Opening Comments
Pictures of the Week
Sapped My Pants
Quick Bites
Markets, Money Losers Tapping Equity Markets, Payrolls, Car Prices
Home Prices, Lumber Cracking, CPI/PCE Explained, UBS Remote Work
Violence in Chicago/NYC, Dukakis on Crime, NYC Mayor Chaos
Trump Org, Homelessness in US, Dynasty Trusts, Biden on Monopolies
Condo Collapse Update, Weight Loss Tool
Virus/Vaccine
Data
Delta Variant-Michael Cembalest Info
Gottlieb on Delta
Pictures of the Week-Tour de France
Some idiot in the crowd, put a sign in front of the riders causing a MASSIVE crash which injured many people. Although the person was later found and arrested, he did a great deal of damage. There is a scary video of the incident and here are the pictures.
Opening Comments
I will hit 4,000 miles on the car this week and need a break. Meeting Jill at Newark on Thursday am and she gets to be the Uber driver for a while. I am heading to Boca and look forward to sleeping in my own bed which does not have 20 grit sandpaper sheets and eating some home cooked meals. Eating out three meals a day has my waist expanding. Couple that with missing gym time and I am not too pleased with myself right now.
Given Jack’s tournaments, this will be a shorter note. I am sure I missed a couple things. I wrote most of this between 11pm and 2am Tues/Wed. I have been on the road non-stop battling a heat wave and he has another tournament today (4 days in a row).
I know many readers stopped receiving the RosenReport due to fire wall issues. I am at a loss of what to do about deliver-ability. If I had to guess, 30%+ no longer receive it. If anyone has ideas, I am all ears. Separately, I know many of my readers are loyal and enjoy reading based on the # of positive emails I receive. Please spread the word. My subscriber gains have slowed. Let’s get this thing going again.
With travel this summer, there will be some missed editions of the Rosen Report.
Sapped My Pants
Jack played in the PA Boys Amateur on Monday and Tuesday at Hershey Country Club in PA. The actual temperature was 95°-97° with a heat index of 110+ (see below). The humidity was in the low 60% range. It was not hot; it was brutal. Jack went through quite a few Gatorade bottles for each 9 holes.
I have a routine with Jack. I help him on the range, work on some drills and watch him tee off 1. I meet him on 9 to check in on him and bring him food/drink. Watch him hit off 10 and then go find him on 17 green to follow the last hole.
Not sure I mentioned it, but the heat was on BIG TIME resulting in some slower play. I miscalculated his time and went out to 17 to see him and I was a couple groups early. As I was walking out to him, a kid hit his ball into the tall weeds and I felt it was my responsibility to help him look for it. No good deed goes unpunished and I got hit with thorns and stickers and did not find the ball.
In my infinite wisdom, while I waited for Jack, I decided to sit down on what appeared to be a concrete block on the ground behind the 17th green. I wanted to get the stickers off my socks. Well, it turned out to be a shaved tree root which was flat, only to look like a concrete block. I wiped it off and felt nothing and sat my ass down. I was sitting there for 20 minutes sweating to death and saw Jack approaching the tee. I tried to stand up to go behind a tree so he would not see me, but my ass was stuck to the root. It was so hot that the sap came up and destroyed my brand new shorts (bought two days prior). I did not realize it and could not see my butt. Again, because I am clearly the President of my local MENSA group, I touched by backside only to now have the glue (aka sap) on my hand. I am livid. But wait, there is more.
A mom of a golfer whom I have never met walked up to me and said, “Hey, did you crap in your pants?” I tried to tell her what happened, but she was sticking to the fact that I soiled myself and proceeded to tell everyone around me that I pooped my pants. I felt like the last kid picked on the kickball team in 3rd grade who was accused of picking his nose even though he did not do it. Everyone got a nice laugh at my expense.
Don’t worry there is more. I went to a bathroom to try to get my hand clean. Son of a… this stuff does not come off with hot water and soap. I washed my hands until they were raw, yet they continued to stick together. Everything I touched in the car now has sap all over it. The funny woman who told everyone about my “accident,” brought me some type of wipes which actually finally got it off my hands.
I took off my shorts and changed to get to our hotel. I went to take a shower, and what do you know, the sap went through my shorts and underwear all the way to the skin. Boys and girls, I have sap on my ass and it does not come off. Yeah, I need a break. I need to go buy turpentine or something to get this crap, I mean sap off my ass. Serenity Now, Serenity Now! Chili, where are you? I need to get the sap off my shorts! If this story happened to my wife, Jill, I would laugh and it would be funny. Instead it happened to me, so it is far less funny and quite frankly irritating.
