Bal Harbour-Shopping for Billionaires

11-5-23

Opening Comments

In an awful typo, I had the wrong word in the title and it changed everything. It was supposed to say, “How you Respond to ADVERSITY Defines You,” and includes a short video of Brian Koppelman explaining a career “dip.” MUST SEE. However, it said, “How you Respond to DIVERSITY Defines You.” I received hundreds of emails telling me of my mistake. Apologies. Please read it if you passed the first time. The most opened links were the longevity doctor supplement idea and the $29mm/year tech CEO who is supporting Work From Home.

3i members is a social network and investment club which I have been involved with since its inception in November ‘21. 3i Members is expanding to London, Atlanta, and Toronto in the coming weeks to meet with members and prospects.  If you are interested in learning more, please reply here, and someone from the 3i team will reach out.  I spend a lot of time with 3i and have made fantastic connections.

I tried the new Italian restaurant in Boca called 388 (from Long Island) and it is good, not life changing. The crowd age is somewhere between 82 and dead, but the portions are quite frankly massive and prices are reasonable. The spicy penne ala vodka was solid as was the chicken parmigiana and the meatball (both meat and chicken). I would definitely go back but might need to wear Velcro shoes and use a walker to fit in. I tried to get in on Saturday night and the first available was 8:45 pm a couple weeks out, so they are doing something right. I will write about it soon, but the number of new restaurants that have come to South Florida is remarkable. Follow the money!

• Pictures of the Day-Ranking CA, NY & FL by US News

• Bal Harbour-Shopping for Billionaires

• Quick Bites

  • Markets

  • Gundlach and Druckenmiller on Markets

  • JPM Private Credit Expansion

  • Business Schools Growing Population of Women

• Israel Headlines

• Other Headlines

• Real Estate

  • Bezos relocating to Miami

  • NYC Co-Ops Under Pricing Pressure

  • Hamptons $2-5mm Under Pressure

  • Ivanka Trump Townhouse Not Sold

New York, California & Florida Ranked by US News & World Reports

I received a lot of flack for my move to Florida over 6 years ago. How could I leave NYC for the culinary and cultural wasteland of South Florida was a question I received far too often. The fact that my NYC apartment is -20-25% in price and my Florida home is up closer to 250% suggests I may not be so stupid after all. I decided to check out US News and World Report rankings on three key states (California, NY and Florida) to see where they stack up and give my perspective. Would you believe CA is ranked #33, NY #20 and FL #10? I was shocked to see FL as the #1 rated state for education. The FL economy is ranked very high, as is fiscal stability and infrastructure despite no income taxes. However, healthcare is ranked low, and would agree 100%. Most of the hospitals down here are AWFUL, but I am seeing more high-quality doctors relocate to South Florida recently. The full links to each state can be found above to find more details. All states rank low on “Opportunity” which is defined as affordability, economic opportunity, and equality. In the R/E section today, I wrote about Bezos relocating to Miami from Seattle. Maybe he read the US News articles too.

Bal Harbour-Shopping for Billionaires

One of my most talked about newsletters was Skiing is for Billionaires about my trip with my daughter to Park City for spring break in March and my recent experience reminded me of that trip. A few weeks ago, I suggested the family go for a little adventure and head to Miami for dinner at Bal Harbour Shops. My son, Jack, had no interest and stayed home to play guitar which is getting quite impressive. My daughter, Julia, wife, Jill, and I headed to Bal Harbor to walk around and try the new Mediterranean restaurant, Aba. We arrived in just under an hour and had time to kill prior to the reservation.

We started walking around the mall and I was blown away by the stores and prices. There are no bargains here. It was clear to me the Rosen family would be spending zero money shopping, as I walked the stores in shock. Who in the hell can afford this stuff? Remember, I am a retired hedge fund manager who also worked for big banks including JPM, Bank America, UBS. I retired young, but apparently, I am far too frugal or too smart to shop at Bal Harbor.

The patrons are very international as you get into Miami. There were a lot of people from Latin America, Europe, Eastern Europe, the Middle East, and not a ton of Americans. Almost everyone was carrying bags which was concerning, impressive, and depressing at the same time.

I have a business idea for the high-end shops. They should start selling bags to people for $15, so they can appear to have spent money even though they did not. The margins for the store are amazing and people can feel better about themselves. I would have bought a couple of bags for my daughter so she could appear to have actually bought something and not just window-shopped.

Julia is 16 and never had her ears pierced. She hates needles and has been reticent to do it. When Julia goes to a doctor and needs a shot, pandemonium ensues to the point I can no longer take her to the doctor if a shot is needed. I am not a patient man and the drama is enough to put me over the edge.

