Opening Comments
I want to start by thanking the numerous readers who have been reaching out to me after Wednesday’s report about my COVID.
I want to give my readers a bit more info than maybe they should have on a medical situation around my experience with COVID. I was diagnosed on Tuesday, October 12th. I was prescribed Paxlovid by Pfizer. I will only suggest that the side-effects pf this drug (below) are very legitimate, especially the 2nd one and I stopped taking it after one day, as a result. Be careful on this medication. No food Tuesday, Wednesday or Thursday or Friday other than 3 bites of plain pasta and a couple crackers. Shockingly no appetite, even as of Sunday afternoon. On Wednesday night, I slept with sweatpants and a sweatshirt due to a high fever and woke up at 3 am convinced I peed in the bed. I had not. I sweat through my clothes so profusely that they were soaked and had to take a shower. It has been a brutal few days. On Thursday morning, my high fever broke, and my severe headache had lessened. By Friday am, I was about 95% other than lack of appetite, something incredibly foreign to me.
Paxlovid
In the past couple Rosen Reports, I had included short podcasts which summarize the piece and gives a little more personal touch than I can do in the newsletter. I don’t get to every point in the newsletter but cover a majority of them. Unfortunately, podcast open rates have been low. Those who have opened them felt they were good and want me to continue. It is meant for people to listen when the go to work, in the gym or while meeting with a major TV Producer who may want to sign me up!
Video of the Day-Where Has Humanity Gone?
Crazy Trump Video
Skinny Jeans
Quick Bites
Markets
UK Situation
Inflation
Bank Earnings Summarized
ACT Scores Falling
Other Headlines
Crime Headlines
Real Estate
European Apartment Stock
Ken Griffin Donating in Miami
Boca Mansion Sold
Video of the Day-Where Has Humanity Gone?
I write extensively about crime and am frustrated with soft-on-crime policies. I find people have become more rude and obnoxious everywhere I go. The way people treat staff at a restaurant, the behavior on planes, subways or airports is shocking. Hate crimes and the lack of respect we are seeing on a widespread basis. The parents’ antics and their children’s sporting events are all concerning. In this short video, a comedian is doing her routine and gets heckled by a woman in an obnoxious manner. Listen for the first 1:38. The comedian does a good job of shutting her up only to find a full can of beer thrown at her head during her skit. The comedian calmly picks it up and drinks it. AWESOME. Listen closely to the video as the person with this woman loses it. It is a sad state of our world today.
Crazy Trump Posted Video
This is a must watch video due to the fact that a former President of the USA actually posted this. I will say that I love Christopher Walken who narrates it. The video is only 1-minute and 30 seconds and starts at the 1 minute mark. I will repeat again, we need new blood to run for President for both the Republicans and Democrats in 2024.
Skinny Jeans
I wrote a piece entitled, “My Waist is Expanding Faster Than Inflation,” in November, 2021. At the time, I had not been going to the gym because of COVID concerns and had put on a few pounds, something which I generally don’t do. I realized this when I tried on a pair dress pants for a meeting, and I could not button them. I was depressed about it and started working out in my garage to get back in shape. Being early 50s, it is harder to keep off the mid-section than it was at 40.
When I worked in NYC, I felt my wardrobe was top notch. I pride myself on my attire and had connections to get the best prices for my high-end fashion taste. Well, moving to Florida meant there was basically no need for dress clothes. Down here people go to meetings in shorts and a golf shirt and believe they are in business casual. If you wear long pants, it is a formal affair. In 5 years in Florida, I have worn a blazer three times. My cumulative spend on dry cleaning n 5 years is not $20, while in NYC during formal attire it would have been over $12,000. I have seen idiots in nice restaurants down here in tank tops and flip flops, for perspective. The bar is awfully low for what people deem fashionable when you look at Boca relative to NYC. Men actually wear shirts like the one below down here. Hard to look at it without throwing up a little in your mouth.
I have a large closet of clothes despite purging a bunch of suits, slacks and blazers when we moved to Florida. I am left with 10 suits, 10 blazers maybe a dozen pairs of slacks and about the same in dress shirts. Before my COVID bout this week, I would guess half the pants fit, and I am being generous when I use the word “fit.” I am not sure I could sit down without ripping a couple, but theoretically, I could put them on and walk. It is irritating, because I exercise daily, eat relatively healthy and weigh 168lbs generally.
