Botswana Beats the Hamptons in This Regard
7-30-23
Opening Comments
My last note was entitled, “My Legendary NYC Apartment Rental.” The most opened link was on the longevity milk shake. The link which did not get top billing but thought it would was about the UFO testimony suggesting non-human bodies were recovered from crashed aircraft. How do you not open that one? Lots of AI generated images in today’s piece like the one below.
I came to NYC for 36 hours and it will be the subject of an upcoming report. I can only suggest that few people could accomplish what I did in such a short time. NYC is great in short bursts, but I did witness a homeless man urinating on a car in the West Village and the homeless issue continues to deteriorate.
We are back in Southampton, and I am heading to the city Wednesday am for my podcast on luxury residential real estate with big brokers from NYC, Hamptons and South Florida. I will be adding excerpts and potentially the entire webinar to a future Rosen Report. I am very excited about the panel, as they have sold almost $20bn of residential R/E combined and sell many of the most coveted homes, condos and co-ops on the market.
In a frustrating and embarrassing twist, I lost my phone the other day. I took the family to dinner and then for ice cream and I must have left my phone when I went to pay for dessert. I did not realize it until I got back to the room and was in full panic mode. I tore about the car (phone was on vibrate) and no joy. I called the phone 10x and no one answered and finally, the manager of the ice cream store answered and told us he found it. We are too reliant on these horrible devices. The smart phone is arguably one of the best and worst innovations of my lifetime. They are incredibly addictive. Just think of the impact on kids. You must watch the movie, “The Social Dilemma,” on the topic of the impact of social media. I generated this picture through the Tome website in about 3 seconds.
Remember to hit “View Entire Message” if your report is truncated.
Markets
Impact of AI on Work
MTA Overtime Waste
McConnell Froze, Age Limits, Term Limits…
China Youth Unemployment Exploding
Migration Data
Saban buys $17mm Jupiter Home & $50mm Palm Beach Estate Sold to Tech Investor
Strip Malls are Outperforming
Manhattan Commercial Construction Falls in 1st have of 2023
Pictures of the Day-Hamptons Party for 3i Members
Given the theme of today’s piece I thought it was apropos to write about the party I attended last week in Bridgehampton thrown by 3i Members. I have been a member for 18 months (since inception) and enjoy my time at social events and have made some very close friends. As a matter of fact, I met a man named Jason at the party who invited me and Jack to play National (GREAT golf course). It was an amazing time and he could not have been a nicer host. If you want information on 3i, click this link. Dozens of potential new members reached out after the last note.
Botswana Beats the Hamptons in This Regard
My first Hamptons experience was in 1994. It did not start off on the right foot as I was driving out of NYC on Friday afternoon at 3pm in July. I was thinking why someone would put themself through this? My friend and host were going from the highway to the service road like a wild man navigating before Waze or Google Maps existed.
His house was in Quogue, and it took us a few hours to get there despite the fact that it was only 80 miles from the city.
The house and pool were quite nice and although I had fun, I did not see the appeal of the commute to be there for only two days. He paid $25k for the summer and at the time, I thought that seemed like a million bucks.
The drive home Sunday night was no picnic and I thought I was “one and done” on my Hamptons life, as I lived in Chicago at the time and was not considering NYC.
Eventually, I moved to NYC in 1997 and started coming out with regularity in 2003. The Hamptons grew on me and I had plenty of friends, a great golf course in Atlantic, and despite the commute, I enjoyed my time in the serene beach town of Southampton.
I do not know where a more concentrated area of wealth is in the USA in the summer. The most powerful people tend to congregate in the Hamptons. Bankers, traders, hedge fund managers, Private Equity, C-Suite corporate America, entrepreneurs, trust fund babies, and anyone else with means seem to be out East for part of the summer. High-end summer rentals can cost $1mm/month and homes for sale can be $50-100mm+.
I always disliked the traffic, but post-pandemic it is another level of bonkers. The other day, I drove Julia to camp, where she is a counselor, and the backup on Cobb in Water Mill (back roads) to get to 27 was at least 200 cars at the stop sign.
