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WEEK AHEAD
The turmoil in the markets is likely to continue next week, with investors shifting positioning
among bets in the dollar, bonds, the euro and yen and commodities markets. The dollar could see
more volatility as investors moved sharply away from the greenback after weak data and dovish
signals from Fed officials, only to flip back into the U.S. currency after Friday's payrolls
figures. The market will be intensely focused on Fed Chair Yellen's testimony on Wednesday and
Thursday, which should give people a better sense of the Fed's intentions in coming months, as
recent comments from others suggest a less aggressive path of rate increases than expected. This
is also one of the last heavy weeks of earnings, and that should keep investors focused on weak
results out of the stock market.
January's retail sales report on Friday is expected to show that domestic demand remains firm
and that drag on the economy is mostly coming from external sources. The Commerce Department is
expected to report that retail sales rebounded 0.1 percent last month after slipping 0.1 percent
in December, according to a Reuters survey. Core retail sales, which correspond most closely
with the consumer spending component of gross domestic product, are expected to have risen a
solid 0.4 percent in January after falling 0.3 percent in the prior month. Core retail sales
exclude automobiles, gasoline, building materials and food services. Also on Friday, the Labor
Department is expected to report that its import price index fell 1.4 percent in January after
declining 1.2 percent in December as falling oil prices keep the cost of imported energy
products subdued. A strong dollar is also dampening imported inflation pressures. The University
of Michigan's consumer sentiment survey is expected to show that confidence among U.S.
households nudged up in early February despite ongoing stock market volatility. Other data
scheduled for release next week include wholesale trade and business inventory reports for
December, which could have implications on the fourth-quarter GDP growth estimate.
Coca-Cola Co is expected to report fourth-quarter revenue slightly below analysts' expectations,
according to Thomson Reuters StarMine. U.S. sales in the quarter were likely boosted by higher
pricing and the company's "Share a Coke" promotional campaign. However, a strong dollar and
weakness in Latin American currencies could have reduced revenue as the company gets more than
half of its total revenue from markets outside North America. When Coca-Cola reports results on
Tuesday, details on the company's efforts to diversify into other beverages such as cold-pressed
juices and energy drinks will be on investors' radar.
Walt Disney Co is expected to report a rise in first-quarter revenue and profit, helped by the
blockbuster release of "Star Wars: The Force Awakens," the first "Star Wars" film produced by
the company. "The Force Awakens" is the highest-grossing release in North America and the
third-biggest global release in history. When Walt Disney reports earnings on Tuesday, focus
will also be on its sports cable network ESPN, which is grappling with a drop in subscriber
numbers.
Cisco Systems Inc (O:CSCO) is expected to report a fall in second-quarter revenue and profit on
Wednesday, according to Thomson Reuters StarMine. The network equipment maker may have been hurt
by a slowdown in order growth and weakness in its enterprise business outside the United States.
A strong dollar probably affected demand for Cisco's enterprise products in Asia-Pacific, Canada
and Latin America. Cisco has been actively buying other companies to beef up its enterprise and
wireless security businesses.
PepsiCo (N:PEP) Inc is expected to report fourth-quarter sales below the average analyst estimate on
Thursday, according to Thomson Reuters StarMine. The snacks and beverage maker's push into
non-carbonated beverages is paying off, with analysts expecting U.S. sales to have got a boost
in the quarter from higher pricing and solid sales of Gatorade and Starbucks (O:SBUX) coffee sold by
Pepsi. However, a strong dollar and weakness in Russian and some Latin American currencies are
likely to have hurt revenue. Analysts have also raised concerns that the company's Lay's potato
chips is losing market share in North America to Kellogg's Pringles and Diamond Foods' Kettle
chips.
American International Group Inc (N:AIG), which recently announced plans to downsize its retail business
after facing pressure from billionaire Carl Icahn, is seen posting a smaller-than-expected
fourth-quarter loss on Thursday. The biggest U.S. commercial insurer said it would spin off its
mortgage insurance unit, cut jobs and sell its broker-dealer network. The company plans to
return $25 billion in capital to shareholders over the next two years. The recent changes in AIG
reflect the U.S. insurance industry, which is seen to be reshaping in a highly regulated
environment.
Microblogging service provider Twitter (N:TWTR) Inc is expected to report a rise in fourth-quarter
profit, beating the average analyst estimate, according to Thomson Reuters StarMine. Chief
Executive Jack Dorsey, who took the top job in 2015, has rolled out new services and products,
but analysts and investors remain wary. On Wednesday, investors will look for details on the
company's strategy for fiscal 2017 following a recent management shake-up.
