What to Watch in the Week Ahead and on Monday, June 16
(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 Federal Reserve's policy-setting panel convenes this week, and is widely expected to decide to continue to pare the central bank's massive bond-buying stimulus by another $10 billion per month. Less predictable and of great import to markets will be fresh economic forecasts from the policymakers, which could show officials see faster progress toward the Fed's goals of full employment and 2 percent inflation than they saw in March, the last time official forecasts were published. Also highly anticipated is the publication of a matrix of dots representing when each of the Fed's policymakers expect rates to begin to rise, and how quickly. Fed Chair Janet Yellen will hold a quarterly press conference, and any comments about slack in the economy or the likely path of rate hikes will be closely parsed by investors. After several weeks of calm, the markets are watching events in the Middle East with some concern as an insurgency in Iraq threatens Baghdad and by extension, several million barrels of daily exports. The effects have already been seen on crude oil prices and a subsequent reaction in gasoline costs would dampen consumer spending. It may fuel a bit of a pullback in an equity market that has steadily risen with nary a correction. Bond prices could be helped in a safety move but investors have been letting Treasuries cheapen a bit of late in comparison to UK and other benchmarks. Industrial production and housing starts data next week will shed more light on how strong the economy will rebound after a dismal first quarter. On Tuesday, the Commerce Department is expected to report that housing starts slipped to a 1.036-million-unit pace in May from 1.072 million units. Building permits are also seen dipping to a 1.055 million-unit pace from 1.059 million units. The Labor Department's inflation report on Tuesday is expected to show consumer prices rising 0.2 percent in May after advancing 0.3 percent in April. Core CPI is seen gaining 0.2 percent. Investors will be looking for signs that Oracle is making progress against smaller rivals when it reports fiscal fourth-quarter results after the bell on Thursday. In March, Oracle forecast results for the May quarter that met analysts' expectations and since then the company's stock has outperformed the broader market on cautious expectations of progress against Workday, Salesforce.com and other cloud competitors. Parcel delivery company FedEx is likely to have benefited from a rise in shipments, which are being boosted by a surge in online retail sales. The company is scheduled to release fourth-quarter results before the bell on Wednesday. FedEx's investment in its Express service is also expected to add to earnings this year. Investors will be looking for any hit from higher fuel costs and one less operating day in the quarter. FedEx's comments on how it expects the rest of the year to play out will also be keenly watched. Photoshop maker Adobe Systems on Tuesday is expected to report second-quarter profit and revenue above analysts' estimates, according to StarMine data. The company is benefiting from strong demand for its Creative Cloud Suite and digital marketing software. Analysts say the company's subscription-based revenue growth strategy is paying off and Adobe has said it would soon phase out the traditional box license versions of its Creative Suite 6 and offer the software only on a web-based subscription model. Supermarket operator Kroger appears to be gaining steam as rival Wal-Mart's massive grocery business limps along. Kroger is scheduled to report first-quarter results before the bell on Thursday. It is expected to get a boost from its acquisition of Harris Teeter Supermarkets for about $2.5 billion in January - a deal that added more than 200 supermarkets to its network. Linux operating system vendor Red Hat's quarterly results on Wednesday will likely be in line with analysts' estimates, according to StarMine. Analysts expect the company to report a fall in first-quarter billings due to the impact of strong billings growth in the fourth quarter. Investors will look forward to know how Rite Aid is coping with competition from new generic drugs that hurt its pharmacy same-store sales last month. The drugstore chain operator, scheduled to report results on Thursday, had estimated first-quarter profit much below analysts' expectations and also cut its full-year earnings outlook as it expects higher drug costs and bigger-than-expected fall in reimbursement rates. Contract electronics maker Jabil Circuit's third-quarter results on Wednesday are expected to be slightly above estimates, according to StarMine, helped by higher sales of mobile phones and video game consoles in the quarter. The company, which had issued a conservative outlook in December due to the winding down of its business with BlackBerry, expects to return its core operating income within its diversified manufacturing services business to "more normalized levels" in fiscal year 2015. Darden, at odds with some major activist shareholders over plans to sell its Red Lobster chain, is expected to report weak fourth-quarter results before the market opens on Friday. The company is struggling to keep up with rapidly changing consumer demand and results from its major chains Red Lobster and Olive Garden have flagged. Financial information service provider Markit's initial public offering is expected to raise as much as $1.14 billion, valuing the company at up to $4.47 billion. The company, which competes with Bloomberg and Thomson Reuters, provides pricing and reference data, indices and valuation services. Markit, founded by Canadian Lance Uggla in 2001, counts Singapore state investor Temasek Holdings, Bank of America, Deutsche Bank and Goldman Sachs Group among major stockholders. Thermal coal producer Foresight Energy Partners is expected to raise up to $367.5 million from its initial public offering of 17.5 million common units, representing limited partner interests. Foresight is expected to be valued at about $1.36 billion at the higher end of its estimated price range between $19 and $21 per unit. Data on Thursday will show whether the pace of Mexican private spending continued to ease in the first quarter after growing just 0.1 percent in the three months through December. On Friday, retail sales figures for April will reveal whether expansion continued, after sales rose in March for the first time in three months. Analysts will be closely watching Central Bank meeting minutes, also released on Friday, to learn how unified central bankers were in deciding to deliver a surprise 50 basis points cut to bring the benchmark rate to a record low of 3.00 percent last week. MONDAY, JUNE 16 The Federal Reserve is expected to report that U.S. industrial production increased 0.5 percent in May after falling 0.6 percent in April. (0915/1315) The International Monetary Fund is due to release its annual review of the U.S. economy. IMF Managing Director Christine Lagarde is scheduled to hold a news conference to discuss the report. (0930/1330) The Chilean central bank is due to release its latest quarterly Monetary Policy Report, which could update growth forecasts for 2014 (currently 3.0 to 4.0 percent) and give possible hints on the direction of monetary policy. A recent uptick in inflation has limited the bank's room to carry out much further loosening after cutting interest rates 100 basis points since October. (Compiled By Ayesha Sruti Ahmed in Bangalore)
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