The Future is Now-AI+Restaurant Review
5-22-24
Opening Comments
My last note was a review of Taki Omakase and the most opened links were the Kenny Smith discussion on becoming successful (must watch) and the investing lessons from Stan Druckenmiller.
I received a nice note from a young hedge funder who sent me this: I was reading the latest Rosen Report and had a random thought after your point around the cost of living in NYC. Me and my buddies (all hedge funders) have been debating what the appropriate savings rates are at our age (~30). NYC is getting so ridiculous from a cost-of-living perspective that it is tough to stomach spending $5k / mo. to rent some dump. The flip side is I think we all came out of school believing the “spend base, save bonus” philosophy. Unfortunately, tough to hold to that as you start to grow out of awful apartments. My friend, the short answer is the power of compounding is real. Saving money now and investing it wisely will pay off in spades over the next 20-30 years. Unfortunately, we all need to make choices but I can promise you that being frugal and fiscally responsible will result in an early retirement and a better life as you age. I am the world’s greatest saver, but not the world’s best investor. I always lived well within my means and put my money away. In short, you don’t want to live in a hell hole to save money, but finding the right balance that allows you to put as much money away as possible is key. Be smart today and you will look brilliant 20 years from now. Trust me. I was making millions of dollars and lived in a one-bedroom apartment until I splurged on something nicer at 33 years old as outlined in an old Rosen Report. I retired young because I saved and did not waste money. I strongly advise programmatic savings where you regularly invest in low-cost ETFs or index funds.
Markets
Soaring Deficits Threaten the Economy?
Career Success Depends on One Skill (CEO of Amazon) Advice
Starwood REIT Liquidity
JPM Leased in WPB at 360 Rosemary
Florida’s Largest Apartment Sale of the Year
Florida Insurance +125% in Short Order
Where Rents are Rising and Falling
Video of the Day-Subways in China Compared with NYC
If you travel to major cities in China or Japan, you will find streets clean and subways in tip-top shape. I vividly recall my trip to Tokyo where I spoke at a conference to 2,000 Japanese investors. I was in awe of how clean the city streets were at the time. NOTHING like America. Head to NYC and the opposite is true. This short video shows a beautiful subway in Guangzhou, China compared the the NYC Subway. There need to be consequences for bad acts.
Di Farina
I was disappointed in my meal at Di Farina because I had heard so many wonderful reviews but it did not live up to the hype. The concept is interesting and reminds me of some of the Italian restaurants in NYC like Roscioli or Eataly with a butcher shop, and Italian market inside the restaurant. However, that is where the similarities end.
The room is nicely done but the patrons are quite casual. The meatball appetizer was underwhelming. I cannot get excited about all beef meatballs (no pork or veal). My kids wanted to try the empanadas (not exactly Italian) and they were left uneaten given they were dry and the chef did nothing with them to make them special. My sister ordered a grilled Caesar Salad that was underwhelming by every aspect other than the croutons. I enjoyed my shrimp in olive oil with garlic and white wine sauce and it was cooked to perfection.
After our appetizers were done, we waited 40 minutes for the entrees and the restaurant had plenty of empty tables. You can “Build Your Own Homemade Pasta,” by choosing the type of noodle, sauce, meat… My kids had the Fusilli with Ala Vodka sauce which was pretty solid. Jack ordered the Lobster Agnolotti pasta and he barely ate it. He said, “Dad, the lobster inside is cold.” I had the highly recommended Short Rib Pappardelle that had maybe 3 oz of meat on it. The short rib was fine, nothing remarkable. My sister had the Black Seafood Linguini and I took a bite and it was so salty that I could barely eat it. If you want better Italian, Sea Mario blows the doors off Di Farina and it is just down the street.
The Future is Now-AI
I started writing about AI in January 2023 and discussed how I thought AI was incredible and would be a game changer. The issue is I did NOT put my money where my mouth was and invested ZERO DOLLARS into the space. Had I just bought some NVIDIA stock, I would feel much better about myself given the stock is up 6+ times since then. Stock was up Wednesday after hours to $985/share post strong earnings.
