October 28, 2014 / 6:49 PM / 4 years ago

What to Watch in the Day Ahead - Wednesday, Oct. 29

(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 Federal Reserve wraps up a two-day meeting that appears certain to end with an announcement that the U.S. central bank’s bond-buying stimulus is coming to a close. Less certain is what Fed officials might say about the outlook for the economy and inflation, given an uncertain global backdrop that has led investors to reappraise when the central bank will be able to finally raise interest rates. Visa Inc, the world’s largest credit and debit card company, is expected to report a fourth-quarter profit, helped by higher spending by customers using its cards. The company is looking to capitalize on the growing mobile payment business, as it has been gaining traction among businesses and consumers alike. Visa, which partnered with Apple for its Apple Pay service, also launched online offerings like Visa Checkout and Visa Token. Visa lowered its full-year revenue forecast in July, citing slow growth in cross-border transactions. Global investment bank Deutsche Bank AG reports third-quarter results. Investment banking roared back to life in the quarter, but costs for fines and settlements are likely to have hit Germany’s top lender hard. Barrick Gold Corp, the world’s biggest gold producer, is expected to report lower third-quarter results on a weaker gold price and a fall in gold production after the sale of some of its higher-cost gold mines. The market’s focus is likely to be on the way forward for Barrick following a number of key executive changes, including the elimination of its chief executive position. There will also likely be questions about Barrick’s assertion that a higher royalty rate in Zambia could threaten the economic viability of its Lumwana copper mine. Canadian miners Agnico Eagle Mines Ltd and Yamana Gold Inc are expected to report third-quarter earnings. The market will likely be looking for updated commentary on Agnico’s outlook for 2015, news on expansions at the Goldex and Kittila mines and any further scope for acquisitions following the purchase of Mexico-focused miner Cayden. Yamana’s results are expected to be relatively low key, after the company announced preliminary production results earlier in the month that were in line with expectations. World’s second-biggest uranium miner Cameco Corp reports third-quarter results, following a challenging period. Canada’s biggest diversified metals company, Teck Resources Ltd, is expected to report lower third-quarter earnings on weaker coal and base metals prices, with the market’s focus on the impact of China’s recent decision to reimpose import tariffs on metallurgical and thermal coal. French oil company Total SA reports third-quarter results. The impact of the sharp drop in oil prices since June should start hurting, although a drop in the euro could temper that somewhat. Whiting Petroleum Corp, on the verge of buying Kodiak Oil & Gas to become North Dakota’s largest oil producer, is expected to post a spike in third-quarter profit thanks to increased drilling. U.S. health insurer WellPoint Inc is expected to report a higher third-quarter profit. The company, which operates Blue Cross Blue Shield plans in 14 states, will also be expected to give a pulse check on Obamacare. Life insurer MetLife Inc is expected to report a rise in third-quarter profit, helped by derivative gains linked to credit spreads. The company, heavily exposed to persistently low U.S. interest rates, has a large derivatives program designed to reduce that risk. Last month, the Financial Stability Oversight Council proposed to designate the insurer as “systemically important,” which could subject it to stricter oversight by the U.S. Federal Reserve. MetLife, which has vehemently opposed the proposal, has decided to contest the decision. Allstate Corp’s estimated pre-tax catastrophe loss for the third quarter is expected to be about $517 million, down significantly from $936 million in the preceding quarter. The largest listed U.S. home and auto insurer has been raising insurance rates in its home insurance business to offset catastrophe losses and low interest rates on its investments. Chief Executive Thomas Wilson said Allstate’s focus this year would be to attract customers to boost its market share rather than go for “abnormally large” price increases. Department chain operator Kohl’s Corp’s leadership team will host an investor conference to present their “multi-year growth” plans. Kohl’s had said it expects third-quarter comparable sales to decrease 1.4 percent, hurt by weak demand for women’s apparel. The company also said its 2014 earnings would be at the low end of its prior forecast of $4.05-$4.45 per share and that sales remained softer through October. Hershey Co, which makes Hershey’s Kisses and Reese’s Peanut Butter Cups, is likely to report a third-quarter profit above analysts’ average expectations, according to StarMine. Investors will be looking for indications on how the price increase has impacted sales, particularly as rival Mondelez International had to cut 2014 sales targets in August after price hikes to cover commodity costs sparked a backlash by consumers and retailers in some European markets. After a slide in its shares this year, Eaton Corp will try to win back investors when it reports third-quarter results. The manufacturer of power systems and products has faced concerns about its markets and