Opening Comments
My last note was about my hurricane experiences over decades. The most opened links were the 4 things a doctor would never do and five lifestyle habits to help you live to 100.
I have written frequently about how awful the weather is in South Florida from July-September. October is bad early in the month but starts to break mid-month. This is the temperature at 9pm on 10-17-24. Humidity is breaking, wind is picking up out of the northeast and temperatures are dropping. From now until May, it is paradise. I wore a long-sleeve pullover on Thursday night, an event that rarely happens.
Markets
CLOs are Hot
Nassim Talib on Markets
$500bn Added to US Debt in 3 Weeks
Sara Blakely’s New Shoe Endeavor-Sneex
New Condo Development in Midtown Manhattan
Floyd Mayweather Buying Affordable Housing in NYC
Four Seasons Midtown Re-Opening Next Month
Video of the Day-Special Needs Student In a Frat
This is a 25-second video of a young man with Down’s Syndrome who is celebrating joining a fraternity at Clemson. His happiness is palpable and the fact that his brothers are cheering and embracing him is touching.
Old Man and the Sea
The sea was angry that day, my friends (great soliloquy by George from Seinfeld). My friend Dustin and I ventured out early in the morning on Sunday, October 13th in heavy seas of 3-5 feet for some fishing. The wind was blowing and very few boats were out. The dark blue sea signifies clean water and is a good sign for fishing. Also promising, the tide was dropping and it was a few days from the full moon.
We quickly were hit and had four fish on at once - two rods for each of us. This is hard to manage with two anglers who are also driving the boat. The rod of my main focus was peeling the line off my reel, leading me to believe it was a big fish. While that was happening, I focused on the other rod was not running as hard, making me think it was a smaller fish. I got the first fish in and it was foul-hooked, meaning the hook was in the body of the fish, not the mouth, which made it fight much more than if it was hooked properly. It was a 10 lb skip jack, which is not a good fish, so I threw it back. The other line, however, turned out to be a wahoo (prized fish) that only started fighting when it was closer to the boat.
After that, we hooked what seemed like a substantial fish again. I fought it and, based on the way it was fighting, I was convinced it was a larger wahoo. After 15 minutes of reeling, I got it next to the boat and it was a 40-pound sailfish. There was a shark lurking nearby, so I got it off the hook quickly and let it go. I was disappointed that I did not get a photo and that it was not a wahoo.
We then caught a couple of kingfish. My arms were tired and, given my left leg remains injured, I was not myself. The rough seas took a toll on my calf. Of course, we hooked a monster. I fought it for 25 minutes and got it RIGHT NEXT to the boat. It was 40 pounds or more of a wahoo. That is a very nice fish for Boca. It was just out of range for the gaff when it made its last dive, catching me off guard. To be honest, I was also cramping from fighting so many fish. The powerful fish went under the boat and the tail smashed my taught line and broke it. I was upset, as I don’t get many 40+ pound wahoo chances in these parts.
My bad leg, losing the wahoo and being tired from all those fish made me feel a little like Santiago, from The Old Man and the Sea, my favorite Hemingway book. Hemingway won the 1953 Pulitzer Prize for it and the book was his last major work of fiction. In the book, Santiago fights a massive marlin only for it to be eaten by sharks as he is heading home with his prized catch. Despite feeling like Santiago and losing the wahoo, I still loved being on the water and enjoyed myself.
Quick Bites
The stock market continued to climb and it is the 6th straight week of gains for the longest winning streak of the year. The major indices were all +.8-+.1% on the week. More than 70 S&P 500 companies have reported earnings this season. Of those, 75% have beaten expectations, according to FactSet. Treasuries remained at elevated yields with the 2-Year at 3.95% and 10-year at 4.08% but were largely unchanged on the week. Interestingly gold hit another high of $2,737, as a combination of uncertainty around elections, the Middle East and rising debt levels worry investors. Gold is now +27% YTD and +32% for the past year. Since 1979, gold has only performed better in 4 years (79, 93 05, 10). Bitcoin is at $68.5k and was +9% on the week and is +54% YTD.
