If Caterpillar's Data Is Right, This Is A Global Industrial Depression

Tyler Durden's picture




 

Most cats bounce at least once when they die, but not this one: after CAT posted its first annual drop in retail sales in December of 2012, it has failed to see a rise in retail sales even once.

In fact, since then Caterpillar has seen 34 consecutive months of declining global sales, and 11 consecutive months of double digit declines!

Why is this important? Because a month ago we asked: "What On Earth Is Going On With Caterpillar Sales?"

We have been covering the ongoing collapse in global manufacturing as tracked by Caterpillar retail sales for so long that there is nothing much to add.

 

Below we show the latest monthly data from CAT which is once again in negative territory across the board, but more importantly, the global headline retail drop (down another 11% in August) has been contracting for 33 consecutive months! This is not a recession; in fact the nearly 3 year constant contraction - the longest negative stretch in company history - is beyond what most economists would deem a depression.

We got the answer just three days later when the industrial bellwether confirmed the world is now in an industrial recession, when it not only slashed its earnings outlook, but announced it would fire a record 10,000.

Moments ago, CAT reported its latest monthly retail sales and they were even worse than last month: in the month of September there was not a single region that posted either a increase of an unchanged print. This was the first month in all of 2015 in which every region posted a drop.

 

Putting CAT's result in context, the Great Financial Crisis resulted in 19 consecutive months of sales declines. We are currently at 34 months and showing no signs of any pick up.

 

As such, based on CAT's ongoing shockingly bad retail sales we wonder if it is no longer merely a global recession: perhaps that time has come to call it what it really is - a global industrial (at first) depression, which has so far been hidden from plain view thanks to $13 trillion in central bank liquidity, whose marginal impact is evaporating by the day and a Chinese credit machine which recently hit a brick wall.

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Wed, 10/21/2015 - 10:23 | 6694015 Newsboy
Newsboy's picture

"AAaauugh, Global Depression!"

Wed, 10/21/2015 - 10:26 | 6694028 lostintheflood
lostintheflood's picture

"AAaauugh, Global Depression!"

molon labe....

Wed, 10/21/2015 - 10:31 | 6694057 NoDebt
NoDebt's picture

The Chinese could never copy the designs of our American-made bulldozers and make cheaper copies that would compete with Caterpillar.

Wed, 10/21/2015 - 10:33 | 6694061 NoDebt
NoDebt's picture

And, as always, I am glad none of this can affect the price of my stawks.

Wed, 10/21/2015 - 10:54 | 6694167 greenskeeper carl
greenskeeper carl's picture

if anything, it should make them go up, right? bad news is good news. Clearly this means we are in need of moar central bank intervention. Bullish....

Wed, 10/21/2015 - 10:55 | 6694171 Haus-Targaryen
Haus-Targaryen's picture

Nope, this is nothing but propaganda.  Everything is AwEsOMe! 

Wed, 10/21/2015 - 11:18 | 6694259 Pairadimes
Pairadimes's picture

Fuckin' weather.

Wed, 10/21/2015 - 11:25 | 6694287 jeff montanye
jeff montanye's picture

xcmg, perhaps the most successful chinese heavy equipment manufacturer, has seen its stock go from above 8 in 2011 to about 4 now.

Wed, 10/21/2015 - 11:51 | 6694354 sunaJ
sunaJ's picture

@NoDebt

I appreciate the idea of CAT being one of many guages of the actual industrial slowdown as opposed to cooked numbers and the markit as it is presented, but can it also be attributed to the fact that CAT is not the bellweather that it has been in the past?  You have hundreds of foreign (Asian) industrial and commercial companies whose very purpose is to produce what CAT produces and for cheaper prices.  These companies have come online in the mining and mega-machine manufacturing sectors much in the last decade.  Could not one also attribute CAT's decline to increased competition from cheaper industrial/commercial manufacturers?  If you look at the sales by region, N.A. seems to also be the last region to get the memo. 

 

You say they cannot copy CAT's designs, I believe copying is what they are best at, and if they can make it half the quality for half the cost, then what is the advantage of making the highest quality?  Re: this, I would never say never.

 

 

Wed, 10/21/2015 - 11:54 | 6694406 Osmium
Osmium's picture

He forgot the /sarc tag

Wed, 10/21/2015 - 12:57 | 6694747 sunaJ
sunaJ's picture

Doh, I'm usually pretty good at spotting that.  Well, his statement makes much more sense then.

