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Weekly Markets
Perspectives
For important disclosures, refer to the Disclosure Section, located at the end of this report.
n
Jan
ua
ry2
8th
,2
01
3
S&P500 closed above the 1,500 mark for the first
time since December 2007. The index climbed for the
fourth straight week, increasing 1.1% over last week.
Of the 147 companies in the S&P500 that have
already released results, about 76% managed to beat
consensus projections, while 67% beat sales
estimates. The Republicans decided to raise the debt
ceiling temporarily (by two months), which has also
supported financial markets.
European stocks also posted a weekly gain, reaching
a 23-month high. The Stoxx Europe 600 index has now
advanced 3.6% in 2013. The euro area economy
seems to be stabilizing, but the steadily increasing
Euro will not help the recovery that is expected for the
second half of the year.
The Bank of Japan announced that it will formally
adopt a 2% inflation target and introduce an open-
ended asset purchase programme starting from
January 2014, after the current purchase programme
has concluded.
Weekly SummaryPortugal’s first bond sale since its 2011 rescue
programme was very well received, attracting
strong demand. Portugal’s earlier than expected
return to the market was a positive surprise.
Moreover, the EU Economic and Monetary Affairs
Commissioner mentioned that there are several
options under consideration to help Portugal (and
Ireland) return to markets, including possibly
extending the maturity of bailout loans or
providing a new precautionary credit line.
The first FOMC meeting of 2013 will conclude this
Wednesday. No major changes are expected. It
will be a busy week for data releases. In the US,
January’s employment report and the ISM
manufacturing index will be released. In Europe,
final PMIs for January are disclosed on Friday, and
on Wednesday we will have the euro area EC
confidence indicators. The earnings season will
also continue. In Portugal, Portucel (on Tuesday)
and BPI (on Wednesday) are expected to
announce 2012 results.
-8
-6
-4
-2
0
2
4
6
80
85
90
95
100
105
110
115
120
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Ifo Business Climate Indicator and German GDP
Ifo Business Climate Indicator (LHS)
German GDP (% y/y, RHS)-5
-3
-1
1
3
5
7
70
80
90
100
110
120
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Spanish GDP and EC Economic Sentiment
Indicator
EC Economic Sentiment Indicator (LHS)
Spanish GDP (% y/y, RHS)
Spain: Initial estimate points to a
0.6% q/q contraction in Q4 2012• The Bank of Spain’s initial estimate points to a GDP
quarterly drop of 0.6% in Q4 2012. If confirmed by
the official figure, it would be the weakest outturn
since Q2 2009;
• Q4 2012 would be the fifth consecutive quarterly
contraction;
• The Government forecast the economy to contract
by 0.5% in 2013;
• The EC’s Economic Sentiment Indicator for Spain
have shown signs of stabilization in recent months.
Nevertheless, the Spanish economy remains weak.
Germany: Ifo Business Climate Survey
provides positive news
• The headline index rose from 102.4 to 104.2,
providing further signs that the economy could
fare better in Q1 2013;
• The headline reflects increased optimism
about future prospects, rather than an
underlying improvement in actual economic
conditions;
• The sectorial breakdown points to an increase
in the manufacturing and construction
components.
Source: Statistical Office of Spain, European Commission Source: European Commission, Ifo Institute
-6
-4
-2
0
2
4
35
38
41
44
47
50
53
56
59
62
2005 2006 2007 2008 2009 2010 2011 2012 2013
Composite PMI Output and Euro-zone GDP
Composite PMI Output (LHS) Euro-zone GDP (% y/y, RHS)
Euro-zone: Composite PMI rose from
47.3 to 48.2• January’s flash euro-zone Purchasing Managers’
Indices provided further evidence that the pace of
contraction in the euro is decelerating. Composite
PMI rose to 48.2, above the consensus forecast of
47.4. This was the third consecutive increase and
left the index at its highest level since March 2012;
• The manufacturing index rose from 46.1 to 47.5,
while the services index increased from 47.8 to
48.3. German composite index rose above 50 for
the first time since March 2012. However, the
French index fell to 44.4.
Germany: Investors expect the
German economy to improve
• The headline index, which measures investors’
expectations for the German economy in six
months’ time increased from 6.9 to 31.5, a
two-and-a-half year high and above its long-
run average;
• January’s figures point to a rise in sentiment;
• However, the ZEW current conditions index
registered a smaller rise.
Source: Bloomberg, Eurostat
Source: Zew Institute
ZEW Indicator of Economic Sentiment
Economic Expectations Current Situation Economic Expectations Current Situation
October 2012 -11.5 10.0 -1.4 -79.4
November 2012 -15.7 5.4 -2.6 -80.3
December 2012 6.9 5.7 7.6 -79.9
January 2013 31.5 7.1 31.2 -75.3
---------------- Germany ------------------- ----------------- Euro-zone ------------------
-20
-10
0
10
20
30
40
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Poland Retail Sales (% y/y)
0.60.7
0.6
-0.4
0.4
0.1
0.6
-0.3-0.2
-0.4
0.9
-0.3
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
UK GDP Chained GDP at Market Prices % q/q
UK: First estimate suggests that
GDP fell by 0.3% q/q in Q4 2012
• The first estimate of Q4 2012 real GDP delivered a
0.3% q/q decline. A fading Olympics boost and a fall
in energy output represented important
headwinds;
• Manufacturing is still contracting (-1.4% q/q) and
there was a negative surprise in the decisive
finance sector;
• Construction showed a small 0.3% q/q gain;
• Four of the last five quarters have registered a
negative q/q real GDP growth rate.
