What to Watch in the Day Ahead - Tuesday, Oct. 28

Mon Oct 27, 2014 2:42pm 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) A fretful global economy and suddenly volatile markets will form the backdrop for the U.S. Federal Reserve's two-day policy meeting. There is no press conference and no new individual economic forecasts due from policymakers. But the statement at 2 p.m. (1800 GMT) Wednesday will be parsed for any sign that the Fed is worried that trouble in Europe or elsewhere may infect the U.S. recovery and slowg its timetable for an initial rate increase.

Pfizer Inc is expected to post lower third-quarter earnings, hurt by cheaper generics, but investors will be especially interested in clues on whether the largest U.S. drugmaker will renew its unsolicited bid for British rival AstraZeneca Plc. Pfizer walked away after its final $118 billion bid was rejected on May 26, but under UK law will be allowed to resume its quest for its smaller rival in late November.

DuPont, the largest U.S. chemical maker by market capitalization, is expected to report a higher third-quarter profit, helped by higher earnings from its safety and protection, nutrition and health and industrial biosciences businesses. However, the company's farm business is expected to take a hit from farmers' preference for soybean seeds rather than corn seeds, which is the mainstay of the unit. The focus this quarter will be also be on the company's response to demands from activist investor Nelson Peltz, who has called on the company to break itself up, blaming its conglomerate structure for "underperformance." U.S. durable goods orders probably rose in September, and a reading on business investment spending is also expected to show an increase. A good set of data would suggest the manufacturing recovery remains on solid ground after a see-saw ride in news orders that reflected lumpy aircraft demand (0830/1230). CaseShiller's home price index for August (0900/1300) and the Conference Board's consumer confidence figures for October will also be released (1000/1400). Consumer confidence is expected to edge higher after hitting its lowest level since May in September. Facebook Inc, owner of the world's No.1 Internet social network, releases third-quarter results after the bell. Mark Zuckerberg has wowed Wall Street by turning Facebook into the industry's most effective mobile advertising platform. But while investors should cheer what's expected to be another quarter of strong revenue growth, they will also be eager for details about the timeline for making money from the collection of pricy assets that the company has acquired, including Instagram, WhatsApp and virtual reality headset maker Oculus. Swiss bank UBS AG's third-quarter report comes as it faces down several potentially costly probes. Last month, UBS warned of new fines after confirming it was holding talks to settle allegations that it was involved in rigging foreign exchange rates. UBS also faces a French investigation into whether it helped wealthy French individuals dodge tax, in connection to which French investigating magistrates have proposed the bank pay a fine of 4.88 billion euros ($6.2 billion), according to a judicial source. UBS is currently asking investors to swap their shares into a new group holding company, a restructuring effort designed to ensure it can be broken up more easily in a crisis. Analysts expect French drugmaker Sanofi SA's third quarter to look good compared with year earlier, helped by a recovery in its animal health and vaccines units and by more favorable exchange rates. Investors will be on the lookout for comments on M&A, new allegations of bribery within Sanofi subsidiaries in East Africa and the Middle East, and the group's plans to offload a portfolio of off-patent drugs and the plants that make them in France. Swiss drugmaker Novartis AG is expected to report a slight rise in third-quarter sales, despite facing full generic competition to its once best-selling blood pressure pill Diovan for the first time.