I started my career at Continental Bank in 1992 and began trading loans in 1994. My career was made due to the loan business and I have been involved in every aspect of it. This WSJ article is entitled, “CLOs Are So Hot Right Now, They’re Getting ETF’d,” and hits close to home. Low-rated corporate loans are having a banner year. Wall Street is trying to find more ways to sell them to ordinary people. At least four asset managers, including BlackRock and Nuveen, have recently asked permission from the Securities and Exchange Commission to launch new exchange-traded funds of collateralized loan obligations—securities made by bundling junk-rated loans together. Those will join about a dozen CLO ETFs that have already entered the market in recent years and that now have about $16 billion in assets under management. CLOs buy junk-rated corporate loans by borrowing money from investors. Investors in CLOs aren’t buying the loans themselves, but rather floating-rate debt securities used to purchase the loans. Those come with varying credit ratings and offer disparate yields—with lower-rated, higher-yielding securities at greater risk of losses when the underlying loans start to default. I love seeing the loan market grow through the explosion in CLOs and Private Credit. I am thankful for my career and loans was where it all started.
Nassim Taleb, author of "The Black Swan," the famed treatise on the risks related to improbable events, aired concerns over the state of the market in a recent interview with Bloomberg. The environment, he said, mirrors prior crashes, and he added that he was focused on preparing for such an event. "We have a lot of risks building up," the Universa Investments advisor told Bloomberg on Friday. "I would say that … my focus would be more on being hedged against an eventual market collapse because we're more fragile than we were probably at any point in the last 20 years, if not, you know, 30 years," he later added. Taleb pointed to a handful of risks looming over the market despite the bullish backdrop for stocks over the past year. Stock prices look "crazy," he said, noting that most of the S&P 500's rally has been concentrated in a small pool of companies linked to artificial intelligence. The West is also holding on to more debt "than we can handle," Taleb said, with the debt-to-GDP ratio in the US notching 124% at the end of September. If high debt levels are combined with an external shock, that could result in a "death spiral," Taleb has previously predicted. Taleb is a legend. These markets defy gravity and I have been shocked at the performance. Taleb is suggesting to prepare for some pain.
I do not know anyone who has written more frequently about debt, deficits, spending and entitlements than the author of the Rosen Report. The Government spending is UNSUSTAINABLE and no one seems to care. Check out he chart that shows $500bn added to the debt level in 3 weeks. As of today, the national debt is at $35.8 trillion. We are running $2 trillion deficits during all-time highs in stocks, low unemployment, and real estate at or near peak levels. Deficits to GDP are running at 6-7%. These levels are reserved for recessions. What could possibly go wrong? If the 2024 election is about the border and inflation, 2028 will be about debt, deficits, and entitlements.
I enjoy seeing innovation and creativity. Sarah Blakely created Spanx and sold it for over $1bn. She has now created high-heeled sneakers for women, a company called Sneex. There is a short video about the concept that I found interesting. Some of the shoes are not awful. I am sure they are far more comfortable than the alternative. The prices I saw were in the $400-600 range.
The college application process has never been more competitive or challenging. Acceptance rates have plummeted, and many kids with perfect scores and grades are being rejected from top programs. This WSJ article is entitled, “The Guru Who Says He Can Get Your 11-Year-Old Into Harvard.” The article is about Jamie Beaton, a 20-year-old Rhodes scholar who is working magic to help kids get into college. This year, Beaton’s clients made up nearly 2% of students admitted to the undergraduate class of 2028 at several elite schools including Brown, Columbia, Harvard and the University of Pennsylvania. Among his clients, 24 earned admission to Yale, 34 to Stanford and 48 to Cornell. Clients pay Beaton’s firm from $30,000 and $200,000 for a four- to six-year program that includes tutoring in academics and test-taking, and advice on how to gather stellar teacher recommendations and how to execute extracurricular projects. Those can range from writing a book, to publishing an academic research paper or starting a podcast. Beaton is doing amazing things. He raised $75mm from venture funds and has offices in 21 countries. He started a high school with 2,000 students and has 850 full-time staff. This is the Daily Mail version for those who do not subscribe to the WSJ. This article outlines the colleges closing since 2020. The money these college advisors charge is no joke. I spoke with one who told me a Middle Eastern family spent $750k to help their kid get into a top school (test preparation, tutoring, essay and application assistance).
On a related topic, this chart outlines if college is worth it.
