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Coffee With Greta: Continued Weakness


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DJIA Futures: -82 (-0.2%)

SPX Futures: -11 (-0.3%)

NASDAQ Futures: -41 (-0.3%)

Good morning friends!

Futures are slipping, adding to Tuesday’s losses. 

Let’s get right to it!

Boston Fed President Comments On Rates

Boston Fed President Susan Collins is calling for a patient approach to future monetary policy. 

In a speech this morning, Collins said the Fed may be “near or even at the peak” for interest rates.

But she said more hikes may be needed depending on future data. 

Collins said, “Overall, we are well positioned to proceed cautiously in this uncertain economic environment, recognizing the risks while remaining resolute and data-dependent, with the flexibility to adjust as conditions warrant.”

These comments align with other recent Fed statements which have all supported remaining data dependent. 

Collins said, “There are promising developments, but given the continued strength in demand, my view is that it is just too early to take the recent improvements as evidence that inflation is on a sustained path back to 2%.”

CME Group’s FedWatch Tool shows 93% of traders expect no rate hike on September 20 with the market split on the possibility of one last hike on November 1.

Roku Rallies After Layoff Announcement

Roki (ROKU) shares are up 9.3% ahead of the open after announcing plans to lay off 10% of its staff. 

The company announced that move in a new SEC filing this morning. 

Roku’s cost-cutting efforts also include consolidating office space, reviewing its content portfolio, and reducing outside services expenses.

The company also hiked its Q3 revenue guidance, now expecting $835 million to $875 million vs $815 million previously. 

Southwest Slips On Weak Bookings

Southwest Airlines (LUV) shares are down 3.6% in premarket trade  after reporting weak leisure bookings in August. 

The airline said those bookings were on the lower-end of its expectations and cut its Q3 outlook in response. 

Southwest now expects revenue per available seat mile to decline year over year by 5% to 7% vs 3% to 7% previously. 

The airline also expects fuel costs to be higher in the quarter, forecasting $2.70 to $2.80 per gallon vs $2.55 to $2.65 previously. 

Southwest did say it booked record revenue for Labor Day weekend and in a statement said, “the Company continues to expect record third quarter operating revenues.” 

Mortgage Demand Drops

Mortgage demand fell to a 27-year low last week despite rates pulling back for the first time in weeks. 

The Mortgage Bankers Association reported total application volume fell 2.9% from the previous week, to the lowest level since December 1996. 

Purchase applications fell 2% weekly and 28% year over year while refinance applications were down 5% weekly and 30% annually. 

The average 30-year fixed contract rate slipped to 7.21% from 7.31% the previous week. 

That was the first decline in several weeks but rates remained more than a full percentage point higher than a year ago.

Trade Deficit Widens Less Than Expected

The U.S. trade gap widened less than expected in July. 

The Commerce Department reported the deficit rose 2% to $65 billion. 

The was lower than expectations for $68 billion. 

The June deficit was also revised lower from $65.5 billion to $63.7 billion. 

Both exports and imports rose in July. 

Exports were up 1.6% to $251.7 billion, the first gain in three months. 

Imports rose 1.7% to $316.7 billion.

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