Opening Comments
Picture of the Day
Bad Reaction
Quick Bites-Markets (Apple/Facebook), Bitcoin, Federal Reserve
Archegos Losses, Taxes, House Seats, Gottlieb
Urban Shuffle, NYC/LA Reopening, NYC Rent
Caitlyn Jenner, Murder in Paris, Rudy Raided
Virus/Vaccine-Data is improving, but vaccination rates are slowing
R/E
Opening Comments
South Florida is definitely heating up and crowds are thinning out. The Rosens are leaving on the 21st for the tri-state area and will be travelling around to golf tournaments for a few months. Jet Blue flight was $104. However, rental cars are a disaster. The rental car prices have almost tripled since last summer. An SUV is in the $10k range for three months. Last year, I rented a huge SUV for the summer for less than $4k. Hawaiian tourists are renting U-Haul vans instead of rental cars due to a massive shortage causing prices of $700/day. I do not understand how inflation is not being more readily discussed-home prices are skyrocketing , new and used cars, oil/gas, semiconductors, lumber, consumer products, food, clothing, logistics/shipping, plastic and the list goes on. GS was out overnight with a bullish commodities note which suggested “the biggest jump in oil demand ever-a 5.2mm barrel/day rise over the next 6 months.” Deutsche Bank put out a piece today on food prices. Bloomberg’s agriculture spot index rose by 76% year-on-year. That’s the biggest annual rise in nearly a decade, and there are only a couple of other comparable episodes since the index begins back in 1991.
Restaurants nationwide cannot find employees. One McD is offering $50 just to show up for an interview. Very few people are showing up for interviews for restaurants across the country. The TSA wanted 6,000 new officers by summer and most positions are unfilled. Pay people to stay home and make similar money, why should they go back to work?
Picture of the Day
I am not a lover of heights. For example, there is no chance I would sky dive. Just would never happen. The same is true of me going into this pool opening in London. It sits 115 feet above the ground and connects two buildings.
Bad Reaction
I had received my first Pfizer dose 3 weeks ago and apart from a sore arm for a couple days, I had no side effects. Well, that changed with the second shot on Tuesday am. Interestingly, my first experience was not great given I had to wait in line with 250 people and it took me 1.5 hours from start to finish. For my second shot, I was #3 in line and in and out in 25 minutes including the 15 minutes of wait time post the shot Again, my arm was quite sore, but Tuesday night, it was more than my arm. About 2am, I started shivering severely. Picture being outside in February in Chicago with no shoes shivering. My teeth were chattering to the point I thought I might crack a molar. I was dripping sweat, but freezing despite wearing a sweatshirt and having multiple blankets on me. I have had meningitis, dengue fever, shingles, and severe flu, but this was a bit crazy, as it happened so quickly. I could not stop shaking and my heart was racing. I tried to take my pulse and it was over 150, while my resting heart rate is 50 or less. I was cramping up and my legs were contorting a bit like I was possessed (no comment from the peanut gallery). It lasted a couple of uncomfortable hours and subsided a bit. I woke up groggy, but no longer freezing or shivering. I am a little out of it today, so, don’t be surprised if there are some sloppy mistakes. Apologies.
I wanted to let readers know in case they have a reaction like mine, not to panic. One concern was the lack of people at the vaccine this time. There have been 232 million doses given in the US, but the rate is down to 2.7mm/day after being as high as 3.4mm/day. If the vaccine gives me protection to start some resumption to normal, it is worth an uncomfortable evening in my book.
I did not write a piece on Sunday, as I was having a bad reaction to the Rosen Report and delivery issues. At the peak, I was getting 90% opens. Mind you, the pandemic was crazy and everyone was locked at home. I get some natural attrition, but using Substack, my open rate was below 50% for the first time and it seems 30 to 40% of my readers do not receive it despite being on the list. Either it goes to spam or gets stuck in a firewall or something. It take a lot of time to do the research, write, edit and format the pieces and I have been frustrated with the recent sharp declines in the delivery. If anyone has any suggestions on how to be sure the Rosen Report gets delivered, I am all ears. If people don’t want to read it, I am ok, I do not need to write it. However, it seems that people are complaining they are not getting it and I cannot seem to get any answers from Substack. No phone support, only email and it takes time to hear back from them.
