What to Watch in the Day Ahead - Thursday, April 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) Alphabet Inc is expected to report a rise in first-quarter revenue that is likely to beat analysts average estimate, according to Thomson Reuters StarMine data. Investors will be looking for continued growth at Alphabet's Google unit, which has been driven by strong mobile advertising sales. Investors will also be keen to gather more information on the company's Other Bets business, which includes glucose-monitoring contact lenses and Internet balloons. Capital expenditures in the business are expected to increase this year, although no concrete details have been offered. Microsoft Corp is expected to post an increase in third-quarter revenue, which will also beat analysts consensus estimates, according to Thomson Reuters StarMine data. The company is expected to benefit from growing demand for its cloud products and services. Though Chief Executive Satya Nadella has focused on cloud services and mobile applications, to offset slower growth in its traditional software business, the company is still heavily reliant on PCs. Research firm IDC expects Microsoft's Windows business, which has 270 million active users eight months after launching, will improve later this year as companies that had delayed replacing machines before upgrading to Windows 10 make the switch. Analysts and investors will be looking whether the company has been able to sustain growth in its cloud business, and any impact from a stronger dollar. Visa Inc is expected to report a decline in first-quarter profit as a volatile global economy and the strong dollar cut into revenue from customers outside the United States. Consumers in some slowing economies around the world have been reining in spending. Some analysts say, however, that payment volumes are still likely to grow at Visa due to strong consumer spending in the United States. Schlumberger Ltd is expected to report a fall in first-quarter profit, hurt by weak drilling activity. The world's largest oilfield services provider, which recently closed its acquisition of Cameron International Corp, warned last month that its revenue would fall by about 15 percent from the fourth quarter. Verizon Communications Inc is expected to report first-quarter profit and revenue in line with analysts average expectations. The No.1 U.S. wireless phone service provider has benefited from heavy promotions as it counters rivals such as AT&T in a crowded U.S. wireless market. The focus will be on commentary around a possible bid for faded Internet pioneer Yahoo's core assets as well as any updates to financial guidance for the remainder of 2016. New applications for U.S. unemployment benefits likely rose last week, but remained well below a level associated with a buoyant labor market. Last week's claims covered the survey period for April nonfarm payrolls and will be dissected to see if there was any impact from the Verizon strike. While striking workers do not qualify for unemployment benefits, some have filed applications in the past. According to a Reuters survey of economists, initial claims for jobless benefits probably rose 10,000 to a seasonally adjusted 263,000 for the week ending April 16. That would leave claims slightly above the March payrolls survey week. (0830/1230) Separately, the Philadelphia Federal Reserve business survey is expected to show manufacturing in the mid-Atlantic region expanded in April for a second month. (0830/1230) Starbucks Corp will release its results for the second-quarter. Starbucks has the high-class problem of having to meet investors' outsized expectation that it will continue reporting industry-leading sales growth. Any stumble, real or perceived, will likely be punished. General Motors Co will announce first-quarter results. The company said on Friday it was recalling nearly 1.04 million newer pickup trucks for a seat belt flaw. The company said the recall in the United States includes 895,232 vehicles and a stop-sale of about 3,000 new 2014 and 2015 model year pickups still on dealer lots. The recall includes about 142,000 vehicles outside the United States. Union Pacific Corp and Norfolk Southern Corp, the No.1 and No.4 U.S. railroad operators, will post first-quarter results. With coal freight volumes still in freefall across the industry thanks to low natural gas prices and the strong dollar, analysts will be watching to see how the railroads are managing costs through furloughs, back office layoffs and mothballing locomotives. Biogen Inc is expected to report a largely in-line first-quarter as prescriptions written for its multiple sclerosis drug remain unchanged in the United States. Management previously noted that the uptick in scripts may not be seen until the second quarter. Investors will also look for more details on the Massachusetts-based drugmaker's hemophilia assets, which the company is said to be looking to sell. Travelers Companies Inc, the first big U.S. insurer to report quarterly results, is expected to report a decline in first-quarter profit due to weak underwriting gains and lower returns from its energy investments. Travelers, which competes with AIG for the title of biggest U.S. commercial property and casualty insurer, has felt a sting in recent quarters from a steep fall in oil prices as they drag on energy investments made through private equity funds. BB&T Corp, Fifth Third Bancorp and KeyCorp are likely to report a decline in first-quarter profit as they put aside more money for sour energy loans. Many lenders have ramped up reserves in recent months, concerned by the increasing number of energy companies that have gone bankrupt and defaulted on loans as oil prices stay stubbornly low. U.S. homebuilders including D.R. Horton Inc and PulteGroup Inc report their quarterly results. D.R. Horton and PulteGroup are expected to report a higher profit for the second and first quarter, respectively, helped by higher home sales. Johnson Controls Inc reports second-quarter earnings amid a pending merger with Ireland-based Tyco International Plc. The merger would save Johnson Controls $150 million a year in taxes. Sportswear maker Under Armour Inc is expected to report first-quarter profit below analysts' estimates, according to Thomson Reuters StarMine data. Under Armour's gross margin in the quarter is expected to have been hit by higher promotions to clear excess inventory and slowing apparel sales growth, the company's largest source of revenue. A fall in the average price of its running footwear and a shift in sales mix towards lower-margin footwear are also expected to hurt margins. Investors will look for an update to the forecast, inventories, and comments on the Sports Authority bankruptcy. Advanced Micro Devices Inc is expected to post first-quarter revenue below analysts average estimate, according to Thomson Reuters StarMine data. Investors will be looking for an update on its Polaris graphic processing units, which it plans to ship in the middle of this year. Mexican cement company Cemex SAB de CV reports first-quarter results. Investors will be looking at the impact of the peso depreciation on the company's debt load as well as any recovery in its U.S. business. European Central Bank (ECB) holds interest rate decision. Economists say lackluster demand, not inadequate credit, is holding the euro zone economy back. They say the ECB is unlikely to cut its deposit rate further from the current -0.40 percent. That too underscores the diminishing returns from monetary policy, especially since the ECB is well over a year into its trillion-plus euro stimulus program, has cut rates several times and pledged longterm loans to banks, with little pick-up in inflation so far. The U.S. government and Volkswagen AG face a court deadline to come up with a plan to address excess emissions from 580,000 diesel vehicles sold in the country. Despite robust talks, EPA officials have expressed skepticism if the sides would agree to a deal by the deadline set forth by U.S. District Judge Charles Breyer. A judge will read out the verdict in the bribery trial of Canadian Senator Mike Duffy, whose high-profile case helped reduce the popularity of former prime minister Stephen Harper and contributed to his defeat in an October 2015 election. The Liberals of Prime Minister Justin Trudeau used the case as an example of how they said the Conservatives had been corrupted during their near-decade run in office. Duffy was tried on 31 criminal charges related to activities after Harper appointed him to the Senate, the upper chamber of Parliament. LIVECHAT - BITCOIN'S FUTURE with Anatoliy Knyazev, Executive Director and Co-Founder of Exante brokerage company We talk about the outlook for Bitcoin and its potential role in combating money laundering and financial crime with Anatoliy Knyazev, executive director and co-founder of Exante, a next generation brokerage company that aims to give its clients access to a broad range of financial instruments and markets. (0503/0903) To join the discussion, click here bit.ly/1kTxdKD (Compiled by Sourav Bose in Bengaluru; Editing by Savio D'Souza)
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