What to Watch in the Week Ahead and on Monday, July 7
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Aluminum maker Alcoa kicks off the U.S. corporate earnings season after North America markets close on Tuesday, announcing its results for the second quarter. Investors may look for comments from Alcoa executives on possible plans to diversify away from the commodity aluminum business at a time the market is highly oversupplied. The company recently bought a global supplier of aerospace jet engine components, made largely out of nickel-based alloys and titanium, for $2.85 billion. There may also be questions on possible future smelter capacity cuts following a number of curtailments. Executives may also be asked about Indonesia's bauxite export ban and how that may affect Alcoa. On Tuesday, the National Federation of Independent Business issues Small Business Optimism Index for June. On Thursday, the Labor Department is set to release weekly jobless claims, while the Commerce Department is scheduled to issue wholesale inventories for May. Federal Open Market Committee is scheduled to issue minutes from its meeting of June 17-18 on Wednesday. Wells Fargo is scheduled to report second-quarter results on Friday. The largest U.S. mortgage lender's streak of 16 straight quarters of earnings-per-share growth seems about to end. Wells Fargo's new home loans in the second quarter are expected to rise from the first quarter, but executives have said that the increase would be less than previously thought, given a weak spring selling season. On Tuesday, Federal Reserve Bank of Richmond President Jeffrey Lacker is scheduled to speak on "Economic Outlook, July 2014" before a luncheon. On the same day, Federal Reserve Bank of Minneapolis President Narayana Kocherlakota will speak on "Monetary Policy and the Economy". Federal Reserve Bank of Kansas City President Esther George is expected to speak on the U.S. economy and monetary policy before a business and community leaders luncheon on Thursday. On Friday, Federal Reserve Bank of Philadelphia President Charles Plosser moderates a panel on entrepreneurial issues at the Global Interdependence Center's Sixth Annual Rocky Mountain Economic Summit. On the same day, Chicago Fed President Charles Evans and Atlanta Fed President Dennis Lockhart is expected to speak at the same summit on a panel entitled "Federal Reserve Policy: Success and Failures."
U.S. Treasury Secretary Jacob Lew and Secretary of State John Kerry will join their respective Chinese co-chairs, Vice Premier Wang Yang and State Councilor Yang Jiechi on Wednesday, for the sixth round of the U.S.-China Strategic and Economic Dialogue.
Chile is scheduled to release its inflation reading for June on Tuesday. A weaker peso in recent months has spurred inflation to multi-year highs. Inflation rate accelerated from an annual 1.5 percent in October to 4.7 percent last month, well above the central bank's 2-4 percent target range and giving it cause to pause in its easing cycle.
French bank BNP Paribas is scheduled to plead guilty on Wednesday to federal charges it violated U.S. sanctions laws as part of a broad $8.9 billion settlement. The plea, before U.S. District Judge Lorna Schofield, follows an earlier guilty plea to New York state charges of falsifying business records and conspiracy and the unveiling of the global accord resolving an investigation that the bank violated sanctions laws by facilitating transactions involving Sudan, Cuba and Iran. MONDAY, JULY 7 Canada's central bank is expected to publish its quarterly survey of businesses and of senior loan officers to gauge expectations for sales, hiring, investment, inflation and credit conditions. The survey found that businesses widely expect their input costs to rise as a result of a weaker Canadian dollar, but they were not necessarily passing these costs on. It also found that they expected some improvement in sales and planned to invest more and hire more.
Brazil's central bank releases results of a weekly economic survey of more than 100 financial institutions. This will include forecasts for gross domestic product, interest rates and inflation rates.
Chile is scheduled to release IMACEC activity index reading, a proxy for GDP, for May. In recent months, the index has been weak as the economy has slowed, often undershooting market forecasts. (0830/1230) Separately, Chile is likely to show June data for imports, exports and copper exports. (0830/1230)
Argentina is due to send a delegation to New York to meet with the court-appointed Special Master Daniel Pollack to discuss how to solve the standoff with holdout investors led by Elliott Management Corp, NML Capital and Aurelius Capital Management. The parties have until July 30 to conclude a deal and unlock a blocked bond payment to holders of restructured Argentine debt. If no deal is reached, Argentina will be in default on these bonds and be effectively shut out of international capital markets because it remains in breach of a U.S. court order to pay holdouts at the same time it pays exchange bondholders. (U.S. markets will remain closed on Friday, July 4, for Independence Day.) (Compiled by Sourav Bose in Bangalore; Editing by Kirti Pandey)
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