Another Atlanta Sports Meltdown

10/13/22

Opening Comments

Today’s Podcast-25 minutes.

I received countless responses to my last piece, “Bad Idea Bunny.” People wrote about their teenage memories of dates, shopping at Spencers, Cheryl Tiegs, and awkward moments. A few people actually had the Patrick Nagel poster I showed. Thanks again to all the readers who contribute each week by sending me literally hundreds of stories and ideas.

Hurricane Nicole thankfully largely missed Boca Raton, but we had some winds 30mph+ and heavy rain. This is the radar from 11pm on Wednesday night, and you can see we were hit by the tail. It was much worse to the north. Volusia County was hit much harder.

On the election, I remain in shock how long it takes to count votes. I struggle with the US process/systems, as they are so inefficient. 60 hours after the polls closed, AZ only counted 80% of the votes. In CA 22, only 39% of the votes were counted as of 3pm on Sunday. I found this 2020 article from US News about just how poorly the US ranks in election integrity. Talk about embarrassing. It is clear that the US needs a more centralized process, as # 57 is not exactly impressive as you can see below. Look at the countries with better election integrity than the US. This should be a Saturday Night Live skit. We are 48 spots below Costa Rica and worse than Barbados on the list, but tied with Mexico and Panama in terms of scoring.

GA is the only state left, which will have a run-off December 6th. NV was called for the Democrats, but the Republican candidate may request a recount on his own dime. The current count is 50/49 Democrat to Republican going into the GA runoff, and the betting odds have it 51/49 in the end. The Democrats will keep control of Senate either way. On the House, I am thinking the Republicans squeak by with a tiny majority in the 218-220 range, but too many races are too close to call. It is going to be very close, and who knows when we will get official word or recounts. 218 is the majority for the House. This election was a HUGE win for Biden and the Democrats and there was NO RED WAVE. Below is from CBS News.

Again, this election was a major statement against Trump. I had many former Trump supporters email me that they want to move on from him and onto DeSantis. Murdoch media dumped on Trump as well. Of course, Trump went after DeSantis after a stellar run by the Governor. Trump just can’t help himself. Trump demanded “average” DeSantis duck a 2024 run. Republican party, it is time to move on from Trump. He is bad news. Trump is also raging against VA Governor, Younkin. Trump. STOP. Also, McConnell did a poor job as Senate Minority Leader in doling out cash to candidates. This article suggests that a pro DeSantis Super PAC is launching due to the poor Republican mid-term showing. A new poll has DeSantis 7 points ahead of the former President. It appears Kevin McCarthy may not have the votes for Speaker of the House if the Republicans gain a majority.

• Picture of the Day-Super Bowl Advertisers/FTX Bankruptcy

• Another Atlanta Sports Meltdown

• Quick Bites

  • Markets

  • CPI Drove Stocks Higher

  • Global Shipping Rates

  • Wealth Taxes Passed in CA on R/E and Income in MA

  • Clothing Contributing to Pollution

• Other Headlines

• Crime Headlines

• Real Estate

  • 2/2 Apt for $117k/month in Miami

  • Shell Bay Development Miami

  • $218mm Palm Beach Island Home

  • Mortgage Rates Falling

  • Other R/E Headlines (Lots of Stories in Other Headlines)

• Virus/Vaccine

Picture of the Day-Super Bowl Advertisers

A Tweet was sent out about the stock performance of select Super Bowl advertisers. I ran these numbers through Thursday after the BIG rally. Not pretty. FTX is private and was worth $32bn at peak and now worthless. FTX used customer accounts to fund risky bets in a shocking development. I read up to $10bn in customer accounts was loaned to the trading arm, Alameda and $1-2bn is unaccounted for today. FTX filed for bankruptcy and Bankman-Fried stepped down as CEO. So much for FTX Arena in Miami. That was quick. The last picture is the Forbes curse. Many who have been on the cover crash and burn. I have read about multiple stories suggesting FTX was run by roommates in the Bahamas who dated each other, and here is one of those. No idea of true, but shocking that the company was able to get such impressive investors if that was the case. Separately, I am told FTX took 30,000 ft in Brickell (Miami) and moved into it in the past week or so. Which crypto related entity will fall next?

