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Durable goods slowdown could soften Fed taper

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Recapping the day's news and newsmakers through the lens of CNBC.

Durable goods slowdown could soften Fed taper

Notes:

We all like to think the economy is getting better, but then something like Monday's dismal durable goods report comes along to remind us that things are still pretty shaky. Orders for long-lasting products had their biggest drop in nearly a year, down a worse-than-expected 7.3 percent in July and reversing three months of gains.

The numbers suggest manufacturing will not bounce back as fast as many economists had anticipated. Of special concern was a 3.3 percent decline in nondefense capital goods orders excluding aircraft, a gauge of business spending plans. Some analysts now think weak data like these will lead the Federal Reserve to reduce its tapering next month, making a smaller cut in bond purchases than many had expected.

Quotes:

"This is a big, big set of red lights at the durable goods intersection."—CNBC's Rick Santelli

"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."—CNBC's Bob Pisani

"There's a lot of people thinking that maybe bad news would actually be good news [for financial markets] at this point in the economic cycle. ... Maybe concerns about Fed tapering start to moderate."—Brian Levitt, senior economist Oppenheimer Funds

September looks even riskier this year

Notes:

Investors beware. Those durable goods numbers, plus some worrisome housing data, could make for a rocky September—a month that's historically the worst one for stocks, anyway. September, of course, will bring the long-anticipated mid-month meeting of the Federal Reserve, when tapering will or will not begin. There also will be German elections, tax changes in Japan, and a U.S. budget debate. Analysts say much of the stock market's gains this year were based on the belief the economy would pick up in the second half, and now that's in doubt.

Quotes:

"In August, the spring has been coiling, and in September the spring explodes. What people are kind of doing is taking positions to prepare for next month."—Marc Chandler, chief currency strategist at Brown Brothers Harriman

"September is usually not a good month for equities, so there are the seasonal issues. Given the volatility in the first half, net net, September is not going to be great, but October, November and December should be good."—Binky Chadha, Deutsche Bank chief global strategist

Trump: Students got what they paid for

Notes:

America's premier showman often acts like any publicity is good publicity, but not this time. Developer and TV star Donald Trump is firing back after New York's attorney general sued Trump and his namesake for-profit university for fraud. The $40 million suit filed Saturday claims the investing seminars were a bait-and-switch that proved useless. Trump says students got exactly what they expected, and that the AG is retaliating for a lack of Trump campaign donations.

Quotes:

"Everything was a lie. ... The students were not taught anything except how to be victims of a bait and switch. ... They were fleeced."—New York Attorney General Eric Schneiderman

"The students that enrolled knew exactly what they were doing and what they were getting, and after the seminars, and after they finished the courses, they were given ... a report card to sign on us: What do you think of the job they did? What do you think of the instructors? We had a 98 percent approval."—lawsuit target Donald Trump

A tale of two recoveries, one good, one bad

Notes:

If you're an investor you have a lot to be thankful for, with the S&P 500 up about 150 percent since March 2009. But many Americans have not been riding that wave, and have therefore essentially missed out on the recovery. In fact, for about 95 percent of the population the recovery has been a bust, largely because, unlike the top 5 percent, the rest have the bulk of their wealth tied up in their home.

Quote:

"Average all wealth and income and it appears that the economy is expanding to the benefit of all, when it fact only the top 5 percent have escaped the recession; the recession never ended for the bottom 95 percent."—Charles Hugh Smith, of the alternative financial blog, oftwominds.com

—By Jeff Brown, Special to CNBC.com.

Market Insider with Patti Domm