The Day Ahead

1. 1
MARKET RECAP at 4 pm ET
Indexes rallied, led by shares of technology
and financial companies with banks among
the biggest gainers as investors speculated
of a rate increase from the Federal Reserve
in coming months, which in turned pushed
the dollar and Treasury yields higher. Oil
prices rose on U.S. crude drawdown hopes
and gold extended losses.
ComingUp
Costco Wholesale Corp is likely to report
third-quarter sales and profit below
analysts' average estimates, according to
Thomson Reuters StarMine data. The
company reported weaker-than-expected
comparable sales in April due to lower
traffic, falling food prices and as it phases
out tobacco sales.
HP Inc, which houses former Hewlett-
Packard Co's legacy PC and printing
businesses, is expected to report second-
quarter revenue slightly below the average
analyst estimate, according to Thomson
Reuters StarMine data. Investors will be
looking to gains from the company's
efforts to cut costs, especially its 3,000-
person workforce reduction program.
Federal Reserve Bank of Philadelphia
President Patrick Harker speaks on the
economic outlook before the Forum on
America's Economy 2016. Separately, the
Federal Reserve Bank of Minneapolis
President Neel Kashkari participates in
conversation on the relationship between
the energy sector and monetary policy
before the Williston Basin Petroleum
Conference. The Federal Reserve Bank of
Dallas President Robert Kaplan
participates in a moderated question-and-
answer session before the Greater Houston
Partnership Thought Leader Series.
Tiffany & Co is expected to report first-
quarter sales below analysts' average
estimates, according to Thomson Reuters
StarMine data. While the impact of a
strong dollar is waning, Tiffany, like other
luxury companies, has been struggling
with customers preferring to spend more
on homes, insurance and travel. Tiffany
has said it expected earnings to pick up in
the second-half of the year. Investors will
watch out for updates to the forecast and
comments on strategic changes to the
company's operations.
Mortgage Bankers Association, a
Washington-based industry group,
releases its weekly mortgage market
index. The index decreased 1.6 percent to
482.6 in the week ended May 13.
Separately, the U.S. Federal Housing
Finance Agency issues home price index
for March. The index rose 0.4 percent in
February.
Exxon Mobil Corp and Chevron Corp will
face their toughest-ever push by
shareholders concerned about >>>
KEY ECONOMIC EVENTS
Build permits R number mm for Apr 0730 -- 1.116 mln
Build permits R change mm for Apr 0730 -- 3.6 pct
Advance goods trade balance for Apr 0830 -- -56.90 bln
Monthly home price mm for Mar 0900 -- 0.4 pct
Monthly home price yy for Mar 0900 -- 5.6 pct
Monthly Home Price Index for Mar 0900 -- 231.4
Events ET Poll Prior
STOCKS Close %Chng Yr-high Yr-lowChng
DJIA 17706.05 213.12 1.22 18229.80 15370.30
Nasdaq 4861.06 95.27 2.00 4969.32 4209.76
S&P 500 2076.06 28.02 1.37 2132.82 1810.10
Toronto 13952.85 33.27 0.24 15205.34 11531.22
FTSE 6219.26 82.83 1.35 6427.32 5499.51
Eurofirst 1349.71 30.20 2.29 1436.12 1191.74
Nikkei 16498.76 -155.84 -0.94 18951.12 14865.77
Hang Seng 19830.43 21.40 0.11 21794.84 18278.80
TREASURIES Yield Price
10-year 1.8629 -7 /32
2-year 0.9135 -1 /32
5-year 1.4029 -4 /32
30-year 2.6456 -7 /32
FOREX Last % Chng
Euro/Dollar 1.1138 -0.70
Dollar/Yen 109.99 0.70
Sterling/Dollar 1.4628 1.01
Dollar/CAD 1.3138 -0.02
COMMODITIES ($) Price Chng % chng
Front Month Crude /barrel 48.80 0.72 1.50
Spot gold (NY/oz) 1227.30 -21.19 -1.70
Copper U.S. (front month/lb) 0.0207 0.0001 0.58
Reuters/Jefferies CRB Index 184.11 0.15 0.08
S&P 500 Price $ Chng % Chng
GAINERS
Chesapeake Energy 4.06 0.39 10.63
Xilinx 47.45 2.56 5.70
Pultegroup 18.73 0.91 5.11
LOSERS
Best Buy 30.55 -2.45 -7.42
Cf Industries 27.65 -2.20 -7.37
Newmont Mining 31.75 -2.08 -6.15
Vertex Pharmaceuticals 88.42 4.00 4.74
Anthem 128.48 -4.70 -3.53
NORTH AMERICA
REUTERS/ Mike Blake

