Disconnected At Sea-Fishing Up a Storm

2-13-22

Opening Comments

This is an abbreviated note. I was in the middle of the Atlantic Ocean with no internet for a couple days. As a result of that and the Super Bowl, this is short and sweet and an early send. I felt the volatile markets, inflation readings, Treasuries, and Ukraine justified some Rosen Report. Some of the data outlined is a bit concerning. I wrote this Saturday night after everyone went to sleep.

This was my prior report, “I’m a Social Media Moron.” We got a lot of new subscribers this week, and I want you to see what my reports generally entail. Today’s is not indicative of the regular volume. No Real Estate section today for the 1st time in months.

• Picture of the Day-Optical Illusion

• Disconnected At Sea-Fishing Up a Storm

• Quick Bites

  • Markets, Treasury Bonds

  • Inflation/Bullard Comments, Car Prices

  • Consumer Sentiment, Russia/Ukraine Explained

  • Biden Approval Ratings

  • Trump-White House Documents

  • John Durham Papers on Spying Accusations

• Other Headlines-Highlighting Crime and Lack of Consequences

• Virus/Vaccine

  • Data-Improvements Across the Board-Cases -78% from Peak

  • Booster Potency

  • Vaccine for Kids

Picture of the Day

I am always amazed when I see these types of pictures. I am showing it as I saw it, and you will find the proof of the illusion below just prior to Quick Bites. It is crazy how your mind adjusts as the real picture is quite unflattering. Upon first glance, you might not spot what's wrong with the upside down image of billionaire Telsa founder Elon Musk. (see above Quick Bites for the answer).

Disconnected At Sea-Fishing Up a Storm

I slept on the beautiful 68’ Viking Sport Fishing boat on Thursday night as the captain was leaving the dock at approximately 3am Friday. This beautiful boat is $6mm and it is a fisherman’s dream. I slept in a small room with bunk beds which were 2 feet apart. I fell asleep easily at about 11pm. However, I was awoken by the sound of what seemed like a bad gear shift in a manual sports car. This horrendous sound would go on for 15 seconds at a time as the captain was using his “bow thrusters” to steer the big boat away from the dock. I did not go back to sleep as I was getting tossed around like a rag doll in the open ocean. Seas were 3-4 feet but it was so rough in the cabin that I could not sleep on the top bunk for fear of falling. Sleeping on the bottom bunk meant that I would hit my head when we crashed into waves. You can see the bunk bed in the video below. I slept on the floor in a 2 ft by 5 ft area. I crawled to use the bathroom as I was worried about re-injuring my bad calf given how much the boat was bouncing around. Luckily, I never get seasick. It made the trip more of an adventure. I wish I had this evening on film as it was quite funny, but the great fishing, fun people and experience made it worth the while. The boat is similar to this one. There is a 2 minute video of what a similar boat looks like here for those interested. My room was shown at 1:19 of the video.

I had been checking my phone instinctively all night and the last email I received was at 2:40am Friday. Given I am a prolific user of email and text, it felt odd to be so out of touch. Sadly, these damn smart phones have becoming addicting. I must have checked my phone 25 times Friday and zero signal. I must be delusional thinking I am important enough to matter that I cannot enjoy myself for 36 hours. Did I mention my love/hate relationship with technology?

We started fishing at 6:30am Friday and were largely trolling for Yellowfin Tuna, Mahi, Wahoo and maybe a Blue Marlin. We hooked into many Mahi and a couple nice Yellowfin in short order. We saw a couple Blue Marlin, but did not catch them. You always look for birds feeding or large debris floating and the video shows both. I was reeling what was likely an 80lb Yellowfin and got sharked not so far from the boat. We also got a decent Wahoo. The short video shows some of the fishing and fish.

Me with a decent Mahi. Those buggers are slippery.

This was a small Yellowfin Tuna which was hit by a shark right next to the boat.

This is the bigger Yellowfin Tuna. They taste amazing.

It was a beautiful day and lots of fun and the fancy boat made it very enjoyable as you can take a break in the air conditioned cabin and watch satellite TV. I was watching the market tank in the afternoon on the heels of the Ukraine news from the middle of the ocean. Still no phone connection despite checking constantly. I need to go to phone rehab.

