Opening Comments
The travelling has been non-stop, and my head is spinning. After heading from NYC to Carlisle, PA on Sunday, we drove to Baltimore on Monday and at 6am flew to Atlanta, GA. Then we drove 3.5 hours to Dothan, Alabama (southeast corner of state) for another tournament. From there, I am heading to Boca Raton (home), and Jack is heading solo up to PA for a tournament and my wife is meeting him there. I will be home to work out, fish, eat real food, drink real wine and sleep in a real bed. The miles driven since May 30th has surpassed 3,100.
Of course the heat is following me. On Wednesday, it was 107with the heat index and check out the forecast for the week. I caddied for Jack in a practice round today and almost died. I am not sure I could have had more water or Gatorade.
For those traveling, get to the airport early as a combination of light staffing and heavy travel approaching pre-pandemic levels is resulting in uncomfortably long lines. I had never had a problem with my kids getting in TSA with me. Kids over 12 no longer can get though TSA without having TSA Precheck themselves. When I flew with Jack on May 30, no problem. On June 21st, problem. This is a complete pain in the butt, so be prepared. Check out TSA precheck data which is about 90% of pre-pandemic now.
In my last note, I shared a picture of Jimmy Choo on Madison with a broken door due to a smash & grab which took place early Saturday am. A reader suggested this was “fake news” as he could not find it in the press. I took the picture with my own camera as I walked by the store early Saturday am. The entire Rosen clan witnessed it, so I am pretty sure we did not hallucinate the damage. The Rosen Report is like Drudge breaking the Lewinsky scandal or Woodward & Bernstein on Watergate. You find out news here that is not anywhere else. Actual Picture from my phone. When there are no consequences for crime, it is shocking what happens and businesses small and large are hurt which ultimately negatively impacts the consumer with higher prices and store closures. DA Bragg has got to go.
Big shout out to Ned Zachar, an amateur who qualified for the US Senior Open at Saucon Valley Country Club in Pennsylvania this week. We are members there, but unable to support him in person given we are in Alabama. Go Ned. It is no coincidence that he is a reader of the Rosen Report and qualified for the major golf tournament. It is well documented that I take credit for everyone else’s accomplishments.
Picture of the Day-3,400 Year Old City Emerges in Iraq
Spicy Rigatoni Vodka Alone is Worth The Wait at Carbone
Quick Bites
Markets
12 Month Recession Odds Climbing
Gas Tax Holiday Coming?
NYC/NY State Budget Issues
Construction Costs Rising With Labor Shortage
Gun Legislation Coming
Elections Matter
Other Headlines
Virus/Vaccine
Data
Polio Case in London
Real Estate
General Comments-High End Boca Weaker
US Home Sales Slowing
Global Home Sales (Great Chart)
Not a Redo of 2008
Other R/E Headlines
Rates
NYC Luxury Chart
Picture of the Day-3400 Year Old City Emerges in Iraq
When I was 7, my mother took me to the Field Museum in Chicago for the King Tut exhibit and I was amazed. Even though it was 45 years ago, I still remember it vividly. Anytime I see ancient ruins uncovered, I think about that museum trip.
A sprawling 3,400-year-old city emerged in Iraq after a reservoir's water level swiftly dropped due to extreme drought. Kurdish and German archaeologists excavated the settlement in the Mosul reservoir, along the Tigris River in the Kurdistan region of northern Iraq, in January and February. The project was in partnership with the Directorate of Antiquities and Heritage in Duhok to preserve the area's cultural heritage for future generations. The archaeological site, Kemune, is believed to be the Bronze Age city Zakhiku, a major hub of the Mittani Empire that reigned from 1550 to 1350 BC. The kingdom's territory stretched from the Mediterranean Sea to northern Iraq, according to Ivana Puljiz, junior professor in the department of near eastern archaeology at the University of Freiburg in Breisgau, Germany, and one of the directors of the project.
