Download Coming Up - Thomson Reuters

NORTH AMERICA
For Wednesday, August 31, 2016
MARKET RECAP at 4 pm ET
Wall Street ended lower, dragged down by
Apple, but a gain in financial stocks limited
the impact. The dollar rose against a
basket of major currencies as the market
focused on crucial jobs data this week for
clues on when the Federal Reserve will
next raise interest rates, while gold
slipped. Oil prices dropped as glut
concerns weighed. Treasuries were little
changed as cautious investors held their
positions.
Close
STOCKS
DJIA
Chng %Chng
18454.30 -48.69
Yr-high
18668.40 15450.60
5275.74 4209.76
5222.99
-9.34
-0.18
S&P 500
2176.12
-4.26
-0.20
14684.85
2.88
0.02
6820.79
-17.26
-0.25
6955.34
5499.51
1357.17
6.77
0.50
1436.12
1191.74
Nikkei
16725.36
-12.13
-0.07
18951.12 14864.01
Hang Seng
23016.11
194.77
0.85
23193.90 18278.80
FTSE
Eurofirst
TREASURIES
Yield
Price
10-year
1.5697
-1 /32
2-year
0.8013
1 /32
5-year
1.1799
-1 /32
30-year
2.2335
-13 /32
FOREX
Last
% Chng
Euro/Dollar
1.1143
-0.40
Dollar/Yen
102.96
1.04
Sterling/Dollar
1.3075
-0.21
Dollar/CAD
1.3091
0.65
COMMODITIES ($)
Front Month Crude /barrel
Spot gold (NY/oz)
Copper U.S. (front month/lb)
Reuters/Jefferies CRB Index
S&P 500
2193.81
Payrolls processor ADP is expected to
report that private employers hired
175,000 workers in August, after adding
179,000 jobs in July. Also, the National
Association of Realtors is seen reporting
that contracts to buy previously owned
homes increased 0.6 percent in July, after
rising 0.2 percent in June.
1810.10
14855.69 11531.22
Chng
% chng
46.44
1310.86
0.0207
183.73
-0.54
-12.15
-0.0001
-1.62
-1.15
-0.92
-0.34
-0.87
Price
REUTERS/Robert Galbraith
Cloud software maker Salesforce.com Inc
is expected to report a rise in secondquarter revenue as the demand for its web
-based sales and marketing software
continues to rise. Investors are likely to
keep a keen eye on the company's forecast
and may look for comments on new
developments in its artificial intelligence
Price
$ Chng % Chng
GAINERS
Mosaic Company
United Continental Holdings
CF Industries
LOSERS
30.46
50.99
26.20
Hershey Co
Newmont Mining
99.65
38.60
-12.02
-2.31
-10.76
-5.65
Gap Inc
25.33
-1.15
-4.34
2.51
4.04
1.22
8.96
8.60
4.88
technology.
Federal Reserve Bank of Minneapolis
President Neel Kashkari participates in a
conversation on "The Role of the Fed and
its Board of Directors," hosted by the
Amherst H. Wilder Foundation in St. Paul,
Minnesota.
Brazil's recession probably continued in
the second quarter but appears to be
nearing an end as consumers and
businesses grow more confident about a
recovery. Gross domestic product likely
fell 0.5 percent between April and June, in
what would be the sixth straight quarter of
contraction in Latin America's largest
economy.
Yr-low
-0.26
Nasdaq
Toronto
Coming Up
LIVECHAT - U.S. POLITICS BY THE
NUMBERS with Reuters' Chris Kahn
U.S. politics polling editor Chris Kahn
parses data for trends, clues and meaning
of twists and turns of the 2016 elections,
with an eye on helping Forum members
look beyond the day-to-day campaign
noise. (1330 ET/1730 GMT) To join the
Global Markets Forum, click here
KEY ECONOMIC EVENTS
Events
ET
Poll
Prior
MBA mortgage application
0700
--
-2.1 pct
Mortgage Market Index
0700
--
530.1
MBA Purchase Index
0700
--
213.4
Mortgage Refinance Index
0700
--
2355.2
MBA 30-year mortgage rate
0700
--
3.67 pct
ADP national employment for Aug
0815
175,000
179,000
Chicago PMI for Aug
0945
54.0
55.8
Pending Homes Index for Jul
1000
Pending sales change MM for Jul
1000
0.6 pct
0.2 pct
1
111.0
THE DAY AHEAD
Top News
EU hits Apple with 13 billion euro Irish
tax demand
The European Commission ordered Apple
to pay Ireland unpaid taxes of up to $14.5
billion as it ruled the firm had received
illegal state aid. Apple and Dublin said the
U.S. company's tax treatment was in line
with Irish and European Union law and
they would appeal the ruling, which is part
of a drive against what the EU says are
sweetheart tax deals that usually smaller
states in the bloc offer multinational
companies to lure jobs and investment.