 

Wed, 10/21/2015 - 17:26 | 6695981 Save_America1st
Save_America1st's picture

so no channel stuffing of CATs and zero interest buy one, get one free deals?  C'mon, let's get creative.  There's gotta be a way to tax-payer subsize puting a CAT in every fucking yard in America.  It's our civil right, damnit, and we can't be denied!!!

*disclosure:  I'd really love to have a CAT D11 Dozer preaze ;-)

Wed, 10/21/2015 - 18:33 | 6696253 new game
new game's picture

say that again, i've got some immeadiate uses right now...stumps, home pad, ect ect...

Wed, 10/21/2015 - 18:45 | 6696291 Money Counterfeiter
Money Counterfeiter's picture

The Fed would argue they already had their bubble, 2001-07, so stop bitching and wait your turn.

Wed, 10/21/2015 - 18:58 | 6696341 monk27
monk27's picture

Guess what: CAT data is right ! Not only that, but I dare you to show me a company producing real stuff (preferably, useful too) that is not in trouble, worldwide.  Draw your own conclusions...

Wed, 10/21/2015 - 20:27 | 6696646 Bunghole
Bunghole's picture

I dont need a D11. 

A nice sized skid steer will do.

C'mon CAT.

Make this eCONomy thrive.

Wed, 10/21/2015 - 21:27 | 6696854 Overfed
Overfed's picture

So...Cat is showing 34 months of flat sales, what about Komatsu, Kobelco, Hitachi, Liebherr, etc.? If all of 'em are flat and/or declining, then we're on to something.

Wed, 10/21/2015 - 22:56 | 6697069 Escrava Isaura
Escrava Isaura's picture

 

 

Good point.

Article lacks empirical evidence/comparison to be taken serious.

Too bad.

 

Thu, 10/22/2015 - 02:03 | 6697349 lakecity55
lakecity55's picture

Kubota?

Wed, 10/21/2015 - 22:09 | 6696959 Peak Bull
Peak Bull's picture

Real stuff and useful. Hint: Colorado, soon Canada. UN pushing.

Wed, 10/21/2015 - 11:57 | 6694419 El Oregonian
El Oregonian's picture

I wonder if CAT still loves being used as a tool of Der Emperor Barry's?

Wed, 10/21/2015 - 15:36 | 6695500 Never One Roach
Never One Roach's picture
ESPN lays off 300 people as subscriber base shrinks

 

http://www.msn.com/en-us/money/companies/espn-lays-off-300-people-as-sub...

 

Who in the world would pay for that stuff anyway?

Wed, 10/21/2015 - 16:53 | 6695835 r00t61
r00t61's picture

What are the chances that this will be "The Lead" story on Sportscenter?

Wed, 10/21/2015 - 20:30 | 6696654 Bunghole
Bunghole's picture

ZSPN

Soylent for the sheeple.

Wed, 10/21/2015 - 21:12 | 6696819 847328_3527
847328_3527's picture

I hope everyone grabbed one of those $45 ESPN ties before they're all sold out....they're so cool!

 

 

NOT!

Wed, 10/21/2015 - 20:51 | 6696736 ZEN_and_Now
ZEN_and_Now's picture

E........EXTRA  S........STUPID  P.........PEOPLES  N..........NETWORK

 

OH YA!!!!

Wed, 10/21/2015 - 20:02 | 6696560 Mike in GA
Mike in GA's picture

Barry's speech hyping the Great Recovery from Cat HQ was their kiss of death.

Wed, 10/21/2015 - 12:14 | 6694507 messymerry
messymerry's picture

Hey Lost, leggo my labe,,,

I agree sunaj, any meaningful comparison would have to show inroads made by Cat's competitors.  I see a lot of big equipment with weird names on it... 

In saying that though, I think we are well into the early stages of a global socio-economic collapse and the ardent deniers are going to have a very tough time going forward. 

Buckle up kiddos, the ride is beginning,

;-D  

Wed, 10/21/2015 - 12:51 | 6694716 Son of Loki
Son of Loki's picture

Caterpillar BOGO event of the Century!

 

Buy ONE giant CAT and get the Second one FREE!

 

It's so Robust!

 

" Yes we can! "

 

Coming to a country near you soon.

