Opening Comments
My last note was entitled Old Man and the Sea about my fishing adventure. The most opened links were the list of famous people in the Diddy lawsuits and the video of the special needs student getting into a fraternity at Clemson.
In many cases, some of my most opened links are about health. A reader, Marc, sent me information on an app called- Yuka. Yuka deciphers product labels and analyzes the health impact of food products and cosmetics. The idea is brilliant. I have no affiliation with this app, but started using it on Monday and quickly determined that so much food in America is bad for you. The FDA is failing Americans with lax standards, especially around kid’s food. I used Yuka to learn more about breakfast cereals and the feedback was overwhelmingly negative. Check out this interview of food expert, Jason Karp about the testimony he gave before the Sernate on this topic. His shocking claims are incredibly concerning.
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Pictures of the Day-Most Popular Generative AI Tools & Launch Costs
Markets
Goldman Forecasts 3% for S&P for Next Decade
Global Deficits
Headhunters “Dupe” Wall Street
AI Accusing Students of Cheating
Deshaun Watson
North Bay Road, Miami Beach Sales
$195mm Beverly Hills Home for Sale
The Migration Continues at a Slower Pace
North Dakota Trying to Eliminate R/E Taxes
Home Sales Crashing
Pictures of the Day-Popular AI Tools & Launch Costs
There is an adage, “A picture is worth a thousand words.” The picture below from Visual Capitalist, says it all. ChaptGPT dominates generative AI tools with 17 times the traffic of the next closest competitor. A couple years ago I wrote about how I thought AI would change the world. I just wish I would have bought Nvidia stock on that day. The 2nd chart shows the drastic reduction in cost per kilogram to launch into orbit. Musk played a big role in dropping the cost. Here’s a fascinating discussion from the All-In Podcast on the topic, with startling ramifications.
Night Out in Miami
Some friends invited me to Miami for dinner. I had gotten up that morning at 5:30 am to fish and had not had much to eat. I left for the 7 pm dinner at Carbone at about 5 pm, so I could go somewhere and have a drink and maybe a light bite to tide me over. I made it to South Beach in 51 minutes, which was a nice surprise. It looked like it was going to pour, so I decided to go to Carbone and sit at the bar. I ordered a glass of overpriced wine and asked for a bar menu. “We do not serve food at the bar,” the bartender replied.
I decided to brave the rain and run next door to the new Asian restaurant, GAO. The place was empty; maybe three tables were taken. The room is very nicely done with high ceilings and beautiful covered seating outside. The bartender asked what I wanted, and I ordered a glass of wine and asked for a menu. He said he needed to leave, and a young woman would be helping me. He said, “I must tell you, she does not speak English.” I thought this was a joke, but it was not. She did not speak English. Welcome to Miami! I pointed to the menu to order my shrimp spring rolls. It was awkward, but the food was pretty good. I am not convinced this place will stay in business.
I then walked over to Carbone to meet my friends. We sat down to dinner at the well-appointed dining room. The crowd is hip and cool, even if some of the attire was too casual for my taste. They brought us salami, pickled veggies and some Parmesan cheese. However, the bread stole the show. Both the focaccia and garlic bread were on another level.
The appetizers we ordered, meatballs that are not on the menu, are among my favorite dishes at Carbone. However, my former love, spicy rigatoni vodka, was disappointing. I once wrote a review entitled, “Spicy Rigatoni Vodka Alone is Worth the Price of Admission At Carbone.” However, it was uninspiring in the Miami location Sunday.
For entrees, we had a couple of porterhouse steaks for two and dover piccata. Both were good, but way overpriced. The cook on the porterhouse was solid, but for $295 (per steak), hardly worth the price. And there is no piece of fish worth $120, which is the price of the dover piccata.
Major Food Groups (MFG) does an amazing job of creating a great vibe and bringing beautiful people together. The rooms at the restaurants are always well done and many millions are spent to create the special atmosphere. However, I feel MFG restaurants have missed the mark recently, and rarely go to them today. The bill came out to almost $1,500 for 6 people and each person only had one drink. Sorry, I just don’t feel it is worth the price, despite the view and vibe. The food no longer dazzles me at any of the MFG restaurants. As an aside, the Wolf of Wall Street, Jordan Belfort, was at the table next to us.
