What to Watch in the Week Ahead and on Monday, Dec. 1
(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 A slew of data next week ranging from manufacturing to employment and trade will offer fresh clues on how well the U.S. economy is weathering the global slowdown. On Tuesday, automobile manufacturers are expected to report strong sales figures for November. The ADP employment report on Wednesday will offer an early read on the labor market situation in November. Private payrolls are forecast increasing 228,000 after rising 230,000 in October. Also on Wednesday, the Institute for Supply Management will likely report that its services industry index rose to 57.5 in November from a reading of 57.1 in October. On Friday, the Labor Department is expected to report that nonfarm payrolls increased 228,000 in November after rising 214,000 in October. The unemployment rate is forecast remaining at a six-year low of 5.8 percent and wages rising a tepid 0.2 percent. Also on Friday, the Commerce Department is expected to report that the trade deficit narrowed to $41.5 billion in October from a $43.0 billion gap in September. Speeches by several Federal Reserve officials next week could help shed light on how much longer the Fed may keep rates low in the teeth of stronger U.S. economic growth and a rapidly dropping unemployment rate. Highlights include two of the central bank's most influential policymakers, Fed Vice Chair Stanley Fischer and New York Fed Chief William Dudley, whose views are seen as very much in line with those of Fed Chair Janet Yellen; and the first public speech by new Board Governor Lael Brainard. Investors will also hear from the presidents of the Dallas, Philadelphia and Cleveland Feds. Abercrombie & Fitch Co, the troubled apparel retailer, is likely to report a better-than-expected third-quarter profit on Wednesday, according to StarMine. Although Abercrombie has improved its production and distribution supply chain and has introduced newer, trendier merchandise, the company's sales glut is not expected to improve as mall traffic continues to be weak and intense competition forces it to cut prices to attract customers. Barnes & Noble Inc, the largest bookstore chain in the United States, is expected to report a profit above analysts' estimates for the second quarter on Thursday, according to StarMine. The company, which said it would spin off its Nook Media business in 2015, has been offering discounts on popular books and has added gifts and home goods to its stores, in addition to improving the presentation of popular books to drive traffic to its stores. The company said in September that sales would be helped by higher demand for young adult and children's books. On Thursday, Kroger Co, the biggest U.S. supermarket operator, is expected to report a third-quarter profit above analysts' average estimate, according to StarMine. The company raised its full-year profit forecast in September, boosted by its acquisitions of Harris Teeter Supermarkets and online vitamin and supplements seller Vitacost.com. However, it said sales were expected to remain slow in the second half of the year as it did not expect consumer spending to pick up. But larger rivals Wal-Mart and Target bucked several quarters of slow same-store sales, helped by a drop in gasoline prices and higher discounting in the third quarter. On Wednesday, new Microsoft CEO Satya Nadella faces rapturous first annual shareholder meeting. Nadella is likely to get a warm reception at his first annual shareholders' meeting, having added $90 billion to the company's market value since taking the helm in early February. Nadella has soothed Wall Street and restless investors with a string of bold moves designed to haul the aging software behemoth into the mobile, cloud-computing era, such as putting its Office suite on Apple's iPad. Some militant investors are pushing for shareholders to vote down Nadella's recently revealed $80 million multi-year pay package. That is almost certain to fail, but Nadella may yet trip himself up with his own prolixity, as he did at a women's computer conference in October, when he suggested women should not ask for pay raises. Royal Bank of Canada, the country's largest lender, is expected to report a stronger fourth-quarter profit on Wednesday, helped by loan growth at its domestic retail operation and income from its growing wealth management. Analysts are forecasting adjusted earnings per share of C$1.58. Bank of Montreal, the country's No. 4 lender, is expected to report a fourth-quarter profit on Tuesday, supported by loan growth at its Canadian and U.S. retail arms. Analysts expect the company to report adjusted earnings of C$1.68 a share, roughly in line with a year earlier. Guidewire Software Inc releases first-quarter results on Tuesday. The company, which makes software for the property and casualty insurance industry, is expected to report revenue well above estimates, according to StarMine data. Guidewire, which sees most of its revenue come from licensing, is expected to benefit from a long-deferred deal from one customer. The company said that it intends to spend more this year to invest in research and development and expand in new territories like Europe. Aeropostale Inc, the teen apparel retailer is expected to report a loss for the third quarter on Wednesday below analysts' estimates, according to StarMine. The mall-based retailer's sales have been falling as its mostly teen customers favor clothing from other fast fashion brands such as