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For Caterpillar, This Is What The "Second Great Depression" Looks Like
Having repurchased billions of its own stock near the all-time high price (or, to avoid cause-and-effect confusion, leading to all time high prices), Caterpillar recently hit its debt issuance ceiling and as a result is no longer able to sell debt and use the proceeds to buyback stock. The result: CAT stock has recently tumbled to levels last seen in 2011. And judging by its monthly retail sales data it is going much, much lower.
The reason: the second great depression which for industrial bellwether CAT started in December 2012 and has since resulted in 32 consecutive months of declining global retail sales and over a year longer than the decline observed during the great financial crisis, refuses to go away.
Notably, CAT suffered a sales decline in virtually every region, not just Asia where the drop accelerated from -19% to -25% Y/Y, but surprisingly in North America where the -5% slide was tied for the largest decline in two years. The one silver lining: Latin America is no longer seeing sales plunge by 50% - in august the Lattin America plunge was "only" -37%.
So how can a company report 32 consecutive declines, the vast majority of which are double-digit? Simple: just think of its as Xeno's paradox for the New Normal: the sad reality is that CAT retail sales can decline in perpetuity and they will never actually hit zero, although the same can not be said for CAT's stock price if the stock buyback machinery has indeed gotten rusty.
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no(moar) depression here if you elect me ... let's make America great again !
Let it go bankrupt.
I'd love to watch Cramer talk about how great everything is with his "go to" stock in the middle of Chapter 11.
as most zh readers know, the business cycle is cyclical.
that makes this a good time to buy caterpillar.
not just a share.
an actual cat machine.
http://www.cat.com/en_ZA/products/new/equipment.html
I'll wait post collapse. Then again, thats when I get into real estate.
The reality of what’s driving economic activity and commodity consumption down…
The 2015 flow of young and core (0-64yrs/old) annual global population growth is approx. 63 million…but only 4 million of that growth is in the “consumer” nations (34 OECD nations + China, Brazil, Russia). The 59 million remainder of the 0-64yr/old growth is in the ROW (“rest of the world”)…India, Indonesia, Africa, and M. East nations that consume relatively little compared to the West.
The flow of OECD + C,R,& B 0-64yr/old populations will begin outright declining in the next couple years…and become progressively more negative thereafter. And the ROW 0-64yr/old annual growth will decline year in, year out from here.
Check the link for the demographic reality behind the coming breakdown…
http://econimica.blogspot.com/2015/08/depression-does-not-come-close-to.html
What I’m showing is that growth is not coming back in our lifetimes and using debt to buy time until growth picks up is beyond stupid…it is economic suicide. One of the only ways to protect your savings is likely the constant in the equation where debt is the ever increasing variable attempting to make up for collapsing consumer demand.
That's an outstanding analysis. Thanks,
It shows that all the "analysts" only look a few years into the future, and only look at a narrow set of issues. Demographics has been proved to be a reliable predictor of future economics
Great points!
CAT should get into the defence department, coal and mining are dead, oil is dead, and construction is dead. Need a flying drone end loader with the arm and bucket replaced with a 155mm barrel.
CAT should get into the defence department...
Been there, doing it. If you'll notice, the chart is in reference to "Dealer Retail" sales. I somehow doubt their full line of defense machinery, ( http://www.cat.com/en_US/products/new/by-industry/governmental-defense/military.html ), is being included in this report as that would somehow be "classified" information and not suitable for mentioning in a Clinton e-mail.
Don’t cry for CAT, they’ll do quite well regardless of the bottom sitting in the seat at the controls. And we know they’ll never let the government get away with only paying retail.
CAT put the engine in my M1078 truck. . .
This so-called "Recovery" is inching along at a caterpiller's pace...
or, is it permanently cocooned?
Compress this implosion into a short time period and this makes the China blast look tame.
pods
Let's help the economy: get on of these motherfuckers for the morning communte and just SEE if some asshole tries to cut you off.
http://www.cat.com/en_ZA/products/new/equipment/wheel-dozers/large-wheel...
Long, Valium: https://youtu.be/EklCI7D7Rns
Which arrow? Which sentiment?--the message, the messenger, the implication?
comb your hair pro bailout loser
hey i'm worth billions, possibly trillions, and have a hot wife...who you calling loser ?!
since when does a large corporation need to worry about surviving when they have the US TAXPAYER as their fucking BACKUP. give me another shot of Jose' and a coupla 714's. hold the salt, lime, and the glass.
