Rao's The Hardest Ressie In Town
6-9-24
Opening Comments
My last note was about the power of the Rosen Report and mentoring upcoming talent. Thankfully, I received more successful mentors to help me in my growing efforts to impact the next generation of leaders. The most opened links had a common theme around success: America’s richest self-made woman and self-made millionaires #1 money tip for new grads.
Although today’s note is on Rao’s, I have eaten out for dinner every day and an upcoming note will include “Elastic Pants” in the title. Noz Market, Fogo de Chao, Fish Cheeks, Milo’s, JG Melon’s, Sette Mezzo, Pizza Loves Emily and others were all crushed by the Rosen Report author. I have been frustrated by food prices at restaurants. I connected with a restauranteur and he sent me ingredient prices from 2021 and today. Check out the massive price difference, especially in ketchup. Many restaurant owners have told me margins have been hit by rising wages, huge increases in ingredient prices, and higher insurance costs. This story talks about CA fast-food minimum wage law hurting small businesses and consumers. I also thought these two stories on ice cream costs were worth a look. NYC parents are melting down over $14 ice cream and a funny video of a British girl screaming about the cost of two ice creams.
Thanks to reader support, word of mouth, being on Bloomberg… my readership is growing. As a reminder, readers contribute news stories to my email at rosenreport@gmail.com. I get 1,000 emails a week and open each one. If you have a story idea, comment, constructive criticism, or find an error, send it over. Also, some servers truncate the Rosen Report. Remember to hit “View Entire Message” so you don’t miss any life-changing information.
I have been in NYC since Tuesday and taken the Subway 11 times all over Manhattan including at 10pm on Saturday night. I have never felt unsafe one time. However, the homeless situation on the subway has led me to move cars. I call out NYC for lots of shortfalls but need to be honest about my experiences.
Markets
Buffett’s Investing Advice
GME Awful Earnings-Roaring Kitty Disaster
NYC Update and Congestion Pricing
Mounting R/E Losses Including Multi-Family
Baseball Stadium Apartment Conversion
NYC Fire Sale Office Building
Video of the Day-Eric Rosen on Bloomberg Surveillance
I was fortunate to be a guest on the show with Tom Keene and Damian Sassower last Wednesday morning at 7am for 8 minutes. A lot of topics were covered in short order (South Florida Housing market, Jamie Dimon, Interest Rate Cycle, Private Credit, Consumer, Concentration Risk in ETFs). I had a blast and hope to do more of these media events in the future. Thank you to Bloomberg for giving me the opportunity.
Rao’s-Hardest Ressie in Town
On Thursday night, I was invited to Rao’s, the special Southern restaurant Italian in Harlem that has been in business since 1896 as a family-run enterprise. The recipes are all passed down from the family, which is a nice bit of history. Rao’s is an institution and one of the hardest tables in the country to reserve. The experience at Rao’s is like no other and, despite being my third time there, I was very excited to have the opportunity to go back.
The “L” shaped dining room is small (11 tables) with a tin roof that leads to a louder dining experience than you would expect. The staff has generally worked at Rao’s for decades and could not be nicer or more accommodating. Before I walked in, a chef came out to me outside to introduce himself, as a Rosen Report reader told him I would be coming and sent a picture of me. He gave me a great Rao’s hat.
The manager, Joe, sat down with us to explain our food choices (all from memory); the menu is ample but nothing was handed out to the table. It is a family-style restaurant with everything meant to be shared and the portions are NOT small. I did have some wines by the glass that were a bit disappointing but never saw a full wine list.
We started with baked clams, seafood salad and roasted peppers. I love small clams and they were sweet, breaded deliciousness. The seafood salad was devoured by all parties and was a light dish I highly recommend. I am allergic to peppers, so I did not eat it, but folks seemed to enjoy it.
The next course was pasta and Joe walked through a ton of options. We settled on the Penne Ala Vodka and Angel Hair with Bolognese with a side of meatballs. I thought the penne was just ok. The Penne Ala Vodka at Carbone is far better. I enjoyed the Bolognese (the cook on the angel hair was perfect), but I have had better. I prefer the old meatball recipe (pre-pandemic). The new one is sirloin only (no pork or veal). I just do not believe I have ever had an amazing meatball with only sirloin. The story I was told was during the pandemic, Rao’s was closed for indoor dining and was doing a TON of take-out orders. For simplicity, they went to 100% sirloin during the rush and did not change it back. I love the gravy, but prefer the old meatball recipe.
For the final course, we had lemon chicken, which was pretty good and well-seasoned, but a little dry. We also had veal and peppers. Given my allergies, I did not try the latter.