There is a place where a lot of young girls go to get their ears pierced and it is called Maria Tash. We walked in and started looking around. My wife had a startled look on her face and pulled me aside. She had asked how much a starter diamond stud earring was and the price freaked her out. So I walked over and asked to see the starter studs. She pulled out the tiniest of diamond studs and said, $1,250 each. I said, what about one a little larger and she showed me ones for $5,300 each, meaning to get my daughter’s ears pierced it would be $11,000 with tax. Needless to say, I ran out of there faster than Usain Bolt in the 100-meter dash. I would rather use a needle, match, rubbing alcohol, and do it myself for Julia than spend $11k. Unfortunately, my daughter was not super impressed with my penny-pinching idea, but it would have made a good story and video. I spoke with a jeweler friend who told me I could buy two .25 carat studs which are quite nice for a total of $600 and if I spent $1,000, they would be great. At Tash, they would be over $4,000.

Various articles have Bal Harbour as the highest-grossing mall on a square foot basis some years ago around $3,000/ft. In speaking with managers of various shops inside, they all were consistent that since the pandemic, sales have exploded. I get the money is coming to South Florida, I just don’t the reckless spending. Clearly, these buyers have a massive net worth or did not read the Rosen Report, especially a recent one about Warren Buffett and being frugal.

We looked around a bit more and bought zero before going to Aba for dinner. It was fine, but not a place I would travel to again for dinner. The only food I am allergic to is bell peppers and the waitress screwed up the order and brought my entree with peppers. The better place nearby is Avra from NYC. Recently opened and I may write more about it in an upcoming piece.

Quick Bites

• Thursday’s regular session saw a broad rally for stocks as Treasury yields retreated. The S&P 500 notched its best day since April, up 1.9%, while the Dow saw its best session since June with a 1.7% gain. The Nasdaq Composite posted its best day since July, rising about 1.8%. However, after hours, Apple reported weak guidance and the stock fell 3%. Apple lacks a clear path to growth this holiday season after four straight quarters of shrinkage. On Friday, a weaker-than-expected jobs report (good for inflation) sent Treasury yields down and stocks flying again. 150k jobs were added relative to expectations of 170k and September’s blowout number of 297k. On the week, the S&P 500 was +5.9% and the Nasdaq +6.6%, which was the best week for the indices in a year. Bad news for the economy is good news for the stock market ... as long as it doesn’t get too bad. Treasury bonds rallied and yields were -13bps for the 2-year (4.85%) and -9bps for the 10-year (4.56%). The 30-year Treasury yield is down to 4.77% after hitting 5.15% two weeks ago. In a move I did not see coming, oil is down to $80/barrel after being $92 recently and was -6% on the week.

  

  

• DoubleLine Capital CEO Jeffrey Gundlach believes interest rates are about to trend lower as the economy deteriorates further and tips into a recession next year. “I do think rates are going to fall as we move into a recession in the first part of next year,” Gundlach said. The so-called “bond king” pointed to a few signs of an economic slowdown. Firstly, the unemployment rate, while still low, has been trending higher. Secondly, the key spread between 2-year and 10-year Treasury yields has stayed inverted for more than a year, and has recently started to steepen, which is a recession signal, he said. He also saw an initial wave of layoffs. “I really believe that layoffs are coming,” Gundlach said. Gundlach also sounded an alarm over the growing federal deficit, which ballooned to nearly $1.7 trillion at the end of the latest fiscal year that ended in September. The budget shortfall adds to the staggering U.S. debt total, which stood at almost $34 trillion. In a related note, Stan Druckenmiller shared similar concerns about deficits and spending on CNBC. “We are spending like drunken sailors,” Druckenmiller said Wednesday. Druckenmiller said government entitlement programs, which make up almost half of the federal budget, might be forced to be pared down in the future. He proposed a cut in Social Security benefits. Druckenmiller believes the market will be “very challenged” in the current environment, and only disciplined stock pickers would be rewarded. I have been pounding Entitlement Reform for years and feel it must happen now (Means Testing and Raising the Age for Benefits.”

  

• Bloomberg story entitled, “JPM is seeing out a partner to accelerate its private credit push,” is a statement about how hot the private credit market has become. JPMorgan is searching for a potential partner to grow its private credit business and accelerate its push into one of the hottest areas in leveraged finance. The discussions with prospective partners — including sovereign wealth funds, pension funds, endowments and alternative asset managers — began in recent months. JPMorgan approached some firms and received inbound inquiries from others, one of the people added. JPMorgan is looking for third-party capital to supplement the more than $10 billion of balance sheet cash that it has already set aside for its private credit strategy, which it began rolling out in the last year. A bigger pool of capital would allow the bank to better compete with heavyweights such as Blackstone Inc., Apollo Global Management Inc. and Ares Management Corp. by making larger commitments or participating in larger deals.

