What to Watch in The Day Ahead; Wednesday, Aug. 20
(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) The Federal Reserve releases the minutes from its July 29-30 policy meeting that could shed further light on how the central bank plans to eventually exit from its extraordinary monetary stimulus. It could also show whether there is a growing divide between 'hawks' and 'doves' over when to raise interest rates. (1400/1800) Hewlett-Packard, the world's largest computing corporation, is scheduled to release third-quarter results after the bell. The company offers latest glimpse into slow-burning restructuring as Wall Street concerns mount. HP is ploughing ahead with its plan to transform itself into a hardware-software-networking conglomerate that caters to corporate and government clients, though topline growth remains elusive in a difficult IT spending environment and recently expanded layoffs revive fears that the company is sacrificing long-term innovation for short-term gains. The company has not seen the type of drastic deceleration in China that Cisco and IBM have, but some analysts think it's just a matter of time before anti-U.S. sentiment catches up with the company.
Target is expected to report second-quarter earnings before the bell. The beleaguered retailer pre-announced second-quarter earnings this month, cutting its profit estimate after resorting to price cuts to attract cash-strapped consumers and win back customers unnerved by a massive holiday-season data breach. It also said same-store sales were flat in the United States, mirroring Wal-Mart's performance. All eyes, however, will be on how new CEO Brian Cornell will rebuild the company's reputation following the breach and stanch losses in Canada, where a botched expansion led to nearly $1 billion in losses last year. Investors will also be keen to hear about the company's back-to-school initiatives.
Lowe's, the world's second-largest home improvement chain after Home Depot, is likely to report a second-quarter profit above analysts' expectations, according to StarMine. The company is expected to benefit from higher sales of building material, garden equipment and supplies as more people undertook home-renovation projects delayed by the long winter. Investors are looking out for comments about the second half of the year, especially after Home Depot defied analysts' expectations of a housing slowdown by raising its full-year profit forecast.
Staples, the largest U.S. office supplies retailer, is expected to report second-quarter results amid tough competition as customers shift to e-retailers such as Amazon.com, mass merchants such as Wal-Mart Stores and drugstores to buy their office supplies. Smaller rival Office Depot last week warned of weak sales this year as it struggles with tough competition. Investors will be interested to know how Staples intends to curb the pressure on its margins as a result of heavy discounting ahead of the back-to-school season and how sales are tracking in the quarter. They will also look for updates on the planned closure of up to 225 stores in the United States and its spending on e-commerce and marketing.
Asset manager Eaton Vance's third-quarter profit is expected to rise, partly helped by strong markets. BlackRock, the world's largest money manager, also reported a quarterly profit last month that beat estimates, boosted by higher flows into its funds across asset classes and regions.
L Brands, which operates in the specialty retail business, is scheduled to release second-quarter earnings after the market.
Chinese solar company JA Solar is expected to report its third-straight second-quarter profit, helped by higher panel prices and robust demand. The company, which is adding production capacity, started producing its high-efficiency panels in June in an effort to boost margins. Investors will want to know more about the company's plans for the U.S. market in the face of tariffs on China- and Taiwan-made solar products.
Statistics Canada is scheduled to release June's wholesale sales data. Analysts forecast a gain of 0.4 percent in June wholesale trade from May, which jumped by an unexpectedly high 2.2 percent from April. (0830/1230) Argentina President Cristina Fernandez is scheduled to address the Buenos Aires stock exchange. Investors will be looking out for comments on Argentina's debt crisis that move beyond frothy rhetoric and indicate what the government's next move will be. Separately, the INDEC statistics agency is likely to release Argentina's June economic activity index. (1500/1900) Brazil's inflation probably remained at the upper limit of the central bank's tolerance range in mid-August, sparing President Dilma Rousseff from a potential embarrassment during a tense moment in her re-election campaign. Consumer prices likely rose 6.50 percent in the 12 months to mid-August, staying at the top-end of the official target range, according to the median forecast of 20 economists. In mid-July, annual inflation was at 6.51 percent. (1800/1200) The Bank of England Monetary Policy Committee is scheduled to release the minutes of its August meeting and there is speculation that the meeting might have seen the first dissenting vote in favour of a rate hike.
(All analysts' estimates are according to Thomson Reuters I/B/E/S/) (Compiled by Sourav Bose in Bangalore; Edited by Maju Samuel)
