Implications: Today's report on durable goods was rip-roaring positive on business investment and confirms the V-shaped recovery. Although overall orders fell 1.3%, all of the decline was due to a huge drop in orders for civilian aircraft, which is the most volatile part of the report and very likely to be temporary. Excluding the transportation sector, orders increased 2.8%, the largest gain since 2007. Ex-transportation orders are up at a 15% annual rate in the past six months. Orders for industrial machinery are particularly strong, up 8.6% in March and up 22.3% in the past year, the strongest 12-month gain since the early 1980s. Meanwhile, shipments of "core" capital goods (which exclude defense and aircraft) increased 2.2% in March (3% including upward revisions to February). Moreover, orders for core capital goods are once again running ahead of shipments, suggesting further strength ahead. Cash-rich companies (who are earning essentially zero percent interest on their money) are deciding to invest their cash. This is consistent with an acceleration in private-sector payroll gains over the next few months.
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