What to Watch in The Day Ahead; Wednesday, Aug. 6

Tue Aug 5, 2014 2:31pm 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) The quarterly results of Viacom, Twenty-First Century Fox and Time Warner will be of particular interest this quarter given that Time Warner rebuffed Fox's offer to buy it for $80 billion. Time Warner CEO Jeff Bewkes is largely expected to unveil parts of a plan to persuade shareholders why Time Warner is better suited to go alone. The next move is with Fox owner and chairman Rupert Murdoch. Fox executives should give some indication on how it plans to proceed. On the sidelines, Viacom executives will be questioned about the potential deal and what it means for the media landscape. Prudential Financial is expected to report a second-quarter profit that will likely beat expectations, according to StarMine. The company's profit is likely to be driven by higher premium income and strengthening of Japanese yen against the dollar. The company's retirement services business, where it assumes pension obligations of large industrial companies, has witnessed stronger operating income over the past few quarters, helped by a rising stock market. Mondelez International is expected to report results for its second quarter. The company, whose portfolio includes Oreo, Milka, Cadbury chocolates, Trident gum and Jacobs coffee, is dealing with a tough environment as consumers look to save money and increasingly shop for healthier products. The Commerce Department is expected to report that the U.S. trade deficit widened in June. Investors will look at how the inflation-adjusted deficit stacks up against the assumptions the department made about trade in its advance report on second quarter GDP. It previously said trade sliced more than a half point off of GDP in the second quarter as imports surged, displacing domestic production. (0830/1230) Separately, the Mortgage Bankers Association of America is scheduled to release its weekly indexes. (0700/1100) Cognizant Technology Solutions, expected to report earnings, had warned that growth in its North America healthcare business would remain slow in the second quarter due to lower spending by customers adjusting to U.S. healthcare reforms. Cognizant said it expects revenue to grow by at least 16.5 percent in 2014, its slowest in five years. The company provides services such as claims processing, billing and call center operations to insurers, hospitals and some state-run healthcare exchanges set up under President Barack Obama's Affordable Care Act. Dish Network is expected to report its second-quarter results. The company had warned that it expected expenses to increase especially for acquiring content from local broadcast channels and on sports programming. Dish also said that margins may face pressure if it is unable to renew long-term programming contracts on favorable pricing. Dish's billionaire chairman Charlie Ergen is expected to tell Wall Street a bit more about how the company plans to deploy its billions of dollars worth of wireless spectrum. Ergen has said Dish does not want to get into a bidding war with Masa Son's Sprint for T-Mobile but now that France's Iliad has thrown itself into the ring with a bid, investors are wondering whether there's a role for Dish to play. Keurig Green Mountain is expected to report a third-quarter profit above Wall Street expectations, according to StarMine. The K-cup coffee pod maker has been partnering with companies such as J.M. Smucker and Nestle to sell their coffee pods and is also working with Coca-Cola to launch a new cold beverage system in October. Investors will be looking for details on the launch and whether the company could raise coffee prices like Smucker did for the first time in three years in June, as arabica futures prices rise due to a drought in Brazil, the world's No. 1 coffee producer. Chesapeake Energy Corp is likely to report second-quarter earnings. Investors will be looking to see how much progress CEO Doug Lawler has made in cutting spending and debt at the Oklahoma City, Oklahoma-based oil and natural gas producer. Devon Energy Corp is expected to report quarterly results. The U.S. oil and gas company in June sold $2.3 billion in assets it considered nonessential and will update investors on its wells in places such as the Permian Basin in West Texas and New Mexico and the Eagle Ford in South Texas. Separately, Rowan Co is scheduled to report its results for the second quarter. Also expected to report profit is oil producer QEP Resources. The company is expected to post a jump in quarterly profit. The Bank of England is scheduled to conduct its two-day Monetary Policy Committee meeting. Separately, various data from other regions, expected to be released, comprise German factory orders, and UK's industrial output. A spike up in volume is expected. Symantec, known for its Norton antivirus software, is expected to report first-quarter earnings above the average analyst estimate, according to StarMine. Symantec is benefiting from higher spending by companies on security software to protect their network and data from sophisticated hacking attacks and malware. Investors will be keen to see how business is faring for Transocean, one of the world's largest offshore drillers, as it faces tough competition, pressure to modernize its fleet, and high costs. Separately, HollyFrontier is expected to report a lower second-quarter profit as the difference between prices for West Texas Intermediate and Brent crude has narrowed sharply from a year earlier. All of HollyFrontier's refineries are situated inland, unlike other refiners with exposure to coastal crudes. Investors will be looking for comments on U.S. exports. Refiners have largely opposed exports as it is likely to push up costs for the crude they refine. U.S.-based CF Industries and Canada's Agrium, both large nitrogen producers, are scheduled to report second-quarter results after markets close. Nitrogen and potash demand perked up during the quarter, but Agrium had unexpected downtime at its Carseland, Alberta nitrogen plant. Of interest will be thoughts on spending later this year by U.S. farmers on chemicals and fertilizer in light of falling crop prices. Investors will also look for updates on both the companies' expansion projects. AOL is expected to report second-quarter results. Investors will look to see if it can keep up progress it has made in increasing advertising revenue. Tim Hortons, Canada's largest coffee and doughnut chain, is expected to report bigger earnings and revenue for the second quarter, as it opens new restaurants and fine-tunes its menu. Analysts will also scrutinize sales at established stores and transaction counts to help determine whether the company's growth strategy is on track. Expansion-hungry rivals such as Starbucks and McDonald's want to grow in Canada, increasing the competitive pressure on Tim Hortons. For 2014, the company has said it expects same-store sales growth of 1 to 3 percent in Canada and 2 to 4 percent in the United States. Auto-parts maker Visteon is expected to report higher quarterly revenue, helped by increased global vehicle production. Higher vehicle production is likely to boost sales of its climate control products, which are used by automakers including Ford, GM, Honda and Hyundai, and account for more than two-thirds of annual revenue. Analysts will look for update on the company's full-year forecast. Hospital operator Kindred Healthcare is likely to post its second-quarter results after the bell. Alpha Natural Resources is expected to report a bigger second-quarter loss as coal prices remain weak. Burdened by falling margins, coal miners have shuttered many a mine and cut jobs to reduce costs. Alpha Naturals said that it plans to idle 11 mines in West Virginia and cut up to 1100 jobs. The company is also being hurt by poor rail service in Wyoming's Powder River Basin, preventing it from cashing in on an uptick in demand for electricity-generating coal. Investors will look for details on the company's cost cuts and its forecast for steel-making coal. (All analysts' estimates are according to Thomson Reuters I/B/E/S/) (Compiled by Nandi Kaul in Bangalore; Editing by Maju Samuel)