What to Watch in The Day Ahead: Friday, July 18

Thu Jul 17, 2014 2:32pm EDT
 
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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) In General Electric's second-quarter earnings report, investors will want to see if the U.S. conglomerate can keep the momentum going after posting strong first-quarter industrial revenue growth, continue expanding margins through cost cuts and show improvement in its equipment order book. The report is GE's first since settling on an agreement to buy Alstom's power assets for $16.9 billion, so analysts may also seek more financial details about GE's biggest-ever deal. Trust bank BNY Mellon is likely to report second-quarter earnings. The report comes as the company faces questions about the performance of its investment management arm, a key area in its competition with State Street. Analysts expect BNY to earn 56 cents per share, down from 62 cents per share in the same period a year earlier. The Thomson Reuters/University of Michigan's preliminary report on consumer confidence is expected to show that U.S. consumers were more upbeat about the economy in early July than they were at the end of June. Consumer confidence likely rose to 83.0 from 82.5 in June. (0955/1355) The private-sector Conference Board is scheduled to release Leading Economic Index, which rose 0.5 percent last month after a downwardly revised 0.3 percent increase in April. (1000/1400) Sales of auto turbochargers and chemicals for the energy industry are expected to help Honeywell International offset tepid revenue from its aerospace division when the U.S. diversified manufacturer reports second-quarter results. Analysts will also be keen to learn more about Honeywell's acquisition plans after the company said in March it planned to spend $10 billion on deals over the next five years. Johnson Controls, expected to release third-quarter results, has been cutting its reliance on the automotive industry to focus on its fast-growing heating and cooling systems business for buildings. But the company last quarter said it expected sluggishness in that business to continue until the start of the next fiscal year. Investors will be looking for comments on its forecast for the remainder of the year. Shire and drugmaker Abbvie plan to announce a $53 billion merger as soon as Friday morning, sources told Reuters. Dublin-based Shire, which sells drugs for rare diseases, said earlier this week it was ready to recommend a deal to shareholders after AbbVie increased its offer. Chicago -based AbbVie, which makes top-selling arthritis drug Humira, boosted its bid for Shire to 53.20 pounds per share after Shire rejected four bids. Under British takeover rules AbbVie has until July 18 to announce a firm offer for Shire, extend the deadline for an offer, or walk away. Apparel manufacturer VF Corp is expected to report second-quarter results before the bell. Sales at its higher-margin outdoor and action sports brands such as Timberland and The North Face are expected to have been boosted by the prolonged cold weather. Analysts expect this to make up for lower demand for its jeanswear, contemporary, and sportswear brands as consumers hold back on discretionary spending due to stagnant wage growth and weak economic activity. Kansas City Southern, expected to report second-quarter results, said in April it expected its grains business to show very good year-over-year growth throughout the current quarter and noted that coal volumes were better than their expectations. Demand for thermal coal is expected to recover in the United States after two years of decline as power producers switch back to coal due to a recent run-up in natural gas prices. Investors will be looking for comments on coal volumes recovery and outlook for the remainder of the year. Autoliv, the world's biggest maker of auto safety products, is expected to report second-quarter earnings. The main focus will be its guidance for the third quarter and full year. Mexican cement company Cemex is scheduled to report second-quarter results, the company's first since CEO Lorenzo Zambrano died suddenly in May. Advertising company Interpublic Group is likely to report second-quarter results above analysts' average estimate. Analysts expect the company's revenue growth in the United States and in Continental Europe to continue, helped by business win from Microsoft and a strengthening European market. Laboratory service provider Laboratory Corp of America is scheduled to post second-quarter results before the bell. TerraForm Power's initial public offering is expected to raise as much $421 million, valuing the unit of solar company SunEdison at up to $1.38 billion. TerraForm will operate as a "yield co", a way for solar companies to bundle existing solar power plants and spin them off into separate entities. TerraForm will own and operate plants that it acquires from SunEdison and others. Trupanion, a pet insurance provider, is expected to raise up to $100 million in an initial public offering. The offering of 7.1 million shares is expected to be priced at between $13 and $15 per share. At the top end of the range, the company will be valued at about $400 million. The company, which mainly insures cats and dogs, earns most of its revenue from the premiums. Statistics Canada is scheduled to release inflation data for June. Costlier energy unexpectedly pushed the country's annual inflation rate to a 27-month high of 2.3 percent in May from 2.0 percent in April. A rise in core inflation, that hit a 22-month high of 1.7 percent in May, also defied the Bank of Canada's low-inflation forecasts. (0830/1230) Separately, wholesale trade data is expected to show a decline of 0.6 percent for the month of May. (0830/1230) The data will show if the Mexico's job market is improving or not after a rise in May's jobless rate pointed to a sluggish economic recovery in Latin America's No. 2 economy. (0900/1300) Peru's central bank is scheduled to publish a quarterly report that includes its updated estimates for important indicators such as GDP expansion, inflation, trade, current account and fiscal balances. Bank of Portugal chief Carlos Costa is scheduled to speak to the parliament committee for finances about the situation around Banco Espirito Santo, the country's largest listed bank, following financial problems at the holding companies of its founding family that roiled markets last week, triggering new concerns about Portugal's financial stability just two months after it exited an international bailout. (0500/0900) (Compiled by Nandi Kaul in Bangalore; Editing by Savio D'Souza)