I Have Failed You

7-25-24

Opening Comments

My last note was about Shelter Island and some attractions there including the restaurant, Leon 1909. The most opened links were the Kamala video of her unburdened commentary which is hysterical. The other link was the CNBC story about raising successful kids.

• Video of the Day-Orca Killing Great White

• I Have Failed You

• Quick Bites

  • Markets

  • 2/10s Tresury Predictive Ability Explained

  • Small Caps vs Big Tech

  • Cost of Living Crisis

• 2024 Election

• Israel/Middle East

• Other Headlines

• Olympics

• Real Estate

  • Blackstone Mortgage Trust Stock Rout

  • Ken Griffin Chicago Condo Sales in Perspective

  • Starter Homes start at $1mm in 237 US Cities

Video of the Day-Orca Killing a Great White Shark

• A 60-year-old grandmother orca killed a great white shark. It was the 1st time a single orca was recorded taking down a great white shark. Watch the short video. Nature is amazing.

I Have Failed You

I pride myself on my ability to consume an incredible amount of data as well as food. I regularly read for hours each day to come up with ideas for the report. I am also eating two dinners each day to write my reviews when I travel. But last week, I finally met my match.

I arrived in NYC on Sunday night and immediately took a subway to Casa Mono, a brilliant Spanish Tapas restaurant in Grammercy. It has had a Michelin Star since 2009 and although I do not get there much, it is a fantastic experience. The small plates are great to taste different flavors and food types. The flavoring, presentation, and service were amazing. I am not a huge fan of Spanish white wines, but other than that, Casa Mono was a hit. I loved my three dishes below.

From Casa Mono, I walked over to get a decadent cookie from Levain Bakery. My favorite is the Double Chocolate Peanut Butter. One of the best cookies in town.

Monday, I went to Union Square Cafe for lunch and had the tuna tartare and burger as well as dessert.

Monday evening, I went to Junoon and crushed yet another dinner as you can see below.

On Tuesday, my friend, Alex, invited me to Shogun Omakase in Midtown. We had the 13 course meal + the wagyu flight. Some of the courses are pictured below. I have no plans on returning to Shogun. It was average.

For dinner, I was dying to try the new Italian by the Rezdora crew called Massara. I have written about Rezdora frequently and a review can be found here. While Rezdora focuses on the food of Emilia-Romagna in Northern Italy, Massara creates dishes based on Southern Italy, specifically, Campania, as outlined on the maps below.

I arrived at Massara at 4:50pm and was able to get a seat at the upstairs bar. The place is spectacular. It is much larger than Rezdora and they did a wonderful job on the buildout. I sat down and ordered two pastas, broccolini, grilled bread and eggplant. The manager, Samantha, came over to say hello as I knew her from my 8 trips to Rezdora. We spoke for 15 minutes and I was excited that she remembered me and was now managing Massara.

My food started coming out and it was DELICIOUS. The best word I can use to describe the experience at Massara is “sophisticated.” The room, service, food, presentation, wine, and staff all embodied sophistication.

The Ciabatta-grilled bread with oil, garlic and salt-was strong. The candele beef ragu genovase parmigiano was highly recommended, so I had to try it. It has caramelized onions in it as well and was unique. I also had the cavatelli “allo scoglio,” which comes with shellfish.

Then, I was surprised as they brought out the corteccia, which is a sausage ragu in bianca with breadcrumbs. I generally do not eat sausage and would not have ordered the dish, but I am glad Samantha sent it, as it was my favorite. Let’s not forget the modo parmigiano, which is a modern take on eggplant parm. I felt the corteccia and candele stole the show. Despite my love of fish and shellfish, the cavatelli fell a little short for me. I felt it was too fishy and not on par with the other pastas. The broccoli rabe was prepared in a beautiful garlic, olive oil and peperoncino. The dish that surprised me the most was the eggplant that looks nothing like you think it should and was packed with flavor. It also has a unique texture that you must try to believe. The menu also has pizzettes and a handful of entrees and sides. I enjoyed Massara a great deal including the ambiance, service, food, and wine. There is a 100% chance I will be returning.

