Ignore the headlines saying that durable goods orders fell in May.
Boeing is almost single-handedly responsible for the drop as aircraft orders fell 30% in May after soaring by more than 200% in April. Boeing said it received just 5 orders in May after getting 34 in April and 43 in March. But that’s just business as usual for the air plane maker.
Durable good orders–excluding the volatile trtansporation sector–rose in May by 0.9%, according to a report by the Department of Commerce this morning.
The May increase in orders for goods meant to last three years or more follows on a 0.8% drop in April that raised fears that the U.S. economic recovery had faltered.
With consumer spending still showing only modest growth—What do you expect with unemployment still near 10%?–U.S. manufacturing has been leading the recovery. Fears going into today’s report were that manufacturers had cut back on orders for equipment and software because of their worries that demand growth had slowed.
Instead what today’s report shows is that companies are reinvesting growing profits in their businesses. That should be enough to keep the economy growing while consumer spending catches up on an eventual, if slow, fall in unemployment.
Orders for non-defense capital goods—that’s the stuff that companies use to make more stuff—increased by 2.1% in May after falling 2.7% in April. In the last three months, orders for non-defense capital goods have climbed at a 29% annual rate.
The 0.9% increase in orders for May is a tad under the 1% median forecast by 78 economists surveyed by Bloomberg News.
robert1234 perhaps because the market doesn’t actually reflect the economy. That seems to be one of the most common misconceptions out there.
bcapshaw,
Exactly how do you know traditional Chinese medicine is snake oil? Mind you, I am not saying you are wrong.
jamba,
I don’t know, but that was an awfully pricey purchase if they did.
robert1234,
It is very possible that others might not dive as deep into the numbers as Jim or see it the way he sees it. So they might very well see these numbers as negative. Look at other posts on the web “Durable goods orders see their biggest drop since August.”
http://articles.moneycentral.msn.com/Investing/Dispatch/default.aspx?feat=1773900
Ed,
Is 2008 the year that they bought Fording, maybe that had some effect on earnings? I will have to check.
ed, off topic:
Re CSKI. You aren’t bothered by a company that is no more than a snake oil salesman praying on an uneducated population? And, if you google “snake oil”, it started in China. Figures.
If the economy is in recovery, why did the market fall 115 points last time I looked ?
Did the market fall on good news ?
How could the market drops again on this good news? This “rally” is not impressive even as a technical bounce.
Off topic:
High court sides with ex-Enron CEO Skilling
I wouldn’t expect otherwise from a SCOTUS whose most members were appointed by the representatives of the crooks who destroyed the economy.
http://news.yahoo.com/s/ap/20100624/ap_on_bi_ge/us_supreme_court_skilling_appeal
Durable Good Orders is today’s most important data point.
If the news is good, then why aren’t the markets doing well?
Oh well…
jamba,
There are several nation-specific ETF’s for Latin America and South America, unless you are looking for Latin American countries not normally covered?
One thing I just noticed on TCK: It had a REALLY disappointing year in 2008. It’s EPS went from $3.97 to $1.42, on increased sales. Their operating margins cut in half that year.
While their numbers have been coming back up to pre-recession levels, I would be concerned if we do see a double dip recession. I would call that a MAJOR risk to this company.
Ed,
That is the price I was looking at to start accumulating some shares. I think that they are one of the cheaper ways to play the space and offer nice diversification.
I was also looking at buying some of the ETF ILF what is your opinion of this as an investment vehicle for latin america?
jamba,
I wouldn’t pay more than $29 for TCK. That looks to be the bottom price on it.
I still wouldn’t buy into this market. Even if I did, I would keep a short leash on any equities I did own.
Ed,
I know I have mentioned TCK before and you liked their financials but would not buy in this market yet. Is there a price you would start to buy at? 5% -15% lower than it is currently?
Hi Jim,
Could you also provide an update on Qualcom?
Thanks for everything!
Hi Jim,
Could you provide updates for FLS and BGC?