What to Watch in the Day Ahead - Wednesday, Sept. 3

Tue Sep 2, 2014 2:36pm EDT
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(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) A big jump in aircraft orders at Boeing is expected to have pushed U.S. factory orders up sharply in July. Even looking behind the "noise", the data is expected to offer the latest sign of the firm trajectory of U.S. manufacturing activity (1000/1400). Also, automakers are expected to report that sales in August raced to an annual pace of 16.6 million units from 16.48 million units in July (0000/0400). Separately, the Federal Reserve issues its so-called Beige Book, an compendium of anecdotes on the health of the economy drawn from the central bank's sources across the nation. The Federal Reserve meets to adopt the Liquidity Coverage Ratio, which bank regulators first proposed in October. The rules force banks to hold enough easy-to-sell assets to meet their cash needs for 30 days, in case the next crisis hits. It is a joint rule with the FDIC and the OCC. The Fed will also vote on the amount of margin buyers and sellers of uncleared swaps need to put up. This is a rule that was first proposed in 2011, but the Basel Committee has since intervened and come out with guidelines last year. Undoubtedly, the new rules will be based on those guidelines. Banks keep a very close eye on the cost of margin to see how popular these products are with hedgers and speculators (1030/1430). Luxury homebuilder Toll Brothers has stayed ahead of its peers in a choppy U.S. housing market recovery as its affluent buyers are less affected by rising home prices and interest rates. While other U.S. homebuilders such as D.R. Horton and PulteGroup reported a less-than-stellar spring selling season, Toll is largely expected to have performed better in the season, which runs from mid-April through mid-June and is to builders what the holiday season is to U.S. retailers. With recent housing data suggesting that the recovery may be picking up steam again, investors will be looking for comments on Toll's capital investment plans for the rest of the year when it reports third-quarter results. Tax preparer H&R Block is expected to report a first-quarter loss, according to StarMine data. H&R Block's first and second quarters are seasonally weak as it is the off-season for U.S. tax filing. Investors will be interested to know about the sale of the company's banking unit, announced in April. Truck and engine maker Navistar is expected to report another messy quarter as it continues to deal with warranty costs related to its big investment in a proprietary engine technology that failed. Economists unanimously expect the Bank of Canada to keep its overnight interest rate on hold at 1 percent and will instead be looking for its evaluation of recent data and whether it will change its language on the future direction of rates. The last announcement explicitly said the bank was neutral on whether rates could go up or down and while analysts see it as unlikely to change this language, many say it is hard to believe the chances of a cut are equal to the chances of a hike. Economists polled by Reuters unanimously expect the next rate move to be up, and the median forecast is for this to be in the third quarter of 2015 (1000/1400). The Canadian arms of Ford, General Motors and Chrysler release August auto sales. The data will follow a record performance for the month of July, when new vehicle sales soared 11.3 percent, with strong demand for trucks driving records at both Chrysler and Ford. Brazil's central bank is expected to hold its benchmark Selic rate at 11 percent for the third straight time, even after the economy fell into recession for the first time in five years. Although inflation has eased somewhat and the economy remains weak, the central bank will likely refrain from any action in the last month of the heated presidential race. Looking ahead, analysts are divided on when the central bank will move rates again and whether policymakers will cut or hike borrowing costs. The Chilean central bank is due to release its latest quarterly Monetary Policy Report, which should update growth forecasts for 2014, give its first forecasts for 2015 and give possible hints on the direction of monetary policy. (Compiled by Ayesha Sruti Ahmed in Bangalore; Editing by Simon Jennings)