After no January Durable Goods report as the government was shut down one month ago, today we got a double whammy of a Durables report, with both November and December data, and as many had warned, it was disappointing, rising just 1.2%, below the 1.7% expectations, if up from 1.0% in November (revised up from 0.7%).

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However, much of the upside was once again due to transportation orders, read Boeing defense and airplane spending. Indeed, new orders for nondefense aircraft and parts soared 28.4%, by far the biggest contributor of December spending. Ex airplanes, under the hood things were even uglier:

• New orders ex-trans. rose 0.1% in Dec. after 0.2% fall
• New orders ex-defense rose 1.8% in Dec. after being unchanged

Most importantly for those following the buyback vs capex debate, non-defense capital goods orders ex-aircraft, i.e. core capex spending, fell 0.7% in Dec. after falling 1.0% in Nov (revised lower from -0.7%).

This was the third consecutive month of declines, the longest stretch of contraction since late 2015 when China nearly dragged the entire world into a recession and only the early 2016 Shanghai accord saved the world from what would have been a certain contraction.

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