Emotional Support Alligators-STOP

5-8-24

Opening Comments

Mt last note was about my dining experience at the impossible reservation of “Regina’s Farm,” with an 8 year wait-list. Again, it was a unique night, but not mind blowing from a food perspective, especially relative to the hype. The most opened links were the Scott Galloway explanation of Israel being held to a higher standard than any other country and the Forbes article on employers souring on Ivy League grads.

Prior Error

Unlike 99.9% of other media outlets, the Rosen Report corrects mistakes. I made an error in my AirBnB comment and an eagle-eyed reader, Markus, pointed it out. My math was right that $150k would be worth $5bn, but I had a typo on the market cap. The market cap of AirBnB is $100bn, not $10bn as I stated in my prior note.

NYC Trip

I have some meetings in NYC and will be flying in May 29th-31st, staying downtown. I have the annual JPM alumni dinner with Jamie and I always look forward to reconnecting with former colleagues and getting some time with Jamie. I will head back to FL on the 31st only to fly back to NYC on June 4th as I have 3 dinners in NYC and important meetings. I know I am going to Sparks and the impossible reservation, Rao’s, but unsure of all the other places yet. I made a reservation May 29th at Crown Shy (Michelin Star) and am looking forward to it. Given my son, Jack, has some exciting summer internships in NYC, I will be there for much of June and part of July. I will be working at times out of the 3i Members offices at 40th and 5th. Hope to connect with readers. I will also be in the Hamptons a little bit this summer. We are pretty sure Julia, my daughter, will be working at Love Shack Fancy in Southampton with a big sales quota. Ladies, any shopping needs to be done through Julia Rosen out of the Southampton store, please!

Readership

The Rosen Report is now read in 49 states (Alaska is killing me) and 95 countries. I am not convinced the data is perfect as I feel I have far more as a percent of total in the tri-state area. Thank you for helping me grow the report.

I had to send early today as I coach a middle school golf team and there was an early match across town.

• Video of the Day-Steve Jobs-Disease of Thinking the Idea is 90% of the Work

• Emotional Support Pets Have Gone Too Far

• Quick Bites

  • Markets

  • Berkshire Lessons and Top 5 Holdings

  • Partnership for Miami Having an Impact

  • Government Incompetence Strikes Again

  • Recent Election Polling Results

• Israel

• Other Headlines

• Real Estate

  • Boca on the Upswing

  • Freddie Mac Doing Home Equity Lines?

  • Brickell Office Demand Slowing?

  • Distressed Projects in Chicago and Austin

Video of the Day-Steve Jobs-Disease of Thinking the Idea is 90% of the Work

This is a fascinating short video of Steve Jobs, the Apple visionary. His point is too many people believe the idea is 90% of the work and called out John Scully. Jobs believed there is a tremendous amount of craftsmanship between a great idea and great product. He talked about tradeoffs as you develop new products and the way he articulated his views was captivating to me. Given the genius of Jobs, I thought this short piece was interesting.

Emotional Support Pets Have Gone Too Far

I want to begin by saying I am fully supportive of those who need reasonable emotional support pets, but believe there are countless thousands taking advantage of the new inclusive world. This article outlines the craziest 30 emotional support pets people have and include kangaroos, peacocks, snakes, pigs, spiders, llamas, rats and pigeons. I have seen people with ridiculous “service” animals on planes that make no sense to me. A person brought a massive Great Dane on a plane that should have had its own seat. Thankfully, it did not sit near me. I hate snakes. I was on a plane some years ago and a guy had a huge boa as an emotional support pet. As our fearless President says, “Come on, Man.”

If you want a poodle as an emotional support animal, I get it. But a kangaroo, mini horse, turkey, squirrel? We need more strict rules on this topic. If I sit next to someone with a pet tarantula, I will crap in my pants. I hate spiders. American Airlines recently instituted a “No Spider” rule for Emotional Support animals.

