In the U.S.:
- In an interview with Bloomberg, Chicago Fed President Evans (voter) reiterated that the central bank can be patient on rates, and that “we’re at a good point for pausing”. Evans is not too worried about inflation and cited economic uncertainty from slower growth in China and Europe.
- The government shutdown continued this week without a resolution. This is now the longest shutdown in US history and the effects of a prolonged shutdown may weight on the economy going forward.
Uniti Group, Inc. (UNIT) entered into a partnership with Macquarie Infrastructure Partners to acquire the fiber assets of Bluebird Network, LLC for $319M. As part of the deal, Uniti is selling their fiber operations to Bluebird for $6M, maintaining ownership of the fiber assets which will be leased to Bluebird.
- December exports unexpectedly fell 4.4% y/y versus November’s 5.4% y/y growth. The lackluster reading was viewed as a direct result of the trade war and may explain the recent willingness from Beijing to reach a trade deal.
- Bloomberg reported that China offered to start a six-year program to ramp up imports from the US, increasing its annual level by a combined value of more than $1T. The article notes that US negotiators have expressed some skepticism about the offer.
- December core CPI rose 0.7% y/y versus November’s 0.9% y/y reading. Energy prices continued to be the main detractor as inflation continued to be well below the BoJ’s 2% target.
CapitaLand announced that it would buy Ascendas and Singbridge from state investor Temasek for S$6 billion ($4.4 billion). The acquisition will create Asia’s largest real estate investment management company.
- UK PM Theresa May’s Brexit deal was defeated in parliament. As the March deadline draws closer, MPs from UK’s main parties have intensified efforts to prevent a no-deal Brexit. Of note, the EU has called on the UK to clarify its intentions as soon as possible.
Germany’s Alstria Office-REIT-AG surprised investors this week with a brief, but positive update on the year-end valuation of its portfolio. In a relatively short press release the Management Board announced that it had received confirmation from its auditor that they had finalized their review of the valuation reports for its real estate portfolio that was conducted by its independent appraisers. The valuation of Alstria’s real estate portfolio amounted to approximately €3.9 billion as of December 31, 2018 with a P&L impact of the new portfolio valuation being approximately €400 million (€2.25/sh). The amount was much higher than many analysts had expected. While the company does not normally give preliminary indications of its valuation updates ahead of their earnings release, evidently the magnitude of the increased value was significant enough that they felt compelled to do so. The stock reacted positively to the news as it provided further confirmation of the strength of the German office market and strong investor demand in the investment market.
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.