January 9, 2015 / 9:03 PM / 4 years ago

What to Watch in the Week Ahead and on Monday, Jan. 12

(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 equity market seems to be a bit a-twixt and a-twitter, alternating big upward moves with sweeping moves lower. With the first earnings getting out of the gate and earnings warnings likely to garner attention, individual stocks could be more actively volatile as investors react to company-specific news. The bond market could resume its yield-flattening, where short-dated yields underperform the long end. However, if the Fed is seen as moving more slowly, a steepening trend could take over. The dollar is likely to keep strengthening. JPMorgan Chase & Co reports quarterly results on Wednesday. The company could give a new indication of how much more it may have to pay to resolve government probes of its conduct. The bank, the biggest in the U.S. by assets, tried to put the bulk of those liabilities behind it in 2013 when it agreed to pay more than $20 billion in settlements. But additional allegations of misconduct in foreign exchange trading and other operations have pointed toward additional liabilities in the past year and left open the question of how much more it will cost the bank to clean up its affairs. Separately, the coming week will also see other major banks reporting their earnings. Goldman Sachs announces results for the fourth quarter on Friday, and on Wednesday, Bank Of America Corp and Wells Fargo & Co report their fourth-quarter results. Retail sales and consumer sentiment data next week will be watched for confirmation that consumer spending remains upbeat despite a surprise drop in earnings in December. The Commerce Department is expected to report on Wednesday that retail sales were flat in December as lower gasoline prices weighed on receipts at service stations. Core retail sales, which exclude gasoline and three other categories, are forecast rising 0.4 percent after increasing 0.6 percent in November. A Labor Department report on Thursday is expected to show that lower gasoline prices helped to push producer price index down 0.4 percent in December after it fell 0.2 percent in November. On Friday, the Labor Department is expected to report that the consumer price index fell 0.4 percent in December after dropping 0.3 percent in November. The core CPI is forecast edging up 0.1 percent after a similar gain in November. Also on Friday, the Federal Reserve is expected to report that industrial production was flat in December after jumping 1.3 percent in November. Manufacturing output is forecast rising 0.2 percent after advancing 1.1 percent in November. The University of Michigan’s consumer sentiment index is forecast rising to 94.1 in early January from 93.6 in December. Citigroup reports fourth-quarter results on Thursday. In what some analysts have called a “kitchen sink quarter,” the bank plans to report a tiny profit as it loads up on expenses to throw out costly business processes and settle legal claims. CEO Mike Corbat warned in December that the company would take $3.5 billion in charges in the quarter and barely breakeven. Analysts are expected to press him on whether he will win approval in March from the Federal Reserve to spend more on dividends and stock buybacks and then meet 2015 targets for profits and efficiency. Federal Reserve Bank of Philadelphia President Charles Plosser speaks on the economic outlook before the Greater Philadelphia Chamber of Commerce Economic Outlook event on Wednesday. Federal Reserve Bank of Minneapolis President Narayana Kocherlakota speaks on “Goal-Based Monetary Policy Report” before the Financial Planners Association of Minnesota on Friday. Separately, Federal Reserve Bank of St. Louis President James Bullard speaks on the U.S. economy and monetary policy before the CFA Society of Chicago on Friday. Schlumberger, world’s No.1 oilfield services provider, reports fourth-quarter results on Thursday. The company may report a higher quarterly profit, helped by growth in its Middle East and Asia Pacific operations. A majority of analysts covering the stock have cut their earnings estimate by an average of 6 percent over the past month. Schlumberger, which provides drilling technology and equipment, said in early December that it would take a $1 billion charge in the quarter related to job cuts and the writedown of some seismic vessels as it responds to a slump in oil prices since June. Investors will look for comments on the company’s outlook for 2015 following oil and gas producers’ moves to scale back capital budgets and to deploy fewer rigs. The company is also under pressure from the planned merger of two of its closest rivals - Halliburton and Baker Hughes. Intel Corp. reports fourth-quarter results on Thursday, as investors look for new signs of meaningful demand for personal computers to justify the chipmaker’s strong stock gains over the past year. Under CEO Brian Krzanich, Intel made meaningful inroads with its tablet chips in 2014 but at a heavy cost to profitability that many on Wall Street are not keen to see continue. When giant asset manager BlackRock Inc reports its 2014 earnings on Thursday, it is likely going to show the historically institutionally focused shop has made big inroads with retail investors despite continued struggles with its active equity funds. Federal Reserve Banks of New York, Atlanta, Cleveland and Philadelphia will release findings from a joint regional survey on small business credit conditions on Thursday. On the same day, Federal Reserve Bank of Philadelphia issues Business Outlook Survey for January. American Bankers Association’s Economic Advisory Committee, a group of chief economists from the nation’s largest banks, holds a press conference on Friday to discuss monetary policy predictions and its consensus economic forecast for 2015. IHS Inc, which publishes the Jane’s Defence Weekly, reports fourth-quarter results on Tuesday. The business research firm’s revenue is expected to be above estimates, according to Thomson Reuters StarMine data, fueled by growth in its subscription business. IHS, which raised its full-year revenue forecast last quarter, has seen revenue from its Americas and EMEA division rise steadily. Friday marks the trading debut of Sutherland Asset Management Corp, a REIT managed by Waterfall Asset Management, and insurance outsourcing company Patriot National Inc on the NYSE. On Tuesday, The World Bank publishes its twice-yearly Global Economic Prospects that looks at key economic trends and how they affect developing countries. The bank is likely to find that the recovery from the global financial crisis remains sluggish, and urge emerging markets to use low oil prices as a chance to build up fiscal buffers. AltaCorp, a Calgary investment bank, holds its annual three-day conference in Toronto beginning Tuesday with a broad range of companies expected to attend. Presenters include a number of oil-service companies whose clients have been slashing capital spending in the wake of falling oil prices, as well as regional pipeline operators, airlines and engineering firms. Brazil November retail sales data expected on Wednesday. Retail sales disappointed last year, as the economy slipped into recession and consumer confidence weakened to the lowest in more than five years. Separately, data on country’s capital flows and foreign reserves is expected on the same day. On Wednesday, Mexico’s National Statistics Institute will release gross fixed investment data for October. The monthly indicator contracted in September after 7 months of expansion. On Friday, data will show whether unemployment increased in December, after remaining stable at 4.71 percent in November. Peru releases on Thursday data on economic activity for November. The country’s finance minister has said November’s growth rate could be slower than the 2.37 percent year-on-year expansion posted in October. Separately, Peru’s central bank decides on Friday whether to hold the benchmark interest rate at 3.50 percent for the fourth straight month, amid sluggish economic growth. MONDAY, Jan. 12

