Durable Goods Big Miss -4%, Expected -1%, Biggest Sequential Drop Since January 2009

Tyler Durden's picture


And so the transition to the QE3 "economic disappointment" regime begins. Because after the ECB is done with the LTRO it's over for global QEasing, and the Fed is next. Remember- Bernanke's semiannual testimony to Congress is tomorrow. Whatever will he say....

  • Headline Durable Goods plunges from +3.2 to -4% on expectations of -1%
  • More painfully, Durable goods non-defense ex aircraft down a whopping -4.5% on Exp of -1.3%, down from +3.4%.

Digging between the numbers, via Bloomberg:

  • Decline in shipments of non-defense capital goods, ex. aircraft, suggests “weak business investment” for 1Q GDP report, says Bloomberg economist Rich Yamarone  
  • Overall decline "mostly" due to contraction in civilian aircraft orders, "slightly" slower pace of new motor vehicles bookings, defense orders, says Bloomberg economist Joseph Brusuelas   
  • Slowdown ex. transport "consistent with the broader slowdown in growth in industrial production"  

And a recap from Stone McCarthy:

January new durable goods orders were reported down 4.0%, following a slight upward revision in December to up 3.2% (previously +3.0%). The January performance was below most expectations, and reflected widespread softness across components, not just the expected drop in transportation due to a decline in civilian aircraft orders. Although the fall in new orders was steep, it was also after two months of solid gains. Since these numbers tend to see-saw from month-to-month, a one-month decline is should not be worrisome. Strong orders for civilian aircraft in February are likely to boost the next month's report.


Expectations in a Bloomberg survey centered for a 1.0% decline. Estimates fell across a range of down 4.3% to up 1.5%. Our forecast was for a decline of 1.8%.


Transportation orders were anticipated to fall in January due to fewer civilian aircraft orders. Boeing reported 150 new orders for the month, which was a drop of 137 from the prior month Overall orders for transportation equipment were down 6.1%, with declines of 19.0% in nondefense aircraft and 5.6% in defense aircraft. Motor vehicle orders rose 0.9%, reflecting the steady demand for new autos and trucks.


Nonetheless, new orders excluding transportation were still down 3.2%. There were notable declines in primary metals (-6.7%), machinery (-10.4%), computers (-10.1%), and electrical equipment (-1.9%). With the exception of computers, these were all higher in the prior two months, so this is consistent with the direction of total new orders. There was a modest gain of 0.7% for fabricated metals and communications equipment of 1.4%.

Visually, this is the biggest decline since January 2009.

Source: Census Bureau

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Tue, 02/28/2012 - 09:36 | 2203351 ShortTheUS
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Let's pare some gains, bitchez!!!

Tue, 02/28/2012 - 09:37 | 2203356 slaughterer
slaughterer's picture

Op robo-kill entering phase 2 now. 

Tue, 02/28/2012 - 10:13 | 2203502 TruthInSunshine
TruthInSunshine's picture

This isn't possible.

The Geithner, Brian Wesbury, Warren 'Taxpayer Buffet' Buffett, Mark Zandi, Barton 'Smally' Biggs, Joe LaVorgna, Abby Joseph/Sacha Baron Cohen, and the real legends of prognositication, James Altucher, Joe Wiesenthal & James Glassman all said so.

Recovery Summer 3.0?

Tue, 02/28/2012 - 10:13 | 2203528 Sudden Debt
Sudden Debt's picture



It would have....


It should have...


but it didn't....


Tue, 02/28/2012 - 10:58 | 2203749 krispkritter
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Recovery Bummer 3.0?  IT spending seems off across the board with my clients.  Locally(FL Suncoast) businesses that produce for the Global market are either hiring or expanding manufacturing out of the local airport park but two other small businesses in the medical and electronics areas shuttered in the past 4 months. What equipment clients are buying they are asking me to source it used as so much is available on the secondary market. I don't see much of anything happening in my area that looks like a Recovery.  And food and gas along with animal feeds are up significantly which hurts alot of locals. People are giving away livestock or abandoning it if you look at CL.

Tue, 02/28/2012 - 10:15 | 2203538 midtowng
midtowng's picture

I'm sure this is bullish for some reason that I haven't figured out yet.

