US EQUITIES WEEK AHEAD: Debt Suspense; July Jobs, Auto Data
July 29 2011 - 4:25PM
Dow Jones News
All eyes are on Washington next week as U.S. lawmakers continue
arguing over competing budget plans tied to the federal debt
ceiling, which the Treasury Department says must be increased by
Tuesday if the government wants to continue meeting its payment
obligations.
Standard & Poor's, meanwhile, is holding firm on its promise
to downgrade U.S. debt even if lawmakers agree to lift the ceiling,
as the credit-rating agency is suggesting the country would need a
$4 trillion deficit-reduction deal to maintain its AAA status.
Markets have so far reacted cautiously to the impasse, but an
unprecedented rating action on federal bonds could send shock waves
through the global economy.
CBS, Time Warner, Viacom Report 2Q Results
CBS Corp. (CBS) will kick off a series of quarterly earnings
reports from U.S. media firms on Tuesday, with Time Warner Inc.
(TWX); NBC Universal's majority owner, Comcast Corp. (CMSCA,
CMCSK);, and Viacom Inc. (VIA, VIAB) slated to report later in the
week.
Allstate Corp. (ALL), Church & Dwight Co. (CHD), Lowe's Cos.
(LOW) and Pfizer Inc. (PFE) also have quarterly earnings scheduled
next week.
Big 3 Seen Gaining Ground In July Car Sales
Auto makers are forecast to report a modest 1.6% increase in
U.S. new-vehicle sales in July from a year ago, according to
car-shopping website Edmunds.com, as stronger sales from Detroit's
Big Three and Nissan Motor Co. (NSANY, 7201.TO) should again offset
declines from Japan's other top manufacturers. Chrysler Group LLC
is projected to post a 15% increase in sales from year-earlier
levels, which would make it the strongest performer in July. The
industry's results are due Tuesday.
European Banks Expected To Take Hit From Greece
Earnings reports from French banking giants BNP Paribas SA
(BNP.FR, BNPQY) and Societe Generale SA (GLE.FR) next week are
expected to show big impacts from the Greek rescue plan. The head
of the French Banking Federation on Friday predicted French banks
and insurers will lose around EUR3 billion by writing down the
value of Greek bonds but said French financial institutions remain
"solid" and have little exposure to Greece overall.
Senate To Question Nominee For Consumer Agency
The Senate Banking Committee on Thursday will decide whether to
confirm former Ohio Attorney General Richard Cordray to lead the
new U.S. Consumer Financial Protection Bureau. The Obama
administration picked Cordray over presidential adviser Elizabeth
Warren after some senators cast doubt over her confirmation
chances.
Eyes On Australian Central Bank's Rate Decision
A once-in-a-century commodities boom could prompt the Reserve
Bank of Australia to raise the country's interest rates for the
first time since November as officials look to tame an alarming
inflation jump over the past six months. The bank's policy-making
board will meet on Tuesday to weigh the price data against signs of
slow credit growth. Australia & New Zealand Banking Group
(ANZ.AU) on Thursday predicted the central bank will hike interest
rates 25 basis points, but other economists surveyed said the bank
will wait until the fourth quarter at earliest.
Higher Sales Expected At US Retail Chains
Same-store sales at big U.S. retailers are expected to climb
4.2% in July, according to a poll of analysts conducted by Thomson
Reuters. High unemployment and weak consumer confidence still give
discount chains an edge over mid-priced rivals, while Gap Inc.
(GPS) continues to struggle--analysts forecast a 1.3% sales drop at
the company's namesake stores open for at least a year.
July Jobs Data Add To Potentially Volatile Week
The U.S. Labor Department on Friday will release July
unemployment figures, which could either move markets or just be a
footnote to the bigger headlines over raising the debt ceiling. The
department last Thursday said initial claims for unemployment
insurance fell below the crucial 400,000 level, which could signal
positive momentum in the labor market. ADP's July employment report
on Wednesday will foreshadow the government data.
The Institute for Supply Management also releases data on
manufacturing activity Monday, followed by the U.S. Census Bureau's
factory orders report on Wednesday.
Spanish Debt Sale To Test Investors' Confidence
An auction of Spanish government debt slated for Thursday will
test the confidence of investors still fretting about the effect of
the Greek crisis on other shaky euro-zone economies. Moody's
Investors Service on Friday highlighted the risks when it put
Spain's Aa2 rating on review for possible downgrade Friday, citing
rising funding costs and the possible precedent for bondholder
losses set by the latest Greek bailout. At the same time, Barclays
Capital said the high proportion of domestic investors holding the
country's debt should help drive natural demand for the
auction.
Alabama County Might File For Bankruptcy
Leaders of Alabama's debt-laden Jefferson County are again
slated to discuss filing the largest bankruptcy in municipal
history unless a counterproposal from creditors succeeds. The
county encompassing Birmingham, Ala., could file for bankruptcy
Thursday.
Fourth Round Of Sanctions Expected For Syria
The European Union will likely place a fresh round of sanctions
on Syria by early next week, several diplomats told Dow Jones
Newswires. The new sanctions--the fourth round of restrictive
measures--will likely target only "a few additional names," one
diplomat said, while another said it might include one company, but
could not give further detail. Syrian strongman Bashar al-Assad is
facing increasing international pressure for his violent crackdown
on political protests in recent weeks.
Uganda Protests Continue Over Rising Food Prices
Ugandan opposition parties said they will resume nationwide
protests against escalating food prices and inflation next week,
blaming the government for not addressing problems with the
economy. The group is planning to resume the protests in the
Ugandan western robusta coffee hub of Masaka.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909;
Andrew.FitzGerald@dowjones.com
--Nicholas Bariyo, Emese Bartha, James Glynn, Alessandro Torello
and other Dow Jones Newswires staff contributed to this report.
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