Coming Up - Thomson Reuters

NORTH AMERICA
For Friday, August 19, 2016
MARKET RECAP at 4 pm ET
Stocks edged higher as gains in energy
shares and Wal-Mart offset telecom's
losses. Treasury yields gained on bets the
Federal Reserve is in no hurry to raise
interest rates and uncertainty about global
risks to economic growth at home. Gold
advanced, buoyed by a weaker dollar. Oil
prices rose as the world's biggest
producers prepared to discuss a possible
freeze in production levels.
Close
STOCKS
Chng %Chng
18597.70
23.76
Nasdaq
5240.15
S&P 500
2187.02
14695.68
DJIA
Toronto
Yr-high
Yr-low
0.13
18668.40 15370.30
11.49
0.22
5271.36 4209.76
4.80
0.22
-1.92
-0.01
14855.69 11531.22
6955.34 5499.51
2193.81
1810.10
FTSE
6868.96
9.81
0.14
Eurofirst
1349.68
8.45
0.63
Nikkei
16486.01 -259.63
-1.55
18951.12 14864.01
Hang Seng
23023.16 223.38
0.98
23084.52 18278.80
TREASURIES
Yield
Price
10-year
1.5355
8 /32
2-year
0.7095
2 /32
5-year
1.1120
6 /32
30-year
2.2586
10 /32
FOREX
Last
% Chng
Euro/Dollar
1.1359
0.65
Dollar/Yen
99.88
-0.36
Sterling/Dollar
1.3168
0.99
Dollar/CAD
1.2768
-0.58
COMMODITIES ($)
Front Month Crude /barrel
Spot gold (NY/oz)
Copper U.S. (front month/lb)
Reuters/Jefferies CRB Index
S&P 500
1436.12
1191.74
Lipstick is displayed in the M.A.C flagship store in Paris, February 28, 2013.
REUTERS/Philippe Wojazer/Files
Price
Chng
% chng
48.27
1352.01
0.0217
190.26
1.48
3.83
0.0002
2.45
3.16
0.28
0.70
1.31
Price
Coming Up
Cosmetics maker Estee Lauder Cos Inc
reports fourth-quarter earnings. The
company is working to turnaround slowing
demand in its mainstay, the Clinique
brand, by marketing to a younger
customer base. Even though it has been
reporting lower-than-expected sales for
the last two quarters, brands such as
Smashbox and M.A.C. have been posting
strong demand in international markets.
Investors will look out for full-year forecast
and strategic initiatives to boost sales of its
older brands.
Deere & Co is scheduled to report its fiscal
third-quarter earnings. A global farm
recession, combined with weak demand
from construction markets, has slowed the
agricultural machinery manufacturer's
sales. Analysts on average estimate
revenue of $6.094 billion and 94 cents
earnings per share. A year ago, the
company posted $1.53 earnings per share
and a 20 percent fall in revenue to $7.6
billion.
LIVECHAT - THE WEEKAHEAD - with
Reuters markets editor Mike Dolan
Join Mike Dolan as he goes through key
macroeconomic and political themes for
the coming week at 0600 ET/1000 GMT.
Click here to join Global Markets Forum
$ Chng % Chng
GAINERS
Netapp
Chesapeake Energy
Williams Companies
Marathon Oil
LOSERS
33.88
6.20
28.11
16.68
5.03
0.52
2.05
0.98
17.44
9.15
7.87
6.24
CF Industries
Staples
H & R Block
Viacom
22.74
8.48
23.95
42.84
-0.57
-0.19
-0.52
-0.90
-2.45
-2.19
-2.13
-2.06
KEY ECONOMIC EVENTS
Events
ET
Poll
Prior
ECRI Weekly Index
1030
--
137.6
ECRI weekly annualized
1030
--
8.4 pct
1
THE DAY AHEAD
Top News
Wal-Mart draws more shoppers, raises
fiscal-year outlook
Wal-Mart Stores reported higher-thanexpected quarterly earnings, saying it
benefited from cleaner and more efficient
U.S. stores, investments in technology that
improved online shopping and higher
employee wages that fostered better
customer service. Store visits increased 1.2
percent, and the average size of an order
rose 0.4 percent during the second
quarter. The company said sales were
strong for grocery items and apparel but
weak for electronics. The company raised
its fiscal-year earnings outlook to between
$4.15 and $4.35 a share, including an
estimated hit of 5 cents from the Jet.com
acquisition, from a previous range of $4.00
to $4.30. Second-quarter earnings per
share of $1.07, excluding a gain from the
sale of Wal-Mart's e-commerce business in
China and other items, exceeded the
analysts' average estimate by 5
cents. Sales at U.S. stores open at least a
year rose 1.6 percent, excluding fuel prices,
to beat expectations in their eighth
straight quarter of growth. International
sales fell 6.6 percent to $28.6 billion but
increased 2.2 percent on a currencyneutral basis. Total revenue rose 0.5
percent to $120.9 billion.
