Mexico Musings
12-25-24
Opening Comments
My last note was about my market bet with Chris Burch with a fancy dinner at stake. I received a lot of positive comments about the piece. The most opened links were the story of Assad selling secrets to Israel for safe passage and the AA flight that flooded midair.
Bet update from the last piece. I win a fancy dinner form Chris Burch if the Russell is up less than 17% on the year. Through 12/24, the Russell is +11.5%. Our last exchange looked like this:
Merry Christmas/Happy Hannukah and Happy New Year to all.
Correction
My readers know I put any mistakes at the top of my newsletter. In my last note, I put in a story about a $600mm Bezos/Sanchez wedding in Aspen after reading it in numerous outlets. Bezos came out and said it was fake news. I was freaking out how someone can spend $600mm on a wedding. I apologize for putting in what turned out to be fake news. Given Bezos spent $500mm on a yacht and is worth over $200bn, I thought it was in the realm of possibility.
Markets
Government Spending Chart
Zero Day Options
Crypto Hacking?
10 Biggest Residential Deals of South Florida in 2024
Homeowner’s Insurance and Taxes are Crushing People
320 Park Avenue
Pictures of the Day-Media Bias on the Subway Murder
I feel the media is incredibly biased. Most of the major outlets are more on the left, as is social media. This week, there was a horrific attack on a NYC subway when a woman was set aflame while she was sleeping on the “F” Train. Turns out the assailant was not only was an illegal immigrant, but he also sneaked back into the US after being deported. I snipped various media outlets and the headlines after the suspect was nabbed. You decide who is biased and trying to hide the fact that the suspect arrested is a Guatemalan immigrant. The left leaning outlets have no mention of the fact that the accused murder is yet another illegal immigrant committing a heinous crime. The right leaning outlets led with the fact that he is an illegal immigrant. Don’t get me wrong: the right leaning outlets are biased too - this is just one recent example. You cannot get your news from just one source. You need to be more thorough and read stories from both sides. To add insult to injury, the clown governor of NY took a victory lap for making subways safer. You cannot make this stuff up. Musk and Ritchie Torres crushed her for good reason. On Christmas Eve, another maniac slashed two people on the subway. Soft on crime policies are ineffective. Bragg must go. The person in custody for the crime has three prior arrests including assaulting a police officer.
Mexico Musings
I have written a few times about the absurdity of the price of a luxury vacations and crazy costs of shopping: Skiing is for Billionaires, Who Can Afford it?-Vacations+Weath Report and Bal Harbor- Shopping for Billionaires. The Rosen family went to Mayakoba, Mexico for 5 days over winter break. There are four hotels in the resort. Given the absurdity of prices, I could not stay at the nicest place, Rosewood. The expansive resorts cover 620 acres and nearly 1,000 rooms/villas across all four hotels.
We rented a nice two-bedroom villa. The 1st floor was the small kitchen, dining room, den, and a half bath. Downstairs were two bedrooms, and on the roof was another half bath and a deck with a small plunge pool overlooking the golf course where the PGA tour event is held. We did not even spend 5 seconds in our little plunge pool. The room was clean and spacious, but nowhere close to the 2,700 ft as advertised unless we include outdoor space, the roof, pool, and part of the golf course. If this room is 2,700 feet, I am 6’4.” My readers know that is not the case.
The lobby area was quite beautiful, but the check in process was painful. I’m talking 30 minutes of my ADHD kicking in to listen to some crap. The grounds are expansive and confusing. They give each villa bicycles, and it is not an easy place to navigate with small paths that have golf carts riding on them and limited signage. Our bikes were “taken” four times leaving us stranded.
Jack and I rode our bikes to check out the padel facility, and it was quite an adventure over rough paths with massive speed bumps, foliage growing onto the path, and monkeys in the trees. The tennis center for all hotel rooms is a bit underwhelming with Astroturf tennis courts, a few pickleball courts, and one padel court. The padel court is covered in trees that hang over the court and disrupt play. The Astroturf is torn, and the walls are not high quality. I would give the courts a “C-.”
The first dinner was at Cello, an Italian restaurant on the grounds. The setting was nice as it was outside on the water. However, the food was fine with spotty service. Nothing on the menu dazzled and the prices were full. We spent $45 on bottled water given you cannot drink the tap water. Overall, a B- experience – almost $100 per person without alcohol for just pasta and salads
The beach was nice, and the pool area was good enough. Getting a beach char is akin to winning the Powerball, but once you are settled it was relaxing. The service at the beach was very snappy.
