Opening Comments
Pictures of the Day-Boat/Plane Hybrid for Commuting
Afghanistan Update-From Bad to Worse
I Won the Lotto, Kinda
Quick Bites
Markets/JPM High Yield Update, Core PCE/Powell
WFH Boom, China Labor Issues, LA Port Back-Up
Obesity Is Killing Us-PLEASE READ
Longevity Ideas, Hurricane Ida-150mph Winds
Virus/Vaccine
Data-Closer to Delta Peak
UK Study-43% of COVID Patients were Admitted for Something Else
Natural vs. Vaccine Immunity-READ THIS
Blood Clot Risk
Mother Lost Visiting Rights Over Lack of Vaccine-Chicago
Real Estate
Boca Price Increases from 2017, 2019 to Today
Fortune Article on US Housing Market-Signs of Cooling
Greenwich, CT Update by Mark Pruner
Opening Comments
From my last post regarding passwords, a shocking number of responders suggested Last Pass. Others included Bitwarden, Nordpass, Dashlane and 1Password.
I played a little doubles tennis this am and I must tell you it is uncomfortably hot down here. Played almost two hours and even though it was doubles, I looked like a I went swimming when it was done. Gotta play early or late or it is unbearable. We have a couple months of uncomfortable weather down here.
Lots of new readers for the Rosen Report. Be sure to send ideas, give feedback, reach out. I try to respond to everyone. If I don’t means it went to spam and will find it after a day or two.
Pictures of the Day
At a time when transportation infrastructure projects seem to be taking center stage in US public debate, a Boston-based start-up backed by some of Silicon Valley's most prominent investors wants to turn the sea lanes along the country's east and west coasts into high-speed transit corridors. LA to San Diego in 50 minutes? What about New York City to Boston in two hours? And all this without road traffic or airport hassle. These are the sort of commutes that may become possible if REGENT's seagliders become a reality. Regent's founders have aviation backgrounds -- including degrees in aerospace engineering at MIT and a stint at Boeing subsidiary Aurora Flight Sciences -- but they turned to the seas for inspiration when they started looking for new, sustainable ways to transform inter-city travel. Billy Thalheimer and Mike Klinker have raised $9.5 million from the likes of Y Combinator, Mark Cuban and Peter Thiel, among other investors, to reimagine the wing-in-ground effect (WIG) concept and turn it into a mainstream means of transportation with zero emissions. Wing-in-ground effect vehicles are a kind of boat-aircraft hybrid.
Afghanistan Update
Suicide bombs from ISIS-K killed 13 Marines and at least 90 Afghans and injured countless others as the situation continues to deteriorate. A CNN article suggested at least 170 people in total were killed and over 200 injured in the attack. Now, the US is working with the Taliban. According to a report from Politico on Thursday, American officials in Kabul "gave the Taliban a list of names of American citizens, green card holders and Afghan allies to grant entry into the militant-controlled outer perimeter of the city's airport." The report says this was intended to "expedite" the evacuation efforts but that the move has drawn outrage from military officials and from lawmakers. "Basically, they just put all those Afghans on a kill list," a defense official said. Biden admitted the “kill list” may have been given to the Taliban. I always pull for the pilot, but what the hell is going on here? The US left BILLIONS of dollars of weapons for the Taliban, left Americans and allies in harm’s way, gave the Taliban a list of Americans and Afghans who aided Americans, 13 hero Marines were killed as well as dozens of Afghans and many more injured… In my opinion, this is one of the worst foreign policy disasters I can remember. Additionally, President Joe Biden was warned Friday by members of his national security team that another terror attack in Kabul is “likely.”
I contemplated whether or not to include the picture of the Taliban beheading an Afghan soldier. I included it because the Taliban are ruthless murders and rapists. Yet, the US gave them the names of all the remaining Americans and Afghans who helped the US and the Taliban is using the equipment left behind by the US to do it. The Taliban has mobilized a special unit, called Al Isha, to hunt down Afghans who helped US and allied forces — and it’s using US equipment and data to do it. I do not care how left or right you are politically, no one can tell me this withdrawal is going well.
