What to Watch in the Week Ahead and on Monday, Oct 26

Fri Oct 23, 2015 5:30pm EDT
 
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WEEKAHEAD

Markets go into next week with both stocks and the dollar enjoying strong rallies, with the
question being whether they're built on sand or not. The dollar should continue its gains unless
the Federal Reserve interrupts this with its statement next week on interest rates; if it
remains dovish, it could undermine the greenback's rally, but a widening in the U.S.
Treasury/German Bund spread should also make the dollar the beneficiary of foreign flows.
Equities are close to emerging from the corrective period we have been in since August, after
strong tech results that could be furthered with Apple's earnings next week.

Apple Inc, the world's largest publicly traded company by market value, reports fourth-quarter
results on Tuesday and its revenue is expected to be above average analysts' estimates,
according to StarMine data. Investors will be looking for commentary around the demand for its
latest iPhones, which kicked off record sales during their first weekend in 12 markets, as well
as performance in China.

A number of other Dow 30 companies report results in the week; Pfizer Inc, Merck & Co Inc and
DuPont on Tuesday; and oil giants Exxon Mobil Corp and Chevron Corp on Friday. Exxon is expected
to report lower third-quarter earnings as the crude oil rout continues to take a toll on the
world's largely publicly traded oil company.

Strapped by declining sales of generic drugs and a strong dollar that crimped sales, Pfizer is
expected to report lower third-quarter sales and earnings. Investors will want to hear about the
company's plans for the poorly performing generic division, which it is not allowed to dispose
off before 2017. Merck, whose shares have lagged most of its big pharma peers this year, can be
expected to do some cheerleading and point to potential sources of revenue growth within its
drug pipeline.

DuPont is expected to report a lower third-quarter profit, hurt by the strong dollar and weak
agricultural markets in Brazil and other emerging markets. Investors expect Chief Executive
Edward Breen, who took over the post temporarily after Ellen Kullman stepped down earlier this
month, to effectively initiate further cost cuts to avoid a second proxy war with Nelson Peltz's
Trian Management Fund. Rival Dow Chemical's announcement on Thursday that it would "review all
options" for its farm chemicals and seeds unit, has also led to speculation about a possible
tie-up between the two chemical giants.

The U.S. Federal Reserve's Federal Open Market Committee holds a two-day meeting on interest
rates, starting Tuesday, with the Fed releasing a statement on Wednesday. The European Central
Bank's recent signal that more stimulus is coming for Europe's economy could complicate the
Fed's own message about when it might move in the opposite direction. Fed Chair Janet Yellen and
other officials have said they expect a rate increase will be needed by the end of this year. 

Federal Reserve Bank of Atlanta President Dennis Lockhart gives opening remarks on Thursday
before the Workforce Development Panel and Book Launch hosted by the Fed. Separately, on Friday,
the Federal Reserve Bank of San Francisco President John Williams participates in the discussion
"Where Interest Rates Will Be When the Economy is (Finally) Healthy and Why It Matters" at an
event hosted by the Brookings Institution. On the same day, the Federal Reserve Bank of Kansas
City President Esther George speaks on "Federal Reserve Structure" before the CityAge "The New
American City" conference.

U.S. economic growth likely braked sharply in the third quarter as businesses worked through an
inventory glut and a strong dollar hurt exports. Growth was also likely hampered by continued
spending cuts in the energy sector. A Reuters survey forecast that data due Thursday will show
gross domestic product likely expanded at a 1.6 percent annual rate, sharply down from the
second quarter's 3.9 percent pace. Meanwhile, data due Tuesday is likely to show orders for
long-lasting U.S. manufactured goods fell for a second straight month in September. Analysts
forecast durable goods orders falling 1.1 percent last month after declining 2.3 percent in
August. Separately, consumer spending data expected Friday will likely show continued growth in
September, offering confirmation that domestic demand remains solid. Economists forecast
consumer spending rising 0.2 percent after increasing 0.4 percent in August.

