1. 2012
Weekly Markets
th,
Perspectives
8
n
October
For important disclosures, refer to the Disclosure Section, located at the end of this report.

2. Weekly Summary
Spain's holdout on aid continues to dominate and the budget deficit were the main focus of the
European equity markets. It seems the process debate. Mitt Romney´s electoral hopes seem to
lacks an immediate catalyst or someone to lead the have bounce back.
parties to an agreement. Last Friday, Spain´s
Economy Minister repeated that the country US Economy still stronger than Europe… The
doesn’t need a bailout. September Eurozone manufacturing PMI came in
at 46.1, an increase from the prior month, but still
Portuguese Finance Minister announced new tax pointing to a weak economy. In the US, we had an
increases… to replace the previous proposal to unexpected move to above 50.
increase the employee contribution to social
security to fund a reduction in the employer … with an encouraging Employment Report: The
contribution. Should we expect a stronger unemployment rate fell to 7.8% in September.
economic downturn next year? The improvement is probably not enough from
the FED point of view but it will be important to
… while in Greece, talks between the Greek election momentum. It was the penultimate
government and the Troika continue: The budget report before polling day on November 6th.
deficit should narrow to 6.6% of GDP in 2012 and
4.2% in 2013. New QE policy from the FED continued to
support the US equity market. Monsanto started
In the US, President Obama and Mitt Romney the US earnings season.
faced off in their first debate: As expected, taxes

3. US ISM manufacturing rises … and the services sector
in September… also showed strength.
• The ISM Manufacturing Index in September • The ISM non-manufacturing index in September
rebounded to a 4-month high of 51.5 from 49.6 increased to 55.1 from 53.7 in August. The index
in August. The forward-looking new orders is now back to a level last seen in March;
component increased to 52.3 from 47.1; • The best sectors were transport, retail and
• The employment index rose to 54.7 from 51.6; construction;
• Although it is positive surprise, a higher headline • The US economy seems to have gained some
ISM will probably be needed to suggest a pick-up momentum.
in the economy’s growth rate.
63 US: ISM Manufacturing Index US: ISM non-manufacturing
60
60 2010
58
57
56 55.1
54
54
51
2011
52
48 2012
50
45
48
Jan-11 Mai-11 Set-11 Jan-12 Mai-12 Set-12
Source: Bloomberg Source: Bloomberg

4. US unemployment rate Mid-September minutes
drops to 7.8%. were released.
• September’s US non-farm payrolls was 114,000. • The minutes detailed the justification for why the
The numbers for the two months before were FOMC opted for an aggressive easing step. The
revised upward by 86,000; decision to launch QE3 seems to have been a
• The unemployment rate fell to a three-and-a- fairly brief one;
half-year low. The unemployment rate has fallen • "Many" participants believed that additional
by 0.5% in two months; asset purchases would support the economy
• Average weekly hours worked increased to through lower interest rates and easier financial
34.5, from 34.4 the previous month. conditions;
300 EUA: Non-farm Payrolls (000s) • “Many participants thought that more-effective
forward guidance could be provided by specifying
250
numerical thresholds for labor market and
200 inflation indicators" . It is surprising to see how
150
close the FOMC came to tying its forward
guidance to an explicit numerical threshold for
100
the unemployment rate and/or inflation.
50 Reaching an agreement on the exact numbers
0
was not possible;
• The minutes contained no discussion of other
policy tools.
Source: Bloomberg

5. Royal Bank of Australia cut 6%
Australia: GDP (YoY change)
interest rates. 5%
4%
• On October 3rd, in an unexpected move, RBA 3%
reduced cash rate by 25bps to 3.25%; 2%
• 19 of the 28 economists surveyed by Bloomberg 1%
0%
expected the Central Bank to leave interest rates 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
on hold; Australia: Cash Rate Target
• Accordingly with Central Bank’s Governor 8%
Stevens “the outlook for growth in the economy 7%
6%
has softened over recent months, with estimates
5%
for global GDP being edged down”; 4%
• The rationale behind this decision could be 3%
RBA´s concern over China’s growth and the 2%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
resilience of the Australian Dollar;
Australia: Consumer Price Index (YoY)
• The Central Bank seems to expect a benign 7%
inflation outlook; 6%
• In the local economy, credit growth is now 5%
weaker and the investment cycle is probably 4%
3%
near its peak; 2%
• Main commodities prices for Australia are below 1%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
levels recorded at the beginning of the year.
Source: Bloomberg

