fincor weekly markets perspectives 19 nov2012
DESCRIPTION
TRANSCRIPT
Weekly Markets
Perspectives
For important disclosures, refer to the Disclosure Section, located at the end of this report.
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Euro area Q3 2012 GDP declined for the second
quarter in a row, so an official technical recession
can now be declared.
Risk assets were not helped by US fiscal cliff
worries and escalating tensions in the Middle East.
The S&P500 finished lower for the second
consecutive week. The index is now more than 7%
off its highs in mid-September.
Obama met with the four top leaders of congress
at the White House last Friday in the first formal
fiscal cliff talks. They emerged from their meeting
promising they would reach a fiscal compromise
before Christmas. Are we closer to a solution on
the fiscal cliff ?
The FOMC minutes showed committee members
were open to the idea of another round of QE,
after the conclusion of the maturity extension
program in order to achieve a substantial
Weekly Summaryimprovement in the labour market. Fed vice-chair
Janet Yellen said that the Fed is considering tying
Fed policy to inflation and unemployment
targets.
Portuguese output contracted by 0.8% q/q in Q3
2012, following a 1.1% contraction in the
previous quarter. Q3 2012 was the 8th
consecutive quarter of sequential output
contraction. According to the Statistical Office of
Portugal, the unemployment rate reached 15.8%
at the end of Q3 2012.
The Q3 2012 reporting season is almost over. In
Portugal, Mota-Engil should disclose its results on
Wednesday, November 21st.
This week's Eurogroup/ECOFIN (Nov 20th)
meeting should decide on the next steps for
Greece in terms of a disbursement and debt
sustainability.
2.1%
-1%
0%
1%
2%
3%
4%
5%
2006 2008 2010 2012
CPI Housing (% y/y)
Owners' Equivalent Rent
US Retail Sales show
weakness in October
Source: US Census Bureau
• October’s retail sales suggest that US
consumption has lost some momentum;
• It could have been due to Hurricane Sandy or
due to the fiscal cliff;
• After excluding sales of gasoline, autos and
building materials, underlying sales fell by 0.1%
m/m, after a strong 0.9% m/m rise in
September (see chart);
• If Sandy is to blame, then sales should recover
in November.
US CPI and PPI inflation remain
consistent with the Fed’s target• The annual rate of CPI inflation rose to 2.2% last
month. Core inflation remained unchanged at
2.0%, in line with the Fed’s target;
• The housing recovery is leading to a higher
growth rate of housing costs, which account for
more than 30% of the CPI index (see chart);
• October’s headline producer price inflation
reached 2.3% (down from 2.6% in September)
and core producer price inflation was 2.1% (2.3%
in September).
Source: Bureau of Labor Statistics
92
94
96
98
100
102
104
92
94
96
98
100
102
104
2008 2009 2010 2011 2012 2013
Level of real GDP
Dec. 2007=100
Germany
Spain
Italy
Euro-zone GDP declines for a second quarter
Source: Eurostat
• The first estimate of Euro area GDP for Q3 2012
reported a contraction of 0.1%, after a 0.2% q/q
contraction in Q2 2012 (see chart);
• The Euro-zone PMI and the German Ifo suggest
that we should expect further contraction in Q4
2012;
• The German economy expanded 0.9% q/q in Q3
2012, after 0.3% q/q in Q2 2012, helped by net
trade. However, domestic contributions were
mixed;
• Q3 2012 GDP in the Netherlands contracted
sharply by 1.1% q/q;
• In France, the economy expanded 0.2% q/q in Q3
2012, after -0.1% q/q in Q2 2012, with
consumption recovering;
• The Italian economy contracted by 0.2% q/q in
Q3 2012. The last 5 quarters have come at -0.1%,
-0.7%, -0.8%, -0.7% and now -0.2%. Is the worst
behind us in Italy?
• In Spain, Q3 2012 declined -0.3% q/q, after -0.4%
q/q in Q2 2012. The breakdown confirms a weak
domestic demand being partly offset by a strong
export performance.
