JPM-Partners Dining Room-A Great Way To Stay Connected
1-3-24
Opening Comments
I hope all the Rosen Report readers had a good and safe holiday. My last piece was about my ineptitude for fixing things and the most opened links were 15 surprising foods nutritionists say they never touch and the No. 1 thing that destroys kids’ confidence. I heard from a shocking # of readers who also admitted to having serious issues fixing anything and a dozen made specific comments on issues with fire alarms going off in the middle of the night for new batteries.
In my R/E section, I go into some detail about Florida R/E taxes and Homestead Exemption rules. I get so many questions about it, I did research and summarized it in conjunction with a report on all the Palm Beach homes spending over $1mm/year on R/E Taxes.
The US Federal government’s Debt crossed $34 trillion after hitting $33 trillion in September. The spending levels and entitlement programs are unsustainable and we cannot continue this idiocy. Remember, total debt was $9 trillion in 2007 and $23 trillion in 2020. I have a great deal of respect for Jeff Gundlach (founder of Double Line). He too is ringing the alarm bell on deficits, debt levels, interest expense... Great quotes in the link. Gundlach, Druckenmiller, Dalio, Sternlicht, Rosen all sounding the alarm bells on this topic. Good short video of Gundlach in the link. Running massive deficits with full employment is a major deal. We need fiscal restraint.
JPM Partners Dining Room-A Great Way To Stay Connected
Markets
Job Market
Gallup Poll on Faith in Institutions
Xi Jinping Admitted to A China Slowdown
Highest R/E Taxes in Palm Beach (chart)
FL R/E Taxes/Homestead-Explained by Eric
Boca Examples of High-End Slowing
85% of Americans Feel it is a Bad Time to Buy a House
Picture of the Day-The Most Watched Telecasts of 2023-NFL, NFL, NFL
I was a bit surprised to see the list of the 50 most-watched telecasts of 2023. The NFL DOMINATES the list far more than I would have thought. I believe 38 out of the top 50 telecasts were NFL. The Super Bowl was viewed more than two times the next closest event at 115mm. There were three NBA Playoff games three NCAA Basketball games in the top 50. The Oscars were #15 and the Grammy Awards were #36. The 60 Minutes with Prince Harry was #40. 14 out of the top 15 viewed telecasts were NFL related. I am not a Roger Goodell fan, but wow; the NFL dominates.
Eye On the Market-Mike Cembalest-Pillow Talk
This is Mike’s 2024 outlook and it is quite comprehensive with dozens of great charts. Too much to summarize. Falling US inflation and possible Fed easing are increasing talk of a soft landing rather than a recession, hard landing and bear market. Leading indicators point to slowing economic growth but not a collapse. While odds of a soft landing have increased, markets are already pricing that in at a time of single-digit earnings growth and single digit returns on the median stock. Our 2024 Outlook takes a closer look and includes sections on the national debt, weight loss drugs, antitrust risks to US mega cap stocks, Japan, China and ten surprises for the new year. Mike goes over the US consumer and suggests a slowdown, not a crash (pg 24-26). Spend 10 minutes going through the piece and checking out charts.
Partners Dining Room JPM-A Great Way To Stay Connected
Jamie Dimon started a dining room for Managing Directors and it was located at 270 Park Avenue. I thought it was a fantastic idea. You swiped your work ID and it charged you something minimal for the buffet lunch which was quite good. It gave you a chance to mingle with senior people from other divisions. You could eat with someone from credit cards, retail bank, private bank, asset management, investment bank, commercial bank, autos lending, mortgage lending….I loved it and it was quick. I could pop up there and eat for 20 minutes and be back at the trading desk. Going out to lunch and waiting in line took more time, especially in the winter.
I had some amazing lunches there which were both scheduled and impromptu. I had countless lunches with Jamie and who could forget the famous bathroom incident which happened after one of them. The piece entitled, “Dimon to the Rescue” is worth a read for those who missed it. I feel Jamie’s decision for the Partners Dining Room helped to make the firm feel smaller. I got to know people across all aspects of the bank and would regularly call them to discuss markets and business in general.
I also had a bunch of lunches with Ace Greenberg, the former Bear Stearns CEO. He was sharp as a tack and a great magician. He came to my wedding and I asked him to do magic. He did not disappoint. I fondly recall a lunch meeting with him in the Partners Dining Room after JPM bought Bear Stearns in 2008. I also loved his book, “Memos from the Chairman,” which is worth a read. Two takeaways: control expenses and return calls promptly. Ace was notoriously frugal. Maybe that is why we got along so well.
