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WEEK AHEAD
A confluence of events in the coming weeks could add to the recent volatility in currency
markets and help it spread into equities and other asset classes. The IMF spring meetings
commence, and there is some thought that leaders may address the ructions in forex markets.
Earnings are going to trickle in, beginning with major banks, including JP Morgan and Bank of
America, and the outlook here is weak due to falling long yields and lackluster trading results.
Finally, the oil market is gearing up for the latest OPEC meeting, to be held on April 17 in
Qatar, with anticipation of an agreement to stem production driving gains in oil - and by
extension, stocks and other risk assets.
A flurry of U.S. economic data is due next week, including producer and consumer prices on
Wednesday and Thursday, respectively, retail sales on Wednesday, industrial and manufacturing
outputs on Friday and Federal budget along with import and export prices on Tuesday. Producer
Prices Index as measured by the Labor Department is expected to have gained 0.3 percent in March
after slipping 0.2 percent in February and Consumer Price Index is expected to have increased
0.2 percent in March from February, when it dropped 0.2 percent. Economists forecast March
retail sales likely advanced 0.1 percent after it dipped 0.1 percent in February. Industrial
output for March probably remain unchanged from the previous month, while manufacturing output
likely rose 0.1 percent in March, same as its February reading. University of Michigan's
preliminary consumer sentiment index is due on Friday. The Federal Reserve issues on Wednesday
its "Beige Book", a compendium of anecdotes on the health of the economy drawn from the central
bank's sources across the nation. Import prices for March are expected to have risen 1.0 percent
after it dropped 0.3 percent in February, while export prices are likely to have decreased 0.2
percent from February.
JPMorgan Chase & Co (NYSE:JPM) releases its first-quarter results on Wednesday. JPMorgan has already
signaled a rough first quarter with double-digit declines in investment banking revenues and a
$500 million increase in provisions for expected losses on energy loans. The bank, which has
been named as "too big to fail", may still be able to pull off a rise in quarterly profit,
helped by lower expenses. Investors will be interested to know more about the bank's energy
loans and what it was doing to appease regulators who have pushed for a slimmer balance sheet.
Wells Fargo (NYSE:WFC) & Co, the biggest U.S. residential mortgage lender and a major lender to the energy
industry, is expected to report a lower first-quarter profit as it set aside more money for bad
oil loans. Choppy capital markets are also expected to dent revenue from the company's small
investment banking business. When the bank will release its earnings on Thursday, shares will be
sensitive to comments on outlook for interest rates, energy loans and home sales for the year.
On Friday, Citigroup Inc (NYSE:C) is expected to report a jump in first-quarter profit as the bank
finally puts its legal and repositioning costs behind. Investors have worried that slowing
growth in emerging markets, where Citi has more assets than other U.S. banks, may undermine its
results. But Citi has managed to allay concerns with a tight lid on expenses.
Bank of America Corp (NYSE:BAC) is expected to report a rise in first-quarter profit on Thursday, helped by
lower non-interest expenses. The bank's fixed-income trading revenue, like those of its peers,
has come under pressure largely due to new rules that discourage banks from taking unnecessary
risks. Investors will also be interested to know how the second quarter is shaping up.
BlackRock Inc (NYSE:BLK), the world's largest asset manager, is expected to report a fall in its
first-quarter profit on Thursday. Despite the company's diverse group of clients and the
popularity of its index-tracking exchange-traded funds, BlackRock has been whipsawed by global
market volatility that has trimmed its assets under management.
Philadelphia Fed President Patrick Harker, who has called for his colleagues to "get on with"
raising rates again, speaks in his district's hometown on Tuesday. Harker may once again repeat
his urging for at least three hikes this year including possibly at their next meeting at the
end of April. Investors will look for whether he has hardened this stance on the back of another
robust jobs report earlier this month. On the same day, Federal Reserve Bank of San Francisco
President John Williams speaks on U.S. monetary policy and the global economic outlook before
the Lendlt USA 2016 Conference, in San Francisco and Federal Reserve Bank of Richmond President
Jeffrey Lacker speaks on "Economic Leadership in an Uncertain World" before the Chancellor's
Distinguished Lecture Series sponsored by the University of North Carolina Wilmington's Cameron
School of Business.
On Thursday, Federal Reserve Board Governor Jerome Powell testifies on "Examining Current Trends
and Changes in Fixed-Income Markets" before the Senate Banking subcommittee on securities,
insurance, and investments and the subcommittee on economic policy, in Washington. On Friday,
Federal Reserve Bank of Chicago President Charles Evans speaks on current economic conditions
and monetary policy before the J.P. Morgan Investment Seminar, in Washington.
On Thursday, Delta Air Lines Inc (NYSE:DAL) is expected to report that its first-quarter operating profit
margin more than doubled from a year earlier. But investors will zero in on management's
forecast for the upcoming peak travel season, as attacks in Brussels and Paris potentially
discourage U.S. vacationers from spending top dollar to visit Europe in the summer. They will
listen for Delta's plans to ensure a stable leadership transition and for any changes to
strategy as President Ed Bastian assumes the role of CEO on May 2.
