Opening Comments
Mike Cembalest on Manchin and the BBB
Prime 112-Sold to You
Quick Bites
Markets, Bitcoin Concentration
Electric Vehicle Sell Off, Re-Elections
Chicago Crime Help, DEI in Colleges-GREAT CHARTS
West Palm Commercial Market, Art Market En Fuego
Other Headlines
Virus/Vaccine
Data-Cases Rising, but Deaths are More Stable
Omicron is now 73% of US Cases/1st US Death
Pfizer Covid Pill Approval
Bill Gates Warning
WHO on Boosters
Real Estate
$75mm Star Island-New Record
$36mm L’Atelier PH and $40mm Fisher Island
Peak is in at Apogee?
Single Family Home Rent
Amsterdam Market is Euphoric
Opening Comments
Today’s note is abbreviated as I am in Miami most of this week for Jack’s tournament at Doral and spent a shorter time than normal on this report. We decided to stay down there for a couple days to mix things up and make it easier for Jack to practice. The course has water on basically every hole and the wind was blowing as high as 30mph. The greens were running fairly well and the cold front which came through brought rain and chilly temps with lows in the 50s. Jack had a solid first round and was tied for 4th, but made some mistakes in round two in windy conditions and is also feeling a bit under the weather.
What shocks me is the international play. Kids fly in from Europe, Asia, South America and all over the country. Some were unable to make it due to the Omicron outbreak. I am surprised at how many people can afford this sport when you factor in coaches, trainers, travel, equipment, tournaments…Some parents literally put all their eggs in the golf basket. The truth is a couple hundred people in the world make a living as pro golfers. The chances of making a living are de minimis.
For those celebrating, I hope you have a safe holiday and Merry Christmas. Omicron now accounts for over 70% of the cases and is spreading like wildfire with a six-fold increase in a week. Omicron accounts for over 90% of the cases in some areas of the country. Be careful with gatherings. “All of us have a date with omicron,” said Dr. Amesh Adalja, a senior scholar at the Johns Hopkins Center for Health Security. “If you’re going to interact with society, if you’re going to have any type of life, omicron will be something you encounter, and the best way you can encounter this is to be fully vaccinated.” Interesting article suggesting Omicron could give so many natural immunity, it may help in the long run.
Mike Cembalest on Manchin and the BBB
The link to the Eye on the Market goes into detail with good charts. No need for me to add to his detailed commentary.
Prime 112-Sold to You
Jack is turning 16 in a couple weeks and likes the steak at Prime 112, so we made a reservation Tuesday night given we were staying close by.
For those who do not know, Prime 112 is one of the highest grossing restaurants in the country and is located in SOFI in South Beach. The location is amazing and it is just north of the Continuum buildings. It is a high end steak restaurant which brings an “interesting” crowd. I have seen countless professional athletes, actors, models, titans of industry as well as some incredibly cheesy people. I know the Miami Heat would go after many home games at one point. It gets crowded a bit later in the evening.
I have been 20 times over the years and initially I was smitten, but those days are long gone as I feel the food quality has deteriorated as prices have escalated. “Sold to you,” in the title is a saying on a trading desk and effectively means you don’t want it and it is not something which is associated with good or it suggests the thing in question is overpriced.
On a positive note, the portions at Prime are massive and the menu is diverse enough for everyone. Plenty of appetizers from tuna tartar, crab cakes, Kobe sliders, oysters and more. The Signature Salad is fantastic and is enough for a table of four people. I actually believe the appetizers and sides are better than the entrees.
They have a variety of steaks and all are over priced and generally $65-100+. We ordered a Kobe beef hot dog for $37 which is massive. We had one hamburger for $41 and Jack had a 14 oz NY Strip for $79. We ordered sides of onion rings, fries, spinach and broccoli rabe which each cost $15 and are decent in terms of portions.
I had two glasses of mediocre wine and the bill was $400 without dessert. The food is fine, not remarkable, but massively over priced. I will say that I have always felt the peanut butter smores dessert was pretty solid, but we passed this time.
If you have not been to Prime 112, go once and bring an appetite given the portion control police do not work here. However, leave the Platinum Card at home and use the Black Card, as it is that expensive. I think I went to Prime for my last time. All of us had stomach aches after we left and I was upset at the bill. I checked the prices against the 2019 menu on line and some items are 25%+ more today, especially the meat.
