Comical Misunderstandings. Also Comments Direct from Israel
10-8-23
Opening Comments
My last note was about my marathon interview with PIMCO executives and how I felt I crushed it. The most opened links were raising kids with high emotional IQ and phrases for better etiquette. Given my last piece was about Bill Gross and Mohamed El-Erain, I thought this FT article from Mohamed was interesting and entitled, “The US may no longer avoid a recession.”
As I see new subscribers, so many are joining from banks, investment banks, huge money management firms, hedge funds, private equity, venture, real estate and many others.
Lots of new readers, so be sure you hit “View entire message,” at the bottom, as some email systems truncate the overly long Rosen Report. Read the stuff that you find interesting. I am not offended if you skip around.
The piece is a little longer today given the atrocities which transpired in Israel. I had heard from people in Israel and thought I would share it. The world is a scary place and felt my theme about misunderstandings would add a little levity and might make some crack a smile despite the sad world we live in today. My sister is on the road, so expect a couple of mistakes as I did not have my editor.
Markets
Marko on Market Concerns
NYC Tax Increases?
Trump Mar-a-Lago Value
Shell Bay Golf-WOW
Video of the Day-Powerful Pictures & Video from Israel
Horrific news out of Israel where Hamas fighters attacked using motorized paragliders and hit by land, sea and air. Israel declared a state of war following the surprise attack which saw Israel hit by over 5,000 rockets. The death count is estimated to be 600 and counting in Israel with thousands wounded. I need to put something in perspective, the population of the US is 36 times that of Israel. If 600 people died, that would be the equivalent of 21,600 dying in the US. The carnage dwarfs the numbers on a relative basis to Pearl Harbor or 9/11 given the far larger population in the US.
"The first goal, to cleanse the area of the enemy forces that have infiltrated and restore security and peace," Netanyahu said. "The second goal, at the same time, is to exact a huge price from the enemy. The third goal – to fortify other arenas so that no one makes the mistake of joining this war." This is a short Youtube video of the Hamas attack where the Hamas military commander in Gaza called on Palestinians to go to the streets and launch an attack without restraint. I sure hope Israel destroys Hamas and the terrorists responsible for the attack. Our “friends” in the Iranian Parliament were chanting “Death to Israel! Death to America!” as innocent women and children were being slaughtered. Iran funds a majority of Hamas and Hezbollah.
Sadly, the Saudi-Israel peace deal just imploded with the comment from the Saudi Foreign Ministry, “The Kingdom of Saudi Arabia holds Israel responsible for what has transpired due to its repeated provocations and deprivation of the rights of Palestinians.” I believe, in part, the goal of Hamas was to put an end to the Saudi/Israel peace deal and it looks like it worked.
I listened to a call with United Hatzalah, a volunteer organization of 7,000 first responders (Jews of all kinds, Arab Muslims and Christians, and others) organization in Israel. My good friend, Mark Gerson, is actively involved as Chairman of Hatzalah and invited me to the Zoom. I heard directly from responders LIVE. It is compared to the Yom Kippur attack from 50 years ago, and occurred on the same day October 6th vs. October 7th 50 years ago - clearly a planned attack. Many hostages were taken and terrorists kidnapped many Israelis including babies, young children, women, and Israeli soldiers. The terrorists went to an old age home with Holocaust survivors and posed for selfies while pointing guns at elderly Holocaust survivors. The Israeli army was not prepared for this attack. I have spoken with multiple sources in Israel, and this is far worse than the media is reporting. Bodies were paraded through Gaza streets. On the call, multiple local police stations were taken over by terrorists. There is no way this coordinated attack could have happened without Iran’s aid in my opinion. I made a donation to United Hatzalah in light of this tragedy, as their supplies and equipment are not enough to handle this incident and what will take place in the coming weeks. This is an awful tragedy that requires the assistance of those who have the ability to help. I was on the phone with Israel Hatzalah at 10am EST Sunday and things there remain concerning. Ambulances have been under fire and the terrorists have not been contained. This is not a Left/Right issue or religious one, it is a catastrophic event that requires the aid of those who are fortunate enough to be able to contribute.
United Hatzalah has 1,500 volunteers in the Southern Region
25 Ambulances (5 damaged in past 36 hours)
300 people were transported to hospitals using their ambulances in the past two days
2 Helicopters
Over 1,000 people were treated in the field
United Hatzalah has used 90% of the supply inventory due to these catastrophic attacks and is in desperate need of more to save lives
Lots of links to concerning stories below. I am convinced that the press is not showing how bad things truly are in Israel and where this could be heading.