From Massara, I jumped on the subway to midtown to get to Oceana. Getting on the hot subway threw me for a loop and I started sweating. Suddenly, my stomach became distended and I felt uncomfortable. The three pasta courses at Massara were weighing heavily on me and the prior 36 hours of eating did not help matters.

I got to Oceana a few minutes early and sat down feeling as though I might not make it. I started convincing myself I might have appendicitis, as I was in so much pain and sweating like I just ran a marathon. My friends arrived and immediately started making fund of the fact that I had overeaten and was not doing well. Chris, who I have known for 32 years since the Continental Bank training program, said I looked as though I were getting ready to either die or cry.

He may have been right. As we sat down for dinner, I just could not bring myself to eat at one of my favorite fish restaurants in the city. I sat and watched my friends eat as I moaned in discomfort. It is the first time I have missed a meal while sitting at a restaurant and it was an awful feeling. I have done two full dinners over 300 times in my life and July 24th, 2024 was the first time I botched my attempt at a second meal. I failed myself and my readers and I apologize, as I want to give you as many reviews as possible.

I overate at Massara because it was so damn good and the food from the prior couple days clearly contributed to my pain. I promise, I will be more disciplined, and it won’t happen again. I gained 3 pounds in 2.5 days despite missing my second dinner on Tuesday. I have a lot of steps to take and padel to play to burn off those calories, but don’t worry, I won’t fail you again!

Quick Bites

All non-bolded text below is excerpted from the cited articles. Bold are my thoughts.

• We saw a sharp uptick in volatility as earnings and economic data became available, especially Wednesday and Thursday. Tech was under pressure and small caps outperformed (check 2nd bullet). On Friday, the Fed’s key inflation gauge rose 2.5% in June from a year ago, in line with expectations and markets rallied sharply. The S&P rallied 1.1%, Nasdaq was up 1% and the Russell was +1.5% on the day. However, the S&P and Nasdaq were down on the week. Treasuries rallied, bringing yields lower post the inflation data. The 2-year yield was -4bps to 4.39 and the 10 year was -6bps to 4.19%. Bitcoin is back to $68k but despite Ether’s rally, to $3.2k, it was - on the week. Inflation data and the crypto conference helped foster Friday’s rally, as Trump prosposed a national crypto stockpile.

  

• I have written a great deal about market breadth and the underperformance of small caps until very recently. We have started to see big tech under pressure and small caps outperform. In the past month, the S&P is -.34%, Nasdaq -2.51% and the Russell 2000 is +12%. Strategist Tom Lee just came out with a bold prediction suggesting small caps will surge 15% in August. Lee thinks this will continue for the time being. He pointed to an possible Federal Reserve rate-cutting cycle and the chances of former President Donald Trump being reelected in November. A Trump win would lead to deregulation and boost CEO confidence in M&A activity, ultimately benefiting small-cap names.

  

• I have been of the belief that the inversion of the yield curve, namely the 2s/10s is a sign of a recession. It has predicted every recession for 70 years but has not been accurate in the most recent inversion since late 2022. This CNBC article is entitled, “Why an indicator that has foretold almost every recession doesn’t seem to be working anymore? Wall Street’s favorite recession signal started flashing red in 2022 and hasn’t stopped — and thus far has been wrong every step of the way. The yield on the 10-year Treasury note has been lower than most of its shorter-dated counterparts since that time — a phenomenon known as an inverted yield curve which has preceded nearly every recession going back to the 1950s. However, while conventional thinking holds that a downturn is supposed to occur within a year, or at most two years, of an inverted curve, not only did one not occur but there’s also nary a red number in sight for U.S. economic growth. The situation has many on Wall Street scratching their heads about why the inverted curve — both a signal and, in some respects, a cause of recessions — has been so wrong this time, and whether it’s a continuing sign of economic danger. The article goes into detail of possible explanations that are too cumbersome to summarize. My personal view is the incredible amount of fiscal and monetary stimulus that has taken place in recent years has impacted many relationships that have historically been predictive.

