June 20, 2014 / 7:10 PM / in 4 years

What to Watch in the Week Ahead and on Monday, June 23

(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 There are no public events on the schedule for the Fed’s five governors but the regional bank presidents have a busy week. Philadelphia Fed president Charles Plosser speaks on the economic outlook on Tuesday at the Economic Club of New York. New York Fed President William Dudley talks about the Puerto Rican economy the same day at a San Juan accountants’ symposium, while San Francisco Fed President John Williams joins a panel on the global economy at Stanford University. On Thursday, Richmond Fed President Jeffrey Lacker addresses a regional business gathering in Lynchburg, Virginia, about human capital issues, while St. Louis Fed President James Bullard discusses monetary policy and income inequality at the Council on Foreign Relations in New York. Data next week will likely show signs of housing regaining its footing after a run-up in mortgage rates stalled the recovery. Commerce Department data on Tuesday is expected to show new home sales rising to a 440,000-unit pace from a 433,000-unit rate. On Wednesday the Commerce Department is expected to report that durable goods orders were flat in May. It is also expected to report that the economy contracted at a much steeper 1.7 percent annual rate instead of the 1.0 percent pace reported last month. On Friday, the department is expected to report that consumer spending rebounded 0.4 percent in May after dipping 0.1 percent the prior month. Sportswear maker Nike, scheduled to report fourth-quarter results after the bell on Thursday, warned in March that growing pressures from weaker currencies in key emerging markets would take a big toll on its profit in the quarter and into the next fiscal year. It also said sales in China would be unchanged or even down slightly, reawakening concerns it was having trouble finding its bearings in that market after signs of progress in recent quarters. The Street expect Walgreen’s quarterly results on Tuesday to meet expectations after the drugstore operator’s May sales rose 6 percent, helped by strong growth in both front-end and pharmacy sales. Traffic is likely to remain a challenge in near term as the company implements pricing changes. Investors will want to know how purchasing synergies related to the company’s distribution agreement with AmericansourceBergen are progressing. Accenture is likely to report quarterly revenue below analysts’ average estimate on Thursday, according to StarMine. The company had warned last quarter that weakness in its consulting business, which brings in more than half of its revenue, would carry on through the year. Analysts are expecting Accenture to face pricing pressure in its application service business and suggested that the company may face hurdles converting consulting bookings to revenue. On Tuesday, the House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law is scheduled to conduct a hearing on the proposed merger of AT&T and DirecTV. Witnesses testifying at the hearing will include AT&T CEO Randall Stephenson, DirecTV CEO Michael White, consumer advocates and American Cable Association representatives on behalf of smaller cable providers. Monsanto, the world’s largest seed company, is scheduled to report third-quarter results before the bell on Wednesday. It reported higher-than-expected earnings in the previous quarter with its corn business on track to post record volume for the fiscal year. The company had said it expected full-year earnings per share of $5.00 to $5.20 on an ongoing basis and $5.02 to $5.22 on a net basis. Cruise operator Carnival, scheduled to report results before the bell on Tuesday, warned in March that it may report a loss for the second quarter as it cuts prices and spends more on advertising to attract customers after onboard mishaps hurt demand over the past couple of years. Its lower-than-expected profit forecast was in contrast to No. 2 cruise operator Royal Caribbean Cruises Ltd, which raised its full-year earnings forecast in January, saying its ticket sales in Europe were improving. Packaged foods company General Mills has been battling increased competition from cheaper store-branded foods and is scheduled to report fourth-quarter results before the market opens on Wednesday. Investors will look out for information on how the company plans to revive sales of its U.S. retail business, its largest by revenue. Higher dairy costs and supply chain disruptions earlier this year could hurt the company’s profit. A change in consumer attitudes for heavily processed foods is likely to hurt sales for the company and rivals alike. ConAgra Foods warned that its adjusted fourth-quarter profit would be lower than its forecast, as the company struggles with its big push into private-label foods and sales fall in its consumer foods business. When the company reports results before the bell on Thursday, investors will look for details on its private brands business, where the company is having trouble integrating its $5 billion Ralcorp acquisition. There is emerging evidence of a sector-wide weakness going beyond the unusual weather, with housing data such as U.S. housing starts and a drop in mortgage