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NORTH AMERICA For Wednesday, April 5, 2017

MARKET RECAP at 4 pm ET
Stocks ended little changed as investors,
Coming Up
awaiting the first-quarter earnings, worried Yum China Holdings Inc is scheduled to
over the ability of President Donald Trump report its first-quarter results. The
to deliver on his policy plans. Benchmark company is expected to post a slight rise in
Treasury yields touched their lowest in quarterly sales as it reports for the second
more than five weeks before edging higher time as a standalone company. China's
to trade steadied. The safe-haven yen largest publicly held restaurant operator
advanced against the dollar. Oil prices has been battling stiff competition while
jumped on expectations of lower U.S. REUTERS/Kevin Lamarque
its Pizza Hut Casual Dining segment
crude inventories and gold prices rose. The U.S. Federal Reserve releases minutes weighs on sales. Investors will look for
of its March policy meeting at which it comments on labor, commodities and
STOCKS Close Chng %Chng Yr-high Yr-low raised its benchmark interest rates and protectionist sentiments in China.
DJIA 20689.24 39.03 0.19 21169.11 16165.90 forecast two more rate increases this year.
Nasdaq 5898.61 3.93 0.07 5928.93 5397.99 The minutes will likely show how confident Walgreens Boots Alliance Inc is expected
S&P 500 2360.13 1.29 0.05 2400.98 2245.13 policymakers are in their projections and to report second-quarter results. The
Toronto 15669.07 84.67 0.54 15943.09 13217.17 any division among them on when to start drugstore chain could offer to sell more
FTSE 7321.82 39.13 0.54 7447.00 7093.57 reducing the central bank's $4.5 trillion assets in order to buy smaller rival Rite
Eurofirst 1497.77 3.29 0.22 1508.89 1420.78 balance sheet. Aid, for a deal which has seen the offer
Nikkei 18810.25 -172.98 -0.91 19668.01 18650.33 price being reduced and the merger date
Hang Seng 24261.48 149.89 0.62 24656.65 21883.82 Monsanto Co, which agreed last year to be being delayed twice since it was first
bought by rival Bayer AG, is expected to proposed in October 2015.
TREASURIES Yield Price
report second-quarter earnings. The
10-year 2.3587 -3 /32 company is likely to see strong profits from Mexico will report consumer confidence
2-year 1.2540 -1 /32 U.S. seed sales as farmers prepare to plant data for March. In the previous month, the
5-year 1.8882 -2 /32 the largest combined corn and soybean consumer confidence index rebounded
30-year 2.9991 -10 /32 acres on record. The company has also from a record low after the county's peso
recently expanded its seed offerings in key recovered some ground and the
FOREX Last % Chng
production areas of South America. government trimmed gasoline prices.
Euro/Dollar 1.0667 -0.01 Gross fixed investment data for January is
Dollar/Yen 110.73 -0.13 The Institute for Supply Management will also on the region's economic calendar.
Sterling/Dollar 1.2441 -0.36 likely report that its services sector index
Dollar/CAD 1.3402 0.18 held steady at 57.0 in March. Markit's PMI LIVECHAT: EQUITIES WATCH
TR/HKEX RMB 94.35 -0.03 services and composite data for March Join our Reuters correspondents in London
are expected. A report from payrolls and New York for a discussion on the stock
COMMODITIES ($) Price Chng % chng
processor ADP is expected to show private markets and company earnings. (0900
Front Month Crude /barrel 51.05 0.81 1.61 sector employment increased 187,000 in ET/1300 GMT) To join the Global Markets
Spot gold (NY/oz) 1255.76 2.91 0.23 March after accelerating 298,000 in Forum, click here
Copper U.S. (front month/lb) 0.0261 0.0001 0.40
Reuters/Jefferies CRB Index 187.07 1.08 0.58
February.

