October 22nd, 2012 Weekly Markets n Perspectives For important disclosures, refer to the Disclosure Section, located at the end of this report.
Weekly FocusAt last week’s European Council meeting EU some important companies, including bell-leaders leaved many important issues on banking weather General Electric, disappointed investors.union unanswered. Was there some unofficial 84 S&P 500 firms reported Q3 earnings duringdiscussion of MoU conditionality regarding a last week. Next week will probably be critical inpossible financial aid for Spain? assessing Q4 outlook as many Energy, Tech and Industrial companies are expected to report.In Portugal, the 2013 Budget draft was presentedto Parliament. The government will implement Euro-zone trade data for August together withfiscal tightening measures worth 3.2% of GDP. August’s industrial production seems to suggest that GDP growth in Q3 could be a positiveMoody’s concluded a 4-month plus review period surprise.and kept Spain’s investment grade rating. S&Pdowngraded 11 Spanish banks. According to latest China’s 3Q GDP rose 7.4% y/y. China’s growthnews, Spain seems to be more comfortable making rate is still slowing down. However, thea request for a credit line only in order to satisfy September macro data could suggest somethe conditions of the ECB to begin buying bonds. stabilization.Markets started the week on a positive note The Philly Fed index was back into positivedriven by Citigroup´s earnings beat and a stronger- territory for the first time since April. US housingthan-expected US retail report. However, Last continues to surprise to the upside. September’sFriday, S&P 500 dropped the most since June as inflation rates were in line with the Fed’s target.
Portugal: 2013 Budget draft was presented to Parliament• Tax increases should raise €4.3bn. Expenditure • Pensions, unemployment rates and grants to cuts should bring savings of €1bn, including a foundations will be reduced; planned 50% cut in temporary civil-service jobs; • Protests mounted in front of the parliament• The government will implement fiscal tightening against the new austerity measures; measures worth 3.2% of GDP; • The budget is creating instability inside the• GDP is seen falling 3.0% in 2012 and 1.0% in centre-right coalition that governs Portugal; 2013. The amount of fiscal tightening required by • Will it be more difficult for the government to the Troika is huge. Growth will likely continue to implement further tightening or to continue surprise on the downside; with structural reforms?• Tax increases will include higher income and corporate taxes, an increase in the capital gains Portugal: Budget Forecasts 2012 2013 tax (from 25% to 26.5%) and higher property taxes. A financial transaction tax could also be 5.0% 4.5% introduced;• Income tax brackets are reduced from 8 to 5. A 4% surcharge levy will be introduced on all incomes and an additional 2.5% surcharge will apply on the highest bracket; -1.0%• A new tax over luxury real-estate will be -3.0% implemented. Houses with a value higher than GDP growth Budget Deficit $1mn will have to pay an additional tax; Source: 2013 Budget draft
Bank of Portugal releases Galicia and Basque Country Holdmonthly economic indicators elections to the Parliament • For the market it was a key political event for• In September 2012, the monthly coincident Spain. According to consensus, it could have an indicator for the year-on-year evolution of the influence on the timing of the Spanish request economic activity increased. The coincident for help; indicator for the evolution of private • Meanwhile the constitucional clash in Catalonia consumption increased too; is ongoing. The Catalan parliament approved a• In the three-month period ended in August motion to hold a referendum on independence 2012, the retail turnover index fell 6.3%, in real from Spain. The Spanish government intends to year-on-year terms (-6.7% in Q2 2012); stop any consultation;• In the 3rd quarter of 2012, sales of light • Catalonia is not happy with the inter-regional commercial vehicles dropped 55.5% y/y (-57.4% fiscal transfers´mechanism. in Q2 2012). Sales of heavy commercial vehicles declined 10.2% (-50.2% in Q2 2012). Cement sales of national firms to the domestic market fell 31.5% y/y (-29.7% in Q2 2012);• In August, the annual growth rate of loans granted to the resident non-monetary sector (excluding General Government) by resident banks was -4.2%, 0.2pp lower than the rate observed in the previous month. Source: Centre d´Etudis d’Opinion