Quick Bites
The S&P 500 closed around the flat line on Wednesday after the Federal Reserve left interest rates unchanged in its latest policy decision and hinted that it would keep easy monetary policy where it is for some time despite a strengthening economy and rising inflation. The S&P 500 dipped 0.08% to 4,183, despite touching an intraday record earlier in the session. The Dow shed 164 points to close at 33,820, dragged down by a 7.2% drop in Amgen’s stock on disappointing earnings. The Nasdaq traded lower by 0.28% to 14,051. After the close, Apple had a huge earnings release with sales +54% and $90 billion in authorized stock buy backs. Apple reported double-digit growth in every single one of its product categories, and its most important product line, the iPhone, was up 65.5% from last year. Its Mac and iPad sales did better, with its computers up 70.1% and iPad sales growing nearly 79% on an annual basis. Apple said it would increase its dividend by 7% to $0.22 per share and authorized $90 billion in share buybacks, which is significantly higher than last year’s $50 billion outlay and 2019′s $75 billion. Facebook beat on both earnings and revenue in Q1, and the stock rose as much as 6% after hours. The company attributed its massive revenue growth to a 30% increase in the average price per ad, as well as a 12% increase in number of ads shown. It also reduced its forecast for capital expenditures for the year to between $19 billion and $21 billion.
I am a little confused about Friday’s crypto sell off which wiped out over $200bn in value. The reports suggest Biden’s capital gains tax plan was the culprit. I am not sure why, this has been discussed for some time. Bitcoin fell to $48.5k and is now back to $54.6k or up 13% in a few days. See the big dip in the 5 day chart and subsequent rally.
The Federal Reserve held its key interest rate near zero and said it plans to continue supporting the economic recovery, while acknowledging recent progress in growth and employment. Fed officials voted unanimously Wednesday to maintain the central bank’s policies, aimed at holding down borrowing costs, until the economy heals further from the effects of the Covid-19 pandemic. “Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened,” the Fed said in a statement released after the conclusion of its two-day policy meeting. “The sectors most adversely affected by the pandemic remain weak but have shown improvement. Inflation has risen, largely reflecting transitory factors.”
Global banks’ losses related to the collapse of Bill Hwang’s Archegos Capital Management topped $10 billion after Nomura Holdings Inc. and UBS Group AG disclosed more than $3.7 billion of combined hits from the collapse of the U.S. family office. Astonishing that banks could lose $10bn lending on liquid securities today. Hwang lost another $20-30bn as well. Insanity.
President Biden on Wednesday rolled out the blueprint for another massive tax-and-spend bill, dubbed the American Families Plan, which would boost federal spending by $1.8 trillion through tax hikes on high-income Americans and investors. The package includes $511 billion for education, including universal preschool for 3- and 4-year olds and free community college, and $225 for childcare, including a subsidy that would cap expenses for most workers at 7 percent of income. The plan calls for $225 billion to subsidize 12 weeks of paid parental and sick leave and $45 billion more for food stamps and school food programs. About $800 billion would go toward tax credits, including $200 billion for Obamacare users. The plan would make permanent the recent expansion of tax credits for people with children — from $2,000 per year to $3,000, or $3,600 for children under age six. But in a major blow to New York-area Democrats including Gov. Andrew Cuomo, the proposal omits repeal of the 2017 SALT deduction cap of $10,000 per person, which hammered residents of higher-tax states by preventing them from deducting state tax payments on their federal tax returns. I am a bit surprised by this as the SALT deductions disproportionately hit Blue States (CA, NY, IL, NJ, CT). The article suggests some Democrats will not support this bill as a result of the SALT issue.
President Joe Biden is expected to propose higher capital gains taxes for people with incomes of more than $1 million. The top rate would rise to 39.6%, from 20%. The policy would cost the U.S. $33 billion over a decade if it doesn’t also eliminate the so-called “step-up in basis” at death, according to the University of Pennsylvania’s Wharton School. That’s because the wealthy would likely use the rule more regularly to avoid tax, Wharton said. Biden’s plan would raise $113 billion if it scraps the tax break for heirs
California will lose a seat in the House of Representatives for the first time in history, the U.S. Census Bureau announced on Monday. The Golden State is one of seven states that will lose a seat in the House based on population shifts, a group that includes New York, Illinois, Michigan, Ohio, Pennsylvania and West Virginia. Meanwhile, Texas will gain two seats and Colorado, Florida, Montana, North Carolina and Oregon will each gain one seat. Give people an inferior service and charge them a premium and they find a new place to live. I continue to be surprised by the limited inventory of homes in Florida and the types of people moving down (younger and younger). Did people see the police officer hit in the head with a stick in another brazen attack?
