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July Core Durable Goods Ex-Transports And Defense Implode
Today's Durable Goods number was blistering, if only on the headline. Coming at $230.7 billion, it was up a whopping $9.4 billion or 4.2%, on expectations of a 2.5% increase. The reason for the surge: the volatile transportation segment, which rose 14.1% to $80.4 billion. This is entirely due to Boeing aircraft orders, which rose to 260 this year compared to 10% of that a year ago, which however, as Quantas reminded us yesterday, can and will be promptly reversed (see: "Boeing hit by 'biggest-ever 787 order cancellation'"). In other words next month will be a headline disaster. So what happened beneath the headline when excluding volatile series: well - Durable Goods ex-transportations decline -0.4% in July, missing expectations of a +0.5% print, with the June number revised down from -1.1% to -2.2%. It gets worse: Nondefense capital goods excluding aircraft tumbled in July, and imploded to -3.4%, crashing below expectations of a -0.2% print, with the previous print revised from -1.4% to -2.7%). This means that indeed the brief blip higher in economic activity in the summer was largely transitory and was purely a byproduct of seasonal adjustment. Expect cuts to Q3 GDP forecasts to commence imminently by the sellside lemmings.
Headline- good:
Non-Headline- atrocious:
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Sub zero GDP. recession started in May.
I just though it was going to blow up. I didn't think it was going to implode.....I don't think I like the sound of that.
So the market only goes up on bad news now? Way to go Ben!
"Sub zero GDP. recession started in May."
Sub zero GDP. Depression started in May.
There- fixed.
Depression? That started in 2007.
Now its fixed.
Seems to support the Fed's desire to print. Bultard talks it down yesterday. Evans talks it up today. Strategies of misdirection and confusion completely in play. Regardless, with Brent @ $115/bbl, corn over $8/bshl, and the S&P above 1,400 it is very hard to see how the Fed can pull a trigger. We need more pain first, and more pain we will get!
"Seems to support the Fed's desire to print AFTER the election"
Hence Operation Twist'ed News
Yeah!
Damn!
Horray!
Oh my God!
Ummmmmmm.....does anyone know which way I'm supposed to think?
Better check CNBC. They know everything.
/sarc
Aren't Boeing and EADS the ultimate channel stuffers?
Dude....where you been? They can't hold a candle to GM.
Sorry but Mea culpa,
What with all the bikini posts I read that as "Julie cores durable"
(sigh)
BA should have named it the NightmareLiner
Bullish.. signed. blowhorn
Lots of channels being stuffed. Now if I can just get the misses on board. Come on honey, get with the program!
Clearly bullish. The Bernank better get to printing for job security if for no other reason.
Once China gets its plane building operation in full swing, Airbus and Boeing are going to take their lumps as I'll bet a good chunk of purchases and a lot of the increase is due to Asia and Latin America.
Neo: The Chinese have already purchased three American aviation manufacturers: Superior, Continental and Cirrus. The former two are engine manufacturers, the latter..only the industry leader in General Aviation aircraft sales for the last 5 years..... Maybe with all of their channels stuffed, the Chinese will be like the Japs in the late 80's; buying everything in site at top dollar only later to sell at bottom dollar - after the crash that is to come, that is. Green shoots??
I wouldn't fly in a Chinese-made plane that was manufactured with the sole intent of minimizing its cost.
Good thing we have a military based economy.
Let's see .. We have the war on brown people the middle east, the war on drugs, poverty, and the war on the American people (terrorism). What other wars can we declare? How about declaring a war on fat women in spandex?
you forgot to add "and the military is over there." Or....are they???
with all the channel stuffing going on in the world today makes me hungry for stuffed mushrooms. I feel like a mushroom these days,fed a bunch of shit and kept in the dark!
Mushroom metaphor very good
This is where you can see the real Politicians come to the front...if they yell out this headline as a recovery number....rather than look at the whole report which is showing a slowdown....Statesman they are not...economic smart they are not...liars they are
you can't have it "one way" Tylers' Durden. This is a good report...period. And it SHOULD NOT come as a surprise. This whole "widget factor" view is not becoming this site nor of it's serious view of the nation's economy and what growth looks like...or doesn't look like. The USA is in the midst of an historical technology upgrade cycle in response to the oil crisis of 2008. natural gas, electric and...now we see...dream liner based vehicles will be purchased...how can one argue this is not a perfectly rational decision even though "it costs a lot of money and that creates a recovery and that's b.s.!" the United States will become a net energy exporter...probably sooner than most people think...but more importantly is the "in sourcing" of foreign capital to provide a kicker going forward...hopefully for the American worker...and who knows...maybe even a US based bank at some point.
disabledvet,
So how long will it take from importing 8-9 million barrels of oil PER DAY to being a net energy exporter? Six months? /sarc
You lack to see the severe misallocation of resources. Especially with the huge increase in corporate bonds. Over the last two years bonds have been created at what was seen as low interest rates. Those past orders for Boeing was done at twice the rate as they can get today, meaning airlines that wait, can purchase planes at a lowers marginal rate. This will result in squeezeing out airlines like Quantas, forcing them to cancel new orders or fail to pay debt.
You're right there is some level of upgrade cycles going on, but with cheap money these upgrades are being over invested, only to be beaten by the competitor who waits another year to borrow at a % point lower. This bubble will implode when debt is not paid and banks need to be bailed out again.
Should Quantas have only purchased 1/2 the planes, or did it bump it up due to the low cost of borrowing?
""in sourcing" of foreign capital " - exept a significant amount of capital is redirected towards Treasury.
BofA: The US Economy Is 'In The Eye Of The Storm'
The businesses in my area are all like a deer in the headlight, because fisical policy (fisical cliff, debt ceiling discussion, Obamacare (who can implement?)) is creating such chaos.
QE3 will only put gasoline on commodity prices (input prices) and do NOTHING for final demand, so businesses are scared shitless. What do you shit once your innards have been emptied by anxiety induced diarrhea episodes?
Don't worry, be happy... Israel is gonna bailout the military industrial complex when they bomb Iran... which will happen within weeks.
Crunch the numbers. 787-9 price: $243.6m x 35 = $8.5 billion. Apply next month's corrections should send July back to 0%.
Now does this change affect unfilled orders more? I would think the original boeing order was in a while ago, so it would be a correction to the month when the order was originally taken. No? These accounting reports always confuse me on what they are actually measuring. Specifically, how do cancellation and delayed orders affect these totals?
"Unfilled orders for manufactured durable goods in July, up two consecutive months, increased $7.8 billion or 0.8 percent to $996.3 billion. This followed a 0.4 percent June increase. "
Here's the actual new order airline numbers for July, June, May: 19,552 12,708 9,593
$10 billion or 77% of all new order increase since May.
Here automotive, July, June, May: 49,449 43,855 44,172
$5 billion or 38% of all new order increases since May
Oops, that exceeds 100%. So addressing auto channel stuffing and $8.5 billion in canceled Boeing orders, new orders are in the negative.
THIS IS THE OBAMA ECONOMY!
'The Federal (Private Entity?) Reserve Bank celebrates it's 100th anniversary Dec.31,2012? Isn't this special.
The 'FRB' now controls Americas' Democracy,... 'Hook, Line, and Sinker': Fiscal Policy (hook) --- Employment (line) --- Capitalism (sinker) (???)!
Americana De`mockcrazy is now the 1950`s version of, Back-in-the-USSR... and all the lonely sheeple don't know how lucky they aren`t ...liven in the USSA...
jmo
thankyou tyler