‘We are being slaughtered’: Israelis cry for help as Hamas militants break into homes
There was a post of Israeli women and children taken hostage which was just taken down.
Sickening video shows ‘disgusting’ Hamas terrorists parading naked, battered woman through streets
Biden “stands with Israel.”
Congresswoman calls on US to stop funding Israel amid Hamas attack
Comical Misunderstandings
Story 1
Shortly after I moved to Florida in 2017, I bought a new vehicle. A couple of days after taking possession of it, I received a text from a former NHL star defenseman neighbor commenting on my new car and the exchange went something like this:
Him: New Car? Nice!!!
Me: Yes, given I got a 34’ Jupiter fishing boat, I needed to get something practical to get all my fishing equipment to and from the boat.
Him: Not exactly practical. I saw a sexy Blue McLaren in front of your place on a flatbed.
Me: Now that is funny. That is my neighbor’s car, not mine. I bought a $35k pickup truck (Canyon Denali) which is a bit more practical than a McLaren for fishing. Also, about 10% of the cost. You don’t know me well enough to know how frugal I am. No McLaren will ever be owned by Eric Rosen. I thought you were calling me about my crappy truck.
We still laugh about the exchange today.
I no longer have the truck, but own a $50k Kia Telluride, one of the best cars I have ever owned, and a 1971 Olds 442 Convertible, while my wife drives a Tesla. I just cannot bring myself to own super expensive cars that depreciate quickly, cost a ton to insure, and get me from Point A to Point B just like my cheap cars do.
Story 2
In another comical misunderstanding, I received a call the other day from an insurance agent. I was on the phone and asked to call back. I presumed it was a cold call. I returned the call and got a voicemail and said, “If you are calling to sell me insurance, I am covered.” The guy called me back and told me he was an insurance agent representing me. I was confused.
He said, “I understand you have health issues and want to discuss them with you to get you the right coverage.”
I said, “I don’t know what you are talking about. Who told you I have health issues? What are my health issues?”
He said, “Mark told me you need a transplant.”
I did not know who he was referring to in this conversation and it led to a longer discussion. The man asked about family members who may need a transplant.
I won’t bore you with the rest of this ridiculous exchange, but the agent was given the wrong phone number and was supposed to be calling a different man named, “Eric,” who needs a transplant. Mark had my # and the other Eric’s # and just gave the wrong # to the insurance agent. I thought I was being pranked. The guy was adamant I was sick.
Story 3
I went to the mall with my daughter to buy my wife a birthday gift last week. We were in the women’s shoe department at Neiman’s, and I said to the salesman, “I need to buy my wife a birthday gift and am looking at shoes.
He looked at my 16-year-old DAUGHTER and said, “Happy Birthday, what size shoe do you wear?” I understand there are plenty of old men who are married to young women but to think my 16-year-old daughter could be my wife is disturbing on too many levels to count. I had just picked her up at school and she was in a uniform. My daughter was excited because she felt that meant she looked older. It is funny that when you are young you want to look old and when you get older, you are desperately trying to look young. I don’t know if I should be amused, upset, concerned, irate or all of the above.
Quick Bites
Payrolls soared by 336k in September smashing consensus of 170k. Stocks sold off on the news and the treasury market sold off sharply (10-year hit 4.89%). However, stocks rallied late in the morning and finished higher across the board with the Dow +.9%, S&P +1.2% and Nasdaq+1.6%. Generally, inflationary news such as strong payrolls which sent Treasury yields higher would send stocks lower. Some suggest the market has been oversold recently. I can’t put my finger on it, but was a bit surprised by the market strength Friday post data. This article calls the collapse in Treasury bonds among the worst crashes in history and shows the 10-year plummeted 46% since March 2020. The Fed and too much free money from the government are to blame. Powell’s transitory inflation call will go down in history as one of the worst Fed calls and policy decisions of ALL TIME. Oil has been slammed recently on economic fears despite the stronger dollar. After hitting $94 last week, oil has dropped back to $83/barrel and is now +7% on the year. I am not convinced oil stays down if the Middle East fighting lasts any period of time. Remember, the Biden Administration sold the US Strategic Petroleum Reserves to 40+ year lows. The current situation in the Middle East is exactly the reason why SPR levels should be far higher than today. It is a matter of national security.
JPMorgan’s Marko Kolanovic is bracing for a 20% sell-off to hit the S&P 500.
