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"Our Data Is Not Good" - US Companies Warn That A Recession Is Coming

Tyler Durden's picture




 

Earlier this month, we highlighted comments from new Fastenal CEO (and former CFO) Dan Florness who, on the company’s Q3 call, took homage to one analyst’s suggestion that we’re currently in a “non-recessionary environment.” Here, as reminder, is the exchange:

William Blair’s Ryan Merkel: Then just lastly, Fastenal growing zero percent here in September and in a non-recessionary environment, it’s pretty surprising, I think, for a lot of us. 

 

Florness: The industrial environment is in a recession - I don’t care what anybody says, because nobody knows that market better than we do. You know, we touch 250,000 active customers a month.  

There you go. No ambiguity there. Nor was there anything ambiguous about some of the numbers Fastenal reported. For instance, in September, the company saw its first Y/Y sales decline since 2009. 

And the nuts and bolts manufacturer isn’t alone. 

As we’ve been keen on documenting, bellwether Caterpillar is in the midst of a truly historic sales slump that’s now entering its 35th month. 

It’s fairly easy to explain this if one simply looks at what’s going on at the macro level. Everyone - the WTO, the OECD, the ADB, etc. - now seems to be of the opinion that we may have entered a new era wherein sluggish global growth and trade have become structural and endemic. China’s “hard landing” is both a symptom and a cause of the malaise and the excessively strong dollar isn't doing US multinationals any favors either.

In this new reality, companies are gradually coming to grips with the fact that we’re simply not in Kansas anymore (so to speak) despite trillions in global QE and the proliferation of ZIRP and NIRP. As WSJ reports, “Big firms [are now set] to post [their] first decline in both earnings and sales since the recession.” Here’s more:

Quarterly profits and revenue at big American companies are poised to decline for the first time since the recession, as some industrial firms warn of a pullback in spending.

 

From railroads to manufacturers to energy producers, businesses say they are facing a protracted slowdown in production, sales and employment that will spill into next year. Some of them say they are already experiencing a downturn.

 

“The industrial environment’s in a recession. I don’t care what anybody says,” Daniel Florness, chief financial officer of Fastenal Co., told investors and analysts earlier this month. 

 

Caterpillar Inc. last week reduced its profit forecast, citing weak demand for its heavy equipment, and 3M Co., whose products range from kitchen sponges to adhesives used in automobiles, said it would lay off 1,500 employees, or 1.7% of its total, as sales growth sagged for a wide range of wares.

 

Industrial companies are being buffeted on multiple fronts. The slump in energy prices has gutted demand for drilling equipment and supplies. Economic expansion is slowing in China and major emerging markets such as Brazil, which U.S. companies have relied on for sales growth. And the dollar’s strength also has eroded overseas profits.

 

Profit and revenue are falling in tandem for the first time in six years, with a third of S&P 500 companies reporting so far. Analysts expect the index’s companies to book a 2.8% decline in per-share earnings from last year’s third quarter, according to Thomson Reuters.

 

Sales are on pace to fall 4%—the third straight quarterly decline. The last time sales and profits fell in the same quarter was in the third period of 2009.

 

If you look at kind of the broad industrial-production index, you see industrial production sequentially coming down,” said Fredrik Eliasson, chief sales and marketing officer at railroad operator CSX Corp.

 

U.S. manufacturing production rose in September at its slowest pace in more than two years, the Institute for Supply Management reported earlier this month. 

 

And truckload carriers have warned that they aren’t witnessing the usual uptick in retailer demand as the holiday season approaches, thanks to stubbornly high inventories, said Alex Vecchio, a transportation analyst at Morgan Stanley. “Transportation companies are typically a leading indicator, and our data is not good,” Mr. Vecchio said.

So far, companies have relied on financial engineering to artificially inflate the bottom line. Yield-starved investors have been more than willing to snap up new IG and HY supply and corporate management teams have used the proceeds to fund EPS-inflating buybacks. Now that the cost of capital is set to (maybe) rise, and now that investors are beginning to get wise to the charade thanks to publicity from the likes of Hillary Clinton and BlackRock, the game may be up:

Some investors and analysts worry that companies accustomed to boosting earnings by cutting costs, repurchasing shares and refinancing debt will soon have to face the reality of worsening sales. “The ability of corporations to take a 1% to 2% revenue line [gain] and turn it into 5% to 6% profit growth is waning,” said Charlie Smith, chief investment officer of Fort Pitt Capital Group. “They’ve run out of rabbits to pull out.”

In other words, all signs now point to recession and the "strategy" of leveraging balance sheets to inflate earnings at the expense of growth and producitivty (i.e. making investments in capital both human and otherwise) has all but run its course.

On the “bright” side, the US has a fantastic opportunity in Syria to implement the tried and true method of engineering an economic boom: start a world war.

 

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Mon, 10/26/2015 - 08:06 | 6711417 Sisyphus
Sisyphus's picture

So, bullish?

Mon, 10/26/2015 - 08:10 | 6711425 fudge
fudge's picture

it's depressing ;)

Mon, 10/26/2015 - 08:13 | 6711437 Hype Alert
Hype Alert's picture

We don't need earnings.  We've got the FED, ECB, PBOC, BOJ, and hope.

