Durable Goods Broadly Miss Expectations, Push 10 Year To 2.44%, Lowest Since January 2009

Tyler Durden's picture

Capital goods orders widely miss expectation, coming in at +0.3%, on a consensus of +2.8%, with the previous -1.2% drop revised to just -0.1%. Durable goods ex transportation came in at -3.8%, on expectations of 0.5% (previous -0.9% revised to 0.2%). And the kicker - non-defense capital goods ex. aircraft came in at -8.0% M/M versus expectations of 0.4% (with the previous print of 0.2% revised far higher to 3.6%). The 10 Year has hit 2.439% on the news. Goldman is pretty laconic: "This report is weak and much worse than expected." Pretty much game over for the reflation scenario. Check to you Bernanke - the only option left is the nuclear one.

Goldman's summary on the results:

A Slump Outside Aircraft

BOTTOM LINE: This report is weak and much worse than expected. Orders were roughly flat in July, but only because of a large increase in orders for civilian aircraft. Elsewhere, demand for hard goods fell sharply, with capital goods orders erasing most of the prior two months' gains. Upward revisions to data for the prior month take a bit of the sting out of this report, and push our estimate for the Q2 GDP revision to 1.2% from 1.1% previously.

Durable goods orders -12 (4, -3).

Durable goods orders +0.3% in July (mom, +8.6% yoy) vs. GS +4%, median forecast +3.0%.

1. Orders for durable goods edged up 0.3% in July, but this masked slumps in many sectors as bookings for civilian aircraft rose sharply. We tend to look through the aircraft orders because they are lumpy and because lead times to production are much longer than for most other durable goods. In other types of capital goods, orders fell 8%, wiping out most of the gains of the preceding two months.

2. One moderating factor in this report was an upward revision in the data for June, to -0.1% from -1.2%. This included a mark-up of shipments of capital goods, which restores 0.1 point to our estimate for Friday's revision to the second-quarter growth rate. We now expect that figure to be revised to a 1.2% annualized rate of growth, versus 1.1% previously. However, on balance, this report is yet another sign that the US economy is losing momentum as it moves into the second half of 2010.

Some highlights from the release:

Computers and electronic products, down following four consecutive monthly increases, had the largest decrease, $0.5 billion or 0.4 percent to $121.1 billion.

Inventories continue to grow:

Inventories of manufactured durable goods in July, up seven consecutive months, increased $1.8 billion or 0.6 percent to $311.2 billion. This followed a 1.3 percent June increase.

Machinery, up five consecutive months, had the largest increase, $0.9 billion or 1.9 percent to $51.4 billion.

Capital goods:

Nondefense new orders for capital goods in July decreased $1.8 billion or 2.8 percent to $64.1 billion. Shipments increased $0.9 billion or 1.4 percent to $64.7 billion. Unfilled orders decreased $0.6 billion or 0.1 percent to $487.2 billion. Inventories increased $1.0 billion or 0.8 percent to $129.8 billion.

Full release.




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Bigger Dickus's picture

Time to buy a Rolex Daytona on the cheap?

-Michelle-'s picture

Shoot, soon you'll actually be able to buy Daytona on the cheap.

SheepDog-One's picture

Hell, soon you'll just be able to jump in a Ferrari Daytona and drive off, if you can find some gas! Mad Max, bitchez

MarketTruth's picture

Rolex are easy, not really rare and not good for resale imho unless you want to make pennies per se. Come join the real game and play rare and important Patek Philippe timepieces. Have NEVER lost on a buy/sell deal on a proper vintage collectable Patek.

Added bonus, wear it as you wish and can be easily restored to like new by the factory and virtually no one in the general public really knows what it is. Muggers love Rolex bling yet are generally clueless on Pateks.

Bigger Dickus's picture

Not so for some Rolexes such as the Valjoux and Zenith Daytonas or the classic Milgauss, or any Comex Sub.

MarketTruth's picture

Ok, true and agree. Still, i felt he was talking modern production... Your comment is well valid of course. Still, Pateks are a mainstay and collectors are very able to pay accordingly. If i were to ride the subway, which in fact happens when in various cities, a Patek with deployant clasp would be my first choice to avoid improper attention.