Regeneron Pharmaceuticals Inc (O:REGN) is expected to report fourth-quarter profit below analysts'
expectations on Tuesday, according to Thomson Reuters StarMine. Analysts believe that stalled
sales growth of its eye drug, Eylea, will affect profit. Investors will focus on the sales of
its next potential blockbuster cholesterol drug, Praluent. Regeneron has said earlier that sales
of Praluent, which was approved in July 2015, will take time to accelerate.
CVS Health Corp (N:CVS) is seen reporting fourth-quarter revenue above the average analyst estimate on
Tuesday, according to Thomson Reuters StarMine. The No.2 U.S. drugstore chain by store count had
forecast 2016 profit much below analysts' estimates due to costs related to its acquisition of
Target's pharmacies and as its own pharmacy benefits management business expands in low-margin
Medicare and Medicaid plans. Pharmacy operators such as Fred's have said that a very low
incidence of cold and flu in the quarter reduced sales.
Viacom Inc is expected to report a fall in first-quarter revenue and profit on Tuesday, hurt by
continued decline in ad sales in its U.S. cable TV business, according to Thomson Reuters
StarMine. The media company has also suffered from weak ratings at a number of its networks. The
company recently named Chief Executive Philippe Dauman as its executive chairman, replacing the
92-year-old Sumner Redstone.
Time Warner Inc (N:TWX) is expected to report a fall in fourth-quarter profit on Wednesday, hurt by a
strong dollar. The owner of cable channels including TNT and TBS Cartoon Network had also warned
of lower ad revenue due to a drop in ratings of its key domestic entertainment networks.
Investors will look for details on a sale or spinoff of the company's premium cable channel,
HBO.
Electric car maker Tesla Motors Inc (O:TSLA) will report fourth-quarter results after markets close on
Wednesday. The Palo Alto, California-based company's shares have skidded through January. Chief
Executive Elon Musk could offer insights on future model plans and on production of the new
Model X. Investors are counting on the Model X, an SUV designed to compete with those from
luxury automakers, to make the company profitable after years of losses.
Omnicom Group Inc (N:OMC), the world's second largest advertising company, is expected to report a rise
in fourth-quarter revenue and profit on Tuesday. In November, a source told Reuters that Omnicom
had agreed to pay 1 billion reais for Brazil's Grupo ABC, adding to the company's publicity,
branding services and content in Latin America's largest economy.
Mylan (O:MYL) NV is seen reporting a fourth-quarter profit above the average analyst estimate for the
sixth straight quarter, according to Thomson Reuters StarMine. The drugmaker was helped by
higher sales of its generic drugs in North America. On Wednesday, investors will be keen to hear
about Netherlands-based Mylan's deals strategy after shareholders of smaller rival Perrigo Co (N:PRGO)
Plc snubbed its $26 billion hostile bid late last year.
Internet content delivery service provider Akamai Technologies Inc (O:AKAM) is expected to report
fourth-quarter revenue slightly above the average analyst estimate on Tuesday, according to
Thomson Reuters StarMine. The company's revenue growth has been hurt by a slowdown in online
traffic as well as a strong dollar. Akamai is expecting growth in its cloud security services
and it has been investing to expand its content delivery platform to better serve the
'Over-the-Top' market.
Upscale grocer Whole Foods Market Inc (O:WFM) is expected to report first-quarter profit below analysts'
estimates, according to Thomson Reuters StarMine. The company's sales have been hit due to fewer
customer visits despite price cuts as big-box retailers and supermarkets increasingly sell
organic foods at comparatively lower prices. When Whole Foods reports on Wednesday, investors
will look for current-quarter trends, comments on the industry and forecast.
TV network operator CBS Corp (N:CBS) is expected to report a rise in fourth-quarter revenue on Thursday,
according to Thomson Reuters StarMine. The company, which owns cable channel Showtime and CBS
Sports Networks, has been trying to rely less on ad revenue and it is focusing more on its
online subscription streaming services such as CBS All Access. CBS is expected to benefit from
strong sports advertising sales. CBS recently resolved its leadership controversy after it said
Chief Executive Leslie Moonves would replace Sumner Redstone as executive chairman.
Humana Inc (N:HUM) is seen reporting fourth-quarter earnings above analysts' expectations, according to
Thomson Reuters StarMine. The fifth-largest U.S. health insurer, which reports results on
Wednesday, is expected to have benefited from strength in its large Medicare Advantage business.