The U.S. feels its firms are being targeted
by the EU and a U.S. Treasury
spokesperson warned the move threatens
to undermine U.S. investment in Europe
and "the important spirit of economic
partnership between the U.S. and the EU".
Apple, which had more than $200 billion
in cash and readily marketable securities
at the end of June, is likely to see the case
drag out for years in EU and possibly Irish
courts. The EU's ruling challenges the way
that Ireland agreed to tax the profits of
Irish registered Apple subsidiaries, through
which most of its non-U.S. profits flowed.
Google cloud unit close to winning
PayPal business - CNBC
Alphabet's Google is close to winning
PayPal Holdings as a client for its cloud
business, potentially beating out
Amazon.com and Microsoft, CNBC
reported. While Google is the front-runner,
the online payments processor is
evaluating the other providers and hasn't
made any decision yet, CNBC reported,
citing people familiar with the matter.
However, PayPal may not move its
technology infrastructure in the fourth
quarter, the peak period for online
commerce, CNBC said. PayPal has some
existing business with Amazon Web
Services, according to the CNBC report.
Google has been trying to beef up its
presence in cloud computing, a market
dominated by Amazon and Microsoft.
Abercrombie no longer sees comparable
sales improving this year
Teen apparel retailer Abercrombie & Fitch
posted its 14th straight quarter of declining
sales and said it no longer expects
comparable sales to improve this year,
highlighting its struggles to win back
shoppers. Abercrombie and other retailers
have struggled to compete with the
trendier and often cheaper products at fast
-fashion retailers such as H&M and
Inditex's Zara as well as with online and off
-price retailers. The net loss attributable to
Abercrombie increased in the quarter. Its
adjusted loss of 25 cents per share was
bigger than analysts average estimate of
20 cents, according to Thomson Reuters I/
B/E/S. Net sales fell 4.2 percent to $783.2
million, beating analysts' estimates of
$782.7 million, in part helped by strong
growth in its online business and an uptick
in its European business.
Chevron wins dismissal of claims of poor
savings plan oversight
A U.S. judge has dismissed a lawsuit by
Chevron workers who said the oil company
breached its fiduciary duties by putting
costly and poorly performing investment
options in a $19 billion employee savings
plan. In a decision on Monday, Chief Judge
Phyllis Hamilton of the U.S. District Court
in Oakland, California, wrote that the
workers failed to raise a "plausible
inference" of wrongdoing. Hamilton gave
the plaintiffs until Sept. 30 to file an
amended complaint. The judge also said it
was acceptable for the plan to offer a
money market fund rather than a higherreturn stable value fund for plan
participants seeking to preserve capital.
Neither Jerome Schlichter, whose firm
represents the plaintiffs, nor a spokesman
for San Ramon, California-based Chevron
immediately commented.
Twitter to share ad revenue on videos by
U.S. individual users
Twitter said it would share some of the
advertising revenue on videos created by
its individual users in the United States as
part of an expanded video advertising
program. The microblogging service
provider's Amplify Publisher Program is
currently restricted to large companies
such as CBS's CBS News and
organizations such as the National
Football League and Major League
Baseball. A user has to check a box prior to
tweeting videos, after which ads will run on
the video before it starts. "A portion of the
ad revenue is then shared back with
creator," Twitter said in a blog post. Twitter
will share 70 percent of the revenue with
the video creator, technology website
Recode reported, citing a source familiar
with the matter. Google's YouTube shares
55 percent of the ad revenue, Recode >>>
The logo of Dow Jones Industrial Average stock market index listed company Chevron (CVX) is seen in Los
Angeles, California, United States, April 12, 2016. REUTERS/Lucy Nicholson
2
THE DAY AHEAD
>>> said. Twitter's terms for individual
video creators will be the same as those for
its Amplify partners, the website reported.
