Opening Comments
I thought Brady was going to pull it off again. I think he is done and should be at this point. What a career; The GOAT indeed. I don’t get to watch much football but between the Tampa game and the KC/Buffalo game, I was on the edge of my seat. A couple of the most exciting finishes I can recall. I do not like the overtime rule in pro football. I believe both teams should get the chance and hated the way the KC/Buffalo game ended without Allen getting an opportunity. Almost 43mm people watched the game. With Brady and Rodgers in the final stages of their careers, new QBs like Allen, Burrow and Mahomes will provide fans with excitement for years to come. Like him or not, Roger Goodell puts out quality content. I wanted Brady or Rodgers to get another ring. Now, I hope Mahomes gets his 2nd one.
Given the broader market carnage in stocks and crypto, I am dying to see fund performance for Jan. Did any big funds have substantial draw downs? Who uses leverage which has been hit hard? Based on the sell-off, I would think we would see some substantial drawdowns. Lists of hedge fund performance went around the market, but they were not accurate.
I continue to struggle with deliver-ability of the Rosen Report. For those who receive my report intermittently, you can always go to ericrosen.substack.com to see each of my reports since April 2021. Some servers block Substack even if I am on the safe list.
I need a new desktop computer. My 10-year-old Dell is slowing down. If anyone has a suggestion on the topic, send it over. I want to order it this week before my old dog crashes.
Today, the Other Headlines is expanded and Quick Bites shortened. Just mixing things up a bit. Something happened to my leg today and my ankle has swelled substantially. I’m going to ice it and hit send before my 10th proof read. Enjoy.
Picture of the Day-US Fleet Movement
Century Village, Here We Come!
Quick Bites
Markets/Bitcoin/, Meme Stocks,
IMF on Growth, Bentley to EV
Dalio on Election, Country Corruption Index
SAT/ACT-New Shorter Digital SAT Coming
Smart Phone Usage-Average Americans and Eric-Concerning
Other Headlines
Virus/Vaccine
Data-Clear Case Peak
Moderna Stock Price-From Hot to Not
Real Estate
General Comments
6300 North Bay Road Sold for $21mm-Sold for $9.6mm a Year Ago
Case-Schiller Index for November
Canada Housing Market and Hot Markets
Picture of the Day
A reader who is an active contributor to the Rosen Report sent me this picture of the US fleet move over a month. A picture is worth 1000 words. USNI=US Naval Institute. The US is providing 90 tons of military aid that has arrived in the Ukraine. Also, the US has put 8,500 troops on alert which Russia said caused it “great concern.” But they would only be deployed if the NATO military alliance decides to activate a rapid-reaction force, "or if other situations develop", said Pentagon press secretary John Kirby. Russia has approximately 100,000 troops on Ukraine’s border.
Century Village, Here We Come!
My grandparents moved to South Florida in 1974 and they lived in a retirement community, Hollybrook. It was exclusively for residents over 55 years of age, and there were hundreds of 3 story condos, a golf course, pools, club houses, security…and constant ambulances in the retirement community. They paid $46k for a two bedroom including the $14k club initiation. It was sold 35 years later for the same price and they are for sale today at $150k. I recall visiting and going to the pool. I would swim and play shuffleboard with a bunch of old people. I would hear them talk and all they seemed to speak about was ailments, doctor appointments, procedures, surgery, aches and pains and medications. I recall thinking, “Getting old must really suck. All these people do is complain. Surely, this will never happen to me.” Oh, to be 8 and stupid.
Well, since I have turned 50, a lot of injuries have taken place and I am thinking it may be time to look at one of these retirement communities. I will be the youngest person. I will crush everyone in tennis and golf and the old ladies will love me. If there is a pick up game of basketball, look out. I will score 50 points or may even contend for Wilt Chamberlain’s record of 100 points in a game. I will not be denied. Yes, I will wag my finger when I block the shot of a 5’3” and 120 lb, 77- year-old man named Morty with two fake hips. When I show Levi a crazy cross-over dribble he will fall down over his walker, but I will only extend my hand after I make shot. I am going to own it. When it comes to ailments, those 85-year-old complainers on walkers and canes who wear shoes with Velcro cannot touch me. Let’s go over my list ailments and procedures for the past couple years:
Dengue Fever-4 nights in hospital
103.5 fever, severe pain, lost 18 lbs and thought I was dying
Spinal Tap-Resulted in Horizontal Diplopia (wore an eye patch for 3 weeks)
Needed a Blood Patch-For my spine due to the bad spinal tap
Tore My Thumb Tendon-Called a Stener Lesion-Fell on my boat.
