* Cotações com atraso superior a 15 minutos via Bats CHI-X Europe e NASDAQ Basic

Patris Daily - 25 October 2018

25 Oct 2018



Europe: With the exception of the UK, all major European stock indices closed negative yesterday. Italy (-1.69%) and Germany (-0.73%) underperformed, while the UK outperformed (+0.11%).

STOXX 600 closed negative for the sixth consecutive session (-0.22%), with 11 out of its 19 main sectors closing negative. Retail (+1.14%) and Media (+0.96%) outperformed, while Basic Resources (-1.93%) and Auto & Parts (-2.39%) were the main laggards.

Eurozone sovereign debt market: With the exception of Italy, 10-year EGB traded on a positive note yesterday. Spain and Portugal outperformed with 10-year SPGBs yields down 3.8bps to 1.619% and 10-year PGBs yields down 2.2bps to 1.974%. On the opposite hand, Italy underperformed once again (for the third consecutive session), with Italian yields increasing across the curve with 2-year BTPS yields up 2.7bps to 1.235% and 10-year BTPS yields up 1.4bps to 3.599%.

Portugal: PSI20 finished the day little changed (-0.01%). 10 out of 18 members closed positive with Corticeira Amorim (+3.12%), Ramada Investimentos (+2.33%) and Jerónimo Martins (+2.05%) gaining more than 2%, while BCP (-2.06%) and Altri (-2.24%) were the main laggards.

FX & Commodities: The first future of Brent fell 0.35% (-0.77% as we type), while gold rose by 0.25% (+0.05% as we type). The Euroweakened by 0.69% against the US dollar (+0.10% as we type).

US Equity & Debt Markets: S&P500 fell 3.09% (Nasdaq Composite -4.43%). 3 out of its 11 major industry groups finished the day higher: Utilities (+2.30%), Real Estate (+1.13%) and Consumer Staples (+0.49%). Communications (-4.88%) and Technology were the main laggards. The index is now down almost 10% from the 3 October intraday high. 10-year UST yields fell by 6.4bps to 3.104%, reflecting the sharp fall in equity markets.

Federal Reserve Bank of Dallas President Robert Kaplan (a non-voter this year on FOMC) sees future economic growth as uncertain but probably slow, consistent with the prediction of a lower neutral rate than the median Fed official. He continues to see the FOMC gradually and patiently raising the federal funds rate until the range of a neutral stance is reached. According to Robert Kaplan, the neutral rate of interest is modestly below 3%. Nevertheless, Robert Kaplan considers that fiscal stimulus can lift the short-run neutral level. He intends to make a judgment sometimes in the spring or summer of 2019 based on the economic outlook at that time on the appropriateness of moving into a restrictive interest rate. Finally, he mentioned that an inverted yield curve would concern him.

Robert Kaplan favours a fourth 2018 rate increase in December, and sees two increases as likely appropriate in the first half of 2019. He added that his views on the appropriate path for the fed funds rate would change if productivity jumps in a sustainable way. He expects wage pressure to continue to build. Robert Kaplan does not see a sharp acceleration going forward in inflation or in wages.

Federal Reserve Bank of Atlanta President Raphael Bostic (a voter this year on the rate-setting FOMC) stressed that he is comfortable with four rate hikes in 2018. He views a continued and gradual removal of policy accommodation as appropriate until the FOMC gets to a neutral policy rate. After a few rate hikes, he sees the FOMC reaching a neutral interest rate. At that point, Raphael Bostic believes that the Federal Reserve should look to the economy, in order to see if it is on a sustainable path. Raphael Bostic upgraded his GDP growth forecasts for 2018-19, and sees risks tilted to the upside.

The Federal Reserve’s Beige Book yesterday released mentioned that economic activity continued to expand at a modest to moderate pace. Some manufacturers cited rising costs and trade uncertainties. Moreover, labour shortages were broadly noted and linked to wage increases. Nevertheless, wage growth continued to be viewed as modest to moderate, which is expected to continue over the next 6 months. According to the Beige Book, manufacturers raised prices due to tariffs. Consumer prices were seen rising at a moderate pace.

Latin America: In Colombia, the central bank chief economist said yesterday that GDP is expected to expand by 2.6% this year (3.2% in 2019), supported by higher private sector demand due to the recovery of the labour market and interest rate levels that support spending on durable goods. Peso seen at 3,050 per USD by the end of 2018, weakening to 3,130 per USD by the end of 2019, affected by lower flows to emerging markets due to increased perception of global risks, higher interest rates in the US and the unwinding of central bank balance sheets in developed countries. Fiscal deficit is seen narrowing in line with targets (3.1% of GDP in 2018 and 2.4% of GDP in 2019). The central bank is seen cautiously raising monetary policy in 2019.

