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For Caterpillar, The Second Great Depression Has Never Been Worse

Tyler Durden's picture




 

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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Fri, 06/19/2015 - 13:46 | 6214514 whotookmyalias
whotookmyalias's picture

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.

Fri, 06/19/2015 - 13:50 | 6214526 Creepy A. Cracker
Creepy A. Cracker's picture

Cold weather.  It's becasue there has been cold weather somewhere.

Fri, 06/19/2015 - 14:25 | 6214662 EscapingProgress
EscapingProgress's picture

I don't see why this is such a big deal. You can't eat Caterpillars.

Fri, 06/19/2015 - 16:46 | 6215290 Boris Alatovkrap
Boris Alatovkrap's picture

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.

Fri, 06/19/2015 - 13:24 | 6214426 Colonel Klink
Colonel Klink's picture

This is winning in Obama's eCONomy.

Fri, 06/19/2015 - 13:48 | 6214517 angel_of_joy
angel_of_joy's picture

CAT has been for a long, long time the canary of the real economy...

Fri, 06/19/2015 - 16:49 | 6215294 Boris Alatovkrap
Boris Alatovkrap's picture

Canary is too small, removal of bone is manual tedious. Cat is not so bad, but please to remember, first shave before eat.

Fri, 06/19/2015 - 22:52 | 6216425 angel_of_joy
angel_of_joy's picture

Have a go at your cat Boris. I'll stick with my canary...

Fri, 06/19/2015 - 13:28 | 6214434 Philo Beddoe
Philo Beddoe's picture

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. 

Fri, 06/19/2015 - 13:50 | 6214519 lordylord
lordylord's picture

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?

Fri, 06/19/2015 - 14:22 | 6214568 Creepy A. Cracker
Creepy A. Cracker's picture

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.

Fri, 06/19/2015 - 14:28 | 6214679 Sandmann
Sandmann's picture

After they graduate from the D.C. government school system many of them will learn to read.

 

But all will have GS jobs

Fri, 06/19/2015 - 15:08 | 6214861 Trucker Glock
Trucker Glock's picture

"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.

Fri, 06/19/2015 - 19:31 | 6215834 Creepy A. Cracker
Creepy A. Cracker's picture

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.

Fri, 06/19/2015 - 16:13 | 6215177 Dominus Ludificatio
Dominus Ludificatio's picture

The federal government fucks the state .The state fucks the city .The city fucks the property owners. The riddle is solved.

Fri, 06/19/2015 - 21:50 | 6216238 Abbie Normal
Abbie Normal's picture

My $8K property tax bill wouldn't even cover one semester of private school for one child.

Fri, 06/19/2015 - 13:57 | 6214554 Condition 1SQ
Condition 1SQ's picture

I'd be curious to hear what their reasoning is ..

Fri, 06/19/2015 - 13:30 | 6214439 wissen dass scheiBe
wissen dass scheiBe's picture

Thanks cog dis !!!!!!!   (Please break your lock and key!)

Fri, 06/19/2015 - 13:30 | 6214442 p00k1e
p00k1e's picture

At least CAT has their pension fund obligations paid up.  Right? 

Fri, 06/19/2015 - 13:33 | 6214458 Philo Beddoe
Philo Beddoe's picture

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. 

Fri, 06/19/2015 - 13:50 | 6214529 ghengiskhan
ghengiskhan's picture

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.

Fri, 06/19/2015 - 13:30 | 6214443 pasttense
pasttense's picture

The obvious alternative explanation is that Caterpillar is a failing company--being beaten by Japanese, Chinese, Korean, European... competitors.

 

Fri, 06/19/2015 - 13:35 | 6214470 p00k1e
p00k1e's picture

The Komatsu Ltd chart is the inverse of the CAT chart.

Fri, 06/19/2015 - 13:33 | 6214456 Yen Cross
Yen Cross's picture

    The non-GAAP shenanigans only work for so long.

Fri, 06/19/2015 - 13:33 | 6214457 wissen dass scheiBe
wissen dass scheiBe's picture

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.

Fri, 06/19/2015 - 13:34 | 6214463 cherry picker
cherry picker's picture

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.