Aluminum giant Alcoa Inc will report fourth-quarter results and the market will be watching for signs that the company’s business providing specialized products for the aerospace and automotive industries continues to grow. Analysts will also be looking to see what effect falling oil prices have had on Alcoa’s business. Lower energy prices mean lower costs for Alcoa, but could mean lower demand for its products in the automotive industry. Analysts expect the New York-based company to report earnings per share of 27 cents. Federal Reserve Bank of Atlanta President Dennis Lockhart speaks on monetary policy before the Rotary Club of Atlanta (1240/1740). The annual Detroit auto show and related conferences at which top executives speak will be held in the Motor City. Among the vehicles being shown include new pickup trucks by Japan’s Toyota and Nissan, a new version of GM’s Chevrolet Volt plug-in electric car and more. Among the executives present at the show are GM CEO Mary Barra, Fiat Chrysler CEO Sergio Marchionne, Ford CEO Mark Fields, Nissan CEO Carlos Ghosn, Tesla CEO Elon Musk among more. Bank of Canada issues Business Outlook Survey and Senior Loan Officer Survey. The Business Outlook Survey summarizes interviews with management of 100 firms and gives a sense of the outlook for sales, investment and employment. Brazil’s central bank releases Focus market survey results for prior week. The bank releases results of a weekly economic survey with more than 100 financial institutions. This will include forecasts for GDP, interest rates and inflation rates. (Compiled By Astha Rawat in Bengaluru)

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