A Marine Corps battalion commander was relieved of his duties Friday after he posted a video demanding “accountability” from senior leaders for failures in Afghanistan. Stuart Scheller said, “I have been fighting for 17 years.” “I am willing to throw it all away to say to my senior leaders: I demand accountability.” I would say it was quite courageous to speak up against something so blatantly wrong, but was incredibly costly to the Marine.
For perspective, I found a chart which shows US deaths in Afghanistan by month. In the prior 18 months (all of 2020 and through Aug 25 2021) a total of 11 deaths. I am not belittling the loss of life, but putting it into perspective. Most of the deaths occurred from 2007-2013 which saw 81% of the 2,361 deaths to date.
Clearly Trump had countless of his own self-inflicted wounds during his four years and will never defend it. There were many things I disagreed with during Trump’s Presidency. However, he stood in front of the media for hours while he was being crucified and tried to answer questions. Not always very well, as I did not like many of his answers, but he did it. Biden is only allowed to ask for prepared questions from the media. Biden: “I’ve been given a list here. The first person I am instructed to call on is Kelly O’Donnell from NBC.” WHAT? This is a picture of Biden from his press conference on Thursday. Not exactly exuding confidence and power. I believe we should really want to back a President. Trump was a vote against Hillary. Biden was a vote against Trump. I just wish that in this great country we could vote strongly for someone rather than strongly against someone else.
US drones killed two ISIS-K targets, but names were not disclosed. I also want to put something into perspective. A reader asked me to look at deaths in Chicago during the war in Afghanistan. How many people were murdered in Chicago since 2000 (war started in October 1999)? The right answer is 11,766 murders in the city of Chicago relative to 2,361 Americans in Afghanistan. Yes, there are more people who live in Chicago and US troops in Afghanistan, but wow, it was an eye-opening number for me. For perspective, NYC had 10,187 murders during the same period. Chicago has a population of 2.7mm and NYC has 8.8mm. I read that in 2010, the US peaked with approximately 100,000 troops in Afghanistan.
I Won the Lotto, Kinda
I have written about how challenging it has become to find people to do work and the pandemic has only made matters worse. I am not exactly Mr. Handyman and my least favorite words in the English language are, “Some Assembly Required.” It is actually insulting as the word, “Some” suggests that you only need to assemble a portion, but it sure seems like “All” would be more appropriate anytime I try to put something together which has 700 parts.
I have had a few minor issues in the house for 6-8 months and whenever I contact someone, I am told either they are too busy or they just don’t show up. I asked my friend, Joe, who is a contractor if he has someone to help and he said he would find someone. Well, I went away for 3 months and finally, now that I am back, I had a handyman come to my house with Joe’s help.
It may seem odd to you I should be so happy about something so minor, but Holy $&*T, it is a big deal. The guy fixed a door handle (despite my efforts, it kept falling off), reinstalled a few towel bars which were loose, touched up paint, and installed some outdoor LED lights for our new putting green and a few other small things. It was such a relief. The guy showed up on time, fixed everything, was polite and spoke English. The chance of this happening in South Florida is on an asymptotic line approaching zero. It just does not happen. I asked him how much and gave him more to be sure he was happy. I don’t play lotto, but I probably should have in light of my new-found luck. By the way, for a handyman to come to my apartment in NYC would have been 5x the price or more.
My long-time readers know what happened when I tried to do a touch up paint job on the back of my house. It looked so bad that I had to pay someone to repaint the entire back of the house for $10k. I am bringing back a picture from my report entitled, “Some Assembly Required from 11/30/20 for all those new readers. I thought I was touching up some areas in the back of my house with matching paint. It seemed like a good idea at the time until the paint dried and looked like the picture below. Now you know why a handyman is involved for anything more than a light bulb change and why I felt extremely fortunate to find someone who can help save me from myself.
