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Durable Goods Are Latest Economic Disappointment: June -1.0% Reading Is Largest Decline Since August 2009 (And Misses Consensus Of Course)
The June US durable goods order is the latest disappointment in a streak of poor macroeconomic data that started well over a month ago, and which will soon enough begin to impact not only GDP but also corporate earnings, as the macro double dip which is now firmly in place, makes it all too clear why companies have been miserly conserving cash. Durable Goods came at -1.0%, a major disappointment to consensus which had been hoping to a nice boost from the previous -1.1% number (now revised to -0.8%), and looking for a +1.0% reading. Better luck next time. Durables ex transportation came at -0.6% on expectations of 0.4. New orders of non-defense aircraft plunged by -25.6%, while the ever critical to the global economy Computers and Electronic products, dropped across both shipments (-4.1%) and New Orders (-1.9%). Overall, this was the largest Durable Orders decline since August 2009.
From the PR:
New orders for manufactured durable goods in June decreased $2.0 billion or 1.0 percent to $190.5 billion, the U.S. Census Bureau announced today. This was the second consecutive monthly decrease and followed a 0.8 percent May decrease. Excluding transportation, new orders decreased 0.6 percent. Excluding defense, new orders decreased 0.7 percent.
Yet even after all this time, the old faithful, inventories, just keeps on chugging along. At some point this, too, shall pass, and will destroy corporate margins:
Inventories of manufactured durable goods in June, up six consecutive months, increased $2.8 billion or 0.9 percent to $308.2 billion. This followed a 1.1 percent May increase.
May's revised data:
Revised seasonally adjusted May figures for all manufacturing industries were: new orders, $412.7 billion (revised from $413.2 billion); shipments, $416.0 billion (revised from $416.8 billion); unfilled orders, $803.0 billion (revised from $802.8 billion); and total inventories, $520.8 billion (revised from $520.4 billion).
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Another report to be ignored.
They can only ignore up to the GDP on Friday
And they can then bury the 2Q GDP "adjustment" in September on page 86 of the Poughkeepsie Gazette. Nothing to see here... move along...
But...but...this report is just so "volatile", don't ya know?
Liesman was sputtering on TeeVee that the transportation component is essentially Boeing (something's wrong with the index when one company is considered "transportation" in America) and it doesn't reflect all those orders Boeing received at the Farnborough Air Show.
http://www.farnborough.com/Site/Content/Farnborough2010/default.aspx
http://www.telegraph.co.uk/finance/newsbysector/transport/farnborough-airshow/7898290/Farnborough-Airshow-2010-Emirates-orders-30-Boeing-777-planes-for-9.1bn.html
Looks like Liesman should be hired as a punter by an NFL team because that one sailed right through the center of the uprights.
Liesman Scores and CNBC wins the Super Bowl........not.
It's ok CD, when people lose their money on his/CNBC phony advice this time around, they may want to have eyes in the back of their heads, because I think people will begin to go postal on some of these lying analysts, as investors' personal wealth disappears in a matter of weeks.
Gerald Celente has stated numerous times that there WILL BE kidnappings and murders of "high ranking" (CNBS high ranking?) individuals in major cities, much like what goes on in Second/Third World Countries. He has also stated, "When People Lose Everything And Have Nothing To Lose, They Lose It!"
I have said many times and even warned Cramer that he appeals to ONLY the lowest common denominators in our society, just the ones that will go after his worthless ass.
"I was just following orders."
Off the cliff? Ole!
Aircraft orders are also added to GDP at the time of SIGNING...however...since many orders are subsequently canceled - companies place orders at the shows to HOLD a space - the canceled orders are NEVER SUBTRACTED from subsequent GDP, as a revision.
"...makes it all too clear why companies have been miserly conserving cash..."
Don't know. On the Propaganda Channel they had a poll asking if companies should be forced to cut loose on the cash and start hiring.
Maybe like "BP = beyond petroleum", GE could be "generate employment" with slogans like "We only need 10,000 people to produce our products but we have 100,000 on the payroll! Buy our stuff!"
Sorry but Conoco just beat expectations and guides higher says Becky....all good
That shitty report should be enough to send the S&P up like a bottle rocket.
Exactly. Say... 25-30 points? This is getting tedious to watch.
