Weekly Markets

Perspectives

For important disclosures, refer to the Disclosure Section, located at the end of this report.

n

Jan

ua

ry2

8th

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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.

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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

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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 ------------------

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10

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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.

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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

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-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

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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

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3.0

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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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depending on their specific investment objectives and financial position.

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with investment. It does not take account of whether an investment, course of action, or associated risks are suitable

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