My Memorable Last Day in the Hamptons
8-21-24
Opening Comments
My last note was entitled, “Jacked,” and was about my flat tire in my rental car in the Hamptons. The most opened link was the video of the day of the golden retriever that become a mother to tigers after they were abandoned. The next opened link was the surgeon who recommends you go to the hospital if you have this symptom.
The heat in Florida in August is no joke. At 10 am, I took Julia to hit golf balls for the first time in four months. I did not swing a club and I was sweating like I was playing tennis.
I have written about Max Greyserman (PGA Tour Player & Rosen Report reader/contributor). He finished 2nd 10 days ago after a disappointing back nine. His interview after the tough round shows incredible character. He then shot another 63 this Sunday to make it into the 2nd round of the FedEx Playoffs in the 47th spot. On the Korn Ferry Tour in 2023, Max made $392k. This year, he has made over $3mm on the course and has more to play. He had four top 10 finishes in his rookie season with two 2nd place finishes, one 4th and one 7th. His performance earned him “Elevated Status” for next year, meaning he will play in the eight elevated events. Congrats on an amazing year. If you recall, I interviewed Max earlier this year and had been pushing people to sponsor him. Let’s just say, his price went up, but he has a sponsorship opening for anyone interested. I can connect you. Max, congrats on an amazing year. Finish strong. Max agrees that after he was on the podcast with me, his golf game improved dramatically. As a result, I feel I am entitled to 20% of the winnings. What do you say, Max? Zelle me the money. He is ranked 51st in the world today!
Today is my 20th wedding anniversary. It is mind boggling that Jill and I have two grown children (17 & 18 years old) and we were married exactly 20 years ago in Southampton, NY. She looks eerily similar to what she did 20 years ago. Me, not so much.
Markets
Stocks During Election Years
Bear Markets During My Lifetime
Creditor on Creditor Violence
Consumer News
New Study of Impact of Social Media on Kids
Florida Residential Weakness and Strength
Vanderbilt $520mm Campus to West Palm Beach?
Video of the Day-The Invention of the Birkin Bag
The Hermes Birkin Bag is one of the most sought-after purses in history. Jane Birkin is a French actress and singer. She was on a plane and sat next to the then- CEO of Hermes and an interesting conversation resulted in her designing the Birkin Bag. She drew up a sketch on a barf bag and history was made. Jane outlines the incident of 40 years ago in this short video. Fascinating. Harpers Bazaar tells the story here. For those who do not know, the Hermes Birkin Bag can cost over $100k and some can be found at Sotheby’s.
My Memorable Last Day in the Hamptons
On my last full day in the Hamptons (Friday), I was invited to fish with my friend, Barry (fellow 3i Member). He has a nice center console fishing boat, and his two amazing sons, Aaron and Andrew were on board as well. My readers know about my love of fishing and the fact that I have fished all over the world. They also know I enjoy catching, cooking and posing with my fish. Well, Friday was no different.
We left the dock at 5am and it was a beautiful morning with some fog and maybe some smoke from Canadian wildfires. Note the stunning sunrise (that coloring is due to smoke in many cases.) The seas were dead calm and we were seeing all kinds of amazing wildlife on the ride to the fishing grounds.
The sonar screen was full of fish. A very good sign.
We might have seen two dozen whales. At times they were literally jumping out of the water and making massive splashes. There were hundreds of porpoises frolicking around. This short video shows some stunning sea life, like something out of National Geographic. This was just miles from East Hampton town.
In short order, we were hooked up on nice bluefin tuna and we all had a blast. These fish are strong and put up a nice fight on light tackle. Look at how beautiful the tuna look just after they are caught.
I made some amazing-seared tuna appetizers and poached tuna salad with the fresh catch. My tuna salad includes celery, sweet gherkins, hard boiled eggs, onions, sour cream, mayo, salt, pepper and paprika. The tuna salad was for the sandwiches for the long day on Saturday, as we were flying back to South Florida.
