Two headlines from Bloomberg News this morning:
It's tough out there for an economic forecaster. Everything's unexpected!
The durable goods number is probably more of a surprise than the fact that new home sales declined by .6 percent, month-to-month (and a huge 32 percent compared to May 2008.) The key figure -- orders for non-defense capital goods excluding aircraft -- rose 4.8 percent. We can put that one directly into the "green shoots" category.
But it's hard to find encouragement in the new home sales data, unless one is comforted by the fact that the inventory of unsold new homes fell from 10.4 months supply to 10.2, and the year-on-year decline in median price fell only 3.4 percent, which was the smallest 12-month-drop, Bloomberg tells us, this year.
Bloomberg's Courtney Schlisserman also speculates that the big foreclosure-fueled price drops for existing homes are making it hard for homebuilders to compete. Why buy an expensive new home when you can grab a bargain from a bank desperate to get rid of a foreclosed property at any price?
Whatever the case, in the first hour of trading on the New York Stock Exchange, investors appeared to be far more excited about the durable goods upside jolt than the new home sales downside disappointment. The Dow was up 100 points, providing some relief from several days of investor gloom, while everyone waits for the next "surprise."