S&P 500 Price $ Chng % Chng

GAINERS
KEY ECONOMIC EVENTS
Staples 9.51 0.85 9.82 Events ET Poll Prior
Chesapeake Energy 6.32 0.40 6.76
Vertex Pharmaceuticals 112.29 4.84 4.50 ADP national employment for Mar 0815 187,000 298,000
Range Resources 29.76 1.19 4.17 Markit Composite PMI final PMI for Mar 0945 -- 53.2
LOSERS
Markit Services PMI final for Mar 0945 -- 52.9
Acuity Brands 173.93 -30.13 -14.77
Nvidia 100.78 -7.60 -7.01 ISM Non-Manufacturing PMI for Mar 1000 57.0 57.6
Nordstrom 43.92 -2.56 -5.51 ISM Non-Manufacturing Business Activity for Mar 1000 61.5 63.6
Ralph Lauren 77.75 -3.62 -4.45

1
THE DAY AHEAD

Top News
Office supplies retailer Staples explores
sale sources
Staples is in talks with private equity firms
about a potential sale, sources familiar
with the matter said, as the largest U.S.
office-supplies seller tests buyer appetite
for an industry rattled by online
competition and hefty debt burdens. A
sale to an investment firm could help
Staples escape the glare of the public
market, where its shares have more than
halved in three years. The move comes less
than a year after its proposed merger with
rival retailer Office Depot was torpedoed
on antitrust grounds. Staples has for years
been hurt by the digitization of the
workplace and increased competition from
online retailers including Amazon.com and
big-box stores such as Costco Wholesale
and Wal-Mart Stores.

BMW, Allstate pull ads from 'O'Reilly A Staples store is seen in Los Angeles, California, U.S., March 7. REUTERS/Lucy Nicholson
Factor' after harassment report
More companies, including carmaker for joint defense sales. The announcement had received a complaint but declined
BMW and insurer Allstate, have pulled at the LAAD defense expo in Rio de Janeiro further comment. The German and Italian
their advertising from Fox News' "The confirmed an earlier Reuters report that antitrust authorities did not immediately
OReilly Factor" television program days the long-time partners in the aerospace respond to requests for comment. In a
after the New York Times reported Fox and supply chain were eyeing joint sales in legal memo setting out its complaint to
star host Bill OReilly paid five women to defense as demand in commercial aviation the French competition authority seen by
settle claims he sexually harassed them. begins to cool. Jackson Schneider, head of Reuters, French consumer body Indecosa-
BMW of North America, Allstate, French Embraer's defense division, said the CGT, which has 672,000 members, said
pharmaceutical company Sanofi, direct partnership could eventually lead to McDonald's France forced franchisees to
marketer Constant Contact, men's clothing shared development of new technologies, charge higher prices than at its own stores.
company Untuckit, as well as T. Rowe but for now the companies aim to combine German law firm SKW Schwarz filed a
Price all told Reuters they are no longer existing products to offer more complete similar complaint to the German cartel
advertising on the show. defense offerings. body on behalf of a group that it declined
GlaxoSmithKline and Ainsworth Pet to name.
Nutrition also reportedly suspended their McDonald's faces complaints in Europe
advertising, though Reuters could not over franchise terms Exxon in talks to expand into Brazil WSJ
confirm the reports. Hyundai Motor told French, German and Italian groups urged Exxon Mobil is in talks to gain access to
the New York Times they are reallocating their national competition authorities to Brazil's deep-water oil resources, the Wall
future advertising on the program. The look into alleged anti-competitive Street Journal reported, citing people
National Organization for Women called practices by McDonald's, potentially familiar with the matter. Exxon has held
for OReilly to be fired and demanded an putting the U.S. fast-food chain on course talks about a joint venture through which it
independent investigation into the "culture for multiple investigations in Europe. The would invest in projects with Brazilian
of sexual harassment" at Fox News. three complaints share similar concerns state-controlled Petrobras, the Journal
about McDonald's franchising terms and reported. The talks also included
Embraer, Rockwell Collins to combine conditions, including prices set for discussions about potentially buying
products for defense sales products sold at franchises, saying stakes in offshore tracts that the Brazilian
Rockwell Collins and Embraer agreed to consumers are charged more than at government plans to lease out this year,
work on integrating their remote sensing, McDonald's own stores as a result. The the report said. Exxon is also working with
targeting and communications portfolios French competition authority confirmed it U.S. oil producer Hess Corp to expand into

