UPDATE 1-What to Watch in the Week Ahead and on Monday, Dec. 8
(Adds item on economic data)
WEEK AHEAD Markets are starting to slowdown, with major averages seeing smaller day-to-day moves as trading declines, but investors are inclined to retain a bullish view, particularly after strong jobs data. The jobs report has pushed short-dated yields higher, but the expectation is still that the Federal Reserve will begin to raise rates slowly next year. The overall view of an economy that is accelerating should continue to help U.S. assets, particularly stocks and the dollar, which is still rallying. The data calendar lightens next week with only retail sales, producer price inflation and consumer sentiment reports the only key releases. Commerce Department data on Thursday is expected to show that retail sales rose 0.4 percent in November from 0.3 percent in October, thanks to robust automobile sales. A measure of sales that closely correlates to consumer spending, retail control, is forecast to rise 0.4 percent after increasing 0.5 percent in October. On Friday, Labor Department data is expected to show that the producer price index for final demand fell 0.1 percent in November, reflecting lower energy prices. The Thomson Reuters/UMich consumer sentiment index is expected to increase to 89.5 in early December from 88.8 in November. Inflation expectations will be closely watched after recent declines. Photoshop maker Adobe Systems will report fourth-quarter results on Thursday, with profits expected to beat estimates, according to Thomson Reuters StarMine. Adobe has been switching to web-based subscriptions for its Creative Suite 6 from traditional box licenses to attract predictable recurring revenue. Investors and analysts will be interested to see if the company, whose products are some of the most pirated in the world, can manage to persuade customers, such as individuals and small businesses, to make a switch to the cloud. The U.S. Federal Reserve will meet on Tuesday to propose extra capital standards for the eight largest and most risky U.S. banks. The surcharge will take into account the degree to which the banks rely on wholesale funding. The rules will be in line with the global Basel III capital plan, but may well go over and above it. The banks affected are Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley, State Street and Wells Fargo. Auto parts retailer AutoZone reports first-quarter earnings on Tuesday. The company's results have taken a hit this year as more Americans chose to buy new cars over fixing old ones. U.S. automakers reported their best November sales pace since 2003 on top of strong October sales, suggesting AutoZone may report another weak quarter. Investors will be looking for sentiment going into next year and whether AutoZone expects another severe winter to boost results in the February quarter. United Technologies Corp is set to speak to investors at its annual outlook meeting on Thursday, less than a month after its chief executive abruptly retired. New CEO Greg Hayes, who until recently served as CFO, is expected to lead the meeting in his public debut in his new role. Aside from the company's earnings projection for next year, Wall Street will be eager to hear if the company may embark on a different strategic direction under Hayes' leadership. Marianne Lake, chief financial officer of JPMorgan Chase & Co speaks at an investor conference on Wednesday. Lake may update the company's outlook for the fourth quarter. LPL Financial Holdings Inc, one of the five biggest retail brokerage firms by number of financial advisers, will present the company's outlook for 2015 on Wednesday. The CEO of LPL Financial will discuss the company's regulatory problems, market share opportunities and outlook. As the biggest "independent" broker/dealer - firms whose brokers contract for products and services but are not full-time employees - LPL is a benchmark for the fastest-growing sector of the securities industry. RadioShack Corp reports third-quarter results on Thursday. The struggling electronics retailer is working to cut costs and shore up financing to stay afloat, as it loses market share to online rivals. The company will stop matching employees' retirement-fund contributions and review health benefits to help cut costs, Bloomberg reported. Its discussions to seek approval from lenders to shut 1,100 stores have hit a rough patch, with lender Salus Capital accusing it of breaching covenants, which the company denied. Investors will look out for company's confirmation on changes in employees' health benefits and retirement plans, and updates on discussions with lenders and other cost-cutting measures. LendingClub Corp, the world's largest online marketplace connecting borrowers and investors, is expected to raise $692.4 million at the top end of its expected price range of $10-$12 each. LendingClub, which has facilitated more than $5 billion in loans since its launch in 2007, counts former U.S. Treasury Secretary Lawrence Summers