  

• Good WSJ article entitled, “Top Business Schools Are Enrolling More Women Than Men.” I don’t know the exact numbers of when I went to the University of Chicago for my MBA nearly 30 years ago, but I would have guessed 25-30% were women, far less than today. Women now make up at least half of full-time M.B.A. students at five top business schools, the most to reach that milestone in a given year, new data show.  The rising share of female M.B.A. candidates reflects business schools’ concerted efforts to recruit more women in recent years. Full-time M.B.A. programs at Penn State University and the University of Oxford hit parity for the first time this academic year. They join those at George Washington University, Johns Hopkins University and the University of Pennsylvania, according to the Forté Foundation, a nonprofit focused on advancing women into leadership roles via access to business education. Overall, women represent 42% of full-time M.B.A. students at the foundation’s partner schools, which include more than 50 of the top schools in the U.S., Canada and Europe. That is up from 33% a decade ago.

  

Israel Headlines

I received an email from a reader unhappy about some of my comments on the war in the Middle East. I can’t go through the entire note but want to be sure I address a key point about the thousands of civilians who have been killed in Gaza. It is horrific. Any time an innocent civilian dies it is a tragedy. If it is in the US or abroad, I am upset by the death of an innocent civilian and if my former newsletters ever suggested otherwise, I apologize. Some concerning headlines from Gaza: Hamas admits to using civilians as a shield. Hamas has stated they will do the October 7th attack over and over again until Israel is destroyed. Hamas steals oil from hospitals meant for civilians. Hamas gunned down its own civilians. In this link, a Hamas murderer calls his parents to brag about killing 10 civilians and the father screams that his son is a hero. The terrorists will not allow civilians to leave Gaza so they can be used as a shield. When Israel paused the offensive to allow Palestinians to evacuate, Hamas attacked again. If Hamas cared about the Palestinian civilians, maybe they would release the hostages and not commit unimaginable heinous crimes including on their own civilians. Sadly, I feel Israel is within their rights, but agree that I wish it did not result in the loss of innocent lives. In WWII, the US bombed the city of Dresden killing 25,000 civilians after a 48 hour attack that rained 4,000 tons of bombs on the city. Golda Meir was the Prime Minister of Israel from 1969-1974 and she famously said, "When peace comes we will perhaps in time be able to forgive the Arabs for killing our sons, but it will be harder for us to forgive them for having forced us to kill their sons. Peace will come when the Arabs will love their children more than they hate us." This short video does a nice job of keeping civilian deaths into perspective during wars.

• Israel resists US pressure to pause the war to allow more aid to Gaza, wants hostages back first

• Open hatred of Jews surges globally, inflamed by Gaza war

• Hamas terrorist recounts in horrifying detail how he slaughtered women and children in Oct. 7 massacre: ‘Our mission was to kill’

  • This killer is so calm and matter-of-fact after killing kids.

• Israel admits airstrike on ambulance near hospital that witnesses say killed and wounded dozens

  • Israel believes Hamas is transporting senior leaders and weapons via ambulance.

• Hamas leader shows why no cease-fire is possible if Israel is to survive

• Iranian group puts up recruitment posters for suicide bombers willing to attack targets in Israel

• Jordanian national arrested in Houston allegedly planned attack on Jews

  • Given open borders and no immigration policy, experts believe there are sleeper cells in the US. Yet another reason for strong borders.

• Second Israeli airstrike in two days pummels Gaza refugee camp, deepening a growing outcry

• Tlaib accuses Biden of supporting 'genocide' of Palestinians, warns: 'We will remember in 2024'

• Ivy League students went on spring break to Palestine — then ‘targeted Israelis on campus’

• Harvard student mobbed by pro-Palestinian demonstrators yelling ‘shame’ on campus

  • How is this ok? It is the USA and Harvard. Note many are wearing masks.

• Students walk out of Hillary Clinton’s Columbia class in protest after anti-Israel students exposed by ‘doxxing trucks’

• NJ Jewish high school prohibits college reps from recruiting students unless university has safety plan

  • How sad that a school feels the need to do this to protect Jewish kids?