Moody’s keeps Spain’s rating Spain: NPL ratio reachedat Investment Grade 10.51% in August• Tuesday evening, the Moody’s ratings agency • Non-Performing Loans increased 3.1% m/m announced that it kept the Spanish sovereign (+39.7% y/y) to €178.6bn in August and reached rating at Baa3. The rating was kept on negative the highest level since Bank of Spain started to outlook; collect data in 1962;• The negative outlook reflects that the "risks to its • Spanish banks’ government bond holdings fell to baseline scenario are high and skewed to the €243.8bn in August, still 6.7% of total assets; downside“; • The economy is still deleveraging. Loan volumes• The ratings agency sees significant risks to the decreased to €1,699bn. They are at August 2007 economic outlook in Spain; levels.• Moody’s expect the country to ask for an 12% Spain: Non-performing loans 35% enhanced conditions credit line from the ESM as 10% 10.51% 30% a prerequisite for the ECB to activate its OMT 25% 8% program, rather than a full-blown bailout 20% 6% 15% program; 10%• The consensus is that Spain would ask for aid 4% 5% after the regional elections on October 21st. The 2% 3.08% 0% Eurogroup meeting on November 12th could be 0% -5% an important date to watch. 2008 2009 2010 2011 2012 NPLs to Total Loans NPLs % monthly change (right scale) Source: Bank of Spain
Euro-zone trade data for BOE: October minutes wereAugust was healthy released • It was decided to not expand the asset buying • Export values increased by 3.7% in August. program. This decision wasn’t unanimous. Imports rose by 2.1%. Seasonally adjusted Some members felt that there was still trade surplus reached €9.9bn; considerable scope for assets purchases to • Net trade should have made a positive provide further stimulus on the economy; contribution to euro area GDP in Q3; • “… safe-heaven flows into the United Kingdom • Together with August’s industrial production, had lessened”; euro-zone trade data seems to suggest that • Headline CPI inflation fell from 2.6% y/y to 2.5% GDP growth in Q3 could be a positive surprise. y/y in September. This is the lowest level since Eurozone External EU Trade Balance November 2009. (€bn) 500 Bank of England10 9.9 400 Balance Sheet 399.5 5 300 GBP Bln 0 -5 200-10 100-15 0 2000 2002 2004 2006 2008 2010 2012 2006 2008 2010 2012 Source: Eurostat Source: Bank of England
Not much progress from China’s 3Q increases 7.4%last week’s European • China’s 3Qfollowing 7.6% growth in in line with consensus, GDP rose 7.4% y/y, 2Q; • Industrial production increased 9.2% y/y inCouncil meeting September, compared to 8.9% in August.• Banking union and fiscal coordination were on Electricity production was up 1.5% y/y in the European Council’s agenda; September;• On banking union, the objective to agree on the • Retail sales value increased 14.2% y/y in legislative framework for the Single Supervisory September, compared to 13.2% in August; Mechanism by January 1 st, 2013 was maintained. • China’s growth rate is still slowing down. But, no agreement on the actual implementation However, the September macro data could was found; suggest some stabilization.• With governments’ borrowing costs down, China GDP constant price European leaders don’t seem to have any sense (Y/Y change) 13% of urgency; 12% 11.9%• Moreover, with German federal elections in 11% September 2013, probably there’s little chance 10% of any material progress on these issues in the 9% near future; 8%• We’ll have to wait until the Ecofin (12th/13th) and 7.4% nd/23rd) of 7% the European Council meeting (22 6.2% 6% November to get more clarity on Greece, Cyprus 2005 2007 2009 2011 2013 Source: Bloomberg and Spain.
