What to Watch in the Day Ahead - Wednesday, Dec. 3
(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) The Automatic Data Processing employment report will offer an early read on the U.S. labor market situation in November. Private payrolls are expected to increase by 221,000 after rising by 230,000 in October (0815/1315). Separately, the Institute for Supply Management is expected to report that its services industry index rose to 57.5 in November from 57.1 in October (1000/1500). Meanwhile, the Federal Reserve issues its so-called Beige Book, a compendium of anecdotes on the health of the economy drawn from the central bank's sources across the nation. Federal Reserve Bank of Philadelphia President Charles Plosser speaks on the economic outlook before the Charlotte Economics Club (1230/1730). Federal Reserve Board Governor Lael Brainard participates in "Financial Stability: a Conversation with Lael Brainard," hosted by the Brookings Institution (1400/1900). Federal Reserve Bank of Dallas President Richard Fisher gives a Texas economic update with comments about monetary policy before the Dallas Business Club (1930/0030). Troubled apparel retailer Abercrombie & Fitch Co is likely to report third-quarter profit above analysts' estimates, according to Thomson Reuters 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 remains weak and intense competition forces it to cut prices to attract customers. The market will look for comments on expectations for the holiday season and signs of improvement in the company's brands. Microsoft Corp's new CEO Satya 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 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. Chip design software maker Synopsys Inc is expected to report fourth-quarter revenue slightly above estimates, according to Thomson Reuters StarMine data. The company lost a patent infringement lawsuit 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 Synopsys has to pay out will affect its results. The Bank of Canada will announce its rate decision. The central bank will keep interest rates at 1 percent, according to the poll of 41 economists, and will hold them there until the fourth quarter of 2015, slightly later than forecast in a Reuters poll in October (1000/1500). 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. Royal Bank of Canada, the country's largest lender, is expected to report a stronger fourth-quarter profit, helped by loan growth at its domestic retail operation and income from its growing wealth management operations. Analysts have estimated earnings of C$1.58 per share.
A U.S. appeals court will hear arguments over whether to revive a long-running lawsuit against Google by authors who accused the internet search giant of digitally copying millions of books for an online library without permission. In November 2013, a federal judge in Manhattan accepted Google's argument that its scanning of more than 20 million books, and making "snippets" of text available online, constituted "fair use" under U.S. copyright law. The decision, if it survives the appeal to the 2nd U.S. Circuit Court of Appeals in New York, would let Google continue expanding the library, which it said helps readers find books they might not otherwise locate. Teen apparel retailer Aeropostale Inc is expected to report a third-quarter loss smaller than what analysts are expecting, according to Thomson Reuters StarMine data. The mall-based retailer's sales have been falling as its 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. Brazilian central bank's monetary policy committee, known as Copom, sets the country's benchmark lending rate. A Reuters poll showed the central bank is expected to raise interest rates, tightening its grip on inflation but putting further pressure on the already sluggish economy. All the 49 economists surveyed agreed the central bank will raise borrowing costs 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. Separately, HSBC's Purchasing Managers Index for Brazilian Services is scheduled for release. It dropped on a seasonally adjusted basis to a 26-month low of 48.2 in October from 51.2 in September (0700/1200). (All analysts' estimates are according to Thomson Reuters I/B/E/S) (Compiled by Sourav Bose in Bengaluru; Editing by Kirti Pandey)
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