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This is an addendum to my previous post on the subject of July capital goods orders. With the Aug. 31st release of factory orders came an upward revision (one more of the many upward revisions to this series in recent years) to the July capital goods data. New orders for capital goods were revised up 0.8%, and are now only 3% below their all-time high, after rising 11.7% in the past year. Once again I'll make the point that this is not the stuff of which recessions are made. It's plain old good news that is being buried beneath the avalanche of angst coming out of Europe.
12 comments:
Excellent commentary, and this is one of the most confounding recoveries we have ever seen.
We nearly have two economies--corporate profits are high, capex is good, yet much of the economy is ailing.
If we can trigger a real estate recovery, I think all goes well.
yeah. just angst coming out of europe.
Isn't Europe old news by now? Meaning the full impact is likely fully factored into market pricing.
Benjamin, here is an article on how home prices will recover faster than most expect. In summary, new home construction is so small, and the lead time for new construction so long, especially in over-regulated markets, that even distressed markets may see inventory quickly become very tight. Scott has argued this, but more facts here:
http://assetbuilder.com/blogs/scott_burns/archive/2011/09/02/hope-for-home-values.aspx
randy: why would you never be wrong?
That's funny... sincerely.
Randy-
Thanks for the link, and I hope you are right.
This market could see new 2008 lows, and we could still be expanding. The problems in Europe and possibly Asia is really going to hurt the equity markets globally.
You can't argues with the numbers coming out these days.
BTW I think where yields are and the curve has nothing to do with our future plight in the US. It seems to me that US bonds are the flight to safety choice for global investors, and that is really confusing people in light of these strong economic numbers.
Once the 30-year starts getting into the low 3's territory it is going to be a mortgage fest.
So money flees Europe. Greece defaults. Italy defaults. More money flees Europe. European banks start going. Bailouts are proposed only the Germans say no...they are tired of paying for others excesses. The euro goes away. Us dollar is strengthened and interest rate decline even further.
President Obama announces stimulus 4.0 after the stimulus he announces tomorrow night just adds more debt. The US debt to GDP surpasses 100%. Wealth begins to find other places (Swiss, Ausrailia, Canada)...starting a more precipitous decline in the dollar. Interest rates rise. Interest payments on the debt hit $1 trillion annually.
Money moving to the US is not a bet on America. Money doesn't know where to go that is safe. As the US starts looking more like Greece and Italy all bets are off. Italy wants to spend more and tax rich people. Listen to Obama tomorrow and see what he wants to do.
An idiot is someone who does the same thing over and over expecting different results.
Looks like a V-shaped recovery to me.
The recession in '08 had capex increasing at the beginning. I hope this isn't the same.
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