US Retail sales rises 1.1% in US CPI in line with the Fed’sSeptember target• Even excluding gasoline (+2.5%), autos (+1.3%) • The 0.6% m/m increase in September’s and building materials (+1.1%), sales rose by an consumer price was due to rise in gasoline impressive 0.9% m/m; prices. The annual rate of CPI inflation edged• However, the number has probably been boosted up to 2.0%, from 1.7% in August; by two temporary effects: the increase in food • Excluding food and energy, core prices prices due to the recent drought and the release increased by 0.1% m/m. The annual rate of of iPhone 5; core inflation rose to 2.0%, from 1.9%;• Industrial Production increased 0.2% m/m, a • So, both inflation rates are in line with the small reversion of the 0.7% m/m fall in August. Fed’s target. The manufacturing sector is still struggling, as the Consumer Price Inflation economic slowdown hits exporters. (annual rate) 6% 5% 4% CPI US Retail Sales 3% Jun Jul Aug Sep 2% 2.0% Retail sales (m/m) -0.7% 0.7% 1.2% 1.1% 1% Core CPI 0% (y/y) 3.5% 4.0% 5.0% 0.0% -1% Sales (Ex. Autos, Gas & Buil.) (m/m) -0.2% 0.9% 0.1% 0.9% -2% -3% Source: US Commerce Department 2006 2008 2010 2012 Source: Bureau of Labor Statistics
US: Regional surveys Leading Indicators roseimprove 0.6% m/m in September• The Philly Fed index was back into positive • Leading indicators increased 0.6% m/m in territory for the first time since April. The Empire September, after falling -0.4% m/m in the State Index also showed some signs of recovery; previous month. The economy is still fluctuating• Both surveys seems to indicate that the national around a slow growth trend; ISM could increase in October; • The building permits and financial components• Conditions for the US industry seems to be offset negative contributions from ISM new improving a bit. orders and consumer expectations. 6 of the 10 components of the indicator increased last US Regional Surveys month. 25 Empire State Index US: Leading Indicators 20 15% (y/y change) 15 10% 10 5% 5 5.7 2.9% 0% 0 -5% -5 -6.16 -10% -10 Philly Fed Index -15% -15 -20% -20 -25% Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2008 2009 2010 2011 2012Source: Bloomberg Source: The Conference Board
S&P 500 Earnings Update: Q3 2012 as of October 19th, 2012• So far, 116 companies have reported Q3 results; • The consensus estimate of the Information• The average EPS surprise has been 4%; Technology sector’s Q3 2012 EPS fell after• Excluding Financials, there are fewer positive Microsoft and Google missed earnings and surprises and more negative surprises; revenue estimates; • Financials sector’s EPS has been rising since the start of the Q3 season. S&P 500 Q3 Earnings Summary as of October 19th, 2012 Number of companies Earnings Suprises Average Q3 Revenues Surprises Average Q3 Reported Total % of Cos Positive Negative In-line Surprise Positive Negative In-line Surprise Oil & Gas 6 41 14.6% 50.0% 50.0% 0.0% -4.2% 16.7% 83.3% 0.0% -0.5% Basic Materials 5 26 19.2% 60.0% 40.0% 0.0% -0.8% 40.0% 60.0% 0.0% 0.4% Industrials 19 75 25.3% 63.2% 36.8% 0.0% 0.3% 36.8% 63.2% 0.0% -0.9% Consumer Goods 14 57 24.6% 71.4% 28.6% 0.0% 2.6% 35.7% 64.3% 0.0% -0.9% Health Care 11 46 23.9% 81.8% 18.2% 0.0% 2.6% 18.2% 81.8% 0.0% -1.1% Consumer Services 18 74 24.3% 77.8% 16.7% 5.6% 2.6% 38.9% 61.1% 0.0% 0.1% Telecommunications 1 8 12.5% 0.0% 0.0% 100.0% 0.0% 0.0% 100.0% 0.0% 0.0% Utilities 0 32 0.0% n.m. n.m. n.m. n.m. n.m. n.m. n.m. n.m. Financials 29 85 34.1% 82.8% 13.8% 3.5% 12.9% 69.0% 31.0% 0.0% 3.3% Technology 13 54 24.1% 38.5% 61.5% 0.0% -2.8% 38.5% 61.5% 0.0% -1.9% S&P 500 116 498 23.3% 69.0% 28.5% 2.6% 4.0% 42.2% 57.8% 0.0% 0.2% S&P 500 ex. Financials 87 417 20.9% 64.4% 33.3% 2.3% 0.0% 33.3% 66.7% 0.0% 0.8% Comparative Data (full earnings season) Q2 2012 69.4% 29.8% 0.8% 3.8% 41.8% 58.0% 0.2% 0.1%Source: Bloomberg