Asia: Asian equity markets followed the US sell-off: TOPIX -3.10%, HANG SENG -1.56% as we type, SHANGHAI COMPOSITE +0.02%, HSCEI -1.12% as we type, TAIEX -2.44%, KOSPI -1.63% and S&P/ASX200 -2.83%. Chinese domestic stocks outperformed.


Eurozone: September Monetary and Credit Data

The annual growth rate of broad monetary aggregate M3 stood at 3.5%y/y in September, after 3.4%y/y in August. The annual growth rate of narrower monetary aggregate M1 accelerated from 6.4%y/y in August to 6.8%y/y in September.

The annual growth rate of adjusted loans to the private sector (i.e. adjusted for loan sales, securitization and notional cash pooling) stood at 3.4% in September, unchanged from the previous month. The annual growth rate of adjusted loans to households reached 3.1%y/y in September, unchanged from the previous month, while the annual growth rate of adjusted loans to non-financial corporations increased to 4.3%y/y in September, from 4.1%y/y in August.

US: FHFA House Price Index

FHFA US house price index purchase rose +0.3% m/m in August (vs. consensus +0.3%m/m), after +0.4%m/m in July.

US: September New home sales

New home sales fell 5.5%m/m in September to a 553k annualized rate, from a downwardly revised 585k in August (previously estimated at 629k). The result was significantly below consensus expectations of 625k.


Galp Energia: Galp, partner of the BM-S-11 consortium, informed that FPSO P-69 started production in the Lula Extreme South area, in the pre-salt of the Santos basin. FPSO P-69 is the eighth production unit to start operations in the Lula/Iracema projects. Galp, through its subsidiary Petrogal Brasil, owns a 10% stake in the consortium that develops block BM-S-11. Petrobras is the operator of the Lula/Iracema projects, holding a 65% stake, with Shell Brasil Petróleo, holding the remaining 25% (Galp Energia’s filing on CMVM)

BCP: Bank Millennium disclosed a 3Q18 net profit of PLN200.2mn (vs. consensus PLN199.2mn). Banking income reached PLN684.5mn (vs. consensus PLN683.8, with NII at PLN463 (vs. consensus PLN457.2mn). EBIT ex-provisions reached PLN373.6 (vs. consensus PLN376.3mn) (Bloomberg)

Corticeira Amorim: Corticeira Amorim, through its subsidiary Amorim Florestal, the sub-holding company of the group’s Raw Materials Business Unit, has entered into an agreement to acquire 100% of Cosabe - Companhia Silvo-Agrícola da Beira, whose main asset is a forest property named Herdade da Baliza, located in the Castelo Branco /International Tagus area (Portugal), for a total amount of €5mn (Corticeira Amorim’s filing on CMVM)

Ebro Foods: Ebro Foods reported net income for 9M18 of €99.7mn vs €128mn y/y, 9M18 EBITDA of €211.5mn vs €261mn y/y, 9M18 EBITDA margin of 11% vs. 14.3% y/y, 9M18 EBIT of €147mn vs. €202.7mn y/y, 9M18 sales of €1.92bn vs. €1.8bn y/y, and 9M18 pre-tax profit of €147.4mn vs. €200.1mn y/y (Bloomberg)

Bankinter: 9M18 net income reached €404mn, with net interest income at €816.3mn. The bad loans ratio reached 3.2% in September, while CET1 ratio fully loaded stood at 11.7% (Bloomberg)

IATA: Airline industry trade body forecasts number of air passenger journeys will double in 2037. China is expected to overtake the US as the largest air passenger market by 2025. India will rise to nº3 by 2037 from seventh today, Indonesia becomes fourth from 10thcurrently (Bloomberg)

Moncler: Moncler reported wholesale sales at constant FX for the third quarter that beat the average analyst estimate. 3Q wholesale sales at constant FY +10% vs estimate +9%, 9M18 revenue €872.7mn, 9M18 sales at constant exchange rates +23%, 9M18 retail sales at constant FX +30% (Bloomberg)

PSA: PSA 3Q18 revenue €15.4bn (vs. consensus €15.7bn). Company downgraded China’s market growth forecast to 1% vs 2% previously, while Latin America is seen up 3% vs 4% previously (Bloomberg)

