In the U.S.:
- On Wednesday, the 10yr and 2yr Treasury Bonds inverted sending the markets tumbling to the worst single day of 2019 on recession fears. However the markets bounced back towards the end of the week as recession fears may have been overblown.
- President Trump backed off of the September 1 tariff hike in order to soften the trade war impact on US holiday sales. The move was seen as a backpedal from previous rhetoric and somewhat of an admittance that the impact of the trade war would be felt by US consumers.
- In earnings, 457 companies in the S&P 500 Index have reported, 76.4% beat, 0.7% were in-line, and 22.9% missed estimates.
Bloomberg reported that CyrusOne (CONE) was exploring a sale after receiving takeover interest. Both Credit Suisse and Cowen reported that CyrusOne was in a good position in either private or public domain and that a takeover was likely.
In REIT earnings, 105 companies in the Wilshire U.S. REIT Index have reported, 65 beat, 2 were in-line, and 38 missed estimates.
- Hong Kong protests continued to flare up this week with protesters bringing the Hong Kong airport to a halt and frequent clashes with riot police causing chaos. In addition, reports that mainland troops were amassing at the border of Hong Kong and calls by one of the protest leaders for protesters to make a run on the mainland Chinese banks continued to intensify the situation.
- Japan eclipsed China as the largest foreign holder of US bonds in June. Although not the first time this has happened, it is being watched closely as the trade war between China and the US continues.
CK Asset Holdings Limited delayed a Hong Kong luxury flat sale amid the protests, citing prospective difficulties in selling luxury units at the current time. The economic price continues to mount on Hong Kong developers as CK Asset has seen its shares fall almost 10% in August.
- Germany’s preliminary Q2 GDP was -0.1% q/q versus Q1’s 0.4% q/q reading. Magazine Der Spiegel reported Chancellor Angela Merkel and Finance Minister Olaf Scholz would be willing to increase debt in order to offset a tax revenue shortfall due to an economic slump.
- June Eurozone industrial production fell 1.6% versus May’s 0.8% gain. The reading was the largest decline since February 2016.
German residential property company Deutsche Wohnen reported 1H19 results for the six months ended June 30. FFO 1 per share increased 12.9% YOY to €0.79/sh. Like-for-like rents increased 3.4% for the portfolio, +3.6% in Berlin where approximately 70% of the portfolio is located. EPRA NAV increased 2.8% to €43.43/sh, while the LTV ended the period at 36.9%. Full year guidance was confirmed with FFO 1 estimated to be ≈ €535 mn for the full year and like-for-like rental growth estimated at +3% for the full year. Management did not speculate on the outcome of the proposed 5 year rental freeze that is currently being discussed by the Berlin Senate, but did reiterate its desire to work constructively with politicians to work towards a solution to Berlin’s housing shortage.
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.