Opening Comments
Video of the Day
Mike Cembalest-JPM-Inflation Duh!
NYC Parking-Serenity Now!
Quick Bites
Markets, Bitcoin, Equity Margin, Shopping Habits
Exxon, Amazon/MGM, Schiller, Elizabeth Warren,
Cobalt (battery), Jewish Hate (multiple stories)
Jewish Population, Trump Org. Grand Jury, 6 Fingers
Virus/Vaccine
Biden/Wuhan Lab Investigation
Wuhan Lab Sick Employees
Fauci Under Pressure
Real Estate
General Comment
Moves to Florida
US Home Prices
Opening Comments
Back in NYC for the 1st time in almost one year. A bit busier than I expected, but it’s nowhere close to pre-pandemic levels. One big difference between NYC and Florida is 80% wear masks walking down the street in NYC. Why? These people have been vaccinated and are outside. Upper East has a ton of stores for lease. One block in had 5 out of 8 storefronts for lease on the West side of Madison in the lower 60s.
I wanted Phil to win the PGA, but did not think he could pull it off. I WAS WRONG (don’t tell my wife). Glad he did it, but surprised. I felt the summer Olympics would be fine in July. I was wrong again, but looks like they will go on. International Olympic Committee member Dick Pound says he believes the Olympic Games will go ahead this year and says the option of canceling the event is "essentially off the table. The State Department on Monday warned Americans against traveling to Japan as the country experiences an increase in coronavirus cases less than two months before the start of the Tokyo Olympics.
Video of the Day
I love the Olympics. These athletes dedicate their entire lives to a sport to achieve greatness every four years. I am not a fan of some sports which I question as to why they are an Olympic event (rhythmic gymnastics, trampoline, canoe, badminton…). I am excited that surfing made the cut this year. I love watching women’s gymnastics, especially the floor exercise. How in the hell do they jump, flip, twist and contort that way? Simone Biles is an incredible athlete who has won it all. There is a video of an insane vault called the “Yurchenko double pike,” which I am struggling to comprehend. The cost of being wrong here is high. Watch the short video; to me, it is incomprehensible.
Mike Cembalest-JPM-Inflation Duh!
The newest Eye on the Market is about inflation. As usual, Michael gives lots of easy to follow charts and his conclusion is surprising about the correlation of inflation to stock market performance. I have been concerned about inflation and the Fed being wrong and Cembalest discusses this on the top of page 6. There is much in the piece, but here is my favorite chart which questions the correlation between stock performance and inflation suggesting inflation is not always good for the stock market.
NYC Parking-Serenity Now!
I can think of so many tasks I would prefer to do rather than park in NYC. Some that come to mind are having a root canal, walking barefoot on hot pavement covered in glass, sitting in a middle seat in the back row with a seat which does not recline for a long flight…For those loyal readers, you know I have limited patience and like to brag about how little I spend, not how much. Most people like to brag about being big spenders, not me. My favorite words are “clearance sale,” or “80% off.” I have pet peeves about certain costs, such as parking a car. When I lived in NYC, I paid $1,000/month to park, gave a tip each time they got the car and then a holiday bonus. It ended up costing closer to $1,200/month. It was very irritating to me to spend this money to park a car we did not drive often. Kind of insane to spend so much to park your car, but that is the cost of doing business in the city that never sleeps. Some people park blocks away from their apartment to save some money. When I 1st moved to NYC, I lived on the Upper West Side (81st and West End), but parked my car at an outdoor lot on 11th Avenue and 34th Street. I had to take a $10 cab ride to get my car, but I saved over $600/month in parking fees and only drove on the weekends.
I got to NYC Monday around 6pm and needed to park. First lot said, $80 + tax for the 13 hours. That came to $96. I will sleep in my car before I spend $96 to park it overnight. Just rubs me the wrong way. If magically, I was worth $5bn, I am not convinced I would think any differently on the subject. There are just some things I hate spending money on which I believe are wasteful.
My trip to NY, between Budget Rental Car, traffic, cell service and parking in NYC have made me learn new swear words, but my kids understand that dad’s frugal ways can be painful.
