Mostly Miserable with a Little Oppressive

9-7-22

Opening Comments

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I have a 34’ Jupiter fishing boat, which I store near my house. When I started, it was $1,120/month for storage (inside a Cat 4 hurricane proof warehouse). I just received a note about yet another price increase and that new storage for my boat is $1,810. I am getting a discount to $1,600 for being a long-time customer. In 4.5 years, my monthly storage fee has increased 43% before environmental and other fees which are added on. If I were to store the boat as a first timer, the rate would have increased nearly 62%. There are no spots available and the wait list is years.

• Picture of the Day-Julia’s Golf Scorecard

• Eye on the Market-Mike Cembalest

• Mostly Miserable with a Little Oppressive

• Quick Bites

  • Markets

  • 1.5 Trillion Euro Energy Margin Calls

  • Texas Tax Revenue Record

  • Beware of Home Energy Deals

  • Porsche IPO

  • Four Year Degree vs Vocational in a Picture

• Other Headlines

  • Crime Headlines

• Virus/Vaccine

• Real Estate

  • General Comments

  • Other Headlines

Photo of the Day-Julia’s Golf Scorecard

My 15 year old daughter, Julia, is on the high school golf team. She did not play one time this summer and is on the bottom of the depth chart, given there are a handful of 70s golfers who play everyday. Julia does not practice much, and her short game has been holding her back. She played 9 holes on Monday where I caddied and helped her with club selection, aim, course management and green reading/speed. Of note, under the new rules, a caddy cannot help aim the player, but I am aiming her for now in practice. She does not play enough to understand pin positions and strategy with wind, for example and gets herself in trouble with club selection despite good swings. She played her best 9 of all-time with a 37 (+1) with a birdie, 6 pars and 2 bogeys including a bogey on the last hole. She hit 6 fairways, 7 greens and had 17 putts. When she made the birdie on #8, she was so excited and it was fun to watch. She said, “Dad, you know what? Golf is fun when you play well and frustrating when you don’t.” No truer words have ever been spoken. We are entering tournaments where I can caddy for her until she better understands how to do it alone.

Eye on the Market-Mike Cembalest

• Everyone loves Mike’s take on the world. Today’s piece is entitled, “On CPI, S&P, GHG and the IRS.’ I inserted two, but there are a ton of great charts in the piece. Always informative.

  

  

Mostly Miserable with a Little Oppressive

I am not sure why I am more impacted by the heat this summer than any other since I have been in Florida, but I am dying down here this year. I have seen days with the heat index of 110 degrees. Even simple tasks like taking out the garbage are draining in such heat. I decided to check temps relative to a few years prior. This does not factor in the humidity or heat index, but it does appear to be warmer with less rain in August of 2022. The red boxes on each picture show that August 2022 is indeed hotter than prior years.

The picture below is mostly “miserable,” (red) with a little bit of “oppressive,” (pink).

The golf course management decided to buy brand new golf carts with black seats. I asked why and was told they needed carts and everything else was on back order. I took Julia golfing and I now have third degree burns on my ass and hamstrings. If you get up from the seat for 2 minutes and sit back down, it is akin to sitting on molten lava. Now I understand the McDonald’s lawsuits over hot coffee spilled on the lap in the drive-thru. As an aside, my air conditioned seats in my Kia Telluride make a big difference when the car has been sitting in the heat.

I generally go to bed around midnight and wake up by 5:30am. Given I am so drained from heat exhaustion this summer, I am sleeping by 10:30pm and waking up at 6am.

I am not sure what rocket scientists from the Florida School Board decided to have it start in mid-August, but I hereby suggest we begin a petition to start in mid-September and end in mid-June. August and September are the worst months down here, and it would be a huge positive to have school start later to miss the worst of the season. Below are averages for Boca by month. Yes, I meant to draw the line down the middle of October.

When I lived in Chicago or NYC and college football season began, I would be sad. It marked the end of the summer and meant after a couple more nice months, the weather would turn frigid. In Florida, the start of college football season means the heat from hell is nearing an end and Florida’s prime-time weather will soon be here. It also means hurricane season will soon pass. Come on mid-October!

Quick Bites

• Stocks rose Wednesday — trying to shake off a three-week slide — as rates and oil prices eased, cooling investor concerns about continued high inflation.