Quick Bites
The S&P 500 rose to a record high on the final day of June to close out a strong first half of the year for Wall Street. The Dow Jones Industrial Average rose about 210 points, boosted by strong days for Walmart, Boeing, and Goldman Sachs, to 34,502. The S&P 500 perked up 0.1% to 4,297 for its fifth-straight record close. The Nasdaq lagged, ticking down roughly 0.1% to 14,503. Wednesday was the last day of the second quarter and final day of the first half of 2021. The S&P 500 has risen 14.4% year to date, while the Nasdaq Composite and the Dow have each gained more than 12%. For the quarter, the S&P 500 climbed 8.2%.
If you think a rush by companies to sell their shares is a bad omen for the market, imagine a scenario where most of the sales come from firms that don’t make money. It’s happening now. Since the end of March, almost 100 unprofitable U.S. companies, including GameStop Corp. and AMC Entertainment Holdings Inc., have raised money through secondary offerings, twice as many as coming from profitable firms, according to data compiled by Bloomberg.
Private payrolls growth increased at a faster rate than expected in June thanks to a burst in hiring for the hospitality sector, ADP reported Wednesday. The gain of 692,000 was well above the 550,000 Dow Jones estimate though it fell short of May’s 886,000. In one bit of bad news for the jobs market, the May count was revised down sharply from the initially reported 978,000, though that still left it as the best month since September 2020. From an industry standpoint, the biggest hiring gain came from the 332,000 pickup in leisure and hospitality. The sector, which includes bars, restaurants, hotels and other related businesses, took the hardest hit from the Covid-19 pandemic but has shown strong gains during the economic reopening.
The sticker price on cars isn’t sticking. In some cases, it’s going up. Auto makers typically set what is known as the manufacturer’s suggested retail price, or MSRP, a figure that appears on the window sticker of a new model. But with inventory tight and customers clamoring for cars and trucks, auto dealers are charging more, increasing the price above sticker and in some cases requiring customers buy certain add-ons, such as protective coatings and accessories, as part of the increase. Some buyers say they have encountered dealerships asking for thousands of dollars above MSRP. And analysts and dealers say the practice is becoming more widespread and occurring on a wider range of vehicles, including more mainstream models that typically wouldn’t be targeted for such price increases. I am hearing from numerous readers who are shopping for cars (new and used) and are finding it challenging to get decent prices. The WSJ article I included goes into some detail on the topic. In a related note, I have driven across MA, CT, NJ, PA, NY and can tell you that I am seeing signs for “Help Wanted” all over the place. Offering sign on bonuses, $20+/hr and begging for workers. Is this not inflationary?
This article is about April home price appreciation in the US. No inflation here either. (For those new readers not used to my sense of humor, I am being a bit sarcastic.) “April’s performance was truly extraordinary,” said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices. Home prices in April saw an annual gain of 14.6%, up from a 13.3% increase in March, according to the S&P CoreLogic Case-Shiller National Home Price Index. Among larger cities covered by the index, the 10-city composite was up 14.4% year over year, up from 12.9% the previous month. The 20-city composite was 14.9% higher, up from 13.4% in March. We also saw a strong May for housing. Pending home sales surprised the experts, rising 8% in May. Realtors point to lower mortgage rates for some of the sales gains. Pending sales were strongest in the Northeast and West.
The great lumber bubble of 2021 has popped. After a jaw-dropping rally this spring, lumber prices have come back down to earth as supply increased, speculative trading action cooled and home building demand eased. Lumber futures have tanked 42% in June alone, on pace for their worst month on record dating back to 1978. The building commodity is down more than 13% in 2021, headed for the first negative first half since 2015. At their peak on May 7, lumber prices hit an all-time high of $1,670.50 per thousand board feet on a closing basis, which was more than six times higher than their pandemic low in April 2020. This is helpful to stem the tide of rising construction costs.
