Mr. Irrelevant
12-14-22
Opening Comment
On the road in NYC and borrowed someone’s laptop and struggled. Expect some typos. I did not have a ton of time this afternoon. Apologies.
Great feedback on my last note, “Lessons Learned From Bosses Good & Bad.” If you missed it, just read the theme piece, and hopefully, you take away a lesson from it.
I am in NYC and the weather is not what I had in mind and a reminder of one of the reasons I love South Florida. On a positive note, I get to amortize the cost of a coat I no longer wear. NYC is 30-40 and rain/snow, while Boca Raton is 65-82 with some clouds and rain.
Jack golfed with a 17-year-old kid in a tournament, and I asked where he was from. He said, “I just moved from LA to South Carolina.” I laughed and asked, “What made your family relocate?” The kid looked at me deadpan and said, “Are you serious? The crime is out of control. Homelessness is terrible. The taxes are high. The politicians are overly woke, and my parents were getting upset about what was being taught in schools, despite being private.” I was a bit surprised by how well-versed this young man was, but I do think it is official that the pendulum has swung too far, as the kid sounded as though he had been reading the Rosen Report.
Pictures of the Day-DB on the Fed
Mr. Irrelevant
Quick Bites
Markets
Blackrock & Gundlach on Markets and Recession
Consumers More Comfortable Inflation is Falling
Americans Who Hate the Flag is Getting Concerning
Other Headlines
Crime Headlines
Real Estate
$32mm non-waterfront Palm Beach Spec House
Condo Sales In Miami-Dade
$21mm Condo Sale at Surf Club
Other R/E Headlines
Virus/Vaccine-Data Deterioration CONTINUES
Picture of the Day-Deutche Bank View on Rates
From time to time, I use Jim Reid’s pictures in my piece. I liked today’s picture of the DB call for rates and GDP. I have written repeatedly that I believe the Fed is nearly done and think they will cut in 2023 due to the slowing economy and inflation falling. Spend a minute on the chart below, especially given today was the Fed, today which suggested more raises in 2023 and cuts more likely in 2024. The Fed is suggesting higher for longer. I am not adamant as I was about my peak inflation call in June, but have a feeling rates will need to be cut in 2023.
Mr. Irrelevant
Every NFL draft has “Mr. Irrelevant,” the last person picked, who generally does not have any impact in the NFL. He is the 262nd person taken in the draft, and there are plenty of statistics on how these people perform.
However, Mr. Irrelevant in 2022 has received a shocking amount of attention given he started at QB on Sunday for the 49ers. His name is Brock Purdy, and he played quarterback for Iowa State for four years. Below are his college statistics which are pretty decent, and he played in the Big 12 division.
However, according to the scouts and the NFL draft, Purdy lacked the size, arm strength and accuracy to compete at the next level. The NFL stats had him as an unrestricted free agent with a prospect grade of 5.57. Check his grade vs a recent #1 pick below in Joe Burrow who came out of LSU on the heels of winning a National Championship and having a record senior year. Burrow had a prospect grade of 7.07 (Pro Bowl Prospect).
Ten days ago, when Jimmy Garapollo, the 49ers QB, was injured during the game with his team down 7 - 3. Purdy went 25 of 37 for 210 yards with two touchdowns and one interception to help lead the 49ers to a win over one of the AFC's better teams (Dolphins). Just Sunday, Purdy received his first official start and threw 3 TDs (no INTs) and his team crushed Tom Brady’s Tampa Bay Bucs 35-7, and now there is talk about how legit Purdy might be. Looks like he is having fun out there. Brady went on a tantrum as can be seen here.
I did a little research and found an article that outlines the prior 10 Mr. Irrelevant picks. Absent 2020 and 2021, most players get little or no playing time as seen below.
It is too early to call Purdy a real starting QB, but his 1st two games were a great start. Let’s hope for his sake that he keeps up this momentum and has a career in the NFL. Let’s just say, I don’t think Tom Brady is worried about losing GOAT status to Purdy any time soon.
Given Garopollo is out for the season, Purdy has a chance to showcase his talents for more games. Let’s see what you got, kid. If you remember, Brady was taken in the 6th round (199th pick) after an above-average, but hardly remarkable time at the University of Michigan. No one thought he would become the Brady we all know and respect today. In my mind, Brady is the UNDISPUTED GOAT. Brady played back-up QB to Drew Bledsoe at the New England Patriots who got injured in September 2001 after a vicious hit by the Jets, Mo Lewis. Brady filled in (lost that game) but WON THE SUPERBOWL that year for his 1st of 7.
From a salary perspective, Purdy will make approximately $934k/year, and the chart below outlines what the top 10 QBs will make per year. The average QB makes $7mm in the NFL.
The 49ers look pretty solid with a record of 9-4 and are in 1st place in the NFC West. It would be an amazing story for the ages if Purdy could lead the 49ers to become Super Bowl Champions after being declared Mr. Irrelevant. I think it is safe to say if that happens, he will officially lose the Irrelevant title! I love underdogs. Remember, at some point in your career, you are likely going to be given an opportunity to shine. With preparation and some luck, maybe you can change the game as Brady did, and with any luck, Purdy too.
