What to Watch in the Day Ahead - Wednesday, Oct 21
(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) General Motors Co, the No.1 U.S. automaker, will try to convince a skeptical Wall Street that much of its problems are behind it, as it reports its third-quarter results. A slowdown in sales in China and South America is expected to weigh down a moderate recovery in Europe. GM said on Oct. 1 that it expected before-items earnings for 2015 of $5-$5.50 per share. Investors will be looking out for management's comments and guidance regarding foreign sales, particularly China. Beverage giant Coca-Cola Co's third-quarter revenue is likely to come in below the average analyst estimate. Rival PepsiCo reported revenue and profit above analysts' estimates, helped by higher demand for snacks and non-carbonated beverages in North America. Coca-Cola's higher sales in North America in the last two quarters have mostly come from higher prices and distribution of energy drinks made by Monster Beverage, in which Coke bought a stake last year. The company said in September it was planning to sell nine production facilities to three of its independent bottlers as it seeks to unload low-margin assets and reduce manufacturing costs. Investors will be looking out for comments on the performance of Keurig's Kold cold drink making device, for which Coke has partnered with Keurig, and other measures to diversify beyond bottled carbonated drinks and cut costs. American Express Co, the world's biggest credit card issuer, is expected to report third-quarter earnings in line with analysts' estimates. AmEx, which generally caters to affluent customers, is now looking to tap into a customer base with relatively lower credit scores in the wake of increasing competition and the loss of exclusive contracts with CostCo Wholesale Corp and JetBlue Airways. AmEx reaffirmed its long-term guidance recently though the last four quarters have been lukewarm. Investors will be interested in the company's growth plans and new exclusive agreements to offset the impact of its fallout with CostCo. With Boeing Co having delivered 37 of its 787 jetliners in the third quarter, well above the target of 30, investors will be looking for strong cash flow in its results and evidence that Boeing is reducing 787 production costs and catching up to Airbus's massive lead on new plane sales this year. A charge related to costs of developing the 747-8, which has failed to attract a sale for two years, may come as a possible surprise in the report. There's also talk that 787 deliveries will slow in October, which seems inevitable given the high pace in the third quarter. Abbott Laboratories Inc is expected to report third-quarter sales above analysts' estimates due to increased demand for its generic drugs. The company, which is more than 120 years old, beefed up its basket of generic drugs by buying Chile's CFR Pharmaceuticals for nearly $2.9 billion this year. Analysts will want to see if the company, which gets nearly 70 percent of its revenue from outside the United States, is able to keep up the 30 percent-plus growth rate it has seen in branded generic sales. Analysts will also be looking for commentary from the company about acquisitions in the medical device maker space. When U.S. biotech company Biogen Inc reports its third-quarter results, investors will be looking for any signs of a bounceback after a disappointing first half of the year. The company has lost nearly a third of its market value since it slashed its full-year sales forecast in July due to slowing demand for its oral multiple sclerosis drug, Tecfidera. U.S. pipeline company Kinder Morgan Inc is expected to report a lower third-quarter profit, hurt by a drop in U.S. oil production. Kinder Morgan, which folded all its units into one publicly traded company last year amid weak oil prices, has been on an acquisition spree. The company said on Tuesday it was buying some U.S. fuel storage terminal assets from BP Plc. Earlier this year, it acquired Royal Dutch Shell's stake in a natural gas joint venture and also a pipeline company. It will have to raise its quarterly dividend to meet its full-year dividend target of $2 per share. However there are investor concerns about the company's ability to do so. Investors will want to know about the company's plans for further acquisitions and how it will improve its margins. Luxury carmaker Ferrari is expected to make its long-awaited debut on Wall Street. Fiat Chrysler Automobiles is offering a 10 percent stake in the company at $48-$52 a share, a price that would give the maker of famous sports cars such as the Testarossa a market value of up to $9.8 billion. Some analysts say Ferrari may struggle to justify such a valuation once the IPO hype fades, given its profit margins and the investments needed to put its prancing horse logo on other products. Fiat Chrysler plans to use the proceeds for its own ambitious turnaround plan. Chipmaker Texas Instruments Inc has forecast third-quarter revenue below analysts' expectation due to weak demand for its chips used in PCs and industrial and communications equipment. Industrial and communications equipment accounts for nearly half of Texas Instruments' total revenue. Last quarter, CFO Kevin March warned that the company did not expect any recovery in the communications or PC markets in the current quarter. Worldwide shipments of personal computers fell 7.7 percent in the third quarter, according to research firm Gartner. The company, however, could benefit from the use of its chips in the latest iPhones by Apple Inc. EMC Corp, the data storage company being acquired by Dell Inc, is expected to report third-quarter revenue below analysts' average estimate. EMC reported preliminary results on October 12, and the primary focus will be around any commentary on the acquisition. E-commerce company eBay Inc is expected to report third-quarter revenue below expectations, according to some analysts. EBay has a number of challenges ahead after spinning off its payments business, which includes PayPal. The business has since lost customers and seen sluggish growth in the past few years as retailers increasingly move their online operations