2024 Election
The Fox interview of VP Kamala Harris was a welcome change in how candidates are interviewed. I felt Baier was quite aggressive and could have toned it down a notch, but prefer this style to softball questions with zero follow-up. To be fair, check out when Baier interviewed Trump last year. He was even more aggressive with Trump and interrupted him frequently. I did not feel that Harris answered many of the key questions asked about the border crisis, having the government pay for sex change operations for prisoners, what she would do differently as President, why 50% of Americans are voting for Trump and many others. I believe Harris was effective at bashing Trump at every opportunity. She also touted her time as a prosecutor. However, I do not believe Harris showed her best stuff in the interview and refused to answer too many basic questions. Baier’s follow-up questions were amazing. The question “When did you notice that Biden was diminished,” resulted in yet another non-answer. No, Harris did not implode, but she avoided virtually every question asked. Thank you to VP Harris for putting yourself out there….finally. Long overdue. I respect you more now that you will go into a more challenging interview. Next time, try to answer a couple of questions. Bret Baier called it abruptly because 4 of Harris’ staff were waving their arms at the anchor to stop it. Below is the take from various media outlets:
I have written about the major swings in the election momentum. Sunday morning, Polymarket (betting) had Trump at 60% and Harris at 40%. Remember, Harris had a 53% to 44% lead on the same site less than one month prior. Large bets overseas drove Trump’s winning chances higher. Of note, many of the key swing states have moved in favor of Trump (AZ, GA, PA, MI, WI, NV) as well, according to Polymarket. However, the stock market action suggests Harris has a 72% chance of victory.
Market ‘Very Convinced’ Trump Is Going To Win, Billionaire Investor Says
My investing hero, Stan Druckenmiller commented on Bloomberg TV. Dan Loeb, another great investor, is of the same mindset as Druck.
Trump kicks off a Pennsylvania rally by talking about Arnold Palmer’s genitalia
NYT plagiarism consultant admits Kamala Harris scandal ‘more serious’ than he thought
The Biden administration has pushed back against some states' efforts to purge voter rolls
12,091,130 mail-in and early in-person votes cast nationally
Trump says Jan. 6 was a "day of love," glossing over his supporters' assault on officers
Trump proposes massive one-time tax on the rich
The story was from 25 years ago (1999) where Trump suggested a “net worth tax” on individuals and trusts worth $10mm or more. Dumb idea.
Bill Maher questions media avoiding Doug Emhoff controversies: 'Wouldn't that make it look worse?'
Emhoff reportedly slapped his girlfriend at Cannes, and knocked up his nanny while married, and the Liberal media won’t touch it.
I liked this chart that shows a massive decline of trust in government by both parties. The Republicans are down to 9% from 79% 60 years ago.
Musk promises to award $1 million each day to a signer of his petition
Trump spoke at the Al Smith Dinner. Kamala skipped it. Here are his jokes/comments. Some are quite funny. He absolutely eviscerated DeBlasio.
Israel/Middle East
At periods in my life, I hid my Jewish faith. It was not that I was embarrassed, but I was around Jew hate and it was the path of least resistance. Today, I have never been more proud to be a Jew. Israel is eviscerating terrorists at an amazing clip. Every time a new leader is announced, they are taken out by the incredibly efficient IDF and their various teams. I am not religious. I have never been to Israel and my kids did not receive a Bar or Bat Mitzvah. However, the atrocities that continue to happen to Jews and the global hate only make me more proud, as Jews and Israel are forced to fight for existence. Israel, get those awful terrorists. I hope they all suffer the same fate as Sinwar. Check out the gruesome pics of another Hamas leader! Listen to Erin Molan from Australia who has been a true champion for Israel and Jews. Her take on the assassination is amazing. She also crushes Kamala Harris for trying to take credit. Remember, Biden and Harris warned Netanyahu about going into Rafah, which is where Sinwar was killed.
Pro-Iranian account leaks alleged U.S. intel on Israel's attack plans
If I were running Israel, I would not be sharing critical info with the US.
Israel 'plots strikes on Iran to topple regime' and 'is planning to hit them hard'
I hope this happens ASAP. We must stop Iran from getting nukes.
Inside Israel’s secret 20-year plan to strike Iran: Advanced weapons unveiled
From long-range missiles to bunker-busting bombs, Israel has spent decades and billions developing specialized munitions for a possible attack on Iran's nuclear facilities.
Dimwitted TikTokker tore down Greek flags at NJ restaurant thinking they were Israeli: ‘My bad’
This was done at a restaurant called, “Eli’s Gyro.” Clearly, the influencer is both antisemitic and stupid.
Columbia University bars pro-Israel professor from campus for 'threatening behavior'
Nothing could get me to send my children to Columbia.
