What to Watch in the Day Ahead - Wednesday, Feb. 25
(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) Federal Reserve Chair Janet Yellen continues her semiannual testimony on the economy and monetary policy before the House Financial Services Committee. As investors sought clues on the timing of the Fed's first interest rate increase since 2006, Yellen told the Senate Banking Committee on the first day of the testimony that the central bank is preparing to consider interest rate hikes "on a meeting-by-meeting basis", a subtle shift of emphasis. (1000 /1500) Retailer Target Corp is expected to report a sharp jump in fourth-quarter profit due to solid holiday sales, in a rebound from last year when the security breach marred its results. Lowe's Cos Inc, the second-largest home improvement retailer, is expected to report better-than-expected fourth-quarter profit and sales, according to Thomson Reuters StarMine data. Improved spending on home renovation is likely to drive sales this year. Increased demand and better pricing are likely to improve operating margins at the company. Investors will look for comments on the overall housing market and how sales shaped up during the holiday season. The U.S. Commerce Department issues data on sales of new single-family homes, which is expected to have dropped to a seasonally adjusted annual rate of 470,000 units in January. The sales increased 11.6 percent to a seasonally adjusted annual rate of 481,000 units in December. (1000/1500) Separately, the Mortgage Bankers Association releases its weekly seasonally adjusted index of mortgage application activity. (0700/1200) Royal Bank of Canada, Canada's No. 1 lender, is expected to report a rise in earnings per share in the first quarter, though investors will be watching closely for indications of how sluggish economic growth and a sharp fall in oil prices are affecting personal and commercial lending and profits at its capital markets arm. RBC management could also update investors on its $5.4 billion acquisition of Los Angeles-based City National Corp, a deal which will bulk up its U.S. wealth management business. Dollar Tree Inc announces fourth-quarter results. Investors will be looking for comments on whether the discount retailer will have to divest more stores to satisfy antitrust regulators reviewing its planned acquisition of Family Dollar Stores. The retailer had previously said it expects to divest fewer than 300 stores. Investors will also look for an update on whether efforts to offer customers more quality at $1, even at a slight cost to margin, is able to drive traffic into the company's stores. Cloud software company Salesforce.com Inc is expected to report fourth-quarter results slightly above analysts' average estimate, according to Thomson Reuters StarMine data. Salesforce has been benefiting from higher demand for its web-based sales and marketing software and services. However, investors will look out for the impact of a strong dollar as the world's biggest maker of online sales software generates about 30 percent of its revenue from outside Americas. Cloud-based human resources software maker Workday Inc is expected to report fourth-quarter revenue slightly below analysts' average estimate, according to Thomson Reuters StarMine data. Workday, which has been aggressively pricing its offerings to outdo larger rivals such as Oracle Corp and SAP SE, had earlier forecast fiscal 2016 revenue below market estimates, indicating that its growth was slowing. The company recently decided to sell its products in local currencies, and investors will be looking to see how that impacts full-year forecast. Chesapeake Energy Corp, which last week alleged in a lawsuit that former CEO Aubrey McClendon stole trade secrets, is expected to report fourth-quarter results and a 2015 budget that reflect the collapse in crude oil prices. Canadian natural gas producer Encana Corp spent billions trying to recast the company as an oil producer to diversify its operations and free it from relying on low-value natural gas. But the company's biggest move, the $5.9 billion purchase of Athlon Energy for its oil production in the Permian basin of Texas, came just as oil prices plummeted. The fourth-quarter report will be the first to detail whether the company's purchase has been in the interests of shareholders. Independent refiner HollyFrontier Corp is expected to report a lower fourth-quarter profit due to narrowing margins between U.S. crude and the international benchmark Brent. U.S. refiners typically process cheap shale crude into diesel and gasoline, which are sold at prices linked to the more expensive Brent. But the gap between U.S. crude and Brent nearly dissolved in the fourth quarter, squeezing refining margins. The focus will be on 2015 forecast, given 5-year low oil prices. Whiting Petroleum Corp, the largest oil producer in North Dakota's Bakken shale formation, is expected to report a drop in fourth-quarter profit and announce deep cuts to its 2015 capital budget as the company responds to tumbling crude prices. Cablevision Systems Corp is expected to post further losses in its video subscribers in the fourth quarter, as companies such as Verizon and AT&T attract more customers with competitive pricing. The company, which has been losing video subscribers for the past four quarters, sued Verizon last month, accusing it of false advertising. Cablevision is, however, expected to post a profit above Wall Street expectations, according to Thomson Reuters StarMine data, due to increased cable TV prices and higher advertising revenue. Oil producer Halcon Resources Corp is expected to report a drop in fourth-quarter profit, though Wall Street is eager to learn how the company is developing its lucrative North Dakota acreage. The initial public offering of Wowo Ltd, the operator of Chinese daily deal website 55tuan.com, is expected to raise $66 million, valuing the company at up to $423 million. Wowo is the first Chinese company to list in the United States in 2015. The company filed for an IPO in the United States in 2011, but later withdrew it. The company's revenue more than tripled between 2011 and 2013. The website offers deals on restaurants, movie theaters and beauty salons. Jochen Tilk, CEO of Potash Corp of Saskatchewan, presents at Bank of America's investor conference in Florida. Of interest are Tilk's thoughts on Canpotex's upcoming potash supply contract with China's Sinofert, and Potash Corp's review of its equity stakes in Sinofert and three other fertilizer companies. CF Industries, Mosaic and Agrium will also present at the conference. Mexico's central bank will reveal its current account balance for the fourth quarter, when markets punished the peso thanks to plunging oil prices. (1000/1500) (Compiled by Sourav Bose in Bengaluru; Editing by Sriraj Kalluvila)
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