Mon, 10/26/2015 - 08:19 | 6711447 Momauguin Joe
Momauguin Joe's picture

Moar War

Mon, 10/26/2015 - 08:24 | 6711461 clooney_art
clooney_art's picture

The news can't get any better for the stock market. Dow 20K here we come.

Mon, 10/26/2015 - 08:32 | 6711486 Al Gophilia
Al Gophilia's picture

I was wondering what the next ploy would be. Bring on QE, its all that's left other than outright theft through govt spending. Vanished bank accounts will have to be a plan when there are no money market funds left to loot. Churn those accounts boys and girls and Corzine all your clients.

Mon, 10/26/2015 - 08:44 | 6711516 SuperRay
SuperRay's picture

A false consumer culture based on propaganda to convince people to buy shit they don't need, that focuses on promoting anti-human superficial materialistic values, isn't working? Fuck yeah!

Mon, 10/26/2015 - 08:53 | 6711537 Dick Gazinia
Dick Gazinia's picture

I never get the whole consumer spending thing.  All the shit we buy is made in China.  So we get our retail sales cut.  BFD

Mon, 10/26/2015 - 08:57 | 6711545 Bobbyrib
Bobbyrib's picture

American consumers funded a lot of those purchases with debt. Some consumers are less willing to load up on debt and some do not have access to that kind of credit anymore. That unhealthy debt kept the economy going.

Mon, 10/26/2015 - 09:17 | 6711597 two hoots
two hoots's picture

Markets/greed can kill a good company.  Staying private has its merits. 

Mon, 10/26/2015 - 09:32 | 6711630 Bunghole
Bunghole's picture

Who needs fasteners like grade 8 bolts to hold together heavy equipment, bridges and structures?

That's what hope and change is for.

Mon, 10/26/2015 - 10:05 | 6711742 Bastiat
Bastiat's picture

"Took homage?" Umbrage.

Mon, 10/26/2015 - 10:37 | 6711851 dontgoforit
dontgoforit's picture

Everything is awesome.

Mon, 10/26/2015 - 11:41 | 6712008 dizzyfingers
dizzyfingers's picture

S'about collecting local taxes at the cash register.

Mon, 10/26/2015 - 09:07 | 6711568 JRobby
JRobby's picture

It worked until it didnt. It would have kept working if the bubble machine could have kept going. Greed pops the bubbles.

Now we have falling asset prices as the prices of every day needs rises.

Only the best and brightest could have engineered a shit show this profoundly fucked.

Mon, 10/26/2015 - 09:33 | 6711637 J Jason Djfmam
J Jason Djfmam's picture

One ah, Two ah, Three ah.

Start the bubble machine ah.

Lawrence Welk could have been president of the Fed.

Mon, 10/26/2015 - 09:37 | 6711651 Perimetr
Perimetr's picture

Coming???

Mon, 10/26/2015 - 10:01 | 6711731 Sudden Debt
Sudden Debt's picture

The problem for those big companies is that they're to big.

The got to become so big because they could buy smaller companies with cheap credit that they didn't really invest in looking for new clients, they got their new clients throuh merger and aquisitions.

These companies work on a retaining strategy where the target is hold what you have.

And they've introduced so much bureaucracy that it's going to kill them.

If they can't get their hands on cheap credit to buy more companies, they won't grow anymore. And if they stop growing, they can't sell their PE of 20 to 30 to their'shareholders anymore.

If you understand this, you understand how the future will be like. You also need to understand what influences all the parts.

 

Now for the economy, those big companies are a pest. They only hire about half of what the smaller companies hired so they are the contributors of unemployment.

And everybody is so affraid to let those companies go belly up because they employ to many people.

In short, if you like the big US companies, you love communisme and hate entrepreneurship.

And in order for us to ever have a sound economie they need to go bankrupt.

 

These companies don't return anything to their shareholders. In times like this, you need a 15% return on stock investments. That's about 7 to 8 times more then what we get now. That means that the shareprice of those companies needs to'drop about 85% to become normal again.

And those CEO's won't let that happen because their salary depends on the share price.

And they'll use whatever cheap credit they can get their hands on to keep it possible. 

All in all, I don't think the economy will ever recover in our lifetime because we've got to see all the rot be destroyed first.

We need a lot more smaller companies and no more giants that live on the economy like a parasite.

 

Why do big companies keep getting tax breaks and government funding....  and the small companies keep getting higher taxes?

It's fascisme to the max in America right now!

And in America, they've run out of small companies so they started to look overseas to buy small companies in Europe. 

And there they learn what every American companie learned before them... you can't operate in Europe like you do in America. Europe has it's own ways in every country.

American marketing doesn't work in europe at all.

Americans like to controll their workforce like they

'Re mindless drones and here in Europe we like to be treathed like individuals. 

Whenever a job applicant shows up at a American company, they're always warned: This is A american company where initiative is not accepted, rules rule and the entire strucutre is shaped like a pyramid. Are yousure you want to work here?

And that's why 7 out of 10 employees who work for a American company want to change jobs. But nobody else wants to hire them because they're to affraid that the culture from those American companies could infect their company and that's why those people are stuck.

 

Mon, 10/26/2015 - 10:25 | 6711805 orez65
orez65's picture

"... become so big because they could buy smaller companies with cheap credit ..."