Last week’s market highlights• Shares of Google lost 8% last Thursday, after disappointing number that came hours ahead of schedule. Google issued a statement blaming R.R. Donnelley & Sons, its filing agent. Core Google q/q revenue growth was 4.7%. Core Google q/q advertising revenue reached 2.1%. Google web sites revenues were driven by weakness in international and FX;• Nokia’s cash performance was weak in Q3. Net cash Nokia share price (€) decreased by €633m. Excluding the quarterly cash 4.0 payment from Microsoft, it fell by €835m. Devices 3.0 remain fragile but NSN is showing a better performance; 2.0 2.104• Citigroup unexpectedly announced that Vikram Pandit was stepping down as CEO. Mike Corbat, most recently 1.0 Jan-12 Mar-12 Mai-12 Jul-12 Set-12 CEO of Citi’s EMEA business, has been elected as the new CEO;• Last Friday, S&P 500 fell -1.7%, the most since June, as General Electric (-3.4%), McDonald’s (-4.5%) and Microsoft (-2.9%) disappointed investors. Advanced Micro Devices sank 17%, its biggest drop in 4 years. The company said Q4 sales will miss analysts’ estimates. AMD will reduce 15% of its staff. Source: Bloomberg
What we are watching this week: CALENDAR - Event Date Hour (BST) Survey Prior• HSBC Manufacturing PMI for China Bank of Japan minutes (of Oct 5 monetary policy meeting) 10-22-2012 Not Available Not Available Not Available will be released Wednesday. Euro-Zone Consumer Confidence 10-23-2012 15:00 -25.9 -25.9 France INSEE manufacturing survey (Oct) 10-23-2012 07:45 90 90 September’s PMI was 47.9. A higher Ireland European Court of Justice (to hear Irish ESM case) 10-23-2012 Not Available Not Available Not Available Canada monetary policy decision 10-23-2012 Not Available Not Available Not Available value should probably be well BoEs Governor King speech 10-23-2012 Not Available Not Available Not Available Richmond FED Manufacturing, US 10-23-2012 15:00 4.0 4.0 received; HSBC flash Manufacturing PMI, China (Oct) 10-24-2012 02:45 Not Available 47.9• Many survey indicators will be Germany issues 10Y, GB 10-24-2012 Not Available Not Available Not Available PMI Manufacturing, France 10-24-2012 08:00 44.0 42.7 released this week in Europe. PMI Services, France 10-24-2012 08:00 45.4 45.0 PMI Manufacturing, Germany 10-24-2012 08:30 48.0 47.4 Following the trade data and PMI Services, Germany 10-24-2012 08:30 50.0 49.7 IFO - Business Climate, Germany (Oct) 10-24-2012 09:00 101.6 101.4 industrial production positive PMI flash Manufacturing, Euro-Zone (Oct) 10-24-2012 09:00 46.5 46.1 PMI flash Services, Euro-Zone (Oct) 10-24-2012 09:00 46.4 46.1 surprises for August, some recovery ECBs Draghi meeting with German lawmakers in Bundestag 10-24-2012 Not Available Not Available Not Available is expected for those indicators; MBA Mortgage Applications, US Markit US PMI Preliminary 10-24-2012 10-24-2012 12:00 Not Available Not Available 51.5 -4.20% Not Available• In the US, regional surveys and New Home Sales, US US FOMC monetary policy decision (statement at 7.15pm BST) 10-24-2012 10-24-2012 15:00 19:15 385K 0.25% 373K 0.25% housing indicators should be Euro-Zone M3 s.a. YoY (Sep) 10-25-2012 09:00 3.0% 2.9% Sweden Riskbank monetary policy meeting 10-25-2013 Not Available Not Available Not Available released during the week; Preliminary GDP YoY, United Kingdom (3Q12) 10-25-2012 09:30 -0.5% -0.5% Durable Goods Orders US 10-25-2012 13:30 6.80% -13.20%• A two-day FOMC meeting concludes Inital Jobless Claims, US 10-25-2012 13:30 371K 388K Pending Home Sales MoM US 10-25-2012 15:00 2% -2.60% on Wednesday. No further policy Kansas City FED Manufacturing, US 10-25-2012 16:00 5 2 stimulus announcement is expected; GfK Consumer