August 14, 2015 / 9:39 PM / 3 years ago

UPDATE 1-What to Watch in the Week Ahead and on Monday, Aug. 17

(Removes entry on economist Bill Witherell's LIVECHAT as the event got cancelled.)

The stragglers for the earnings season - Home Depot, Wal-Mart and a few others - will report
results to close out the quarter next week, with expectations that retailers would see decent
sales after recent revisions show better-than-expected activity in the second quarter. The
markets will also continue to watch the Chinese yuan after its unexpected devaluation this week,
with anticipation that the dollar will strengthen a bit more, boosting bond-market activity in
what is otherwise expected to be a slower week.
Fed minutes are released on Wednesday and will be parsed for clues of an interest rate rise. The
Changes in the July statement pointed to an improving economy and labor markets.
Characterization of the debate in the minutes could indicate how firm opinions are about the
state of the U.S., and how confident members are that inflation and employment will move towards
the Fed's target levels. Investors will also look for the Labor Department's Consumer Price
Index on Wednesday, which is expected to have increased 0.2 percent in July, a bit down from a
rise of 0.3 percent in June. Housing data, including housing starts and building permits on
Tuesday and existing home sales on Thursday will be in focus. The Conference Board releases its
Leading Economic Index, a gauge of future U.S. economic activity on Thursday.
Retailer Wal-Mart Stores Inc and Target Corp release its results for the second quarter.
Wal-Mart is expected to report better-than-expected quarterly sales on Tuesday, while Target is
expected to miss estimates when it reports on Wednesday. Also on Tuesday, TJX Cos Inc is
expected to report second-quarter profit and sales above analysts' average estimates. The
off-price retailer is expected to be helped by lower gas prices, wage growth, and higher traffic
to its stores as more consumers hunt for bargains. A hike in the number and quality of brands in
its stores and merchandise that reflects popular fashion trends is also expected to drive sales.
Investors will look for third-quarter forecast, commentary on industry trends and plans to
expand in international markets.
Home Depot Inc, the world's No. 1 home improvement chain, is likely to report second-quarter
sales below analysts' average estimate on Tuesday. Strong housing market data over the last few
months is expected to have kept overall demand for home improvement goods steady. However,
record rainfall in May and June in large parts of the United States is likely to have kept a lid
on sales of products in the home exterior improvement categories, such as paint and gardening
supplies. Lowe's Companies Inc, the second-largest U.S. home improvement chain, is likely to
report second-quarter sales below analysts' average estimates on Wednesday.
Hardware and software maker Hewlett-Packard Co is expected to report third-quarter earnings
slightly above analysts' average estimate on Thursday. HP has been cutting costs and focusing on
higher-margin sales in the face of a strong dollar and weak enterprise demand for its services.
The company is also in the processes of separating its computer and printer businesses from its
faster-growing corporate hardware and service operations. Inc, the world's biggest maker of online sales software, is expected to report a
second-quarter profit above analysts' average estimate. Salesforce has struggled to earn
consistent profits despite strong revenue growth over the past few years, hurt by higher
spending on hiring. The company reported a profit for the first time in seven quarters in May.
On Thursday, the investors will look for improvement in margins in the quarter and
merger-related comments.
Data storage equipment maker NetApp Inc is expected to report first-quarter revenue on Wednesday
slightly above average analysts' estimate. NetApp, which cut about 500 jobs in May, has been
trying to boost growth by focusing on cloud-based products as businesses cut spending on
high-end storage systems. The company appointed George Kurian as its new CEO in June to replace
Tom Georgens. Investors would be looking for second-quarter forecast.
On Wednesday, the Federal Reserve Bank of Minneapolis President Narayana Kocherlakota speaks
before the "Macroeconomic Policy and Price Measurement Issues in a Low Inflation Environment"
conference, in Seoul, South Korea. On Thursday, the Federal Reserve Bank of San Francisco
releases the text of the speech Federal Reserve Bank of San Francisco President John Williams
delivered before the Bank Indonesia-BIS Research Conference in Jakarta, Indonesia.
Apparel retailer Gap Inc is expected to report a second-quarter profit below analysts' estimates
on Thursday. Out of fashion merchandise and a general lack of trendy products have led to a
decline in sales at the company's flagship Gap brand, leading to heavy discounts. Shipment
delays caused due to disruptions at the West Coast ports early this year and a strong dollar are
