take money from suckers.
The obvious alternative explanation is that Caterpillar is a failing company--being beaten by Japanese, Chinese, Korean, European... competitors.
The Komatsu Ltd chart is the inverse of the CAT chart.
Pull that out of your ass?
http://r2.oemoffhighway.com/files/base/OOH/image/2014/10/16x9/640x360/Ma...
The non-GAAP shenanigans only work for so long.
I'd like to see sales on cats competitors.......
Kabatsu? Etc....
Are they losing market share or just victim of producing quality machines that don't need constant replacement. I still see cats from the 60'S on sites here and there.
I used to be in heavy equipment decades ago. Even though there is increased competition, CAT has always been a good indicator of the upcoming economy.
However, it looks like they really did well in 2011 and 2012 and I wonder if that also did not contribute to the falling off. This is not the kind of stuff you trade in every one or two years for a new model.
Especially with all the global over capacity and depressed commodity prices.
So, you're saying they're down like 300%, right?
How much money did they donate to getting this clown elected?
http://www.endtheoccupation.org/article.php?id=2148
And yet their stock is only down a little over 20% from their all-time high.
What an effed up market.
These charts reflect reality; a chart of the S&P 500 would look pretty much the same if not for ZIRP-backed buybacks. Pure, unadulterated wealth transfer from future generations to current execs compensated in stock options.
mirrors macros perfectly.
I warned Oberhelman about this four years ago. I advised him to step down along with his entire Board of Directors due to their incompetence to grasp the long term quantum behavioural economics that would destroy CAT in the long run. What contemporary Economists don't get is that this upcoming depression will wipe out everyone in the entire World forever. This is not a short term thing when one examines what has manifested since 08. The trend is clear to all, and there is no let up in the downward Hegelian Spiral that is poised to annihilate all banks in the World since 08. Furthermore, we have just evidenced 29 successive business quarters of contraction on a Worldwide level. There is no indication, or empirical evidence, that suggests there will be any turn around on the horizon. Business, and especially multinational business, cannot function off of faith in 'fundamentals' anymore. The markets are dead, and the systemic destruction of the repeal of Glass-Steagall has already played out globally.
Bottom line is that Oberhelman is yet another incompetent CEO like Richard Fuld, frankly. The so-called 'masters of the universe' are faux 'masters of the universe' as there is only one MASTER OF UNIVERSE in the World, eh.
Master of the Universe, I applaud your candor and am hopeful that you are correct.
When the globalist policy is finally denounced and declared fraudulent and defunct, the rebuilding can occur.
It would indeed be a pleasure to experience - once again - fair and honest markets, trustworthy politicians and an economy that can function without constant podding and propaganda. I recall such a time, when I was very young. It all ended around 1971.
Crashing the system would be a proper good start.
Yes, unfortunately, there are now 7+ billion of us that want to experince that utopia and there is no monetary, fiscal, economic or political solution to resource scarcity.
Hence, the powers that be are trying to bring us back to fuedal times... ..for our "own good" of course...
Luckily, man does not need much to survive and the energy from the sun is free.
<<...and there is no monetary, fiscal, economic or political solution to resource scarcity.>>
People just need to be left alone and they will thrive anywhere. There is no material resource scarcity in the world. The only thing that is scarce is freedom.
In 1971 I was 11 years old and asked my Chartered Accountant father what President Nixon was doing by exiting the gold back standard. My father explained it to me as best he could, and I understood what he was telling me at that young age. I fully agree with you that Nixon's incompetence is what has brought us to this juncture. What irks me most is that people like Nixon, and my father, should have understood that when Glass-Steagall was repealed by the Gramm-L-B-Act it was game over for the World. All academic Economists have had decades to figure out the basic mathematics manifesting today. I don't get how they could be this collectively stupid when everyone on Z/H gets it no problemo? Moreover, the divide between Z/H orthodoxy, and FED orthodoxy, is as large as Philosophy itself. Clearly, one side of orthodoxy is wrong, and the other side is right. Thank God we are on the correct website. And I fully agree that the system has to crash completely before we can possibly rebuild on a more suitable substrate.
fed is 100% know what he is doing.