You may be aware that the Federal Reserve doesn’t use the Consumer Price Index, which is published by the Labor Department’s Bureau of Labor Statistics, to measure its progress toward achieving an inflation rate averaging 2%. It prefers to judge itself by the personal consumption expenditures price index, which is published by the Commerce Department’s Bureau of Economic Analysis. You may even know that the CPI tends to run higher than the PCE price index. In the year through May, for example, the CPI rose 5.0% while the PCE price index rose 3.9%. But did you know that the Bureau of Economic Analysis publishes a table—Table 9.1U—that lays out in detail why the two price measures have (or haven’t) diverged quarter by quarter? The latest version of Table 9.1U was published on June 22. This chart is boiled down from the table.
UBS Group AG will permanently allow as many as two-thirds of its employees to mix working at home and the office, as it seeks a recruitment edge over some Wall Street banks taking a more hardline approach. The bank’s internal analysis shows that two-thirds of its workforce are in positions suitable for hybrid working, while some roles, such as traders and branch staff, will have to work from site. No date for a return to the office has been set. Employees can start applying for hybrid working as soon as local pandemic rules allow for a return full-time to the office. So far staff in Australia, China, Hong Kong, New Zealand and Taiwan can begin such discussions, according to a person familiar with the matter. “Hybrid work options will be introduced on a country-by-country basis, with timing dependent on the local pandemic situation,” said Nadine Reif, a UBS spokeswoman. To be clear, I feel UBS is not a market leader and my one year stint there was a horrible experience leaving me scarred for life. Many other firms including JPM and GS have been far more vocal about coming to the office. Shockingly, I like what UBS is doing. Not for every business, but do feel employees will work harder and be more efficient if given the ability to work in some hybrid role in many cases.
70 people were wounded and 8 were killed in weekend violence in Chicago last weekend. Remember, I was born in Chicago and then lived there after college getting my 1st job there and attending the University of Chicago for business school, so it is a city near and dear to my heart. I am sorry, it has been a mess forever and seems to get worse when I thought it to be impossible. The mayor actually is trying hard to be worse than DeBlasio, and doing a good job of that - something I felt was impossible. Four of the attacks were mass shootings with four or more people wounded. The attacks accounted for nearly a third of all the shooting victims between Friday evening and early Monday morning. Chicago has seen at least 331 homicides so far this year, compared to 319 at this point last year and 247 in 2019. That’s an almost 4 percent increase over last year and a 34 percent increase compared to 2019. There have been at least 1,842 shootings this year, compared to 1,625 at this time in 2020 and 1,171 in 2019. This year has seen a more than 13 percent increase compared to 2020, and 57 percent compared to 2019.
Tourists visiting Times Square on Monday expressed fears for their safety — and the city’s future — following the second shooting there in as many months. “Worrying about getting killed in a crossfire was not on my itinerary when I booked this trip with my girlfriends — especially while touring the biggest attraction,” said Pat Flanagan of Cleveland. “It’s actually more sad than scary because I want to see New York pick up again.” Hey, DeBlasio, you know NYC relies on tourism to drive the city? People fearing for their lives is not a good tourism campaign. “Come to NYC and have fun dodging bullets, stepping over homeless people, watching people shoot up and seeing garbage on the streets.” Not sure that will be a super effective campaign. Do your job. Here are just a few headlines from the past two days and there are many more. “Homeless Man Beaten with Bat,” “Dirt Bikers Pummel NYC Postal Worker,” “Man Busted for Swinging an ax on NYC Train.”
A generation ago, Michael Dukakis saw his chances of winning the presidency crushed after Republicans cast him as soft on crime. Now he is warning his party not to make the same mistake. The "defund the police" movement is “nuts,” Dukakis, the Democratic presidential nominee in 1988, told this column. “I’m saying to myself, my God, what the hell is going on here?” Dukakis added during a 40-minute phone interview from his home in Brookline, Mass., late last week. “On one hand, you have folks screaming and yelling about getting rid of policing, which makes no sense at all. And then on the other hand, you have some people totally misinterpreting what community policing is, just as we were really making huge progress,” he said. I had a great conversation with a State Trooper the other day. I thanked him for his service and he gave me a big handshake and said, “Thank you. At times, it is really hard.” He feels he is vilified for trying to help people and has been an officer for over 20 years. He has a few more years to go and is looking forward to retirement. His son wanted to follow in his footsteps and he will not allow it for all the obvious reasons. Based on what is going on in big Democratic cities (NYC, SFO, LA, Portland, Seattle, Baltimore…) maybe people will realize being soft on crime is not super successful.
