Opening Comments
Video of the Day-Hero
Hmmm, The French Laundry or the Emergency Room?
Quick Bites
Markets, Snap/Ad Spend, Bill Gates, Biden Comments
Wine/Gas, China R/E, Vaccine Mandate on Supply Chain
Gain-of-Function/Fauci Ouchie, Amherst Legacy
Target SFO, Facebook Hate, New Covid Theory
Other Headlines
Virus/Vaccine
Data-Continued Improvement
Mix & Match Vaccines
1 Minute Video on Spread of Covid in US
UK Case Growth
Real Estate
My General Comments
Martis Camp/Tahoe
South Florida New Terms of Trade-Must Read
Some Markets Showing Signs of Cooling (Chart)
Opening Comments
I received many ideas about Memphis BBQ, thanks. The most popular recommendation was called, “Rendezvous.” I fished today and crushed it again. Half dozen mahi, two small wahoo and a small tuna. Lots of fish to vacuum seal. I think I am making Poke Bowls tonight.
A reader, Bo, sent me a picture of price inputs for a restaurant, Trattoria L’incontro in Astoria which were a bit concerning. We are talking almost 300% price increases. Do we really believe all of it is transitory? This CNBC story has more restaurants using robotics and automation to speed up service and deal with the labor shortage.
Mixed reviews on the new section, “Other Headlines.” Do readers want it or not? Always looking for ideas on how to improve the Rosen Report. It has come a long way since the early days. Thanks for reading and sending story ideas.
Video of the Day
Personally, I support the police and military. There are bad cops, but there are bad people in the clergy, education, business, sports and every other industry. This 8 second video is amazing. It is a former marine, James Kilcer, in a convenience store and there is an attempted robbery. This is one bad ass dude. He crushes the robber in 2 seconds. Sir, thank you for serving the USA and thank you for protecting innocent citizens. You are amazing. I hope you get an award.
Hmmm, The French Laundry or the Emergency Room?
The Michelin-3- Star restaurant is one of the most famous in the world. Thomas Keller is the chef/owner and is the only American born chef with two 3-Star restaurants by Michelin. I went to the French Laundry almost twenty years ago. I remember it was amazing, but it was early in the history of the now famous restaurant. I had a group of friends who just went last week and spent $9,200 for 8 people with the 14-course tasting menu, champagne, three bottles of wine and tip. They are raving about it and felt it was a once-in-a-lifetime experience. Hearing about the French Laundry experience reminded me of a funny story.
A good friend of mine went to Napa with his wife and another couple maybe a 15 years ago. As soon as they checked into the hotel at Auberge du Soleil (love it), the men went mountain biking, and the women went to a spa. As an aside, I enjoy drinking on the patio of Auberge (pictured below) and it is one of my favorite views in the Napa area. My friend literally crashed his bike in the first 5 minutes of the ride as he went over the handlebars landing awkwardly on his wrist. He knew immediately it was broken. His friend helped him off the ground and they walked the bikes the short distance back to the rental shop.
View from the patio at Auberge
My friend went in search of his wife and told her he needed to get his wrist looked at as he was sure it was broken. She said, "Are you kidding me? I am not missing the reservation at the French Laundry because you don't know how to ride a bike." So my buddy took some Advil and bags of ice to try to deal with the pain. They arrived at the restaurant and my friend was sweating as he was in agony. The wait staff brought him more ice for what is a clearly broken wrist. My nameless friend got through the dinner and despite a normally big appetite, he struggled to eat while in excruciating pain.
French Laundry
By the time dinner was finished, my friend’s wrist had ballooned to an alarming size. They went straight from the 8-course meal to the local emergency room. Given his insatiable appetite, he had to make a pit stop at a vending machine in the ER for hostess donuts. He is that kind of a guy. Love it. The decadent food was not enough to fill him up.
Don't get me wrong, I am one of the biggest foodies of all time and if I had to guess, I would think I have 200+ Michelin Stars in terms of the number of restaurants I have eaten at over the past 30 years. Despite this, if I broke my wrist, I don't think I could have made it through dinner despite the world class experience.
Any time I hear of the French Laundry, I am reminded of this story. Now you will be too.
