What to Watch in the Week Ahead and on Monday, Feb 22
(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 U.S. economy regained some momentum at the start of the year, next week's data on consumer and business spending will likely show. The heavy data week kicks off on Tuesday with housing and consumer confidence reports. Home re-sales are expected to have slowed in January after a record surge in December. According to a Reuters survey of economists, the National Association of Realtors is expected to report that sales of existing home sales fell 2.9 percent to a 5.35 million unit-rate. The S&P/Case-Shiller house price index likely rose 5.8 percent in December from a year ago. The Conference Board is expected to report that its consumer confidence index slipped to 97.3 in February because of the stock market turmoil from a reading of 98.1 in January. Data from the Commerce Department on Wednesday is expected to show new home sales fell 4.4 percent in January to a 520,000 unit-rate, likely reflecting bad weather. On Thursday, the Commerce Department is expected to report that orders for long-lasting manufactured goods rebounded 2.9 percent in January after tumbling 5.0 in December. Core capital goods orders, a proxy for business investment, are forecast rising 0.7 percent after plummeting 4.3 percent in December. The Commerce Department's second estimate of fourth-quarter gross domestic product on Friday will likely show the economy expanded at a 0.4 percent annual rate, compared with the 0.7 percent pace reported last month. Also on Friday, the Commerce Department is expected to report that consumer spending rose 0.3 percent in January after being flat in December. The report will probably show an uptick in inflation pressures last month. Next week, investors will look for comments from a range of Federal Reserve speakers. Jeffrey Lacker, president of Federal Reserve Bank of Richmond, will speak on Wednesday on "Can Monetary Policy Affect Economic Growth?". On the same day, Federal Reserve Bank of Dallas President Robert Kaplan speaks on "Current Economic Conditions and Monetary Policy" before the Harvard Clubs of Dallas and Fort Worth; and Federal Reserve Bank of St. Louis President James Bullard gives presentation on the U.S economy and monetary policy before the Money Marketeers of New York University. On Friday, Federal Reserve Board Governor Jerome Powell participates in panel, "Language after Liftoff: Fed Communication Away from the Zero Lower Bound" before the 2016 U.S. Monetary Policy Forum and Federal Reserve Board Governor Lael Brainard participates in panel, "International Monetary Policy Synchronization" before the same forum. Meanwhile, the Federal Reserve Bank of Atlanta President, Dennis Lockhart, gives welcome remarks on Thursday before the 2016 Banking Outlook Conference; and the Federal Reserve Bank of San Francisco President, John Williams, speaks on the economic outlook. On Tuesday, Stanley Fischer, Federal Reserve Vice Chair, speaks on "Developments in Monetary Policy" before the CERA Week 2016 event. HP Inc, which houses former Hewlett-Packard Co's legacy printer and PC business, is set to report on Wednesday its first-quarter profit and revenue below the average analyst estimates according to Thomson Reuters StarMine data. Investors will be looking at how the company maintains its bottom line, given the diminishing prospects for the PC market in 2016. HP will seek to combat foreign-currency translation headwinds, competitive industry pricing, and PC channel inventory issues over the first half of the year. Home Depot Inc is expected to report fourth-quarter revenue on Tuesday above analysts' estimates, according to Thomson Reuters StarMine data. The biggest home improvement retailer benefited from a recovery in the U.S. housing sentiment and an uptick in builder's confidence in 2015. The company typically sees a rise in sales after a harsh winter leads to increased demand for home repair. But an unseasonably warm weather is likely to prompt the company to have sold more building and outdoor products in the quarter. The big-box retailer Target Corp is expected to report fourth-quarter revenue below analysts' estimates on Wednesday, according to Thomson Reuters StarMine data. Target, which is finding it difficult to stave off intense competition, said in November that it cannot meet its full-year online sales growth, due to weak demand for electronics. Also, a warmer-than-usual winter is expected to hit demand for winter wear. Investors will be interested in Target's forecast for the new year, and any strategic developments to address its problems. Macy's Inc forecast a 4.7 percent