September's Polar Vortex? Durable Goods/Retail Sales Slowing into 4Q

Headline durable goods declined -1.3% sequentially, the second consecutive month of negative growth, and decelerated on both 1Y and 2Y basis. 


Sure, the drop in commercial aircraft orders and communication equipment (both volatile components) led the softness but, overall, it just wasn’t a strong report.  Almost every sub-aggregate reported negative MoM growth and most decelerated on a year-over-year and 2Y ave basis as well. 


Durable goods ex-Defense & Transports were down -0.5% sequentially, Core Capital Goods dropped the most in 8 months and Durables ex-Defense & Aircraft – i.e. the stuff the average household purchases – was down for a second consecutive month - the 1st such instance since the polar vortex/weather distortion peak in Jan/Feb. 


It’s worth noting also that the rise in consumer credit has followed the slope of durable goods consumption in recent quarters as household spending on durable goods has helped buttress soft’ish growth in services/non-durables consumption.  A retreat in durables spending would weigh on both credit growth and aggregate PCE heading into 4Q.  


So, while the labor and income data has held steady, the spending and mfg data is slowing from a second derivative perspective as we head into 4Q.   


If you agree with our view that it's the rate of change, or slope of the line, that matters in front-running market and economic inflections then the traversing from “Good” to “Okay” in the domestic macroeconomy as the preponderance of the ROW transitions from “Okay” to “Poor”  as growth slows and disinflation predominates is not your cue to buy the top end of a late-cycle rally with leverage.


A lot of myopic speculation coming down the pike with the Trick-or-Treat double header of FOMC & 3Q GDP on deck to close out the week……     


"Learn to separate the majors from the minors. A lot of people don't do well because they major in minor things."


September's Polar Vortex?  Durable Goods/Retail Sales Slowing into 4Q - Durables Ex Def   Air


September's Polar Vortex?  Durable Goods/Retail Sales Slowing into 4Q - Core Cap Goods


September's Polar Vortex?  Durable Goods/Retail Sales Slowing into 4Q - Revolving Credit vs Durables


September's Polar Vortex?  Durable Goods/Retail Sales Slowing into 4Q - Eco Summary 102814


September's Polar Vortex?  Durable Goods/Retail Sales Slowing into 4Q - Durables Table



Christian B. Drake


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more