What to Watch in the Week Ahead and on Monday, Aug. 24
(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 Equities could remain under pressure if turbulence in China's stock market continues to stoke worries about the global growth picture. After breaking through July lows on Thursday, support on the S&P 500 is now being looked at around the January lows in the 1,980 to 2,000 range, at which point stocks may be primed for a bounce. Any further attempts by the world's second-largest economy to devalue the yuan could also bring more pain for emerging markets and their currencies. Next week's economic data, including the second reading on GDP and more data on the housing market, which was strong in the past week, may bring back some expectations for a September rate hike from the Fed. The dollar, which eased in the wake of the central bank's minutes released on Wednesday, could see a rebound if the data shifts perceptions back towards September for liftoff from the Fed. If the dovish interpretations of the Fed hold it may help keep a bid under bonds, along with month-end extensions for Treasuries, concerns over tumbling stocks and low inflation concerns. However, yields could come under pressure as the Treasury sells new supply while Fed Vice Chair Stanley Fischer will be closely watched when he speaks on inflation in Jackson Hole next Saturday for any rate hike clues. The National Association of Realtors on Thursday releases its Pending Home Sales data for July. Economists expect the index to have gained 1 percent in July after it declined 1.8 percent in the previous month. The Conference Board, an industry group, is expected to issue the index of consumer attitudes on Tuesday. The U.S. consumer confidence index is expected to rise to 93.3 in August from 90.9 last month. On the same day, financial firm Markit's preliminary reading of its Purchasing Managers Index for the service sector is predicted to edge higher to 56.0 in August from the final reading of 55.7 in July. Also on Tuesday, the S&P/Case Shiller composite index of 20 metropolitan areas releases for the month of June. The index in June is projected to have gained 5.1 percent, year over year. Toll Brothers Inc, the largest luxury U.S. homebuilder, is likely to report a jump in third-quarter orders on Tuesday, as the housing recovery gathers steam. Latest data showed a rise in housing starts as well as mortgage applications, suggesting the market was firing on all cylinders. Demand is expected to spike in the next few weeks, ahead of a possible interest rate increase in September. Toll Brothers is better positioned than most other national homebuilders since its affluent customers are less affected by fluctuations in mortgage rates. Investors will be looking for comments on whether Toll expects increases in selling prices to moderate over the next few months. On Thursday, discount retailer Dollar General Corp is expected to report second-quarter revenue in line with analysts' average estimate. The company, which is set to be dethroned as the top U.S. discount retailer by store count after it lost a takeover battle for smaller rival Family Dollar Stores Inc to Dollar Tree Inc, expects to speed up store openings this year. On Wednesday, PVH Corp, the owner of Tommy Hilfiger and Calvin Klein brands, is expected to report second-quarter sales below estimates. PVH, which gets a majority of sales from international markets, is affected by a strong dollar that reduces the value of those sales. Sales are likely to fall in the quarter, in part due to currency impact in the core Tommy Hilfiger brand, analysts say. The company has been increasing promotions in the United States to fend off fast fashion retailers who have taken away shoppers. Best Buy Co Inc reports its second-quarter earnings on Tuesday. The electronics retailer has stabilized the business by aggressively cutting costs under its Renew Blue program but concerns about its market share and margins in the face of intensifying competition persist. Investors will be looking for comments on the pipeline of product launches, real estate optimization, new investments in its online business and store-in-store partnerships with OEM's. Luxury jeweler Tiffany & Co is expected to report second-quarter sales and profit in line with estimates on Thursday. Tiffany is heavily dependent on macro economic factors such as the strength of the dollar and other currencies which determine tourists' spending behavior. While a smaller influx of Chinese and Japanese visitors to the United States has taken some shine off sales at stores such as the flagship Fifth Avenue store in Manhattan, the company said last quarter that it saw an uptick in tourist spending in Europe as weaker euro and pound encourage spending in the region. Investors will be interested in comments on the impact of the recent yuan devaluation in China and how that could affect business and any forecast for the current year. Software maker Autodesk Inc is expected to report second-quarter revenue slightly below average analysts' estimate on Thursday. The company, which makes computer-aided