Opening Comments
My last piece was about my bad liverwurst experience after my “friend” stole my sandwich. Many people thought it was a fun story. The most opened links were the Max Greyserman (PGA Golf Story) and the John Coyle’s blog about aging/healthspan.
Markets
Berkshire Earnings/Cash
Federal Debt Hits $35 Trillion
Higher Auto Repos
Home Price Declines
J Lo NYC PH Sale into Perspective
Wealth Migration Chart-Florida Wins
Fire Sale on Midtown Office Building
Lower Mortgage Rates
Pictures of the Day-Trump Fundraising Debacle
Trump held a high-priced dinner Friday at Cantor CEO, Howard Lutnick’s home in Bridgehampton with tickets from $25-$500k. My son, Jack, and I were driving back from golfing near Boston and took the ferry to Orient Point (North Fork) that got there at 7:25pm. We were driving towards Southampton and ALL roads were closed to get on or under the highway (27). The roads were blocked for HOURS. Let me get this right. The Secret Service let a 20 year old with an assault rifle within 130 yards of Trump and get multiple shots off and I cannot drive under an overpass that the President would not be on for hours? I was livid, tired and hungry. Gas was low and traffic was backed up for MILES. I had the car off and windows down and it started pouring, forcing me to close the windows to turn my car into a sauna. We left Marion, MA at 3:30pm and did not get to Southampton until after 10:30 due to the ridiculous traffic stoppage. I think Trump was supposed to raise $10mm and ended up raising $15mm with 100 in attendance. You want a silver lining? I might have lost one pound in my hot car.
Let’s Go Champ
On the plane to NYC recently, I sat next to the two-time World Heavyweight Champion boxer, Shannon Briggs. I was a huge boxing fan years ago and remember Briggs’ reputation as a heavy puncher with a ton of knockouts. It turns out he had 60 professional wins with 53 knockouts (31 in the 1st round). He also had 6 “Life Lessons” that others would call losses. His phrase is “Let’s Go Champ,” something he says frequently. He has a big personality that fits perfectly with his big stature.
Briggs grew up in Brownsville, Brooklyn - a bit of a boxing mecca. Turned out, 7 world champions, including Mike Tyson, Riddick Bowe, Shannon Briggs, and Zab Judah are all from there. There is also another up-and-coming boxer named Bruce Carrington from Brownsville. Remember, Brownsville has some of the worst crime statistics in NYC. The 2.6 square mile city is a dangerous area that lacks sufficient sports facilities. The median household income in Brownville is $32k with only 21% of residents owning a home. Compare this with the neighboring town of Bay Ridge/Dyker Heights that has median household income of $74k with 42% home ownership.
As you can see in the picture, Shannon’s fist was larger than my head. I know it is difficult to tell us apart given we both look as though we could be heavyweight boxing champions, but I am pretty sure if Briggs punched me, I would die…instantly. I think Shannon and I need to do a jump rope clinic together to see how well I can hang with the champ.
Either way, we had a great conversation, and I learned he is looking to start a boxing program in Brownsville, Brooklyn.
Given I am a boxing fan, and had just met a former two-time world champion who asked me for help on a 7 am fight, I decided to go downtown for a meeting about a charity event to raise money for his project later that same day. Shannon is building Brownsville Boxing Gym & Academy, a 12,500 square foot training facility for boxers. The mission of the academy is to provide a welcoming and supportive environment for people of all skill levels to learn and improve their boxing technique. We believe that boxing is not just a sport, but a way of life that promotes discipline, focus, and self-confidence. The Brownsville Gym and Academy will be an institution, the first of its kind. A boxing and fitness gym and academy backed by some of the biggest names to ever hit the sport, training the next generation of champions. The academy will be run as a non-profit, focusing on the development of underprivileged children from the Brownsville and Brooklyn area through government backed education initiatives for sport, music and film related careers.
Briggs and his team are planning on hosting a fundraiser by selling art at a NYC event in the fall. The proceeds will help Shannon build out the gym for kids to train. Given the schools in the area have challenges, many do not have gyms. As a result, Shannon’s gym will serve as a place for students to work out and get in shape.
Amazon has also greenlit a documentary on Shannon and the Brownsville Gym & Academy, which will bring much needed attention to a great cause. “My goal is to save lives,” said Briggs. “The kids need this. They need to be off the streets, they need a place to go, they love boxing and they are pretty good at it.”
Anyone who is a fan of boxing and wants to get involved with Shannon’s project to help kids in Brownsville, Brooklyn, let me know - I will connect you with his team.
Let’s Go Champ!
Quick Bites
All non-bolded text below is excerpted from the cited articles. Bold are my thoughts.