Had four months of Physical Therapy as it was a partial tear
X-Ray/MRI
Tore a Calf Muscle-Tennis
Physical Therapy, but it was not horrible
MRI
Tendinosis of my Achilles-Incredibly Painful
Physical Therapy for 3 months
MRI
Tendinitis of my Elbow-Incredibly uncomfortable
Physical Therapy
Back Issues-Threw out my back 3 times in two years
Heavy Chiropractor usage and limited movement
Narrow Angle-Has to do with eyes and may require a laser procedure
I go to doctor every 6 months and just went on Friday
Colonoscopy
Stress Fracture of Foot-Walking on the grass!
X-Ray
Arthritis in Foot-Shockingly uncomfortable
Heavy doses of anti-inflammatory
MRI
Tore Calf Muscle in multiple places-Tennis
Crutches for 3 weeks or more and Physical Therapy and heavy anti-inflammatory meds. Incredible pain.
MRI
When you are young, you don’t think about getting old. Given I pride myself on being in shape, I never thought it would come to this at my age, but I am knocking on the door of a retirement community. I have my orthopedic surgeon on speed dial, and when I walk into his office, I am greeted like Norm from Cheers. I use the physical therapist so much, I have a frequent user card. I found some place in Century Village which caters to people between the ages of 80 and dead. Just think of the dollar take out trade when I move from an 8,000 ft house in a high-end community to a 916 square foot 2/2 for $164k! This idea is really growing on me. Jill, we are moving to Century Village. Meet our new neighbors below. I think I can take all of them in basketball, tennis, golf and shuffleboard too. Let’s not forget how I completely dominate in bingo and am considered the BinGoat by many. I am going to be the Big Man on Campus when I move in with my elderly new friends. I’m covering the guy on the lower left when we play basketball. He is going to wish I never moved into that neighborhood. Let the trash talkin’ begin. I am pretty sure I can take the whole top row in tennis…at the same time, but not until my calf heals.
My daughter, Julia, took a picture of me this am with the aging Snapchat filter to give us an idea of what I will look like in a few years, as I am clearly aging at a rapid rate.
Quick Bites
The Dow Jones Industrial Average fell in volatile trading Wednesday, after Federal Reserve Chairman Jerome Powell suggested the central bank has plenty of room to raise interest rates before it would harm the economy. The blue-chip average fell 130 points, or 0.4%, to 34,168. The Dow was up more than 500 points at one point, but rolled over after the Fed’s update. The S&P 500 fell 0.2% to 4,350. The Nasdaq finished little changed at 13,542, buoyed by Microsoft’s post-earnings gain. Stocks came off their highs and Treasury yields surged after Powell said at a press conference there was “quite a bit of room” to raise interest rates before it would hurt the labor market. Powell also said prices could continue to run higher as “inflation risks are still to the upside.” The plan is to raise rates in March and ends it bond purchases that month as well before launching what was characterized as a significant reduction in its asset holdings. Powell wont rule out a hike in every meeting. Tesla beat after the close and the stock was up 2%. Intel had better than expected results and delivered upbeat guidance and the stock was -3% after the close.
The moves on Wednesday were the opposite of the moves on Monday and Tuesday which saw substantial morning sell offs and am rallies. On Monday, the Dow rallied well over 1,000 points after the morning sell-off for perspective. For the year, The Dow is -6%, the S&P is -8.7% and the Nasdaq is -13.4%. In 2021, we saw mostly upticks with no major draw downs and 2022 is starting off with far more volatility. Of note, CNBC reported that there are 25mm new market participants in the past 18 months. They must be a bit nervous seeing this kind of volatility for the first time. The benchmark 10-year Treasury yield climbed above 1.87% after Powell’s comments as traders took them to mean the central bank may be more aggressive in tightening policy, even with the markets in turmoil during January. Oil was up almost 2% to $87 and Natural Gas was up over 4% to $4.2. I have been screaming about inflation for approximately 9 months and feel the Fed was many months late and behind the curve. I am beginning to take the view that although things may get slightly worse on the inflation front, I believe they will be better by the fall due to a combination of the impact of rates, balance sheet reduction, supply chain improvements and the impacts of market volatility impacting the consumer. Reminder, Apple earnings are tomorrow after the close.
