What to Watch in The Day Ahead; Thursday, May 15

Wed May 14, 2014 2:37pm EDT

(The Day Ahead is an email and PDF publication that includes the day's major stories and events, analyses and other features. To receive The Day Ahead, Eikon users can register at . Thomson One users can register at RT/DAY/US. All times in ET/GMT) Federal Reserve Chair Janet Yellen is in focus for U.S. central bank watchers, as she is scheduled to air her latest views on the state of the economy and small businesses, a traditional driver of job creation, when she speaks in Washington. Dow 30 component Walmart is expected to report first-quarter results. To combat sluggish sales, broaden its customer base and fend off aggressive rivals, the retailer is opening new small format stores and investors will be keen to hear how those locations have performed. They will also be looking for details on the company's new money transfer business, which is expected to drive traffic at its stores. According to StarMine, analysts expect the company to miss both profit and sales estimates for the first quarter. Retailers Nordstrom and Kohl's are also expected to post first-quarter results on the same day. The Labor Department is expected to report that April Consumer Price Index edged up 0.3 percent, rising for the fourth straight month, but inflation is expected to remain below the Federal Reserve's target. A rise in food prices and rental housing costs drove up consumer prices the prior month (0830/1230). Labor Department jobless claims data is expected to show that weekly claims for initial jobless benefits rose to 320,000 from the prior week's figure of 319,000 (0830/1230). Separately, the New York Fed's gauge of manufacturing will likely show a jump in manufacturing activity in May (0830/1230). The Federal Reserve is expected to report that factory output increased 0.3 percent in April. A decline in demand for utilities as temperatures rise, however, likely curbed industrial output (0915/1315). It also releases data on Philadelphia Fed's Business Index. (1000/1400) U.S. telecommunications regulators hold the most controversial monthly meeting since Chairman Tom Wheeler took the helm of the Federal Communications Commission in November. In what may be the issue that shapes Wheeler's legacy as FCC chairman, the five-member commission will vote whether to formally propose Wheeler's new "Open Internet" rules. His rules would allow Internet service providers to strike deals with content companies to deliver their content faster, for a fee, as long as the deals are deemed as "commercially reasonable." The FCC is expected to outline the specifics of the "commercially reasonable" standard and the promised strict enforcement of violations before the vote. The FCC will also vote to set bidding rules for the next year's major sale of highly valuable low-frequency airwaves, or spectrum. The restrictions would limit bidding by largest carriers Verizon and AT&T and would help the smaller providers, Sprint and T-Mobile - an outcome that the larger carriers have criticized. Chip equipment maker Applied Materials is scheduled to post fiscal second-quarter results and investors will be looking for new signs of a slowdown in the smartphone market. Strong demand for mobile gadgets in recent years has offset weak spending on manufacturing equipment by PC chipmaker Intel. But signs that the smartphone industry is now losing steam may put pressure on the contract chipmakers that buy Applied Materials' tools. Advance Auto Parts is scheduled to report first-quarter results. The retailer of automotive parts to the replacement industry is likely to have gotten a boost from a harsh winter in the first quarter. Investors will be looking for details on the progress of General Parts International's integration into Advance Auto. Struggling department store operator J.C. Penney is scheduled to report first-quarter results on Thursday after a surprisingly good holiday quarter, in which both sales and margins rose amid a highly promotional environment. The company has since been upbeat about its transformation efforts and said it expects same-store sales to rise as much as 5 percent by 2015. All eyes, however, will be on the performance of its overhauled home goods section and Wall Street will also be looking out for updates on the performance of other turnaround initiatives. Autodesk, which makes computer-aided design software, is expected to report strong first-quarter results, helped by higher subscriptions and higher sales of its software suites. The company, like software maker Nuance, is in the process of transitioning to a subscription-based business model. The world's largest ammunition maker, Alliant Techsystems, is expected to report fourth-quarter results. It has focused on growing its sporting business as its defense unit stays weak due to lower military spending. The sporting business is expected to account for about 45 percent of total revenue once the company's purchase of gun accessories company Bushnell is fully integrated. Analysts are also expecting Alliant's aerospace business to grow, helped by strong demand from commercial aircraft makers. The Brazil central bank is expected to start a two-day seminar about inflation targeting in Rio de Janeiro. Central bank chief Alexandre Tombini is scheduled to speak at the event as well as director Carlos Hamilton Araujo. In focus will be comments from the central bankers as capital inflows return to EM nations, but many fear renewed volatility as the US Fed scales back monetary stimulus and the Chinese economy slows. Statistics Canada's report on March factory sales is expected to show a 1.4 percent increase from February, when manufacturers registered their highest sales since the pre-recession peak in July 2008. The data should help shed light on the non-energy export sector, which is still struggling despite strengthening demand from the United States. (0830/1230) The Chilean central bank meets to set interest rates, which are currently at 4.0 percent. The market will be keenly watching if the bank holds the rate constant again or re-activates its easing cycle. It had cut 100 basis points since October but it held rates in April. (1800/2200) The Peru government releases economic growth data for March. In February the economy beat expectations to expand 5.70 percent compared to the same month a year prior. The finance minister said before February's growth rate was announced that he expected the year-on-year expansion in March to be even stronger as the economy recovers from last year's slowdown (1000/1400). Separately, Argentina is due to release April consumer inflation data. Private estimates tend to come in two to three times higher than the widely discredited official data. (1500/1900) (Compiled By Ayesha Sruti Ahmed in Bangalore)

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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