Harvard donations plunge 15% as alumni cut ties over weak response to campus antisemitism
Wait. Jews at .2% of the global population and 2% of the US population. Yes, Jews give philanthropically more than average. Nothing could get me to pay for my children to go to an Ivy League school today.
Other Headlines
Retail sales post solid gain in September, showing a continued strong economy
Here’s why inflation may look like it’s easing but is still a huge problem
China reports third-quarter GDP growth of 4.6%, slightly beating expectations
Never trust anything out of China, especially economic data.
Australia’s Largest Pension Says China Boom Times Have Finished
U.S.-listed shares of TSMC rise 10% in premarket after quarterly profit soars on AI demand
Netflix third-quarter subscribers barely beat estimates as ad-tier members +35%
Stock +11% post news.
Amazon cloud boss says employees unhappy with 5-day office mandate can leave
Major paint company to lay off 1,800 workers, close facilities
Stellantis to shutter and sell large testing facility amid cost-cutting efforts
NASA’s $100 Billion Moon Mission Is Going Nowhere
Bring in Musk!
The list of famous people who appear in the sexual assault lawsuits against Sean 'Diddy' Combs
Salacious accusations with some big names mentioned.
Brutal NYC train operator stabbing prompts calls from union for MTA to ramp up subway safety
Deport any illegal arrested and convicted.
Open borders are creating chaos in many cities across the country. How anyone ever thought open borders were a good idea is absolute insanity.
Florida Sheriff Arrests 157 Suspects for Human Trafficking, Including 25 Illegal Aliens
Top University’s $250 Million DEI Spending Spree Reportedly Created ‘Culture Of Grievance’ On Campus
The University of Michigan spent $250mm since 2016 on DEI initiatives. Surveys found that students of different races, religions or political beliefs were less likely to interact AFTER all the DEI spending. Go Woke. Go Broke.
The No. 1 way to get more respect at work: ‘I’ve been teaching it for decades’
AI-powered scam targets 2.5 billion Gmail users in sophisticated phishing attacks
Canceling subscriptions has to be as easy as signing up, FTC says in a new rule
This has been a frustration for me. I am loving this new rule.
Disney Introduces New US Park Perk: Skip the Long Lines for $400
The 10 colleges where students study the most—none are Ivy League schools
The top 10 bagel shops in New York revealed in new Yelp poll: ‘It’s an art’
I put very little faith in Yelp reviews. I have only been to a few places on the list and they are good, so it has some credibility. H&H Bagels opened in West Boca. I have not been. I am told it is a disaster, with lines out the door.
Real Estate
Extell Development, the company behind some of Manhattan’s most expensive condo skyscrapers, bought a Madison Avenue office property with plans to build luxury housing and retail at the site. The developer purchased 655 Madison Ave. — between 60th and 61st streets — from Williams Equities for nearly $160 million, according to property records. Tyko Capital, which is backed by Elliott Investment Management, is financing the acquisition, according to a person familiar with the matter who asked not to be named discussing private information. I believe the best building in NYC is 220 CPS from an amenity perspective. Units can trade for up to $12k/foot! However, I do not like the location of the high 50s/low 60s. It is too commercial to live in from my perspective. On a positive note, an outdated office building will be knocked down for more residential units.
Floyd Mayweather Jr. is buying a $402M affordable housing portfolio in Upper Manhattan from Black Spruce Management, one of the largest multifamily deals in NY this year. The portfolio includes more than 60 buildings and approximately 1K units, primarily located in Upper Manhattan. Sources say part of the deal has already closed, with the remainder expected to be finalized in late 2024 or early 2025. This transaction would be one of the largest multifamily deals in New York this year, second only to Michael Stern’s $672M transfer of 9 Dekalb Avenue, which was a distressed sale.
Finally, the Four Seasons in Midtown will reopen after being closed for four years. Guests will arrive beginning on November 15th. The much-delayed reopening includes the addition of a new Italian restaurant called The Garden, which features a “forest-like” setting and overlooks the lobby, according to the property’s website. For the first time, the property will also debut extended-stay accommodations, including one- to three-bedroom apartments, the hotel said. I once took my father-in-law to the Four Seasons for a drink. An incredibly attractive blonde woman who was 6’ tall came over to speak with me. My father-in-law said, “What is going on here?” I said, “She is a prostitute. This place is notorious for them.” He thought I knew her and started laughing when he learned she was a pro.
© 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™ #727 ©Copyright 2024 Written By Eric Rosen.