The route in crypto has been severe. Early last week, I was up 20% on my non-Bitcoin trades. As of today, I am down 9% on them. WOW, how quickly things turn. Again, that is why they were sized accordingly at less than 2% of NW and not 50%. The asset class is too volatile for me to ever make it a huge bet even if it falls another 20%. I will take small bites, but no big ones. Here is a CNBC story entitled “Ex-Goldman CEO Lloyd Blankfein says ‘crypto is happening’ despite plunge in digital assets,” about his view. To me, for Bitcoin and crypto more broadly to be accepted widely, it needs to have stability. 50% swings in value make it challenging to take as a form of payment from my perspective. BTC is just under $37k and ETH is approximately $2.5k. I spoke with Sensei this am who is not overly concerned and views this as a great buying opportunity. He cited Twitter, Meta, Instagram now allowing Verified NFTs to be used as your profile picture. This is yet another way that that the Etherum Network will see massive increases in flows as people buy verified NFT’s to use as profile pictures. Also, Coinbase is also about to launch an NFT market place, and there are 5mm people on the wait list to use it.
Shares of GameStop Corp., AMC Entertainment Holdings and other meme stocks numbered among the hardest hit by Monday’s market turmoil, the latest blow to the favorite bets of many online day traders. Videogame retailer GameStop and movie theater operator AMC fell around 6% and 7% respectively Monday, outpacing broader stock-market declines before major indexes turned higher in late trading. The drops extended a slump that has dragged down GameStop shares by one-third this year, while AMC shares have lost about 40% during the same period. The losses come almost exactly a year after individual investors banded together in online forums to push up prices, sparking parabolic gains. GameStop and AMC, both struggling businesses at the time, finished 2021 with yearly gains of 688% and 1,183% respectively. Driving the declines: concerns about likely interest-rate increases by the Federal Reserve later in the year have cooled investor sentiment around Wall Street’s more speculative bets, such as tech firms, blank-check companies and cryptocurrencies. I have never touched a meme stock and felt it was dangerous. They flew higher than I would have thought showing how hard it is to be short against them. This is a good Bloomberg article entitled, “Meme Investors Learn the Hard Way: The House Always Wins.” The GME 1 year graph below shows -70% as the stock was $325 in late January of 2021.
The International Monetary Fund has downgraded its 2022 global growth forecast to 4.4% from 5.9% in 2021. In its World Economic Outlook report, published Tuesday, the IMF said it expects global gross domestic product to grow 0.5 percentage points less than previously estimated. The revised outlook is largely due to growth markdowns in the world’s two largest economies; the U.S. and China. Clearly, rising rates and less accommodative policy will cool things down a bit, especially as the supply chain opens up.
Bentley Motors plans to spend £2.5 billion (about $3.4 billion) over the next decade to become a fully electric luxury brand by 2030. The investment will include significant upgrades to Bentley’s historic plant manufacturing campus in England. Bentley’s first all-electric vehicle is scheduled to roll off the production line in 2025. I love this, but we will be reliant on oil for decades.
“There is a worry that one should have about the divisiveness and what it means for each other,” Dalio said Monday during a wide-ranging interview for “The David Rubenstein Show: Peer-to-Peer Conversations,” scheduled for broadcast Feb. 2 on Bloomberg Television. Dalio, 72, has contrasted political risks in the U.S. with recent economic growth in China. He praised the Asian country’s drive for common prosperity earlier this month while urging nations including the U.S. to narrow wealth gaps. Dalio has a net worth of $15.7 billion, according to the Bloomberg Billionaires Index. Trump questioned the elections and Hillary made it clear that if Trump won, Biden should not concede. I have a funny feeling there will be fireworks in 2024.
Denmark, New Zealand and Finland were joint first in a list of the least corrupt nations in the world, while South Sudan was at the bottom, an anti-graft watchdog found in its annual report. The U.S. dropped out of the top 25 of the least corrupt nations for the first time as it 'faces continuous attacks on free and fair elections', the same study found. Transparency International's 2021 Corruption Perceptions Index, which measures the perception of public sector corruption according to experts and business people, ranks 180 countries and territories on a scale of a 'highly corrupt' 0 to a 'very clean' 100. I was a bit surprised to see the US in 25th place, but as a country, we have not had a good run for a couple years and have clearly embarrassed ourselves.