Here's your 'we have to find a positive line per the Ministry of Information' headline from Bloomberg:
U.S. Capital-Goods Orders Ex-Aircraft Climb in Sign of Investment Pickup
I kid you not. That's how they wanted to twist this horrible report. The rude awakening will come in September when the reality of an economy with no construction industry hits home. One full quarter plus of real estate imploding again without government support is going to remind people just how dependent our economy is on a total, not partial or accounting manufactured, artificial recovery.
First two paragraphs.
Gotta get to the 6th paragraph before reality kicks in.
Whoops.
funny thing is, too, that when the news is "better than expected", what is here the 6th paragraph would appear as 1st or 2nd... ah the games hopers play.
Well said.
Mortgage apps down, durables down, consumer confidence down - all good news for stocks. Until I sobered up, I didn't realize we really lived in Bizarro World.
bienvenido a bizarromundo!
Buy!, buy!, buy!...soon to be bye!, bye!, bye!
+1
Tune in to CNBS- they will explain to you why this is actually a good report. Maria "I look like a crack whore" Bartiloma(sp?) will have an in depth analysis and an "expert" to explain this all away. JPM will have us up 100 by the close.
Even LIESman couldn't spin this one...
BTW its spelled Fartaroma....
all futures are down but very little Oboma comming to New York Today
im long i gotta a feeling ( FEd Squeeze)but than again i have stop
WOW, did Moody's actually put Outlook Negative out on the TBTF banks (Citi, Bofa, Chase, Wells)? Did I wake up on the same planet this morning?
Hey look, futures just shrugged it off. Time to game the system into another bubble. I have a question to those that were trading in 2007, is this similar as then? With bad economic data points coming out, was the market still melting up?
In fact it was exactly the same, I was then also sitting in Croatia, at the time short swedish banks as the first positive carry hedgefunds imploded. Took another 2 months before real sell off started, China making new highs as late as in October. Difference is that at that time market was still efficient as "mankind" was still able to predict the future outcome of the malaise in bank sector. Today there seems to be a new buyer in the market (when will Benron announce that the FED owns 10% of SP). Interestingly enough is that its much better and cheaper for Benron to keep SP (thus the people happy) highly inflated than stimulus packages with way to much slippage.
Short as can be anyway, will not be stopped out this time. Keep the powder dry though, leverage can hurt as most people knows.
Too all dip-buyers, I hope you keeps the stops tight, you will need it.
By just entering in a name and email address you too can be qualified to trade with Cramer!!!!!! What could possibly be stopping you?
IMO Orders ex-defense ex-aircraft is the least volatile, best proxy for business spending. +0.6% there is weak, but not horrendous.
Take a 3 month average of the noisy all-in headline number for a view on the overall economy, jobs, etc.
So we get a picture where some companies are OK but the overall economy sucks. Makes sense to me.
Remember that the 0.6% is subject to revision, just like May's number was revised down .. to get the 0.6 .. just sayin'.
Flat at best. But flat is good in bizarro world.
And the entire series was recently massively revised/re-benchmarked.
See shadowstats.com. Don't know if it is subscriber material or not.
One thing I don't like about this report is that it shows only the estimated dollar value of the shipments. The reason this results in crap data is because:
1. The numbers are not PPI adjusted.
2. Many durable goods are commodities, which do not behave the same way as, say, the service sector. Case in point would be primary metals, which unadjusted YTD has risen 47.1%.
http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf
In other words, it's possible that manufacturing isn't doing good, but that their stuff is just more expensive.
The only subsection I really think gives a decently accurate picture is the "all other durable goods" category, because it ignores the wildly volatile "big timer" orders and focuses on a wider cross section of "small timer" goods that tend to have a much less volatile cycle.
June 2010 saw about a 5% increase from June 2009 in both shipments and new orders in this category.
Who needs durable goods? Gotta put food on the table and pay the electric bill.
Are they really that durable anyway?
Durable goods are volatile...watch tomorrow's GDP report...buy the dips...watch the ramp up tomorrow.
Rail reports being ignored as 2 recession indicators, autos and waste/scrap take a massive nose dive. Check out the recession watch graphs at the botoom of the page..http://railfax.transmatch.com/
Don't blame me! We had to buy a new refrigerator this month -- so we've done our part.