I finally found a lot for $45, but they said “Full.” Can’t make it up. Someone left after 20 minutes and they let me park, but I had to be out at 8am. I was almost as excited as winning Powerball when I got the spot. Jack and I were scheduled to golf at 9am, so it worked until the host delayed the golf as there was an outing which meant we could not tee off before 1pm.
As Jack and I walked to the apartment from the garage, we smelled lots of weed smoking, something I have never smelled one time in my four years in Florida. Jack and I were on 64th and Park and I saw a successful hedge fund manager I had not seen in years. Given my old age, I could not remember his name. I blame this brief lapse in memory on all the parking stress. At 4am, the name of his hedge fund came to me and I remembered his name with the help of a friend. Getting old sucks, but running into old friends is great and for me, only happens on the streets of NYC.
I went to the garage in the morning and a NYC friend called. I told him I was at 64th and 1st and I went and picked him up and caught up for an hour. It was great to see him and we talked about the pain in the ass parking situation. He pays $1,000/month and complains about it despite being a hedge fund manager. Just frustrating. I dropped him off at the office like an Uber driver after sitting in the car and catching up. What other choice did I have, given we could not find a parking spot and I would not dare spend the $50 to park for an hour.
Upon the return from golf on Tuesday, I needed to find parking again and given dinner reservations, I did not have time to park 7 blocks away. In a fit of good fortune, I found a spot on Madison Avenue and used my valet parking skills to squeeze in there. My son, Jack, did not have faith I could do it. There were at least 8” on either side, NO PROBLEM here, as years of valet parking in tight spots paid off and did it on my first attempt.
I wanted to go to dinner at Dagon and my wife called for reservations. How does 5pm sound? No thank you, I am not 85 years old. We went to Le Bilbouquet. The staff always has an attitude and makes you feel as though you are not worthy. Not sure I get it that some host thinks he is better than me because he has a French accent. Last I checked, he would be speaking German if it were not for Americans, but I digress. I have been there 20x and have ordered the same thing EVERY SINGLE TIME. Cajun chicken is the only thing on the menu from my perspective. Good, not great, but overpriced. There is not a ton I miss about NYC, but good food and people who dress nicely in clothes which fit is definitely a nice change from the gross eats and white shoes and belts from South Florida. As an aside, I did not feel uncomfortable walking around NYC for a couple days. It is hardly clean, plenty of homeless, but I did not feel unsafe as I feared I might from the press.
Quick Bites
U.S. stocks rose on Wednesday as shares tied to the economic reopening supported the broader market once again. The Dow rose 79 points, while the S&P 500 gained 0.3%. The tech-heavy Nasdaq added 0.3%. The S&P 500 sits just about 1.1% from a record with the major benchmark little changed for the month of May. Shares of companies linked to a recovering economy gained. Carnival Corp rose about 2.5%. Royal Caribbean jumped 3.5% and brought its gain this week to 11% after the cruise line operator received approval to begin test cruises with volunteer passengers. The optimism on the economy comes as U.S. average daily Covid cases fall below 25,000 and as nearly half the U.S. population has received at least one vaccination dose. Shares of Ford rose more than 8% after the automobile giant said it is increasing its investment in electric vehicles to $30 billion through 2025. Bitcoin is at 38k and Ehterum at 2.7k. The 10 year Treasury is now yielding 1.58%. This is from the afternoon just prior to the close, so the numbers could be off slightly.
Traders taking excessive risk in the bitcoin market being forced to sell when the price goes down were the bigger culprits for last week’s 30% drop in bitcoin prices, according to analysts. Bitcoin traders liquidated roughly $12 billion in levered positions last week as the price of the cryptocurrency spiraled, according to bybt.com, a cryptocurrency futures trading platform. Brian Kelly, CEO of BKCM, pointed to firms in Asia such as BitMEX allowing 100-to-1 leverage for cryptocurrency trades. Robinhood does not allow traders to use margin for cryptocurrency, and Coinbase only allows it for professional traders. Stupidity never ceases to amaze me. 100x leverage on an asset with MASSIVE volatility? I hope these idiots loose 100% of their money and any dealer who gives them the leverage does as well.