Regions Financial (NYSE:RF) Corp's first-quarter results are expected to get a boost from higher U.S.
interest rates, but some analysts think this could be tempered by yet more provisions for bad
energy loans. When the Birmingham, Alabama-based bank will release its quarterly earnings on
Friday, shares will be sensitive to outlook on energy exposure, which stood at $3.2 billion at
the end of the fourth quarter. The bank may also provide updates on its strategy to grow its
mortgage, capital markets, and wealth management businesses to protect itself in a low
interest-rate environment.
Exchange operator BATS Global Markets is expected to make a second attempt on Friday at going
public on its own stock exchange. A software glitch during BATS's initial attempt at an IPO
caused the company's share price to plunge and led to the canceling of the offering.
Shaw Communications Inc posts it results for the second quarter on Thursday. Shaw Communications
recently transformed into a pure-play communications company, buying Wind Mobile in late
February and closing the sale of its media assets to sister company Corus Entertainment earlier
this month. While those moves likely won't be reflected in the Calgary-based company earnings in
the three months to February, investors will be looking for clues on how the rejig positions
Shaw in an updated outlook. Corus Entertainment Inc releases its second-quarter earnings on
Wednesday.
The Bank of Canada is widely expected to hold interest rates at 0.5 percent on Wednesday. After
a run of better-than-expected economic data at the start of the year, the central bank is
expected to raise its growth forecasts, which will also incorporate the anticipated impact from
the government's recently announced stimulus measures. Bank of Canada Governor Stephen Poloz and
Senior Deputy Governor Carolyn Wilkins will hold a press conference following the bank's
interest rate decision and the release of the monetary policy report.
An independent panel of experts to the U.S. Food and Drug Administration will deliberate on
Clovis Oncology Inc's lung cancer drug on Tuesday. The drug, like the recently approved rival
treatment from AstraZeneca Plc, aims to treat certain patients whose disease has worsened
despite treatment. FDA staff members on Friday questioned whether Clovis's drug was superior to
existing treatments and raised concerns about its safety profile. The FDA is slated to decide on
the Clovis drug by June 28.
Facebook (NASDAQ:FB) will host its annual F8 developer's conference in San Francisco on Tuesday and
Wednesday, where Mark Zuckerberg will deliver a keynote address on the first day.
Cyber security firm FireEye Inc, which works behind the scenes to help organizations in the
Philippines fend off advanced cyber-attacks, holds media briefing on national cyber threats on
Tuesday, with FireEye Country Manager Tom Acero, FireEye President for Asia Pacific Japan Eric
Hoh and Mandiant VP Marshall Heilman.
On Tuesday, U.S. Senate Finance Committee holds hearing on protecting taxpayer information from
cybercriminals, with Internal Revenue Service, Treasury, GAO officials. Witnesses include IRS
Commissioner John Koskinen and Chief Technology Officer Terrance Millholland apart from J.
Russell George and Michael McKenney from the Treasury Inspector General for Tax Administration
and Gene L. Dodaro and Gregory C. Wilshusen from the U.S. Government Accountability Office.
Chile's central bank meets to set the interest rate on Tuesday. Analysts expect it to keep rates
on hold in the near term, as it balances out weak data against above-target inflation.
Separately, Peru's central bank will likely hold its April benchmark interest rate steady next
week at 4.25 percent. On Friday, government data will show the growth of Peru's economy. Peru's
economy is expected to have expanded by 5.10 percent in February from a year earlier. Meanwhile,
Alfonso Prat Gay, former Wall Street analyst and newly installed finance minister of Argentina,
holds a conversation before an audience at the Atlantic Council on Thursday.
ON MONDAY, APRIL 11
Aluminum maker Alcoa Inc (NYSE:AA) kicks off U.S. corporate first-quarter earnings season after markets
close. Alcoa has been struggling with slumping aluminum prices, but its added-value automotive
and aerospace division has continued to drum up business. The company will split in the second
half of this year, with one part of the business taking the legacy smelting operations and the
other focusing on that added-value business. Investors will be looking for the company to answer
questions on how pension and debt liabilities will be divided between the two firms.
Federal Reserve Bank of New York President William Dudley speaks before the Association for
Neighborhood and Housing Development Annual Community Development Conference in New York.
(0925/1325) Federal Reserve Bank of Dallas President Robert Kaplan participates in a moderated
question-and-answer session before a community forum hosted by the Federal Reserve Bank of
Dallas, in Ruston, Louisiana. (1300/1700)
Canadian National Revenue Minister Diane Lebouthillier will unveil tougher measures to combat
tax evasion and avoidance in the wake of the Panama Papers scandal, a huge leak of documents
from a Panamanian law firm that revealed the financial arrangements of global politicians and
other figures. Canada's new Liberal government last month promised to invest almost C$450
million over five years to gather more information about tax evasion and tax avoidance.
The national statistics institute will release Mexico's industrial output data for February
after the indicator rose by the most in more than three years the prior month. (0900/1300)
Keiko Fujimori is expected to win Sunday's first round Peru's presidential election. Markets
will be more concerned with who she faces in an expected run-off, either leftist Veronika
Mendoza or Wall Street favorite Pedro Pablo Kuczynski.
LIVECHAT - SHALE OUTLOOK with Nick Grealy, director of energy consultancy No Hot Air
Join Nick Grealy, director of energy consultancy No Hot Air, for a look at the outlook for the
shale industry in the face of falling energy prices. (0900/1300) To join the Global Markets
Forum, click here