Are We Over-Scheduling Our Kids?
2-8-23
Opening Comments
Reminder, Tomorrow at 11am EST, I will be moderating a panel hosted by Prometheus Alts. My readers are invited to the event. You can register here for the live panel. The hedge fund mangers on the panel are impressive and believe it will be informative.
Markets
Powell-2s/10s Inversion
Paul Singer on Markets
Pimco Bond Fund Falls Back to Earth
Wasteful NY Spending on Subways and Education
Biden SOTU
Fire Sale Commercial Buildings NYC
Midtown Hotel Sold at a Loss
Pictures of the Day-56 Super Bowl Rings ESPN
Given the Super Bowl is coming up Sunday, I thought this ESPN link to all the prior rings would be timely. It is amazing how far they have come over the years. They started smaller with limited bling and have turned into massive diamond complexities. Yes, we have some Rosen pics with rings, but unfortunately, none our owned by the Rosen family. The link gives a ton of history and amazing 360 degree pictures of each ring.
Are We Over-Scheduling Our Kids?
The new world for kids is very different than when I grew up. Part of this can be explained by the socio-economic factors which differ between my childhood and the way my children have been raised. When I was a kid, I rode my bike home from school to an empty home (mom worked & father passed away). I entertained myself. I got on my skateboard or grabbed a ball and played. I tried to find a neighbor and played soccer, stick ball, football, tag, basketball… whatever we could do to entertain ourselves. There were no electronics, lessons, tutors, advisors, nutritionists, ADHD meds, allergies, epi-pens or shrinks like we have today.
My daughter, Julia, is 15-years old and a freshman in high school. She goes to school from approximately 8am until 3pm. However, after school and weekends is anything but normal from my perspective. She has a math tutor three times a week and Latin and Science tutors once a week. She has singing lessons twice a week, guitar twice a week and piano. In the fall, she had golf team practice 2 or 3 times a week and tournaments. She takes two golf lessons a week for a total of 3 hours, and I take her once or twice to practice when her schedule permits. She was taking tennis lessons and enjoyed them, but something had to go and has not taken a lesson in months. She also is required to do regular community service for the school. Add homework, studying for tests, writing papers and seeing a friend, and the calendar has almost zero downtime. Let’s not forget baby-sitting jobs too.
I ask her to practice guitar, singing or piano, and I get Manson Lamps (death stare) as she is exhausted and wants some downtime. In one of the best shows of all time, The Sopranos, Tony Soprano claims his uncle Richie is giving him “Manson Lamps,” or an evil stare. Strong language in the 2-second video link. The fact that she posed for this picture is inanity.
With the invention of smart phones, iPads, laptops…kids have yet another distraction, social media. I feel it is awful for kids, especially young girls who see “perfection” with photo-shopped pictures of influencers living their best lives. It is incredibly unhealthy and we have lots of discussions about the smoke and mirrors of social media. Of course, Julia uses downtime to go post on Tik-Tok and Instagram. She is approaching 20k followers given her music, but takes an uncomfortable amount of selfies.
As parents, are we doing our daughter a disservice? Should she have less structure? I can tell you from experience that I noticed that my efficiency in life has gone down since the structure of working at JPM or my hedge fund. When you have free time, I feel I become less efficient. When I had a team reporting to me and lots of responsibilities, my schedule was tight, and I used my time so wisely, it was impressive. I was up at 4:45am to be at the gym or pool a little after 5am so I could be in the office between 6-6:15am. Today, I feel far less efficient and effective. I have been trying to have a schedule of when I work on the report, advice clients, make investments, spend time with family...and it is hard when you don’t need to be somewhere. On days where I have multiple meetings and must get something done for a consulting client, I feel so much better about myself and what I accomplished that day. I would suggest structure and achievement are almost perfectly positively correlated, at least for me.
I am not sure what the right answer is in terms of over-scheduling children today. As a parent who now has means, I am trying to give our children all the experiences and opportunities that I never had, but at what cost? Maybe a little more down time is not so bad after all? Maybe I will get fewer “Manson Lamps” when I ask her to practice.
