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Durable Goods Ex. Transportation Prints At -0.8%, Misses Target of 0.5%, Boeing Aircraft Orders Save The Day

Tyler Durden's picture





 

Durable Goods prints at 3.3%, higher than expected 2.0% (even as the previous is traditionally revised from -1.3% to -1.0%), which however was pushed exclusively by transportation, as durable goods ex. transportation dropped by 0.8% on expectations of 0.5%, (and down from a revised 1.9%), which was the second drop in the past three months. In fact the transportation segment surged by 16%, mostly due to Boeing which announced receipt of orders for 117 aircraft, compared to 10 the month before. Remove the $6.6 billion contribution from the doubling in non-defense goods and you have a major headline miss, as the M/M change would in fact have come in negative. But just as iPads now determine the tech component of the economy, why not have one-time 787 sales define the broader GDP? Depending on adjustments, today's report may actually bias the October 29 GDP report higher. Lastly, and confirming the weakness of the September report was the Non-defense cap ex aircraft, which came at -0.6% on expectations of 0.8%.

From the report:

  • New orders for manufactured durable goods in September increased $6.3 billion or 3.3 percent to $199.2 billion, the U.S. Census Bureau announced today. Up two of the last three months, this increase followed a 1.0 percent August decrease.
  • Excluding transportation, new orders decreased 0.8 percent. Excluding defense, new orders increased 2.9 percent.
  • Transportation equipment, also up two of the last three months, had the largest increase, $7.4 billion or 15.7 percent to $54.8 billion. This was due to nondefense aircraft and parts, which increased $6.6 billion.

Note the 105% surge in nondefense aircraft orders M/M:

And here is Goldman's commetary which is in line with ours:

MAIN POINTS:

1. Buoyed by a doubling in bookings for aircraft, durable goods orders rose a larger-than-expected 3.3% in September. However, otherwise the report was a disappointment as other orders fell 0.8% on the month. This included a 0.6% drop in orders for nondefense capital goods excluding aircraft, a key barometer for domestic capital spending on equipment and software.

2. The report appears fairly consistent with our expectation that the Commerce Department will announce a 1.5% annualized increase in real GDP for Q3 in its preliminary estimate due Friday morning. Risks tilt modestly to the high side of this figure; however, those risks are mainly in the form of inventory accumulation that would then look high relative to the underlying trend in demand for goods.

 

 


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Wed, 10/27/2010 - 08:45 | Link to Comment the not so migh...
the not so mighty maximiza's picture

The rich are getting their jets ready for the escape.

Wed, 10/27/2010 - 08:47 | Link to Comment Cookie
Cookie's picture

A favor from Boeing. Easy to readjust those orders later

Wed, 10/27/2010 - 09:38 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

Accrual accounting...book it, Dan-O!

Rarely a headline when orders are cancelled, deliveries are missed, and payments are discounted.

Wed, 10/27/2010 - 08:47 | Link to Comment Dr. Engali
Dr. Engali's picture

Should be good for about 10 points on the S&P. Wait...no pomo today. I take that back.

Wed, 10/27/2010 - 08:51 | Link to Comment firstdivision
firstdivision's picture

Good to know they count the orders when they come in, but do not remove them once they have been canceled.  Think Benny had United & Southwest "order" some planes then let them cancel the orders this month?

Wed, 10/27/2010 - 09:14 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Actually Boeing does back out the planes when they are cancelled.

http://active.boeing.com/commercial/orders/index.cfm

In my opinion, the games are played with the "Unidentified Customers" line item. See my post further below.

Boeing has real problems with their new 747-8. It was received conceded by Boeing that the plane will probably never be profitable in the future considering the development costs are way over budget and the 747 order book is very thin, with only one new order so far this year. Ugly ugly ugly.

Wed, 10/27/2010 - 09:19 | Link to Comment firstdivision
firstdivision's picture

Sorry, I should have been more specific in my statment.  I was refering to the Fed backing out canceled orders in the Durable Goods. 

