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

PATRIS The Week Ahead - 1 October 2018

1 Oct 2018


Key Themes for the coming week:

1.Chinese national holiday (“Golden Week”) takes place on 1-7 October.

2.Catalan separatists have clashed with the police over the weekend before the 1 October anniversary of the illegal referendum on secession of the region.

3.The first round of Brazil’s presidential and parliamentary elections takes place on Sunday. Jair Bolsonaro and Fernando Haddad are leading for the first round, according to survey polls released last week.

4.In Mexico, the central bank will meet on Thursday.

5.Eurogroup meeting on Monday, with the participation of ECB President Mario Draghi and ECB Board member Benoit Coeuré.

6.In the UK, the Conservative Party Conference began yesterday and ends on Wednesday, with a final speech by Theresa May.

7.DBRS confirmed Spain at A/Stable trend. Moody’s may update the credit rating for Spain on Friday.

8.Federal Reserve Chairman Jerome Powell speaks at the annual NABE conference on Tuesday.

9.PMI/ISM indices and the US nonfarm report for September are the highlights for this week’s data calendar

10.Vice-President Mike Pence to speak on the topic of Chinese election interference at the Hudson Institute this week. Investors will look for signs that the US is building evidence for sanctions.

11.Key risk events calendar for the following months.

Market attention will soon focus on the 3Q18 earnings season. This week will however remain pretty quiet in Europe and in the US. In the US, five S&P500 are scheduled to report results for 3Q18.

According to FactSet, during 3Q18, analysts lowered bottom-up earnings estimates for companies in the S&P500 by 1.1%. During the past 20 quarters, the average decline in the bottom-up EPS estimate during a quarter has been 3.2% (4.8% during the past 40 quarters and 3.9% during the past 60 quarters). Therefore, the decline in the bottom-up EPS estimate recorded in 3Q18 was smaller than the 5-year, 10-year and 15-year averages.

The estimated earnings growth rate for 3Q18 is 19.3%, according to FactSet. If 19.3% is the final growth rate for the quarter, it will mark the third highest earnings growth reported by the index since 1Q11, trailing only the two previous quarters. The estimated revenue growth rate for 3Q18 is 6.9%. For 4Q18, consensus is projecting earnings growth of 17.2% and revenue growth of 5.7%. For 1Q19, consensus is projecting earnings growth of 7.1% and revenue growth of 6.3%.

We will have MPC meetings in Poland, Romania (both on Wednesday), Mexico (Thursday) and India (decision due on Friday). In Colombia, the central bank publishes on Friday the Minutes from the 28 September MPC meeting. At that meeting, the MPC left the policy rate unchanged at 4.25%, in line with market expectations, and as a result of a unanimous decision.

In Mexico, the MPC decided to leave the policy rate unchanged at 7.75% at the 2 August meeting, in a unanimous decision. The forward guidance remained hawkish, as the FOMC is expected to continue to raise interest rates in the coming quarters and the Bank is concerned with a potential increase in government spending.

ECB Board member Yves Mersch will give a speech at the Latvian central bank on Wednesday, ECB Board member Benoit Coeuré gives a speech in France on Thursday, while Vice-President Luis de Guindos will be speaking in Spain on Friday. In the US, we will have speeches from eight Fed officials, including Chairman Jerome Powell on Tuesday.

The US Federal Reserve delivered the widely expected 25bps rate hike last week at the September FOMC meeting to 2.00%-2.25%. Both the statement and the updated dot-plot were less hawkish that feared by the market, as the phrase “the stance of monetary policy remains accommodative” was removed, the 4-3-1 rate hike path for 2018-20 was kept unchanged and no further rate hikes were showed for 2021. As suggested by the following chart, for now, the FOMC is still likely to keep hiking once per quarter, as Fed officials continue to watch the unemployment rate and wage growth.

PMI/ISM indices and the US nonfarm report for September are the highlights for this week’s data calendar.

Eurozone: Final September’s Markit PMIs will be released across the region on Monday (manufacturing) and Wednesday (services and composite). Focus should be on Italian and Spanish PMIs which do not have flash estimates. August unemployment for the region is released by Eurostat on Monday. Spanish industrial output for August is released on Friday.

UK: We will get the September manufacturing (Monday), construction (Tuesday) and services (Wednesday) PMIs. The Conservative Party’s annual conference will however be the main event of the week, with focus on PM May’s speech on Wednesday. We will also have speeches from Jacob Rees-Mogg and Boris Johnson.

Portugal: Bank of Portugal releases on Tuesday the 2Q18 current and capital accounts data. Also on Tuesday, we will get data on loans granted by the financial sector.

US: September’s ISM indices for manufacturing (Monday) and non-manufacturing (Wednesday), as well as the nonfarm payrolls report are the highlight for the coming week.

Latin America: In Brazil, the industrial production data for August (due on Tuesday) will be at centre stage this week. Investors will also focus on election polls ahead of Sunday’s first round of Brazil’s presidential and parliamentary elections. In Mexico, the central bank releases today its monthly economists’ survey. Also today, the consumer confidence report for September will be released. On Friday, we will get July’s gross fixed investment indicator. In Argentina, the Treasury will disclose the September tax revenue report on Monday. On Tuesday, the central bank releases the monthly survey of economists’ expectations. We will also get during the week the industrial production and construction activity reports for August, as well as the September report on auto production. In Colombia, CPI numbers for September will be released on Friday. Also on Friday, we will get the export data for August. In Chile, focus should be on Friday’s release of the monthly GDP proxy for August. On Monday, the central bank releases the September trade report. The September business confidence indicator, August’s retail sales and nominal wage reports are all disclosed over the week.

Last Friday, DBRS reaffirmed Spain at A/Stable trend. DBRS sees the Spanish economy remaining strong (mostly driven by domestic demand) and able to outperform the euro area in coming years, despite gradually decelerating. DBRS expects to PSOE government to remain committed to fiscal consolidation, although at a slower pace than initially foreseen. Nonetheless, DBRS highlights the degree of uncertainty over the new government’s economic agenda, particularly regarding fiscal policy, and its ability to secure parliamentary approval. The high public debt ratio and high reliance on foreign financing are sources of vulnerability for the credit. A challenging political situation in Catalonia remains a concern, despite the fact that tension levels have eased over the last year, according to DBRS.

This week, Standard & Poor’s may update its credit rating for France on Friday. Moody’s may update the credit rating for Ireland and Spain (Baa1/Stable).

EGB supply this week is scheduled to come from Austria (RAGB 0% July 2023 and 0.75% February 2028, on Tuesday for a combined size of €1.15bn), France (OAT 0.75% 2028 and 2% 2048 on Thursday) and Spain (Bonos on Thursday). There are no cashflows to offset the supply.

France, the Netherlands, Belgium, the ESM and Greece are all expected to sell Treasury Bills during the week.

There is no UST supply scheduled for the upcoming week.

In Italy, coalition leaders and the finance minister agreed on a 2.4% GDP deficit target for 2019. Moreover, the government plans the same deficit for the following two years. Contagion to Spain and Portugal has so far been limited. Nevertheless, headline risk is expected to remain high given the confrontation with the EU and likely rating downgrades, on a backdrop of slow GDP growth for the Italian economy.


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