What to Watch in The Day Ahead; Wednesday, July 30

Tue Jul 29, 2014 2:35pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

(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) Metlife, the largest U.S. life insurer, is expected to report a rise in quarterly profit, helped by derivative gains linked to credit spreads. The company, heavily exposed to persistently low U.S. interest rates, has a large derivatives program designed to reduce that risk. The Financial Stability Oversight Council could label Metlife as systemically important, subjecting it to stricter oversight by the U.S. Federal Reserve by July. Fed's FOMC is scheduled to issue its economic forecast. The market will closely watch whether Yellen is continuing to set aside inflation "noise" and keep the Fed's "slack" wording consistent with the other FOMC forecasts. Any sign that she's leaning away from slack and taking inflation warnings more seriously will hit the market on the downside. (1400/1800) U.S. economic growth likely snapped back smartly in the second quarter after its deepest quarterly plunge in five years in the first three months of the year. Economists polled by Reuters expect the government's first snapshot of GDP to show the economy expanded at a healthy 3.0 percent annual rate. (0830/1230) The monthly ADP report on private sector employment for July is expected to have dropped by 51,000 to 230,000. (0815/1215) Separately, the Mortgage Bankers Association is likely to release its weekly Mortgage Market Index. (0700/1100) Hess Corp is expected to report a drop in second-quarter profit after the company sold off some downstream assets to focus more on oil and natural gas production. Separately, Phillips 66 is due to report second-quarter earnings that reflect smaller crude discounts. Also, Valero Energy, due to report second-quarter earnings, cautioned profit will fall short of Wall Street estimates on seasonal weakness in its biggest Gulf Coast Market. Separately, Halcon Resources is expected to post a modest rise in quarterly profit as rising production in North Dakota's Bakken shale formation is offset by higher costs in Louisiana and Pennsylvania. Asset manager Franklin Resources is slated to report results for its fiscal third quarter before markets open. Analysts on average expect the company to earn 95 cents per share, up from 86 cents a year earlier. Investors will focus on commentary the company offers for its popular, and sometimes contrarian, emerging market bond funds like the one run by Michael Hasenstab, who holds a big position in debt from Ukraine. Kraft Foods, the maker of Oscar Mayer lunch meats and Maxwell House coffee is scheduled to report second-quarter results after market. The packaged foods major's net revenue fell 3.3 percent last quarter. Intense competition in the U.S. grocery products business coupled with higher costs of commodities such as milk, coffee and meat could hurt Kraft Foods' results. Analysts on average expect Kraft to post a profit of 82 cents per share on revenue of $4.84 billion. Sprint is expected to report a smaller loss than in the first quarter as a massive network overhaul comes close to an end. Investors will look for any update on the company's planned $32 billion bid for T-Mobile, expected to be announced in the next few months. The bid has met with skepticism from regulators, who worry it could reduce competition in the near-saturated wireless market. WellPoint, the largest seller of Obamacare exchange plans, is expected to report earnings for the second quarter. The company has reported numerous issues with the rollout of the exchanges, but has also said that it is profiting from these new customers unlike many competitors. Separately, Humana is scheduled to report second-quarter earnings. The company is interested in expanding into more Obamacare exchanges that sell subsidized insurance to individuals. Western Digital, the world's largest hard-drive maker, is likely to report second-quarter results above Wall Street estimates. The company is expected to benefit from higher spending on PCs and cloud storage by businesses. Separately, Garmin is expected to report better-than-expected second-quarter revenue, according to StarMine data. The company is expected to benefit from continued higher sales of its fitness and aviation devices as it struggles with shrinking sales of personal navigation devices, a market it once dominated. Rockwell Automation, likely to report third-quarter results, has faced cost overruns as it ramps up spending on product development. Rockwell said in January it expected costs to grow faster than sales in 2014. The company has also been hit by a strong dollar as its control products business has significant exposure to Brazil, Argentina and Canada. Private equity firm Carlyle Group is expected to report a near-doubling of its second-quarter earnings as it continues to take advantage of a stock market rally and a boom in mergers and acquisitions to exit its investments at high valuations. BBVA, Spain's second-biggest bank, is scheduled to release second-quarter earnings. The lender is one of the most exposed in Spain to emerging markets volatility. Investors will also be looking at how its key Mexican unit is performing and