Confidence Survey, Germany 10-26-2012 07:00 5.9 5.9 Nationwide CPI, Japan (Sep) 10-26-2012 Not Available Not Available Not Available• The Q3 earnings season will begin Korea prelim. real GDP (3Q12) 10-26-2012 Not Available Not Available Not Available Mexico monetary policy decision 10-26-2012 Not Available Not Available Not Available this week in Portugal with Portucel Consumer Confidence Indicator, France 10-26-2012 07:45 84 85 Unemployment Rate (Survey), Spain 10-26-2012 08:00 24.90% 24.63% (today), BPI (Wednesday, after-mkt) Business Confidence, Italy 10-26-2012 09:00 88.7 88.3 Real GDP QoQ (Annualized), US (3Q12) 10-26-2012 13:30 1.80% 1.30% and Jeronimo Martins (Friday). U. of Michigan Confidence, US (Oct) 10-26-2012 14:55 83 83.10%
Next Week Preview: Economics• The first estimate of US Q3 GDP should be US GDP (q/q annualized) 4.1% released next Friday (13:30 GMT). Consumption growth appears to have accelerated. Residential 2.6% 2.4% 2.5% 2.3% 2.2% investment is expected to show a robust 2.0% 1.3% 1.3% increase. However, business investment and net 0.1% trade should be a drag on GDP growth;• Low mortgage rates and higher confidence Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 amongst homebuyers could justify stronger housing demand. Orders at the major US New Home Sales (000s, annualized) 1,500 homebuilders seem to point to futher increases in new sales. The recovery in the housing market 1,000 is gathering pace; 500 373• Survey indicators represent the most important 0 data releases this week in Europe. We’ll have 2000 2002 2004 2006 2008 2010 2012 French and German PMI manufacturing and Germany Ifo business climate index services for October. The September PMIs 120 pointed to divergence between those two 110 countries. Will it continue with October releases? 100 101.4 German IFO business climate will also be 90 released (Wednesday, 9:00 BST). 80 2009 2010 2011 2012 2013 Source: Bloomberg
Next Week Preview: FOMC meeting• Next week’s two-day FOMC meeting concludes US Mortgage Interest rates 4.2% on Wednesday 24th October; 30 yr Fixed rate• No post-meeting press conference is scheduled 4.0% for Chairman Ben Bernanke; 3.8%• Mortgages rates have been falling in the aftermath of the Q3 announcement; 3.6%• The adoption of numerical threholds for the 3.4% 3.37% unemployment rate and inflation could again be discussed. At the last FOMC meeting, The Fed 3.2% Jan-12 Mar-12 Mai-12 Jul-12 Set-12 came close to a decision, but Fed’s officials Source: Freddie Mac Commitment Rates couldn´t reach agreement on a compromise. Will US Unemployment Duration average that change be discussed again? 43 (number of weeks) 39.8• Probably, the Fed will wait until the conclusion of 38 its Operation Twist at the end of the year. Then, 33 28 at its mid-December meeting the Fed could 23 decide about the possibility of expanding QE3; 18• Despite the reported decline in the 13 unemployment rate to a four-year low in 8 September (7.8%), the US labor market is still 3 weak. The broader employment-to-population 1948 1958 1968 1978 1988 1998 2008 ratio has barely moved since 2009. Source: Bureau of Labor Statistics
Next Week Preview: Portugal – Q3 earnings seasonPortucel (PTI PL) – 3rd Quarter Results: A resilient 9M), driven by solid trading gains. Pre-provisionquarter? (To be released 22nd October) profit is expected at €158m (€475m for the 9M) and net profit at €36m (€121m for the 9M). Loans• Sales should rise 6% y/y to €379m, down -2.8% provisions should remain high, given macro q/q. Revenues from the paper division should be challenges in Portugal. resilient. Given the weak macro-environment, the company have been trying to gain market share Jerónimo Martins (JMT PL) – 3rd Quarter Results: in Europe, following capacity