Alibaba Group Holding's earnings for the three months ended September will be under the
spotlight on Tuesday, as the e-commerce behemoth comes to grips with China's economic slowdown
and the threat of lower consumer spending. The firm has already signaled that the growth of
total value of transactions across online shopping sites will be less than expected. 

Ford Motor Co, the No. 2 U.S. automaker, will report third-quarter earnings on Tuesday.
Investors will be looking to see how profits in China fared during a slowdown there and to what
extent its best-selling vehicle, the F-150 pickup truck, boosted North American earnings.

Ferrari NV, which made its Wall Street debut on Oct. 21, will report third-quarter results on
Wednesday. Investors will be looking for comment on the luxury sportscar maker's future
strategy.
    
General Dynamics Corp is expected to report a higher revenue and profit for the third quarter on
Wednesday, helped by sustained demand for business jets in the United States, which is expected
to offset softness in emerging markets.

Major U.S. cable companies have been facing intense competition from streaming video services as
customers shift to cheaper and more flexible options offered by Netflix, Amazon and Hulu. On
Tuesday, Comcast Corp, the largest U.S. cable operator, is expected to report third-quarter
revenue slightly above analysts average estimate, according to StarMine data. Time Warner Cable
is expected to follow suit on Thursday. Both companies are working on new online video services,
any details of which will be closely watched by the market. Investors will also be waiting on
deal closing updates of its planned merger with Charter Communications.

On Tuesday, T-Mobile US Inc is expected to report third-quarter profit below analysts average
estimate for the first time in four quarters, according to StarMine data. However, the No. 4
U.S. wireless carrier's efforts to lure customers from bigger rivals seem to be paying off as
the company raised its 2015 subscriber forecast for the second time this year.

Walgreens Boots Alliance Inc, the largest U.S. drug store chain operator, will report
fourth-quarter results on Wednesday, ahead of rival CVS Health Corp's third-quarter results on
Friday. While Walgreens's revenue is likely to come in below analysts average estimates,
according to StarMine, CVS's is expected to top it. Analysts are expecting Walgreens to raise
its profit targets for the year due to the $1.5 billion cost-cutting plan announced in April.
For CVS, its pharmacy benefit management business is likely to be get a boost from the
distraction of rival Catamaran Corp, which was just acquired by UnitedHealth Group.

Gilead Sciences Inc will report third-quarter results on Tuesday, with investors keen to find
out if sales of the drugmaker's expensive hepatitis C drug Harvoni continue to rise or have
leveled off. Earlier the same day, Bristol-Myers Squibb Co is expected to report lower
third-quarter results, hurt by the strong dollar, but investors will be more focused on
prospects of its promising array of immuno-oncology drugs. On Wednesday, Amgen Inc, the world's
largest biotechnology company, will report third-quarter results after the market closes. And on
Friday, AbbVie Inc is expected to report a third-quarter profit above average analysts average
estimate, according to StarMine data. However, investors will be looking for commentary on the
warning by U.S. Food and Drug Administration of the potential risk of serious liver injury for
certain patients using its hepatitis C treatments.

Also on Friday, Mylan NV, which has been pursuing smaller rival Perrigo since April, is expected
to report third-quarter revenue marginally above analysts average estimate, according to
StarMine data. Investors' focus, however, will be on the looming Nov. 13 deadline when Mylan's
tender offer expires. Meanwhile, Israel-based generics giant Teva Pharmaceuticals Industries Ltd
is expected to release third-quarter results on Thursday.

Boston Scientific Co is expected to report higher third-quarter revenue on Wednesday, helped by
sales of its heart devices. Analysts are optimistic that the company will raise its full-year
guidance, after slashing it for two straight quarters, to reflect the close of its acquisition
of Endo International's urology portfolio. Meanwhile, drug maker Baxter International Inc will
report third-quarter results on Tuesday.