So, I have this large closet of designer duds which is deteriorating on a formula (A*V*W)=IG.
A=My Age
VC=Vino Consumed
W=Waygu Consumed
IG=Waist Inches Grown
Well, this horrible bout of COVID has me down 9 pounds in a hurry. I am trying to find the silver lining here in what has been a brutal week for me. So, here it is. I just tried on a pair of Alexander McQueen black pants which STILL HAS THE TAGS on from a purchase 6 years ago from a massive Bergdorf sale. I had no reason to wear them, and then I could not fit in them.
I have been going bonkers locked in my bedroom for days and started trying on clothes. Guess what? The black pants fit again comfortably. I know I have a very small window of time that I will be able to squeeze into these pants or many of my others from Gucci, Prada, and Armani. A result, next week, I need to go to some fancy dinners in my skinny pants. Readers, feel free to take me to formal dinners where I can dress up only to eat like a bird, so my skinny pants don’t bust open. I can’t count on getting plagues too often to keep the weight down, so if you see me at the beach with my fancy pants, you know I am just trying to get some use out of them while I can.
Quick Bites
Thursday the markets saw a truly insanely volatile day with an initial sell off on stronger than expected inflation data, but quickly rebounded to finish up 2-3%. The Dow had a 1,300 point intraday swing and the S&P moved 5% from low to the close for perspective. Stocks slumped Friday, capping off a volatile week of trading, a day after posting a historic turnaround rally as investors digested inflation expectations. The Dow fell 404 points, or 1.34%, to end the day at 29,635. Still, the index was up 1.15% on the week. The S&P 500 shed 2.37% to 3,583. and notched its seventh negative close in eight days (1.55% on week). The Nasdaq Composite slipped 3.08%, ending the day at 10,321 (-3.11% on week). YTD, the Dow is -18.45%, S&P -24.82%, and Nasdaq -34.03%. I have not been constructive on stocks for a while as written in prior reports and am concerned by the severity of the rallies. These swings are causing damage to the market and forcing hedgers to cover which exposes them to bigger downside in the next move lower. I just feel the market has too many headwinds, but on a positive note, I was positively surprised by big bank earnings. TSLA stock is -49% YTD and now ARKK (Cathie Wood) is at a 5 year low and -78% from record high. There is a story out that the US Treasury asked major banks if it should buy back US Government Bonds due to the lack of market liquidity. I guess so much for Quantitative Tightening. The 10-Year Treasury is at 4.03%. Oil is quite volatile as well and fell almost 4% Friday to sub $86/barrel on global recession fears and weaker China demand despite the announced OPEC cut.
UK news is major, and I saw this on CNBC. “This marks the first time in decades that the financial markets have forced the government of a big, developed economy with its own central bank to capitulate on core fiscal ambitions.” UK PM Truss had proposed tax cuts and apparently scrapped some of her plan based on the market reaction. Betting odds are now 56% that she is ousted by the end of the year. The Bank of England was forced to buy Gilt (equivalent to US Treasury bonds) to prop up levels due to liability Driven Investment (LDI) with pension funds. LDI is essentially leverage in Gilts in order for pensions to reach future return requirements in what had become such a low interest environment for so long. The massive sell off in Gilt (rise in yield) in recent months created a crisis for the pensions and substantial margin calls. ZERO RATE POLICIES have unintended consequences forcing institutions and individuals to take on more risk to generate return. It may be through leverage as is the case with LDI, but in many cases it has been by going down the risk spectrum to riskier assets. On the positive front, the Bank of England announced they are no longer buying Gilt, yet the market rallied bringing down from the highs, but are creeping back up. This was also due to the change in tune around tax cuts and the Chancellor of the Exchequer was pushed out after 6 weeks on the job.
The inflation data ran hotter than expected. CPI peaked a few months ago as I suggested (see chart), but core remains hot. The year-over-year rate of inflation is now 8.2%, down from 8.3% in August, according to the Labor Department’s Consumer Price Index, which measures how much Americans pay for certain goods and services. That is slightly higher than many forecasts, including a Bloomberg survey of 51 economists that predicted a year-over-year inflation rate of about 8.1%. There is a chart out from University of Michigan about next year inflation expectations/consumer sentiment which crept up to 5.1% from 4.7% last month. If this comes to fruition, the Fed will need to be more aggressive on rates. I have never suggested inflation will crash, but did feel it peaked. Some are calling for a quick fall in inflation. I am not convinced that is the case, but as seen in dotted line below, CPI peaked a few months ago.
