What to Watch in the Week Ahead and on Tuesday, May 26
(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
The markets weren't really rocked by Janet Yellen's latest speech, but her words made it clear that the Fed still has designs on raising rates this year, but in a slow fashion, which should keep the pressure on the belly of the curve and boost, however modestly, the longer-dated Treasuries. The dollar should continue to gather a bit of steam, though the market isn't going to push the greenback to parity as quickly as it was expected a couple of months ago. Stocks? They just keep rolling along, regardless of valuations or any effort by strategists to suggest they shouldn't be doing what they're doing, or various scare tactics by yelling about bubbles.
The U.S. Commerce Department releases revised building permits data for April on Wednesday. On Thursday, the National Association of Realtors releases its monthly index of pending sales of existing U.S. homes which is expected to have risen 1 percent in April after gaining 1.1 percent in March. The Commerce Department on Friday releases its preliminary gross domestic product figures for the first quarter. Analysts expect the data to show the economy eased 0.7 percent in the quarter.
On Wednesday, Toll Brothers Inc, the largest U.S. luxury homebuilder, is expected to report higher revenue for the second quarter, helped by strengthening housing demand. Investors will look for an update on the company's full-year forecast and comments on demand trends in the ongoing spring selling season. The season is to homebuilders what the holiday shopping season is to retailers.
Warehouse club operator Costco Wholesale Corp is likely to report third-quarter sales below analysts' average estimate on Wednesday, according to Thomson Reuters StarMine. Retailers have reported mixed results for the quarter ending late April/early May, with Macy's and Kohl's blaming colder-than-usual February and the West Coast port disruptions for slow sales. Others, including Costco's smaller rival Target, reported strong sales with robust online sales and strong demand for apparel, items for children, and health and wellness category.
On Wednesday, the Bank of Montreal reports second-quarter results. On Thursday, Royal Bank of Canada, Toronto Dominion Bank and Canadian Imperial Bank of Commerce, three of Canada's five biggest lenders, will report second-quarter results. Investors look to see if there is any slowdown in profit growth amid concerns about weakness in the energy industry and a sluggish economy. Bank of Nova Scotia, Canada's third biggest lender, reports second-quarter results on Friday.
On Wednesday, Federal Reserve Bank of Richmond President Jeffrey Lacker speaks on "From Country Banks to SIFIs: The 100-year Quest for Financial Stability" before an event hosted by the Louisiana State University Graduate School of Banking, in Baton Rouge, Louisiana. On the same day, Jacob J. Lew, U.S. Secretary of the Treasury, will participate in a moderated conversation at the London School of Economics and Political Science. The discussion will focus on the state of the global economy ahead of the Secretary's travel to a meeting of G-7 Finance Ministers in Dresden, Germany. On Thursday, Federal Reserve Bank of Minneapolis President Narayana Kocherlakota speaks on monetary policy before a Community Leader Lunch hosted by the Helena Branch of the Federal Reserve Bank of Minneapolis in Montana. On the same day, Federal Reserve Bank of San Francisco President John Williams speaks before the Monetary Authority of Singapore Banking Supervision and Regulation joint conference.
Mike Corbat, CEO of Citigroup Inc, the third biggest U.S. bank by assets and one of the biggest players in fixed-income markets, could give an early reading on second-quarter trading revenue on Thursday when he speaks at a conference for institutional investors in New York.
Tiffany & Co, the no. 1 U.S. jeweler, is battling a dearth of tourists as a stronger dollar leads to lower spending on luxury items such as jewelery in the country. The company reported its first fall in quarterly sales after more than one year in March and a big chunk of the blame fell on lower tourist spending, especially at the company's flagship Fifth Avenue store. However, a pull-forward in purchases in Japan before the country's consumption tax increase maybe a bright spot for Tiffany, analysts say. Asia-Pacific still remains a headwind due to political turmoil and lower consumer spending. When the company releases first-quarter results on Wednesday, investors will look out for any updates on full-year forecast and means to mitigate fewer tourist visits in North America. Continued...