  The Dow gained 436 points, or 1.4%. The S&P 500 rose 1.8% and the Nasdaq ticked up 2.1%. U.S. Treasury yields dipped following a substantial increase on Tuesday post a stronger than expected ISM data. The 10-Year Treasury is now 3.27% after starting the year at 1.67%. Oil prices slumped, with West Texas Intermediate crude dipping below $82 a barrel (-6%). Also of note, natural gas fell to $7.8 MMBTU after approaching $10 a couple weeks ago. The British pound hit its lowest level against the dollar since 1985, while the Euro is at levels not seen since 2001 (99.5). On Wednesday, the Federal Reserve gave its summary on current economic conditions, known as the Beige Book. The report showed that economic activity was little changed in many regions across the U.S., and that growth outlooks remain weak. As of Tuesday’s close, the US High Yield market was -10.5% YTD with a Yield to Worst of 8.8%. The average price of HY bonds was $86.5. Today’s rally changes these numbers slightly.

  

  

• Someone mentioned the energy companies “locking” your thermostat remotely and then the next day a reader sent me this concerning story. About 22,000 Colorado households could not set their desired temperature on Tuesday after the power company had locked their thermostats remotely due to an “energy emergency.” The customers whose thermostats were locked had previously signed up for the company’s Colorado AC Rewards program, which gives them a “smart thermostat,” a one-time $100 enrollment credit, and $25 for each year they participate in the program. The smart thermostat is supposed to provide customers with “an easy and convenient way to manage your home’s heating and cooling comfort, as well as costs.” The cost of going green before the alternatives are ready for prime-time is quite high. Europe is an unmitigated disaster. Look at the fine print before you sign up for any energy deals.

• European energy trading risks grinding to a halt unless governments extend liquidity to cover margin calls of at least $1.5 trillion, according to Norwegian energy company Equinor ASA. Aside from inflating bills and fanning inflation, the biggest energy crisis in decades is sucking up capital to guarantee trades amid wild price swings. That’s putting pressure on European Union officials to intervene to prevent energy markets from stalling. I have a lot of stories in “Other Headlines” today on the impact of the European energy crisis. I just do not believe the world is focusing enough on the ramifications.

  

• The Texas government just closed out its 2022 fiscal year with a bang. On Thursday, the state comptroller reported that the Lone Star State's tax revenue rocketed by 25.6% to a total of $75.21 billion. It's only the fifth time since 1988 that revenue grew by a double-digit percentage -- and it's double the next largest increase over that 34-year span.   “Revenues continue to outpace even our most recent forecast as All Funds tax collections closed the fiscal year $841 million above the projection in our Certification Revenue Estimate,” said state Comptroller Glenn Hegar in an official release. Gains from natural gas production tax+185%, oil production tax +84%, sales tax revenue +19.3%, Motor vehicle sales and rental tax +12.5%, franchise tax +25.2%.

• VW Group is taking Porsche public via an IPO which values the Porsche brand around $75bn Euro. Remember, Porsche sales are approximately 3% of VW total sales and almost 50% of pre-tax profits. Only 12.5% of Porsche will be taken public in the IPO and over $10bn is expected to be raised.

  

• A reader, RG, who is among my top contributors sent me this picture, which is one of my favorites. I have written extensively that I feel a large percentage of those going to traditional four-year schools, should not be wasting money or time on it. They are spending upwards of $300k+ on bad majors which won’t lead to jobs which can justify the expense of the education. I feel many students should consider vocational school, and this picture is a fun example of why you should think about your major and the desire for a traditional college degree. This link is to a short video of Bill Maher on the topic and he too questions the four-year programs.

  

Other Headlines

• Top economist Mohamed El-Erian tells investors to get out of 'distorted' markets and pivot to cash and short-term bonds

• MSCI World Index: Stocks Yet to Make ‘Decisive’ Low, Goldman Strategists Warn

  

• Junk-Loan Defaults Worry Wall Street Investors

  • Missed loan payments point to a hard landing for companies squeezed by rising interest rates

    

• Google CEO says he hopes to make company 20% more efficient, hints at potential cuts

• Here’s everything Apple just announced at its iPhone 14 event

• GameStop reports wider loss, announces partnership with crypto exchange FTX

  • Stock was +10% after hours.

• Fast Food Wages Could Increase to $22 an Hour in California

  • Gov. Gavin Newsom signs bill into law on Labor Day, creating a state council to set minimum fast food wages. Great for workers, but the price of goods must go up if the burger flipper, cashier and cleaners are making $22+/hour.

• Gasoline prices are expected to continue to fall after Labor Day and some states could see below $3

  • US Gas prices fell from a June high of $5.01/gallon to $3.78/gallon or -25%.

• Welcome to sanction-hit Russia, where prices are DOWN as Brits suffer from soaring inflation

  

• Germany Warns Russian Gas-Supply Woes Will Test European Unity

  • Please don’t underestimate the potential impact of this issue on Europe.

• Uniper says worst is still to come as Russia halts gas flows to Europe

  • Unipier is a German energy company. Talks about 20 times price increases.