New York City endured its bloodiest week so far this year, as gun violence continues to soar ahead of what could be another violent summer. NYPD data shows 50 people were shot in 46 separate incidents over a seven-day period ending Sunday evening — a more than 250 percent surge from the same week in 2020. Last year, the NYPD says it logged 12 shootings with 14 victims during the same time — more than a month into the city’s COVID-19 lockdown, according to the weekly Compstat data. But the same week in 2019 saw nearly identical figures. How about we put criminals in jail and not let them out without bail? Mayor, protect the law abiding citizens who pay taxes and your salary. Protect the police officers and send a message that shootings won’t be tolerated.
The former head of the FDA said the US should “lean more aggressively forward” into lifting COVID-19 restrictions — adding that he believes the trend of declining cases is “locked in at this point” and he doesn’t anticipate another surge. “I think oftentimes a mistake we make is that we’re quicker to implement these precautions than we are to lift them because we’re worried that once we lift them, we won’t be able to reimplement them,” Dr. Scott Gottlieb said on Face the Nation.“I don’t think we should be thinking about achieving herd immunity,” Dr. Scott Gottlieb told CNBC on Friday. The former FDA chief said the country’s goal should instead be to “keep the level of virus down.” I am a little surprised by Gottlieb’s comment about herd immunity, but the fact that vaccine doses are dropping, it seems more people won’t take it. There is a crazy story (only in Florida) about a school which will not let staff back if they took the vaccine. I thought it was a joke. The school's CEO and co-founder Leila Centner sent a letter to faculty and staff at the Centner Academy citing unsupported assertions about Covid-19 vaccines that contradict a large body of evidence of the vaccines’ safety and efficacy from the FDA, the NIH and WHO.
When New York City became the epicenter of the pandemic, some of the city's wealthiest fled south in a seeming mass exodus. But a year later, Bloomberg reported, the migration has turned out to be more of an "urban shuffle." While the Sun Belt region did see an increase in residents, most of the city dwellers who moved stayed pretty close to home. In fact, more Manhattanites moved to Brooklyn than anywhere else between March 2020 and February 2021. According to Bloomberg, 20,000 residents made the borough switch. That's more than the 19,000 Manhattanites who moved to Florida, whose sunnier locale, lower taxes, and more affordable cost of living have lured many a New York financier during the pandemic.
It took a pandemic to soften the city’s notoriously high rents. As many New Yorkers receive the COVID-19 vaccine and resume their normal lives, the rental market remains in the pits, according to the first-quarter market report from listings portal StreetEasy, which found that city rents continue their free fall to record lows. In Manhattan, for instance, median rents dipped to a brand-new low of $2,700 per month, marking the borough’s cheapest housing price recorded on StreetEasy since the site began tallying in 2010. That figure marks a significant year-over-year drop. By comparison, in the first quarter of 2020, and in the days right before New York’s COVID-19 outbreak, the median asking rent was more than $700 higher at $3,417 per month. In Brooklyn, median rents slipped 10 percent year-over-year to $2,390 — its lowest level since 2011. Queens saw its prices slip to $1,999, the first time they’ve slid below $2,000 in eight years. That borough’s rents are down 10.5 percent year-over-year.
Seating at bars will be allowed in New York City starting May 3, more than a year after restrictions first went into place.Outdoor dining curfews of 12 a.m. are set to end by May 17, and indoor dining curfews will expire May 31. The announcements come as Covid infections decline and vaccinations increase. Los Angeles County, the first county in the US to have recorded more than one million cases, is set to enter its least restrictive reopening phase as early as next week, public health officials announced. The nation's most populous county was once California's pandemic epicenter -- recording one death every 10 minutes in December. Now, the county's public health officials announced that L.A. County would be ready for the most lenient coronavirus restrictions starting May 5 if positive cases continue to drop for another week.
