06 Feb 2019

Yew Grove: FY18 results

FY18 results from Yew Grove (YEW) reflect a busy period of activity for the group, which raised €75m (gross) from June’s IPO

Yew Grove deployed these funds buying well-tenanted and high yielding commercial real estate; and put in place a €19.9m revolving credit facility (rcf) to support further growth. Period end NAV was 100.2c, while a maiden dividend of 0.964c a share (in-line with management guidance) has been declared. For more on this, please see our note released this morning.


Irish Economy: Unemployment rate unchanged at 5.3% in January


The latest Monthly Unemployment release from the CSO shows a stable picture in January, with the seasonally adjusted unemployment rate flat in the month at 5.3% (but 70bps below the January 2018 reading). The seasonally adjusted number of persons unemployed fell by 600 in January to 127,300.


The steady unemployment rate in January is not a particular surprise given the caution implied by recent PMI releases. Assuming a benign outturn to the political machinations in Westminster, we would expect job creation to quicken from here, contributing to tighter labour market conditions.


Our economic forecasts assume a 4.7% unemployment rate for FY19. It is too early in the year to draw a meaningful conclusion from these data.


UK services PMI (Jan)


IHS Markit reported that the UK services PMI had fallen from 51.2 to 50.1 in January (consensus 51.0, Investec 50.7). This left the index at a two-and-a-half-year low and perilously close to the breakeven level of 50 that separates expansion from contraction. Business activity was dampened by the first fall in new order volumes since July 2016, with survey respondents “overwhelmingly” linking the slowdown to the current political uncertainty. Against this backdrop, firms were more cautious in their hiring intentions and chose not to replace voluntary departures, resulting in the first fall in employment since October 2012. Alongside Friday’s 1.4pt fall in the manufacturing PMI (to 52.8) this took the composite PMI down to 50.3, its lowest outturn since July 2016. Overall the surveys suggest that Brexit uncertainty has weighed heavily on the UK economy at the start of 2019. Cable has sold off around 30 pips following the release to $1.3018 currently.


Aussie dollar slides as RBA shifts guidance


The Australian dollar dropped almost 1.5% against the single currency overnight as the Reserve Bank of Australia (RBA) alluded to the fact that any future interest rate hikes that the market had priced in were now unlikely. Referencing a possible change in direction of monetary policy, RBA governor, Philip Lowe said that “looking forward, there are scenarios where the next move in the cash rate is up and other scenarios where it is down" and that "over the past year, the next-move-is-up scenarios were more likely than the next-move-is-down scenarios. Today, the probabilities appear to be more evenly balanced." The EUR/AUD rate has jumped from the 1.5750 level just before the announcement to open the European trading session at just below the pivotal 1.6000 mark on the news.


State of the Union address


Earlier this morning, US President, Donald Trump delivered his delayed address. In a bum-numbing 82 minute address he called for the rejection of the politics of ‘revenge, resistance and retribution’. Fortunately Mr. Trump didn’t declare a ‘National Emergency’ but he did call for Congress to provide funds for the wall on the Mexican border, calling the situation an ‘urgent national crisis’. Neither did he mention any plans for another government shutdown later this month. He also urged Congress to enable the legislation necessary to improve national infrastructure. Mr Trump suggested that the US would have been at war with North Korea, had he not become President whilst setting the date for his next meeting with North Korean leader Kim Jong-un (27/28 Feb), who he called a ‘good one’ (having termed him a ‘depraved character’ in last year’s address). There was little in the speech to shift financial markets but the dollar has firmed slightly across the board.


Economic releases 


13.30 US Building Permits

13.30 US Retail Sales         

          US GDP