(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 A series of Federal Reserve officials give speeches after the U.S. central bank surprised some investors last week with a hawkish-sounding policy statement that confidently predicted only temporary weakness in inflation. Policymakers from across the Fed’s ideological spectrum take to podiums with the dovish head of the Minneapolis Fed Narayana Kocherlakota speaking on Wednesday, and fellow policy-committee members Cleveland Fed President Loretta Mester and Fed Governor Jerome Powell speaking on Thursday, among others. Now that the central bank has ended its massive bond-buying stimulus, financial markets are keen for any insight on how quickly it will raise interest rates after nearly seven years near zero.
U.S. employers likely expanded their payrolls by a healthy 233,000 in October, according to a Reuters poll, a figure that would validate the Federal Reserve’s conclusion that the job market continues to make strides toward full health. The jobless rate is seen holding at the six-year low reached in September. The report on Friday will be the highlight of a data-heavy week that includes readings on trade and the services and manufacturing sectors. The ISM’s services sector report on Wednesday is likely to show a similar pattern. On Tuesday, the government is expected to report that the nation’s trade gap narrowed in September, while data from payroll processor ADP on Wednesday is expected to show private payroll growth accelerated slightly in October.
The blockbuster “Guardians of the Galaxy” movie, the highest-grossing movie of the year, is expected to boost quarterly results for Dow component Walt Disney Co when the media and theme park giant reports its fourth quarter on Thursday. The company is likely to report better-than-expected profit and revenue, according to Thomson Reuters StarMine.
Warren Buffett’s sprawling conglomerate, Berkshire Hathaway Inc, reports third quarter results on Friday. Analysts expect the company to report earnings per Class A share of $2,592.73, from $3,074 in the year-ago quarter.
World’s largest steel producer ArcelorMittal SA presents third quarter results on Friday, which are likely to show divergence between the now buoyant steel industry (particularly in the United States) and muted mining business, which led it to cut its full-year forecast in July.
Media companies Discovery Communications Inc and Twenty-First Century Fox Inc are scheduled to report quarterly results on Tuesday. Discovery’s third-quarter earnings are expected to be below analysts’ expectations while Fox is likely to miss estimates for its first-quarter results, according to Thomson Reuters StarMine data. On Wednesday, Time Warner Inc and CBS Corp will report third quarter results. Time Warner results are expected to be slightly below the average analysts’ expectation and CBS is also likely to miss analysts’ estimates. On Thursday, digital media and entertainment company AOL Inc is expected to report third-quarter profit above estimates.
DirecTV, the No.1 U.S. satellite TV provider, is expected to report third-quarter earnings slightly below analysts’ expectations on Thursday, according to Thomson Reuters StarMine. Investors will look for plans in Latin America, its largest growth area.
Cable company Cablevision Systems Corp’s third quarter results on Thursday are likely to beat analysts’ average estimate, according to Thomson Reuters StarMine data. On the same day cable TV network AMC Networks Inc is expected to report third quarter revenue above analysts’ average estimate.
Tesla Motors Inc will report its third quarter results on Wednesday and barring a surprise in the results themselves the real focus will be on progress toward the Model X SUV launch as well as construction of the battery gigafatory. Analysts have speculated the Model X launch could be delayed, but the company has not said that. Meanwhile, Tesla continues its plans to build the lithium-ion battery factory in the United States and investors will be listening for more details on that schedule.
Duke Energy Corp reporting third-quarter results on Wednesday is expected to report a higher profit for the fourth straight quarter, helped by cost cuts and increasing power demand in North Carolina, South Carolina and Florida. The company, which gets nearly 87 percent of its revenue from electric utilities, have benefited from higher power prices set by regulators. Duke Energy, which has been trying to exit the volatility of wholesale power markets, sold some Midwest power assets in August. Investors will want to know about the future of its utilities holdings and demand.