• Bill Ackman demands suspension of Harvard Law Review editor who accosted Jewish student

• Thousands of pro-Palestinian marchers descend upon WH chanting ‘Allahu akbar,’ ‘F–k Joe Biden’ as they demand ceasefire

• San Francisco police investigating shop vandalized with pro-Palestinian graffiti as hate crime: Jewish owner

• Wall Street titans help to fuel Ivy League donor revolt

• Short-form War-Good piece by Professor Scott Galloway with interesting stats and charts

  

  

• Great short video from the UN that eviscerates the narrative against Israel

Other Headlines

• Berkshire Hathaway posts a 40% jump in operating earnings, cash pile swells to a record $157 billion

  • This is despite a $24bn loss on Apple shares. Record cash levels.

• Roku stock soars 30% on third-quarter revenue beat, solid outlook

• Block shares surge after earnings beat and increased full-year guidance

• Walmart shares hit all-time high, as retailer’s value focus attracts shoppers and investors

• Peloton shares plunge on wider-than-expected loss, tepid holiday forecast

  • The stock peaked at $167/share and is at $5.

    

• Shares of Maersk plunge 18% as shipping giant announces 10,000 job cuts, says profit will be at lower-end of guidance

  • The stock closed -13% on the day. The article cited weaker demand from retailers.

• Ferrari again raises guidance as customers opt for high-priced, personalized sports cars

• Beer giant AB InBev’s US sales plunge more than 13% on Bud Light fiasco

• Eli Lilly results top estimates on Mounjaro strength but slashes full-year profit outlook

• Jamie Dimon Warns Texas to Stop Pushing Anti-Business Bond Laws

  • He said Texas risks undermining its business-friendly reputation with laws designed to punish Wall Street banks for policies that limit work with the gun and fossil fuel industries.

• The EV transition trips over its own cord

  • I have written extensively on this topic and the article has a section called, “Ambition Meets Reality,” which I have included below:

    

• Sam Bankman-Fried found guilty on all seven criminal fraud counts

  • The former FTX CEO faces a maximum sentence of 110 years in prison.

• Trump Leads in 5 Critical States as Voters Blast Biden, Times/Siena Poll Finds

  • With all that happened on Jan 6th, 91 indictments and lawsuits, who would have thought it possible that this would be a close race? Yes, polls are flawed, but it is a horrific statement on the Biden Presidency.

    

• 2024 Presidential Race Stays Static In The Face Of Major Events, Quinnipiac University National Poll Finds; RFK Jr. Receives 22% As Independent Candidate In 3-Way Race

  • To me, this is far less of a statement of RFK’s greatness than it is about how awful the other two candidates are. America deserves better.

• Republican-led push to expel George Santos fails in the House

  • The resolution needed a two-thirds majority to succeed but fell well short. The final vote was 179 to 213 with 19 members voting present. Just a sad state of affairs in DC that this lying idiot cannot get voted out of office.

• Over 20 Republicans join Democrats to kill censure resolution against Rashida Tlaib

  • So, in DC, you can lie to get into Congress or hate Jews and not be kicked out of Congress.

• Ex-DOJ Official Has Withering 1-Liner On Donald Trump Jr.’s Trial Claims

  • It’s “really convenient how Don Jr. seems to have forgotten information that could be damaging to him," said Neal Katyal.

• Uh-Oh: Eric Trump Stumbles in Key “Gotcha” Moment in Fraud Trial

  • Eric Trump appeared to make a big error while testifying in the New York fraud trial against the family business.

• Bridgeport Election Overturned After City Official Pleads 5th To Ballot Harvesting

  • A Bridgeport, Connecticut judge ruled on Wednesday to overturn the city's Democratic primary election after a video emerged of a woman who appears to be the city's vice chair of the Democratic Town Committee, Wanda Geter-Pataky, committing ballot fraud.

• Republican mega-donor Adelson met with Haley in Las Vegas

• Pregnant woman, 25, kicked in stomach by stranger on NYC subway platform

• 2 young women randomly attack woman, 30, in vicious NYC subway assault

• Soros-backed DA Jason Williams of New Orleans was carjacked at gunpoint.

  • DA Williams campaigned against cash bail and called for alternatives to prison. During his first few months in office, he dismissed 66% of all violent felony cases.

• British BLM Activist Jailed For Blowing €36,000 In Donations Intended For Youth Charity On Uber Eats & Clothes

  • This is not the first time BLM employees have been accused of stealing funds. This article suggests that only 33% of the donations to BLM went to charities, as execs were paid millions. Remember, co founder of BLM, Cullors, bought millions of dollars of homes in the US and Bahamas.