Things got so out of control that Delta no longer recognizes ESA’s (Emotional Support Animals) but does permit service dogs as well as psychiatric service dogs (PSDs). I believe that people are doing it just to push the envelope and make a scene. An emotional support peacock? Seriously? There was an emotional support alligator (Wally) denied entry into a Phillies baseball game. With any luck, the alligator eats the owner to deny the owner the ability to procreate. The alligator is not small, and, according to his owner, he likes his chin rubbed and sleeps in the bed with him - there is a Social Darwinism story in the making. However, just last week, Wally the alligator made the news again. He was stolen and placed into a swamp with 20 other alligators. The alligator went from sleeping in a bed with his owner to being placed in a swamp with other gators. You cannot make this up. As long as Wally is not on the plane next to me, I am good.

Please stop the madness and let’s have some sanity on service animals. As a funny aside, this headline was in the news this week, “Snakes almost on a plane: TSA discovers a bag with small snakes in passenger's pants.” Not a service animal situation but a funny one none the less.

Quick Bites

• Although stocks were mixed Wednesday on tech earnings (Shopify -19%, Uber-9%), markets have been performing well with the help of earnings and lower Treasury yields. This CNBC article outlines market movers and earnings today. A week ago, the 2-year Treasury yield was 5.06% and today is is 4.83%, while the 10-year yield fell 21bps during the same period. The Fed announced it was reducing the pace of balance sheet reduction (Quantitative Tightening). YTD, as of 3pm Wednesday, the S&P is +8.6%, Nasdaq+8.5% and Russell +1.1%. Despite the new incursion into Rafah, oil prices are down $4 in the past 10 days as higher inventors outweighed geo-political risks.

  

• Given the annual Berkshire Hathaway meeting last weekend, I thought I would include some advice from Charlie Munger and Warren Buffett. This CNBC article outlines Munger’s 3 lessons to make you a better investor. 1. Patience, 2. Buying great companies rather than great values, and 3. Avoiding losers and crypto. This CNBC article is about Buffett’s best advice for investing and for a happy life. He said ‘We never worried about missing something we didn’t understand,’ and “Write your own obituary” to have a successful life. There are some great lessons in these links that go into greater detail. From the shareholder meeting, life lessons are below. The top five stock holdings are in the chart. Hard to argue with the advice of legendary investors and men.

  • Chose the right partner

  • Give yourself some inspiration… and accountability

  • Make time for yourself

  • Stay in your lane

  

• I found this Bloomberg article entitled, “NYC-Inspired Group Including Ken Griffin Seeks to Build Up Miami,” to be interesting and impactful for the Miami community. The Partnership for Miami, a group that brings establishment Miami together with its newest leaders, including Ken Griffin, Dan Sundheim and Orlando Bravo, is making an impact. It’s an effort to influence the future of a city that’s changing dramatically, boosted by an influx of extraordinary wealth, but one that that faces significant infrastructure and equality issues. “We build relationships across sectors to rise up when there are issues no sector can deal with alone,” said Kathryn Wylde, Partnership for New York City’s CEO. The Partnership for Miami will initially focus on the areas that have grown into the city’s biggest pain points: housing, transit and education. The Partnership’s initial member roster includes senior executives at some of the city’s main law firms, hospitals and sports teams, as well as from cruise lines and real estate. Traditional Miami dynasties, such as the Perez and the Mas families, are also represented. The apolitical group will be funded by members’ dues. When you have business leaders with means that want to have a positive impact, great things are possible. I really like what is happening in Miami today and YTD, I have been 24 times. That is as much as I have been in any single year in my 7 years in Boca. So many amazing restaurants, sporting events, cultural events, concerts, parties, conferences….