Quick Bites
U.S. stocks slid Wednesday as investors returned focus to the latest batch of corporate earnings. Wall Street also continued to weigh the outlook for future Federal Reserve policy moves. The Dow fell by 208 points, or 0.61%, to 33,949. The S&P 500 slid 1.11% to 4,118. The Nasdaq dropped 1.68%, 11,911. For the first quarter of 2023, 42 companies in the S&P 500 have issued negative earnings guidance, according to Refinitiv. Meanwhile, eight have issued positive guidance, while many others have not changed their guidance. Around 69% of the 297 S&P 500 companies that have reported fourth-quarter earnings so far beat analyst expectations, Refinitiv said, though many analysts lowered their expectations for the quarter amid rising concerns about the health of the economy. Just over 27% missed analyst consensus estimates for the quarter. Disney beat expectations after the close, as subscriber losses were not as bad as feared. YTD, the Dow is +2.4%, S&P +7.2% and Nasdaq +13.8%.
Fed Chairman Powell suggested that although inflation is beginning to ease, he expect it to be a long process and cautioned rates could rise more than markets expect. “The dis-inflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector, which is about a quarter of our economy,” the central bank chief said during an event in Washington, D.C. “But it has a long way to go. These are the very early stages.” The 2s/10s curve is inverting more and now is at -80bps for something which histrionically has been predictive of recessions.
Good Bloomberg article outlining Paul Singer’s market view. Singer, the billionaire founder of Elliott Investment Management, warned that there’s likely to be a disorderly unraveling of markets. Singer said the bear market isn’t over and that a drop of 20% is likely not enough. Singer has been warning of trouble for years, citing the Fed’s years of easy money policies. In a February 2021 letter to investors, he described an ugly end for markets given too much leverage in capital structures and low-quality securities. Singer has a personal fortune of about $3.8 billion. This is an excerpt from a Zero Hedge article: "Central bankers think they are the masters of the universe because the world is looking to them (and only them) to deliver continuous stability and prosperity. There is no reason to suppose that they understand the modern financial system and economy to any greater extent than they did in 2007 (that is to say, not at all). Nevertheless, they plow ahead, expressing total confidence that what they are saying and doing is wise and not dangerous drivel..." The substantial rally in equities in 2023 has been impressive. More are convinced of a soft-landing. Apparently, Singer is not one of them.
Interesting WSJ article regarding Pimco. Daniel Ivascyn rode one big trade all the way to the top of the bond-market universe: speculative mortgage debt that he scooped up on the cheap in the wake of the great financial crisis. It made a fortune and, in turn, made everyone forget about the messy departure of Bill Gross. Now, Ivascyn, Pimco’s chief investment officer, finds himself at a critical juncture. His $117 billion Pimco Income Fund, the world’s largest actively managed bond fund, has started to trail its very top-performing peers, and investors, burned by a brutal wipeout across the bond market in 2022, are losing patience. They yanked $23 billion from the fund last year, the most since its launch in 2007. “This cycle is going to be different,” Ivascyn said. “Even in a soft landing, we could see a scenario of multi-year disappointments in the credit markets,” a drawn-out process marked by the restructuring of corporate debt and heightened losses. The 10-year out performance has been spectacular at 4.2% vs an average of bond funds at 1.8% and the Bloomberg USAgg Index at 1.4% . It would be nearly impossible to keep that differential in perpetuity.
I have been critical of government spending and waste. I am not against paying taxes, but am against the government wasting American’s hard-earned money. When you look at where the US is ranked globally in terms of healthcare, crime, education, infrastructure…it is hardly impressive relative to the amount spent. This story out of the MTA in NYC was frustrating, as it outlines the MTA spent twice as much on the Second Avenue subway consultants as it did on construction according to the NY Post article. A study from NYU revealed the MTA’s failure to supervise allowed costs to explode. Every subway project the MTA has built over the past 20 years broke prior world records from a cost perspective. On a related note of NYC waste, NY State spends 89% more than the national average per student, yet ranks 19th out of 50 states for Pre-K through 12th grade, and 14th for higher education according to US News and World Reports. NY State enrollment is declining and for 2022-23, and the state will spend an average of $32.8k/per pupil. NY spending per pupil is almost triple that of Florida, yet NY is 13 spots behind the Sunshine State in ranking.
