Surfing in CA-A Ride to Remember
4-24-24
Opening Comments
My last note was a bit self-deprecating about my mistakes on my CA trip. The most opened links were the #1 way for introverts to gain influence at work and Ozempic changes your personality.
I thought this news on the banning of non-compete agreements was major news. The Federal Trade Commission has issued a final rule making it illegal for bosses to make workers sign noncompetes in any scenario, and voiding nearly all existing noncompetes. This will lead to far more movement in jobs, especially Wall Street and Hedge Funds. Some firms are two to three-year non-competes making it virtually impossible to hire. Here is a more story by the Hill on the subject. The suggestion is the ruling will be challenged.
I posted my first video to Instagram this week with the report today. Please watch the video on Instagram or YouTube in the theme section of me doing something incredibly lucky on a wave last week. Hit the like button and comment!
Le Sorelle Downtown Boca-Hard Pass
This is a newer edition to the Le Sorelle chain of Italian restaurants in Downtown Boca. The lack of parking in the idiotic Royal Palm Plaza is reason enough to skip this meal but add weak, overpriced food and a cheesy ambiance to the mix and run somewhere else. There was not one memorable dish. My Red Snapper was dry and overcooked and doused in too much sauce. The Penne Alla Vodka was watery and the pasta was over-cooked and too soft. My teenage son who is a Hoover Vacuum Cleaner around food left half of his Chicken Marsala uneaten and did not like the texture or the taste. The bill came and I am reminded why going out to dinner in Boca Raton is so frustrating. I could cook a meal for 10 people for the price of this crappy meal for four and mine would have been so much better. The ambiance is awful too. RUN AWAY! How this place stays open defies logic.
Early send. Coaching the middle school golf team today.
Markets
TSLA Earnings/Stock
Biden Tax Proposal
Niall Ferguson on Deficits
Golf Greatness
Luxury R/E Market
LA Luxury R/E Market
Boca Raton Office Market
Video of the Day-1980s Nike Amazing Shoe Decision
In the 1980s, the NBA had a rule, ‘All basketball shoes had to be at least 51% white.” Nike asked the question, “What would happen with a violation of the shoe color rule,” and decided to give Michael Air Jordan shoes that were more than 51% white. The goal was to get a bunch of press and publicity. The fine would be a measly $5k. The plan worked brilliantly as the cameras were on MJs shoes and the commentators were talking about it. It was money well spent and changed the direction of Nike forever. I guess it pays to break the rules once in a while.
Wave Co Part II-Best Wave of the Day
I am fortunate to have amazing friends who like to do interesting things. I was invited for the 2nd year to the Kelly Slater Wave Co surf trip with a dozen great people (Thanks Johnny P). The pool is near Fresno, CA, in the middle of nowhere, approximately 3 hours from LA or San Fran.
The experience at the Kelly Slater Wave Camp is remarkable. The team there does a magnificent job of ensuring the customers have the time of their lives. I was anxious to see my friends and have a grand time surfing the “perfect wave,” for a second time. I had not surfed once since last year and felt a little uneasy. Some of the guys on the trip are very accomplished surfers and I wanted to be sure I did not embarrass myself.
We arrived on Tuesday afternoon and did 4 heats of 3-4 people. I did well enough, but nothing amazing. I was rusty but had a few good rides and got a bit of confidence back riding a 5’9”, 34-liter surfboard. Despite being 11lbs lighter than last year, I moved up 1” and 1 liter but in hindsight, the 5’8” would have been the better fit.
We had a great dinner on Tuesday, as the food was shockingly good and the group was fun. They serve pretty good wine and high-end liquors. The guys are all quite successful with the largest contingent being from Miami. Some flew in from as far as Spain. All the people are friendly, supportive, encouraging and welcoming. I love this trip and look forward to returning.
We started our 3 heats of surfing on Tuesday am and I was getting better and more comfortable as time passed. A couple of pointers were given by the best surfers and crew to elevate my skills. My barrel riding was improving and I was making more critical sections.
