Opening Comments
My last note was about the movie, “A Complete Unknown,” about Bob Dylan. A lot of readers responded with their favorite Dylan songs and all enjoyed the movie. The most opened links were the short video of AOC admitting members of Congress commits insider trading and the 74-year-old musician who wrote a song 50 years ago and makes $1mm a year from it. A close third was the Israeli hostage recalling the horrific sexual assault by Hamas.
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Markets
DeepSeek Market Impact on Monday
Christopher Walken is DISCONNECTED
South Florida Country Club Communities
New Private School in Wellington, FL
Palm Beach Traffic
Miami Office Tower Cancelled
Video of the Day-Scouting Report on Tom Brady
Given football season is wrapping up and the Super Bowl is around the corner, I thought this video was appropriate. It is a scouting report on Tom Brady when he was coming out of the University of Michigan. Let’s just say, it is not very positive. He was slow, did not have an impressive arm, had a poor physique, lacked strength, could not drive the ball downfield, could not throw a tight spiral, and got knocked down easily. Despite being drafted as a backup QB, he won 7 Super Bowls and has twice as many playoff wins as any other QB. His first exchange with Bob Kraft, the owner of the Patriots, was legendary. Listen to the short video to hear Kraft recall the incident. Amazing. The picture below was taken at a party maybe 10 years ago. Sadly, Kraft refused to let me keep the ring. Trust me, I asked for it.
Short Term Memory
For a long time, I prided myself on my memory. I would even say that I had a photographic memory. In college, I could close my eyes and visualize the page of my notes or the book as to the passage and see it. When I was managing tens of billions of dollars of risk at JP Morgan, I knew our positions with ease and could grill the traders on investments without notes. I easily memorized complex data and economic statistics and could regurgitate them without thinking. The same was true at my hedge fund, where I knew all the positions and could answer investor questions with ease.
About a dozen years ago, my father-in-law had dementia, and it was early stages. He would play tennis with his best friend, Billy, and I would get reports that they could never remember the score or who was serving. Billy would tell me, “I played tennis with Stephen today and neither of us knew the score. We forgot who was serving in the middle of the game, but we had a ball.” I was in my early 40s and could not fathom such a thing happening to me. It seemed that was something that happened to the old guys.
Well, I play padel four to five times a week, and… I have no idea what the score is. I forget who’s serving. Constantly. There are only four players, but I act like I’m solving quantum physics. “The score is 30-30,” I’ll say confidently. “What are you talking about?” the young guy across from me says. “It’s 40-15.” It’s humiliating. And it doesn’t happen once or twice – it happens 20 times a match.
Golfers have caddies to help with yardage and club selection. I need a padel caddy. Someone to keep score, remind me who’s serving, and maybe pat me on the back when I get it right. At this rate, between my thinning hair and my short-term memory collapse, I’ll be bald and forgetting my own name by next year.
Strangely, I still remember every crazy statistic I’ve written about, what I ordered at a restaurant five years ago, and every detail about my kids. But after a long rally in padel? No clue. At this point, I’m starting to suspect the young guys I play with are messing with me just to see me spiral. Either that or my brain is really going.
I just can’t remember.
Quick Bites
Stocks took a big nosedive on Monday after DeepSeek, the Chinese AI company rose to the top of Apple App Store. Tech stocks sold off sharply with NVIDIA -17% or $560bn on the day. Also, energy stocks were slammed with the fears that DeepSeek can operate with much less computing power than the US competitors. The Nasdaq underperformed on Monday and was -3% after being down as much as 3.6% or 720 points. The VIX was +26% at one point on Monday. Markets rebounded on Tuesday, with the Nasdaq outperforming with a +2% finish. On Wednesday, markets sold off again and the Fed warned about inflation, while leaving rates unchanged. Here is the full Fed meeting recap. The Nasdaq underperformed, but was only down .6% on Wednesday as of 3:45pm. The 10-year Treasury yield is 4.55%, and rose slightly after the Fed comments on inflation. Sorry, Trump, Fed ain’t cutting rates. Bitcoin remains highly correlated to the tech sector and Monday’s sell-off in stocks drove BTC -5.3% back to $102k. Post-closing earnings from MSFT, Meta and TSLA today.
