Durable Goods Orders decline unexpectedly

The other shoe dropped this morning as Durable Goods Orders for June came in at -1.0% compared to May's data of -0.6%. Expectations were for a positive +1.0%. They revised May's data downward, as well, to -0.8% from -0.6% and that isn't good either. If you look at Durable Goods Orders less Transportation, the data came in at -0.6% compared to May's data of +1.2%. This is not good news for the economy nor for the stock market.

So couple yesterday's Conference Board's Sentiment Index data which was also disappointing at 50.4 versus an expected 51.0 and a previous month data revised of 54.3, and you have 2 sets of poor numbers if you wanted to see a strengthening economy, to help solve the Unemployment problem. Things are pointing in the wrong direction. Instead of getting better we are getting worse. There is no other way to be realistic about these numbers.

I will be out this morning and will not see the market's reaction until I return, but Futures are dropping in pre-market, the Dow Futures are down 30. They should be down a lot more in my view on this data. European markets are still positive after the reporting our news on Durable Goods Orders. Be looking for the positive spin they try to put on this on CNBC. But you believe the spin at your own peril. I notice that CNBC is sprinkling in good earnings reports to lessen the focus on Durable Goods data.

Be sure to leave a comment below, if you want to add anything to the conversation or the spin.

More on Consumer Confidence data for July

In order to put the data in perspective here are some facts on Consumer Confidence data released today by the Conference Board:

The Conference Board, a private research group, said Tuesday that its Consumer Confidence Index slipped to 50.4 in July, down from the revised 54.3 in June. Economists surveyed by Thomson Reuters expected 51.0. Just to put the number in perspective, if you look at a chart of the data from Market Harmonics charting it shows that Consumer Confidence has stayed relatively low and the same since June 2009. These are the facts. To look at their chart click here. It has not been updated with the data released today, but if you look at the last point, which should be revised upward to 54.0, not 52.9, and then see where 50.4 is on the axis, you can clearly see we are in the same range we have been in for over 1 year and that we are really not feeling better.

The decline follows last month's nearly 10-point drop, from 62.7 in May, which marked the biggest since February, when the measure also fell 10 points.

One component of the Consumer Confidence Index, which measures how people feel now about the economy now, declined to 26.1, from 26.8. The other barometer, which measures respondent's outlook over the next six months, declined to 66.6, from 72.7 last month.

This is not good as Consumers represent 70% of the economy. Americans are reluctant to spend any money on any non essentials it seems, understandably with the jobless rate near 10%.

The Conference Board survey is based on a random survey that was mailed to 5,000 households from July 1 to July 21. It is relevant and a leading indicator rather than what the reported GDP number that will be released Friday, which is a lagging indicator. Tomorrow's Durable Goods orders while can be a leading indicator, it doesn't mean that the Sales will be there but rather merely a build of some inventories so remember that tomorrow when the data is reported at 8:30am EST.

December's Consumer Confidence rises. And the point is?

Don't be fooled by the headlines about the rise in Consumer Confidence for this month. Here's a direct quote from one article from this headline. And I quote,"The Conference Board said its Consumer Confidence Index rose to 52.9, up from a revised 50.6 in November, but the reading is still far short of the 90 that would signify a solid economy. In October, consumer confidence was 48.7." So you see yes, Consume Confidence is up in December, but let's face it a reading of 52.9 is a long was from 90. I can remember this Index was as high as the mid 140's. To see a chart from 1967 click on this link:

To put the numbers into a more provocative perspective, after 9/11 the index dropped to the mid 80's. We aren't yet up to post 9/11 levels. I just wish the media would not continue with the hype of an improved economy. We aren't all stupid you know! This hyping isn't working on me and I suspect not on you either. Tell me by making a comment.

Market review

So Continuing Claims are down a bit today and the Weekly Job Claims are down a little over 8,000 but you would think by the commentary on CNBC this morning that everything was turning for the better and we are almost at a point where we are coming out of the recession. Bah, humbug! You can't believe that hype really, can you? I surely don't. Look folks, let's face it, many are on vacation and things are slow in business this summer, including layoffs. Restaurants might be surviving based upon summer vacation visitors and many stylists might be getting some business because people wanted their hair done before their vacation. But I tell you things are no better out there and this Fall, which by the way is only 2 months away, is going to bring back more unemployment. Don't be lulled by complacency that things are truly better, by just buying into an overbought market. You will surely be disappointed and lose some capital if you do. Next week they will have the Unemployment report for July and while it currently stands at 9.5% unemployment in June, I expect a creep up for July, maybe to 9.7%.

But remember the Consumer Confidence numbers came out this week and were down from the previous month. June numbers from the Conference Board for Consumer Confidence was 49.3 and in July it was 46.6 and when the economic outlook is good this number is usually over 90 to as high as 120. So most Americans don't see things improving going forward, and are concerned about whether they will have a job or not. Many writers of economic newsletters are wondering about whether there is sufficient capital to truly have a free market right now and they fear it is manipulation that has created this rally. I am concerned about this too. It is in Wall Street's interest and now the Federal Government to have the stock market rise to give us all the confidence that things are getting better and therefore we should trust the stock market with our capital and invest. I would like to share one line of a recent report I have seen and must keep confidential. Here it is: "even if the Chinese lent the U.S. all their $2 trillion, it would only cover this year’s U.S. borrowing. Where is the U.S. going to get next year’s? Because next year, it’s going to need even more. Let me be as clear as possible. There’s no way out of this without major structural changes. It’s not going to be just a disaster. Catastrophe is a better word."

The Put to call ratio is about 0.92 and the VIX closed yesterday at $25.61 and remember what I have said all along: Preserve capital and we will have a major stock market correction sometime before the Options expiration for October. We are still in the range from 7,800 to 9,300 on the Dow and have not gone above that level yet. If you want to try to capitalize on the move up in the market, go for it but have your hand on the trigger to sell. You have to have the time to watch the market to be able to do it though.