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

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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

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Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12

Bankia share price (€)

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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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