In an age where Remote Work remains prevalent and the Zoom Call is the norm, I am reminded that the Partners Dining Room was a great way to stay connected and meet new people. I hope for JPM, Jamie is putting in a similar dining room in the new building which should be done in the next couple years. My old stomping grounds, 270 Park was torn down and the replacement tower is looking great.
I would bring people who worked with me to lunch there and it was a great way to introduce them to the broader bank. In a funny coincidence, I ate a Monteray, a new American restaurant in the old Maloney and Porcelli in Midtown. The manager was the former manager of the JPM Partners Dining Room. Yes, Monterey is worth a go. Beautiful room and good food. A great way to stay connected.
Quick Bites
Apple was downgraded by Barclays and fell almost 4% on Tuesday and another .8% Wednesday. Stocks sold off for the first couple days of the year, but nothing major. Wednesday, the major indices were -.8 to 1.2%. The Nasdaq and Russell underperformed. The 10-year Treasury hit 4% on Wednesday on fears rate cuts won’t materialize as quickly as expected, but settled in at 3.91% (-3bps). I love the All-In Podcast and they had the 2023 year in review. David Sachs included the first chart below which shows the outperformance of the “Magnificent Seven” relative to the S&P 500 in 2023. I feel 63% is a statistically significant outperformance! Oil prices rose 3.3% to $73/barrel due to Houthi Militant continued issues in the Red Sea. Of course, they are backed by Iran.
Good WSJ article entitled, “Where the Job Market Is Heading in 2024, in Six Charts.” Employers slowed hiring and handed out smaller raises in recent months, signs of fading momentum in the job market that have some forecasters expecting unemployment to rise in 2024. And that might be OK. The key for American workers and Federal Reserve policymakers is to have the labor market cool without collapsing. That would support household incomes while helping inflation drift lower, putting the economy on a glide path to a soft landing—as long as the slowdown isn’t too severe. “You can see these small cracks forming” in the labor market, said Michael Pugliese, a senior economist at Wells Fargo.
“That should give you reason for pause going into 2024.”
Gallup came out with a poll in July that I missed, but thought I would write about it here. I think the chart says it all. Check out faith in Congress (8%), TV News (14%), Newspapers (18%), The Presidency (26%), Public Schools (26%)….
Harvard President Claudine Gay resigned Tuesday afternoon, bringing an end to the shortest presidency in the University's history, according to a person with knowledge of the decision. It is not clear who will be appointed to serve as interim president. I want to thank leaders like Bill Ackman and those vocal donors for being so critical and bringing the debacle to the front page of the news. Although this is the RIGHT decision it took too long. The board lied and covered up Gay’s plagiarism (a dozen charges here), and threatened the journalist who exposed it. Based on the honor code, Harvard students would be expelled for what Gay did. That double standard sends the wrong message. Too much damage was done to a once great academic institution. I was incredibly critical of Gay, the Board, and the school for weeks. The fact that she refused to put the school’s best interest in front of her own is a major red flag. Let this be a costly lesson on how NOT to handle a situation. All university presidents should be required to hold up to the same standards. So if you are going to hire DEI candidates, you cannot be scared to fire them when they are clear mistakes. Note, the Penn President was fired far more quickly and did not have all the plagiarism issues around her. Shockingly, Gay will stay on as a professor with nearly a $1mm salary despite all the damage she caused. Bill Ackman posts 4,000-word screed on Harvard claiming ‘DEI is racist’.
I have been critical of Chinese leadership, lies, cheating, stealing, treatment of its people, and the pandemic and have written extensively about how things have slowed there. This CNN article outlines XI Jinping’s speech in his annual New Year’s message. China’s businesses are struggling and job seekers have trouble finding work, President Xi Jinping acknowledged during his Sunday New Year’s Eve speech. This is the first time Xi has mentioned economic challenges in his annual New Year’s messages since he started giving them in 2013. It comes at a critical juncture for the world’s second-largest economy, which is grappling with a structural slowdown marked by weak demand, rising unemployment and battered business confidence. Acknowledging the “headwinds” facing the country, Xi admitted in the televised speech: “Some enterprises had a tough time. Some people had difficulty finding jobs and meeting basic needs.” China’s economy has been plagued by a set of problems this year, including a prolonged property downturn, record-high youth unemployment, stubbornly weak prices and mounting financial stress at local governments. The last public # for youth unemployment was in the 21% range. Speaking with people who live in China suggests the rate is SIGNIFICANTLY higher. China suspended the release of age-specific unemployment data. The Chinese government loves to be transparent. Visual Capitalist has great charts. The USA has 8% youth unemployment for perspective.
Israel
‘I Went Through a Holocaust’: Freed Israeli Hostage Shares Harrowing Details about Captivity in Gaza
Yes, Hamas is a terrorist organization.
