Wednesday, July 27, 2011

Morning Update/ Market Thread 7/27 – Is there Anybody Out There Edition…

Good Morning,

Equity futures are lower again this morning, but not nearly as low as they should be for the lunacy that goes on. The dollar is slightly higher, bonds lower, yen higher still, oil still being held beneath $100, gold running for the roses now at $1,630, silver higher, and food commodities mixed with rice continuing to rise.

Durable Goods Orders were a big miss coming in at -2.1% in June, this is down from +1.9% and well below the +1.0% consensus. Here’s Econoexcuse:
Headline durables disappoint and ex transportation is soft but the picture is more complex. New factory orders for durables in June fell 2.1 percent, following a rebound of 1.9 percent the prior month (previously up 2.1 percent from the factory orders report). The June advance came in below the median forecast for a 1.0 percent rise. Excluding transportation, durables edged up 0.1 percent after rebounding 0.7 percent in May.

Transportation was the weakest component, dropping a sharp 8.5 percent, following a 5.8 percent rebound in May. All major subcomponents of transportation were down. For June, motor vehicles slipped 1.4 percent, nondefense aircraft dropped 28.9 percent, and defense aircraft fell 205 percent. But Boeing is expected to boost nondefense aircraft soon and autos are expected to recover from supply shortages from Japan.

Ex-autos, weakness was in machinery, down sharply. All other industries in ex autos were up.

Within ex-autos, machinery dropped 2.3 percent in June. On the positive side, gains were seen in primary metals, up 1.0 percent; computers & electronics, up 0.2 percent; electrical equipment, up 0.4 percent; and "other," up 0.2 percent.

So, the real picture is a mostly positive June with isolated weakness in transportation and machinery.

Focusing on investment, new orders for nondefense capital goods excluding aircraft have been volatile but slowly trending up. New orders for nondefense capital goods excluding aircraft slipped 0.4 percent in June, following a 1.7 percent gain the month before. Shipments for this series advanced 1.0 percent, following a 1.3 percent increase the month before.

Overall, the picture for durables manufacturing is mixed, though recovery from temporary weakness in nondefense aircraft and autos should bump up orders and production in durables manufacturing in coming months.

On the news, equity futures eased and Treasury rates nudged down.

What, the dog didn’t do it?

The completely conflicted and hypocritical Mortgage Banker’s Association reported that Purchase Applications fell 3.8% in the past week, and that Refinancing Activity fell 5.5% following their double-digit extreme nonsense the week prior. These people belong in prison, not creating unbelievable national economic statistics:
The purchase index fell 3.8 percent in the July 22 week to extend a run of weakness that points to trouble for July home sales. The refinance index, which spiked higher earlier this month, fell back 5.5 percent. Rates moved slightly higher in the week with 30-year mortgages averaging 4.57 percent.

Yesterday’s New Home Sales was also a miss, construction still at depression levels.

The VIX continues to rise into the debt and IQ abyss, Holly Cross now in the rearview mirror:

Notice how the political Kabuki has people angry at the politicians instead of the bankers? They are way off point, for it is the central bankers who are at the very root of the debt problem – they created a system of debt money that benefits them, the only reason to be mad at politicians is for giving them the power in the first place, and for not taking it away in the second place. No More National Debt!