Source: Eurostat
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1998 2000 2002 2004 2006 2008 2010 2012
Unemployment rate in Portugal(% of workforce)
15.8%
-4.1%
-3.4%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
GDP (y/y quarterly change rate, %)
The Portuguese recession
goes on…
Source: Statistical office of Portugal
• Portuguese output contracted by 0.8% q/q in Q3
2012, following a 1.1% contraction in the previous
quarter. The Portuguese recession continues. Q3
2012 was the 8th consecutive quarter of
sequential output contraction;
• According to the Portuguese statistical office, real
GDP registered a y/y change rate of -3.4% in Q3
2012, after -3.2% in Q2 2012;
• The domestic demand recorded a less negative
contribution, reflecting a less expressive reduction
of investment. However, the positive contribution
of net trade decreased significantly.
… and the unemployment rate
reaches a new record high• According to the Portuguese statistical office,
the unemployment rate was 15.8% in Q3 2012.
This value is up 3.4% y/y and 0.8% q/q;
• The employed population fell by 4.1% y/y and
by 0.7% q/q;
• The Labor force decreased by 0.3% y/y, but rose
by 0.2% q/q;
• The participation rate of the working age
population stood at 61.3%, unchanged y/y and
up 0.1% q/q.
Source: Statistical office of Portugal
Spain: Transfer of assets to
the bad bank is getting closer
Source: Bank of Spain, Oliver Wyman and National Asset Management Agency
• Spain intends to use European bailout funds to
pay for the majority stake the country plans to
take in the bad bank for problem loans;
• According to recent news, the vehicle (SAREB) is
generating interest among foreign investors. The
government is expected to meet five investment
banks today to search for private capital;
• The banks will transfer real estate linked assets
(credit as well as foreclosed) with some limits in
terms of size. The bad bank is to incorporate
assets at a discount of 63.1% for foreclosed and
45.6% for credit, higher than the impairments
required under Oliver Wyman’s adverse scenario.
Portugal: TAP and ANA attract
bids• The government shortlisted 5 offers (including
from companies such as Mota-Engil, Fraport
and Vinci) for the Portuguese airport operator
ANA, valuing the company between 12x and
13x its 2011 EBITDA (€199.8mn);
• TAP, the Portuguese airline company, attracted
only one bid (Synergy, which is controlled by a
Brazilian investor). 2011 Sales at TAP totaled
€2.44bn, but the company reported a net loss
of €76.8mn. The airline’s financial debt amounts
to €1.23bn;
• Portugal is auctioning the two companies to
raise cash under the bailout agreement with
the IMF and the European Union.
-1.12%
0.00%
-0.02%
2.09%1.88%
0.01%
-0.15%
1.10% 1.15%
0.01%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
12-Nov 13-Nov 14-Nov 15-Nov 16-Nov
A weaker JPY.... and higher stock prices
Topix (Tokyo Stock Price Index) USDJPY exchange rate (Price of 1 USD in JPY)
Japan to hold elections on
Dec. 16th
Source: Bloomberg
• Prime Minister Noda announced his intention to
dissolve the lower house. The LDP and its
coalition will probably gain the majority;
• The LDP has a strong stance to public investment.
But, how will the investment be financed? There
seems to be no intention to increase fiscal deficit;
• The pressure on the Bank of Japan is already
increasing. Shinzo Abe, the current leader of the
LDP and probably the next Prime Minister, made
a speech on monetary policy, requiring more
aggressive easing policies.
• Malaysia´s economy expanded 3.6% q/q during
Q3 2012 (5.2% y/y vs. consensus 4.8% y/y). The
strength of domestic demand has more than
offset the weakness in external demand;
• Hong Kong’s Q3 2012 GDP delivered a more
modest expansion (2.4% q/q annualized), after
a 0.4% q/q annualized contraction in the
previous quarter. Real GDP expanded 1.3% y/y
(vs. consensus of 1.7%). The trade sector
continued to be a drag in Q3, while domestic
demand held up better;
• Singapore’s Q3 GDP fell 5.9% q/q annualized.
Domestic demand oriented activities looks
resilient, but manufacturing and trade are being
affected by the weak global demand;
• With slower demand growth in China and in the
US, the resilience of domestic demand has been
decisive for these economies.
Resilient domestic demand…
weakness in external demand
174.7%
184.2%
188.9%
188.3%
176.7%
170.6%
160% 165% 170% 175% 180% 185% 190% 195%
2016 Est
2015 Est.
2014 Est.
2013 Est.
2012 Est.
2011
Greece Debt-to-GDP Ratio
7.9%
4%
6%
8%
10%
12%
2008 2009 2010 2011 2012 2013
US Unemployment Rate
US: More QE on the way?
