In the U.S.:
- Initial jobless claims for week ending 2-May were 3.169M, above the 3M consensus following last week’s revised 3.846M. Brings seven-week total to over 33M. Continuing claims for week ending 25-Apr rose sharply to 22.647M following a revised prior week reading of 18.011M.
- Nonfarm payrolls fell 20.5M versus last month’s revised 870K decline. Unemployment rate jumped to 14.7%, a post-war high.
- In earnings, 422 companies in the S&P 500 Index have reported, 68.2% beat, 0.5% were in-line, and 31.3% missed estimates.
Apartment Investment & Management Co (AIV) provided an update on rent collection where they were on par over the past six days with the previous month’s collections of 96% cash and 3% accrued based on security deposits. If you do away with the 3% accrued collection, the collection of 96% cash would be considered a solid figure given the COVID-19 pandemic.
In REIT earnings, 84 companies in the Wilshire U.S. REIT Index have reported, 54 beat, 2 were inline, and 28 missed estimates.
- April exports rose 3.5% y/y versus consensus expectations for a 15.7% drop and first month of growth since December. The very good exports number was aided by a giant surge in medical supply exports.
- Both the US and China reiterated that both sides would make good on the trade agreement and that good progress is being made on creating governmental infrastructure necessary to make it a success. The news was welcomed, as tensions regarding the origin of the COVID-19 pandemic are rising due to the US blaming China for the early containment mistakes and misinformation.
- March household spending fell 6.0% y/y versus February’s -0.30% y/y reading. Core spending contracted 4.3% m/m leaving Q1 down 2.7% q/q.
Amazon (AMZN) is said to be considering adding to its investment in India’s Future Retail Ltd. Future Retail is debt heavy and is battling a cash crunch.
- The BoE left key rate at 0.1% and QE target at £645B. The BoE stated that it stands ready to take more action if needed and will act rapidly if market conditions deteriorate.
- Reuters reported that March German exports slumped by 11.8% marking the steepest drop since current records began in 1990. With the coronavirus to blame for the drop, economists believe that the recovery will most likely be slower than previously projected.
German listed Alstria Office REIT-AG reported its 1Q20 results and a Covid-19 update. As with many, 1Q results were generally in-line with expectations since shelter-in-place (SIP) orders around the world not being rolled out in Germany until the later part of the quarter (March 23rd in Germany) and had limited impact with 1Q results. FFO was €0.17/sh while EPRA NAV at €18.08/sh and LTV at 26.1% at quarter end. There was not update to the portfolio valuation in the quarter with the next update scheduled at the half year results. As of May 1st, AOX has received approximately 89% of rents for April with deferral requests from 144 tenants totalling €1.9 mn/month of rental income. AOX has agreed a rent waiver for 47 tenants for three months, amounting to €0.22mn/month (approx.1,5% of monthly rents), with the remainder under deferred payment plans. The waivers were primarily given to small retail and service businesses (typically very small businesses w/ less than 10 people that have otherwise been good tenants that paid rent) most impacted by SIP order. Given the limited impact so far, AOX elected not to revise its 2020 guidance with expected revenues of around €179m and FFO of €108m, but did acknowledge extended shutdowns with a further deterioration in economic conditions could alter their outlook. Management currently believes that it is in a strong financial position to weather the current uncertain economic outlook given a high level of liquidity and manageable financial obligations over the next two years.
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.