In the U.S.:
- As expected, the Fed raised rates by 25 bps. The markets reacted negatively as the statement from Fed Chair Powell was not as dovish as expected given that the language “further gradual” increases was not removed.
- The government looks likely to shutdown as House Republicans passed a funding bill that included the $5.7B in border wall funding that the White House requested. The bill does not have the votes in the senate and will likely collapse upon arrival.
Digital Realty Trust (DLR) completed its acquisition of Ascenty, the leading data center provider in Brazil, from private equity firm Great Hill Partners for approximately $1.8B. The move positions Digital Realty as the leading data center provider in the Latin American region.
- Bloomberg noted that China said “significant” cuts to taxes and fees will be implemented in 2019. The article also pointed out that the same language to describe monetary policy was used in 2014, before it cut benchmark rates and RRRs the following year.
- November core CPI rose 0.9% y/y versus October’s 1.0% y/y reading. Energy contributions were marginally lower driven by a deceleration in gasoline prices.
Chinese property stocks gained as Heze, a Shandong province, ended the rule requirement that individuals had to own their homes for at least two years before putting them on the market. The move increased speculation that other provinces would start easing property rules to spur on growth.
- The EU and Italy reached a budget deal, with the deficit target of 2.04%. The EU stated that it would allow Italy to avoid disciplinary action as long as it fully implemented the agreed measures. The agreement will see Italy delay the introduction of a new social security program and scale back other initiatives.
- On the Brexit front, the Financial Times highlighted comments made by Irish PM Varadkar, which has cast doubt on the contentious backstop that has hampered the Brexit process and offers some encouragement to PM Theresa May’s efforts. Varadkar stated that even in a no-deal Brexit without a backstop there would be no border in Ireland. On a separate note, the idea of sending the Brexit question back to the public, either through another referendum or national election, is gaining steam.
Norges Bank disclosed this week in regulatory filings that it has increased its stake in UK London specialist Shaftesbury Plc from 23.15% to 24.46%. London based Samuel Tak Lee continues to own 26.15% of Shaftesbury. Shaftesbury owns a unique and difficult to assemble £3.95 bn portfolio of retail, restaurants/leisure, office and residential assets in the heart of Central London. Despite year to date operating results that continue to demonstrate resiliency in the face of the political uncertainties associated with Brexit, Shaftesbury’s share price has experienced weak performance for most of 2018.
The views expressed in this update are as of the date of this blog entry. These views and any portfolio holdings discussed in the update are subject to change at any time based on market or other conditions. The adviser disclaims any duty to update these views, which may not be relied upon as investment advice. In addition, references to specific companies’ securities should not be regarded as investment recommendations or indicative of the Adelante products, strategies, or portfolios.