Another Atlanta Sports Meltdown

Atlanta is an interesting city with some solid sports teams. However, there have been numerous meltdowns which are outlined in this USA Today article entitled, “The 8 worst Atlanta sports meltdowns, ranked from least to most heartbreaking.” I am here to tell you there is now a 9th meltdown which should be at the top of the list. More on that in a moment.

The article lists the following:

8. 60-win Hawks in the 2015 Eastern Conference Finals

7. Georgia vs. Alabama in 2012 SEC title game

6. Outfield Fly Rule

5. Eugene Robinson and the Super Bowl XXXIII

4. Braves 1996 World Series collapse

3. 2012 NFC Championship Game

2. 2018 CFP national title game

1a. Jaron’s Meltdown in Tennis Last Week

1. Super Bowl 51

Who can forget the Tom Brady/Patriots remarkable comeback after being down 28-3 to the Falcons with 17 minutes left in the game? No team had ever blown an 11-point second half lead in the Super Bowl. This was 25 points. My son, Jack was a huge Patriots fan, and was devastated when they were getting killed. I told him, the Patriots have no chance. I was wrong, and he stayed up the entire game and was jumping all over the place when they beat the Falcons. Definitely shows that you can never quit. I have a better meltdown story out of Atlanta.

I have a group of guys who play tennis regularly at the Boca Resort. We are on a text chain. Someone will ask who wants to play the next day, and we show up and have fun. We play a lot of “21” which is a fast -paced points game with no serving. Maarten and I were playing Jaron (from Atlanta) and Ross. We were getting killed and were down 16 to 4 in a game to 21. I joked with my partner, “We got ‘em right where we want ‘em. We are going to come back and win this game.” Well, we started playing well, and Jaron, Mr. Atlanta, started to collapse despite Ross’ solid play. Jaron hit couple into the net, a couple wide and a couple long and some good shots by Maarten and myself, and we were back into the game. Maarten hit a crazy drop shot at the net worth two points. I split Jaron and Ross with another 2 point clean winner, and we were tied at 19. We went on to win 21-19 in an epic meltdown by another Atlanta kid. After, Jaron said, “I want to acknowledge my poor play and apologize to my teammate as well as our fan (yes singular).” Let’s not discuss the epic beat down I received in singles while playing Maarten a few days later. It is clearly not relevant to this discussion.

I often compare myself with Tom Brady. In my 2019 piece entitled, “BinGoat,” I outlined the reasons I am the Tom Brady of Bingo and was considering my own line of Bingo shoes. Now, Maarten and I are clearly the comeback kids who are available for parties, Bar Mitzvahs, weddings…to autograph tennis balls for a fee. We are slightly cheaper than Tom Brady in terms of appearance fees. We also have plenty of room on our shirts, hats and sweatbands for sponsorship opportunities. If you are looking to sponsor aging, mediocre tennis players in Boca Raton, we are your guys. Jaron, you have continued the legacy of the Atlanta meltdown. You have made your city proud and hopefully made Maarten and I rich as we cash in on our newfound fame. Ross, pick a better partner next time….not from Atlanta.

