Coffee With Greta: Waiting For The Fed
Register now for this tomorrow’s free trading Q&A with Derrick Oldensmith on Fed Day! DJIA Futures: -18 (-0.1%) SPX Futures: -2 (-0.1%) NASDAQ Futures: -22 (-0.1%) Good morning friends! Futures are lower as traders wait for Wednesday’s Fed decision. Let’s get right to it! Housing Starts Plunge, Building Permits Rise U.S. new home construction tumbled far more than expected in August. The Census Bureau reported housing starts plunged 11.3% last month to a seasonally adjusted annual rate of 1.28 million units vs 1.43 million expected. That was the lowest level of starts since June 2020 and down 14.8% year over year. Single-family construction dropped 4.3% while multi-family construction tumbled 26.3%. But building may rebound in the months ahead as permits issued rose more than expected. Building permits jumped 6.9% to 1.54 million units vs 1.45 million expected. Single-family permits rose 2% while multi-family permits jumped 14.8%. Fed Meeting Begins The Federal Open Market Committee will kickoff its two-day policy meeting today with the rate decision on Wednesday. CME Group’s FedWatch Tool still shows 99% of traders expecting no rate hike. Focus for the market will be on the Fed’s messaging about future policy decisions. There are still two more Fed meetings this year, on November 1 and December 13. Currently, 28.8% of traders see the possibility of a rate hike in November and 35.4% in December. Oil Rally Continues Oil prices are rising for the fourth straight session. West Texas Intermediate crude futures are up 1.4% at over $92.70 bbl with Brent crude futures up 0.8% at over $95 bbl. Prices have been rising for three consecutive weeks amid supply concerns. The Energy Information Administration reported Monday that U.S. shale output is on track to fall by 9.393 million barrels per day in October. That would be the third straight monthly decline and puts more pressure on global supply. Rocket Lab Plunges After Satellite Launch Failure Rocket Lab USA (RKLB) shares are plunging 18.1% ahead of the open after a failed satellite launch early this morning. The company confirmed its 41st Electron rocket launch from New Zealand failed about 2 minutes and 30 seconds into the flight. The rocket was carrying the Acadia 2 satellite for San Francisco-based Capella space. It was the first failed launch for the company in over two years. Rocket Lab said it is working with the FAA to determine the cause of the issue and postponed its next launch. As a result of that postponement, the company expects to issue revised Q3 guidance. In Case You Missed It Homebuilder sentiment fell more than expected this month. The National Association of Homebuilders’ sentiment index dropped 5 points to 45 vs 49.5 expected. It’s the first time confidence among builders has turned negative in 7 months as higher mortgage rates hurt affordability. Sentiment about current sales conditions fell 6 points to 51, buyer traffic decreased 5 points to 30, and six-month sales expectations dropped 6 points to 49.
Continue Reading -->Coffee With Greta: Fed Week Kickoff
Register now for this week’s free trading Q&A with Derrick Oldensmith on Fed Day! Good morning friends! Futures are flat but mostly lower as traders look ahead to this week’s Fed meeting. Let’s get right to it! Fed Week Traders are looking ahead to the Fed’s rate decision on Wednesday with focus on language about future policy decisions. CME Group’s FedWatch Tool shows 99% of traders expecting no rate hike this week. But the market is more split on whether the central bank might hike again in November and December. The market will be analyzing the FOMC statement and Chairman Jerome Powell’s press conference for a more dovish or hawkish stance on future policy. Meantime, the bulk of important economic data this week is focused on the housing market. The NAHB releases its homebuilder sentiment index at 10:00 a.m. ET today. Then the Census Bureau reports housing starts and building permits at 8:30 a.m. ET Tuesday. And finally, the National Association of Realtors reports existing home sales at 10:00 a.m. ET Thursday. Yields Rise Ahead Of Fed Treasury yields are starting this week higher ahead of Wednesday’s Fed decision. The 2-year yield is up nearly 3 basis points over 5.06% while the 10-year yield is up 2 basis points to 4.35%. Last week’s inflation data was relatively in-line with economists’ expectations and the consumer sentiment index showed a significant decline in inflation expectations. Oil Extends Rally Oil prices are continuing to rise, putting pressure on inflation. West Texas Intermediate crude futures are up 1.2% at nearly $92 bbl while Brent crude futures are up 0.9% at just under $95 bbl. The recent rally comes amid supply concerns after Saudi Arabia and Russia extended their production cuts through the end of the year. Both WTI and Brent have climbed for three straight weeks to the highest prices since November 2022. Prices are on track for the largest quarterly increase since Q1 2022. Arm Slips On Bearish Call Arm Holdings (ARM) shares are down 4.2% ahead of the open after Bernstein initiated coverage on the newly-listed stock this morning. Bernstein analyst Sara Russo rated the stock “underperform” and said it’s too early to know if it will be an AI winner. In a note to clients Russo wrote, “While expectations that Arm will be a beneficiary from AI growth may be adding a premium to the share price, we believe it is too soon to declare them an AI winner. In addition, we remain more conservative on their ability to deliver increased royalty rates at the pace management is guiding.” She put her price target at $46, down more than $14 from where the stock closed on Friday.