Poland: The economy is still slowing
down
Source: UK Office for National Statistics Source: Polish Statistics Office
• Nominal retail sales fell by -2.5% y/y in
December, after +2.4% y/y in November 2012.
It was the first drop since April 2010;
• The weakness was broadly based, extending
to core consumer durables. Car sales were a
large drag;
• The economy has probably slowed more
sharply at the end of 2012, mainly reflecting a
weak private consumption. A 25bp rate cut
seems likely at the February 6th meeting.
-6
-4
-2
0
2
4
6
8
10
12
14
00 01 02 03 04 05 06 07 08 09 10 11 12 13
South Korea GDP (% y/y)
South Korea: Real GDP up 1.5% y/y in
Q4 2012
• Real GDP reaccelerated to 1.5% q/q saar in Q4
2012 (consensus +2.0%), after having slowed for
two consecutive quarters;
• In a y/y base, real GDP growth stayed flat at
1.5%. In 2012 as a whole, real GDP increased
2.0% y/y, following a 3.6% gain in 2011;
• Private consumption firmed up modestly, while
the contribution of net exports declined.
China: January flash PMI reaches its
highest level in two years
Source: Bank of Korea Source: Bloomberg
• China’s flash reading for January Markit
manufacturing PMI rose for the fifth
consecutive month;
• The index increased from 51.5 in December to
51.9, the highest reading since January 2011;
• The new orders component eased to 52.7 in
January (from 52.9 in December). Meanwhile,
the export orders component rose to 50.1
(from 49.1 in December).
US: Markit manufacturing flash PMI
rises to 56.1
• The US Markit manufacturing flash PMI for
January rose to 56.1, from December´s final
reading of 54.0;
• The index has risen in each of the last three
months and is now at its highest level since
March 2011;
• The output, new orders and employment indices
all rose;
• The ISM index and the various regional PMIs have
been more downbeat.
Portugal: 2012 cash deficit was met
• Portugal’s 2012 central government deficit was
€8.3bn or 4.9% of GDP, lower than the target
set out by the Troika;
• Tax revenues fell 6.8% y/y, reflecting the sharp
drop registered by domestic demand. Primary
spending decreased 3.6% y/y;
• The national accounts budget deficit will be
disclosed next month by the Portuguese
Statistical Office. It is expected to reveal a
higher budget deficit, as losses from public
companies, hospitals and PPP will be included.
Source: Bloomberg Source: Ministry of Finance
-3.2
-6.8
-4.7-3.6
-17.9
Revenues Tax Revenues Indirect Taxes
Primary
Spending Wage Costs
Portugal 2012 Cash Budget - Selected Items (% y/y)
IMF expects global output to expand
by 3.5% in 2013• Global growth is expected to increase during 2013.
However, this upturn is projected to be more
gradual than in the Oct 2012 WEO projections;
• Growth in the US is forecast to average 2% in 2013,
rising above trend in the second half of the year;
• The near-term outlook for the euro area has been
revised downward. Activity is now expected to
contract by 0.2% in 2013;
• Emerging Markets are expected to expand by 5.5%.
Brazil: Copom Minutes were released
• The Copom mentioned that it expects a
strengthening of activity during 2013;
• Projected inflation for 2013 and 2014
deteriorated since the previous meeting and
remains above the 4.5% target;
• The Copom still believe that keeping the Selic at
the current 7.25% will deliver inflation at the
4.5% target;
• Total credit to the economy grew 2.4% m/m in
December (+16.2% y/y). The level of NPLs
reached 5.8% (7.9% for personal loans).
