Coming Up

U.S. - EARLY EDITION
For Tuesday, May 24, 2016
TODAY’S MARKET RECAP
Indexes ended slightly lower as the
lingering concerns over the Federal
Reserve rate-hike offset a rise in Apple's
stock. Two-year Treasury yield was near
to its two-month peak. Japanese trade
data and U.S. resistance to currency
intervention from Tokyo boosted the yen
against the dollar. Global oversupply
concerns hurt oil prices and gold eased.
Close
STOCKS
Chng %Chng
Yr-high
-8.01
-0.05
18229.80 15370.30
4765.78
-3.78
-0.08
4969.32 4209.76
S&P 500
2048.04
-4.28
-0.21
Toronto
13919.58 102.26
0.74
15230.72 11531.22
6427.32 5499.51
Nasdaq
2132.82
1810.10
6136.43
-19.89
-0.32
1319.51
-6.94
-0.52
Eurofirst
16654.60
-81.75
-0.49
18951.12 14865.77
Nikkei
19809.03
-43.17
-0.22
21794.84 18278.80
Russell
FTSE
1436.12
1191.74
Hang Seng
TREASURIES
Yield
Price
10-year
1.8350
4 /32
2-year
0.9010
-1 /32
5-year
1.3684
1 /32
30-year
2.6263
8 /32
FOREX
Last
1.1214
-0.07
Dollar/Yen
109.24
-0.82
Sterling/Dollar
1.4475
-0.17
Dollar/CAD
1.3143
0.24
COMMODITIES ($)
Front Month Crude /barrel
Spot gold (NY/oz)
Copper U.S. (front month/lb)
Reuters/Jefferies CRB Index
S&P 500
Price
Chng
% chng
48.14
1248.74
0.0206
183.95
-0.27
-3.17
0.0000
-1.01
-0.56
-0.25
-0.05
-0.55
Price
Hewlett Packard Enterprise Co, which
houses former Hewlett-Packard Co's
corporate hardware and services division,
is expected to report a second-quarter
profit slightly below analysts' expectations,
according to Thomson Reuters StarMine,
largely due to weakness in its enterprise
services business. The company's revenue,
however, is expected to get a boost from
strength in its hardware business.
Investors will be looking out to see benefits
of a reduction of more than 33,000
personnel and the divestiture of MphasiS
to Blackstone.
New home sales, as measured by the U.S.
Commerce Department, are expected to
have increased 2 percent to a seasonally
adjusted annual rate of 523,000 units in
April. New home sales dropped 1.5 percent
in March to a seasonally adjusted annual
rate of 511,000 units.
% Chng
Euro/Dollar
expected to report first-quarter sales
below analysts' estimates, according to
Thomson Reuters StarMine. The company
has forecast current-quarter sales and
profit below analysts' expectations, hurt by
falling sales of mobile devices, and it has
said it expects sales in the first half of the
year to decline. Investors will be watching
out for any changes to full-year forecast.
Yr-low
17492.93
DJIA
Coming Up
$ Chng % Chng
GAINERS
Monsanto
Cf Industries
Tripadvisor
Micron Technology
LOSERS
106.00
29.85
66.87
11.14
4.48
1.26
2.34
0.34
4.41
4.41
3.63
3.15
Roper Technologies
Cigna
Mallinckrodt
Transocean
172.71
126.15
59.23
9.05
-10.39
-5.13
-1.80
-0.27
-5.67
-3.91
-2.95
-2.90
Best Buy Co Inc, the biggest U.S.
consumer electronics retail chain, is
Toll Brothers Inc is expected to report
bigger revenue and profit for the second
quarter, helped by higher home sales.
Investors will be looking for comments on
order trends and pricing during the allimportant spring selling season from the
largest U.S. luxury home builder. They will
also eye an update on the company's fullyear financial forecast.
Wells Fargo & Co, the third-largest U.S.
bank by assets, holds a nine-and-a-half
hour conference on its investor day.