2
THE DAY AHEAD

Brazil after the country revised its commerce business would move to operations of a company as a whole. The
regulations last year to attract more Salesforce.com's cheaper and more other tracking stock - QVC Group - reflects
foreign investment, the Journal reported. efficient Commerce Cloud platform. The the value of Liberty Interactive's home-
company also said that it would integrate shopping businesses including HSN and
Delta shares down after carrier cuts its products from the Fifth Avenue store QVC. The company said eliminating the
revenue metric a second time into the Ralph Lauren men's and women's tracking stock structure would make the
Shares of Delta Air Lines fell after the flagship stores on Madison Avenue and its stocks eligible for inclusion in stock
carrier lowered its forecast for a closely downtown locations. Ralph Lauren said it indexes, allowing them easier access to the
watched revenue metric for the second expects to incur about $370 million in equity market.
time in less than a month. Delta said it charges and save about $140 million from
expects passenger unit revenue to fall the new measures, which are part of a cost Indonesia grants Freeport temporary
about 0.5 percent in the first quarter. The -cutting plan announced in June. The permit
company previously projected first-quarter retailer did not specify how many jobs it Indonesia has issued Freeport McMoRan's
passenger unit revenue would be about would cut. local unit a temporary "special mining
flat. Delta blamed slower-than-expected permit" allowing the miner to apply for a
improvement in average fare prices for Liberty Interactive to drop "tracking stock" resumption of copper concentrate exports
flights booked at the last minute for the structure in complex deal while the two sides negotiate longer-term
decline in its unit revenue outlook. Delta U.S. cable TV mogul John Malone's Liberty mining rights. Mining Ministry Secretary-
also said it continued to expect an Interactive announced a complex deal that General Teguh Pamuji said that Freeport
operating margin of 10 percent to 11 would help eliminate its "tracking stock" could resume exports, which have been
percent for the quarter and an structure, giving the company greater halted for nearly 12 weeks, while
improvement in unit revenue in the second access to the equity market and flexibility discussions with the government continue
half of the year that would offset higher to make acquisitions. The deal includes the on investment stability, divestment and
fuel and labor costs. Delta shares ended purchase of Alaska-based telecom domestic smelting, among other areas.
down 2.61 percent at $45.11. company General Communication for $1.12 With the issuance of the permit, "Freeport
billion, which will then be combined with can export concentrate and pay an export
Ralph Lauren to cut jobs, close flagship Liberty Ventures, the holding entity for duty," Pamuji told reporters. The permit is
Fifth Avenue Polo store Liberty Interactive's cable TV and other backdated to Feb. 10 and will be valid until
Ralph Lauren said it would cut jobs and assets. Liberty Ventures is one of Liberty Oct. 10. A spokesman for Freeport
shut its flagship Polo store on Fifth Avenue Interactive's two tracking stocks - a type of Indonesia said the company was in the
in New York City, among other office and common stock that "tracks" or depends on process of finalizing its application for an
store locations, as part of a cost-cutting the financial performance of a specific export permit "so that exports can resume
plan. The luxury retailer also said its e- business unit of a company rather than the immediately".

Peabody makes fresh U.S. stock debut


after bankruptcy exit
Peabody Energy returned to the New York
Stock Exchange after emerging from a
year-long $8 billion Chapter 11 bankruptcy
with far less debt and an industry
champion in the White House. Early
market trading put Peabody's market
capitalization at around $4 billion,
compared to the company's estimated
value of $3.1 billion used in its rights
offering. Peabody's new stock listing
coincides with increased demand from
Asia and anticipation of eased regulation
under U.S. President Donald Trump that
has fuelled investor enthusiasm for coal.
Some of the winners of Peabody's new
stock listing include large hedge funds like
Elliott Management, which had the right to
buy new shares at a discount of 35 percent
to 45 percent, as well as executives and
The ticker and stock information for Peabody Energy is displayed at the post where the stock is traded on
the floor of the New York Stock Exchange March 16, 2016. REUTERS/Brendan McDermid employees who were awarded new stock.