I asked the manager about buying a table. It turns out that famed NYT restaurant critic, Mimi Sheraton, gave Rao’s a 3-Star review in 1977. As a result, the phone rang off the hook for reservations. Fearful the locals would not get in, the owners called their best customers and asked if they wanted to reserve tables (no one was charged). This guaranteed the best customers would always get in. The reason Rao’s is such an impossible reservation is due to the fact that most of the tables are reserved well in advance, as part of the Rao’s loyalty program, to the best customers. This link gives major milestones for Rao’s and offers a nice history lesson.
In my opinion, the velvet rope (can’t get in), eclectic crowd out of central casting, amazing service, history, Harlem location, limited service hours (6-10pm Monday-Friday), and reasonable prices make Rao’s special. Is the food good? You bet, but is over-rated. On a pure food basis, I prefer other Italian restaurants of various types: Babbo, Don Angie, I Sodi, Via Carota, Carbone, Roscioli, Il Buco, Rezdora, and Marea. However, from an experience and history perspective, nothing can touch Rao’s. As I noted, the price is also reasonable. I did not pay but was told for 5 people, including 4 drinks, the bill without tip was $520 and we had enough leftovers for at two more people. If you ever get invited to Rao’s, do not pass up the opportunity, as it is a special place that will give you memories for a lifetime. And, given the portions, pace yourself and be sure to people watch.
Food-B-
Service-A+
Ambiance-A
Experience-A+
Wines by the Glass-C
Reservation-IMPOSSIBLE
Quick Bites
All three of the major averages notched a winning week. The Dow posted a 0.29% gain, while the S&P 500 added nearly 1.32% and the Nasdaq advanced 2.38%. Nonfarm payrolls expanded by 272,000 for the month, up from 165,000 in April and well ahead of the Dow Jones consensus estimate for 190,000. After a week of sharply falling Treasury yields, they were materially higher post the inflationary payroll news. The 2-Year was +17bps to 4.9% and the 10-year was +15bps to 4.43%. Let’s not forget that the monthly payrolls get revised sharply. Given conflicting data, Treasuries did not sell off more, as we have seen some concerning economic prints drive Treasury yields down. Bitcoin was back to $71k+ (+61% YTD).
Good article about Uncle Warren’s investing advice. During the 1999 Berkshire Hathaway annual shareholders meeting, an ambitious attendee named Grant Morgan posed a compelling question: "If you were starting out again today in your early 30s, what would you do differently or the same in today's environment to replicate your success? In short, Mr. Buffett, how can I make $30 billion?" Buffett’s response didn't focus on get-rich-quick schemes or risky ventures. Instead, he unveiled a timeless blueprint for building wealth, emphasizing the importance of starting early, harnessing compounding interest, and practicing disciplined investing. He explained, "Charlie's always said that the big thing about it is we started building this little snowball on top of a very long hill. We started at a very early age in rolling the snowball down. And of course, the snowball, the nature of compound interest, behaves like a snowball of sticky snow. The trick is to have a very long hill, which means either starting very young or living to be very old." I am a firm believer that the power of compounding is real and not enough young people are investing early. More people need to limit the urge for fiscally irresponsible behavior and instead invest the money in sound stocks and bonds to let it grow. I recently had this chart in my newsletter as picture of the day. Now, see the next bullet about crap stock GME and the ridiculous valuations. Don’t chase stupidity. Invest for the long haul. FOMO is a killer.
This GME price action is driving me to drink. The company announced earnings Friday am and they were awful, yet the stock remains at elevated levels because “Roaring Kitty” announced a livestream event. The announcement of the event caused the stock to hit $66/share creating a market cap of $20bn but then the stock fell to $27post earnings and the livestream. Shocker. This is a crappy company without the fundamentals to justify the valuations, as I have been writing about for years. The company loses money and sales are shrinking, but some dude suggests you buy the stock and people listen. He is the Wayne’s World of investing advice. He sounds more like Jeff Spicoli from Fast Times at Ridgemont High than an investor. Here is the earnings release summary. Sales FELL 29% year over year. The net income, I mean NET LOSS, was $32mm for the quarter. As of Friday am at $46/share, the EV to EBITDA was 460 times. Investors, be smarter than this. Buy stocks of real companies with real fundamentals. At $20bn market cap, GME would be 345 on the S&P 500 ahead of Northern Trust, Labcorp, Textron, United Airlines, Warner Brothers and many others. Sadly, I watched the “Roaring Kitty” podcast for a short time. He started 30 minutes late and half a million people were watching the stupidity unfold. I am embarrassed that I spent time watching this moron. It started with him acting as though he had a seizure and did not get much better from there. He was drinking beer during the presentation and wore a fake sling and bandages to act hurt. Anyone who listens to this guy should rethink their lives. I lasted 15 minutes and I think my IQ dropped 12 points in that time. He started speaking at 12:30pm with the stock at $37.5 and by the time he ended, the stock was $27.7 (-26% during the talk). RUN AWAY.