Wed, 10/27/2010 - 09:22 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Ohhhhhh,

You mean the official first level manipulation of economic numbers rather than the second level corporate manipulation? :>)

Wed, 10/27/2010 - 09:52 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

Beat me to it CD, just wanted to further point out that a big bunch of orders happened on literally the last day of September, specifically, 54 orders of 737-800's from the Air Force (Air Logistics Center, or ALC) and 20 orders from "unidentified".  There were also another 18 orders from "unidentified" in the month of September in general.  Only 25 of the 117 orders were from actual, identified private businesses.

Wed, 10/27/2010 - 10:07 | Link to Comment Gordon Freeman
Gordon Freeman's picture

Yeah, that was my order.  I have since changed my mind.  Maybe some other time.

Wed, 10/27/2010 - 08:52 | Link to Comment RobotTrader
RobotTrader's picture

Amazing how:

-  The faster the economy deteriorates

-  The more POMO's and free money printed out

-  The higher the illegal short interest rises on the COMEX

Gold and silver keep getting sold off with the utmost urgency.

Jim Sinclair, Eric Sprott, Eric King, Bill Murphy all must be puking up blood today.

Meanwhile, cult retail stocks and 60 P/E tech stocks continue to rocket into Outer Space.

Wed, 10/27/2010 - 08:59 | Link to Comment Turd Ferguson
Turd Ferguson's picture

"Jim Sinclair, Eric Sprott, Eric King, Bill Murphy all must be puking up blood today."

Uhhhh, I rather doubt it.


Wed, 10/27/2010 - 09:29 | Link to Comment Quintus
Quintus's picture

You are surprised that waves of illegal short selling are putting pressure on Gold and Silver???

Wed, 10/27/2010 - 08:59 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I suspect that Boeing, under orders from the White House "intelligence czar", is playing games in the "Unidentified Customers" column. Remember that the "intelligence czar" can now order companies to cook the books. "Unidentified customers" now represents 35% of Boeing's commercial plane orders year to date. Very strange.

http://www.businessweek.com/bwdaily/dnflash/may2006/nf20060523_2210.htm?campaign_id=rss_daily

Intelligence Czar Can Waive SEC Rules

Now, the White House's top spymaster can cite national security to exempt businesses from reporting requirements.

Boeing is currently showing 151 B-737 planes on "order" by "Unidentified Customers" out of a total of 166 "Unidentified Customers" orders, an increase of 50 since the last update.

While this line item ebbs and flows from quarter to quarter, the number has grown quite large and I suspect it has become just another way to goose the numbers to continue the mythical "growth" story. See Boeing's order page below.

http://active.boeing.com/commercial/orders/index.cfm

Wed, 10/27/2010 - 09:03 | Link to Comment Anarchist
Anarchist's picture

Left unsaid is the creative financing being offered to these buyers. Who wouldn't buy when you know you can default in the future with no repercussions. After a few years of minimal maintenance to boost profits and the loan is under water might as well default.

Wed, 10/27/2010 - 09:06 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Assuming there are real "buyers" for all these planes, identified or not. There have been rumours that some of the "named" customers have been.....how do we say this........encouraged to place orders with Boeing that will quietly fall off the books in the future when they are canceled.

Normally Boeing expects a small payment when the contract is signed (thought this does vary) and it's my understanding that a large number of orders this year (compared to other years) didn't require the small down payment.

Interesting. Buyer's market or playing with the numbers? Since Boeing and Airbus are always competing with each other, the actual contracts never see the light of day. So who knows what's going on here.

Trust no one.

Wed, 10/27/2010 - 10:14 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

Looking at a somewhat harder to BS numbers, EPS growth year to date is -49%. The stock performance YTD is +34%.  Just to reiterate, the earnings, per share, dropped almost 50%, yet the stock price went up 34%.

Somewhat of a tangent, but does anyone else note that RBC is always way the hell aggressive in their price targets, whereas UBS typically isn't?

Wed, 10/27/2010 - 09:00 | Link to Comment Charley
Charley's picture

quite astonishing ...

Wed, 10/27/2010 - 09:08 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

quite astonishing ...

Including the junk I received.

