Two Good NYC Dinners (Rezdora & Lupa)
10-15-23
Opening Comments
My last note was about the Italian Wine Tasting I hosted and the most opened links were three: Video of the Max Grayserman Interview (New PGA Tour Player), #1 key to a happier life, and Keith McNally hate on Jews. This article suggests McNally is fuming over lost business. I ask you to consider which companies and brands you support going forward. Everyone has a right to their opinion and as consumers, we have a right on where we spend our money.
Given the volume of stories on Israel, I started a new section for those who want to see it. In today’s section, there are some amazing articles and video content.
Markets
Will War Lead to Recession?
Deficits
R/E to Build Wealth
Flipping High-End in South FL
Century City, CA Office on Fire
Picture of the Day-New JPM Headquarters
I went to see my former colleagues and friends at JPM on Wednesday morning and there was a new model of the building under construction going up next door. It is an impressive building. The public number suggests $3bn to build, but I will suggest it is more. It will be 1,338 feet tall and will be state-of-the-art. All my loyal readers recall my Dimon bathroom incident story which cannot happen in the new building given the technology. Here is a 2-minute video of my take on the famous bathroom incident. It was great to reconnect with my former colleagues and nice to see so many of the people who were hired during my tenure do so well. Tony, thanks for setting it up. However, it should be noted that as I was walking into the current JPM headquarters, I bumped into one of my big investors from my hedge fund. We stood in front of JPM for 10 minutes on 47th and Madison to catch up and a homeless man was SCREAMING profanities at the top of his lungs at all passersby. Sadly, most people were numb to it. I asked security inside and they told me he is there every day and when the police move him he comes right back.
Two NYC Dinners
I was in NYC for two nights and I am sorry to disappoint you. I only ate two dinners during that time. It is a rarity, but when you see how much I ate at each place, you will understand. I gained 2.4 pounds on my trip. In a funny coincidence, I flew on a JBlue flight from Palm Beach to LaGuardia on Tuesday at 7 am. I just got on the plane at 6:30 am and my tennis group chat lit up, “Who wants to play at 8 am today?”
I responded, “I am on a plane to LGA.”
Maarten, a member of the group said, “I am on a plane to LGA.” We were on the same flight and agreed to get dinner. I went down to the Flatiron and put our name down at Rezdora and told Maarten to get his butt down there in a hurry. He got tied up and was late and I had to beg to hold our seats and used some grease to do it. He came and we sat down and had an amazing meal. There are some who do not care for Rezdora and I cannot for the life of me figure out why.
As usual, I started with the Gnocco Fritto, my favorite appetizer in NYC. The air-filled dough melts in your mouth. We shared four pastas as seen below. Three of the were specular (Roasted Squash, Lobster/Basil, Grandma Walking in the Forest in Emila). However, the “Special” of pasta with meat and parmigiana with 12-year-old balsamic disappointed me. I felt the pasta was undercooked by 45 seconds and underwhelmed. It tasted great, but I expected it to be better. The cipollini onions with balsamic were fantastic and the wines were top-notch. Overall an “A,” not “A+” given the one pasta. We ordered the rosemary cake which was fantastic. After dinner, our friend, Teddy, joined us for a drink at Gramercy Tavern. I love Rezdora. It has a Michelin Star for a reason.
On Wednesday, I was meeting someone who was coming in from NJ and wanted it to be convenient for him. I jumped on the B Train to Times Square changed to the #1 train and headed downtown to West 4th. I walked South towards Houston and met him on 6th Ave and Houston. We walked East to the Village, and I picked Lupa. Given my Tuesday night dinner, it was not a wise choice to double up on pasta given my diet, but it was the best place in the area and we walked in. We sat outside on a beautiful night.
I ordered a bunch of appetizers and entrees as you can see below. No, it is not Rezdora, but it is quite good. Solid meatballs. Great kale Caesar. Tasty Prosciutto.