disappointed some investors when it signaled earlier this year that it would not spin off its vehicle business, as some on Wall Street had hoped. Goodyear Tire & Rubber Co’s results have been pressured this year, first from a severe U.S. winter that hurt auto demand and then by lower sales of its high-margin tires to automakers. The company has also sold fewer tires in Latin America, which has been hurt by lower vehicle production in Brazil and economic turmoil in Venezuela. These trends have also pinched rivals Bridgestone Corp and Michelin. Goodyear is the first of the group to report third-quarter results and investors will be watching for commentary on global auto production going into next year. SunPower Corp, the second-largest solar panel maker in the United States, is expected to report a lower third-quarter profit. Uneven revenue recognition from solar projects has been weighing on the company’s results. The company is now diversifying into installation of solar panels on rooftops, a market dominated by SolarCity. Investors will look to see if SunPower will continue to lease out panels to customers, or adopt other financing methods. Also of interest to investors will be the formation of a yield co. Akamai Technologies Inc, whose networks help improve the quality and speed of content delivery, is likely to report third-quarter revenue above the average analyst estimate, according to StarMine. Akamai is benefiting from higher consumption of online video and streaming music and the company had forecast current-quarter profit and revenue largely above estimates. However, higher spending on sales, marketing and research and development may impact profit as the company is investing more on developing higher margin services to compete with rivals. Network equipment makers JDS Uniphase Corp and F5 Networks Inc are scheduled to report first-quarter and fourth-quarter results, respectively. JDS Uniphase’s profit is expected to beat the average analyst estimate, according to StarMine data. F5 Networks is also expected to report results slightly above the average analyst estimate, according to StarMine. Chipmakers RF Micro Devices Inc and Cirrus Logic Inc are expected to report second-quarter profit above estimates, according to StarMine data, helped by record sales of Apple’s iPhone 6. Navigation equipment maker Garmin Ltd is expected to report third-quarter results slightly above analysts’ estimate, according to StarMine. The growth in Garmin’s fitness, aviation and other businesses in the past few quarters has offset a fall in sales of personal navigation devices. Investors will focus on sales of action camera Virb, which failed to resonate with customers after tough competition from GoPro. IAC/Interactive Corp, the owner of internet brands such as Investopedia and About.com, is expected to post a third-quarter profit below estimates, according to StarMine data. The company’s search and applications business, which contributes to more than half of the company’s revenue, has seen slowing growth in the past few quarters and it has also been spending more on advertising expenses. Take-Two Interactive Software Inc, the publisher of the blockbuster “Grand Theft Auto” games, will report second-quarter earnings. Investors will keep an eye out for digital sales during a seasonally quiet quarter and earnings guidance ahead of the launch of Grand Theft Auto V for Sony’s PlayStation4 and Xbox One consoles this holiday season. Animation studio DreamWorks Animation SKG Inc is expected to report third-quarter revenue below estimates, according to StarMine. Investors will look for details on an SEC investigation along with expectations for “Penguins of Madagascar” - DreamWorks’ last movie for the year slated for release in November. Shares of Shell Midstream Partners LP, a master limited partnership formed by Royal Dutch Shell Plc, are expected to start trading on the New York Stock Exchange. Shell Midstream Partners said it expected its initial public offering of common units to be priced at $19-$21 per unit, valuing it at up to $1.42 billion. The Houston-based company’s offering of 37.5 million units will raise $787.5 million at the top end of the expected range. Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will testify at the Senate banking committee on the Monetary Policy Report they presented on Oct 22. The testimony was rescheduled from Oct. 23 because of the shooting attacks in Ottawa the day before. The governor’s opening statement will not be identical to the published opening statement that had been intended for the post-MPR news conference, which was canceled. Statistics Canada announces September data for producer prices. Separately, the country’s national statistics agency also releases raw materials prices for September (0830/1230). Brazil’s central bank is likely to hold interest rates steady despite stubbornly high inflation, as it waits for President Dilma Rousseff’s first economic measures after she was re-elected on Sunday, a Reuters poll showed. The economists surveyed expect the central bank to keep its benchmark Selic rate unchanged at 11.00 percent. That would be the fourth straight meeting without changes to Brazil’s key base rate, the longest period without rate moves since early 2010. Separately, Chile’s statistics agency gives manufacturing output data for September. (Compiled by Ayesha Sruti Ahmed in Bangalore; Editing by Maju Samuel)

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