closures. EBITDA Underpinned by Poland (To be released 26th October) should reach €94m, down -3% q/q, but up 3.4% y/y. EBITDA margins should fall to 24.9%. Higher • Sales should rise 12% y/y to €2.881m exports to Eastern Europe should penalize gross underpinned by Poland. The activity in Portugal margins. Net income is expected at €47m, should reflect the depressed economic activity. roughly at the same level of Q3 2011, but down - EBITDA margin should decrease this quarter 13% q/q. over the year ago. High LFLs are expected in Poland. The total number of stores in theBPI (BPI PL) – Q3 Earnings Preview country should have increased during Q3.(To be released 24th October, after market’s close, 17:00 BST) EBITDA and Net Income are expected to have• Q3 NII is expected at €148m (€440m for the 9M). increased. Next Thursday, we´ll put out a NII should reflect the cost of CoCo’s. Total earnings preview report with further details. revenues should reach €314m (€947m for the
Next Week Preview: Q3 European results• A really big number of European companies should report this week. nd th Monday, October 22 Thursday, October 25 Svenska Handelsbanken AB Q3 2012 Results ABB Ltd Q3 2012 Results Credit Suisse Group AG Q3 2012 Results Koninklijke Philips Electronics NV Q3 2012 Results Novartis AG Q3 2012 Results Electrolux AB Q3 2012 Results BASF SE Q3 2012 Results Scania AB Q3 2012 Results Technip SA Q3 2012 Results rd Tuesday, October 23 Skandinaviska Enskilda Banken AB Q3 2012 Results Enagas SA Q3 2012 Results Jeronimo Martins SGPS SA Q3 2012 Results Solvay SA Q3 2012 Results Koninklijke KPN NV Q3 2012 Results Daimler AG Q3 2012 Results Norsk Hydro ASA Q3 2012 Results Sanofi Q3 2012 Results Swedbank AB Q3 2012 Results Sandvik AB Q3 2012 Results Alfa Laval AB Q3 2012 Results Petroleum Geo-Services ASA Q3 2012 Results ARM Holdings PLC Q3 2012 Results Banco Santander SA Q3 2012 Results Stora Enso OYJ Q3 2012 Results Banco de Sabadell SA Q3 2012 Results STMicroelectronics NV Q3 2012 Results UPM-Kymmene OYJ Q3 2012 Results th Debenhams PLC Y 2012 Results Wednesday, October 24 Metso OYJ Q3 2012 Results SAP AG Q3 2012 Results Luxottica Group SpA Q3 2012 Results Nordea Bank AB Q3 2012 Results Acerinox SA Q3 2012 Results Telenor ASA Q3 2012 Results Dassault Systemes SA Q3 2012 Results Wacker Chemie AG Q3 2012 Results AstraZeneca PLC Q3 2012 Results Altisource Portfolio Solutions SA Q3 2012 Results Volvo AB Q3 2012 Results th Friday, October 26 Storebrand ASA Q3 2012 Results Banco Popular Espanol SA Q3 2012 Results Verbund AG Q3 2012 Results Red Electrica Corp SA Q3 2012 Results Konecranes OYJ Q3 2012 Results Snam SpA Q3 2012 Results Outokumpu OYJ Q3 2012 Results Marine Harvest ASA Q3 2012 Results Reckitt Benckiser Group PLC Q3 2012 Results Belgacom SA Q3 2012 Results Iberdrola SA Q3 2012 Results Statoil ASA Q3 2012 Results Telefonaktiebolaget LM Ericsson Q3 2012 Results Atlas Copco AB Q3 2012 Results Husqvarna AB Q3 2012 Results Mediaset Espana Comunicacion SA Q3 2012 Results Mapfre SA Q3 2012 Results Volkswagen AG Q3 2012 Results Mediq NV Q3 2012 Results Saipem SpA Q3 2012 Results CaixaBank Q3 2012 Results Home Retail Group PLC S1 2013 Results Abertis Infraestructuras SA Q3 2012 Results