Source: Bloomberg
• The minutes of the October 23-24 FOMC
meeting suggested that more Quantitative Easing
remains a strong possibility after the end of
Operation Twist (at the end of 2012): "Looking
ahead, a number of participants indicated that
additional asset purchases would likely be
appropriate next year after the conclusion of the
maturity extension program“;
• The data-driven thresholds communication project
seems to be gaining momentum;
• The Fed staff upgraded its real GDP growth
expectation for 2013 reflecting "better-than-
expected incoming information for consumer
spending, residential construction, and labour
market conditions“.
Source: European Commission
• The Eurogroup decided to extend Greece’s
fiscal adjustment period by two years as
requested by the Greek government;
• A final decision on the disbursement of the
next aid tranche was postponed;
• The meeting has revealed disagreement
between the IMF and the Eurogroup. the
disagreement seems to bear on the date at
which the stock of debt can be brought back
to 120% of GDP (2020 for the IMF, 2022 for
the Eurogroup);
• Greece issued 1 and 3-month treasury bills to
redeem €5bn bonds last Friday;
Eurogroup meeting inconclusive
Portugal: Last week’s results (I)
• BES reported a net profit of €65m for Q3 2012,
well above consensus of €34m (Reuters),
reflecting strong trading gains in the quarter. The
results were also helped by BES allowing its loan
coverage to fall;
• The bank has reduced its ECB reliance to €9.8bn, -
28% from June 2012;
• Provisions were up 71% y/y and 38% q/q and
reached €326m in Q3 2012. The ratio of credit at
risk as a proportion of the loan portfolio rose
from 7.91% to 9.30% over the quarter.
Banco Espirito Santo (BES PL): Q3 2012 above
market expectations. Still our top pick in the
Portuguese Banking Sector.
BES: Income Statement Summary
Q3 2012 Q2 2012 Q3 2011 q/q y/y
Net Interest Income 299 313 331 -4% -10%
Fee Income 167 238 187 -30% -11%
Trading Income 235 83 -182 n.m. n.m.
Operating Income 675 653 528 3% 28%
Operating Costs -286 -288 -284 -1% 1%
Impairments -326 -236 -191 38% 71%
Net Income 65 14 -18 n.m. n.m.
Source: Company data
Portugal Telecom (PTC PL): Good news from Brazil• Oi reported Q3 2012 numbers. They showed
improvement, both on the revenues and on the
earnings side. Net profit increased to R$315mn,
reflecting a revenue increase of 1.9% q/q;
• On the revenue side, we would underline:
o the 1.9% q/q increase in Residential, due to
the RGUs increase and a lower churn rate;
o a 3.4% q/q rise in Mobility, due to an
increase in the post-paid segment;
o a 3.1% q/q rise in Corporate sustained by
the offering of new products.
• Portugal Telecom will report Q3 2012
consolidated results on November 30th.OI - Q3 2012 Earnings Summary
Q3 2012 Q2 2012 Q3 2011 q/q y/y
Lines in Service 18,707 18,722 19,078 0% -2%
Broadband Subs 5,556 5,332 4,776 4% 16%
Mobile Subs 48,398 47,794 42,871 1% 13%
Net Revenue 7,041 6,909 6,940 2% 1%
EBITDA 2,186 2,141 2,467 2% -11%
EBITDA Margin 31% 31% 36%
EBIT 860 857 1,100 0% -22%
Net Interest Expense -554 -692 -302 -20% 83%
Net Income 315 64 426 n.m. -26%
Source: Company reports
0.30
0.35
0.40
0.45
0.50
0.55
0.60
Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12
Sonae Share Price (€)0.552
Portugal: Last week’s results (II)
• Net income fell on the 9M 2012 to €92m. The
main reason was the non-existence of capital
gains associated with the sale of assets by Sonae
RP;
• Q3 2012 Turnover fell 1% y/y. On the positive
side, Sonae MC reported a growth of 0.8% y/y;
• Q3 2012 EBITDA increased 0.6% y/y to €167mn.
Once again, Sonae MC was a positive surprise
with its margin increasing surprisingly 0.4%, even
considering the current competitive environment
in the Portuguese retail sector.