Former Olympic decathlete and reality TV star Caitlyn Jenner on Friday officially announced her bid for governor of California. Jenner, a longtime Republican, is seeking to replace Democratic Gov. Gavin Newsom in a recall election, hoping her celebrity status and name recognition can yield an upset in the nation's most populous state. But in deep-blue California, she's decidedly not branding herself as a Trump Republican even as she's counting on some of the former president's advisers to drive her strategy. She's assembled a team of prominent GOP operatives including Tony Fabrizio, the top pollster on Donald Trump's 2016 and 2020 campaigns, Ryan Erwin, founder of RedRock Strategies, and Tyler Deaton, president of Allegiance Strategies.
A sickening story about a Jewish woman murdered in Paris, France. Sarah Halimi was a retired French physician and schoolteacher. She was also an Orthodox Jew. On April 4, 2017, Halimi was in her Paris apartment where she lived alone. In the middle of the night, a 27-year-old Muslim man of Malian origin named Kobili Traoré, who lived in the building, broke into her apartment. Traoré tortured Ms. Halimi, who was in her 60s, beating her and kicking her. According to neighbors, who called the police after hearing Halimi’s cries, Traoré called her a “shaitan” (satan) and a dirty Jew. Ultimately, he threw Ms. Halimi’s battered body out of her third-story apartment window shouting “Allahu akbar.” French prosecutors had decided to drop murder charges against Traoré, a man with nearly two dozen prior convictions, on the grounds that he had smoked pot. Despite Paris being a beautiful city, I never plan on returning there. They treat Americans poorly and hate Jews. Anti-Semitisim there is rampant. This woman looks eerily similar to my mother as she looked 20 years ago. There are protests going on about this now.
Federal agents raided former Mayor Rudy Giuliani’s Manhattan apartment and office on Wednesday morning, two law enforcement sources briefed on the matter told The Post. The agents executed a search warrant and seized electronic devices from both locations, one source said. The moves were tied to an investigation into Giuliani’s dealings in Ukraine, according to reports. Michael Cohen, Trump’s former lawyer Tweeted, “Here we go folks!!!”
Virus/Vaccine
Cases in the US fell by 15% on the week and the 7 day average is down to 53.8k/day. Hospitalizations are a little sticky and only down 2% on the week to 45k. Deaths are down 4% on the week and the 7 day average is now 696/day. More than 1.06 billion doses have been administered across 172 countries, according to data collected by Bloomberg. The latest rate was roughly 19.8 million doses a day. In the U.S., 232 million doses have been given so far. In the last week, an average of 2.7 million doses per day were administered.
According to an MIT study, the risk of being exposed to Covid-19 indoors can be as great at 60 feet as it is at 6 feet in a room where the air is mixed. Existing safety guidelines have omitted too many factors to accurately quantify the risk of airborne transmission, such as time, mask use and ventilation rates. Bazant and Bush question long-held Covid-19 guidelines that recommend 6 feet of distance between people.
As India continues to grapple with an unrelenting second wave of COVID-19 in some neighboring countries in South Asia are seeing their own surges in case numbers, prompting border closures and travel bans. India is now reporting approximately 1 million new coronavirus cases every three days, with the daily death toll exceeding 3,293 on Wednesday, according to data from the Indian Ministry of Health. The outbreak has pushed the country's healthcare system to near breaking point. With no space left in hospitals, patients are being left to die at home, in ambulances and outside clinics. Even those who are given a bed remain in danger, with hospitals running out of oxygen and asking patients' families to bring their own.
The Pfizer-BioNTech and Moderna Covid-19 vaccines were found to be 94% effective at preventing hospitalizations among people ages 65 and over in a real-world study published Wednesday by the CDC. The two-dose mRNA vaccines were also found in the study to be 64% effective at preventing hospitalizations in the elderly who received just one shot. The U.S. agency said the findings were consistent with those found in clinical trials.
Real Estate
Things down here remain hot on the R/E front. One broker is at 80% of his full year 2020 totals and that was a record. He mentioned that despite lighter inventory, the turnover is in days, not months. He only has a handful of listings, but they all sell in a week and then gets 5 more. He told me of a listing for over $14mm which saw three offers all above ask within 72 hours of being listed. Another broker is up 50% from full year last year through 4 months.
I spoke with a young finance guy who is relocating to South Florida. This is not the kind of person you would expect to leave NYC. He is married with no kids and feels the quality of life, weather, taxes, cost of living is far superior to NYC. Tonight, I am having dinner with a two NYC folks and one Greenwich person. All are now residents of South Florida. Former hedge fund managers and bankers.