My Daughter the Saleswoman
8-25-24
Opening Comments
My last note was about my last day in the Hamptons which included some amazing wildlife and fishing. The most opened links were the stroke symptoms to take note of and my 1-minute video of the whales, porpoises and tuna off the coast of East Hampton. A reader sent me this 5-second video from this weekend in East Hampton of a whale right next to shore jumping out of the water.
New Car
My son will be driving my 2021 KIA Telluride. For those new readers, I did extensive research and came to the shocking conclusion in 2020 that the KIA Telluride was the best mid-sized SUV in America. KIA hired R&D experts from top German automakers and turned around the car company. In 20 years, US sales of KIA have increased 3-fold. The result is an incredibly high-end vehicle at a reasonable price. I needed a new car and have been considering options and despite extensive research again, have yet to find another vehicle that can compete anywhere near the $50-55k price point. Car and Driver agrees, rating the Telluride as the “Best Mid-Sized SUV. Of note, Edmunds came to the same conclusion about the Telluride. I believe my readers purchased 80 Tellurides after discussing it in depth over the years as my readers followed suit. I am not aware of any complaints. I picked up my new 2024 KIA Telluride on Saturday. The cameras and safety equipment are incredible. I do not believe in spending crazy money on depreciating assets like cars. I bought my car from Phil Smith Kia in Lighthouse Point (the manager is Jason and the salesperson I worked with was Ernest (954-545-7200). You no longer pay over sticker for these cars or many others. Tell them I sent you. When you talk about depreciation, the KIA holds up very well. I paid $48k for my 2021, which came to about $52.5k with all the tax, tag, title…. I was just quoted $35k on a trade-in after 39k miles and nearly 4 years of ownership. I will write up a more detailed review in a couple of weeks after I have driven the new car around. I paid $58k for a fully loaded Telluride SX (X-Package) Prestige. This price includes tax, tag, title, dealer prep, fees…..If you buy one, let me know.
I am often asked by readers how many people work on the Rosen Report and how long I spend on it each week. To be crystal clear, I do this alone and have no staff. However, I did hire an editor, named Lisa, to spend about an hour on each report to be sure they flow properly and the links work. A couple of years ago, I was spending 20+ hours on each piece or 40 hours a week. Given I am receiving so many story ideas (1,000 emails/week) from readers, I am spending 15 hours for each newsletter to read all the articles, write the report, edit it, and do the graphics in PowerPoint. Separately, I spend a lot of time responding to readers via email and phone calls. Thanks for the help and please send your ideas or comments to rosenreport@gmail.com. Also, remember that some servers truncate the report and you need to hit “View entire message.”
Markets
Peter Boockvar on Powell/Rate Cuts
Analyst Call for Recession
10 Markets That Will Benefit from Lower Rates
Chicago High-End Ressie Debacle
Distressed San Fran Office Market
Video of the Day-Milton Friedman on Capitalism
Milton Friedman was an amazing economist and close friend of my uncle, labor economist, Sherwin Rosen. This 2-minute video is of Friedman being interviewed by Phil Donahue in 1979 about capitalism and greed. “Great achievements did not come from government bureaus,” he said. I do not need to add anything to these comments other than I wholeheartedly agree with his commentary.
My Daughter the Saleswoman
This summer, my daughter, Julia, was a salesperson at Love Shack Fancy in Southampton, NY. It is a women’s clothing store that caters to younger women. The brand seems to be growing quickly, as outlined in this Forbes article that suggested 70% year over year growth in 2023. Julia went into the summer nervous for her first real job outside of babysitting. She said, “Dad, I am excited to meet new people. The women who work there are my age and in college and I cannot wait to make new friends.” Julia has a positive attitude and was genuinely excited to learn and network. She received an hourly wage of $16 and a commission based on store performance for the month.
I told her she had to be at work 20 minutes early every day to show the manager she was eager to be there. I was in NYC on her first day of work and my wife walked her to the store early. I texted Julia on the first day of work to check in on her. Let’s say, it was not going well. She was not accustomed to a sales job, standing all day and competing for a commission. The other salespeople were more seasoned, experienced, and assertive.