On a side note, the last time we were there just prior to the pandemic, the craziest thing happened. A young couple from France was eating at the table next to us and was incredibly rude to the waiter. They kept sending back the food after they ate 75% of the dish and ordered an expensive bottle of wine from the extensive wine list. The waiter brought out the wine and the man tasted it only to spit it out all over the waiter who was now covered in red wine from his face to his stomach. It was the most offensive move I have ever seen from a patron in a restaurant. The manager came over and escorted the couple out and they were incredulous that they would be asked to leave. People were clapping to get them out of the restaurant. On Tuesday, we happened to sit a the same table the French couple sat in, so it reminded me of the story.
Food B-
Service B+
Ambiance A-
Wine List A
Price-Offensive
Quick Bites
U.S. stocks rose on Wednesday, rallying for a second day as the market continued to rebound from a three-day losing streak spurred by fears about the omicron Covid variant. The Dow gained 261 points, or 0.7%, to 35,753, bringing its two-day rally to more than 800 points. The S&P 500 climbed 1% to 4,697, on track for a winning week. The Nasdaq Composite climbed 1.2% to 15,522. Trading stayed relatively thin ahead of the holidays. Caterpillar rose 1.9% after Bernstein upgraded the stock, saying the machinery maker will be a key beneficiary of a rebound in global growth. Tesla shares jumped more than 7% after Elon Musk said in a podcast that he had reached his goal of selling 10% of his shares for tax reasons. The FDA on Wednesday granted emergency use authorization for Pfizer’s Covid pill, the first antiviral drug against the virus for at-home use. Pfizer shares gained about 1%. The 10-Year Treasury is now 1.45% and crypto rallied with BTC at $50k and ETH at $4k. Oil was +2.5% to $80. I paid as little as $3.04/gallon the other day.
The study showed that the top 10,000 bitcoin accounts hold 5 million bitcoins, an equivalent of approximately $232 billion. With an estimated 114 million people globally holding the cryptocurrency, according to crypto.com, that means that approximately 0.01% of bitcoin holders control 27% of the 19 million bitcoin in circulation. By comparison, in the U.S., where wealth inequality is at its most extreme in decades, the top 1% of households hold about a third of all wealth, according to the Federal Reserve.
Shares of electric vehicle companies tumbled Monday following the apparent failure of President Joe Biden’s “Build Back Better” plan that includes significant incentives for the growing sector. The stocks of EV start-ups such as Lordstown Motors, Faraday Future and Nikola all shed more than 7% Monday. The EV incentives under the Build Back Better plan include up to $12,500 per vehicle and are viewed as critical to spur consumer demand. I won’t be surprised if BBB gets resurrected in some form between Biden and Manchin.
The ramifications are significant of so many Democrats not seeking re-election in the House. Florida Rep. Stephanie Murphy announced Monday that she will not seek a fourth term in Congress, the latest in a rapid series of retirements within the Democratic ranks that suggest momentum is moving heavily against the party as it seeks to hold on to its razor-thin majority next November. Murphy's decision came less than 24 hours after New Jersey Rep. Albio Sires said he would be retiring at the end of this Congress. And, just before the Sires' news, California Rep. Alan Lowenthal said he, too, would be stepping aside. All together, there are now 22 Democrats retiring or running for other offices this election cycle as opposed to just 11 Republicans doing the same. This article lists the names of those not running again and totals 23 Democrats and 13 Republicans.
First SFO realizes the error of its ways. Now, one of the worst mayors in the history of the US has come to the same conclusions. Chicago Mayor Lori Lightfoot is calling for federal officials to help her curb gun violence in the city and target its root causes. In a speech on Monday, Lightfoot urged U.S. Attorney General Merrick Garland to utilize agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives to address illegal firearms and for more prosecutors to bring criminal cases, according to The Chicago Tribune. “Keeping you safe is my priority — not one of, but the first and primary priority,” Lightfoot said to the citizens of Chicago. “I wake every morning with this as my first concern and I push myself and all involved to step up and do more and better because we cannot continue to endure the level of violence that we are now experiencing.” The mayor also requested that judges in Cook County stop releasing people charged with violent crimes including murder, aggravated gun possession, sex crimes, illegal gun possession and kidnapping on electric monitoring, the Tribune noted. Yes, this is the same Mayor who suggested $80mm be taken out of police budgets just last year.