A Hamas official killed in a Beirut strike had been on Israel’s hit list for years
Hezbollah has built a vast tunnel network far more sophisticated than Hamas’s
Tunnel system in south Lebanon runs hundreds of kms, up to the border and even into Israel; launchers can fire precision-guided missiles from there, then disappear.
In historic ruling, High Court strikes down key judicial overhaul legislation
In 8 vs 7 decision, justices rule that reasonableness law undermines Israel’s democratic character; 13 justices assert court’s right in principle to strike down Basic Laws.
Only 15% of Israelis want Netanyahu to keep job after Gaza war, poll finds
Iran says at least 103 people killed, 141 wounded in blasts at ceremony honoring slain general
Other Headlines
These are the boldest bitcoin predictions for 2024 — one calls for a 1,000% rally to $500,000
I kept all my crypto. At one point, I was -85%. With the rally in BTC, ETH and Solana, I am clawing back and not down a ton now. I need to recalculate but would guess -35-40% now. A bunch of the altcoins were wiped, but my biggest bets were on BTC (+169% for past year), ETH (+94%) and Solana (+848%). BTC Hit $45k for the first time since April 2022. before falling 5% on Wednesday.
Maersk’s Red Sea shipping pause highlights challenges for U.S.-led efforts to protect trade
Electric Car Models Eligible for $7,500 US Tax Credit Cut to 13
Among the vehicles still eligible for the consumer credit are the Model Y by Tesla Inc., Rivian Automotive Inc.’s R1T pickup truck, Stellantis NV’s Jeep Wrangler 4xe and Ford Motor Co.’s F-150 Lightning pickup truck.
X now worth 71% less than when Musk bought it, Fidelity estimates
The suggestion is it is worth $13bn today according to Fidelity. I wrote extensively around the time of the acquisition that he overpaid by $29bn and was ridiculed for it. My math would have suggested $15bn was fair value.
Americans Are Canceling More of Their Streaming Services
Hulu, Netflix and other streamers are turning to bundles, discounts and ad-supported plans as customer defections rise. However, 39% resubscribe after cancelling as seen in the 2nd chart.
Many in Congress made unusually timed trades resulting in huge gains
I have written extensively about my concerns about politicians’ trading prowess and timing of investments. More needs to be done here. It is BOTH parties. I have called out Nancy Pelosi, but she is not alone. Let’s see how these criminals do if they quit Congress and start a hedge fund where inside info is not allowed.
The Campaign Promises That Joe Biden Kept—and the Ones He Broke
A fraying coalition: Black, Hispanic, young voters abandon Biden as election year begins
Interesting take by USA Today, a Left left-leaning media outlet. Biden now claims the support of just 63% of Black voters, a precipitous decline from the 87% he carried in 2020, according to the Roper Center. He trails among Hispanic voters by 5 percentage points, 39%-34%; in 2020 he had swamped Trump among that demographic group 2 to 1, 65%-32%.
Republican loyalty to Trump, rioters climbs in 3 years after Jan. 6 attack
WaPo article. 1-Over a third of Americans believe Biden’s election was illegitimate. 2-Most Americans, but few Republicans, think Jan. 6 threatened democracy. 3-Fewer Republicans blame Trump for Jan. 6 attack. 4-Most Americans think Trump is guilty of a crime over Jan. 6. 5-About 7 in 10 Americans believe Trump will not concede if he loses in 2024.
It's a new year and a whole new John Fetterman: He's kissing his progressive ways goodbye
I believe Fetterman is unfit for office and the fact that he won is a joke. However, I appreciate that he is forming some of his own opinions and has been supportive of Israel. “I’m not a progressive, I’m just a regular Democrat,” Fetterman recently posted on X, formerly Twitter.
She forgave her mum's killer then he murdered her too!
Sad story of forgiveness gone wrong. The daughter of a murdered mom hired the killer after he was out of jail and he ended up murdering her too.
Fatal New Year's Eve car crash in Rochester, NY: Possible terrorist incident
Watch Ian Ziering get into brawl with biker gang in LA on New Year’s Eve
Welcome to LA where there is never a consequence for crime.
This country has more of the world’s 50 best restaurants than any other
I was shocked that Spain was the country with the most in the top 50. When I went nearly 30 years ago, I did not have the means for fancy meals. Do I hear a Rosen Report trip to Spain to give them a try?
2024 is the ‘year of globetrotting,’ travel expert says. Here are some of the hot spots
YouTube mega-star MrBeast had a cutting response to Elon Musk's request to post content on X
Interesting commentary from the biggest name on YouTube.
