What to Watch in the Day Ahead - Wednesday, Jan. 21
(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) American Express, the world's biggest credit card issuer, is expected to report fourth-quarter earnings in line with estimates, according to Thomson Reuters StarMine, helped by lower loan-loss reserves and a rise in holiday sales. The company's growth depends mostly on its affluent customers, people who have been pretty consistent with their spending during a recession. The National Retail Federation estimated total holiday sales rose 4 percent, the highest since 2011, helped by strong online buying, improved job market and falling gas prices. Also benefiting from lower loan-loss reserves and a rise in holiday sales will be Discover Financial, whose fourth-quarter results are expected to be in line with estimates, according to StarMine. EBay Inc reports fourth-quarter results ahead of spinning off PayPal, its payments division. The e-commerce giant's earnings are expected to reflect the relative weakness of its marketplace division compared to the overall market. The stronger U.S. dollar and search algorithm changes from Google likely stunted revenue growth for eBay Marketplaces. The company is expected to report earnings of 89 cents per share. Later this year, eBay will split its marketplace and enterprise units from PayPal. BGC Partners says PayPal could garner a valuation of $40 billion or more as a stand-alone business and once split, the two companies would be worth a combined $78 billion, 14 percent more than the current value. U.S. Commerce Department releases its monthly report that likely will show housing starts picked up in December, signaling a gradually recovering housing market. Analysts polled by Reuters expect starts were 1.040 million units last month, up from 1.028 million units in November (0830/1330). Applications for building permits are forecast marginally up at 1.055 million-unit rate for December, according to analysts. (0830/1330) SanDisk posts fourth-quarter results, as the memory chip maker expands further into high-margin solid-state drives for companies and governments. Investors will be looking for new signs of expansion after the company bought specialized enterprise storage maker Fusion-IO last June. Microsoft CEO Satya Nadella lays out plans for the Windows 10 operating system for mobile phones, expected this autumn. Investors are eager to find out how the new CEO, about to finish his first year in charge, intends to reverse Microsoft's near-irrelevance in the mobile arena. Investment banking and retail discount securities brokerage company TD Ameritrade reports first-quarter earnings. Rising stock markets that bolstered client portfolios and stimulated active trading by retail investors, coupled with likely lower compensation expenses, could raise earnings by about 10 percent from a year ago. The company is still a long-term play as investors bet its true earnings surge will occur when the Federal Reserve finally raises interest rates so it can book big gains on client cash that it holds. Chipmaker, Xilinx Inc is expected to report third-quarter revenue in line with analysts' expectations, according to Thomson Reuters StarMine, helped by increased revenue from its aerospace and defense businesses. Xilinx's semiconductors are sold off the shelf and can be programmed by customers to do specific tasks, eliminating hefty expenses to develop custom chips. The company had earlier said it expected third-quarter revenue to stay flat or rise up to 4 percent from the second quarter. Network gear maker F5 Networks is expected to report first-quarter results above analysts' expectations, according to Thomson Reuters StarMine. F5 Networks, which generates a majority of its revenue from enterprise customers, has been benefiting from strong demand for network security products in the wake of increasing cyber attacks directed toward large companies. Closing arguments are scheduled in a nonjury trial in the long-running court battle between Johnson & Johnson and Boston Scientific over the latter's acquisition of Guidant. J&J is seeking up to $4.2 billion in damages as well as an additional $3 billion in interest. The case is before U.S. District Judge Richard Sullivan in New York. Treasury Secretary Jacob Lew will preside over an open session of the Financial Stability Oversight Council at the Treasury Department in Washington. Federal Reserve chair Janet Yellen will also attend the event. The agenda includes an update on benchmark reform efforts and a discussion of the Council's process for considering nonbank financial companies for potential designation. The Bank of Canada issues its decision on interest rates and its quarterly monetary policy report. While the central bank is expected to hold rates at 1 percent, analysts say the bank could lower its growth projections in its updated monetary policy report. Analysts will be looking to see how the bank balances the hit to the economy from lower oil prices with the burgeoning demand for Canadian goods from the United States, and in particular whether growth is expected to be enough to take spare capacity out of the economy and thus hasten an eventual rate hike. It has to exceed 2 percent to do that (1000/1500). Following that, Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins hold a news conference to explain the rate decision and monetary policy report. (1115/1615) Canada wholesale trade is expected to pull back modestly in November after hitting a record high in dollar terms the month before. (0830/1330) Central Bank of Brazil's monetary policy committee, known as Copom, is expected to raise interest rates, for a third straight time, to 12.25 percent, quelling any doubts about its commitment to ending years of high inflation. That would be the highest rate since August 2011. Bank of England will release the minutes from its January policy meeting (0430/0930). Separately, BOE Deputy Governor Minouche Shafik speaks on financial markets in Brussels. (0700/1200) (Compiled By Astha Rawat in Bengaluru; Editing by Savio D'Souza)
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