Quick Bites
Stocks rallied sharply on Tuesday after softer-than-expected inflation data (3rd bullet) but sold off on fears that the combination of slowing data and Fed rate hikes could lead to a recession. Stocks slid Wednesday as investors absorbed the Federal Reserve’s latest interest rate hike decision in its efforts to crush inflation.
The Dow fell 197 points, or 0.58%, as markets gyrated following the Fed rate hike decision. The S&P 500 declined 0.74%, while the Nasdaq dropped 0.93%. “The inflation data received so far for October and November show a welcome reduction in the monthly pace of price increases. But it will take substantially more evidence to give confidence that inflation is on a sustained downward path,” said Powell. The Fed delivered a widely-anticipated 50 basis point rate hike at the conclusion of its December policy meeting. It’s a smaller bump from the prior four consecutive rate hikes of 75 basis points. The rate hike was expected. I have been in meetings, but just believe the Fed will need to be more dovish in 2023 prior to year end. I do want to watch oil. Been speaking about it lately. Bond yields were generally a couple basis points lower on the day.
“Recession is foretold as central banks race to try to tame inflation,” BlackRock’s team of strategists write in their 2023 Global Outlook. In fact, the strategists believe that central banks are “deliberately causing recessions by over-tightening policy” in an effort to bring price levels under control. In the past, when the economy entered a downturn, the Fed typically stepped in to help. But due to the cause of this projected recession, BlackRock says we can’t count on the central bank. The S&P 500 has already plunged 18% year to date, but BlackRock believes that equity valuations “don’t yet reflect the damage ahead.” On a related note, one of my heroes, Jeff Gundlach (Double Line), said an economic downturn will arrive next year, which could prompt the Federal Reserve to swiftly reverse its policy stance. “The effects of these rate hikes and the accumulation of quantitative tightening and draining of liquidity from the bond market [are] going to make 2023, in my view, probably a recessionary year.” I have stated for months that I believe the Fed will be forced to cut rates in 2023 due to deteriorating conditions.
Consumers grew more optimistic about inflation in November amid expectations that both food and energy price increases would be less severe in the coming year, according to a New York Federal Reserve survey released Monday. The central bank’s Survey of Consumer Expectations indicated that respondents see one-year inflation running at a 5.2% pace, down 0.7 percentage points from the October reading. That’s the lowest level for that reading since August 2021 — the early days of the inflation surge that has gripped the economy and pushed the Fed into a series of aggressive interest rate hikes that is likely to continue this week. The consumer price index rose just 0.1% from the previous month, and increased 7.1% from a year ago, compared with respective estimates of 0.3% and 7.3%. Core CPI rose 0.2% on the month and 6% on an annual basis, compared with respective estimates of 0.3% and 6.1%. Although I called for peak inflation in June, and it has proven true, I believe it will continue to trend down. But am a little concerned about China coming back on-line. I fear oil prices may be setting up for a big run higher, based on very low inventory levels (3rd chart). However, this Bloomberg article is entitled, “Bond Traders Bet on Recession-Level Inflation Plunge Next Year (4th chart). Tampa inflation fell below 10% after peaking in June at 11.3%.
Federal authorities charged FTX founder Sam Bankman-Fried with using tens of millions of dollars of misappropriated customer funds to make illegal political donations to both Democratic and Republican candidates. Prosecutors said one of the reasons he made those contributions was to influence the direction of policies and laws affecting the cryptocurrency industry. I listened to a little of the testimony of the current CEO, Ray on Tuesday, and his comments about the lack of infrastructure, independent board, and process were stunning. SHAME on the big funds who gave this dirtball money. “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” the new FTX leader said. “From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated, and potentially compromised individuals, this situation is unprecedented." As an aside, the little I listened to had Representatives asking decent questions. Generally, they are awful. Also, Ray said that SBF’s father had been giving legal advice and been paid. No conflicts there!
A reader sent me this article and, it upset me. I am very proud to be an American, and it is frustrating that incidents like this are taking place every day in the USA. I am all for free speech, and this person is entitled to her opinion, even though I disagree with it. Earlier this fall, a Pitzer student raised concerns about an American flag hung from a student's balcony. She claimed that the flag brought a “malicious” impact and urged the student to remove it via a college emailing list. The student disclosed the location of the flag at the dormitory then declared that “the American Flag is not only a symbol of hatred, but a threat to students of color, and makes a multitude of students feel unsafe.” One student recounted how she “saw the white guy who hung it up and asked him to take it down. He responded ‘No. Why? This is America, right?’ As a black student on this campus…That flag makes me feel unsafe and invisible in so many ways… let’s not act like this country doesn’t actively murder people that look like me on a daily basis…If you love this country so much, HANG THAT SH*T UP IN YOUR ROOM.” I am not saying America is perfect and racism and antisemitism don’t exist, but to suggest the American flag is a symbol of hatred is unfair in my mind. You can always move elsewhere.