Continue Reading -->Coffee With Greta: Rally Fizzles
Register now for next week’s free trading Q&A with Derrick Oldensmith on Fed Day! DJIA Futures: -8 (-0.02%) SPX Futures: -4 (-0.1%) NASDAQ Futures: -36 (-0.2%) Good morning friends! Futures are slipping as traders attempt to hold-on to this week’s rally. Let’s get right to it! Arm Extends Gains After Debut Arm Holdings (ARM) shares are up 1.8% ahead of the open after debuting on the Nasdaq Thursday. The stock began trading Thursday at $56.10 per share on Thursday after the company priced its IPO at $51 per share. ARM closed 24.7% higher at $63.59. That price puts the stock at a high premium. With a $60 billion valuation, the price-to-earning multiple would be over 110 based on the most recent fiscal year profit. Nvidia (NVDA) for comparison currently trades at around 108 times earnings. Workers Strike At Ford, GM, Stellantis Plants S Ford (F) shares are falling 1.1%, General Motors (GM) shares are down 0.4%, and Stellantis (STLA) shares are up 0.6% in premarket trade as thousands of United Auto Workers Union members go on strike at three plants. Workers are on strike at assembly plants of all three companies after the union and automakers failed to reach a new labor contract Thursday night. At midnight eastern time the union posted on X, formerly Twitter, “The UAW Stand Up Strike begins at all three of the Big Three.” The strike includes about 12,700 total workers at three plants: GM’s midsize truck and full-size van plant in Wentzville, Missouri – 3,600 workers Ford’s Ranger midsize pickup truck and Bronco SUV plant in Wayne, Michigan – 3,300 workers Stellantis’ Jeep Wrangler and Gladiator plant in Toledo, Ohio – 5,800 workers This is the first time the UAW has staged strikes at all three of the “Big Three” automakers at once. Import Prices Jump Import prices rose more than expected in August thanks to higher oil prices. The Bureau of Labor Statistics import price index jumped 0.5% vs 0.3% expected. That was the biggest increase in 15 months as foreign-produced fuel costs surged 6.7%. Excluding fuel though, import prices fell 0.1%. The total cost of imports was down 3% year over year with nonfuel import prices falling 0.8%. Export prices rose 1.3% in August but are still down 5.5% compared to a year ago. Key Manufacturing Gauge Rebounds The New York Fed’s Empire State manufacturing index jumped 21 points this month to 1.9. That sharply beat economists’ expectations for -10 and reverses the 20.1 point drop in August. The new orders index jumped 25 points to 5.1 while shipments index rose 24.7 points to 12.4. Unfilled orders rose 1.6 points to -5.2, a sign they are continuing to decline. The six-month expectations index jumped 6.4 points to 26.3, the highest reading in more than a year.
