Maybe I am Not an Idiot After All
12-31-23
Opening Comments
Happy New Year to all my readers. This is the last note of 2023 bringing the total to 102 newsletters for the year. My last note was about the family vacation to Nizuc in Mexico. In short, go to relax, as there are limited activities there. The most opened links were the Rabbi being verbally attacked in Times Square by an 11-year-old and the video of the artichoke dip gone wrong.
It is good to be back home, and the weather is stunning now that the cold front has moved through. I wore a long sleeve pull-over, a rarity in South Florida.
I have some good news. Muammar Gaddafi’s only daughter reached out to me via email and has $27.5mm for me. I left all the misspellings. I looked it up and indeed Gaddafi had one daughter named Ayesha, but it is spelled differently than the imposter trying to steal my money!
My golf club had a sale without me. Given my legendary clearance sale shopping skills, it should be illegal. They knew I was out of the country and put a sale rack out. You cannot deny greatness. By the time I got back in town, the only bargains left from the sale were a pair of Chervo shorts and 3 belts. It is like a defender telling Michael Jordan “I will shut you down,” only for him to score 50. The pro shop employee had the nerve to tell me I was not allowed to participate in the sale. Funny. The GM and Director of Golf put the young man up to it, and are no longer on my holiday card list due to their shenanigans. I will say it again, Chervo is the best brand of golf clothes on the planet (not cheap) and Redvanly is the best value.
Markets
EV Slump in Charts
The Future is Moving South
Forgetting Someone’s Name
Best New NYC Restaurants (FT) & Best Italian Restaurants By State
Office R/E Stories
Housing Affordability Issues
China Housing Slump
Video of the Day-Orca Attacking a Dolphin
Nature is amazing. I have spent THOUSANDS of hours on and in the ocean fishing and surfing. I have seen remarkable and scary things during my time with the ocean. This short video of an Orca attacking a dolphin shows the massive power of the 13,000 pound beast. That flying dolphin probably weighs 300 pounds for perspective. I went to Tofino on Vancouver Island, Canada, and saw Orcas up close. It was amazing. I highly recommend a trip to Vancouver Island. Great wildlife (bears, eagles, whales, orcas) fishing, hiking, canoeing… Shockingly good restaurants.
Maybe I am Not an Idiot After All
My lack of ability to fix things is legendary. I don’t know why I even try. When the “mechanical ability gene” was passed around, I skipped the line and went to something else, but I am not sure what yet. I was banished to the bedroom on the 1st floor of my house due to COVID and my wife’s germaphobia. While stuck in the “dungeon” a fire alarm went off suggesting a battery change. I grabbed the ladder out of the garage and set it up, took off the alarm, changed the battery, and reinstalled it. I walked away and the irritating, “BEEP” came blaring back. I redid the entire series again and ensured the battery was in properly. I walked away only to hear the dreaded, “BEEP.” I got yet another new battery, went through the motions and “BEEP.” I ripped the damn alarm out of the connector and 6 hours later, I hear another “BEEP.” I was concerned my house was possessed. The alarm was lying lifeless on the floor with no battery and unplugged. Turned out, yet another alarm was the culprit this time. The sound bounces off the walls and it is hard to tell which alarm is going off initially.
I dragged the 8ft latter out of the garage again, set it up, and went through the machinations as before, and again and again the “BEEP” continued. I called my builder, Carl, who can fix anything. He is like MacGyver. He walked me through it for 10 minutes as I was on the ladder and he could not figure it out. So, I ripped that one off the wall too. I am thinking how is it possible that a University of Chicago MBA could not change the battery on two $30 fire alarms? I was dejected.
I called the alarm guy and he sent over a technician. I was very animated due to my frustrations and would have been livid if he fixed it in two seconds. After 15 minutes, he said, both of your alarms are done and you need new ones. What are the chances that two alarms go bad within 6 hours? I said to the tech, “I want to thank you. Had you fixed them quickly, I would have been more pissed. I would far rather buy new ones and not feel like an idiot.” I had to order the new alarms on line.
This by no means guarantees that I am not an idiot, but I sure feel better about myself than had he told me I installed the batteries backward.
Quick Bites
The year turned out to be a banner one for the major stock exchanges with the biggest tech companies outperforming in many cases. The big story was declining inflation leading to yields falling after a sharp rise in yields earlier in the year. Stocks outperformed expectations with the S&P+24.2% and the Nasdaq+43.4%. The Nasdaq performance was one of the best in two decades and came after 2022 which saw -33%. The Russell was the laggard at +15.1%. AI was the big winner and Nvidia the beneficiary +239% on the year. Meta was+184% and cut 20,000 jobs after a -64% showing the prior year. A reader, Robert, sent me the 2nd chart showing the best stock performers over 20 years and I found it interesting. Oil finished the year -5% after a big move down followed by a rally and sell-off due to oversupply, OPEC cuts, and demand issues from China. Bitcoin and Ether came back sharply and were +153% and 91% respectively on the year. The VIX finished the year at 12.5 after hitting 31.0 in March and starting the year at 21.7.
