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

2
THE DAY AHEAD
Brazil after the country revised its
regulations last year to attract more
foreign investment, the Journal reported.
Delta shares down after carrier cuts
revenue metric a second time
Shares of Delta Air Lines fell after the
carrier lowered its forecast for a closely
watched revenue metric for the second
time in less than a month. Delta said it
expects passenger unit revenue to fall
about 0.5 percent in the first quarter. The
company previously projected first-quarter
passenger unit revenue would be about
flat. Delta blamed slower-than-expected
improvement in average fare prices for
flights booked at the last minute for the
decline in its unit revenue outlook. Delta
also said it continued to expect an
operating margin of 10 percent to 11
percent for the quarter and an
improvement in unit revenue in the second
half of the year that would offset higher
fuel and labor costs. Delta shares ended
down 2.61 percent at $45.11.
Ralph Lauren to cut jobs, close flagship
Fifth Avenue Polo store
Ralph Lauren said it would cut jobs and
shut its flagship Polo store on Fifth Avenue
in New York City, among other office and
store locations, as part of a cost-cutting
plan. The luxury retailer also said its e-
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
commerce business would move to
Salesforce.com's cheaper and more
efficient Commerce Cloud platform. The
company also said that it would integrate
its products from the Fifth Avenue store
into the Ralph Lauren men's and women's
flagship stores on Madison Avenue and its
downtown locations. Ralph Lauren said it
expects to incur about $370 million in
charges and save about $140 million from
the new measures, which are part of a cost
-cutting plan announced in June. The
retailer did not specify how many jobs it
would cut.
Liberty Interactive to drop "tracking stock"
structure in complex deal
U.S. cable TV mogul John Malone's Liberty
Interactive announced a complex deal that
would help eliminate its "tracking stock"
structure, giving the company greater
access to the equity market and flexibility
to make acquisitions. The deal includes the
purchase of Alaska-based telecom
company General Communication for $1.12
billion, which will then be combined with
Liberty Ventures, the holding entity for
Liberty Interactive's cable TV and other
assets. Liberty Ventures is one of Liberty
Interactive's two tracking stocks - a type of
common stock that "tracks" or depends on
the financial performance of a specific
business unit of a company rather than the
3
operations of a company as a whole. The
other tracking stock - QVC Group - reflects
the value of Liberty Interactive's home-
shopping businesses including HSN and
QVC. The company said eliminating the
tracking stock structure would make the
stocks eligible for inclusion in stock
indexes, allowing them easier access to the
equity market.
Indonesia grants Freeport temporary
permit
Indonesia has issued Freeport McMoRan's
local unit a temporary "special mining
permit" allowing the miner to apply for a
resumption of copper concentrate exports
while the two sides negotiate longer-term
mining rights. Mining Ministry Secretary-
General Teguh Pamuji said that Freeport
could resume exports, which have been
halted for nearly 12 weeks, while
discussions with the government continue
on investment stability, divestment and
domestic smelting, among other areas.
With the issuance of the permit, "Freeport
can export concentrate and pay an export
duty," Pamuji told reporters. The permit is
backdated to Feb. 10 and will be valid until
Oct. 10. A spokesman for Freeport
Indonesia said the company was in the
process of finalizing its application for an
export permit "so that exports can resume
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
employees who were awarded new stock.
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
exchanges seek more speed bumps
U.S. stock exchanges that spent decades
speeding up markets with cutting-edge
technology are now rushing to slow them
down. The New York Stock Exchange,
Chicago Stock Exchange and Nasdaq are
all awaiting decisions by the U.S. Securities
and Exchange Commission on whether
they can delay trades through so-called
"speed bumps" and new order types. The
about-face comes after advances in
technology made it possible to complete
trades almost at the speed of light,
prompting concerns by some market
participants that sophisticated high-
frequency traders were eating the lunch of
ordinary investors.
"Not natural friends": Trump, Xi will be
"odd couple" at first summit
When U.S. President Donald Trump meets
Chinese President Xi Jinping this week,
their summit will be marked not only by
deep policy divisions but a clash of
personalities between Americas brash
tweeter-in-chief and Beijings cautious,
calculating leader. Five months after his
election on a stridently anti-China
platform, Trump appears to have set
himself on a course for collision rather
than conciliation with Xi. This summit
should offer a study in contrasts: Trump
impatient, outspoken and prone to angry
tweet-storms; Xi, outwardly calm and
measured, with no known social media
presence.
4
COLUMN-U.S. gasoline consumption
flattens as fuel economy improves: Kemp
Growth in U.S. gasoline consumption is
slowing after two years of brisk increases
between the middle of 2014 and the
middle of 2016. The average fuel economy
of vehicles on U.S. roads is improving, as a
result of federal regulations, which is
offsetting the continued growth in driving.
U.S. refiners and fuel blenders supplied an
average of 8.5 million barrels per day of
motor gasoline to domestic consumers in
January, according to the U.S. Energy
Information Administration. The volume of
gasoline supplied was down by almost
170,000 bpd compared with the same
month a year earlier and 70,000 bpd
below the 10-year average.
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.

6
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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