We had a couple of pastas and broccoli rabe. I highly recommend Lupa and they have great wine and cheese as well. The same owners have Eataly, Babbo, Otto, Del Posto and many others.
It is unlike me to only eat two dinners in two nights. I apologize, but pasta is filling and I am back into my 31” pants and I now need to shed weight or I can’t squeeze into them. Interestingly, Michelin just added 11 new restaurants to the NYC guide, so it means I have more to try.
Quick Bites
Had you told me the S&P would be +.45% on the week and the Dow up .8%, I would have thought you were crazy, but you would have been right. The VIX (volatility) was at 19.3. I will be surprised if we do not see 30 before year end. We had very poor Treasury auctions this week in 3-year, 10-year and 30-year. For the 30-year auction, the yield of 4.837% was almost 4 bps above the when-issued yield and compare that to the tail of 2 bps in both the 3-year and 10-year auctions. Dealers were left with 18% of the 30-year auction which is the most since December 2021 (from Peter Boockvar). Also of note, the CPI came out slightly higher than expected .4%, which added to the volatility on the week. Oil jumped 4%+ on the week and was up almost 6% on Friday alone, settling at $87.7/barrel given the Middle East conflict. Gas prices are -6.5% in the last month and now average $3.6/gallon.
This Bloomberg article is entitled, “Wider War in Middle East Could Tip the World Economy Into Recession,” and I do not feel the market is behaving as though this is a possible outcome. Like Middle East wars of the past, the conflict between Israel and Hamas that broke out this past week has the potential to disrupt the world economy — and even tip it into recession if more countries are drawn in. That risk is real, as Israel’s army prepares to invade Gaza in response to an attack by the militant group. The death toll from the Hamas assault and the ongoing Israeli air strikes on Gaza is already in the thousands. There’s concern that militias in Lebanon and Syria that support Hamas will join the fighting. A sharper escalation could bring Israel into direct conflict with Iran, a supplier of arms and money to Hamas, which the US and the European Union have designated a terrorist group. In that scenario, Bloomberg Economics estimates oil prices could soar to $150 a barrel and global growth drop to 1.7% — a recession that takes about $1 trillion off world output. The article goes into great detail. Shockingly to me, since Hamas began the atrocities, the S&P 500 is +.45%.
Any Rosen Report readers know I am maniacal about deficits and entitlement spending. This WSJ article is entitled, “The Federal Deficit Is Even Bigger Than It Looks,” and has some amazing charts. When it comes to the size of the federal government’s annual deficit, appearances can be deceiving. The gap between spending and revenue for fiscal year 2023, which ended on Sept. 30, was $1.7 trillion, the Congressional Budget Office projected ahead of the official Treasury Department figures. That would be a roughly $300 billion widening in the shortfall from fiscal year 2022. But the gap was actually much larger. That is because of the odd way President Biden’s attempt to broadly cancel student debt shows up in budget figures. When the Biden administration announced its plan to forgive federal student debt held by 40 million Americans in September 2022, it logged the long-term cost of the program, $379 billion, on the budget all at once, even though effectively no money was spent on it that year. Treasury last year put fiscal 2022’s deficit at $1.4 trillion. But in June 2023, the Supreme Court tossed the debt-cancellation program, meaning most of that money wouldn’t actually be spent. Rather than update last year’s deficit numbers, though, the Treasury recorded the changes as a $333 billion spending cut in August 2023. The US has $33.5 trillion in debt and growing quickly. In 3 months, we added $1 trillion to the debt level. The US did not hit $1 trillion in debt until 1981, 205 years after the country was formed. Let’s not forget about $100 trillion in underfunded social security, Medicare, and Pension and retiree health benefits. The estimates range from $80 trillion to $120 trillion or more in underfunding.