6. Portugal: new tax hikes were announced for 2013.
• Government acknowledged deficit slippage of • CGTP, one of Portugal’s main unions, called for a
1.2% in 2012 over the current target of 5% of general strike on November 14th. Protests and
GDP; strikes have risen in recent weeks;
• Increases in capital gains, property and income • The country’s recession could worsen if these
taxes were announced; measures further undermines consumer
• The number of brackets would be cut from eight confidence.
to five. The new tax thresholds have yet to be
announced. An additional 4% tax surcharge will Unemployment rate:
be levied on incomes next year; Portugal vs Eurozone
• The Portuguese Finance Minister said that the 16% 15.0%
combined impact of these measures should lead 14%
to an average increase of 7pp in household
% workforce
12%
Eurozone
income tax; 10% 11.3%
• According to the government the measures 8%
(including spending cuts) amount to 3% of GDP; 6%
• The unemployment rate is expected to reach 4%
Portugal
2%
16.4%, from the current record level of 15%.
0%
Portugal’s youth unemployment rate stood at 2000 2002 2004 2006 2008 2010 2012
35.9% in August;
Source: Bloomberg

7. Debt swap helps Portuguese funding needs for 2013.
• The Portuguese government swapped €3.75bn of o Net International Investment Position
government bonds maturing in Sep13 for new worsened slightly to -111% of GDP;
ones maturing in Oct15. The swap (probably o The household accounts show that
done with the help of domestic investors) is not disposable income fell 3.1% yoy in Q2;
particularly large but does reduce Portuguese o Households’ investment (mainly
financing needs for next year. However, because investment in new houses) was down 5.7%
the deficit-to-GDP ratio were changed for 2012 yoy, after a 6.2% yoy drop in the previous
and 2013, funding needs could increase when quarter.
compared to initial estimates; 25%
Portugal: Government 2 years
• The ability to access the market will be decisive
for the ECB to intervene with its OMT program. Bond Yields
20%
Portugal is supposed to partially go back to the
Yield-to-maturity
markets in Q3 2013 and regain full access to 15%
funding by mid-2014;
• Portugal released information on non-financial 10%
accounts by the institutional sector for Q2: 3 years 4.9%
o The current account deficit was 1.3% of 5%
4.7%
GDP (SA), the lowest since 1995;
0%
2008 2010 2012
Source: Bloomberg

8. ECB: Waiting for Is Spain edging closer to
governments… asking for financial aid?
• Key ECB interest rates were left unchanged. No • Spain continues to deny that it will ask for aid.
major new policy initiatives were announced; The waiting game continues;
• Regarding the Outright Monetary Transactions • The head of the government of the Spanish
Program (OMT) Draghi said “Our decisions as region of Catalonia said his administration does
regards OMT have helped to alleviate tensions not agree with the 2013 deficit targets that
over the past few weeks, thereby reducing Spanish government is planning to set for the
concerns about the materialization of regions;
destructive scenarios”. “It is now essential that • Moody's will announce this month the results of
Governments continue to implement the its review of Spain's sovereign debt rating, which
necessary austerity steps to reduce both fiscal is currently just one notch above junk;
and structural imbalances and proceed with
35,000 Spain: Bond and bill redemptions
financial restructuring measures”; (€million)
• Draghi indicated that a range of indicators 30,000
25,000
would be examined to assess the degree of
20,000
disruption to normal monetary policy 15,000
channels, when deciding whether intervention 10,000
is appropriate; 5,000
• The ECB might consider cutting interest rates 0
again, but a reduction had not been discussed Set-12 Out-12 Nov-12 Dez-12 Jan-13 Fev-13 Mar-13
Bonds Bills
at the Governing Council meeting. Source: Bloomberg

9. Greece: 2013 GDP could fall 5% according to the Troika.
• Government’s three coalition partners agreed • Reportedly, the Troika also casts doubts on €2bn
on a new 2013/14 €13.5bn austerity package. worth of revenue-raising measures that should
€10.5bn will come from spending cuts, with the be implemented next year;
remaining coming from revenue increases; • In a interview to a German newspaper, Greek
• Talks between the Greek government and the Finance Minister stated that he hopes to get
Troika continued ahead of today’s Eurogroup disbursement of next tranche by end of October.
meeting;
• The draft budget showed that the Government Main new fiscal measures currently negotiated
expects the economy to contract 6.5% this year with the troika for 2013 (€mn)
and 3.8% in 2013. The budget deficit should Total Expenditure 7,308
of which:
narrow to 6.6% of GDP in 2012 (from 9.1% last
Wage bill 1,000
year) and 4.2% in 2013. The primary budget is
Pensions bill 3,799
forecasted at -1.4% in 2012 and +1.1% in 2013;
Restructuring of public sector 483
• The two sides have showed some disagreement Social benefits 347
regarding the expected contraction of GDP next Healthcare costs 803
year and, thus, the spending cuts needed to National defense 304
meet the fiscal targets. Accordingly, the Troika Total Revenues 492
wants to increase the amount of cuts to be of which:
implemented in 2013 to €9.2bn from €7.8bn; Streamlining of family allowances 427
Source: FinMin of Greece