Ain't that the fucking truth. Just bribe a few congressmen on the right committees, promise em lobbyist jobs, and pretty soon all government builders and the Corps of Engineers are using D9's.
Large companies don't even need the government. That's what Chapter 11 is all about.
Machines too spendy ! Back to work , serfs ! ....shovel, pick, wheelbarrow.
Bullish. They should immediately metamorphose to the pre-revenue model.
https://m.youtube.com/watch?v=BzAdXyPYKQo
It's the hangover from the 5+ years of artificially low interest rates plus QE. There's too much equipment for current demand. This trend will take at least as long to unwind as it did to build, unless CAT started making shorter-lived equipment (I've noticed this with farm tractors, they dont make 'em to last like they did pre-1990).
A D-5 is not a Honda. It's expensive, will be repaired until it's a hunk of rust, and most are purchased used. I've often wondered who buys all this equipment new. They make good stuff, but it's expensive.
.gov supported road builders and mines, I suppose.
In Denver when they were building the new airport there were thousands of eathmoving machines bought and used....but when it was done..there were lots with 100s of earthmovers that just sat there....I dont know if they sold them off...but I know there were no new big contracts for earth moving....so they sat for several years....they are gone now....wonder where they went...
Probably sold at a Ritchie Bros. auction for 1/3 of what they cost new.
I see you are versed in the industry, and for that I give you a green...most common folks dont know an L track from a soup spoon...
I forgot to add: purchased by a company (companies) that doesn't get massive .gov contracts.
digging tunnels?
Yes, may I help you?
How many helpers did you have to spring that Mexican Drug Dealer? :>D
http://www.npr.org/sections/alltechconsidered/2015/08/17/432601480/diy-tractor-repair-runs-afoul-of-copyright-law
Nothing like a nation run by attorney's that has litigated itself into stagnation. At some point, the only thing for the beast to devour is itself.
Sometimes it really does pay to just keep old stuff running instead of buying new.
Get back in there and SELL, SELL, SELL...
https://www.youtube.com/watch?v=wDI6SEIzwNM
Isn't that the company that Obama stood with for press coverage stating this represents America? He wasn't joking; he just forgot to mention the other part of the "plan". It was never "Hope and Change"; it was "Change" & "Hope you survive".
--------------
The good news:
Better is the little that the righteous has than the abundance of many wicked.
17 For the arms of the wicked shall be broken, but the LORD upholds the righteous. 18 The LORD knows the days of the blameless, and their heritage will remain forever; 19 they are not put to shame in evil times; in the days of famine they have abundance.Obama is a well educated moron. There are many like him in AMerica. Get a degree, maybe two degrees, and all of a sudden the person is an expert. But that person never questions anything, they just go along with the teachings. This is how such dangerous memes such as Neo-Keynsian politics stay at the top of the education pillar - the PhDs are paid to shill out the information.
O'Bama is CIA...get a clue. They've all been, or officially approved, since the witless Jimmy Carter.
JF Kennedy was the last non-CIA approved president. Well, maybe Reagan, but they got him onto the reservation.
There is a way that seems right to a man, but its end is the way to death.
Do you have your DJ 16k hat on?
:)
no, but i am wearing a tin fedora as we speak. you just never know man.
Maybe if they start to work on a an electric Earth mover that will save the planet; call it the "Jolt" and get the Department of Energy to fund it.
You know, revive the Eveready 9 lives cat and get Elon Musk on board; we'll use it to build his people mover stations!
We can do it if we all just pull together!
eb
The electric earth mover was invented many years ago by Letourneau. Unfortunately moving the extension cord was difficult so they had to install gensets on the machines.
But your thoughts did bring a smile. Personally I vote for Cat buying another Chinese company so they can increase their tax losses with another quick billion dollar write-down.
K
let's see:
miners going bust
empty cities completed
in debt up to their eyeballs
what's not to like? /s
Parker Schnauble is in the market for a good used D10 last I heard...throw in delivery and you may just turn his head...just trying to help..
Grampa Schnauble worked a lifetime and well past retirement age to save up the $150,000 in gold he gave his grandson. Hard come, easy go.
its obvious Parker appreciates what he learned...who dont love John? Truely one of the last of the Mighty Men..good thing he passed it on to Parker....
As Caterpillar goes, so goes the economy. It's a very good barometer. I work in the mining industry, and I can tell you when mining across the board is depressed, it is a lagging indicator that the rest of the economy is headed the exact same way. If you can't mine it, you have to grow it, and farmers are suffering, too.
