PM Bolt-On: Was he pushed or did he jump +...FQM & Noble Group (Cap in hand)

Good Evening,

How dare you think it's VW!

It’s rather full on at the moment, for those thinking one twiddles thumbs all day. Thoughts in the morning are limited. It’s around this time I'd kick Li and Ian for their limited input, but hooray, they're working flat out. Hugo's man-flu is in recovery, so almost full-house. 

It was only a few weeks ago we were discussing the conviction of selling short Caterpillar (NYSE: CAT). This has been a focus here for some time, not just because of Mining but Shale and Construction per se. 

When should Caterpillar have updated the market on their outlook? Was the threshold for notifying the market today post a review, or perhaps a month prior to Chris Curfman vice president of Caterpillar's Mining Sales & Support Division's retirement? It’s somewhat immaterial to the outlook but it raises the question of "was he pushed or did he jump?"

Caterpillar et al where stunned when commodities all crashed, and operating costs became all the rage - admittedly the markets attempted to deny this for too longer period of time. This is not hindsight but more a realisation of basic economics. Caterpillar now have to reduce prices, irrespective of their commentary about market share gains. Feel free to catch up with the proverbial sandwich 8-K Report of unscheduled material events or corporate event. 

Points:

1. What are the risks to Caterpillar finance and future planned growth? What inventory levels are they committed to? Are there likely to be stock write-downs in addition to the adjustments for the restructuring.
2. With limited focus on new mine development, plus machines being utilised more efficiently - what are the implications on new sales? Part margins? Service agreements?  
3. With other companies attempting to maintain space in a more competitive market, Caterpillar's premium is at risk. Margins are key...over to the Japanese/China. The latter in terms of machinery has been totally overlooked! 
4. Can Caterpillar reduce costs quick enough? Caterpillar's savings in operating costs have a long lead time and not without significant cost. 
5. With new machinery on a cycle, Caterpillar may find the Aldi and Lidl scenario being played out. Over to heavy machinery manufacturers with better FX outlook (weakening). 

What's a few days? It was meant to be commented on the other day, but FQM holdings in company. Now one could be forgiven for the odd day, but 232 days after passing the threshold to report? 

Some VW: Some comments on EMC: VW that's worth noting (comments sections). More soon on Chinese liquidity, global inventories and borrowing as a percentage of company assets. 

Finally, we have Noble Group (SGX: N21) where rumours are rife that they sounding out investors for a Glencore type rights issue. Noble Group are allegedly cap in hand for $750-$1B. Would you? Not on your Nelly! In the absence of being able to roll-up their debt, expect some clever enticements for investors. (Glencore 2.0). 

Common-sense caveats apply about trading gossip...although with their balance sheet looking like a train wreck and other "issues", admittedly disputed, one suspects it’s got some plausibility to it. 

Atb Fraser (Tired so if the spelling/grammar police are out, feel free to correct.)