What to Watch in the Week Ahead and on Monday, Dec. 15

Fri Dec 12, 2014 3:10pm EST
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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) WEEK AHEAD Markets head into a relatively quiet week. Investors are worried, simultaneously, about the threat that lower oil poses to demand for energy projects and energy jobs that have been growing the economy, and about what message lower costs are sending about global demand. The decline in energy has also put high-yield bonds in the crosshairs, as investors are increasingly concerned about credit spreads widening that may undermine the gains in the stock market at a time when investors have been busy trying to square up bets after a good year and now instead are playing defense. The question is whether the Fed removes its language about a "considerable period" of keeping rates low - if so, it may be a signal the Fed isn't overly worried yet about oil's declines, and if it keeps the language, it suggests more concern. Policymakers at the Federal Reserve will debate whether to drop their pledge to hold interest rates near zero for a "considerable time" at a meeting on Tuesday and Wednesday, with many economists betting it will be replaced with a softer verbal commitment. Signs of strength in the job market argue for a change to maximize policy-making flexibility, but officials may worry financial markets could come to expect a rate hike sooner than they intend. At the same time, a dark global backdrop in which inflation is increasingly looking like a worry of yesteryear should allow the central bank scope to bide its time when it comes to raising borrowing costs. The Fed will issue its statement at 1400 ET (1900 GMT) on Wednesday, along with fresh economic and interest rate projections. Fed chief Janet Yellen will discuss it all at a news conference a half hour later. A swath of economic indicators suggest the U.S. economy is revving up its engines. Inflation is not one of them. A plunge in gasoline prices means a Labor Department report due Wednesday will likely show a decline in consumer prices last month, and inflation even outside of energy and food is expected to be sedate. That could color discussion that same day at the Fed on when to tighten policy. Low interest rates are seen boosting new home building for November in data due Tuesday, while a manufacturing output report on Monday will likely show acceleration despite a strengthening U.S. dollar. Sportswear maker Nike Inc is expected to report strong second-quarter results on Thursday as it gains market share in Europe at the expense of rivals such as Adidas. Market share gains in the United States, particularly in the basketball and running shoes segments, and strong demand in China are also expected to boost results. Investors will be looking out for changes to full-year forecast, as the impact from the stronger dollar is likely to have increased since the company reported results in September. Consulting and outsourcing company Accenture Plc is, on Thursday, expected to report first-quarter profit marginally above estimates, according to Thomson Reuters StarMine. Accenture had said that it expected profitability to improve this fiscal year as it looked to trim operating costs. The company, whose outsourcing business competes with India's Infosys Ltd and Tata Consultancy Services, has been grappling with pricing pressure and sluggish business spending in the last few quarters. General Electric Co hosts analysts and investors in New York on Tuesday to present its financial forecasts for next year, with Wall Street keen to hear updates on the company's cost cutting plan, its massive acquisition of Alstom's power assets, and efforts to slim down its finance operations. As an economic bellwether, GE's view of the health of various sectors will be of interest, especially oil & gas, an area in which GE has been investing and one that has come under scrutiny given the falling oil prices. CarMax Inc, the largest U.S. used car retailer, is expected to report strong third-quarter sales on Friday as the supply of used cars in the market rises. Falling gas prices are also likely to have boosted demand, analysts say. Investors will be looking for comments on the company's subprime sales, which were hurt by tighter lending norms in the previous quarter. Package delivery company FedEx Corp is scheduled to report second-quarter results on Wednesday. The company reported a better-than-expected 24 percent jump in first-quarter profit in September. General Mills Inc, the maker of Cheerios cereal and Betty Crocker cake mixes, will release second-quarter results on Wednesday after it cut its full-year sales and profit growth forecast in November. Red Hat Inc, which makes open-source software, is likely to post third-quarter profit below the average analysts' estimate on Thursday, according to Thomson Reuters StarMine. In September, the company forecast lower-than-expected revenue for the quarter due to slower billings growth. Analysts also expect foreign exchange headwinds and slower growth in some regions to weigh on results. Management's commentary on fourth-quarter outlook will also be in focus. Olive Garden parent Darden Restaurants Inc reports quarterly results for the first time since activist shareholder Starboard Value LP ousted the company's entire board. When the company reports second-quarter results on Tuesday, investors will be looking for an update on its CEO search and progress on the changes being made by new management. ConAgra Foods Inc reports second-quarter results on Thursday. The company reported a higher-than-expected first-quarter profit in September. Mining equipment maker Joy Global Inc's results have been hit in the past two years as a coal supply glut forced miners such as Peabody Energy and Alpha Natural Resources to close mines and cut spending on new equipment. Joy Global's larger rival, Caterpillar Inc, has increased focus on its construction equipment business to offset lower sales to the mining industry, a market the company does not expect will pick up next year. Joy Global flagged a pick up in maintenance spending earlier this year, suggesting miners could no longer put off servicing older equipment. When the company reports fourth-quarter results on Wednesday, investors will be looking for an update on expectations for that business next year since it makes up more than two-thirds of the company's revenue. Contract electronics maker Jabil Circuit Inc is, on Wednesday, likely to post first-quarter profit and revenue above analysts' average estimate, according to Thomson Reuters StarMine. The company is expected to benefit from strong sales of the iPhone 6 and 6 Plus. KB Home, the fifth-largest U.S. homebuilder, is coming off a choppy recovery in the housing market this year, which recorded some of the strongest home price increases since the financial crisis, driving away some buyers. Some of KB Home's larger rivals indicated a pickup in demand towards the end of the year as mortgage rates stabilized and new rules were proposed to make borrowing easier. When the company reports fourth-quarter results on Thursday, investors will be looking for comment on expectations for California, its biggest market, which some analysts suggest will be one of the drivers of the recovery next year. Navistar International Corp reports fourth-quarter results on Tuesday. The maker of trucks, buses and military vehicles posted a smaller-than-expected loss in the previous quarter. On Thursday, Winnebago Industries Inc, the maker of motorhomes and camping trailers, is expected to report another strong quarter of sales, lifted by rising consumer confidence and plunging gas prices. Loan platform operator On Deck Capital's initial public offering on Wednesday is expected to raise about $180 million, valuing the company at up to $1.3 billion. The company makes loans of up to $250,000 and counts Google Ventures, Institutional Venture Partners, Tiger Global Private Investment Partner and SAP Ventures among its stockholders. MONDAY, DECEMBER 15 Verifone Systems Inc is scheduled to report fourth-quarter results. The maker of credit card swipe machines raised its full-year revenue forecast when reporting third-quarter results, encouraged by strong sales of devices that can accept chip-embedded credit cards. Diversified U.S. manufacturer Honeywell International Inc releases its 2015 outlook. The aerospace components and climate control systems maker, which will also hold a call to discuss its forecast, is expected to post a 10 percent increase in earnings per share next year, according to Thomson Reuters I/B/E/S. The Chilean central bank is due to release its latest quarterly Monetary Policy Report (IPoM), which should update growth forecasts for 2014 and 2015 and give possible hints on the direction of monetary policy. (Compiled by Ayesha Sruti Ahmed in Bengaluru; Editing by Savio D'Souza)