• I have written extensively about government waste and wrote a piece entitled, “I am From the Government and Here to Help,” in May of 2023. I gave numerous examples of Federal, State and City waste to the tune of hundreds of billions. This headline is yet another example of why I want smaller government, “California mocked over $11 billion high-speed rail bridge to nowhere that took 9 years to build.” Venture Capitalist Patrick Blumenthal insinuated the authority should pump the brakes on praising itself, posting a breakdown of the lack of progress the rail-line project has made. “0.3 miles completed. After $11.2 BILLION. $36.96 billion per mile,” he wrote on X. For ~$9.6B of outside capital, SpaceX has launched a rocket into orbit over 320 times. For $11B of taxpayer money, California built 1600ft of a concrete bridge. The criticisms are justified, but more than just one leg of the rail has been built, to be clear. Politicians at the state and Federal level are trying to increase your taxes in many cases while they continue to waste your hard-earned money. Under Biden’s tax plan, despite a sharp raise in revenues and taxes, deficits will still run $2 trillion/year. We have a spending problem, not a revenue issue. We need fiscal responsibility at the city, state and Federal level and we need to hold politicians accountable. Remember, CA has the highest taxes in the country and will run a $68bn budget deficit this year. This article outlines far cheaper costs for similar projects. Obviously, they are not in the USA.

• Some recent election polls have come out and this link to the ABC News/Ipsos Poll has some amazing charts. I continue to believe that America deserves better than our elderly candidates, but the polling is actually fairly clear. I am including some of the charts in the article, but not all of them and highlighting some of the key take-aways. How can there only be a 17 point difference on the border? I think the difference should be 50 points on that topic. Inflation and the economy are most important to voters followed by crime and safety. Trump is beating Biden handily in the polls on the economy and inflation, as can be seen in the last chart. Trump dominates Biden on physical and mental sharpness. Has anyone seen Trump? For him to dominate someone on physical health, it seems impossible given Trump’s diet of McD, KFC while drinking milkshakes and Diet Coke. Biden wins handily on abortion access.

  

  

  

Israel/Middle East

• Israeli offensive in Rafah targets Egypt border crossing after Hamas tried to change terms of cease-fire

• U.S. Reportedly Suspended A Weapons Shipment To Israel With Rafah Invasion Imminent

• UCLA Jewish student beaten unconscious by Gaza activists on campus speaks out: “It’s so terrifying.”

  • The young girl was kicked in the head and knocked unconscious. What are the consequences? Jail time? Deportation to Gaza or Iran?

• Abigail Shrier: There Are Two Sets of Rules for Speech

  • Frat parties with offensive themes are swiftly punished. But publicly contemplate murdering Zionists? That’s a different story.

• Wave of Legislation Seeks to Penalize Criticism of Israel as Antisemitism

  • Federal and state laws’ new definition of antisemitism includes subjective actions like holding Israel to a “double standard” not applied to other nations.

• Anti-Israel protesters now demand U. California cuts ties with Hillel, Jewish groups: ‘It’s antisemitism’

  

• Radical anti-Israel nonprofit urged rampaging Columbia occupiers to recreate BLM ‘summer of 2020’ riots

• Columbia cancels university wide commencement ceremony after weeks of protests on campus

• Pro-Palestinian protesters are backed by a surprising source: Biden’s biggest donors

• Bomb threat emailed to nearly two dozen Jewish sites in NYC as disturbing text revealed

  • “Hello, if you see this email just have notice of a bomb I have set inside of your
    building.” “This isn’t a threat,” it said. “I have set a bomb in your building, you have a few hours to disarm or else blood will shatter everywhere.” The targets included 14 Manhattan synagogues and Jewish centers, five in Queens and another two in Brooklyn.

• ‘Hamas used rape systematically’: Sheryl Sandberg on new doc

  • I watched Sheryl on the All-In Podcast and a fair amount of time was spent discussing her new documentary. I have yet to see it but it sounds powerful and something that will lead to a lot of tears.

• The University of Florida over the last 7 days:

  • This is leadership. It is already challenging to get into UF and now, it will be impossible.

    

Other Headlines

• Stanley Druckenmiller gives Biden’s economic policies an ‘F,’ blames the Fed for reigniting inflation

  • Druckenmiller is the best investor of our generation. He has done amazing things and had 30%+ returns for 30 years with NO down years. Druckenmiller also called himself a “man without a candidate” as he feels a Donald Trump presidency would fuel inflation.

