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Forget Recession: According To Caterpillar There Is A Full-Blown Global Depression

Tyler Durden's picture




 

One wouldn't know it by looking at CAT stock, which has gone very much nowhere in the past 5 years thanks to just one thing - an exponential increase in the company's share buybacks...

 

... but the company's publicly disclosed monthly retail sales have just one message for anyone who follows them: forget recession, there is a global depression going on.

And it is not just in China as many would like to scapegoat: in June, in addition to a -19% drop in Asia Pacific (following a 30% Y/Y plunge a year ago, which in turn followed a 21% drop in 2013), US retail sales posted their first Y/Y decline since February, dropping by 5%.

But the real depression is in Latin America, where CAT retail sales plummeted by a whopping 50%: the most in reported history, and follow an 18% drop from a year earlier.

 

Summarizing it all, after an increasingly shallower series of dead CAT bounces in the past year, first thanks to Latin America, and then the US, global retail sales just dropped by 14% - marching the biggest Y/Y decline since the financial crisis.

And the cherry on top: there has now been an unprecedented 31 consecutive months of CAT retail sales declines. This compares to "only" 19 during the near systemic collapse in 2008. 

 

In other words, if global demand for heavy industrial machinery, as opposed to unemployed millennials' demands for $0.99 Apple apps, is any indication of the true underlying economy, forget recession: the world is now in a second great depression which is getting worse by the month.

Source: CAT

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Wed, 07/22/2015 - 09:55 | 6341100 slaughterer
slaughterer's picture

Depression is bullish cuz it means more QE.  

Wed, 07/22/2015 - 10:01 | 6341119 Creepy A. Cracker
Creepy A. Cracker's picture

The cold Summer.  Nobody wants to buy/drive construction equipment in the cold Summer temperatures.

Wed, 07/22/2015 - 10:04 | 6341127 VinceFostersGhost
VinceFostersGhost's picture

 

 

I had a sudden urge to turn to CNBC to see how they would spin this.

 

Fortunately the urge passed.

Wed, 07/22/2015 - 10:10 | 6341167 MonetaryApostate
MonetaryApostate's picture

It's called trickle down economics, great depressions happen when people begin to wake up to all of the corruption the wealthy are perpetuating upon the masses. Just look @ Greece...
http://galeinnes.blogspot.com/2015/07/mouse-traps-galore.html

Wed, 07/22/2015 - 10:14 | 6341187 StackShinyStuff
StackShinyStuff's picture

Yawn - so old economy.  Shut up and BTFD.

Wed, 07/22/2015 - 10:26 | 6341239 MonetaryApostate
MonetaryApostate's picture

Playing in the stawks & options casino is old economics...
It's just that some people didn't learn from the last dip because they are still a dipshit...

Wed, 07/22/2015 - 10:47 | 6341334 General Decline
General Decline's picture

Israel needs to step up the pace a bit on bulldozing Palestinian settlements. That should stimulate heavy equipment sales.

Wed, 07/22/2015 - 10:59 | 6341378 IRC162
IRC162's picture

Long Craftsman Tools and Shade Tree Mechanics

Wed, 07/22/2015 - 11:30 | 6341497 fockewulf190
fockewulf190's picture

Baltic Dry Index is taking off like a rocket.  Result of all those filled to the rim Iranian oil tankers suddenly let loose?  https://www.quandl.com/data/LLOYDS/BDI-Baltic-Dry-Index

Wed, 07/22/2015 - 11:56 | 6341570 Arnold
Arnold's picture

Sub prime loans haven't kicked in for D-9s yet.

Although IDF models should be selling well.

Wed, 07/22/2015 - 12:14 | 6341638 Shocker
Shocker's picture

Depression is an understatement

Layoff / Closing List: http://www.dailyjobcuts.com

-

Wed, 07/22/2015 - 12:35 | 6341693 zaphod
zaphod's picture

At that is with the printing press already on full power. Not much ammo left for the FED to fix the next downturn. Better make sure you have your own store of ammo if you know what I mean.

 

Wed, 07/22/2015 - 12:38 | 6341707 Amish FinEng
Amish FinEng's picture

Channel stuffing bulldozers? Not working huh?

Wed, 07/22/2015 - 12:54 | 6341753 SWRichmond
SWRichmond's picture

Construction equipment is only required if you want to actually make something real, out of real materials.  If all you want to do is create money-digits from nothing, then use those money-digits to buy other non-real financial product things also created out of nothing (like stocks and bonds), THEN WHAT THE FUCK DO YOU NEED MACHINERY FOR?

