Opening Comments
The weather has turned for the better with lows in the 60s and highs in the low-80s. I golfed on Thursday (3 birdies) and mistakenly wore pants given the am chill. After 3 holes it was too warm for the pants, but an amazing day with our good friend, Bill.
A reader emailed me that some of my coins actually have some value. There are miracles, after all. One of my pieces might be worth $1,000. It is a 1900 $5 gold piece. It is slightly less than the $4.2mm nickel, but better than a sharp stick in the eye.
On the COVID front, I feel pretty good, but my cough persists. I played tennis Monday and Friday and felt like a 3-pack a day smoker out there. My chest remains tight and am told this can last for months.
We are heading to Mandolin for dinner tonight in the Miami Design District. I am told it is amazing Greek at Turkish cuisine. Sunday nights are easier to get down there for us, given it is 43 miles. Off to Austin, TX tomorrow until Wednesday.
This is today’s Podcast which is 25 minutes.
Video of the Day-California Homeless Issue
Jelly Belly Dregs
Quick Bites
Markets
UK Political Disaster
Wall Streeters Sounding Alarm
Biden Energy Policy
Consumer Resiliency
NYC School Wokeness Training for Parents
Other Headlines
Crime Headlines
Real Estate
Miami Remains Hot-Crazy Examples
Existing Home Sales
NYC Office Occupancy Improving
Other R/E Headlines
Virus/Vaccine
Video of the Day-California Homeless Issue
Susan Sarandon is drawing attention to the homelessness crisis in California. The actress and progressive political activist shared a TikTok video of a large encampment on Oct. 17. The footage shows a collection of tents, dilapidated wooden structures, clothes, and discarded furniture along a street in Oakland. The video is only 30 seconds, but look at how disgusting the encampment has become with trash and filth. Think of the diseases and the impact to the community. According to the National Alliance to End Homelessness, CA, NY, OR and WA are the worst states in homeless per capita and can be seen in this link. CA has 161.5k homeless or 40.9 homeless per 10,000. NY has 91.2k or 46.9 homeless per 10,000. The link has the interactive map to check each state. I rarely see a homeless person in Florida. On November 8th, 2022, LA residents will decide on a measure to potentially increase property taxes to fund new, affordable housing units and services. The measure will add a transfer tax of 4% on residential and commercial property sales of $5-$9.9mm and 5.5% for sales over $10mm (3rd Picture). This is in addition to the current transfer tax of .45% for any sale. Think about the transaction costs of selling an expensive home between existing taxes, proposed taxes and brokerage fees. There is nothing to get me to live in LA or CA for that matter. No wonder why the wealthy are leaving in droves. There are also all kinds of proposed wealth taxes in CA. If you can get out, do it now. Florida welcomes you with open arms.
Jelly Belly Dregs
I don’t eat a ton of candy and prefer chocolate, but from time to time, I grab some Jelly Belly candies. My club in Florida has a small area with self-serve nuts, chocolate covered raisins, chocolate covered peanuts and Jelly Bellies from gumball machine- like units. I went the other day and grabbed a handful of the colorful snacks. I don’t know why I did it. I always get upset because 90% of the Jelly Belly candies taste great and 10% are awful. Who was the sadistic person who came up with a few of these flavors?
I feel it is too much pressure to manually pick out the gross tasting beans. Who wants to work that hard to have a sweet snack? When I eat a cookie, I don’t want to bite around the walnuts. I want to not have to think about it. Eating Jelly Bellies has become too much work for me. You grab a handful and throw them in your mouth only to get one of the gross ones. Buttered Popcorn? Who the hell likes that one? Caramel Corn or Toasted Marshmallow? I want to start a petition to get rid of a handful of flavors of the Jelly Belly candy. I don’t want to take a bite of a handful of candies only to spit them out all over the place because one of the dozen tastes like crap.
As an aside, I would never take uncovered candy from a bowl in a public place such as a restaurant, club or office. I have seen too many people refuse to wash their hands in the bathroom and know those mints or candies are covered in too many bad germs to mention. My sister calls them, “Piss Mints.”
Jelly Belly was founded in 1898, far earlier than I would have thought. It was founded by Gustav Goelitz and is now run by the fourth, fifth and sixth generation of the descendants of Gustav Goelitz. People, I think it is time you focused on the good tasting beans and take out the disgusting ones for the good of humanity. I just can’t keep eating these things and spitting them out all over the place. Please help.