Quick Bites
All major averages finished the week higher for three straight weeks of gains, with the Dow rising to a record close. The Dow climbed nearly 74 points, or 0.2%, to 35,677, its first record close since Aug. 16. The S&P 500 edged lower by 0.1% to 4,544 a day after the benchmark closed at a record. The Nasdaq Composite shed 0.8% to 15,090. On the month, the S&P and Dow are up about 5% while the Nasdaq is up 4%. The Dow got a boost Thursday as investors rotated out of tech stocks and into blue-chips. American Express led the index higher with a 5% gain on the back of a strong earnings report. Intel and Snap pulled the Nasdaq lower Thursday, after both companies reported disappointing earnings. Intel shares retreated more than 11% after reporting weaker-than-expected sales and a revenue miss, for which it blamed the industry-wide chip shortage. Snap said its advertising business declined due to Apple’s privacy changes. Snap shares sunk more than 26%. Social media stocks also dropped, with Facebook and Twitter pulling back 5% and 4%, respectively. Oil closed above $84 and natural gas closed at $5.3. The 10-year Treasury yield is 1.64%. After a recent tear, crypto was hit with Bitcoin -3.4% to $61k and Ether-2.4% to $4k. Below is a chart of SNAP stock for the past 5 days.
Bill Gates said in an interview that aired Wednesday as part of the virtual SOSV Climate Tech Summit that “there will be eight Teslas, 10 Teslas” in the space. He also expects climate innovation to lead to a Microsoft, a Google and an Amazon for investors. These are bold statements from Gates. I am not convinced we see as many as he suggests, but am convinced the new world of ESG will result in many big companies. TSLA has a market cap of almost $900bn, I am not of the view there will be 10 created in ESG.
President Joe Biden said he doesn’t think there are enough Democratic votes to raise tax rates in a deal on his economic agenda, but that he believes he’ll reach an agreement on the overall legislative package. “I don’t think we’re going to be able to get the vote,” he said in response to a question about individual and corporate rates at a CNN town hall on Thursday in Baltimore. A White House official said Biden was referring only to corporate tax rate increases, not other potential provisions to raise federal revenue, including other tax proposals. This CNBC article outlines fading Biden support. My hope is for an infrastructure bill with details on how it will be spent and a curtailed “Build Back Better” program. I am not supportive of $3.5 trillion with stocks, housing, cars, wages and everything else out of control. It seems clear Biden does not have support to get his wish list passed and his polling numbers are not helping matters. The President’s town hall during prime time Thursday night had 1.2mm viewers and only 271k in the coveted 25-54 year old group. For perspective, that is less than 1/2 of the viewers of Tucker Carlson, 30% less than Hannity and 10% less than Chris Hayes or Rachel Maddow.
The supply-chain issues snaring container ships in traffic jams and emptying store shelves are also threatening one of California's most famous products - wine. A dire shortage in glass bottles is forcing some winemakers to let wine age in wooden barrels for too long, which can lead to the drink tasting "like a sawmill," Phil Long, the owner of Longevity Wines in Livermore, California, told Insider. With prices of nearly every good needed to bottle wine soaring, Long said vineyards may eventually be compelled to raise the price of wine as well. The cost of glass has skyrocketed by 45% compared to 2019, but Long said he has resisted raising prices so far. Gundlach believes inflation will stay above 4% through next year. Saturday, Jack Dorsey (Twitter & Square CEO), says “hyperinflation” will happen soon in the US and the world. I am not convinced of hyperinflation, but for over 6 months, I have been writing about my concerns of inflation lasting longer and being higher than the market or the Fed is considering.
I found this CNN article compelling around the impact of vaccine mandates on an already stressed supply chain. I have often written about unintended consequences of rules, laws, actions and here is another example. Remember, I am double vaccinated, I just do not agree with the federal and corporate mandates. I have read about people quitting jobs just because the employer is mandating the vaccine and these people are vaccinated. President Joe Biden's vaccine order will force employers to lay off thousands of workers, making the supply-chain crisis much worse, a major business group warned the White House this week. The National Association of Wholesaler-Distributors, an influential trade group that represents an industry with nearly 6 million workers, is pleading with the administration to delay a December 8 deadline for employees of federal contractors to get vaccinated. "If tens or hundreds of thousands of employees are terminated just two weeks before Christmas...the result could be nothing short of catastrophic for the newly unemployed and their families and for the US economy," Eric Hoplin, the NAW's president and CEO, wrote in a Wednesday letter to Biden.
