(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 Next week promises to be another wild one after the Swiss National Bank’s sudden decision to abandon its peg against the euro in favor of, well, chaos. With the European Central Bank meeting on Thursday, all markets are likely to be volatile in and around that decision period in anticipation of an increase in monetary stimulus. The U.S. equity market will contend with plenty of earnings releases as investors hope for some kind of salve to cut off a period of selling driven by falling commodity prices and worries about weak growth worldwide. Next week’s housing data will likely confirm that a slow and steady recovery pattern continues. Commerce Department data on Wednesday is expected to show housing starts increased to a 1.04 million-unit rate in December from 1.02 million-unit pace in November. Building permits are forecast little changed at a 1.05 million-unit rate. The National Association of Realtors is expected to report on Friday existing home sales rose to 5.05 million-unit pace in December from a 4.93 million-unit rate in November. U.S conglomerate General Electric reports fourth-quarter earnings on Friday. Given oil’s more severe slide since the company’s outlook meeting last month, GE will face further questions about the prospects of its oil and gas business, where it has been investing heavily in acquisitions since 2007. On Thursday, the largest wireless carrier in the United States, Verizon Communications, is expected to report fourth-quarter profit below estimates, according to StarMine data. Verizon had recently warned that its profitabilty would be affected by various promotional offers and price cuts in its wireless business. The carrier has been cautious in cutting prices in a hyper-competitive environment but recently launched a series of promotions following price reductions by rivals. Investors will be looking for color around their initial 2015 guidance around revenue growth, the directions that margins will take and their capital expenditure range. Fast food chain McDonald’s reports fourth-quarter earnings on Friday. Last year was one of McDonald’s worst for results. Investors and analysts will be looking for announcement on more changes in its quarterly conference call. Wednesday sees earnings release of American Express and Discover Financial. The world’s biggest credit card issuer American Express’s fourth-quarter earnings are expected to be in line with estimates, according to StarMine, helped by lower loan-loss reserves and a rise in holiday sales. The company’s growth depends mostly on its affluent customers, people who have been pretty consistent with their spending in spite of the global recession. Estimated total holiday sales rose 4 percent to $616 billion, its highest growth rate since 2011, helped by strong online buying, improved job market and falling gas prices, the National Retail Federation said last week. Lower loan-loss reserves and a rise in holiday sales will also benefit Discover Financial’s fourth-quarter results, which are expected to be in line with estimates, according to StarMine. With its shares near all-time highs, Honeywell reports fourth-quarter earnings on Friday. Questions will likely persist about the diverse U.S. manufacturer’s exposure to the oil and gas sector with commodity prices sliding, even after Honeywell said last month that lower fuel was positive for the company. SanDisk posts fourth-quarter results on Wednesday as the memory chip maker expands further into high-margin solid-state drives for companies and governments. Investors will be looking for new signs of expansion after the company bought specialized enterprise storage maker Fusion-IO last June. eBay Inc reports fourth-quarter results ahead of PayPal split on Wednesday. The e-commerce giant is expected to report earnings that reflect the relative weakness of its marketplace division compared to overall market. The stronger U.S. dollar and search algorithm changes from Google likely stunted revenue growth for eBay Marketplaces. The company is expected to report earnings of 89 cents per share. Later this year, eBay will split its marketplace and enterprise units from PayPal, its payments division. BGC Partners says PayPal could garner a valuation of $40 billion or more as a stand-alone business and once split, the two companies would be worth a combined $78 billion, 14 percent more than the current value. When Starbucks reports first-quarter results on Thursday, focus will be on whether the company had a ho-hum holiday quarter as increasingly bloated food menus cool visits from busy customers. That would be bad news for the recently red-hot coffee chain, which announced earlier this month that Troy Alstead, widely viewed as the company’s second in command, is taking an unpaid sabbatical to spend more time with his family. On Wednesday, Microsoft CEO Satya Nadella lays out plans for the Windows 10 operating system for mobile phones expected this autumn. Investors are