I want to be careful on this bullet. I am no expert on the subject of AI or Large Language Models, but I’ll give you my perspective. The market reaction to DeepSeek’s AI model suggests people were caught off guard by the claims around the Chinese start-up. For background, DeepSeek was founded in 2023 by Liang Wenfeng, the chief of AI-driven quant hedge fund High-Flyer. The company develops AI models that are open-source, meaning the developer community at large can inspect and improve the software. Its mobile app surged to the top of the iPhone download charts in the US after its release in early January. The app distinguishes itself from other chatbots like OpenAI’s ChatGPT by articulating its reasoning before delivering a response to a prompt. DeepSeek launched a free, open-source large language model in late December, claiming it was developed in just two months at a cost of under $6 million (I question this claim). These developments have bolstered questions about the large amounts of money big tech companies have been investing in artificial intelligence models and data centers. In a social media post, Marc Andreesen called DeepSeek’s product “one of the most amazing and impressive breakthroughs I’ve ever seen” and a “profound gift to the world.” NVIDIA fell 17% as the concern around demand for the company’s AI chips drove the stock sharply lower. NVIDIA rebounded 9% on Tuesday but fell another 5% to $122 on Wednesday (Monday’s low was $118). My gut tells me the market overacted Monday, and Tom Lee of Fundstrat agrees. It’s still a bit early to say for sure, and I’m not convinced we have enough information yet, but I do believe this could affect some of the higher-cost incumbents. I do not see major businesses running to use a Chinese AI model for all the obvious reasons (e.g., the US Navy banned it). However, the implications are concerning for the tech and energy space if the Chinese claims are remotely true. Over time, there will be cheaper and more efficient alternatives. Jevon’s Paradox suggests that technological improvements that increase resource efficiency often lead to higher overall consumption – a factor that isn’t being discussed enough. The suggestion is that lower prices and more accessible models will lead to wider adoption and lower prices. AMSL’s CEO believes low-cost models will drive demand. This is Mike Cembalest’s take from JPM on the subject of DeepSeek.
DeepSeek Won’t Sink U.S. AI Titans
Panic fueling the selloff of Nvidia, Broadcom, and other tech giants is overblown
ASML shares jump 9% as surge in orders defies fears of DeepSeek hitting AI chip demand
I think about how much more productive we all are today thanks to technology. The power of our smartphones allows us to call, email, text, search the net, have maps, flashlights, clocks, alarms, control our homes, start our cars, and so much more. I remember early in my career needed to send faxes all the time. It was so time-consuming. However, having a smartphone means you are always connected. It is the last thing I look at before bed and the first thing I look at when I wake up. An article about Christopher Walken’s lack of connectivity just made me crazy. “I don’t have technology,” he said in an interview with The Wall Street Journal. “I only have a satellite dish on my house. The 81-year old actor has no cell phone, never sent an email, and no streaming services. He watches shows on DVDs! Although I cannot fathom going back to being disconnected, it might be nice for a weekend to not start at my phone, respond to emails or texts, or search the web for news. Maybe we should all commit to be disconnected once in a while. On second thought, maybe not. Someone important is texting me. I better respond IMMEDIATELY.
Politics
Scott Bessent wins Senate confirmation as Treasury secretary
RFK Jr. grilled over shifting positions on vaccines and abortion
Trump Medicaid freeze seems to lock 72 million Americans out of their health insurance
Trump administration offering buyouts to nearly all federal workers
The Trump administration has said that 6% of federal employees work in person. That # seems extremely low to me. I believe many of the 2mm Federal employees are not needed. Trump expects 10% to accept the buyout.
Trump Slaps Colombia With 25% Tariffs, Sanctions in Migrant Dispute
The Colombian President caved and will send a presidential plane to Honduras to pick up migrants. The US is starting to lead with authority. It is the way it should be done.
The Del Rio sector – which is the same sector that would sustain over 4,000 crossings per day during the height of the border crisis in December 2023 – only recorded 60 crossings.
US Border Patrol Agents Exchange Gunfire With Mexico Drug Cartel
Pittsburgh mayor declares he will not cooperate with ICE on raids
Indiana man pardoned by Trump after Jan. 6 conviction is shot dead by deputy during traffic stop
White House reporters went from covering an 'invisible president' Biden to 'omnipresent' Trump
Politico's White House reporters wrote on Saturday about the stark contrast between the "invisible" and "shielded" former President Biden and the "omnipresent" President Donald Trump. Since Trump’s inauguration last week, White House correspondent Eli Stokols and White House Bureau Chief Dasha Burns reported how Trump has given multiple speeches, made several policy announcements and has spoken to reporters at length. Trump has also pledged to boost outside media access to the White House Briefing Room.
Trump’s New Press Secretary Unveils Huge Shake-Up for White House Reporters
Karoline Leavitt, 27, holds court for first time, warning reporters the administration won’t tolerate ‘lies’ from the ‘legacy media.’
White House Press Secretary’s ‘Unconstitutional’ Claim Is Quickly Dismantled By Critics
Once again, Trump starts a term with a weak approval rating
Trump Media surges after expansion into financial services including crypto and ETFs
I would never touch this stock. $7bn market capitalization. Makes no sense.
Middle East
Jordan rejects Trump’s idea to ‘clean out’ Gaza by moving Palestinian refugees to Jordan and Egypt
This is not surprising. Jordan and Egypt do not want to be overrun with extremists who take over their country.