design software AutoCAD, forecast lower-than-expected second-quarter revenue in May, citing a strong dollar, and also cut its full-year revenue forecast. The company has been moving to cloud subscriptions from license-based model which is impacting results as subscriptions bring less money up front. Investors will be looking for growth in subscriptions and billings. Human resource software company Workday Inc is expected to report a smaller-than-expected loss for the second quarter on Wednesday. The company, which makes software to manage employee performance and payroll, hopes to make a turnaround in spending on marketing and product development. The company's revenue is expected to come above analysts' estimate, helped by continued subscription growth for its web-based human resource management software. GameStop Corp reports its second-quarter results on Thursday. The world's largest retailer of video game products is expected to benefit from the June release of "Batman: Arkham Knight", the latest in the "Batman Arkham" series by Warner Bros. The Street has worried about the impact of digital game downloads on the company's software sales. But in the last quarter, GameStop mitigated the concerns by reporting an increase in mobile game downloads, a trend expected to continue to the second quarter. J.M. Smucker Co, the maker of Folgers coffee and Jif peanut butter, is likely to report its first-quarter sales above the analysts' average estimate, on Thursday. The company in July cut prices for most of its Folgers and Dunkin' Donuts coffee brands in the United States by 6 percent, partially reversing last year's price hikes, to woo back customers, as green coffee costs fall. Analysts are looking out for cost-cutting announcements following the company's $3.2 billion acquisition of pet food maker Big Heart Pet Brands. Teen apparel retailer Abercrombie & Fitch Co is expected to report its tenth straight quarter of falling sales on Wednesday. The company's North America sales are expected to fall again in the second quarter, mainly due to weak traffic and demand for its clothes, heavy discounts and intense competition. While Abercrombie has seen an improvement at its Hollister brand in Europe, a stronger dollar is also expected to hurt the company this quarter as it gets nearly 40 percent of revenue from international markets. Investors will be looking for comments on quarter-to-date trends, back-to-school sales, impact of price cuts in Europe, plans to reinvigorate traffic, and benefits from lower cotton costs. Troubled mall-based retailer Aeropostale Inc is expected to report its 11th straight quarter in the red on Thursday. A combination of falling mall traffic, weak demand for its casual apparel, and heavy promotions is expected to hurt the company in the second quarter. The company has closed underperforming stores, cut costs, improved the store experience and is betting on a merchandise overhaul to drive sales in the crucial back-to-school shopping season. Investors will look for trends so far in the third quarter, forecast, and commentary on sales in the BTS season. On Tuesday, Bank of Canada Deputy Governor Lawrence Schembri will speak at the Canadian Association for Business Economics' policy conference in Kingston, Ontario. Schembri's topic will be "The Long-Term Evolution of House Prices: An International Perspective". Mexican data on Monday for early July is expected to show the annual inflation rate has cooled to a new record-low as weak growth offsets a sharp drop in the peso currency. Current account data on Tuesday will show how foreign investment flows held up in the second quarter, while trade balance data on Thursday will show if exports picked up in July after uneven exports to the United States weighed on the economy in the first half of the year. On Friday, the statistics institute reports the jobless rate while the finance minister will declare its fiscal balance as of July. MONDAY, AUGUST 24 Federal Reserve Bank of Atlanta President Dennis Lockhart speaks on "Pensions and Economy" before the 2015 Public Pension Funding Forum co-hosted by the National Conference On Public Employee Retirement Systems, in Berkeley, Calif. (1555/1955) Mexico's national statistics institute releases the inflation rate in the 12 months through mid-August. The annual figure is expected to ease to 2.70 percent from 2.76 percent in July. (0900/1300) Separately, the Argentinean government issues the trade surplus data for July after it narrowed to $456 million a month earlier. LIVECHAT: OUTLOOK FOR RATES with Wilmington Trust's Luke Tilley As September nears, the message is increasingly clear from the Fed that a rate hike is imminent. So why are markets so nervous? Join the discussion at 1000 ET/1400 GMT for a chat about markets and the Fed with former Philly Fed official Luke Tilley. To join the Global Markets Forum, click here: bit.ly/1kTxdKD (All analysts' estimates are according to Thomson Reuters StarMine, unless mentioned otherwise) (Compiled by Hardik Vyas in Bengaluru; Editing by Maju Samuel)
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