The Democratic primary race for mayor was thrown into chaos Tuesday as the city Board of Elections appeared to have botched the count amid the city’s first ranked-choice election — adding 135,000 pre-election “test” ballots that hadn’t been cleared from a computer. Preliminary results released earlier in the day showed a total of 941,832 ballots cast for mayor, an increase of more than 140,000 from the 799,827 that were counted on June 22, the day of the primary.
The glaring discrepancy at first went unnoticed until it was flagged by front-runner Eric Adams. “The vote total just released by the Board of Elections is 100,000-plus more than the total announced on election night, raising serious questions,” an Adams spokesman said. The preliminary results that were initially posted had Adams with 51.1% of the vote and Garcia with 48.9%, with 15,908 votes separating the two. Later, the BOE took down the results due to the discrepancy. To be clear, I am a little confused here. I think I am seeing that 135k ballots were added which shows Adam’s lead collapsing and now Garcia is close, but the BOE then took off those new 135k ballots for now. This is my understanding of the developments. More election controversy. Do we live in a third world country or the USA? This Bloomberg story gives more details.New York prosecutors investigating the Trump Organization are scrutinizing cash bonuses as part of their focus on whether the company failed to pay taxes on benefits provided to some of its employees, people familiar with the matter say. The interest in cash payments, which has not been previously reported, is part of investigators' look at whether executives and the company failed to pay appropriate taxes on benefits, including school tuition, cars and rent-free apartments, the people said. It's not clear who received the bonuses, which were likely paid by check or wire, or how much they totaled.
The U.S. Department of Housing and Urban Development has released its latest report about homelessness in the United States, finding that the number of people sleeping rough grew 2% last year. Levels of homelessness have now increased for four consecutive years and just over 580,000 people experienced it on a single night in 2020. Of that total, 61% were staying in emergency shelters or transitional housing while the remainder were forced to live in unsheltered locations such as the street, abandoned buildings or locations unsuitable for human habitation. Unsheltered homelessness in the U.S. is primarily a problem in cities with nearly 6 out of every 10 people experiencing it living in an urban area. More than half of all people experiencing homelessness in the U.S. last year were in just four states: California (28% or 161,548 people), New York (16% or 91,271 people), Florida (5% or 27,487 people), and Texas (5% or 27,229). California is also particularly notable as accounting for more than half of all unsheltered homeless people in the entire country. I never see homeless people in Florida. I have no idea where they are, but they ain’t in Boca. Based on the article, maybe more in Miami and Orlando.
An unpleasant surprise for wealthy Americans was lurking halfway through a 114-page document released by the U.S. Treasury late last month. Technical provisions in the proposal — not mentioned when President Joe Biden presented his plans to raise taxes on the rich in April — could disrupt or dismantle some of the most popular ways super wealthy people have legally avoided taxes for decades. One target is dynasty trusts, vehicles that wealthy families can use to benefit multiple generations of descendants. Another is an even more common tool among the top 0.1% — trusts that can move millions, and sometimes billions, of dollars to heirs tax-free. “This is the stuff that’s really going to make a difference,” said Joe Maier, director of wealth strategy at Johnson Financial Group. “It’s going to make a difference in the anxiety that wealthy people and their advisers have, and would really make a difference in the revenue the government collects.”
The White House is crafting an executive order aimed at promoting competition throughout the U.S. economy, a move aimed at lessening the stranglehold of dominant players in industries ranging from banking and agriculture to shipping and air travel, according to three people familiar with the discussions. The order, which could be issued as soon as this week, fits in with a growing theme for President Joe Biden, who has elated progressives by appointing advocates of tougher antitrust enforcement to top jobs at the White House and agencies such as the Federal Trade Commission. Whatever you morons do, don’t look at Google and Facebook. Nothing to see there with respect to market dominance, suppressing information, impacting elections and having control of their markets.