GE names Richard Laxer CEO of GE
Capital
General Electric named Richard Laxer
chief executive of GE Capital, which the
conglomerate began shrinking in 2015 as
part of efforts to return to its industrial
roots. Laxer, 55, will take over on Sept. 1
from company veteran Keith Sherin, who
will retire at the end of the year after 35
years of service. Since April 2015, Sherin
has led the transformation of GE Capital
into a smaller, more focused business, GE
Chief Executive Jeff Immelt said. GE, which
had set a target of selling $200 billion in
assets of its finance arm, said earlier this
month it had signed deals worth about
$192 billion. Sherin, who served as GE's
finance chief for 15 years, is also vice
chairman of the company and chairman of
GE Capital.
Caesars wins lawsuit shield to pursue
'uphill' appeal
A federal judge gave Caesars
Entertainment a five-week shield from $13
billion in lawsuits, capping a week of
frantic court hearings as the casino group
struggles to salvage a high-stakes debtcutting plan for its bankrupt subsidiary.
Judge Robert Gettleman said at an
emergency court hearing in Chicago that
he will decide on Oct. 5 whether he should
overturn a U.S. Bankruptcy Court ruling
from Friday that cleared the way for
bondholders to sue Caesars. In January,
Caesars will seek to confirm a plan of
reorganization that would slash the $18
billion of debt held at its bankrupt Caesars
Entertainment Operating Co, subsidiary. It
is desperate to keep bondholders at bay
until then. The lawsuits were brought by
investors who allege that Caesars reneged
on guarantees of bonds issued by its
subsidiary, known as CEOC, which filed for
Chapter 11 protection in January 2015.
Self-driving car startup Drive.ai names
former GM executive to board
Silicon Valley self-driving startup Drive.ai
has named to its board a former Wall
Street investment banker and General
The logo of U.S. conglomerate General Electric is pictured at the company's site in Belfort, April 27, 2014.
REUTERS/Vincent Kessler
Motors executive as investor interest in
autonomous vehicles intensifies. Steve
Girsky, a former GM vice chairman and
Morgan Stanley alum, was named a
Drive.ai director. The appointment comes
roughly five months after GM bought
Cruise Automation, a one-time rival of
Drive.ai, for $1 billion. Just earlier this
month, Uber acquired another one-time
rival, Otto, for an undisclosed sum
estimated at close to $700 million. Drive.ai
is one of a handful of startups building
fully autonomous systems for cars, a sector
that has drawn more attention since the
Cruise and Otto deals.
Uber hires senior Target executive to
lead global operations
Uber Technologies has plucked a top
executive from retail giant Target to help
lead the growing ride services company
and reshape its image. Uber said it hired
Jeff Jones, chief marketing officer for
Target, to oversee the bulk its global
operations. Jones will be president of ridesharing at Uber, running local Uber
services in every city, as well as marketing
efforts and customer support. The hire
marks a move by Uber, which has become
the dominant on-demand ride service, to
bolster its reputation and brand. The
company has since 2009 expanded to
3
more than 450 cities, often by
steamrolling regulators and launching
campaigns against lawmakers until local
officials relented. The addition of Jones
comes a day after Uber announced the
departure of Alphabet executive David
Drummond from its board of directors.
Cyber security firm LogRhythm raises
$50 million after changing IPO plans
Cyber security company LogRhythm has
raised $50 million from private investors
after postponing plans for an initial public
offering late last year, the company said on
Tuesday, the latest sign of how austere the
IPO market has become for some
technology start-ups. LogRhythm selected
bankers more than a year ago with an eye
on a $1 billion-plus IPO in the second half
of 2015, Reuters reported last year. But the
company altered course in the fourth
quarter after assessing changes in the IPO
market and a chillier reception among
investors, company executives said. "We
definitely were contemplating an IPO,"
said Dave Welsh, a partner at Adams
Street Partners and LogRhythm investor
and board member. "A lot of the original
decision not to pursue the IPO were
market factors." "We thought: 'Let's not
push this into a really bad market if we
don't need to,'" he said
THE DAY AHEAD
A firefighter holds a statue of Jesus prior to the funeral for victims of the earthquake that leveled the town in Amatrice, central Italy August 30, 2016.