Continue Reading -->Coffee With Greta: Busy Morning
Register now for next week’s free trading Q&A with Derrick Oldensmith on Fed Day! DJIA Futures: +148 (+0.4%) SPX Futures: +21 (+0.5%) NASDAQ Futures: +72 (+0.5%) Good morning friends! Futures are up as traders digest a slew of economic data. Let’s get right to it! Wholesale Inflation Comes In Hot U.S. wholesale inflation pressures were hotter than expected in August. The Bureau of Labor Statistics’ producer price index rose 0.7% monthly and 1.6% year over year. That was higher than economists’ expectations for 0.4% monthly and 1.3% annually and driven by higher gas prices. The BLS report said over 60% of the August increase was due to gas prices, which surged 20% during the month. It was the fastest monthly increase in headline PPI since June 2022. The core PPI rose 0.2% monthly and 2.2% annually. That was in line with expectations. Retail Sales Jump U.S. retail sales rose more than expected in August for the second month in a row. The Commerce Department reported retail sales jumped 0.6% to $697.6 billion. That was higher than expectations for just a 0.1% gain. Like inflation, the jump was driven by higher gas prices. Sales at gas stations jumped 5.2% in August from July. Clothing and accessories store sales rose 0.9%, health and personal care sales were up 0.5%, and grocery store sales increase 0.4%. Three categories saw a decrease in sales totals. Furniture store sales were down 1%, miscellaneous store sales fell 1.3%, and sporting goods sales dropped 1.6%. Weekly Jobless Claims Rise Weekly jobless claims rose less than expected last week. The Labor Department reported 220,000 Americans filed initial claims for unemployment benefits. That was up by 3,000 from the previous week but lower than 225,000 expected. Continuing claims rose by 9,000 to 1.688 million in the week ending September 2, below estimates for 1.693 million. ARM Awaits IPO Chipmaker Arm Holdings is set to make its debut on the Nasdaq later today. The company priced its IPO at $51 per share Wednesday, valuing it at $54 billion. It will trade under the ticker symbol ARM. The U.K.-based company is expected to list at least 95.5 million American depository shares on the Nasdaq. In its prospectus, Arm reported fiscal 2023 revenue of $2.68 billion and profit of $524 million. Arm’s largest customers, including Apple (AAPL), Alphabet (GOOGL), Nvidia (NVDA), Advanced Micro Devices (AMD), and Intel (INTC) said they would buy shares as part of the IPO. Delta Cuts Profit Forecast, Upbeat On Revenue Delta (DAL) shares are rising 2.4% ahead of the open after cutting its Q3 profit outlook but issuing upbeat revenue guidance. The airline now expects adjusted EPS between $1.85 and $2.05 in the current quarter, down from $2.20 to $2.50 previously But the company’s revenue outlook is rosier. Delta expects Q3 revenue to be in the “upper half” of its previous guidance for growth of 11% to 14%. The airline blamed the lower profit outlook on higher fuel costs.
Continue Reading -->Coffee With Greta: Hot CPI
Register now for today’s free trading Q&A on LinkedIn with me and JR Romero! DJIA Futures: +7 (+0.02%) SPX Futures: -1 (-0.01%) NASDAQ Futures: -10 (-0.1%) Good morning friends! Futures are flat as traders digest hotter-than-expected inflation data. Let’s get right to it! CPI Runs Hot U.S.inflation pressures were hotter than expected in August. The Bureau of Labor Statistics’ consumer price index rose 0.6% monthly and 3.7% year over year. That was hotter than economists’ expectations for a 3.6% annual gain. The core CPI, which excludes food and energy prices, rose 0.3% monthly and 4.3% annually. That was higher than economists’ estimates for a 0.2% monthly gain but in-line with annual expectations. Gas prices saw the largest jump on a monthly basis, surging 10.6% from July. On an annual basis, gas prices were still down 3.3%. Grocery prices rose 3% annually, restaurant prices were up 6.5%, and transportation services prices jumped 10.3%. Oil Prices Extend Gains Oil prices are up again this morning on supply concerns. West Texas Intermediate crude futures are 0.5% higher at over $89 bbl while Brent crude futures are up 0.4% at just under $92.50 bbl. Bank of America analysts expect Brent futures to top $100 bbl by year-end. On Tuesday, OPEC maintained its forecast for global oil demand to rise by 2.25 million barrels per day in 2024. But supply is expected to remain tight as Saudi Arabia and Russia continue supply cuts of 1.3 million bpd until the end of this year. The International Energy Agency meantime lowered its Q4 demand growth forecast by 600,000 bpd. American, Spirit Airlines Cut Forecasts American Airlines (AAL) shares are down 4% with Spirit Airlines (SAVE) shares falling 3.7% ahead of the open after both companies cut their summer profit forecasts. American now expects Q3 adjusted EPS between $0.20 and $0.30 vs $0.85 to $0.95 previously. The company cited higher fuel prices and a new pilot labor deal for that revision. The airline also cut its operating margin forecast in half to between 4% and 5%. Spirit expects to report margins of -15.5% in Q3, worse than the previous forecast for -5.5% to -7.5%. The airline also lowered its revenue guidance to between $1.245 billion and $1.255 billion vs $1.3 billion to $1.32 billion previously. Mortgage Demand Stalls Mortgage demand continued to fall last week as high rates put pressure on buyers. The Mortgage Bankers Association reported total application volume was down 0.8% from the previous week. Purchase applications actually rose 1% weekly but were 27% lower from a year ago. Refinance applications dropped 5% weekly and 31% year over year. The refinance share of applications also dropped to 29.1% vs 63% at the same time in 2020. It was the seventh decrease in eight weeks and the lowest level of applications since 1996. The average 30-year fixed contract rate rose to 7.27% from 7.21%. In Case You Missed It Apple (AAPL) shares fell 1.7% on Tuesday after the company unveiled 4 new models of the iPhone. The basic iPhone 15 model will come in two sizes, with the smaller starting at $799. The iPhone 15 Pro will also come in two sizes, starting at $999. As expected, the phones will come with a new USB-C charging port in compliance with new EU regulations. The phones can be pre-ordered starting this Friday and will be available September 22.