10. Euro Zone – An economy stuck in a recession…
• Revisions to earlier months revealed that the • The downturn remains more severe in the
unemployment rate has been at a new record region’s periphery.
high of 11.4% since June. Spain (25.1%), Greece
PMI Manufacturing
(24.4%) and Portugal (15.9%) show the highest 65
rates; 60
• The unemployment increase probably reflects 55
Euro Zone
the cost of economic adjustment taking place in 50 Germa ny
the Eurozone and, in particular, in the peripheral 45 Fra nce
Ita ly
economies; 40
UK
• Notwithstanding the small recovery, PMI indices 35
30
for manufacturing and service sectors still point 2008 2009 2010 2011 2012
to a downturn; Euro Zone PMI
Composite is PMI Services
3% advanced 6 65 65
months
2% 60 60
1% 55 55 Euro Zone
Germa ny
0% 50
50
Fra nce
-1% Employment YoY 45
45 Ita ly
-2% PMI Composite 40 UK
(right sca le) 40
-3% 35
35
2005 2006 2007 2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
Source: Bloomberg Source: Bloomberg

11. China: manufacturing PMI Syria – Are we reaching a
rose modestly in September. tipping point?
• China September official manufacturing PMI
• There has been an exchange of artillery fire
came in at 49.8 vs. 49.2 in August. This was the
between Turkey and Syria;
first rise since last May. Is the economy
• For the last 18 months, there has been a huge
stabilizing?
death toll in Syria caused by a civil war;
• The new orders component rose to the highest
• In Turkey, the Parliament approved the
figure since May this year. That component is
deployment of troops to Syria;
above 50 for 9 of the total 21 sectors. The orders
• Will the conflict escalate? Do not forget that
to inventory ratio rose to 1.04 in September (1.01
Turkey is a member of Nato.
in August). The PMI component on new export
orders also showed decent gain to 48.8 in
September.
China: Manufacturing PMI
65
60
55
50 49.8
45
40
35
2008 2009 2010 2011 2012
Source: Bloomberg Source: Financial Times

12. Last week market´s Highlights:
• Last week was positive for European (Euro Stoxx Euro Stoxx 50 and S&P 500
(Daily Changes)
50) and US equity markets (S&P 500). An 2.00% 1.82% 1.83%
expansionary global monetary policy is still 1.50%
creating “asset price inflation”;
1.00%
• Monsanto announced Q4 2012 of -$0.44 vs. 0.72%
Street estimates of -$0.43. Revs $2.11bn vs. 0.50% 0.27% 0.36%
0.09%
Street estimates $2.23bn. The company 0.00%
provided initial FY2013 guidance of $4.18-$4.32 -0.21%
-0.04% -0.03%
-0.50% -0.27%
vs. Street estimates of $4.38, which implies 13%- 1-Out 2-Out 3-Out 4-Out 5-Out
17% EPS growth. Monsanto expects “significant Source: Bloomberg
Euro Stoxx 50 S&P 500
earnings growth” in Q1 2013;
HPQ US: Stock Price
• In its analyst meeting, Hewlett-Packard issued a 30
below-consensus FY2013 outlook. The company 28
announced a 4-5 year plan for its 26
24
transformation. FY2013 EPS range of $3.40 to
22
$3.60 was well bellow consensus of $4.18; 20
• With Spain still undecided regarding accepting 18
aid, Spain’s Government bond yields continued 16
falling during last week. 14
Jan Fev Mar Abr Mai Jun Jul Ago Set Out Nov Dez
Source: Bloomberg

