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Durables Goods, Excluding Bumper Boeing Orders, Suffer Biggest Drop Of 2014

Tyler Durden's picture




 

The headline print of a record-breaking 22.6% gain - smashing the 8.0% expectation - hides the extremely obvious factor of the largest civilian aircraft orders (an entirely one-off non-repeatable factor). Durables ex Transportation collapsed from a 3% gain to a 0.8% drop - the biggest drop in 2014, missing expectations by the most in 8 months. Perhaps even more concerning, non-defense ex-aircraft new orders dropped 0.5% (missing expectations of a 0.2% gain).

 

One-off...

 

Boeing orders from UK air show lead to nondef aircraft orders increased 318%

Transportation Equipment orders in July were $133 billion, up from $76.3 billion in June; driven by Nondefense aircraft and parts new orders at $70.3 billion, up from $16.9 billion

Here is a chart of what happens as everyone scrambles to order Boeing jets ahead of what may be the upcoming "expiration" of the ExIm bank: nothing short of an outlier print for transportations nondefense aircraft and parts new orders:

Reality is much less pretty, with the 0.8% drop in ex-transports the largest of 2014.

 

There was some good news in the capital goods nondefense ex-aircraft shipments and orders prints, which posted a quickening in Y/Y print as follows...

... until one realizes that once again, it was all in the seasonal adjusment factor: July non-defense capital goods ex-aircraft shipments unadjusted plunged from $75.8 billion to $66.3 billion, while New Orders tumbled from $78.5 billion to $68.3 billion. As a reminder, even the BLS now admits it is having trouble figuring out what the correct seasonal adjustment factor should be.

For now, however, let's wait as the beancounter models take the SA prints and use them to boost GDP estimates.

 

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Tue, 08/26/2014 - 08:42 | 5144265 huggy_in_london
huggy_in_london's picture

Yeah but orders are still orders.  People still need to be employed to actually make the stuff.  And the chain effects are large.  You can't just dismiss them out of hand.

Tue, 08/26/2014 - 08:44 | 5144273 GetZeeGold
GetZeeGold's picture

 

 

Turns out people with 29.5 hr/wk jobs can't afford durable goods.....I know...it surprised me too.

Tue, 08/26/2014 - 08:44 | 5144277 huggy_in_london
huggy_in_london's picture

No but they get to work their 29.5 hours though cause someone else can.

Tue, 08/26/2014 - 08:48 | 5144287 GetZeeGold
GetZeeGold's picture

 

 

If Obama illegally allows illegal aliens......it's fixin to be a lot less.

Tue, 08/26/2014 - 08:53 | 5144295 wallstreetapost...
wallstreetaposteriori's picture

I bet there is some noise in that number.... looks to be too big of a spike.  I mean really, who is buying all those airplanes all sudden?  I want to know what washers and dryers look like.  That will be a better indication for how well things are going.

Tue, 08/26/2014 - 08:58 | 5144308 Whoa Dammit
Whoa Dammit's picture

Malaysia had to buy a couple of airplanes...

Tue, 08/26/2014 - 08:45 | 5144278 Clueless Economist
Clueless Economist's picture

But you are wrong, CNBC reports this am that "the economic rebound is finally taking hold" and "investors are impressed with the great economic numbers"

 

Well which is it?

Tue, 08/26/2014 - 08:48 | 5144283 huggy_in_london
huggy_in_london's picture

Listen, anything that gets these maniacs at the fed to move rates from zero is what i root for.  High print?  Great, take rates away from zero.  at worst the economy can do its cleansing, at best maybe "investment" might move away from speculation.

Tue, 08/26/2014 - 09:09 | 5144356 Headbanger
Headbanger's picture

Again.. The Feral Reserve MUST start raising rates now to save the US duh-lar from being worthless as a former world currency.

Tue, 08/26/2014 - 09:22 | 5144400 hairInTheSoup
hairInTheSoup's picture

there is no cleansing of a debt economy that create money out of thin air.

it's all a banksters joke, get over it.

the only cleansing availabale beside world war & natural catastophies is to put those people in jail, to backup currencies with some relevant commodity (& therefore, by consequence, to allow only the lending of money that exists already).

the reserve rate debt system is designed to crash & that's mathematic.

Tue, 08/26/2014 - 09:14 | 5144380 BandGap
BandGap's picture

No shit, all I heard this AM on the radio is how the durables number was the highest it's been in 23 months, or something like that.

Happy days are hear again, a chicken in every garage.

 

Tue, 08/26/2014 - 09:30 | 5144447 Headbanger
Headbanger's picture

And pot in every car!

Tue, 08/26/2014 - 09:05 | 5144335 ejmoosa
ejmoosa's picture

At 29.5 hours, it does not even pay enough to go to work.  