U.S. labor market firming; factories still
struggling
The number of Americans filing for
unemployment benefits fell more than
expected last week, reinforcing views of
labor market strength that could
encourage the Federal Reserve to raise
interest rates soon. Initial claims for state
unemployment benefits dropped 4,000 to
a seasonally adjusted 262,000 for the
week ended Aug. 13, the Labor
Department said. Economists had forecast
initial claims slipping to 265,000 in the
latest week. In a separate report, the
Conference Board reported that a gauge of
future U.S. economic activity increased in
July for a second consecutive month. In a
third report, the Philadelphia Fed said its
business conditions index gained 5 points
to a reading of 2.0 in August as more
companies reported an increase in
Click on the chart for an interactive graph
shipments. August marked the third
positive reading for the index this year.
Applied Materials forecast beats,
powered by chip demand
Applied Materials, the world's largest
supplier of tools used to make
semiconductors, forecast current-quarter
profit far above analysts' estimates as it
benefits from higher demand for
technology used to make memory and
smartphone chips. Applied Materials said
it expected an adjusted profit of 61-69
cents per share for the fourth quarter and
net sales to rise 15-19 percent from the
third quarter. Analysts on average were
expecting a profit of 48 cents, according to
Thomson Reuters I/B/E/S. Applied
Materials is considered an industry
bellwether and its results are seen as an
indicator for the overall chip sector. Net
sales rose 13.3 percent to $2.82 billion in
the third quarter ended July 31. The
company's net income rose to $505
million, or 46 cents per share, from $329
million, or 27 cents per share, a year
2
earlier. Excluding items, the company
earned 50 cents per share. Analysts on
average had expected a profit of 48 cents
per share and revenue of $2.84 billion,
according to Thomson Reuters I/B/E/S.
T. Rowe Price sues Valeant over
"fraudulent scheme"
T. Rowe Price Group has sued Valeant
Pharmaceuticals, alleging that investors in
the Canadian drugmaker lost billions of
dollars as a result of the company's
"fraudulent scheme". Valeant's U.S.-listed
shares reversed course to trade down. They
had risen as much as 5 percent, after the
company's lenders agreed to an
amendment to loosen covenants on its $31
billion of debt. T. Rowe Price, one of the
biggest investment managers in the world,
said Valeant had used a secret pharmacy
network, deceptive pricing and
reimbursement practices, and fictitious
accounting to shield the company's
branded drugs from generic competition
and artificially inflate revenues and profits.
Valeant's relationship with specialty >>>
THE DAY AHEAD
>>> pharmacy Philidor RX was revealed
last fall, including the aggressive tactics
used to receive payments from insurers. T.
Rowe Price, which held a 6.4 percent
passive stake in Valeant as of Dec. 31, filed
the lawsuit in the District Court of New
Jersey on Monday. Valeant closed 2.70
percent down at $29.19 on NYSE.
Gawker.com to shut down as Univision
buys other sites
U.S. internet publisher Gawker Media
Group Inc said on Thursday that it would
shut down its news and gossip website
Gawker.com next week after Univision
Holdings Inc successfully bid for the
internet publisher's six other websites.
Gawker said near-term plans for the
website's coverage and its archives have
not yet been finalized. The decision comes
two days after Univision Holdings won a
bankruptcy auction to acquire Gawker for
$135 million, outbidding media company
Ziff Davis. Gawker sought bankruptcy in
June after facing a $140 million court
judgment following an invasion of privacy
lawsuit from former professional wrestler
Hulk Hogan over the publication of
excerpts from a sex tape.
Apparel retailer Gap's adjusted profit
beats estimates
Apparel retailer Gap reported a betterthan-expected adjusted quarterly profit
largely due to higher customer visits to its
Old Navy stores in June. The company's
net income fell to $125 million, or 31 cents
per share, in the second quarter ended July
30, from $219 million, or 52 cents per
share, a year earlier. Excluding items, the
company earned 60 cents per share,
beating the average analyst estimate of 59
cents, according to Thomson Reuters I/B/
E/S. Net sales fell to $3.85 billion from
$3.90 billion.