Just please click (print) us each $1,000,000,000, then no one will ever have to work again.  It's so simple, this keynesianism.  No more workplace injuries, no more sitting on a hot dozer trying to move earth, no more comfy indoor administrative office jobs for women even.  Just shop!

Wed, 07/22/2015 - 13:41 | 6341932 cdevidal
cdevidal's picture

Are we certain this is because of a global depression and not that CAT is having bad sales?

(Maybe a little of both...)

Wed, 07/22/2015 - 13:53 | 6341984 dontgoforit
dontgoforit's picture

Legimate question.  How is Komatsu and the other competition faring?  It could be that Cat has run up against the lower-cost models and come up short. 

Thu, 07/23/2015 - 01:05 | 6344256 OldPhart
OldPhart's picture

WE just bought 3 $250,000 Komatsu loaders.

We haven't bought a Cat since 2006.

Wed, 07/22/2015 - 13:28 | 6341896 Liquid Courage
Liquid Courage's picture

Contrary to what your link says, Crude Oil is not included in the Baltic DRY Index. Interesting that it's rocketing, though. Thanks for the head's up on that. Wonder what the cause is. Chinese commodity shopping spree with all their cash from bond sales maybe?

Wed, 07/22/2015 - 14:23 | 6342043 fockewulf190
fockewulf190's picture

Did some googlin´and yeah, your right.  Thanks.  Maybe mass shipments of Australian iron ore at cut rate prices?

http://www.theguardian.com/business/2015/jun/25/gina-rinehart-offers-her...

Thu, 07/23/2015 - 01:03 | 6344251 OldPhart
OldPhart's picture

Looks like gas is going to drop by another nickle pretty soon.

Wed, 07/22/2015 - 13:26 | 6341828 Paveway IV
Paveway IV's picture

.

Wed, 07/22/2015 - 13:26 | 6341870 Paveway IV
Paveway IV's picture

 "...Israel needs to step up the pace a bit on bulldozing Palestinian settlements..."

I'm guessing your down arrows have no idea what kind of reference you're making to Caterpillar here, GD. Especially Cat's profitable D-9 'Zion Reclaimer' model. 

A picture is worth a thousand words... Caterpillar's response?

1. It's Israel's fault not ours:

...But in a response to the Forward, Caterpillar strongly defended its sales to Israel, saying it could not monitor how its bulldozers and other machines are used. The company stressed that it does not militarize the bulldozers, called D9s, that are at the heart of the activists’ charges. That customizing is done by Israel...

2. It's the U.S. military's fault for giving free D-9s to Israel:

...Still, court documents make it clear that Caterpillar has sold its D9s to Israel via an American military program — and that the U.S. Defense Department has financed those sales, even as the U.S. State Department cites Israel’s use of those same D9s to demolish Palestinian homes as serious human rights concerns...

Ultimately, it's my fault. My tax dollars have/will pay for every last nut and bolt of those D-9s killing Palestinians and Americans and destroying their homes. I would advocate banning Cat sales as part of the Boycott - Divest - Sanction movement against Israel, but I think it's against the law in the U.S.

Israel WAS trying to get an anti-BDS movement added as an article to the U.S. Constitution, but everyone in congress just laughed at them: "The Constitution? Who the fuck cares about THAT anymore? There's no money in THAT for US. Hah hah haa haa..."

Caterpillar would also be in deep shit if they had any involvement in killing Jews, or so says the Israeli Supreme Court (Palestinians are not considered human by Israel, so they're OK to bulldoze):

Some years ago, the Israeli Supreme Court made a groundbreaking decision on in the trial of Nazi war criminal Adolf Eichmann. They ruled that, “the degree of responsibility increases as we draw further away from the man who uses the fatal instrument with his own hands.” In other words, the company that is producing the weapons that make wanton destruction possible are equally, if not more, responsible for the crime. Caterpillar sinks further into the mire of war crimes by supplying bulldozers to Israel not as construction equipment but unambiguously as weapons, unnecessarily risking its reputation, image and credibility.

Crying about Caterpillar sales being down is like complaining about I.G. Farben's Zyklon sales being down in 1945. It's profane.