The restaurant, Saffron, is a Thai eatery that was solid. I had chicken and shrimp pad Thai that did not disappoint despite the full price.
Lots of small children under the age of eight were running around. If you want to get away from little kids, this is not the place for you. The breakfast buffet was good and had a wide variety of food. Lots of fresh fruit and an assortment of fresh juices, hot dishes, pastries and tacos.
The Rosewood is clearly another level, and the dining experience there was quite good. We ate at the Asian/sushi restaurant, and it did not disappoint.
Tomahawk at the Banyan Tree is the worst dinner for the price I can recall in recent memory. $600 for overcooked meat and fish. Nothing could get me to ever consider going back there. The $140 ribeye (12oz) was insulting on every level. The price for inferior meat was literally double that of a high-end NYC steakhouse. A 20oz ribeye in NYC at the Striphouse is $74 and $70 for a 14oz that is dry-aged and high-quality meat. Stay away from Tomahawk. You are in trouble when the highlight is the bread and the empanada appetizer. The “fish of the day” was overcooked and bland. When the bill came, I cried. We left the overpriced steak almost half eaten. They had Opus One from 2019 for $2,500/bottle. In the states it cost under $400.
In a funny incident, the men’s and women’s bathroom photo looks similar. For the first three days, every time I went to the bathroom on the grounds, the men’s room was on the right. On the fourth day, I presumed that was always the case and walked into what I thought was the men’s bathroom. It was not the case.
Overall, the room was nice. The grounds are impressive, albeit confusing. The service was fine despite some imperfections. For instance, there were no towels one day and did not clean the room another. I called for towels and it took one hour to get them. The requirement for a golf cart to take you anywhere can be annoying. We asked for dinner reservations and they kept telling us they were sold out. We went over to the restaurants and they were empty. I would not come back during peak season, as it seems there were some staffing shortages. I called the operator eight times before getting one on the phone. Securing a dinner reservation requires donating a kidney. There are boats that connect the hotels and the rides at night were quite beautiful. The weather was amazing with sunny days and cool evenings.
Apart from quality family time, the single biggest highlight of the trip was the excursion to see the Mayan ruins which will be outlined in a future report. The Asian dinner at Rosewood was good and the tostadas at Pueblito were amazing. The breakfast buffet was solid with a huge variety of food. Another highlight was new friends made: a couple from NY and a family from South Africa/Toronto that we ended up playing padel with each day. We also got to spend time with friends from NYC. I am a bit underwhelmed given the price point of the hotel. Sorry, I expected more, but the Rosen family had fun and are heading back this afternoon. Welcome to the new world of overpriced vacations that don’t live up to the hype.
Quick Bites
Tuesday marked the start of the seasonal Santa Claus rally, which happens in the last five trading days of the year and the first two in January. Since 1950, the S&P 500 has generated an average return of 1.3% during this period, widely outpacing the market’s average seven-day return of 0.3%, according to LPL Research. Month to date, the S&P is now +.1% and the Nasdaq is +4.2%. MTD, Alphabet is +16%, Apple +9% and TSLA +34%. However, long rates keep rising with the 10-year yeild at 4.59% or 100bps higher than when the first rate cut happened in mid-September. Bitcoin has been volatile and after hitting $107k, it is back to $98k. BTC is now +165% YTD.
I write extensively about government spending, deficits, debt levels and entitlements. This post by the Kobeissi Letter got my attention. US government expenditures hit a massive $6.9 TRILLION over the last 12 months, the most since 2021. Social Security, Interest Costs, Healthcare and Defense were the largest outlays. This means government spending has now DOUBLED over the last 10 years. The only period when government spending was higher was 2020-2021 when pandemic stimulus was handed out. Spending is unsustainable. $2 trillion deficits are unsustainable. I hope DOGE saves some money and someone is brave enough to tackle entitlement reform. The 2nd chart shows the number of “kinless adults” surpassed those married with children for the 1st time. Think about the ramifications the declining birth rates will have on the ability of the workforce to support the aging population.