United Air names new CFO, chief
commercial officer in shuffle
United Continental Holdings said it
appointed a new chief financial officer and
chief commercial officer in the first major
management shuffle since Oscar Munoz
took the helm of the airline last
September. United named Andrew Levy its
CFO, filling a job that has been vacant for
more than a year. United also said Julia
Haywood, a former Boston Consulting
Group partner, was named chief
commercial officer. Chief Revenue Officer
Jim Compton will retire at the end of 2016,
the airline said. Haywood's role will be the
same as Compton's despite the change in
title. The moves are the latest attempt by
United and its reshuffled board to shape a
new strategy and boost its stock price. The
airline has lagged larger rival Delta Air
Lines in on-time arrivals and profit
margins. PAR Capital Management
partner Edward Shapiro won a seat on
United's board following the hedge fund's
activist campaign last spring.
Uber buys self-driving truck startup
Otto; teams up with Volvo
Ride service Uber Technologies said it has
acquired the self-driving trucks startup
Otto, and it also announced that Volvo Car
Group has agreed to a $300 million
alliance to develop self-driving cars.
Anthony Levandowski, one of Otto's cofounders, will lead Uber's self-driving
efforts in San Francisco, Palo Alto and
Pittsburgh, Uber Chief Executive Officer
Travis Kalanick said in a blogpost on the
company's website. The Uber-Volvo
partnership will allow Uber to pool
resources with the Swedish-based
carmaker, owned by China's Geely, into
initially developing the autonomous
driving capabilities of Volvo's flagship
XC90 SUV model. The investment will be
shared roughly equally by the two
companies. Volvo aims to launch an
experiment involving self-driving cars in
China, Britain and Sweden. Uber will
purchase Volvos and then install its own
driverless control system for the specific
needs of its ride-hailing service.
Harley-Davidson to pay $12 million fine
over motorcycle emissions
Harley-Davidson agreed to pay a $12
3
million civil fine and stop selling illegal
after-market devices that cause its
motorcycles to emit too much pollution,
the U.S. Justice Department said. The
settlement resolves government
allegations that Harley sold roughly
340,000 "super tuners" enabling
motorcycles since 2008 to pollute the air
at levels greater than what the Milwaukeebased company certified to the U.S.
Environmental Protection Agency.
According to the government, the sale of
such "defeat devices" violates the federal
Clean Air Act. The settlement calls for
Harley to stop selling the super tuners by
Aug. 23, and buy back and destroy all such
tuners in stock at its dealerships. Harley
will also spend $3 million on an unrelated
project to reduce air pollution, the Justice
Department said. Harley said it disagreed
with the EPA's view of the case, but settled
without admitting liability in what it called
a "good faith compromise."
Twitter suspended 360,000 accounts
for 'promotion of terrorism'
Twitter has shut down 360,000 accounts
for threatening or promoting terrorist acts
since the middle of 2015, the company said
in a blog post. It has previously come
under fire from Washington and thirdparty groups for not doing enough to stop
accounts linked to Islamic State militants.
But, since February, it has suspended an
additional 235,000 accounts, after halting
125,000 accounts since the middle of
2015, most of which were related to
Islamic State. Twitter said its daily
suspensions of terrorism-linked accounts
have jumped 80 percent since last year
and that it has reduced its response time.
Watchdog groups praised Twitter's swift
response to online celebrations from
Islamic extremists glorifying a July truck
attack in Nice, France, that killed more
than 80 people. Although the company
says an algorithm cannot identify extremist
propaganda, it relies on spam-fighting
tools to help identify repeat offenders,
including those who create new accounts
when they are suspended.
THE DAY AHEAD
Syrian refugee girl Housaida rests inside the Spanish rescue vessel Astral after being rescued by the Spanish NGO Proactiva off the Libyan coast in the
Mediterranean Sea August 18, 2016. REUTERS/Giorgos Moutafis
Insight and Analysis
As technology shifts more layoffs loom
at tech companies
Cisco Systems Inc's announcement on
Wednesday that it plans to lay off 5,500
employees is unlikely to be the last round
of Silicon Valley pink slips as hardware
companies struggle to keep up with rapid
technology shifts, analysts and recruiters
said. Companies that traditionally have
made most of their money selling
computers, chips, servers, routers and
other equipment are especially vulnerable,
analysts say, as mobile apps and cloud
computing become important. The Cisco
layoffs come in the wake of Intel's
announcement in April that it was laying
off 12,000 workers. IBM, Hewlett Packard
Enterprise, Oracle and Dell could be next
to shed workers, analysts said.