We were off to our last heat and realized I should get some surfing with the world-famous Rosen Report hat. My heat was at 7:30 pm, just as the sun was setting. I asked for the 1st wave so there was still some light. I had my hat on forwards and I caught the wave and started surfing. I had not considered the fact that I would be surfing approximately 20mph and the hat could fly off. Well, the hat flew off during my ride, and given my catlike reflexes, I caught it behind my head, put it back on backward to avoid another issue, and continued to surf the wave.
The wave is designed to barrel or tube near the end of the ride and I pulled into the barrel with my hat on backward. I was deep in the tube and certain I would not make it out. I closed my eyes for a second, fully accepting the fact that I was sure I would crash and be slammed on the shallow concrete bottom. Well, due to a combination of some luck and maybe a touch of skill, I maneuvered through the barrel and got out the other side only to “claim” the wave with my hands held high. The drone got all the footage and the jet ski driver was screaming with joy over all the unfolded in the 45-second ride.
I was giddy and screaming after what had transpired. I finished my heat and everyone had seen it unfold and was giving me high fives and talking about what I had just pulled off. Even the staff was singing my praises. It felt terrific especially as I was a little self-conscious given my lack of water time, which totaled 4 hours in 5 years before this trip. This is the 25-second video of the hat falling off, me putting it back and getting the barrel to great music. (MY FIRST INSTAGRAM POST). Pass it around and let’s get some views and likes to get more Rosen Report subscribers.
That night, we had dinner and there was a ceremony where the staff picked the “Wave of the Day,” an award I never thought I would get given how great some of the surfers were on the trip. Dennis, a lovely young man from NJ who works at the Wave Ranch, gave out the award and called my name for “Wave of the Day” due to the hat ride which ended with a nice tube. Everyone cheered and I was on Cloud 9. I was given a special shirt and could pose with the trophy. Yes, Kelly Slater has 11 world surfing titles but one “Wave of the Day,” same as the author of the RR.
Thank you to the team at the Wave Co and my friends who were with me at the camp. Can’t wait to do it again. I sent out this subtle reminder picture to the guys of my award. The Surf Ranch is an amazing place that will give you memories to last a lifetime. I HIGHLY recommend it. The downsides are it is tough to get there and not inexpensive, but you are giddy by the time you leave. Check out this short video of 26-year-old Austin Tovey RIPPING. This kid can surf.
Check out my boys showing their best stuff.
Quick Bites
After a bit of a pull-back, markets rebounded with strong earnings reports on Monday and Tuesday. However, stocks were down slightly Wednesday as of 3:00pm, as the 10-year Treasury yield was +7bps. Spotify jumped 15% post-earnings, UPS rallied, GM, Danaher, Roblox, and GE Aerospace rallied too. JetBlue -16%, Cleveland Cliffs -9%, Nucor -7%, Sherwin Willims-2%, LKQ-15%, MSCI -13%, Pepsico-2% all fell post earnings. Meta reports after the bell today as well. The S&P Global flash April composite index of output of manufacturers and services providers slipped 1.2 points, the most since August. The level is 50.9 and over 50 indicated expansion. For perspective, it was almost 70 in June of 2021.
Although TSLA reported a 9% drop in first Q revenue on Tuesday due to price wars, reported -$2.5bn of free cash flow and had an operating profit margin of a measly 5.5% (11.4% prior year), the stock was +12%. I was not impressed with earnings. The biggest contributing factor to the share price action was that TSLA announced it would “accelerate” the launch of cheaper cars (Sub $30k). Let’s hope there is a more seamless launch than the TSLA Truck which has been an unmitigated disaster. "We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025," Tesla said in its first quarter shareholder release. Also contributing to the rally was the discussion of Tesla robot-taxis.
