What to Watch in the Day Ahead - Friday, Oct. 17

Thu Oct 16, 2014 3:13pm 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) General Electric Co's third-quarter earnings are expected to be driven by higher sales of its jet engines and oil and gas equipment as the U.S. conglomerate tries to convince investors of its strategy of becoming a more focused infrastructure company with improved profit margins and a simpler organization. Analysts will look for updates on recent transactions, including GE's $16.9 billion deal for the power assets of France's Alstom, spinoff of its North American credit card business and sale of its appliances unit, which are designed to give GE more exposure to industrial businesses. Morgan Stanley will report its third-quarter results. It was another strong quarter for investment banking activity on Wall Street, though trading businesses are still experiencing light volumes. Now that the bank has more than half of its revenue coming from wealth and asset management, it will help offset any weakness in trading. Investors will be watching to see whether Morgan Stanley gets closer to targets for improving return-on-equity and boosting profitability within wealth management. The U.S. Commerce Department will release September data for housing starts and building permits. In August, groundbreaking declined 14.4 percent to a seasonally adjusted annual 956,000-unit pace (0830/1230). Separately, the Thomson Reuters/University of Michigan's preliminary reading for October for the overall index on consumer sentiment is expected at 84.1. Final September reading on the index finished at 84.6, the highest since July 2013 (0955/1355). Federal Reserve Bank of Boston President Eric Rosengren gives welcome and opening remarks before the "Inequality of Economic Opportunity in the United States" conference, where Federal Reserve Chair Janet Yellen is also scheduled to give her speech. Investors will eye Yellen's comments closely for any clues on her thinking on monetary policy (0830/1230). Honeywell International is expected to post third-quarter revenue growth of about 4 percent, with the biggest sales jump in its performance materials and technologies unit, which makes chemicals used in the oil and other sectors. Honeywell shares have held up better this year than those of rival U.S. diversified manufacturers. The company has signaled that it planned to get more aggressive with acquisitions over the next few years.

Ahead of the November quarterly refunding, the U.S. Treasury Department will release the agenda for Primary Dealer Meeting (1200/1600).

Railroad operator Kansas City Southern is expected to report higher third-quarter revenue and profit, helped by increased shipments of agricultural products and automobiles. Kansas City Southern operates on a unique North-South route through the central United States and gets half of its revenue from cross-border trade with Mexico, which rose during the quarter. Investors will be looking for an update on 2015 outlook. Textron Inc posts third-quarter results before the bell. An increase in sales of its Cessna business jets is expected to help Textron post higher quarterly revenue and profit - a trend that is likely to continue in the current quarter as business confidence improves. Deliveries of Bell helicopters, however, are expected at best to remain flat in the current quarter due to lower government spending. Investors will be looking for details of the company's 2015 outlook. The initial public offering of Zayo Group Holdings Inc is expected to raise about $694 million, valuing the fiber network company at up to $5.7 billion. Zayo, whose rivals include CenturyLink and Equinix, has a network covering seven countries, connecting the largest U.S. and European cities. Zayo's regional and metropolitan fiber networks allow its customers to transport data, voice, video and internet traffic as well as to interconnect their networks. The company's revenue almost tripled to about $1 billion in 2013, but net loss widened to $137.2 million from $1.2 million, a year earlier. Zayo's investors include private equity firms Oak Investment Partners, Columbia Capital and Charlesbank Capital Partners. Statistics Canada releases September reading on inflation. Analysts expect year-on-year inflation rate to cool to 2.0 percent in September from 2.1 percent in August. Separately, economists expect the closely-watched annualized core rate to remain unchanged at 2.1 percent in September, while the monthly figure for core CPI is expected to edge lower to 0.2 percent from 0.5 percent in August (0830/1230). Mexico's national statistics institute releases the jobless rate for September. The jobless rate of Latin America's No. 2 economy fell in August. The seasonally adjusted unemployment rate was 4.87 percent in August (0900/1300). (All analysts' estimates are according to Thomson Reuters I/B/E/S) (Compiled by Sourav Bose in Bangalore; Editing by Kirti Pandey)