After work, we spoke via Facetime and I talked to her about how the day unfolded. She was overwhelmed and nervous about her second day, as she felt the other salespeople, including college kids from some of the top schools in the country, were out-hustling to win sales.
I said, “Julia, get your bearings and watch. What are these other young ladies doing to win business? Learn from them. If you want to be in business, you need to be assertive. You cannot let people run you over. You are beautiful with a great sense of style and you connect well with people. Take a few days to observe and then show them what you are capable of in the store. Don’t let the other salespeople beat you. Make it a competition in your mind about how much you can sell relative to them. Beat them in a competition they do not know exists.”
Julia listened and asked questions. After a couple of weeks, she was outperforming the other salespeople and gaining confidence. She could not wait to get to work. She was building clientele and making new friends. She was catching the eye of managers as they saw her hustling and her eagerness to help. By the end of the summer, she was the #1 salesperson in the store with far more sales in her two months than any other staffer.
Julia developed relationships with her clients and would call them when new styles dropped in items she felt her clients would like. She also created outfits for customers; if they wanted a skirt, she would pair it with a nice top.
This was a great summer for Julia. She worked hard. Learned how to sell, compete, build relationships, and gain confidence. I could not be more proud of my daughter who just started her junior year of high school. I am unsure of what the future brings for her, but I have more confidence that she will succeed regardless of her path due to how she responded this summer.
Thank you to Love Shack Fancy for allowing Julia to work for your amazing company. Julia is anxious to return next summer to grow and improve her skills. She cannot stop talking about Love Shack Fancy for good reason. It was the experience of a lifetime, and it made Julia realize what is in the art of possible.
Quick Bites
Powell spoke at Jackson Hole on Friday and signaled rate cuts that sent stocks sharply higher. “The time has come for policy to adjust,” Powell said during the Fed’s annual retreat. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.” The S&P was +1.2%, Nasdaq+1.5% and Russell +3% on Friday alone which resulted in a winning week for the major averages. Treasury yields fell decently post the speech with the 2-Year yield -10bps to 3.9% and the 10-year -6bps to 3.81%. Bitcoin and Ether were both +5.5% on Friday with a nice rally given the Powell speech and lower rates.
Peter Boockvar has become a good friend and regular contributor to the Rosen Report. He is impressive and below is his summary of Powell and the ramifications. The bottom line to the Powell speech is, “The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.” Emphasizing their shift in attention to the labor market, this was then followed by “We will do everything we can to support a strong labor market as we make further progress toward price stability…The current level of our policy rate gives us ample room to respond to any risks we may face, including the risk of unwelcome further weakening in labor market conditions.” In other words, any aggressive rate-cutting cycle from here, rather than methodical and measured, will be because the economy and labor market deteriorate. Either way, with 100 bps of cuts priced in through year end followed by another 100 bps priced in through next August, nothing here should be a market surprise, though we see the initial stock market reaction is excitement. The 2 yr yield however is little changed in response. Despite Powell’s comments, Mohamed El-Erian does not believe the Fed will cut as much as expected.
As the likelihood of a soft-landing increases, I thought this CNBC story of a recession call from BCA Research was interesting. Contrary to what many believe, investment research firm BCA Research sees that the economy is on the cusp of a recession, and the predicted upcoming U.S. Federal Reserve rate cuts will not be sufficient to steer markets out of it. “Every single one of us now believes there’s a recession, and that’s exactly the opposite of what the market believes,” Garry Evans, BCA Research’s chief strategist of global asset allocation told CNBC’s “Squawk Box Asia.” Evans pointed to signs of the economy slowing down, including what he called the “deteriorating” U.S. labor market. The U.S. Labor Department reported that the unemployment rate inched to 4.3% in July to its highest since October 2021, and a gauge for U.S. manufacturing activity fell to an eight-month low in the same month. “There’s things that are breaking down quite rapidly now,” said the strategist. “A few rate cuts are not going to prevent a recession. Average recession is 10 months… It takes something like a year before fed cuts actually start to give a boost to the economy,” he said. A recession is not my base case, but the slowing consumer and weaker employment data are something to watch. The 818k downward revision to nonfarm payrolls this week was the largest since 2009.