Here is a direct quote from the Biden 2025 budget proposal: “Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.” Under the Biden proposal, the combined federal-state capital gains tax exceeds 50% in many states. California will face a combined federal-state rate of 59%, New Jersey 55.3%, Oregon at 54.5%, Minnesota at 54.4%, and New York state at 53.4%. I am a firm believer you cannot tax your way to prosperity. I would welcome a tax increase if it was done in conjunction with fiscal responsibility and a balanced budget. Under the latest CBO estimates, we are looking at $2 trillion in deficits per year for the next 10 years. The reckless spending and free money giveaways are unsustainable and irresponsible. Spend my money judiciously.
I am not sure anyone has been more on top of fiscal irresponsibility over the past few years than I have been. I am relentless as I feel our ballooning debt levels, reckless spending, poor refinancing policies by the Treasury and rising interest expenses will come back to haunt us. An increasing number of important finance leaders are more frequently echoing my sentiments (Dimon, Dalio, Gundlach, Sternlicht, Druckenmiller, Griffin). This Bloomberg opinion piece by Niall Ferguson outlines his concerns. He is a senior Fellow at the Hoover Institution at Stanford and a historian. Remember, these $2 trillion deficits are taking place while the US is at full employment, record highs for stocks and housing. It is called reckless behavior in my opinion. My sole contribution to the statute book of historiography — what I call Ferguson’s Law — states that any great power that spends more on debt service (interest payments on the national debt) than on defense will not stay great for very long. True of Hapsburg Spain, true of ancien régime France, true of the Ottoman Empire, true of the British Empire, this law is about to be put to the test by the US beginning this very year, when (according to the CBO) net interest outlays will be 3.1% of GDP, defense spending 3.0%. Extrapolating defense spending on the assumption that it remains consistently 48% of total discretionary spending (the average of 2014-23), the gap between debt service and defense is going to widen rapidly in the coming years. By 2041, the CBO projections suggest, interest payments (4.6% of GDP) will be double the defense budget (2.3%). Between 1962 and 1989, by way of comparison, interest payments averaged 1.8% of GDP; and defense 6.4%.
I have recently written about Nelly Korda and Scottie Scheffler concerning the epic golf they have played. It is not often we see domination at this level. Nelly won her 5th straight LPGA event Sunday, while Scottie went 4 for 5 by winning the RBC Heritage after winning the Masters the week prior. Nelly has made $2.4mm YTD while the #2, Maja Stark, has made $815k. Scottie has made $18.7mm YTD while, the #2, Wyndham Clark, has made $9.1mm. These are epic performances. Let’s not forget 15-year-old high school freshman, Miles Russel, who finished 20th in a professional Korn Ferry event. Watching greatness is exciting and it is hard not to be fired up by the amazing results of these remarkable golfers. I have seen Miles in person and he is hardly a big kid but he sure can play. His scoring differential is -8.44. No, it is not the equivalent to a +8.44 in golf handicap terms, but would say he is a +5.5 or +6. Yes, these kids can play.
Israel
As more Jew hate spreads around the globe, it is clear that Hamas got what they wanted. They slaughtered and raped innocent women and children and ignited global hate of Jews. Many campuses are no longer safe and school leadership is not doing enough about it. Jews donate a disproportionate amount to charities, especially schools. We are seeing more wealthy Jews pull back donations for good reason. School leadership has the right to handle the situation how they see fit. Jews have the right to boycott schools and not send their children and no longer donate. More colleges are rethinking graduation over fears of Pro-Palestinian protests according to this WSJ article. This headline is very sad: “GOP senators urge Biden to mobilize National Guard to protect Jewish college students.”
More than 14 Palestinians killed as violence flares in West Bank
Palestinian Ruling Party Admits: Hamas Steals Aid, Kills Aid Workers in Gaza
Columbia protesters agree to dismantle tents, keep non-students out, university says
Nothing could get me to send my kids to Columbia.
