(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
Markets will be squarely focused on data, including private-sector employment figures, factory survey data, and the big report of them all, February’s jobs figures. The bond market has been swaying back and forth on each bit of economic data, but believes a rate increase isn’t likely until September. Expectations for more aggressive Fed policy have favored the dollar, and clarity on other central banks will come with meetings of the ECB and Bank of England next week. Investors are starting to become concerned with the rise in the equity market as the Nasdaq knocks on 5,000.
U.S. Federal Reserve releases results of its annual bank ‘stress test’ health check on Thursday. The U.S. Federal Reserve measures how banks hold up in a hypothetical next crisis in a series of economic simulations. Banks need to keep their top-tier capital above 5 percent in a simulated severe crisis. The tests are followed a week later by a more high-profile exercise that says whether the banks can execute planned shareholder returns such as dividends and share buybacks.
On Tuesday, the U.S. auto industry is scheduled to report February sales and analysts expect the industry to maintain its strong pace despite the snow and cold weather in large parts of the country. Analysts expect the automakers to report an annual sales rate in the month of 16.6 million to 16.7 million vehicles, which would match the rate from January and continue the industry’s hot streak since February 2014. It would mark the 12th straight months of a sales rate above 16 million. So far, many automakers have been able to raise prices faster than incentives they offer consumers, and investors will be looking to see if that remains the case. (1330/1830)
On Thursday, warehouse club operator Costco Wholesale Corp is likely to report second-quarter profit below analysts’ average estimate, according to Thomson Reuters StarMine data. The company reported an 8 percent rise in December same-store sales. American Express said in February its credit cards will not be accepted at Costco’s U.S. stores from next year. Investors will be looking for Costco’s comments on this, and who could be its new card partner. Also, any comments on Wal-Mart’s decision to increase minimum wage would be of interest.
No. 1 office supplies retailer Staples Inc’s fourth-quarter sales are expected to benefit from a rise in demand for copy and print products in North America. Staples’ quarterly sales are expected to beat analysts’ estimates, according to Thomson Reuters StarMine data. The company is acquiring smaller rival Office Depot Inc for about $6.3 billion in cash and stock to better compete against online retailers such as Amazon.com. Staples is expected to file a registration statement with the SEC soon that may give an update about its talks with the FTC about possible store divestitures required to seal the deal. On Friday, investors will be watching out for the company’s full-year forecast and any regulatory comments regarding the acquisition.
AutoZone Inc, the No.2 U.S. auto parts retailer by market cap, is likely to report better-than-expected second-quarter results on Tuesday, as lower oil prices that put more disposable income in the hands of customers likely pushed up sales at its Do-It-Yourself business. The company has, however, lagged its peers in its commercial/do-it-for-me business and investors will be looking out for comments on how the company hopes to catch up. AutoZone, which has about 8 percent of its total stores outside the U.S., is also less likely to be hit by a strong dollar.
On Tuesday, Federal Reserve Chair Janet Yellen speaks on “Bank Regulation and Supervision” and receives Citizens Budget Commission Medal for High Civic Service and speaks at award dinner, in New York. (2000/0100) Meanwhile, Federal Reserve Bank of Chicago President Charles Evans speaks on current economic conditions and monetary policy on Wednesday. (0900 /1400) Federal Reserve Bank of Kansas City President Esther George speaks on the U.S. economy on the same day. On Thursday, Federal Reserve Bank of San Francisco President John Williams speaks on the economic outlook before the CFA Society Hawaii 10th Annual Economic Forecast Dinner. (2315 /0415)
Abercrombie & Fitch Co, the struggling teen apparel retailer, is expected to report revenue for the fourth quarter on Wednesday that is expected to miss analysts’ average estimate, according to Thomson Reuters StarMine data. The strong dollar, low demand for Hollister and Abercrombie & Fitch clothes and margin declines due to heavy discounting during the holiday season are expected to weigh on profits for the quarter too. Abercrombie has been trying to revive sales by improving its merchandise and speeding up the supply chain to respond quicker to fashion trends, but consumers’ preference for cheaper fast-fashion brands, and clothes that do not feature heavy company branding is hindering the company’s efforts. Investors will be looking for 2015 forecast, progress on its efforts to find a new CEO and business strategy going forward this year.
On Tuesday, Target Corp, the third-largest U.S. retailer, holds a meeting with the financial community in New York. CEO Brian Cornell and other senior executives will be in attendance. Target is expected to give full-year 2015 forecast as well as details on some new investments.
Panel maker Canadian Solar Inc’s fourth-quarter profit is expected to more than triple, helped by strong demand from its high-margin business of building solar plants. The company has been heavily investing in its utility business to offset the impact of low-margin panel business. Canadian Solar has also been expanding in newer markets, besides growing its presence in China, the world’s largest consumer of solar products. When Canadian Solar posts results on Thursday, investors will want to know how the company will be affected by slowing growth in Japan. Canadian Solar has said it expects to make a decision on forming its own yield co in 2015, investors will want to more about that.