Spicy Rigatoni Vodka Alone is Worth The Wait at Carbone
On Saturday night, we went to the Major Food Group’s most notable Italian American eatery, Carbone, which has one Michelin Star. I had been to the Greenwich Village restaurant a half-dozen times, but it had been years since I was last there. It is my favorite restaurant of the Major Food Group empire and one of the coolest/hippest Michelin Star restaurants in NYC. The reservation is impossible to get and had to call in some favors. Despite our 6:30pm seating, the place was packed. I have been there when Leo DiCaprio and a host of his model friends sat at the table next to me. It brings in the A-Listers for a reason; it is damn good and fun. Although I believe there are better one Michelin Star food experiences in NYC, I prefer the combination of food, service and ambience at Carbone as a package.
The old building has exposed brick walls, low ceilings and dim lighting to give it charm and an antique feel and the food will knock your socks off. There are various rooms so despite being a decent size, the experience feels more intimate in the back room. On the perfect night, I would go to Lupa (great pasta and love the bar) across the street to sit at the bar and have a glass of wine prior to going to Carbone. The owners took the old Rocco sign and turned it into the Carbone sign in a clever fashion, which keeps the old-world vibe.
When dining at Carbone, it is important to go in with a family-style mindset. There are so many good dishes, you want to try as many as possible. I highlighted my personal favorites on the menu. We started with Eggplant & Zucchini Scapece and Calamari Marco for appetizers. They also bring you amazing fresh bread, cauliflower, salami and cheese for the table. The Eggplant and Zucchini is my favorite appetizer which is grilled to perfection with a few toppings including a little cheese and bursts with flavor. The calamari is good, but not the best ever.
For the entrees, we had amazing pasta, Spicy Rigatoni Vodka, which is hands down the best I have ever tried. The sauce is perfectly done and my only complaint is we could have eaten more. It is not as heavy as other vodka sauces and I believe the best item on the menu. You must order it. For me, it is a top three pasta dish in NYC and that is saying something. We also had a the Lobster Ravioli which I had for the first time and was a hit with cream sauce and a shocking amount of lobster inside and outside of the ravioli.
The Chicken Massimo is delicious (not pictured) and the meatballs were spectacular, but not on the formal menu. Trust me, ask for them. The meatballs are topped with fresh basil and a healthy portion of the famous Carbone Red Sauce. The consistency is hard to beat.
The wine list by the glass is a bit limited, but the full wine list is solid, albeit pricey. Overall, the food is very good and they do have rave reviews for a reason. The fact that Carbone combines an amazing culinary experience with great service, cool vibe, and a solid wine list makes this one of my favorites in NYC. Most Michelin Star restaurants have a more formal setting, and this one just pulls off a great evening and a fantastic date idea as they will be impressed unless they lacks tastebuds. The downside is getting in is nearly impossible, and the price is not for the faint of heart, but not obnoxious. The service is top-notch and the wait staff is incredibly knowledgeable about every item on the menu. I am not an Italian dessert lover, but Carbone pulls it off better than any other Italian I have eaten with some American inspirations. I am not a carrot cake fan, but people rave about it. I am all about chocolate.
Food-A
Service-A
Ambiance-A+
Wine List-A-
Price-Full, not insane, but worth it
Quick Bites
Stocks fell slightly Wednesday in choppy trading as markets struggled to sustain a rebound from earlier in the day. Traders also weighed comments from Federal Reserve Chair Jerome Powell, who reiterated the central bank’s stance to fight inflation. The Dow dropped 47 points, or 0.15%, to 30,483, slipping in the final hour of trading. The S&P 500 dipped 0.13% to 3,760. The Nasdaq fell 0.15% to 11,053. Growing concerns of a recession on Wall Street have recently weighed on stocks. (next bullet). Tuesday, stocks were up sharply with indices up between 2-2.5%. For the last 5 days, stocks are largely unchanged despite the massive volatility. Oil was down almost 5% on the day and is back under $105. I believe it is recession fears driving oil lower. I don’t think the Biden Gas Tax holiday should have a big impact. Crypto was hit again with BTC under $20k and ETH approaching $1k. The 10-year Treasury rallied 15bps and is back to 3.15% on growing recession fears. The 2-year Treasury rallied 14bps to 3.06%. The 2s/10s is just under 10bps from 1.55% in March of 2021.