Markets sold off sharply on Thursday as jobless claims and the ISM manufacturing index came in worse than expected. The data caused fears that the Fed was behind the curve and the economy could be slowing faster than initially believed. Friday market losses accelerated on a weak jobs report, fears the economy is slowing and weak tech earnings. Job growth totaled 114k versus a downwardly revised 179k expectation. The unemployment rate is up to 4.3%. I wrote about the former JPM market strategist, Marko Kolanovic was out of a job a month ago after his bearish market call that is now coming to fruition. The 10-year Treasury fell below 4% for the first time since February. The VIX exploded and is now at 23 (+25% on Friday alone) due to the sharp selloff in equities. Once high-Flying NVIDIA stock is -21% from the June highs. At the end of the day, the massive fiscal and monetary policy stimulus that entered the system made it hard to analyze what was real. Things are beginning to show more signs of economic weakness, which is healthy after an impressive run. In my interview on Bloomberg recently, I warned about the reason for lower rates and what happened after sharp rate decreases in 2001 and 2008. BofA’s Hartnett Says Sell Stocks at the Fed’s First Rate Cut. It seems as though that there is now a chance of a 50bps cut in September. On Friday, the 2-Year Treasury was -28bps at 3.88% and the 10-Year was -18bps to 3.80%. For perspective, in April, the 2-Year was 5.05% and the 10-year was 4.74%.
Berkshire Hathaway reported earnings on Saturday and a couple big takeaways were Buffett sold half of his Apple Stake and the cash position is up to $276.9bn. Apple remains 22% of the portfolio and the previous record for cash position was $189bn from last quarter. Operating earnings were +15%, due in part to strength at Geico. Is Buffett trying to tell us something with nearly $300bn in cash?
Given the upcoming election, a lot of talk about deficits, spending, and taxes. I want to be crystal clear with my views which I have stated previously. I do not believe we have a revenue problem but do believe we have a spending issue. BOTH parties are to blame, as the last time we had a balanced budget was under Bill Clinton. I believe the Democrats are bigger spenders today, but the Republicans share blame. If you want to raise taxes on the wealthy, I am supportive. However, you need to spend money judiciously and not run $2 trillion deficits in perpetuity. The Biden Administration is running deficits of 6% of GDP during record high stocks and real estate prices with 3.5% unemployment. This reckless spending is unsustainable. We need entitlement reform, balanced budgets, and cleaner bills out of Congress without all the pork in them. The runaway inflation is partially due to an inept Fed AND the Biden Administration’s ridiculous spending and free money giveaways. Let’s be fiscally responsible and start paying down debt. US tax receipts have gone up 4 times since 1990 while the cumulative deficit (money spent over tax receipts) has gone up 9 times. Historically tax receipts made up about 17% of GDP and it's where we stand now. Spending has been usually 20% of GDP, but now we're at about 23-24%. The charts below don’t lie. My hero, Druckenmiller, agrees with me. He is the single best hedge fund investor of all time with a 30%+ return for over 30 years with NO DOWN YEARS. My belief is the 2028 election will be about debt, deficits, entitlements and spending while the 2024 election is about inflation and the border.
We have seen more companies cite the slowing consumer and this article outlines a 23% year over year rise in auto repossessions. The article has detailed data including rising new car inventory (+36%), longer sale times (+41% to 65 days), average new car costs of $735/month and used car costs of $523/month. It also goes into borrowing of $40.6k for the average new car and $26.1k for a used vehicle. Cox Automotive believes car repossessions will increase in 2025. More companies reporting earnings have highlighted the slowing consumer.
2024 Election
If I were to give Trump advice, it would be to be more Presidential and discuss your policies relative to Kamala (border/immigration, regulatory, energy, tax, crime, foreign, Israel…). I would not name call and question Kamala’s race as he did last week. Questioning your opponent’s identity is not a way to win and gives your them more ammo to use against you. I would also not call my opponent “dumb” and “low-IQ.” To Trump, I’d say: a week ago, your campaign was looking strong; since then, you have had too many missteps, allowing the Democrats back into the race.
To Kamala, I’d say: you need to clarify your stance on issues, as you have been labeled the “Most Liberal Senator,” and there are countless videos of your progressive policies on immigration, healthcare for undocumented immigrants, eliminating private insurance, voting rights for criminals, Green New Deal, abolishing ICE, defunding police, banning offshore drilling, banning fracking, and much more. (your words, not mine.) Is this where you stand today? Americans should know. When someone asks you a question, answer it. Do not evade simple questions as seen in this example when asked about inflation. You cannot hide behind a teleprompter until the election.