REUTERS/Max Rossi
Insight and Analysis
COLUMN-Kiss it goodbye, the great
buyback boom is on the wane: James
Saft
The great stock buyback boom may be on
the wane, undermined by falling company
earnings. U.S. company stock buybacks
are down 21 percent in the first seven
months of 2016 compared to the same
period a year earlier, according to
TrimTabs Investment Research, a fall
driven in part by five consecutive quarters
of year-over-year earnings declines among
S&P 500 stocks. Buybacks, which cancel
shares and thus increase per-share
earnings, have played a crucial role in
supporting the stock market since the
financial crisis, flattering earnings even for
companies with static or falling revenues.
They, along with dividends, return cash to
shareholders, a process often facilitated by
borrowed money. Over the first six months
of the year S&P 500 companies paid out
112 percent of their earnings in the form of
either dividends or share buybacks. The
last time companies were paying out this
much more than they are taking in was in
2008, when the financial crisis hammered
revenues faster than companies could cut
buybacks and dividends.
BREAKINGVIEWS-Europe's bite at
Apple could leave bad aftertaste
Ireland’s economy is built on a low tax rate.
After the European Commission deemed a
deal between Dublin and U.S. tech giant
Apple to be against state aid rules on Aug.
4
30, it still will be. The risk is that by coming
on strong, with a call for Apple to repay up
to 13 billion euros in illegal state aid,
Europe pushes Ireland into becoming even
friendlier to corporate taxpayers. Brussels
wants to stop shadowy fiscal deals from
undermining the single market. Some
progress has already been made. Since
2014 Ireland has reformed laws so that
companies domiciled within its borders
must also be resident for tax purposes.
Apple’s back-tax bill, potentially large and
higher than expected, may pressure
politicians to ensure that the only special
deal foreign companies get in Ireland is
their low 12.5 percent tax rate. Factor in
the impact of Brexit on Ireland, however,
and it’s possible to take a less cheery view.
THE DAY AHEAD
Coming Up
Canada's economy is forecast to have
contracted at a 1.5 percent annualized
pace in the second quarter as growth was
shaken by wildfires in northern Alberta
that disrupted oil production. Figures for
June, released at the same time, are
expected to show growth picked up by 0.4
percent in the month that should bolster
expectations the economy will rebound in
TSE's S&P/TSX composite
GAINERS
Ritchie Bros. Auctioneers
Potash Corporation of Saskatchewan
Agrium Inc
LOSERS
B2Gold Corp
Yamana Gold Inc
First Majestic Silver
MARKET MONITOR
the third quarter.
National Bank of Canada reports thirdquarter results. The bank is likely to report
a fall in loan losses as a rally in oil prices
gave some relief to its distressed borrowers
in the oil and gas industry. The bank raised
C$300 million through a share offering
last October to shore up its balance sheet.
Price
$ chng
% chng
46.74
23.30
125.09
9.11
2.40
8.56
24.21
11.48
7.35
3.45
5.40
16.19
-0.30
-0.40
-1.11
-8.00
-6.90
-6.42
Canada's main stock index edged slightly
higher on Tuesday as gains for bank and
fertilizer stocks offset losses for the shares
of mining companies, while gold fell.
Report of a possible merger sent shares of
two fertilizer companies soaring. Potash
Corp was up 11.48 percent at C$23.30 and
Agrium rose 7.35 percent at C$125.09.
The Toronto Stock Exchange's S&P/TSX
composite index unofficially closed up
0.02 percent at 14,684.85. Bank of Nova
Scotia was one of the biggest gainers, with
the country's third-biggest lender up 1.5
percent at C$69.93 after reporting
earnings above expectations even as it
reins in domestic mortgage lending .
The dollar rose 0.65 percent to C$1.3091.
Top News
Potash Corp, Agrium talk merger;
competition scrutiny expected
Canada's Agrium and Potash Corp of
Saskatchewan said they are in talks to
merge, a deal that would create a fertilizer
and farm retailing giant worth more than
$25 billion but also trigger U.S. regulatory
scrutiny. Potash Corp, the world's biggest
crop nutrient company by capacity and
Agrium, North America's largest farm
retailer, said in separate statements that
the talks were at a "preliminary" stage
about a possible merger of equals, adding
that no agreement has been reached. The
deal would be the latest in a string of
agriculture merger attempts, including
potential combinations of seed giants
Monsanto and Bayer, and ChemChina and
Syngenta.