Sonae (SON PL): Surprising results from the Retail
division
Sonae Indústria (SONI PL): Macro Challenges
weigh on the company’s results
• Q3 2012 net loss increased €42m y/y to €51m,
reflecting the European tough economic
environment;
• Q3 2012 revenues in Europe fell 4.6% y/y. Total
turnover was down 6% to €312m;
• EBITDA margin continues to be under pressure
and fell 232bps to 6.41%;
• The Knowsley plant in the UK was closed, which
caused an impairment of €41m;
• The company stated its intention to sell more
non-core assets, which may lead to new
impairments.
Source: Bloomberg
Martifer (MAR PL) reported its 9M 2012 results.
Operating revenues decreased 4.9% y/y. EBITDA
reached €14.6m, with a margin of 4.3% (+5.6pp
y/y). Net loss was €33m, reflecting €11.3m of
provisions and impairments, and higher financial
costs. Metallic Construction and Solar order books
increased y/y to €380m and €230m respectively.
Source: Bloomberg
• Q3 2012 earnings report is close to its end;
• 476 companies have reported Q3 2012 results.
72% of companies reporting have beaten
earnings estimates and 27% have missed. The
average EPS surprise has been 3.7%;
• Despite a tough macro environment, global
slowdown, soft commodity prices and slow
capital markets, companies managed to keep
margins high;
• The decline in the bottom-up Q4 2012 EPS from
September end is similar to the decline in Q3
2012 EPS during Q2 2012 reporting;
• Bottom-up EPS consensus forecasts a 4%
increase in 2012 to $100, and a 14% increase in
2013 to $114;
• The equity market is now focused on post
election uncertainties, mainly the fiscal cliff
resolution and the dividend tax rate.
S&P 500 Earnings Update: Q3 2012 as of November 16th, 2012
S&P 500 Q3 Earnings Summary as of November 16th, 2012
Average Q3 Average Q3
Reported Total % of Co's Positive In-line Negative Surprise Positive In-line Negative Surprise
Oil & Gas 41 41 100.0% 58.5% 0.0% 41.5% 2.2% 53.7% 0.0% 46.3% -0.2%
Basic Materials 26 26 100.0% 50.0% 3.8% 46.2% -2.6% 26.9% 0.0% 73.1% -1.8%
Industrials 71 75 94.7% 69.0% 2.8% 28.2% 3.0% 29.6% 0.0% 70.4% -1.0%
Consumer Goods 53 58 91.4% 79.2% 0.0% 20.8% 6.1% 30.2% 0.0% 69.8% 0.4%
Health Care 43 46 93.5% 86.0% 0.0% 14.0% 4.1% 34.9% 0.0% 65.1% -1.2%
Consumer Services 67 74 90.5% 74.2% 3.0% 22.7% 1.8% 39.4% 1.5% 59.1% -0.7%
Telecommunications 8 8 100.0% 50.0% 0.0% 50.0% 15.2% 50.0% 0.0% 50.0% -0.1%
Utilities 32 32 100.0% 62.5% 0.0% 37.5% 2.5% 9.4% 0.0% 90.6% -8.6%
Financials 85 85 100.0% 79.8% 0.0% 20.2% 7.5% 63.9% 0.0% 36.1% 4.2%
Technology 50 54 92.6% 70.0% 0.0% 30.0% 0.4% 54.0% 0.0% 46.0% -0.6%
S&P 500 476 499 95.4% 71.7% 1.1% 27.2% 3.7% 41.0% 0.2% 58.8% -0.3%
Q2 2012 71.5% 1.0% 27.5% 4.0% 41.4% 0.2% 58.4% 0.4%
Comparative Data (full earnings season)
Earnings Suprises Revenues SurprisesNumber of companies
Source: Bloomberg
• 377 companies have reported Q3 2012 results.
51% of companies reporting have beaten
earnings estimates and 47% have missed. The
average EPS surprise has been 4.7%;
• Companies have generally been guiding down
expectations, and analysts’ 2012 and 2013
earnings forecasts continue to be downgraded,
mainly due to Cyclicals;
• Revenues have softened over the course of
2012. The disappointing macro data over the
course of the year has been felt at the top-line;
• US Fiscal cliff and debt ceiling uncertainties are
adding to earnings concerns.