also expected to hurt the company's results in the quarter. Investors will look for comments on
recovery at the Gap brand and performance in the current quarter.
On Wednesday, teen apparel retailer American Eagle Outfitters Inc is expected to report
second-quarter profit and sales above analysts' average estimates. The earnings beat is expected
to be driven by trendy, fashionable merchandise, lower discounts, benefits from lower cotton
prices and tight inventory controls. American Eagle is also benefiting from a new multi-channel
distribution center that allows it to control inventories more efficiently by enabling it to
supply to its brick-and-mortar as well as online stores. Investors will look for third-quarter
forecast, commentary on promotions and trends, and expectations for the back-to-school shopping
Agriculture equipment maker Deere & Co has been hurt by a strong dollar as well as weak demand
for its farm and turf equipment, which make up about two-thirds of its annual revenue. Falling
U.S. farm income and weak commodity prices have reduced spending on new equipment by farmers. In
May, Deere forecast a fall in global sales for its farm equipment in 2015 and said it would
close plants and cut jobs. When the company reports its third-quarter results on Friday, the
investors will be looking for an update on the company's plans to shutter more factories to
adjust to lower demand, as well as whether it is expected to take a hefty charge on a tractor
recall announced earlier in August. They will also be looking for more information on a fire in
a chemical warehouse in China last week that left some Deere workers critically injured.
Friday data is expected to show that Canada's June retail sales have increased a little,
compared with the previous month's reading. It is likely to have risen 0.2 percent, compared
with a rise of 1.0 percent in May. Canada's inflation data is also out on Friday. Country's
annual inflation is likely to have advanced 1.4 percent in July, up from 1.0 percent in June.
Statistics Canada releases June wholesale trade data on Thursday.
On Thursday, Mexico's statistics institute will release GDP data for the second quarter, after
the central bank said it sees quarter-on-quarter growth of 0.3 percent for the period,
slackening from the first quarter after weaker-than-expected exports and a slump in domestic oil
output. The same day, data with show how economic activity fared in June, after slowing to a
nine-month low in May. On Friday, retail sales data for June will show how domestic spending
performed after rebounding by 0.2 percent in May.
U.S. homebuilder sentiment is expected to stay strong in August as the National Association of
Home Builders's NAHB/Wells Fargo Housing Market index is likely to show an increase to 61 from
60 in July, which was the highest since November 2005. (1000/1400) Also, the New York Federal
Reserve releases its New York Fed's Empire State general business conditions index for August.
Beauty products company Estee Lauder Co Inc has been seeing a revival in sales in North America,
helped by product launches and acquisitions. However, Estee has to increase promotions in its
flagship Clinique and Estee Lauder brands which have shown some weakness. The company's smaller
brands such as Smashbox and Bobbi Brown have seen a rise in demand, helped by their extensive
online presence. Even as sales in overseas markets like the UK and China grow by double digit
percentages, a stronger dollar in the past few quarters has stripped their value. The company is
expected to beat revenue and profit estimates for the fourth quarter. Investors will be keen on
2016 forecast, updates on acquisitions and the impact of the dollar.
Apparel retailer Urban Outfitters Inc is expected to report second-quarter profit and sales
slightly above analysts' average estimates. The beat is expected to be driven by strong
performance at the flagship Urban Outfitters brand, which accounts for a majority of sales, but
margins are expected to be pressured by higher promotions at the Anthropologie brand, where
sales growth has slowed in recent quarters. The company is also benefiting from investments in
its fast-growing e-commerce and online division. Investors will look for commentary on sales
recovery at the Anthropologie brand, promotions, and updates on performance for the
back-to-school shopping season.
Data from Statistics Canada will show the holdings of Canadian securities by non-residents for
June. Foreign investors sold C$5.45 billion in Canadian assets in May.
LIVECHAT: Outlook for rates with Wilmington Trust's Luke Tilley
As September nears, the message is increasingly clear from the Fed that a rate hike is
imminent. So why are markets so nervous? Join Global Markets Forum at (1000 ET/1400 GMT) for a
chat about markets and the Fed with former Philly Fed official Luke Tilley. To join the Global
Markets Forum, click here
(All analysts' estimates are according to Thomson Reuters StarMine, unless mentioned otherwise)

 (Compiled by Sourav Bose in Bengaluru; Edited by Don Sebastian)
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