(Corrects blurb on Canada inflation data)
WEEKAHEAD
Stocks could stay volatile next week as investors brace for the much-anticipated Federal Reserve
Sept. 16-17 policy meeting and announcement. Concerns remain that a rate hike, which would be
its first since 2006, could slow down an economy that hasn't fully recovered, and that would be
a negative for equities. Concerns about a slowdown in Chinese growth also have been weighing on
U.S. stocks. In the bond markets, the yield curve could continue to flatten as investors prepare
for a possible rate increase. If the Fed does not raise rates, it may still suggest that an
increase at its October or December meeting is likely. Currency markets coming off China's
devaluation in August are now all about the Fed and the dollar. The dollar has mostly tread
water for two weeks and looks likely to keep that up through Thursday, when the Fed decision is
due. A hike would almost certainly ignite a second stage of a rally in the dollar.
Software maker Oracle Corp (NYSE:ORCL) is expected to report on Wednesday a small drop in its first-quarter
revenue. Oracle, like other established tech companies, is looking to offer more cloud-based
software, essentially providing services remotely via data centers rather than selling installed
software. The 38-year-old company has had some success with the cloud model, but is not moving
fast enough to make up for declines in its traditional software sales. Analysts say there are
signs of a slight pickup in demand with the shift to cloud but expect headwinds for its
traditional license business to continue in the coming quarters.
Prior to the rate announcement, Tuesday's retail sales data for August will be closely watched,
indicating how the economy is faring after sales rebounded 0.6 percent last month. The retail
sales are expected to have increased 0.3 percent in August. The Commerce Department will also
issue the industrial output and business inventories data for August and July, respectively, on
the same day. On Wednesday, Consumer Price Index and real earnings data are on the radar.
Consumer prices are expected have remain unchanged in August after a slight rise in July. Also,
MBA mortgage index and NAHB Housing Market Index are scheduled to be released on the same day.
Meanwhile, the Commerce Department will announce the second-quarter current account data,
together with August's numbers for housing starts and building permits on Thursday. Friday will
see the Conference Board issue the Leading Indicator Index for August, which is expected to have
risen 0.2 percent in August.
Adobe Systems (NASDAQ:ADBE) Inc, the maker of Photoshop, is expected to report third-quarter results on
Thursday. Its profit is expected to be slightly above analysts average estimate. Adobe is
switching from traditional box licenses to web-based subscriptions for its Creative Cloud
software bundle in search of the more-predictable recurring revenue stream. Analysts expect
Creative Suite 6 to drive subscriber growth, and new offerings such as the stock image service
to boost average revenue per user.
Drugstore chain operator Rite Aid Corp is, on Thursday, likely to report second-quarter profit
above analysts average estimates. The company lowered its full-year profit outlook in June after
reporting lower-than-expected first-quarter earnings that were hurt by interest costs and taxes
related to the acquisition of pharmacy benefits manager EnvisionRx. Larger rival CVS estimated
third-quarter profit below estimates, hurt partly by lower reimbursement rates. However,
analysts expect Rite Aid to have handled reimbursement pressures better.
Companies including UBS, Nasdaq, CME, Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), JPMorgan (NYSE:JPM), Morgan
Stanley, Allstate, and a slew of others are speaking at the Barclays (LONDON:BARC) Financial Services
Conference from Wednesday through Friday.
Amazon (NASDAQ:AMZN) founder Jeff Bezos is expected to unveil plans on Tuesday for a launch site and
manufacturing complex for his Blue Origin rocket company at Cape Canaveral Air Force Station in
Florida.
A report on Friday is expected to show Canada's annual inflation rate remained at 1.3 percent in
August, with prices unchanged on a monthly basis. Core inflation, watched carefully by the Bank
of Canada, is seen at 2.1 percent, down from 2.4 percent in July. Separately, Statistics Canada
will release manufacturing sales data for July on Wednesday.
Potash Corp CEO Jochen Tilk and a senior Mosaic executive speak at a Credit Suisse (SIX:CSGN) investor
conference in New York on Wednesday. Investors will be interested whether Tilk makes comments
about Potash Corp's attempts to buy German rival K+S, including whether it will make a bid
directly to shareholders.
Dozens of Canadian energy producers including Suncor, CNRL, Cenovus and Husky will be present at
Peters & Co Energy Conference in Toronto. The three-day conference, starting on Tuesday, will
see these companies addressing topics such as the cost structure of the oil sands and maximizing
oil netbacks. Other topics up for discussion include LNG, oil development in Saskatchewan, and
attracting investment capital to Canada.
In Latin America, Tuesday will see Peru's gross domestic product data, along with Chile's
interest rate decision. On Wednesday, Brazil will announce the retail sales figures for July. On
Friday, Mexico will announce the private spending data for the second quarter. On the same day,
Argentina is also due to release the gross domestic product figures for the second quarter.
ON MONDAY, SEPTEMBER 14
The Bank of Japan holds a two-day monetary policy meeting. The country's central bank announces
its rate decision on Tuesday and Governor Haruhiko Kuroda is expected to offer a bleaker view on
overseas economies and may lower its assessment on the country's exports next week.
Brazil's central bank will release results of a weekly economic survey with more than 100
financial institutions. This will include forecasts for GDP, interest rates and inflation rates.
LIVECHAT: FED OUTLOOK with Jim Bianco
Jim Bianco of Bianco Research joins the Forum at 1000/1400 to preview this week's Fed meeting.
Jim told the Forum in July that he did not believe the Fed would move until 2016 at the
earliest. To join the discussion, click here: http://bit.ly/1kTxdKD
(All analysts' estimates are according to Thomson Reuters StarMine, unless mentioned otherwise)
(Compiled By Nayyar Rasheed in Bengaluru; Editing by Savio D'Souza)