Presentations will be given by CEO John
Stumpf and Wells Fargo's management
team followed by a question and answer
session with analysts.
Drugmaker Eli Lilly and Co will meet with
analysts and fund managers in New York
to review its improving array of
experimental drugs, including treatments
for diabetes and cancer, with which it
hopes to continue its rebound from years
of stagnant earnings caused by generic
competition for its biggest products. >>>
KEY ECONOMIC EVENTS
Events
ET
Poll
Prior
New home sales-units for Apr
1000
0.523 mln
0.511 mln
New home sales change mm for Apr
1000
2.0 pct
-1.5 pct
Rich Fed Composite Index for May
1000
--
14
Rich Fed, Services Index for May
1000
--
15
Rich Fed Manufacturing Shipments for May
1000
--
14
1
THE DAY AHEAD
to both plug the massive fiscal shortfall
and restart activity as the country
struggles with its second year of recession.
He is expected to announce legislation to
limit public spending, simplify the tax
system and ease labor rules. The market
will be watching carefully to assess
whether his administration is heading in
the right direction to the pull the country
out of its worst political and economic
crisis in decades.
Brazil's central bank releases current
account data for April. Economists
forecast a deficit of $900 million in April,
slightly bigger than the $855 million in
March. The country is expected to have
attracted $6.20 billion in foreign direct
investment in April, higher than $5.56
billion in March.
EU antitrust chief Margrethe Vestager is
set to approve with conditions AnheuserBusch InBev's $100 billion-plus takeover
of SABMiller. EU approval, however,
comes at a high cost as the Belgian-based
company will have to sell a big swathe of
SABMiller's assets in Europe to address
competition concerns. AB Inbev's
concessions managed to do just that,
sources told Reuters last week.
U.S. judge overseeing the Volkswagen
emissions civil lawsuits conducts a status
conference in San Francisco ahead of June
21 deadline to reach a final deal.
Yahoo Inc's chief financial officer, Ken
Goldman, will be speaking at JP Morgan's
Global Technology, Media & Telecom
Conference in Boston. Investors will look
for updates on the sale the company's
internet assets.
Euro zone finance ministers will seek to
clinch a deal with Greece on a package of
contingency steps to ensure Athens will
meet future fiscal targets as well as reach
a political agreement on future debt relief
for Greece. Once a deal on the contingency
package is there, the ministers are likely to
offer Greece a political agreement on
reprofiling Greek debt through an
extension of maturities and grace periods
on existing loans to keep debt servicing
costs under control.
Michel Temer, the interim president of
Brazil, is expected to announce measures
2
Mexico's annual inflation rate is expected
to have risen in the first half of May,
remaining below the central bank's target,
but policy makers could still raise interest
rates due to a deep slump in the peso.
Inflation in the 12 months through midMay likely increased 2.67 percent, up from
2.60 percent in the first half of April.
LIVECHAT: GLOBAL MARKETS with
Brown Brothers' Marc Chandler
Global strategist at Brown Brothers
Harriman, an author and a blogger, Marc is
just back from China and takes questions
on world business conditions, factors
driving central bankers policymaking and
corporate earnings. (1000 ET/1400 GMT)
To join the Global Markets Forum,
click here
THE DAY AHEAD
Market Monitor
Wall Street ended lower on Monday as a
bounce in Apple failed to offset growing
concerns that the U.S. Federal Reserve
could raise interest rates sooner than later.
The timing of future Fed rate hikes in the
face of a sluggish economy is a major focus
among stock investors who have benefited
from historically low borrowing costs since
the 2008 financial crisis. Apple rose 1.27
percent and the Philadelphia SE
Semiconductors Index added 0.66
percent at 669.46 after Taiwan's Economic
Daily News reported that Apple asked
suppliers to build more of its nextgeneration iPhones than previously
expected. S&P’s materials index rose 1.19
percent at 293.40, boosted by Monsanto's
4.41 percent jump. Microsoft fell 1.17
percent. Tribune Publishing dipped 15.04
percent while Gannett slipped 2.36
percent. The Dow fell 0.05 percent, the
S&P 500 edged 0.21 percent lower and
the Nasdaq was down 0.08 percent.