Margin debt’s new all-time high is neither bullish nor bearish. I’m referring to the total amount that investors have borrowed to purchase stocks. Because the effect of margin is to leverage stocks’ gains, its market wide level is a measure of investor confidence. To the bulls, rising margin debt means investor sentiment should be strong enough to propel the market higher. To the bears, in contrast, it is a contrarian indicator, with high levels indicating dangerous levels of speculative excess. Obviously, with stock at all time highs, the dollar amount of debt goes up, so that explains some of it.
As vaccination rates climb and restrictions on human interaction ease, shopping carts are filling up with items designed to facilitate people’s re-entry into civilization instead of toilet paper and baking flour. Deodorant, teeth whitener and condoms are in high demand. Sales of perfume, nail polish, swimsuits, sunscreen, tuxedos, luggage and alarm clocks are climbing fast, according to companies that make these products and large retailers. The surge in grooming products and travel gear is smaller than pandemic-driven rushes on hand sanitizer and disinfectant wipes. Last year some brands had sales double or triple as Americans stayed home and ramped up their cleaning routines. Makes sense, as I had not used hair gel in a year given we did not go anywhere. I bought it for the 1st time in ages and generally go through it like water given the amount it takes to tame the beast.
A first-time activist investor with a tiny stake in Exxon Mobil Corp. scored a historic win in its proxy fight with the oil giant, signaling the growing importance of climate change to investors. Engine No. 1 won at least two board seats at Wednesday’s annual shareholders meeting, according to a preliminary tally. The little-known firm vaulted into the spotlight in December when it began agitating for change at Exxon, including a diversification of its business, the alignment of executive pay with shareholder interests, and a better plan to fight global warming.
Amazon is buying MGM Studios for $8.45 billion, the companies announced Wednesday, marking Amazon’s most ambitious move yet into the entertainment business. The deal is Amazon’s second-largest acquisition. It paid $13.7 billion for Whole Foods in 2017. MGM stock is trading at $140 in the private markets. The full value on a per share basis is approximately $170 assuming the deal closes. The 1st trade in my hedge fund in May 2013 was buying MGM stock at $39/share. Brings back memories. This took a lot longer to come to fruition than I thought it would.
Nobel prize-winning economist Robert Shiller is worried a bubble is forming in some of the market’s hottest trades. He’s notably concerned about housing, stocks and cryptocurrencies, where he sees a “Wild West” mentality among investors. Even though the record run in stocks and crypto has been taking a break over the past couple of weeks, Shiller is worried. He’s particularly uneasy about the latest housing boom.
Senator Elizabeth Warren is proposing to nearly triple the Internal Revenue Service’s budget to help identify wealthy individuals who are cheating on their taxes. The Massachusetts Democrat is proposing to give the IRS a mandatory annual budget of $31.5 billion, up from the $11.9 billion the agency received from Congress for fiscal year 2021. Warren has been tapped to oversee student loans. She has been vocal in cancelling up to $50k/borrower in debt. It will be interesting to see where it shakes out, but do not believe she will get her full ask.
“Our children are dying like dogs.” That is the sorrowful statement of one Congolese mother whose son and cousin died while working the cobalt mines in the Democratic Republic of Congo. She and other parents like her are part of a class-action lawsuit filed in U.S. federal court in Washington, D.C., in 2019 seeking to hold Apple, Alphabet (the parent company of Google), Dell Technologies, Microsoft and Tesla accountable for what they allege is profiting off the misery of child labor in their quest for cobalt. So Musk is bashing Bitcoin due to energy consumption, but has no problem buying cobalt?