• FTX says most customers of the bankrupt crypto exchange will get all their money back

  • I believe these claims traded below 10c at one point.

• AI could drive a natural gas boom as power companies face surging electricity demand

• AI Trading Bot Gains +331% in a Week for Investors with $3K+

  • Is outperformance sustainable? I have no idea, but the #s are impressive.

• How private equity firms can leverage AI to create value

• High-Tech Trading Firms Race to Grab Bond Market Turf

• TikTok sues U.S. government, says ban violates First Amendment

• Citigroup CEO Jane Fraser says low-income consumers have turned far more cautious with spending

  • Affluent continue to spend, while lower-income Americans have become more cautious with their consumption.

• Palantir beats on revenue but gives lower-than-expected guidance

  • Stock -9% after being +8% prior to earnings.

• Reddit shares soar 11% after company reports revenue pop in debut earnings report (shares were +2% by the afternoon)

• Disney says streaming is nearly breakeven, but shares sink 10% on soft guidance

• Private equity firms circle Peloton for potential buyout

• New revelations in Florida documents trial put Trump on offense against 'deranged' special counsel

  • Some fairly damaging allegations against the prosecutors with respect to the documents in question. Prosecutors admitted in a court filing that "there are some boxes where the order of items within that box is not the same as in the associated scans." The prosecutors had previously told the court that the documents were "in their original, intact form as seized." 

• Georgia appeals court will hear Trump bid to disqualify D.A. Fani Willis in election case

• Judge threatens Trump with jail for court violations: ‘I have a job to do’

  • I believe this was the 10th violation of the gag order.

• Judge warns prosecutors about ‘degree of detail’ during Stormy Daniels’ salacious testimony as jurors struggle to keep straight faces

• Judge indefinitely delays Trump's classified documents criminal trial

  • This is a big deal.

• 5 twists that could shake up the election before November

• Chicago teachers' $50B demands include pay hikes, abortions, migrant accommodation

  • Last school year, the district spent more than $21,000 per student, far above the national average of $14,347, according to census data.  Only 21% of Chicago’s 8th graders are proficient readers, so I am struggling to understand how the teachers are doing a great job. I am trying to think of what it would take for me to live in Chicago (my home town) and I cannot think of anything to get me to live there again.

    

• Chic hotel in heart of Broadway converted to migrant shelter in latest sign of growing NYC migrant crisis

  • Based on what I have seen in front of the Roosevelt Hotel after it became a migrant shelter, I will not be walking near either place anytime soon.

• MIT tosses controversial ‘diversity statement’ hiring requirement — becoming first elite US university to throw away practice: ‘They don’t work’

  • “Requests for a statement on diversity will no longer be part of applications for any faculty positions at MIT,” a university spokesperson said.

• One Out of Every 24 New York City Residents Is Now a Millionaire

  • I give NYC a hard time due to the awful policies and what the city has become. However, this statistic (1 out of 24 residents is a millionaire) is amazing. New York has almost 350,000 millionaires, which is the most of any city and up 48% from a decade ago, according to a global ranking of the wealthiest cities by Henley & Partners, an immigration consultancy.

    

• 62% of parents feel burnt out, study shows: 3 tips to manage the stress

• Anger can increase heart attack risk, study finds: ‘Chronic insult to arteries’

  • A cardiologist shared 7 strategies to cope with anger and reduce the risk

• Ken Griffin and Elon Musk Party at Carbone as Wealthy Flock to Miami for F1

  • I avoided Miami last week due to the F1 race. Prices at restaurants go bonkers during the week of the race. At the Hard Rock beach club, a basket of carne asada nachos cost $180. Lobster Rolls, $280. Another $400 added an ounce of caviar. The Hard Rock bash, which also included performances by Ed Sheeran and DJ Steve Aoki, took place over three days right outside the Miami auto drome. Guests that wanted the full event experience had to fork out over $1,700 to get in. Photos of the eye-popping menu went viral on social media. A bottle of Tito’s vodka was priced at $560. A 1.75 liter bottle sells for about $30 retail.