Wealthy college applicants submit SAT and ACT scores at a higher rate than their lower-income peers even as many colleges -- even the most selective -- have made such tests optional. Some 53% of students in the wealthiest households submitted this school year, according to data from the Common Application, the non-profit behind the standardized application form. By contrast, only 39% of the poorest did so. Yet as glaring as the differences are, the data show that, overall, test submissions among the rich and poor are declining from the 2019-2020 school year -- 78% of the wealthiest sent scores during that term, while 71% of the lowest income students did. The difference between the submitters grew over two years. I do believe a major unfair advantage exists for the wealthy with respect to standardized tests. SAT tutors can cost $300-500/hour and make a huge difference in results. I am all for an end to SAT/ACT requirements as a result, but do feel grades, extra- curricular activities, work experience, personal statements, recommendations matter. Interestingly, on 1/25, the SAT announced it is going digital and cutting the test from three hours to two hours. “The digital SAT will be easier to take, easier to give, and more relevant,” Priscilla Rodriguez, vice president of College Readiness Assessments at the College Board, said in a news release.
A reader sent me this article which is irritating and accurate. It shows Americans spend on average 4 hours and 23 minutes on their phones each day and that is up for 24 minutes in 2010. This means we spend 1/3 of our waking hours on the phone. Unfortunately, I tend to be almost double the average due to all the time it takes for my research for the Rosen Report. As you can see, I am down 18% and still basically 8 hours a day and I would guess 80% of this is due to research for my blog. It is all your fault! The first chart is average Americans and the 2nd chart is me. All joking aside, I believe social media is the biggest downside of these phones. I am not using it much, but the impact on kids is devastating. I am on my phone doing research, they on the phone on Instagram. My wife yells at me all the time about the kids and the phones. Of course, it is my fault. I invented social media. Everyone knows that, much like Al Gore invented the internet.
Other Headlines
Jim Chanos says the notion that the Fed will always bail out the stock market is dangerous
Remember, he is a famous short seller.
Short sellers are up $114 billion this year with winning bets against Tesla and Netflix
Microsoft beats on earnings and revenue, delivers upbeat forecast for fiscal third quarter
Mortgage refinance demand plunges 13% as interest rates climb toward two-year high
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 3.72% from 3.64%. Refinance applications fell 13% for the week and were 53% lower year over year.
Retailers' average return rate jumps to 16.6% as online sales grow
Ballistic missiles intercepted over Abu Dhabi; U.S. State Department issues alert
Georgia judge approves special grand jury for Trump election interference probe
Supreme Court Justice Stephen Breyer to retire, giving Biden nomination chance
Pelosi announces re-election bid ahead of 2022 midterms
Pelosi previously vowed to step down as the leader of House Democrats after the 2022 election
Biden caught cursing about Fox News reporter on a hot mic
The president called the reporter a "stupid son of a [expletive]" as reporters were led out of a room after Biden's remarks on inflation.
Beatles Memorabilia to Be Sold as NFTs
Items offered include John Lennon’s black cape he wore in the film Help! alongside an NFT of Paul McCartney notes for the hit “Hey Jude.”
Let me be clear, for almost $1mm/show, I will sing anywhere, but I just don’t think people want to hear my horrific voice which my sister calls, “lower than 3 out of 10.”
Chaotic video captures shooting at NYC hospital that left victim injured, ER in lockdown
Another video of shoplifting at Rite Aid emerges as store forced to shut
I ask you to watch the short video of a shoplifter walking out of a store and telling the security guard he is stealing. I am sorry Mayor Adams and DA Bragg, this is wrong and your policies must condemn this with consequences. Look at SFO. Is this what you want to become?
Dispute Between Apollo Co-Founders Black, Harris Boils Over
Some crazy allegations from Black concerning Harris and his alleged smear campaign against Black
Spitzer used alias at hospital hours after allegedly choking Russian prostitute
Serial murders, beatings and beheadings: violence against the homeless is increasing, advocates say
We need to have a homeless solution in the worst cities (NYC, LA, SFO…). This is getting out of control.
Dutch tourist fined over Nazi salute at Auschwitz
Unfortunately racism and anti-Semitism still exists
Supreme Court to Review Race-Conscious Admissions Policies at Harvard, UNC-Justices will weigh conservative-led legal challenges seeking to eliminate race as a factor in college admissions.
Webb telescope reaches destination, 1 mn miles from Earth: NASA
I sure hope they find some interesting things out there and maybe some signs of life? Given it is 24,901 miles to circle the earth, this telescope is 40x further than the distance around the earth.