I have been very critical of NY politicians for good reason. The city I once called home for decades has become a disgusting mess of drugs, homelessness, illegal immigrants, crime and filth. I walked down 5th Avenue by Rock Center and almost stepped on a hypodermic needle. Then, I saw a homeless man undress in front of Saks 20 seconds later. I walked through my former neighborhood in the Village and crossed Washington Sq Park to find 3 people shooting up at noon on a Wednesday and another one doing the same just outside of the park. It was the same park my kids grew up in and is now a scary, disgusting mess of drugs, prostitution, and homelessness. Sorry folks, you deserve better. By the way, a one bedroom apartment in my old building next to the park rents for $7.8-$8.5k/month for the privilege of being next to drug addicts and homeless people. There are no amenities in the building other than a doorman and no parking garage. I was very critical of the Congestion Pricing Tax plan which was to be implemented beginning June 30th. Good news, Governor Hochul put an indefinite hold on it after so much negative press. The bad news, the government spent over $500mm to buy and install scanners across the city and spent thousands of hours to implement the plan. Now, the expected revenues from the tax need to be made up elsewhere and there is speculation about a different tax. NYC is among the highest taxed cities in America and has become a complete mess. Maybe if politicians made better decisions with your money, they would not be in a situation where they need to charge you so much for the privilege to live and work in a rundown city. Elect better politicians. Demand more. If you want to move to Florida, I can help you. Reach out at rosenreport@gmail.com.
Israel/Middle East
Israel’s Benjamin Netanyahu is set to address the US Congress on July 24
Nancy Pelosi blasts ‘very sad’ Netanyahu invite to address Congress: ‘I think this is wrong’
Israel rescues four hostages in operation Gazan officials say killed more than 200
Civilian deaths are sad. Maybe if the Hamas terrorists released the hostages this would not happen. War means death. Sadly, more civilians will die as was the case in most wars in the world. Look at what happened in WWII, the war in Iraq, Afghanistan, Ukraine….I believe the Israeli army goes above and beyond to try to reduce civilian deaths.
I have written on this topic extensively and proved the Hamas figures were wrong in prior notes. The link goes into more details. Remember, Hamas uses women and children as shields to protect their terrorist fighters. Hamas took hostages and raped them.
US warns Israel: 'Limited war' in Lebanon could push Iran to intervene
UN adds Israel to global list of offenders that harm children
It is war. Hamas raped and mutilated women and children. Having the Israeli Army on the same list as Hamas and Palestinian Islamic Jihad is a joke. Shame on you, UN.
Other Headlines
ValueAct increases Salesforce stake to nearly $1 billion, sending shares up
EV slump, Hertz fire sale take used Teslas to ‘no haggle’ $25,000 price
There are real deals out there on EVs. Some readers received $40k off of a Mercedes. I’m also hearing Cadillac EVs have some good deals on leases. I have been saying for a while now that the expectations of EV adoption will never be met, despite the massive subsidies. These cars are too expensive, lack range and charging options, plus the cost to operate is not low. My electric bill is up notably since I bought an EV and it needs new tires every 20k miles at $500 each.
U.S. regulators to open antitrust probes into Nvidia, Microsoft and OpenAI
Trump heads to tech fundraiser in San Francisco, with some guests paying $300,000
The NYC Bragg case is backfiring on the Democrats. I am no Trump fan, but that case is ridiculous. Look at what the Clintons did, time and again, with no consequences of substance. Many Americans are upset with the handling of the case and are donating to Trump post-verdict. Trump raised $400mm in a week.
Biden tells Muir US weapons will not be used to strike Moscow, Kremlin
Sen. John Fetterman tells critics he's 'not a progressive': That label left me
I felt he was unfit to serve after his stroke, depression, hospitalization and behavior. He has actually had some sound commentary recently. Shocking.
Supreme Court Justice Clarence Thomas accepted gifts worth millions of dollars over 20 years
What a horrible person.
Nothing to see here folks. Bragg is the best DA in town…if you are a career criminal. If you are a law-abiding, tax-paying citizen he hates you.
Horrifying video shows madman firing randomly at cars in LA killing father of 4
This is very scary. What about the death penalty for the shooter?
Massive California residential tower to offer homeless private rooms, gym, cafe and more amenities
The 19-story building also includes a library, computer room and soundproof music lounge. The project is expected to cost approximately $165 million and will receive financing from Proposition HHH, state housing funds and $56 million in state tax credits. Each unit is projected to cost $600,000. Seems pretty expensive to me. Remember, the average house in the USA is $432k. I guarantee you that I could make housing far more affordable then these clowns.