2. 2
THE DAY AHEAD
>>> a warming world at annual meetings,
as the Paris accord to tackle climate
change ratchets up investor pressure on
two of the world's largest oil companies.
BlackRock Inc holds its annual
shareholder meeting in New York as the
world's largest asset manager has come
under pressure on its CEO's pay and its
oversight of the companies owned by its
funds. Despite a trend to low-cost passive
investing and volatile markets that have
hurt most fund managers, BlackRock has
managed to float above its rivals.
US Foods Holding Corp is set to price its
$1 billion initial public offering (IPO), the
largest IPO of a leveraged buyout since
KKR's First Data last year. The highly
levered company will test investors'
appetite for debt-laden IPOs in a year that
has seen investors constantly reject them.
Mexico's statistics agency releases trade
balance data for April. The new data will
give an outlook on exports, which slumped
in March for the third month in a row.
Mexico posted a $1,956 million trade
deficit in March when adjusted for
seasonal swings. In non-seasonally
adjusted terms, Mexico posted a trade
surplus of $155 million.
Senate Banking Committee holds hearing,
"Understanding the Role of Sanctions
Under the Iran Deal: Administration
Perspectives" with Adam J Szubin, acting
under secretary of treasury for Terrorism
and Financial Crimes at the Office of
Terrorism and Financial Intelligence, and
other witnesses to be announced, in
Washington.
LIVECHAT: BRICS FOCUS: CHINA with
Eric Burroughs
With China's economy one of the main
drivers of market sentiment, we ask
Thomson Reuters Buzz editor Eric
Burroughs whether growth this year is
likely to be strong enough to ease
concerns. (0500 ET/0900 GMT) To join
the Global Markets Forum, click here
A man walks next to a BlackRock sign pictured in the Manhattan borough of New York, October 11, 2015.
REUTERS/Eduardo Munoz
Company Name* Quarter ET EPS Estimates** Year Ago Rev Estimates (mln)Smart Estimates
KEY RESULTS
Costco Wholesale Q3 21:00 $1.21 $1.22 $1.17 $27,067.68
CSRA Q4 AMC $0.48 $0.48 -- $1,306.19
HP Q2 AMC $0.38 $0.38 $0.87 $11,717.84
NetApp Q4 AMC $0.58 $0.58 $0.65 $1,401.94
PVH Q1 AMC $1.43 $1.43 $1.50 $1,897.99
Tiffany & Co Q1 BMO $0.67 $0.68 $0.81 $915.10
*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.

3. 3
THE DAY AHEAD
TopNews
Monsanto rejects Bayer bid, but open to
more talks
Monsanto turned down Bayer's $62 billion
acquisition bid as “incomplete and
financially inadequate" but said it was
open to engage further in negotiations.
and seek a higher price, two people
familiar with the matter said. Monsanto's
decision puts pressure on Bayer to decide
whether to raise its bid, even as the
company faces criticism from some
shareholders that its $122-per-share cash
offer is already too high. It was not clear
what price Monsanto would be willing to
sell for.
Best Buy forecasts profit below
estimates
Best Buy's earnings beat expectations and
the company registered strong online sales
growth, but a lower-than-expected outlook
for current-quarter profit sent its shares
down. The retailer said Q2 profit will be
impacted partly due to a supply disruption
after an earthquake in Japan and due to
investments in services launched last
September. Best Buy also said Chief
Financial Officer Sharon McCollam will
step down on June 14 and will be replaced
by Corie Barry, who currently serves as the
chief strategy officer. Best Buy forecast
adjusted profit of 38 to 42 cents per share
for the second quarter. Analysts on
average expected 50 cents per share. The
net income attributable to shareholders
rose 18 percent to $229 million, or 70 cents
per share.
HP Enterprise to merge enterprise unit
with Computer Sciences Corp
Hewlett Packard Enterprise said it planned
to spin off and merge its enterprise
services business with Computer Sciences
as the company shifts its focus to the cloud
services business. It said the merger of the
two businesses is expected to produce cost
synergies of about $1 billion in the first year
after close. Its net earnings rose to $320
million, or 18 cents per share, in the second
quarter, from $305 million, or 16 cents per
share, a year earlier. The company's board
also authorized additional $3 billion for
share repurchases.
Investigators raid Google Paris HQ in
tax evasion inquiry
French police raided Google's Paris
headquarters, escalating an investigation
into the digital giant on suspicion of tax
evasion. Google, which said it was fully
complying with French law, is under
pressure across Europe from public
opinion and governments angry at the way
multinationals exploit their presence
around the world to minimise the tax they
pay. Google pays little tax in most
European countries because it reports
almost all sales in Ireland.
Toll Brothers revenue jump shows
demand robust for luxury homes
Toll Brothers' quarterly revenue jumped
nearly 31 percent as the company sold
more luxury homes at higher prices,
underscoring a steady growth in the U.S.
housing market. Toll Brothers' orders
increased 3.2 percent to 1,993 homes in
the second quarter. Its net income jumped
31 percent to $89.1 million, or 51 cents per
share, beating the average analyst
estimate of 46 cents per share, according
to Thomson Reuters I/B/E/S. Revenue
rose for the third straight quarter to $1.12
billion, topping the average estimate of
$1.04 billion.
Apple rehires prominent security pro as
encryption fight boils
Apple, which has resisted pressure from
U.S. law enforcement to unlock encrypted
iPhones, this month rehired a top expert in
practical cryptography to bring more
powerful security features to a wide range
of consumer products. Jon Callas rejoined
Apple in May, an Apple spokesman said.
Callas had worked at Apple in the 1990s
and again between 2009 and 2011, when
he designed an encryption system to
protect data stored on a Macintosh
computer. Callas has said he is against
companies being compelled by law
enforcement to break into their own
encrypted products. But he has also said
he supports a compromise proposal under
which law enforcement officials with a
court order can take advantage of
undisclosed software vulnerabilities to
hack into tech systems.