The construction workers flock to the Hamptons in the morning causing eastbound traffic to be a nightmare. Then, in the afternoon, when the construction crews leave, the westbound traffic is a nightmare. Remember, from Southampton, 27/Montauk Highway is a one lane road. When I stay in Southampton and I am invited to East Hampton, I am almost always a “no go” given the amount of time it takes to go 13 miles makes it untenable. This is a 10 second video of eastbound traffic the other day on 27. The traffic was backed up for 5 miles.
My biggest frustration is I feel as though I am in the Dark Ages in terms of connectivity. The cell service is better in Botswana (46% are poor or vulnerable) than the Hamptons. I just spoke with someone who went to Botswana on safari and sang the praises of the cell connections and made a comment how much better they were than the Hamptons. I was just on a tiny island (Grand Cay) in the Bahamas and the cell service had 4 bars the entire time. The island has 500 residents and would guess the per capita income is less than 20% of the US. I lost zero calls and was able to send texts with pictures, something which never happens on the 1st try when in the Hamptons.
In the Hamptons, there are limited cell towers in the area, and you lose calls constantly. You don’t have enough signal to send or receive a text even if it is only a few words and there are not many spots of joy from a cell coverage perspective. I lose my mind and scream when I am on an important call trying to get a deal done only to be disconnected countless times.
Given the wealth and power out here and the need for them to deals, I am shocked at the lack of coverage. I was trying to have a conversation and the call dropped almost 20 times in a little over 30 minutes. Check out the texts and the number of calls I made to try to connect. Ryan told me he called me 7 times to no avail during the same period.
The irony that all these wealthy business people struggle to do business given connectivity is quite amusing but so disappointing when it happens to me.
There is an aversion to the unsightly cell towers in the Hamptons, but the cost of the desire for beauty is too high. It is time for a couple new towers to amplify cell signals. If that can’t happen, you can always summer in Botswana. I understand the traffic is not bad, cell service better and costs fractional to the Hamptons.
You can make a business call without being dropped 17 times in 30 minutes. Sounds like paradise absent all the fancy pants financiers and models. Couple this with safari country nearby and maybe the Rosens head to Botswana next summer to have some uninterrupted business calls and reasonably priced services.
Quick Bites
Stocks rose Friday with the Dow and S&P 500 closing out their third winning weeks in a row as a measure of inflation closely watched by the Federal Reserve came in at its lowest in nearly two years. The Dow jumped 176.57 points, or 0.50%, to 35,459. The S&P 500 added 0.99% to 4,582. The Nasdaq gained 1.90% to 14,317. On Friday, June data for the personal consumption expenditures price index continued to show easing inflation. The gauge showed core PCE gained 0.2% month-over-month, in line with the 0.2% increase expected by economists polled by Dow Jones. Core PCE rose 4.1% from the year-ago period, lower than the anticipated 4.2%. The stock market this year has seen an impressive run which has out-paced any economist view I have seen. The Nasdaq is + almost 37% and the S&P is up almost 20% YTD. The 2-year Treasury yield was down by 6 basis points to 4.879%. The yield on the 10-year Treasury was trading at 3.957% after falling by more than 5 basis points.
The more work I do on AI, the more excited and concerned I become. I received a bunch of emails after my last piece asking for AI speakers and I spent hours going through interesting experts on the subject. I am convinced that AI will have a massive impact on the future in many aspects. I am hardly an expert, but the more I read, the more I am convinced. Here are a couple articles showing the impact of AI. One reader sent me this article outlining how AI is changing the residential real estate market and taking jobs. So far, the most typical use cases for AI in real estate are writing listings, generating marketing materials and reviewing legal contracts. In one example, the office manager uses a chatbot to generate much of his team’s marketing materials after a departure left a gap in his team’s workflow. “Recently, we let our marketing person go. She was spending hours writing,” he said. Now instead his office manager works with ChatGPT to streamline the process. According to a report released by Goldman Sachs economists a couple months ago, "the labor market could face significant disruption." Economists predict that 18% of work can be computerized and white-collar workers could be the first to be replaced. According to the report, administrative workers and lawyers are most at risk of losing work to automation. However, jobs that require manual labor and outdoor tasks will feel "little effect" from the AI boom. About two-thirds of current jobs in the United States and Europe "are exposed to some degree of AI automation," and AI could potentially substitute a quarter of current work, the report said. Make no mistake, AI is a game changer and will dramatically impact the economy in coming years. The article suggests 300 million jobs worldwide could be impacted. Check out this incredible story: Social media is fawning over 19-year-old influencer Milla Sofia — but she's not even real.
