What to Watch in the Day Ahead - Thursday, Dec 3

Wed Dec 2, 2015 2:38pm 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) Federal Reserve Chair Janet Yellen will appear before the congressional Joint Economic Committee and could give indications of how close the central bank is to raising interest rates. (1000/1500) Separately, the Federal Reserve Bank of Cleveland President Loretta Mester and Treasury Office of Financial Research Director Richard Berner will give welcome remarks before the "Financial Stability: Policy Analysis and Data Needs" conference sponsored by the Federal Reserve Bank of Cleveland and the Treasury Dept. Office of Financial Research, in Washington. (0840/1340) Meanwhile, the Federal Reserve Vice Chair Stanley Fischer, who will speak on "Financial Stability and Shadow Banks", will be introduced by Mester. (1310/1810) Medtronic Plc, the largest standalone medical device maker in the United States, will report a better-than-expected second-quarter profit as the company reaps the benefits of buying Covidien and demand for its products rise in China. Analysts will also be looking for comments to see if patients, who had put off optional procedures during the recent financial crisis, opt to have their surgeries regaining confidence from an improving economy and healthcare insurance coverage provided by Obamacare. The European Central Bank (ECB) is almost certain to ease policy but what measures it will take is up in the air. The Governing Council is expected to debate a wide range of options, from a fairly uncontroversial deposit rate cut to a highly unorthodox scheme to buy up bundled non-performing loans. Markets expect the bank to settle on a 10 basis point rate cut, a slight increase in monthly asset buys and a modest extension of the quantitative easing programme. However, given the wide range of options on the table and the ECB's practice of overdelivering, a surprise is highly likely. With the ECB's rate decision, there is a chance the Swedish National Bank will also be called into action - it has said it can act between meetings if necessary to safeguard inflation. The question for the Riksbank is how it will affect the crown. A sharp reaction would almost certainly force the Riksbank into a tit-for-tat easing. Furthermore, Deputy Governor Skingsley hinted the Riksbank wanted time to assess the ECB's action and its own actions before taking further steps. New applications for U.S. unemployment benefits likely rose last week, but remaining near 43-year lows as the labor market continues to tighten. According to a Reuters survey of economists, initial claims for jobless benefits probably rose to 268,000 from 260,000. Claims are close to levels last seen in 1973 and probably do not have much room for further declines. (0830/1330) Meanwhile, the Institute for Supply Management's non-manufacturing index is likely to have dropped to 58.0 last month from 59.1 in October. (1000/1500) Separately, the new orders for factory goods are expected to have increased 1.4 percent after it fell for a second straight month in September. New orders for manufactured goods declined 1.0 percent after a downwardly revised 2.1 percent drop in August. (1000/1500) Supermarket operator Kroger Co releases its results for the third quarter. The company, which is not working promoting and cutting prices as much as rivals, is likely to have benefited from the higher beef and chicken margins. Discount retailer Dollar General Corp's same-store sales are likely to come in below analysts' average estimate for the third quarter, hurt by clearance activity at Family Dollar, which was acquired by Dollar Tree this year. However, the company's expanded assortment of health and beauty products and sales of popular licensed items such as Star Wars toys is expected to have boosted sales. Sears Holdings Corp will report earnings for its fiscal third quarter. The struggling department store is expected to post a loss of $2.84 per share, according to Thomson Reuters I/B/E/S. Department store Sears Canada Inc is expected to post a rise in third-quarter same-store-sales, which have been falling for two years. Investors will be interested to know how the struggling store operator plans on increasing profit from operations, besides selling assets and units. Investors are also interested in how and when the company plans to settle all the pending lawsuits against it. Chipmaker Marvell Technology Group Ltd is expected to report third-quarter results below analysts' average estimates, according to Thomson Reuters StarMine, hurt by weak demand for its chips used in PCs and third-generation mobile phones. Investors would look for any comment about the health of its PC-chip business and whether the company needs to trim its workforce further. Bookstore chain Barnes & Noble Inc is expected to report a second-quarter profit below analysts' estimates, according to Thomson Reuters StarMine. Barnes & Noble is improving store merchandise, featuring popular books and movies and is integrating its online and retail platforms to reverse falling sales. Investors will look for updates to the forecast, information on trends and store traffic, and comments from its new CEO. At a meeting in Amsterdam, Fiat Chrysler shareholders will vote on the spin-off of Ferrari and the distribution of FCA's remaining stake in the luxury unit among the parent's investors. The vote will formalize the separation of the unit, due to happen at the start of 2016, and establish Fiat's founding Agnelli family as Ferrari's top shareholder. The separation will also boost Fiat Chrysler's coffers as it seeks to reduce its heavy debt pile before attempting again to merge with bigger U.S. rival GM. Both FCA CEO Sergio Marchionne and Chairman John Elkann will be in attendance, so investors will seek fresh comments on merger plans, China weakness, and product delays. MPLX LP, MarkWest Energy Partners LP and Marathon Petroleum Corp management will discuss MarkWest's sale to MPLX at an analyst and investor meeting. About 80 percent of MarkWest unitholders voted in favor of the cash-and-stock deal, which values the company at $10.38 billion. Toronto Dominion Bank and Canadian Imperial Bank of Commerce are seen posting higher fourth-quarter profits as investors look for signs of strength in their domestic retail businesses and any potential rise in energy-sector bad loans. Canada Mortgage and Housing Corp releases data on the number of vacant completed condominiums in Canada, a measure of overbuilding or oversupply in the nation's uneven housing market. Condo vacancies have been at or near a record high in 2015 and the absorption rate has been falling, suggesting the number of vacancies could increase. Enbridge Inc releases its 2016 guidance. Enbridge has been successful in expanding its Mainline system, which ships the bulk of Canadian crude exports to the United States, largely slipping beneath the radar of environmental groups opposed to new pipeline projects. However, the company is still awaiting a presidential permit for its cross-border Alberta Clipper expansion and its stalled Northern Gateway pipeline to Canada's Pacific Coast is facing multiple hurdles including the new Liberal government in Ottawa, which has pledged a moratorium on tankers on British Columbia's northern coast. Brazilian industrial output likely continued to drop in October but probably at a slightly slower pace than in the previous month. Industrial production likely fell 10.4 percent from October 2014, compared to a decline of 10.9 percent in September. Separately, Mexican gross fixed investment, the measure of spending on machinery, equipment and new construction, is expected to have increased 5.2 percent in September on an annual basis. It was up 2.9 percent from the same month a year earlier. LIVECHAT - COMMODITY FOCUS: Hans Van Cleef, commodities analyst, ABN AMRO Join Hans Van Cleef, commodities analyst at ABN AMRO, for a look at the prospects for commodities markets as the price of metals slides and oil flirts with new lows. Is there any respite in sight? To join the Global Markets Forum, click here bit.ly/1kTxdKD (Compiled by Sourav Bose in Bengaluru; Editing by Maju Samuel)