A loyal Rosen Report reader sent me two articles about DEI (explained below) on college campuses. The over-woke academic institutions are actually doing more harm than good in many instances and the stories in these articles are eye-opening. There are amazing charts and graphs in each of the two links below. One graph compares the number of DEI personnel to those dedicated to ADA compliance. The promotion of diversity, equity, and inclusion (DEI) on college campuses has become a central concern of higher education. Universities have created administrative and staff positions tasked with developing programming and offering services related to DEI. Certain universities had strikingly large numbers of people officially labeled with DEI responsibilities. At the University of Michigan, for example, 163 people were identified as having formal responsibility for providing DEI programming and services. At the University of North Carolina at Chapel Hill (UNC), there were 13.3 times as many people devoted to promoting DEI as providing services to people with disabilities. At Georgia Tech, there were 3.2 times as many DEI staff people as history professors. At the University of Louisville, the ratio of DEI personnel to history faculty was 2.9. The University of Virginia had 6.5 DEI staff for every 100 professors. To measure antisemitism among university DEI staff, we searched the Twitter feeds of 741 DEI personnel at 65 universities to find their public communications regarding Israel and, for comparison purposes, China. Those DEI staff tweeted, retweeted, or liked almost three times as many tweets about Israel as tweets about China. Of the tweets about Israel, 96 percent were critical of the Jewish state, while 62 percent of the tweets about China were favorable.
Related Cos. said Tuesday that it plans to build two office properties in the city with a price tag of about $750 million. The two projects and two other Related developments are set to increase the total office space in the city’s central business district by more than 50% to 4.3 million square feet, from 2.8 million square feet last year, according to data from CBRE Group Inc. Goldman Sachs Group Inc. and investment firm Elliott Management Corp. have signed leases at a recently completed Related development in West Palm Beach. Gopal Rajegowda, a partner at Related, said that 75% of the West Palm Beach office space it leased out over the past 18 months went to companies new to the city. Having lived in NYC and Chicago for decades during my career and now in South Florida for almost 5 years, I feel strongly that more people should and will move down here. The cost of living, taxes, weather, quality of life just annihilate the Northeast or Midwest. Related is going big in Palm Beach for a reason. Sure, I want to go to NYC to get culture experiences for shows, restaurants, museums…but I do that in a long weekend and unless I am starting my career on Wa ll Street, I just don’t see the need to live there in 2022. Clearly, a lot of people agree with me based on the inability to find a house From Miami to Palm Beach.
The massive wealth creation across stocks, crypto, NFTs, Real Estate… has pushed many young people into collecting art according to this CNBC story. To me, many of the pieces of art going for big bucks is incredibly ugly, but everyone has different taste. The Big Three auction houses hit a record $15 billion in sales this year, as a surge in global wealth and a wave of young, first-time collectors drove sales of everything from Basquiats to Birkin bags. Christie’s on Monday reported total sales of $7.1 billion for 2021, the highest total in five years. Sotheby’s earlier reported total sales of $7.3 billion, its best showing in the company’s 277-year history, and Phillips said its sales rose to $1.2 billion this year, also a company record. “Every single category is outperforming,” said Guillaume Cerutti, CEO of Christie’s. The auction records highlight the surge in global wealth during the pandemic, as government stimulus, central bank easing, soaring asset prices and a rebound in consumer demand created a massive wave of liquidity for wealthy buyers. The boom in crypto and online stock trading also spawned a new generation of young, wealthy collectors who started buying everything from art and classic cars to luxury goods, wine, watches and diamonds online.
Other Headlines
Biden gets 40 judges confirmed in first year, double Trump's number
Corporate donations to Sen. Joe Manchin’s PAC surged as he fought President Biden’s agenda
House Jan. 6 probe seeks information from Rep. Jim Jordan about his contact with Trump
Progressives demand Biden act alone to implement agenda after Manchin kills massive spending bill
Criminals have stolen nearly $100 billion in Covid relief funds, Secret Service says
Cuba Sees 2021 Inflation of 70% Amid Reforms and Import Hikes
Virus/Vaccine
Cases are starting to grow more quickly again as Omicron spreads. Cases are +27%, but testing is +62%. In Florida, the lines to get tested can be 150 people deep now. The top 10 states and territories for growth range from NJ+86%, NY+102%, TX +113%, LA+132%, GA+139%, FL +371%, DC +440%, HI+557%, Puerto Rico +962% for the two-week growth rate. Seven of the top 10 locations for growth are at the US average vaccination rate or higher. Hospitalizations were +13% to 69k, but deaths grew slowly at +4%.
I have spoken with over 100 Rosen Report readers who have been infected with Omicron. Most have mild symptoms. One person is double vaccinated with the booster and is young and healthy. He is the sickest of anyone I have spoken with and has a sore sore throat, fever, chills and overall strong flu-like symptoms. The 1st Omicron death in the US was in Texas and was an unvaccinated an who had been previously infected. I have heard stories of weddings and parties where Omicron ripped through it infected an overwhelming majority of the guests.
The rapidly spreading omicron variant is now the dominant Covid strain in the U.S., representing 73% of sequenced cases, according to data published Monday by the Centers for Disease Control and Prevention. Omicron has displaced the previously dominant delta variant, which the CDC says is now an estimated 26.6% of sequenced cases for the week ending December 18. Just one week earlier, delta made up 87% of cases to omicron’s 12.6%, the data shows.