  

  

• This is an interesting article from Bloomberg on Yahoo (anyone can open it). The title is “Cost-of-Living Crisis Hits Sales of Food, Cars, Luxury Goods.” A global consumer backtrack from post-pandemic revenge spending is starting to hit companies’ top and bottom lines. From food producers to airlines, automakers to luxury houses, evidence of the impact is piling up. Whether it’s US grocery shoppers tapped out after a period of punishing inflation or wealthy Chinese customers postponing their next splurge, the effects are rippling across the corporate landscape. Nestle SA, the world’s biggest food company, cut its revenue outlook for the year on Thursday, while Unilever Plc reported sales that missed estimates and Jeep-owner Stellantis NV posted a plunge in profit. A day before, US appliance maker Whirlpool Corp. lowered its earnings forecast, while big US airlines have warned that cut-rate airfares are weighing on sales and profits.  A cost-of-living crisis has taken its toll on shoppers who’ve traded down to cheaper brands, and consumer giants have struggled to coax them back. Around 80% of US shoppers are reducing grocery spending, according to a recent poll of 1,000 people who broadly represent the US demographic. The US consumer has been more resilient than I thought possible, but they have spent their excess savings and drawn down on credit cards and used Buy Now Pay Later to keep spending. Credit card delinquencies hit a 12 year high according this NBC News article. The consumer and the Federal government need to learn fiscal responsibility.

  

2024 Election

Biden gave his address to the nation about his decision to drop out of the race. I thought it was a well written speech that can be seen here. He claims he will finish his term. I do not feel that is the right decision and I believe both the Republicans and Democrats agree. The 25th Amendment should be invoked today. However, the Republicans will be unlikely to do it as it would give Kamala more power as the incumbent going into the election. Check out this headline: Biden’s doctor defends ‘excellent’ mental acuity, insists prez doesn’t have Parkinson’s-related ailment.

• White House comms shop's credibility questioned after Biden bows out: 'Scandal'

  • Former White House press secretary Ari Fleischer says the White House 'covered up the president’s frailties'

What’s been particularly interesting to watch is the attempted gaslighting by the left-leaning media. The SAME media outlets that called Kamala Harris the “Border Czar” are now saying, “She was NEVER the Border Czar.” That short video is just comical. People in the media know that the border has been an unmitigated disaster and is a top issue for Americans this election, along with inflation. So the media is literally re-writing history to protect their favored candidate. Outlets, including Time Magazine, USA Today, The New York Times, New York Daily News, and Newsweek, all echoed similar sentiments, suggesting that the unofficial title was "misleading" and inaccurate. However, their claims are, at best, puzzling, considering that some of those same publications referred to Harris as the "border czar" or something similar in reporting that dates back to early 2021. Govtrack deleted the website ranking Harris as 2019’s most liberal Senator. Kamala Harris polls better nationally than Biden but worse in swing states. President Obama and Michelle endorsed Harris.

This link is a short video outlining some of the policy comments Kamala has made over the years and they are quite progressive: In the video: Get Rid of Filibuster to Pass Green New Deal, Ban Fracking, Ban Offshore Drilling, Open Borders, Abolish ICE, Defund Police, Reduce Red Meat Consumption, Voting Rights for Criminals, Eliminate Private Health Insurance, Health Care for Illegal Immigrants. Despite the press about Harris, she is improving significantly in the WSJ poll and betting odds as seen below.

• I was not voting before, now I am: gen Z voters on what they think of Kamala Harris

  • Clearly Harris will help with the younger vote and Black turnout.

• ‘Let’s go’: Harris agrees to debate Trump, accuses him of ‘backpedaling’ on Sept. 10 date

• This video is crazy uncovering donation fraud. Thousands of donations have been made in the name of other people that had no idea. One guy had 31,000 donations in his name and knew nothing about it. It’s called “Smurfing”: The activity of laundering money by conducting a large number of small transactions through banks and individuals.

Trump spoke in NC and turned his attacks on Harris. Donald Trump unleashed a barrage of attack lines Wednesday against his likely new opponent, Vice President Kamala Harris, whom he called his “new victim to defeat.” He also accused her of deceiving the public about President Joe Biden ‘s ability to run for a second term. Trump called her a “radical left lunatic” and said she was “crazy” for her positions on abortion and immigration. "If you don’t mind, I’m not going to be nice," Trump said to cheers from the crowd. Trump quickly took aim at Harris, claiming she was "incompetent" and the "worst vice president in American history." I want Trump to be more Presidential and fight with facts and examples, not name calling.