whether the domestic turnaround is improving. Separately, Banco Popular is expected to report second-quarter results. Popular has been one of the more acquisitive banks of late, and bought a retail banking network from Citigroup. Thomson Reuters is expected to report second-quarter results and executives are expected to update investors on the progress of sales to financial clients. Allstate's estimated pretax catastrophe loss for the second quarter is expected to be about $936 million. Chief Executive Thomas Wilson had said that Allstate, the largest listed U.S. home and auto insurer, would focus this year on attracting customers to boost its market share rather than go for "abnormally large" price increases. Yelp.com, the operator of consumer review website, is expected to report a better-than-expected quarterly profit, according to StarMine data. Yelp is forecast to report higher revenue from advertising, as it benefits from its partnership with the Yellow Pages website businesses. Barrick Gold is expected to produce weaker second-quarter results on lower production, after the sale of several operations in the past year. Investors will want an update on the restart of Zambian copper mine Lumwana and further details on a recent joint venture transaction signed on the company's Jabal Sayid copper project in Saudi Arabia. Separately, investors will be closely eyeing Yamana Gold's second-quarter results to see if the company can deliver on its full-year guidance. Meanwhile, Kinross is expected to report second-quarter earnings. The gold producer is expected to face questions about its operations in Russia, following U.S. and Canadian sanctions on the country. Suncor, Canada's largest oil and gas company, is scheduled to report its second-quarter results. Investors will be looking for an update on the progress of work in its new Fort Hills oil sands project, and watching the performance of the company's refineries and international operations. CGI Group, the Montreal-based computer services provider that lost the contract to manage last year's Obamacare U.S. health plan, is expected to produce flat profit and revenue in its third quarter. Investors will be cheered by any improvement in its book-to-bill ratio in either Europe or North America. Cenovus Energy, Canada's No.2 independent petroleum producer, is likely to report second-quarter earnings that are expected to be burnished by higher production at the two oil sands projects it operates in northern Alberta. Goodyear is expected to have benefited in the second quarter from a rise in auto demand, which has returned after a severe winter in the United States kept buyers away. U.S. auto sales in June posted the best annualized figures in eight years. Investors will be looking for comments on trends expected in the rest of the year, particularly whether Goodyear expects the strong demand to hold. Akamai Technologies, which hosts content for companies on its servers to quicken their delivery over internet networks, is likely to report better-than-expected quarterly results. The company is expected to benefit from strong demand for online video streaming during the recent soccer World Cup in Brazil as well as demand for online gaming and web-based services. Huntsman, a chemical maker, is expected to report a higher second-quarter profit, led by higher demand from energy, additives and agricultural markets. The company is expected to benefit from rise in prices and demand of polyurethane, the company's biggest business. Investors will be looking for comments on closure of the $1.1 billion paint pigments deal with Rockwood Holdings announced last year. Agnico-Eagle is expected to return to profit in the second quarter after a loss a year earlier, when results were hit in part by a maintenance shut down at a mine in Finland. Investors will want an update on operations at Canadian Malartic mine, which Agnico jointly purchased with rival Yamana Gold recently. They will want to hear of any potential joint operating synergies that the partners have found to improve the mine's economics. Japan's Sumitomo Mitsui Financial Group is due to announce its April-June results, the first among the top three "megabanks." It is expected to report sharp profit fall from a year-earlier period, when Abenomics-driven stock market rally pushed up value of its equity holdings. Domestic lending has shown signs of recovery but interest margins remain under pressure. Telefonica Brasil, the local unit of Spain's Telefonica, is likely to report flat revenue from a year earlier to due to a drop in interconnection fees and disruption in business activity during the World Cup. Net income should also compare unfavorably with a year earlier, when a tax benefit boosted the company's bottom line. The IGP-M index for July, Brazil's broadest price measure encompassing wholesale, construction costs and consumer prices, is likely to be released. It has declined in recent months as wholesale food prices dropped, suggesting a relief in consumer inflation in coming months. Chile is scheduled to release its manufacturing data and retail sales for June. (All analysts' estimates are according to Thomson Reuters I/B/E/S/) (Compiled by Nandi Kaul in Bangalore; Edited by Sriraj Kalluvila)