Bigger Dickus's picture

Man, you are a Patek snob (mind you, Patek is my no1 favorite brand though). I have got you figured out: Rolex does not make any complicated movements, therefore they are not worthy. Jesus m#t#er #ucking Christ, guys like you cannot admit that for robustness and practicality nothing comes close to a non-chronograph Rolex.

The new 2010 Subbie with ceramic bezel? It makes me puke. Why would Rolex copy Chanel? The real Rolex brand ended in 2009 when the last of the old style Sea-Dwellers left the retailers.

ATM's picture

I will stick with my IWCs. Rolex are bourgeois......lol.

RockyRacoon's picture

Gold up $8.40 -- that's my durable goods.

Temporalist's picture

This has seemed apropos for a while now:

Revise bitchez!

MichaelG's picture

"Check to you Bernanke - the only option left is the nuclear one."

Aieee! How'd he get the launchcodes?!!!1!

John McCloy's picture

Oh so consumers are not on their 4th and 5th Vizios?

Young's picture

Banks not letting 'em get another... But still the PPT seems to think Visa is a buy... Bastard won't fall...

firstdivision's picture

That is one of my Puts currently giving me heartburn.  I still have faith it will fall, and even further than I thought. 

mephisto's picture

IMO that's part of the genius of the Hindenburg omen indicator - counting new highs as well as new lows. I'm not aware of any data on what happens to stocks in those 2 categories when the collapse does come, but the obvious guess would be the outperformers fall harder.

Good luck.

John McCloy's picture

Look at Netflix.That stock will eventually go to zero. They are only a middleman an the moment Apple decides they want those streaming rental profits they will have. They have alll the consumer friendly interface devices and the connections to acquire hard to get licensing.

They will go the way of blockbuster

MachoMan's picture

One middleman won't work so another will?

johngaltfla's picture

The big number is in capital goods. So much for the "business is retooling and thus the GDP can't shrink" crowd. July is a prime month for capital expenditures and if those orders are down, then Q3/Q4 are going to Monica.

tmosley's picture

Nice one.  Took me a second.

MachoMan's picture

They're going to get cigars stuffed in their cooters?

barkingbill's picture

i went into best buy a couple weeks ago to help buy my parents a t.v. there was no one in the store, just a giant wall of flat screen tvs more then a hundred feet long and no customers at all. it was the middle of the day, on a weekend. 

EscapeKey's picture

I see that here in the UK as well - a prosperous part of the UK, in fact.

Comet, PC World, you name it - Saturday, 2pm, usually the busiest part of the week, and it's half empty.

The scariest part of this is when you try to warn your friends about the upcoming scenario, they refuse to listen. Most people don't want the news, they only want to be told "it will be ok".

barkingbill's picture

well they must know its not so ok, because they aren't going out and buying new flat screen tvs.

mephisto's picture

People here in London are living day to day.

I know smart, aware young people who dont watch the news any more, read papers or relevant blogs. No more bad news please. In the meantime, no big purchases, even huge discounts in summer sales. House sale volumes are essentially zero - only death and divorce cause property to come to market.

However people still believe things will improve in time - maybe because the alternative is so bad.They have no evidence for this, its just hope. When I tell them I trade for a living, they still ask  - hey, what should I buy? They get confused when I say 'puts'...

Its the calm before the storm, I fear, when their hope is dashed.

RoRoTrader's picture

Brilliant comment and insight. Try explaining why it is possible to 'buy' and 'sell', and still make money.

Vampyroteuthis infernalis's picture

barking, the reason why average Joe is not buying has nothing to do with the fact that things are not OK. It is the fact they have no money.

ejmoosa's picture

If we needed it, we'd already have it.  Those that run the stores know that as well.

knukles's picture

Check out empty golf courses on beautifully weathered Saturday afternoons.

No One's picture

Concur. Over the last year to 18 months, I have had ZERO problems walking on local golf courses here in So Cal and have had few 5.5+ hour rounds.

During the bubble years, if I was lucky enough to walk on, it was a guaranteed 6 hour round at some places.

Hell, I played a local muni here in 3.5 hours a few weeks ago.  

SheepDog-One's picture

Reetoolin, I'll give ya retoolin come here ya knucklehead!

