In the U.S.:
A deal was struck to reopen the government for three weeks while border security is discussed. The deal was welcome news to federal employees which had gone for over a month without getting paid. However, President Trump threatened that if no deal border security deal was reached by February 13, he would either close the government again or declare a national emergency to fund the wall.
Marriott International, Inc. (MAR) stated that it had been taking a hit from the Government shutdown. Marriott’s Global Chief Commercial Officer, Stephanie Linnartz stated that Marriott’s 150 hotels in the Washington, D.C. area have seen double digit declines since the shutdown started.
- With Vice Premier Liu He meeting with USTR Lighthizer next week, the likelihood of a major breakthrough has been downplayed. The consensus view is that a deal to avoid tariff escalation will be reached and that the more divisive issues, such as the handling of IP and trade flow imbalances will continue to be debated.
- December exports fell by 3.8% y/y versus November’s 0.1% y/y growth. The sharp drop in export growth was mainly due to the slowdown in China’s economy.
- As widely expected, the BOJ voted 7-2 to leaving short term rates at minus 0.1% and long term rates at around 0%. The BOJ also revised down its inflation forecasts and GDP estimates for FY18.
Sun Hung Kai Properties had the winning bid for a 60.3K sq. m. land site at the old Kai Tak Airport for HK$11.3B. The site, which is designated for non-industrial purposes, has a full view of Victoria Harbor and is expected to sell completed homes at around HK$30K per sq. ft.
- The Italian debt outlook was back in focus this week, as both the IMF and Bank of Italy cut the 2019 growth forecast to 0.6% from 1%. Economy Minister Tria said that there was no need for additional debt cutting measures, but that the weaker growth outlook could raise issues over the sustainability of Italy’s debt.
While the ongoing political and economic uncertainty surrounding the UK’s exit from the EU has continued to dominate the news, office leasing activity is continuing to occur in London. London office specialist Great Portland Estates (GPOR) issued their 3Q fiscal year trading update this week for the three months ended December 31, 2018. New lettings and rent reviews settled during the period were all above the March 2018 estimated rental values (ERV’s) provided with full year 2017 results. Vacancy levels remain low, declining a further 110 bps during the period to end at 3.7%. GPOR continues to be active with capital recycling with sales of £74.4 million during the period to bring year to date nets sales for the fiscal year to £339 million. Since commencing a £200 million share buyback program in November 2018, GPOR has bought back £34.4 million through December 31, 2018. GPOR has continued to maintain a very strong and flexible financial position given the uncertainties associated with Brexit and ended the period with a LTV of approximately 7.3%.
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.