KEY DATA: Orders: +6.5%; Excluding Aircraft: +0.2%; Capital Spending: -0.1%/ Claims: +10,000

IN A NUTSHELL: “It still doesn’t appear as if the private sector is investing heavily, and that is troubling.”

WHAT IT MEANS: Another day, another indication that the economy continues on its less than stellar growth path. Durable goods orders soared in June, but don’t get too carried away by the headline number. Nondefense aircraft demand surged by 131%, making up just about all of the increase. Still, the details weren’t terrible. Orders for metals, both raw and fabricated rose and the demand for machinery and communications equipment was up. But the computer and electrical equipment and appliances sectors posted declines. The real concern in the report was the measure of private sector capital spending. This indicator was off slightly after having posted a sharp rise in May. Businesses just cannot seem to make up their minds if they want to go all in on the future economy or move ahead cautiously. With all the chaos in Washington, it should not be a surprise if firms take a wait and see attitude.

New claims for unemployment insurance jumped last week. The four-week moving average, which smooth’s out the volatile data, was flat and remains at a pretty low level. The labor market is tight and a week from tomorrow the July employment report is released. It should give us a better indication of how tight things really are. With the Fed hoping for inflation, the wage and hours worked numbers continue to be the real focus of attention.

MARKETS AND FED POLICY IMPLICATIONS: With Congress wrapped up in the theater of the absurd, businesses are now flying by the seat of their pants. How long will health care dominate the agenda? The quagmire that is health care, which sucked the life out of Democrats, seems to be trapping Republicans. The failure to actually come up with an alternative over the past seven years is causing chaos and there seems to be no simple way out of it. At least there is no simple political way out. When you claim you can quickly and easily replace the ACA with a plan that lowers costs, provides better health care and makes insurance more available, you have creating a challenge that is not likely to be met. The problem is, there is no second best when you start reducing the number of people insured, at least politically. How easily the Republicans can pivot to tax reform, and the impact of the health care debacle on their ability to actually reform the system rather than doing the usual, which is provide tax cuts, is just not clear. And that uncertainty has to weigh on corporate decision-making. As for investors, earnings look good so there appears to be little worry about the future.