Gas keeps getting more and more expensive, especially in California. But perhaps nowhere is it pricier than the remote central coast community of Gorda. The town's only gas station is offering regular unleaded for $7.59. Premium is nearly $8.50. A reader sent me a picture of LA gas last night between $5.89 and $6.29 depending on the octane. Nothing to see here. No inflation. Around my house, gas is as much as $3.89 for regular and was $1.50 about a year ago. I just went to a Shell station and paid $3.29. I don’t know why, but the Exxon across the street is between 50-60 cents higher. I never understood this concept.
China’s real estate sector has to be “substantially smaller” to keep the overall economy healthy and stable, said a top expert on the Chinese housing market. “We have too big of a risk in the sector. We built too much housing, so the stabilization first has to come from trimming the sector,” Li Gan, an economics professor at Texas A&M University, told CNBC’s “Street Signs Asia” on Wednesday. Gan estimated that about 20% of China’s housing stock is vacant as buyers rack up second and third properties as investments. Even then, developers continue to build millions of new units each year, he said. Chinese property developers have grown rapidly following years of excessive borrowing. Troubles in the sector came to the forefront in the last few months as Evergrande and other developers missed bond repayments and face the threat of defaulting. Overall, the contribution of real estate and related industries to China’s gross domestic product could fall from roughly 30% currently to around 15%, predicted Gan. From what I am reading, seems the R/E contagion is becoming more widespread in China and given the size of the R/E market, the impact of the fall could be meaningful there.
My Rosen Report entitled, “Fauci Ouchie” from 6-6-21 stated it was time for Fauci to go. These stories do nothing to change that view. Remember, Fauci argued gain-of-function research are worth the increased risk of a potential pandemic-causing lab incident in a 2012 paper. Fauci, with almost 250mm cases confirmed, 5mm deaths and trillions destroyed, is it still worth the risk? Remember, when people suggested the lab leak theory, much of the media believed it was racist to consider and many large networks refused to discuss it. A top NIH official admitted in a Wednesday letter that U.S. taxpayers funded gain-of-function research on bat coronaviruses in Wuhan and revealed that EcoHealth Alliance, the U.S. non-profit that funneled NIH money to the Wuhan Institute of Virology, was not transparent about the work it was doing. In the letter to Representative James Comer (R., Ky.), Lawrence A. Tabak of the NIH cites a “limited experiment” that was conducted to test if “spike proteins from naturally occurring bat coronaviruses circulating in China were capable of binding to the human ACE2 receptor in a mouse model.” One article I read said, “A US partner of the Wuhan Institute of Virology manipulated a coronavirus to generate up to 10,000 times the viral load, violating provision of the NIH contract that forbade unregulated research that could make the disease significantly more dangerous or transmissible.” Does anyone else have a problem with this type of gain of function research which generates 10,000 times the viral load, or is it just me?
It gets worse, now there are multiple news outlets (Newsweek) suggesting Fauci funded animal experiments which were abusive to dogs and spent $1.68mm of tax payer funds for the experiments. A group of bipartisan legislators demanded answers from Fauci around claims that 44 beagle puppies were used in a Tunisia, North Africa, laboratory, and some of the dogs were abused. For example, dogs had their vocal cords removed, allegedly so scientists could work without incessant barking. Additionally the beagle puppies were locked in cages where sand flies “ate them alive” and some of the pooches were allegedly injected with disease-causing parasites. I am curious to Fauci’s response to these allegations and IF proven true, what are the consequences.
Amherst College will eliminate the preference given to legacy applicants for the first time. “Now is the time to end this historic program that inadvertently limits educational opportunity by granting a preference to those whose parents are graduates of the college,” Carolyn “Biddy” Martin, Amherst president, said in a statement Wednesday. Well-qualified children of alumni will be considered using the same criteria as the rest of the applicant pool, Amherst said. Legacies have accounted for about 11% of each class. I have mixed feelings about this trend in college acceptance. I appreciate what they are trying to do, but if legacies are not given any preferential treatment, I believe many will be far less likely to donate money. I wonder if there will be a material impact on the endowments over the next 10 years?
