Latest / Markets with Megan: A Quick Financial Markets Update / Focus or False Security? The Market’s Mixed Signals S2 060 | 07-25-25

Transcript

Focus or False Security? The Market’s Mixed Signals S2 060 | 07-25-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: We got some further evidence today that the second quarter GDP actually, while positive, is still a bit challenged.
• 0:07
  Megan Horneman: It's Friday, july 25th, and this is Markets with Megan.
• 0:11
  Megan Horneman: If you like this podcast, please subscribe and hit that alarm bell.
• 0:14
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• 0:18
  Megan Horneman: What we want to do is break down the economic data that we've received this morning and what does it mean for economic growth.
• 0:24
  Megan Horneman: And what we received this morning was the preliminary reading on durable goods orders, and we focus on this because there's several components of this report that are direct feeds into the GDP number that we'll get and keep in mind, next week we'll get that advanced reading of the second quarter GDP.
• 0:41
  Megan Horneman: So let's dig into these details that we got for the month of June.
• 0:45
  Megan Horneman: First of all, the headline number, which includes all of the goods orders.
• 0:49
  Megan Horneman: That means airlines defense.
• 0:52
  Megan Horneman: This actually declined.
• 0:54
  Megan Horneman: It was the biggest drop we've seen since the pandemic, since 2020.
• 0:58
  Megan Horneman: Now, to put that in perspective, we also saw a pretty big increase in the prior month, so a drop is not that surprising.
• 1:06
  Megan Horneman: However, when we dig apart the details, it's showing us that there is some challenges due to the uncertainty around tariffs in business spending.
• 1:16
  Megan Horneman: So, when you exclude out the non-defense ex-aircraft orders.
• 1:22
  Megan Horneman: This tends to be a leading indicator for GDP Because, keep in mind, these aren't firm orders.
• 1:25
  Megan Horneman: This tends to be a leading indicator for GDP because, keep in mind, these aren't firm orders.
• 1:26
  Megan Horneman: They can be canceled.
• 1:27
  Megan Horneman: That actually declined for the third time out of the past six months.
• 1:31
  Megan Horneman: It was expected to be positive, but it actually declined 0.7%.
• 1:35
  Megan Horneman: Now, the most important number in here is the actual shipments, so what orders have been placed, have been fulfilled and have actually been shipped?
• 1:43
  Megan Horneman: That number is a direct input into that GDP that we'll get next week and we saw that rise about four-tenths of a percent.
• 1:51
  Megan Horneman: So you are seeing some modest growth here from a business spending perspective.
• 1:57
  Megan Horneman: Now let's look at where this is being concentrated.
• 1:59
  Megan Horneman: Aircraft orders tend to create a lot of volatility around that headline number.
• 2:04
  Megan Horneman: When you look at non-defense aircraft orders, there was a lot of it placed in the beginning of this year.
• 2:09
  Megan Horneman: They were up 231% in the month of May and we did see over a 50% drop here in June, so that's not too surprising can be highly volatile numbers.
• 2:18
  Megan Horneman: When you look at some of the other areas, we're still seeing some investments being made here, whether it's orders on vehicles, some of the other areas.
• 2:24
  Megan Horneman: We're still seeing some investments being made here, whether it's orders on vehicles, orders on electric equipment, machinery.
• 2:27
  Megan Horneman: These things are still growing.
• 2:29
  Megan Horneman: So we are seeing some CapEx spending from businesses.
• 2:33
  Megan Horneman: It is a bit challenged here because there is that uncertainty around what will happen from the trade deals Again.
• 2:41
  Megan Horneman: Next week's a much bigger week.
• 2:42
  Megan Horneman: We'll get that first reading on second quarter GDP.
• 2:45
  Megan Horneman: We'll also get to the jobs report, then we will get personal income and spending.
• 2:50
  Megan Horneman: There's a lot of earnings.
• 2:52
  Megan Horneman: We'll get the Fed's preferred inflation reading, the PCE core, and then we will get some more information on home sales.
• 2:59
  Megan Horneman: But really the big thing will be the Fed meeting which takes place in the middle of next week, and we don't expect the Fed to be making any changes at this policy meeting.
• 3:08
  Megan Horneman: Instead, we think they're going to probably let people know that September is not a done deal either.
• 3:13
  Megan Horneman: That's all we have today.
• 3:15
  Megan Horneman: If you like this podcast and want a history of it, you can go to marketswithmegan.
• 3:17
  Megan Horneman: fm.
• 3:19
  Megan Horneman: Thank you.