High profile bank earnings this week. JPM beat with impressive Net Interest Margin (NIM) sending the stock up 5%+ initially, but Dimon was cautious. “There are significant headwinds immediately in front of us – stubbornly high inflation leading to higher global interest rates, the uncertain impacts of quantitative tightening, the war in Ukraine, which is increasing all geopolitical risks, and the fragile state of oil supply and prices,” Dimon said in the statement. “While we are hoping for the best, we always remain vigilant and are prepared for bad outcomes.” Citi shares fell after reporting a 25% decline in 3rd Q profits. Wells boosted loan loss reserves, but beat on revenues and missed on earnings. The stock was up 1%. Morgan Stanley missed on profits with a 55% collapse in investment banking revenues and the shares were down almost 3%. A smaller bank, First Republic fell 16% on a bad miss on NIM. Overall, I was positively surprised by earnings and feared higher reserves ahead of what should be a period of increasing defaults. Higher rates clearly helped NIM which should only get better with these rates moves. Of note, Investment Banking revenue fell at JPM -43%, MS-55% and Citi-64% year over year.
This year’s high school graduates scored lower on the ACT college admissions exam than any other class in the last 30 years, showing the toll pandemic-era disruptions has taken on student learning. The national average composite school for the Class of 2022 was 19.8 — the lowest average score since 1991. Roughly 1.3 million students nationwide took the ACT during their senior year — or 36% of recent graduates. The implications may go beyond the lower scores while applying to college. More than 4 in 10 test-takers did not meet any of the ACT’s benchmarks for “college readiness” in English, reading, math and science — suggesting these students whose high school careers were impacted by COVID-19 for larger stretches may have arrived on campus unprepared for high-level coursework. Not sure what to say about this scary story. Kids are unprepared and are not being taught enough in schools. Too much time on woke teaching and not enough reading, writing, arithmetic. The pandemic lockdowns and mask mandates did not help kids learn either. Let’s get back to basics.
Other Headlines
Jamie Dimon says expect ‘other surprises’ from choppy markets after U.K. pensions nearly imploded
BMO cuts 2022 year-end S&P 500 outlook, saying it underestimated inflation
The lower level is 4,300, down from 4,800 and would be a 18% increase from today.
Kroger agrees to buy Albertsons for $24.6 billion
Big transaction and good news that big deals still happening. Both stocks were down about 8% on the news.
Intel Plans Thousands of Job Cuts in Face of PC Slowdown (INTC)
Beyond Meat to cut 19% of its workforce as sales, stock struggle
Social Security cost-of-living adjustment will be 8.7% in 2023, highest increase in 40 years
Fed’s Bostic Reveals Trading Violations; Powell Opens Probe
How does this keep happening? Bostic-Harvard and Stanford PhD. Extensive trading during blackout days. He claims they were done by financial advisors and not directed by him.
Trump indictment odds skyrocket after bombshell Mar-a-Lago report, legal experts say
Trump worker told FBI about moving boxes on Trump's orders," tweeted former Mueller "pit bull" prosecutor Andrew Weissmann.
Biden says son Beau 'lost his life in Iraq' during Colorado speech
Losing a child is horrible, but not remembering how they died seems a bit odd to me. I don’t see how this guy lasts 27 more months.
A very good number for Republicans in new CNN poll
Below is the Predictit data for the 2024 Presidential Election. Note, Trump fell 3 points this week. You can put money down at these levels.
Xi warns against foreign interference in Taiwan, says China will ‘never promise to renounce’ force
Saudi Arabia Pushes Back at U.S. Outrage Over Oil Cuts
The Saudi’s confirmed Biden urged for the cuts to be delayed a month. Could you imagine if Trump did that to impact the election? The media would have eviscerated him. I just want consistency.
Anti-oil environmentalists pour tomato soup on Van Gogh 'Sunflowers' painting
This is disgusting. The speech seems less anti-oil and more about the lack of affordable oil to me. The Van Gogh should be worth tens of millions. If my kid pulled a stunt like this I would let them rot in jail. Video above. The irony? The granddaughter of Getty Oil is funding ”Just Stop Oil.”
