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WEEK AHEAD
The month of August mercifully comes to an end for markets next week, leaving investors looking
to September, the Federal Reserve, and a whole lot of data next week that includes manufacturing
surveys, car sales, factory orders and of course, the jobs report. Fed members have been
wavering on their desire to raise rates, so next week's figures will loom large in that
calculation. Data on Friday is expected to show nonfarm payrolls increased 220,000 in August and
the unemployment rate remained at 5.2 percent. Short-term bond yields and federal funds proxies
would suggest that even after the tumult, expectations for a rate hike are back to where they
had been - leaning closer to December than September, but still of a mind that it will happen
soon. Given the late-week equity market recovery, that could be taken in stride.
Discount retailer Dollar Tree Inc (NASDAQ:DLTR) is expected to report on Tuesday a second-quarter profit
slightly below the average analyst estimate. The company dethroned Dollar General Corp (NYSE:DG) as the
top U.S. discount retailer by store count after it won a takeover battle for rival Family Dollar (NYSE:FDO)
Stores Inc. With the deal closing in July, analysts are looking for any revision in the
company's full-year forecast. Analysts say Dollar Tree has a lot of work to do on the Family
Dollar business and this may cause disruption for both.
Campbell Soup Co releases its fourth-quarter results on Thursday. The maker of Pepperidge Farm
cookies and Goldfish crackers is struggling to grow as consumer tastes shift toward less
processed foods. In July, Campbell cut its long-term organic sales growth forecast to 1-3
percent from 3-4 percent to reflect the slow-growth environment in the packaged foods industry.
The company is also reducing costs through job cuts and implementing zero-based budgeting, which
requires managers to justify every cost in each new period, to increase its margins.
Federal Reserve Bank of Boston President Eric Rosengren speaks on the economic outlook, before
the Forecasters Club of New York on Tuesday. On Friday, the Federal Reserve Bank of Richmond
President Jeffrey Lacker speaks on "The Case Against Further Delay" at the Retail Merchants
Association Economic Forecast Breakfast.
Mining equipment maker Joy Global Inc (NYSE:JOY) is expected to report lower third-quarter revenue and
profit on Thursday as coal miners cut production. The company gets more than 60 percent of its
revenue from coal miners. Investors will look for an update on the company's full-year forecast.
Canadian department store chain Sears Canada Inc is expected to report a smaller quarterly loss
for the second straight quarter, helped by improved demand in the back-to-school season. The
company has launched a couple of new programs, including one that allows customers to exchange
children's clothing once for the next size up. Another program gives customers warranty covering
children's clothing and footwear items from wear and tear as long as a child continues to wear
the size. When the company posts its second-quarter results on Wednesday, investors will want to
know about its hunt for a new CEO and its plans to boost sales while keeping costs low.
Statistics Canada releases gross domestic product data on Tuesday. Canada's economy is expected
to have contracted in the second quarter, with annualized negative gross domestic product growth
of 0.9 percent. Separately, data on Friday is expected to show the unemployment rate remained at
6.8 percent in August.
The European Central Bank's interest rate decision is due on Thursday. The ECB is expected to
cut its inflation forecast, mainly due to weak commodity prices and slowing growth in emerging
markets, another sign that quantitative easing is not yet working as planned. The bank's chief
economist has already flagged that quantitative easing may have to be expanded or accelerated so
the bank could start laying the groundwork for more asset buys. Growth, however, looks to be
picking up and lending growth is at its best in two years, offering at least some hope that the
euro zone is slowly getting back on its feet.
Next week, Latin American investors will focus on economic data, including Tuesday's trade
balance of Brazil and Mexico's Markit Manufacturing PMI, along with Peru's inflation numbers.
Brazil's auto sales numbers are also due to be released on Friday.
Puerto Rico's indebted utility Puerto Rico Electric Power Authority (PREPA) has a deadline on
Tuesday to agree a restructuring plan.
ON MONDAY, AUGUST 31
The Chicago Business Barometer for August is expected to come in at 54.7. (0945/1345) Also, the
details of the Federal Reserve Bank of Dallas' Texas August manufacturing index are due to be
released. (1030/1430)
Statistics Canada releases current account data for the second quarter. The current account
deficit had widened in the first quarter to C$17.47 billion. (0830/1230)
LIVECHAT - U.S. and China rates with Bob Eisenbeis
China is slowing just as the U.S. economy looks stronger - a natural environment for a weakening
Chinese currency. But markets are less sure of a Fed rate move in September than they were just
two weeks ago, and some are blaming deflationary pressure from China. Cumberland Advisors Chief
Monetary Economist Bob Eisenbeis returns to the Forum at 1000 ET/1400 GMT to talk about the
shifting dynamics between the world's biggest economies. To join the Global Markets Forum, click
here http://bit.ly/1kTxdKD
Chile's manufacturing production is expected to have increased 1.7 percent in July. Also, the
government releases jobless rate data for May-July.
Chicago Mayor Rahm Emanuel meets citizens in a rare public forum to discuss looming spending
cuts and tax hikes as the country's third-largest city struggles with a growing financial
crisis. Emanuel says he plans to listen to revenue generating suggestions from citizens in the
three meetings scheduled for Monday, Wednesday and Thursday, but he may also use the forum to
make his case for cutting public programs. Many Chicago aldermen believe property tax hikes are
inevitable. Chronic structural budget deficits and a $20 billion hole in funds for public
pensions are pushing Emanuel toward unpopular decisions on cuts and revenue. The city is paying
higher and higher rates to issue bonds and one of the three big credit rating agencies has
downgraded its debt to junk status. Emanuel has accelerated the process for the 2016 budget,
which begins on Jan. 1, pledging to unveil his spending plan in September instead of October.
(All analysts' estimates are according to Thomson Reuters StarMine, unless mentioned otherwise)