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Trade Deficit Comes in Lesser Than Expected

Busy earnings report activity after yesterday’s close — and most of it stronger than expected — has helped give a boost to pre-market activity this Hump Day. Microsoft MSFT, Alphabet GOOGL and Chipotle CMG, among others, showed calendar Q1 strength across sectors. Also, sliding market indices over the past week and a half looked due for a bid, and they’re getting it: the Dow is +40 points at this hour, the S&P 500 is +7 and the Nasdaq — home to many of the tech companies reporting positive earnings surprises — is +120 points currently.

Advance Trade Balance in Goods for March improved month over month: -$84.6 billion is notably better than the downwardly revised -$92 billion reported in February. This is the second-lowest print of the 12-month cycle, and first tighter than -$90 billion since November of last year. We’re also gladly well removed from the sub-$10 billion zone we found ourselves grappling with as of April of 2022.

Preliminary Durable Goods Orders, also for March, came in much higher than anticipated on headline: +3.2% versus expectations of +0.5% and the previous month’s downwardly revised -1.2% the previous month. This is also higher than any print we’ve seen since December of last year. (As a preliminary figure, it’s important to spell out, these results are subject to change in future revised issues.)

But these numbers give us an excellent example of why it’s important to strip out volatile Transportation costs; when we do this, we see the +3.2% figure dwindle to +0.3% — still stronger than the previous month’s 0.0%. Non-defense, ex-aircraft (a proxy for “normal” business spending) came in -0.4%; Shipments also reached -0.4% for the month. We can see clearly that commercial aircraft had a big month and skewed the headline Durable Goods number.

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Of course, there’s no bigger aircraft maker on the planet than Boeing BA, which posted mixed results in its Q1 report this morning. Negative earnings of -$1.27 per share was a deeper cut than the -98 cents expected, while revenues of $17.92 billion outpaced the Zacks consensus by +3.25%. Boeing also announced it plans to boost production of its 787 MAX, even with some supply constraints remaining. Shares are up +3% on the news; year-to-date, Boeing is tracking the S&P almost exactly, up +6.1%.

Thermo Fisher TMO outperformed expectations on both top and bottom lines: earnings of $5.03 per share beat the Zacks consensus by 8 cents (although down from the $7.25 per share reported a year ago) on quarterly sales of $10.71 billion, which beat forecasts by +1.35% (though down from $11.82 billion in the year-ago quarter). Shares are trading down -4% on underperformance in its Life Sciences business.

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