Barry, Andrew and Aaron, thanks for having me aboard. Come to Florida and we will go fishing on my boat. I look forward to hanging out again. What an amazing way to finish the summer. In the wintertime, we catch these in Florida. Note that I am in shorts in the winter.
Quick Bites
Stocks remain resilient despite the sharply downwardly revised payroll data. Nonfarm payroll growth was revised down by 818,000 for the 12 month period through March 2024. It was the largest revision since 2009. Do we assume the trend continued for the past few months? Fed minutes suggested a rate cut in September. “The vast majority” of participants at the July 30-31 meeting “observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting,” the summary stated. Stocks were up on Wednesday and now YTD, the S&P is +18%, Nasdaq +19%, and Russell 2000 +7%. The futures market now has a 42% chance of a 50bps cut in September and a 100% chance of a total of 100bps of cuts b year end. Oil is down below $72/barrel post the employment data. Oil was $80 10 days ago on Middle East tensions.
A lot of readers have sent me notes asking about stock performance in election years. I lack the infrastructure to do a full analysis on my own. However, I found this US Bank article outlining stock performance in election years. The historical data suggests that economic and inflation trends, more so than election outcomes, tend to have a stronger, more consistent relationship with market returns. U.S. Bank investment strategists reviewed market data going back to 1948. Using average 3-month returns following each election outcome—and comparing those with the average 3-month return during the full analysis history—strategists calculated the statistical significance of the relationship between political control and market performance using a calculation called a t-statistic, or t-test. A t-test determines whether one group of variables (in this case, the political composition of the White House and Congress) has a measurable effect on another variable (in this case, average three-month S&P 500* returns during the control period). The analysis also looked at the exact periods of time when parties took control of different branches of government (rather than starting from election dates themselves), although this analysis resulted in similar outputs and conclusions.
Two scenarios corresponded to positive absolute returns in excess of long-term average returns:
Democratic control of the White House and full Republican control of Congress.
Democratic control of the White House and split party control of the Senate and House.
One scenario corresponded to positive absolute returns modestly below long-term average:
Republican control of the White House and full Democratic control of Congress.
I will be 55 years old in November and decided to do research on bear markets during my lifetime. We have seen the S&P pull back by 20% nine times since I was born. I was far too young to remember the first two but recall stories about how bad things were in the early to mid-70s. One friend bought a co-op in NYC for $400k in 1970 (VERY expensive at the time). By 1974, he told me he could not sell it for $150k. It was sold a couple of years ago for $33mm and was a total gut job. In the early 80s, I vividly recall Jumbo CD rates in the high teens. In August 1981, 3-month CD rates were 18.7% and a 30-year mortgage rate was 18.6%. I was in high school during the 1987 crash and had saved a few thousand from my jobs. I knew almost nothing about the market but bought my first stock in Disney as it was falling. I was so worried I was going to lose my $1k. The stock went from $4.87 to $2.73/share before bouncing and eventually hitting $4.06 in 1988. I made a little money and was convinced I was Warren Buffett despite losing sleep as the stock went lower after I bought it. I was running the credit trading desk at JPM during the Global Financial Crisis and had shorted the world in 2007, leading to billions in revenues in 2008 and 2009. However, I was early on the short and 2007 was not a banner year as a result of the rally. Who can forget the pandemic sell off? Sadly, I was too bearish on it. The article and charts give a good idea of market pull backs, causes, severity. Interesting reading.
Good WSJ article around extreme measures borrowers are taking and it is entitled, “Coming to a Cash-Strapped Company Near You: Creditor-on-Creditor Violence.” Grand alliances. Secret pacts. Betrayal. It’s all in a day’s work in the booming market for low-rated corporate debt. U.S. companies that struggle to repay their below-investment-grade bonds and loans have increasingly squeezed concessions from lenders by pitting them against one another. The private-equity firms and wealthy individuals who own most of the companies call the deals “liability management exercises,” or LMEs. Debt investors call them “creditor-on-creditor violence.” Companies using these tactics—or preparing to—run the gamut from telecommunications provider Altice USA to cloud-computing firm Rackspace Technology and aerospace supplier Incora. Some funds are fighting back by joining forces to pre-empt such tactics. Lenders to radio broadcaster iHeartMedia have recently organized, fund managers who have participated in the groups said. But even in such alliances, debt investors can turn on each other, they said.