Tue, 08/26/2014 - 08:46 | 5144280 hairInTheSoup
hairInTheSoup's picture

yes you can since it is chinese people in china that actually make most of the stuff that goes in the plane

Tue, 08/26/2014 - 08:48 | 5144284 firstdivision
firstdivision's picture

Why would they hire when more than half the orders will be canceled, and this data point will never be revised

Tue, 08/26/2014 - 09:08 | 5144350 DblAjent
DblAjent's picture

How is this market still bullish under these conditions?? It's like a runaway train wherein the engineers & conductors have long since off boarded, and are now betting on its derail.

Tue, 08/26/2014 - 09:17 | 5144393 Dr. Engali
Dr. Engali's picture

The market is still bullish because stawks and bawnds are the two authorized places for the excess currency the fed is printing to go. All other asset classes will be smacked down if they try to get out of hand. 

Tue, 08/26/2014 - 08:47 | 5144282 101 years and c...
101 years and counting's picture

always a caveat to "good news".  the Astros beat the A's last night.  that is, if you back out the last 7 runs the A's scored.

Tue, 08/26/2014 - 08:50 | 5144290 GetZeeGold
GetZeeGold's picture

 

 

7 <--- there's that number again.

 

Maybe we should run this by the IMF.

Tue, 08/26/2014 - 08:49 | 5144288 Spungo
Spungo's picture

Come on Tyler, don't pull this non-GAAP bullshit of removing one item then saying it's a disaster.

Tue, 08/26/2014 - 09:08 | 5144352 ejmoosa
ejmoosa's picture

Yeah, that would be like pulling Apple out of the S&P 500 results...

Oh wait....definitely do not do that.

Tue, 08/26/2014 - 09:09 | 5144354 NoDebt
NoDebt's picture

If you go to any MSM news outlet you'll just hear the headline 22% number.  I like having a more sceptical perspective of the numbers that ZH provides to balance against that.  As soon as I heard the "Everything Is Awesome" headline number on my drive in, I knew ZH would have the break-down waiting by the time I got to my computer.

22% is still 22%, that's true, but there is no breadth to the gains.  If it was 22% headline and 7% of it was non-def/non-transport durable goods, that would paint a VERY different picture of the economy than 22% and -.8% does.

Tue, 08/26/2014 - 10:30 | 5144736 yrbmegr
yrbmegr's picture

You beat me to it.  The post is invalid.

Tue, 08/26/2014 - 11:46 | 5145053 Sticky Wicket
Sticky Wicket's picture

It's called Durables Ex Transportation. Aircraft purchases are extremely volatile, and the only time the MSM includes them is when it makes the number look good.

Tue, 08/26/2014 - 08:50 | 5144289 RiskyBidness
RiskyBidness's picture

Just BTFD and STFU!

Tue, 08/26/2014 - 09:12 | 5144366 Headbanger
Headbanger's picture

Just BTATFH and STFU!

Tue, 08/26/2014 - 08:55 | 5144301 arby63
arby63's picture

From CNBC:

 

Fly durables fly! Orders soar by nearly 23%, thanks to aircraft orders

http://www.cnbc.com/id/101945427

 

Tue, 08/26/2014 - 08:58 | 5144309 BeetleBailey
BeetleBailey's picture

Moosh are the brains of anyone watching that fucked up mouthpiece for the MIC, government and elite.

cnbc.....

a bucket of shit, with tits hanging out to gussy it up....while they deliver shit....

Tue, 08/26/2014 - 09:26 | 5144365 ejmoosa
ejmoosa's picture

And that's why the ExIm Bank is so damn important....

They finance the products of Boeing.

And without that, our numbers look so....recessionary.

 

But I am sure that the EXIM boys are loaning bucks to only those of good credit risk.

Tue, 08/26/2014 - 08:59 | 5144312 yogibear
yogibear's picture

China is already on it's way of  manufacturing it's own commercial aircraft for it's markets as well as it's own engines and avionics. It already has all the technology from all the western manufacturers.  

 

Goodbye Boeing, GE Airbus and other's profits. 

Tue, 08/26/2014 - 09:03 | 5144326 LawsofPhysics
LawsofPhysics's picture

Correct.  Having done business with the Chinese, one thing is for sure.  If they can get away with it, the Chinese hire only Chinese and buy only Chinese made products.  Again, if they can and it will work for the application.  Apparently, my pecans and walnuts are the "Porsche" of foods over there.

Tue, 08/26/2014 - 13:03 | 5145552 DblAjent
DblAjent's picture

Would you fly on a Chinese aircraft? Maybe Walmart will keep them in stock...

Tue, 08/26/2014 - 09:03 | 5144328 buzzsaw99
buzzsaw99's picture

why bother? BA will outsource IT ALL eventually.

