It’s All In The Reporting

The durable goods report came out this morning – so how was it?  Let’s go to the spin:
“July 28 (Bloomberg) — Orders and shipments for non-military capital goods excluding aircraft climbed in June, signaling investment by U.S. businesses picked up heading into the second half of the year. 
Such bookings increased 0.6 percent after jumping 4.6 percent in May, more than previously reported, figures from the Commerce Department showed today in Washington. Total orders for durable goods, those meant to last at least three years, unexpectedly dropped 1 percent, depressed by a decrease in demand for aircraft which is often volatile. 
Eaton Corp. is among manufacturers benefiting from a pickup in demand as companies in the U.S. and abroad update equipment that is helping to support the recovery. The gains will partially compensate for a slowdown in consumer spending that is causing the world’s largest economy to cool heading into the second half of the year. 
“Businesses are, in general, still investing,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit, who projected a decline in durable goods orders excluding transportation. “If they want to compete, they have to invest. The recovery is continuing.”

Bloomberg even managed to conjure up a bullish comment on the numbers from an economist!  I guess they were good numbers, right?  Well, maybe not…Let’s read the next one:

AP:  Stocks Set to Retreat After Weak Orders Report

NEW YORK (AP) — Stock futures fell Wednesday after another disappointing economic report called into question the pace of recovery.

This time the Commerce Department’s durable goods orders report indicated growth is slowing. Orders for goods expected to last at least three years fell 1 percent last month, well short of the 1 percent gain that economists polled by Thomson Reuters had forecast.

Orders dipped 0.6 percent when the volatile transportation sector was excluded. Economists had expected a small gain without those orders.”

Again, the lesson here, apart from the fact that you need to be ultra-careful with everything you read from the mainstream media,  is that you need to make sure you aren’t guilty of confirmation bias:  only seeking out opinions that reinforce your own view.  It’s always wise to try to understand the other side of the trade, and other interpretations of the data.


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