On Wednesday, Trina Solar Ltd is expected to report a higher fourth-quarter profit as demand improved in the world’s biggest market, China. Smaller peer ReneSola Ltd is expected to report a loss, compared with a year-ago profit, hurt by soft demand from its biggest market, Europe. The companies, faced with U.S. import tariffs, have also been expanding in newer markets and strengthening their utility businesses. Investors will want to know how the companies will be affected by slowing growth in Japan and if the companies will spin off some of their power plants into yield cos.
Boeing Co Chief Financial Officer Greg Smith speaks at JP Morgan Aviation, Transportation and Industrials conference in New York on Thursday. He is likely to be asked nitty-gritty questions about the growing mountain of deferred costs Boeing has amassed producing the 787.
Canadian fuel-cell maker Hydrogenics Corp is expected to swing to a fourth-quarter profit on Wednesday. The company had said in July it expects to post its first-ever profit on an adjusted basis in 2014, indicating a rise in demand for its fuel cells used in power backup. Hydrogenics, which provides hydrogen generation, energy storage and fuel cell power modules, counts CommScope and E.ON among its customers. Investors will be interested in the company’s order backlog, often seen as an indicator of future sales, as well as comments on new orders.
On Tuesday, Statistics Canada releases gross domestic product data for the fourth quarter, which is expected to show the economy expanded 2 percent, a rate lower than the 2.8 percent expansion in the third quarter. (0830/1330) The Bank of Canada will likely hold interest rates steady on Wednesday as it waits to see how last month’s surprise cut is being absorbed by the economy. Analysts expect the central bank to lower rates once more by mid-year, a Reuters poll found. (1000/1500)
On Tuesday, Mexico’s National Statistics Institute will reveal gross fixed investment data for December. On Thursday, the country’s central bank will post its poll of private sector analysts for February, after analysts cut their 2015 growth forecast to 3.29 percent and envisioned a sharply weaker peso for the close of the year. On Friday, data will show how consumer confidence fared in February, after falling to a three-month low the prior month.
Warren Buffett, the billionaire investor and head of sprawling conglomerate Berkshire Hathaway, will be on CNBC to talk about his annual letter to shareholders, the company’s full-year results and what the next 50 years might mean for Berkshire, especially when Buffett is eventually no longer at the helm. Berkshire Hathaway releases full-year results and Buffett his annual letter on Saturday, Feb. 28.
U.S. drugmaker Mylan Inc is expected to report fourth-quarter profit as sales of generic drugs continued to increase. The company, which also sells branded drugs, gets nearly three-fourths of its revenue from selling copycat drugs. Half of those generics are sold outside of North America, setting the company up to get a hit from the dollar’s gains in the fourth quarter. Mylan does not disclose the geographic split of sales of its branded drugs. In the fourth-quarter, the company launched five generic products.
The U.S. Commerce Department issues data for consumer spending for January. It recorded its biggest decline since late 2009 in December. (0830/1330) Meanwhile, the Institute for Supply Management is scheduled to release its index of national factory activity for February. (1000/1500)
Offshore driller Nabors Industries Ltd is expected to report a lower fourth-quarter profit, hurt by dwindling demand amid a slump in global crude prices. Investors will be looking for commentary on cost-cutting efforts. C&J Energy Services cut the cash portion of its offer to buy Nabor’s well-maintenance unit by $250 million earlier this month.
Molycorp Inc, a rare-earth metals miner, is expected to post its 11th straight quarterly loss due to a fall in prices. The company has been weighed down by concerns over cash burn and speculation of a potential bankruptcy filing. Molycorp has hired law firm Jones Day to advice on debt restructuring, according to media reports. When the company releases its fourth-quarter results, investors will be looking for commentary on pricing, debt restructuring and updates on production at the Mountain Pass facility.
Apple, Google, Intel and Adobe have agreed to pay $390 million to settle accusations that they refrained from poaching each other’s workers, thus driving down salaries and violating antitrust laws. An antitrust hearing is scheduled in the case and this is the second attempt by the companies to settle the high-profile lawsuit, as a San Jose judge rejected an earlier $324 million deal as too low.
Chinese solar panel maker JinkoSolar Holding Co Ltd is expected to report a smaller fourth-quarter profit as the company struggles to cope with high costs. The company has been heavily investing in its solar plant building business to offset the impact of weak panel prices. JinkoSolar, which was slapped with U.S. import tariffs, said in November it will continue to build its position in the high-priced U.S. markets. Investors will want to know how the company will be affected by slowing growth in Japan and also plans to form a “yield co”. JinkoSolar has said it could spin off some power plants into a separate unit by mid-2015 and list it in either the United States or Hong Kong.
Statistics Canada releases current account data for the fourth quarter. Canada’s current account deficit in the third quarter unexpectedly narrowed to C$8.40 billion, its best performance in six years. (0830/1330) Separately, the RBC Canadian Manufacturing Purchasing Managers’ index, a measure of manufacturing business conditions, is scheduled to be released for February. (0930/1430)
HSBC PMI data will reveal Mexico’s factory sentiment for February, after the indicator rose to an over two-year high in January. (0100/0600) The fiscal balance for January will also be released. (1530/2130)
Compiled by Sourav Bose in Bengaluru