Iran’s supreme leader forced to wear flak jacket as fears of existential threat grow
Iran's IRGC Confirms Purchase Of Russian Advanced Sukhoi-35 Jets
German Holocaust remembrance under fire from German far right
Ireland’s Shameful Commemoration
At Dublin, Jewish attendees, including an Israeli-Irish woman, are dragged from an event to remember the Holocaust.
Fires
Floods, landslides threaten Los Angeles along wildfire ‘burn scars’
California is facing unprecedented ‘triple threat’ after LA fires, Redfin CEO Glenn Kelman warns
A top real estate executive warned that California is facing an unprecedented “triple threat” with rising house prices, interest rates and insurance rates as it embarks on a critical rebuilding phase after the Los Angeles fires.
Other Headlines
US consumer confidence dips again to start the year, according to business group
The Americans Pledging to Buy Less—or Even Nothing
People are tiring of overconsumption and want to pay off debt. I have written extensively about my concerns over consumer spending and the impact of inflation. A new trend on social media is “no buy 2025” in an effort to show restraint on spending. It is much needed in my opinion.
World’s Richest People Lose $108 Billion After DeepSeek Selloff
JetBlue shares tumble roughly 20% after disappointing outlook
Starbucks earnings top estimates, but same-store sales decline for fourth straight quarter
Goldman Sachs staffers fume over paltry bonuses after CEO David Solomon’s eye-popping $39M payout
Some 30-second Super Bowl commercials this year are selling for $8 million
Woman shoved into moving NYC subway train by homeless man who was arrested as recently as last week
Why do the judges in these cities continue to let out repeat criminals to harm law-abiding citizens? Without consequences for crime, you have chaos.
210 million people are now addicted to social media: This is how to detox from your phone
I do feel the children’s reliance on social media is a big issue. I admit, at times, I can watch Facebook Reels for an hour without realizing it.
Mona Lisa to be moved after reports of dire conditions at the Louvre spur overhaul
Scary story about deteriorating conditions at the most famous museum in the world. I have been to the Louvre 10 times. With almost 9mm visitors in 2023 and all the related sales, how is the museum in such bad shape?
Subaru’s poor security left troves of vehicle data easily accessible
Florida principal charged after booze-filled party with 100 teens thrown at her home
Elementary school principal and another teacher should win a Darwin award for throwing a party and providing booze. One kid had a medical emergency and another a DUI. Of course it was in Florida.
Real Estate
I have some real estate showings in gated golf course communities on Friday, and four of the homes that we were scheduled to see sold last weekend. One sold within 48 hours of being listed and got into a bidding war selling above the asking price. Yes, there are pockets of weakness in South Florida (old condos, $750k or less homes that are interest rate sensitive. etc.), but these golf course communities at the higher end are on fire. Remember: you need to spend $150-200k for mandatory initiation fees for the course above what you pay for the house, and dues for golf and HOA fees are generally in the $40-50k/year range. The amount of inventory in these communities is 1-3% of the total inventory. Pre-pandemic, the inventory was 5-8% of the units in these communities. The flow of people from the NY Tri-State area, Chicago, and California is still going strong. A high-end condo in Miami Beach just sold for $29mm at 8701 Collins. It was 6,466 square feet and a 17th-floor PH. The last sale was $18.2mm in 2020.
I have consistently written about the lack of quality private schools in South Florida and the challenges of gaining admission in the post-pandemic environment. Well, billionaire Steve Ross is involved in a new endeavor in Wellington, Florida that will bring a private school into town. Ross has been working with school operator ElevateED to open a not-for-profit K-12 institution on a 70-acre (28-hectares) lot that was public land owned by the village of Wellington. Ross will turn a portion of it into retail, residential and a hotel, while half will go to the school. “You won’t get people to move if you don’t have great schools,” Ross said at the iConnections Global Alts conference in Miami Beach. “We’re very proactive in really understanding what is needed for growth and bringing it here.” The article suggests it will take three years to build. If the school is any good, it will be full immediately.
Traffic on Palm Beach has become out of control. With Trump’s reelection, many roads are blocked making once easy drives nearly impossible. I have been in Palm Beach two or three times per week, and it has been challenging with many residents complaining. Heavy construction, bridge closures, security measures and more people in town for the season results in pandemonium. In a bid to reduce traffic congestion, Palm Beach plans to require contractors for large or high-value construction projects to transport workers on and off the island.
Swire nixed its plan for an office supertall in Brickell, amid questions over the long-term viability of South Florida’s office market. The real estate arm of the Hong Kong-based firm won’t develop the roughly 1,000-foot-tall One Brickell City Centre, instead hiring CBRE to put the site at 700 Brickell Avenue and 799 Brickell Plaza in Miami on the market, Bloomberg reported. “The current office market has been challenging, and the pre-leasing for that specific scheme has not materialized in the way that we had hoped,” Henry Bott, president of Swire, told the publication.
© 2025 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™ #757 ©Copyright 2025 Written By Eric Rosen.