Other Headlines
What you need to know about today's nuclear fusion announcement — and what comes next
Big news worth a look. Scientists at Lawrence Livermore National Laboratory’s National Ignition Facility have made history by successfully producing a nuclear fusion reaction resulting in a net energy gain, a breakthrough hailed by US officials as a “landmark achievement” and a “milestone for the future of clean energy.” This is CNBC’s take on it. The implications for a new energy source are exciting but don’t expect it to come to a theater near you any time soon.
UK inflation falls from 41-year high as fuel price surge eases
CPI of 10.7% vs 10.9% expectations and 11.1% in October.
FTX founder Sam Bankman-Fried arrested in the Bahamas after U.S. files criminal charges and has been denied bail.
Sam Bankman-Fried spent FTX funds on swanky real estate, donations — and himself: SEC
King and queen of the crypto con may be turning on each other
FTX Bankruptcy Means $73 Million in Political Donations at Risk of Being Clawed Back
Crypto exchange Binance temporarily halts USDC stablecoin withdrawals
Electric Ford F-150 Lightning named MotorTrend's truck of the year
Illinois ranks least tax-friendly state for middle-class families, 2nd-worst for retirees
How many reasons does one need not to live in Chicago? Crime, homelessness, weather, taxes, cost of living, woke policy, horrific politicians, crazy school teachings….
Trump in trouble: Republican support for his 2024 bid falls amid political, legal setbacks
Merriam-Webster Expands the Definition of ‘Female’
Merriam-Webster now offers a second definition of “female”: “having a gender identity that is the opposite of male.” And the second definition of “male”: “having a gender identity that is the opposite of female.” My daughter has a girl in her class who identifies as a “furry,” meaning she thinks she is a cat. Will she be offended that Webster did not include her?
Biden invites anti-police nonbinary drag queen to White House: 'F--- the police'
Just like I called out Trump for meeting with Kanye and Fuentes, I am calling out Biden for meeting at the White House with a drag queen who is a cop-hater who tweeted, “Anyone who thinks drag isn’t for children is wrong.”
Sen. Joe Manchin won’t rule out leaving the Democratic Party
Moderna’s mRNA Cancer Vaccine Shows Promise in Preliminary Study
The shot combined with a Merck immunotherapy reduced the risk of relapse in people with skin cancer in a study
Nelly Cheboi, who creates computer labs for Kenyan schoolchildren, is CNN's Hero of the Year
I love this story of Cheboi who quit a lucrative software engineering job to start a non-profit, TechLit Africa, which has provided thousands of students across rural Kenya with access to donated computers.
Crime Headlines
Zyaire Crumbley busted in NYC stabbing death of girlfriend, 16
Kidnapped teen beaten with baseball bat for 12 hours, then dumped on road, NY cops say
What is wrong with people?
Shot NYPD hero rips ex-con's release with ex-NFL player's help as 'absolutely insane'
Man shot in hand in Miami’s Brickell neighborhood during attempted armed robbery
This is close to where Ken Griffin’s new office will be. Clearly, crime is everywhere, but not nearly as bad as the hell-hole of Chicago.
Atlanta grandmother stabbed to death in garage in gated community
Florida cop treated for overdose after exposure to fentanyl
This drug is so scary. Read this story about how an officer was exposed to fentanyl which was rolled up in cash and almost died.
Man found shot in hand during robbery in Brickell taken to hospital
This happened right near where Citadel’s new headquarters will be built. Yes, Miami is far safer than Chicago, but not without crime. A reader pointed this story out to me.
Real Estate
A NON-Waterfront spec mansion was sold for $32mm in Palm Beach at 220- Jungle Road. The property is .4 acres and sold for $12mm on 6/23/21. Let’s say they put $10mm into it. Not bad for 18 months. Welcome to the hot market of South Florida high-end R/E. I don’t have a picture of the home, but this is the lot, just off the water. It was sold in an off-market transaction which tends to happen quite a bit down here.
Condo sales data in Miami-Dade for the past couple weeks. Miami-Dade County’s condo sales volume fell last week, while the average sale price rose. Condo sales totaled $97.7 million, lower than the $119.8 million in sales from the previous week. The average sale price continued to climb, as it has for several weeks, reaching $913,000. That compares with $754,000 the week prior. Prices for the top 10 sales ranged from $1.5 million to $21 million, compared with $1.8 million to $9.4 million the previous week. The Four Seasons Residences at The Surf Club took the top spot last week. Unit S-607 at 9001 Collins Avenue in Surfside sold for $21 million. The unit was purchased for $8.9mm in 2018 from the developer and is almost 4,000 ft. I have multiple readers who reside in the Surf Club.
Other R/E Headlines
Housing market ‘extremely unaffordable’ right now despite rates falling, says Black Knight’s Walden
Housing market to sink to a 12-year low in 2023, Redfin says
Intensified housing market correction has homebuilders offering sweetheart deals to Wall Street
Sweden’s Free-Falling Property Market Triggers Worst Economic Slump in EU
Home values in Sweden are now down 15% from their peak
Commercial real estate has been identified as the main risk
Virus/Vaccine
Data deterioration is significant. Every category is exploding with cases +55%, hospitalization +22%, and deaths +65%. Watch this carefully.