Tue, 02/28/2012 - 10:42 | 2203683 I am more equal...
I am more equal than others's picture

Its a durable depression.  Onward and upward because those inflated dollars mean ever increasing profits.  Right?

Tue, 02/28/2012 - 09:39 | 2203357 bdc63
bdc63's picture

Nothing to see here .... move along .... get your sunglasses out 'cause our future is bright ...

Tue, 02/28/2012 - 09:41 | 2203374 JPM Hater001
JPM Hater001's picture

Call Cramer quick!  I need to know what to short.

Tue, 02/28/2012 - 09:44 | 2203384 schismjism
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one wonders how much horse shit they will keep telling us about oil speculators causing the high oil prices...    


Tue, 02/28/2012 - 09:52 | 2203423 bdc63
bdc63's picture

Keep your shovel handy, 'cause I suspect the answer is A LOT.

Tue, 02/28/2012 - 10:33 | 2203649 ExpendableOne
ExpendableOne's picture

Yes, no doubt manufacturing is contracted out to China....

Tue, 02/28/2012 - 09:43 | 2203389 Gully Foyle
Gully Foyle's picture

How many goods are actually durable these days?

Tue, 02/28/2012 - 10:20 | 2203564 Sir Real
Sir Real's picture

I think they meant "adorable"

Like my new adorable refrigerator that is a piece of #$%.

Tue, 02/28/2012 - 09:37 | 2203358 Cdad
Cdad's picture

Completely "priced in"...in 4...3...2...

Tue, 02/28/2012 - 10:00 | 2203467 SheepDog-One
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Gotta reach DOW 14,300 for the Emperor...nothing else matters of course.

Tue, 02/28/2012 - 10:07 | 2203493 Caviar Emptor
Caviar Emptor's picture

As long as our headline number looks good, then national pride and security are intact

Tue, 02/28/2012 - 10:13 | 2203524 Chump
Chump's picture

Futures are yawning.

Tue, 02/28/2012 - 09:37 | 2203359 GeneMarchbanks
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Tue, 02/28/2012 - 09:37 | 2203360 nantucket
nantucket's picture

so a neg was expected (i beleive some capital investment tax credits expired 12-31-11), but was there anything else we need to weed out of the data or is that miss "clean"?

Tue, 02/28/2012 - 09:42 | 2203378 JPM Hater001
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There was a stiff wind that hit the east coast and slowed down production.

Total one off.

Tue, 02/28/2012 - 11:01 | 2203565 TruthInSunshine
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There will be a statement soon that the previous 1% decline that had been forecasted has been revised down, after the actual release, to a 10% decline, thus making today's 4% decline (i.e. 6% better than the post-release revised forecast) an extraordinarily shocking upside surprise.

We're going to need Greece to ramp up their purchases of our exports.

Tue, 02/28/2012 - 09:38 | 2203361 digitlman
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Green shoots!

Tue, 02/28/2012 - 09:40 | 2203368 Problem Is
Problem Is's picture

Gangrene shoots...

Tue, 02/28/2012 - 09:38 | 2203363 Cursive
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Who needs durable goods? If the AAPL model is any indication, nothing should last more than a year or two before requiring an upgrade.

Tue, 02/28/2012 - 10:40 | 2203679 roadhazard
roadhazard's picture

"Would you like to buy a one year warranty with that brand new product?"

Tue, 02/28/2012 - 09:39 | 2203365 AU5K
AU5K's picture

ES ticked down 2.5 pts last tuesday, so this was already well priced in.

Tue, 02/28/2012 - 09:40 | 2203367 Ruffcut
Ruffcut's picture

I love when a recovery comes together. Everbody buy a toaster or something and keep this party going.

Tue, 02/28/2012 - 09:56 | 2203440 Taterboy
Taterboy's picture

My previous toaster didn't make a year. Not to durable.

Tue, 02/28/2012 - 09:41 | 2203372 Atomizer
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The road to recovery is going well.