The company, which is being bought by larger rival Aetna Inc (N:AET) in a $37 billion deal, may also be
helped by a weak flu season.
TripAdvisor Inc (O:TRIP) is expected to report a lower profit for the fourth quarter as it continues to
roll out its instant booking feature to more geographies across the globe. The instant booking
feature allows travelers to book a hotel directly from the company's website, instead of being
directed to a third-party booking site. While the instant booking feature results in improved
traveler conversion rate and revenue in the long run, it causes near-term revenue loss as fewer
travelers are directed to third-party websites. TripAdvisor gets a big portion of its revenue
from payments from third-party booking sites such as hotels and online travel agencies, based on
the number of travelers who click on each type of accommodation listing. TripAdvisor rolled out
the feature in nine more countries in the fourth quarter. When the company reports results on
Thursday, investors will look for comments on how a global rollout of the feature in 2016 would
affect its full-year financial forecast.
Videogame maker Activision Blizzard Inc (O:ATVI) is expected to report fourth-quarter revenue above
analysts' estimates on Thursday, according to Thomson Reuters StarMine. In November, the company
agreed to buy "Candy Crush Saga" creator King Digital Entertainment for $5.9 billion as it makes
a major push into the fast-growing mobile market. It also launched a film and TV studio to
create original content based on its videogame franchises. Activision expects to benefit from
strong sales of its newly launched "StarCraft II: Legacy of the Void" game.
Goodyear Tire & Rubber Co is expected to report a rise in fourth-quarter profit on Tuesday as it
cut costs throughout the year. The tire maker shut its Wolverhampton manufacturing plant in
England in June and transferred production to the EMEA region. Goodyear's revenue, however, is
expected to fall, hurt by a warmer winter and a strong dollar. Investors will be looking for the
company's 2016 forecast and any impact from the snowstorm that hit the U.S. East Coast.
Oil sands developer Cenovus Energy Inc is expected to report a smaller fourth-quarter loss as
lower costs mitigate the impact of low crude prices. The company has clamped down on spending,
deferring projects and limiting drilling in response to a more than 70 percent fall in oil
prices since June 2014. When Cenovus reports results on Thursday, investors will want to know if
it plans to slash its dividend further, after a 40 percent cut in October.
Canada's No.2 pipeline company TransCanada Corp is expected to report a lower fourth-quarter
profit as a drop in power prices in Alberta weigh on its energy unit. When the company reports
results on Thursday, investors will focus on its plans for its pipeline business after U.S.
President Barack Obama rejected its controversial Keystone XL pipeline last year.
Minnesota-based Mosaic Co, which is facing declining fertilizer prices, releases fourth-quarter
results on Thursday. Investors will be watch for any possible closure of the company's potash
production capacity as prices slump.
Burger chain Wendy's Co is expected to report fourth-quarter sales slightly below analysts'
estimates on Tuesday, due to intense competition from rivals such as McDonald's and Burger King.
Wendy's has been shedding most of its company-owned restaurants to become nimbler. The company
has said that it has seen higher traffic at its stores, but it remains to be seen if that
momentum can be sustained. Investors will be looking for any comments on forecasts for 2016 and
whether falling beef prices will help boost profit.
Kinross Gold, the world's fifth-biggest bullion miner, is expected to report a bigger
fourth-quarter loss on Wednesday as gold prices slumped. Kinross, which has been under pressure
to boost its exposure to safer mining jurisdictions, said late last year that it would spend
$610 million in cash to buy two mining assets in Nevada from Barrick Gold and it also struck an
exploration joint venture with Barrick for a property. Some viewed that price tag as steep, but
Kinross said the mine and properties had big potential that wasn't fully appreciated by the
market because they were a relatively small part of Barrick.
Zynga Inc is expected to report fourth-quarter revenue above analysts' estimates on Wednesday,
according to Thomson Reuters StarMine. Founder Mark Pincus, who returned as chief executive in
2015, has been focusing on cutting costs and reducing the "FarmVille" maker's slate of games.
FireEye Inc is expected to report higher fourth-quarter revenue on Thursday, but the number is
seen missing the average analyst estimate, according to Thomson Reuters StarMine. The cyber
security firm had warned that reduced Chinese hacking had hurt U.S. demand and that its sales
had fallen short in Europe. Analysts are skeptical of that reason and believe that the company
is affected by intensifying competition from rivals such as Palo Alto Networks Inc.