At-home brain zapper helps binge-eaters lose weight
In light of today’s theme piece, I may need to look into this one.
The 28 sodas, juices and other drinks recalled by the FDA over harmful chemicals revealed
Term "Gynecologist" Offensive, According To Scholars
Instead say, “Reproductive Health Specialists.” No, I am not kidding. The paper outlines other offensive terms such as breastfeeding (human milk feeding) and breastmilk (human milk provision).
Sick of ‘tip creep’? 5 times it’s OK not to tip, according to etiquette experts
I have written about my frustrations on this topic. I bought a cookie and they are looking for a 20% tip. I bought fish at the market and the same thing. The article gives guidance on when a tip is not needed.
World’s best restaurant for 2024 revealed
Mark sent me this story that shows only one of the top 50 best restaurants in the world are in the USA. Below are the top 15.
Dave Portnoy slams ‘unreal dumb’ Caitlin Clark 2024 Olympics snub that stunned sports world
Good video. I am in complete agreement with Portnoy. How you leave the most popular basketball player on the planet off the team is a joke. Remember, the 1992 Dream Team had Christian Laettner (rookie). She may not be the #1 WNBA player today, but she brings in eyeballs and money. Anyone who was part of the decision to exclude her would never run my company. The 0-11 Washington Mystics hosted Caitlin Clark and the largest WNBA crowd in 17 years. Sorry, Clark brings butts in seats. I am boycotting the WNBA and am no longer watching. However, WNBA star Sabrina Ionescu’s comment below has some suggesting that the Official Roster may include Clark. Let’s hope.
92-year-old just became one of America’s richest self-made women—she’s worth $700 million
Amazing story.
A 500-Year Old Device Invented By Leonardo Da Vinci May hold The Key to Quieter Drones
The potential finding here is remarkable and Da Vinci was brilliant.
The Most Popular Song When You Graduated High School
The link goes from 1960-2023, so basically 97% of my readers should find their song here.
I hope this is not an accurate depiction of what is happening.
Python swallows woman whole in Indonesia
There are a lot of ways I don’t want to die, but being eaten by a 16ft snake might be at the top of the list. I am likely going to Indonesia in September. I better not see any 16ft snakes. Check out the pictures.
Russia deploying air and sea assets for military exercises in Caribbean, U.S. official says
String of mysterious attacks across Europe opens new front in Russia’s war on the West
The suggestion is Russia is behind a bunch of attacks in Europe.
Real Estate
This Bloomberg article is entitled, “Real Estate Investors Are Wiped Out in Bets Fueled by Wall Street Loans,” and gives troubling examples of money lost in various deals including apartment buildings. Remember, R/E is generally purchased with leverage, which works amazing when prices are stable-to-rising. When prices start falling and rates are rising, the problems mount. The troubles in commercial real estate are now only deepening as high interest rates persist and loans come due. Some big landlords are trying to stave off asset sales: Barry Sternlicht’s Starwood Real Estate Income Trust, a vehicle for personal investors, last month tightened limits on shareholders’ ability to pull money to preserve liquidity and hold off on having to unload property in a falling market. Apartment owners such as Western Wealth, however, sometimes need to sell buildings at steep losses to pay debt or escape a cash crunch. Their turmoil is extending to the far corners of Wall Street, where the $80 billion market for commercial real estate collateralized loan obligations— the investment vehicles for the bundled loans — is facing unprecedented strain. Distress in CRE CLOs reached a record 8.6% in April, according to data provider CRED iQ, and creation of new CLOs is roughly 90% lower so far this year than in 2022.
Great CNBC story about the development of an old baseball stadium purchased for $1 that was turned into amazing apartments in Indiana. I love people who have vision. I have a lot of respect for developers who can see the potential in a project and bring it to life. The apartment complex is Stadium Lofts, a former baseball stadium that was converted into 138 apartments by Core Redevelopment, a Midwest developer group. The property is owned by Michael Cox, John Watson and his two sons. “Initially, people thought that we were crazy for wanting to turn an abandoned baseball stadium into apartments,” Cox, the principal at Core Redevelopment, tells CNBC Make It.
Deutsche Bank takes a $350M loss on a Manhattan office building. DB paid $500M for the tower at 222 Broadway in 2014. They just sold the building to a TPG JV for $150M. It is the tale of two markets. I spoke with the owner of a Class A office building in Midtown who has signed a bunch of rents in the $130/ft range with Net Effective Rents in the $110+ context. However, the Class B/C buildings are toast in many cases.
© 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™ #689 ©Copyright 2024 Written By Eric Rosen.
The Stadium Lofts complex looks sweet. I wouldn't mind having a baseball field in my backyard.