Alex Jones Trial Latest: Almost $1 Billion in Damages for Sandy Hook Hoax Lies
I really never understood this lunatic. He has brought so much pain to families who have lost their children. What the hell is wrong with people?
Manhattan congressional candidate publishes a porn video to highlight his sex positive platform. Hard to make this up.
NYC homeless shelter population hits all-time high amid cascading migrant crisis
Big problem’: Wawa considers halting expansion after viral riot video
So, bad crime policies are crushing business. The article suggests that due to the mob ransacking of a store, Wawa is reconsidering expansion and announced separately two stores are closing in the area due to safety concerns. Yes, Philly has a horrible DA, Krasner. The article talks about massive increases in security costs impacting margins.
Crime Headlines-Hard not to be disgusted by the horrific crimes across the country.
Two Connecticut cops fatally shot, one injured in Bristol
The officers were responding to a fake domestic disturbance call and were ambushed.
North Carolina shooting leaves 5 dead, including off-duty police officer; suspect in custody
Chilling video shows rape suspect abducting girl in LA
The sicko abducted a 14-year-old girl and raped her in the bathroom. There is a video of him walking with the girl. SCARY. He threatened her with a gun.
Dads shoot young girls in Florida road-rage gun battle
Idiots shot each other’s children in a car battle gone wrong. Jacksonville, FL. The difference between South Florida and Central and North Florida is staggering.
Mom and baby hit by teen driver flee LA, Gascon's policies: 'Good citizens are being punished'
Horrible story of a teen who intentionally ran over a mother with her baby and was given a slap on the wrist despite the fact that the teen was out on probation at the time of the attempted murder. The mother has left LA and has been critical of the crime policies there.
Teen boy, 13, arrested in beating death of Los Angeles liquor store clerk during alleged robbery
How is this possible?
Los Angeles Taco Bell stabbing of 82-year-old man in wheelchair caught on video
Mom Arrested For Letting Son, 10, Get Large Tattoo On His Arm, Police Say
How is this possible? What kind of idiot allows their 10-year-old child to get a large tattoo or any tattoo?
Real Estate
I continue to hammer Europe for bad policies, especially around energy. A reader sent me this picture which I thought was telling and decided to do a little research around it to compare it to the US. In short, a large R/E concern which owns 400,000 apartments in Germany, Sweden and Austria with a market cap of over $16bn is called Vonovia. The stock is -65% YTD and the price-to-book ratio fell to .25 as of Friday (lower than the chart below). The price-to-book was 1.7x in 2020. What does a price-to-book of .25 for a major apartment owner telling us? I checked some large US REITS which own apartments and Independence Realty Trust has a price-to-book of .96. Equity Residential stock is -30% YTD and has a price-to-book of 2.2x and a market cap of $24bn. The current moves in Vonovia are concerning about what the market thinks is going to happen there. The 2nd picture is the Eiffel Tower gone dark. I wonder what happens in Europe this winter?
Florida welcomed Ken Griffin with open arms after he left the crime-ridden city of Chicago, which is run by imbeciles. Of course the man who donated $750mm to Chicago over 10 years started his Florida tenure with donations by funding $250k to a scholarship program for STEM students. He will also match other $1mm. He has donated $25mm to Miami in recent years as well. Thank you Kenny G.
A waterfront home sold and closed in Royal Palm in Boca Raton. It sold for $25.75mm (slightly more than I would have thought). The pictures are stunning, and it is on the intracoastal. Brand new with 8,287 ft of living space. Things have cooled down a bit in terms of transactions over the past few months. This is the first big sale I have seen in a while. Check out the link and pictures. I find the street busy and one I would not want to live on, but the house and water are great. The community has 33 homes for sale, which is up from 4 in December, but down fro 71 when I moved in 2017. Today, asking prices range from $3.2mm (knockdown) to $40mm for new construction on the water. When I moved down, $10mm was almost unheard of for water front.
Other R/E Headlines
Home Flippers Get Burned by US Housing Market’s Sudden Slump
Falling demand and rising interest rates mean some investors are likely to take losses on quick deals.
Economists predict “ugly” fourth quarter for US housing market
North Texas homebuilders pursue ‘magic bullet’ to entice buyers as mortgage rates rise
Virus/Vaccine