Groupon Inc is expected to report a fall in fourth-quarter revenue on Thursday but still beat
analysts' estimates, according to Thomson Reuters StarMine. The operator of daily deals website
groupon.com, which has witnessed a slowdown in its active customer base, said in November it
would lower its focus on offering consumer electronics and take a $50 million-$100 million hit
on its fourth-quarter revenue. Groupon, which named a new chief executive in November, is
betting on higher marketing spend to woo more customers.
Avon Products Inc (N:AVP), the pioneer of direct-selling, is expected to report fourth-quarter sales
well below analysts' estimates, according to Thomson Reuters StarMine. Avon, which has seen its
market share being eroded by bigger players in a growing retail environment, has been on a
decade-long turnaround program that included cost cuts and the separation of its North America
business. In January, the company and top investor Cerberus Capital laid out plans, such as
increasing marketing expenditure and reducing overheads, to boost profitability. However,
analysts are not convinced that these steps would reverse its sales decline. When the company
reports results on Thursday, investors will look out for other strategic plans and forecast.
Time Inc is expected to report a fall in fourth-quarter revenue on Thursday, according to
Thomson Reuters StarMine. Lower print advertising and circulation revenue might have hurt the
revenue of the company, which publishes Sports Illustrated, People and Time magazines. To cope
with a relentless decline in the print industry, the company has been slashing costs, tapping
revenue sources with higher margins and beefing up its digital offerings.
Canadian miner Teck Resources Ltd is expected to report weaker fourth-quarter earnings due to
lower coal, copper and zinc prices. The markets are likely to focus on Teck's heavy debt and its
plans on how to reduce it. The company may also announce more cost-cutting measures when it
reports results on Thursday.
The National Statistics Institute of Mexico will release inflation data for the full month of
January on Tuesday. Inflation came off a record low in the first half of the month. On Thursday,
December industrial production numbers will be released, after the gauge shrank by the most in
six months in November.
MONDAY, FEB 8
Film and TV company Twenty-First Century Fox Inc is expected to report a fall in second-quarter
profit, missing the average analyst estimate, according to Thomson Reuters StarMine. The company
has said that it would offer some of its employees voluntary exit options in an effort to reduce
costs by about $250 million in fiscal 2017. However, the Rupert Murdoch-controlled company is
expected to report a rise in quarterly revenue, helped mainly by higher political coverage.
IT services provider Cognizant Technology Solutions (O:CTSH) Corp is expected to report a rise in
fourth-quarter revenue and beat analysts' expectations, according to Thomson Reuters StarMine.
The company had raised its full-year revenue forecast for a third time, driven by increased
spending by clients in the healthcare and financial sectors in North America. Investors will
look for the extent of impact from a strong dollar.
Loews Corp (N:L) is expected to slightly miss profit estimates for the fourth quarter, according to
Thomson Reuters StarMine. The hotel, energy and financial services conglomerate is expected to
have taken a hit from its unit, Diamond Offshore Drilling Inc (N:DO), which is seen reporting a smaller
fourth-quarter profit as rig demand falls in an oversupplied market. Diamond Offshore, one of
the world's top-five offshore rig contractors, has made steep cost cuts and stacked rigs to cope
with an oil price slump that has now lasted 18 months.
Toymaker Hasbro Inc (O:HAS) is expected to report fourth-quarter sales slightly above analysts'
estimates, according to Thomson Reuters StarMine, driven by demand for toys based on "Star Wars:
The Force Awakens" film. Investors will look for any confirmation of reports that the company
plans to merge with larger rival Mattel (O:MAT). Analysts will also look for current-quarter sales
forecast as Hasbro started selling Disney Princess dolls, which were previously made by Mattel,
from January.
Consumer review website operator Yelp Inc is expected to report a rise in fourth-quarter
revenue, according to Thomson Reuters StarMine, helped by growth in its reservations business.
Analysts expect Yelp to profit from local advertising in the Internet sector, a largely untapped
area.
Bank of Canada Deputy Governor Tim Lane will give a speech on "Monetary Policy and Financial
Stability - Using the Right Tools," in Montreal. Lane will be watched for clues on further
easing by the central bank, considering a renewed downturn in oil prices. The central bank had
cut rates twice last year as sinking oil pushed the country into a mild recession.
LIVECHAT-FX WEEK AHEAD with Reuters FX analyst Jeremy Boulton
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