eager to find out how the new CEO, about to finish his first 12 months in charge, intends to reverse Microsoft’s near-irrelevance in the mobile arena. Travelers Companies Inc is scheduled to report fourth-quarter earnings on Thursday. The property and casualty insurer is expected to benefit from the lack of any major catastrophe losses in the fourth quarter and higher premium income. The Dow 30 company has aggressively raised insurance prices in the past several quarters to offset low interest rates. As pricing continues to decelerate in the commercial insurance sector, investors are keen to get a view of the company’s average renewal price rate increase. Auto parts maker Johnson Controls Inc is likely to benefit from the continued growth in auto sales in North America when it reports its first-quarter earnings report on Thursday. With analysts forecasting global vehicle demand increase of 3 percent in 2015, the company is likely to gain from rising car production in emerging countries like China, where it already has a sizable presence. Sales in its automotive batteries unit is also expected to translate into higher sales as demand for auto batteries is on the rise. Investment banking and retail discount securities brokerage company TD Ameritrade reports first-quarter earnings on Wednesday. Rising stock markets that bolstered client portfolios and stimulated active trading by retail investors, coupled with likely lower compensation expenses, could raise earnings by about 10 percent from a year ago. The company is still a long-term play as investors bet its true earnings surge will occur when the Fed finally raises interest rates so it can book big gains on client cash that it holds. Following that, discount brokers E*Trade Financial Corp reports fourth-quarter results on Thursday after the market closes. The company is still on the path to recovery from the financial crisis of 2008. It has withdrawn from making bank loans (mortgages) that almost killed it, and investors are looking for hints as to when regulators will allow it to pay a dividend. Also reporting results on Thursday is Skyworks Solutions. The radio frequency chip supplier is expected to report first-quarter revenue in line with estimates, according to StarMine. The company had forecast revenue above expectations, boosted by strong sales of smartphones, in particular Apple’s latest line of iPhones. The radio frequency chip market is expanding as telecom operators upgrade to 4G networks, and the company has been benefiting from it. Skyworks, whose chips connect smartphones and tablets to a telecom network, said it is expected to outperform the semiconductor market in 2015 and beyond. On Wednesday, network gear maker F5 Networks is expected to report first-quarter results above analysts’ expectations, according to StarMine. F5 Networks, which generates a majority of its revenue from enterprise customers, have been benefiting from strong demand for its network security products in the wake of increasing cyber attacks directed toward large companies. Xilinx Inc also reports Wednesday. The chipmaker is expected to report third-quarter revenue in line with analysts’ expectations, according to StarMine, helped by increased revenue from its aerospace and defense businesses. Semiconductors made by Xilinx are sold off the shelf and can be programmed by customers to do specific tasks, eliminating hefty expenses to develop custom chips. The company had earlier said it expected third-quarter revenue to stay flat or rise up to 4 percent from the second quarter. Shares of the online data storage provider Box Inc are expected to start trading on the NYSE. The offering is one of the most-awaited technology IPOs this year after Chinese e-commerce giant Alibaba Group Holding Ltd’s blockbuster debut in September. Box competes mainly with privately held Dropbox and claims to have about 32 million users. Box expects its initial public offering to be priced at $11-$13 per share, valuing the company at up to $1.55 billion. The offering could raise up to $162.5 million. Box’s shareholders include venture capital firms Draper Fisher Jurvetson, U.S. Venture Partners and hedge fund Coatue Management. Family Dollar’s shareholders will vote on Thursday on the company’s agreement to be bought over by Dollar Tree Inc, putting an end to a months-long tussle. Dollar General last week said it was sticking to its estimate of divesting 1,500 stores to win approval for its bid, a move that analysts said could end up handing the company to Dollar Tree Inc, particularly after proxy advisory firms ISS and Glass Lewis advised shareholders to vote for a deal with Dollar Tree as it offered more certainty of closure. Financial Stability Oversight Council holds open session in Washington on Wednesday. Treasury Secretary Jack Lew, Federal Reserve Chair Janet Yellen will participate in the open session. Agenda includes an update on benchmark reform efforts and a discussion of the Council’s process for considering nonbank financial companies for potential designation.
