Grinch Steals Christmas As Durable Goods Crater?

As reported this AM, durable goods orders were very weak. Although much is attributed to aircraft orders, the underlying tone is weak as well. What is highly disturbing in the data is very weak capex orders. Computer orders are down about 30%. Companies like IBM, Microsoft, Cisco, EMC, Intel, Dell, HP, Oracle, SAP, BEA, CA and other infrastructure players rely on a strong fourth quarter as a significantly disproportionate percentage of annual sales.

We can assume part of this rally in large cap technology was in anticipation of a strong fourth quarter. Will we have a strong fourth quarter? Doesn't appear so from this data point. As I stated months ago, while I am comparatively bullish on these companies versus the consumer oriented market leaders over the last four years, I believe the rally is misguided and would not personally own any of these stocks as a long term investment.