13. What we are watching this week:
CALENDAR - Event Date (GMT) Hour Survey Prior
• We´ll highlight the Ecofin meeting EcoFin Meeting 10-08-2012 Not Available Not Available Not Available
(will Spain and Greece be discussed?) US Columbus Day (Some markets closed) 10-08-2012 Not Available Not Available Not Available
Germany issues €4bn in 6M TB 10-08-2012 10:30 Not Available Not Available
and the IMF’s World Economic Industrial Production MoM SA, Germany 10-08-2012 11:00 -0.50% 1.30%
Outlook. US Trade Balance, PPI and France issues €3.8bn in 3M, €1.6bn in 6M and €1.6bn in 12M TB 10-08-2012 14:00 Not Available Not Available
consumer will probably show the IMF releases World Economic Outlook 10-09-2012 Not Available Not Available Not Available
Current Account, Japan 10-09-2012 00:50 JPY421.1bn JPY625.4bn
cost of imported oil; Chancellor Merkel meets PM Samaras in Athens 10-09-2012 Not Available Not Available Not Available
• In the US, Chevron, Alcoa UK Bank of England Governor King speech 10-09-2012 Not Available Not Available Not Available
EcoFin Meeting 10-09-2012 Not Available Not Available Not Available
(Tuesday), Safeway (Thursday), Wells Industrial Production MoM, UK 10-09-2012 09:30 -0.50% 2.90%
Greece issues €1bn in 6M TB 10-09-2012 10:00
Fargo, Google, JP Morgan (Friday) are Not Available Not Available
Industrial Production MoM, France 10-10-2012 07:45 0.00% 0.20%
expected to report. In President Hollande and PM Rajoy meet in Paris 10-10-2012 Not Available Not Available Not Available
Europe, Lufthansa should release Brazil Copom monetary policy decision 10-10-2012 Not Available Not Available Not Available
US's Federal Reserve's Beige Book 10-10-2012 Not Available Not Available Not Available
September traffic data on Germany issues €4bn in 5Y and €1.5bn in 11Y GB 10-10-2012 10:30 Not Available Not Available
Wednesday. A trading update is MBA Mortgage Applications, US 10-10-2012 12:00 Not Available 16.60%
Machine Orders MoM, Japan 10-11-2012 07:00 -2.30% 4.60%
expected from Burberry on Thursday CPI YoY, Germany 10-11-2012 07:00 2.00% 2.00%
and Carrefour will report its Q3 Sales; CPI YoY, France 10-11-2012 07:45 2.30% 2.10%
• In Portugal, Banif will hold its General Korea BOK monetary policy meeting
Italy issues Bonds
10-11-2012
10-11-2012
Not Available Not Available
10:00 Not Available
Not Available
Not Available
Shareholders Meeting. Industrial Trade Balance, US 10-11-2012 13:30 -$44bn -$42bn
Initial Jobless Claims, US 10-11-2012 13:30 365K 367K
sales (August) and Employment
Gabinet Office Monthly Economic Report, Japan 10-12-2012 Not Available Not Available Not Available
Report will be announced. Industrial Production MoM SA, Euro Zone 10-12-2012 10:00 -0.40% 0.50%
Finally, The Bank of Portugal release PPI MoM, US 10-12-2012 13:30 0.70% 1.70%
U. of Michigan Confidence, US 10-12-2012 14:55 77.9 78.3
data on the banking sector (all IMF, World Bank Meeting 10-12-2012 Not Available Not Available Not Available

14. What should we expect from this week’s EcoFin meeting?
• The EcoFin/Eurogroup meeting on October 8-9th • Will Spain ask for ESM/EFSF support during the
should be a preamble to the European Council meeting? Probably not. Sentiment is not
meeting on October 18-19th; deteriorating. Market is not pressuring.
• We should probably not be too ambitious: Nevertheless, some progress could happen in this
o The Troika negotiations with Greece are yet week’s EcoFin/Eurogroup meeting. The country’s
not concluded; new budget measures seems to satisfy most of
o Germany is entering a pre-electoral period Europe’s demands. But, the Spanish regional
(good reason to stall the European election calendar should probably be taken into
integration process?). account.
• However, further work should be done on the
“compact for growth and jobs” (agreed at the
June summit);
• An “integrated financial framework” should
probably be a topic in this meeting too (a single
supervisory mechanism, deposit guarantee
scheme, direct bank recapitalization). Will some
progress toward a Banking Union occur?
• Some discussions should be held regarding “an
integrated budgetary and economic policy
framework”.

15. Disclosure Section
This research report is based on information obtained from sources which we believe to be credible and reliable, but is
not guaranteed as to accuracy or completeness. All the information contained herein is based upon information
available to the public.
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financial instruments mentioned herein.
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financial instruments. The investment discussed or recommended in this report may be unsuitable for investors
depending on their specific investment objectives and financial position.
The material in this research report is general information intended for recipients who understand the risks associated
with investment. It does not take account of whether an investment, course of action, or associated risks are suitable
for the recipient.
Investors should seek financial advice regarding the appropriateness of investing in any securities or investment
strategies discussed or recommended in this research report and should understand that the statements regarding
future prospects may not be realized. Investors may receive back less than initially invested. Past performance is not a
guarantee for future performance.
Fincor – Sociedade Corretora, S.A. accepts no liability of any type for any indirect or direct loss arising from the use of
this research report.
Recommendations and opinions expressed are our current opinions as of the date referred on this research report.
Current recommendations or opinions are subject to change as they depend on the evolution of the company or may
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