“I love it when a plan comes together”
The quote above, of course, comes courtesy of former A-Team Captain and current 4Q23 macro strategist, John “Hannibal” Smith.
And below is the pre-holiday, Durable Goods edition of our ongoing Shot → Chaser series whereby we document the evolution of “The Plan”
*Reminder: The Plan:
- Shock-tober (shot) → organic decel + UAW distortion + Other (student loan repayment/etc.) = accelerated/amplified deterioration in the domestic high-frequency data
- November (chaser) → Easy Y/Y & M/M comps + UAW distortion reversal = probable acceleration in the reported sequential & Y/Y data (Nov data reported in December) = Quad 1 or Quad 2 month, at least optically
From there, Jan will = stiff double shot of hard comps and asymmetric downside risk
With respect to Durable Goods:
- Headline Durables = -5.4% M/M (against negatively revised Sept estimates) = -680 bps deceleration to +0.3% Y/Y = RoC Cycle Low
- Ex-Transports (i.e. imperfect read on ex-UAW related impacts) = +0.0% M/M = flat at +1.3% Y/Y
- Ex-Defense & Aircraft (cleanest read on underling private sector demand) = -1.2% M/M = -110 bps deceleration to -0.2% Y/Y = RoC Cycle Low
- Capex = -0.06% M/M = -97 bps decel to +0.58% Y/Y = continued Trend decel
In other words, “The Plan” remains on script with respect to the reported October data, as does the prospective November data as:
- Some/all of the Transport related weakness is likely to reverse
- Boeing received $63B+ in November orders alongside the Dubai airshow … which will presumably flow through the Aircraft Orders data for November & help juice Headline Durable Goods
In other, other words (first pic below) …
<chart7>