Quick Bites
Stocks climbed on Friday as Wall Street closed a volatile week on a high note despite some disappointing earnings reports. The Dow gained 749 points, or 2.47%, to close at 31,083. The S&P 500 rose 2.37% to 3,753. The Nasdaq added 2.31% to 10,860. Friday’s moves extended the market’s gains for the week. The S&P 500 and Dow gained 4.7% and 4.9%, respectively, while the Nasdaq rose 5.2%. It was the best week since June for all three major averages. A big driver of the rally was falling Treasury yields. The 2-Year Treasury fell almost 13 bps in yield to 4.48%. Treasury yields fell from their highs on Friday morning after a report from the Wall Street Journal that some Fed officials are concerned about over-tightening with large rate hikes. I believe that the Fed will need to pause early next year as the economy slows. This WSJ article is entitled, “Fed Set to Raise Rates by 0.75 Point and Debate Size of Future Hikes.“ Another positive factor on Friday was the Bank of Japan intervening on the Ye, which is down over 20% against the US Dollar this year. Overall, earnings were better than I thought despite a few misses. Oil had fallen to $82 this week and bounced up over $85 with stronger than expected China demand offset by broader economic concerns. The US High Yield bond market is yielding just under 10% and the market is down approximately 13% YTD through Thursday.
U.K. Prime Minister Liz Truss resigned Thursday following a failed tax-cutting budget that rocked financial markets and which led to a revolt within her own Conservative Party. Truss was in office for just 44 days, making her the shortest-serving prime minister in British history. For 10 days of her premiership government business was paused following the death of Queen Elizabeth II.
She said in a statement outside 10 Downing Street, “We set out a vision for a low-tax, high-growth economy that would take advantage of the freedoms of Brexit.” I don’t follow UK politics incredibly closely, nor do I understand how things work there. I have read the following are front runners to replace Truss: Kemi Badenoch, Boris Johnson, and Grant Shapps. The Pound rose on the Truss resignation, and the 10-Year Gilt was little changed.
A growing number of influential Wall Street executives and business titans have sounded the alarm over the state of the U.S. economy. Relentless inflation, combined with the most hawkish Federal Reserve in decades, have raised the specter of a recession, according to some of the most prominent CEOs in the country. The U.S. central bank has embarked on one of the fastest monetary tightening paths in decades as it seeks to wrestle consumer prices that are still running near a 40-year high back to 2%. The article outlines thoughts from Goldman CEO, David Solomon, Jeff Bezos, Elon Musk, Jamie Dimon, and Sundar Pichai, who are all discussing recession fears and challenging macroeconomic conditions. In a related note, according to the Conference Board’s Leading Economic Indicators index, conditions worsened in September, with the gauge down 0.4% from the month before and off 2.8% for the six-month period.
If you read the Rosen Report, you know I have been critical the Biden Administration’s energy policies. There has been an unhealthy vilification of the fossil fuels industry. When a company makes an investment in new production, it is a multi-year investment. Again, we will be reliant on fossil fuels for decades, and the grids will not support EV power in the manner desired. Now, after Biden has crushed the fossil fuel industry, he wants the companies to stop buying back stock and ramp up production. “My message to the American energy companies is this: You should not be using your profits to buy back stock or for dividends. Not now. Not while a war is raging,” Biden said. “You should be using these record-breaking profits to increase production and refining.” This article suggests the world does not have enough lithium and cobalt to replace all batteries every 10 years. Last I checked, companies in the US are free to use their excess capital to buy back stock, pay dividends or reinvest in their business. However, if the administration hates the fossil fuel industry and the CEOs of major energy concerns have no confidence that the rug won’t be pulled out from under them (Keystone Pipeline, for example). If I were an energy related CEO, no chance I take a 5 year investment horizon based on the policies of this administration. Europe should be a warning for American energy policy. Check out this headline: Qatar’s energy minister says Europe will get through its energy crisis this winter—but it’s going to be ‘much worse next year.’
U.S. consumers have demonstrated a willingness to continue to pay higher prices in the face of a sluggish economy that could be tipped into a recession, according to credit card giants American Express and Bank of America. American Express on Friday reported stronger-than-expected third-quarter earnings and revenue, while raising its full-year forecast. The company said overall customer spending jumped 21% year over year, driven by growth in goods and services as well as travel and entertainment. American Express said its travel and entertainment segment saw spending climb 57% from a year ago. “We expected the recovery in travel spending to be a tailwind for us, but the strength of the rebound has exceeded our expectations throughout the year.” I know consumer spending is a good thing for the economy, but growing consumer debt is concerning. I have always been conservative with respect to borrowing. I have never had a credit card bill which went unpaid in full at the end of the month, even when I made very little money. I am of the view if I can’t afford it, I don’t buy it. Too many people need instant gratification and borrow beyond their means. I fear the consequences too much. This WSJ article is something to watch, “Wall Street Warns of Trouble Brewing in Auto Loans as Prices Dip.” It discusses the weaker auto prices and the impact on borrowers. Interestingly, car dealerships near me had little inventory up until recently and now lots are filling back up.