• After Trump Assassination Attempt, Rutgers Prof Wrote ‘Let’s Hope Today’s Events Inspire Others’

  • How is this allowed. How does she have a job?

• JD Vance admitted he ‘hates cops’ & called Trump a ‘morally reprehensible human being’ in bombshell emails to classmate

  • When running for major office it seems lots of skeltons are exposed.

Israel/Middle East

• An Israeli airstrike hits a school sheltering people in Gaza, killing at least 30

• Biden administration fears Israel-Hezbollah war after terror group rocket kills 12 on soccer field

• Strike on Israeli Golan Heights kills 11 and threatens to spark a wider war. Hezbollah denies a role

• Cop Dragged, Assaulted, And American Flag Burned As Pro-Palestine Protesters Rage In DC

  • Anti-Israel Protesters Release Maggots, Mealworms and Crickets at Watergate Hotel Hosting Prime Minister Netanyahu

  • Anti-Israel agitators burn American flags, accuse Netanyahu of being 'war criminal' as he addresses Congress

  • “We don’t want no Zionists here. From the river to the sea… We will never back down,” were chants from protestors.

  • More “Mostly Peaceful” protests of Jew hate. Let’s deport all these protesters to Gaza to live under Hamas rule. Below was left in DC after protests. Click on the picture for the video.

    

• Harris slams ‘despicable’ protests at DC’s Union Station during Netanyahu visit

  • Nice touch, but her history has not been incredibly positive towards Israel. If Mexico came into the US and murdered 40k including women and children and took 8.7k hostages, what would the US do to Mexico? Israel has every right to defend itself. Amazing short video in the link.

• Around half of Congress' Democrats skip Netanyahu speech

  • Roughly 100 House Democrats and 28 Senate Democrats were present in the chamber for the Israeli prime minister's speech, meaning around half of both caucuses were absent.

• Trump meets with Netanyahu at Mar-a-Lago as Israeli leader wraps up U.S. trip

Other Headlines

• U.S. Economy Grew a Robust 2.8% in Second Quarter

  

• Tech’s splurge on AI chips has companies in ‘arms race’ that’s forcing more spending

• BofA Says Cooling Economy Will Crack Big Tech Rally Even More

• OpenAI announces a search engine called SearchGPT; Alphabet shares dip

  • Google has 87% of the search market share in the US.

• 3M Delivers Strong Second-Quarter Results-Stock +23% on Friday.

• IBM shares jump on earnings and revenue beat

• Viking Therapeutics stock jumps 20% after drugmaker moves weight loss injection to late-stage trial

• Lilly Loses $120 Billion in Value as Rival Obesity Drugs Impress

• Ford shares tumble 11% after massive earnings miss

  • If you invested $10k into Ford 25 years ago, you would have $8k today including dividends. The investment in the S&P would be $65k. If you invested in Amazon, it would be $589k today. If you invested in TSLA at the IPO in June 2010, you would have $2.1mm today.

    

• Dexcom shares plunge more than 40%, head for worst day on record

• NYCB Shares Tumble Most Since March as Loan Provisions Surge

  • The bank reviewed 80% of its NYC rent-stabilized portfolio, revealing a troubling increase in delinquencies (up 767%), charge-offs (up 590%), and non-accruals (up 134%).

• Shares of Gucci-owner Kering hit seven-year low after weak forecast, revenue drop on low China sales

• Jeep, Dodge-maker Stellantis reports 48% drop in first-half net profit on weak U.S. sales

• Chipotle earnings and revenue top estimates, restaurant traffic rises again

• Renewable energy demand will triple as electricity consumption surges

• Moped-riding menace slugs two out-of-towners in NYC, leaving one clinging to life

• Shoplifting skyrockets by 24% across US even as most other crimes fall to pre-pandemic levels

  • Bad policies and overly woke DAs are hurting business, Americans.

• Squatter gets 40 years for illegally taking over Panama City Beach condo in Florida

  • In NY and CA, they give squatters steak dinners. In FL, you go to jail. I LOVE this. State Attorney Larry Basford said in a release. "Do not come to Northwest Florida and try to steal people's identifications and/or property by squatting because we will not tolerate this."