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THE DAY AHEAD

A civil defence member breathes through an oxygen mask, after what rescue workers described as a suspected gas attack in the town of Khan Sheikhoun in rebel-
held Idlib, Syria April 4. REUTERS/Ammar Abdullah

Insight and Analysis


Wall Street braces for rough ride as "Not natural friends": Trump, Xi will be COLUMN-U.S. gasoline consumption
exchanges seek more speed bumps "odd couple" at first summit flattens as fuel economy improves: Kemp
U.S. stock exchanges that spent decades When U.S. President Donald Trump meets Growth in U.S. gasoline consumption is
speeding up markets with cutting-edge Chinese President Xi Jinping this week, slowing after two years of brisk increases
technology are now rushing to slow them their summit will be marked not only by between the middle of 2014 and the
down. The New York Stock Exchange, deep policy divisions but a clash of middle of 2016. The average fuel economy
Chicago Stock Exchange and Nasdaq are personalities between Americas brash of vehicles on U.S. roads is improving, as a
all awaiting decisions by the U.S. Securities tweeter-in-chief and Beijings cautious, result of federal regulations, which is
and Exchange Commission on whether calculating leader. Five months after his offsetting the continued growth in driving.
they can delay trades through so-called election on a stridently anti-China U.S. refiners and fuel blenders supplied an
"speed bumps" and new order types. The platform, Trump appears to have set average of 8.5 million barrels per day of
about-face comes after advances in himself on a course for collision rather motor gasoline to domestic consumers in
technology made it possible to complete than conciliation with Xi. This summit January, according to the U.S. Energy
trades almost at the speed of light, should offer a study in contrasts: Trump Information Administration. The volume of
prompting concerns by some market impatient, outspoken and prone to angry gasoline supplied was down by almost
participants that sophisticated high- tweet-storms; Xi, outwardly calm and 170,000 bpd compared with the same
frequency traders were eating the lunch of measured, with no known social media month a year earlier and 70,000 bpd
ordinary investors. presence. below the 10-year average.

4
THE DAY AHEAD

Coming Up MARKET MONITOR

Canada's main stock index advanced on Tuesday to a nearly six-week high as gains in
No major events are scheduled. gold and oil prices helped boost the shares of mining and energy companies.

TSE's S&P/TSX composite Price $ chng % chng


Canadian Natural Resources added 1.99 percent, and Encana gained 2.37 percent.
GAINERS Barrick Gold rose 0.97 percent, and Goldcorp added 0.50 percent.
Kelt Exploration 6.98 0.31 4.65
Russel Metals 27.49 1.07 4.05
The Toronto Stock Exchange's S&P/TSX composite index was up 0.54 percent, at
Hudbay Minerals 9.27 0.36 4.04
LOSERS
15,669.07.
Linamar 57.03 -2.17 -3.67
Prometic Life Sciences 2.20 -0.08 -3.51 The U.S. dollar was up 0.18 percent against the Canadian dollar, at C$1.3402.
Magna International 54.45 -1.69 -3.01