Continue Reading -->Coffee With Greta: Oracle Drags
Register now for tomorrow’s free trading Q&A on LinkedIn with me and JR Romero! DJIA Futures: -38 (-0.1%) SPX Futures: -11 (-0.2%) NASDAQ Futures: -47 (-0.3%) Good morning friends! Futures are falling as high oil prices pressure the market and Oracle drags on tech. Let’s get right to it! Oracle Tumbles Oracle (ORCL) shares are dropping 9.5% ahead of the open after fiscal Q1 revenue missed expectations. Here’s how the database software maker’s results compared to analysts’ estimates: Adjusted EPS: $1.19 vs $1.15 expected Revenue: $12.45 billion vs $12.47 billion expected Overall revenue grew 9% year over year. Oracle’s cloud services and license support segment saw revenue jump 13% from a year ago to $9.55 billion vs $9.44 billion expected. But the cloud license and on-premises license segment revenue dropped 10% to $809 million vs $892.7 million expected. Hardware revenue fell 6% year over year to $714 million vs $739.6 million expected. And cloud infrastructure revenue totaled $1.5 billion, up 66% from a year ago but slowing from the 76% growth in fiscal Q4. Oracle’s forecast was also weak. The company expects fiscal Q2 adjusted EPS of $1.30 to $1.34 and 5% to 7% revenue growth. Analysts were calling for adjusted EPS of $1.33 and 8% revenue growth. Oil Prices Jump Higher oil prices are putting pressure on the market this morning. West Texas Intermediate crude futures are up 1.5% to over $88.50 bbl while Brent crude futures are up 1.1% to over $91.60 bbl. Brent prices topped $90 last week for the first time in 10 months after Saudi Arabia and Russia extended production cuts until the end of the year. Now investors are awaiting new data on U.S. crude stockpiles later today. A preliminary Reuters poll showed expectations for U.S. inventories to fall by about 2 million barrels. The International Energy Agency and OPEC will also release monthly reports later this week. Apple Rises Ahead Of iPhone Event Apple (AAPL) shares are up 0.4% in premarket trade ahead of the company’s iPhone launch event later today. The event is set to begin at 1:00 p.m. ET at its headquarters in Cupertino, California. Apple is expected to unveil four new iPhone 15 models at this event. Like the iPhone 14, the new phones are expected to include two sizes of the iPhone 15 and two sizes of the iPhone 15 Pro. The biggest change expected at this year’s event is Apple switching to a USB-C charging port on its phones from the Lightning port on older phones. That change is required by new regulations in Europe. Other announcements at the event are expected to include a new Apple Watch and iOS 17.
