What to Watch in The Week Ahead and on Tuesday, May 27
(The Day Ahead is an email and PDF publication that includes the day's major stories and events, analyses and other features. To receive The Day Ahead, Eikon users can register at . Thomson One users can register at RT/DAY/US. All times in ET/GMT) WEEK AHEAD Fed presidents will be busy at speaking engagements next week, with all eyes on clarity on the long-term vs short-term labor debate relative to wage pressures. Atlanta Fed's Dennis Lockhart speaks on banking and monetary policy in Baton Rouge on Wednesday, while Cleveland President Sandra Pianalto speaks on Thursday. Three Fed presidents speak on Friday - Kansas City's Esther George, Richmond's Jeffrey Lacker and Pianalto. Senate Majority Leader Harry Reid is expected to set a final vote on Stanley Fischer's Fed vice chairmanship when the Senate returns from its Memorial Day recess the week of June 1. Data next week is expected to show that the economy contracted in the first quarter and got off to a sedate start in the April-June period. The Commerce Department's revisions on Thursday are expected to show the GDP contracted at a 0.5 percent annual pace. It was previously estimated to have expanded at a 0.1 percent rate. On Friday, the department is expected to report that consumer spending increased 0.2 percent after jumping 0.9 percent in March. A steadily increasing membership base has spurred Costco's comparable store sales growth since last year as U.S. buyers look for cost-saving options amid a weak economy. Monthly same-store sales have been strong in the year so far, signaling the company has not been affected by the harsh winter weather that many other retailers have flagged for weak results. When Costco reports third-quarter results on Thursday, investors will be focusing on new membership signups, membership renewal rates and the rise in number of executive members. They will also be watching out for the effect of currency fluctuations on the company's international operations, which are expected to rub some shine off quarterly sales. Chipmaker Avago Technologies is likely to report on Thursday second-quarter results below analysts' average estimates, according to StarMine data. The company had warned of lower revenue last quarter, saying it lost revenue from a smartphone customer. Analysts had speculated that the customer to be Apple Inc. Fashion accesories retailer Michael Kors is scheduled to report fourth-quarter results before the bell on Wednesday amid high expectations after its trendy handbags and watches won over holiday shoppers and the company raised its full-year forecast. The company has already grown bigger than rival Coach and investors will look for an initial 2015 forecast. Teen apparel retailer Abercrombie & Fitch is expected to post another decline in quarterly sales when it reports results before the bell on Thursday. The company said earlier this year that it would lower prices to battle competition and has been expanding its merchandise to include shoes and larger clothes sizes for women to draw more shoppers. Investors will be looking out for any commentary on when sales are expected to pick up and for new initiatives to boost sales. Luxury homebuilder Toll Brothers is scheduled to report second-quarter results on Wednesday. There is emerging evidence of a sector-wide weakness going beyond the unusual weather. While the recent run up of interest rates might not worry the company, shortage of properties and labor scarcity might weigh on the results. Data analytics software maker Splunk has forecast first-quarter adjusted margins to shrink 8-10 percent as it invests in product development and hires more sales people. However, analysts expect revenue to beat expectations due to strong growth in licensing revenue, as corporate and government clients spend more on indexing and analyzing data. The company reports results on Thursday. Chinese solar company ReneSola is expected to report a much smaller first-quarter loss on Thursday, helped by improving demand and prices for its panels from China. Investors will also want to know if the China improvement is sustainable and will look for the company's U.S. shipment forecast after it was named as a respondent in the U.S. Department of Commerce's anti-dumping investigation. TUESDAY, MAY 27 The Commerce department is expected to report that durable goods orders fell 0.5 percent in April after surging 2.5 percent in March. A measure of business spending plans is forecast to rise 0.2 percent after increasing 2.9 percent in March. (0830/1230) Weakness in auto parts retailer Autozone's do-it-yourself business could offset increased demand due to extreme winter. When the company reports third-quarter results before the bell, the focus will be on how it plans to grow its do-it-for-me business, which accounts for only 16 percent of its overall revenue. Web-based human resources software maker Workday's first-quarter profit and revenue are likely to beat analysts' average expectations, according to StarMine data. The company has forecast a rise of 61-67 percent in revenue in the first quarter, driven by subscription growth. Chinese solar company JinkoSolar Holding is expected to post its fourth straight quarterly profit as it benefits from sales to higher-margin markets such as Japan and the United States. Investors will be looking for comments on the company's plans of spinning off its solar power plant business and will also want to know if demand from China is improving. (U.S. markets will remain closed on Monday, May 26, in observance of Memorial Day.) (Compiled By Ayesha Sruti Ahmed in Bangalore)
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