Top News
Canada swings to unexpected trade deficit Canada trade balance
in Feb as exports fall
Canada swung to an unexpected trade
deficit in February as exports tumbled by
the most in nearly a year, suggesting
economic momentum may have hit a
speed bump and giving the Bank of
Canada room to maintain its cautious
stance next week. Following three
consecutive months of surpluses, Canada
posted a trade gap of C$972 million,
Statistics Canada said, short of
economists' expectations for a surplus of
C$500 million. January was revised down
to a surplus of C$421 million from the
initially reported C$807 million. The value
of exports fell 2.4 percent, the biggest
decrease since March 2016, with declines
widespread. Excluding energy products,
exports were down 2.4 percent.
Click on the chart for a detailed and interactive graph
Scotiabank, Bank of Montreal defend sales
practices amid probes
Bank of Nova Scotia and Bank of Montrea overdraft limits, both without customers' degree of confidence" in the bank's staff
defended their sales practices after media permission. Scotiabank Chief Executive and believed the bank had good practices
reports that staffers were pressured to Brian Porter told shareholders at the with regard to sales. Fair Canada, a group
meet targets. The probe follows media bank's annual meeting that he believed advocating for investor rights, called on
reports that staff at the country's biggest the bank's sales practices were "very the Canadian Securities Administrators, an
banks were pressured into meeting sales sound". Speaking to shareholders at Bank umbrella body of all of Canada's provincial
targets by moving customers to higher-fee of Montreal's annual meeting, Chief securities regulators, to address the recent
accounts and raising credit card and Executive Bill Downe said he had a "high reports.

5
THE DAY AHEAD

TRADE DEFICIT NARROWS U.S. trade balance


U.S. trade deficit falls from two-year high on
weak imports
The U.S. trade deficit fell from a near two year
high in February as slowing domestic demand
weighed on imports and stronger global growth
boosted exports of American goods. The
Commerce Department said the trade deficit
declined 9.6 percent to $43.6 billion, also as
exports increased to their highest level in more
than two years, after rising to a near two-year
high of $48.2 billion in January. In February,
imports of goods and services fell 1.8 percent to
$236.4 billion. Exports of goods and services
increased 0.2 percent to $192.9 billion. A second
report from the Commerce Department showed
new orders for U.S.-made goods increased for a
third straight month in February on growing
demand for machinery and electrical equipment. Click on the chart for a detailed and interactive graph

LACKER RESIGNS
Fed's Lacker leaves U.S. central bank over leak of market sensitive news
Richmond Federal Reserve President Jeffrey Lacker abruptly left the U.S. central bank after admitting a conversation he had with a Wall
Street analyst in 2012 may have disclosed confidential information about Fed policy options.

Xi-TRUMP SUMMIT
U.S. business seeks action, not trade war, in Xi-Trump summit
Although worried about the prospect of a trade war, American businesses operating in China nonetheless want President Donald Trump
to wring some concessions on market access from China's leader Xi Jingping when the two meet this week.

CLAYTON VOTED IN FAVOR


U.S. Senate banking panel votes in favor of Clayton's SEC nomination
The U.S. Senate Banking Committee voted to advance Jay Clayton's nomination as the next head of the U.S. Securities and Exchange
Commission to the full Senate for approval.

CLOUDY HEALTHCARE REFORM


Ryan plays down hopes for quick revival of U.S. healthcare
President Donald Trump and Republicans in Congress lurched between repealing Obamacare or rewriting the U.S. tax code as their top
priority, with House of Representatives Speaker Paul Ryan dampening White House hopes for a quick vote on healthcare legislation.

DIMON ON BANKING REGULATIONS


JPMorgan CEO calls for regulatory changes in shareholder letter
JPMorgan Chief Executive Jamie Dimon devoted one-third of his annual shareholder letter to arguments for changing regulations,
particularly those on bank capital and liquidity, as well as home mortgage loan financing.

COMMISSIONS SLICED
BlackRock's big funds cut commission rates for Wall Street research
BlackRock, the world's biggest asset manager, slashed the amount it paid out in commissions to Wall Street firms for research by more
than half for its largest mutual fund over the last two years, according to filings.

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THE DAY AHEAD

KEY RESULTS
Company Name* Quarter ET Smart Estimates EPS Estimates** Year Ago Rev Estimates (mln)

Bed Bath & Beyond Q4 AMC $1.76 $1.77 $1.91 $3,501.07


Monsanto Q2 BMO $2.79 $2.79 $2.42 $4,732.03
Walgreens Boots Alliance Q2 7:00 $1.36 $1.36 $1.31 $30,251.23

*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.

The Day Ahead - North America is compiled by Nandi Kaul and Sourav Bose in Bengaluru.

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