We had a great dinner on Friday night and woke up Saturday am to do fish again. Friday night, I slept on the couch and actually got a few hours of sleep. When I woke up, of course I checked my phone and zippo! However, we very quickly hooked into a large Mahi (close to 50lbs) and it literally spit the hook 10 ft from the boat and within minutes, got another one. Check out the size of this beast which is in the 40lbs range. Nate and the mate, Gunner with a beautiful fish. This was clearly the fish of the trip. The 1:38 second video of fishing can be found here.

I got this picture of the above Mahi jumping next to the boat and it is on the video. These fish are fun to catch as they do many aerials during the fight.

We also “Deep Dropped” which is a form of fishing using electric reels to drop bait to 1,500 feet of water to catch snapper and grouper. We caught a few of each. In total, we caught maybe 20 Dolphin, 2 Yellowfin Tuna, 1 Wahoo, 2 Queen Snapper and two Grouper. I did not take a picture of the Snapper, but this was one from a previous trip, so you can see the beauty. This was from my boat and you can see the large electric reel in the background. Note the eyes are so big given the limited light in deep water. These are the best tasting fish to me.

The fishing trip was a great adventure with a good group of people, and fishing on a beautiful boat made it all the more enjoyable. The crew was on top of everything and helpful. Unfortunately, my addiction to being connected made it very hard for me to feel relaxed, being so out of touch. I currently have a few deals going and pride myself on my responsiveness. I am actually saddened that my phone reliance took away from a once in a lifetime opportunity. I believe being “disconnected” once in a while is healthy and we have all become too dependent on the crack phone, especially our kids. My wife, Jill, goes ballistic on the kids staring at the phone. One time, Julia had a friend over and they were glued to their phones rather than in conversation and I kind of lost it myself. I need to practice what I preach!

Interestingly, I was not alone, when we got within about 15 miles from the shore in Florida, every other person on the boat was frantically trying to check for those life altering messages. I had over 600 emails and 20 texts and many are from readers in 36 hours. My calf is on ice today as it was a bit too much with the rough seas. The Rosens are likely going to the owner of the boat’s house for a Super Bowl party. What do you think he is serving for dinner? I am ready to go back and catch more fish next week and will probably need another break from my phone anyway.

This is the optical illusion photo from Picture of the Day

You'll notice that his facial features aren't quite right. Flip the image upside down and you'll spot that the South African's eyes and mouth are actually the right way up. The brain is not able to spot the small changes when the figure in it is upside down but notices right away once it's flipped 180-degrees. It's an illusion that has been around since 1980 when a scientist created what's thought to be the first iteration. It was shown in a paper by Peter Thompson, of York University, and featured a doctored image of former UK Prime Minister Margaret Thatcher.

Quick Bites

• Stocks slid on Friday as increased tensions between Ukraine and Russia sent oil spiking and led investors to dump risky assets like equities. Shares were mostly flat on the day until Ukraine-related headlines in afternoon trading caused traders to dump stocks and buy Treasury Bonds. The Nasdaq fell 2.78% to 13,791, while the S&P 500 dropped 1.9% to 4,419. The Dow tumbled 504 points, or 1.43%, to 34,738. Stocks moved sharply lower in afternoon trading after a jump in oil prices that appeared to be tied to increased concerns about Russia taking military action against Ukraine. With about 2 hours left to the trading day, U.S. National Security Advisor Jake Sullivan said at a White House briefing that there were signs of Russian escalation at the Ukraine border and that it was possible that an invasion could take place during the Olympics, despite speculation to the contrary. Both the U.S. and U.K. have called for their citizens to leave Ukraine as soon as possible. Sullivan noted that the U.S. is not certain that Russian President Vladimir Putin has made a final decision to invade Ukraine. But “it may well happen soon,” he said. Also, on Thursday, a red-hot inflation report spooked the market sending the Dow down 600 points at session lows. On the week, the Dow was -1.1%, the S&P was -1.9% and Nasdaq was -4.6%. Year to Date, the Dow is now - 4.4%, S&P -7.3% and Nasdaq -11.9%. The high growth stocks have been hit the hardest on rising rates and the pandemic slowing down, while the more established Dow components have outperformed. BTC is down slightly to $42k and ETH is -4.4% to $2,8k.