The simplest, and correct, root cause of the Western World economic woes is our fiat monetary system.

Get rid of Central Banks and Fractional Reserve Banking and all the problems that you listed go away.

Mon, 10/26/2015 - 08:21 | 6711453 _ConanTheLibert...
_ConanTheLibertarian_'s picture

We don't need no stinkin' earnings. There fixed it for ya.

Mon, 10/26/2015 - 08:35 | 6711495 Handful of Dust
Handful of Dust's picture

"Recession"?

 

Bolderdash! Barry said just last week 'everything is great!"  He added we are very close to "Liftoff."

 

 

Mon, 10/26/2015 - 09:21 | 6711609 sun tzu
sun tzu's picture

The BLS and lamestream media will make it so

Mon, 10/26/2015 - 08:42 | 6711498 ThirteenthFloor
ThirteenthFloor's picture

'Money won is twice as sweet as money earned"
The Color of Money.

It's caught on.

Mon, 10/26/2015 - 09:09 | 6711575 JRobby
JRobby's picture

'Money stolen is twice as sweet as money earned"

The Bankster Show

Mon, 10/26/2015 - 08:50 | 6711527 GMadScientist
GMadScientist's picture

"We don't need earnings.  We've got the FED, ECB, PBOC, BOJ, and hope."

G'on hurt like a sumbitch when they start dropping fasteners from helicopters though.

Mon, 10/26/2015 - 11:35 | 6712056 newnormaleconomics
newnormaleconomics's picture

All you need is Fed love  . . . and All In II and NIRP. 

It's all good. Now, go holiday shopping. 

 

Mon, 10/26/2015 - 09:29 | 6711625 SheepRevolution
SheepRevolution's picture

It's not depressing depressing, only depressing.

Mon, 10/26/2015 - 10:17 | 6711773 spekulatn
spekulatn's picture

Depressing is bullish.

BTFD.

Thank you.

That is all muppets.

Mon, 10/26/2015 - 08:16 | 6711444 Luckhasit
Luckhasit's picture

So much bull that its turned to shit, ergo, bullshit.

Mon, 10/26/2015 - 08:30 | 6711482 plane jain
plane jain's picture

First widespread industrial downturn since 2007...was actually in the GMA crawl at the bottom of the screen this morning.

Mon, 10/26/2015 - 10:49 | 6711908 Panafrican Funk...
Panafrican Funktron Robot's picture

Oddly, yes.  Given the Fed's unofficial mandate to keep supplying green shoots, this unambiguously bad data = unambiguously high probability of QE4.

Mon, 10/26/2015 - 13:12 | 6712537 The central planners
The central planners's picture

So, BS

Mon, 10/26/2015 - 08:06 | 6711418 onewayticket2
onewayticket2's picture

MOAR!

Mon, 10/26/2015 - 08:09 | 6711422 JustObserving
JustObserving's picture
"Our Data Is Not Good"

How about calling a spade a spade?  All US economic data are fraudulent.  And have been for decades, especially inflation (to goose GDP) and unemployment (to keep the dollar strong)

Mon, 10/26/2015 - 08:38 | 6711501 Lostinfortwalton
Lostinfortwalton's picture

The data is neither "good" or accurate; we seem to be in the middle of a disaster with no reliable information to tell us how bad it really is.

Mon, 10/26/2015 - 09:39 | 6711661 Bunghole
Bunghole's picture

Those $36/lb. filet mignons at the butcher shop told me how bad it is.

Pork.  It's what I can afford.

Mon, 10/26/2015 - 23:17 | 6715248 TheMerryPrankster
TheMerryPrankster's picture

There's a slogan for a t-shirt, if people could afford to buy t-shirts with slogans.

Mon, 10/26/2015 - 09:17 | 6711598 silverer
silverer's picture

It would be accurate to say that everything, including profits, salaries, etc.. has followed the debasement of the dollar.  It simply goes hand in hand.  We lost capitalism in its uncorrupted form all the way back in the thirties, and as government regulation started to grow, we began to lose productivity.  When "Tricky Dick" Nixon pulled the gold out from behind the currency and they started running the printing presses, most everything afterwards was a lie.  Now we are in an "Every man for himself" nightmare, while they squeeze the last few drops of blood from what's left of the value of the dollar with financial trickery before its heart stops beating. It's at that point that we'll find out where we really are.

Mon, 10/26/2015 - 11:07 | 6711954 Spigot
Spigot's picture

To begin with, bad grammar: "Our data are not good." is the correct usage.

Secondly, CAT has now burned through the entire 'bounce' gains and is significantly net negative for the period starting 2007-8.

Bonus tip: Housing is starting to crumble a bit earlier than I thought. I was projecting the peak to be in late November. However with the 17% YOY drop in high end sales (far more negative in the most recent 6 months of the period) AND the rapid shift AWAY from 'new housing' to and toward 'used housing' on the part of the low end RE home buyer (RE less than $250k), we have entered the singularity.

RE crash on deck, to proceed into the Fall of 2016. Buckle up me hardies. This is gonna hurt bad.