DJ Europe 600 Earnings Update: Q3 2012 as of November
16th, 2012
Average Q3 Average Q3
Reported Total % of Co's Positive In-line Negative Surprise Positive In-line Negative Surprise
Oil & Gas 22 24 91.7% 55.6% 0.0% 44.4% 9.5% 47.4% 0.0% 52.6% -2.6%
Basic Materials 34 36 94.4% 51.9% 0.0% 48.1% -4.0% 52.9% 0.0% 47.1% 0.0%
Industrials 74 76 97.4% 58.6% 0.0% 41.4% 1.0% 52.8% 0.0% 47.2% 0.7%
Consumer Goods 48 49 98.0% 41.4% 0.0% 58.6% 4.4% 59.6% 0.0% 40.4% 2.5%
Health Care 28 29 96.6% 52.0% 4.0% 44.0% 2.4% 39.3% 0.0% 60.7% -0.2%
Consumer Services 33 36 91.7% 52.0% 4.0% 44.0% 20.1% 46.9% 3.1% 50.0% -0.8%
Telecommunications 17 18 94.4% 78.6% 0.0% 21.4% 11.7% 41.2% 0.0% 58.8% -0.3%
Utilities 18 18 100.0% 40.0% 0.0% 60.0% 7.9% 75.0% 0.0% 25.0% 6.3%
Financials 84 95 88.4% 43.8% 4.7% 51.6% 1.4% 50.0% 0.0% 50.0% -0.2%
Technology 19 20 95.0% 46.7% 0.0% 53.3% -12.7% 73.7% 0.0% 26.3% 1.1%
DJ Europe 600 377 401 94.0% 51.2% 1.8% 47.0% 4.7% 52.8% 0.3% 46.9% 0.4%
Number of companies
DJ Europe 600 Q3 Earnings Summary as of November 16th, 2012
Earnings Suprises Revenues Surprises
1.01
0
1
2
3
4
Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12
Bankia share price (€)
40
50
60
70
80
90
100
110
Dec-11 Mar-12 Jun-12 Sep-12 Dec-12
KPN vs. European Telecom Sector
KPN
DJ Europe 600
Telecom Sector
Dec. 2011=100
• KPN (KPN NA) slid 13% last week to €4.03, the lowest
price in 10 years. A new-entrant in the Dutch mobile
market is a well known negative catalyst. Moreover,
German MTR cuts (effective December 1st) are expected
to be a significant drag for E-Plus, KPN’s subsidiary in
Germany. Management has already indicated they would
operate above previous leverage ratios and even accept
a lower credit rating to keep investing in its network. KPN
is finalizing its business plan through 2015. Consensus
seems to fear a right issue, not just a dividend cut;
• Bankia (BKIA SM)’s holders of junior and hybrid debt will
likely take a loss of up to 50% of the face value of their
securities, as a condition for the Spanish bank to receive
European aid. Negotiations are still ongoing;
• Microsoft (MSFT US) announced that Windows President
Steven Sinofsky was leaving the company. Mr Sinofsky
was brought over to run the Windows Division after the
disappointing release of Windows Vista back in 2006. The
news have been negatively viewed by the investment
community, with the stock falling more than 7% during
the week.
Last week’s market highlights
Source: Company data
Source: Bloomberg
Source: Bloomberg
What we are watching this week:• Final Q3 GDP data and its components
for Germany are due Friday (Nov 23rd);
• Advance November PMI data for the
Euro area, Germany and France should
be disclosed on Thursday (Nov 22th).
German IFO data for November are due
Friday (Nov 23rd);
• In the UK on Wednesday (Nov 21st), the
Bank of England releases the minutes of
its November meeting;
• Hurricane Sandy is likely to continue
distorting economic indicators in the
coming week, including housing starts
(Nov 20th) and jobless claims (Nov 21st);
• The Fed chairman will speak on “The
Economic Recovery and Economic
Policy” on Tuesday (Nov 20th).
Weakness in US equity markets suggest
the Univ. of Michigan consumer
sentiment index could reverse some of
its recent gains.