  

  • Treasury Bonds all rallied on the flight to quality on Friday. The 2-year is now trading at 1.49% and the 10-year is at 1.91% after hitting 2.06% earlier in the day. On Thursday, the 2-Year moved by 20bps, which is massive. In my Omakai Sushi report from 1/30/22, I wrote extensively on the 2s/10s Treasury curve and it is down to 42bps. The spread was 266 bps in December of 2013 Look at the chart below and you can see the 2s/10s was 158bps 3/31/21. According to one website, the average spread is 93bps, but was unable to verify that number. Traditionally, steep yield curves (indicated by a high 2s10s reading) are often followed by strong economic and financial market performance, while flat yield curves (indicated by low 2s10s readings) are followed by weaker performance. I used an edit function to circle prior low points in 2s/10s and the metric is accurate in predicting recessions wen 2s/10s goes to zero or negative. The vertical grey bars are recessions and the current 2s/10s rate is declining rapidly. The 30-Year- Fixed Rate Mortgage is at 4.02% or +43% in a year as it was well under 3% one year ago. Most consumers are concerned more about the monthly payment and rising rates will have a large impact on affordability. Refinance applications are down 52% and purchase applications were down 12% from one year ago.

  

  • Thursday’s consumer price index report showed a year-over-year rise of 7.5%, hotter than expected and the largest gain since 1982. As a result of the hot reading, Saint Louis Fed President, Bullard, stated that he now favors a 50 bps rate hike in March and wants 100 bps by July. This WSJ article suggests inflation is costing people $276/month for the average household. Several other Fed official are pushing back against the Bullard call. I find the Fed a joke. I will give them credit for the handling of the GFC (after they were late to the party) and the early handling on the pandemic. However, they left the gas on the fire too long yet again.

  • One of my investing heroes, Jeff Gundlach said, the fed is “obviously behind the curve,” and will raise rates more than expected. Jeff has had some remarkable calls in his career and is indeed the “Bond King.” Gundlach’s prowess in detective work caught the robbers who stole $10mm from him as seen in this story. He is a legend. My readers know that for over nine months I have been writing about my inflation concerns. For the life of me, I cannot understand how the “smartest people in the room, the Fed,” missed it again. Over 6 months ago, I called for the end of the bond buying program, yet the Fed is buying $60bn/month and were buying $120bn in November. If so many in the Fed are so worried about inflation, remind me of why they continue to add fuel to the fire? I also had mentioned we could see a 50bps hike in my 1/30/22 report and now the market’s implied probability for such a move was over 90% on Thursday, when at the time I suggested it, the probability was less than 20%. Friday, levels normalized back to a little over 50% for a 50bps hike in March.

• Soaring car prices have set off a battle between automakers and independent dealers, with consumers routinely paying hundreds, often thousands, more than the listed price amid a protracted vehicle shortage. But data shows such markups are pervasive across the industry: More than 80 percent of U.S. car buyers paid above MSRP in January, according to auto market research firm Edmunds. That compares with 2.8 percent the same month a year ago and 0.3 percent in 2020.

• As concerns around inflation soar, American consumers’ outlook on the trajectory of the U.S. economy has deteriorated, worrying some experts that negative attitudes could dampen expenditure and put a dent in economic growth. The University of Michigan’s closely-watched consumer sentiment index fell to 61.7 in early February, hitting the lowest level since October 2011. January saw a reading of 67.2. Recent declines in the measure have been driven by weakening personal financial prospects amid rising inflation, less confidence in the government's economic policies, and the least favorable long-term economic outlook in a decade, the University of Michigan said in its latest report Friday. This data does not bode well for Biden and the Democrats for the mid-terms unless sentiment improves dramatically. The substantial change in Democratic states COVID restrictions is partially due to improved data and due to the growing disdain of the rules which will make elections challenging for the left. The index below shows we are approaching the levels from 1974, 1980, 1990, and 2008/9. Consumer sentiment is down 19.7% for one year.