Last week, after Walgreens announced that five additional outlets in San Francisco would be closing on top of the 17 that already have been shuttered since 2019, the company claimed that changes in both the law and prosecutor attitudes and made it impossible to run a profitable business in the city. San Francisco Police Department has revealed that the iconic Target on Mission Street between Third and Fourth Streets will be shutting its doors before the end of the year. “This store loses $25,000 a day to shoplifting,” an SFPD officer told the Globe in lengthy, taped interviews conducted this week. I have written about moronic policies extensively. How can DAs believe that decriminalizing theft is good? It hurts everyone but the criminal. Countless stores and small businesses are closing or suffering. Tax-paying/law-abiding citizens are harmed with higher prices and less stores as a result of these “woke” law changes. One store losing $25k/day is not proof enough? I am not sure there is a job offer I could get which would force me to move to a once great city like SFO despite amazing restaurants and wine. When I went with Jack a few years ago, it was disgusting and hear it is far worse today. There were homeless people everywhere. Some homeless people came into the restaurant we were eating at and begged for food with their carts. It was quite disturbing and the restaurant did not kick them out, so we left. There was human waste on the side walk and we were told to leave nothing in our car parked in front of the valet given the homeless would break in and steal it and the valet attendants were not allowed to intervene as one was sprayed with mace by a homeless man.
I have been writing about Facebook and other social media companies running wild for some time. How many whistleblowers and examples will it take for Congress to act? A new Facebook whistleblower has reportedly emerged, dishing to US regulators that an official at the social network in 2017 blew off concerns about hate speech as a “flash in the pan,” adding that while “some legislators will get pissy” Facebook is “printing money in the basement.” The new whistleblower told the Securities and Exchange Commission under penalty of perjury that the company has constantly shrugged off concerns about hate speech and misinformation in pursuit of growth, the Washington Post reported on Friday. The people coming forward seem to have documents proving their claims.
I need to apologize to my readers. I have been pushing the lab leak theory for almost 18 months and clearly I am incorrect. It was not the “batwoman,” Shi Zhengli, at the Wuhan Institute of Virology who caused the pandemic, but instead it was apparently Maine Lobster imported to China in November 2019. The following story is from NBC news. I am sorry for leading my readers down the lab leak path when all this time the pandemic was started due to the tasty Maine crustaceans according to the Chinese consul general. For all those new Rosen Report readers, I write with a sarcastic tone often and this would clearly me another case of it. Hello, Chinese propaganda machine, if you are going to come up with alternative theories, make them have some modicum of believably. In mid-September, Marcel Schliebs, a disinformation researcher at the University of Oxford who had been tracking messaging that Chinese diplomats and state media spread on Twitter for 18 months, spotted the emergence of a surprising coronavirus origin theory. Zha Liyou, the Chinese consul general in Kolkata, India, tweeted an unfounded claim that Covid-19 could have been imported to China from the United States through a batch of Maine lobsters shipped to a seafood market in Wuhan in November 2019.
Other Headlines
Deadline-Trump Says He’s Launching His Own Social Media Network Called Truth Social
Bloomberg-Trump-Tied SPAC Jump Ignites Retail Frenzy, Volatility Halts
Fox-Austin's understaffed police tell citizens to collect evidence at crime scenes themselves
Bloomberg-Think Everything’s Expensive Now? Wait Until You See What’s Next
CNBC-2021's U.S. box office trails 2019's movie ticket sales by 70%
Bloomberg- Global Warming COP26 News: Saudi Arabia to Go Carbon Neutral
WSJ-Opinion-Will the Sun Ever Set on Anti-Semitism?
WaPo-Democrats move to finalize new ‘billionaire’ tax proposal, targeting 700 wealthiest Americans as key source of revenue for spending plan
Virus/Vaccine
The charts show continued improvement for cases, hospitalizations and deaths. Cases are down almost 60% from the delta peak and hospitalizations are down almost 50% from the delta peak in early September. Deaths are down 27% from the delta peak, but we are still seeing approximately 1,500 deaths per day. I do not blame Trump nor do I blame Biden, but this has definitely dragged on longer than I anticipated.
