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Capex continues to register strong growth

This proxy for business investment spending continues to grow at impressive rates. New orders for capital goods are up at a 10.3% annualized rate over the past six months, and September orders were up much more than expected (2.4% vs. 0.5%). We've finally seen a new, all-time high for this series. This is undeniably good news, and it shows that businesses are indeed putting their record profits to work, albeit in a hesitatingly slow fashion: profits are up 50% from their Q2/08 levels, yet capex has only just broken new high ground. Yes, things could (and should) be a lot better, but the news today confirms that the economy is still growing and the fundamentals are still improving. We're not in another recession, and we're certainly nowhere near the recession/depression fears that are embedded in 10-yr Treasury yields and S&P 500 PE ratios of 13.

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