What to Watch in the Day Ahead - Friday, Jan. 30
(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) Chevron Corp, the second-largest U.S. oil producer, is expected to report a drop in fourth-quarter profit due to slumping commodity prices, according to analysts and update its 2015 spending plans. The Commerce Department's Advance or first estimate of U.S. fourth-quarter Gross Domestic Product report is expected to show the economy expanded at a 3 percent annual pace after the third quarter's robust 5 percent rate. The economy likely delivered another quarter of solid growth, defying earlier expectations of a sharp slowdown, with consumer spending in the fourth quarter expected to be the fastest in four years. As recently as November, fourth-quarter growth estimates ranged as low as a 1.7 percent annual pace. But following strong November retail sales, wholesale inventory and industrial production data and a smaller trade deficit, economists raised their rate estimates in December. (0830/1330) Following that, Commerce Under Secretary for Economic Affairs Mark Doms and Beth Ann Bovino, chief economist for Standard and Poor's, participate in a conference call hosted by Business Forward to discuss the newest GDP figures released by the Bureau of Economic Analysis. Separately, the Labor Department is expected to report that its employment cost index, the broadest measure of labor costs, increased 0.6 percent in the fourth quarter, building on the third quarter's 0.7 percent rise. (0830/1330) Later, the University of Michigan is expected to report that its consumer sentiment index held steady at 91.5 in January. (1000/1500) Mastercard Inc, the world's second-largest credit and debit card company, is expected to post a higher fourth-quarter profit as it benefits from higher consumer spending over the holidays and falling gas prices. However, the company's growth in the United States, its largest market, may be hampered by the strong U.S. dollar, although the volatility in foreign exchange rates is expected to boost its cross-border volumes. Investors will look for the company's plans to operate in China, which recently opened up its domestic card market. Pharmaceuticals company AbbVie Inc, which in October backed away from its planned $55 billion purchase of Irish drugmaker Shire Plc, is expected to report higher fourth-quarter earnings as strong sales of arthritis treatment Humira help offset falling sales of heart medicines. The big focus will be on Viekira Pak, the company's newly approved treatment for hepatitis C, and what strategy is needed to maximize sales in the face of competition from market leader Gilead. U.S. drugmaker Eli Lilly & Co will begin turning the corner in the fourth quarter, with relatively flat earnings after taking a battering over the past three years due to patent expiries on its biggest medicines. As its painful patent cliff begins to fade away, investors will want details on the progress of experimental drugs, including treatments for diabetes and cancer, needed to drive Lilly's growth in the years to come. California asset manager Franklin Resources Inc announces first-quarter results. Investors will focus on flow data and how net withdrawals from the fund run by star manager Michael Hasenstab may hit the bottom line of the company, known for its heavy exposure to developing markets, including the Ukraine and Africa. Xerox Corp is expected to report fourth-quarter revenue below estimates, according to Thomson Reuters Starmine data. The company had recently agreed to sell its information technology outsourcing arm to French IT services firm Atos SE to focus on faster-growing units such as business process outsourcing and document outsourcing. Investors and analysts will be looking for more information on the sale of the business. Barbie doll maker Mattel Inc is expected to post fourth-quarter profit and net sales below the average analyst estimate. Worldwide net sales in the all-important holiday quarter fell 6 percent, its fifth straight quarterly decline, despite the company's efforts to offer promotions and increase media spending in North America by 40 percent. Mattel was deposed by Denmark's Lego Group as the world's largest toymaker by sales. The Federal Reserve Bank of Boston releases an online version of President Eric Rosengren's speech to a closed conference of the 10th Basel Committee on Banking Supervision/Financial Stability Institute in Cape Town, South Africa. (0245/0745) Separately, Federal Reserve Board Governor Daniel Tarullo speaks on "Advancing Macro-prudential Policy Objectives" before the Office of Financial Research and Financial Stability Oversight Council's 4th Annual Conference in Fairfax. The speech comes as the Fed ramps up its internal efforts to build up its own financial stability operation, a controversial subject given the complexity of trying to deflate an asset bubble before it pops. It also comes as the Fed has increasingly voiced concern that the FSOC will be unable to move quickly or effectively to act ahead of the next crisis. (1245/1745) Lear Corp, a maker of auto seats and electrical power systems, reports fourth-quarter earnings. Lear's third-quarter revenue was nearly evenly split between North America and Europe/Africa. Eighty percent of revenue comes from its automotive seating business. The strong U.S. dollar and high December auto sales may impact earnings. Weakening coal and oil prices likely hurt CONSOL Energy Inc's fourth-quarter results. The company is expected to report a lower profit as it deals with the continuing slump in commodity prices and faces increasing regulatory pressure in the North American coal market. The Pennsylvania-based coal producer switched its focus to oil and gas exploration and production last year in an attempt to protect itself from lower coal prices. Capital expenditure guidance for the year is likely to be the key figure as oil and gas companies continue to slash spending budgets. Investors will also keep an eye out for an updated timeline for the proposed initial public offering of CONSOL's thermal coal business. Shake Shack Inc, a burger chain that grew out of a hot dog stand in New York's Madison Square Park, is expected to raise up to $95 million its initial public offering. The company's offering of 5 million class A shares, expected to be priced between $17-$19 each, will value Shake Shack at up to $674.5 million. Known for its Shackburgers, flat-top hot dogs and eponymous milkshakes, Shake Shack has developed a cult following since it was founded by restaurateur Daniel Meyer in 2001. Meyer's Union Square Hospitality Group LLC, private equity firm Leonard Green & Partners LP and employee-owned hedge fund sponsor Select Equity Group LP are Shake Shack's major shareholders. Statistics Canada releases its November Gross Domestic Product report after the Canadian economy showed surprising strength in October, growing by 0.3 percent due in part to an unexpected surge in manufacturing. (0830/1330) The premiers of Canada's 10 provinces and three territories will hold a day-long meeting in Ottawa at which they are set to renew demands for more money from the federal government. Some premiers will most likely be asked about the effect of falling oil prices on their economies. Colombia's central bank will hold its benchmark interest rate at 4.5 percent, a Reuters poll showed, although more analysts expect cuts to the lending rate may not be far off, to stimulate the economy as plunging oil prices slash export revenues. Separately, Mexico's finance ministry will reveal the fiscal balance for December. (1530/2030) The European Central Bank's quantitative easing programme will be enough to bring inflation back to target, a slim majority of euro zone money market traders polled by Reuters said. However, economists polled by Reuters had narrowly said it would not and forecast that euro zone inflation probably fell to -0.5 percent annually in January. (0500/1000) (Compiled By Astha Rawat in Bengaluru; Editing by Simon Jennings)
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