I was an early adopter on TSLA and EVs, but they are not incredibly practical given costs, range limitations, hurricanes in South Florida… and this WSJ article outlines some of the issues. It is entitled, “How Electric Vehicles Are Losing Momentum with U.S. Buyers, in Charts.” EV sales growth hit a speed bump in the U.S. this year, and the impact is being felt throughout the industry. As customers in the U.S. hesitate to make the switch from traditional gas-engine vehicles, some auto companies are delaying plans on electric vehicle spending. In the near term, the cooling buyer interest has weighed on U.S. makers that had ramped up vehicle and battery production in anticipation of a larger surge in customer demand. As a result, electric cars and trucks are piling up on dealer lots, causing auto companies to reassess their investment plans. It takes a dealership around three weeks longer to sell an EV than a gasoline vehicle, according to data from car-shopping website Edmunds.
The future of the US economy is in the South. That's according to a report published on December 7 from Bank of America that compared population and economic trends across the Northeast, Midwest, West, and Southern regions of the United States. Population growth is among the key drivers of economic growth, and Americans are clustering in the South. The 16 states that make up the region, per BofA, accounted for 39% of the entire US population as of 2022. Since 1960, the region has been responsible for nearly half of the increase in the US population. While the US has experienced a population slowdown in recent years, the South has the highest birth rate of any region, per BofA. And people who were born in the region tend to stick around. I believe that the South is going to continue to grow due to awful policies in the Northeast, Midwest and West for the most part.
I am 54 years old and need to admit that I cannot remember everyone’s name. I meet people everywhere and the Rosen Report has me with many thousands of new friends and contacts. What I do is I immediately put in the name, #, and email into my phone and write notes describing where I met them or who introduced me to help me in the future. It is embarrassing, but it is what I do. This CNBC article written by another Harvard-trained “Expert,” suggests you should never tell them you forgot their name. I don’t know anymore. I am old and names don’t come to me so quickly as they once did. Please don’t be mad if I don’t recall your name. I get my kid’s names wrong all the time now.
My readers love my food suggestions and reviews. My friend, Maarten, sent me the list from the FT of the best new restaurants in NYC: Cafe Carmellini, Essential by Christophe, The Bazaar by Jose’ Andre’s, Tolo, Sailor, Ilis, Roscioli, Lupetto, Spicy Nepal, Le B, Jazba, Kolman, and Casa Bond. I have been to Jazba and Roscioli (reviewed them two weeks ago) and they did not disappoint. The websites for each of these new eateries look AMAZING and some world-class chefs and Michelin stars are involved. Downtown NYC is where the best food is in my opinion with uptown being a Culinary Wasteland. I will try to hit more on the list on my next trip. Separately, a dear friend, Billy, sent me this link to the best Italian Restaurants in each state. I have only been to the one in Boston (Scampo) and NYC (Via Corota) and both are good. They are not my favorites in either city, but solid, so the list has some credibility. Check it out. Let me know if you go to some of the restaurants on the lists.
Israel
Iran and Hamas argue over credit for Oct. 7 terror attacks: 'Looking to wash blood away with blood'
Iran tried to take credit for the October 7th attacks and Hamas denied those claims suggesting it was Hamas alone. Cannot make it up. Iran funds Hamas.
US Navy sinks 3 Houthi boats attacking merchant ship in Red Sea, US says
I think we need to ask ourselves how such views are formed. Academia has been taken over by the far left and is indoctrinating children of all ages from pre-k to college. The crap I hear being taught would make your head spin. Kids are not coming to these horrific conclusions alone.
If passed, the proposal would force every high school to teach anti-Semitic “critical” ethnic studies if they wanted students eligible for the university system.
Other Headlines
Toyota Saw Record Sales, Output in November on Demand Abroad
Russia, Iran Officially Ditch U.S. Dollar for Trade
I don’t see a near-term alternative to the US Dollar, but this chart shows the decline in recent decades which is likely to continue. The 2nd chart is 2020, and the US $ is approximately stable since then. In 1970, the US $ was 85% of reserve currencies in 1971 and is 59% in 2023. This is a great YouTube Video of the change over the past 120 years.
The "Post-Degree" Era Is Here: Study Reveals Top 10 Six Figure Careers That Don't Rely On College
Social media companies made whopping $11B in ad revenue from minors
Study Finds That Just 3.4% of American Journalists Are Republicans
Syracuse University’s Newhouse School of Public Communications study shows the lack of Republicans in journalism. I would be equally appalled if it found only 3.4% were Democrats. The study suggests Republicans were 18% in 2002 and 25.7% in 1971.
Maine's top election official rules Trump ineligible for 2024 primary ballot
I do not want Trump to be President, but also think Biden has been an unmitigated disaster. I am not supporting kicking Trump off the ballot. However, I would like to see a Democrat with some skills not named Biden or Harris. Anyone should be able to beat Trump and the Dems trying to block him from running is a bad idea. Even Newsome agrees. He says, “In CA, We defeat candidates at the polls.”