Last week’s deadly Florida condo collapse may have started at the base of the building, engineers have said, according to reports. “It does appear to start either at or very near the bottom of the structure,” consulting engineer Donald O. Dusenberry told the New York Times, after watching video footage of the 12-story Champlain Towers South Condo collapsing in Surfside early Thursday. “It’s not like there’s a failure high and it pancaked down.” The developers of the collapsed Surfside condominium tower worked around local building codes by adding a penthouse that wasn’t part of the original plan, a review of town building records shows. Plans submitted by the developer of the Champlain Towers South initially called for 12 floors of residential units. The developer decided to add a penthouse, which increased the building’s height by about 9 feet with an additional floor. That put the tower slightly above the town’s legal height ordinance at the time. An anonymous contractor shared the pictures with the Miami Herald, taken just two days before the collapse. They show a wet floor, cracked concrete and severely corroded rebar in the building's pool equipment room. The contractor also reported deep standing water in the building's parking garage, just below the pool deck. People are asking me what I think happened. To be clear, I have no inside info here, and am not an engineer. My gut tells me it was a host of factors which together caused the perfect storm so to speak. Poor construction (skirted building codes), leaking pool, corroded rebar, construction on the roof and weakness due to proximity to the ocean and the salt water/air causing damage all likely played a role in it. I do not believe it was a sinkhole after speaking with a PhD who is an expert on erosion. Not only is she an avid reader, she is my niece who will be an Assistant Professor at the University of Rochester in the fall. (Pics below from 2 days prior to the collapse).
A weight-loss tool that uses magnets to stop people from opening their mouths wide enough to eat solid food has been developed by scientists in order to tackle obesity. The device, developed by medical professionals from the University of Otago in New Zealand and scientists from Leeds in the UK, can be fitted by dentists and uses magnetic components with locking bolts. It has been criticized online, however, with people likening it to a medieval torture device. The University of Otago tweeted that it was “a world-first” weight-loss device “to help fight the global obesity epidemic: an intra-oral device that restricts a person to a liquid diet.” Given my summer of bad food and limited gym time, I may need to order this in the fall.
Virus/Vaccine
Trying something new this week. Found these charts/data. In short, things are going in the right direction despite the Delta Variant. Great data from Michael Cembalest below.
From Michael Cembalest (JPM)
The Delta variant is now becoming the dominant strain of COVID on a global basis, and may entail a higher rate of breakthrough infection. However, vaccines are still highly effective vs the Delta variant, concentrating infection and hospitalization risks mostly among the unvaccinated. Natural immunity acquired through prior infection is less likely to shield people vs the Delta variant. While recent studies confirm higher heart inflammation risks for young males taking an mRNA vaccine, the CDC cites vaccination benefits that still substantially outweigh risks for this cohort.
Background and research findings
According to a May CDC report, “breakthrough” infections are rare: of 101 mm people vaccinated from January through April in the US, 10,000 were infected (0.01%), 995 hospitalized (0.001%) and 160 died (0.0002%). The CDC now cites 4,115 hospitalized and 750 fatalities among vaccinated individuals; even so, these numbers are still very low. People suffering breakthrough infections were 60% less likely to have a fever, and experienced shorter and milder cases than unvaccinated individuals. However, these low breakthrough rates occurred at a time when the UK (Alpha) variant was predominant in the US.
The Delta variant is now becoming the dominant strain of COVID on a global basis, and may entail a higher rate of breakthrough infection. However, vaccines are still highly effective vs the Delta variant, concentrating the risks among the unvaccinated. The recent UK infection surge is illustrative. Of 90,000 infections attributed to the Delta variant, 65,000 were not vaccinated; 20,000 had received one dose and 7,000 had received two doses (i.e., breakthrough infections). Here’s a roundup of the latest research findings on the Delta variant:
Despite the data above, we are seeing more mask mandates.The more transmissible Delta variant has spread to almost every state in the US, fueling health experts' concerns about Covid-19 spikes. The variant is expected to become the dominant coronavirus strain in the US, the director of the Centers for Disease Control and Prevention said. And with half the US still not fully vaccinated, doctors say it could cause a resurgence of Covid-19 in the fall -- just as children too young to get vaccinated go back to school. In Los Angeles County, the pace of Delta's spread has prompted officials to reinstate mask guidance for public indoor spaces -- regardless of vaccination status. The new, voluntary mask guidance is needed until health officials can "better understand how and to who the Delta variant is spreading," the county's department of public health said. I can tell you that from my travels, multiple stores will now not let you in without a mask regardless of vaccination status.
Coronavirus cases in the U.S. will increase due to the delta variant, Dr. Scott Gottlieb told CNBC on Wednesday. However, he stressed, “I don’t think it’s going to be a raging epidemic across the country like we saw last winter.” Parts of the country with high vaccination rates such as the Northeast should be “largely protected,” the former FDA chief said. However, he cautioned, “I don’t think we should be cavalier about this.”