Health insurer Aetna Inc is expected to report third-quarter profit largely above analyst
average estimate on Thursday, according to StarMine data. Investors will be looking for updates
on its deal to buy smaller rival Humana, what with Democratic presidential candidate Hillary
Clinton raising questions this week about mega mergers among health insurers. The same applies
to Anthem Inc, which agreed to buy smaller rival Cigna Corp in July and is expected to report a
third-quarter profit on Wednesday.

HCA Holdings Inc will report third-quarter profit on Tuesday, after warning last week that it
would miss analysts' estimates. The largest for-profit U.S. hospital operator has been hurt by
higher labor costs and less favorable payer mix. Later in the day, pharmacy benefit manager
Express Scripts Holding will also release third-quarter results.

Colgate-Palmolive Co is likely to report third-quarter sales on Friday below analysts average
estimate, according to StarMine data. The impact from the strong dollar is likely to have
worsened in the quarter as the personal care products maker has a large presence in Latin
America, where many currencies are down since July 31, particularly the Brazilian real.
    
Twitter Inc reports on Tuesday and its third-quarter profit is expected to beat consensus
estimates, according to StarMine data, helped by the CEO Jack Dorsey's turnaround strategy in
his second stint at the top job. Dorsey has rolled out new product features, cut jobs and taken
steps to mend the company's relationship with developers and advertisers. On Thursday, LinkedIn
Corp, the biggest social networking site for professionals, is expected to report third-quarter
profit below analysts average estimate, according to StarMine data. The company has been
spending heavily to acquire businesses and investors will be looking for updates on its upcoming
referral feature and enhancements to its mobile app.

On Wednesday, major hotel chain operators Hilton Worldwide Holdings Inc, Marriott International
Inc and Starwood Hotels & Resorts Worldwide Inc report third-quarter results. Hilton has been
benefiting from the recovering economy and record occupancy levels across the industry, but
Starwood, which gets more than half its revenues from outside the United States, has been pulled
down by the strong dollar.

New York Times Co is expected to report third-quarter revenue slightly above Wall Street's
consensus estimates, according to StarMine. When it posts results on Thursday, analysts will
look for guidance on its strategy related to digital offerings and new partnerships, as it aims
to double its annual digital revenue by 2020 with a concentrated effort to win over more readers
on smartphones. On the same day, Gannett Co Inc, the publisher of USA Today, is also scheduled
to report third-quarter results. 

On Wednesday, Mondelez International Inc is expected to report third-quarter revenue above
anlaysts' estimates, according to StarMine data. The numbers are likely to be helped by improved
sales in Europe and India for the maker of Cadbury chocolates and Oreo cookies. However, an
increase in promotion and marketing expenses are likely to have hurt profit. On the same day,
Hershey Co is likely to report third-quarter profit slightly below estimates, according to
StarMine data. Investors will be looking for details on the company's big push into China,
including its $500 million acquisition of Shanghai Golden Monkey, which hasn't panned out so
far.

On Wednesday, PayPal Holdings Inc is expected to report third-quarter profit above analysts
estimate, according to StarMine data. The payments company is reporting for the first time since
its spin-off from eBay, and investors are looking for guidance to ease concerns about increasing
competition from the likes of Stripe and Jack Dorsey's Square Inc. Meanwhile on Thursday,
Western Union is expected to report a marginal rise in third-quarter earnings as gains from cost
cutting and foreign exchange hedging were tempered by lower remittances from several Asian
countries. Earlier in the day, MasterCard Inc, operator of the world's second largest payment
network, is also scheduled to report third-quarter earnings.

Valero Energy Corp is expected to report a higher third-quarter profit on Wednesday, helped by
weak oil prices. Investors will be on the lookout for any comments about potential M&A
opportunities for the refiner. On Friday, Phillips 66, another U.S. refiner, will be reporting
its third-quarter results.