J&J expects more than $3 billion in Covid vaccine sales this year in mixed quarterly report
Omicron Is Spreading. Resistance Is Futile
This is a WSJ Opinion piece
Virus/Vaccine
It appears the peak is in for cases, and the chart shows a clear decline. As I suggested a couple weeks ago, the peak would take about one month from the large uptick in cases as was the case in South Africa, the UK, Puerto Rico and now the US. In the UK since the peak 3 weeks ago, cases have fallen 52%. The Northeast, South and Midwest are seeing case declines, but the West is roughly flat. Interestingly, testing is up 100% over the prior two-week period and despite this, cases are down. The Johns Hopkins positivity rate hit a high of 30.2% the other day, but has since fallen below 25% and I would expect that to drop quickly. I am shocked it remains so high with the massive testing program. Prior to Omicron, it was approximately 6% for perspective. Hospitalizations appear to be coming down slightly, but the data on deaths has taken another turn for the worse (approaching 2,400/day), but with cases declining, I would hope to see deaths peak soon and finally be turning down.
Moderna peaked at $484/share in August 2021. It is now $155/share or down 68% from the highs and the stock is down 34% YTD. The stock was $19/share in January 2020 for perspective. The company’s heavy reliance on COVID vaccines made it a high flyer until it wasn’t.
Real Estate
In my community, there are 4 homes for sale which is down from 70 in 2017. Two of the homes are being built, and two are existing. One of the existing homes is very tired, and one is move in ready (built in 2020). The lack of inventory is just crazy to me. Of the 10 homes in the link, 6 are under contract. I love Sam Zell and he was interviewed by CNBC for 5 minutes and he outlines his views and highlights geopolitical risks. He believes the office market will fill in as Omicron subsides. I did put down a $10k refundable deposit on Panther National, the new development I wrote about recently in Palm Beach Gardens, out west. Nothing to see there yet, but I am going to check it out in February.
6300 N Bay Road Miami Beach, FL
This street is the most sought after in Miami Beach. Check out the link. The home is a tear down, and my friend Devin Kay was the broker who just sold it. It last sold on 1/21 for $9.6mm and prior to that $12.5mm. The price more than doubled since last year after what Devin just sold it for! Pre-pandemic, there were typically 10-15 homes for sale on N Bay Road; today there is one available waterfront home (15+ year old Mediterranean house asking $29M that was bought last year for $10.5). And only one non-waterfront option is available (only 2-3 off market options available and the prices range from $20-60mm++, contact Devin for info). Separately, my friend bought a place for $14mm on North Bay road about 2.5 years ago (the seller he bought it from paid $25mm). I would guess it is worth over $50-60mm now that he has renovated it. The views from his house are crazy. The 50s and 60s on North Bay tend to have the best views and offer the most amount of privacy, less street traffic and don’t get nearly as much boat traffic zipping past your house as further south). Below is the house which sold for $21mm.
Even as the housing market entered its traditionally slower season in November, home prices showed big gains from a year ago. Prices rose 18.8% year over year on the S&P CoreLogic Case-Shiller National Home Price Index. Yet that was a slower rate than the October pace, which was a 19% annual gain. The 10-city composite rose 16.8% annually, down from 17.2% in the previous month. The 20- city composite grew 18.3%, down from 18.5% in October. Some markets are posting some stunning gains. Phoenix, Tampa, and Miami saw the highest year-over-year gains among the 20 cities in November, with increases of 32.2%, 29.0% and 26.6% respectively. Chicago, Minneapolis and Washington, D.C. showed the smallest annual gain, although they were all still up around 11%.
Interesting Bloomberg article on frothy R/E markets. The 2nd chart is concerning for the market. I presume the chart is for Canada. I watched a CNBC interview of one of my heroes, Sam Zell (the Grave Dancer) and surprisingly, he was less concerned about the rate impact on the real estate market. He feels even if they go up 200bps, they are still low from a historic perspective. The low interest rate loans that are helping propel one of the world’s frothiest property markets could also be what make it burst. For 12 consecutive years, Canada’s housing market has soared to record heights. Tight inventory, particularly in Toronto and Vancouver, has made property price appreciation and bidding wars among the most aggressive anywhere. This has pushed Canadians into playing a very dangerous game. To hold down the size of their monthly payments as home values continue to rise, record numbers of mortgage applicants are opting to take out loans that offer the lowest initial interest rates. The problem with these loans, known as variable-rate mortgages, is that their rates automatically rise along with the country's benchmark borrowing cost. And by all indications it's about to go up — potentially by a lot. Bank of Canada policy makers are expected to lift the rate from 0.25% at a meeting on Jan. 26 to quell soaring inflation and to then follow up with several more hikes over the course of the next two years.