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July Core Durable Goods Ex-Transports And Defense Implode

Tyler Durden's picture





 

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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Fri, 08/24/2012 - 08:51 | Link to Comment bnbdnb
bnbdnb's picture

Sub zero GDP. recession started in May.

Fri, 08/24/2012 - 08:57 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

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.

 

 

Fri, 08/24/2012 - 10:49 | Link to Comment Hype Alert
Hype Alert's picture

So the market only goes up on bad news now?  Way to go Ben!

Fri, 08/24/2012 - 09:10 | Link to Comment JPM Hater001
JPM Hater001's picture

"Sub zero GDP. recession started in May."

Sub zero GDP. Depression started in May.

There- fixed.

Fri, 08/24/2012 - 09:15 | Link to Comment bnbdnb
bnbdnb's picture

Depression? That started in 2007.

Fri, 08/24/2012 - 12:03 | Link to Comment Doubleguns
Doubleguns's picture

Now its fixed.

Fri, 08/24/2012 - 08:51 | Link to Comment Wm the Shrubber
Wm the Shrubber's picture

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!

Fri, 08/24/2012 - 09:02 | Link to Comment aleph0
aleph0's picture

"Seems to support the Fed's desire to print  AFTER the election"

Hence Operation Twist'ed News

Fri, 08/24/2012 - 08:52 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

 

 

Yeah!

Damn!

Horray!

Oh my God!

Ummmmmmm.....does anyone know which way I'm supposed to think?

Better check CNBC. They know everything.

/sarc

Fri, 08/24/2012 - 08:52 | Link to Comment MeetTozter
MeetTozter's picture

Aren't Boeing and EADS the ultimate channel stuffers?

Fri, 08/24/2012 - 08:58 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Dude....where you been? They can't hold a candle to GM.

 

Fri, 08/24/2012 - 08:53 | Link to Comment Byte Me
Byte Me's picture

Sorry but Mea culpa,

What with all the bikini posts I read that as "Julie cores durable"

(sigh)

Fri, 08/24/2012 - 08:53 | Link to Comment buzzsaw99
buzzsaw99's picture

BA should have named it the NightmareLiner

Fri, 08/24/2012 - 08:53 | Link to Comment Meesohaawnee
Meesohaawnee's picture

Bullish.. signed. blowhorn

Fri, 08/24/2012 - 08:55 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Lots of channels being stuffed.  Now if I can just get the misses on board.  Come on honey, get with the program!

Fri, 08/24/2012 - 08:59 | Link to Comment Dr. Engali
Dr. Engali's picture

Clearly bullish. The Bernank better get to printing for job security if for no other reason.

Fri, 08/24/2012 - 09:00 | Link to Comment NEOSERF
NEOSERF's picture

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.

Fri, 08/24/2012 - 09:24 | Link to Comment GraveyardSpiral
GraveyardSpiral's picture

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??

Fri, 08/24/2012 - 11:45 | Link to Comment ElvisDog
ElvisDog's picture

I wouldn't fly in a Chinese-made plane that was manufactured with the sole intent of minimizing its cost.

Fri, 08/24/2012 - 09:02 | Link to Comment midtowng
midtowng's picture

Good thing we have a military based economy.

Fri, 08/24/2012 - 09:06 | Link to Comment Dr. Engali
Dr. Engali's picture

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?

Fri, 08/24/2012 - 09:07 | Link to Comment disabledvet
disabledvet's picture

you forgot to add "and the military is over there." Or....are they???

Fri, 08/24/2012 - 09:10 | Link to Comment caimen garou
caimen garou's picture

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!

Fri, 08/24/2012 - 09:18 | Link to Comment TrustWho
TrustWho's picture

Mushroom metaphor very good

Fri, 08/24/2012 - 09:12 | Link to Comment youngman
youngman's picture

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

Fri, 08/24/2012 - 09:13 | Link to Comment disabledvet
disabledvet's picture

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.

Fri, 08/24/2012 - 10:11 | Link to Comment Hohum
Hohum's picture

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

Fri, 08/24/2012 - 11:11 | Link to Comment natew
natew's picture

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.

Fri, 08/24/2012 - 09:27 | Link to Comment TrustWho
TrustWho's picture

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?

Fri, 08/24/2012 - 09:44 | Link to Comment lolmao500
lolmao500's picture

Don't worry, be happy... Israel is gonna bailout the military industrial complex when they bomb Iran... which will happen within weeks.

Fri, 08/24/2012 - 10:51 | Link to Comment natew
natew's picture

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.

 

 

Fri, 08/24/2012 - 11:57 | Link to Comment MFLTucson
MFLTucson's picture

THIS IS THE OBAMA ECONOMY!

Fri, 08/24/2012 - 14:02 | Link to Comment earleflorida
earleflorida's picture

'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

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