I recently wrote a piece entitled, “I am From the Government and I am Here to Help,” about government waste and inefficiency. A reader sent me this article about the MTA overtime and waste. Check out these statistics:
More than 1,100 MTA employees doubled their annual salaries through overtime pay.
566 MTA employees each collected more than $100,000 in OT.
Metro-North Railroad OT hit a new record of $131 million.
We should be able to do better and waste less money, but no one is ever held accountable. I am telling you now the cumulative waste by city, state and the Federal government will come back to haunt as deficits explode, populations age and rates are elevated from years of near zero. Individuals making over $200k in overtime pay is unacceptable. 1,133 employees more than doubled their 2022 regular pay with overtime, up from 835 in 2021. When you hear, “I’m from the government and I am here to help,” RUN. More entities need to be privatized. I am not convinced the government is the best steward of capital. My privileged children would waste less money. Time for Jack and Julia to run the MTA.
I have been CONSISTENLY critical of BOTH the Left and the Right when it comes to cognitive decline, age, and term limits. The story about Mitch McConnell is the genesis of this section, but he is not alone. Senate Minority Leader Mitch McConnell suddenly stopped speaking during a weekly Republican leadership news conference Wednesday afternoon, appearing to freeze, and then went silent and was walked away. He also face planted the other day getting off a plane. The short video attached is concerning. Look at Feinstein, Fetterman, Biden, Grassley, Robert Byrd, Strom Thurmond (was 100 years old in office). Stop the madness. Did anyone watch Fetterman debate and speak? How can you vote for him knowing he did not have it all upstairs due to a serious stroke. What did he do? Took months off for depression just after taking office and has embarrassed himself and this country wearing shorts and hoodies in major meetings and stumbling through basic speeches. We need term limits and age limits as well as cogitative tests. I would bet more than a handful of our senior leadership would not pass the test on both sides of the isle. These jobs in the Senate, House and President are too important to have questionable minds at the helm. We even elect DEAD Representatives as recently as 2022-”Pa. State Rep Anthony DeLuca Elected Despite Being Dead.” Of note he was 85 at the time of his death. The US is facing many problems today from fiscal issues with massive debt levels and rising rates, immigration, crime, homelessness, education, annual deficits, infrastructure, national defense, natural disasters and foreign adversaries which hate us (Russia, China, Iran, Syria, North Korea…). We need leadership who are not cognitively impaired, elderly, and without the stamina to do the job. I want term limits, age limits and cognitive testing NOW. IF we re-elect Biden and he serves out his full term (NO CHANCE) he would be 86 in office. That means Kamala Harris would be President.
China’s economy is slowing down and there are many casualties from real estate to youth unemployment. This WSJ article is entitled, “How Bad Is China’s Economy? Millions of Young People Are Unemployed and Disillusioned.” For the estimated 11.6 million college graduates in 2023, having heeded calls by the state to study hard, the prospect of resorting to the physical labor that many of their parents performed is distinctly unappealing. The problem isn’t that jobs don’t exist in China. They do. With its shrinking population, China needs workers as much as ever. It is that China’s weakened economy isn’t producing enough of the high-skill, high-wage jobs that many college students have come to expect. Disenchanted, many young people are opting out of the job market entirely, or “lying flat,” as many of them call it. Longer term, the risk is that millions of unemployed people will lose the ambition China needs to achieve Xi’s goal of rejuvenating the country as a great power and will struggle on the fringes of society as potential threats to the Communist Party. Without stable work, many Chinese are putting off getting married and having children, worsening the country’s demographic problems. I am not a fan of the Chinese government and their lies, treatment of people, hacking, stolen IP, unfair practices, pollution, and a little thing called COVID and the behavior around it. However, I do fear that an unstable China can lead to other unintended consequences, so we need to watch this one carefully. The US youth unemployment rate is approximately 7% compared with China’s 22%. Some economists believe the true Chinese youth unemployment rate is in the 46% range and that the government is lying. It would be so unlike the Chinese government to be disingenuous on anything. Check out this headline, “U.S. Hunts Chinese Malware That Could Disrupt American Military Operations.“
Other Headlines
GDP grew at a 2.4% pace in the second quarter, topping expectations despite recession calls
Consumer spending was +1.6% down from +4.2% the prior Q, but better than I thought. How long can the consumer spend like this?