Haley acknowledges Civil War ‘about slavery’ after facing backlash
Chicago mayor pleads for federal help as he sounds alarm on border crisis: ‘Country is now at stake’
Wait. Letting millions of undocumented people into the USA to the tune of 200k/month is leading to problems, even in Liberal cities? Who would have thought it? I keep writing that this is a massive failure of the Biden Administration. More cities like NYC, Denver and Chicago cannot handle the volume of people and there is zero plan from the administration. This article outlines the horrible economic impact and cites NYC store closings and lost business near the Roosevelt Hotel (migrant shelter). I wanted to go to a store near there last time in NYC and decided against it after my last debacle. Stores are closed and claim sales drops of up to 40% due to lost business given the circus in front of the store. This is forcing businesses to close, hurts R/E values, taxes, R/E taxes… No one else is concerned about the chart below?
To give you a sense of the immense and growing size of illegal immigration!
Tweet from Elon Musk.
Immigration Court Backlog Explodes to a Record 3 Mil, Judges Average 4,500 Cases
Undocumented immigrants will qualify for free health care in California on Jan. 1
700,000 undocumented immigrants will obtain full coverage while the state is running a $68bn budget deficit. The state has an awful power grid, weak education system, massive homeless population, expensive housing issues and a strained Medi-Cal system, yet decided to give undocumented immigrants healthcare? Given the chart below, CA should be spending money on its legal citizens to make it a better state. Note, Florida is #1 in education, #7 in economy, and #10 overall according to US News.
USA Boxing Codifies Rule Allowing Male Participation in Women’s Division
Again, I am looking for balance. The ratio of Dems to Reps is too far. I would say the same if it is reversed. Kids need to learn balance. That does not happen in academia today.
The article suggests beer sales plummeted to 1999 levels on the heels of the Bud Light campaign debacle. Simple suggestion, “KNOW YOUR CUSTOMER.”
2 California cities top list of places homebuyers want to leave
A new report by Redfin found San Francisco topped the list of all cities in America where homebuyers are looking to relocate from. Los Angeles ranked second, followed by New York, Washington, D.C. and Boston.
With the aging population and young people not having as many kids, we have a major problem. The chart move since 1980 is concerning. We need entitlement reform NOW.
The No. 1 thing that destroys kids’ confidence, according to a Harvard-trained parenting expert
Eight people taken to hospital as waves up to 30ft high pound California coast
15 surprising foods nutritionists say they never touch — and why you shouldn’t either
The only thing on the list I eat is Milk Chocolate. Sorry, I ain’t giving that up for ANYONE.
Real Estate
Here are a couple concerning Commercial R/E stories. The first one is about Tower 57 (135 E 57th Street NYC). According to the Real Deal, Cohen Brothers Realty defaulted on the ground lease and owes $9mm in rent and $4.2mm in property taxes. The trouble stems from “substantial vacancy” at the Billionaires’ Row tower and weak demand for office space. Cohen claims the landlord’s refusal to allow a conversion to residential is creating the problem. We Work had about one-third of the 300,000 foot building in 2018. According to the article, Cohen is delinquent on over $600mm in CMBS backed by NYC office. In another story, KBS Realty Advisors from Newport Beach warned shareholders that “considering the current commercial real estate lending environment, this raises substantial doubt as to KBS REIT III’s ability to continue as a going concern.” KBS REIT III has $1.7 billion in loan maturities in the next 12 months. The fund said in the Dec. 15 report to shareholders that “the company may relinquish ownership of one or more secured properties to the mortgage lender.”
Housing affordability is a huge issue. Housing affordability is a nationwide issue, but it’s particularly acute in Boston, which has seen its number of affordable listings plummet from last year. A mere 4.7 percent of listings in the Boston area were deemed affordable in a recent analysis by Redfin, the Boston Business Journal reported. Redfin determined that a listing was affordable if a typical monthly mortgage payment represented no more than 30 percent of the local median household monthly income. Last year, Greater Boston had an affordability rate of 8.7 percent; the sudden decline is largely thanks to rising home prices and high mortgage rates. Boston is also significantly more unaffordable than some of the other major cities in New England. Providence has an affordability rate of 6.1 percent, according to Redfin, while Worcester came in at 7.6 percent. The chart below was from a great WSJ article entitled, “The Math for Buying a Home No Longer Works.”
The slump in China’s housing construction will continue in 2024, dragging down economic growth and suggesting that government efforts to stabilize the sector haven’t been enough to reverse the downturn. That’s the consensus from 10 investment banks and securities brokerages, including Goldman Sachs Group Inc., Morgan Stanley and UBS Group AG. If they’re right, that leaves China on track to post three straight years of contractions in property construction, a record streak. The country’s main measure of real estate investment fell 8% on year in the first 11 months of 2023. For all of last year, the measure dropped 8.4%. I reported a few months ago that a Business Insider article estimates that there are no enough homes in China for 3bn people. The problem is China has 1.4bn people.
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Rosen Report™ #643 ©Copyright 2023 Written By Eric Rosen