Next Week Preview: US earnings season• This could be an important week. We’ll have many Tech and Industrial companies reporting. Apple should announce its quarterly results Thursday. Wednesday, October 24 th nd Kimberly-Clark Corp Q3 2012 Results Monday, October 22 Eli Lilly & Co Q3 2012 Results Caterpillar Inc Q3 2012 Results Lockheed Martin Corp Q3 2012 Results Freeport-McMoRan Copper & Gold Inc Q3 2012 Results Praxair Inc Q3 2012 Results Texas Instruments Inc Q3 2012 Results General Dynamics Corp Q3 2012 Results Yahoo! Inc Q3 2012 Results Corning Inc Q3 2012 Results Boeing Co/The Q3 2012 Results Wynn Resorts Ltd Q3 2012 Results rd AT&T Inc Q3 2012 Results Tuesday, October 23 Symantec Corp Q2 2013 Results Virgin Media Inc Q3 2012 Results Zynga Inc Q3 2012 Results United Technologies Corp Q3 2012 Results Bristol-Myers Squibb Co Q3 2012 Results Harley-Davidson Inc Q3 2012 Results Level 3 Communications Inc Q3 2012 Results Lexmark International Inc Q3 2012 Results Allegheny Technologies Inc Q3 2012 Results Reynolds American Inc Q3 2012 Results Delta Air Lines Inc Q3 2012 Results CIT Group Inc Q3 2012 Results US Airways Group Inc Q3 2012 Results th AK Steel Holding Corp Q3 2012 Results Thursday, October 25 New York Times Co/The Q3 2012 Results EI du Pont de Nemours & Co Q3 2012 Results International Paper Co Q3 2012 Results Whirlpool Corp Q3 2012 Results Dow Chemical Co/The Q3 2012 Results Xerox Corp Q3 2012 Results PulteGroup Inc Q3 2012 Results United Parcel Service Inc Q3 2012 Results Bunge Ltd Q3 2012 Results Illinois Tool Works Inc Q3 2012 Results Colgate-Palmolive Co Q3 2012 Results Netflix Inc Q3 2012 Results Biogen Idec Inc Q3 2012 Results Gilead Sciences Inc Q3 2012 Results Procter & Gamble Co/The Q1 2013 Results Altera Corp Q3 2012 Results Sprint Nextel Corp Q3 2012 Results Raytheon Co Q3 2012 Results Broadcom Corp Q3 2012 Results ConocoPhillips Q3 2012 Results Questcor Pharmaceuticals Inc Q3 2012 Results KLA-Tencor Corp Q1 2013 Results Compuware Corp Q2 2013 Results Eastman Chemical Co Q3 2012 Results Aflac Inc Q3 2012 Results Apple Inc Q4 2012 Results Juniper Networks Inc Q3 2012 Results Amazon.com Inc Q3 2012 Results Fortune Brands Home & Security Inc Q3 2012 Results th Friday, October 26 Facebook Inc Q3 2012 Results Legg Mason Inc Q2 2013 Results Amgen Inc Q3 2012 Results Goodyear Tire & Rubber Co/The Q3 2012 Results 3M Co Q3 2012 Results First Solar Inc Q3 2012 Results
Charts we are watching (I)• The spread between Portuguese and German 10-year Government bond yiels reached its lowest value since May 2011. Portugal has recently announced new austerity measures to make up for the budget shortfall. Nevertheless, the overall economic and public finance outlook remains very fragile. Does the market believe that with the OMT the road to market access will be easier? Source: Bloomberg Italian 2yr Government bond yield• The ECB’s recently announced OMT program seems to have been decisive for the italian 7% yield-to-maturity Government bond market. A stagnant economy has been a feature of Italy. This could 5% affect the long-term sustainability of its debt trajectory. If Spain ask for aid, will market 3% pressure intensify again and push Italy towards 2.1% asking for sovereign support? 1% Mar-11 Set-11 Mar-12 Set-12 Source: Bloomberg
Charts we are watching (II) EUR-INR exchange rate 75• India’s September headline inflation (7.8% y/y) came higher than consensus expectations. 70 70.37 INR per EUR unit Underlying pressures persist. This could reduce 65 the likelihood of a rate cut on October 30th. India has recently been characterized by 60 persistent inflation, a rising fiscal and current 55 account deficit, high currency volatility and weakening output growth… 50 2006 2007 2008 2009 2010 2011 2012 Source: Bloomberg • Standard & Poor’s revised this month South Africa’s sovereign rating for both foreign ZAR - EUR Exchange rate currency (to BBB) and local currency (to A-) by 14 ZAR per EUR unit one notch. The statement accompanying the downgrade noted the current risks to growth 12 11.27 and to the current account deficit from domestic labor disruptions, the political 10 environment and from a weak external environment. The local currency is weakening 8 again... Source: Bloomberg 2008 2010 2012
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