Mon, 10/26/2015 - 08:12 | 6711433 Grandad Grumps
Grandad Grumps's picture

“The ability of corporations to take a 1% to 2% revenue line [gain] and turn it into 5% to 6% profit growth is waning,” said Charlie Smith*

*Actually, they could never do this, so people such as Charles Smith have been compliciit in changing the definition of "profit", so as to justify higher stock prices, that should have never happened if not for the banker manipulation.

Mon, 10/26/2015 - 08:14 | 6711439 RabbitOne
RabbitOne's picture

Earnings fizzle right on time in the cycle. This signals our next QE to push stocks 38% higher and rate increases get put off to 2020 “…at the earliest…”.  

Mon, 10/26/2015 - 08:17 | 6711445 Dead Canary
Dead Canary's picture

Is it time to yell movie in a crowded firehouse?

Mon, 10/26/2015 - 08:52 | 6711531 GMadScientist
GMadScientist's picture

That'll just make the sheeple bunch up at the exits while they gaze in slack-jawed amazement at whatever Adam Sandler squatted onto a negative.

Mon, 10/26/2015 - 08:18 | 6711446 NubianSundance
NubianSundance's picture

If the consumer isn't spending everything else is irrelevant. Amazing CB's cant grasp this simple fact.

Mon, 10/26/2015 - 08:23 | 6711459 Bobbyrib
Bobbyrib's picture

Why do you think Wall St runs up the price of housing, food, and energy? Then you have the government running up the price of healthcare for everyone who isn't poor and destitute. They know what they're doing.

Mon, 10/26/2015 - 11:13 | 6711983 Supernova Born
Supernova Born's picture

The higher education cartel seems to have agreed $60,000 a year is the going rate for an undergrad.

Mon, 10/26/2015 - 19:10 | 6714312 Bobbyrib
Bobbyrib's picture

I forgot about the costs of college. Chalk that one up to the government too.

Mon, 10/26/2015 - 09:35 | 6711642 madcows
madcows's picture

Well, the consumer is certainly buying vehicles.

And iGadgets.

And meals out.

And, they're still buying the other stuff, too.  Just not so much of it.

Mon, 10/26/2015 - 10:25 | 6711789 Md4
Md4's picture

Precisely.

No bucks...no Buck Rodgers.

No deleveraging either...

m

Mon, 10/26/2015 - 08:26 | 6711449 undercover brother
undercover brother's picture

Everyone knows no one looks at year over year revenue or eps because if they did it stocks should have been in a bear market 5 years ago.  The only thing the financial media and most investors ever look at is quarterly revenues and EPS versus analyst expectations.  

Mon, 10/26/2015 - 08:28 | 6711468 Collapsed_Elast...
Collapsed_Elastic_Pants's picture

Absolutely

 

Load up on stocks

Mon, 10/26/2015 - 08:50 | 6711526 Jstanley011
Jstanley011's picture

Great advice, 200 points ago.

Mon, 10/26/2015 - 08:25 | 6711463 ILike2Watch
ILike2Watch's picture

Nope! Winter is coming........the recession is already here, they're finally just denying it less.

Mon, 10/26/2015 - 09:12 | 6711585 JRobby
JRobby's picture

Election cycle

"I will put America back to work!, back on the path to prosperity"

Etc. Etc.

Mon, 10/26/2015 - 08:27 | 6711469 lester1
lester1's picture

No worries. The unaudited Federal Reserve will be the stock buyer of last resort.

 

https://youtu.be/mXmNpdYpfnk

Mon, 10/26/2015 - 08:29 | 6711478 Not if_ But When
Not if_ But When's picture

Already are and have been when things look at all punky.

Mon, 10/26/2015 - 09:14 | 6711591 JRobby
JRobby's picture

Will be ?

So ramping up buying stocks above where the Fed is already at = will be.

I get it. So simple!

Mon, 10/26/2015 - 08:27 | 6711471 Teh Finn
Mon, 10/26/2015 - 08:58 | 6711548 TheMerryPrankster
TheMerryPrankster's picture

Greenshoots, definitely greenshoots... or is that gangrene?

Mon, 10/26/2015 - 08:28 | 6711473 Not if_ But When
Not if_ But When's picture

When you have a nation with economic policy 100% focused on the fortunes of Wall Street/bankers and the investor class - WHY THE FUCK should it not be expected that demand for any number of products is greatly declining?

(except for Ferraris, etc)

Mon, 10/26/2015 - 08:29 | 6711477 mrdenis
mrdenis's picture

Clearly Bush's fault .......

Mon, 10/26/2015 - 08:53 | 6711536 GMadScientist
GMadScientist's picture

He's not alone, but yes, most definitely.

Mon, 10/26/2015 - 08:30 | 6711481 I AM SULLY
I AM SULLY's picture

A recession?

(more like a depression that never ended)

Mon, 10/26/2015 - 08:32 | 6711487 buzzsaw99
buzzsaw99's picture

the company’s Q3 call, took homage to one analyst’s suggestion...

i believe the word you're looking for is "umbrage"

Mon, 10/26/2015 - 08:32 | 6711488 E.F. Mutton
E.F. Mutton's picture

"Well we had negative earnings and growth, but they identify as profits - who are you to judge?"

