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Durable Goods False and Misleading Headlines Bestow Gifts On Wall Street Dealers

The market is taking a huge dump this morning, misled yet again by phony, fictitious, misleading, and flat-out wrong seasonally adjusted (SA) data on Durable Goods orders. The Wall Street conomist consensus guess was for a gain of 0.5% in the SA headline number. Woops. It came in at minus 3.4%. The crowd shit its pants and dumped stocks into the arms of waiting market makers, your friends and mine, the Primary Dealers and their little partners in crime.

Here’s how the Wall Street Journal put it.

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Durable Goods Orders Fall Sharply

Demand for big-ticket manufactured goods tumbled last month, a sign U.S. businesses remain cautious about spending.

Bloomberg-

Orders for U.S. Capital Goods Drop for Fourth Straight Month

Orders for business equipment unexpectedly fell in December for a fourth month, signaling a global growth slowdown is weighing on American companies.

Bookings for non-military capital goods excluding aircraft dropped 0.6 percent for a second month, data from the Commerce Department showed today in Washington.

But what are the facts? I looked at those same core durable goods orders on an actual, not seasonally adjusted (NSA) basis in real terms, that is, adjusted for changing price levels, to arrive at a number showing the actual unit volume of sales. I put that data into a chart so that you can see for yourself just how bad December was.

Real Core Durable Goods - Click to enlarge

Real Core Durable Goods – Click to enlarge

Now, it is no lie that the long term trend STINKS. Core durable goods orders have been declining for 15 years. Manufacturing in the US is a dead business. It’s not a zombie rising from the grave. It’s dead. But this is not news. Conversely, December’s order volume was UP 3.7% year versus December 2013. That’s a big uptick in momentum from November’s 0.6% year to year gain.

What about the month to month change? Since the data isn’t seasonally manipulated, we merely need to compare the November-December change to the same time frame in years past to get an idea of just how bad or good this December was. The month to month change in December was a gain of 6.9%.How good is that? December is usually an up month, but this number is better than the 10 year average for December of +5.7%. It’s better than December 2013’s +3.7%. It’s better than December 2012’s +4.6%.

That is in no way, shape, or form, what the mindless idiot Wall Street captured media told us. They told us that the US economy is going to hell and we must all jump ship now if we don’t want to burn in those hellfires. Hey, they lied. No big deal. They lie all the time and nobody calls them on it. So they’re smug. .

The media simply ignores the actual, not seasonally adjusted data. It reports only the seasonally adjusted nominal data, and that number was just wrong. But that’s the number that everybody ran with. The futures were already off sharply when this news was released at 8:30, so other things triggered much of the selling. But this news caused another wave of selling. If this is the reason everybody is selling the cash market in New York this morning, so be it, they’ve based their decision on made up “data” that in no way reflects what actually happened.

If there are lasting underlying changes in macroliquidity flows–which I have not seen yet in my proprietary research–then the selloff will stick, but if not, then it won’t, and the Wall Street media will have presented the Dealer crowd with yet another gift in their central bank funded marketing campaign to distribute stocks at ever higher prices. This is the real crime.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, and was lead analyst for Sure Money Investor. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both analytical and sales capacities. Prior to starting the Wall Street Examiner I worked as a commercial real estate appraiser in Florida for 15 years. I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. My perspective is not of the Ivory Tower. It is from having my boots on the ground and in the trenches of the industries that I analyze and write about today. 

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