Coffee Talk
8-31-25
Opening Comments
My last note was about the surf created by Hurricane Erin from Florida to New York. I also outlined a project I am working on for a South Florida surf park. The most opened links were Kuppy’s short piece on his AI valuation concerns and the #1 secret of high-achieving kids. My old NYC apartment continues to pull strong interest, topping clicks for the third newsletter in a row.
So many readers have asked about how Jack is doing at Wake Forest. Turns out he loves it. He is making friends, studying hard, and playing some basketball and ping pong with his new buddies. His dorm building is very nice, but his room is quite small. The only issue is his schedule, which has him in calculus at 3pm M, T, Th, F, which is not fun.
The heat and rain continue in Augus,t and on Thursday morning, the thunder and lightening storm was deafening. The afternoon heat is unbearable. Julia had golf practice for one hour at 4pm on Wednesday and it looked like I ran a marathon by 4:30 pm just standing outside in the blazing heat. South Florida is best consumed from November through May. I played 9 holes of golf Thursday morning in 36 minutes. There were two groups (including me) on the entire course.
A reader turned me on to Perplexity AI and am now basically addicted. One of the most time-consuming tasks is my due diligence on news stories and Perplexity helps me do it so much faster. My time to write these newsletters is coming down due to lower research time, more reader engagement (sending me stories), and me becoming efficient. I am yet to have AI write a Rosen Report, but that may happen too.
Markets
Walmart and Costco Multiples
High Yield Spread Distribution
Richest Avoiding Taxes
Estate Planning Mistake
Exclusive Naples, FL Neighborhood-HUGE Prices
“Sleepovers” Prior to Buying a Home
Large Amount of Equity in US Housing Market
Slowing Luxury Student Housing Market
Video of the Day-Crazy First Date
This is a 1 minute and 30 second video of a story of a couple’s first date in Utah. After dinner, they went to look at the stars at an overlook at Provo Canyon in Utah and became spooked. On the walk back to the car they felt very uncomfortable and stepped on something soft and kept running. Turns out, they stepped on a dead body who was just killed by Ted Bundy. The couple survived because they did not stop and look around or Bundy would have killed them, according to the interview the serial killer gave. The couple had no idea at the time but saw in interview with Bundy years later when he told the story of nearly being caught by the couple and they realized it was them. What a first date!
Coffee Talk
Saturday Night Live had a great skit called “Coffee Talk” with Mike Myers who played a middle-aged Jewish woman. The skit ran from 1991-1994 and was one of my favorites and made for a good title for today’s theme piece.
When I was interviewing for jobs starting in 1991, the employment market was very challenging. The economy was in a recession from August of 1990 through March of 1991 due to high oil prices, a credit crunch in the real estate market, the S&L crisis, and restrictive monetary policy. The result was jobs in banking were HARD to come by. Given I paid for college, I went to a state school, which only made landing a job at a top firm more challenging.
I tried to be creative and started cold calling people at various firms. “I am Eric Rosen, and I am a college senior. I will be in in town next week on an interview and I would appreciate the opportunity to take you for a cup of coffee to learn more about what you do in investment banking…” Although most of the time the people on the other line were skeptical, many agreed, and we met for a coffee or a drink. Rarely would they let me pay.
However, these meetings gave me valuable insight into what various roles on Wall Street entailed and better prepared me for my ultimate interviews. I am not convinced I would have landed my job at Continental Bank had I not been prepared through my “coffee meetings.”
I found that most of the people I met ended up being eager to help me, made introductions, and made themselves available to answer follow-up questions. I recall one such meeting where a banker walked me through the questions he asks before making a loan. In my interview at Continental Bank, I was asked, “What questions would you ask before you made a loan?” I had just had coffee with the banker who walked me through his question list and repeated some of his questions making me sound as though I knew what I was talking about despite being in college. The interviewer was “blown away” by my answers, and I quickly received a job offer. I am not sure the result would have been the same if I did not have that cup of coffee.
I thought about these meetings after my friend Ted Merz published a piece on Michael Bloomberg and his “coffee meetings” when he started the company. Read the short note on Bloomberg’s tenacity helped him to build a massive company and create a net worth on excess of $100bn. Who would have thought that a cup of coffee would be so powerful?
As a funny aside, I am now 55 years old and never had a cup of coffee in my life. I always had a bottle of water or if it was freezing, maybe a hot chocolate. As a kid, my mother had coffee candy on the living room table, and I tried it when I was four years old and have been traumatized ever since. Despite my dislike of coffee, I found taking people for a cup definitely helped me early in my career. Could you imagine me on caffeine? The world is a better place that I do not partake.