In the oil and gas sector, a slew of companies reporting results include oil producer EOG Resources Inc and independent refiner Valero Energy Corp with third quarter results on Tuesday; Continental Resources Inc, refiner HollyFrontier Inc and offshore oil and gas drilling services provider Rowan Co on Wednesday. Apache Corp and offshore drilling contractor Transocean Ltd report results on Thursday. While Continental is expected to post a jump in quarterly profit, Transocean is expected to post a lower profit. HollyFrontier and Rowan both are expected to report a higher quarterly profit.
Cash-strapped miner Molycorp Inc is expected to report a third-quarter loss and revenue nearly unchanged from the year-ago period on Wednesday, as it sold more rare earth but at lower prices. Investors will mainly look for comments on the company securing additional funds to ramp up operations at its flagship Mountain Pass facility in California, for which the company secured a loan of $400 million from Oaktree Capital Management in August.
IT services provider Cognizant Technology Solutions Corp is likely to report third-quarter revenue below estimates on Wednesday as it expects delays in booking revenue from large deals, which the company’s CEO attributed to leadership changes in some North American and UK clients.
Emerson Electric Co, which manufactures automation and power supply systems, reports fiscal fourth-quarter earnings on Tuesday. Analysts will be looking for more information about Emerson’s growth next year after the company in October said its underlying sales growth would “slightly exceed” its rate in 2014.
Second-largest U.S. life insurer Prudential Financial Inc’s third quarter results on Wednesday are expected to miss expectations, according to Thomson Reuters StarMine. The weak Japanese yen, which fell about 8.2 percent against the dollar in the third quarter, is likely to hurt the company as it earns more than half of its revenue from international operations, mainly Japan.
In the health care sector, Becton Dickinson and Co and Regeneron Pharmaceuticals Inc report quarterly results on Tuesday, Actavis Plc reports third quarter results on Wednesday, Hospira Inc reports on Thursday and Humana Inc on Friday.
Premium beauty products maker Estee Lauder Cos Inc will report first quarter results before the bell on Tuesday. The company has been growing sales faster than those of rivals such as L’Oreal SA, Coty Inc, and Elizabeth Arden in key U.S. and European markets, where demand for its Clinique Dramatically Different Moisturizing Lotion and Estee Lauder Pure Color Envy Sculpting Lipstick are driving sales.
Motorola Solutions Inc is likely to report third-quarter revenue below expectations on Tuesday, according to Thomson Reuters StarMine data. The company had forecast a drop in sales due to lower demand in North America, citing budget cuts and lowered government spending in the United States.
Symantec Corp, which makes Norton antivirus software, is expected to post a third quarter profit below the average analyst estimate on Wednesday, according to Thomson Reuters StarMine data. While the antivirus business has been hurt by slowing PC sales, sluggish demand for its storage and data management software continues to hurt its other business.
Fast food chain Burger King Worldwide Inc is expected to report third quarter profit and sales above the average analysts’ estimate on Tuesday, according to Thomson Reuters StarMine. The company is expected to benefit from higher traffic in its restaurants in the United States, its largest market. Investors will be looking for more details on its deal to acquire Canadian coffee and doughnut chain Tim Hortons Inc as well as comments on outlook for the remainder of 2014, given higher foods cost, particularly for beef. On Thursday, third-largest U.S. quick service hamburger company The Wendy’s Co is expected to miss estimates for both third quarter profit and revenue.
Molson Coors Brewing Co, which brews, markets and sells beer brands such as Coors Light, Molson Canadian, Carling, and Blue Moon, will report third quarter results before the bell on Thursday. The brewer has been helped by newer launches and higher growth in international markets, offsetting volume declines in the United States and Canada. It expects to spend higher on brand investments in the second half of this year.
Investors worried about decelerating same-store sales at Whole Foods Market Inc are bracing for the natural and organic food seller’s forecasts for fiscal 2015 when it reports fourth-quarter results on Wednesday. Whole Foods is losing its grip on the niche it pioneered amid competition from rivals ranging from specialty grocers like Sprouts and Fresh Market to mainstream food sellers Wal-Mart and Kroger.