Source: IMF World Economic Outlook January 2013 Update Source: Bloomberg
2011 2012 2013 2014 2013 2014
Global Economy 3.9% 3.2% 3.5% 4.1% 3.6% 4.2%
Advance Economies 1.6% 1.3% 1.4% 2.2% 1.6% 2.3%
United States 1.8% 2.3% 2.0% 3.0% 2.1% 2.9%
Euro-Zone 1.4% -0.4% -0.2% 1.0% 0.1% 1.1%
Germany 3.1% 0.9% 0.6% 1.4% 0.9% 1.3%
France 1.7% 0.2% 0.3% 0.9% 0.4% 1.1%
Italy 0.4% -2.1% -1.0% 0.5% -0.7% 0.5%
Spain 0.4% -1.4% -1.5% 0.8% -1.4% 1.0%
Japan -0.6% 2.0% 1.2% 0.7% 1.2% 1.1%
Emerging and Developing Economies 6.3% 5.1% 5.5% 5.9% 5.6% 5.9%
Brazil 2.7% 1.0% 3.5% 4.0% 3.9% 4.2%
Russia 4.3% 3.6% 3.7% 3.8% 3.9% 3.9%
India 7.9% 4.5% 5.9% 6.4% 6.0% 6.4%
China 9.3% 7.8% 8.2% 8.5% 8.2% 8.5%
South Africa 3.5% 2.3% 2.8% 4.1% 3.0% 3.8%
Oct 2012 WEOWEO Jan 2013 Update
6%
8%
10%
12%
14%
16%
18%
2%
3%
4%
5%
6%
7%
8%
2006 2007 2008 2009 2010 2011 2012
Brazil CPI Index and Selic Target Rate
CPI IPCA y/y (LHS) SELIC Target Rate (RHS)
Japan: BoJ introduced a 2% price
target• The BoJ monetary policy meeting on January
21st-22th raised the price target from 1% to 2%;
• The current asset purchase program will change
from the start of 2014 and it will become open-
ended. A predetermined value of financial assets
will be purchased each month (JPY2tn in long-
term JGBs and JPY10tn in short-term JGBs);
• The Government and the BoJ agreed to
strengthen policy coordination and work
together to “overcome deflation early”;
• In the BoJ’s Interim Outlook for Economic
Activity and Prices, the bank lowered its FY2012
real GDP growth from 1.5% (its October
estimate) to 1%.
European Banks will repay €137bn of
LTRO loans to ECB next week
• It is the first opportunity to pay back part of the
€1tn borrowed a year ago;
• The ECB announced banks will repay €137bn of
the LTRO, leaving €882bn outstanding;
• Large part of the put back is likely to come from
banks in core countries. Limited activity is
expected from peripheral banks;
• From now on, banks have the option to repay the
LTRO on a weekly basis until expiry;
• With 2 years remaining, LTRO remains an
attractive facility. Many banks still can’t achieve
comparable terms in the funding market.
Bank Country Amount that it is Total
expected to repay (€bn) LTRO (€bn)
KBC Belgium 8.3 8.9
Belfius (state-owned) Belgium 5.0 25.0
Commerzbank Germany 10.0 16.0
Deutsche Pfandbriefbank (state-owned) Germany < 2.0 4.0
Bankinter Spain 1.4 9.5
Sabadell Spain 1.5 24.0
Llodys UK 8.0 - 10.0 13.5
Source: Bloomberg
BoJ Outlook for Economic Activity and Prices (%)
FY2012 FY2013 FY2014
Real GDP Jan-13 1.0 2.3 0.8
Oct-12 1.5 1.6 0.6
Core CPI Jan-13 -0.2 0.4 2.9 (0.9)
Oct-12 -0.1 0.4 2.8 (0.8)
Source: BoJ
FY2014 core CPI forecast in parenthesis excludes consumption
tax hike effect
• Sonae Industria (SONI PL) showed the best performance in the
index over last week. The stock advanced 23.9% to €0.653. The
company is strongly exposed to an euro area economy that
seems to be stabilizing. Meanwhile, Sonae Industria has
undertaken a restructuring program, but its high leverage
remains a concern;
• BCP (BCP PL) added more than 14%. The execution of the bank’s
operational turnaround is still key to investor sentiment and to
be able to redeem the State CoCos. BCP is expected to report
FY2012 earnings on February 11th;
• Portugal Telecom (PTC PL) was the mais loser. The shares of the
Portuguese telecom company fell 6.0%. Oi has replaced its CEO,
following the rumours that some shareholders were dissatisfied
with the results achieved throughout 2012. Moreover, Oi
reported unaudited FY2012 results. Revenues reached
BRL27.5bn (vs. consensus BRL28.0bn). EBITDA was BRL8.7bn, a
1% beat vs. consensus of BRL8.6bn;
• EDP (EDP PL) was down 2.2% over last week. The Portuguese
Treasury State Secretary said in a press interview that the
remaining 4.14% stake in the company still owned by the State
might by placed in the market. Nevertheless, the Government
may still ask for new direct proposals.
PSI20 Weekly Review
Source: Bloomberg
• Portugal’s first bond sale since its 2011 rescue programme
was very well received, attracting strong demand, mostly
from non-domestic investors. Portugal sold €2.5bn (more
than the €2bn initially planned) of five-year bonds through
banks, as the country makes progress in regaining access to
long-term markets. The 4.35% bonds due in October 2017
were allotted at a yield of 4.891%;
• This issuance has probably been an important first step for
Portugal to see ECB’s OMT programme being activated;
• The maturities of Portuguese loans from the EFSF and the
the EFSM are likely to be extended at the March Eurogroup
meeting, in a move that is expected to reduce its
refinancing risk for the coming years;
• Moreover, according to the EU Economic and Monetary
Affairs Commissioner, the combination of an ESM
precautionary programme with the ECB’s OMT programme
could eventually be used to help Portugal return to the
market;
• Portugal’s 10-year government bond yield fell to the lowest
level in more than two years on January 23rd. However, the
rate finished the week one basis point higher at 6.13%.