Here are a handful of stories and charts on the US consumer that I lumped together. Most households can weather a $400 financial shock, research finds — but some have to get creative. Most families — 92% — can cover a $400 “expense shock” through a combination of cash savings, disposable income or short-term credit, JPMorgan Chase Institute finds. Not just for kids anymore: Adults turn to lemonade stands as side hustles. Back-to-School Shopping Will Put a Third of Americans in Debt. Lowe’s cuts full-year outlook as it expects weaker home improvement sales. The headlines I see suggest suggest the consumer is slowing more rapidly now, but there are pockets of strength. The discount retailers such as TJX, Target, Wal-Mart and Amazon are doing well as shoppers are increasingly price conscience.
I have been critical of the impact of social media on children and adults alike. A new study commissioned by LG Electronics does nothing to dissuade my view. Three in four Gen Z Americans are putting the blame on social media for having a negative impact on their mental health. The survey, commissioned by LG Electronics and conducted by Talker Research, offers compelling insights into the digital habits and emotional responses of 2,000 Gen Z social media users. In a startling revelation, 20% of Gen Zers cite Instagram and TikTok as detrimental to their well-being, followed by Facebook at 13%. Despite these concerns, social media remains an integral part of Gen Z’s daily life. The average user spends a whopping five-and-a-half hours per day on social media apps, with 45% believing they outpace their friends in usage time. Boredom (66%), seeking laughter (59%), staying informed (49%), and keeping tabs on friends (44%) are the primary motivators for their online engagement.
2024 Election
The DNC kicked off Monday and President Biden gave a 49-minute speech, albeit nearly an hour late and out of Prime-Time on Tuesday. Nate Silver suggested the delay was intentional. “The media is very East Coast focused though, you've gotta be pretty naive to think the prolonged DNC tonight is for any reason other than diminishing Biden’s visibility," Silver said. Biden was far more coherent than during the disastrous debate and the crowd ate it up. I felt Biden was full of fire and passion and he was very pro-union. Although we know Trump is the king of exaggeration, I felt Biden overstated things as politicians do. Here was Biden’s comments on the war in Israel: Biden himself addressed the issue head-on, saying he’d keep working to “end the war in Gaza and bring peace and security to the Middle East.” “Those protesters out in the streets have a point,” Biden said. “A lot of innocent people are being killed, on both sides.” Overall, I thought Biden did a pretty good job. His most memorable line of the speech was: “Crime will keep coming down when we put a prosecutor in the oval office rather than a convicted felon.” Yes, he had some blunders, but I did not feel it was a bad speech.
This short video shows a Venezuelan migrant trying to enter the DNC. They required an ID and application process. It is harder to get into the DNC than it is to vote for the President or enter the USA illegally. Does this make sense?
Democratic National Convention Draws 20 Million On First Night, Surpassing RNC Viewership
Exclusive-Harris' election effort raises around $500 million in a month
Kamala Harris Supports President Biden’s 44.6% Capital Gains Tax Proposal
It also includes a 25% tax on unrealized gains for high-net-worth individuals (more than $100 million in wealth). This is an absolutely horrific idea that will cost a ridiculous amount to monitor. Focusing on cutting costs.
Harris proposes raising the corporate tax rate to 28%, rolling back a Trump law
Two questions. Is this competitive with other countries and how will the money be spent? This link shows tax rates by country and it seems to me 28% would be on the high side. Based on the spending by the Biden/Harris administration, I have zero faith that any extra tax revenues will pay down $35 trillion in debt.
Trump continues personal attacks against Harris: ‘I’m a better looking person’
VERY Presidential. Focus on why your policies are better than Harris, not aesthetics.
Trump says he would offer Tesla CEO Elon Musk a Cabinet slot, but might end EV tax credit
Trump is his own worst enemy. Suggesting that a civilian award is better than a Medal of Honor is an insult to Veterans. Trump, I am begging you to think before you speak.