• Russia has amassed more than 100,000 troops (some estimates are at 130,000) near Ukraine's border in recent weeks, according to US estimates, raising fears from Western and Ukrainian intelligence officials that an invasion could be imminent. As frantic diplomatic efforts are made to avert war, analysts are warning that Russia's military poses an immediate threat to Ukraine. But if an invasion were to occur, it is not clear where it would begin. Russia has created pressure points on three sides of Ukraine -- in Crimea to the south, on the Russian side of the two countries' border, and in Belarus to the north. Here are the three fronts Ukraine and the West are watching, and the recent Russian movements detected in each. From what I have read, a big driver of Putin and Ukraine is preventing NATO’s expansion to include the Ukraine. After the Soviet Union collapsed, NATO expanded eastward, eventually taking in most of the European nations that had been in the Communist sphere. The Baltic republics of Lithuania, Latvia and Estonia, once parts of the Soviet Union, joined NATO, as did Poland, Romania and others. As a result, NATO, an alliance created to counter the Soviets, moved hundreds of miles closer to Moscow, directly bordering Russia. And in 2008, it stated that it planned — some day — to enroll Ukraine, though that is still seen as a far-off prospect. This NY Times article does a good job of explaining the situation. This WSJ article suggests the Russians have already started a hybrid war with bomb threats and cyber attacks against Ukraine.

  • U.S. President Joe Biden tried to send Vladimir Putin an ultimatum about the consequences of any invasion of Ukraine in an hour-long conversation that left both sides at an impasse and Russia’s intentions unclear. Biden warned his counterpart in Moscow that Russia would face “severe costs.” For his part, the Russian leader accused the U.S. of failing to provide him with security assurances he needs to back down.  IF Putin were to stand down and not invade, Biden could claim victory, a win he sorely needs. Regardless of the reason for Putin, it could easily be spun as a Biden assist. Interestingly, a Russian ambassador says, “Moscow doesn’t give a sh#t about sanctions.

• For the first time since taking office, Biden's approval rating — based on an accumulation of polling data — fell below 40%. A Real Clear Politics average of all the most recent national surveys measuring Biden’s standing put the president’s approval at 39% and his disapproval at 54%. This was prior to the inflation reading and Ukraine news. Again, I do not feel Biden has done a good job a little over a year into his Presidency and the pools agree. I do not see Biden running in 2024, but have said that since he won.

  

  These are the latest betting odds in the way too early 2024 Presidential Elections. I do not believe Trump, Biden or Harris are the next POTUS despite the fact that this has Trump in the lead based on betting odds.

  

• There are multiple stories of Trump and his handling of documents from the White House. One story discusses a Congressional panel is seeking answers about the removal of 15 boxes of White House documents from Trump’s Florida residence. There is a WaPo story which has been picked up by others suggesting that Trump frequently ripped up documents while in office, including briefings, letters and memos, which were then taped back together by staffers. While President Trump was in office, staff in the White House residence periodically discovered wads of printed paper clogging a toilet — and believed the president had flushed pieces of paper, Maggie Haberman scoops in her forthcoming book, "Confidence Man." Although I felt Trump had a handful of solid policies, I felt his behavior was horrible and was the least Presidential President of all time. I am sure more will come out about these stories, but clogging toilets? Come on man!

• Special Counsel, John Durham, filed papers in court explaining the alleged hack funded by Hillary Clinton’s campaign on Donald Trump in a bid to find ties to Russia to smear her arch rival. The former chief investigator of the Trump-Russia probe for the House Intelligence Committee under Republican Devin Nunes, Kash Patel, said Friday’s filing ‘definitively showed the Hillary Clinton campaign directly funded and ordered its lawyers at Perkins Coie to orchestrate a criminal enterprise to fabricate a connection between President Trump and Russia.” Trump said: 'The latest pleading from Special Counsel (John) Durham proves indisputable evidence that my campaign and presidency were spied on by operatives paid by the Hillary Clinton campaign in an effort to develop a completely fabricated connection to Russia. Trump continued: 'In a stronger period of time in our country, this crime would have been punishable by death. I just want readers to recall the 60 Minutes when Trump suggested his campaign was spied on and Leslie Stahl’s response (40 seconds). I do not know if these latest allegations are, but if it turns out to be accurate, this is pretty bad in my opinion. Americans from both parties should be outraged if it is proven. I am not hear to tell you Trump is a saint or that I agree with his antics; I don’t. However, the media paints him as the devil and the Democrats as angels and it is just unfair. To me, they are all bad. I have not spent enough time on this given I was away, but a reader sent me some compelling links from John Durham filings. I would like the media to look at both sides and present more balanced views as opposed to just hate on the other side. This is a 4 page excerpt from the Durham filing.

