Caterpillar Dealer Sales Soar Most In 6 Years

If Caterpillar's dealer sales statistics, traditionally released just one day before the company's earnings report, are an indication of what to expect from the heavy industrial equipment maker, then CAT's Q4 results will be a blow out.

As shown in the following chart, growth in world retail sales jumped from 26% to 34% in December, the highest single month increase since August 2011, and nearly double the 19% growth rates just 2 months ago. The last time retail sales spiked this fast we into the 2010-2011 inflationary surge, which led to China rapidly hiking rates to arrest inflation, and unleashed the most acute phase of Europe's sovereign debt crisis. So far, inflation in China remains missing although that will change soon.

On a regional basis, CAT reported an increase in every single geographic segment:

  • North America machine sales up 23% after rising 12% in Nov.
  • Asia/Pacific Dec sales up 50% after rising 43%
  • Latam Dec. sales up 55% after rising 48%
  • EAME (Europe, Africa, Middle East) Dec. sales up 37% after rising 32%

 

As Bloomberg's Andrew Cinko further adds, "Commodity traders -- especially those in the copper and oil markets -- take note: machine sales to the natural resources industry were up 50% y/y in December. Particularly strong were the 107% increase in Latin America and an 81% increase in Europe, Africa, Middle East. EMEA sales have been growing for seven months now. However, Latin America has seen a dramatic turnaround. Sales have only been growing for the last three months -- and December's 107% increase is stark compared to April when sales were plunging 69%."

That said, before reading too much into the CAT data, recall that between 2013 and 2017, CAT went through a period of 51 consecutive months of declining retail sales, which however failed to adversely impact either the CAT stock price, or result in an accepted economic recession. It is worth noting, however, that CAT's rebound, as well as that of every other asset, start in early 2016, right around the time of the Shanghai Accord, when China's implicit intervention in global market changed everything and has resulted in 21 of 22 consecutive months of S&P growth.

 

Comments

espirit Bes Wed, 01/24/2018 - 09:48 Permalink

It's more likely the ocean bottom is littered with BULLdozers.

Either that, or we're rebuilding entire countries that the MIC has destroyed.

 

OT - Does anybody other than me notice that posts default to newest first, even with page refresh?

I smell something bad...

In reply to by Bes

MuffDiver69 Wed, 01/24/2018 - 09:28 Permalink

Next year when sales are even stronger what will be the deflection. Those missing out on this deserve to be ridiculed. That graph doesn’t need spin

ghengiskhan TheRideNeverEnds Wed, 01/24/2018 - 11:14 Permalink

We now exclusively trade intrinsic societal value for these endless gains.  They went all in and the price is everything.  Look no further then the state of the tech, media and education industries for obvious proof.  The Mayans were right about 2012.  It happened and all us frogs sitting in the warming pot of soon to be boiling water failed to notice. 

In reply to by TheRideNeverEnds

spastic_colon Wed, 01/24/2018 - 09:29 Permalink

gee so earnings season with all the adjusted numbers appears to be good....nothing says manufactured like non-gaap and having companies report at month-end and first of month to game the indexes.

J Mahoney Wed, 01/24/2018 - 10:00 Permalink

Until true manufacturing comes back to the USA, a low dollar is not good for the USA and I sense Mnuchin knows it but this is all a big smoke screen to complete STEP 1 of their plan (Progress is really slow in this). How do you entice foreign held monies to come back? This dollar masacre is a good way, along with the tax cut. So, for a while we will be paying more for all our shit from China and with Lumber up, rates up, oil up, they may initiate a recession so I personally feel this will only be a window that is left open for a couple months. Step 2--How to get the money invested instead of used for stock buybacks--here's where the administration will war with Wall Street since their motives may differ. I think Trump may realize Wall Street wins so he will settle for the money just coming back and the big bump up in tax revenue and then will ignite the economy with infrastructure spending on The Great Wall, and the typical politician "Roads and Bridges" narrative. Perhaps this is why CAT has been moving up. I personally hope they build a hell of a lot more water reservoirs around the largest growing metropolitan areas and tie it to places not fighting Trump on Sanctuary City/State (2 birds one stone theory)

Blankone J Mahoney Wed, 01/24/2018 - 10:29 Permalink

Sounds like more promises of Trickle Down economics (where the citizens take the pain on empty promises of a future benefit) combined with broken windows economics.

Paving roads that are functional as is does not increase commerce, it just waste tax money. Replacing bridges that are structurally sound because the guardrails are no longer up to code does not improve efficiency.
Taking my tax dollars to replace the water lines in another city because those people wasted their tax dollars for the last 40 yrs on corruption and being progressive only rewards waste and prevents a responsible community from maintaining it's systems in a responsible way.

And who is this "they" that you want to build all those water reservoirs around and for the largest growing metropolitan cities? The people living in rural towns, smaller cities or even different large cities. A large metropolitan city should tax themselves and pay for it.

In reply to by J Mahoney

Laowei Gweilo Wed, 01/24/2018 - 10:55 Permalink

this would be impressive for CAT if not the fact the stock was already ridiculously high by ever MDA imaginable back to the recession lol

good sign for precious metals and energy tho

Albertarocks Laowei Gweilo Wed, 01/24/2018 - 11:14 Permalink

Exactly right... that's who they are selling to, miners.  The mining industry is getting ramped up for the biggest bull run probably since the 70's.  It should last at least a decade.  Which in turn should keep the energy sector propped up.  Steve St. Angelo put out this mind-blowing report about how much energy the mining sector needs just to get one ounce of gold.  For example, it takes 30 times as much energy to mine one ounce of gold as it takes to get one ounce of silver.

And those big tires on those monster mining trucks?  It takes 50 barrels of oil to make just one.  The cost of those tires... $250,000 for a set of 4.  In 2013 Barrick went through 6,000 of 'em.  Stunning stuff.

https://www.silverdoctors.com/gold/gold-news/the-market-is-underestimat…

In reply to by Laowei Gweilo

Laowei Gweilo Albertarocks Wed, 01/24/2018 - 11:25 Permalink

dunno about any of that, or miners in general

but i do think that the ZIRP BTFAH market has created so much new wealth that eventually if shit starts to turn down they're gonna flee to safe havens, and it ain't gonna be US bonds or dollars =p

I do like Barrick tho purely from a fundamental POV... pretty great P/E, assets, and dividend for any company, or a gold miner.

tho i admit i'm biased to anything that's canadian and involves digging shit up haha grew up playing with too many tonka trucks i guess

In reply to by Albertarocks

Albertarocks Laowei Gweilo Wed, 01/24/2018 - 11:41 Permalink

Barrick is a giant company as you know, but it has a reputation for being very poorly run.  But there are an absolute shit-ton of amazing Canadian junior miners that are about to explode in price.  They have cash in the bank, proven reserves and a whole whack of exploration and drilling in progress.  You can buy a lot of them them for 15¢ a share.  These assets would make you, your children and your grandchildren rich.  I just blows my mind how few people even care about them.  Me... I've backed my truck up about 9 times and have all I can carry.   I hope you pick some up.

In reply to by Laowei Gweilo