• 1,200-year-old pub is fighting for survival amid cost of living crisis

  • Soaring energy costs are to blame. 1,200 years and now may close. Just think of how many cycles this pub has witnessed.

• Toilet paper manufacturer Hakle is insolvent-Germany. (energy costs)

• Swiss Face Up to 3 Years in Prison For Violating Heating Rules

  • The rules forbid setting the temperate above 19C or 66F or face prison. Nothing to see here folks. If you rely on alternatives too soon, the cost is high. Moronic policy makers in the US, please do not follow Europe into the abyss.

• California power grid declares emergency amid record-breaking heat wave

  • Does not bode well for lofty EV goals.

    

• Wind Power’s ‘Colossal Market Failure’ Threatens Climate Change Fight

  • Costs skyrocketing and subsidies are changing. The US is behind plan.

    

• Material on foreign nation’s nuclear capabilities seized at Trump’s Mar-a-Lago

  • Why does he have this information?

• Barr's latest anti-Trump broadside raises political stakes of Mar-a-Lago search drama

• CNN reporter tweets there are ‘serious questions’ about Hunter Biden, FBI: ‘Shouldn’t be a partisan issue

  • I agree 100%. I am seeing CNN become slightly more balanced under new leadership. I spoke with someone senior at CNN and they definitely feel it too.

• Liz Truss is UK’s next Prime Minister with 57% of vote and promises ‘bold plan’ to cut taxes and tackle energy crisis

• Oath Keepers Members Include Hundreds Of Elected Officials, Police And Military Personnel, Leaked List Suggests

• Judge grants Trump a special master to review Mar-a-Lago docs

• Black Lives Matter exec accused of stealing $10M in lawsuit

• The 10 most in-demand work-from-anywhere jobs companies are hiring for in 2022

• Russia Recruits Soldiers From Mental Health Unit to Make Up Troop Shortfall

• Scientists release new forecast for spread of radiation in event of accident at Zaporizhzhia Nuclear Power Plant

Crime

• NYC-Summer 2022 crime surged in nearly every major category

  • As of last week, the rate of serious crimes was up 35.6% over 2021, with robberies, burglaries, grand larcenies and auto thefts rising between 32.6% and 46.6% each.

• Husband of woman hit by stray bullet on Williamsburg Bridge calls NYC a ‘war’ zone

• Chicago shootings: 55 shot, 11 fatally, in Labor Day weekend violence across city, police say

• Seattle rocked by deadliest month in recent history in wake of defund police movement

• One suspect found dead, the other remains at large, following mass stabbing in Canada

  • It appears many incidents took place in an Indigenous community, and 10 people have died with 18 more injured.

• What’s in the SAFE-T Act? A look at the 2021 criminal justice reform and how it has evolved

  • The SAFE-T Act states that all defendants “shall be presumed eligible” for pretrial release unless prosecutors present “clear and convincing” evidence to deny the suspect pretrial release, such as proof that the suspect committed the crime and poses a threat to the physical safety of a “specific, identifiable” person. The bill is hundreds of pages and is effective on 1/1/23 in IL. I hope the judges protect citizens and are harder on violent or repeat offenders.

Virus/Vaccine

Real Estate

• I am hearing more discussions of new Miami residents being unable to get kids into schools, and there is talk of building new schools to accommodate. Something has got to give. You cannot have uber-wealthy families move down with such limited private school options. Every school is apparently full. I have heard people from Miami trying to get into schools in Boca Raton. I have no idea how that commute would happen. It would be similar to living in NYC and going to school in Westport, CT, but with limited public transportation. This Real Deal headline is perfect for my commentary: Mansions on hold: Deals delayed because Palm Beach private schools at capacity. I keep suggesting readers get kids into school prior to buying a home down here. Trust me, it is an issue. There are just so few schools in each town (Palm Beach, Boca, Fort Lauderdale, Miami), that if you don’t get in, then what? When we moved down 5 years ago, acceptance required a pulse. Now, they are turning away very strong candidates. One school administrator told me 3000 applications for 150 seats. UNHEARD OF down here.

Other R/E Headlines

• Manhattan luxury market hits Labor Day high

  • Market ticks up from summer slump with 20 contracts signed at $4M+.

• Madison Avenue retail activity rising

  • Six stores opened this summer, with hospitality and restaurant offerings in pipeline. Crazy stats in the article about lower foot traffic in the area.

• San Francisco Braces for Epic Commercial Real Estate Crash

  

• Make an offer — something real estate agents haven’t said in a long time

  

• US 'Zoom towns' will get hit with falling home prices

  • Boise, Austin, Nashville, Phoenix, and Sacramento were listed.