Quick Bites
Stocks rose on Friday and headed for a winning week as Federal Reserve Chairman Jerome Powell prepared the markets for the central bank to pull back on some of its monetary stimulus, saying it’s likely to start tapering its $120 billion in monthly bond purchases this year. The Dow gained 242 points, or 0.69%, to 35,454. The S&P 500 rose 0.88% to hit a new intraday high and closed at 4,509. The Nasdaq Composite added 1.23%, also hitting a new record during the session, closing at 15,129. The three major stock averages close the week in the green. The Dow is up 0.96% for the week, while the S&P 500 added 1.52% and the Nasdaq Composite gained 2.82%. The 10-year Treasury yield, which ran up this week into the Powell speech, eased slightly after the Fed chief’s remarks as he made clear that interest rate hikes would not immediately follow after tapering was over. The S&P is +20% YTD for perspective.
JPM HY Bond Market Update-High-yield bond yields declined sharply over the past week as capital market activity stalled and as risk-on tone resurfaced ahead of Powell’s Friday speech at Jackson Hole. High-yield bond yields and spreads decreased 18bp and 21bp over the past week to 4.54% and 395bp, which compare to the past several months’ low and high of 4.22%/4.72% and 369bp/416bp. Leading the way over the past week was the Energy sector (+1.20% w/w) and other reopening plays. And BB, B and CCC spreads are now 265bp (-19bp w/w), 441bp (-23bp w/w), and 698bp (-21bp w/w), which are 4.7%, 8.7%, and 14.1% above their year-to-date lows of 253bp, 405bp, and 611bp. The HY bond index is providing a 0.08% gain in August, with CCC bonds (+0.27%) outperforming BB bonds by 12bp (+0.15%) and Single B bonds by 30bp (-0.03%). These are the lightest gains for the HY index since September 2020. Meanwhile, new-issue activity has stalled ahead of the Labor Day holiday, with August’s high-yield new-issue volume at $34.4bn gross or $16.0bn ex-refi. I went through other JPM reports to give some additional examples. The average BB bond price is approximately $106. The yield for the average BB rated bond is now 3.3% and B rated is 4.9%. There is limited product to buy and it pushes investors into riskier assets searching for yield/return. Who would have thought that 13 years after the GFC rates would still be hoovering around zero?
An inflation measure the Federal Reserve uses to set policy rose 3.6% in July from a year ago, meeting Wall Street expectations but also tying the highest level in about 30 years. The core personal consumption expenditures price index, which the Fed sees as the broadest measure of inflation, was unchanged from June, which was revised up one-tenth of a percentage point, the Commerce Department reported Friday. That 3.6% reading equaled the Dow Jones estimate and appeared to be the highest level since May 1991. Including volatile food and energy prices, the index rose 4.2% year over year, up from 4% in June and the highest reading since January 1991. Personal income also surged for the month, jumping 1.1%, well ahead of the 0.3% Dow Jones estimate.
Federal Reserve Chairman Jerome Powell’s conviction that the inflation winds whipping through the U.S. economy this year soon will subside is not universally shared. In fact, a growing contingent within the Fed’s virtual halls is raising concern that the supply chain disruptions, burgeoning demand and shortages of labor and supplies could push the current trend well into 2022 and beyond. No fewer than five Fed regional presidents have told CNBC it’s time to pull back on the easy-money policies, citing various levels of confidence in the economy tempered by worries over inflation. Patrick Harker, the president of the Philadelphia Fed, said as much Friday in a CNBC interview that aired just before Powell gave his pivotal Jackson Hole symposium speech. I have been crystal clear on my view for months. I am NOT with Powell here. Too much accommodation for where prices are across the board: stocks, bonds, housing, cars, commodities, consumer products, food, shipping/logistics as well as growing labor issues.