Quick Bites

• Thursday, Stocks flew sharply higher and bond yields crashed on the Consumer Price Index (CPI) report outlined below, which came in lower than expectations. Many beaten down stocks were +8-15% on the day, for perspective. The Dow jumped 1,201 points, or 3.7%, to 33,715 for its biggest one-day gain since stocks were emerging from the depths of the pandemic bear market. The S&P 500 jumped 5.54% to 3,956 in its biggest rally since April 2020. The Nasdaq surged 7.35%, its best since March 2020, closing at 11,114. On Thursday with respect to sector performance, Info Tech was +8.3%, R/E +7.8%, Consumer Discretionary +7.7% and Materials +5.6%. US Tech billionaires had their best day on record Thursday by adding $59bn to their fortunes. Two through 10 year bond yields fell 30-34bps, another massive move due to better than expected inflation data. The 10 year rallied back to 3.8% and was 4.21% just days prior. Futures suggest 50bps for December, and I feel that will happen despite the CPI data. The Dollar Index was down 2.5% Thursday given the massive rally in rates and was -4%+ in two days. The Dow was up about 4% on a weekly basis, while the Nasdaq Composite is up more than 8%. This week is a resumption of a comeback rally for the bear market which began in mid-October, but paused in recent weeks. The S&P 500 is now up more than 14% from its bear market low, but still down 16% for the year. Oil prices are back up to the $90 range, as China is reopening, which also drove China related stocks higher. As an aside, when distillate prices rally sharply, in many cases oil follows. Watch oil prices post election. We very well may see sharply higher oil in coming months.

  

  

  

• The CPI rose less than expected in October, an indication that while inflation is still a threat to the U.S. economy, pressures could be starting to cool. The consumer price index, a broad-based measure of goods and services costs, increased 0.4% for the month and 7.7% from a year ago. Respective estimates from Dow Jones were for increases of 0.6% and 7.9%. Excluding volatile food and energy costs, so-called core CPI increased 0.3% for the month and 6.3% on an annual basis, compared to respective estimates of 0.5% and 6.5%. I called peak inflation in June/July and feel my inflation call “NOT TRANSITORY,” in 2021 in at least 20 Rosen Reports proved accurate. I am not suggesting inflation crashes, but felt peak was set and many things are turning over now. Wages, food and diesel fuel are areas of concern.

  

• During the pandemic, shipping rates exploded and shipping containers were impossible to find. Prices for 45 ft containers from China to Long Beach went as high as $26k. My friend just sent twenty 45 ft containers from China to Long Beach for $2,250 each, a level not seen in years. Shipping containers are now plentiful in another sign of global economic slowdown. In a related matter, truck brokerage giant C.H. Robinson Worldwide is laying off between 1,000 and 1,200 employees, most of whom are at the vice president and general manager level. The move, as FreightWaves CEO Craig Fuller reports, "might be the largest layoff in the history of freight brokerages, not related to a bankruptcy or acquisition." There are many signs of global slowdown in asset prices, shipping/freight, new/used cars, housing, clothing, electronics, lumber, iron ore…

  

• The Los Angeles ULA tax appears to have enough votes to pass (54.8% as of Sunday am). ULA levies a tax on high-end real estate with proceeds to be used for low-income housing and income assistance for low-income seniors and people with disabilities. Ordinance ULA seeks an additional 4% tax on property sales (commercial or residential) that exceed $5 million, and sales at over $10 million would see a 5.5% tax. This is in addition to the existing .45% tax. Massachusetts, appears to have passed the “Fair Share Tax,” which would be an additional 4% surtax n income over $1mm in addition to the 5% state tax rate. So, what does this do to those wealthy who have the ability to leave already high tax states? I sense we will continue to see a migration from the Northeast, Midwest and CA to NV, TX, TN, FL, SC, NC. I have no faith the states or Federal government can get to the right answer with my money based on the horrific policies since the dawn of time. If ULA passes as expected, it is effective 4/1/23. I expect a flood of closings prior to that date. Also, Mass passed a “Millionaires Tax” of 4% on all income over $1mm. This is in addition to the 5% income tax for Mass.

  

• The U.S. throws away up to 11.3 million tons of textile waste each year—around 2,150 pieces of clothing each second. The fashion industry might not be the first that comes to mind as a superuser of fossil fuels. Today, in fact, fashion accounts for up to 10% of global carbon dioxide output—more than international flights and shipping combined, according to the United Nations. Great charts in the piece. Just wanted to highlight that an unexpected industry is using plastics.