-Michelle-'s picture

Looking at discount sites like slickdeals.net, there used to be a wide variety of deals to be had.  Over the past few months, the vast majority of bargains have all been electronics-related.

I'd wondered why; now, I know.

Cursive's picture

Jinx!  We posted at the same time.  Christmas season is going to be an electronics consumer's dream, if there are any electronics consumers left.

saulysw's picture

Still no baby? I have the towels ready....push, PUSH!

Ah, our first Zerohedge birthing. Makes me proud.

I'm still stuck on her name though...

-Michelle-'s picture

LOL!  I still have about two weeks to go officially; I'm just hoping she finishes up a little early.  It's August and hot.

We decided on Jane, btw.

saulysw's picture

Jane ... very nice! You gotta like a name because, well, you are going to be saying it a great deal for the rest of your life!

How about her middle name though -- perhaps we can squeek a suggestion in there?

Jane Marla ?

Sounds ok to me! Hahahaha....


Cursive's picture


I didn't know you were expecting.  Always love your posts and love "Jane."  Will be praying for you and the baby....

Cognitive Dissonance's picture

We demand video with 24 hours.

The name can wait until your rustle the little darling down to your local town hall to have her cute butt stamped as wage slave. You do this by registering the birth like you register the model and serial numbers of the TV you just bought with the manufacture. Only in this case the state's children are being registered with the state, thus begins their life long servitude.

But other than that Michelle, we're all "pulling" for you. :>) 

-Michelle-'s picture

With each child we've had, I've dreaded the trip to the office of Vital Statistics more and more.  I suppose it shouldn't matter, considering my husband is military.  They already know everything there is to know about us.  There's just something about having to walk in to that room and fill out the paperwork...

Cognitive Dissonance's picture

I've found the average man doesn't give this process a second thought. It's just what you do. But woman seem to be more aware. Or should I say polarized.

Sorry for the sterotyping but from what I've seen, read and actually hear when I ask people these questions (people think I'm strange, I wonder why?) woman either see this process as a way of making sure their children are safely within the bosom of the state or they intuitively understand that by doing so, they are tying a bind they (or their children later) might not be able to unwind.

RoRoTrader's picture

Well, you are strange CD. Of course so is just about eveyone who reads and writes this blog.

Mephisto was spot on with the observation, "However people still believe things will improve in time - maybe because the alternative is so bad.They have no evidence for this, its just hope. When I tell them I trade for a living, they still ask  - hey, what should I buy? They get confused when I say 'puts'..."

Brilliant, if you ask me.

I like Jane too. Very nice name.

Cursive's picture

I am seeing heavy pricing pressure in consumer electronics.  Laptops, netbooks, LCD HDTV's.  I'm not pulling the trigger, though.  These prices will drop further.  I'm thinking the Dell Mini line will see prices from $99 to $150 later this Fall or for a Christmas promotional.  You could have already picked up a Mini 10 for $195 last week.  It's deflation.  And yes, I know food is still too high, but we can thank the FRB for that.  They have only been successful at reflating the basic goods prices, but it won't last forever.

ColonelCooper's picture

My parents cabin was broken into last weekend.  They took some tools, but left the TV, the DVD player, good quality bookshelf stereo and the computer.

Buy a TV?  Shit people won't even steal them anymore.  Kind of ironic that we have reached a point where tools are more valuable to a thief than electronics.


Hephasteus's picture

If it's a lcd tv they are incapable of living longer than 3 years unless you never turn them on so what's the point.

SheepDog-One's picture

DONT WORRY! New 3D TV's are hittin the shelves and surely everyones lining up for this 'nevermind no food, must-buy' event with shiny new credit cards Im sure! Retardnation ON!

-Michelle-'s picture

You can really tell they panicked there.  Usually, there's just enough delay between introducing new technologies to allow the aspirationals to hit each product.  Plasma to LCD, then the new HD sets and so forth.  They practically just came out with the LED TVs and the new internet TVs and now they're already pushing out 3D.

Cursive's picture


Brilliant observation.  The pace of innovation is only reinforcing the consumer's deflationary instinct.  Why buy something today when you could have something better and a relatively cheaper price tomorrow?  Not saying 3D is better than LED (who wants to ear the glasses?), but you get the idea.