Israel Related Headlines/Videos
The atrocities are awful and the support of Hamas is concerning. I want to put the Jewish population into perspective. Globally, there are 15.3mm Jews with 6mm in the US. Globally, there are 8.1 billion people with 331 million in the US. This means Jews represent 1.8% of the US, but only less than .2% of the global population. The chart below is fairly telling when you look at how tiny the Jewish population is globally.
Over 1,300 are dead in Israel including 29 Americans (15 unaccounted for) with over 3,000 wounded. The deaths in Israel are equivalent to 47,000 deaths in the US due to the population difference. Reports also suggest 2, 215 Palestinians have been killed with 8,700 wounded as of Saturday.
Someone I have a great deal of respect for sent this Atlantic story out, “Israel Is Walking Into a Trap. It gives a different perspective on the reason for the attacks and is a short read. I have the PDF, but for the life of me cannot turn it into a link.
Hamas planned Israel attack for 2 years but was shocked by success
Hamas says 13 hostages killed in air strikes on Gaza. ‘Lies,’ Israel says
The market is pricing in very little chance.
Gaza devastation laid bare in apocalyptic photos after relentless Israeli airstrikes
Tensions are boiling over as America's elite colleges respond to Hamas' terrorist attack on Israel
Stanford teacher suspended for allegedly separating out Jewish students in class as ‘colonizers’
Israeli student beaten with stick outside Columbia University library
A dozen CEOs back Bill Ackman’s call to not hire Harvard students who blamed Israel for Hamas attack
Jewish Home in Berlin Marked with Star of David Symbol in Grim Reminder of Germany’s Past
Over $400 Million in Taxpayer Funds Have been Sent to Gaza Since Hamas Takeover
US, Qatar agree to keep Iran from tapping $6B in unfrozen assets
Slitting babies’ throats is not terrorism, claims smirking ex-BBC correspondent
Videos
Informative video on Israel by Gideon Argov
I watched the entire thing
Douglas Murray “Treat UK Hamas supporters like ISIS supporters”
Powerful 10-minute video
Father describes relief of daughter being killed by Hamas rather than being abducted
Watch this short video of a man rejoicing his 8-year-old daughter’s death. He would rather her dead than be tortured in Gaza. Hard not to cry.
Other Headlines
CEO Jamie Dimon acknowledged that the biggest U.S. bank by assets was “over-earning” on net interest income and “below normal” credit costs that will both normalize over time.
Big Banks Say Trouble Is Coming, but Their Earnings Are Still Strong
Robust economic growth propelled earnings at the nation’s largest banks, but their executives warned the good times may be coming to an end.
Leon Cooperman expects very little from the market and is only interested in individual stocks
JPMorgan Chase CEO Jamie Dimon warns this is ‘the most dangerous time’ for the world in decades
Beyond the military conflicts in Ukraine and Israel, Dimon cited the burgeoning national debt and “the largest peacetime fiscal deficits ever.” I agree with Dimon, but the markets don’t seem to believe it. What about the slowing consumer, China which has been the biggest driver of global growth, the lack of direction from DC and no Speaker of the House and a major issue of billions of loans maturing at far higher rates with lenders pulling back.
Deflation is the anti-inflation. Here’s where prices fell in September 2023 in one chart
I do not agree with all of this chart. Insurance falling 37%? Eggs? I don’t see it.
As Tesla price cuts concede billions in sales, investors push Elon Musk to finally spend on ads
It’s official: The era of China’s global dominance is over
There is a mini bank run going on overexposure to the R/E entity Evergrande. Housing is slowing sharply and the the overbuilding is phenomenal. In a country with a population of 1.4bn, they have housing for a population of 3bn. What could possibly go wrong?
2024 showdown: DeSantis, Haley battle for second place behind Trump
Fetterman mocked for saying US not electing ‘best and brightest’: ‘How ironic’
House GOP selects Jordan as speaker candidate, teeing up House-wide vote
I am not convinced he has the votes to secure the Speaker role.
Biden 2024 campaign, allies raise $71 million in latest quarterly haul
High-Level Iranian Spy Ring Busted in Washington
Read this article. It is unbelievable. How in the hell does this happen today?
