Ugly Durable Goods Number Masked By Second Monthly Surge In Boeing Orders

One look at the June headline Durable Goods number today would have been enough to send algos into a buying spasm: printing at 4.2% it was three times greater than the forecast 1.4%, and followed an upward revised 5.2% (previously 3.6%). However, as always, there was a footnote: the entire Durable goods number was due to one thing: Boeing aircraft orders and other transportation equipment which have risen by a whopping $20 billion in the past two months, from $67 to $87 billion, or growth rates of 14.8% and 12.8%. Put another way, of the $21 billion increase in overall Durable Goods since April (from $223 billion to $244 billion), $20 billion is due to transportation equipment (from $67 billion to $87 billion). Sure enough, the June Durable Goods order ex-transports missed expectations of a 0.5% increase and was flat compared to May.

Still, even with the transportation fudge, in which Boeing orders are now the sole factor seemingly keeping US GDP afloat, the Year over Year change in Durable goods is hardly confidence inspiring.

Finally, when it comes to pure CapEx, also defined as Capital Goods Defense Shipments excluding aircraft, the picture is bleak at best. If there is any good news in the chart below is that at least it is not negative yet. It is perhaps worth noting that the both previous times this number shifted into the red, the US was in recession.

One can only hope that nothing bad ever happens to that paragon of airborne safety, the Dreamliner, or that Boeing isn't suddenly hit with a wave of order cancellations, or else...