Portuguese Sovereign and Corporate Debt Weekly Review
Source: Bloomberg
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Jan-12 Mar-12 Mai-12 Jul-12 Set-12 Nov-12 Jan-13
Portugal 10-year Government Bond Yield (%)
200
400
600
800
1000
1200
1400
200
400
600
800
1000
1200
1400
Jan-12 Mar-12 Mai-12 Jul-12 Set-12 Nov-12 Jan-13
BES CDS 5Y
BESPL CDS EUR SR 5Y
Corp
BESPL CDS EUR SUB 5Y
Corp
• Gas Natural (GAS SM) showed the best performance over last week in
the IBEX35. The Spanish Government disclosed a draft decree law that
incorporates a €157mn charge to be included in the gas access tariffs
related to the overcoast paid by the company to Sonatrach over the
2005-2008 period;
• Obrascom Huarte Lain (OHL SM) has exercised an equity swap contract
representing 5% of the share capital of Abertis. OHL now holds 15% of
the motorway group;
• Grifols (GRF SM) rose 5.8%. Baxter released Q4 2012 results and
confirmed the growth prospects for the plasma industry;
• Repsol (REP SM) advanced 3.8%. According to the Spanish press, Repsol
will enter Namibia. The company will become the operator of the
offshore area;
• Telefonica (TEF SM) rose 0.3%. The European Commission fined the
company €66.9mn for an illegal non-compete contract clause in the
Iberia markets. Moreover, Telefonica is seeking €1.25bn of credit lines
to extend debt maturing in 2014;
• Bankinter (BKT SM) was the worst performer over last week. The stock
went down 4.8%. Credit Agricole (ACA FP) announced the disposal of a
5.2% stake in the Spanish bank through an accelerated book building.
Credit Agricole now holds a stake of 9.9% in Bankinter. The French bank
agreed to a 180-day lockup period in respect of its remaining holding.
IBEX35 Weekly Review
Source: Bloomberg
• Nokia (NOK1V FH) lost 7.0% over last week. Nokia announced
Q4 2012 results and Q1 2013 outlook in line with its pre-
announcement. The company said it will omit dividend for the
first time in the last 143 years. Despites higher than expected
Smartphone gross margins, investors remain concerned about
Nokia’s ability to increase the shipment of Lumia devices;
• Unilever (UNA NA) advanced 2.7%. Q4 2012 results were well
ahead of consensus on organic revenue growth (7.8% vs. the
company-compiled consensus of 6.3%);
• Novartis (NOVN VX) rose 1.6%. Q4 2012 core EPS was broadly
in line with Bloomberg consensus. The company issued 2013-
2015 guidance. It was also announced that current chairman
Dr. Vasella would not be standing up for re-election and will
be replaced;
• Apple (AAPL US) fell 11.8%. The company has lost the title of
most valued company to Exxon Mobil (XOM US). Apple
reported Q1 FY2013 revenues of $54.51bn, below consensus
of $54.73bn. EPS of $13.81 was above consensus of $13.44.
The company hasn’t been able to deliver what investors have
been accustomed to. Moreover, investors seem to have been
disappointed by Apple’s guidance.
Last week’s European and US equity market highlights
Source: Bloomberg
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Jan-12 Mar-12 Mai-12 Jul-12 Set-12 Nov-12 Jan-13
Nokia Share Price (€)
23
24
25
26
27
28
29
30
Jan-12 Mar-12 Mai-12 Jul-12 Set-12 Nov-12 Jan-13
Unilever Share Price
What we are watching this week:• Key data will be released this week in the US
(Change in non-farm payrolls, ISM
Manufacturing). The FOMC meets on Tuesday and
Wednesday;
• In Europe, final PMIs for January are released on
Friday. The euro-zone money supply data is due
today. On Wednesday, we have the euro area EC
confidence indicators.Event Date Hour (GMT) Survey Prior
Consumer Confidence Ind. sa, Italy 28-Jan 09:00 86 85.7
Euro-Zone M3 s.a. 3 mth ave. 28-Jan 09:00 3.8% 3.4%
Durable Goods Orders, US 28-Jan 13:30 2.0% 0.7%
Durables Ex Transportation, US 28-Jan 13:30 0.8% 1.6%
Cap Goods Orders Nondef Ex Air, US 28-Jan 13:30 -1.2% 2.7%
IMF Meets with Spain to discuss Banking Reform 28-Jan n.a. n.a. n.a.
GfK Consumer Confidence Survey, Germany 29-Jan 07:00 5.7 5.6
Consumer Confidence Indicator, France 29-Jan 07:45 86 86
2012 GDP, Poland, y/y 29-Jan 09:00 2.2% 4.3%
RBI Rate Anouncement, India 29-Jan 05:30 n.a. n.a.
Consumer Confidence, US 29-Jan 15:00 64.0 65.1
Industrial Production (y/y), South Korea 29-Jan 23:00 1.2% 2.9%
ECB LTRO Repayment Begins 30-Jan n.a. n.a. n.a.