Interesting WSJ article, “Wall Street’s Hot New Trade Is Fueling Gambling Addictions,” discussing zero-day options trading. New data from SpotGamma shows the explosive growth in this market. Around half of all trading in Nvidia and Tesla options, some of the most popular trades, has been concentrated in bets expiring within five days, according to the data provider. The share of S&P 500 index options expiring the very same day jumped to a high this year. The WSJ interviewed more than 30 individuals who said they struggled with the irresistible urge to bet in financial markets such as options, crypto or stocks. Many of them said they found short-dated options especially addictive. These trades can provide instantaneous returns or giant losses within minutes or even seconds. A jackpot always seems one click away, leading traders to keep going back for more. I asked Alon Rosin, who runs Institutional Equity Derivatives at Oppenheimer about zero-day options. His response, “100%-the attractiveness of the optical “cheapness” relatively will continue to keep short term options active ahead. For example, the 12/18 600 puts were only $0.10 ahead of the FED Wed that would have given one an opportunity to exit as high as $14 by the close!” That gave option traders the ability to make a killing in short order.
One of my fears about crypto is hacking, and the new Google quantum computing chip, Willow, could be a factor. Google’s recent announcement of the arrival of Willow, a quantum chip that has reduced the error tendencies of some of its predecessors, is a milestone in the effort to bring quantum computing into the real world, and in the years ahead, it could change the way we think about the risk in cryptocurrencies. Willow’s speed is almost incomprehensible — according to Google, it’s able to perform a computation in under five minutes that would take one of today’s fastest supercomputers 10 septillion years to solve. Ten septillion is 10,000,000,000,000,000,000,000,000 years. That means chips improving upon Willow’s breakthrough will be able to help hackers target crypto — but at least for the moment, the concern is only theoretical. This is not much of a short-term concern, but as these quantum chips continue to evolve, I wonder if these crypto currencies could be more easily hacked.
Election/Politics
Shutdown chaos has Republicans worried about moving Trump agenda
The slim margin in the House will make Trump’s agenda far more challenging to get adopted as planned. The debt ceiling debacle is an early warning sign.
I do support closing the border, deporting any and all criminals and reducing assistance to the illegal immigrants. However, I support the TikTok ban.
‘Missing’ GOP Congresswoman Not Seen For Six Months Finally Found Living at Dementia Care Home
Yet another cover-up. No wonder politicians have such a bad reputation. How is the public just finding out about this? Why did the staff not alert the proper channels?
I wrote extensively about how bad the nomination of Gaetz was for AG. Why did Trump nominate this clown?
Elon Musk Under Investigation by US Defense Dept
For failing to comply with federal protocols by not disclosing meetings with foreign leaders.
Tired Biden forced grieving military families to wait hours — while he napped on Air Force One
The Federal Reserve Bank of Philadelphia has found that the Biden administration inflated employment statistics across 25 states in the second quarter of 2024. The second quarter of 2024 figures are the Fed’s most updated statistics.
Biden commutes dozens of death row sentences to life without parole
Now most will be classified as “Life without the possibility of parole.” Many were murders, pedophiles, rapists… check out Bill Ackman’s take: How can a president with cognitive issues be allowed to abuse the pardon power? This is the danger of not using the 25th amendment. I called for the 25th Amendment two years ago and was vilified for it.
New ethics inquiry details more trips by Clarence Thomas paid for by wealthy benefactors
Only 35% of Americans trust the US judicial system. This is catastrophic.
Congress Approves Full Social Security Benefits for Public Sector Retirees
The popular measure gives full benefits to millions of people who currently receive them at a reduced level. Critics warn the $196 billion cost will speed up the program’s insolvency.
Trump’s 25% tariff could be an existential threat to Canada’s auto industry
Nothing to see here folks. Biden has been pardoned for everything anyway.
Israel/Middle East
Weakened Iran could hit back with a nuclear bomb, Trump told by White House
I fully support of a joint mission by US/Israel to take out Iran’s nuclear capabilities ASAP.
