Great Night in NYC Despite an Awful Dinner
6-23-24
Opening Comments
My last note was about career advice and hope all the young readers take a look. It received some very good commentary, so if you missed it, check it out. I hope college students and young professionals read the article. The most opened links were high fat diets impact on anxiety and Biden “freezing” on stage with Obama.
I had a funny interaction with an older gentleman at the airport. We were waiting to board and he was looking at me. To be polite, I tried to make small talk. I had zero interest in talking with him, but from his gaze, I misinterpreted his interest in speaking with me. I said, “Are you from New York or Florida?” His response told me he was a New Yorker. “Why is where I am from any of your damn business?” Wow. I said, “Sir, you should probably read the book How to Win Friends and Influence People by Dale Carnegie,” and walked away. Clearly not a Rosen Report reader or smart enough to be one!
A reader sent me this story about moped riding armed robbers stealing a man’s $100k watch outside Carbone. When I was in Argentina, this kind of stuff happened all the time. It is now happening in major cities in the USA. I no longer wear fancy watches despite what once was an impressive collection. You will find me in my Apple Watch or something of modest value 99.9% of the time. I walked Thompson Street 4 times last week. That is where Carbone is and put pictures in my piece showing it.
I left Saturday morning for my fishing trip to Walker’s Cay in the Bahamas. We only got in a few hours on Saturday and caught a handful of fish including a 10lb Mutton Snapper. This is not worth enough for a Rosen Report picture. Hope to have some good stuff in coming days. I am back Tuesday and want to get something out Wednesday if time permits. These fishing trips are so much fun. We saw massive whales today. I am sure I missed stories this weekend given I am in the middle of the ocean. Early send as a result. Fishing.
Markets
Fiscal Irresponsibility
Supreme Court Tax Ruling Implications
Javier Milei’s Programs are Working
NATO Spending
Office Issues Persist
Blackstone Real Estate Growth
Single Family Inventory Rising/Austin,TX Too
Video of the Day-Trump Interviewed by All-In Podcast
Trump was interviewed by the All-In Podcast and you can watch it here. He was interviewed for 50 minutes and took questions on every topic. Yes, he said some grandiose comments that pushed the envelope, but I struggle to believe Biden could have handled this line of questioning. Biden has been invited on the show and has not done it. I felt Trump did a pretty good job during this interview and taking tough questions (China, Russia, Ukraine, Covid, Immigration, Border Wall, HB-1 Visas, Fauci, Abortion, Taxes, Israel, Iran, NATO, Federal Debt Level, Deficits, US Dollar…). My biggest takeaway was the response by the two Left podcast hosts, Jason and David Friedberg. I know it is asking you to watch for an hour. However, the interview was 50 min and the discussion after was worth your time to come to your own conclusions.
Great Night in NYC Despite an Awful Dinner
Yes, I give NYC a hard time for all the obvious reasons. They make it so easy. However, in short stints, NYC is remarkable, and today’s note gives you a little why. As you all know, I am actively involved in 3i Members, a social network and investment club. They are up to 450 members and growing. The CEO is a 30-year-old wunderkind named Teddy Gold. Teddy and I are very close and he asked me to play tennis with another 3i employee, Maisie. Let’s just say, Maisie can play tennis. She played at #1 at Bates College. I could not come close to competing with her. However, the three of us played at the Town Tennis Club on 56th between 1st and York.
To get to the tennis club and courts, you walk into an old condo building past the doorman and there is a small sign that lets you know you have arrived at Town Tennis. You walk down a narrow hallway with the names of members on the rackets on the walls. I quickly recognized dozens of names of major hedge fund managers, Goldman partners, senior Wall Street folks and major families.
There are 3 tennis courts that sit atop a parking garage, at Town, and it is such a lovely oasis within the concrete jungle. Yes, it is impossible to get into the club today, but it was so much fun and different to play in the middle of the city surrounded by tall buildings. It was also a great reminder of what makes NYC amazing, impressive and different from other cities.