CALENDAR - Event Country Date Hour (GMT) Survey Prior
NAHB Housing Market Index (Nov) US 19-Nov 15:00 41 41
Existing Home Sales (Nov) US 19-Nov 15:00 4.75M 4.75M
BOJ rate announcement Japan 20-Nov Not Available 0.10% 0.10%
RBA MPC minutes Australia 20-Nov 00:30 Not Available Not Available
Housing Starts (Oct) US 20-Nov 13:30 840K 872K
Richmond Fed's Lacker speaks on monetary policy in New York US 20-Nov 14:00 Not Available Not Available
EU general affairs ministers prep budget summit Euro-Zone 20-Nov 09:00 Not Available Not Available
Eurogroup meeting on Greece in Brussels Euro-Zone 20-Nov 16:00 Not Available Not Available
Fed Chairman Bernanke speaks at Economic Club in New York US 20-Nov Not Available Not Available Not Available
Bank of England MPC Minutes UK 21-Nov 09:30 Not Available Not Available
Initial Jobless Claims (for week to 17 Nov) US 21-Nov 13:30 400K 439K
Continuing Claims (for week 17 Nov) US 21-Nov 13:30 3345K 3334K
Markit US PMI Preliminary US 21-Nov 14:00 51.0 Not Available
U. of Michigan Confidence (final; Nov) US 21-Nov 13:12 84.5 84.9
Leading Indicators US 21-Nov 15:00 0.1% 0.6%
HSBC Flash Manufacturing PMI China 22-Nov 01:45 Not Available 49.5
Public holiday US 22-Nov Not Available Not Available Not Available
PMI Manufacturing France 22-Nov 08:00 44.0 43.7
ECB General Council meeting (no rate announcement) Euro-Zone 22-Nov Not Available Not Available Not Available
PMI Services France 22-Nov 08:00 45.0 44.6
PMI Manufacturing Germany 22-Nov 08:30 46.0 46.0
PMI Services Germany 22-Nov 08:30 48.3 48.4
PMI Manufacturing (flash; Nov) Euro-Zone 22-Nov 09:00 45.6 45.4
PMI Services (flash; Nov) Euro-Zone 22-Nov 09:00 46.0 46.0
Euro-Zone Consumer Confidence (flash; Nov) Euro-Zone 22-Nov 15:00 -25.9 -25.7
GDP (final; y/y) Germany 23-Nov 07:00 0.4% Not Available
Public holiday Japan 23-Nov Not Available Not Available Not Available
ECB President Draghi speaks at 22nd Frankfurt European Banking Congress Euro-Zone 23-Nov 09:00 Not Available Not Available
IFO - Business Climate (Nov) Germany 23-Nov 09:00 99.5 100.0
Eurogroup meeting on Greece• The Euro-zone Finance Ministers are to hold an
extraordinary meeting on Tuesday, November
20th to try to bridge the difference within the
Troika (mainly regarding debt sustainability
issues). They will also try to find a solution to
Greece’s additional funding needs;
• Nonetheless, and according to Eurogroup
President Jean-Claude Juncker, the Finance
Ministers might have to meet again by the end of
the month;
• Various press reports suggested that the funding
needs could be covered via a cut in the interest
rates Greece pays on its loans or through a
lengthening of loans maturities and issuance of T-
bills;
• The major issue that needs to be resolved is
Greece’s debt sustainability. However, given the
politically controversial decisions that would be
involved, European politicians will probably
continue kicking the Greek can down the road.
Next Week Preview: Eurogroup meeting and Black Friday
Let’s go to the shopping mall…• The first sales day after next week’s Thanksgiving
holiday is usually considered to be a reliable
barometer of sales during the whole holiday
season;
• The growing popularity of “Cyber Monday”
means that retail sales over this “long weekend”
are important;
• The whole holiday period accounts for an
important share of many retailers’ total annual
sales. Will the treat of a fall in after-tax incomes
on January 1st (fiscal cliff driven) restrain sales
over the holiday period?
Source: US Census Bureau
Portugal will tap bond markets
this week• On November 21st, the Portuguese Treasury and
Debt Management Agency is going to auction
three Treasury Bill lines maturing on February
2013, May 2013 and May 2014, with an indicative
global range amount of €1,75bn to €2bn;
• After this auction, the 2012 funding programme
will be completed. Therefore the auction
scheduled for December 19th will not be
proceeded.
Next Week Preview: Portugal debt auction and Fiscal Cliff
No fiscal cliff concerns this
week… Really?