Canada will see a flurry of economic reports next week, as well as an interest rate decision from the Bank of Canada. While the central bank is expected to hold rates at 1 percent, analysts say it could lower its growth projections in its updated monetary policy report. The statement will be parsed for insight into when the Bank of Canada may resume raising rates, with some analysts already pushing expectations for rate hikes out into 2016. Any indication of the impact of falling oil prices will also be key, after the head of the central bank said last month the price slide will probably take about a third of a percentage point off growth this year. A number of economic reports are also on the docket, including manufacturing sales, wholesale trade, inflation and retail sales. Mexico’s retail association Antad will report December retail sales on Tuesday. On Thursday the national statistics institute will release consumer price data data for the first half of January, after annual inflation cooled to 4.08 percent in December but remained stuck above the central bank’s 4 percent ceiling. Tuesday, Jan.20 Johnson & Johnson is expected to report slightly better-than-expected fourth-quarter sales and earnings as growing sales of new drugs and older mainstay brands offset struggling sales of the company’s array of medical devices and consumer healthcare products. IBM, The world’s largest technology services company is expected to report a fourth-quarter profit below estimates, according to StarMine. The company, grappling with weak client spending, has been trying to stimulate growth in its higher-margin businesses such as security software and cloud services. Investors and analysts will be looking for the company’s operating earnings per share target for 2015, after the company ditched its earlier target in the prior quarter. IBM had said it will divest its low-performing businesses that will contribute almost $7 billion in revenue this year, and plans to continue getting out of those sectors. Morgan Stanley reports earnings for the fourth quarter before markets open. Analysts expect a decent but not spectacular period for the capital markets the bank is focused on like investment banking, stock trading and wealth management. The average analyst estimate of 58 cents in earnings per share is better than a year ago but much softer than the preceding quarter. Investors will be looking for more progress on improving return-on-equity, and on reducing risk-weighted assets to a degree that the Wall Street bank will be able to buy back more shares or increase its dividend in the new year. Along with earnings, the focus will be on Morgan Stanley’s Wealth Management report card. Results also put focus on the success of the retail brokerage unit, the world’s largest, on which the bank is betting. Industry executives say the bank remains more vulnerable than any of its large rivals to defections by top brokers from Smith Barney, Legg Mason and other firms Citigroup had sold to Morgan Stanley. Assets gathered and revenue per broker in the quarter and the year should give some answers. Halliburton Co and Baker Hughes, who are merging in a $35 billion deal, are expected to report higher fourth-quarter profits. Cost cuts and continued strength in the Middle East are expected to help the oilfield services providers minimize the effects of weak oil prices. Analysts will seek details about cost cuts at the two companies, including potential layoffs. Analysts will also look to see if Halliburton’s acquisition of Baker Hughes will help it better cope with pricing pressure from oil producers, who are cutting spending. Video streaming service Netflix Inc will tell Wall Street how many subscribers it added around the world for the fourth quarter, typically one of its strongest periods of the year, when it releases earnings after markets close. Federal Reserve Board Governor Jerome Powell participates in “Reforming U.S. Dollar LIBOR” discussion before the Brookings Institution “Making Markets Fair and Effective for All” conference in Washington. (1000/1500) Delta Air Lines, the most profitable U.S. carrier for years, reports fourth-quarter results. The company now faces increased competition from United Airlines and American Airlines, which may surpass Delta in terms of income. Investors will look forward to Delta’s 2015 guidance and plans for its capacity growth, fleet and fuel to see whether the Atlanta-based carrier can stay ahead. Advanced Micro Devices posts its fourth-quarter results as the chipmaker struggles to expand beyond personal computers. The company abruptly replaced its CEO three months ago. Analysts expect the U.S. National Association of Home Builders Housing Market Index for January to be at 58, one point above December’s 57 but below the year’s peak of 59 in September. (1000/1500) (U.S. markets are closed on Monday, Jan.19, for Martin Luther King Jr. Day.) (Compiled By Astha Rawat in Bengaluru; Edited by Don Sebastian)