The FDA granted emergency authorization Wednesday to Pfizer’s Covid treatment pill, a major milestone that promises to revolutionize the fight against the virus. The medication, which is recommended for people at a high risk of developing severe Covid-19, could be available to patients as early as this weekend. Pfizer CEO Albert Bourla told CNBC earlier this month the company has already shipped some of the pills to the U.S. so they can be prescribed as soon as the FDA authorization comes through. The Centers for Disease Control and Prevention is expected to quickly follow suit with its seal of approval, authorizing its distribution.
In a series of tweets late Tuesday, Bill Gates says he plans to cancel most of his holiday plans and warned that that the United States "could be entering the worst part of the pandemic." Asserting that the Omicron variant is spreading faster than any virus in history, the billionaire and Microsoft co-founder said the big unknown remains how sick the Omicron variant can make you.
"We need to take it seriously until we know more about it. Even if it's only half as severe as Delta, it will be the worst surge we have seen so far because it's so infectious," Gates said. Gates also expects the wave to last three months in the United States. I do not think Omicron lasts three months in the US given how quickly it is spreading.
World Health Organization officials on Wednesday criticized blanket Covid-19 vaccine booster programs as poor countries struggle to obtain initial doses, warning that the unequal access to immunizations could lead to more mutated variants that drag out the crisis. “Blanket booster programs are likely to prolong the pandemic, rather than ending it, by diverting supply to countries that already have high levels of vaccination coverage, giving the virus more opportunity to spread and mutate,” WHO Director-General Tedros Adhanom Ghebreyesus said during a news briefing.
Real Estate
Some incredibly high end sales in Miami this week. A new record on Star Island at $75mm. The roughly 15,000-square-foot home is located on a 1.85-acre lot with about 200 feet of water frontage, according to the listing from Elizabeth Lima of Berkshire Hathaway HomeServices Florida Realty. The home has nine bedrooms, a four-car garage and a commercial-grade generator. The previous record in Miami-Dade County was a $60 million sale at Faena House in 2015, according to research and appraisal firm Miller Samuel.
In two record-breaking condo deals last week, Kayak co-founder and chief executive Steve Hafner paid $40 million for a 10,000/ft penthouse on Fisher Island and sold a smaller unit at L’Atelier Miami Beach for $36 million. The L’Atelier unit was 8,000/ft inside and 8,500/ft of terrace. To me, the condo he sold at L’Atelier in Miami looks nicer. Great pictures in the link. I would never live on Fisher Island as you need to get on a ferry to get off and my lack of patience would give me a nervous breakdown.
A reader sent me this picture of a rare price reduction in South Beach at the Apogee. I believe the Apogee is the nicest building down there despite being just off the beach. The apartments are large and the amenities are beautiful. Unit 1401 is 4,154 feet and the new asking price is $3,128/foot. Here is a link to the unit. Have we found levels which people just won’t pay?
This CNBC story outlines rent growth for single family homes. Demand for single-family rental homes is so strong that rents have nowhere to go but up, and they are rising at an increasingly fast pace. Single-family rents in October were up 10.9% year over year, according to the latest report from CoreLogic. That is three times the 3.2% annual growth seen in October 2020. The jump comes as too much demand meets not enough supply. Vacancy rates on these homes are now at a 25-year low, as an increasingly competitive and pricey for-sale housing market drives more potential buyers to rentals.
Apparently, the Amsterdam housing marketing is hot as well according to the Bloomberg article about bidding wars and crazy prices. As real-estate prices boom across the globe, house hunters in Amsterdam say they are losing out on deals even when bidding 30% or more above asking price — in a city deemed one of the riskiest housing markets in the world. Prices surged 16.5% in the July to September period this year from the same period in 2020, according to NVM, a Dutch association of real estate agents and appraisers, with the average price of a transaction at roughly 564,000 euros ($636,600). And even as bubble chatter grows louder in the Dutch capital known for narrow canals and gabled-roof houses, desperate house hunters say they’re willing to ignore the risk.
The city’s housing prices have long been a concern for economists and local officials, who point to a chronically low level of housing supply and an increasing influx of investors, lured in by the Airbnb-ready potential of the city’s canals, Rembrandt paintings and marijuana coffee shops. Authorities passed a range of measures in recent years, including capping the amount of days an Airbnb could be rented out, increasing taxes for investors and eliminating stamp duty for first-time buyers for properties under 400,000 euros. The city also plans to build 52,500 new homes by 2025.