in-house. Revenue from the company's marketplace business, which includes its e-commerce platform, ebay.com, fell last quarter, hurt by increasing competition from rivals such as Amazon.com and changes in Google's search algorithms. Oilfield services provider Baker Hughes Inc, which is being acquired by bigger rival Halliburton for $35 billion, is expected to post a quarterly loss, compared with a year-ago profit, hurt by a decline in drilling activity due to weak commodity prices. Investors will mainly focus on comments around planned divestitures and timeline for the pending approval of the acquisition. Earlier this month, Baker Hughes' third-largest shareholder, ValueAct Capital Management, said the company's shares were undervalued and that it was looking for ways to enhance shareholder value. Heart device maker St. Jude Medical Inc is expected to report third-quarter revenue in line with analysts' estimates due to higher sales of its cardio and neuro products. The company, which has been under pressure from rival heart device launches in the market, is expected to raise its full-year guidance to reflect the close of its recent acquisition of Thoratec Corp. Investors will also look for comments on the adoption of St. Jude's new heart failure monitoring device, CardioMEMS, which was recently issued a warning letter by the Food and Drug Administration. Interpublic Group of Cos Inc is expected to report third-quarter revenue above the average analyst estimate. The advertising firm, whose clients include General Motors Co, Johnson & Johnson and L'Oreal, is benefitting from higher advertising spending by U.S. businesses. Investors will be looking for the impact of a strong dollar on its international revenue. Personal care products company Kimberly Clark Corp is expected to report third-quarter revenue below estimates. The company has cut costs to boost profits, but getting more than half of total sales from outside the United States means their value has reduced. Analysts expect volume in the United States to have bounced back after weak showing in the previous quarter. Investors will look out for any updates on forecast for the coming quarter and year, especially how much impact the company expects currency to have. Federal Reserve Board Governor Jerome Powell will be moderating "Repo Markets, Liquidity, and the U.S. Treasury Market" panel before conference, "The Evolving Structure of the U.S. Treasury Market" at the Federal Reserve Bank of New York. (1330/1730) U.S. Treasury Secretary Jack Lew, Blackstone President and COO Tony James, Centerview Partners Co-founder and Partner Blair Effron, U.S. Commerce Secretary Penny Pritzker, former U.S. Treasury Secretary Lawrence Summers and former Council of Economic Advisers chair Laura Tyson participate in Center for American Progress "Creating Long-Term Value: Business Leaders on Shared Prosperity, Innovation, and Investment" conference in Washington. (0830/1230) SanDisk Corp, a data-storage products maker, has forecast third-quarter revenue largely below analysts' average estimate as it grapples with falling sales of solid-state drives. The company has been grappling with a delay in sales of certain embedded parts used in solid-state drives. Hard disk drive maker Western Digital Corp is in advanced talks to acquire SanDisk, people familiar with the matter told Reuters on Monday. Investors will look for any deal related details. Jack Dorsey, named Twitter's permanent CEO earlier this month, is expected to deliver the keynote address at the company's annual developer conference at San Francisco's Bill Graham Civic Center. Angie's List Inc, the operator of website that allows users to review local businesses, is expected to report a bigger-than-expected loss. The company has been losing market share and subscribers because it charges customers membership fees to access reviews and ratings on its site that Yelp, TripAdvisor and others provide for free. Angie's List has been cutting marketing costs to make up for the weakness and said in April it expected marketing expenses to keep falling as a percentage of revenue. The Bank of Canada will announce its interest rate decision. After two rate cuts earlier this year to buffer the effect of cheap oil on the economy, the central bank is widely expected to leave rates on hold at 0.50 percent. The bank will also update its economic projections. Canada's economy was in a mild recession in the first half of the year, but the bank expects growth resumed in the third quarter. (1000/1400) Mutual fund companies and other money management firms that sell their wares through brokerage firms and investment advisers begin a two-day meet at the Money Market Institute conference in New York. The meet is likely to discuss political and business contingencies at a time when regulators and consumer advocates are screaming about the high costs fund companies pass on to investors. Brazil's annual inflation rate probably neared 10 percent in mid-October after state-run oil company Petrobras raised fuel prices to adjust for a massive currency drop. Consumer prices likely gained 9.79 percent in the 12 months through mid-October, the highest since December 2003. (0700/1100) Separately, Brazil's central bank is scheduled to announce its interest rate decision. The monetary policy committee, known as Copom, is expected to keep its benchmark Selic rate at 14.25 percent. The central bank will also release the capital flows and foreign reserves data. Meanwhile, Mexico's statistics institute will present retail sales data. The indicator is expected to have increased 0.30 percent in August on a monthly basis after having risen for a third month running in July. Also, the Argentine government is due to release the September trade balance data. LIVECHAT - Currency Chart Corner: Take a look at the FX charts with Reuters technical analyst Martin Miller. Join us for a quick round up of what the technical charts are telling us with analyst Martin Miller at 0600 ET/1000 GMT. To join the Global Markets Forum, click here, bit.ly/1kTxdKD (Compiled By Nayyar Rasheed in Bengaluru; Editing by Kirti Pandey and Sriraj Kalluvila)
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