Two-year yield edged up, nearing its
highest in two months as traders bet the
Federal Reserve may raise interest rates as
early as June if the economy shows further
improvement. The two-year yield rose near
to its highest in two months, as traders bet
the Federal Reserve may raise interest
rates as early as June if the economy
shows further improvement. The two-year
notes fell 1/32 to yield 0.90 percent after
hitting 0.905 percent, nearing the twomonth peak of 0.920 percent set last
Thursday. Five-year notes rose 1/32 to
yield 1.37 percent. Benchmark notes rose
4/32 to yield 1.84 percent.
The dollar tumbled nearly 1 percent
against the yen on Japanese trade data
and Washington's resistance to currency
intervention by Tokyo, but was little
changed against the euro as investors
awaited fresh U.S. economic data. The
dollar was last down 0.82 percent against
the yen at 109.24 yen, after data showing
Japan logged a trade surplus for the third
consecutive month. Besides the trade data,
a Group of Seven finance ministers'
meeting concluded on Saturday with the
United States warning Japan against
intervening to weaken the yen, a rift that is
perceived as preventing Tokyo from acting.
The dollar erased most of its earlier gains
against the euro, and was down 0.07
percent at $1.1214 after hitting a session
low of $1.1187. The dollar index fell 0.08
percent at 95.26.
Oil prices eased after Iran vowed to ramp
up output and as the number of rigs
drilling for crude in the United States held
steady after declining for eight straight
weeks. . However, oil pared losses after
market intelligence firm Genscape
reported an inventory drop of 978,862
barrels at the Cushing, Oklahoma storage
hub for U.S. West Texas Intermediate
(WTI) futures in the week to May 20,
traders who saw the data said. WTI's front
3
-month fell 0.56 percent at $48.14 a
barrel after plumbing to a session low of
$47.40. Brent's fell 0.57 percent at $48.44
per barrel, off a low of $47.58.
Gold dipped to a 3-1/2-week low as
expectations rose that the U.S. Federal
Reserve will hike interest rates as early as
June, but prices came off their lows as late
-day short-covering entered the market.
Bullion has been under pressure since the
Fed last week released the minutes of its
April meeting, which showed officials
believe the U.S. economy could be ready
for another rate increase next month. Spot
gold fell 0.25 percent to $1,248.81 an
ounce after hitting $1,242.63 an ounce, the
lowest since April 28, in earlier trade. Gold
futures fell 0.28 percent at $1,249.40
an ounce.
THE DAY AHEAD
Top News
Bayer defies critics with $62 billion
Monsanto offer
German drugs and crop chemicals group
Bayer has offered to buy U.S. seeds
company Monsanto for $62 billion in cash,
defying some of its own shareholders in a
bid to grab the top spot in a fastconsolidating farm supplies industry. The
non-binding bid was made to Monsanto's
management on May 10, Monsanto has
said it would review the proposal. The
unsolicited proposal would be the largest
all-cash takeover on record, according to
Thomson Reuters data, just ahead of
InBev’s $60.4 billion offer for AnheuserBusch in June 2008. Bayer said it would
offer $122 per share, a 37 percent premium
to Monsanto's stock price before rumours
of a bid surfaced. Antitrust experts see an
overlap in the seeds business, particularly
in soybeans, cotton and canola. Bayer's
LibertyLink line of weed killers, plus crops
that are resistant to it, are an important
alternative for farmers suffering from
weeds that have grown resistant to
Monsanto's Roundup herbicide. Sources
close to the matter have said BASF is
unlikely to start a bidding war with Bayer.
Monsanto's stock rose 4.41 percent to
$106.00.