Tech industry's legal shield is feeling
the heat
When San Francisco passed an ordinance
this year imposing fines on home rental
companies for listings by hosts not
registered with the city, Airbnb sued,
saying the measure runs afoul of Section
230 of the U.S. Communications Decency
Act. The case is the latest test of Section
230, a federal law that has been a trusty
workhorse for the tech industry. By
protecting website operators from liability
for content posted by others, it helped
pave the way for the explosion of social
media platforms, such as Facebook and
Twitter, as well as Amazon and eBay. But
detractors say the law has been applied
too broadly, and judges have pushed back
in a string of recent cases.
4
COLUMN-Before a career break,
millennials need a money game plan
Until a month ago, Andrew Lampert was
moving up the career ladder in New York
City as a pricing manager at an auto parts
company. Now, national parks are what
Lampert, 28, and his girlfriend Elise
Murphy, 24, call home. “The high cost of
New York City can make it seem
impossible to get by without an income
and money on top,” Lampert said. “I’m
staying in national parks for free, cooking
on an open campfire – no rent, no cable,
no utilities." Like many millennials,
Lampert is fed up with traditional 9-to-5
jobs. A recent study by Wells Fargo found
that fewer than half of millennials (ages 22
to 35) are employed in their preferred
career.
THE DAY AHEAD
MARKET MONITOR
Coming Up
Canada's inflation rate is expected to have
cooled to 1.3 percent in July, bringing it to
the low end of the Bank of Canada's 1-3
percent target range. It is unlikely to
change the path of monetary policy as the
central bank has said inflation is being
influenced by temporary factors.
TSE's S&P/TSX composite
GAINERS
MEG Energy
Canadian Energy Services
Encana
LOSERS
Extendicare
Valeant Pharmaceuticals
West Fraser
Separately, retail sales are expected to
climb by 0.5 percent in June, maintaining a
relatively robust pace. The economy likely
shrank in the second quarter but analysts
will be looking at the retail sales figures for
an indication of how the hand-off to the
third quarter held up.
Price
$ chng
% chng
6.41
4.85
12.95
0.41
0.28
0.72
6.83
6.13
5.89
8.58
37.19
41.92
-0.32
-1.32
-1.38
-3.60
-3.43
-3.19
Canada's main stock index ended barely
lower on Thursday, its second straight
marginal loss, as gains for energy
companies as oil prices pushed higher
were offset by losses for banks. The
Toronto Stock Exchange's S&P/TSX
composite index fell 0.01 percent, at
14,695.68. Valeant fell 3.43 percent,
Suncor Energy rose 0.85 percent.
Brookfield Asset Management declined
1.37 percent while First Quantum
Minerals advanced 1.84 percent. BCE was
off 0.8 percent while Telus gained 0.02
percent.
The dollar fell 0.58 percent against the
Canadian dollar to C$1.2768.
Top News
Foreign investors scoop up Canadian
equities in June
Foreign investors scooped up Canadian
securities for the sixth month in a row in
June, driven by the largest purchase of
Canadian equities since April 2004, data
from Statistics Canada showed. Foreign
investment in securities totaled a net
C$9.02 billion in June, while May's
purchases were revised slightly lower to
C$13.99 billion from the initially reported
C$14.73 billion. The inflow of investment
was due to a C$13.41 billion purchase of
Canadian stocks. The bulk of this was due
to the issuance of new Canadian shares to
foreign portfolio investors as a result of
cross-border mergers and acquisitions.
Foreign investors also purchased C$2.6
billion of Canadian shares on the
secondary market, despite Canada's main
stock index being little changed in June.
Kinross to retreat from Chile, puts unit
on the block
Kinross Gold is looking to retreat from
Chile and has put its main assets in that
country up for sale, according to people
familiar with the process. The world's fifthlargest gold miner by output has hired
Bank of Nova Scotia to help find buyers for
its two main Chilean gold mines, the
sources said. They requested anonymity
because the matter is not public. Interest
has been very strong, with bids coming
from mining companies from Canada,
Chile and other parts of the world, the
sources said.
