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US we have a problem, and its name is durable goods

A man looks at a Turbo Chef oven at the General Appliance & Kitchen store in Berkeley, California.
Kimberly White | Bloomberg | Getty Images
A man looks at a Turbo Chef oven at the General Appliance & Kitchen store in Berkeley, California.

U.S. durable goods have sent a shudder through the market, after July's headline number checked in much weaker than expected, down a whopping 7.3 percent versus expectations of a 4 percent decline.

Even the much-parsed ex-transportation figure came in far below expectations with a 6.7 percent plunge. Excluding defense and air, the core number was down 3.3 percent, after four consecutive up months.

You can't even blame it on seasonality or some statistical fluke. This was the most high profile data point this week, and the result greatly complicates the taper talk.

The pressure is really on the nonfarm payroll report for August, due next week. You really need a strong number for the Fed to even flirt with scaling back its bond purchases in September. Consensus for nonfarm payrolls is around 166,000, but that number needs to be really strong —arguably over 200,000.

The U.S. Treasury 10-year yield dropped about 3 basis points on that news, to 2.79 percent. This is the second day in a row the 10-year has dropped, following Friday's disappointing July New home sales report.

Elsewhere

1) China's Shanghai index rose 1.9 percent overnight. A spokesman for the Cabinet's statistics agency "There are growing signs of stabilization and also of further growth," the spokesperson said. "We are confident we can hit our full-year growth target."

While that's not much to go on, both Citigroup and Credit Suisse reportedly upped their China GDP outlook.

2) Italian stocks are down 2.4 percent on more political instability. Berlusconi's center-right coalition is threatening to bring down the government if the government votes to expel him from parliament. The former prime minister was recently convicted of tax fraud.

3) BATs and Direct Edge announced a merger today. I noted on Friday that the deal makes sense for several reasons, most importantly because it would increase the market share for stock trading, which is an increasingly low-margin, low profit business. The combined entity would control 21 percent of all stock trading, making it the second largest exchange in the U.S. after the NYSE.

Exchange market share (source: Tabb Group)

NYSE 23%

NASDAQ 18%

Direct Edge 11%

BATS 10%

Internalized 37%

4) Muriel Siebert, RIP. The dean of female brokers died this weekend at 80. I met with Muriel on the floor many times in the past 17 years. Despite her many accomplishments she was always most proud of the fact that she was the first woman to own a seat at the NYSE, beginning in 1967. She never actually worked on the floor, but she was a frequent visitor.

She loved to tell everyone that when she came here there was no ladies room on the floor. This did not seem to irk her as much as the fact that there was no ladies room in the Luncheon Club on the seventh floor! That's when she put her foot down. They had to build a ladies room there, next to the men's room. But— shades of Get Smart! (which had just debuted two years before)— they had to build the entrance through one of the phone booths.

So to get to the Ladies Room at the Luncheon Club, the ladies had to go through phone booth #5, a story Art Cashin still likes to tell.

By CNBC's Bob Pisani

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

Wall Street