I was watching the All-In Podcast as they discussed the newest Open AI release of Chat GPT 4o (Omni) and showed some examples for the new model. The first was the translation function. Watch at the 14-minute mark for just over one minute. Chat GPT 4o can listen to you in one language and translate it instantly to allow you to have a conversation with someone who does not speak your language. The program can translate both party’s language to facilitate a conversation. Then check out the tutoring functionality right after the translation function. This shows how technology can teach students efficiently and effectively with interactive teaching through AI. The new functionality blew my mind.
Microsoft debuted a new category of personal computers with AI features as it rushed to build the emerging technology into products across its business and compete with Alphabet and Apple. The ability to crunch AI data directly on the computer lets Copilot+ include a feature called "Recall." "Recall" tracks everything done on the computer, from Web browsing to voice chats, creating a history stored on the computer that the user can search when they need to remember something they did, even months later. I listened to CNBC Tuesday morning and they were explaining it. Just think of how scary and efficient it would be to be able to find what you are looking for in seconds.
My point is simple. The speed at which improvements are happening is unprecedented as these models become smarter. I am not here to tell you Open AI is better than any of the other models or that they will be the winner. The first mover is not always the ultimate winner. Facebook was not the first social media platform, yet has proven to be a dominant force 20 years after its founding, while many of the first movers went bankrupt (see chart). I am just here to tell you that the totality of the revolutionary breakthrough in Artificial Intelligence will continue to amaze. Think about what AI will disrupt over the next few years and many are outlined in this article. What about the jobs AI will replace from personal assistants, call centers, tutors, translators, drivers, and factory workers? The list is endless. The Brookings Institution did a study about how A.I. will impact jobs. Overall, AI will, in some way, influence more than 95% of jobs. As the study notes: “Fully 740 out of the 769 occupational descriptions Michael Webb analyzed contain a capability pair match with AI patent language, meaning at least one or more of its tasks could potentially be exposed to, complemented by, or completed by AI. This link outlines the jobs most likely to be replaced by A.I. according to McKinsey. (customer service, receptionists, accountants/bookkeepers, salespeople, research, warehouse working, insurance underwriting, retail. The article also lists those roles that won’t be replaced by A.I.
The All-In Podcast went into a new program called Glue that seems to be very disruptive for Slack on the chat front. I am not a Slack fan. I find it cumbersome and I never see the messages meant for me. Hear about the discussion on the All-In Podcast here. Glue can search history as outlined in the link. Again, I found myself amazed. By using Chat GPT, the system summarized each of the hosts of the podcast and their personalities just by listening and the summary was spot on. Please watch for 5 minutes to educate yourself about the future, which is happening now.
If you are very interested in AI developments and how to help your business, you should listen to the All-In Podcast I cited. David Sacks used Glue to write a letter to the chairperson of the FTC, Lena Kahn. You should listen to what Glue/Chat GPT was able to do including citing positive things that were said about her on previous episodes of the podcast. Glue was able to find old episodes and quote them in a letter to Kahn. Do you know how much time I spend going back to find old Rosen Reports and find something I wrote about? I spend HOURS each week. For this report, it took me one hour to find the report that I first cited AI from January of 2023. I had thought it was from November of 2022.
I am excited and nervous about the rate of change we are seeing. I only wish I invested in AI when first understood it 16 months ago.
Quick Bites
The S&P and Nasdaq are down slightly over the past 5 trading days. There was some pullback Wednesday after Fed minutes raised concerns of persistent inflation. Treasury yields ticked up after Fed minutes with the 2-Year +4ps to 4.88%. All eyes were on NVIDIA earnings after the close Wednesday and I waited until the results were reported. NVIDIA beat on revenues and earnings driving the stock up 4% to $985 after hours. Also, a 10 for 1 stock split announced. Snowflake also reported and beat on revenues driving the stock +8% after hours. Bitcoin has rallied back to $70k and is +58% YTD while Ether crossed $3.7k and is +58% YTD with ETFs increased purchases of the cryptocurrencies. Also of note driving Ether’s largest two-day gain in two years was speculation about the outcome of applications for US spot exchange-traded funds for Ether.
