banner

Ticker

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

PATRIS The Week Ahead - 7 January 2019

7 Jan 2019

noticias/newsletter.jpeg

Key themes for this week:

1.The debate on Prime Minister May’s BREXIT deal restarts this week as parliament returns from recess. Investors will probably also watch out for news around the General Affairs Council on Tuesday. Meanwhile, according to press reports, Theresa May might again push back a final vote in parliament on her BREXIT deal.

2.Italy and Spain might be reviewed by DBRS and Fitch, respectively, on Friday.

3.The December FOMC meeting minutes will be released on Wednesday. At that meeting the FOMC raised rates by 25bps to 2.25%-2.50%.

4.Fed Chairman Jerome Powell and Fed Vice Chairman Richard Clarida will both speak on Thursday. In an interview at the American Economic Association conference last Friday, Fed Chairman Powell highlighted the Fed’s flexibility and willingness to be patient. He also stressed the possibility of changes in the plans for balance sheet normalisation.

5.The ECB will release on Thursday the account of December’s Governing Council meeting. Focus should be on the discussion around risks and forward guidance.

6.A US delegation will visit China for continuing trade talks on 7-8 January. Investors will be looking for signs on whether trade negotiations between the US and China may yield positive results. Elsewhere, US Trade Representative Robert Lighthizer will meet with trade ministers from the EU and Japan to continue exploring potential WTO reforms. President Trump said on Sunday that weakness in the Chinese economy is a reason to local authorities to work towards a deal.

7.Following Apple’s announcement last week that the company was reducing expectations for quarterly earnings, focus this week will probably be on the annual consumer electronics show - CES 2019 that starts on Tuesday in Las Vegas.

8.US December’s non-manufacturing PMI (due on Monday) and CPI inflation (due on Friday) are likely to be this week’s key data releases.

9.Update to the Key Risk Events Calendar for the following months.

In the coming week, there will be MPC meetings in Poland (Wednesday), Canada and Peru (both on Thursday).

Fed speakers this week include Fed Chairman Jerome Powell and Fed Vice Chairman Richard Clarida (both on Thursday). We will also have Atlanta Fed Raphael Bostic (FOMC non-voter), Chicago Fed Charles Evans (FOMC voter), Boston Fed Eric Rosengren (FOMC voter), Richmond Fed Tom Barkin (FOMC non-voter) and St. Louis Fed James Bullard (FOMC voter).

DBRS might update its view on Italy (BBBhigh/Stable) on Friday. On the same day, Fitch is expected to review Spain (A-/Stable).

Standard & Poor’s, Moody’s, Fitch and DBRS have already released their sovereign rating release calendars for this year

During the upcoming week, only two S&P500 companies are scheduled to report quarterly results. In Europe, focus should continue on sales reports coming from UK retail companies.

In the US, according to FactSet, analysts expect companies in the S&P500 index to report earnings growth of 11.4% (which would mark the fifth straight quarter of double-digit earnings growth) and revenue growth of 6.1% in 4Q18.

During the fourth quarter of last year, analysts lowered earnings estimates for companies in the S&P500 for the quarter by 3.8%. Over the past 20 quarters, the average decline in the bottom-up EPS estimate during a quarter has been 3.1% (-4.5% for the last 40 quarters and -3.9% for the last 60 quarters). 4Q18 also marked the largest percentage decline in the bottom-up EPS estimate during a quarter since 3Q17. According to FactSet, the bottom-up EPS estimate for 2019 fell by 2.3% during the fourth quarter. This decline was larger than the 5-year average (-1.8%) decrease in the annual bottom-up EPS estimate during the fourth-quarter, but smaller than the 10-year (-3.6%), 15-year (-2.4%) and 20 year (-3.2%) average decreases in the annual bottom-up EPS estimate during the fourth quarter.

US December’s non-manufacturing PMI (due on Monday) and CPI inflation (due on Friday) are likely to be this week’s key data releases.

In China, December’s CPI and PPI inflation will be released on Thursday. In the Eurozone, the December European Commission economic sentiment index is released on Tuesday. Germany will publish on the same day the November industrial production. The industrial production figures for France will be released on Thursday, while on Friday we will get the data for Spain and Italy. In Portugal, INE releases during the week November’s monthly employment and unemployment estimates (Tuesday), international trade statistics (Wednesday), perspectives on export of goods (Thursday) and December’s CPI inflation (Friday). The Bank of Portugal releases on Tuesday data on loans to households and non-financial corporations for November, as well as 3Q18 current/capital accounts and international investment position.

According to data released last week by the Bank of Portugal, Maastricht net debt of assets in deposits of general government in Portugal rose by 1.3%y/y (or +€2,786mn).

INE released last week the December business and consumer surveys. The economic climate indicator declined for a fourth month in a row. However, the index remained well above its long-term average.

Meanwhile, consumer, construction & public works, services, manufacturing and trade confidence indices remain all above their long-term averages. 

EGB supply this week is expected to come from Austria (RAGB 0.75% February 2028 and RAGB 1.5% February 2047, for a combined size of €1.265bn on Tuesday), Germany (Bundei 2030, €0.5bn on Tuesday, and Bund February 2029, €4bn on Wednesday), the Netherlands (DSL 1.75% July 2023, size €1.25bn to €1.75bn, on Tuesday), France (OATs on Thursday) and Italy (BTPs on Friday). There are more than €18bn of redemptions and coupons eligible for reinvestment during the week.

In the US, the Treasury will issue around $78bn across 3-year (new issue, $38bn on Tuesday), 10-year (re-opening, $24bn on Wednesday) and 30-year (re-opening, $16bn on Thursday) sectors. There will be no cashflows eligible for reinvestment.

In Portugal, IGCP released last week the 2019 Financing Programme. The net borrowing needs of the central government for 2019 are expected to be around €8.6bn. Opportunities to perform bond exchanges and buybacks will be explored. IGCP anticipates a positive contribution of €1bn from OTRV and a negative contribution of €1bn from retail products (excluding OTRV). An amount of €15.4bn is to be met through gross issuance of PGBs, combining syndicated operations with auctions, through monthly issuance. In 2019, issuance of Treasury bills should have a positive impact of €600mn in net financing.

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

For further information, or to receive the PDF file, please contact +351 912 897 835 or research@fincor.pt

Disclaimer

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. 

Voltar