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Another Durable Goods Debacle, This Time Masked By Boeing Order Deluge

Tyler Durden's picture




 

The headline September Durable Goods number was great: rising at 3.7%, this was well above the August revised 0.2% increase and far above expectations of a 2.3% increase. However, a quick glance into the reasons shows why the reality is - once again - far uglier. Actually, the reason is just one: Boeing, which reported 127 plane orders in September compared to just 16 in August. This translated into a 57.5% monthly increase in non-defense aircraft orders in September (and Syria's contribution can't be denied either, leading to a 15.2% increase in defense airplane orders). So what does the US capital spending climate look like when stripped away from very volatile (and very cancelable) Boeing orders? In a word ugly: Durable Goods ex transports actually declined by -0.1, on expectations of a rebound to 0.5%, following an even more downward revised August print of -0.4%.

But aside from the broader durable goods, and focusing on pure CapEx, in the form of Capital Goods Orders non-Defense Shipments (not so much order which too can be canceled), it is here that we get yet another validation of our thesis from early 2012, namely that the Fed has killed all corporate CapEx-driven growth.

Cap Goods orders declined -1.1%, from a sharply downward revised 0.4% (was 1.5%) in August and wildly missing expectations of a 1.0% increase: this was the third consecutive miss in a row in this series.

As for the shipments: at -0.2%, sliding from a downward revised 1.1%, and also missing expectations, this was the 6th miss in the Shipments category in the past 7 months. So much for any hopes of a recovery.

But wait until we get the October print when the government was "shut down" for more than half the month: it is here that the real plunge in Corporate CapEx will arguably be felt and the chart below will look like it suddenly had a downward facing heart attack.

Summarizing the above: with such horrible news, it is impossible for the S&P to not hit a fresh record high today. After all: not only is the Noctaper guaranteed, but the scenario of an increase in QE is becoming ever more likely...

 

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Fri, 10/25/2013 - 08:52 | 4089640 Max Damage
Max Damage's picture

BTF- 1 point - D!!!!!

Fri, 10/25/2013 - 09:22 | 4089707 Stuart
Stuart's picture

"the scenario of an increase in QE is becoming ever more likely"   With Yellen now as FOMC chair, it's almost assured!   Little wonder the Chinese are clearing the shelves of physical gold.   Hey round eye, you co-operate and get your agents to keep prices constrained so we can pick up cheap and we'll keep your treasuries for a little longer and buy you time to cover your asses...

Fri, 10/25/2013 - 09:23 | 4089714 Manthong
Manthong's picture

Crap..

Put 2 and 2 together and we can see another reason 4 the curious removal of any limits at all in the recent CU.

The state has carte blanche to spend and spike the numbers all it wants and of course it has a lender of first and last resort conveniently available.

I’m tired of that worn analogy of giving an alcoholic more liquor.

I feel like an obese diabetic with failing kidneys whose doctor is the devil, put me on a diet of glazed donuts and sent me to a dialysis clinic located in a candy store.

Fri, 10/25/2013 - 08:55 | 4089651 Tsar Pointless
Tsar Pointless's picture

OMG! The S&P futures are red! What does this mean? I'm only accustomed to green!

Hey, that rhymed.

Fri, 10/25/2013 - 09:29 | 4089734 Max Damage
Max Damage's picture

There we go, thats better, they bought the dip, using all the free money Ben has stuffed into their pockets to fuck the rest of us over

Fri, 10/25/2013 - 08:55 | 4089652 101 years and c...
101 years and counting's picture

someone needs to tell BA that bad is good because bad = more money printing.  im sure 90% of those orders will be "cancelled" in Oct so the next print will be -6%.  and ben will ramp the printers into hyperdrive prior to his departure.

Fri, 10/25/2013 - 08:58 | 4089659 krispkritter
krispkritter's picture

OT but with Boeing shipping more Screamliners it looks like another comedy/horror show as Japan wants to work with India, on what?

http://www.wtop.com/256/3336792/Japan-India-summit-aims-at-nuke-technology-talks

Fri, 10/25/2013 - 09:06 | 4089666 ebworthen
ebworthen's picture

Boeing selling more plastic planes with bad batteries and panels that fall off mid-flight?

I don't care what kind of composite whiz-bang space age material they say it is; it reminds me of the tiles on the Space Shuttle and the plastic crap I've had to glue and re-glue for the past 35 years.

Fri, 10/25/2013 - 10:02 | 4089843 Winston of Oceania
Winston of Oceania's picture

Nothing wrong with carbon fiber, must be the union labor installing it.

Fri, 10/25/2013 - 09:19 | 4089697 Sudden Debt
Sudden Debt's picture

It's pretty clear that AMERICA NEEDS MOAR WOARS!!!

BECAUSE WOARS DEMAND THE CONSTRUCTION OF DURABLE GOODS LIKE TANKS AND BOMBS!!

Fri, 10/25/2013 - 09:36 | 4089750 wonderatitall
wonderatitall's picture

i blame the shutdown and repubilcans or the teper or sequerster or ... bush. if it is good , well obama did it.

Fri, 10/25/2013 - 10:01 | 4089838 Winston of Oceania
Winston of Oceania's picture

Now you know very well that bombs are not a durable good, only the delivery mechanism should be counted, be it rocket, plane or drone. Long drones...

Fri, 10/25/2013 - 09:41 | 4089777 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Is there anything that tracks cancelled orders. A lot of times, I've done it myself companies will purposely put in sales orders, shift inventory around for financial disclosure purposes then cancel the orders, ship inventory back. Many years ago when I was a tool and die maker we used to do it all the time with safety equipment for lathes and such. When we knew OSHA was coming we'd order safety equipment, make it look dirty, once the inspection was done we'd send it back. The possibilities are endless.

Fri, 10/25/2013 - 11:01 | 4090074 Yen Cross
Yen Cross's picture

  I'm supposing a large part of that Boeing order consists of this.

  Exclusive - Boeing gets $20.7 billion worth of 737 Max commitments from China: sources | Reuters

Fri, 10/25/2013 - 11:30 | 4090169 optimator
optimator's picture

Orders can and have been cancelled.

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