Investors Yank $800 Million From I Bonds as Inflation Slows Down
The Bank of Japan just shocked markets with a policy tweak — here’s why it matters
The Dow just posted its best winning streak since the 1980s. Why it keeps going higher
Jim Cramer lists 10 market themes to watch after the Fed’s July hike
Child-free generation? 1 in 4 young adults already ruling out having kids
With an aging population, exploding healthcare costs, entitlement spending crowding out the Federal budget and young adults ruling out children, how can this end well? Politicians for the most part only care about reelection and refuse to make the tough decisions we need to address. The numbers don’t lie. Entitlement reform now.
Intel jumps 7% as it returns to profitability after two quarters of losses
Procter & Gamble sales rise slightly, fueled by higher prices
McDonald’s earnings top estimates as diners flock to U.S. and China restaurants
A reader sent me this picture of gas prices in Manhattan. They are literally $2.40/gallon more than near my house in Boca according to Gas Buddy. $3 more if you pay with a card. Ridiculous.
Trump, aide face additional charges in classified docs case as 3rd defendant is added
Trump leadership PAC spends more than $40 million on legal fees amid indictments
‘Private citizen’ Hunter Biden gets motorcade entourage to and from court, triggering uproar
A half dozen SUVs escorted the private citizen to and from court. Why and how much did it cost taxpayers?
NYC cabbie, 60, viciously beaten by 5 brutes on busy street
Watch the video. We need SERIOUS consequences for such brutal behavior. Of note, this is in MIDTOWN MANHATTAN on 34th Street. Should these criminals be out on the street? The cabbie is furious that two of the suspects were already let go and he is right. Anyone who savagely attacks people should not be on the streets to do it again. I am all for non-violent first time offenders getting out with no bail. Violent offenders should not have that privilege.
Cleveland Police arrest 12 teenagers for 'brutal attack' on 34-year-old man at gas station
Kids as young as 12 beat the crap out of a man sitting down minding his own business. Not all have been caught. The perpetrators were in stolen cars. They had guns and beat the hell out of him. What is the right punishment. They fired the guns multiple times (no one was hit). "This brutal attack and use of guns is just one horrific recent example of the rising violence we have seen this summer," said Cleveland Mayor Justin Bibb. "As I've previously stated, we are using the full weight of the law to hold criminals accountable and put them on notice that these actions will not be tolerated."
Major cities such as NYC, Chicago, LA, SF, DC...need a better plan.
Anheuser-Busch to lay off hundreds of US corporate workers after Bud Light campaign disaster
Know your customer. Horrible idea on the campaign given the core customer of Bud Light. It has cost huge market share and billions in market cap due to massive stock underperformance.
Family of USMC Sgt. Nicole Gee charged $60,000 to send her body to Arlington National Cemetery
She died with 12 other service members on Aug 26, 2021, in a suicide bombing at the airport in Afghanistan. How in the hell could the US government charge her family to bring her body to Arlington National Cemetery? The US can give BILLIONS to illegal immigrants, foreign countries and waste trillions but cannot pay for someone who gave their life in defense of the USA? Disgusting.
Limited inventory, high prices, lower industrywide sales, fewer lease deals and more expensive used cars are listed in the article. Note the chart on the left and the monthly cost for a car. How is this not squeezing the average consumer?
Box Office Bonanza: ‘Barbie’ to Blast Past $700M Globally by Sunday After Record Week
A worm has been revived after 46,000 years in the Siberian permafrost
Interesting and concerning.
A fitness trainer shares the No. 1 exercise for a ‘longer life’: It has ‘major aging benefits’
I am 100% in agreement around weight training being critical for health.
I went 9 for 10 and I am convinced the one I missed was an error!
Mysterious illness triggered by tick bite could affect thousands, yet many doctors are unaware of it
The Alpha-Gal tick is no joke. Multiple readers have been impacted. You can’t eat meat in many instances.