Capgemini: Capgemini reported revenue for the third quarter of €3.23bn and raised the growth target for revenues (Bloomberg)

Orange: 3Q18 adjusted EBITDA stood at €3.69bn (vs. consensus €3.67bn), while 3Q18 revenues reached €10.31bn (vs. consensus €10.32bn). The Company sees growth in adjusted EBITDA, reduction in capex and growth in operating cash flow for 2019 and 2020 (Bloomberg)

Daimler: 3Q18 revenue reached €40.21bn (vs. consensus €39.33bn). 3Q18 EPS reached €1.58 (vs. consensus €1.89). The group still sees a slight increase in 2018 group revenue and unit sales (Bloomberg)

AB Inbev: 3Q18 adjusted EPS reached $0.82 (vs. consensus $0.98), with 3Q18 EBITDA at $5.36bn (vs. consensus $5.86). 3Q18 organic revenue reached +4.5% (vs. consensus +5.9%), while 3Q18 organic volume growth stood at +0.2% (vs. consensus +1.8%). The Company disclosed 3Q18 revenues of $13.3bn (vs. consensus $14.1bn) (Bloomberg)

Microsoft: 1Q revenue reached $29.08bn (vs. consensus $27.92bn). 1Q EPS stood at $1.14 (vs. consensus $0.96) (Bloomberg)

WHAT TO WATCH TODAY: On the data front, focus should be on the German Ifo Business Climate Survey for October and the USSeptember durable goods data.

We will have MPC meetings in Norway, Turkey, and the Eurozone.

The ECB is not expected to change policy rates, the APP or forward guidance. Focus should be on any updated details on the reinvestment of maturing bonds held under the APP, as well as on the risk assessment (given that weaker trade, higher oil prices and Italian risks present a more challenging backdrop for the ECB), including whether Mario Draghi repeats confidence in the inflation outlook. Italy will probably be discussed in the press conference.

International Paper, ConocoPhillips, Valero Energy, Merck and Bristol-Myers Squibb report quarterly earnings before market opens, while Alphabet, Amazon and Intel will do so after market closes.

In the US, the Treasury will issue around $31bn across the 7-year sector.


For further information, or to receive the PDF file, please contact +351 912 897 835 or


The information and opinion contained in this report was prepared by PATRIS - SOCIEDADE CORRETORA, SA ("Patris"), which is part of the group of companies whose holding is PATRIS INVESTIMENTOS, SGPS, SA (Patris Group), listed in Alternext, which holds 100% of the share capital and voting rights of REAL VIDA SEGUROS SA which, in turn, holds 100% of the share capital and voting rights of Patris.

The information contained herein is based on publicly available data obtained from sources believed to be reliable and has not been subject to independent verification. To the extent permitted by applicable law, Patris does not expressly or impliedly guarantee the accuracy, completeness and / or correctness of such data, or any omission. This document, or part thereof, may not be (i) modified, (ii) transmitted or distributed or (iii) copied or duplicated by any means or means, without the prior written consent of Patris.

The analysts involved in the preparation of this report did not receive, receive and will not receive any compensation, direct or indirect, based on the information contained in this report.

PATRIS - SOCIEDADE CORRETORA, SA or another company of the Patris Group or its respective shareholders, management, and / or employees may carry out personal transactions on the securities referred to in this report, at any time and without prior notice.

Any opinion contained in this report may be outdated as a result of changes in market conditions, applicable laws and other factors. It should also be considered that the analyst may make changes to the estimates, assumptions and evaluation methodology used.

This report has been prepared for information purposes only, not taking into account the specific investment goals, financial situation and particular needs of any specific person who may receive the report. This report therefore has no specific recipient.

Patris is subject to high internal standards of behavior associated with the capital market, prepared on the basis of the applicable legislation of the Portuguese State and the European Union, which include rules to prevent and avoid conflicts of interest and barriers to the disclosure of information.

Investors should bear in mind that the rate of return on the securities identified in this report - if any reference is made to those returns - may vary and the price of such securities may rise or fall. Investors should thus be aware that they may receive less than initially invested. While this report may refer to the historical performance of securities, past performance is no guarantee of future performance. In addition, market conditions, applicable laws and other factors that have an effect on performance are all likely to change, with the consequent change in the information contained in this report. Patris or any other company of the Patris Group does not accept, to the extent permitted by applicable law, any liability, whether direct or indirect, resulting from losses that may arise due to the use of the information contained in this report.

Patris's activity is overseen by the Bank of Portugal and the Securities Market Commission.