Sadly, Maisie eviscerated me, but I am looking and hope not get beaten so badly next time. After Maisie ran home as the champ, Teddy and I decided to grab a bite and sulk. To be clear, the 50s and 1st Avenue is a true culinary wasteland of epic proportions. Teddy found a Lebanese place that was highly rated just a couple blocks away called Au Za’atar. However, I have renamed it Au DISGUSTING. Shockingly, after dinner, I checked reviews myself and found amazing 5-star reviews suggesting the food was fantastic. I do not understand how there could be this big of a divergence between my experience and that of 414 other reviews.
The place was packed and almost every table outside was occupied. We ordered some starters and a couple of entrees. The service was somewhere between slow and non-existent. The baba ghanoush was average at best and the grilled Halloumi cheese was weak. However, the warm pita was nice. We had the Lamb Kebab Platter which comes in a pita. Although it looked appetizing, the lamb was dry and terrible. We waited another 25 minutes or more for the chicken shawarma after complaining. 45 minutes after we ordered, it finally came out and it was a monstrosity. It was also AWFUL. We each took a bite and asked for the check. Either way, both were on the verge of inedible. Was it the worst restaurant I ever tried? No. However, the combination of bad food, bad service and a nearly $300 bill with no alcohol or drinks put me over the edge. They offered us a free dessert and we passed, as we were so disgusted with the experience.
Despite the bad food, I had a great night with Teddy and a fun time at tennis. We also had a laugh about the awful meal. I will never go back to Au Disgusting, but clearly, some people are enamored with it. Maybe all those people are missing taste buds?
Food-C-
Service-D
Value-D
Quick Bites
All non-bolded text below is excerpted from the cited articles. Bold are my thoughts.
The S&P was +.6% on the week and the Nasdaq finished flat. Some signs of an overextended market have begun to appear in recent sessions, although it’s unclear whether the artificial intelligence-fueled rally has reached its limits. Even Nvidia, which is large enough to sway the market, is showing signs that its upward momentum may be slowing. I thought this CNBC article was interesting, “The stock market is in its longest stretch without a 2% sell-off since the financial crisis.“ On the week, the 2-year Treasury yield was +5bps to 4.73% and the 10-year Treasury yield was +5bps to 4.26%. Oil rallied for a 2nd straight week and is above $82/barrel and JPM forecasts $90 Brent on summer fuel demand.
I continue to write about my concerns about government debt, spending, entitlements, and interest costs…and many smarter, more successful people have echoed my concerns. Federal interest expenses have exploded given higher rates and ballooning debt levels and are projected to increase from here. The “brilliant” forecasters at the Congressional Budget Office continue to increase their deficit estimates and just raised them to $21.9 trillion from $19.8 trillion for the next 10 years. I believe the deficits and resulting debt growth will be higher than they forecast today. If they are right, we will have approximately $56 trillion in debt by 2034. I speak with politicians who have no fears over deficits, entitlements, interest expense or budget issues. Yet, the smartest investors of our time see it differently (Druckenmiller, Dalio, Sternlicht, Dimon, Gundlach….). I wonder who is right? Career politicians who don’t understand economics or billionaires who understand the cumulative impact of decades of fiscal irresponsibility. Why would being more fiscally responsible and trying to pay down debt be a bad thing?
I am not an expert on the tax code, but this recent ruling by the Supreme Court could be a big deal. The Supreme Court on Thursday upheld a tax on foreign income over a challenge backed by business and anti-regulatory interests, declining their invitation to weigh in on a broader, never-enacted tax on wealth.
The justices, by a 7-2 vote, left in place a provision of a 2017 tax law that is expected to generate $340 billion, mainly from the foreign subsidiaries of domestic corporations that parked money abroad to shield it from U.S. taxes. But the larger significance of the ruling is what it didn’t do. The case attracted outsize attention because some groups allied with the Washington couple who brought the case argued that the challenged provision is similar to a wealth tax, which would apply not to the incomes of the very richest Americans but to their assets, like stock holdings. Such assets now get taxed only when they are sold. I received 20 calls on this topic. As I understand it, this ruling potentially leaves an opening for a wealth tax on unrealized gains. I have written extensively on why that would be an unmitigated disaster. People should speak with their tax advisors to understand the ramifications. I felt the Bloomberg article outlined everything very well. This is Bloomberg’s take, But in rejecting a constitutional challenge to the Mandatory Repatriation Tax, the justices might have scattered some breadcrumbs about their attitudes toward a potentially more sweeping wealth tax.
