Orders for durable goods in April declined 3.6 percent. The main
culprit, according to mainstream media reports, was supply
disruptions caused by Japan's March earthquake and less demand for
aircraft equipment. Other scapegoats were considered but couldn't
be located before article deadlines.
Durable goods are generally defined as items
like refrigerators and cars that can be used for a few
years before wearing out.
Motor vehicles sales (NYSEArca: VROM) and parts dropped 4.5
percent as Japan's production/supply issues infected the output for
The worst news was in the
(NYSEArca: FAA) where Boeing (
) received just two orders in April compared to 98 in March. The
durable goods report showed a 30 percent drop in civilian airplane
orders and 8.9 percent slump in military aircraft. The one piece of
silver lining, according to a completely different report, is that
people are still flying.
One of the few bright spots has been with demand for agriculture
and construction equipment from developing countries (NYSEArca:
EEM). Sales of farm equipment and machinery has been boosting
stocks in the
(NYSEArca: XLI) over the past year. Deere (
) increased its earnings forecast for 2011 and General Electric (
) sees more demand for its energy related products.
Interestingly, the Aprildecline in orders for durable goods was
more than the minus 2.5 percent figure a group of economists polled
by Bloomberg had originally forecasted. How many times has the
collective 'wisdom' of consensus forecasts been wrong? Help me out,
because I lost count. Or as Nobel Prize winning economist Paul
Samuelson quipped, 'Wall Street indexes predicted nine out of the
last five recessions.'
Sub-2 percent readings for second quarter GDP look realistic.
And so does another round of Fed administered QE juice.