The headline for the durable goods report was not very bright this morning - Durable goods orders slid 8.3 percent in Oct - Yahoo! News

New orders for U.S.-made durable goods tumbled much more than anticipated in October on a big drop in civilian aircraft but were also down unexpectedly when transportation was stripped from the total, a government report suggesting economic weakness showed on Tuesday.
Durables goods — big-ticket items expected to last three years or longer — fell 8.3 percent, the biggest drop since July 2000. The decline was propelled by a 21.7 percent fall in transportation orders, the
Commerce Department said.

But even excluding transportation orders, durables declined 1.7 percent as manufacturing, fabricated metal, and computers and electronics orders all slid.

As is our custom, however, we like to dig a little deeper into the data to determine whether there are any bright spots. Instead, what we saw for the most part was rising inventories and falling orders and shipments. All charts below are based on information provided by the U.S. Census Department and collected by Stock Market Beat.

Although last month we said it looked like it was time to play defense, even that sector is giving back much of its strength.

Also consider computers and related products. Both shipments adn orders are falling through the floor. The potential bullish case is that customers are holding off on equipment upgrades in anticipation of Microsoft (MSFT) Windows Vista. However, given the strong recent performance at Dell and Hewlett Packard (HPQ - Annual Report) this bullish case may be priced in already. That could leave investors holding a heavy bag if the Vista orders don’t come in as expected.

Communications equipment, which had formerly been bucking the trend in technology, has also seen a sharp reduction in order growth.

Semiconductors may be the bright spot, but at this point it seems too early to tell given that the one strong data point is balancing several weak ones. At the least, the strength could support the argument that slowing computer sales and orders are Vista related, and that the semiconductors will be needed to build computers in a few months.

Electrical equipment and appliances also look strong, which is probably due at least in part to strong holiday sales of flat-panel televisions.

There seem to be few places to hide.

The market being in a celebratory mood, little attention is being paid to such gloomy news as the durable goods report, which Briefing.com describes in rather bleak terms:

August durable goods new orders dropped a disappointing 0.5%.  There was nothing in the breakdown of the data to provide contrary cheer. Every key category was soft.

So, in an attempt to find the silver lining and push the market over the critical hump so we can enjoy the champagne we have had on ice since January, 2000, here are the durable goods categories that showed better growth in both shipments and new orders in August (all data sourced from US Department of Commerce, on a non-seasonally adjusted year/year basis.)

The clear winner in today’s report was Defense Capital Goods, which saw nearly a 70% rise in new orders and a 10% rise in shipments. And while the trend does nothing to help our general sense of well-being, with inventory and backlog flat and a customer with good credit quality the defense sector appears to be a good play in this environment.

The runner-up for our affections is Communications Equipment, not traditionally a defensive play but perhaps so today due to how low the sector sunk and the high credit quality of its remaining customers. Those who deride Verizon’s capital spending may not appreciate that the company is one of the last threads on which the economy hangs. At any rate, their spending appears to be lending a helping hand to the environment for comm equipment manufacturers.

In the “ehh, I guess we’ll take it” department is Transportation Equipment. New orders improved and turned positive, while shipments did just a bit better. Still, the inventory growth suggests that the industry is making too much stuff and will have to cut prices, production or both in the near future.

Finally, last but (unfortunately) not least comes Motor Vehicles and Parts.  Orders and shipments for beleaguered Detroit were both down year/year. However, they were down less than they were in July. With inventory building up further the industry may still be going to hell in a handbasket, but it will take longer to get there. That’s positive, isn’t it?

We now return to our previously scheduled celebration.

Found via Dealscape:

The unexpected death of L-3 Communications Holding Inc. CEO Frank Lanza is, of course, terribly sad [see story]. But after a decent interval, this news release will undoubtedly find its way into sales pitches from corporate branding consultants: BROOMFIELD, Colo., June 7 /PRNewswire-FirstCall/ — Level 3 Communications Inc. (Nasdaq: LVLT - News) today issued the following statement to respond to an incorrect media report concerning the company’s CEO, James Q. Crowe. “There was an incorrect media report today stating that Level 3’s CEO had passed away. The report was in fact incorrect and CEO Jim Crowe is well.”

What a macabre twist to the very same mistake we pointed out last week.

Reuters reports:

L-3 Communications Holdings Inc. (LLL.N: Quote, Profile, Research) Chief Executive Frank Lanza died suddenly late on Tuesday, leaving the mid-tier U.S. defense contractor without a designated leader and prey to acquisition-hungry rivals.

The board of the New York-based company, which Lanza built from nothing to become the Pentagon’s ninth-largest contractor, will meet on Wednesday to discuss its leadership.

L-3 shares were up 4 percent on the New York Stock Exchange.

Just last week L-3 shares were downgraded, with the analyst “citing uncertainty over option grant timing, pricey acquisitions and a lack of visibility with succession planning.”

The timing of option grants to Frank Lanza now seems somewhat trivial. The Street is betting that L-3 will be the next pricey acquisition. And that lack of succession planning just might make it happen. So the shares are up.

“The Street” is a cold, calculating beast, and if someone didn’t bid up the shares on the news someone else would have. But that doesn’t cleanse the bad taste we have in our mouths.

This won’t be the first time, but somebody is getting confused about similarly named stocks, and is confusing us in the process. In an AP story this morning, we get this following quote about today’s big move in L-3 Communications (LLL):

L-3 Communications Holdings Inc., down $5.65 at $72.22

CIBC World Markets cut the fiber-optic network operator to “sector performer,” citing uncertainty over option grant timing, pricey acquisitions and a lack of visibility with succession planning.

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