Battle over Redstone's media empire
sparks hope for change
The legal battle over control of Sumner
Redstone's $40 billion media empire has
investors hopeful that change will come to
underperforming Viacom. Sumner
Redstone removed both Viacom CEO
Philippe Dauman and Viacom board
member George Abrams from the trust
that will determine the future of CBS and
Viacom after controlling shareholder
Redstone dies or is declared mentally
incapacitated. Dauman fired back saying
the moves to replace him and Abrams
from both the trust and National
Amusements board would amount to an
"unlawful corporate takeover" by Sumner's
daughter, Shari Redstone. Separately,
Sumner Redstone asked a Los Angeles
Court for an order validating his removal of
Dauman and Abrams from his trust and
from the board of National Amusements.
The outcome of the court cases, and who
ends up with control over the trust, and
over the National Amusements board, will
have wide-ranging implications for Viacom
and CBS shareholders and could result in
changes at the top of both companies,
possibly through mergers and acquisitions.
Some investors are hopeful that change is
imminent.
Ares Capital to buy American Capital in
deal valued at $3.4 billion
Specialty finance company Ares Capital
agreed to buy smaller rival American
Capital in a cash-and-stock deal valued at
$3.4 billion, aiming to capture a bigger
share of lending to mid-sized firms as big
banks turn cautious. Elliott Management,
which owns 14.4 percent of American
Capital, said it strongly supported the Ares
deal. If the deal falls apart, Elliott would be
able to appoint one of four American
Capital directors, with the other three to be
mutually agreed upon by Elliott and
American Capital. American Capital and
Ares Capital had combined investments of
4
more than $13 billion at fair value as of
March 31. Ares Capital is offering $6.41 per
share and 0.483 of its shares for each
share of American Capital. American
Capital Mortgage Management will be
sold to American Capital Agency for $562
million.
Fed's Bullard: rates too low for too long
could be risky
U.S. interest rates being kept too low for
too long could cause financial instability in
future and stronger market expectations
for a rate rise are "probably good", St.
Louis Federal Reserve President James
Bullard said. A relatively tight labour
market in the United States may also exert
upward pressure on inflation, raising the
case for higher interest rates, Bullard
added. A possible British exit from the
European Union in a vote next month will
not affect the Fed's upcoming decision on
rates, Bullard said. Separately, the Federal
Reserve is on track to hike interest rates in
June or July despite risks such as a "Brexit"
vote, and will continue with even more >>>
THE DAY AHEAD
Pink performs "Just Like Fire" at the 2016 Billboard Awards in Las Vegas, Nevada, U.S., May 22, 2016
>>> hikes next year given U.S. economic
strength, San Francisco Fed President
John Williams said. Given continued labor
market improvement and some indication
of inflation strength, Williams expects two
or three rate increases this year.
Meanwhile, Goldman Sachs economists
said they estimated a 35 percent chance
the Federal Reserve would raise its target
on the federal funds rate at its June 14-15
policy meeting. They placed a 35 percent
probability of a rate hike at the July 26-27
meeting and a 20 percent probability for
one at the Sept. 20-21 meeting, they wrote
in a research note.
Bank of America $1.27 billion mortgage
penalty is voided
A U.S. appeals court threw out a jury's
finding that Bank of America was liable for
mortgage fraud leading up to the 2008
financial crisis, voiding a $1.27 billion
penalty and dealing the U.S. Department
of Justice a major setback. The 2nd U.S.
Circuit Court of Appeals in New York ruled
that the proof was insufficient under
federal fraud statutes to establish liability
in connection with a mortgage program
called "Hustle" run by the former
Countrywide Financial Corp. The Justice
Department claimed Countrywide, which
Bank of America bought in July 2008,
defrauded government-sponsored
mortgage finance giants Fannie Mae and
Freddie Mac by selling them thousands of
toxic loans. But U.S. Circuit Judge Richard
Wesley said the evidence at most showed
Countrywide breached contracts to sell
Fannie and Freddie loans of a specified
quality, but that no proof existed to show it
intended to deceive the buyers when those
contracts were executed.
