Durables

by Larry Levin

Whoa, what's this? Was I dreaming or did I read an honest-to-goodness no BS positive report this morning? Proving once again that economists are as useful as laminated pizza, the Durable Goods data blew away the egg-headed expectations.

The average economists guess for today's durable goods orders data were about +.2%. However, the report came in at +1.3% and its so-called core data were also much better than expected. This drove the market higher today, despite a rise in oil and a potentially devastating hurricane taking aim at oil rigs in the Gulf of Mexico .

Although the headline number was good, not everyone believes it will last. When we think about some of the details [of the durable-goods report], the basis for optimism isn't that great, but the market's reaction shows the market may be ready to embrace better news, said Tony Crescenzi, a market analyst at Miller Tabak & Co. In a note to clients, Mr. Crescenzi wrote that there is weak basis for further gains in durable goods orders given the weak U.S. economy, and that the fresh data should be taken with a grain of salt.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote that the domestic economy remains very weak indeed, and that companies benefiting from the export boom are likely behind the increase in capital spending. The risk must be that in time the combination of slowing global growth and a stronger dollar crimps exports, but for now they are the lifeline, Shepherdson wrote.

There is more data to move the market both tomorrow and Friday so stay ready. Oh, and keep an eye on Gustav.

Real Time Trading Signals*for

Trade Date: 8/27/08

E-Mini S&P Trades*
(before fees and commissions):

1) FT buy @ 10:00am at 1275.50 = +.50 & b/e

2) OTF sell @ 11:00am at 1275.75 = -1.75*2

3) TP buy @12:30pm at 1282.00 = -1.50 (1 lot)

4) FT buy @ 1:10pm at 1280.00 = +2.00 (1 lot)

5) Algorithm positions (6)...combined total...+4.50


ZB (30 Year Bond) Trades*
(before fees and commissions):

1) Sell @ 8:05am at 118.045 = +5.5 (1 lot)

2) Buy @ 9:22am at 118.070 = -1.5*2...combined total...+2.5


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