• Why dozens of birds are being renamed in the U.S. and Canada

  • How far can a pendulum swing? Read the article. Changing names of birds because they are found offensive. Someone stop the madness.

• Fake Nudes of Real Students Cause an Uproar at a New Jersey High School

  • After boys shared faked pornographic images made of female classmates, both the school and the local police began investigating

• They Cracked the Code to a Locked USB Drive Worth $235 Million in Bitcoin. Then It Got Weird

  • Amazing story about what is in the art of possible regarding technology.

• Elon Musk unleashes in fiery Joe Rogan podcast: Tesla owner slams George Soros for 'eroding the fabric of civilization', says he bought Twitter because it was being 'controlled by the far-left' and warns of the woke 'mind virus'

• Taylor Swift Fans in Argentina Have Camped Out in Tents for Five Months in Order to Be Front Row at the Eras Tour: ‘People Are Very Upset With Us’

• World War 3 fears as Putin mouthpiece warns 'Russia will eventually conquer Germany'

Real Estate

• Amazon Founder Jeff Bezos Announces Move to Miami from Seattle. Jeff Bezos said he was moving to Miami from the Seattle region, relocating to be closer to his parents and the Cape Canaveral operations of Blue Origin LLC, his space exploration company. Bezos made the announcement Thursday via Instagram, which included video of him in his Seattle garage where he founded Amazon in 1994. Bezos bought two homes in Indian Creek for $79mm and $68mm recently. I wonder why he did not move to San Fran, LA, Chicago, Minneapolis, St. Louis, DC, NYC, or Philly? This article outlines Bezos’ $500mm R/E portfolio with pictures. With a $161bn net worth, he is underinvested in R/E! Think about the tax savings living in Florida relative to NYC, CA or other high-tax states. On a related note, Matt Damon’s former Miami Beach mansion and an adjacent lot are for sale for $65mm on North Bay Road.

  

• I spoke with some real estate experts recently on NYC co-ops and for the most part, there is material weakness in the market. I went online and checked prices and found so many were slashed DRAMATICALLY in order to try to attract buyers. I lived in a co-op once and there is no realistic discount that would make me ever go through that process again. The intrusive process to get in requires you to show tax returns for years and answer ridiculous questions. Then, the board can turn down buyers for no reason. The co-op discount should be massive due to the process and illiquidity of the asset relative to condos. Throw on top the amenities of a new condo building (real gym, pool, parking, storage, concierge…) and there is a reason condos trade at a big premium. However, you can now get amazing co-op apartments at far more reasonable prices than in prior years. If you are considering buying a high-end co-op in NYC, you should take a look as I am seeing big discounts, inventory sitting on the market and hearing about more desperate sellers. So many of the units I checked out have seen substantial price drops in recent months. Check out the chart and the massive price cuts with no takers. I am seeing heavy price reductions at 740 Park, 730 Park, 720 Park (top NYC co-ops) and many others as well. This is the latest Douglas Elliman report on the subject.

  

• The so-called “middle class” in the Hamptons – New Yorkers with second homes in the in the $2 million to $5 million range – are frantically slashing prices to offload their properties, real estate sources said. While choice Hamptons real estate is always highly desirable, agents say prices for homes on the lower end of the spectrum are dropping from pandemic highs when buyers were paying double or triple to snag homes. “When it comes to having a vacation home, it’s just not as easy to justify the cost.” At issue: interest rates – which were close to 3% in 2020 have popped to nearly 8% today. For buyers with 3 or 5 year fixed interest rates, they’ll soon be paying significantly more for the property than they were previously. Now those prices are dropping. Multiple homes reviewed by On The Money in posh neighborhoods like Sag Harbor and Amagansett have been cut by as much as 20% — shaving hundreds of thousands of dollars off asking prices — in recent months. I am of the belief that 2nd home prices will start falling more dramatically given rates and where I feel the economy is heading. I will be in the market for a 2nd home soon in the mountains.

  

• The late Ivana Trump’s townhouse in New York has sat on the market for one full year with no takers. In September, it took a $4 million cut from its original asking price, down to $22.5 million.  The extravagant residence remains virtually untouched since her death in July 2022. In fact, very little has changed since Ivana Trump, former President Donald Trump’s first ex-wife, renovated the home in the 1990s.  The pictures are truly frightening. Bad taste runs in the Trump family. Look at Trump’s homes and Mar-a-Largo. The finishes are so opulent and grotesque. The pictures in the link partially explain why it has not sold. There is no point in my lifetime that I could ever think this interior is nice looking.

  Rosen Report™ #628 ©Copyright 2023 Written By Eric Rosen