Two interesting articles on the workforce and work from home. If you recall, for countless months, I have suggested WFH/work-life balance may one of the biggest changes due to the pandemic. These articles suggest as much. I am surprised at how high of a percentage is planning on changing jobs. I played tennis today with a radiologist who works from home. He has a special computer system and reads all images from his house. The power of technology is remarkable. He lives in Boca and Utah and no longer goes to a hospital. Most Americans expect to look for a new job as the pandemic continues. Some 55% of people in the workforce, meaning that they’re currently working or actively looking for employment, said they are likely to look for a new job in the next 12 months, according to Bankrate’s August jobseeker survey, published Monday. YouGov Plc conducted the survey of 2,452 adults for Bankrate from July 28 to July 30. The survey comes at a remarkable time given the experience of the past year and a half, said Mark Hamrick, senior economic analyst at Bankrate. “There have been a lot of epiphanies and reckonings that have occurred during the time with respect with how we’re prioritizing ultimately our values, and of course how work fits into that.” In a separate article, Salesforce CEO Marc Benioff says employees aren't returning to in-office work environments at the rate CEOs expected. Benioff is pleasantly surprised at the global shift in office culture, citing increased productivity at home.
I found this WSJ article addressing labor issues in China interesting. Unlike the US, China is not paying people to stay home, but they are having a big problem filling factories with workers. Yet another inflationary pressure on good we source from China. Labor shortages are materializing across China as young people shun factory jobs and more migrant workers stay home, offering a possible preview of larger challenges ahead as the workforce ages and shrinks. With global demand for Chinese goods surging this year, factory owners say they are struggling to fill jobs that make everything from handbags to cosmetics. Some migrant workers are worried about catching Covid-19 in cities or factories, despite China’s low caseload. Other young people are gravitating toward service-industry jobs that pay more or are less demanding. The trends echo similar labor-market mismatches in the U.S., where some employers are finding it hard to hire enough workers, even though millions of people who lost jobs during the pandemic remain unemployed. But China’s problems also reflect longer-term demographic shifts—including a shrinking labor pool—that are legacies of the country’s decades long one-child policy, which was formally abandoned in 2016.
In a related story, good from China are having trouble landing in the US. Forty-four container carriers were anchored and awaiting a berth space outside the twin ports of Los Angeles and Long Beach, California, as of late Friday, topping the record of 40 initially set in early February, according to officials who monitor marine traffic in San Pedro Bay. The average wait rose to 7.6 days, from 6.2 in mid-August, according to L.A. port data. Vessels are lining up because imports are pouring into the world’s largest economy just as inland transportation -- like trucking and railroads -- contends with its own bottlenecks of shipping containers that aren’t being moved fast enough into distribution centers and warehouses. One good outcome of the logistics issues with China is more US companies are working on bringing production back to the US. It means good jobs and Made In America. The downside is it takes a while to get factories up and running.
Pandemic-related weight gain is becoming a problem for children and it could be due to the rise of eating processed food, recent studies suggest. A new study from the Pediatric Obesity journal reports that unhealthy dietary habits and a sedentary lifestyle may have adversely impacted children throughout the coronavirus pandemic. I am not trying to take the focus away from the pandemic, but with all the government, school, office… vaccine and mask mandates, why is no one focused on the massive obesity problem across the US? I do not just mean children. As I mentioned countless times, this summer, I ate out for breakfast, lunch and dinner about 85 out of 91 days. At one breakfast diner, I asked Jack what he noticed about the crowd. He replied, “Wow, everyone is obese.” Not one person other than the two of us out of 32 people was average or underweight. From the CDC- from 1999 to 2018, US obesity prevalence increased from 30.5% to 42.4%. During the same time, severe obesity increased from 4.7% to 9.2%. Overweight is having a BMI of over 24.9 and Obese is a BMI of over 30. If you include overweight, 73% of American adults are either overweight or obese and NO STATE in the US has an obesity rate under 20%. Again from the CDC- obesity causes heart disease, stroke, diabetes and some forms of cancer. The 1st chart below is again from the CDC. Not all circled deaths are 100% caused by obesity, but you get the idea. I spoke with my dear friend and famous heart surgeon, Dr. Kathy Magliato, an avid Rosen Report reader, so she is smart after all. She said, “We have an epidemic super-imposed on a pandemic. 42% of adults gained weight during the pandemic and of those people who gained weight, the average weight gain was 29 pounds. One in 10 people reported gaining more than 50 pounds!” Think about the healthcare costs and burden on the system due to the issue of Americans and weight issues. Obesity drives 3 other cardiovascular risk factors (diabetes, hypertension and dyslipidemia-abnormal lipids). According to Dr. Magliato, “Obese people have a higher susceptibility to contract COVID and, in a recent article in the Journal of the American Medical Association, patients at the highest BMI’s have a 33% increased risk of hospitalization, up to double the risk of requiring a ventilator, and a 61% increased risk of death compared to healthy weight patients.”