According to the Institutional Investor hall-of-famer, high interest rates are creating a breaking point for stocks — and choosing cash at a 5.5% return in money market and short-term Treasuries is a key protection strategy right now. “I’m not sure how we’re going to avoid it [recession] if we stay at this level of interest rates,” the firm’s chief market strategist and global research co-head told CNBC’s “Fast Money” on Thursday. ″[We’re] not necessarily calling for an immediate sharp pullback,” he said. “Could there be another five, six, seven percent upside in equities? Of course... But there’s a downside. It could be 20% downside.” He warns the “Magnificent Seven” stocks, which include Apple, Amazon, Meta, Alphabet, Nvidia, Tesla and Microsoft, are among the most vulnerable to steep losses due to their historic gains amid high rates. The group is up 83% so far this year — carrying the bulk of the S&P 500′s gains. He makes good points which I have been writing about for some time. Concerns about rates, market breadth, alternatives to stocks, clear concerns around consumers.
I have written about my concerns of budget deficits and the Federal, state and city level. I have suggested the reckless spending is unsustainable and believe many blue states will be required to raise taxes. Wealth has left major cities bringing substantial tax revenue with it. Now, the commercial R/E market is getting slammed on office and retail and even apartments with higher rates and work-from-home. The careless spending continues by city and state governments despite weaker tax collections. There are multiple articles recently surrounding AOC’s desire to raise taxes for the top 5% of income earners. The New York City congresswoman is pushing to slam the “top 5%” of New Yorkers with a massive total $15 billion in state income-tax hikes that would hit households making just over $250,000 a year. The targeted “top 5%” involves married New York couples with an adjusted gross income of more than $250,000, or each spouse averaging $127,500 each, according to analysis of income tax rolls by the Empire Center for Public Policy’s Tim Hoefer. I am not here to tell you what will pass, but am here to suggest that the spending, migrant crisis, and reduced tax receipts need a solution, as the status quo is not an answer. California has tried to pass wealth taxes, higher income taxes on the wealthy and exit taxes. These states have BILLIONS in budget deficits and the wealth continues to leave for greener pastures. The last projected budget deficit for CA was $32bn and NY was $9bn for the next fiscal year. NY is projecting $36.4bn of deficits in the next 3 years (from the State Comptroller). I am not convinced these budget numbers are achievable and won’t be surprised to see larger deficits. The picture is from Michael Ramirez, award-winning cartoonist and says it all.
Other Headlines
Rivian shares sink 20% after the EV maker said it plans to raise $1.5 billion
Levi’s Shares Fall as Sales Weakness Sparks Downbeat Outlook
Apparel company trims its guidance for full-year revenue. CEO says that consumers are ‘really feeling squeezed.’ Stock -16% YTD.
DoorDash, Instacart execs lose billionaire status as light demand wipes $15B from fortunes
What does this mean for all the venture investments made by funds. How many have the positions marked at the proper valuation?
Why borrowing costs for nearly everything are surging, and what it means for you
Ken Griffin’s hedge fund Citadel bucks the downtrend in September, up nearly 13% this year
He is my hero on so many levels. He is brilliant, a great investor, business builder, and philanthropist, and voted with his feet when he disagreed with politicians on how to properly run a city.
Last month, over 200,000 illegal immigrants crossed the border. I have been writing about the chaos and now Biden wants to build the wall he was so critical of under the prior administration? Biden said, “There will not be another foot of wall construction in my administration.” Wait, having a secure border is a good thing? Who could have possibly thought of that?
50,000 Venezuelans Illegally Crossed U.S. Border Last Month, Shattering Previous Record
New York City moves to suspend ‘right to shelter’ as migrant influx continues
These calls were so easy to see as bad ideas, yet so many cities thought they could take an unlimited number of migrants without any negative impact. We need a border policy and limits on immigration. Who will pay for the housing, food, school, clothing… for these immigrants? The cities are running massive deficits before the impact of the immigration policies. AOC is opposing the “cruel” wall.
Pound of crystal meth found by cops at NYC hotel housing migrants
Applications are now open for “the worst job in Washington”
The WaPo article is interesting and felt the cartoon which was separate from it was a funny one. Michael Ramirez is an award-winning cartoonist and sums up the situation perfectly below. The last I read, Scalise, Jordan and Trump were the names bantered about to be Speaker.
Sex, Signal messages and sabotage: SBF’s top execs and Bahamas roommates tell all in court
I hope SBF gets life in prison, but also wish we saw more consequences for violent crimes in many cities. I don’t think I will get my wish.
Unhinged man attacks 3 people with glass bottle in NYC rampage that began at Midtown Whole Foods
Look at these awful pictures. We need consequences for crime. He has been busted 8 other times. Why is he out to harm innocent people?
