What to Watch in the Week Ahead and on Monday, April 13
(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 U.S. markets will be focused on the first full week of corporate results, with banks dominating the early reports, as markets once again hit yearly highs. The dollar is poised to keep gaining ground, while bond yields will be affected by data on housing, industrial production and retail sales figures, as investors look for clues that the economy is improving in the second quarter after a weaker-than-expected first quarter. JPMorgan Chase & Co, the biggest U.S. bank by assets, is expected to report a rise in first-quarter profit on Tuesday as revenue from fixed-income trading rebounds. Trading picked up early in the quarter after the Swiss National Bank shocked currency markets by scrapping a three-year old cap on the Swiss Franc without warning, causing the currency to soar against the euro. The bank has been trying to put a lid on expenses and investors will be looking for comments on what more the company will do to cut costs. General Electric Co reports first-quarter earnings on Friday, and Wall Street is keen to see the fallout from the drop in oil prices on the conglomerate's oil and gas equipment business that made up 17 percent of its industrial revenue last year. Investors will also want to gauge GE's progress on cost cuts to improve its profit margins and hear CEO Jeff Immelt's view of the health of the global economy. Healthcare conglomerate Johnson & Johnson is expected to report a slightly lower first-quarter profit on Tuesday as the strong dollar takes a toll on overseas sales. Declining sales of its hepatitis C drug somewhat offset strong demand for new cancer medicines. Investors will also be keen to see any evidence that medical devices and consumer products will bounce back in 2015 after disappointing 2014 results as management suggested would be the case in January. Wells Fargo & Co, the largest mortgage lender, is expected to benefit from a surge in refinancing during the first quarter. Wells Fargo is also expected to post on Tuesday strong loan and deposit growth as interest rates continue to decline. The bank, which has been cashing in on the U.S. energy boom, said in January it is reviewing the possible energy loan defaults exposure. Analysts are expecting higher credit cost due to potential loan loss reserve against energy provisioning. Citigroup Inc, the most international of the big New York-based banks, is expected to report its first-quarter results on Thursday, and Thomson Reuters StarMine is predicting a small beat. Earlier last month, Citigroup CFO John Gerspach said at an investor conference that the bank's revenue from fixed-income and equity markets is expected to decline in the first quarter, largely because of a slow start in spread products and a hit during the January revaluation of the Swiss currency. He projected a "mid-to-high" single-digit percentage fall in revenue from that business. Citi expects revenue in the interest rates and currencies portion of the business to be higher than a year earlier. Bank of America Corp posts first-quarter results on Wednesday. Analysts are expecting the second-biggest U.S. bank to report a clean quarter, with no material surprises in terms of litigation or repositioning charges. Since 2010, the bank has agreed to pay at least $70 billion to resolve disputes linked to home loans, mortgage bonds and other problems stemming from before and during the crisis. Investors will be looking for any updates on the company's fee income growth and its ability to offset the coming inflection in loan loss provisioning. Goldman Sachs Group Inc is expected to report a rise in first-quarter profit on Thursday, helped by a pickup in trading activity. The investment bank is more dependent on trading revenue than peers because it has a less diverse business. Investors will be interested to know more about the trading environment and what the company expects for the rest of the year. On Wednesday, Federal Reserve Vice Chair Stanley Fischer moderates "Session 2: Macro-Prudential Tools: Gathering Evidence" panel before a seminar during the IMF/World Bank meetings. Meanwhile, Federal Reserve Bank of Richmond President Jeffrey Lacker speaks on "Investing in People for Long-Term Prosperity" before a group of business and community leaders on the same day. Separately, Federal Reserve Bank of Atlanta President Dennis Lockhart speaks on the economic outlook and monetary policy before a group of Palm Beach business leaders on Thursday. Also, Federal Reserve Bank of Cleveland President Loretta Mester speaks on the economic outlook and monetary policy before the Forecasters Club of New York Monthly Meeting on the same day. Meanwhile, Federal Reserve Bank of Boston President Eric Rosengren participates in "The U.S. Economic Outlook and Implications for Monetary Policy" event hosted by Chatham House on Thursday. Schlumberger Ltd, the world's No.1 oilfield services provider, is expected to report a lower quarterly profit as weak oil prices weigh on drilling activity. Schlumberger has warned of lower prices for its services in North America due to falling rig count. When the company reports its first-quarter results on Thursday, investors