Iran recruiting children to carry out attacks on Israeli targets in Nordic nations
IDF Arrests Two Syrian Residents in Demilitarized Zone on Suspicion of Spying for Hezbollah
Other Headlines
Nordstrom to go private in $6.25 billion deal with founding family, Mexican retailer
Mark Zuckerberg went all in on Meta’s AI strategy this year. The pressure builds in 2025
13 anonymous media executives make predictions for the new year
From Nike to Intel, CEO departures at U.S. companies hit a record this year
Behind Amazon’s quiet launch of Haul, which competes with Temu in ultra-low-price items from China
The rich are fleeing authoritarians at a record pace
Florida shattered the Tourism Record
Georgia homeowner arrested after trying to move back into her house inhabited by squatter
New York migrant admits feeling guilty over city's benefits: 'We're getting spoiled'
Billions of dollars on food, shelter, clothing, education, phones and more = and taxpayers are footing the bill.
Anti-immigrant anger rises at scene of German market attack
Open borders in the US and Europe have backfired and are a big reason for political turmoil with leadership. A major reason the Democrats lost was open borders.
Luigi Mangione’s sweater sells out at Nordstrom one day after court appearance
‘He’s a very impulsive person.’ Broward man gets Luigi Mangione tattoo on his leg
What the hell is wrong with people?
Alleged California shoplifters shocked to learn stealing now a felony
Wait. Consequences for crime? Why would CA do such a thing? Yes. Sarcasm.
Seven reasons why Americans pay more for health care than any other nation
Some interesting points in the article. I have written on this topic, but this article has pretty good data.
70 cities in New Jersey now dealing with discolored water that smells like nail polish
No chance I allow my family to bathe in or drink this water.
Data-center power use could triple
U.S. data center power demand could nearly triple in the next three years, and consume as much as 12% of the country’s electricity, as the industry undergoes an artificial-intelligence transformation.
James Bond Battles A New Foe: Amazon
Salacious article about the relationship between Barbara Broccoli and Amazon.
These 9 Miami Restaurant Openings Changed the Game in 2024
Wealth brings better food, and the money flowing to South Florida is crazy. The pictures and descriptions look amazing. I am eating at Sparrow next week.
7,000-year-old sculpture resembling an alien creature links Stone Age societies
I promise that we are not alone.
Unearthed footage gives unique look at bustling Yonkers during 1920s — and long-forgotten trolley
Real Estate
Interesting Real Deal article outlining South Florida’s top 10 residential deals of 2024. The money down here is REAL! South Florida’s top residential sales this year reveal a tropical region fundamentally changed. Broward County, which has always lagged behind neighboring Palm Beach and Miami-Dade counties, cracked the top 10 priciest deals of the year with a record-shattering $70 million sale. Victoria and David Beckham bought a waterfront mansion on Miami Beach’s North Bay Road for a once-unthinkable $72.3 million. And ultra-luxury spec developer Todd Glaser sold a private island for $150 million, marking a record for non-oceanfront properties in Palm Beach. South Florida’s luxury real estate market proved its staying power in 2024. The region was transformed by the pandemic, triggering colossal wealth migration and unprecedented demand for luxury homes. Record-breaking deals became commonplace.
I have written extensively about soaring homeowner’s insurance costs and rising R/E taxes due to higher home prices. Now, the WSJ is weighing in: “Insurance and Taxes now Cost More Than Mortgages for Many Homeowners.”
Soaring costs for home insurance and property taxes are busting homeowners’ budgets. Insurers have pushed big rate increases because of losses from natural disasters and rising costs to repair homes. Surging home values in recent years, meanwhile, have lifted property taxes for many homeowners. These ballooning expenses are rewriting the math of homeownership. In September, 32% of the average single-family mortgage payment went to property taxes and home insurance, the highest rate ever for data going back to 2014, according to Intercontinental Exchange. Reach out to Kevin Lang (866) 964-4434 and his team to help you on your insurance needs. I did and saved a ton. He writes policies for Home, Auto, Jewelry, Fine Art, Wine, Umbrella, Watercraft, Flood & Excess Flood in all 50 states with the best insurance companies.
The sluggish office-building sale market got a half-billion-dollar gift — not from Santa, but from the world’s largest reinsurance company. Munich Re quietly bought out its joint-venture partner Mutual of America at 320 Park Avenue, the 760,000 square-foot tower between East 50th and 51st streets, The Post has learned. Munich Re had previously owned 25% of the fully-leased property. The deal reflects the strength of Park Avenue north of 42nd Street, where most buildings are fully leased to prime tenants.
© 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™ #747 ©Copyright 2024 Written By Eric Rosen.