Great article outlining the President of Argentina’s accomplishments in a short time. After Milei’s Davos speech, I wrote an entire article “Free Market Capitalism by Javier Milei,” about his commentary. Argentina’s new free-market President Javier Milei is lapping Colombia’s Gustavo Petro and Brazil’s Inacio Lula da Silva in terms of economic achievement and the ability of people to live in freedom. So far Milei has achieved, well, the unachievable. Argentina — yes, the country that was until recently South America’s economic basket case — now has a primary fiscal surplus, the first in more than a decade and a half. March was the fourth straight month with more government revenues than non-interest spending: In other words Milei, who was inaugurated in December, has produced a government budget surplus every month since taking over. This surplus is partly because Milei has also delivered on another of his promises: paring back Argentina’s gargantuan state. He has halved the number of federal agencies, from 18 to nine, slashing public spending by up to 30%. Best of all, Milei is also making inroads against Argentina’s biggest bugbear for decades, inflation. Monthly inflation in May cooled for the fifth straight month — again, marking the entire Milei presidency so far — and now sits at 4.2%, compared to over 25% in December when Milei’s term began. Wait. Socialism does not work and sound policies do? Who would have thought such a thing?
A record 23 out of the 32 NATO member nations are set to hit the alliance's 2% of GDP defense spending target this year, as member nations sharply increase spending, according to a NATO report released on Monday. The 2% guideline was agreed upon a decade ago, in the wake of Russia's annexation of Crimea, when only three allies — the United States, Britain, and Greece — met the target. However, Russia’s invasion of Ukraine in 2022 has shifted global priorities and launched military spending to the forefront of policy discussions. In the last 18 months, once-neutral Sweden and Finland have joined the alliance, further bolstering NATO's annual expenditure by $16 billion, though no nation, within or outside the alliance, comes close to the United States' budget. In 2024, America's defense spending is expected to reach a colossal $968 billion, which will be some 65% of NATO's total. Relative to the size of its economy, the US is actually not the biggest spender in NATO — Poland, which shares a 140+ mile border with Russia, spends more than 4% of its GDP on defense. Despite global turmoil and massive geopolitical risks, we have 9 countries that still do not meet the spending threshold.
Israel/Middle East
Hezbollah chief says nowhere in Israel will be spared in case of full-blown war
Hezbollah leader warns Israel of war with ‘no red lines,’ threatens Cyprus
As few as 50 hostages held by Hamas are still alive, US officials estimate
Netanyahu blames Biden for withholding weapons. US officials say that’s not the whole story.
US offers assurances to Israel this week in the event of full-blown war with Hezbollah
When you elect overly woke DAs who don’t believe in consequences for crime, you have chaos. Walk the streets of NYC and tell me these policies work. Drugs, crime, closed retail stores, homeless, filth, smell of weed…
Democrats in Disarray Over Boycotting Netanyahu's Speech
Israel is at war against vicious terrorists and is not getting the support they should. However, the most corrupt government of all-time, Ukraine, seems to get non-stop support from the US. Speaker Emerita Nancy Pelosi (D-CA) expressed earlier this month that "it's very sad" and "wrong" to invite Netanyahu.
NY ‘Squad’ Rep. Jamaal Bowman finally apologizes for denying Hamas rape atrocities on Oct. 7
Listen to his original comments. Sorry, buddy. Nothing could ever get me to vote your way. “There’s still no evidence of beheaded babies or raped women, but they still keep using the lie,” Bowman said. Bowman, move to Gaza.
