WEEK AHEAD
A stronger-than-expected jobs report has put the markets in a rosier mood even if data points
more firmly to a Federal Reserve rate hike in December. The recent rally in the equity market
suggests comfort with the Fed's intentions. However, next week might see a bit of selling as
stocks aren't far from all-time highs. Bonds could continue their upward trajectory with
flattening between the short- and long-dated part of the curve, and the dollar should continue
to be favored over other major currencies.
Cisco Systems Inc (O:CSCO) is expected to report first-quarter revenue and profit above analysts'
estimates on Thursday, according to Thomson Reuters StarMine. The network equipment maker is
expected to benefit from a recovery in sales of its switches and routers. Investors will look
for details on Cisco's security business, where revenue has been growing steadily. Cisco is also
working on a joint venture with Chinese server maker Inspur to offset the impact of weakness in
its U.S. business.
The Labor Department releases its producer price index (PPI) for October on Friday. The PPI is
forecast to have gained 0.2 percent last month after declining 0.5 percent in September.
Meanwhile, the Commerce Department will release retail sales data on the same day. Retail sales
are expected to have increased 0.3 percent in October. Economists have also projected a slight
decline in import prices last month. The prices, scheduled to be released on Tuesday, are
estimated to have dropped 0.1 percent in October. The University of Michigan's preliminary index
on overall consumer sentiment, scheduled to be released on Friday, is expected to have risen to
91.5 in November from 90.0 in October.
Chip equipment maker Applied Materials Inc (O:AMAT) is set to report fourth-quarter revenue and profit in
line with analysts' expectations on Thursday, according to Thomson Reuters StarMine. Reports of
declining capex spending among chipmakers have hit equipment makers such as Applied Materials
the hardest. Investors will want to know how the company can register a recovery on its
stuttering foundry sales and how it combats a slowdown in Intel Corp (O:INTC).
Department store operators Macy's Inc (N:M) and Kohl's Corp (N:KSS) are expected to report third-quarter sales
below analysts' estimates, according to Thomson Reuters StarMine. Macy's results are scheduled
for release on Wednesday and Kohl's on Thursday. In addition to a strong dollar, their sales
have been hurt by heavy discounts as the unseasonally warm weather in September and most of
October led to shoppers delaying purchases of cold weather apparel and footwear, which
department stores stock up on mainly in these months. JC Penney Co, which reports its
third-quarter results on Friday, is less likely to have been hurt by unseasonal weather. The
company is expected to report a quarterly loss smaller than analysts are expecting, according to
Thomson Reuters StarMine. JC Penney is expected to benefit from higher sales at beauty brand
Sephora's outlets, which are now present in almost half of Penney's stores.
D.R. Horton Inc, the No.1 U.S. homebuilder, is expected to report a rise in fourth-quarter
revenue and profit on Tuesday, helped by higher home sales. Investors want to see how D.R.
Horton coped with labor shortages, which led to construction delays for smaller rival PulteGroup (N:PHM)
Inc in the period and caused its profit to fall more than a fifth.
Federal Reserve Chair Janet Yellen will give welcome remarks in Washington on Thursday before
the "Federal Reserve Conference on Monetary Policy Implementation and Transmission in the
Post-Crisis Period." At the same event, Fed Vice Chair Stanley Fischer will speak on
"Incorporating Financial Stability into Monetary Policy." Also on Thursday, Federal Reserve Bank
of St. Louis President James Bullard speaks on the economy and monetary policy before the Cato
Institute 33rd Annual Monetary Conference, "Rethinking Monetary Policy". The same day, Federal
Reserve Bank of Chicago President Charles Evans will be speaking on current economic conditions
and monetary policy before the Communities Council Fall Leadership Forum: "Inspiring Ideas,
Transforming Communities". Thursday also sees Federal Reserve Bank of New York President William
Dudley speak on "The Economic Outlook and What it Means for Monetary Policy," before the
Economic Club of New York.
Viacom Inc, the owner of MTV, Comedy Central and Nickelodeon, is expected to report on Thursday
a fourth-quarter profit below the average analyst estimates, according to Thomson Reuters
StarMine. The company has been hurt by lower advertising revenue from its U.S. cable TV business
as viewers increasingly shift to online streaming services. Investors will await commentary
around viewership changes in the United States and signs of stability in the cable TV business.
Chemicals and seeds company DuPont (N:DD) has been talking to rivals about its struggling agriculture
business and it will discuss its strategy with investors on Thursday. The company has come under
pressure from activist investor Nelson Peltz for failing to meet earnings targets. Peltz has
called for a separation of its volatile businesses from its more stable ones. Interim Chief
Executive Edward Breen is looking to streamline the company's cost structure to avert a second
proxy war with Peltz.
Canadian natural gas producer Encana Corp is expected to report a third-quarter loss on
Thursday, compared with a year-earlier profit, hurt by a prolonged slump in oil and gas prices.
Encana has been selling off natural gas assets to cut its net debt by $3 billion by the end of
the year. Investors will be keen on knowing more about the company's divestitures and efforts to
improve cash flow.
ON MONDAY, NOVEMBER 9
Priceline Group Inc is set to report third-quarter results. Travel bookings on the company's
websites are expected to have risen in the quarter. Analysts will be looking at whether the
pressures of a strong dollar eased in the third quarter and whether Priceline Group, the most
profitable online travel services company in the world, expects them to ease in the fourth
quarter. Wall Street will want greater clarity on the prospects for its latest acquisition, AS
Digital.
DISH Network Corp (O:DISH), the No.2 U.S. satellite TV company, is expected to report third-quarter
profit and revenue above analysts' estimates, according to Thomson Reuters StarMine. Investors
will look for details on the company's strategy to amass spectrum without building out
infrastructure to offer its own wireless service as well as any comments on the Time Warner
Cable-Charter Communications deal.
U.S. solar company SunEdison Inc is expected to report a bigger quarterly loss, hurt by lower
sales and higher costs in the third quarter. SunEdison, which was among the first to spin off
some of its power plants into a yieldco, said last month that it no longer planned to sell any
assets to its yieldcos. Investors will want to know more about its plans.
Dean Foods Co, the largest U.S. milk processor, is expected to report third-quarter profit
slightly above the average analyst estimate, according to Thomson Reuters StarMine. Analysts
expect Dean Foods to announce capacity reduction plans to counter the drop in sales.
Federal Reserve Bank of Boston President Eric Rosengren will be speaking on the economic outlook
at the Newport County Chamber of Commerce Economic Update Luncheon in Portsmouth.
Coal miner Arch Coal Inc, which is nearing bankruptcy, is expected to report a bigger quarterly
loss in its third-quarter report. Investors will focus on comments around the company's
restructuring plan.
Canadian housing starts are expected to have fallen in October from September. The seasonally
adjusted annualized rate of housing starts probably fell to 200,000 in October from 230,701 the
prior month. (0815/1315)
Focus will be on Mexico's inflation data for October, after the annual inflation rate came at a
new record low the prior month, cooling to 2.52 percent in the 12 months through September.
(0900/1400) Chile is also scheduled to report its October trade deficit.
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