All of that said, we had a great time with amazing friends. Miami has a lot to offer, and I love going down to Miami, sometimes twice a week. When I first moved down in 2017, I went 5 times a year; now I go 50 times a year or more.
Quick Bites
Rates sold off more this week with the 10-year hitting 4.24%, or +61bps since the Fed cut rates in September. The 2-year yield is 4.09% or +50bps since the rate cut. Stocks sold off in conjunction with the move higher in rates, as I suggested in my last note. Stocks were negative each day this week with the biggest drawdown happening Wednesday with major indices -1-2% on the day (as of 3pm). Tech underperformed and the VIX hit 20.
Goldman is forecasting a 3% annual return for the S&P 500 for the next 10 years relative to a 13% return for the last decade. Goldman’s team is worried that these returns have been driven by just a few stocks — namely “the Magnificent Seven” led by the likes of Nvidia and Alphabet — and that a few stocks can only keep up their dominance for so long. “The intuition for why concentration matters for long-term returns relates to growth in addition to valuation,” stated the strategy paper from the end of last week. “Our historical analyses show that it is extremely difficult for any firm to maintain high levels of sales growth and profit margins over sustained periods of time.” The markets have been extremely resilient. Far more than I could ever have ever imagined.
When it comes to debt, deficits, and entitlements, I am like a broken record. This Bloomberg article, “The World’s $100 Trillion Fiscal Timebomb Keeps Ticking,” outlines the issues on a global basis. For those without Bloomberg, this link from Yahoo Finance is a similar one. The IMF’s Fiscal Monitor will feature a warning that public debt levels are set to reach $100 trillion this year, driven by China and the US. Managing Director Kristalina Georgieva, in a speech on Thursday, stressed how that mountain of borrowing is weighing on the world. “Our forecasts point to an unforgiving combination of low growth and high debt — a difficult future,” she said. “Governments must work to reduce debt and rebuild buffers for the next shock — which will surely come, and maybe sooner than we expect.” As for the biggest borrowers of all, the glimpse of the IMF’s report already published contains a grim admonishment: your public finances are everyone’s problem. Sure, every country could use more revenues, but the spending has gotten out of control. I am focused on the U.S., where there is no end in sight to $2 trillion annual deficits. Investing Legend, Paul Tudor Jones (PTJ), said, “We are going to be broke,” when discussing deficits/government spending on CNBC Tuesday. Druckenmiller, PTJ, Sternlicht, Dalio and others all share my concerns.
This Bloomberg article, “Headhunter Said to Use Fake Identities to Dupe Wall Street Traders,” is interesting. I vividly recall getting calls from headhunters back in the day and not being convinced the opportunities existed. The story suggests that these headhunters make up jobs to get candidates to open up about their comp range and profitability. However, there is no real job on offer. The scammers are doing it to get intel. Be careful! Odin Partners is the firm mentioned, but they are not alone. I remember a publication called, “Trader Magazine,” that would call me and tell me how much I was paying my staff. They were off by multiples, but their salacious articles sold copies. I vividly recall telling them, “I will not tell you how much I pay that trader, but if you publish the number you mentioned, you will look like a complete idiot.
This Bloomberg article, “AI Detectors Falsely Accuse Students of Cheating—With Big Consequences,” is concerning. The article outlines examples of students being falsely accused of using AI to write papers. Educators now rely on a growing crop of detection tools to help spot sentences, paragraphs or entire assignments generated by artificial intelligence. About two-thirds of teachers report using an AI checker regularly, according to a survey of more than 450 instructors. The best AI writing detectors are highly accurate, but they’re not foolproof. Businessweek tested two of the leading services—GPTZero and Copyleaks—on a random sample of 500 college application essays submitted to Texas A&M University in the summer of 2022, shortly before the release of ChatGPT, effectively guaranteeing they weren’t AI-generated. Businessweek found the services falsely flagged 1% to 2% of the essays as likely written by AI, in some cases claiming to have near 100% certainty. This is a bit concerning, as innocent students have been accused of cheating.