Quick Bites
I published my last note from the golf course as I am a coach of a high school girls’ golf team, and wanted to wait for the Nvidia earnings which soundly beat. I glanced at it quickly and did not realize that the data center revenue came in short of expectations which pushed the stock down 3% after hours. With 90% of the S&P reporting, 87% have beat on EPS (81% beat on revenues) , which is above the 10 year average of 75%. EPS growth is 11.8% year over year. Core inflation rose 2.9%, the highest since February, but in line with expectations. The inflation data pushed stocks lower and Treasury yields higher. Although stocks sold off about 1% on Friday, on the month, the S&P is +1.9% and Nasdaq+1.6%. Bitcoin fell down to $108k after being $124k just two weeks ago. One cause of recent weakness is a Bitcoin whale sold $2.7bn.
This Bloomberg article outlines the high multiples of Costco and Walmart. While valuation Cassandras tend to focus on the pricy multiples of artificial intelligence stocks, Walmart and Costco actually trade at richer blended forward price-earnings ratios (34.3 times and 47 times, respectively) than Nvidia Corp. (34 times), and the situation is getting less tenable with time. Walmart’s multiple is about 3.3 standard deviations above its 2015-2024 average of 20 and Costco trades at about 1.7 standard deviations above its 10-year average of 34. From a first principles standpoint, it’s highly unusual for a pair of earthly retail stocks to have forward earnings yields — the inverse of the price-earnings multiple — that are now significantly more paltry than the yield on a two-year Treasury note. In slightly oversimplified terms, investors are willing to pay more per dollar of next year’s earnings than they’re willing to pay for a supposedly risk-free two-year Treasury note with government-guaranteed coupons.
Good report on high yield spreads by Apollo’s Torsten Slok. The spread on the high yield index is currently trading at around 300 basis points, but the distribution inside the index is very skewed, with more than half of the bonds in the index trading at less than 200 basis points, and 13% of the index trading at more than 500 basis points, see chart below. On a related note, Slok also put out a note on yield convergence (2nd chart). His suggestion is fixed income yields are more attractive than public equity markets today.
Interesting Atlantic article, “How the Richest People in America Avoid Paying Taxes.” According to the Joint Committee on Taxation, the richest of rich Americans pay an average tax rate of 34%, higher than any other cohort’s. In reality, as everyone has long known, they pay less than that. A new study by some of the country’s most preeminent economists has finally put concrete numbers to the disparity. The average rate that the richest Americans pay, they find, sits at just 24%. The study was of the Forbes 400 or the top .0002%, which has a minimum net worth of $3.3bn.
Understanding estate tax laws is critical for wealthy people who want to most efficiently pass on wealth to heirs. This WSJ article outlined a story of the Rowland family, who did not properly complete the estate return of the wife who died first. When the husband died, the heirs realized the mistake, and it cost them $1.5mm. The Rowland case has lawyers and accountants who prepare estate-tax returns on edge. The Tax Court sided with the IRS last month, disallowing the estate from using the common planning technique known as portability.
That lets a surviving spouse use any leftover exclusion amount from the first spouse to die—as long as the estate filed a return and filled it out properly. The trouble is, often no one checks the work until the second spouse dies. At that point, it can be too late to fix any mistakes.
Tariffs
Most Trump tariffs ruled illegal in blow to White House trade policy
“The core Congressional power to impose taxes such as tariffs is vested exclusively in the legislative branch by the Constitution,” the court said. “Tariffs are a core Congressional power.”
Trump tariffs that are voided by — and ones that are safe from — Friday’s appeals court ruling
An Update About CBO's Projections of the Budgetary Effects of Tariffs
The CBO is projecting $4 trillion in tariff revenues over 10 years. I want this to REDUCE debt, not be paid back to citizens. Based on the ruling above, this may not hold. Hopefully, the Supreme Court allows tariffs. It is raising trillions of dollars.
Retail panic: What the end of the ‘de minimis’ exemption means for brands across the globe
Higher Prices Are Coming for Household Staples
Companies from Hormel to Ace Hardware forecast prices rising as the costs of Trump’s tariffs are passed on to consumers
Lamborghini CEO says tariffs are causing even the wealthiest buyers to pause
U.S. orange juice shipments plummet as Canadians find Florida OJ hard to swallow
Politics
Trump Ratings and U.S. Mood Stay Tepid in August
CRAZY Gallup poll results. This is not good for America. Divide too great.