In my last couple notes I wrote about Harris surging in the polls and betting odds. Check out this headline: “Donald Trump Dealt Quadruple Polling Blow Within 48 Hours.” Across six national polls released on Tuesday and Wednesday, Trump trailed behind Harris in four and led in two. Harris was up by 4 percentage points in a Civiqs survey, 3 points in a Leger survey, 2 points in a YouGov survey and a point in an Ispos survey. Trump, on the other hand, had a 2-point advantage in a McLaughlin poll and a 2.6-point advantage in an ActiVote poll. Additionally, for the first time, Harris led in the PredictIt poll as of Thursday evening.
You want leadership. Look at Jamie Dimon’s comments/advice for candidates. Far more details in the link.
1. Acknowledge Our Problems
2. Develop Policies that Reflect our Critical Place on the Globe
3. Implement Smarter Policies
4. Build the Best Team
5. Earn the Support of All Voters
Donald Trump Agrees to Kamala Harris Debate, Calls Her 'Crazy'
Joe Rogan Predicts Kamala Harris Defeats Trump: ‘I’m Just Being Honest’
Kamala Harris raised $310 million in July, dwarfing Trump haul for month
Kamala Harris gets support of more than 100 VCs and tech execs in online pledge
Viral Video Reveals 14% Of Illegal Immigrants Admitting They're Registered To Vote
To be clear this was 14% of illegal immigrants in an apartment building in Georgia. The reason Democrats are pushing illegal immigration is to allow them to vote. Biden, Harris, Schumer and others have discussed this.
From Musk-Government is underreporting an additional 46,500/month in illegal immigration!
Meta AI’s false facts about Trump shooting are part of a disturbing trend
Israel/Middle East
Iran's Khamenei orders attack on Israel as revenge for Haniyeh elimination
Ismail Haniyeh was killed by explosive device planted months ago. What a complete gangster move by the Israelis. How did they smuggle a bomb into Iran? How did they get it into the “Safe House?” They used Iranian Revolutionary Guards for help and detonated it remotely. This shows the power of Mossad but makes me ask how in the hell they missed Oct 7th.
Iran plans to attack Israel on Tisha B’Av - the Jewish day of disasters, Western intelligence says
Tlaib ally mourns assassination of top Hamas leader: 'His martyrdom is not in vain'
US strikes Iraqi group about to launch drones on Israel
First American strike in Iraq for six months kills ‘at least five’ militants at base of the Hashd ash-Shabi movement.
Israel confirms death of Hamas military leader Mohammed Deif
Deif was second in command of the militant group and described by Israelis the mastermind behind the Oct. 7 attacks.
Other Headlines
Wealthy investors help drive surging demand for gold
Family offices and rich individuals likely to be behind record second quarter, says report
Bill Ackman’s Pershing Lost 4.7% in July, Erasing Most of 2024 Gains
Loss follows a failed IPO for a US-traded closed-end fund
Japan’s Nikkei drops 5% to an 8-month low, Topix clocks worst day in 8 years as Asia markets fall
Amazon shares slide on revenue miss, disappointing guidance for third quarter
Apple sales rise 5%, topping estimates as iPad and Services revenues jump
Snap shares plunge more than 20% on weak guidance
Worst volatility of any company around earnings I can recall.
Intel to cut 15% of workforce, reports quarterly guidance miss
Intel shares plunged 28%, dragging down global chip stocks. Remember the Chips Act that gave Intel $8.5bn, tax breaks and loans? Months later they are cutting 15k jobs?
Nintendo profit falls 55% as sales of its ageing Switch console plunge
Meta shares pop 7% on revenue and earnings beat, better-than-expected forecast
Moderna stock falls 20% as it slashes guidance on low EU sales, tough U.S. vaccine market
Wayfair CEO likens home goods slowdown to 2008 financial crisis
Interesting and concerning commentary from CEO. “Our credit card data suggests that the category correction now mirrors the magnitude of the peak to trough decline the home furnishing space experienced during the great financial crisis,” Wayfair CEO Niraj Shah said in a news release. “Customers remain cautious in their spending on the home.
Chevron says it is moving its headquarters out of California
Chevron has been headquartered in CA for over 100 years. However, the state gave them too many reasons to leave.
Defense Secretary Lloyd Austin revokes plea deal for accused 9/11 terrorists in shocking reversal
Maybe the US government is not filled with complete idiots after all.
What alternate world do we live in where this is ok? What would happen if Americans were in Jordan and tried to breach an Army base there?
Nearly 1-In-20 Of All Syrians Now Lives In Germany, Over Half Receive Welfare
Most Germans are livid. Look at what is happening here in the US.