To be clear, I am Jewish, but not religious. I do not go to temple, never been to Israel and my kids have not had Bar or Bat-Mitzvah. However, as my last note suggested, I am troubled by the rise in hate crimes. I have written many times about the incidents of violence against Black people. Now, there have been a significant rise in crimes against Asians and Jews. My grandmother lost all her 7 brothers and sisters to the Holocaust and was lucky to escape. Obviously, the Rosen Report would not be in existence had she suffered the same fate as her siblings. Since my last report there have been additional hateful incidents and it is hard for me not to share my concerns. #FireMeghanMcCain was trending on Twitter. What terrible, awful thing had she said to warrant trending on Twitter? The co-host of “The View” had done something few others have: decried an alarming spike in anti-Semitism. It’s not surprising, if you’re familiar with Twitter, to see how an outspoken defender of the Jewish people may find herself in its cross hairs. This is a place where variations of the phrase “Hitler was right” were posted more than 17,000 times (according to the Anti-Defamation League) in just a one-week span in May. In a disturbing example, the anti-Semitic hashtag #Covid1948 has been trending on Twitter in several countries, including the United States. Often accompanied by nakedly anti-Jewish content, the hashtag likens the birth of the state of Israel in 1948 to the COVID-19 virus. According to the NCRI, the hateful hashtag was shared up to 175 times per minute for over four hours on May 13. While we’ve seen President Donald Trump and countless numbers of his supporters booted off Twitter’s service, purveyors of Jew hate like Iran’s Supreme Leader Imam Sayyid Ali Khamenei, Hamas leader Ismail Haniyyeh, and Louis Farrakhan are still regularly posting. How is it possible that Trump can be banned from social media, but Khamenei, Farrakhan and others who spew hate against Jews are not censored? We all need to be concerned about the rise in hate crimes and as a Jew, it is my duty to speak up. I am just looking for even treatment. Ban Trump, but you must ban others too. As Americans, the power of the media is something which should concern us all. I am not one who calls for regulation, as I believe in free markets, but believe the media/social media needs to be regulated when it comes to banning accounts and determining who has a voice.
A 97-year-old Holocaust survivor was overwhelmed with anti-Semitic hate on social media amid the Israel-Palestinian conflict, including posts that praised Hitler, her family said. Lily Ebert, a native of Bonyhád, Hungary, who was deported to the Auschwitz Nazi death camp in 1944, operates a TikTok account to answer questions about the Holocaust. But she’s been flooded with vile messages praising Hitler during the Sabbath. Are you kidding me? This woman has been through hell and is a 97-year old survivor of the Nazis. What the F*# is wrong with people to go after this person because she is Jewish?
A former campaign surrogate for Sen. Bernie Sanders, I-Vt., and ally to "Squad" member Rep. Rashida Tlaib, D-Mich., told people on social media to "stop condemning anti-Semitism." Comedian and activist Amer Zahr called on "activists and leaders" who are speaking out against "terrorism" and anti-Jewish rhetoric to "stop condemning anti-Semitism" in a video posted Saturday to his Twitter account. A Democratic congressman from Minnesota has called out the progressive wing of his party for what he says is their "deafening" silence on the rising anti-Semitic attacks in America. Rep. Dean Phillips, whose district covers the western suburbs of the Twin Cities including Bloomington, Eden Prairie and Edina, put his progressive colleagues on notice in a Monday tweet. The two-term congressman eviscerated the progressives for not putting as much gusto behind condemning anti-Semitism as they have other progressive priorities.
House GOP leadership on Tuesday condemned one of their own — Rep. Marjorie Taylor Greene — for her recent comments likening coronavirus restrictions to the Holocaust. House Minority Leader Kevin McCarthy (R-Calif.), Minority Whip Steve Scalise (R-La.) and House Republican Conference Chair Elise Stefanik (R-NY) all asserted that the controversial freshman Georgia Republican’s remarks do not reflect the views of the party.
Here is a little perspective. There 14.7mm Jews in the world with a global population of approximately 8bn people. There are 6.9mm Jews in Israel and 6.7mm Jews in the USA. The Jewish population has seen limited growth. Since peaking at 17mm in 1939, it fell to as low as 11mm in 1945 (Holocaust) and we have never come back to 1939 levels. Below are a couple charts. Note the only religion which is expected to show meaningful growth from 2010 to 2050 is Muslim. By 2050, approximately 30% of the global population will be Muslim and .2% will be Jews.