Nixon did what he did and I don't agree with what he did, but he was painted into a corner. I think it was LBJ that was holding the brush. That brush was the Vietnam War and the Great Society welfare programs, or "guns & butter", as they collectively referred to it back in the day.
Once you strip out DoD Sales and Israeli Settlements does CAT have any customers not funded by the US taxpayer ?
CAT still makes the best combat bulldozers. Israel still has a lot of Palestinian homes that they want to be bulldozed under in the Occupied Palestinian Territories. Should be bullish for CAT.
Thirty months of retail sales dropping at 10% per month would result in current retail sales being 4.2% of the original sales level [0.9 to the 30th power = .042]. This seems inconsistent with the WSJ reporting average earnings for the past 4 quarters of $1.65 per share, and income growing at 20% (now over $1B per quarter), while sales are reported as down 4% for the current quarter (source: http://quotes.wsj.com/CAT). So, was this current agitprop hit piece written by Marc Faber, or can we expect this kind of sloppy reporting from lesser lights, now that the current meme has turned to "markets are due for a crash." Or is the WSJ now into blatant lying to maintain their leadership role as buyside cheerleaders?
Fishhawk
Gameplan like McDookie and just quit releasing monthly sales, problem solved.
Buy Caterpillar they said. It was different this time they said.
My family ownes an ag equipment chain of stores and we are off 35% ytd. The 501C program and ZIRP created a massive robbing of future sales and now the bill is due. Add to that the 4th commodity cycle burning in flames, demand is imploding. But don't worry, the railroad just hit me with a 5-10 rate icrease. Wall street companies have become completely disconnected with the world we live in.
The economic alchemists, & the 'American Exceptionalists', thought they had a sure thing with Financialization/Securitization Ponzi Casino Capitalism, but then reality came home to roost in 08. Three years previously Dr. Rag Rajan warned the Committee to Ruin the World that they were heaping on risk where they thought they were spreading risk thin. Lawrence Samuelson Summers admonished Dr. Rajan, and accused him of being a Ludditte. The rest is history.
P.S. Sell all the equipment, and the stores, before you get foreclosed due to bankruptcy. Your clients will not be making any BIG ticket purchases in the foreseeable future. Ergo, this will be a zero sum game for you until you liquidate.
Caterpillar don't make earth moving equipment, they sell finance.
(the machinery is the asset with which to back the security).
Looked at in that context the graphs make sense, they can't sell debt for shit even to subbies.
My gross is down 30% ytd from last year too. People who used to pay me w/in 5-7 days are now taking 21-25 days.
I'm being forced into a differentiation strategy to hopefully grow my revenues going forward as my competition is increasing. I also lost a client who up and closed his doors. The guy had 10 employees back in 2007. The prices seem to increase daily wherever I go out and spend money. This is not sustainable.
Obummer and Yellen don't care about you. Where's your $ contribution?
Just get more and more cheap Federal Reserve money and buy back shares to boost up the stock price like everyone else.
More proof of the Collateral Damage from the war on commodity producers. You would think they would stand with the miners against the banksters but not appearing to. Seeems like Deere would be in the same boat with the Ag sector in deep caw caw too.
Thanks for you comments 4777
Bullish.
There's always shovels.
Liberty is a demand. Tyranny is submission.
Obamao and Old Yellen say its okay. I'm not worried. <sarcasm>
And yet they'll gladly tell you that you don't own that tractor that you bought.
Why has it not occurred to anyone that CAT's poor performance may have something to do with the fact that whenever a Palestinian house is demolished, we see a CAT bulldozer doing it ?
China is in the middle of the largest building boom in the history of the planet. It is being powered by Japanese, Korean, and Chinese machinery.
Komatsu, Hyundai, Hitachi, Daewoo/Doosan, Sany, Zoomlion, Longking, XCMG, LiuGong, Sumitomo, Volvo, Shantui, and Chery are going gangbusters.
CAT is conspicuous in its absence.
The recession the article refers to is only for Caterpillar and a few American countries.
They definitely played their cards wrong.