BMI – Body Mass Index. Weight in kilograms divided by height in meters Squared or Kg/M (Squared)
Coincidentally, just after preparing the prior bullet, I found a piece from a longevity expert with more interesting information. He gives a list of non-negotiable ideas to keep you healthy and living longer. In the article each item has details. As a follow up to my last point, the article points to a Lancet study which shows 11mm people in 195 countries die each year from poor diet which I presume includes both unhealthy choices and other areas where they do not have enough food. There are almost 4.5mm covid related deaths in 18 months and the article suggests more than double that die a year due to diet.
Get regular checkups
Let food be thy medicine
Get moving
Eat early and often
Constantly work on quitting bad habits
Make sleep you superpower
Hurricane Ida is no joke with sustained winds of 150mph (strong Cat 4). It made landfall on the 18th anniversary of Katrina. Having grown up in South Florida and now lived here again for four years, I have seen quite a few strong storms. Ida is no joke and can do incredible damage. If you are in the path, go to safer grounds. The only good things which happened due to these storms when I was a kid was no school and good waves prior to and after the storm. I remember we had no generator and at times had no power for over a week. I can tell you that in South Florida, having no power for a week in September is brutal.
Virus/Vaccine
Case growth continues to slow as I suggested it would a month ago. In late July, cases were growing at 172% over the prior two-week period and on Wednesday, it was 28%. As of Saturday, it is down to 20% growth. Hospitalization growth has slowed as well and is now 25% for the past two weeks relative ot 57% in late July. Unfortunately, over 100k patients are currently hospitalized (January levels) and the two-week average is 99k. As we all know, deaths are lagging indicators and the growth rate continues in the wrong direction at +95%.
More than four in 10 patients hospitalized with the Delta variant in England may have been admitted for something else, MailOnline's analysis of official data suggests. Public Health England's fortnightly update on coronavirus strains circulating around the country showed 7,285 people had spent at least one night in hospital with the mutant virus by August 15. But it admitted as many as 3,154 (43 per cent) had likely come to A&E for 'a diagnosis unrelated to Covid' and tested positive later through routine swabbing. I am not making light of the pandemic, but do believe many people in the hospital and who have died had COVID-19, but were not admitted or died because of it. Theywere admitted with COVID, but not because of it. One story in Florida had a man who died in a motorcycle accident and the cause of death was COVID-19. He died with COVID-19, not of it.
The Israeli researchers discovered that immunity acquired through infection from COVID-19 is superior to immunity from the Pfizer-BioNTech vaccine (early stage, not peer reveiewed). The study also found that fully-vaccinated but uninfected people were significantly more likely to have a “breakthrough” COVID infection than people who had previously been infected and recovered from the disease. “This study demonstrated that natural immunity confers longer lasting and stronger protection against infection, symptomatic disease and hospitalization caused by the Delta variant,” the authors conclude. The new analysis relies on the database of Maccabi Healthcare Services, which enrolls about 2.5 million Israelis. The study, led by Tal Patalon and Sivan Gazit at KSM, the system’s research and innovation arm, found in two analyses that people who were vaccinated in January and February were, in June, July, and the first half of August, six to 13 times more likely to get infected than unvaccinated people who were previously infected with the coronavirus. In one analysis, comparing more than 32,000 people in the health system, the risk of developing symptomatic COVID-19 was 27 times higher among the vaccinated, and the risk of hospitalization eight times higher.