Wed, 07/22/2015 - 15:45 | 6342461 Hugh G Rection
Hugh G Rection's picture

Rock solid up until the Zyklon reference.  Years of ignoring the propaganda and investigating for myself has lead me to believe there were no gassings by Germany in WW2. (A statement that could land me in prison in 17 Countries)  Hmmm... Now why make questioning a historical event illegal... If there is nothing to hide?

The Hard Facts About The "Holocaust"

https://www.youtube.com/watch?v=j5QlWJUk4-o

Wed, 07/22/2015 - 20:56 | 6343609 Optimusprime
Optimusprime's picture

Thanks for the truth.  +1

Wed, 07/22/2015 - 11:00 | 6341371 SilvertonguedAngel
SilvertonguedAngel's picture

Trickle down pee-conomics, everybody just pisses on the guy below him on the socio-pee-conmic two step ladder.

The .001% gets the gold, everybody else gets the golden shower.

Wed, 07/22/2015 - 18:26 | 6342665 mkkby
mkkby's picture

Well, golden shower this fuck tard.  Maybe, just maybe caterpillar isn't the only choice in earth moving equipment.  I'll bet there are chinese, korean, russian and latin american companies that make much cheaper models. Or that used equipment isn't being maintained longer.

I'm surpised the IQ level on ZH is so low, that everyone just assumes lower cat sales equals depression.

Wed, 07/22/2015 - 11:45 | 6341541 JR
JR's picture

Great article:

"Life is full of a lot of quality analogies, but one of the famous secrets of becoming wealthy is 'Building a better mouse trap.

"If you learn to build a quality mouse traps, the mice will come to eat the cheese, and then you are free to do whatever you want with the foolish mice who didn't see the trap for what it was.  There are many different mice traps in life, like your bank, laws, cars, the stock market, homes, and so very many more truly, indeed most things in life can be considered a mouse trap..."

Thanks, MonetaryApostate. Good stuff, great website. Fraid I've eaten a bit of cheese myself.

Wed, 07/22/2015 - 10:11 | 6341178 foodstampbarry
foodstampbarry's picture

Bullish Becky Quicks tits.

Wed, 07/22/2015 - 11:31 | 6341500 fockewulf190
fockewulf190's picture

What tits?

Wed, 07/22/2015 - 12:34 | 6341691 Jumbotron
Jumbotron's picture

Yeah....alls I see is the back of her head in Warren Buffett's lap.

Wed, 07/22/2015 - 13:46 | 6341960 OldPhart
OldPhart's picture

I'm in the Mojave Desert.  Normal temperatures are around 115F this time of year.  It's 80 for the last couple days.

Wed, 07/22/2015 - 10:02 | 6341122 Headbanger
Headbanger's picture

What part of "the Fed raises rates in September" don't you get!?

Wed, 07/22/2015 - 10:05 | 6341136 Texas Ginslinger
Texas Ginslinger's picture

Ritchie Brothers Auctioneers, on the I35 frontage road near Albert Lee, MN, is jammed full of heavy construction equipment.

Have never seen it that full.

Telling sign.

Wed, 07/22/2015 - 11:39 | 6341525 Took Red Pill
Took Red Pill's picture
Caterpillar, The World’s Leading Industrial Bellwether. When it does well, the economy is good and when it's down so goes the economy.

 

Wed, 07/22/2015 - 10:39 | 6341306 Hugh G Rection
Hugh G Rection's picture

Is Caterpillar running out of Palestinian homes to demolish?

Wed, 07/22/2015 - 11:59 | 6341594 HowdyDoody
HowdyDoody's picture

Two people regard the truth as anti-semitic

Wed, 07/22/2015 - 10:03 | 6341128 Jumbotron
Jumbotron's picture

Hang on.  I'm sure the thesis is correct.

But....could this be that CAT is having a hard time selling against other big equipment manufacturers like Hitachi, Hyundai, Komatsu, Volvo and a hoard of Korean and Chinese knock-offs ?

 

What about seeing global sales charts of these manufacturers so we can compare and contrast ?

Wed, 07/22/2015 - 10:12 | 6341180 ghengis86
ghengis86's picture

Seconded.  CAT is probably having their asses handed to them gloabally.  Not unlike GM/Ford/Chrysler via Toyota/Nissan/Hyundai.

Wed, 07/22/2015 - 10:25 | 6341246 Fahque Imuhnutjahb
Fahque Imuhnutjahb's picture

Defacto trade wars, over capacity, currency headwinds.  So much future sales was pulled into the present with cheap money and tax/depreciation deals, at some point you catch up to actuality.