GDP (Constant SA) (y/y), Spain 30-Jan 08:00 -1.7% -1.6%
Economic Sentiment, Italy 30-Jan 09:00 n.a. 75.4
Business Confidence, Italy 30-Jan 09:00 89.5 88.9
Euro-Zone Economic Confidence 30-Jan 10:00 88.2 87.0
Business Climate Indicator, Euro-Zone 30-Jan 10:00 -1.00 -1.12
Euro-Zone Indust. Confidence 30-Jan 10:00 -13.5 -14.4
Euro-Zone Consumer Confidence 30-Jan 10:00 -23.9 -23.9
Euro-zone Services Confidence 30-Jan 10:00 -9.0 -9.8
ADP Employment Change, US 30-Jan 13:15 165K 215K
GDP q/q (Annualized), US 30-Jan 13:30 1.2% 3.1%
Personal Consumption, US 30-Jan 13:30 2.1% 1.6%
FOMC Rate Decision, US 30-Jan 19:15 0.25% 0.25%
Industrial Production y/y, Japan 30-Jan 23:50 -5.6% -5.5%
Event (Cont.) Date Hour (GMT) Survey Prior
Retail Sales (y/y), Germany 31-Jan 07:00 -1.5% -0.9%
Producer Prices (y/y), France 31-Jan 07:45 2.0% 1.9%
Consumer Spending (y/y), France 31-Jan 07:45 0.1% -0.2%
Consumer Price Index (y/y), Spain 31-Jan 08:00 3.0% 2.9%
Spains Ban on Short Selling Ends 31-Jan n.a. n.a. n.a.
Unemployment Rate (s.a), Germany 31-Jan 08:55 6.9% 6.9%
Unemployment Rate, Brazil 31-Jan 11:00 4.5% 4.9%
Consumer Price Index (y/y), Germany 31-Jan 13:00 2.0% 2.1%
Personal Income, US 31-Jan 13:30 0.8% 0.6%
Personal Spending, US 31-Jan 13:30 0.3% 0.4%
PCE Core (y/y), US 31-Jan 13:30 1.4% 1.5%
Initial Jobless Claims, US 31-Jan 13:30 350K 330K
Gross Domestic Product y/y, Canada 31-Jan 13:30 1.4% 1.1%
Chicago Purchasing Manager, US 31-Jan 14:45 50.3 51.6
GDP (prel.) Q4 2012 GDP, y/y 31-Jan 00:30 3.0% 1.0%
Ext Trade - Export (YoY), South Korea 1-Fev 00:00 9.4% -5.5%
Ext Trade - Imports (YoY), South Korea 1-Fev 00:00 0.8% -5.3%
Manufacturing PMI, China 1-Fev 01:00 51.0 50.6
HSBC Manufacturing PMI, China 1-Fev 01:45 52.0 51.5
PMI Manufacturing, Spain 1-Fev 08:15 45.5 NA
PMI Manufacturing, Italy 1-Fev 08:45 47.4 46.7
PMI Manufacturing, France 1-Fev 08:50 42.9 42.9
PMI Manufacturing, Germany 1-Fev 08:55 48.8 48.8
Unemployment Rate (SA), Italy 1-Fev 09:00 11.2% 11.1%
PMI Manufacturing, Euro-Zone 1-Fev 09:00 47.5 47.5
PMI Manufacturing, UK 1-Fev 09:30 51.0 51.4
Euro-Zone CPI Estimate (y/y) 1-Fev 10:00 2.20% 2.20%
Euro-Zone Unemployment Rate 1-Fev 10:00 11.90% 11.80%
Industrial Production nsa (y/y), Brazil 1-Fev 11:00 -4.70% -1.00%
PMI Manufacturing, Brazil 1-Fev 12:00 n.a. 51.1
Change in Nonfarm Payrolls, US 1-Fev 13:30 155K 155K
Unemployment Rate, US 1-Fev 13:30 7.8% 7.8%
Markit US PMI Final, US 1-Fev 13:58 n.a. n.a.
U. of Michigan Confidence, US 1-Fev 14:55 71.4 71.3
Construction Spending m/m, US 1-Fev 15:00 0.7% -0.3%
ISM Manufacturing, US 1-Fev 15:00 50.5 50.7
Source: Bloomberg
Next Week Preview: Economics • The euro area inflation estimate is due Friday and is likely to
remain flat at 2.2% y/y. In the UK, PMI manufacturing will be
released on Friday and it is expected to fall to 51.0 from 51.4
in December;
• In Colombia, the central bank is likely to cut its policy rate by
an additional 25bp to 4.00% in response to continued weak
activity indicators;
• In the US, durable goods orders will be released today (13:30
GMT) and should be supported by aircraft orders.