The CDC late Thursday cleared booster shots of Moderna’s and Johnson & Johnson’s Covid-19 vaccines, giving people the freedom to mix and match any of the three vaccines approved for use in the U.S., the agency said in a statement. An influential Centers for Disease Control and Prevention advisory committee earlier Thursday unanimously endorsed boosters of Moderna’s and Johnson & Johnson’s Covid-19 vaccines. This CNN article discusses which booster to get.
U.S. health officials are keeping a close eye on an emerging Covid-19 subvariant, dubbed “delta plus,” that some scientists say may be more contagious than the already highly transmissible delta variant. Formally known as AY.4.2, delta plus includes two new mutations to the spike protein, A222V and Y145H, which allow the virus to enter the body. Those mutations have been found in other Covid variants, so it’s unclear how dramatically those changes affect the virus. An increasing number of doctors in the U.K. are warning that the country, and its health service, are facing a renewed health crisis due to rampant Covid-19 infections and a rising number of hospitalizations and deaths. The warnings, from several big British medical bodies over the last couple of days, come as government officials have insisted that more restrictions on public life are not yet necessary, despite Health Secretary Sajid Javid warning Wednesday that Covid cases could reach 100,000 a day as we enter the winter period. In reading a few articles on these subjects, it appears there are some spikes in places in the world where the weather is turning colder and some concerns the US will follow suit in coming months.
Real Estate
I have written about many real estate markets, but have focused on the tri-state and Florida given that accounts for probably 75% of the readers of the Rosen Report. I have also written about CA, AZ, UT, MT, and others. Martis Camp in Lake Tahoe is a stunning community with something for everyone. I desperately wanted to buy there three years ago and did not (big mistake). I just spoke with a top broker over there and I asked him for examples of pre-pandemic compared with today. “Cabins that used to sell for high $3.5mm are now $6mm. 4,500 sq foot homes sold for $5mm now are $7.5mm.” He also said pre-pandemic there would be 20-25 home listings and 20 lots for sale and tolday there are 3 homes and eight lots for sale meaning inventory is down approximately 75%. Remember, this is the CA side of Tahoe. High taxes.
No, Miami is not insane. Devin Kay (broker from Miami to Jupiter) told me that it is becoming more common for a crazy show clause on tenant occupied properties. If you want to sell your home and it is rented, more owners have a clause which says you can only enter/see the property if you have a “full-priced and accepted offer” on it. If not, you cannot go in to see the house.
There is also a new addendum in a buyer’s agreement with their representing broker given how fast homes sell. Buyers are now giving brokers authority to bid in increments up to a certain amount without confirmation from the buyer. Given the speed at which homes sell and the risk of losing out, buyers might say, “You can bid up to $18mm in $250k increments on a house listed for $15mm.” This helps to prevent the buyer from losing the home which can sell so quickly, the broker and buyer cannot connect. We are in a market where you buy $20mm homes without seeing them and give brokers the authority to increase the offers without the buyer’s involvement. Homes are selling for 2, 3, 4 times what they sold for pre-pandemic for waterfront homes in Miami. In speaking with Devin, he has had at least a dozen situations recently where clients of his decided to negotiate one last time and the sellers found another buyer so quickly, there was no time to lob in the final best offer. These are $5-20mm+ homes. So after the fact, many buyers have said, “I should not have gotten so cute.” Personally, I am not convinced this is a healthy market and the massive central bank accommodation which has driven the price of risky assets higher cannot go on for a lot longer. The article below suggests some cities are seeing some cracks.
Interesting Bloomberg article on more cities where housing inventory is growing and buyers now have the upper hand. About a month ago, I started suggesting the housing run cannot continue at the pace it had been going. Looks like we are starting to see some cracks despite the Fed support. No city exemplifies the mania of the Covid-era U.S. housing market better than Boise, Idaho, where prices have surged by more than 30% in the past year. But in a sudden reversal, buyers are now the ones with power. Asking prices for houses are being slashed. Bidders no longer have to waive inspections to win over sellers juggling multiple offers. Demand has slowed so much it’s like a light switch suddenly turned off, said Dominic Zimmer, a local Realtor. “You’re seeing the fear of missing out switching from buyers to sellers,” Zimmer said. “Now sellers are afraid of not scoring the way they saw their neighbors do a year ago.” The article lists cities with the biggest share of home listings with price reductions ranging from 50% (Denver, CO) to 81% (Boise City, ID). Picture is a little blurry, but you get the idea.