4. 4
More challenges than cheer for Apple
chief on Asia tour
With slowing iPhone sales in China, Apple
is having to take India more seriously, but
investors hoping for a stock price fillip from
CEO Tim Cook's week-long Asia trip
instead were given a taste of the daunting
challenges that lie ahead.
The second leg of Cook's trip, to India, the
world's third-largest smartphone market,
comes at a crucial time as Apple battles
slowing growth in China, its second-
biggest market. But the challenges
suggest it will be years before India is
anything close to a major earnings pillar
for the U.S. tech giant. In meetings with
India's two largest carriers, Bharti
Airtel and Vodafone, Cook discussed ways
to work more closely to sell iPhones.
What’s so scary about falling
population, growth and prices?
It may be time to question our common
faith that the only natural and acceptable
path is growth: for population, for prices
and for the economy itself.
From central bank inflation targets to
almost all reporting on and analysis of the
economy, this assumption is built into our
view of the world. With population
shrinking in Japan, close to topping out in
China and with birth rates in Italy, for
example, now at their lowest in its history
as a modern state, growth of all sorts may
be scarce, leaving us in need of a better
way to frame the problem. The question
may not be how to get growth, but how
best to live without it, even if that brings
phenomena like falling prices, or deflation.
POLL-U.S. e-cigarette use stalls as
health concerns grow
Use of electronic cigarettes and other
vaping devices has stalled in the United
States as more Americans question their
safety, according to a new online Reuters/
Ipsos poll.
About 10 percent of the 9,766 adults
surveyed between April 19 and May 16 use
the devices, the same percentage as in a
similar Reuters/Ipsos poll in May, 2015.
This year, however, a growing percentage
of participants expressed negative
attitudes toward e-cigarettes.
Forty-seven percent of respondents
said vaping was not healthier than
smoking conventional cigarettes
compared with 38 percent who felt that
way a year ago.
THE DAY AHEAD
Iraqi federal police advance with Shi'ite fighters towards Falluja, Iraq, May 24, 2016.
InsightandAnalysis