Other Headlines

• Nebraska Joins Call For Convention Of States To Amend US Constitution

  • Interesting article which I did not know about pertaining to states seeking to “impose fiscal restraints on the federal government, limit the power and jurisdiction of the federal government, and limit the terms of office for its officials and for members of Congress.” Nebraska is the 17th state to push for this.

• Multiple Arrests as Police Clear Canadian Trucker Protest at Ambassador Bridge

  • Initially organized to oppose vaccine mandates for truckers crossing the border from the U.S., it has since grown into a movement against pandemic restrictions in general.

• French COVID protest convoy defies Paris stay-away order

  • Inspired by horn-blaring "Freedom Convoy" demonstrations in Canada, dozens of vehicles slipped through the police cordon, impeding traffic around the 19th century arch and the top of the boutique-lined Champs Elysees, a magnet for tourists. Police fired tear gas at the crowd.

• “Extreme Suffering”: 15 of 23 Monkeys with Elon Musk’s Neuralink Brain Chips Reportedly Died

  • Musk, if it is so safe, insert one into your brain. Before you do that, wire me $10bn into my personal account. You won’t miss it.

• Biden weighs appeal of 3 top candidates for high court

  • I feel the best candidate should be selected for this incredibly important LIFETIME appointment. I am indifferent of the color of the candidate’s skin, sexual preference, religion or preferred pronoun. I want the best candidate and do not feel they should be limited to 6 or 7% of the US population (Black females). This article suggests 76% of Americans agree with me.

• Serial NYC purse snatcher has 59 busts — and still avoids jail

  • As long as complete idiots run the system, it won’t get better. This is ridiculous. How about locking him up? How many more times has he not been caught? Send a message. What does this do to tourism?

• Suspect who caught a break from Manhattan DA Alvin Bragg held on bail in sanitation worker attack

  • The DA downgraded the felony robbery charge last month and he then went and punched a city sanitation worker. Keep up the great decisions, DA office. Let’s be tougher on violent criminals and repeat offenders. NYC and the policies on crime are taking a toll. The people leaving are the wealthy who pay a disproportionate amount of taxes and spend far more NYC. This leads to larger deficits. Hello.

• Queens man with lengthy rap sheet charged in random NYC subway attack on Thai model

  • 44 arrests since 1997. Makes complete sense that he would be walking the street to attack innocent people. I just do not understand the logic here.

• ‘Barely holding on’ Queens business owners plead for help with decades-high theft levels

  • This small stores lose up to $2,000/day. Remind me why being soft on crime is good for law-abiding, tax-paying citizens working hard to support their families. I am sorry, the leadership in these moronic cities needs a wake-up call.

• NYPD seeking alleged shoplifter who punched Duane Reade worker in face

  • I hope they catch the criminal and he is prosecuted and not let go without consequences for his actions.

• Woman fatally stabbed inside NYC apartment after being followed

  • Are the politicians watching the news? Get crime under control.

• Manhattan judge rejects no-bail bid, sends accused teen robber to jail

  • Finally, a tough judge. Shooting at a cop, robbing people and hitting him in the face with a gun. Sounds like a lovely 16 year old kid. Thank you, Judge Jackson for sending a message to your soft on crime Manhattan prosecutors.

• Kodak Black reportedly among 4 shot outside Super Bowl party

  • The star studded event had Bezos, Bieber, Lauren Sanchez, Tony Gonzalez, Drake, Khloe Kardashian… What happens if someone in the uber elite gets shot? Is that a wake up call for a tough on crime stance? If Bezos were to have taken a bullet, would that have changed the DAs thinking?