Syphilis Emergency Looms in the US as Drugs Run Low
Huge increase in cases coupled with penicillin shortages are creating chaos. Yet another example of why we need to produce our own antibiotics in the US. Also, case in point for safe sex. Chemo, antibiotics and ADHD meds are in short supply today.
Major League Pickleball founder looks to capitalize on the sport’s growing ‘cool’ factor
Japanese man who spent $16K to become a ‘dog’ shares video of 1st public walk
I am speechless about the world today. Please watch the video.
Real Estate
Great article on wealth migration with no shocking results but it is good to see the actual data which was 2020-2021. This article has some updated data as well on migration away from CA and NY. What is the impact to the budget in these states? How will politicians respond? Higher taxes? Remember, CA and NY are running massive deficits now and the immigration crisis will add billions of costs.
Florida and Texas gain the highest earners, while California and New York lose the most. Florida added a whopping 27,500 high-earning filers even after accounting for outflows, while Texas added the second most at 9,000. Meanwhile, California and New York lost more than 45,000 and 31,000 high-earning filers, respectively – more than any other state. California’s net outflow of high earners accelerated significantly (40%) from the previous year’s outflow.
These Northeastern states lost high earners year over year. New Jersey, Massachusetts, New York and Pennsylvania all saw a net outflow of households making $200k or more. Still, Massachusetts, New Jersey and Connecticut are the only three states with over 10% of tax filers earning more than $200,000 per year.
$200K tax base is growing fastest in Idaho, Florida and Montana. As a percentage of the overall population in each state, high-earning households grew the most in this trio of states in 2021.
Seven of the top 20 states are in the Southeast. The high-earning population is growing in the Southeast, including in Florida, North Carolina, South Carolina, Tennessee, Georgia, Alabama and Arkansas.
High earners are leaving Washington D.C. at a fast pace. The nation’s capital lost a net total of 2,009 high-earning households between 2020 and 2021. As a percentage of all filers, high earners left D.C. at a faster rate than any state.
University of Alabama Head Coach Nick Saban purchased a waterfront estate on Jupiter Island for $17.5 million, The Real Deal has learned. Saban purchased the home at 619 South Beach Road that traded hands in May, sources revealed. Records show At High Tide LLC, a Delaware entity, purchased the 6,200-square-foot, six-bedroom home in Hobe Sound. Martin County property records show a trust led by Bart Kavanaugh and Betty Sacks sold the home. It hit the market last year for $21.5 million, and the price was reduced to $19.5 million in December. In another large transaction, Harvey Jones (tech inventor) bought a waterfront Palm Beach home for $50mm. The house built in 1974 is 7,500 ft and last sold for $7.4mm in 2002.
Interesting WSJ article entitled, “The Hottest Real-Estate Play Is in Your Neighborhood.” With investor anxiety rising about types of commercial property from shiny office buildings to self-storage facilities, the low-slung structures are a rare bright spot. Retailers want to stay close to where customers are spending more time these days: their homes. The leased occupancy rate at strip center real-estate investment trusts stood at 95.3% as of the first quarter, a level last reached about eight years ago, according to real-estate advisory firm Green Street. Physical occupancy was 92.4%, right around where it was prepandemic. One reason for strip malls’ strength is the widespread shift to a flexible working environment, which means consumers are spending more time at home rather than city centers where their offices are. Conor Flynn, CEO of Kimco Realty, the largest shopping-center-focused REIT, said during an industry conference in June that the flexible work environment has led to a pickup in visits to the shopping center. The article makes sense, but I was surprised by the strength in the strip mall market.
The value of commercial and multifamily construction starts in the Big Apple declined by 31 percent year-over-year from January through June, the New York Business Journal reported. The data is courtesy of Dodge Construction Network, which aggregates data and provides insight into commercial construction.
The value of first half commercial construction starts in the city was $10.8 billion, which still towered over all other metros the report analyzed. But that value looked meager in comparison to last year’s $15.5 billion. In the same period from 2021 to 2022, commercial construction starts in the city rose 22 percent.
“Commercial and multifamily construction has suffered thus far into 2023 as tighter lending standards, higher interest rates, slowing demand and societal changes, such as continued remote work, impact the sector,” Dodge said in a statement.
I am now very skeptical, why Mr. Eric could you predict the 2024 presidential election on July 30, 2023?