Michigan fans trying to go to national championship game in Houston will have to spend big
Sadly, major sporting events are out of reach for most families. The cost of flights, transportation, hotels, food and tickets is incredibly expensive The CHEAPEST tickets at the TOP of the stadium are $1,160 before fees. A really good seat is $5,000+fees. The fees were approximately 35% of the ticket cost! Don’t get me started on this fee topic.
Jelly Roll, an Unlikely New Star, on the Grammys and His Rap Past
Very interesting interview with a former rapper who got his GED in jail at 24 and is now a big star.
Nearly 200 names linked to Jeffrey Epstein are expected to be made public
I believe Epstein was murdered. I also believe someone has all the videos of high-powered men in compromising positions. I am shocked they have not been released. Being on the list does not mean you were involved with illegal acts. However, I am sure many of the people were. Names will be released at some point on Wednesday.
State Farm home insurance to increase in CA by an average of 20%
Insurance is turning out to be a major issue.
Sean Hannity Announces He’s Left New York and Moving to Florida Full Time
Another rich person who left NY. Interestingly, Tucker Carlson moved to Florida as did Joe Scarborough and Mika Brzezinski. Wealthy people from both parties are smart enough to leave NY for Florida.
Shocking so many people lived when you see the pictures.
Real Estate
This Palm Beach Daily News article is entitled, “The Million-Dollar Taxpayers Club,” and outlines homeowners who pay $1mm+ in annual R/E taxes. Palm Beach has nearly two dozen homeowners who have been billed at least $1 million in local property taxes for 2023, according to a new analysis by the Palm Beach Daily News of the just-finalized tax rolls. A staggering 23 residential taxpayers have found a spot in what the Palm Beach Daily News has dubbed “The Million-Dollar Taxpayers Club,” according to the tax rolls certified in October. There are pictures of each estate in the link. I presume many of these are residents of Florida today, so think of the lost taxes of NY and other states as a result. Also, consider the multiplier effect of these billionaires not spending as much time and money in their former home state. Note the amount of top R/E taxpayers from Palm Beach who were in hedge funds (4) and Private Equity (5). There are a few trusts and I presume some are in the investment game too. Also of note, Jews are punching above their weight again (at least 8 out of 20 or 40%). I do not believe the market value prices are accurate and in many cases sharply under-estimate the value.
I get asked questions on R/E taxes in Florida a lot. I spoke with the Palm Beach Tax Authority to ask questions (561-355-2866). If you get the Homestead Exemption, you are capped at 3% annual R/E tax growth. If you DO NOT get Homestead Exemption, the cap is 10%. However, the Local and State School Authority (1/3 of the tax) does not recognize the cap. As a result, if you do not get the Homestead Exemption, your taxes can go up more than 10%. With the large increase in R/E values in South Florida in recent years, people without the exemption have seen the taxes increase by as much as 20% in a year. As a general rule, you will pay approximately 1.75% of the assessed value for your annual R/E tax, but it varies slightly as millage rates can change. You also get a discount for paying the full amount early. The initial Taxable Value is the same regardless if it is Homestead or not. The big difference is the growth in taxes each year on a non-Homestead vs. Homestead property. The Tarpon Island house is worth closer to $150mm than $77mm and last sold for $85mm before a massive renovation. It is listed for $187mm today after asking as much as $218mm. I believe Ken Griffin’s properties are worth over $1bn.
I have written recently that I am seeing things slow in many high-end markets in South Florida. Inventory is building and homes are staying on the market longer than before. In the luxury home community of Royal Palm in Boca, at the end of 2022, there were 29 homes on the market and 16 homes were over $14mm. In 2022, three homes sold between $14-19.9mm and one over $20mm. Today, there are 43 homes on the market (many more off-market and under construction). In 2023, two homes sold between $14-19.9 and two sold over $20mm with a 3rd selling over $20mm (Intracoastal lot that will be split into two homes by a developer). Today, there are 13 homes listed between $14-19.9mm and another 11 homes listed over $20mm. At the peak of the market in December 2021, only 4 or 5 homes were for sale. However, when I moved down, 71 were listed in May of 2017. I feel to clear the higher-end inventory, more homes will need to come down in price. Yes, the migration continues, but at a far slower pace than peak COVID levels. There are just not that many buyers in Boca at $14mm+. On a positive note, you get a lot more bang for your buck in Boca relative to the best spots in Miami or Palm Beach Island. Also, there are a handful of edible restaurants in Boca today, and more coming constantly. The average age is ticking down quite a bit too. Remember, if you are buying or selling in South Florida, reach out as I am a Realtor® with Douglas Elliman and can assist you with my team.
A record 85% of Americans feel it is a bad time to buy a house
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Rosen Report™ #644 ©Copyright 2023 Written By Eric Rosen