I have never been a Deshaun Watson fan and cringed when the Cleveland Browns spent $250mm on a GUARANTEED contract for him, despite dozens of accusations of sexual assault and harassment. His performance at Cleveland has been awful. In 2.5 seasons, he has 19 TDs and 12 INTs and is currently ranked 28th out of 32 starting QBs. Watson tore his Achilles on Sunday and will miss the remainder of the 2024 season. Paying someone $250mm guaranteed, despite dozens of accusations from women, was an awful call by the Browns.
2024 Election
Silver's nuanced election forecast model still shows Harris with a narrow lead nationally, with the vice president at 48.9% and Trump at 47.2%, as of Sunday afternoon. But Trump, who last Sunday was ranked 46.5% in Silver's model, appears to be gaining ground.
This chart is a big positive for Trump
Michigan Voter Rolls Claim 8.4M Voters, When There Are Less Than 8M Eligible Residents
Kamala Harris wants America to have the world's highest death tax
The current exemption from estate tax is $13.6mm and in 2026, it reverts back to $5mm. Kamala is supportive of the shift back to 2018 levels. I am adamantly opposed to death taxes, as your money has already been taxed. If you live in NYC or CA, you pay effectively 50%+ in income tax. Then you die and pay another 40% Federal and 16% in NY on wealthy estates. So you end up paying 75% in total taxes on meaningful estates.
The left-wing newspaper "Los Angeles Times" has decided NOT TO ENDORSE Kamala Harris for president.
McConnell backed Jack Smith, wanted Trump to “pay” for Jan. 6
McConnell has a biography coming out the week prior to the election.
John Kelly: Trump offered private praise for ‘Hitler’s generals’
Trump doubles down on tariff plan that voters hate
I feel Trump’s tariff plans are too aggressive.
Trump said so many stupid things this week, I decided to just round them up
This was from the USA Today on Sunday evening. The guy sure says some dumb things.
If elected, Trump says Xi will not invade Taiwan: ‘He knows I’m crazy
Elon Musk's election promise of $1 million daily giveaway sparks call for probe
I’m not a lawyer, but this plan seems questionable to me.
Ted Cruz Suffers Blow as Texas' Biggest Newspaper Endorses Opponent
Israel/Middle East
US investigates leak of Pentagon documents on Israel’s plans to attack Iran
This is a major breach and the ramifications are serious. Israel will not be sharing information in the same manner moving forward, in my opinion.
Safieddine, the apparent Hezbollah heir who was killed by Israel
That was quick. Way to go, Israel.
IDF: Hezbollah hiding $500 million in gold, cash in bunker under Beirut hospital
Nothing like taking food from your starving people. Everyone involved in Hamas must face consequences.
Hamas leader Yahya Sinwar’s wife reportedly spotted with $32,000 Birkin bag as she went into hiding
Park Slope Food Co-op members face anti-Israel, antisemitic hate
Jewish Students at UCLA Were Harassed, Threatened and Assaulted on Campus, Report Finds
Finally, someone who does not want all Jews to die.
Other Headlines
Apparently, he is shorting Treasury bonds in decent size.
China’s Steel Demand Has Shrunk to Less Than Half Global Total
The Energy Transition Is Powered By — Wait for It — Coal
Electricity consumption is accelerating faster than renewable sources can provide for it. And so the world keeps turning to the dirtiest of fossil fuels.
Empty Tables and Rising Costs Push More Restaurants Into Bankruptcy
High food and labor costs coupled with insurance and rent have hit many restaurants. The article also mentions private equity and notes that banks are more cautious on the sector.
McDonald’s shares fall after CDC says E. coli linked to Quarter Pounders
‘Utter betrayal’: New report reveals DHS official used social media to promote illegal immigration
Immigration and Customs Enforcement said a Massachusetts court "refused to honor" its request to hold a Guatemalan man accused of raping a child. How is this ok in America?