decline in quarterly same-store sales, hit by weak holiday sales due to unusually warm weather and a strong dollar keeping tourist spending low. The owner of Macy's and Bloomingdale's department store chains has said it will cut more than 2,000 jobs at its stores and call centers. In its fourth-quarter report on Tuesday, investors will look for 2016 forecast, and how the company plans to reverse a year-long streak of falling sales. On Thursday, rival Kohl's Corp, will report fourth-quarter results. Like Macy's, Kohl's has said sales and profit in the holiday quarter were hurt by unseasonably warm weather and deep discounting. The company is reportedly exploring options to go private and has eliminated three senior positions, including chief digital officer, in February. Also, Sears Holdings Corp is expected to report its fourth-quarter results on the same day. Meanwhile on Friday, J.C. Penney Co Inc is likely to report a fourth-quarter profit above analysts' average estimate, according to Thomson Reuters StarMine. Unlike its upmarket rivals, the company reported strong sales in the holiday shopping months of November and December, helped by higher online sales and strong demand for the company's private-label offerings and gift products. The no. 2 U.S. home improvement retailer, Lowe's Companies Inc is likely to report fourth-quarter sales on Wednesday slightly above analysts' average estimate, according to Thomson Reuters StarMine. Sales of building material and garden equipment are expected to benefit due to the strong housing market. Investors will also be looking for details on how Lowe's plans to integrate its $2.28 billion acquisition of Canada-based Rona Inc, which it announced earlier this month. The off-price retailer, TJX Companies Inc, is expected to report a fourth-quarter profit above analysts' estimates on Wednesday, according to Thomson Reuters StarMine. TJX - which sells clothing, merchandise and accessories at low prices - has fared better than traditional apparel retailers in the past year. Analysts said the off-price retailer was a preferred destination for much of the middle and upper-middle class bargain hungry shoppers this holiday season. Investors will look for sales forecast for the first quarter and the retailer's plans to expand in international markets. On Thursday, Kraft Heinz Co, the maker of Jell-O and Oscar Mayer meats, is expected to report fourth-quarter sales below analysts' estimates, according to Thomson Reuters StarMine. The company has been battling sluggish sales of its beverages and boxed dinners in the United States, as consumers increasingly prefer organic and fresh foods. It has also slashed jobs and has launched a plan aimed at saving $1.5 billion in annual costs by the end of 2017. Dollar Tree Inc, the biggest dollar store chain, is expected to report fourth-quarter revenue above estimates on Thursday, according to Thomson Reuters StarMine data. Higher rents, taxes and healthcare costs have made the company's "$1 or less" concept highly attractive to thrifty shoppers. Dollar Tree's results serve as a barometer for the broader spending behavior of low-income customers. While sales more than doubled in the previous quarter, expenses tied to rebranding Family Dollar stores ate into profit and margins. The company bought out Family Dollar last year. On Wednesday, Salesforce.com Inc is expected to report fourth-quarter revenue above the average analyst estimate, according to Thomson Reuters StarMine data. The cloud-based software maker has been gaining market share from Oracle and SAP in customer relationship management software. The company also bought sales software maker SteelBrick in December for about $360 million. However, investors' confidence in tech stocks has been shaken after weak forecasts by Tableau Software and LinkedIn led to a broad selloff earlier this month. Investors will be looking for the company's first-quarter forecast. On Thursday, Best Buy Co Inc, the biggest U.S. consumer electronics retail chain, is expected to report fourth-quarter sales below analysts' estimates, according to Thomson Reuters StarMine data. In January, Best Buy reported a drop in sales in nine-week holiday season ended Jan. 2, due to weak demand for mobile phones, and estimated fourth quarter sales to also fall. Gap Inc is expected to report profit largely in line with analysts' estimates on Thursday, according to Thomson Reuters StarMine data. The apparel retailer has provided weak January sales and expects fourth-quarter profit to fall compared with last year. Gap and other retailers have been hurt by a long spell of warm weather in 2015, which is weighing on cold-weather