Corning Inc is expected to report third-quarter profit and revenue below analysts' expectations
on Tuesday, according to StarMine data. Analysts expect demand for its glass displays to be hurt
by weak sales of personal computers and lower TV sales, mainly in China. Investors will want to
know if adoption of 4K TVs and continued demand for Gorilla glass for Apple and Samsung
smartphones can make up for the weakness.

Electronic Arts Inc is expected to report second-quarter revenue and profit above analysts'
average estimate on Thursday, according to StarMine data. The video game publisher is expected
to benefit from strong sales of its newly released Madden NFL and FIFA 16 games.

Yelp Inc is expected to report third-quarter profit below analysts average estimate on
Wednesday, according to StarMine data. The operator of consumer review website Yelp.com, which
forecast lower-than-expected revenue for the quarter in July, has been facing slowing subscriber
growth in a crowded market. Investors will be looking for growth in subscriptions and in its
recently acquired food delivery business.

Akamai Technologies Inc is expected to report third-quarter profit above analysts average
estimate on Tuesday, according to StarMine data. Investors will be looking for revenue upside
from the growth in over-the-top video streaming services.

Coach Inc is expected to report profit below analysts estimates on Tuesday, according to
StarMine data. Investors will be keen on the seeing the benefits of a transformation that the
handbag maker launched in the face of fierce competition from newer entrants.

GoPro Inc is expected to report quarterly revenue slightly below analysts' estimates on
Wednesday, according to StarMine data. The action camera maker has been on a strong sales growth
trajectory, but Barron's said in September that the company's latest product launch underwhelmed
consumers and that investors were "skittish" about the company's ability to ward off competition
from Apple Inc, which has upgraded the abilities of its iPhone camera.

Data due Friday is expected to show the Canadian economy expanded 0.1 percent in August. A
Reuters poll showed Canada's economic growth will not receive a major boost next year from the
newly elected Liberal government's fiscal stimulus plan because of lingering uncertainty about
oil prices and demand for exports. Meanwhile, on Thursday, data from Statistics Canada will
likely show a 0.2 percent fall in producer prices for September, compared to a 0.3 percent
decline in August.

Mexico's central bank will likely keep interest rates steady on Thursday and not lift borrowing
costs until the first quarter of next year. Analysts expect Banco de Mexico to hold its key rate
at 3 percent. Separately, Brazil's IGP-M price index is due to be released on the same day.
Meanwhile, data on Chile's jobless rate for the July-to-September period is also scheduled for
release on Friday.
 
ON MONDAY, OCTOBER 26

Xerox Corp is expected to report third-quarter earnings below analysts' average estimate,
according to StarMine data. The printer and copier maker has been shifting its focus to
high-value software and service businesses. The company said it would incur an after-tax charge
of about $240 million in the quarter.

New U.S. single-family home sales likely dipped in September after two straight months of gains,
but the trend should remain consistent with a strengthening housing market. Sturdy housing data
is supporting consumer spending, helping to soften the blow on the economy from slowing global
growth and a strong dollar. A survey forecast new home sales slipping to an annual rate of
550,000 units in September from 552,000 units in August. (1000/1400)

In order to address the allegations made against the company by an influential short seller,
Quebec-based Valeant Pharmaceuticals will hold a conference call to defend itself and reassure
investors.

Jakks Pacific Inc is expected to report third-quarter profit and sales slightly above analysts'
estimates, according to StarMine data. Like market leaders Mattel and Hasbro, Jakks is expected
to be hurt by a strong dollar. Nonetheless the maker of WWE-branded toys and Pokemon cards is
expected to get a revenue boost from higher sales to retailers ahead of the holiday season.

Argentina's monthly EMAE economic activity index, which is a close proxy for gross domestic
product, is expected to show that economic activity grew 2 percent on the year in August.
Meanwhile, its industrial output is likely to have risen 1.4 percent in September compared with
the same month a year ago.

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 (Compiled by Nayyar Rasheed in Bengaluru; Editing by Savio D'Souza)