Shanda Group reports 11.7 percent stake
in LendingClub
Chinese billionaire Chen Tianqiao has
5
bought a nearly 12 percent stake in
LendingClub as the largest U.S.
marketplace lender seeks funding after a
botched sale of loans spooked some of its
biggest investors. Singapore-based private
investment group Shanda Group, which is
led by Chen, said that it saw the online
lender's battered stock as an attractive
buying opportunity. The sale of the 11.7
percent stake comes as growth in
LendingClub's loan originations is slowing
and regulatory interest in the sector is
increasing. The U.S. Treasury called this
month for greater scrutiny of online
lending, and the New York Department of
Financial Services is probing
LendingClub’s business practices,
according to a source familiar with the
matter. "We have been in discussions with
Shanda regarding their investment, and
we look forward to a continued dialogue
with them," a LendingClub spokesman
said. The company bought a total of >>>
THE DAY AHEAD
>>> about 29 million LendingClub shares
for $148.7 million. It also has call options
to buy 15.7 million shares for $11.2 million.
Tribune gets $70.5 million investment
from billionaire Soon-Shiong
Tribune Publishing, the owner of the Los
Angeles Times and the Chicago Tribune,
said billionaire Patrick Soon-Shiong
invested $70.5 million in the company,
becoming its second largest shareholder.
Tribune also rejected Gannett’s latest
takeover offer, but said that it would allow
the publisher of USA Today access to some
confidential corporate information. Los
Angeles-based Soon-Shiong, through his
fund Nant Capital, will hold about 12.9
percent in Tribune and join the publisher's
board as vice chairman on June 2. Tribune
rejected Gannett's $15 per share cash offer,
raised last week from $12.25 per share,
saying it was not in the best interests of
shareholders. Gannett said it would
consider whether to proceed with the offer,
valued at $864 million including debt.
Allergan CEO says company is "weeks
away" from closing Teva deal
Allergan Chief Executive Brent Saunders
said the company expects to close the
$40.5 billion sale of its generic medicines
portfolio to Teva Pharmaceutical Industries
in a matter of weeks, opening the door for
new acquisitions. While Allergan needs the
Teva transaction to close before pursuing
new targets, "the good news is we are
weeks away from that happening,"
Saunders said after a presentation at the
UBS Global Healthcare Conference in New
York. Saunders said Teva and the U.S.
Federal Trade Commission were working
"very constructively" on the issue and that
a planned closing of the deal next month
is still the most likely scenario. The FTC
has blocked several major transactions this
year, prompting concerns among investors
that there could be problems closing the
Allergan-Teva deal.
In Oracle vs. Google retrial, lawyers
make final pitches to jury
Oracle filed a multibillion-dollar copyright
lawsuit against Google because Oracle
failed in its own attempts to enter the
smartphone market, a Google attorney
said in closing arguments. However, an
Oracle attorney accused Google of taking
its intellectual property without permission
and reaping huge profits as a result. In a
retrial at U.S. District Court in San
Francisco, Oracle Corp has claimed
Google's Android smartphone operating
system violated its copyright on parts of
Java, a development platform. Google
attorney Robert Van Nest played a video of
a speech by Oracle Chairman Larry Ellison
praising "our friends at Google" for
building devices that use Java. Ellison then
suggested Oracle should also build similar
hardware. But Oracle was never able to
build a smartphone of its own, Van Nest
said, so it decided to accuse Google of
unfair copying instead. But Oracle attorney
Peter Bicks said it was Google that needed
a quick way to build a viable smartphone,
6
and purposefully decided to use Java
without a license. Bicks presented internal
Google documents, in which company
executives contemplated being "out of
business in 10 years" if they did not quickly
enter the mobile market.