2024 Election
The DNC wrapped up and Kamala gave her acceptance speech. It was very well done, disciplined, and coherent. After three full minutes of applause and cheers, she started her speech and spoke of her “unlikely journey,” after having thanked her husband and the President. It was an effective opener. She told a story of protecting a young girl in her class that was being abused by her stepfather - an experience led her to become a prosecutor. She called Trump an “Unserious man,” adding “The consequences of putting Donald Trump back in the White House are extremely serious.” Although she spoke about a lot of topics, no details were given on her policies. I did think her discussion of the border was a bit comical after the unmitigated disaster of the past 3.5 years and the lack of action as the “Border Czar.” Make no mistake, it was a moving speech that had a purpose. She was able to call out Trump for his many missteps and crushed him on the issue of a woman’s right to choose and the events of January 6th. I do not think Harris is very good at interviews and am curious as to how she performs at the debate on September 10th. However, her 38-minute speech Thursday was pretty darn good and can be seen here. Remember, Trump’s rambling speech was 1.5 hours in Milwaukee last month. AOC and the Squad were unhappy that the convention was not more sympathetic to the anti-Israel crowd.
Here are a couple different perspectives of her speech: AP News, CNBC, Fox News
TV Ratings: Democratic Convention Closes With 26M Viewers, Edging RNC Final Night
The 10 Senate seats most likely to flip in 2024
This is CNN’s take and they have suggest a lot of weakness in Dem seats.
Chuck Schumer outlines 2025 agenda if Democrats sweep, eying filibuster changes
I am adamantly opposed to this idea and McConnell comments on it here. Ending the filibuster is a slippery slope.
I have stated the border has been the biggest mistake of the administration and the news continues to suggest as much.
Trump speaks from behind bulletproof glass at 1st outdoor rally since Butler shooting
Trump shooter had multiple encrypted accounts overseas, including Germany: Rep. Waltz
Thomas Matthew Crooks allegedly had encrypted messaging accounts in Germany, Belgium and New Zealand. Hard not to believe something bigger is not happening here.
How Lara Trump and the GOP are preparing for war with Kamala Harris
Crypto industry accounts for almost half of corporate donations in 2024 election
Israel/Middle East
Israel launches ‘preemptive’ strikes in Lebanon as Hezbollah fires back hundreds of rockets
Israel and Hezbollah trade heavy fire before pulling back, jolting a region braced for war
At 150k tons, this tanker is almost twice the size of the Exxon Valdez. The environmental damage to the region will be massive.
Hamas Executing Hostages? Autopsies Of 6 Bodies Recovered From Gaza Reveal Bullets
A reader sent me this YouGov poll. I think polls are challenging and filled with issues. I look at big differences and trends. Check the chart on where people sympathize with respect to Israel or Palestinians. Those who support Trump support the Israelis 69% and those who support Harris are with Israelis 16%.
Other Headlines
Peloton shares rise more than 25% as turnaround plan takes hold, losses shrink
The stock hit $167 in January of 2021. Despite the 25%+ rally, its @ $4.29. The market cap of Peloton went from $49bn to $1bn today despite the rally.
Zoom stock has best day in almost 2 years on quarterly results, increased guidance
The stock was $568/share in October of 2020 and is now $68.
Telegram messaging app CEO Durov arrested in France, French media say
Estimated net worth at $15bn and he claims to have fathered 100 kids.
Americans Say It Takes $2.5 Million to Be Considered Wealthy
A new Charles Schwab survey found a 14% increase from last year in how much money people think it takes to be rich.
Migrant accused of beating 2 NYPD cops arrested again — then set free without bail
Why is he still allowed to be in America to terrorize citizens? The system is broken.
Stabbings and slashings surge across NYC, leaving bloody trail of death and destruction
The ridiculous policies of NYC failed law-abiding citizens. When there are no consequences for crime, there is chaos. If I were in charge, I would do the opposite of what Bragg and Soros are doing.