It's amazing what people consider "junk" on ZH these days. Or maybe it's just my shadow lover/junker going at it again. The sexual release must be considerable. :>)

Wed, 10/27/2010 - 08:54 | Link to Comment Headbanger
Headbanger's picture

It's amazing all the goodies like jets the Fed can buy now with QE!

Wed, 10/27/2010 - 08:54 | Link to Comment jus_lite_reading
jus_lite_reading's picture

I'm sure this will offer Main Stream Media an opportunity to put a wonderful spin on this today as there is no POMO scheduled.

Now, given that the gov't has been "revising" numbers as of late so as to avoid the fallout of the truth, Boeing I'm sure can easily adjust the numbers at a later and more practical time- the fact that Boeing has strong ties with capital hell...oppps I meant, Capital Hill, then we know the lies will never stop.

It's all about the "headline" figures; no one pays much attention to the "revised" numbers a month later.

Wed, 10/27/2010 - 08:54 | Link to Comment chunkylover42
chunkylover42's picture

Tyler, if I didn't know better, I'd say you are skeptical of the strength of our recovery.

Wed, 10/27/2010 - 09:00 | Link to Comment John McCloy
John McCloy's picture

I'm confused Tyler. You mean everyone with a 50" LCD is not buying 3DTVs and Rosie the Robots?

Wed, 10/27/2010 - 09:23 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Ummm,

Please describe, in detail, exactly what Rosie the Robot does and where I can get one. :>)

Wed, 10/27/2010 - 09:41 | Link to Comment John McCloy
John McCloy's picture

Rosie the Robot was the Jetson's maid. Korea however is developing one. Regardless in 10 years the way Ben is robbing the taxpayer we will all be maids and there will be no need for Robots.

http://m.zdnet.com/blog/emergingtech/korean-robot-maid-upgraded-to-do-la...

Wed, 10/27/2010 - 09:02 | Link to Comment Ratscam
Ratscam's picture

does greece belong to the category of unidentified customers?

Wed, 10/27/2010 - 09:11 | Link to Comment firstdivision
firstdivision's picture

Instead of a turkey in every pot, it will be a Boeing 737 in every driveway.  All I can say is I will be giving mine away the minute it arrives due to parallel parking one of those is a bitch.  I'll keep my 727 with the tighter turning radius.

 

Well I would have to say that it is official that we are in a bubble.  Just like 2008, rampant speculation in the commmodities, economy obviously in crapper even with govn't intervention, companies missing sales/revenues, and stock prices are valued to unknown realities.  Viva la reveloution!

Wed, 10/27/2010 - 09:11 | Link to Comment Cortez
Cortez's picture

Unlike CNBC, AP and Reuters,  Bloomberg actually managed to provide an accurate headline reflecting durable goods ex-transportation. 

"Orders for U.S. Capital Goods Fall, Signaling Less Investment"

Wed, 10/27/2010 - 09:14 | Link to Comment scatterbrains
scatterbrains's picture

Gregor MacDonald has a story over at BI suggesting the gold producers are leaving the gold in the ground rather then exchange it for paper other then to pay the bills and post dividends.

Wed, 10/27/2010 - 09:25 | Link to Comment unum mountaineer
unum mountaineer's picture

unbelieveable this shit is. smile and wave boys and girls..just smile and wave

Wed, 10/27/2010 - 09:33 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"Just smile and wave" October Fest style. :>)

Wed, 10/27/2010 - 09:36 | Link to Comment unum mountaineer
unum mountaineer's picture

hhhhhmmm beer wenches

Wed, 10/27/2010 - 10:10 | Link to Comment Gordon Freeman
Gordon Freeman's picture

That one on the right looks like she'd make you see God...

Wed, 10/27/2010 - 10:14 | Link to Comment Gordon Freeman
Gordon Freeman's picture

Boeing is sort of a "second tier" asset to the Oligarchy.  It is used in just the way it is described in this thread, to manipulate data.

For all the cretins that think of it as an investable idea, I will remind you that it is time for the traditional falling apart of their labor agreements, which reliably craters the stock.

Sun, 10/31/2010 - 17:14 | Link to Comment max2205
max2205's picture

Please...fed uses BA IBM GE to make their #'s. They just cut a PO or call in a bogus order

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