Tue, 08/26/2014 - 09:07 | 5144348 negative rates
negative rates's picture

I hope they made some modifications, cause our stuff has a half life of a gnat.

Tue, 08/26/2014 - 09:02 | 5144321 ms8172
ms8172's picture

They are going to fake this thing right into having to raise rates....then this will be over people!  Defaults like you've never seen before. 

They keep talking like we are in a recovery? I drive around the city alot and see lots of empty buildings and consignment shops everywhere.  The malls are empty, golf courses are empty middle of day and I just don't see real activity other than the lower income people scraping savings at Walmarts.

This is going to be unbelievable when it ends!  I'm sad about it too....

Tue, 08/26/2014 - 09:03 | 5144329 LawsofPhysics
LawsofPhysics's picture

Optimist.  Defaults you say?  Allow bad debt to clear?  How novel.

Tue, 08/26/2014 - 09:06 | 5144338 GetZeeGold
GetZeeGold's picture

 

 

My main mall is a feakin ghost town.

Tue, 08/26/2014 - 09:10 | 5144358 negative rates
negative rates's picture

We have a river fixin to run through ours.

Tue, 08/26/2014 - 09:21 | 5144413 Vendetta
Vendetta's picture

But its filled with all that hope and change

Tue, 08/26/2014 - 10:10 | 5144627 Hohum
Hohum's picture

ms8172,

Golf courses must be empty because everyone is working, part-time at least ;)

Tue, 08/26/2014 - 09:05 | 5144333 yogibear
yogibear's picture

Golf courses around my area are empty as well as more and more vacant store fronts.

Wonder how much longer they can keep the stock buy-backs and BS going? In the mean time 10,000 baby boomers per day are retiring and downsizing.

Tue, 08/26/2014 - 09:14 | 5144381 ejmoosa
ejmoosa's picture

They can keep it going nearly forever.  The question is when will we start ti ignore the results they report by doing so?  

When retail investors start to dump these companies (and they will), things will change.

Total profit dollars need to be what we look at, and compare to what was done a year ago.  No adjustments.  No one time charges.  No earnings per share.  No beating expectations.

Real results.

 

 

Tue, 08/26/2014 - 12:54 | 5145502 walküre
walküre's picture

Wait a minute, I thought the boomers who closed the stores due to their retirement are now all rushing to the golf courses? Something doesn't add up... hmmm

Tue, 08/26/2014 - 09:05 | 5144337 HUGE_Gamma
HUGE_Gamma's picture

 beancounter... as opposed to the losing trader that has been shorting this market since S&P 700

Tue, 08/26/2014 - 09:09 | 5144357 drchris
drchris's picture

Great news! Raise interest rates.

Of course, the same people who talk about how great things are will be the same ones complaining that the Fed exited too soon. 

Tue, 08/26/2014 - 09:20 | 5144405 TabakLover
TabakLover's picture

Bad = Good until further notice.  The Ministry of Truth.  Thank you.

Tue, 08/26/2014 - 09:57 | 5144556 roadhazard
roadhazard's picture

When wages are at 1980 levels with prices at 2014 levels and no credit this is what you get. I get my washer and dryer from the "moving" ads in the paper. My 1995 pick up truck still runs like new with a little TLC.The only thing I buy new are guns and ammo.

Tue, 08/26/2014 - 10:16 | 5144647 yrbmegr
yrbmegr's picture

This is an invalid treatment of data.  You cannot eliminate a "one-off non-repeatable factor" from only the last data point in a series and draw any meaningful conclusion from such treatment.  Moreover, what makes something a "one-off non-repeatable factor"?  Is aircraft orders the only such factor in this data point, or in the series?  The entire post is invalid and should be ignored.

Tue, 08/26/2014 - 11:11 | 5144875 hairInTheSoup
hairInTheSoup's picture

if durable goods ex transport (-0.8%, 1.3% short of expectations) is invalid i wonder why it is released at all by the census bureau, that's for half of the post.

the second half is about +22% (+22% !!!); when you get such numbers you don't want to understand the how & the why ? you're just like, "oh 22% great us economy is doing so well";

(i hope you're not an analyst)

Tue, 08/26/2014 - 11:27 | 5144963 thethirdcoast
thethirdcoast's picture

I've found that Boeings are much more assured when taking off and landing, whereas Airbus products seem to have more comfortable seating and cabins.

Tue, 08/26/2014 - 12:42 | 5145430 hairInTheSoup
hairInTheSoup's picture

planes are delivered empty, seatings & cabins are designed & furbished by the air company.

what means "more assured" ? they pay better if they crash on landing or take off ?

Tue, 08/26/2014 - 12:52 | 5145494 walküre
walküre's picture

Great news. It will take thousands of new CATs to build airplanes, won't it?

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