Nonetheless, excluding transportation, core orders probably
increased at a more modest pace;
• The Conference Board should disclose its measure of US
consumer confidence on Tuesday (15:00 GMT). It is likely to
have slipped from 65.1 to 64.0 in January, reflecting the drag
on sentiment caused by the payroll tax cut;
• US Q4 2012 real GDP (1st estimate) will be disclosed on
Wednesday (13:30 GMT). Real GDP probably slowed quite
sharply to 1.2%, from 3.1% in Q3 2012. In the third-quarter,
GDP growth was driven by a surge in government expenditure;
• The employment report and the ISM Manufacturing index will
both be released on Friday at 15:00GMT. Payroll employment
is expected to show a steady increase (155,000). Source: Bloomberg
Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2010 -40 -35 189 239 516 -167 -58 -51 -27 220 121 120
2011 110 220 246 251 54 84 96 85 202 112 157 223
2012 275 259 143 68 87 45 181 192 132 137 161 155
Change in Non-Farm Payrolls (000s)
60
62
64
66
68
70
72
74
Jan-12 Fev-12 Mar-12 Abr-12 Mai-12 Jun-12 Jul-12 Ago-12 Set-12 Out-12 Nov-12 Dez-12
US Conf. Board Consumer Confidence
30
35
40
45
50
55
60
65
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
US ISM Manufacturing Index
Next Week Preview: FOMC meeting and Portuguese Earnings
SeasonFOMC will hold its first meeting of 2013• The first FOMC meeting of 2013 is unlikely to
bring any major changes;
• The majority of Fed officials will probably be
satisfied with the market response to their QE
policy announcements. However, the minutes
from the last FOMC meeting revealed that
"several… (members) thought that it would
probably be appropriate to slow or to stop
purchases well before the end of 2013“;
• The annual voting rotation of the regional Fed
Presidents is not expected to sift the balance of
power significantly.
• Portucel (PTI PL) is expected to released Q4 2012
results on January 29th;
• The paper division is expected to benefit from
stable UWF paper prices (-1% y/y) with lower
discounts. The pulp unit is likely to reflect the rising
trend of BEKP prices (+7% y/y). EBITDA margins
should benefit from lower wood costs;
• Investors’ focus will probably be at the company’s
expectations regarding demand evolution in the
UWF paper industry. Consensus expects Q4 2012
Revenues, EBITDA and Net Profit of €381mn,
€103mn and €52mn respectively;
• BPI (BPI PL) is due to report 2012 results on January
30th. Top line is expected to remain sluggish,
reflecting NIM pressures. Impairments should be
down both y/y and q/q. Stable nominal costs are
expected. International operations should remain
solid;
• Consensus expects Q4 2012 Net Profit of €28.9mn.
Portucel and BPI to report earnings
0
500
1,000
1,500
2,000
2,500
3,000
03 04 05 06 07 08 09 10 11 12
FED's Asset Holdings ($bn)
Source: Federal Reserve
Next Week Preview: European Earnings Season
• Philips (PHIA NA) is due to report Q4 2012
results on January 29th. The company has a
low correlation with the general industrial
cycle and Q4 is usually its biggest quarter
of the year. Investors will focus on the
group’s cost cutting momentum;
• Roche (ROG VX) will report H2 2012 results
on January 30th. Consensus expects
revenues of CHF22.897bn and diluted core
EPS of CHF6.91. in Q3 2012, Roche showed
a 1.4% revenue beat vs. consensus, with
key products beating consensus by 4%-7%;
• Royal Dutch Shell (RDSA NA) reports its Q4
2012 results on January 31th. Brent prices
were stable but US gas prices showed a
robust increase. However, refining margins
came off during the quarter;
• LVMH (LVMH FP) will report FY2012 results
after market close on January 31th.
Many Blue Chips are expected to
report earnings this week
Company Name Company Ticker Time (GMT) Event Description
Monday, 28th
January
Colruyt COLR BB 16:45 Q3 2013 Sales and Revenue Release
Ryanair Holdings RYA ID Q3 2013 Earnings Release
Tuesday, 29th
January
Philips Electronics PHIA NA 06:00 Y 2012 Earnings Release
Software SOW GR 06:00 Y 2012 Earnings Release
Sandvik SAND SS 07:00 Y 2012 Earnings Release
British Land BLND LN 07:00 Q3 2013 Sales and Revenue Release - Interim Management Statement
William Hill WMH LN 08:30 Q4 2012 Sales and Revenue Call - Trading Update
British Land BLND LN 09:00 Q3 2013 Sales and Revenue Call - Interim Management Statement
