Good News is Bad Again

We’ve seen a lot of interpretations of the bad news/good news story over the past five years.  We’ve become inured to the idea that bad news is good, because it ensures continued central bank easing — which is supposedly good for the “markets.”

So, with ever louder cries for rate and policy normalization, and all eyes on the Jackson Hole confab, it’s not too surprising that the futures aren’t loving this morning’s strong durable goods beat.  There was a lot under the hood on this report, namely:

  • Durable goods new orders +4.4% vs 3.3% exp.
  • New orders ex-transportation +1.5 vs 0.5% exp.
  • Non-defense cap goods ex-aircraft +1.6% vs 0.3% exp.

While it was a nice month-over-month beat, the year-over-year comparisons were atrocious:

  • Durable good orders -6.4% (2nd big annual drop in a row)
  • Capex shipments non-def, ex-aircraft -9.5% (unadjusted)

The futures are off across the board, with CL notably well on its way to our downside target and stocks likely to follow.  Our downside targets from last week and our Aug 3 analog remain in place.

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