Source: Bloomberg
• Last week ended on a hopeful note. Democratic
and Republican Congressional leaders met at the
White House with President Obama and
emerged from their meeting promising they
would reach a fiscal compromise before
Christmas;
• President Barack Obama and top lawmakers
agreed on last Friday to work on a framework
for reforming the U.S. tax code and
"entitlement" programs next year;
• Lawmakers have gone for the Thanksgiving
holiday on an upbeat note. However, it will still
probably be a bumpy road to reach an
agreement;
• Meanwhile, the uncertainty may continue to
affect household and business spending over
the next few weeks.
CALENDAR - Event Country Date Hour (GMT)
Treasury Bills France 19-Nov 14:00
12M and 18M Treasury Bills Spain 20-Nov 9:30
2017 Government Bonds (GPB4.5bn) United Kingdom 20-Nov 10:30
10Y Government Bonds (€4bn) Germany 21-Nov 10:30
3, 6 and 12M Treasury Bills Portugal 21-Nov 10:30
Government Bonds Spain 22-Nov 9:30
Next Week Preview: Key corporate eventsKey corporate events in Europe• With the reporting season almost over, the
biggest event next week in Europe could be
Xstata’s EGM on Tuesday. Shareholders will vote
on the merger of Glencore.
Company Date Event
CRH 19-Nov Capital Markets Day
Subsea 7 19-Nov Q3 Results
Intertek Group 19-Nov Trading Statement
Mitie Group 19-Nov H1 Results
Xstrata 20-Nov EGM
Glencore 20-Nov EGM
British Land 20-Nov Q2 Results
Signet Group 20-Nov Q3 Results
Easyjet 20-Nov FY Results
OPAP 20-Nov Q3 Results
Compass Group 21-Nov FY Results
Jonhson Matthey 21-Nov H1 Results
Randstad 21-Nov Investor Day
SABMiller 22-Nov H1 Results
Experian Group 22-Nov Shareholders Meeting
Smiths Group 22-Nov Shareholders Meeting
Halma 22-Nov H1 Results
Mothercare 22-Nov H1 Results
United Internet 22-Nov Q3 Results
Galp 23-Nov Shareholders Meeting
Key corporate events in the US
• In a shorter week than usual due to the
Thanksgiving holiday, the highlight will probably
be Hewlett-Packard. The company is scheduled
to report on November 20th. HP guided down in
Services last month. Moreover, there’s been
signs of PC softness.
Company Date Event
Honeywell 19-Nov Defense and Space Investor Day
Lowe's (LOW) 19-Nov Earnings release ($0.35)
Broacade Com (BRCD) 19-Nov Earnings release ($0.14)
19-Nov
Hewlett-Packard (HPQ) 20-Nov Earnings release ($1.14)
HJ Heinz (HNZ) 20-Nov Earnings release ($0.88)
Campbell Soup (CPB) 20-Nov Earnings release ($0.85)
Best Buy (BBY) 20-Nov Earnings release ($0.12)
Medtronic (MDT) 20-Nov Earnings release ($0.88)
Deere & Co (DE) 21-Nov Earnings release ($1.88)
3.4%
2.0%
0%
5%
10%
15%
20%
25%
Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12
Ireland Government Bond Yields
2 years
5 years
1.295
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12
Mota-Engil share price (€)
Charts we are watching• Mota-Engil, the Portuguese Construction and
Engineering group, will release its Q3 2012 earnings
on November 21st, after market close. In Portugal,
revenues should reflect the weak performance of
the domestic construction market. However,
investors will probably focus on the performance of
the international division: Latin America, Central
Europe and, particularly, the African unit. The stock
price increased more than 34% since the beginning
of 2012. Mota-Engil announced in its H1 2012 results
the new strategic plan, with ambitious goals for its
international units.
• Last week, Fitch has revised the Outlook on Ireland’s
BBB+ sovereign rating to Stable. Ireland has made
progress towards consolidating its fiscal expenditure.
it cut its deficit to 9.4% of GDP in 2011, from 12.6%
in 2010, and intends to achieve an 8.6% deficit ratio
this year. However, Irish growth is highly dependant
on external demand. Slowing growth in its main
trading partners (the UK and the euro area) could hit
GDP and hurt tax receipts.
Source: Bloomberg
Source: Bloomberg
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