RFK Jr. campaign ‘looking at’ joining forces with Trump, running mate Shanahan says
Illegal border crossings surpass 12.5 million since Biden-Harris took office, most in US history
How many were bad actors? How many crossed and were not caught given the porous border?
As Democrats kick off convention, House GOP drops impeachment report accusing Biden of corruption
Protests erupt, Chicago businesses board up as the DNC kicks off Day 1 festivities
Israel/Middle East
Blinken ends latest Mideast visit without cease-fire for Gaza, warning ‘time is of the essence’
Hamas and Palestinian Islamic Jihad Claim Responsibility for Sunday’s Suicide Bombing in Tel Aviv
Hezbollah commander lured out of hiding with phone call moments before deadly airstrike
Majority of antisemitic incidents committed by leftists, not Islamists or neo-Nazis, research find
Of the Pro-Hamas protests on campuses across the country, what percent of those in attendance were on the left?
Every graduate of elite NYC Jewish high school avoids Columbia for first time in decades
Other Headlines
California Reveals All Job Gains In 2023 Were Fake
Start-up failures rise 60% as founders face hangover from boom years
Inability to raise funding is key driver.
US new bankruptcy filings hit 6,276 in Q2 2024, the highest level since Q2 2017
To fix Starbucks, incoming CEO Brian Niccol will have to tackle its mobile app problem
Labor costs, inflation, concerns over health, long lines and mobile app issues. Niccol has a lot on his plate.
Estee Lauder forecasts bleak annual results; CEO Freda to depart
Slowing demand in China was the main cause. Many companies seem to be mentioning the China slowdown. Demand for even “affordable luxuries” such as lipsticks and perfumes, widely considered recession-proof, are seeing a hit, with Estee expecting continued declines in the prestige beauty segment in China and European peer L’Oreal highlighting a lack of a rebound in the region.
Trump Media shares hit post-merger low as DJT slump continues
I have been very critical of this stock and have written on it extensively. After hitting $79.4 in March, the stock is -65% to $24.5/share. It has a $4.8bn market cap and remains overvalued at these depressed prices based on comps and a shrinking revenue base.
Waymo is developing a roomier robotaxi with less-expensive tech
A reader told me he swears by Waymo, despite the high price.
There’s a Gender Split in How US College Grads Are Tackling a More Difficult Job Market
A Bloomberg News analysis of government data finds that young men are holding out for the right positions, while women are being more flexible. According to the article, kids with good degrees are applying to 1,000 jobs and have nothing to show for it.
The CEO Who Made a Fortune While His Hospital Chain Collapsed
The unmitigated disaster of Steward Health Care systems is ridiculous. The company paid the CEO $250mm during his 4-year stint, despite creating the largest hospital failure in decades. Where was the board? The compensation committee?
The Extreme Renters Who Own Nothing, Not Even Their Jeans
It’s not just leasing your car. Christmas trees, camping gear and even caskets are up for rent. This is absolutely crazy.
‘Gold Bar Bob’ Menendez negotiating pardon from Biden for leaving Senate race
1010 WINS reporter attacked on NYC street in random assault: ‘This is the new norm’
Concerning FBI Data on Unsolved Homicides in the US
In 1965, 95% of murders were solved; today it is just above 50%.
Vicious duo who pummeled elderly woman on NYC street freed without bail — despite arrest history
In what alternate universe is this possible? The pair have 18 prior arrests and beat an 82-year-old woman.
Migrant who pushed man onto Tube tracks was in process of appealing deportation for sex crimes
This was in the UK. No wonder why people are so upset with the bad immigration policies.
Pop Star Bebe Rexha Is Booted From Flight In ‘Hate Crime'
Rexha spoke to security at the airport in Albanian and was punished by Lufthansa. Crazy.