New York City private schools are pushing woke training on parents. At least five elite schools — where yearly tuitions hover around $60,000 — are forcing parents to undergo both mandatory and “optional” training in “anti-racism” and “diversity, equity and inclusion.” The controversial theories demand a hyper-focus on race and privilege and have been accused by critics of demonizing white people. Prospective parents at The Brearley School are informed on their application that “parents are expected to attend two diversity, equity, inclusion and antiracism (DEIA) workshops per school year,” and write a 500-word essay demonstrating their fealty to those values. I am not sure where to begin here other than to say that there is nothing to get me to send my children to these once impressive schools. If you think I am writing an essay for Brearly or anywhere else, you are out of your mind. Grace Church, Chapin, Spence and Horace Mann were named in the article. Woke has gone too far. Why is it ok for schools to indoctrinate children in woke teachings? Why do parents allow it? Based on the calls, emails and texts I receive from readers, people are livid and many do not support such material in schools. They are too scared to speak out. So much for America and Free Speech.
Other Headlines
GOP holds big leads on key economic issues ahead of the November elections, CNBC survey shows
Why I’m Telling My Friends That The Senate Is A Toss-Up
This is from lefty Nate Silver who has generally overplayed the Democratic chances.
Elon Musk says a global recession could last until the spring of 2024
Tesla shares slide after Q3 revenue miss, Bernstein says earnings call ‘didn’t sit well with us’
The stock was -6.5% on Thursday post earnings. Musk suggested TSLA could be worth more than Apple and Saudi Aramco combined someday. Good luck with that one. The stock is -49% YTD.
Elon Musk’s Twitter Takeover Debt to Be Held by Banks Amid Turbulent Markets
Snap plunges more than 25% on third-quarter revenue miss
Stock was -28% and -90% from September 2021 highs.
Documents detail plans to gut Twitter’s workforce
The article suggests Musk is telling investors he plans on getting rid of almost 75% of Twitter’s 7,500 workers. I don’t mind this. These employees are so biased that new blood is needed and I hope they are more balanced.
Instacart Cuts Its Valuation for a Third Time to $13 Billion
The company was valued at $39bn in 2021, then $24bn in March of 2022, then $15bn in July. It is now set at $13bn.
Delhivery Share Price Set for Record Drop as Growth Falters
Of course, Softbank is an investor.
Southern California’s Notorious Container Ship Backup Ends
Another sign of inflation/supply chain issues cracking. It went from 109 ships in January to four today.
Americans Reclaim 60 Million Commuting Hours in Remote-Work Perk
I am a big fan of hybrid models which combine WFH and in office as well. Great work-life balance where it can make sense.
China shuffles leadership committee and retains many Xi allies
China, 'factory of the world,' is losing its manufacturing dominance
This makes me very happy. The government is responsible for millions of COVID deaths and hope to see the country implode.
College Enrollment Declines Again Though Online Schools, HBCUs See Increases
Let’s see. It is expensive. Too much woke teaching. Kids graduating with too much debt and not getting enough high-paying jobs. Again, I don’t feel most kids should go to traditional 4-year colleges and universities.
First 'concrete picture' of Neanderthal family revealed by DNA
'I can say antisemitic s*** and Adidas cannot drop me' - Kanye West
JPM and Balenciaga dropped him for good reason. I refuse to support this idiot. He needs serious meds. I read $2bn or 10% of Addidas sales are Kanye related.
A cardiologist shares the 5 foods she avoids for a 'healthy heart'—and what she eats instead
Aide To New York Mayor Admits That Migrant Crisis Is Destroying The City
Wait. Bad immigration policy ruins cities? Who would have thunk it.
Biden says it's his 'intention' to run again in 2024
I am not being mean here. I just don’t understand how this is possible. He is old, demented, and has horrible policies with a low approval rating. Time for new blood not named Biden, Harris or Trump.
Evil Putin ‘plans to blow up major dam’ & create ‘historic disaster’ after telling citizens to flee
I think it is time he was taken out.
Crime Headlines
NYPD on pace to see record 4K-cop mass exit by year’s end
High Crime+Less Cops+No Consequences=Disaster.
Retired NYPD cop hit in 'knockout game' attack speaks out and blasks bail “disreform.”
Woman maces stranger who stabbed her boyfriend on NYC subway
Man randomly shoved onto NYC subway tracks in yet another transit attack, suspect still at large
Straphanger hit with sword sheath on NYC subway
L.A. Woman Brutally Raped by Man Who Was Released from Police Custody Hours Earlier
He was released despite possessing a weapon as the soft-on-crime policies do not punish criminals. How many times will we see criminals be set free only to inflict more harm on the community? I am hopeful more people start carrying guns to take matters into their own hands.
