What to Watch in the Week Ahead and on Monday, March 14
(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) WEEK AHEAD The Federal Reserve's policy meeting next week will be a big event for equity, currency and bond markets. With traders widely expecting the Fed not to take any action next Wednesday, investors will look for the central bank's view on the economy and to tease out its pace for raising interest rates in a world of soft demand and low inflation. The Fed will likely downgrade its "dot plot" from four rate hikes to the current market view of not more than two increases, which should spur appetite for bonds and push two-year Treasury yields from their highest levels in two months. If the Fed puts markets on notice for a rate hike in the months ahead, the dollar would stand to benefit. Stocks have rallied back in the past month, with the S&P 500 closing in on flat for the year, so indications of a faster-than-expected path of hikes could blunt the rally.
A heavy economic data week, with February retail sales and inflation reports dominating the calendar. These reports could shed more light on the health of the economy and the path of U.S. monetary policy. The Commerce Department is expected to report on Tuesday that retail sales fell 0.1 percent, reversing January's 0.2 percent gain, according to a Reuters survey of economists. The expected decline reflects cheaper gasoline, which has weighed on the value of receipts at service stations, and a slight drop in automobile sales. But core retail sales, which exclude gasoline, autos, building materials and food services, are expected to have increased 0.2 percent after rising 0.6 percent in January. Also on Tuesday, the Labor Department is expected to report that producer prices dipped 0.2 percent in February after rising 0.1 percent in the prior month. On Wednesday, a report from the Labor Department will likely show that the consumer price index fell 0.2 percent in February on lower gasoline prices after being unchanged in January. The core CPI, which excludes energy and food prices, likely rose 0.2 percent after increasing 0.3 percent in January. The Commerce Department is expected to report that housing starts rose to a 1.15 million-unit annualized rate in February from a 1.099 million-unit rate in January. Also on Wednesday, the Federal Reserve is expected to report that industrial production fell 0.3 percent in February after spiking 0.9 percent in January. Weekly jobless claims on Thursday cover the survey period for March nonfarm payrolls. Claims fell to a five-month low in the week ended March 5. Also on Thursday, the Labor Department will release its jobs openings report for January. Other reports due on Thursday include the Philadelphia Federal Reserve business conditions survey for March and the Commerce Department's current account report for the fourth quarter.
Valeant Pharmaceuticals International Inc, under scrutiny for its accounting and business practices, releases fourth-quarter results on Tuesday after much delay related to the recent recovery of health for CEO Mike Pearson and an internal committee's investigation of a specialty pharmacy it previously used. The embattled drugmaker, which will also update its 2016 forecast, added a representative from shareholder Pershing Square Capital Management to its board along with two other new directors.
Oracle Corp is expected to report third-quarter revenue slightly below estimates on Tuesday, according to Thomson Reuters StarMine data, hurt by a strong dollar and a continued drop in licensed software sales. Oracle, like other established technology companies, has been moving its business to the cloud-based model, essentially providing services remotely via data centers rather than selling installed software.
Adobe Systems Inc is expected to report first-quarter revenue and profit above estimates on Thursday, according to Thomson Reuters StarMine data, helped by a strong subscriber growth for its Creative Cloud package of software tools. San Jose-based Adobe has largely finished switching to web-based subscriptions from traditional licensed software to enjoy a more predictable recurring revenue stream.
On Friday, Federal Reserve Bank of St. Louis President James Bullard speaks on the U.S. economy and monetary policy before the Ninth Conference of the International Research Forum, in Frankfurt, Germany. Meanwhile, Federal Reserve Bank of New York President William Dudley gives welcome and opening remarks before the "Supervising Large, Complex Financial Institutions: Defining Objectives and Measuring Effectiveness" conference. At the same conference, Eric Rosengren, President of the Federal Reserve Bank of Boston discusses objectives and goals of supervision.
Tiffany & Co is expected to report profit and revenue below analysts' estimates for the fourth quarter on Friday, according to Thomson Reuters StarMine. A sustained decline in tourist spending in the United States, the stronger dollar and a slowdown in China are expected to hurt Tiffany's sales. Investors will look for forecast and commentary on luxury and tourist spending.
On Tuesday, plaintiffs suing General Motors Co over a faulty ignition switch will ask the 2nd U.S. Circuit Court of Appeals in Manhattan to reverse a pair of rulings last year that largely upheld the automaker's protection from liability over conduct predating its 2009 bankruptcy.
TerraForm Power Inc, a yieldco of SunEdison, is expected to post a loss in the fourth quarter on Tuesday, compared with breakeven results a year earlier, as demand falls. Investors will look for comments on the company's forecast and an update on Vivint Solar terminating a deal to be acquired by SunEdison. Continued...