Former co-defendant of British tycoon missing in luxury yacht sinking dies after being struck by car
This is a crazy story. Two defendants, Mike Lynch and Stephen Chamberlain, who were both acquitted in June of fraud relating to the sale of their company to Hewlett-Packard for $11bn, died in separate, unusual incidents. Stephen Chamberlain, 52, a former VP of finance at Lynch’s former company Autonomy, was hit by the car while out running on Saturday, his lawyer Gary Lincenberg told CNN Monday. The incident took place just two days before the British investor Lynch, 59, went missing along with five others after a tornado sank the luxury yacht carrying them off the coast of Sicily in the early hours of Monday. Chris Morvillo, Lynch’s lawyer, was on the boat and is also missing.
Air Force veteran, brother sentenced to ‘notorious’ Dubai jail after being ‘drugged’
Crazy story of brothers who were drugged and arrested. They face serious jail time.
Man who smoked legal weed in Nevada now faces years in prison in Dubai
He smoked weed in Vegas and went to Dubai. Got sick and went to the hospital in Dubai and when they tested his urine, it showed traces of marijuana which was reported to police.
German Climate Activists Glue Themselves to Tarmac, Halting Flights
These people sure are committed to the cause. Others glued themselves to the stadium at the US Open last year.
Best- & Worst-Run Cities in America (2024)
'A surreal feeling': 15-year-old named TIME's 2024 Kid of the Year after new invention
Haman Bekele is a 15-year-old that invented a soap that may treat skin cancer. This kid sounds as though he is 50, not 15. IMPRESSIVE.
I’m a doctor — don’t delay care if you experience these stroke symptoms
3 ways your body is letting you know you’re experiencing burnout, from a psychologist
Great info on sports that extend your life according to a study discussed by Elon Musk on Joe Rogan
Let’s add my favorite new sport, Padel, to the list!
Fatherhood at 50: Older men starting families create health concerns for their kids
People are falling in love with — and getting addicted to — AI voices
Even OpenAI warns that chatting with an AI voice can breed “emotional reliance.”
Phil Donahue, daytime-talk-show legend, dead at 88
What a legend. I fondly recall his talk show that ran for 29 years until 1996.
I have been wrong about a lot of things in my life. I had thought Russia would destroy Ukraine in 10 days and it would be over. The only good news out of this is Russia’s army has been severely depleted. Ukraine attacks Moscow in one of largest ever drone strikes on Russian capital.
Real Estate
Much has been made of growing inventory and slowing sales in Florida. I concur that some markets have slowed sharply, especially at the lower end and older condos that are seeing special assessments. The high end from Miami to Palm Beach has been strong with limited inventory when priced appropriately. The first two graphs show Florida’s housing inventory growth. The last chart is data from the Royal Palm community in Boca Raton, Florida. In total volume in Royal Palm, it is the 2nd best year in history only behind 2021 (Covid). The median and average price is the highest in history by 52% and 42% respectively. When I moved down in 2017, the highest price home sold for $12.4mm and there was only one house sold over $10mm that year. In 2024 so far, 19 homes have sold for over $10mm and five have sold for over $25mm and it is only mid-August. Although the community has 33 listings today relative to four in December of 2021, there were 70 listings in 2017. Average prices in my community are +3.3x since 2017. No, I do not believe the next 7 years will look like the prior years.
Vanderbilt University, one of the nation’s best-ranked higher ed institutions, wants to build a $520 million campus in West Palm Beach, Fla. The 300,000-square-foot campus would house 1,000 students, according to a filing to Palm Beach County and West Palm Beach. Plans call for the construction of a main academic building, student housing, and a parking garage. Education programs would include business, artificial intelligence, data science as well as a so-called innovation hub. The campus would be nestled between the civic center and Dreyfoos School of the Arts in Downtown West Palm Beach. Of the estimated $519.6 million construction cost, $267.6 million would go towards academic buildings, $217.4 million toward student housing and $34.6 million toward parking. Schooling programs could start as soon as Fall 2026. The massive migration of wealth and business to Florida made this possible. It is not your grandparents’ Florida anymore. The number of major businesses and wealthy people relocating to Florida is remarkable. They bring with them important changes to South Florida. The downside is that housing is not so affordable in the best locations.
© 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™ #711 ©Copyright 2024 Written By Eric Rosen.
Happy anniversary