Who the West gave up in the prisoner swap that freed Evan Gershkovich
When there are no consequences for bad actions, chaos ensues.
Americans have 4 core beliefs about money—but only one helps you get richer
Many chocolate products contain toxic heavy metals, study warns
I love chocolate. Researchers analyzed 72 cocoa-based foods — including dark chocolate, often praised as a heart-healthy treat — over eight years. They found that 43% of the products contained an amount of lead that tops recommendations, while 35% exceeded cadmium limits.
Pre-sex NDAs and background checks: What it’s like to date the rich and famous
Judge rules for NFL, overturns $4.7B 'Sunday Ticket' verdict
Here’s how much athletes at the Paris Olympics earn for winning medals
Pic showing Simone Biles and Shaquille O’Neal’s height difference goes viral again during Olympics
He is 7’1” and she is 4’8” making for a comical photo.
Two boxers competing at Olympics despite failing gender test at World Championships
The overly woke world must stop. Someone is going to get killed. Biological men should not compete against biological women. One fighter in question beat a biological woman in 46 seconds pushing her to tears. IOC 'saddened by abuse' of two boxers facing gender questions. This article outlines Imane Khelif’s story which is quite complicated regarding her sexual identity.
China’s Wang Chuqin falls in Olympic table tennis stunner after broken paddle fiasco
Heavily favored to win gold and was heartbroken when photographers accidentally broke his paddle, causing him to be an emotional wreck and lose to someone he always beats.
Real Estate
This NY Post article is entitled, “Here are the places in the US where home prices are falling fast.” Overall, home prices appreciated by 4.9% nationally in May. But in a few notable cities, the story was different. Thanks to sky-high mortgage rates and cooling demand, Austin’s property values took a 3.5% nosedive over the past year, outpacing the top 100 markets in the US. San Francisco experienced a 2.6% drop, while New Orleans saw a 0.9% decline. In Florida, Cape Coral and North Port also felt the chill, with prices dipping 0.6% and 0.2%, respectively. The surge in mortgage rates to around 7% for a 30-year fixed-rate deal has put a damper on the market. In May alone, 16 of the 100 largest metros saw price declines, with El Paso, Texas; Gary, Indiana; and Buffalo, New York among the top five. Sales of newly-built homes plummeted 17% in the first half of the year, with only Portland, Oregon, and Las Vegas, Nevada, bucking the trend, each up by 2%. Investor activity also cooled, making up 23% of single-family home purchases in June, down from 28% in January. Sales of existing homes tumbled 19% in June compared to last year, with an early seasonal slowdown likely driven by a surge in mortgage rates.
J Lo sold her PH apartment at 21 E 26th Street for $23mm after being on and off the market for 7 years. She paid $20.1mm for it in 2014 and it looks stunning. The 6,540 ft condo has 4 beds, 6.5 baths and almost 3,000 feet of outdoor space. The building is very nice and in a great location (I lived 2 blocks from there). It got me to thinking about what an awful return on investment the apartment was for J Lo when you compare it to what she would have made investing in South Florida. It would have been hard to spend $20mm on a house down there at that time, but if you did buy on Palm Beach Island 10 years ago for $20mm, it would be worth between $80-100mm+ today. Here is a house built in 1983 that sold for $8.5mm in December of 2013 and is asking $54mm for perspective. In Miami, if you spent $20mm in 2014, it would be worth at least $60mm and could be $100mm depending on where you bought it. In Boca, nothing in my community went for $10mm in 2014. If you bought two places in 2014 on the intracoastal and spent $8mm each, they would be worth a combined $45-50mm+ today. For J Lo, given cumulative inflation since her purchase 10 years ago was almost 33%, she actually lost money and we did not factor in any improvements to the apartment. What does the price appreciation in many NYC high-end units vs. those in South Florida tell us? It tells me that NYC is doing something wrong and Florida is doing something right.
People making $200K+ a year are moving from blue states to red states. Those gaining the most are Florida, South Carolina, Idaho, and Montana. Biggest losers are Illinois, California, DC, and New York. Maybe this explains some of J Lo’s house price issues.
135 W 50th St in NYC is a 23-floor office building in NYC. In 2006, this building sold for $332 million. Yesterday it sold for $8.5 million at auction. I do not know how much the owners put into the building over 18 years in upgrades. Now factor in inflation over 18 years and the $332mm purchase price should be equivalent to $526mm today. Instead it just sold for $8.5mm. However, this is only part of the story. The former owners sold the land beneath the building for $285mm, meaning the new price does not include the land. According to articles, the building is 65% vacant.
© 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™ #705 ©Copyright 2024 Written By Eric Rosen.