Few have written more about deficits, Federal debt levels, entitlement programs, interest burden and fiscal responsibility than I have over the past couple of years. This CNBC article is entitled, “Soaring debt and deficits causing worry about threats to the economy and markets.” Government debt that has swelled nearly 50% since the early days of the Covid pandemic is generating elevated levels of worry both on Wall Street and in Washington. The federal IOU is now at $34.5 trillion, or about $11 trillion higher than where it stood in March 2020. Concern over such eye-popping numbers had been largely confined to partisan rancor on Capitol Hill as well as from watchdogs like the Committee for a Responsible Federal Budget. However, in recent days the chatter has spilled over into government and finance heavyweights and even has one prominent Wall Street firm wondering if costs associated with the debt pose a significant risk to the stock market rally. We need entitlement reform (means testing and raising the age of benefits), spending cuts, and Buffett’s idea for deficit reduction. “I could end the deficit in five minutes,” Buffett said. “You just pass a law that says that any time there’s a deficit of more than three percent of GDP, all sitting members of Congress are ineligible for re-election.” The US national debt is growing by $1 trillion every 100 days. We are running at over $1 trillion a year in interest expense (3rd chart by Visual CAPITALIST). UNSUSTAINABLE and the idiots in DC refuse to make tough decisions. Of note, both Presidential candidates have taken entitlement reform off the table.
I mentor close to 100 high school kids, college students, and young professionals each year. I do my best to help them find their way, prepare for interviews, resume writing and advice once on the job. I have suggested that work ethic and a positive attitude are the most important keys success. This CNBC article is entitled “Amazon CEO: An ‘embarrassing’ amount of your success depends on this one skill,” and he stole one of my two keys. The trick to getting ahead at work isn’t being the fastest learner or the smartest in the room — it’s having a positive attitude, says Amazon CEO Andy Jassy. “I think an embarrassing amount of how well you do, particularly in your 20s, has to do with attitude,” Jassy, 56, said. Having a positive attitude means you work well on a team and honor deadlines, among other strengths. Can you work in a team? I agree and feel that attitude goes a long way to success. No one wants to work with Debbie Downer. Lastly, this short video discusses the importance of your “reference group.” Who you associate with is determinative of your success. Hang out with winners and good things happened based on a 25-year Harvard study.
Israel/Middle East
Read this CNN article that outlines Israel and Hamas. It also discusses how the US bombed hospitals in the fight against ISIS. However, if Israel kills one Muslim civilian it is genocide. The author interviewed John Spencer, a 25-year infantry soldier who served in Iraq and is the chair of the urban warfare studies at West Point. He said, “I can say with very strong confidence that Israel has done everything the US military has ever done in the history of urban combat and things that we’ve never done, implementing every civilian harm mitigation technique that has been developed in the last 30 years despite Hamas’ tactics.”
Iran’s president killed in helicopter crash, election set for next month
Tehran blames US sanctions withholding air fleet parts for Raisi crash
Let me get this right. This is a government that hates Americans, Jews, Women, and Gays. Too bad the entire government was not on the plane.
Egypt changed terms of Gaza ceasefire deal presented to Hamas, surprising negotiators, sources say
Apparently, one man sent one set of terms to Israel and another to Hamas.
Biden’s Israel approval gets lowest mark yet in new poll
The latest Harvard CAPS/Harris poll found Biden with a 36% job approval rating on the conflict, down from 39% last month and 44% back in October.
Hamas flag proudly waved at NYC anti-Israel demonstration: ‘Marching for terrorists’
Israel's hawkish Netanyahu faces global isolation
I never would have thought that being attacked by Hamas would lead to so much hate and condemnation for Israel. War results in civilian deaths. There was no outrage when Syria killed hundreds of thousands or Sadam Hussein killed hundreds of thousands of Muslims. Israel gets treated differently and is held to higher standards.