apparel such as coats and jackets. The company is also trying to offer trendier products across its brands to woo shoppers back from popular fast-fashion retailers. EOG Resources Inc, considered one of the best-run North American shale oil producers, is expected to report a loss in its fourth-quarter report on Thursday after a plunge in crude prices. Hilton Worldwide Holdings Inc will report fourth-quarter results and provide an update on its full-year financial forecast on Friday. The U.S. hotel operator is expected to announce plans to spin off some or all of the hotel properties that it owns into a real estate investment trust, a move that will help it save on corporate income taxes and return more cash to shareholders. The solar company First Solar Inc on Tuesday is expected to report lower quarterly profit in its fourth-quarter report, pressured by irregular revenue from its solar project shipments. The extension of investment tax credits beyond 2016 is expected to help the company's long-term earnings outlook. On Thursday, Palo Alto Networks Inc is expected to report second-quarter revenue and profit above average analysts' estimate, according to Thomson Reuters StarMine data. The cyber security company has been grabbing market share from traditional firewall suppliers. Rival FireEye Inc, last week, forecast a bigger-than-expected loss for the first quarter and said it expected growth in cyber security spending to slow this year. Palo Alto earlier this month announced a partnership with peer Proofpoint Inc to jointly provide security services to customers. Offshore rig contractor Transocean Ltd is expected to post a smaller quarterly profit on Wednesday, hurt by weak demand for rigs due to a prolonged slump in oil prices. Investor focus will be on costs incurred due to idling and scrapping rigs. Toll Brothers Inc, the largest U.S. luxury homebuilder, is expected to report a higher first-quarter revenue on Tuesday, helped by rising home prices. However, recent market volatility and a decline in oil prices could impact demand in the luxury segment of the housing market in regions such as Texas, which is among its biggest markets by revenue. Investors will be looking for comments on demand trends, pricing and the outlook for the spring selling season. The U.S. refiner HollyFrontier Corp is expected to post a higher quarterly profit in its fourth-quarter results on Wednesday, helped by higher gasoline demand and improved refining margins due to lower crude costs. The focus this quarter will be on new Chief Executive George Damiris's plans for the company, which has dismissed speculation that it may be a possible acquisition target by rival Tesoro. Continental Resources Inc, run by billionaire wildcatter Harold Hamm, is expected to report a fourth-quarter loss on Wednesday due to a plunge in crude prices. Data analytics vendor Splunk Inc is set to report profit and revenue for the fourth quarter below the average analyst estimate, according to StarMine data. Investors will be keen on the company's outlook for the year, given Tableau Software's weak results and outlook earlier in the month. DreamWorks Animation SKG Inc is expected to report its fourth-quarter revenue on Tuesday above the average analyst estimate, according to Thomson Reuters StarMine data. The Hollywood studio has been focusing on increasing revenue from licensing its original content to Netflix to tap the shift in viewing habits to digital platforms. The company, which produced only one movie in 2015, plans to make fewer movies with stronger plots as well as sequels of popular films to beat stiff competition from other studios. The oil and natural gas producer Chesapeake Energy Corp is expected to report a loss in the fourth quarter on Wednesday, compared with a year-ago profit, hurt by a prolonged slump in the prices of both the commodities. The company, whose debt is eight times its market value, has tapped a legal adviser to look at restructuring options. The focus this quarter will be on how the company planned to slash debt and whether it will make $500 million in debt payments due in March. Investors will also be keen on knowing whether Chesapeake planned to renegotiate billions of dollars worth of contracts with pipeline companies. Whiting Petroleum Corp, North Dakota's largest oil producer, is expected to report a quarterly loss on Wednesday due to a plunge in crude prices. Goldcorp Inc is expected to break even this quarter, compared with a profit last year, hurt by lower gold prices. Investors are likely to focus on additional cost-cutting measures at the company. Magna International Inc is expected to report a lower quarterly