Lloyd’s Scuttlebutt

By Lloyd Graff

Capital Equipment Business Slow in 2014

We’ve seen April Fools Day. My turn. What’s happening?

For machining people, the first quarter was solid if not spectacular. The harsh winter hampered production, and inventories piled up in the last quarter of 2013. Automotive was a little soft in January and February, but generally machining folks were satisfied. Not so for companies selling capital equipment.

After a strong finish to 2013, machinery and capital goods firms were looking forward to a strong start in 2014. They did not get it from the scuttlebutt I hear. Nobody knows why for sure. You can blame the rush to use the investment tax savings last year, or tight-fisted big companies who are determined to squeeze more profit out of relatively flat sales (and succeeding). Maybe it’s sticker shock on European manufactured goods, or it’s the ridiculous five-month winter. However you spin it, the first quarter was a disappointment for capital goods sellers. Three more quarters to catch up.


We are coming off a terrific year for the American stock market. It caught everybody by surprise with 25-30% gains for the indexes. It happened with the Fed easing off the gas pedal, interest rates rising (but not a lot), top line sales growth struggling, persistent unemployment, huge budget deficits, Washington gridlock and mediocre growth in the economy. All these headwinds, yet people piled into stocks.

My own feeble answer is “where else do you invest?” Baby boomers see that retirement on interest is impossible at these rates. Real estate is interesting, but difficult for most people to get into on their own. Precious metals and collectibles are tough in times of very low inflation. Starting a business is an option for some, but a forbidding challenge for most. So people pile into index funds and hope for the best. Last year it worked beautifully.

But I always try to keep in mind that the crowd is often wrong, especially if they follow the pundits. Almost every predictor last year was certain that interest rates were going to spike when the Fed stopped priming the pump aggressively. So far, rates are up very modestly on a historical basis. Inflation continues to be almost non-existent. Commodities are flat. Copper and gold have tanked. And this is while running huge federal deficits. The old equations on inflation no longer seem to hold. I ask, can you raise the prices for your product? I doubt it.


This is the best NCAA Tournament I can remember. Overtimes, upsets, tremendous defense. I love it. I like Kentucky with its superior athletes to win it, but I am rooting for Wisconsin.


One of the greatest political ironies is that President Obama has only one play that Vladimir Putin will respect – flooding the world market with cheap oil and gas, plus dirty old coal. If Obama okays the Keystone Pipeline, makes it easy to drill on Federal land, and embraces fracking as the source of national power, he could scare the Ruskies silly. He could even threaten to use the Strategic Petroleum Reserve, which is full, to knock down world oil prices. Oil at $75 would probably end Putin’s political career and wreck the Russian economy, which is built on oil almost as much as that of Saudi Arabia and Venezuela. It would be a juicy irony for Obama, who has catered so ardently to the Democratic Greens, to use American carbon to punish Putin on Ukraine.

Question: Are you working more for less money than you did five years ago?

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17 thoughts on “Lloyd’s Scuttlebutt

  1. Robert M

    You are dreaming to even consider the possibility that Obama would approve the Keystone pipeline and embrace fracking on Federal Land. His energy policy is meant only to benefit OPEC and Kenya. And in answer to your question, I am earning significantly less than I did 5 years ago, performing the same job, however I still have a job.

  2. Joe

    My wages as compared to 5 years ago are much better, in 2009 we had the “great rescission” to deal with so overtime and 40 hour work weeks were none existent. I felt lucky to work 30 hours a week at that time and I think many people forget just how bad it was when they think of today. Our economy still needs a lot of help, our President hasn’t lived up to our expectations on this, by any means, but he has done much better than his predecessor. The economic “meltdown” occurred on President Bush’s watch, and Obama was left with the mess. He hasn’t gotten the economy back to where any of us think it should be, but I dare say it’s better than it was when he inherited the mess. This is no solace for those people that are out of work, but it bewilders me that we are constantly looking for entry level people and the ones we do hire don’t stay long or have severe attendance issues. Granted if you have 20 years experience an entry level position isn’t what you want, but to me working at anything is better than not working at all.