will look for comments on the company's international operations, which account for two-thirds of its revenue. The company has said it expects industry-wide spending on exploration and production to drop by 10 to 15 percent in 2015. Investors will also look for details on cost cuts. The company has already slashed 9,000 jobs in January in response to weak oil prices. Schlumberger's Russian operations are also of interest. Despite recently imposed Western sanctions, the company said in January it plans to buy a 45.65 percent stake in Eurasia Drilling, Russia's most active oilfield services company. UnitedHealth Group Inc is expected to report slightly better-than-expected first-quarter profit on Thursday, as the largest U.S. health insurer expands its offering of medical coverage under Affordable Care Act. UnitedHealth, which agreed to buy pharmacy benefit manager Catamaran for about $13 billion in late March, had said it priced its plans for 2015 to account for more use of medical services, as enrollments increase and concerns for insurers go up over covering an older and sicker population of policy holders. Honeywell International Inc, a diversified manufacturer of sensors, safety systems and airconditioning equipment, is expected to report a higher quarterly profit driven by an economy growing strong. When the company posts its first-quarter earnings on Friday, investors will be looking for the impact of the strengthening dollar and if an increase in aviation sales is offset by discounts given to plane makers like in the fourth quarter. Intel Corp is expected to report first-quarter results marginally below lowered Wall Street estimate on Tuesday, according to Thomson Reuters StarMine. The company slashed nearly $1 billion from its first-quarter revenue forecast in March as small businesses put off upgrading their personal computers. Personal computer shipments fell 5.2 percent in the first three months of this year, extending three years of declines, according to research firm Gartner. Some analysts speculate that a possible uptick in PC demand in the June quarter could help the company issue a positive forecast. Video streaming pioneer Netflix Inc is expected to report a first-quarter profit above Wall Street's average estimate on Wednesday, according to Thomson Reuters StarMine. The company has been benefiting from expansion into international markets such as Europe, as growth in the United States slows. Netflix is also expected to report strong subscriber addition numbers, according to some analysts, helped by the recent release of the third season of Emmy-winning original series 'House of Cards'. Data storage products maker SanDisk Corp is expected to report a first-quarter profit below estimates, according to Thomson Reuters StarMine data. The company's stock lost about 40 percent since touching a record high in July, making it a potential target for takeover, according to analysts. The company reported a string of issues, including unplanned maintenance at its chip foundry, weak sales of enterprise products and lean inventory levels of NAND memory chips. The company had cut its first-quarter revenue guidance, citing lower-than-expected sales, lower pricing and product qualification delays. Analysts will be looking for guidance, potential strategic alternatives, when the company reports its quarterly results on Wednesday. Toymaker Mattel Inc will report first-quarter results on Thursday after the market closes. The company, struggling with falling demand of its Barbie dolls and Fisher-Price preschool toys, said this month interim Chief Executive Christopher Sinclair, 64, will take up the job permanently. This move, analysts said, will help drive a turnaround at Mattel after it lost out to smaller rivals Hasbro Inc and Jakks Pacific Inc in the latest holiday quarter. Mattel reportedly laid off 107 employees at its El Segundo headquarters this month. Investors will be looking for comments from the CEO on his revival plans for the company, new product launches and cost saving initiatives. Canadian media and cable company Shaw Communications Inc is expected to report a slightly lower second-quarter profit on Tuesday as its video subscriptions continue to fall. Demand for video subscriptions is sliding as customers switch to comparable products from phone companies, Netflix and websites such as YouTube. Investors will like to know more about the company's on-demand video streaming service Shomi which it recently launched in partnership with Rogers Communications. Electronic trading firm Virtu Financial Inc's IPO is expected to raise up to $314 million on Thursday, valuing the company at about $2.6 billion. The company is a market-maker in equities, fixed income, currencies and commodities. It earns money through "spreads" - the difference between what buyers and sellers are willing to pay or accept in a trade. Virtu Financial postponed its IPO last year following the release of Michael Lewis' book "Flash Boys: A Wall Street Revolt", which questioned whether markets were rigged in favor of high-frequency traders. Founder Vincent Viola, a former chairman of the New York Mercantile Exchange, will control the company after the offering through ownership of all Class D shares, which have more