H&M, Forever 21 and Zara, and cut back on discretionary spending. Low mall traffic has also prompted the company to discount heavily to drive traffic. Network communication equipment maker Finisar Corp is expected to report revenue and profit marginally above estimates for the second quarter on Thursday, according to StarMine data. While the company's telecom business has been struggling, in the data com segment, the company has been seeing strong demand for its products. Finisar has also been seeing good demand for certain products, particularly in China. On Wednesday, chip design software maker Synopsys Inc is expected to report fourth-quarter revenue marginally above estimates, according to StarMine data. The company lost a patent infringement verdict to Oregon-based electronic design automation company Mentor Graphics Corp in October and investors will be looking for any information regarding the case and how the damages the company has to pay out will affect Synopsys' results. Bank of Nova Scotia will report fourth-quarter results on Friday, with profit slated to take a hit from a charge for soured bets in the Caribbean and Latin America. Scotiabank had warned in November it expected to book a pretax charge of C$451 million, reducing earnings by about 28 Canadian cents a share. Canadian Imperial Bank of Commerce, Canada's No. 5 lender, is expected to report a fourth-quarter profit on Thursday. The bank has benefited in recent quarters from strong gains at its wealth management and investment dealer divisions. But investors will be closely watching results at its retail and business banking arm, which was hit by last year's sale of about half of its Aeroplan Visa credit card portfolio. Toronto-Dominion Bank, Canada's second-largest lender, is expected to report a fourth-quarter profit on Thursday. The bank's bottom line has been boosted in recent quarters by gains at its core Canadian retail business and the impact of buoyant capital markets on its investment banking and trading arm. On Thursday, Gildan Activewear Inc, the Canadian clothing maker, is expected to post a higher fourth-quarter profit, helped by an increase in sales from its printwear business and branded apparel. The company is also expected to have benefited from lower cotton costs during the third quarter. Gildan acquired a Canadian hosiery company, Doris Inc, to add to its own list of brands such as Gold Toe socks and Gildan underwear. Investors will look for comments around the company's new product line such as Gildan Platinum and an update on costs due to expansion of retail business, which weighed on the company's earnings last quarter. The Bank of Canada will likely defer an interest rate hike until late next year despite high household debt and above-target inflation, a Reuters poll showed. The central bank will stay put at Wednesday's policy decision, according to the poll of 41 economists, leaving its key interest rate on hold until the fourth quarter of 2015, slightly later than forecast in a Reuters poll in October. Separately, Bank of Canada Governor Stephen Poloz will be interviewed on stage at The Economist's The Canada Summit, in his first public remarks since the central bank's rate decision in the morning. Brazil's central bank is widely expected to raise interest rates for a second straight meeting next week, tightening its grip on inflation but weighing further on sluggish economic growth, a Reuters poll showed. All the 49 economists surveyed agreed the central bank will raise borrowing costs on Dec. 3 from the current 11.25 percent. Most, or 29 economists, expect the bank to raise rates by 25 basis points, to 11.50 percent. The remaining 20 think policymakers will opt for a bolder 50-point hike as part of recent government efforts to boost market confidence in President Dilma Rousseff's economic policy. MONDAY, DECEMBER 1 The Institute for Supply Management is expected to report that its national manufacturing index slipped to 58.0 in November from a reading of 59.0 in October (1000/1500). Federal Reserve Vice Chairman Stanley Fischer participates in panel before the Council on Foreign Relations symposium, "100th Anniversary of the Federal Reserve," (1300/1800). Federal Reserve Bank of New York President William Dudley also speaks at an event hosted by Barnard M. Baruch College (1215/1715). The RBC Canadian Manufacturing Purchasing Managers' index, a measure of manufacturing business conditions is scheduled to be released. It rose to a seasonally adjusted 55.3 last month from 53.5 in September (0930/1430). Peru's statistics agency reports inflation data for November. In October, rising consumer prices pushed the annual inflation rate rose above the central bank's target ceiling for the first time in months (0100/0600). Brazil's central bank releases results of a weekly economic survey with more than 100 financial institutions. This will include forecasts for GDP, interest rates and inflation rates. Separately, The HSBC Purchasing Managers' Index for Brazil's manufacturing is scheduled to be released. It dropped to 49.1 in October from 49.3 in September in seasonally adjusted terms (0700/1200). Mexico's HSBC Mexico Manufacturing Purchasing Managers' Index is scheduled to be released. It rose to 53.3 in October, after adjusting for seasonal variation, from 52.6 in September (1030/1530). (All analysts' estimates are according to Thomson Reuters I/B/E/S) (Compiled by Sourav Bose in Bangalore; Editing by Maju Samuel)
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