When you read this story, you will be disgusted. I believe in the death penalty and would use it here. Raping a 12-year-old while screaming anti-Semitic slurs deserves serious consequences. The world hates Jews and Hamas ignited a fireball of disgusting behavior globally. There must be consequences.
Other Headlines
Stocks’ Relentless Rally Makes Bears Endangered on Wall Street
Super Micro, Dell shares jump as Elon Musk calls them suppliers to xAI supercomputer project
I am renaming the Rosen Report to Rosen Report-Ai. I believe it will significantly improve subscription rates and valuation.
OpenAI competitor Anthropic announces its most powerful AI yet
SoftBank CEO says AI that is 10,000 times smarter than humans will come out in 10 years
What are the ramifications if this is true?
Amazing video examples in link.
Solar is growing faster than any electricity source as Big Tech seeks clean energy for data centers
Fast-food customers are shifting to casual-dining chains, Darden Restaurants CEO says
Rising fast food prices cited.
Regulators hit Citigroup, JPMorgan Chase, Goldman Sachs and Bank of America over living will plans
Tesla internal data shows company has slashed at least 14% of workforce this year
The stock is -55% from the November 2021 highs and -27% YTD.
Trump Media shares sink 15% as DJT slide accelerates
The stock hit $66/share in March and is now $27.6 with a $4.9bn market cap today. Still too high based on every metric. I was crushing this stock during the rally. The metrics are going the wrong way, and it is not worth the price. Since his conviction, the stock is -46%.
Fox News Poll: Three-point shift in Biden-Trump matchup since May
The results will surprise you given it is Fox. Shows Biden improving. A dozen good charts and graphs are in the link. However, swing states are key.
Trump leads Biden in six key states — and ties in blue Minnesota
Mitt Romney says he’s still anti-Trump after meeting with him: ‘Matter of personal character’
Unfortunately, America deserves better candidates. It is the lesser of two evils which is a consistent theme in American politics. We tend to vote against one person or party rather than “for” someone.
Republicans seek probe of Philly US attorney for alleged retaliation against Hunter Biden prosecutor
"Intentional": Harvard legal scholar says SCOTUS "deliberately delayed" Trump immunity ruling
Wales could become first country to criminalize politicians who lie
I love this one. Could you imagine if this was passed in the USA? We would have zero policiticans left.
France is about to bring the EU to the brink of collapse
Anyone interested in European politics should read this article. The upcoming vote's ramifications are serious; with the Olympics coming up in France, this could get crazy. Many issues voters face in the US (immigration, inflation, regulations, green mandates, higher taxes…) are what voters in Europe are fighting against.
NY social worker who was viciously beaten during home visit dies of injuries
How many times has the government failed its citizens due to woke policies? The alleged murderer was already expected to face charges of attempted murder and assault with the intent to cause physical injury.
A Semi Driver Accused of Causing Fatal Crash Is an Illegal Immigrant
According to many outlets, Cruz-Mendoza has faced many removals from the United States. He has been removed and returned to Mexico at least 16 times. Immigration and Customs Enforcement (ICE) has been aware of his presence in the Jefferson County, Colorado area since 2002. That year, he was reportedly arrested in Oregon on a drug trafficking charge. Wait. He was removed 16 times and continued to get back in and the Biden Administration wants to tell us we don’t have a border issue.
Migrant charged with murder of 12-year-old Jocelyn Nungaray was released into US just weeks ago
Open borders have consequences.
In first five years, 79,000 of DACA recipients admitted to U.S. had arrest records
I am all for legal immigration that is in reasonable size to allow the US to handle the flow. Why in the hell are we taking nearly 80k people with arrest records into this country?
Wrong conclusion when you look at what she did. Why are there not real consequences for crime? There is a reason Philly is so gross. She looted, and live-streamed her actions. Pretty conclusive evidence. She went to court with a necklace that said, “Baddies” on it. The judge was not amused.
Oakland, California Transformed Into Warzone On Juneteenth
Watch this video of shooting and chaos. When there are no consequences for bad acts, mayhem ensues.