Continue Reading -->Coffee With Greta: Tech Bounce
Register now for Wednesday’s free trading Q&A on LinkedIn with me and JR Romero! DJIA Futures: +71 (+0.2%) SPX Futures: +23 (+0.5%) NASDAQ Futures: +126 (+0.8%) Good morning friends! Futures are rising as traders attempt to shake-off last week’s loss. Let’s get right to it! Qualcomm Jumps On Apple Chip Deal Qualcomm (QCOM) shares are up 5.3% ahead of the open after announcing a new chip agreement with Apple (AAPL) this morning. Qualcomm said today it will supply Apple with 5G modems for smartphones through 2026. That’s much longer than Qualcomm’s previous expectation for Apple to switch to an internally developed 5G modem starting in 2024. The continued sales to Apple are expected to boost Qualcomm’s handsets segment. About 21% of the company’s fiscal 2022 revenue came from Apple sales. By 2026, Qualcomm only expects to supply 20% of the modems Apple needs. Hostess Soars On J.M. Smucker Takeover Announcement Hostess Brands (TWNK) shares are rallying 19.1% in premarket trade after J.M. Smucker (SJM) agreed to buy the company. J.M. Smucker will acquire Hostess for $34.25 per share in a cash and stock transaction. The deal values Hostess at $5.6 billion. The transaction has already been unanimously approved by both company’s boards and is expected to close in the third quarter of J.M. Smucker’s current fiscal year, ending April 30, 2024. Tesla Jumps On Morgan Stanley Upgrade Tesla (TSLA) shares are up 6.6% ahead of the open after the stock was upgraded by Morgan Stanley analyst Adam Jonas on Sunday. Jonas upgraded the stock to Buy from Hold and raised his price target to $400 a share from $250 a share. He called Tesla his top pick and cited autonomous driving as the reason. Jonas wrote, “The autonomous car has been described as the mother of all AI projects. In its quest to solve for autonomy, Tesla has developed an advanced supercomputing architecture that pushes new boundaries in custom silicon and may put Tesla at an asymmetric advantage in a $10 trillion total addressable market.” Meta Is Developing AI System Meta Platforms (META) shares are resign 1.4% in premarket trade following a Wall Street Journal report the company is developing a new AI system. The Journal reported Sunday that Meta is working on a system as capable as OpenAI’s most advanced model. It’s also expected to be more powerful than the AI software it released with Microsoft (MSFT) two months ago, Llama 2. Meta is reportedly planning for the new AI model to be ready next year. The report said the company is currently building up data centers and acquiring more Nvidia (NVDA) H100 chips. CEO Mark Zuckerberg is reportedly pushing for the model to be open-sourced, which differs from its main competitors in the AI space.
Continue Reading -->Coffee With Greta: Losing Week
Register now for next week’s free trading Q&A on LinkedIn with me and JR Romero! DJIA Futures: +12 (+0.03%) SPX Futures: +3 (+0.1%) NASDAQ Futures: +8 (+0.1%) Good morning friends! Futures are flat as the market heads for a losing week on concerns about interest rates. Let’s get right to it! Treasury Yields Mixed U.S. Treasury yields are mixed this morning as investors remain concerned about the future of interest rate policy. The 2-year yield is flat at 4.95% while the 10-year yield is up 3 basis points at 4.25%. Investors have become more concerned about the possibility of another rate hike after strong economic data released this week. CME Group’s FedWatch Tool shows 93% expect no rate hike at the September 20 meeting while about 40% are now anticipating a hike at the November 1 meeting. Kroger Falls On Mixed Earnings Report Kroger (KR) shares are down 1.6% ahead of the open after reporting mixed Q2 results. Here’s how the grocery store chain’s results compared to analysts’ estimates: Adjusted EPS: $0.96 vs $0.91 expected Revenue: $33.85 billion vs $34.13 billion expected Revenue was down 2.3% year over year while same-store sales grew 1% vs 1.3% expected. Kroger reiterated its full-year outlook for adjusted EPS of $4.45 to $4.60 and same-store sales growth of 1% to 2%. The company also revealed it agreed to pay $1.2 billion in installments over the next 11 years to settle the majority of opioid claims against the company across the country. Kroger said this settlement will not affect its ability to close its proposed acquisition of Albertsons (ACI). DocuSign Jumps On Strong Earnings DocuSign (DOCU) shares are up 1.8% in premarket trade after beating Q2 expectations on the top and bottom line and hiking its full-year outlook. Here’s how the electronic signature company’s results compared to analysts’ estimates: Adjusted EPS: $0.72 vs $0.66 expected Revenue: $688 million vs $678 million expected DocuSign now expects full-year revenue between $2.73 billion and $2.74 billion vs $2.71 billion and $2.73 billion previously. But the company also warned about a challenging macro environment. The CEO said, “While we are pleased with our results, like many others, we’re seeing continued macro pressures tempering expansion rates.” RH Tumbles On Weak Guidance RH (RH) shares are dropping 7.8% ahead of the open after beating Q2 expectations but issuing weak Q3 guidance. Here’s how the luxury home good retailer’s results compared to analysts’ estimates: Adjusted EPS: $3.93 vs $2.65 expected Revenue: $800 million vs $791 million expected But the company warned the higher-end housing market, which it relies on, will likely remain rocky. The CEO said, “We continue to expect the luxury housing market and broader economy to remain challenging throughout fiscal 2023 and into next year as mortgage rates continue to trend at 20-year highs and the current outlook is for rates to remain unchanged until the second quarter of 2024.” RH forecast Q3 revenue of $740 million to $760 million, below $779 million expected. For Q4, the company expects $760 million to $800 million in sales vs $775 million expected. RH raised the low end of its full-year sales outlook, now expecting $3.04 billion to $3.1 billion in revenue vs $3 billion to $3.1 billion expected. Analysts were forecasting $3.08 billion in full-year revenue.