Valeant CEO Papa plans to lower debt
by more than $1.5 billion in 2016
Valeant Pharmaceuticals plans to lower its
debt by at least $1.5 billion this year, Chief
Executive Officer Joseph Papa said during
his first large meeting with investors since
taking the top job three weeks ago.
Valeant has about $30 billion in debt and
has had to appease creditors, who had the
option of forcing early payment of some
loans and bonds after Valeant missed
deadlines for filing financial records with
regulators and triggering default notices.
Papa told investors at the UBS Global
Healthcare Conference that the company
would fund the payoffs in part through the
sale of non-core assets outside of its main
franchises if it can get attractive prices for
the assets.
THE DAY AHEAD
ANALYSIS & INSIGHT
With HoloLens, Microsoft aims to avoid Google's mistakes
BY SARAH MCBRIDE
hen Google introduced its Google
Glass smartglasses four years ago, it
turned to Glass-sporting skydivers
buzzing a San Francisco convention center,
Glass-adorned models at a glitzy fashion show
and a Twitter campaign to notify early "Glass
Explorers" of their luck in snagging a pair.
This year, when Microsoft showed off an early
edition of its HoloLens augmented-reality
goggles, it took the opposite approach:
targeting the software developers it needs to
make the device useful. No stunts. No fashion
spreads. No consumer marketing at all.
The discreet launch reflects the daunting
hurdles confronting the nascent industry of
augmented reality, known in the industry as AR.
Such devices overlay images as holograms onto
a user’s real-life field of vision, with the goal of
improving efficiency at businesses ranging from
doctors' offices to factory floors.
Some industry veterans see it as an even
bigger opportunity than its cousin, virtual
reality, which completely immerses users in an
artificial world. But early efforts around
augmented reality, including Google Glass and
Microsoft's own predecessor to HoloLens called
Kinect, have sputtered.
"They’re taking a more measured approach
with HoloLens, and it’s the right strategy," said
Tipatat Chennavasin, general partner at the
Venture Reality Fund, which invests in
augmented-reality and virtual-reality start-ups.
"You don’t want to overhype it and get people
very disappointed, and that’s what happened
with Google Glass."
The market research consultancy Digi-Capital
predicts the AR industry could be worth $90
billion annually by 2020. That's triple the
projections for total sales in virtual reality.
Google, Microsoft, Facebook and Sony are
among the many tech firms that are betting on
augmented reality, virtual reality or both. The
traditional methods of interacting with a
computer - usually featuring a keyboard or a
touch screen -- will eventually seem quaint as
these technologies proliferate, many in the
industry believe.
"Microsoft has a huge opportunity here, that
is: to create a market for holographic, mixed
reality and to dominate it," said J.P. Gownder,
an analyst at Forrester Research. Success, he
said, would mean selling hundreds of
thousands of units by the end of 2017 to
businesses.
But history suggests augmented and virtual
reality still have along way to go.
Virtual reality developers, newly energized by
the release of Facebook's Oculus headset, have
W
Students don the new HoloLens during the Microsoft Build 2016 Developers Conference in San Francisco,
California March 30, 2016.
focused on gaming, but no "killer app" -- musthave software that motivates someone to buy a
device -- has yet emerged.
Many users still
experience problems with nausea, which
plagued earlier virtual reality efforts.
Google announced last week a big virtual
reality initiative, and players in the space
ranging from start-up Leap Motion to
smartphone maker HTC have generated plenty
of buzz. But many of the promised products
have yet to hit the market.
Augmented reality, meanwhile, seems
destined at this stage for specialized niches in
industries such as medicine and manufacturing.
Google has shifted its focus too and no longer
sells Glass to consumers, who found few useful
things to do with the devices. Glass is still
available to developers.
"It took Google a long way to evolve to a more
substantive approach," said Ian Shakil, chief
executive of Augmedix, a San Francisco startup
that recently raised $17 million for a smart-glass
system for doctors that automatically records
patient data.