Awful story of a drugged-up mother that killed her son in a car accident.
Disturbing video shows child sex offender stalking girl, 10, at Florida Home Depot
Very scary story. You need to be vigilant wherever you go. The mother was smart to seek help.
Jack Daniel’s owner scraps diversity targets amid ‘anti-woke’ backlash
The change comes amid pressure on companies to abandon “woke” policies.
Great questions.
Jeff Bezos appears to have taken delivery of the newest, most-hyped private jet on the market
Jeff Bezos seemingly took delivery of a new private jet, a Gulfstream G700 ($80mm) in July, according to JetSpy. In 39 days, it emitted the same amount of carbon dioxide as the average American would in 17 years.
You could be twice as likely to get a dementia diagnosis if you live here
World’s oldest person, whose secret was avoiding ‘toxic people,’ dies at 117
Suicide risk for female doctors 76% higher than general population
Flexibility could be key to longer life
I try to stretch for 15 minutes every day.
Alarming video shows NJ woman who nearly had her hand chewed off by tiger after climbing zoo fence
Social Darwinism. No sympathy from me.
Real Estate
This realtor.com article outlines the “10 Places Where Lower Mortgage Rates Will ‘Unlock’ the Housing Market the Fastest.” The article considers what percent of the mortgages in these cities have rates above 6.5%. For example, Naples, FL has 15.2% of its mortgages at a rate of over 6.5%. This will mean as rates come down, homeowners will be able to refinance at lower rates. As you can see in the 2nd chart, mortgage rates have come down from 8% in late 2023 to 6.5% today and are likely to fall further over the next 12 months as rate cuts become more prevalent.
I was born in Chicago, had my first job at Continental Bank in Chicago, and then went to the University of Chicago for business school. I feel I am well versed on the city that I once loved, which I feel is no longer inhabitable. I entertained on Thursday night with a family from Chicago and they only reinforced my concerns. This Real Deal story is entitled, “Chicago’s most-expensive home sold at $50M loss to sellers-Lincoln Park estate cost $65M for land buy and construction, sold for $15.25M.” The 25,000-square-foot home, built in 2010 by United Automobile Insurance Company Chairman and CEO Richard Parrillo and his wife, Michaela, traded for 30% of its initial asking price and roughly 65 percent of its last listing price. They spent about $65 million acquiring the land and building the house, the outlet reported. The sale marks the only Chicago-area home to surpass the $10 million mark so far this year, underscoring subdued activity at the very top of the market. Think about it. The once-bustling city of Chicago has had one home sold for more than $10mm this year. In my community in Florida of 750 homes, we have seen 19 homes sell for over $10mm and 5 sell for over $25mm. Yes, policies and elections matter. Wealth leaves crime, high taxes, and overly woke policies for greener pastures. Ken Griffin took his toys to Florida along with many of his colleagues. During the 1st three days of the DNC in Chicago, 22 people were shot and 6 were killed. I just cannot figure out why the high-end R/E market in Chicago is not commensurate with the population and jobs.
The value of some distressed offices in San Francisco have plunged by more than 80%. The city, which has lost hordes of office workers to remote work, has seen valuations for distressed buildings drop by between 20% and 84%, the San Francisco Examiner reported, citing an analysis by CoStar. The overall office vacancy rate is a record 37%. The distress has been most acute in sectors reliant on traffic in Downtown, according to Nigel Hughes, senior Bay Area director of market analytics at CoStar. Hughes conducted a survey of strained commercial mortgage-backed security loans, where the loan servicer asked for an appraisal and found resulting valuations that had fallen precipitously. “It gives you a feeling as to how much pressure the owners are under, in that because of the way the economy has moved, the value they have in these buildings has been seriously eroded,” Hughes told the Examiner. Local office landlords since the pandemic have been beset by burdensome debt obligations and buildings suffering occupancy declines. Among the hardest hit properties is a 65,700-square-foot building at 340 Bryant Street. The four-story building, built in 1932, has lost $43.8 million, or 84 percent of its former value, according to CoStar.
© 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™ #712 ©Copyright 2024 Written By Eric Rosen.