Mon, 10/26/2015 - 08:32 | 6711491 Charles Offdensen
Charles Offdensen's picture

“The ability of corporations to take a 1% to 2% revenue line [gain] and turn it into 5% to 6% profit growth is waning,” said Charlie Smith, chief investment officer of Fort Pitt Capital Group.

If that doesn't spell out the kind of fraud and manipulation that has been taking place because of QE, ZIRP then I don't know what does. True valuation does not to be manipulated. It should speak for itself

It's like telling a woman with barely an A cup that she has perfect CC's just because you stuffed her bra with toilet paper.

Give me the real thing not your worthless paper.

Mon, 10/26/2015 - 09:02 | 6711547 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

There's revenues, and there's expenses.  Mr. Smith may simply have been suggesting that expenses have been slashed so hard for so many quarters that the capacity of corporations to continue to do that in order to legitimately produce more profit has been diminished.  Yet, if that is the case, it is still not a positive indicator.

Mon, 10/26/2015 - 11:12 | 6711975 Caleb Abell
Caleb Abell's picture

Corporations have indeed slashed expenses, but they did it by slashing the number of employees, their benefits, and their wages.  The brilliant Ivy League MBAs at corporate headquarters weren't smart enough to realize that they were also slashing demand for their crappy products.

Mon, 10/26/2015 - 08:40 | 6711507 taopraxis
taopraxis's picture

After the 2008 crash surfaced the systemic financial fraud that goes all the way to the top of the government, I said to people, "Bernie Madoff was chairman of the freaking stock exchange. From that high visibility perch he operated a Ponzi scheme that was fingered by multiple whistle blowers who tipped off the authorities who responded to those tips by investigating the *whistle blowers*. Think that over for second...it's all crooked, just like your old man always used to say. This, by the way, may be why the dreaded "old white man" is the target of so much negative commentary in the propaganda press. Old men know the score and they do not like it one bit. Funny, by the way, that ageism, sexism and racism are somehow okay as long as you're calling out the shortcomings, real or imagined, of old, white men.

Mon, 10/26/2015 - 08:57 | 6711543 GMadScientist
GMadScientist's picture

What portion of the people responsible for these messes (debt, broken markets, wars around the globe) are old, white, men?

Even conservatively (pun!), I'd estimate 98%, and that's counting Yellen as a woman.

Mon, 10/26/2015 - 09:17 | 6711595 taopraxis
taopraxis's picture

What proportion of old white men are controlling the global financial system? How many of these men do you see down at your local diner or barbershop? Your reasoning is backwards.

Mon, 10/26/2015 - 11:04 | 6711946 Caleb Abell
Caleb Abell's picture

Everyone picks on poor Bernie Madoff.  He's a good guy.  

Why?  Because he only stole from rich people.  That's why the govt went after him like a pack of rabid hyenas.

If he stole from working people and grandma's living on social security, like the rest of wall street does, he would still in out on his yacht, and eating caviar like they do.

How many other financial crooks have gone to jail since 2007?  None!  After all, they stick to legitimate targets ... like working people.

Mon, 10/26/2015 - 08:40 | 6711508 buzzsaw99
buzzsaw99's picture

don't worry about oberhelman. he and his ilk got plenty:

http://insiders.morningstar.com/trading/executive-compensation.action?t=CAT

Mon, 10/26/2015 - 08:42 | 6711511 Last of the Mid...
Last of the Middle Class's picture

takes a lot of paper money to lift a D10

Mon, 10/26/2015 - 08:43 | 6711514 Handful of Dust
Handful of Dust's picture

With destruction of the middle class that means destruction of consumer spending and therefore destruction of about 60% of the GDP.

 

I don't see any Grote in the near future.

Mon, 10/26/2015 - 08:51 | 6711528 Bobbyrib
Bobbyrib's picture

Would you like some layoffs, increased corporate debt with increased stock buybacks with your destruction of the middle class? Of course you would. /sarcasm.

Mon, 10/26/2015 - 08:56 | 6711542 taopraxis
taopraxis's picture

The power of the banksters is based upon nothing but popular illusions. The middle class collectively wastes so much money on unnecessary stuff, their spending could drop by half and people would be fine. The stock market would not be fine, however. Imagine if every middle class household decided to return to a simpler life, one-income household, one car, cook at home, etc. If the authorities destroy middle class economic aspirations, the pyramid schemes are doomed. Wall Street cannot afford to impoverish the masses. The masses will adapt and survive. The financial system willl not.

Mon, 10/26/2015 - 09:17 | 6711599 GMadScientist
GMadScientist's picture

Imagine if people even had the option to "decide" to pursue your inane "simpler life"; if wishes were fishes, we wouldn't be emptying the seas quite so quickly.

You have a vastly insufficient understanding of the pressure that middle class families are up against. Pretending that it's bcause they eat out too often or have two (necessary) incomes may be somehow comforting to you, but is entirely fiction.

Mon, 10/26/2015 - 09:22 | 6711611 taopraxis
taopraxis's picture

I cannot count the number of people I've met over my life who have arrogantly and ignorantly explained to me why what I've been doing for the past twenty years is impossible for hapless fools like me. Yet, here I am...

Mon, 10/26/2015 - 10:26 | 6711803 GMadScientist
GMadScientist's picture

And if you gladly give up your steady job, they can too.