voting power than ordinary shares. The online craft retailer Etsy's initial public offering is expected to raise up to $267 million on Thursday, valuing the company at about $1.8 billion. The company, which offers an online marketplace for unique handmade goods and craft supplies, had 1.4 million sellers and 19.8 million buyers as of December. Etsy charges fee from sellers to list products and earns a commission from each item sold. The company, led by former Yahoo executive Chad Dickerson, said net loss widened to $15.24 million in 2014 from $796,000 a year earlier. Etsy's investors include venture capital firms Union Square Ventures and Accel Partners. Shares of Party City Holdco Inc, the largest U.S. party goods retailer, are expected to start trading on Friday on the New York Stock Exchange. The company is expected to be valued at nearly $2 billion. The company is backed by buyout firm Thomas H. Lee Partners LP. The IPO of 21.9 million shares would raise up to $372 million, at the higher end of the expected $15-$17 price range. Thomas H. Lee acquired a majority stake in Party City in a $2.69 billion deal from private equity peers Advent International Corp, Berkshire Partners LLC and Weston Presidio in 2012. Thomas H. Lee currently holds about 69 percent stake, while Advent has about 24 percent interest in the company. On Wednesday, Levy Economics Institute of Bard College holds 24th Annual Hyman P. Minsky Conference on the State of the U.S. and World Economies in Washington. Participants include Federal Reserve Board Governor Lael Brainard, Federal Reserve Bank of St. Louis President James Bullard and Treasury Under Secretary for International Affairs Nathan Sheets. On Wednesday, the Bank of Canada releases its decision on interest rates and its quarterly Monetary Policy Report, which evaluates the economy and inflation. Bank of Canada Governor Stephen Poloz holds a news conference upon the release of the Monetary Policy Report. Separately, Canada's Teranet-National Bank Composite House Price Index, which measures price changes for repeat sales of single-family homes, will be released on Tuesday. On Tuesday, Brazil's statistics agency IBGE releases retail sales data for February. Retail sales have disappointed as the economy slipped into recession and consumer confidence feel to record lows. Separately, Brazil's statistics agency IBGE releases the inflation rate for the month to mid-April on Friday. Monthly inflation is expected to gradually ease after a steep increase in the first quarter. Chile's central bank meets to set the interest rate on Thursday. The rate is expected to remain at 3 percent. Peru's statistics agency reports growth data for February on Wednesday. The economy expanded 1.7 percent year-on-year in January on stronger mining activity, up from the 1 percent expansion in the fourth quarter but still below expectations. European Central Bank rate and monetary policy decisions are due on Wednesday. ECB President Mario Draghi will hold a press conference after the scheduled Governing Council meeting. The ECB was "about right" in claiming its trillion-euro quantitative easing programme was having a positive impact before it had even begun, according to three-quarters of economists polled by Reuters. Monday, April 13 The U.S. Food and Drug Administration staff is expected to review the Medicines Co's intravenous blood clot preventer, Cangrelor. The drug, which won European marketing approval in January, will be reviewed by the U.S. agency for the second time, after the company was asked to re-analyze its mixed trial data. The review comes two days ahead of a meeting of independent experts who will recommend to the FDA whether the drug should be approved. LIVE CHAT - Preview U.S. corporate reports due this week with Alpha Now's Greg Harrison Big banks' earnings are due this week, and the outlook for industrials has dimmed for some after Alcoa's revenue miss. Join Global Markets Forum on Monday to preview the first heavy week of results, with anlayst Greg Harrison from Alpha Now. (1000/1400) To join the Global Markets Forum, click here bit.ly/1kTxdKD Victor Dodig, chief executive officer of the Canadian Imperial Bank of Commerce, will give a breakfast speech in Ottawa on the future of banking. Mexico's ANTAD real estate association releases retail sales data for March after the indicator saw expansion of 5.1 percent in February. Separately, Brazil's central bank releases results of a weekly economic survey with more than 100 financial institutions. This will include forecasts for GDP, interest rates and inflation rates. Bank of Japan Governor Haruhiko Kuroda will deliver a speech at the outset of the meeting, which will be a summary of the bank's view on the economic and price outlook as well as on Japan's financial system and monetary policy. The BOJ will then issue a quarterly report on the regional economy, which is among factors the bank's policymakers scrutinise at their rate reviews. (Correction - U.S. Treasury Department is expected to issue Federal budget for March on Monday, April 13, not on Friday as reported in The Day Ahead edition on Thursday) (Compiled by Sourav Bose in Bengaluru; Editing by Don Sebastian)
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