LEGACY OF KINECT
The HoloLens traces its lineage to Kinect, an
add-on for Microsoft's Xbox gaming console
that was introduced in 2010. Kinect turned user
gestures into commands, and deployed sensors
and cameras to map the rooms where it was set
up, creating the foundation for a more
immersive gaming experience.
Consumers liked Kinect, but it never lived up
7
to its full potential, in part because it spawned
no blockbuster games. Microsoft failed to
persuade top gaming studios to invest seriously
in Kinect, developers say, and by 2014 it was no
longer being included with Xbox consoles.
But the Kinect technology found a second life
in the HoloLens, which enables users to control
holograms through finger bends in a motion
called the "air tap." Kinect developer Alex
Kipman and much of his team also led the
creation of HoloLens.
The new product, which sells in its developer
version for $3,000, featured prominently at
Microsoft's recent software developers
conference in San Francisco, with participants
donning goggles to take a tour of Mars led by a
hologram of astronaut Buzz Aldrin. They also
played with the "air tap," which controls a
hologram's movements much as a mouse
manipulates icons on a computer screen.
But Microsoft makes it clear the playfulness
takes a back seat to purpose. It plans to
"cultivate a thriving developer community and
to foster a vibrant app ecosystem," according to
a company spokesperson.
Tim Gabrhel, a developer at IT consultancy
Concurrency who attended the Build
conference, talked about how useful HoloLens
would be for maintaining industrial-scale
printing equipment. Workers probing
malfunctioning parts, he explained, could get
tailored instructions beamed onto the screen, or
perhaps a hologram of a skilled technician >>>
THE DAY AHEAD
>>> showing how to make repairs.
Ronald van der Putten, a software architect at
Honeywell, said the HoloLens could allow
hands-free scanning in warehouses.
Brandon Haase, an engineer at Valorem
Consulting, said he could see uses in insurance:
creating inventories of homeowners’ belongings
by wearing a HoloLens during a walk-through of
a house, for example.
James Ashley, a software developer in Atlanta
and an expert on Kinect, said Microsoft was
aiming to "fix a mistake seen with the Kinect,
that the Kinect was for gamers" only.
“They’re trying to align this new technology
with their core business” of building technology
for corporations, he said.
Eventually, perhaps some time in 2017,
Microsoft will likely unveil a consumer version of
HoloLens, said Gownder, the analyst.
"Over time, less expensive hardware would
create a larger market," he said, adding he
expected the first consumer HoloLens to be
priced under $1,500.
PREDICTED RESULTS SURPRISES FROM STARMINE
Company Name
Smart Estimate
Science Applications International
Predicted Surprises
$0.76
American Woodmark
Golar Lng
Market Cap. (mln) Industry
3.35%
$0.91
2.71%
-$0.44
-3.10%
Tsakos Energy Navigation
$0.24
-8.84%
Lions Gate Entertainment
-$0.03
-17.44%
$2,410 IT Services
$1,231 Building Products
$1,623 Oil, Gas & Consumable Fuels
$506 Oil, Gas & Consumable Fuels
$2,968 Media
StarMine SmartEstimates® predict future earnings more accurately than consensus (or mean) estimates by putting more weight on the recent forecasts
of StarMine's top-rated analysts. StarMine is a subsidiary of Thomson Reuters. The predicted surprise is the difference between the SmartEstimate and
consensus.
KEY RESULTS
Company Name*
Quarter
ET
EPS Estimates**
Year Ago
Rev Estimates (mln)
Autozone
Q3
BMO
$10.92
$9.57
$2,646
Best Buy Co
Q1
BMO
$0.35
$0.37
$8,293
Intuit
Q3
AMC
$3.21
$2.85
$2,249
Hewlett Packard Enterprise Co
Q2
AMC
$0.42
--
$12,335
*Includes companies on S&P 500 index. **Estimates may be updated or revised; release times based on company guidance or past practice.