UCLA locks doors on conservative students, preventing them from hosting pro-Israel event
Other Headlines
JPMorgan CEO Jamie Dimon signals retirement is closer than ever
Among the best CEOs of all time and the top of my CEOs for financial institutions. He said, “Succession at JPM is Well on the Way.”
FDIC Chair Martin Gruenberg to resign after damning workplace harassment probe
Shares of Hims & Hers Health surge 27% after startup says it will offer GLP-1 injections
They believe the weight loss injections will bring in more than $100mm in revenue by the end of 2025. The Hims pricing is up to 85% less than Wegovy according to this article. I know these drugs work and have seen friends lose 50lbs+. However, I am concerned about the side effects. Given 42% of the U.S. adult population is obese and 66% overweight, hopefully, it makes a dent.
Lowe’s beats on earnings and revenue, even as consumers spend less on DIY
First Solar earnings could surge 370% by 2027 as Big Tech hunts for renewables to power AI, UBS says
Target shares tumble 10% as consumers buy fewer groceries and home goods
Google cuts mystery check to US in bid to sidestep jury trial
Google is a dominant force with 88% of the search market share in the US. They control you between search and Gmail and have way too much info. Of course, Google management paid to not have a jury trial. Interesting article that suggests Google’s efforts may not work to avoid a jury trial.
Just like the Meme Stocks, I have been very critical of the Truth Social valuation and outlined it in multiple reports. Q1 revenues were $770k and lost $327mm yet has a market cap of $6.1bn. This valuation makes no sense. The company is not growing, on track to lose $1bn and has a tiny number of users relative to competitors at this valuation.
Biden to release 1 million barrels of gasoline to reduce prices at the pump ahead of July 4
Here we go again. His Strategic Petroleum Reserve decimation put America at risk and he has yet to restore it. Bad policies continue. Two new candidates, please. Biden’s approval rating is now 36% according to Reuters (lowest of his Presidency).
I was inside the court when the judge closed the Trump trial, and what I saw shocked me
This is Alan Dershowitz’s concerning take on the trial.
Santos was booted, why not Menendez?
Biden suggests he was vice president during COVID-19 pandemic: 'Barack said to me, go to Detroit'
Trump Hilariously Claims He ‘Doesn’t Freeze!’ in Viral Gaffe Pushback
Trump froze for 35 seconds and claimed it did not happen. Are you telling me that the BEST America has to offer is Biden or Trump? How can that be?
FBI Was Prepared to Use 'Deadly Force' at Mar-a-Lago Raid
This is a bit shocking. Hate Trump all you want. This is not right. What the would media say if Biden was raided by the FBI and it was prepared to use “deadly force?”
Voting preference by where voters get news
NYC crime wave continues with 21,000-plus shoplifting complaints for 2024 so far
That’s a 5% increase over last year’s obscene 20,552; more than 41% of the 2024 crimes are concentrated in Manhattan. I will never understand these soft-on-crime policies.
Woman, 69, punched in apparently random attack on Upper East Side
This is supposed to be the glitzy UES. When there are no consequences for crime and people elect idiot DAs, this is what happens. Elect real people who will demand consequences for crime.
Cornell University using DEI policy to reject faculty candidates for not ‘conforming,’ group claims
Nothing could get me to send my kids to Cornell.
How Red Lobster’s misguided endless shrimp promotion drove it into bankruptcy
Read the article on how not to run a business. In high school, I thought Red Lobster was a Michelin Star restaurant; I took my girlfriend, Stacey, and wore my Sunday best.
Elvis Presley's home Graceland to be sold off at foreclosure auction
There is a claim of $3.8mm that the family said was fraudulent.
Yes, these drugs are remarkable and will have a big impact on the world. However, they are not without risks.