Big difference between saying you can and everyone can.

Mon, 10/26/2015 - 10:41 | 6711864 taopraxis
taopraxis's picture

I did not say what you said I said...I said, *collectively*, half of middle class spending could go away. *Half* could give up their jobs. Obviously, this will not work for everyone regardless of their individual circumstances and abilities but only someone with a central planning conceit would ever presume to impose a one-size fits all prescription upon an entire population. The majority have always been free to choose a lifestyle that is not only simpler and cheaper but far healthier. All they're missing is the necessary imagination...the virtue of necessity could easily fix that.

Mon, 10/26/2015 - 11:57 | 6712171 Peak Finance
Peak Finance's picture

I think the "average" household can cut cable, take the smartphones away from the kids, and switch to cheaper cell ohone plans and magically "find" 250 bucks a month without much effort.  

There are simple and almost efortless things you can do to cut heatling, cooling and electricty by 50% easily. 

EVERYONE seems to have a new car, with those new car payments and high insurance.  (Of cpurse I am not talking about the ZH guys but the "Amuricans") 

There tons of stuff you can do to cut expenses easily but people are hopelessly addited to their crap and showing off.  EBT and poor people with iPhones then bitching about money. It's as much a culture / propaganda problem as it is a financial problem. 

Mon, 10/26/2015 - 11:47 | 6712130 Bloodstock
Bloodstock's picture

One income household, really? I like the idea but in today's economy a one income household would be extremely difficult to pull off.

Mon, 10/26/2015 - 10:34 | 6711836 Md4
Md4's picture

You're right, but it's actually more than 70%.

When the shortsighted, completely brainless western corporation (that 401k holders and the Wall Street sharks fog monitors over daily) outsourced jobs and middle class incomes for more than 40 years...this is where you end up.

They've cut their own throats too.

Recoverable?

No.

Retribution?

m

Mon, 10/26/2015 - 08:50 | 6711524 Niall Of The Ni...
Niall Of The Nine Hostages's picture

Even a world war isn't an option. The folks who did all the actual fighting in the last one are now on the other side. Starting a war will succeed only in removing the only significant remaining source of cheap oil---which is all that's keeping most western economies from complete collapse.

Mon, 10/26/2015 - 08:52 | 6711532 Bobbyrib
Bobbyrib's picture

"Even a world war isn't an option. The folks who did all the actual fighting in the last one are now on the other side. Starting a war will succeed only in removing the only significant remaining source of cheap oil---which is all that's keeping most western economies from complete collapse."

Not according to some people who thought it was a great source of jobs, newly found wealth, and economic growth.

Mon, 10/26/2015 - 09:03 | 6711557 idontcare
idontcare's picture

I'm getting seasick.... last week was puppy dogs and kittens for US companies' earnings and this week we are being told that DOOM is on the horizon again.   Wake me up when the S&P hits 666 again in intra-day trading.

Mon, 10/26/2015 - 09:06 | 6711565 JDFX
JDFX's picture

They either print more money, take it from the people who have it , or get rid of people. 

 

There's nothing new to figure out.  :) 

Mon, 10/26/2015 - 09:38 | 6711655 J Jason Djfmam
J Jason Djfmam's picture

I'm betting on all three.

Mon, 10/26/2015 - 09:14 | 6711590 Sandmann
Sandmann's picture

There are figures somewhere which show that the biggest chunk of Gross Fixed Capital Formation since 1945 has been in a) Oil Sector   b) Chemicals   c) Aerospace  and that these were the drivers of economic expansion.  Maybe that was the Schumpeterian Driver and it has now reached secular stagnation ?

Mon, 10/26/2015 - 09:27 | 6711622 VW Nerd
VW Nerd's picture

What these companies are witnessing is a dying middle class.  The once burgeoning middle clas in Europe and North America drove the global economy for decades, largely because of the petrodollar system in my opinion.  We all know this middle class demographic is dying. Remedial policies for this waning consumption  are seen in the record food stamp usage, record student loan debt, profligate subprime car financing and mortgage underwriting.  All are in place to bolster consumption.  Call it corporate welfare via direct and indirect transfer payment mechanisms.  I think of food stamps.  Not just a subsidy for grocers and food producers.  Subsidized food, in theory, frees up a portion of a person's depleted budget to go out and buy an iwatch or a new 0 percent car.  Next step to force consumption....NIRP.  Short of a much needed deflationary cycle, expect this economic malaise to continue.

Mon, 10/26/2015 - 09:30 | 6711627 JimmyRainbow
JimmyRainbow's picture

dear editors of this wonderfull page:
your page loads a full page ad with video, no close button, video not playing,
ad promises to close but no close time given so one has to reload the page (zerogedge) to have some 15 seconds to read before again the full page ad with video blocks your page indefinetely......
additionally the video frame is visible but the video never plays.....

Mon, 10/26/2015 - 11:24 | 6712025 RockySpears
RockySpears's picture

JR

Adblock + Fire Fox, 

Mon, 10/26/2015 - 09:31 | 6711629 ThrowAwayYourTV
ThrowAwayYourTV's picture

The crash starts this November.

