Let's think. Caterpillar just reported that April EM dealer sales were down 20% versus last year, and that this marked the 17th straight month of Y/Y decline. Could that be happening because the fires in the great industrial maw of China are being banked?
Is it possible that the world's coal, iron ore, copper, nickel and assorted other miners of industrial materials have massively over-invested during the last decade owing to the China Bubble and the ultra-cheap debt financing that was shoveled out by the central banks? If so, it is possible that retail sales of the Big Yellow machines will be depressed for years to come?
In short, when old-fashioned economists talked about capital allocation, accurate pricing of debt and the dangers that central bank manipulation of financial markets would generate distortions, deformations and malinvesments on a grand scale---it is quite possible that they knew what they were talking about. It is also blindingly evident that today's central bankers are so intoxicated in their own hubris that they have no use whatsoever for market pricing of money, debt, the yield curve and the risk asset categories which feed off from them.
Stated differently, this graph below amounts to a big yellow CAT in the mine shaft. There is not a chance, however, that Dr. Yellen and her monetary politburo will even take notice. Instead, they will fuel the third great bubble of this century with zero cost money for the carry trade gamblers until the whole thing explodes yet another time.
In any event, someone should send a memo to the PM talking heads who come on bubblevision brimming with bullish enthusiasm because the EM economies are allegedly accelerating. But don't mention that to the world's CAT dealers.
By Tyler Durden at Zero Hedge
If someone was looking for a reason to buy CAT stock (alongside the company's stock buybacking -sic- management), and send it to fresh all time highs, today's latest monthly report of CAT April dealer retail sales should be sufficient.
First, the good news: US retail sales of machines in the US posted its fourth monthly pick up, rising 12% compared to April of 2013 which print, however, was the biggest, at -18%, annual drop for US sales since 2010 so this was merely a modest stabilization relative to depressed comp levels.
As for the bad news, well: everything else. The drubbing in sales across all other markets 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.
Frankly, we are surprised that CAT hasn't started reporting non-GAAP retail sales: those which exclude all negative numbers.