Could you imagine the outrage if the professor barred was Black, Hispanic, Native American, or LGBTQ?
UC Berkeley’s campus is in turmoil. It’s unlike anything in recent memory.
Another school my children will never attend.
Jewish Yale student journalist stabbed in the eye with Palestinian flag during protest
The U.S. Department of Education lists schools under investigation for antisemitism
Other Headlines
SEC hit with new lawsuit alleging 'mass surveillance' of Americans through stock market data
Ray Dalio’s Famous Trade Is Sputtering and Investors Are Bailing
General Motors raises 2024 guidance after big first-quarter earnings beat
Apple iPhone sales drop 19% in China as demand for Huawei smartphones soars, research says
JetBlue shares tumble 12% after airline lowers 2024 revenue outlook
Tesla shares slide to 15-month low ahead of earnings, as Wall Street frets over price cuts, layoffs
Election interest hits new low in tight Biden-Trump race
NBC News' latest national poll shows Biden’s numbers inching up as Robert F. Kennedy Jr., inflation and abortion all scramble the 2024 contest.
Trump wins voters on inflation as Biden zeroes in on tariffs, jobs: NBC News poll
Trump Had To Be ‘Jolted Awake’ In Court — 4th Time At Least
Age limits, term limits and cognitive tests should be required for national offices.
This video of ancient Mitch McConnell does not help matters. He froze up again and was lost.
I was critical of Biden’s handling of the withdrawal of troops in Afghanistan. I was not upset at pulling troops but felt leaving over $7bn of defense equipment (planes, helicopters, tanks, guns, millions of rounds of ammo, night vision goggles…) was a massive mistake. Please listen to this 1-minute video of Biden talking about the risks of leaving such equipment while he was on the campaign trail. Then he went ahead and left all the equipment anyway.
Democrats pulling out all the stops against RFK Jr.
I believe RFJ Jr’s choice of a Progressive VP candidate would bring more votes from the Left than the Right. The article outlines the ways the Dems are trying to discredit RFK Jr.
Biden’s Gains Against Trump Vanish on Deep Economic Pessimism, Poll Shows
NY Home Depot hires guards, dogs to keep parking lot safe from thieves, aggressive migrants
50 women attacked randomly in Manhattan so far this year
Man charged with hate crimes for 7 unprovoked attacks on women in NYC
What are the consequences?
Toxic: How the search for the origins of COVID-19 turned politically poisonous
Convenience store chain with hundreds of outlets in 6 states hit with discrimination lawsuit
The suit alleges the convenience store chain discriminates against some races of people over background check failures. The article suggested that 14.5% of Black candidates, 13.5% of multiracial candidates, and 13% of Native American candidates were denied a job due to background check failures. However, less than 8% of White candidates failed background checks.
Oracle is moving its world headquarters to Nashville to be closer to health-care industry
I love Nashville and could live there.
Wave of 'narco chemical terrorism' as cartel may soon 'drop fentanyl from drones'
Scary developments brewing in the drug war.
I am so frustrated that kids do not write anymore. Concerning article citing a study that found that handwriting is linked to increased cognitive brain function, motor skills, and memory.
If you use these 3 phrases, you’re more resilient and secure than most, psychologists say
I’m a doctor — here are my 4 dos and don’ts for staying in hotels
When does ‘old age’ really begin? Seniors think 75 is the new 65
I have 20 more years before I am old.
Swiss Air jet nearly collides with four other planes on JFK runway
I was on a plane that touched down and lifted up quickly as another plane was on the runway. I nearly crapped my pants.
4 travel secrets of the mega-rich, from a vacation planner for billionaires
Should the SAT still matter after all these years? Why some colleges are bringing it back
'Do I get floor seats?' College coaches pass on athletes because of parents' behavior
The Best Foodie Destinations For Culinary Delights
I have been to 4 out of the 6 cities listed across the globe and agree they have great food.