and former Morgan Stanley Chief Executive John Mack on its board. At the top end of the expected price range, LendingClub will be valued at $4.33 billion. Shares of Alibaba Investment-backed Momo Inc, a Beijing-based provider of mobile chat apps, are expected to start trading on the Nasdaq on Friday. The company could raise up to $232 million from the initial public offering of 16 million American depositary shares, expected to be priced within the range of $12.50-$14.50 each. The company would be valued at about $2.7 billion at the top end of the IPO price range. Momo's debut follows Alibaba's blockbuster listing on New York Stock Exchange in September. Alibaba will buy $50 million of Momo's Class A ordinary shares in a concurrent private placement. Venture capital firm Sequoia is among Momo's shareholders. Shares of auto parts provider Metaldyne Performance Group Inc are expected to start trading on the New York Stock Exchange on Friday. The company's initial public offering of 15.4 million shares could raise up to $323 million at the top end of the expected price range of $18-$21 each. The company would be valued at about $1.4 billion at the top end. Private equity firm American Securities is selling all the shares in the offering. Metaldyne supplies auto parts to companies including Ford, General Motors and Chrysler. Shares of analytics software maker New Relic Inc are expected to start trading on the New York Stock Exchange on Friday. The company could raise up to $100 million at the top end of the expected price range of $18-$20 each. The company would be valued at about $922 million at the top end. Benchmark Capital Partners and Insight Venture Partners are among New Relic's shareholders. Shares of analytics software maker Workiva Inc are expected to start trading on the New York Stock Exchange on Friday. The company could raise up to $108 million from the IPO of 7.2 million class A common shares, at the top end of the expected price range of $13-$15 each. The company would be valued at about $593 million at the top end. Bank of Canada will release its twice-yearly financial system review on Wednesday. This is "a detailed review of developments in the financial system and an analysis of policy directions in the financial sector". Bank of Canada Governor Stephen Poloz will hold a news conference where Senior Deputy Governor Carolyn Wilkins will also be present. On Thursday, Poloz will speak before the Economic Club of New York. Statistics Canada releases October data for new housing prices on Thursday. Canada's housing report is expected to show new home prices edged up 0.2 percent in October. On Friday, the November Teranet-National Bank Composite House Price Index, which measures price changes for repeat sales of single-family homes will be released. Mexico's retail association Antad will release same store sales for November on Tuesday, after sales at stores open at least a year accelerated by 2.1 percent in October. Also on Tuesday, the national statistics institute will reveal annual inflation data for November, after inflation for the twelve months through early November moderated to 4.16 percent but remained above the bank's 4 percent ceiling. On Wednesday, gross fixed investment data will be released for September. Data on Friday will show how industrial production fared in October, after slumping in September thanks to falling oil output and a dip in construction activities despite a pickup in factory activity. MONDAY, DECEMBER 8 Federal Reserve Bank of Atlanta President Dennis Lockhart speaks on economic outlook and monetary policy before the Council for Quality Growth (1230/1730). McDonald's, the world's largest restaurant chain, reports November same-store sales data. The company's investors are hoping the chain's weak same-restaurant sales will bottom. The world's biggest fast-food chain, which is struggling to appeal to more health-conscious diners, has been fighting tough U.S. competition, the after-effects of a supplier scandal in Asia, and economic and political turmoil in Europe. UBS hosts Global Media Conference from December 8 to 10. Several media heavyweights will be key noting and presenting including James Murdoch, co-COO of 21st Century Fox, Time Warner CEO Jeff Bewkes, WPP's Martin Sorrell, New York Times CEO Mark Thompson, CBS CEO Les Moonves, and News Corp's Robert Thomson. Housing data of Canada is starting with two separate reports on housing starts and building permits. Housing starts are forecast to pick up to 200,000 in November, suggesting the housing market remained robust heading into the end of the year (0815/1315). Euro zone finance ministers will discuss the European Commission's assessment of their national draft 2015 budgets with focus on the EU executive's decision to postpone any action against France or Italy over their insufficient fiscal consolidation until early March 2015. (Compiled by Astha Rawat in Bengaluru; Editing by Siddharth Cavale)
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