Suspected Tren de Aragua gang members caught after fleeing brutal Stamford murder scene
Tren de Aragua member trafficked 15-year-old NYC runaway while free on attempted-slay rap
The illegal immigrant open fire at a man in the Bronx and was released without bail. He was picked up for drugs and released. Then, last week, he was caught for allegedly sex-trafficking a minor.
Number of Young People Accused of Serious Crimes Surges in New York City
NYT article-37% increase in major crimes from minors (since 2017)
Girl, 9, drugged and sexually assaulted after being kidnapped outside Harrods
I have long been critical of over woke teachings and philosophy. These NYT headlines say it all.
The employee faulted her boss for looking 'beyond gender identity' to find the candidate 'most qualified for the job'
NYC officials envision turning Fifth Avenue into a grand boulevard
NYC officials unveiled a plan to transform a central portion of the thoroughfare between Bryant Park and Central Park into a more pedestrian-centered boulevard.
Some of my readers in consumer-facing businesses are talking about seeing a slowdown in spending. This article suggests an expected 8% increase in holiday spending in 2024.
Prostate cancer warning: Be vigilant about this one telltale sign, experts say
Prostate problems can manifest as urinary symptoms, including an urgent need to pee and/or difficulty starting the steam, weak flow or straining. In addition to urinary symptoms, the presence of blood in the urine or semen should be addressed with a doctor immediately.
Sugar shock: Average person consumes 80 pounds of sugar each year
Think of the impact on teenagers if adults think it is toxic.
Tickets for this year’s World Series are the most expensive ever
North Korean troops are already in Russia, Lloyd Austin confirms
Real Estate
I frequently write about North Bay Road in Miami Beach. It is the most sought- after street in town. The owner of LAs largest mansion bought two homes on North Bay Road recently. Fashion Nova’s billionaire founder Richard Saghian has splashed out $30 million for a prime piece of Miami Beach property — two of them, in fact. The retail mogul scored two properties in a swift, all-cash deal: a luxe waterfront mansion and a house across the street, both located on exclusive North Bay Road, according to the Real Deal. Ami Shashoua, a fintech executive and developer, sold the properties to Saghian, who plans to use the waterfront home as a getaway spot. The 7,800-square-foot waterfront mansion, built in 2022, boasts views of Biscayne Bay with 75 feet of frontage. Across the street, the second home features four bedrooms, 4.5 bathrooms, and a new pool and spa. One house is on Biscayne Bay and the other is across the street on a dry lot.
A $195mm home hit the market in Los Angeles. The mansion sits on 6 acres in the Beverly Hills post office area. Clad in imported white Italian limestone, the gated estate is about 50,000 square feet with 16 bedrooms, 27 bathrooms and 18 fireplaces. The primary suite has his and hers bathrooms and closets, as well as an indoor and outdoor fireplaces, a hairdressing area, a custom pop-up TV and a balcony. The pictures in the link are amazing. I just cannot think of anything I would want to own less than a massive mansion in Beverly Hills, California. The carrying costs would keep me up at night.
Since the great migration of 2021 and 2022, moves have slowed down, but are far from over. The chart below is for 2023 and, as you can see, CA to FL, NY to FL , CA to TX and NY to TX flows continue. You will also find that the trend continues with higher net-worth people leaving Blue states for Red. What are the ramifications for Blue states from a budget perspective when the wealthy leave, especially while those same states are struggling with massive immigration costs?
North Dakota voters could end property taxes — and pour ‘gas on the spark’ of a growing tax revolt. Supporters of Measure 4 say it would repeal the ‘most egregious and least moral of all the taxes.’ Critics say it would ‘create chaos.’ Municipalities across the country collected $363.3 billion in property taxes from single-family homes last year, according to Attom, a real-estate data-analytics company — a nearly 7% annual increase. If the state stops collecting property taxes, where will the $3.2bn (over two years) shortfall come from? With no income tax in Florida, the state collects over $40bn per year in R/E taxes.
© 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™ #728 ©Copyright 2024 Written By Eric Rosen.