applications pointing to a loss of momentum. Builders have consistently raised concerns about stiff credit conditions for buyers and tight supply of building lots and labor. While Lennar has inched up to become the second largest homebuilder from third this year, investors will be keen to know how much longer a large land bank could keep it immune from other problems and maintain its lead against other homebuilders when it reports results on Thursday. Apollo Education, owner of the University of Phoenix, has been struggling with falling enrollments and stricter regulation. The for-profit education industry faces new government regulations that could force colleges to revise course structures or risk losing federal aid if 30 percent or more students default on their loans. Apollo’s peer, Corinthian Colleges, said last week the Department of Education had stepped up oversight of the company and had asked for information about job placement data, attendance and grades. Investors will be watching for similar comments from Apollo when it reports third-quarter results on Wednesday, and whether the company finally expects student enrollments to pick up. North Dakota Governor Jack Dalyrmple is ratcheting up pressure on Enbridge, Oneok and other pipeline companies to help curb flaring pushing them to double efforts to build new gathering lines across the state’s oil fields. At a pipeline conference in Bismarck on Tuesday, Dalrymple and other state regulators are expected to launch tough new penalties for existing wells that flare, which contributes to greenhouse gas emissions, and also unveil new regulations that should streamline right-of-way problems that have hobbled pipeline development thus far. Bookstore chain Barnes & Noble said this month it will develop a tablet with Samsung as it tries to revive its money-losing Nook digital business. The company said in February it was “still studying” the possibility of separating its businesses, which include superstores, college bookstores and Nook. The agreement with Samsung is likely to help cut expenses in the Nook business and help it become profitable. When the company reports fourth-quarter results before the bell on Wednesday, investors will be looking out for details on cost savings and its forecast for the full year. Paul Konigsberg, a former accountant for Bernard Madoff who was indicted last year on charges he helped the convicted swindler defraud thousands of customers in the Ponzi scheme masterminded by Madoff, is expected to enter a guilty plea, becoming the 15th defendant to be convicted in connection with the fraud. The hearing is before U.S. District Judge Laura Taylor Swain on Tuesday. Among IPOs scheduled for the week are ServiceMaster Global Holdings and wearable camera maker GoPro on Thursday, and arts and crafts retailer Michaels Cos on Friday. GoPro’s initial public offering is expected to raise about $427 million, valuing the company at up to $3 billion. ServiceMaster Global, which owns the largest pest control company in the world, Terminix International, is expected to raise up to $754 million. Its offering of 35.9 million shares is expected to be priced between $18 and $21 per share, valuing the company at up to $3 billion. Michaels Cos is expected to raise up to $528 million. Its offering of 27.8 million shares is expected to be priced at between $17 and $19 each and will value the company at up to $4 billion. On Tuesday, Mexico’s inflation numbers will reveal whether the rate continued to ease in early June off a seven month low of 3.44 percent notched in the first half of May. Economic activity data out the same day will shed light on economic activity in April, after March figures registered a 0.81 percent contraction month on month. On Friday, May trade balance data will show whether Mexican factory exports continued to rise after expanding by 2.13 percent in April, when consumer imports surged at their fastest pace in over a year. MONDAY, JUNE 23 France’s leading power equipment and train manufacturer, Alstom, has to decide on General Electric’s $16.9 billion bid for its energy assets. GE in late May agreed to extend the deadline from June 2 to June 23, to allow for continued negotiations with the French government. The deadline could bring some finality to the deal saga, in which German rival Siemens has teamed up with Japan’s Mitsubishi for a rival bid. The National Association of Realtors is expected to report that home re-sales increased to a 4.73 million-unit pace in May from a 4.65 million-unit pace. (1000/1400) Micron Technology is scheduled to report fiscal third-quarter results as Wall Street looks for strength in solid-state drives and signs of stability in a lackluster PC industry. Micron’s stock has surged 30 percent in the past three months reflecting optimism about demand for DRAM and flash memory chips, but a miss from the chipmaker could spark a selloff. Data from Mexico will show whether unemployment continued easing in May, after cooling off of an over one year high the prior month. (0900/1300) Separately, Argentina is due to release current account and gross domestic product figures for the first quarter. (1500/1900) (Compiled By Ayesha Sruti Ahmed in Bangalore)

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