Manhattan's top prosecutor has convened a grand jury that is expected to decide whether to indict former President Donald Trump should prosecutors present criminal charges in their probe of the Trump Organization, two people familiar with the matter told The Washington Post. The panel, convened by Manhattan District Attorney Cyrus Vance, could also decide to indict executives at the Trump Organization or the business itself if criminal charges are presented, the Post reported. The grand jury is set to sit for three days a week for six months, according to the newspaper, and will likely hear matters beyond just the Trump Organization probe during that time.
Do you sometimes need an extra pair of hands around the house? How about just two extra thumbs? It may sound like science fiction, but a new study finds the human brain could happily get used to having a sixth finger. Call me crazy, I am good, I do not need two extra thumbs.
Virus/Vaccine
Cases down to 24.7k for the 7 day average (-20% on the week). Remember, they peaked at 255k for the 7 day average in early January. Hospitalizations fell again and total 28.7k (-12% on the week). Deaths are 568 for the 7 day average (-11% on the week). More than 1.71 billion doses have been given across 176 countries, according to data collected by Bloomberg. The latest rate was roughly 28.9 million doses a day. In the U.S., 288 million doses have been given so far. In the last week, an average of 1.75 million doses per day were administered.
President Biden has ordered a closer intelligence review of what he said were two equally plausible scenarios of the origins of the Covid-19 pandemic. Biden revealed that earlier this year, he asked the intelligence community to assess “whether it emerged from human contact with an infected animal, or from a laboratory accident.” The hypothesis that the virus may have escaped from a Chinese lab has gained more mainstream traction. I have been critical of the Chinese government since day one and suggested this was a lab accident early on in the process. The Chinese government has lied about everything and cannot be trusted. How are we going to investigate something which has been cleaned up in a foreign country which probably won’t allow us access? The fact that Biden is saying this means he knows more than he is letting on in my opinion.
Three researchers from China’s Wuhan Institute of Virology became sick enough in November 2019 that they sought hospital care, according to a previously undisclosed U.S. intelligence report that could add weight to growing calls for a fuller probe of whether the Covid-19 virus may have escaped from the laboratory. I have said repeatedly, that I believe this was not a “wet market” incident, but did originate in the Wuhan Lab. More people are starting to come to my side including Fauci who is not open to the potential. How is it that China leadership is making out so well and are not paying any price for these actions?
Republican lawmakers are calling for Dr. Anthony Fauci to be fired, amid his litany of shifting opinions on the coronavirus, its origin and his stance on an investigation into the Wuhan Institute of Virology. Fauci is coming under fire from congressional Republicans who point to his admission that the NIH earmarked $600,000 for the Wuhan Institute of Virology to study the possibility that bat coronaviruses could be transmitted to humans. I happen to like Fauci, but he has been wrong on so many things. I think it is time for him to move on. He has served the country well, but his last year has been a bit disappointing from my perspective.
Real Estate
I heard another crazy story in the Hamptons on a lower price point. Hampton Bays is a less expensive area in the Hamptons relative to South, Bridge, Sagaponack, East…Someone bid on a $499k starter home in Hampton Bays which was not in good shape. Dozens of bids showed up for this house. Only all cash offers with no financing contingency were considered. The guy bid $515k and lost to a $560k all cash offer. Even the lower end of Hamptons homes are crazy.
About 900 people a day are moving to Florida, the state's CFO, Jimmy Patronis, told Fox Business on Monday, attributing it mainly to higher taxes in states such as New York and New Jersey. Migration to Florida had steadily risen over the past decade before booming during the coronavirus pandemic as remote working and the warm climate drew people to the Sunshine State. Florida also has no personal income tax. In comparison, New York unveiled proposals in April to bump up its income-tax rates for its wealthiest residents. Patronis told Fox that states like New York and New Jersey were "financial train wrecks." Of my wealthy friends, most have decided to relocate to Florida, at least from a residency perspective. The ones who are having the most difficulty, work for big dealers and can’t work remotely.
Home prices in March were 13.2% higher in 2021, compared with March 2020, according to the S&P CoreLogic Case-Shiller National Home Price Index. Higher costs for land, labor and building materials have impacted home builders. With homeowners unwilling to sell, a record low supply of homes for sale has forced buyers into intense bidding wars. At the end of April, there were only 1.16 million houses for sale in the U.S. down 20.5% from the year before.