What to Watch in the Week Ahead and on Monday, Aug. 17
(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 The stragglers for the earnings season - Home Depot, Wal-Mart and a few others - will report results to close out the quarter next week, with expectations that retailers would see decent sales after recent revisions show better-than-expected activity in the second quarter. The markets will also continue to watch the Chinese yuan after its unexpected devaluation this week, with anticipation that the dollar will strengthen a bit more, boosting bond-market activity in what is otherwise expected to be a slower week. Fed minutes are released on Wednesday and will be parsed for clues of an interest rate rise. The Changes in the July statement pointed to an improving economy and labor markets. Characterization of the debate in the minutes could indicate how firm opinions are about the state of the U.S., and how confident members are that inflation and employment will move towards the Fed's target levels. Investors will also look for the Labor Department's Consumer Price Index on Wednesday, which is expected to have increased 0.2 percent in July, a bit down from a rise of 0.3 percent in June. Housing data, including housing starts and building permits on Tuesday and existing home sales on Thursday will be in focus. The Conference Board releases its Leading Economic Index, a gauge of future U.S. economic activity on Thursday. Retailer Wal-Mart Stores Inc and Target Corp release its results for the second quarter. Wal-Mart is expected to report better-than-expected quarterly sales on Tuesday, while Target is expected to miss estimates when it reports on Wednesday. Also on Tuesday, TJX Cos Inc is expected to report second-quarter profit and sales above analysts' average estimates. The off-price retailer is expected to be helped by lower gas prices, wage growth, and higher traffic to its stores as more consumers hunt for bargains. A hike in the number and quality of brands in its stores and merchandise that reflects popular fashion trends is also expected to drive sales. Investors will look for third-quarter forecast, commentary on industry trends and plans to expand in international markets. Home Depot Inc, the world's No. 1 home improvement chain, is likely to report second-quarter sales below analysts' average estimate on Tuesday. Strong housing market data over the last few months is expected to have kept overall demand for home improvement goods steady. However, record rainfall in May and June in large parts of the United States is likely to have kept a lid on sales of products in the home exterior improvement categories, such as paint and gardening supplies. Lowe's Companies Inc, the second-largest U.S. home improvement chain, is likely to report second-quarter sales below analysts' average estimates on Wednesday. Hardware and software maker Hewlett-Packard Co is expected to report third-quarter earnings slightly above analysts' average estimate on Thursday. HP has been cutting costs and focusing on higher-margin sales in the face of a strong dollar and weak enterprise demand for its services. The company is also in the processes of separating its computer and printer businesses from its faster-growing corporate hardware and service operations. Salesforce.com Inc, the world's biggest maker of online sales software, is expected to report a second-quarter profit above analysts' average estimate. Salesforce has struggled to earn consistent profits despite strong revenue growth over the past few years, hurt by higher spending on hiring. The company reported a profit for the first time in seven quarters in May. On Thursday, the investors will look for improvement in margins in the quarter and merger-related comments. Data storage equipment maker NetApp Inc is expected to report first-quarter revenue on Wednesday slightly above average analysts' estimate. NetApp, which cut about 500 jobs in May, has been trying to boost growth by focusing on cloud-based products as businesses cut spending on high-end storage systems. The company appointed George Kurian as its new CEO in June to replace Tom Georgens. Investors would be looking for second-quarter forecast. On Wednesday, the Federal Reserve Bank of Minneapolis President Narayana Kocherlakota speaks before the "Macroeconomic Policy and Price Measurement Issues in a Low Inflation Environment" conference, in Seoul, South Korea. On Thursday, the Federal Reserve Bank of San Francisco releases the text of the speech Federal Reserve Bank of San Francisco President John Williams delivered before the Bank Indonesia-BIS Research Conference in Jakarta, Indonesia. Apparel retailer Gap Inc is expected to report a second-quarter profit below analysts' estimates on Thursday. Out of fashion merchandise and a general lack of trendy products have led to a decline in sales at the company's flagship Gap brand, leading to heavy discounts. Shipment delays caused due to disruptions at the West Coast ports early this year and a strong dollar are also expected to hurt the company's results in the quarter. Investors will look for comments on recovery at the Gap brand and performance in the current quarter. On Wednesday, teen apparel retailer American Eagle Outfitters Inc is expected to report second-quarter profit and