Parents, stop asking kids, ‘How was your day?’ — 10 tips to really get them talking
ACT reports record low scores on its college readiness exam
California high school grad lands job at Google after being rejected by 16 colleges
Google has hired a California high school graduate after he was rejected by 16 colleges including both Ivy League and state schools. 18-year-old Stanley Zhong graduated from Gunn High School in Palo Alto, California, a city part of Silicon Valley. According to ABC7 Eyewitness News, he had a 3.97 unweighted and 4.42 weighted GPA, scored 1590 out of 1600 on the SATs and launched his own e-signing startup his sophomore year called RabbitSign. How in the hell can someone with that resume go ZERO for 16?
‘Miracle drug’ euphoria: Experts warn widespread use of weight loss medicine faces major hurdles
Terrified traveler dons hazmat suit on plane amid bed bug explosion
Who can forget my wife’s paranoia flying during COVID? Recall my piece, Cootie Couture,” where she and my children wore hazmat suits on a flight as seen below.
Roughly 80% Of Grades Given At Harvard Are In The 'A' Range
I believe it is far harder to get into Harvard than to do well there. Over time, the grades at Harvard have gone up sharply.
Ring Announces Million Dollar Search for Extraterrestrials This Halloween Season
Watch Jon Batiste transform Beethoven's music
Wow, that was cool. I want to be able to do that!
Real Estate
I am a big believer that real estate is a key component to building wealth. This CNBC article suggests that 45% of people surveyed believe R/E is the best way to build real wealth. If I could have done anything differently in my life from an investing perspective, I would have built a more meaningful portfolio of income-producing R/E starting 25 years ago. The article also defines how people think of wealth.
Good WSJ article about flipping South Florida R/E. When oceanfront estates in the heart of Palm Beach, Fla., began skyrocketing in value during the pandemic, Russ Weiner, creator of the Rockstar Energy drink, knew it was just a matter of time until high-end waterfront homes in nearby communities began experiencing similar growth. So in September 2020, he bought two properties, spanning a total of roughly 3 acres, for roughly $32 million in the village of North Palm Beach. A few weeks later, he sold the properties for around $50 million to private-equity executive Robert F. Smith. Weiner, 53, began dabbling in high-end real estate after he founded Rockstar Energy in 2001. He’d buy luxury homes, redo them to his liking and then live in them until he decided to move somewhere else. Eventually, he said, he became good at the flipping part. “And I vowed never to do it again, probably 10 times. But I kept going, and I guess I got addicted,” he added. Great pictures in the article. Devin Kay, my R/E broker friend has sold over $60mm in Shell Bay (Hallandale, FL) in the last 30 days including a $10mm PH. There have been 4 deals in the past week for over $8mm at Shell Bay and the feedback has been incredible. Hope to check it out in the next week. Also of note, Bezos bought another Miami Beach mansion for $79mm bringing his total recent spend to $147mm.
Great article about the strength of the office market in Century City which is in stark contrast to San Fran and downtown Los Angeles. For office landlords, Century City has it all. Vacancy is in the single digits for many owners and rents are on the rise. A 15-year lease signed by Clearlake Capital earlier this year came out to $12 per square foot per month or $144 per square foot annually. In the rest of the city, average rates are below $4 per square foot per month. “It’s the best office market in the country,” Kevin Shannon, the leader of Newmark's West Coast capital markets team, said. The neighborhood’s premier status stands in stark contrast to Downtown LA, where distress is running rampant and one office tower received a bid of just $53 per square foot (more on that later). I almost went to work in Century City and it is so much better than downtown LA.
A Colorado Mansion First Listed for $37 Million Sells for Big Discount
The roughly 17,000-square-foot home near Denver fetched $14.705 million three years after hitting the market
Rosen Report™ #622 ©Copyright 2023 Written By Eric Rosen
