Caterpillar

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

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… the Greatest Depression.

– Forget Recession: According To Caterpillar There Is A Full-Blown Global Depression (ZeroHedge, July 22, 2015):

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.

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For Caterpillar, This Is What The “Second Great Depression” Looks Like

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Welcome to the recovery!

– Welcome to the Recovery (New York Times, by Timothy Geithner, August 2, 2010)

– For Caterpillar, This Is What The “Second Great Depression” Looks Like (ZeroHedge, May 20, 2015):

To put Caterpillar’s ongoing second great depression in context, during the Great Financial Crisis, CAT suffered “only” 19 months of consecutive retail sales declines. As of April 2015, this number is now 29, and there is no hope in sight of seeing an annual rebounce any time soon.

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Caterpillar Suffers Worst Month Since Lehman, 26 Consecutive Months Of Declining Retail Sales

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– Caterpillar Suffers Worst Month Since Lehman, 26 Consecutive Months Of Declining Retail Sales (ZeroHedge, Feb 19, 2015):

Once upon a time, Caterpillar was the world’s industrial bellwether and a Dow Jones Industrial staple. Lately, in addition to suddenly developing a very close relationship with Federal authorities who “are investigating the movement of cash among Caterpillar Inc. ’s U.S. and overseas subsidiaries”, CAT has become a completely ignored and forgotten poster name of the “old-economy” (the on in which cash flow still mattered). However, there are those who still believe that the second coming “eyeballs” as the only valuation term category is destined to end in tears, and as such care about how companies like CAT do.

Sadly, we have some more bad news: Caterpillar just reported that in January, it suffered its worst retail sales month since Lehman, with global sales plunging 14% from last January (when sales in turn had dropped 8% from a year before, while the year before had slid 3% from the year before that and so on). In fact, January was so bad, it was the first month since 2013 when CAT reported declining sales across all regions in which it does business, now that the dead CAT bounce in North America is over.

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Caterpillar Retail Sales Plunge By 13%, Most Since February 2010; Decline For 17 Consecutive Months

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– Caterpillar Retail Sales Plunge By 13%, Most Since February 2010; Decline For 17 Consecutive Months (ZeroHedge, May 20, 2014):

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The drubbing in sales across all other markets excluding the US continued, with sales in Asia/Pacific, EAME and Latin America all dropping by more than 20% compared to last year.

End blended result: global retail sales have now declined Y/Y for 17 consecutive months, which incidentally is just shy of the longest stretch of declining retail sales on record. Worse: the -13% drop in world retail sales matched the biggest annual drop since February of 2010.

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Caterpillar Global Sales Down 12%, Crushes Recovery Hopes With Negative Sales Around The World

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– Caterpillar Global Sales Down 12%, Crushes Recovery Hopes With Negative Sales Around The World (ZeroHedge, Dec 19, 2013):

Among other things, the month of November was memorable because for the first time, Caterpillar – that bellwether of the old industrial economy in which “stuff” was actually made, dug out of the ground, erected, or otherwise processed instead of merely hosted ad impressions – posted declining retail sales in every region around the globe. This was the first time of uniform declining retail sales since February 2010. To say that this data conflicts massively with all the rumors, fairytales and lies about a global recovery, is an understatement which is why it has not been mentioned anywhere, in hopes the subsequent month would demonstrate some improvement and perhaps an upward inflection point. That did not happen.

Read moreCaterpillar Global Sales Down 12%, Crushes Recovery Hopes With Negative Sales Around The World

Pension bombs going off

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Exploding pension fund shortfalls are blowing billion-dollar holes in the balance sheets of some of the Chicago area’s biggest companies, forcing them to make huge contributions to retirement plans at a time when cash flow and credit are already under stress.

Boeing Co.’s shareholder equity is now $1.2 billion in the hole thanks to an $8.4-billion gap between its pension assets and the projected cost of its obligations for 2008. At the end of 2007, Boeing had a $4.7-billion pension surplus. If its investments don’t turn around, the Chicago-based aerospace giant will have to quadruple annual contributions to its plan to about $2 billion by 2011.

