We begin with NFTRH.com's post from July 16 noting the message I got from a former associate (from my previous life as a manufacturer)…
“Just an update for you, some disturbing news has leaked out this week. Machine tool builders have put out blow out [lists] to all sales persons in the USA, not sure if world wide. Mori Seiki list has 600 to 700 machines on it WOW!!! never have i heard of such a huge list by any one Builder. Not sure what they see coming but it can't be good.”
My comment from that post: “Mori is a big builder and when the big builders start blowing out it goes right down the food chain.”
Concurrent with this NFTRH had been watching Machine Tool builder Fanuc ever since projecting its upside in Q4 2014 (due to BoJ's Yen eroding monetary policy that would help exporters). We watched Fanuc in particular because it has been getting hyped (on Robotics) by certain suits (i.e. financial types) who have probably never set foot on a manufacturing floor in their lives, let alone operated a Machine Tool. But also, I know first hand that Fanuc is a quality builder and I like a good and progressive company as much as the next guy.
On July 28 we noted the devil in the details of Fanuc's financial results and downward-revised forecast.
Here is the current weekly chart of Fanuc for reference. When Fanuc was getting a hype bid we noted in NFTRH that it would need to come down and test support for a new buying opportunity to come about. But that was before the grim news shared by my contact in the industry.
The Yen must be rising, right? Why else would large Japanese machine tool builders be blowing out inventory? Well, not so much according to the daily chart of the Yen (below). There is nothing actionable here as a bullish indicator. It does not mean the Yen cannot rise, but this chart shows nothing in price or momentum that would indicate it (here I will note that we have been following an interesting ‘USD historical' map for the Yen that calls for a rise in the Yen in and around this time. But, usually historicals and a buck 60 will get you a cup of coffee.