National Grid NG/ LN 14:00 Q3 2013 Sales and Revenue Call - Interim Management Statement
Luxottica Group LUX IM Q4 2012 Sales and Revenue Release
Wednesday, 30th
January
Roche ROG VX 06:00 Y 2012 Earnings Release
Nordea NDA SS 06:00 Y 2012 Earnings Release
Antofagasta ANTO LN 07:00 Q4 2012 Sales and Revenue Release - Production Results
Scania SCVB SS 08:30 Y 2012 Earnings Release
SKF SKFB SS 12:00 Y 2012 Earnings Release
Unibail-Rodamco UL FP Aft-mkt Y 2012 Earnings Release
STMicroelectronics STM IM Aft-mkt Y 2012 Earnings Release
Hennes & Mauritz HMB SS Y 2012 Earnings Release
Fiat F IM Y 2012 Earnings Release
Imperial Tobacco IMT LN Q1 2013 Sales and Revenue Release - Interim Management Statement
United Utilities UU/ LN Q3 2013 Sales and Revenue Release - Interim Management Statement
Thursday, 31th
January
TeliaSonera AB TLSN SS 06:00 Y 2012 Earnings Release
Skandinaviska Enskilda Banken SEBA SS 06:00 Y 2012 Earnings Release
Ericsson ERICB SS 06:30 Y 2012 Earnings Release
Infineon Technologies IFX GR 06:30 Q1 2013 Earnings Release
Royal Dutch Shell RDSA LN 07:00 Y 2012 Earnings Release
Diageo DGE LN 07:00 S1 2013 Earnings Release
Vedanta Resources VED LN 07:00 Q3 2013 Sales and Revenue Release - Production Results
Fortum FUM1V FH 07:00 Y 2012 Earnings Release
AstraZeneca AZN LN 07:00 Y 2012 Earnings Release
British Sky Broadcasting BSY LN 07:00 S1 2013 Earnings Release
UPM-Kymmene UPM1V FH 07:30 Y 2012 Earnings Release
Novo Nordisk NOVOB DC Bef-mkt Y 2012 Earnings Release
Banco Santander SAN SM Bef-mkt Y 2012 Earnings Release
Deutsche Bank DBK GR Bef-mkt Y 2012 Earnings Release
Atlas Copco ATCOA SS 11:00 Y 2012 Earnings Release
LVMH MC FP Aft-mkt Y 2012 Earnings Release
Fiat Industrial FI IM Y 2012 Earnings Release
Lonmin PLC LMI LN Q1 2013 Sales and Revenue Release - Production Report
SSE SSE LN Q3 2013 Sales and Revenue Release - Interim Management Statement
Friday, 1st
February
Electrolux ELUXB SS 07:00 Y 2012 Earnings Release
OMV OMV AV 07:00 Q4 2012 Sales and Revenue Release - Trading Statement
Banco Bilbao Vizcaya Argentaria BBVA SM Bef-mkt Y 2012 Earnings Release
Banco Popular Espanol POP SM Bef-mkt Y 2012 Earnings Release
CaixaBank CABK SM Y 2012 Earnings Release
BT Group BT/A LN Q3 2013 Earnings Release
Enel Green Power EGPW IM Q4 12 Sales and Revenue Release - Preliminary Results
Tate & Lyle TATE LN Q3 2013 Sales and Revenue Release - Interim Management Statement
Source: Bloomberg
Next Week Preview: US Earnings Season
• Pfizer (PFE US) will release earnings on
January 29th. The focus will probably be on
2013 guidance and on management’s
comments for launch expectations for
Xeljanz and Eliquis;
• Ford Motor (F US) will report Q4 2012
earnings on January 29th. Earnings are likely
to be driven by strong operating income
from North America. The company has
guided towards strong losses in Europe.
The company will also provide general
2013 outlook;
• Dow Chemical (DOW US) will report Q4
2012 results on January 31th, which will
probably reflect a positive evolution on
integrated margins for polyethylene and an
improvement in the Performance Plastics
segment.
Healthcare will probably be the
highlight with Lilly, Pfizer and
Merck reporting this week
Company Name Company Ticker Time (GMT) Estimate Event Description
Monday, 28th
January
Biogen BIIB US Bef-mkt 1.459 Q4 2012 Earnings Release
Caterpillar CAT US 12:30 1.703 Q4 2012 Earnings Release
Seagate Technology STX US Aft-mkt 1.278 Q2 2013 Earnings Release
Yahoo! YHOO US Aft-mkt 0.279 Q4 2012 Earnings Release
American Electric Power AEP US 0.456 Q4 2012 Earnings Release
Tuesday, 29th
January
Valero Energy VLO US Bef-mkt 1.19 Q4 2012 Earnings Release
Pfizer PFE US Bef-mkt 0.442 Q4 2012 Earnings Release
DR Horton DHI US Bef-mkt 0.141 Q1 2013 Earnings Release
Corning GLW US Bef-mkt 0.324 Q4 2012 Earnings Release
Tyco International TYC US Bef-mkt 0.394 Q1 2013 Earnings Release
Harley-Davidson Inc HOG US Bef-mkt 0.314 Q4 2012 Earnings Release
International Paper IP US Bef-mkt 0.65 Q4 2012 Earnings Release
Danaher DHR US 11:00 0.856 Q4 2012 Earnings Release
Ford Motor Co F US 12:00 0.256 Q4 2012 Earnings Release
Illinois Tool Works Inc ITW US 13:00 0.899 Q4 2012 Earnings Release
Robert Half International Inc RHI US 21:00 0.408 Q4 2012 Earnings Release
Broadcom BRCM US Aft-mkt 0.735 Q4 2012 Earnings Release