So back to our silver discussion...
-Argenta
Good point....with the drought on here in CA, there is a lot of surplus farm equipment for sale...such as CAT tractors.
The other problem CAT is up against is the current currency war. Their competitor Kubota, as one example, now has a big advantage in pricing due to that.
What I find surprising is that JOY's stock has been able to maintain its current level.Their main business is selling to the coal mining industry and we all know how healthy those folks are. By all rights that stock should have headed south by now. Just shows how phucked up the market is today.
CAT still manufacturers all over the world, not just in the US.
...but they are still under price pressure due to the ongoing currency wars....
caterpillar - a wormlike and often brightly colored and hairy or spiny larva of a butterfly or moth
On time will tell if this Caterpillar turns into a beautiful butterfly or an unwanted moth...Shai-Hulud simply does not turn into a beautiful butterfly.
"May the World be cleansed by his passing..."
Oberhelman sucks n' blows trailer hitch balls.
Would love to own a 320E.
My first trip off the ranch would be to D.C. to start rearranging things.
A plunge is a plunge. Just because the rate of plunging is decreasing, does not indicate the fact that it is a plunge.
Quiz: An decrease in the rate of increase is still what?
I like the the cut of your jib Argenta. I've been loading up on Pretium. The great thing is- they have a shit ton of gold, locked into the ground and none of it is being sold into this fraudulent market.
CAT should be making a killing in the middle east, croitia, africa, and the like with ALL the men, women, and children that need to be buried/un-buried, form genocide and wars that have been going on for years, decades, and centuries. @ THE least since our peace loving, Game of Drones, nobel prize winner president & co. have been in office. that includes you too Bush family.........FUNSA(Fuck yoU NSA)
CAT needs to stop reporting monthly. That's what the smart companies are doing.
Buy rubles. God will split the bering sea
Can't they just do a stock buyback and increase their debt load?
Seems to work for most of the succesfull companies in the US...
I am going to make a prediction: Cat will eventually implement San Meyer type technology on their engines.
The only question is whether they will do this before or after their competition.
Why will they do this? To survive.
ROTFLMAO
A perpetual motion machine to power their equipment is even dumber than a stock buyback with debt.
For humanity to survive, we need to grow up.
https://www.youtube.com/watch?feature=player_detailpage&v=lyXi1efbYrk#t=4787
As energy slowly moves away from oil to renewables fewer dollars available to recycle into US debt. Petrodollar breakdown in progress.
Policy switch from petrodollar to militarydollar is being eroded by materials produced increasingly by foreign competitive countries. Militarydollar breakdown in progress.
Dollar default is in progress. Producing nothing of value to the world except unsustainable debt is not a recipe for reserve currency status.
Propaganda of HOPE for the US ecomomy is dying and the FED has lost all credibility.
Dollar default is the only option left.
just my thoughts.
Who needs new heavy equipment when the old stuff works just fine?
https://www.youtube.com/watch?v=gmzV--3iJjo
I had an old post detailed post relating to Caterpillar but this next sentence summarizes their predicament well. The global marketplace is reductio ad absurdum. And they are witness to it in their operations. The recent past has provided rapid growth Latin America. Yet, it is already severely feeling the financial pain and suffering of the soon to be abject failure of the global fiat based economy.
Some have fallen for the trap that accepting monetary expansion means destruction and greed rule at all costs. The destruction of invaluable national, regional, cultural and medicinal treasures, like the rain forest, are far too high a price for the world to pay for the current financial system.
My knowledge varies but my admiration for the contributions of many cultures is global. As just one example I know that Latin America has a huge number of forest derived medicinal treatments for many ailments. These can be tremendously effective at both treatment and cure. For example Chanca Piedra is amazingly effective at breaking up kidney stones. And Uña de Gato is a powerful anti-inflammatory.
Regionally Brazil, which is part of BRICS, isn't even faring too well. Those countries that are going it alone are going to find this a dangerous path. I'd like to see each one of the countries in Latin America participate in a global financial solution. The whole region should be willing to work on an alternate financial solution and outcome with where it is currently positioned and heading. They will be among the first to feel the pain of the fiat financial failure. I'm confident they would all be welcomed to join a future financial alternative that would facilitate growth and preservation over the greed and destruction instilled by the current system.
http://www.zerohedge.com/news/2015-08-06/country-latin-americas-next-arg...