How much Nike is paying Caitlin Clark with historic shoe contract
Gold dust spewing volcano leaves boffins baffled as it leaks crystals worth £5k each day
Scientists reckon extreme heat causes molten rock to rise up from the Earth's interior along with gold particles that get carried to the surface before crystallizing.
Good Samaritans save driver trapped inside car engulfed in flames on Minnesota highway
Real Estate
I have recently written of the slowdown in some aspects of the residential market while many luxury markets remain in high demand. This CNBC article is entitled, “Luxury real estate prices just hit an all-time record.” Palm Beach Island say the single family median price of $12.25mm in the 1st quarter (+47% from last year). This does not include the high end sales of Tarpon Island, the rumored $350-375mm sale and one over $65mm that took place in the 2nd Q. Real estate is increasingly a tale of two markets — a luxury sector that is booming, and the rest of the market that continues to struggle with higher rates and low inventory. Overall real estate sales fell 4% nationwide in the first quarter, according to Redfin. Yet, luxury real estate sales increased more than 2%, posting their best year-over-year gains in three years, according to Redfin. Real estate experts and brokers chalk up the divergence to interest rates and supply. With mortgage rates now above 7% for a 30-year fixed loan, most homebuyers are finding prices out of reach. Affluent and wealthy buyers, however, are snapping up homes with cash, making them less vulnerable to high rates. Nearly half of all luxury homes, defined by Redfin as homes in the top 5% of their metro area by value, were bought with all cash in the quarter, according to Redfin. That is the highest share in at least a decade. In Manhattan, all-cash deals hit a record 68% of all sales, according to Miller Samuel. This Tweet by Nick Gerli highlights housing inventory surging in some markets and highlights FL and TX. Clearly, this is not at the high end, but only furthers my point. This article suggests more signs of trouble even at the high end of the San Fran residential market.
The LA high-end housing market has slowed dramatically given the idiotic ULA tax that imposed a 4% tax on any residential or commercial property over $5mm and a 5.5% tax over $10mm. The result is sales slowed dramatically. The most expensive home in a while just sold in Hollywood Hills. The 23,000 ft spec house sold for $62.8mm to an Asian buyer who also purchased another mansion for $23.7mm on Tanager Way in February. The house was originally listed for $78mm in October of 2023 after the developer paid $11.2mm for the site in 2017. Located in the Bird Streets section of the hills, the estate, completed earlier this year, has eight bedrooms between the main house and a separate guesthouse. Shaped like the letter E, the main house has a Parisian-inspired front door and garage doors painted blue in a nod to the Chanel flagship location in the French city. A grand entry foyer has a 20-by-30-foot skylight, and there is a media room, bar, gym and spa. Outside, the roughly 1.5-acre property has two outdoor pools in addition to the pickleball court. The WSJ link above has some amazing pictures.
I spoke with a commercial R/E broker in Boca Raton. Remember, Boca has not seen a new Class A office building in over 20 years. The Class B & C office goes for $20-35/ft in Boca. I am told there was a deal at $75/ft on a triple net basis (tenant pays all expenses) at an East Boca building and the landlord is raising rents to near $100/ft. There is a new office building breaking ground in Boca soon on East Palmetto. I presume if the market stays hot when it is completed, expect $100+/ft in rent. I will be getting a tour soon and will report back on the new office product. In NYC, class B/C is under pressure and there are deals for $45-70/ft yet the best buildings can get over $200/foot. Availability for Class B overall in Manhattan is 21%, while Midtown trophy properties is 9% and ex-new construction about 6%. The gap between the best product and B/C quality is growing in most markets from what I can tell. LNR just bought a San Fran office building for 10.5% of the 2018 purchase price ($72/ft).
© 2024 The Rosen Report LLC. All rights reserved. Does not constitute investment, financial, legal, or tax advice. Consult with your lawyers and professional financial advisers. Rosen Report™ #676 ©Copyright 2024 Written By Eric Rosen.
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