Skyworks Solutions Inc, which supplies radio frequency chips to Apple, which reports results on Thursday, estimated fourth quarter adjusted profit and revenue above its previous forecast. Skyworks has been benefiting from higher demand from handset makers, particularly Apple. The company’s upbeat estimates come at a time when investors are concerned about a broad-based downturn in the semiconductor industry due to lower demand for electronic devices.
3D printer maker Stratasys Ltd is likely to report a better-than-expected third quarter profit on Wednesday, according to Thomson Reuters StarMine data. The company, which holds 55 percent of the market for printers priced at over $10,000, had raised its forecast for the full year in August on strong demand for its 3D printers. The company is also expected to face higher competition as other traditional printer makers such as HP has announced plans to enter the 3D printing market with faster and cheaper technology. Analysts and investors are looking for guidance in the context of competition from HP.
Cyber-security vendor FireEye Inc forecast current quarter revenue above analysts’ estimate in August, citing strong demand for its software and services. The company reports third quarter results on Tuesday and investors will look out for management commentary on demand for its security products and current quarter outlook.
Time Inc, the largest magazine publisher in the United States, is expected to report third quarter profit below the average estimate on Tuesday, according to Thomson Reuters StarMine data. The publisher of Sports Illustrated, Time magazine and People is facing declining circulation and advertising revenue as consumers shift to reading on smartphones and tablets. The company, which gets half of its revenue from advertising, had cut its full year forecast last quarter, citing payment defaults and the relocation of its headquarters.
With newspapers struggling, News Corp has been spending its money in interesting places including real estate listing site Move Inc – its biggest acquisition to date. The company reports fiscal first quarter results on Wednesday.
Office supplies retailer Office Depot Inc has warned that sales would be weak this year as stiff competition from online and mass retailers erodes sales in its North American retail division. To improve its business it said it was implementing a program to refine its unique selling proposition and is concentrating on two segments where it is significantly underpenetrated. Investors will be interested in details on these two segments as well as steps the company is taking to arrest the decline in sales in North America. According to Thomson Reuters StarMine, third quarter sales are expected to miss the average analysts’ forecast on Tuesday.
The European Central Bank meeting on Thursday will be the main money event in Europe in the coming week – despite the fact that it is not likely to be one of action. As usual, the attention will be on ECB chief Mario Draghi’s nuances at the news conference that follows the likely non-decision. The Bank of England looks also looks to keep interest rates on hold at record low levels after three of its most senior officials expressed staunch opposition to hiking rates in the last two weeks.
On Friday, shares of Freshpet Inc, a maker of healthy food for cats and dogs, and Chinese solar park-operator Sky Solar Holdings Ltd are expected to start trading on the Nasdaq. Freshpet’s offering is expected to be priced at $12-$14 per share, valuing the company at about $445 million at the top end of the range. Sky Solar’s offering is expected to be priced at $10-$12 per ADS, valuing the company at about $658.8 million at the top end of the range.
October consumer confidence data for Mexico will be released on Wednesday after the index hit a three month high in September as shoppers became more optimistic about the outlook for the country’s economy. Data on Friday will show whether inflation, which hit 4.22 percent in September, continued to climb above the central bank’s 4 percent ceiling.
MONDAY, NOVEMBER 3 U.S. manufacturing likely lost half a step in October, but still moved forward at a pace that would provide a solid underpinning for growth. The Institute of Supply Management releases its monthly manufacturing report for October (1000/1500). Also on the radar is September construction spending data from the Commerce Department (1000/1500) and auto sales data for October.
Federal Reserve Bank of Dallas President Richard Fisher speaks before a Shadow Open Market Committee meeting sponsored by the Manhattan Institute in New York (1240/1740).
Sprint Corp, the third largest wireless carrier in the United States, is expected to post a loss of 177,000 postpaid subscribers, as the company continues a network overhaul that has caused gaps in coverage. Sprint has undergone mass restructuring this year with round after round of layoffs, as its new CEO, Marcelo Claure attempts to turn the company around. When the company reports second-quarter results, investors will look for signs of a turn around, the impact of recent pricing plans and indications of more layoffs to come.