Biotech Gilead Sciences Inc, maker of $84,000 hepatitis C drug Solvaldi, reports third-quarter results and will likely provide an update on the launch of Harvoni, an even more expensive combination treatment for the virus that was approved by regulators earlier this month. Early U.S. prescription statistics show that Harvoni is off to a strong start and investors will be looking for confirmation of continued robust sales despite the backlash from some insurers. Amgen, the world's largest biotechnology company, is expected to provide an update on its pipleline of drugs in development and further details on the reorganization plans it announced in July at a formal presentation for analysts and investors at a New York hotel. Amgen may also address recent calls by a major shareholder to split into two companies - one for older legacy products and another for new growth medicines. Electronic Arts Inc offers the first snapshot of the videogaming industry when it reports third-quarter results after the bell as it gears up for the holiday season. The company that gave us the "Sims" and a hodge-podge of bestselling U.S. sporting simulations hopes to boost its software sales and devise a mobile-gaming strategy that can win Wall Street's approval. Arizona-based Freeport-McMoran Inc is expected to report lower earnings in the third quarter on the back of weaker copper and gold prices and volumes, the latter due to an export ban in Indonesia. The market's focus will likely be on the company's potential to build a smelter in Indonesia as well as the renegotiation of its contract of work in the country. There will likely also be questions on safety at the country's massive Grasberg mine after four workers died last month. Investors will also be hoping for an update on plans for sales of non-core assets as they company works to reduce its $20 billion debt. Anadarko Petroleum Corp reports third-quarter earnings, but Wall Street is most interested in the company's spending plans for next year following a more than 20 percent slide in crude prices. Health insurer Aetna Inc is expected to report a higher third-quarter profit and detail how its sizeable new business on the Obamacare exchanges is shaping up after its first full quarter of paying claims for these new customers. Hard-drive maker Western Digital Corp is expected to report first-quarter profit above analysts' estimates, according to StarMine, helped by higher demand for storage used in servers and data centers. Investors will look out for updates on the company's full-year outlook. Quarterly results from Starwood Hotels & Resorts Worldwide Inc, operator of the Sheraton and Westin hotel chains, and Marriott International Inc, owner of Ritz-Carlton brand, are expected to benefit from a strong increase in global travel. The market will be looking for an update on 2015 forecasts, when hotel occupancy in the U.S. is expected to be at the highest since 1995, according to a lodging forecast from PwC. For both companies, there will likely questions about how Ebola could affect travel. Timken Co is expected to report lower-than-expected third-quarter profit, hurt by weakness in the mining and agricultural industries, according to StarMine. Timken supplies ball bearings to companies such as Caterpillar and Cummins. Both the companies have cited softness in the mining industry for its weak results. Timken recently laid out plans to restructure its aerospace unit, which will result in pre-tax charges of $110 to $120 million in this quarter. Investors will be looking for comments on its reported bid for Emerson Electric's power transmission solutions business. Coal and natgas producer Consol Energy Inc is expected to post a third-quarter profit compared a year-earlier loss due to heavy tax expenses. However, revenue is expected to plunge about 28 percent amid weak natural gas and oil prices, and softening demand for thermal coal from the power sector. Investors will want to know about the future of demand, and the company's capital budget. Miner Arch Coal Inc is expected to report a bigger loss in the third quarter as weak prices for steel-making coal continues to offset cost cuts. Rail line congestion in Western U.S. states and a slowdown in the Chinese steel market is also expected to hurt the company's bottom line. Coach Inc, known for its Poppy handbags, will report first-quarter results amid high expectations as the company begins to see strong demand for its products from international markets. Investors will look for details on the company's performance in China, where it has seen strong growth in the past, and will also keep an eye out for any updates on the previously announced closure of about 70 stores in North America. Investors in speciality glass maker Corning Inc will focus on any benefit from strong sales of Apple Inc's iPhone 6 and 6 Plus, which use Corning's Gorilla glass and will also look for guidance on opportunities from the auto industry, which analysts say is larger than the LCD market and one that Corning is planning to enter. Discount brokerage firm TD Ameritrade Holding Corp reports its fiscal year-end results and outlook for 2015. Recent market volatility is a positive for the firm since it is popular with do-it-yourself traders who try to take advantages of ups and downs in the stock market. But the protracted delay by the Federal Reserve is a negative since AMTD and other discount brokers make much of their money on returns from investing their clients' cash. Insurance broker Marsh & McLennan Cos Inc's third-quarter results are expected to beat estimates, according to StarMine. Marsh, which kicks off brokers' earnings season, is expected to benefit from the rising insurance rates in the United States. Satellite radio service provider Sirius XM Holdings Inc is expected to report third-quarter revenue above analysts' average estimate, according to StarMine. Analysts speculate the company is likely to benefit from a strong market for auto sales. Buyers of new cars fitted with Sirius receivers typically get free access for a few months but then must pay to keep the service. The company raised its full-year revenue forecast last quarter. Wall Street will be looking for an update from Panera Bread Co on its effort to speed up service at its popular bakery-cafes when it reports third-quarter results. Up until it started reporting problems with service times, Panera was mentioned in the same breath as Chipotle, which is renowned for its ability to squeeze ever more sales out of existing restaurants. Home appliance maker Whirlpool Corp and Cummins Inc, which makes diesel engines, gas turbines and assorted automotive parts, also report third-quarter results. (Compiled by Ayesha Sruti Ahmed in Bangalore)