Nothing surprising here from my perspective and it is something I hear a great deal from those who relocate from CA, IL, NY, NJ, CT, MA… to South Florida. There are very few exceptions to the rule that people prefer Florida.
Of the 25 most polluted areas in the US. California has 16 of them. Florida has 0.
CA is the most stringent on so many things around the environment yet has the worst pollution. The irony is not lost on me.
Two climate activists arrested after spaying orange paint on Stonehenge
What the hell is wrong with people? Throw them in jail.
Why is Boeing not grounded?
Louisiana classrooms now required by law to display the Ten Commandments
I have flown 3 legs in two weeks and the airports have been packed with long lines at check in and security.
Once you hit this credit score ‘you’re good,’ says credit expert—here’s how to get even better
I wrote two pieces about my frustration with FICO and scores. This article suggests the average is 717. How in the hell is that possible? Mine is 749. I pay every bill on time and never had a credit card balance. I have no debt. Own my house. How is mine not sharply higher than average???
Ferrari’s first electric car to cost over $500,000, well above many rival EVs
For my readers who appreciate the Rosen Report, why don’t you pool some money together to buy me a new Ferrari EV. Sound fair?
Oldest wine ever discovered contains a horrifying secret ingredient
Guess the ingredient. If you said, “cremated human remains,” you would be correct. I love wine, but I am a hard pass on this one.
Watch the videos from high school when he was 7’6” against people two feet shorter. Comical.
Stinging nettles-upright plants that sting. Never heard of them. How many reasons do you need to not live in California?
How China could take Taiwan without even needing to invade
Interesting take on a dicey situation.
Real Estate
There are so many stories about office buildings selling for a fraction of the prior transaction that I cannot include all of them. I only include a handful from time to time. Here are a couple more. A prime Manhattan office tower (65 Broadway) saw value plunge $100M+ in just ~5 yrs The building was valued at $215M in 2019 A recent appraisal valued it at $104M - that's over a 50% drop. I spoke with the owner of a small office in the northeast. The bank asked him for additional capital to pay down the loan due to a new appraisal coming in low. He offered to give them the keys back and the bank does not want it. The owner is reticent to put in new money in light of the market environment and the bank knows taking it over as owner will lead to its own problems. There will be many deals that end up being renegotiated at lower debt levels or rates to give owners more time in these challenging conditions.
On a related note to the last bullet-At Blackstone's $339 Billion Property Arm, the Honeymoon Is Over. The article details Blackstone’s history of investing in R/E and how the stratospheric growth in assets makes it harder to find deals. The article also outlines, the impact of higher rates and tighter lending standards and the impact on the R/E markets. The deeper question for Blackstone on offices is whether it wants to seize the greatest opportunity on distressed prices since Lehman Brothers’ collapse. But its executives have been so damning of the sector lately, unlike fierce rival Brookfield Corp., that changing course would be jarring. Meantime, it has been dipping a toe back into shops via luxury sites in Paris and London. And as it hunts for ways to put $65 billion to profitable use in a beleaguered market, it’s holding onto the belief that pure firepower still gives it an edge. “We’ve been investing in real estate for 33 years,” McCarthy says. “We have huge advantages thanks to our scale, and unparalleled access to data.”
The chart below about new single family homes is one to watch. A combination of housing prices, higher rates, higher insurance, and inflation pushing up costs to maintain a home is creating a major problem in some markets. The second chart is about Austin, TX, the once hot R/E market which is cooling significantly. Values down and inventory up sharply.
© 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™ #693 ©Copyright 2024 Written By Eric Rosen.
My credit card bills are paid each month. I leased a car. You should be rewarded for being fiscally responsible. I would far rather lend me money than a 717 credit score with a mortgage, car payments, and limited savings. The joke is I should be sharply higher. I get how they do the math. I don’t agree with it.
Your FICO score isn’t higher because you haven’t demonstrated to lenders that you are more credit worthy. It’s about debt and having a history of paying it on time. No mortgage, car payment or CC use is not the way to raise your score. You may not think that doesn’t make sense but that’s how the system operates.