Bizarre moment women pose for selfie after bloody car crash in Mexico
If anyone questions whether the world is doomed, look no further than this article which describes a bloodied woman and her friend crawled who out of a wreck to take a selfie. Are you serious? Pictures to prove it.
Expert warns Sweden on 'brink of civil war' as country gripped by migrant violence
Check my prior reports. I was critical of Fauci, called for his resignation, supported the lab leak theory early… I was canceled for my views. Check out this from the NIH advisor-“[I] learned from our foia [sic] lady here how to make emails disappear after I am foia’d but before the search starts,” Morens wrote in a Feb. 24, 2021, email. “Plus I deleted most of those earlier emails after sending them to gmail.”
Real Estate
If you read the RR, you know I am a big fan of Barry Sternlicht and almost went to run his family office. He is a brilliant investor and very articulate on markets who often gives his opinions in public forums. However, multiple articles suggest he is having liquidity issues at some funds given investor withdrawals. According to the CRE Daily story, Barry Sternlicht’s SREIT has tapped over $1.3B from its $1.55B unsecured credit facility since the start of 2023 due to a flurry of redemption requests. Entering the year with an untouched credit line, the fund now has just $225M to draw.
Despite asset sales expected to close soon, liquidity remains a critical concern, especially as the fund granted only a fraction of redemption requests in the first quarter of 2024. My point is simple. If one of the best R/E investors of our generation is having liquidity issues in some funds, do you think he is the only one? There are more shoes to drop on this topic, especially as rates are not coming down as fast as most initially thought. This is yet another accessible story on the topic from the WSJ but can be opened without a code.
JPMorgan Chase & Co. signed a lease at 360 Rosemary, Related Cos.’ newly developed office tower in West Palm Beach, Florida, that’s become popular with finance firms. The bank joins a wave of other finance firms such as Goldman Sachs Group Inc. and Point72 Asset Management that have taken spots at the tower, which opened in 2021, according to a statement from Related. The building is in a great location and is the nicest office building in West Palm Beach. I believe rents are in the $80/ft Triple Net with effective rents of approximately $100/ft. On a related note, this article, “How Florida and Texas became the Wall Street of the south,” is a good article that has maps and details of companies that moved. Wall Street banks, hedge funds, and other financial institutions looking to expand their operations are increasingly turning to the business-friendly Sun Belt.
In South Florida’s largest multifamily deal so far this year, global asset manager Ares Management (ARES) paid $139.7 million for a 284-unit property in Boca Raton, property records show. Called Ceru, the 373,856-square-foot complex sits on 4 acres at 5205 Congress Avenue, north of Yamato Road. The property is 95 percent occupied, said a source with knowledge of the deal. The cash sale comes out to just over $490,000 per unit. The seller, Fort Lauderdale-based Mainstreet Capital Partners, completed the eight-story building in 2022, two years after purchasing the parcel and securing a $55 million mortgage from Pacific Western Bank, according to property records. It is nice and near an on-ramp to I-95. Close to $500k/unit is impressive given where rates are today and the location in Central Boca (3 miles from beach).
I have written about challenges on property and casualty insurance in Florida and California. Coverage is getting harder to find and costs have exploded. This Bloomberg article found in Yahoo is entitled, “Florida’s 125% Surge in Property-Insurance Bills Sows Havoc.” With Florida being threatened by more powerful hurricanes, commercial-property insurance costs last year surged at nearly five times the national pace, according to credit rating firm AM Best Co. Inc. The article goes into the detail of the impact of higher insurance on assisted living centers, but insurance premiums are crushing consumers. Remember, my sponsor, Lang Insurance has helped dozens of readers improve coverage and save money. Reach out to Kevin at (866) 964-4434 for help with your personal insurance coverages including Home, Auto, Watercraft, Fine Art, Jewelry, Valuables, Umbrella, Flood, and Excess Flood across all 50 states. This article is entitled, “Beverly Hills 90210 Mansions Lose Fire Coverage as Insurers Flee.”
© 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™ #684 ©Copyright 2024 Written By Eric Rosen.