  

Other Headlines

• Wall Street layoffs pick up steam as Citigroup and Barclays cut hundreds of workers

• Read Elon Musk’s first email to all Twitter employees: Remote work over, company needs subscriptions to survive downturn

  • So, you spend $44bn on a company and within two weeks of closing send a message questioning the viability of the company? “Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn.” “Bankruptcy is not out of the question.” I called this early that it was massively overvalued. Also, more high-profile departures. What an unmitigated disaster. Twitter already paused the “Blue Service” which was $7.99/month. Impersonators are overtaking brand accounts on Twitter and offering free goods. Musk, you can be better than this. Although no trades have happened to my knowledge, the Twitter bank loan has seen buyers in the 60 range, but banks are looking for 70 cents on the dollar. Bank loans at that price suggest the equity ain’t worth anywhere near $44bn.

• Disney plans targeted hiring freeze and job cuts, according to a memo from CEO Bob Chapek

• 'People are scared': Poland homeowners are lining up for days and even turning to trash to heat their homes — and coal stocks are still white-hot due to the demand

  

• Amazon’s new ‘Sparrow’ robot threatens to take warehouse worker jobs

  

• MSNBC’s Katy Tur suggests Fetterman could run for president: 'Makes you wonder about his future'

  • I thought this was a joke. He is cognitively challenged after the stroke. Oh wait, that just might be the perfect Presidential candidate.

• Dems Blow Nearly $200 Million on Perennial Losers Beto O’Rourke, Stacey Abrams

  • We need spending limits. Warnock raised $123mm or 3 times more than Walker. Too few people have too out sized an influence on elections given their huge wealth. How much will be thrown at Walker and Warnock for the December runoff? Two horrific candidates.

• Remove these 5 dangerous tech gadgets in your home NOW

  • Old cell phones, outdated routers, old power strips and others.

• Citadel's Ken Griffin: Woke ideology is 'soul-crushing'

• California sheriff's office will no longer patrol during the day due to 'catastrophic' staffing

  • Tehama County has a recruitment/retention issue due to pay. 66k residents in the town in Northern, CA. Oh yeah, violent crime rate is 9.79 per 1,000 residents, meaning it is less safe than 97% of the cities in the country. Good luck with that. On my top list of places not to live.

• Teens vaping within 5 minutes of waking up is on the rise

  • Everywhere I go I see teens to late 20 somethings vaping. My kids know they consequences if I were to catch them. I am an adamant non-smoker and non-vaper. I have never done either. NOT ONCE.

    

• Microsoft co-founder Paul Allen’s art collection smashes record with $1.5 billion auction

  • Five paintings went for over $100mm.

• More Hotel Rooms Are Looking Shabby, Even With Higher Prices

  • Guest complaints are rising about broken air conditioners, showers and more as hotels struggle to fix them quickly.

• I’m addicted to my big lips — doctors say I could die but I won’t stop

  • I am rarely at a loss for words. What do you tell this person other than to get mental help?

    

• Russia paid Iran for its suicide drones by sending a plane full of $140 million in cash and captured Western weapons.

  • Concerning article.

Crime Headlines

• Convicted murderer on parole tries to kidnap girl, 8, in NYC

• Cops hunt crazed woman who pummeled 10-year-old girl, her mom on NYC subway as transit crime rages on

• NYC shooting leaves one person dead, two wounded

  • 100 yards from where my children went to school at Avenues in Chelsea.