Tue, 02/28/2012 - 10:00 | 2203463 zx12r
zx12r's picture

It's pretty hilarious to me, that the White Hut propaganda machine, AKA: ABC, NBC, CBS, CNN etc. keeps running with stories that disingenuosly proclaim that the economy is indeed recovering, when no one observing the real world buys it for one second. Most people know that reports of the so called recovery, are something to point at and be sarcastic about (like you). If gas prices do reach $5.00 a gallon or more this summer, we will quickly fall into another deeper substratum of recession, if not depression. People will strengthen their already (saving) approach to our economic future. Until Obama is dragged out of office, and replaced with his mirror opposite, the economy will be at risk of unrecoverable status, and most understand that, and are in fear of it.

Tue, 02/28/2012 - 10:03 | 2203479 Cursive
Cursive's picture


Yes, people are foregoing rent AND a washer and dryer. People ate resorting to a bar of soap and the bathtub or sink.

Tue, 02/28/2012 - 09:41 | 2203375 Clueless Economist
Clueless Economist's picture

After consulting my economics texts, charts, and formulas, I can say with conviction...Rut Roh Raggy....err I mean we need a gigantic stimulus of $5 Trillion NOW.

Tue, 02/28/2012 - 09:44 | 2203385 JPM Hater001
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Are you sure that's big enough.  Better make it 8...I mean it's only monopoly money after all.

Tue, 02/28/2012 - 09:45 | 2203393 Dr. Engali
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Hmmm my numbers come out to eleventy trillion. You need to update your models.

Tue, 02/28/2012 - 09:48 | 2203407 mayhem_korner
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Eleventy, Bilbo?

Tue, 02/28/2012 - 10:00 | 2203466 LawsofPhysics
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My numbers say at least 707 trillion.

Tue, 02/28/2012 - 10:55 | 2203735 boiltherich
boiltherich's picture

Come on LOP, that is a tad high, I mean we can't have any leak out to Main Street lest it trigger inflation that can't be erased from the price stats can we? 

Tue, 02/28/2012 - 09:54 | 2203434 GeneMarchbanks
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Ridiculous, since when is 5 Tril 'gigantic'?

Tue, 02/28/2012 - 10:08 | 2203496 Caviar Emptor
Caviar Emptor's picture

Not anymore it ain't!

Tue, 02/28/2012 - 09:42 | 2203377 Dow 36000
Dow 36000's picture

This means stocks go up...right?

Tue, 02/28/2012 - 09:45 | 2203392 JPM Hater001
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Correct.  They will also be delivering your Unicorn eggs...I shipped overnight for before 10 AM delivery.

Tue, 02/28/2012 - 09:58 | 2203454 Christoph830
Christoph830's picture

Disagree. Ben needs risk assets (most notably oil) to sell off before he can implement more QE.

Tue, 02/28/2012 - 10:12 | 2203517 mayhem_korner
mayhem_korner's picture



Ben doesn't need to implement more QE with Dow 13,000 and the ECB printing like mad.  He's doin' his part with the Twist and the discounted currency swaps with Europe.

Very, very difficult for the complex to get oil and PMs tamped down without diffusing the hopium of the equities. 

Big question is whether ISDA lets the CDS underwriters or buyers hold the bag come Mar. 20th...and then how fast is the sinkhole filled with fiat and where do the liquidations come from - equities, commodities, or elsewhere? 

Tue, 02/28/2012 - 10:24 | 2203596 vh070
vh070's picture

Yup, up is the new down.

Tue, 02/28/2012 - 09:42 | 2203379 Scalaris
Scalaris's picture

" Cyclical Trends "

Tue, 02/28/2012 - 11:04 | 2203769 krispkritter
krispkritter's picture

That's the spinning effect introduced by the toilet bowl we're in...there's a goldfish and a dead hamster in here too. Bully!

Tue, 02/28/2012 - 09:44 | 2203388 Dr. Engali
Dr. Engali's picture

It's amazing how these numbers just happen to come in soft or strong depending on what the fed needs for either cover to ease or proof that their policies are working.

Tue, 02/28/2012 - 09:44 | 2203391 mayhem_korner
mayhem_korner's picture



Sawtooth pattern suggests a lot of "play" in the reported values.  Not sure it helps illuminate reality.

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