profit, hurt by higher costs and technical issues at its factories in North America. The focus on Friday, when it releases its fourth-quarter results, will be on the company's plan to make more acquisitions, after buying German transmission parts maker Getrag last year. On Friday, the Canadian oil producer Husky Energy Inc is expected to post a loss in the fourth quarter, compared with a year-ago profit, hurt by lower oil prices. The company has scrapped dividend and cut capital spending to weather the prolonged oil price slump. The focus this quarter will be on the company's plan to sell assets and other cost-cutting measures. FEMSA, now the largest company on Mexico's blue chip stock index, reports its fourth-quarter results on Wednesday. The company, which owns the sprawling Oxxo chain of stores and co-owns Coca Cola bottler Coke-Femsa, has been opening hundreds of new stores a quarter. Investors will be looking for updates on growth and details on its new retail gasoline business, buying gas station franchises from Mexican state oil company Pemex, which it said a sweeping energy reform, finalized last year, now allows. On Friday, Mexico's state-owned oil company, PEMEX, reports fourth-quarter results amid slumping oil prices and declining output. The company lost nearly $10 billion in the third quarter of 2015, its 12th consecutive quarter in the red. State-run Banco do Brasil, Latin America's biggest bank by assets, is expected to report fourth-quarter earnings before markets open on Thursday. Mexican GDP data for the fourth quarter of 2015 is due on Tuesday. Preliminary data in January projected the economy grew 0.6 pct quarter-on-quarter slowing from the 0.8 percent rate in the third quarter. Inflation data for the first half of February on Wednesday will show if peso weakness has fed into higher consumer prices. The central bank will release fourth-quarter current account data on Thursday. The trade balance data for January on Friday will show if factory exports are picking up or not after recent weakness due to uneven U.S. demand. ON MONDAY, FEBRUARY 22 Allergan Plc is likely to post better-than-expected quarterly earnings for the eight straight quarters, according to Thomson Reuters StarMine data. The Botox maker's fourth-quarter results are expected to benefit from strong sales in its high-margin branded drugs division. Investors will also focus on how things are playing out on the Pfizer merger, as well as the Teva deal to buy Allergan's generic business, both of which could be delayed by antitrust concerns. Dean Foods Co, the largest U.S. milk processor, is likely to report fourth-quarter sales and profit above analysts' average estimate, according to Thomson Reuters StarMine. Dean's launch of its DairyPure national brand last May has helped reverse market share losses in the higher-margin branded milk business, analysts say. A revival in demand for fresh milk is also expected to help boost volume sales following a drop in milk prices from their peaks in 2014. Motorola Solutions Inc is likely to report fourth-quarter revenue slightly ahead of analysts' average estimate, according to Thomson Reuters StarMine data. The walkie-talkie and radio systems maker is counting on its services business to drive growth, and had said in 2015 that private equity firm Silver Lake would invest $1 billion to boost that side of the business. In December, it said it would buy UK-based Airwave Solutions Ltd to beef up its services business. Fitbit Inc is expected to report fourth-quarter profit and revenue above Wall Street expectations, according to Thomson Reuters StarMine. The maker of fitness tracking wristbands and watches is seen benefiting from strong holiday quarter demand for its wearable devices, including its new Surge smartwatch, which has received favorable reviews. Investors will look for management's commentary on the company's forecast on profit and margins. Mexico's national statistics institute will release the retail sales data for December. Retail sales in November rose 0.5 percent compared to the previous month. (0900/1400) LIVECHAT - Global Flows with Lipper Tapping data for 117,000 mutual funds, ETFs and other investment vehicles in more than 60 countries, the Lipper analysts who help set industry-standard benchmarks and ratings, take questions and brief Global Market Forum members on what changing money flows say about asset allocations, hot and cold sectors, and the varying appeals of regions and industries. (1030/1530) To join the Global Markets Forum, click here bit.ly/1kTxdKD (Compiled By Nayyar Rasheed in Bengaluru; Editing by Anil D'Silva)
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