Amazon.com AMZN US Aft-mkt 0.265 Q4 2012 Earnings Release
Boston Scientific BSX US 0.11 Q4 2012 Earnings Release
United States Steel X US -0.768 Q4 2012 Earnings Release
Eli Lilly & Co LLY US 0.788 Q4 2012 Earnings Release
Wednesday, 30th
January
Northrop Grumman NOC US Bef-mkt 1.736 Q4 2012 Earnings Release
Boeing BA US 12:30 1.186 Q4 2012 Earnings Release
Southern Co SO US 12:30 0.39 Q4 2012 Earnings Release
QUALCOMM QCOM US 21:00 1.125 Q1 2013 Earnings Release
ConocoPhillips COP US Aft-mkt 1.414 Q4 2012 Earnings Release
JDS Uniphase JDSU US Aft-mkt 0.139 Q2 2013 Earnings Release
Thursday, 31th
January
PulteGroup PHM US Bef-mkt 0.308 Q4 2012 Earnings Release
Colgate-Palmolive CL US Bef-mkt 1.395 Q4 2012 Earnings Release
Time Warner Cable TWC US Bef-mkt 1.551 Q4 2012 Earnings Release
Dow Chemical DOW US Bef-mkt 0.341 Q4 2012 Earnings Release
Whirlpool WHR US 11:00 2.248 Q4 2012 Earnings Release
Altria Group MO US 12:00 0.545 Q4 2012 Earnings Release
United Parcel Service UPS US 12:45 1.376 Q4 2012 Earnings Release
Viacom VIAB US 0.911 Q1 2013 Earnings Release
Dominion Resources D US 0.694 Q4 2012 Earnings Release
Friday, 1st
February
Exxon Mobil XOM US Bef-mkt 2.004 Q4 2012 Earnings Release
Merck MRK US Bef-mkt 0.81 Q4 2012 Earnings Release
Mattel MAT US 11:00 1.148 Q4 2012 Earnings Release
Chevron CVX US 13:30 3.028 Q4 2012 Earnings Release
Ford Motor F US 14:30 January 2013 Sales and Revenue Release
Source: Bloomberg
Next week's Selected Bonds and T-Bills Supply
Issue Country Date Amount (€bn) Hour (GMT)
Dec 2014 Italy 28-Jan 4.0 10:00
Sep 2018 Italy 28-Jan 2.5 10:00
3M France 28-Jan 4.0 13:50
6M France 28-Jan 2.0 13:50
12M France 28-Jan 1.5 13:50
12M Germany 28-Jan 3.0
6M Italy 29-Jan 8.5 10:00
Jul 2044 Germany 30-Jan 2.0 10:30
Nov 2017 Italy 30-Jan 3.0 16:00
Nov 2022 Italy 30-Jan 3.5 16:00
Next week's Selected Bonds and T-Bills redemptions
Issues Country Date Amount (€bn) Hour (GMT)
Bonds Spain 31-Jan 14.3
T-Bills France 31-Jan 7.8
T-Bills Italy 31-Jan 9.8
T-Bills Netherlands 31-Jan 4.8
Bonds Italy 01-Fev 21.0
Source: Treasuries; Fincor
Next Week Preview: Government Debt Issuance Calendar and
Idea of the week
• Over the week, Italy is expected to auction
T-Bills and bonds;
• Italy and Spain will have bond redemptions
this week;
• Germany will issue ultralong bonds (July
2044).
Italy will probably be the highlight
of the weekIdea of the week: Repsol (REP SM)
• Investors expect an announcement on the sale of the
LNG business. If the deal goes ahead, it will probaby
be enough for Repsol to maintain its investment
grade credit rating;
• The company is expected to present sector leading
organic production growth with the start-up of key
fields in Peru and Brazil;
• As volumes growth, earnings are likely to improve;
• Repsol has underperformed the sector following the
expropriation of YPF. But, the company has an
interesting portfolio of projects.
Source: Company Information
Source: Bloomberg
Charts we are watching• Following some Brazilian press reports that Oi’s
shareholders were dissatisfied with CEO Francisco Valim’s
handling of the company, the Brazilian Telecom operator
announced its replacement by Jose Mauro da Cunha, its
current Chairman. In an attempt to ease market concerns,
Oi released in line selected preliminary unaudited figures
for 2012. Moreover, the company disclosed a BRL1bn
dividend, equivalent to a 7% yield. According to the
Brazilian press, Portugal Telecom (PTC PL) could be in talks
to buy the stakes in Oi owned by the Jereissati and
Andrade families for $985mn. This is an additional
evidence that the Portuguese company considers the
Brazilian market to be key.
Source: Bloomberg
6
7
8
9
10
11
12
2011 2012 2013
OI (OIBR4 BZ) Share Price (BRL)
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
8,000
8,500
2011 2012 2013
PSI 20 Portuguese Stock Index
• Stocks in peripheral Europe have posted the biggest gains
among developed markets in 2013 ytd. Portugal’s
benchmark PSI 20 rose 8.5% and Spain’s IBEX 35 increased
5.3%. Germany’s Dax has only advanced 1.4%. With tail
risks having been removed by the ECB and peripheral
countries moving progressively to a current account
surplus, the improvement in investor sentiment could
continue to support these stock markets.
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