What goes up must come down. The saying applies not only to aircraft, but aircraft orders. As a reminder, last month the volatile nondefense aircraft order category soared by 318%, leading to a 22.6% increase in headline Durable Goods, a record monthly swing courtesy of Boeing conducting its own "subprime for flying clunkers" program which sent airplane orders to an all time high. And now that the bumper airplane order month is over, with all orders purchased on credit gobbled up by yield-starved investors of course, the anticipated drop took place, with durable goods sliding by a record 18.2%, a fraction worse than the -18.0% expected.
And the year over year change:
So volatile transport grouping aside, here is how the core data acted:
- Durable goods ex transports: 0.7%, essentially in line the expected 0.6% print, with the previous month revised from -0.8%, or the worst drop of 2014, to -0.5%
- Capital Goods shipments non-defense ex aircraft, i.e., actualized CapEx: 0.1%, Exp. 0.5%, last revised from 1.5% to 1.9%
- Capital Goods nondefense ex-aircraft, i.e., projected CapEx: 0.6%, Exp. 0.4%, last month revised from -0.5% to -0.2%
Judging by the market's complete non-response to either this or last month's durable goods report, it is quite clear that the market is far less focused on still non-existant real CapEx growth, and is far happier to reward the use of leverage to fund stock repurchases, i.e., instant stock pops, instead of long-term growth.