Scotiabank reins in mortgage lending,
stays vigilant
Bank of Nova Scotia has pulled back on
mortgage lending in its domestic market,
potentially insulating itself if house prices
fall in Vancouver and Toronto. Canada's
third-biggest lender earned C$1.55 per
The shortfall, though slightly smaller than
the C$20.50 billion forecast in a Reuters
poll, was the second-largest after the
C$20.20 billion deficit in the third quarter
of 2010. The deficit for international
transactions in goods jumped to a record
C$11.28 billion from C$6.48 billion in the
first quarter.
REUTERS/Chris Wattie
share in the quarter, up from C$1.46 a year
earlier. Analysts had on average expected
earnings of C$1.48 per share, according to
Thomson Reuters I/B/E/S. The bank
benefited from a decline in funds set aside
to cover bad loans to energy companies,
with a partial recovery in the price of oil
helping borrowers pay back credit.
Canada current account deficit hits near
-record C$19.86 billion
Canada's current account deficit widened
to a near-record C$19.86 billion in the
second quarter as the value of exports
continued to sink, Statistics Canada said.
5
Canada producer prices up as Brexit
fuels gold, silver demand
Investor demand for gold and silver in the
wake of Britain's vote to leave the
European Union in late June helped push
Canadian producer prices up by 0.2
percent in July, Statistics Canada said.
Prices for primary non-ferrous metal
products rose by 5.3 percent, the largest
month-on-month gain in almost four
years, on higher demand for both
unwrought precious metals and precious
metal alloys. "Given the financial market
volatility following Britain's decision to
leave the European Union, prices for
precious metals increased as investors
pursued safe-haven assets such as gold
and silver," Statscan said.
THE DAY AHEAD
ECONOMY GAINS STEAM
U.S. job market optimism lifts consumer
confidence to 11-month high
U.S. consumer confidence rose to an 11-month
high in August, with households more upbeat
about the labor market, in a further sign that the
economy was regaining steam after faltering in
the first half of the year. While other data
showed a moderation in house prices in June,
the gains probably remain sufficient to boost
household wealth and continue to support
consumer spending, as well as make home
purchasing affordable for first-time buyers. The
Conference Board said its consumer confidence
index increased 4.4 points to 101.1 this month,
the highest reading since September 2015.
Consumers' assessment of both current business
and labor market conditions improved sharply in
August. A separate survey last week showed an
ebb in consumer sentiment this month.
FISCHER REMARKS
Fed's Fischer says U.S. job market 'very close' to full strength
The U.S. job market is nearly at full strength and the pace of interest rate increases by the Federal Reserve will depend on how well the
economy is doing, Fed Vice Chairman Stanley Fischer said.
BANKS SEE HIGHER INCOME
U.S. banks see higher net income, expand lending in Q2 - FDIC
U.S. banks saw their net income increase $584 million, or 1.4 percent, compared to the second quarter of last year in a sign of strength for
the sector, according to the Federal Deposit Insurance Corporation.
POTENTIAL DEAL
Blackstone in talks to buy real estate group Officefirst -sources
Buyout group Blackstone is in talks to acquire German real estate group Officefirst in a potential $3.6 billion deal, three people familiar
with the matter said.
CO-INVESTMENT REGULATION
Buyout firms' hushed deals with top investors risk US regulators' ire
Some U.S. private equity firms are courting their biggest and savviest investors with privileged access to special fee-saving deals without
telling other investors, according to people involved in buyout firms' fundraising.
MARKET MAKERS GET BACKING
Exchange operator Bats shifts payments to market makers for ETFs
Bats Global Markets will stop paying issuers of exchange-traded funds to list their high-volume securities on its exchange and instead will
compensate the firms that support trading in those ETFs, the company said.
QUBE STAKE SALE
Carlyle launches $264 million selldown in Australian logistics firm Qube -IFR
Private equity firm Carlyle Group launched the sale of a stake in Australian diversified logistics company Qube Holdings worth $264
million, IFR reported citing a term sheet of the transaction.
6
THE DAY AHEAD
KEY RESULTS
Company Name*
Quarter
ET
Smart Estimates
EPS Estimates**
Year Ago
Rev Estimates (mln)
Brown-Forman
Q1
08:00
$0.37
$0.37
$0.38
$883.40
Salesforce.com
Q2
AMC
$0.22
$0.22
$0.19
$2,019.15
*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.
Children play on pontoons as clouds gather over the banks of the river Ganges in Allahabad, India August 30, 2016. REUTERS/Jitendra Prakash
The Day Ahead - North America is compiled by Hardik Vyas and Riniki Sanyal in Bengaluru.
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7