sales above analysts' average estimates. The earnings beat is expected to be driven by trendy, fashionable merchandise, lower discounts, benefits from lower cotton prices and tight inventory controls. American Eagle is also benefiting from a new multi-channel distribution center that allows it to control inventories more efficiently by enabling it to supply to its brick-and-mortar as well as online stores. Investors will look for third-quarter forecast, commentary on promotions and trends, and expectations for the back-to-school shopping season. Agriculture equipment maker Deere & Co has been hurt by a strong dollar as well as weak demand for its farm and turf equipment, which make up about two-thirds of its annual revenue. Falling U.S. farm income and weak commodity prices have reduced spending on new equipment by farmers. In May, Deere forecast a fall in global sales for its farm equipment in 2015 and said it would close plants and cut jobs. When the company reports its third-quarter results on Friday, the investors will be looking for an update on the company's plans to shutter more factories to adjust to lower demand, as well as whether it is expected to take a hefty charge on a tractor recall announced earlier in August. They will also be looking for more information on a fire in a chemical warehouse in China last week that left some Deere workers critically injured. Friday data is expected to show that Canada's June retail sales have increased a little, compared with the previous month's reading. It is likely to have risen 0.2 percent, compared with a rise of 1.0 percent in May. Canada's inflation data is also out on Friday. Country's annual inflation is likely to have advanced 1.4 percent in July, up from 1.0 percent in June. Statistics Canada releases June wholesale trade data on Thursday. On Thursday, Mexico's statistics institute will release GDP data for the second quarter, after the central bank said it sees quarter-on-quarter growth of 0.3 percent for the period, slackening from the first quarter after weaker-than-expected exports and a slump in domestic oil output. The same day, data with show how economic activity fared in June, after slowing to a nine-month low in May. On Friday, retail sales data for June will show how domestic spending performed after rebounding by 0.2 percent in May. MONDAY, AUGUST 17 U.S. homebuilder sentiment is expected to stay strong in August as the National Association of Home Builders's NAHB/Wells Fargo Housing Market index is likely to show an increase to 61 from 60 in July, which was the highest since November 2005. (1000/1400) Also, the New York Federal Reserve releases its New York Fed's Empire State general business conditions index for August. (0830/1230) Beauty products company Estee Lauder Co Inc has been seeing a revival in sales in North America, helped by product launches and acquisitions. However, Estee has to increase promotions in its flagship Clinique and Estee Lauder brands which have shown some weakness. The company's smaller brands such as Smashbox and Bobbi Brown have seen a rise in demand, helped by their extensive online presence. Even as sales in overseas markets like the UK and China grow by double digit percentages, a stronger dollar in the past few quarters has stripped their value. The company is expected to beat revenue and profit estimates for the fourth quarter. Investors will be keen on 2016 forecast, updates on acquisitions and the impact of the dollar. Apparel retailer Urban Outfitters Inc is expected to report second-quarter profit and sales slightly above analysts' average estimates. The beat is expected to be driven by strong performance at the flagship Urban Outfitters brand, which accounts for a majority of sales, but margins are expected to be pressured by higher promotions at the Anthropologie brand, where sales growth has slowed in recent quarters. The company is also benefiting from investments in its fast-growing e-commerce and online division. Investors will look for commentary on sales recovery at the Anthropologie brand, promotions, and updates on performance for the back-to-school shopping season. Data from Statistics Canada will show the holdings of Canadian securities by non-residents for June. Foreign investors sold C$5.45 billion in Canadian assets in May. LIVECHAT: Outlook for rates with Wilmington Trust's Luke Tilley and China markets with Cumberland Advisors' Bill Witherell As September nears, the message is increasingly clear from the Fed that a rate hike is imminent. So why are markets so nervous? Join Global Markets Forum at (1000 ET/1400 GMT) for a chat about markets and the Fed with former Philly Fed official Luke Tilley. Also, Bill Witherell, Chief Global Economist and a senior consultant at the Organization for Economic Cooperation and Development, recently joined GMF to discuss the RMB becoming a global reserve currency. He returns to the Forum at (1100 ET / 1500 GMT) to chat about what the latest moves mean in the context of Beijing's longer-term currency ambitions. To join the Global Markets Forum, click here bit.ly/1kTxdKD (All analysts' estimates are according to Thomson Reuters StarMine, unless mentioned otherwise) (Compiled by Sourav Bose in Bengaluru; Edited by Don Sebastian)
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