We are continuing to get bad data from Europe. Business climate from Germany and Belgium was horrific. Also industrial Eurozone orders were negative (surprised by a full percent). I am totally dumbfounded what the heck EUR/USD is doing up here. I know, I am not the only one. This is almost a paradox, that with all the recent data the currency of the recession-bound economy would go up. Is the market wrong, or is it "fixed"?
US durable goods came in higher than expected. Everyone rushed to the wires to denounce recession worries. Well, let's look under the hood. While the headline number is greatly helped by autos and aircraft, the other important components were weak. Here is the breakdown for negative new orders:
Communications Equipment -24.8%
Computers and related -7.4%
Appliances -1.8%
Machinery -1.5%
Capital Goods (excluding aircraft) -1.5%
Let's not forget the regional data from Philly and Richmond Fed. It pointed to lower orders all around. Looking at above numbers all cyclical components are very weak.
Please excuse my wet blanket, but I think this report is highly suspect. And if anything, Tech and Industrials will hurt once this data is digested.
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