Canada's new child benefit set to boost
back-to-school shopping
Canada's newly revamped cash handout to
families ahead of the start of a fresh school
year could spur retail sales during a period
of weak economic growth and high
consumer debt. The Canada Child Benefit
gives eligible families an annual benefit of
up to C$6,400 for each child under 6 years
old, and up to C$5,400 for each child
between 6 and 17. The benefit replaces a
similar measure under the previous
Conservative government as well as other
tax benefits. The government says eligible
families will see an average increase of
almost C$2,300. The child benefit is the
first tangible effect of the Liberal
government's plan to spend to boost the
economy. The government estimates
families will get C$23 billion in the 2016-
5
2017 benefit year.
REUTERS/Lucas Jackson
Valeant amends credit facility for
second time in six months
Valeant Pharmaceuticals International
said its lenders had approved an
amendment to its credit facility, giving the
drugmaker more flexibility to sell assets
and repay loans by taking on other debt.
The embattled drugmaker, which is
amending its credit agreement for the
second time in six months, agreed to
increase the interest on the facility by 0.50
percent, it said in a statement. Valeant,
whose long-term debt stood at about $31
billion as of June 30, had asked lenders in
March to amend its credit agreement to
give it more time to file its financials.
THE DAY AHEAD
CITI’S STRATEGY
Citi CEO seen asking for more patience as
targets still elusive
Earlier this year, an analyst asked Citigroup Chief
Executive Michael Corbat what he would do if
activist investors tried to shake things up after
what seems like eons of underperformance.
Corbat's response? He would take the new
shareholders down to the U.S. Federal Reserve
so they could see the limitations he faces.
The Fed's tight control over capital distributions,
business plans and interest rates is a challenge
for all big U.S. banks today. But Citigroup may
be the best example of how the Fed's efforts to
make the banking system safer are tying
management's hands and frustrating
shareholders. Corbat is planning to set out new
targets this year, and people close to him say he
knows the pressure is on. Yet he has little
choice but to ask for more patience, analysts say.
People walk beneath a Citibank branch logo in the financial district of San Francisco, California July 17,
2009. REUTERS/Robert Galbraith/Files
UPBEAT ON LABOR MARKET
Fed's Dudley stays upbeat, says U.S. labor market improving
Strong employment and a long-awaited return of middle-wage jobs suggest the labor market is tightening and the broader U.S. economy
is on track, an influential Federal Reserve policymaker said, appearing to reinforce his more confident message on a possible rate hike.
MERGER BID
Enterprise Products approached Williams over acquisition - sources
Enterprise Product Partners approached Williams Companies earlier this summer about an acquisition that would combine the two U.S.
oil and gas pipeline companies, according to people familiar with the matter.
CYBER HEIST FALLOUT
NY Fed, Bangladesh central bank to resume normal money transfers - sources
The Federal Reserve Bank of New York and Bangladesh's central bank have agreed to withdraw additional payment security measures put
in place after one of the biggest cyber heists, theft of $81 million from Bangladesh Bank's account at the Fed, two sources said.
BANKER DISPUTE
Credit Suisse banker dispute shows challenge of CEO's new strategy
Credit Suisse is accusing a group of five investment bankers who left for Jefferies Group in May of stealing confidential information and
trying to coax former colleagues to join them.
UNITED BANKSHARES BUYS
United Bankshares to buy Cardinal Financial in $912 million deal
United Bankshares said it would buy rival lender Cardinal Financial in an all-stock deal worth about $912 million, strengthening its
position in the Washington, D.C., metropolitan area.
JEFFERIES ALLEGED OF SEXIST BIAS
Investment banker sues Jefferies, alleges pregnancy bias
Jefferies Group was sued by a former female investment banker who accused it of stripping away her bonus and derailing her career
because she became pregnant.
6
THE DAY AHEAD
KEY RESULTS
Company Name*
Quarter
ET
Smart Estimates
EPS Estimates**
Year Ago
Rev Estimates (mln)
Deere & Co
Q3
BMO
$0.97
$0.94
$1.53
$6,094.15
Estee Lauder Companies
Q4
BMO
$0.40
$0.40
$0.40
$2,660.52
Foot Locker
Q2
BMO
$0.90
$0.90
$0.84
$1,762.74
*Includes companies on S&P 500 index. **Estimates may be updated or revised; release times based on company guidance or past practice.
EPS and Revenue estimates are according to Thomson Reuters I/B/E/S. Smart Estimates are according to Thomson Reuters StarMine.
The Day Ahead - North America is compiled by Riniki Sanyal and Astha Rawat in Bengaluru.
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7