 

Mon, 10/26/2015 - 09:37 | 6711652 J Jason Djfmam
J Jason Djfmam's picture

Once again:"Nobody could have seen this coming. Nobody!"

Mon, 10/26/2015 - 09:39 | 6711660 GRDguy
GRDguy's picture

If banksters would stop lying and stealing, things would get better quickly!

Mon, 10/26/2015 - 09:40 | 6711664 robnume
robnume's picture

Quick, to the plunge protection-mobile, Batman! And call in the FASB for some moar rule changes!

Mon, 10/26/2015 - 09:43 | 6711671 Temerity Trader
Temerity Trader's picture

“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in a democratic society”    Edward Bernays.

Total insanity and greed.  Everyone now expects to get rich in a matter of months. It took about ONE-HUNDRED f***ing years of inflation for the Dow to go from 100 to 14k. One-hundred years of the most incredible growth in human history, and there was a depression and two or three large recessions along the way. Therefore, it should take another 100 years for the Dow to double again to 28,000.

The bankers will use TRILLIONS of $$ in debt to try to push the Dow to 28k in MONTHS. And inflate housing too, the idiots will feel rich and borrow cheap $$ and spend them on more useless crap made in China. The masses have been brainwashed into cheering the insanity on…they no longer need God; they have the omnipotent central bankers to worship. The bankers will never give up on QE as the politicians will not tolerate ANY downturns and always demand intervention.  Business cycles are not to be allowed anymore in order to prevent social unrest.

Another Fed-caused housing bubble that will just do even more damage when it deflates. $1.2 TRILLION in student loans that can never be repaid. The great unwinding will happen anyway and send millions more illegal immigrants streaming into Europe and the USA to hasten the final collapse. The markets no longer reflect future “earnings” expectations, only stock buybacks, layoffs and the promise of ever more QE. This is insanity and has to end ugly...

Mon, 10/26/2015 - 09:45 | 6711679 yogibear
yogibear's picture

Watch for QE4 to be announced. This time QE will be much larger.

Much more debt. Just look at Japan.

It's why Jack Jew want's to get rid of the debt limit.

Mon, 10/26/2015 - 09:46 | 6711685 Ajax_USB_Port_R...
Ajax_USB_Port_Repair_Service_'s picture

accelerate share buybacks

fudge the inflation rate

depress PM's

fudge the employment rate

throw in some stealth QE

blackout all news from Europe

And we'll make it just past the election in 2016.

Mon, 10/26/2015 - 09:49 | 6711697 ToSoft4Truth
ToSoft4Truth's picture

When was the last time the U.S. wasn’t on the verge of recession – Clint Years?? 

Mon, 10/26/2015 - 09:55 | 6711710 yogibear
yogibear's picture

It's negative rates for the Fed and a double dose of QE.

All the fed cares about are stocks. Everything else can go to hell.

Mon, 10/26/2015 - 09:56 | 6711712 IridiumRebel
IridiumRebel's picture

I work in food and beverage currently. Our sales have fallen precipitously. We are doing half of what we were doing six months ago.

Mon, 10/26/2015 - 09:57 | 6711714 Secret Weapon
Secret Weapon's picture

No worries.  The boxcars are full of green shoots.

Mon, 10/26/2015 - 10:01 | 6711730 Falconsixone
Falconsixone's picture

Recession is coming....lol

I didn't know there where any US companies.

Mon, 10/26/2015 - 10:04 | 6711738 Herdee
Herdee's picture

Most big U.S. cities look like a war has already taken place.Third world infrastructure compared to other countries.Homelessness,lack of affordable housing.50 million plus on foodstamps...It really is a national disgrace to see this while the NeoCons spent trillions going nowhere on Iraq,Afgan-Land,Libya and now Syria.No money for your own people?I never did like the way the U.S. Government treats its own people.

Mon, 10/26/2015 - 10:31 | 6711828 GMadScientist
GMadScientist's picture

The US government has plenty of no-bid contract money for a very small portion of the American people; they've collected it from the people who you've pointed out not getting by on the handouts that end up in corporate coffers at the end of the day (the same people who used to have productive jobs before insane gamblers and their throng of parasitic followers decided it would be best to wreck the remaining economy in the name of consolidating their control).

Maybe if more than 40% of Murkins paid attention to their political system, they could keep the exploitation to a minimum?

Mon, 10/26/2015 - 10:46 | 6711888 Ghost of Robotrader
Ghost of Robotrader's picture

There has to be a lot more downward mobility than we have had before people start getting really angry and paying attention.  But the polls are trending in the proper way.  49 percent consider the government an immediate threat.  Government corruption is the biggest fear of the people.  Way higher than death, terrorism, or nuclear biological or chemical attack lol.

 

Are we just one more recession (at the zero bound) away from some serious unrest?  Lol.  Stay tuned.

Mon, 10/26/2015 - 10:48 | 6711895 taopraxis
taopraxis's picture

Voting will not save you...

Mon, 10/26/2015 - 10:53 | 6711920 taopraxis
taopraxis's picture

Perpetual war is a sign of failure. More war (failure) will not breed success. The power structure is rapidly sowing the seeds of its own destruction. People could end it tomorrow just by staying home from work for one day. All real power always resides with the people who are a physical force of nature. Unfortunately, the people are brainwashed, divided and innumerate.