Covid-19 patients face a much higher risk of developing blood clots than those vaccinated with AstraZeneca Plc or Pfizer Inc.’s shots, according to a large U.K. study. For every 10 million people who receive the first dose of AstraZeneca, about 66 more will suffer from a blood-clotting syndrome than during normal circumstances, according to the study published in the British Medical Journal. This figure compares with 12,614 more incidences recorded in 10 million people who have tested positive for Covid-19. The study followed 29 million people who received their first doses of either AstraZeneca or Pfizer vaccine between December, 2020 and April and also tracked about 1.7 million Covid-19 patients. The findings appear to bolster the decision to continue using AstraZeneca’s vaccine, which has been dogged by safety concerns, to protect people from hospitalization and death. Many developed countries have, however, limited its use to older adults because of concerns about an elevated risk of blood clots affecting the younger population.
A Chicago mother is appealing a court order that revoked her parental visiting rights because she declined to be vaccinated against the coronavirus. When Rebecca Firlit and her ex-husband of seven years participated in a child support hearing via video call on Aug. 10 for the purpose of determining the terms of shared custody of their 11-year-old son, Cook County Judge James Shapiro inquired about Firlit's vaccination status. After Firlit told the judge she did not receive the vaccine because of adverse reactions she has had to other vaccines, he ordered her to be stripped of her parental right to visit her son until she has been vaccinated. "I think that it’s wrong. I think that it’s dividing families. And I think it’s not in my son's best interest to be away from his mother," Firlit told local Fox-affiliate WFLD. I do not agree with this at all and do not believe the courts should have the right to take away visiting rights or custody over the vaccine. The mother has had reactions to vaccines. Do we live in the United States anymore? Remember, I am vaccinated and my kids have received one shot. We are not anti-vax, but am for the right to make your own choice.
Real Estate
Royal Palm Price Moves Since 2017
I did a little research looking at homes for sale in Royal Palm. I believe it is the highest end community in Boca Raton. In March of 2017, there were 74 homes for sale with an average price of $5.3mm 46 homes or 62% were asking $5mm or less. In November 2019, there were 64 homes for sale with an average ask of $6.6mm (+25% from 2017). In 2019, 22 or 35% were asking $5mm or less. Right now, there are 16 homes for sale (up from 11 a month ago) and the average asking price is $11.5mm (+116% from 2017) and if we take out the one $45mm home, the average price is $8.7mm (+64% from 2017). Today, 5 out of 16 or 31% is under $5mm. The big difference is under $5mm is a lot only or a home needing a great deal of work today relative to pre-pandemic. When I moved here, $5mm got you a very nice house. I just wanted to put perspective on the price moves and inventory availability.
A good Fortune article: “6 things to know about the house market’s big shift.” It discusses what appears to be a slow-down in the ultra-hot US housing market. My view is that the remarkable price increases will slow due to a myriad of reasons. I do not see a big crash in South Florida, but cannot imagine the price growth will continue. Homes are just not affordable.
More homes are going on the market
Home buyers are finally pushing back at record prices
Forecasts don’t predict home prices falling
International buyers are coming back
Mortgage rates remain historically low
Forbearance is set to end September 30
Greenwich, CT-Mark Pruner
So far, we have had 733 sales for the year through this week. Of those sales, 131 went for full list price and a similar number, 161 houses, went for over original list price for a total of 292. That’s 40% of our sales going for full list price or over list. Let’s take a look at the very hot $1 – 1.5 million price range. That price range makes up 16% of all sales so far this year and that price range makes up 15% of the at or over list price sales.