Marathon Oil Corp, which has operations in Kurdistan, Libya and the United States, will report third-quarter earnings and provide an update on its goal to grow production from shale formations including the Eagle Ford in South Texas. At the same time, a steep drop in crude oil is likely to hurt profitability.
Canada’s Agrium Inc, a fertilizer producer and retail seller of farm products, reports third-quarter results. The company warned in October that earnings per share from continuing operations would be lower than Street estimates, but the reason was not clear. One possibility is that falling crop prices have caused farmers to rein in spending on chemicals and fertilizer, hitting the company’s North American retail chain. Also of interest will be fourth-quarter guidance and an update on completing expansion of Agrium’s Saskatchewan potash mine. The company holds its Investor Day on Wednesday. Of interest will be the company’s thinking on whether to buy a new source of phosphate production to replace mines that are nearly tapped out, or exit that space.
UK-based bank HSBC Plc reports third-quarter results. Regulation and conduct are the key issues for the bank, specifically the leverage ratio issue and the ongoing FX probe.
Hotel, energy and financial services conglomerate Loews Corp’s third quarter is likely to be weak as its biggest holding, insurer CNA Financial, faces a slowing pace of rate increases. However, some of that weakness should be offset by stronger results at Diamond Offshore, Loews’ offshore rig contractor, which reported a 4.5 percent rise in third-quarter revenue, helped by higher demand and improved rates for its ultra-deepwater rigs.
Insurer American Internaitonal Group Inc will report third quarter earnings. This will be the first quarter in which the company was, at least part of the time, helmed by new CEO Peter Hancock, who took over from Bob Benmosche on Sept. 1. Analysts expect the insurer to post earnings of $1.09 per share. Investors will be watching to see not only how the company is faring under its new chief but also how it is managing expenses around the world. It hosts a conference call to discuss its results on Tuesday.
Herbalife Ltd, the nutrition-product maker facing allegations that it runs a pyramid scheme, will report third quarter results after the bell. According to Thomson Reuters StarMine, the company is expected to miss both profit and sales expectations on weak sales of its daily consumable products such as energy drinks and multi-vitamin tablets. Investors, however, will be more interested in hearing management’s commentary on the FTC probe on the company and whether some form of disciplinary action is imminent. They will also keep an eye on the size of Herbalife’s network of distributors, which has been stagnating.
Shares of Kimberly-Clark Corp’s healthcare division, slated to be called Halyard Health, are expected to start trading on the New York Stock Exchange. Halyard began to see a surge in demand for its protective medical devices in the wake of the Ebola scare. Halyard also sells products that cater to the needs of the elderly, such as pain relief medication and devices. Existing Kimberly-Clark shareholders could exchange eight shares of Kimberly for one Halyard share.
Bank of Canada Governor Stephen Poloz will speak on “The legacy of the financial crisis, what we know and what we don’t.” It will be his first public speech since publishing the Oct. 22 Monetary Policy Report, and it will be made to the Canadian Council for Public-Private Partnerships in Toronto.
The RBC Canadian Manufacturing Purchasing Managers’ index for October is scheduled for release. The pace of growth in the manufacturing sector cooled to a seasonally adjusted 53.5 in September from August (0930/1430).
Automakers report their Canadian sales for the month of October. The industry is heading for a record year – in September, Chrysler Canada said it was on track for its best full-year sales ever, and Ford reported its highest year-to-date sales in Canada in more than 15 years. Taken together, in September the automakers operated at a seasonally adjusted rate of 2 million sales per year for the first time, according to DesRosiers Automotive Consultants.
HSBC PMI data for Mexico will show how factory sector sentiment fared in October after reaching an 8-month high in September (1030/1530).
(Compiled by Ayesha Sruti Ahmed in Bangalore)
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