Donald Trump reveals unprecedented plan for new Republican convention in coming months
These are the outrageously radical DSA-NYC policies Zohran Mamdani refuses to say he rejects
Chicago mayor signs order with blueprint for fighting a potential Trump crackdown
Newsom’s support surges among Democrats ahead of 2028
He is popular and looks the part. An Emerson College poll had Newsom jump to 25% from 12% for Democratic primary voters. The issue is his policies and results in CA are awful (crime, homeless, DEI, taxes, deficits, gas prices, electric grid, natural disaster response, traffic, education, sanctuary cities, lack of voter ID, net migration of wealth and companies leaving the state, cost of living… the list is endless). I do not feel he is the answer to America’s problems based on his performance in his home state. US News has CA ranked #37 out of 50 states and is #24 in education, #38 in crime and corrections, # 32 on economy, #42 on fiscal stability, #35 on infrastructure, and #50 in opportunity.
DeSantis Unleashes ‘Florida DOGE’ in Quest to Kill Property Taxes
Ron DeSantis is seeking to largely wipe out property taxes in Florida, targeting levies that help pay for everything from education to police. The proposal to eliminate or drastically cut property taxes would require a constitutional amendment passed by 60% of voters, with DeSantis and the GOP pledging to get it on the ballot in 2026. I am not convinced this is a good idea. $40-50bn is generated from Florida property taxes. Big hole. One idea from DeSantis is to eliminate taxes for your primary residence. I am all for lowering R/E taxes, but Florida runs a surplus and pays down debt. I don’t want to run deficits. Maybe lower R/E taxes? If the R/E taxes are cut to zero, the sales tax in Florida would need to go from 6 to 12% to make it up according to this article. If there are no R/E taxes, high end R/E in Florida goes up yet again.
Showdown at CDC as director refuses to leave post, amid pressure from Trump administration
A 3rd Property!? Pulte Drops New Criminal Referral On Lisa Cook As Mortgage Scandal Widens
If this is true, she should resign.
Wisconsin judge accused of helping man dodge ICE arrest loses bid to drop charges
Trump revokes Secret Service protection for former Vice President Kamala Harris
The U.K. Tried to Clamp Down on Migration—and Wound Up With an Unprecedented Wave
Britain’s post-Brexit visa program, meant to attract lower numbers of skilled workers, soon backfired. The debacle drew populist Nigel Farage back into politics.
Open borders have consequences. The data in the article is concerning.
Denmark slashes 2025 growth forecast amid Novo Nordisk slowdown
Denmark slashed growth to 1.4% due to weaker pharma exports and higher tariffs and cited Novo Nordisk as a big contributor. One company can impact the economy by that much?
Trump’s hopes for a Nobel Peace prize are imploding.
Kim Jong-un to send 100k troops to Ukraine as North Koreans 'queue up' to fight for Putin
Middle East
Israeli strikes in Yemen said to target gathering of Houthi leaders near Sanaa
Shocking photos show Israel road burning as anti-Netanyahu protests rage
Campuses that took Qatari money saw 300% more antisemitic incidents.
Israel says 2 hostages' bodies returned as Gaza City offensive begins
Other Headlines
U.S. economy expanded 3.3% in Q2, with growth even stronger than initially thought
Higher than the 3.0% estimate. Consumer spending was +1.6% vs 1.4% estimate.
The Dutch are quietly shifting towards a four-day work week
The Netherlands serves as a case study for the advantages and trade-offs of reduced hours in the workplace.
AI Workers in Their 20s Rake In High Salaries
Over $1mm/year for some in their 20s.
Nvidia’s top two mystery customers made up 39% of the chipmaker’s Q2 revenue
Google has eliminated 35% of managers overseeing small teams in past year
Tesla sales plunge 40% in Europe as Chinese EV rival BYD’s triple
Gap stock falls as retailer misses sales expectations, driven by decline at Athleta
Ulta Beauty raises full-year forecast after reporting growth in all major categories
Dick’s Sporting Goods raises guidance after second-quarter earnings beat
A hacker used AI to automate an 'unprecedented' cybercrime spree
More Americans are tapping their 401(k)s for cash—it should be a ‘last resort,’ says CFP
America's New Air Traffic Control Crisis: An Instructor Shortage
The FAA was short 3,900 controllers at the end of 2024 and does not have the instructors needed to train new ones.