Fri, 06/19/2015 - 13:38 | 6214481 Yen Cross
Yen Cross's picture

 Especially with all the global over capacity and depressed commodity prices.

Fri, 06/19/2015 - 13:42 | 6214492 Babaloo
Babaloo's picture

So, you're saying they're down like 300%, right?

Fri, 06/19/2015 - 13:49 | 6214508 MFL8240
MFL8240's picture

How much money did they donate to getting this clown elected?

 

http://www.endtheoccupation.org/article.php?id=2148

Fri, 06/19/2015 - 13:57 | 6214551 Black Warrior W...
Black Warrior Waterdog's picture

And yet their stock is only down a little over 20% from their all-time high.

What an effed up market.

Fri, 06/19/2015 - 13:58 | 6214561 mayhem_korner
mayhem_korner's picture

 

 

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.

Fri, 06/19/2015 - 15:38 | 6215011 Element
Element's picture

mirrors macros perfectly.

Fri, 06/19/2015 - 13:59 | 6214566 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

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.

Fri, 06/19/2015 - 14:15 | 6214622 FreeNewEnergy
FreeNewEnergy's picture

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.

Fri, 06/19/2015 - 14:29 | 6214687 LawsofPhysics
LawsofPhysics's picture

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...

Fri, 06/19/2015 - 15:36 | 6214927 Charming Anarchist
Charming Anarchist's picture

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. 

Fri, 06/19/2015 - 14:34 | 6214704 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

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.

Fri, 06/19/2015 - 14:41 | 6214736 kowalli
kowalli's picture

fed is 100% know what he is doing.

Fri, 06/19/2015 - 14:50 | 6214773 large_wooden_badger
large_wooden_badger's picture

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.

Fri, 06/19/2015 - 14:27 | 6214669 Sandmann
Sandmann's picture

Once you strip out DoD Sales and Israeli Settlements does CAT have any customers not funded by the US taxpayer ?

Fri, 06/19/2015 - 18:27 | 6215652 Clarabell
Clarabell's picture

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.

Fri, 06/19/2015 - 14:28 | 6214677 Fishhawk
Fishhawk's picture

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

Fri, 06/19/2015 - 14:28 | 6214684 Mike Honcho
Mike Honcho's picture

Gameplan like McDookie and just quit releasing monthly sales, problem solved.

Fri, 06/19/2015 - 14:30 | 6214690 large_wooden_badger
large_wooden_badger's picture

Buy Caterpillar they said. It was different this time they said.

Fri, 06/19/2015 - 14:37 | 6214720 4777aggi2
4777aggi2's picture

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.

Fri, 06/19/2015 - 16:03 | 6215137 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

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.

Fri, 06/19/2015 - 15:05 | 6214840 BobRocket
BobRocket's picture

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.

 

Fri, 06/19/2015 - 15:11 | 6214883 CoastalCowboy
CoastalCowboy's picture

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.

Fri, 06/19/2015 - 18:21 | 6215623 thepigman
thepigman's picture

Obummer and Yellen don't care about you. Where's your $ contribution?

Fri, 06/19/2015 - 15:13 | 6214888 yogibear
yogibear's picture

Just get more and more cheap Federal Reserve money and buy back shares to boost up the stock price like everyone else.

Fri, 06/19/2015 - 15:30 | 6214974 KansasCrude
KansasCrude's picture

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

Fri, 06/19/2015 - 15:40 | 6215017 CarpetShag
CarpetShag's picture

Bullish.

Fri, 06/19/2015 - 15:47 | 6215053 kchrisc
kchrisc's picture

There's always shovels.

Liberty is a demand. Tyranny is submission.

Fri, 06/19/2015 - 15:57 | 6215106 autofixer
autofixer's picture

Obamao and Old Yellen say its okay.  I'm not worried. <sarcasm> 

Fri, 06/19/2015 - 18:34 | 6215673 Evil Franklin
Evil Franklin's picture

And yet they'll gladly tell you that you don't own that tractor that you bought.

Fri, 06/19/2015 - 19:00 | 6215759 RMolineaux
RMolineaux's picture

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 ?

Sun, 06/21/2015 - 05:38 | 6218766 roddy6667
roddy6667's picture

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.

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