All estimates are according to Thomson Reuters I/B/E/S.
RESEARCH SUMMARY
Company Name
Action
Boston Scientific
BTIG cut to neutral from buy doubting that future results will mimic the extraordinary Q1 and believe risk now equals reward, while showing faith in new products, expecting minor risks and Q1 surgical market growth could slow.
Dean Foods
Deutsche Bank raised target price to $22 from $21 following strong 1Q16 earnings results and assessing that the pending Friendly’s acquisition, private label business in the west region will contribute incrementally to volume and generate an additional growth in 2H16.
Deere & Co
Citigroup cut target price to $87 from $88 claiming that the increase in loss and return rates on short-term leases is negative, as it will
only add to investor concerns about the earnings trajectory.
Prologis
Schlumberger
Evercore ISI cut stock rating to hold from buy given the significant outperformance exhibited by the industrial sector this year and since
the stocks are now trading in line with our net asset value estimates and therefore are not screening as cheaply as they did 6 to 12 months
ago.
Goldman Sachs added stock to Conviction List with a buy rating stating an increased confidence in the stock as a secular winner in the
New Oil Order and believing that the company is differentially positioned within the oilfield services industry, which should lead to market
share gains for it.
8
THE DAY AHEAD
ON THE RADAR
Events
ET
Poll
Prior
Wed: MBA mortgage application
0700
--
-1.6 pct
Mortgage Market Index
0700
--
482.6
MBA Purchase Index
0700
--
222.0
Mortgage Refinance Index
0700
--
1991.5
MBA 30-year mortgage rate
0700
--
3.82 pct
1.116 mln
Build permits R number mm for Apr
0730
--
Build permits R change mm for Apr
0730
--
3.6 pct
Advance goods trade balance for Apr
0830
--
-56.90 bln
Monthly home price mm for Mar
0900
--
0.4 pct
Monthly home price yy for Mar
0900
--
5.6 pct
Monthly Home Price Index for Mar
0900
231.4
Thu: Durable goods for Apr
0830
0.5 pct
0.8 pct
Durables ex-transport for Apr
0830
0.3 pct
-0.2 pct
Durables ex-defense mm for Apr
0830
--
-1.0 pct
Nondefense cap ex-air for Apr
0830
0.4 pct
0.1 pct
Initial Jobless claims
0830
275,000
278,000
Jobless claim 4-week average
0830
--
275,750
Continued jobless Claims
0830
2.146 mln
2.152 mln
52.40
Markit Composite Flash PMI for May
0945
--
Markit Services PMI Flash for May
0945
--
52.8
Pending Homes Index for Apr
1000
--
110.5
Pending sales change mm for Apr
1000
0.6 pct
1.4 pct
KC Fed Manufacturing for May
1100
--
-8
KC Fed Composite Index for May
1100
--
-4
-8.4 pct
Fri: Corporate profits preliminary for Q1
0830
--
GDP 2nd estimate for Q1
0830
0.9 pct
0.5 pct
GDP sales preliminary for Q1
0830
1.1 pct
0.9 pct
GDP cons spending preliminary for Q1
0830
--
1.9 pct
GDP deflator preliminary for Q1
0830
0.7 pct
0.7 pct
Core PCE prices preliminary for Q1
0830
2.1 pct
2.1 pct
PCE prices preliminary for Q1
0830
0.3 pct
0.3 pct
U Mich Sentiment Final for May
1000
95.5
95.8
U Mich Conditions Final for May
1000
108.5
108.6
U Mich Expectations Final for May
1000
86.6
87.5
U Mich 1 year inflation final for May
1000
--
2.5 pct
U Mich 5-year inflation final for May
1000
--
2.6 pct
9
THE DAY AHEAD
A young boy uses a plastic bag to protect himself from a dust storm in New Delhi, India May 23, 2016.
The Day Ahead - U.S. is compiled by Sourav Bose and Astha Rawat in Bengaluru.
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10