In the U.S.:
- January nonfarm payrolls of 225K beat consensus for 161.5K gain. The unemployment rate ticked up 0.1pp to 3.6%. The strong reading is not expected to have much of a Fed decision impact.
- As expected, the Senate voted along party lines to acquit President Trump and end the impeachment trial. The days following the verdict saw both parties displaying their animosity toward the other, which continues to anchor the country in political turmoil.
- In earnings, 320 companies in the S&P 500 Index have reported, 76.0% beat, 1.0% were in-line, and 23.0% missed estimates.
Cousins Properties Incorporated (CUZ) announced a joint venture with Hines to develop a 287K sq. ft. class A office tower in Tempe, Arizona for approximately $153M. Cousins will have a 90% interest in the tower, which is 44% pre-leased with initial occupancy expected in the first quarter of 2022.
In REIT earnings, 29 companies in the Wilshire U.S. REIT Index have reported, 23 beat, 1 were in-line, and 5 missed estimates.
- Bloomberg reported President Trump and Chinese President Xi reaffirmed their commitment to implementing the phase-one trade deal signed between the two countries last month. China announced on Thursday that it would cut tariffs on $75B of US imports in half.
- The WHO confirmed as of Friday morning, there were 31,211 confirmed coronavirus cases in China and 637 deaths, as well as 270 cases in 24 other countries. PBOC Vice Governor Pan Gongsheng, stated that the central bank was closely watching the impact of the outbreak on the Chinese economy and was preparing policy tools to offset the pressure.
- January services PMI grew to 51.0 versus December’s 49.4 reading. Although above the crucial 50 mark, economists were disappointed with the PMI reading as a larger uptick was expected.
- A cruise ship is being quarantined in Yokohama as the coronavirus has struck 61 people on board, including eight Americans. The ship has approximately 3,700 passengers and crew on board.
In an effort to protect employees from the coronavirus, New World Development, has decided to halt construction for 14 Days. The company plans to track the epidemic weekly and may adjust the reopening of the construction sites if necessary.
- German industrial production fell 3.5% m/m versus November’s 1.2% increase, revised from 1.1%. The sharp drop in production along with a sharp decline in factory orders have raised concerns of a possible recession.
- Following a meeting with Saudi Arabia, Russia decided to support the OPEC+ panel’s recommendation for a provisional 600K bpd cut in crude output. The move was seen as necessary to keep prices steady as demand from China has dropped significantly due to the coronavirus outbreak.
Grainger Plc, the UK’s largest listed provider of private rental housing, provided a 1Q trading update this week for the first four months (thru January 2020) of its 2020 fiscal year. Overall rental growth of +3.5% was split between 3% in their PRS (private rented sector) portfolio and 4.5% in their regulated tenancy portfolio. The portfolio is approximately 60% PRS and 40% regulated. Occupancies remain strong across their portfolio at 97.5%. Sales from its regulated tenancy portfolio continue to provide support for reinvestment to grow its PRS portfolio with sales in the period achieving pricing 0.8% of vacant possession value. Grainger continues to add to its PRS development pipeline with two additional projects added during the period to take their pipeline to 24 projects totaling approximately £2 bn. The total includes both projects currently underway as well as projects that could be started in the coming 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.