Continue Reading -->Coffee With Greta: Focus On Rates
Register now for next week’s free trading Q&A on LinkedIn with me and JR Romero! DJIA Futures: -86 (-0.3%) SPX Futures: -33 (-0.7%) NASDAQ Futures: -197 (-1.3%) Good morning friends! Futures are falling as traders remain focused on interest rates. Let’s get right to it! Weekly Jobless Claims Drop Weekly jobs claims fell unexpectedly again last week. The Labor Department reported 216,000 Americans filed initial claims for unemployment benefits. That was down by 12,000 from the week before and lower than expectations for claims to rise to 233,000. It was the lowest level of claims since February. Continuing claims fell by 36,000 to 1.68 million in the week ending August 26 vs 1.72 million expected. Q2 Productivity Revised Down, Labor Costs Revised Up Unit labor costs during the second quarter were revised higher while worker productivity was revised down. The Bureau of Labor Statistics reported labor costs rose 2.2% in Q2, up from the first estimate of 1.6%. That was down from the 3.3% increase in Q1. The higher costs included a 5.7% increase in hourly compensation. Q2 productivity increased 3.5%, down from the 3.7% initial estimate and lower than 3.8% expected. That change included a 0.5% downward revision to output and 0.2% downward revision to hours worked. GameStop Drops Despite Earnings Beat GameStop (GME) shares are down 1.9% ahead of the open despite beating Q2 expectations on the top and bottom line. Here’s how the video game retailer’s results compared to analysts’ estimates: Loss per share: $0.03 vs $0.14 expected Revenue: $1.16 billion vs $1.14 billion expected GameStop’s expenses decreased to 27.7% of net sales vs 34.1% a year ago. The stock originally jumped in after-hours trading after the results on Wednesday but has since pulled back. AI Plunges C3.ai (AI) shares are tumbling 13.3% in premarket trade after beating fiscal Q1 expectations but issuing weak guidance. Here’s how the artificial intelligence software company’s results compared to analysts’ estimates: Adjusted loss per share: $0.09 vs $0.17 expected Revenue: $72.4 million vs $71.6 million For the fiscal second-quarter, C3.ai called for an operating loss between $27 million and $40 million. That was sharply higher than analysts’ expectations for a $26.6 million loss. The company also withdrew its forecast to reach non-GAAP profitability by the end of this fiscal year. The CEO said, “After careful consideration with our leadership and our marketing partners, we have made the decision to invest in lead generation, branding, market awareness, and customer success related to our Generative AI solutions.” In Case You Missed It The Fed’s latest Beige Book was released Wednesday afternoon, saying, “Contacts from most Districts indicated economic growth was modest during July and August.” Consumer spending on tourism was stronger than expected during the period while other spending slowed. The survey said job growth was subdued across the nation and most districts expect wage growth to slow broadly in the months ahead. Respondents said price growth slowed overall as businesses struggle to pass along cost pressures to consumers. That resulted in lower profit margins across several districts. Activity in the U.S. services sector was stronger than expected in August. The Institute for Supply Management’s services PMI rose unexpectedly to 54.5% last month vs 52.5% expected. That reading was up by 1.8% from July. It was the eight consecutive month of positive readings, with any reading above 50 signaling growth in the sector. The business activity index rose 0.2% to 57.3% and the new orders index increased 2.5% to 57.5%.
Continue Reading -->Coffee With Greta: Continued Weakness
Register now for today’s free trading Q&A on LinkedIn with me and Sami Abusaad! 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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