5. 5
MARKET MONITOR
ComingUp
TopNews
Some crude production restarts as cool
weather saps Canadian wildfire
Some crude producers restarted
operations in Canada's energy heartland
as a mass evacuation of the Fort McMurray
oil town entered its fourth week, though
cool weather and light winds were helping
firefighters dampen the blaze. No oil
facilities or communities were in the fire's
path as of Tuesday morning as its footprint
grew slightly to 523,000 hectares from
roughly 522,900 hectares on Monday,
Alberta officials said. The blaze was
spreading mainly across forested areas to
the east as firefighters were working to
hold fire breaks around prized oil sands
facilities where crews have stripped away
tinder-dry trees and vegetation.
Kinross continues processing at strike-
hit Mauritania gold mine
The processing facility remains in
operation at Kinross Gold's Tasiast mine in
Mauritania, a spokesman for the miner
said after workers at the site went on
strike. Management at the mine in western
North Africa also have a contingency plan
to minimize the impacts of the strike,
which includes processing stockpiled
material, Kinross spokesman Louie Diaz
said in an email. He did not give details of
the plan. Kinross said that unionized
workers at the Tasiast mine had gone on
strike. The Toronto-headquartered gold
miner said it did not expect the strike to
affect an expansion that is currently
planned for the mine.
THE DAY AHEAD
TSE's S&P/TSX composite Price $ chng % chng
GAINERS
Mitel Network 8.82 0.82 10.25
Dhx Media 6.70 0.40 6.35
LOSERS
Kinross Gold 5.71 -0.79 -12.15
Alamos Gold 8.05 -1.10 -12.02
The Bank of Canada is widely expected to
hold interest rates at 0.50 percent but
analysts will parse the statement for
indications that the central bank might cut
its already anemic forecast for second
quarter annualized growth amid a slew of
gloomy economic data. The bank will also
outline the likely economic impact of a
massive wildfire in Alberta's oil sands
region. The disruption to oil production is
likely to dampen growth in the short term.
Bank of Montreal releases its results for
the second quarter. Canada's fourth-
biggest bank is expected to report a rise in
loans to oil & gas companies that have
turned bad, offering further evidence that
the low oil price is hurting Canada's
biggest lenders.
Canada's main stock index closed higher
on Tuesday as strength in the financial
sector ahead of the bank earnings season
helped offset a slump in shares of gold
miners. Bank of Nova Scotia advanced
1.05 percent. Suncor Energy gained 2.58
percent. The Toronto Stock Exchange's
S&P/TSX composite index rose 0.24
percent, to 13,952.85.
The dollar fell 0.02 percent at C$1.3138.
REUTERS/Chris Wattie
Aerial view of the burnt forest in the wildfire is seen over Fort McMurray, Alberta, Canada May 13, 2016

6. 6
HOME SALES DATA
U.S. new homes sales hit eight-year high,
point to firming economy
New U.S. single-family home sales recorded
their biggest gain in 24 years in April, touching a
more than eight-year high as purchases
increased broadly, a sign of growing confidence
in the economy's prospects.
Tuesday's report from the Commerce
Department, which also showed a surge in new
home prices to a record high, offered further
evidence of a pick-up in economic growth that
could allow the Federal Reserve to raise interest
rates soon.
New home sales jumped 16.6 percent to a
seasonally adjusted annual rate of 619,000
units, the highest level since January 2008. The
percent increase was the largest since January
1992.
THE DAY AHEAD
FINANCIAL TARGETS REDUCED
Wells Fargo lowers financial targets, cuts energy loan exposure
Wells Fargo & Co lowered two key financial targets and said it is sharply cutting exposure to troubled energy loans, signaling that tough
times for bank profits may continue through the rest of the year.
MEMBERS APPOINTED
Sumner Redstone appoints two new members to his trust
Sumner Redstone, chairman emeritus of Viacom Inc said he has appointed two new trustees to a trust that will determine the direction of
the media conglomerate and CBS in the event of his incapacitation or death.
DEAL
Aircraft parts maker TransDigm to buy ILC Holdings for $1 billion
Aircraft components maker TransDigm Group Inc said it would buy ILC Holdings Inc from private equity firm Behrman Capital for $1 billion
to expand its spare parts business.
PROXY BATTLE
Retailer Chico's squares off against activist Barington Capital
Chico's FAS Inc is headed for a proxy fight with shareholder Barington Capital, as the women's apparel retailer resists the activist hedge
fund's push to put two nominees on the company's board.
YOUR MONEY
Three ways to budget for fun in retirement
The way retirement is supposed to go is that you scrimp and save for decades while you are working, and then you get to enjoy years of
luxurious, worry-free leisure.
DIESELGATE SETTLEMENT
Volkswagen, U.S. make substantial progress toward final deal-judge
Volkswagen AG has made substantial progress toward reaching a final settlement next month with car owners and the U.S. government
over the German automaker's cheating on diesel emissions tests, a federal judge said.
A man walks on a job site of a home under construction in Manhasset, New York September 16, 2015.
REUTERS/Shannon Stapleton

7. 7
THE DAY AHEAD
The Day Ahead - North America is compiled by Publishing Team in Bengaluru.
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Israeli soldiers of the Search and Rescue brigade take part in a training session in Ben Shemen forest, near the city of Modi'in May 23, 2016. REUTERS/Amir Cohen