• Gov. Gavin Newsom issues executive order for removal of homeless encampments in California

  • CA has the largest homeless population in the US at more than 180k.

• University of Alabama shutters DEI offices, joining Texas and Florida schools in kicking wokeness off campus

• The world's richest one percent increased their fortunes by a total of $42 trillion over the past decade, Oxfam said Thursday.

• New ‘Jetsons law’ paves the way for flying cars from August 1 and will allow future aircraft to be classed as vehicles

  • What could possibly go wrong?

Olympics

This is the full schedule.

• This word is the ‘key’ to being treated well in France, experts say

• 5 takeaways from the opening ceremony of the 2024 Paris Olympics

• Olympic soccer gets off to violent and chaotic start as Morocco fans rush the field vs Argentina

• Canada women’s soccer coach suspended over drone scandal, which may be part of ‘systemic’ issues

• Iranian hackers threaten Israeli athletes at Paris Olympics in new cyber campaign

  • The campaign involves hackers creating social media channels to publish personal information and sending them threatening messages.

• Why the Paris Olympics cost so much less than in Rio, London or Tokyo

  • I have readers heading to the Olympics and I was surprised the tickets were reasonable.

• US tech company pulls Olympics ads after opening ceremony ‘mockery of the Last Supper’

  • Mixed reviews on opening ceremonies that included drag queens.

Real Estate

• Shares of commercial real estate finance company Blackstone Mortgage Trust fell 12% on Wednesday as the firm cut its dividend 24%, facing continued strains from vacant offices. It is the latest sign of mounting woes in commercial real estate. Analysts are predicting more weakness for lenders and owners in the sector as American workers maintain their pandemic-era remote work habits. The shift has left broad swaths of office space empty, while elevated interest rates have left many borrowers struggling to make timely payments on their loans. Blackstone Mortgage Trust set aside an additional $140 million in reserves for expected credit losses. Of its holdings in U.S. office space, 55% is "watch-listed or impaired," according to an earnings presentation.

• Ken Griffin makes billions each year and his net worth is $40bn according to many reports. He famously left Chicago due to crime and safety issues and landed in South Florida. This Real Deal article outlines his recent Chicago condo sales and listings. I am struck by the low prices on a square foot basis in Chicago for luxury. For high-end product, Miami and Palm Beach are far more expensive. I was born in Chicago, worked there for 5 years, went to the University of Chicago for business school and I hope I never go back to that city again. Bad policies have crushed what was once a great city and companies and wealth have left in droves. In Miami, there are numerous condo buildings going for $4,000-6,000 foot including Apogee, Shore Club, Surf Club and many others. The Lower PH at Sternlicht’s Perigon on 53rd and Collins sold for $7,500 foot ($52mm) and is under construction. In Miami, there have been a dozen recent sales between $50-120mm for high end condos including three over $100mm. Griffin only lives in the highest quality buildings. The fact that the top quality PHs in Chicago are selling in the $1,500/ft range is telling. In Boca Raton, high end units are going for more than Chicago. In West Palm Beach at the Bristol, the 23rd floor unit is asking $25mm or $5k/foot and is not on the beach. At Forte in West Palm Beach, there is a PH for sale in a building being delivered in Feb 2025. The asking price is $47.5mm or $5,300/ft. Policies matter. Elections matter. Voting in soft-on-crime politicians who let career criminals walk the street crushes business and R/E valuations. Remember, Griffin donated hundreds of millions of dollars to Chicago over 10 years. His parting gift was a $130mm donation to 40 Chicago charities as he moved. He is donating a ton in Miami now. Thanks Ken, we are lucky to have you.

  

• This Bloomberg article is entitled, “Starter Home Prices Top $1 Million in More Than 200 US Cities.” Just a few years ago, one might expect a large, well-cared for home with a lush lawn and maybe even a pool for $1 million. But not anymore. The typical starter home — defined as the lowest third of residential values in a region — has a seven-figure price tag in 237 cities, including dozens surrounding New York, San Francisco and Los Angeles, an analysis from Zillow Group Inc. shows. That’s more than triple the number of cities just five years ago.

© 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™ #703 ©Copyright 2024 Written By Eric Rosen.