Tortured Texas teens ‘forced to drink bleach, burned and beaten’: Police docs
This is a disgusting story about child abuse. I want the guardians to face the death penalty. These are vile people and anyone who can do this to children should not be alive. Read the story if you want to puke.
Chicago gunmen hang out of car and randomly SHOOT as paramedics take cover in their ambulance
Crazy video. Clearly, the Mayor, DA and Governor need to go.
San Franciscans arm themselves with BASEBALL BATS after drug sobriety clinic opens
The government is failing its constituents by soft-on-crime policies, and people should continue to vote with their feet. CA has the highest taxes, high R/E Costs, highest gas in the country and crime is out of control.
MSNBC's Joe Scarborough: Progressives 'extraordinarily clueless' on crime
You know it is bad when people at the leftmost media outlet are crushing the Progressives on crime.
Real Estate
The Miami market is picking up steam in terms of transactions. Despite higher rates and a broadly weaker Real Estate market, Miami is holding up well. Limited inventory combined with strong demand. A non-waterfront on North Bay Road sold for $8.35mm, the highest price for non-water front on North Bay. It is a record by $2mm for non-waterfront on that street. A condo on Fisher Island 3,807 ft condo which sold for $6.2mm 18 months ago, just sold for $11.2mm this week. The Sternlicht building, the Perigon has started construction, and out of 72 units, approximately 50 units have been sold. It is on 53rd and Collins and will have amazing amenities and the level of finishes and architecture will be amazing. Knowing Sternlicht personally, I can tell you that he has impeccable taste. Premium units are going between $3,000-5000/ft+ range. A 4,800 square foot unit sold for $26.2mm. A PH unit is going for $45mm with 5,000 ft inside and roughly the same outside. There is another phase of the Surf Club (not started) and the entry level is going to be $5,000/ft I am told. The one area which is coming under some pressure is raw land given the time and effort it takes to complete the project. Some land has dropped the price fairly dramatically recently. Part of this can be due to the fact that it was priced too high, but the demand seems to have fallen on raw land. This Real Deal article is entitled, “South Florida home sales keep falling as price growth slows,” but at the high end, the demand far outstrips the supply.
U.S. existing home sales fell for an eighth straight month in September, the longest streak of declines in 15 years, as the once-booming housing market becomes a bigger drag on the U.S. economy. Sales of previously owned homes declined 1.5% in September from the prior month to a seasonally adjusted annual rate of 4.71 million, the weakest rate since May 2020, the National Association of Realtors said Thursday. Excluding the early months of the Covid-19 pandemic, September’s existing-home sales rate was the lowest since 2012, when the housing market was just beginning to recover from the subprime crisis. Demand is likely to continue to slow in the coming months, as the Fed has signaled its intention to keep raising rates and as home purchases typically slow in the fall and winter. Mortgage applications for home purchases fell 38% from a year earlier in the week ended Oct. 14, according to the Mortgage Bankers Association. I believe with limited exceptions housing prices will continue to fall. I expect to see more vacation homes take a decent leg lower.
Offices in New York, Nationwide Hit Peak Post-Pandemic Occupancy
New York office buildings were 48% full last week, Kastle says. I read that Kastle does not have all the buildings and may be understating the actual occupancy by missing some largely occupied buildings. Ridership on New York City’s buses and subways has also risen. Metro-North’s trains that shuttle suburban commuters into the city reached 74% of their 2019 average ridership on Oct. 11, up from 64% on the same day the week before.
US home buyers and sellers are facing the worst market in a decade
Almost 1 In 10 NYC Rent-Stabilized Apartments Left Vacant
The cost of fixing the dilapidated apartments is too high relative to the allowable increase in rent under new laws.
Recession Fears Hit Risky Mortgage Debt Amid Default Concerns
It Cost $35 Million to Create. But This Elaborate Pennsylvania Home Just Sold for $9.26 Million.
I’m shocked it sold for $9mm. I would have thought less. This house on North Bay Road on the water in Miami is hundreds of millions on 10% of the land.
Virus/Vaccine
Although numbers are improving, the rate of improvement is dwindling to a trickle. Be careful as positivity rates are escalating in some areas and lots of people have their guard down. More readers have reached out to me in the past couple weeks after testing positive for COVID. I definitely sense a bit of a change.
COVID Rates Back Above 20% in Parts of Manhattan as Virus Rebounds
Newer coronavirus subvariants ticking up in California amid concerns of winter wave