With respect to the State of the Union, I found a few links with various perspectives. Overall, I was not blown away, but my expectations were so low, I did not feel he embarrassed himself. Again, I will call for younger politicians to ascend to the highest role in the land. I was surprised there was not more talk of China given the spy balloon and deteriorating relations. Although I felt there were times President Biden was off base, I did not feel the heckling by Greene and others was right, and it clearly upset McCarthy. Of note, I felt when Pelosi tore up Trump’s speech at the end of his address, it was wrong as well. A CNN poll was quite positive-72% Approved of Biden Speech — Including 43% of Republicans. This is better than I would have thought. Biden’s comments on the police in the wake of the brutal murder of Tyre Nichols were very good. This Fox link is entitled, ‘President Biden's State of the Union report card: Ratings from former speechwriters,” and gives a somewhat balanced view with positives and negatives. This CNN link is entitled, ”Takeaways from Biden’s State of the Union address,” and although has a positive bent, it also discusses how Biden is viewed by Americans in less than a stellar light. I felt this NYPost article had a good fact check chart (too large for me to insert it) outlining the “claim” versus the “truth” in the State of the Union Speech. The USA Today article title was “In SOTU, Biden didn't deliver the message America needed to hear on unity or economy.” Huckabee Sanders gave the GOP response and was fairly critical of the Left. “The dividing line in America is no longer between right or left,” she said. “The choice is between normal or crazy.” She called for a changing of the guard. Rep. Delia Ramirez delivered the Progressive response to the SOTU here.
Other Headlines
Failure to raise U.S. debt ceiling would lead to ‘economic and financial catastrophe,’ Yellen says
What happens with the continued vilification of fossil fuels which drive electricity? What happens when 50% of cars sold are EVs and everyone is charging cars at the same time at night when there is no solar?
Meta Asks Many Managers to Get Back to Making Things or Leave
Very positive development with Zuck looking for efficiency. 13% of employees fired in November.
Dell slashing more than 6,500 jobs as PC market slumps also Zoom layoffs: Company to cut 1,300 employees
Chipotle Mexican Grill misses expectations for earnings, revenue and same-store sales
Stock -5%.
Maersk, a global barometer for trade, posts record 2022 earnings but warns of a tough year ahead
Please read this link about comments and projections for the massive Danish shipping firm.
SoftBank Vision Fund posts another quarterly loss as tech slump bites
I have been critical of the Vision Fund management for years. They have not been good stewards of capital.
Wholesale egg prices have ‘collapsed.’ Why consumers may soon see relief
Inflation-battered shoppers turn to dollar stores for groceries
I have been to Dollar Stores. Oh my. Lots of crap, but some deals too. I bought a bunch of parchment paper for $1. Unheard of.
Laid-off Silicon Valley workers are panic-selling their start-up shares as valuations plunge
Subversive Partners with Unusual Whales to Launch Democratic and Republican Exchange-Traded Funds
I have been very vocal about insider trading from politicians, and apparently these ETFs will attempt mimic approximate holdings of both parties of Congress. I won’t invest here, but I like the idea of calling out crooked politicians.
Biden to Urge Quadrupling New 1% Tax on Stock Buybacks
Biden spoke of this in the state of the Union when asking energy companies to invest in new projects and not pay dividends or stock buybacks.
Few Americans are excited about a Biden-Trump rematch, Post-ABC poll finds
I truly hope we have candidates not named Trump, Biden or Harris in 2024.
AMC Theatres will soon charge you more money for the best seats
Why ChatGPT is a game changer for AI
13-minute CNBC video which further explains ChatGPT. I did not know Musk was a co-founder; of course he was. In the past month, I have had no fewer than 100 emails asking me questions on ChatGPT. There are clear problems of woke leanings in ChatGPT. This is disappointing.
Google announces Bard A.I. in response to ChatGPT
Clearly, Google was worried about market share losses to ChatGPT and rolled out Bard before they wanted to do so. Google has an 86.5% market share in search in the US and 92.2% globally. No monopoly to see here. They are 11x larger than the next competitor in US search. No wonder why they tabled Bard. However, Alphabet shares fell 7% following the Google AI event.