    1. Don

      Pure delusion! What color is the sky in your world? Any rebound in the economy has been marginal. The only work force increases are tax-payer funded, there are more new enrollees on disability than new jobs, and there’s no end in sight! It will take decades to correct & recover from the spending policies of the past 5 years. Keep making excuses and blaming Bush, and explain to your grandchildren one day what happened to the mightiest country in history. Regardless of how blindly you support your political party, the country owes more than it takes in and is quickly going broke. Today Social Security, Medicare, and Medicaid, along with other entitlement programs such as food stamps, unemployment, and housing assistance, make up 66 percent of all federal spending. We are literally borrowing every dollar that it costs to run our country, and you think blaming Bush is still the solution. It’s about the future of Country, not your political affiliation.

  3. Joe

    Wow, I’m not sure why you have so much anger directed at me, but take a minute, cool down and read Lloyd’s question “Are you working more for less money than you did five years ago?” The economic slowdown began around 2007, in 2009 I was blessed to retain my job, but I was only working 28 – 30 hours a week. I had to accomplish more in those hours, (usually by working unpaid to get the job done) than I have to do now. My political association has nothing to do with this, I was only stating fact that the problem started with President Bush. I agree the entitlement programs such as Social Security are not sustainable, and our country’s borrowing is out of control. I have yet to see anyone who wants to be president with any new idea’s, most republican’s seem to want to go back to the policy’s that got us into this mess, and I really haven’t heard anything new from the democrats either. The one thing I do know is that intolerance and anger will only serve to destroy our great country, and the sooner you and others realize this the sooner we can all get to work and fix this.

  4. Tom

    Am I better off. No… About the same.
    Following up on Joe and Don’s comments. My personal opinion is that both the Rep and Dem’s with Special interests funding perverted the electoral system.
    Here is a question for Lloyd to ask…. When was the last time you really voted for someone? The game that is played is that negative advertising is always used to drive down votor participation or used as a scare tactic.. How many times have you had the thought… I really like the third party’s ideas/ platform but you’re petrified about “wasting” your vote. IMHO whether your a right wing wack job, or a flaming liberal, I’m thinking you should be able to cast for who you feel will do the job.

    Our country is in some big do do. The polarization that is occuring in the current system will be our downfall. Personally it think instant run off is something than make polititions do their jobs and actually come up with real solutions instead of who has the most money and best sound bite wins.


  5. Ray Frattone

    It’s easy to blame President Bush only if you totally overlook the fact that the House and Senate were both Democratic.

  6. Joe

    “The one thing I do know is that intolerance and anger will only serve to destroy our great country, and the sooner you and others realize this the sooner we can all get to work and fix this.”

      1. Joe

        Sorry Robert, it was me. If, however, the President did say that as well then perhaps he is more insightful about our country than I’ve given him credit for in the past!

  7. Maury Minerbi

    It would be a strong net plus for the economies of the U.S., Europe, Japan and China if the price of oil were to decline to $75, as Barron’s recently suggested it might. However, I’d be concerned that the threat to Putin and the Iranian leadership, and also the Saudi monarchy, might prompt them to start conflicts to support the price of oil.

    To Don’s point, the number of people on disability has been increasing each year since 2009. Experience shows that a large percentage of people on disability never return to the labor force. This is a significant structural impediment for reducing the unemployment rate.

  8. Joe

    Maury, I agree with all of your comments, I believe we need to overhaul and rethink all of the entitlement programs. I also agree that reducing the price of oil would help the economy. It is refreshing to have someone in this forum who speaks logically and makes there point without anger or malice.

  9. Maury Minerbi

    To be more precise regarding my previous post, since people on disability aren’t generally looking for work, the increases in their numbers has contributed to the decrease in the percentage of Americans in the labor force, from 66% in 2008 to about 63.2 currently.

    1. Joe

      Once again I agree with you, disability recipients should not be included in unemployment statistics. With many of the baby boomers now approaching the time in life where disability becomes more likely I’m sure these numbers will continue to rise. One thought on what Don said in a previous post about entitlement programs eating up 66% of federal spending, we need to overhaul our entitlement programs. I’m not sure if the 66% number is totally accurate, but I know that we can’t continue down the path we have been on the last 30 years. Social Security will not survive in its current form, it can’t. Disability insurance must be reformed as well, there is too much fraud and abuse of it in its current form.

  10. Ray

    I do not consider SS an entitlement, since I have put in the max. amount for59 years.
    Well over a half million dollars.
    The funds were unable to be raided until President Johnson came along and changed the law. It was self sufficient until then.

  11. Joe


    I sympathize with you, but I as well have put a lot of money into social security over the last 30 years, and I will probably never see that money again. If you have started to draw some of your money back, feel blessed, because I am sure I will not see any of mine, unless in the unlikely event major reform is undertaken.


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