Wed, 10/21/2015 - 14:20 | 6695094 Tall Tom
Tall Tom's picture

CAT Market Share, according to Douche Bank and reported in August, is stable at 12.5%

 

http://www.benzinga.com/analyst-ratings/analyst-color/15/08/5762831/dont...

 

However Forbes Magazine reported in 2011 that CAT Market Share was in the 32% to 33% range.

 

CAT has lost an amazing 60% of its Market Share IN FOUR YEARS??? Now I am certain that it hurt their Bottom Line...and you nailed it that it is PARTLY DUE to competition. (It may be MOSTLY...I do NOT know.)

 

But how much of it is due to a recession in Global Economic Activity?

 

In order to do any in depth analysis, due to the loss of the Bellweather status that CAT once had, a deeper exploration and in depth analysis of revenues of the competitors is demanded.

 

Unfortunately the article lacks this exploration and in depth analysis.

 

Look at Oil Consumption and Industrial Power Consumption if you want to be convinced that we are in an industrial deep depression.

 

We are.

Wed, 10/21/2015 - 16:08 | 6695650 jack reacher
jack reacher's picture

2 years back, CAT was actually buying the chinese made stuff to reverse engineer some of the features that the chinese had built.

howver previous to that the chinese were buying CATs stuff to reverse engineer it.

 

 

Wed, 10/21/2015 - 19:00 | 6696355 Vatican_cameo
Vatican_cameo's picture

There are a few things at work here.  A good portion of Caterpillar equipment is made in China (all the bulldozers, D6 and smaller, for example).  The larger equipment is made here.  Caterpillar only uses virgin metal in all it's domestic machinery, and every nut and bolt is a "Grade 10".  That does make it expensive.  Another issue is that Renting is very popular.  Most companies that have bid jobs that will only last a few years choose to rent the machinery.  Renting is extremely popular, especially here in the Northeast when the weather doesn't always cooperate.  Overall Construction is also, so the need for machinery follows suit.  A lot of negative things happening at once.

Wed, 10/21/2015 - 21:14 | 6696825 847328_3527
847328_3527's picture
Rent A Wheel/Rent A Tire

 

http://www.rentatire.com/

Wed, 10/21/2015 - 17:06 | 6695884 Mentaliusanything
Mentaliusanything's picture

Komatsu is not CAT but it's results smell like Horse exhaust. No green shoots just brown shats

Wed, 10/21/2015 - 19:17 | 6696407 847328_3527
847328_3527's picture

What we need is moar Hope & Change!

 

90% of Los Estados Unidos is already in a depression so it's no surprise CAT reflects reality. It's gonna be sad this Christmas wathcing people pick their their purses for nickels and pennies and dimes to pay for their kids presents, if not their Cheerieos

 

Sad stuff.

Wed, 10/21/2015 - 10:58 | 6694187 15horses1donkey
15horses1donkey's picture

No, no intervention, not that again!

Seriously, the only intervention we need is in the cryptocurrency markets. We need a Zero Hedge Coin. First iteration is in the works, help by voting at http://zhc0.com

Nothing better to do during a depression than leave the real markets alone and play on the toy crypto markets. Let's get into it!

Wed, 10/21/2015 - 20:43 | 6696705 SILVERGEDDON
SILVERGEDDON's picture


I think if you keep pimping this idea on Zero Hedge as a cryptocurrency, I am gonna have to track you down, and bitch slap you into the middle of next week for being a pimp ass bankster schill bitcoin wannabe rat bastard motherfucker.  IF ZERO HEDGE HAD A FUCKING CURRENCY OF IT'S OWN, IT WOULD BE MINTED IN INCORRUPTABLE NON HYPOTHECATED NON DERIVATIVE NON MARGIN ABLE SILVER OR GOLD. Get your shit together, and change your direction while you still have an ass to kick. Jesus, fucking kids these days. You all think technology is a miracle. All it is is electrons that can be made to go poof any fucking minute now. if i blew up your phone right now, you would look like a cow at the slaughterhouse just at the moment the bolt gun goes off - " How could you do this to me ? What'll I do now ? " Improvise. Adapt. Overcome. Triumph over adversity. And, mint a fucking coin out of noble metals, or I will make you look like a one legged man at a nut kicking contest.  