Real Estate

• Great NY Post article about Boca Raton new developments attracting new businesses. The suggestion is it is not your grandparents Boca any more. They also discuss how the food scene has improved. I am 100% in agreement that it is better, but it is coming from a ZERO.

• I thought this article about Freddie Mac’s potential entry into the home equity loan market could be a big deal. The U.S. housing market is harboring the potential for unprecedented economic stimulus that wouldn't require any federal spending, according to Meredith Whitney, the one-time “Oracle of Wall Street.” In a column for the Financial Times on Friday, she noted that mortgage finance giant Freddie Mac asked its regulator last month to enter the secondary mortgage market, or home equity loans, which allow homeowners to borrow against the equity in their houses. Freddie Mac is best known for its role in buying first-time mortgages, pooling them together, and selling them to investors as mortgage-backed securities. Letting Freddie Mac do this for home equity loans could start putting $1 trillion into consumers' wallets as soon as this summer and $2 trillion by the autumn, Whitney estimated. If fellow mortgage giants Fannie Mae and Ginnie Mac follow along, the potential stimulus could top $3 trillion, she added. Their involvement in home equity loans would come as banks have slashed their participation following the financial crisis. Home equity loans outstanding have plunged to $350 billion today from more than $700 billion in 2007, just before the financial crisis, according to Whitney. And that's even as home prices have shot up over 70% in that span. I have mixed views on this idea. Yes, it allows the consumer to get liquidity. However, consumers have a lot of debt and want to see fiscal responsibility. If they are using the home equity lines to pay off higher cost debt, I am all for it. If they are using it to spend carelessly, I am opposed.

• We know that Miami to Palm Beach has seen a flood of new companies relocate or at least open offices and demand went through the roof. This Real Deal article suggests that demand for Brickell (Miami) is slowing. As Miami’s Brickell became the epicenter of South Florida’s office leasing flurry during the past four years, developers jumped into the area with plans for three towers that would add 2.8 million square feet to the market.  But the influx of out-of-state companies signing major leases for big blocks of space in the tri-county region has ended, data shows. The dearth of leases from new-to-market firms puts the projects’ viability into question, including whether all three towers will lease up or be built at all. So far, none of the projects has inked a lease.  Experts say that 30% to 40% of office space has to be preleased before a lender will provide construction financing. The article outlines a bunch of office buildings from various developers. Sounds as though things are slowing down and they all won’t come to fruition.

• Distressed office building in Chicago hits market and could trade at a shocking ~80% 'haircut.' Bids are expected in the ~$16M area or ~$100 a sq ft. The building last sold for $75M in 2015. Salesforce vacated the property last year and it is mostly vacant. Separately, the Fairmont in Austin, TX has been added to the default watchlist due to its upcoming maturity on a $300 million CMBS loan. In a related note, this ZeroHedge article about surging CRE CLO Loans is worth a look. In April, about 8.6% of commercial real estate loans bundled into collateralized loan obligations were distressed, reaching the record high set in January, according to Bloomberg, citing new data from analytics firm CRED iQ. According to data provider Trepp, $78.5 billion of CRE CLO loans are outstanding. This means many CRE CLO issuers are racing to find ways to prevent a tsunami of bad loans from defaulting or risk losing the fees they collect on the securities. Recent estimates from JPMorgan show lenders purchased $520 million of delinquent loans in the first quarter of this year. Lenders have been ramping up the number of buyouts over the last four quarters because of mounting bad loans in a period of elevated rates. 

  

© 2024 The Rosen Report LLC. All rights reserved. Does not constitute investment, financial, legal, or tax advice. Consult with your lawyers and professional financial advisers. Rosen Report™ #680 ©Copyright 2024 Written By Eric Rosen.