In the U.S.:
- February IHS Markit flash manufacturing PMI was 53.7 versus the consensus estimate of 54.8. The reading marked a 17 month low as new order demand slowed considerably.
- In earnings, 447 companies in the S&P 500 Index have reported, 71.4% beat, 1.4% were in-line, and 27.2% missed estimates.
Shares of Uniti Group Inc. (UNIT) fell over 50% this week as fears that their biggest customer, Windstream Holdings, Inc. (WIN), may declare bankruptcy following a stunning court defeat.
In REIT earnings, 83 companies in the Wilshire U.S. REIT Index have reported, 46 beat, 4 were in-line, and 33 missed estimates.
- US President Trump and China Vice Premier Liu will hold a trade meeting Friday afternoon. Reuters reported that, although progress has been made, negotiators have struggled to overcome differences on the US demands for structural changes on key issues such as forced tech transfers, IP rights, currency, and non-tariff barriers to trade.
- February flash manufacturing PMI fell to a 32-month low of 48.5 from January’s 50.3 reading. Both output and new orders fell further into contraction territory as the US/China trade war continued to weigh on demand.
Hang Lung Properties announced plans to sell 4 non-residential buildings in Hong Kong. The four buildings, including a multi-story car park in Mong Kok area, are estimated to have market value of HK$9B.
- February Eurozone manufacturing PMI fell to 49.2 versus January’s 50.5 reading. German manufacturing was the main detractor to the lackluster PMI reading as trade tensions are driving down the auto sector.
- Bloomberg cited an unnamed senior official who said the UK is considering a legally enforceable appendix to the Brexit deal that could give the UK a unilateral exit mechanism from the Irish backstop with a 12-month notice period. Some positive reports have led to speculation that a Brexit deal may be days away or that a three month delay could be requested by PM Theresa May.
Paris focused office REIT Gecina SA reported its 2018 FY results this week with headline results coming in slightly better than expected, but initial 2019 guidance for Recurrent Net Income (RNI) coming in below expectations, primarily due to the impact of disposals, development delivery delays and taking additional properties out of operation to add to the development/redevelopment pipeline. Like-for-like rental growth was +2.5% overall in 2018, +2.7% for the office portfolio and +2.0% for the residential portfolio. EPRA NNNav/sh increased 5% YOY to €160.50/sh with +2.5% increase in 2H18. Initial 2019 guidance for RNI of €5.70/sh – €5.75/sh represents a slight decline versus 2018 RNI of €5.93/sh for the reasons noted above. Adjusted for the impact of disposals, management indicated that RNI growth would be ≈ 2.0%.
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.