Wed, 10/21/2015 - 18:18 | 6696186 divingengineer
divingengineer's picture

Bulldozers are clearly lasting longer do to many 'hedonistic' improvements.

Ergo, the CPI will be revised down since bulldozers are probably more heavily weighted than food and fuel when determining COLAs and what-not. 

Wed, 10/21/2015 - 11:01 | 6694198 Tyrone Shoelaces
Tyrone Shoelaces's picture

Think of the moneys CAT saved by firing 10 Kilopeople!  Bullish for the bottom line, and stuff!

Wed, 10/21/2015 - 17:47 | 6696061 Cosmicserpent
Cosmicserpent's picture

Nothing more bullish than 300 million unemployed Chinese. Revolution bitchez!

Thu, 10/22/2015 - 02:13 | 6697362 lakecity55
lakecity55's picture

Minister?
President Xi, we are in a global depression.
This is not good. Too many laid off comrades equals instability and risks Party Rule. General, you have a comment?
Yes, Mr President. I think Comrade Putin may need help in Syria against the alciaduh head-choppers. Perhaps we could draft 200 million guys and throw in with Assad.
I'll take it into consideration. That will certainly keep our young men busy, General.

Wed, 10/21/2015 - 11:33 | 6694276 two hoots
two hoots's picture

Increased quality/price competition abroad (part of the wanning hegemony thing).

Equipment Rentals increased in slow times.

Miners are finding themselves in a hole and have stopped digging.

Is this a recession, a depression or are we on a downward slope to our new reality?

Sure hope the Fed is not on a fiat spending spree trying to save something that no longer exist?

Wed, 10/21/2015 - 22:01 | 6696929 SomebodySpecial
SomebodySpecial's picture

It would make more sense if they'ed overlaid the top three competitor's sales on the same chart. Oh... MayBe not as sensational?

Wed, 10/21/2015 - 12:28 | 6694596 KnuckleDragger-X
KnuckleDragger-X's picture

With all this supply all that magical Keynesian demand will show up any time now... "Paging Dr. Krugman, your patient is flat-lining".....

Wed, 10/21/2015 - 13:02 | 6694768 ersatz007
ersatz007's picture

They obviously didn't do enough to stimulate the economy.  More intervention is needed.  

Wed, 10/21/2015 - 10:55 | 6694170 roddy6667
roddy6667's picture

Ever heard of Shantui? Google it.

Before we declare a world-wide depression based on CAT's badly-played hand, let's look at these companies that make heavy equipment. They are working 24/7/265 in China, and haven't whined about tough times.

Komatsu, Hyundai, Hitachi, Daewoo/Doosan, Sany, , Zoomlion, Longking, XCMG, LiuGong, Sumitomo, Volvo, Shantui, Chery, Putzmeister, and Schwing.

Wed, 10/21/2015 - 11:02 | 6694199 NoDebt
NoDebt's picture

That was satire, my friend.  You made my point for me perfectly.

If you are European, I can understand your confusion.  My satire never works on Europeans.  I have no idea why, but Europeans always think I'm being serious.  Americans usually get it right away.

Wed, 10/21/2015 - 11:29 | 6694302 Ghordius
Ghordius's picture

I guess that's because most Americans get the - for them possibly glaring - hint from your use of "stawks", while we Europeans etc., particularly if not raised speaking English, can't differentiate that easily if you truly don't know how words are spelled or not

and this without getting into the little matter of how few non-Americans even bother knowing anything about the "stawk-market", since the 401(k) thing is very, very American

like the amazing 30-year state/fed backed mortgage loan, or cheap gasoline, the US is full of truly (no kidding) exceptional things, viewed from outside

Wed, 10/21/2015 - 13:34 | 6694928 KnuckleDragger-X
KnuckleDragger-X's picture

But from the inside it's all evil white privilege and must be eradicated. If we knew what we were doing, we wouldn't be doing this.....

Wed, 10/21/2015 - 16:23 | 6695713 seek
seek's picture

Englishp-speaking Russians will get it right away too, I suspect.

I think the key is that growing up with doublespeak means satire is an effective means of communicating since normal language is so corrupted by the government/media. Not that they don't have it in Europe but I don't think it's quite a pervasive and they seem to have a fair number of politicians a that are members of smaller parties that speak truth to power so the satire-spidey-sense isn't nearly so developed.

 

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