Wed, 07/22/2015 - 11:31 | 6341499 Hugh_Jorgan
Hugh_Jorgan's picture

Komatsu and CAT are the two big boys, and Komatsu stopped publishing their sales figures in 2011, Hmm, odd that...

Wed, 07/22/2015 - 12:38 | 6341708 Jumbotron
Jumbotron's picture

Maybe so......but around here in Florida along the perpetual I-95 build-out, I don't see too many CATs.  But I see A CRAP TON parked at CAT dealers from Jacksonville to Miami.

Wed, 07/22/2015 - 10:25 | 6341248 ThirteenthFloor
ThirteenthFloor's picture

High dollar, means lower exports overseas sales. One would expect CAT to be sinking now, against Asian competition. Or any business exporting from US.

Wed, 07/22/2015 - 11:08 | 6341422 onewayticket2
onewayticket2's picture

"Sam Walsh, the CEO of London-based mining company Rio Tinto, told the paper that his company has been making more and more purchases of Chinese heavy-duty trucks and equipment, noting that the quality has “been impressive.”

“It tends to be sophisticated purchases, which sort of is a little bit intriguing,” Walsh told WSJ. “Funnily enough, when the original ore cars came in and we evaluated those against the traditional supplier[CAT? ], the quality was actually much higher. Instead of spot welds, for example, on the sheet metal they were actually continuous welds.” 

 

-EquipmentWorld

Wed, 07/22/2015 - 11:54 | 6341576 InflammatoryResponse
InflammatoryResponse's picture

Thirded, if that is even something you can do.

 

I've read in various places that CAT equipment isn't like it used to be, so it breaks a lot now, etc.

High maint. costs associated with a CAT purchase.

 

how are the other manuf. doing?

 

Wed, 07/22/2015 - 12:11 | 6341633 Antifaschistische
Antifaschistische's picture

I'll second your third....I think it's all of it.

I was recently faced with a Cummins or CAT Diesel engine decision.   I'm not qualified to make these decisions....the guys I asked said go with Cummins because CAT is too damn expensive.  right? wrong?  i don't know, but that's what I was told.

Now....if I do ever put together my dream truck for the Dakar Rally (no longer in Africa [unfortunately]) then I'm going with the CAT Racing Engine....because it's awesome.

Wed, 07/22/2015 - 22:13 | 6343851 57-71
57-71's picture

Don't overlook the fact that CAT has more iron (and large iron at that) in mines around the world than everyone else combined. These are at least as reliable as any other manufacturer.

The parts business alone is huge, and likely dwarfs sales of new equipment YOY.

Parts is the strength of CAT over all the others, supply, distribution, and equivalent pricing.

How do I know this? I have been managing this equipment for 30 years - all brands - and while CAT has definately lost quality, it is still as good or better than any others depending on the model.

Example, CAT makes a 400t paylod class haultruck that is mechanical drive.

Komatsu makes a similar truck in electric drive.

The Komatsu is superior, however CAT parts are more readily available.

When it comes to ultra class dozers, CAT has productivity, reliability and parts over all competitors. Komatsu however makes a far better ultra class loader.

So be careful about comparisons based on articles by people who don't understand the products from the end users POV.

Wed, 07/22/2015 - 10:22 | 6341237 Bob
Bob's picture

Thirded.  Every time I see one of these CAT stories, I'm left wondering the same thing.  The rest of the manufacturors have come on strong over time, after all.  Will CAT go the way of Allis-Chalmers?

Shit, am I gonna have to pay a premium for my CAT hats? 

Wed, 07/22/2015 - 11:27 | 6341485 Oldwood
Oldwood's picture

There are winners in every recession/depression. The rising tide lifts all ships but a falling one leaves some grounded. Ultimately regardless of if Cat is failing due to competition or the economy, it does not bode well for any of us. We have seen the hollowing out of our economy through debt and substitution of low priced imports for higher priced domestic production, but as the pressure increases we are going to see an even more accelerated gutting our our domestic economy. In recession/depressions the lowest cost producer is not just the winner but the survivor.

Wed, 07/22/2015 - 11:35 | 6341511 nosam
nosam's picture

Yep. In India, JCB dominates. Indian construction has been growing at a heakthu pace.

Wed, 07/22/2015 - 10:45 | 6341326 debtor of last ...
debtor of last resort's picture

Want charts Jumbo? Look at Baltic dry, iron ore etc etc.

Craterpillar.

 

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