Mon, 10/26/2015 - 14:12 | 6712785 Skiprrrdog
Skiprrrdog's picture

I was born and raised in this country but anymore, I just feel like every single politician, government person and their owners/handlers can seriously *go fuck their mothers* and then jump off of a cliff.

 

Putin in 2016!

Mon, 10/26/2015 - 10:10 | 6711750 Dre4dwolf
Dre4dwolf's picture

Central Banking has failed the human race.

Mon, 10/26/2015 - 10:42 | 6711869 bankonzhongguo
bankonzhongguo's picture

Another metric that I was surprised to find is the net DECREASE in the number of employers in my area.

You can pull a lot of census data (not BLS) about the number of tax paying businesses, overall payroll and a host of other employee data.

I was just interest in what is going on - on the ground in my county.

Plug in population growth and inflation and you start to get a reality check - a nation of burrito folders and coffee monkeys.

After some hunting I found a net 10% decrease in the number of registered employers over the last 10 years.

While payrolls are up based on inflation, the grim news is the choices workers have is shrinking and hence competition for jobs is up driving wages flat or down.

And of course all the Ebay/Amazon home based businesses mean only one thing - a nationwide garage sale for cash.

All this is reflected in the macro data we read about more business shut downs, record low entrepreneurs, etc.

But, check out where you live and surrounding counties - go to ground.

Your door-step is your headline.

Mon, 10/26/2015 - 10:59 | 6711930 Ghost of Robotrader
Ghost of Robotrader's picture

Burrito folders and coffee monkeys.   Reminds me of Latin america.  Substitute corn cakes for burritos south of mexico.  That is the future of Roach's global wage convergence.  Welcome to your new Mcjob

 

You will need a $40,000 college degree to get that coffee monkey job though.

Mon, 10/26/2015 - 12:00 | 6712193 Archive_file
Archive_file's picture

I live in San Francisco and live in my van. I go to Indonesia quite often to surf and hang out with my wife. We have 3 houses over there. Everyone has a blender there and every kind of fruit you can imagine. There are flies that land on the blenders and juice. Here in San Francisco the same shit is happening, now we have a juice shop on each corner hawking $10 bottles of juice. Is this supposed to save our economy, pay for the bloated MIC, and keep the ratings agencies happy???

It's all over but for the crying.

Mon, 10/26/2015 - 12:49 | 6712442 Ayn Rand
Ayn Rand's picture

I hope those juice shops are paying their workers $15 an hour.

Mon, 10/26/2015 - 14:07 | 6712754 Skiprrrdog
Skiprrrdog's picture

I dont suppose she has juice makers living in your *three houses* while you are not there?

Mon, 10/26/2015 - 14:05 | 6712745 Skiprrrdog
Skiprrrdog's picture

I can fold burritos, make coffee and let O'BlowMe give me a rim job, all with my eyes closed...

Mon, 10/26/2015 - 10:46 | 6711889 dizzyfingers
dizzyfingers's picture

ComING? You mean worse than last year? Seriously, they think it's "coming", not "been happening for at least the last year?

Blinded to the truth by hopium?

Mon, 10/26/2015 - 10:56 | 6711926 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Who gives a fuck if a recession is coming when we all know that we are in the Greatest Depression ever? Frankly, I already bought all the cheap tools from China that I needed, and I purchased all the hardware I needed from Fastenall(tm) three years ago. Fastenall(tm) can go completely bankrupt for all I care, and China can go fuck themselves silly IMHO.

 

Without helicopter drops of cash the ZOMBIES will get restless, eh.

Mon, 10/26/2015 - 11:06 | 6711952 Ghost of Robotrader
Ghost of Robotrader's picture

Low interests rates have done what they were intended to do. Raise economic activity and attempt to decrease the output gap by pulling future demand to the present. Now that we are all so awash in junk we don't need anymore what happens to retail? We have ten years of inventory stuck in closets and rental units. Lol. Might be a bit of hyperbole but I need nothing either and I am getting awesome 1 buck dress shirts from the resale shop my staff picks up for me as well as hand me downs.

Pushing on a string much?

Mon, 10/26/2015 - 11:56 | 6712167 MATA HAIRY
MATA HAIRY's picture

" took UMBRAGE to one analyst’s suggestion that we’re currently in a “non-recessionary environment."

Mon, 10/26/2015 - 12:47 | 6712423 Ayn Rand
Ayn Rand's picture

Profits will continue to increase until the accountants cut the tax rate they use for earnings press releases down to zero. I await the day they rationalize a negative rate to boost earnings.

Mon, 10/26/2015 - 12:58 | 6712479 Government need...
Government needs you to pay taxes's picture

Looks like we'll get an election year QE lode . . . right in the face.

Mon, 10/26/2015 - 14:00 | 6712727 Skiprrrdog
Skiprrrdog's picture

Recession is coming; wait a minute... are we *not* in a depression any more?

Mon, 10/26/2015 - 15:21 | 6713086 3rdWorldTrillionaire
3rdWorldTrillionaire's picture

Perhaps CAT products have fallen out of favor? I see quite a few Komatsu, Kubota and JCB dealers out there... how are their sales doing over the same period? C'mon ZH, show some peers...

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