• Man arrested with 20,000 fentanyl pills set free-NYC

• One suspect in anti-Jewish Brooklyn gel pellet attack held on bail, two other freed

• Men storm school bus, yell hate slurs at children and perform ‘Heil Hitler salute’ in Chicago, officials say

• 9-month-old boy killed in daylight California shooting

• 11 Temple University students robbed in off-campus Philadelphia apartment

• Sophia Rosing, Kentucky student arrested for racist attack, ‘permanently banned’ from campus

  

Real Estate

• I have written how high end Miami and Palm Beach remain well sought after. Bespoke just came out with a 2 bedroom/2 bathroom apartment which is 1,760 ft at the Surf Club Unit# 806. The asking price? $117k/month seasonal or $78k/month year-round. The apartment faces west (not the beach) and believe it is worth approximately $6mm. I am not sure where the rental price settles, but this is an example of the craziness. Seems a tad bit high to me. High-end suite hotels are out of control in Miami for the season. I checked the Four Seasons Surf Club (same location) room rates and they are $5k/night for a one bedroom and $9.4k/for a two bedroom in December before taxes and fees. With taxes and fees, the 2 bedroom costs $10.5k/night. Throwing up in my mouth. Holiday Inn, here I come. I don’t know what it would take for me to spend $10k/night on a 2 bedroom hotel room, even if I was worth $2bn.

• In a somewhat related story, this Robb Report article is on Shell Bay, the golf course/condo development I wrote about recently. Located in Hallandale Beach, just north of Miami Beach, The Residences at Shell Bay is a fully gated community with a private golf club, The Shell Bay Club; a tennis center; pickleball and padel courts; a 48-slip private yacht club; and a private members’ Clubhouse with a spa and fitness center. There will be 108 residences over 20 stories with one- to four-bedroom floor plans. There will also be an exclusive collection of penthouse homes with private outdoor spaces and plunge pools in select residences.  I have spoken with people involved (Rosen Report Readers), in the project and am told “no expense has been spared,” and the end result will be very high-end. I know Witkoff (developer) is a class act and knows high-end real estate development. I am sure it will be nice. I do fear a little about the lack of acreage for a golf course, practice facility, marina, tennis, hotel condos, restaurants… I believe the course opens in January and look forward to checking it out. The amenities are amazing and believe based on the membership, the services will be top-notch. Multiple Rosen Report readers are members. The current asking price for membership is $1mm. Devin Kay from Douglas Elliman is selling condos at Shell Bay and some listings are below.

  

  

• High-end developer, Todd Glazer, relisted his private island home in Palm Beach for $218mm. Highlights include 11BR/15.7BA, 5 car garage, 98' south facing pool with spa and cold plunge. Fantastic indoor spa with massage room, hair salon, steam room, and sauna. Rare lighted clay tennis court features viewing pavilion. Beautiful library with hardwood flooring, premium built-ins, and Bar with wine fridge, beverage center, and humidor cigar display. Entertainment Room with fireplace, wine refrigerator, billiards table, and movie lounge. Home gym features weight room, cardio room, wet bar, and fireplace. Additional highlights include wine room, elevator, and large playroom with beverage station. Loggia with full outdoor kitchen, fireplace, and pool bar. Glazer’s website is amazing.

• I have written about mortgage rates increasing dramatically in 2022, but with the big move lower in Treasuries, mortgage rates are back under 7%.

Other R/E Headlines

• The 10 most expensive ZIP codes in the U.S.

  

• Manhattan Luxury Rents Go ‘Through the Roof,’ Other Prices Fall

  • Prices for the costliest rental apartments climbed in October even as the rest of the market eased up.

• Florida bracing for new influx of residents fleeing blue states after Dems’ election success

  • I concur with this headline as calls already started coming in from wealthy NYC folks who were hoping for a material change in crime policy which now won’t materialize. The stream of educated, wealthy, successful people will continue. Many were hoping for Bragg to be removed and a tougher crime policy. That does not appear to be a priority for Hochul.

• Redfin Shuts Home-Flipping Business, Lays Off 13% of Staff in Slumping Housing Market

• WeWork’s bleeding continues as firm cuts 40 locations

• Compass Soars 89% Over Two Days on Cost Cuts

  

Virus/Vaccine

More cases are showing up. The gym now requires you to wipe down equipment after use, something which I had not seen in a while.

• L.A. County coronavirus cases, hospitalizations rising as Thanksgiving nears

• Cruise ship with 800 Covid-positive passengers docks in Sydney