Guns were obtained legally. Of note, the shooter changed from male to female at 17 years of age and identified as a female. The shooter died of self-inflicted wounds. The transgender shooter’s journal mused about slaughtering “filthy Zionist Jews.” He also wrote, “I hate those entitled, penny-sniffing k-kes.” Plenty of antisemitic, anti-Black, and anti-Hispanic slurs. Another comment, “6 million wasn’t enough,” and comments about killing Trump. The shooter also wrote, “I’m tired of being trans.” Of note, the shooter’s mom worked at the school, and has not cooperated with police and has hired a defense attorney.
Why is he on the streets?
Vote out Bragg or don’t complain about crime.
This idiot should be castrated and not allowed to procreate.
Feds charge ‘Subway’ sandwich tosser with misdemeanor after grand jury balks at felony indictment
150 job applications, rescinded offers: Computer science grads are struggling to find work
Texas QB Arch Manning NIL salary is crazy
Manning @ $6.8mm (thought it would be higher). #2-Carson Beck @ $4.3mm. Despite the big bucks, Manning looked terrible on Saturday.
Americans expected to bet record $30 billion on the 2025 NFL season legally
It Has Been Reported That The Weeknd Might Land A $1 Billion Music Deal
This is shocking to me. Seems like way too much money.
Pentagon baffled by 8,000 mysterious UFO orbs hovering over US military bases
Interstellar object caught emitting mysterious metal-suggests 'technological origin'
Health
Risk of colon cancer slashed by eating specific types of vegetables, study finds
Broccoli and other cruciferous veggies could slash colon cancer risk by 17%, researchers say.
This 92-year-old sprinter has the muscle cells of someone in their 20s
Restaurant owner reveals the menu items you should never order when dining out to avoid getting sick
The top 3 countries that are aging the slowest — and which has the fastest agers
Very interesting article on aging. Chronological age is the number of years we’ve been alive. Biological age is the age of our cells, tissues and organs — it may be higher or lower than our chronological age because it’s affected by genetics and lifestyle habits such as diet and exercise.
Not Drinking Enough Water? Your Stress Hormones May Go Into Overdrive
Brain surgery under hypnosis: 'He took me on a trip to Thailand'
I am not doing this.
CDC warns travelers to use ‘enhanced precautions’ as dangerous disease spreads
COVID is spiking again, especially in these states
Real Estate
This Florida neighborhood has been crowned America’s next hot spot for ultra-wealthy homebuyers
Port Royal, a secluded corner of Naples, Florida, is fast becoming one of the country’s most exclusive neighborhoods to live — where pastel-toned mansions line man-made peninsulas and sales are setting records on par with Palm Beach and Malibu. In February, a bayfront property with new construction traded for $85 million, the highest sum ever paid for a non-beachfront house in Collier County. Businessman and philanthropist David Hoffmann was the buyer. That same month, a three-parcel compound on 15 acres sold off-market for a stratospheric $225 million, securing the most expensive residential deal in Florida history and second place nationally. The seller is tied to the billionaire DeGroote family of Canada, but the buyer still remains unknown. Those transactions cemented Port Royal’s status as one of the few enclaves capable of producing nine-figure sales, according to Mansion Global. Pre-pandemic, these prices were unheard of in Florida. Today, there is a listing for $210mm in Port Royal and many homes in the $20-30mm range. In 2020, a house currently listed for $30mm sold for $10.9mm.
I thought this article, “Buyers Are Test-Driving Homes With Sleepovers,” was interesting, and I agree with the idea. A house is your biggest purchase, and you should have confidence in it before making a huge commitment.
Good article about low mortgage amounts relative to housing values. It puts things into perspective and despite a slowdown in housing, the ratio of loan size to property values is quite low relative to history.
Good CNBC article on the slowing market for luxury student housing. Consumers are increasingly concerned about the state of the economy, and that is affecting yet another real estate sector — student housing. Rent growth in the sector slowed to just 0.9% in July across 200 colleges surveyed by Yardi. The average advertised asking rent fell to $905 per bed, a 1.4% decrease from the $918 peak in March “as operators struggle to lease remaining inventory,” according to the Yardi report. “What we’re seeing is fall-off at the top and the bottom,” said Robert Bronstein, founder and CEO of Scion, one of the country’s largest owners and operators of student housing. Scion owns roughly 95,000 beds across 83 schools in 35 states, with over $10 billion in assets under management.
© 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™ #815 ©Copyright 2025 Written By Eric Rosen.
Break was impressive just of worth ave beach pb.