• Chicago woman is carjacking victim for second time

  • Lightfoot said there is a 'very real and pervasive fear of carjacking across our city, our region and our state'

  • Mayor, then be tough on crime and do something about it. I lived in Chicago and there is nothing to get me to move back to the city that Billionaire, Ken Griffin said, “Chicago is like Afghanistan on a good day.” He said he saw, “25 bullet shots in the glass window of the retail space” in the building he lives in. Given he is worth $20bn, I have a funny feeling he lives in a “good” neighborhood.

    • The video is less than 2 minutes and listen to Griffin speak about Chicago from a few months ago.

• Atlanta Fends Off Wealthy Enclave’s Effort to Leave the City

  • Buckhead movement collapses amid opposition, logistic hurdles

  • Secession would have dealt deep blow to capital’s finances

  • This would have been a disaster for Atlanta, but part of me wanted the movement to pick up steam to put all cities on notice that citizens will become aggressive if officials are unwilling to get to the right answer.

• Rand Paul said he hopes trucker protests "clog up cities," including during Super Bowl and in DC

• Beto O'Rourke flip-flops again on confiscating AR-15s as polls show him trailing Texas Gov. Abbott

• Chloe Kim begged reporters for snacks because she was starving after her gold-medal victory

  • China sure knows how to throw a party. Starve the athletes. The accommodations, food, treatment of those testing positive for COVID…. has been outrageous.

• China orders athlete to delete photos that showed flooding in Olympic Village

  • Nothing like free speech and press in China.

• A Black Hawk helicopter flew for the first time without pilots

  • What are the ramifications over the next decade of autonomous vehicles and all the jobs (Uber, Lyft, cab, truck, delivery driver….) which will start being replaced.

• A simple pregnancy ultrasound could be the key to diagnosing autism, study says

• Finding love for $300,000: Behind the scenes of a luxury matchmaking business

• Teen goes on life support with lung damage — vaping habit to blame

• My kids know if I catch them smoking or vaping, the consequences are dire. I see so many kids 14-25 vaping and just cannot understand the attraction. There are SERIOUS consequences here. Please stop.

  

• Pregnant mom ‘thinks she can hold it,’ accidentally delivers her own baby in gas station: ‘So many emotions on your wife’s face’

  • If my wife gave birth in a gas station, I would be blamed, and I am pretty sure it would end in divorce. They should name the baby Chevron, Shell or Mobile, whatever the name of the station was.

    

• Death of Hamptons caddy Kevin Somers came after 'tussle' with best friend

  • This was caddy master at the Maidstone Club in East Hampton. It is incredibly exclusive and nearly impossible to get in, even prior to the pandemic.

Virus/Vaccine

• The charts are all moving in the right direction. Cases fell 67% from the prior two week period and are now averaging 178k/day. Cases are now 78% from the peak level of 807k/day on 1/14. Hospitalizations were -34% and are averaging below 97k with 19% in ICU. As suggested would happen, deaths declined 5% from the prior two weeks and are averaging below 2.5k/day now. The John’s Hopkins Positivity rate was 29.8% a couple weeks ago (2nd chart) and it has fallen down to 10%.

• Given the reluctance of many to be boosted or take the vaccine every few months, I do not feel this is an ideal outcome. A fourth dose of the COVID-19 vaccine might be necessary for some Americans. New data from the Centers for Disease Control and Prevention (CDC) finds that the mRNA shot's protection begins to decline after about four months, according to a study released Friday. Although vaccine effectiveness against COVID-related hospitalizations was at 91 percent during the first two months after a third dose, it decreased to 78 percent by the fourth month. The study, which was conducted during the Omicron-dominate phase of the pandemic, focused on those who sought medical treatment for COVID symptoms. It did not include a breakdown of age or whether their third dose was a booster or part of their primary inoculation series, which the CDC recommends for some immunocompromised people.

• The FDA and Pfizer dashed parents’ hopes this week when they delayed the authorization of the Covid vaccine for children under 5 years old. The FDA and Pfizer said they are waiting on data about the effectiveness and safety of a third dose, which won’t come until April. Dr. Paul Offit said the fast-track plan was based on the assumption that the third dose would prove safe and effective, but there’s no guarantee that will be the case. “I’m glad that we’re going to wait until we have all of the data to make that decision,” Offit said.