Major airlines duped into using plane parts with phony inspection certificates in $3M scam
The parts got into 126 plane engines across the world. I am shocked this could happen today.
Nobel Peace Prize awarded to jailed Iranian activist Narges Mohammadi
Lawyers bail on MyPillow’s Michael Lindell, saying he owes millions in fees
The No. 1 phrase people who are good at small talk always use, says Stanford public speaking expert
Weight loss drugs may be linked to stomach paralysis, other rare but severe issues, study says
I think these drugs are amazing, but feel diet and exercise are key. I recently lost 12 lbs by cutting back on food and exercising more. I also found I had an underactive thyroid and went on a low dose of a med which I think has helped as well. I do fear long-term ramifications of these “wonder drugs,” but the weight loss results are impressive. More talk of the impact of weight loss (positive for airlines, but negative for restaurants and grocery stores). Walmart says weight loss drugs is impacting sales.
Artificial intelligence used to cook 'perfect' steak in 3 minutes
The pictures look amazing but it is not cheap.
NYC snubbed in top 10 US foodie cities list — and No. 1 will shock you
I don’t put much credibility in this list, but it is interesting that it has 3 of the top six in Florida. I don’t agree with any list which has NYC #20 regarding food. Boca has seen 20 new restaurants open in recent years. Many high-end: Meat Market, Gallaghers, Eddie Vs, Rosebud, Red Pine, Rino’s, Corvina, Flamingo, Principessa, Japanese Bocce Club, Sushi by Bou, Alley Cat, American Social…..
Real Estate
I would guess I have been asked by 40 readers what I feel the value of Trump’s Mar-a-Lago is after a judge suggested the number was $18mm. It is 17 waterfront acres on Palm Beach Island. I am not a Trump fan, but let me be clear, the place is worth a LOT more than $18mm. The incredibly ugly house has 58 bedrooms, 33 bathrooms, 12 fireplaces, five tennis courts, and a 20,000 ft ballroom. I spoke with a real estate developer in Palm Beach who regularly sells $50mm homes. He has an 8,000ft house on 1/3rd of an acre (NOT ON THE WATER), but next to Mar-a-Lago and the broker wants to list it for $45mm. I believe as a single home, Trump’s property is worth $350mm or more. If you could subdivide it, I would guess over $500mm in LAND VALUE. It has gold everywhere and is so gaudy and ostentatious, it is a turn-off. However, it is worth a lot more than $18mm. Trump bought it in a distressed sale in 1985 for $5mm which seems unbelievable. Hate him all you want, the guy has done some good deals as well as plenty of bad ones (Trump Taj Mahal, Plaza Hotel, Trump Hotel & Casinos Resorts, Trump Entertainment Resorts all filed for bankruptcy).
Shell Bay Golf Club opened up last week to RAVE reviews. The course is impossible from the back tees, and everyone I spoke with claims the course was immaculate and service was at another level. The superintendent/greens keeper was formally at Sebonack, Bethpage Black and head of bunker crew at Augusta National. I spoke with a top golf teacher and his words were, “The place is next level.” Ian Poulter, Henrik Stenson and Bubba Watson came out on Monday (all of whom are members) and said it’s the most impressive facilities they’ve seen In Florida. Last I heard, Bubba shot -2 from the tips which was very low relative to many others. From the back tees, there is a 286-yard par 3 that plays into the wind. I know Steve Witkoff, developer of Shell Bay, and I can tell you this guy is legit and does it right. I believe I have almost 20 members as readers now. If you have interest in a condo, I can connect you with Devin Kay who seems to have sold about 90% of them thus far.
I want to put something into perspective. Shell Bay is now $1.3mm to join (initiation). When I moved down in 2017, the most expensive club in Florida was $175k (LaGorce) and that was very expensive most high-end clubs $100k or less. LaGorce is now $750k with a wait list miles long. I believe Shell Bay is the most expensive club in Florida by far and the location sells as Miami has little to offer in private golf. There are a bunch of new clubs going up north of Palm Beach in Hobe Sound. I do not see them doing nearly as well as Shell Bay given the vast amount of golf and the locations are generally not appealing and far from where you want to live. Given the economic slowdown, I believe many will struggle. Shell Bay is FULL on membership with only availability for those buying condos. I have been invited 3 times but have yet to make it out. After next week, I free up and plan on taking Jack to check it out and will write about it.
Rosen Report™ #620 ©Copyright 2023 Written By Eric Rosen