Stock market losses also pounded pension funds at Abbott Laboratories Inc., Caterpillar Inc. and Exelon Corp., with others sure to emerge as companies file their annual financial reports with the Securities and Exchange Commission in coming weeks.

The pension gaps underscore a growing conundrum. Unfunded pension liabilities have to be subtracted from shareholder equity, weakening balance sheets at a time when it’s already tough to borrow money. Barring a reprieve from Congress, companies may be forced to make more layoffs or curb capital investments to divert cash to shore up pensions.

“There are companies out there faced with paying their pension plan or staying in business,” says Mark Ugoretz, president and CEO of the ERISA Industry Committee, a Washington, D.C., lobbying group. ERISA refers to the Employee Retirement Income Security Act of 1974, which sets standards to ensure pension plans are sufficiently funded.

The Chicago companies are symptomatic of nationwide woes. Last year, the 100 largest corporate pension funds in the U.S. saw their net assets decline by 21%, while liabilities increased 1.2%. Applying those averages to any of the region’s top funds puts almost all of them into the red by at least $1 billion.

PRESSURE MOUNTS

Read morePension bombs going off

Caterpillar, Sprint, Pfizer slash at least 72,500 jobs

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Paul King, mine manager, inspects a Caterpillar Inc. haul truck at the Australian Bulk Minerals iron ore mine at Savage River in Tasmania, Australia, on Nov. 6, 2008. Photographer: Carla Gottgens/Bloomberg News

Jan. 26 (Bloomberg) — Caterpillar Inc., Sprint Nextel Corp. and Home Depot Inc. led companies today announcing at least 72,500 job cuts as sales withered and construction slowed amid a global economic recession that may persist through 2009.

The biggest layoffs were at Peoria, Illinois-based Caterpillar. The world’s largest maker of construction equipment said it’s cutting 20,000 jobs after fourth-quarter profit fell by almost a third.

Pfizer Inc., the New York-based drugmaker that’s acquiring competitor Wyeth for $68 billion, said it will close five factories and eliminate 19,000 jobs, or 15 percent, of the combined company’s workforce.

The firings came as American jobless claims hit a 26-year high, reaching 589,000 in the week ended Jan. 17, as shrinking demand for products and services forced companies to lower costs.

Read moreCaterpillar, Sprint, Pfizer slash at least 72,500 jobs

GAO: 83% of big U.S companies, contractors use offshore tax havens

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“Citigroup – which has received $25 billion from the bailout fund, plus $300 billion in government guarantees – has set up 427 tax haven subsidiaries to do business: 91 in Luxembourg, 90 in the Cayman Islands and 35 in the British Virgin Islands. Other havens include Switzerland, Hong Kong, Panama and Mauritius.”


The Government Accountability Office (GAO) has just issued a report showing that most of the nation’s largest public companies and government contractors rely on offshore subsidiaries to do business and cut their tax bills. Some of these same firms – including big banks and insurers – have already received tens of billions in taxpayer money from the federal bailout fund.

Citigroup, Bank of America, Morgan Stanley, American International Group, American Express have set up hundreds of tax-haven subsidiaries, the report states. All have taken billions from the bailout fund. Pepsi and Caterpillar, both of which have received billions in tax dollars from being major government contractors, also shelter revenue in offshore subsidiaries, The Washington Post says.

Read moreGAO: 83% of big U.S companies, contractors use offshore tax havens

Fed May See Companies, States as Next Crisis Fronts

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Oct. 6 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke may find the next fronts of the financial crisis to be just as chilling as last month’s downfall of Wall Street titans: its spread to corporate America and state and local governments.

Companies from Goodyear Tire & Rubber Co. and Duke Energy Corp. to Gannett Co. and Caterpillar Inc. are being forced to tap emergency credit lines or pay more to borrow as investors flee even firms with few links to the subprime-mortgage debacle. California Governor Arnold Schwarzenegger says his and other states may need emergency federal loans as funding dries up.

A cash crunch on Main Street would endanger companies’ basic functions — paying suppliers, making payrolls and rolling over debt. The widening of the crisis suggests that Bernanke and Treasury Secretary Henry Paulson may have further fires to put out even as the Treasury sets up the $700 billion financial- industry rescue plan approved last week.

Read moreFed May See Companies, States as Next Crisis Fronts