Millennials' ability, ambition comes into question following new polls: 'Go out and get a job'
One new Fortune poll shows that 35% of millennials across America rely on their parents to pay their bills.
Picture shows incredible find in house’s walls
I thought this story was crazy. 700lbs of acorns in the walls of a house from a woodpecker.
Todd English to serve refined Greek fare and $3,500 wines by the glass
I am not the biggest Todd English fan, but want to try out this pre-fixe Greek restaurant which basically suggests they will bring out food until you are full. My son, Jack, and I might bankrupt the restaurant. I am wearing pants with an elastic waist when we go.
Enough Fentanyl to ‘kill every American five times over’ seized at the border
We need a better border policy. This administration is not doing a good job and even Liberal mayors agree that they cannot handle the massive inflows.
I missed this story last week, and a reader pointed it out to me. There is speculation that Russia is attempting to buy some of the defense equipment the US left behind in Afghanistan, but is now in the hands of the Taliban. I read a half dozen articles about it. Nothing is conclusive, but yet another reminder that the exit could have been executed better. North Korea is supplying Russia with artillery shells according to articles.
Crime Headlines
Shot off-duty cop’s brother-in-law returned fire during botched NYC robbery
An off duty cop and his brother-in-law were trying to buy a car for $24k in cash in what appears to be a Facebook Marketplace ambush.
Teacher Abigail Zwerner sent emails about 6-year-old’s behavior before shooting
Horrific story, but the signs were clear the kid was a problem.
Florida teen Aiden Fucci pleads guilty in fatal stabbing of 13-year-old cheerleader Tristyn Bailey
Both the teacher shooting and the stabbing above were preventable. Lots of warning signs. Lots of people knew something was wrong, but help did not come in time. We all need to be more cognizant and demand intervention when we feel people are in danger.
US charges 'neo-Nazi' leader in plot to attack power stations
Real Estate
I have written extensively about my concerns on the office markets and this Real Deal article is pretty telling. With the mortgage due on its Tower 56 building in the Plaza District, Pearlmark Real Estate is negotiating a deal to sell the property at a price that will just about cover its debt. Pearlmark is nearing a deal to sell the 33-story Tower 56 at 126 East 56th Street for a price around $110 million. That sum will basically cover the loan held on the property by Blackstone. Pearlmark paid $158 million in 2008 to buy the boutique office building and spent $30 million on improvements. I thought these two sentences in the article were interesting: As mortgages come due this year, many office owners are expected to be in forced sale situations because their properties are worth less than the debt. In CMBS alone, there are some $16 billion worth of commercial real estate loans in the city set to mature this year.
A landmarked hotel in Midtown has sold at a huge loss compared to the last time it traded hands, reflecting the troubles still facing the city's hospitality industry amid the pandemic. Hawkins Way Capital and Värde Partners have purchased the property at 525 Lexington for about $153 million. The hotel was last purchased for $270 million in 2015.
Other R/E Headlines
Will the housing market crash in the US in 2023? Here’s what the experts say
Home-Buying Companies Stuck With Hundreds of Houses as Demand Slows
As mortgage rates surged, some customers backed out of purchases or needed more time for financing
New Orleans housing market cools after two years of frenzy; here's what's causing the changes
London’s rental market is in crisis. Here’s why and how renters are struggling
15 most affordable U.S. cities for people who want to live alone
This issue is, the cities listed for the most part would be awful to live in as a single person or married for that matter.
Millennials Have Regrets Buying Their First Homes
82% of millennial first-time homeowners have regrets
Oceanfront Hamptons Home Sells for Close to $35 Million
1 acre property on Dune Road in Bridgehampton, and the seller was James Carney.
Buyers Are Flocking to NYC’s Suburbs. Too Bad There Aren’t Many Homes to Sell.
Lots of discussion of limited inventory and bidding wars for NYC suburbs despite the layoffs, rising rates and talk of recession.
Virus/Vaccine
Data improving, but deaths remain high at 454/day.