Economists surveyed by The Wall Street Journal have dramatically raised the probability of recession, now putting it at 44% in the next 12 months, a level usually seen only on the brink of or during actual recessions. The likelihood of a recession has increased rapidly this year as inflationary pressures remained strong and the Federal Reserve took increasingly aggressive action to tame them. Economists on avhttps://www.cnbc.com/2022/06/22/powell-tells-congress-the-fed-is-strongly-committed-to-bringing-inflation-down.htmlerage put the probability of the economy being in recession sometime in the next 12 months at 28% in the Journal’s last survey in April and at 18% in January. There is one NY Federal Reserve Bank model out which is concerning, but it is not the official model. It shows 10% chance for a “soft landing” and can be seen in the 2nd chart. It shows negative GDP growth in both 2022 and 2023. Wednesday, Fed Chair Powell told Congress the Fed is ‘strongly committed’ on inflation and noted a recession is a ‘possibility.’ Powell, you have been wrong on almost everything. Suggesting it is a possibility is a slight understatement. Remember, you felt inflation was transitory not long ago and were buying mortgage bonds for over a year longer than necessary. Take some blame for contributing to this mess.
For months, drivers across the U.S. face have faced eye-popping prices when they fill up their gas tanks. Now, President Joe Biden called on Congress for a federal gas tax holiday. The federal gas tax amounts to 18.4 cents per gallon and 24c for diesel, while states separately impose their own levies. I appreciate Biden’s efforts, but this falls far short of what is needed in my opinion. The average US driver drives 14k miles a year with an average of 24mpg. They consume 583 gallons of gas per car. The three month holiday will save them $314/car. It helps on the margin, but is not a huge needle mover. Obviously, the diesel savings will help on the margin on logistics as well. Biden, read the Exxon CEO’s letter carefully and think about MAJOR things you can do to fix the problem you helped to create.
Wall Street generates an outsized share of New York’s tax revenue, so the recent drop in stock prices should worry both Gov. Kathy Hochul and Mayor Eric Adams — even if a recession doesn’t quickly follow. The securities industry generates 20% of total private wages in the city, despite comprising only 5% of private employment. In all, one out of every nine jobs in every category is either directly or indirectly associated with Wall Street, the state comptroller has estimated. Last year’s bull market helped fill Albany’s coffers to overflowing with higher taxes on capital gains, investment-firm profits and bonuses. But that wave has now receded. The article outlines both NYC and NY State budgets. The same is true of California which gets outsized tax collection from the tech sector. I believe both states will be under pressure given Wall Street woes, the tech debacle (ARKK Innovation -68% in one year), IPO proceeds are down almost 95% YTD from the same period last year, and the wealthy continue to leave for greener, safer, less woke and tax-efficient pastures.
Construction projects across the U.S. are running short on labor just as $1 trillion in federal infrastructure money starts to kick in, leading companies to get creative in their quest to attract and retain workers. In Southern states, contractors advertise sunny weather and 12 months of work on help-wanted websites in the frostier Northeast and Midwest, where highway construction goes dormant during the winter months. Project managers in remote areas are luring employees with signing and referral bonuses and per diems for housing, knowing they won’t be able to find enough workers locally. Everyone is hiring, and wages are going up which is a good thing to help people fight inflation. The bad news is it drives up the cost of everything we buy and the infrastructure bill impact will be hitting driving prices even higher. Spoke with a foreman on infrastructure projects last night. Pre-pandemic, people which were making $17 an hour are getting $25+ and hard to find. Those skilled laborers who were making $35 are getting $45-48 today. His biggest challenge is filling positions and this is for projects in Alabama and Georgia.
Senate bargainers reached agreement Tuesday on a bipartisan gun violence bill, the parties’ top two negotiators said, teeing up votes this week on an incremental but notable package that would stand as Congress’s response to mass shootings in Texas and New York that shook the nation. Nine days after Senate bargainers agreed to a framework proposal — and 29 years after Congress last enacted major firearms curbs — Sens. Chris Murphy, D-Conn., and John Cornyn, R-Texas, told reporters that a final accord on the proposal’s details had been reached. The legislation would toughen background checks for the youngest firearms buyers, require more sellers to conduct background checks and beef up penalties on gun traffickers. It also would disburse money to states and communities aimed at improving school safety and mental health initiatives. I have no problem with more strict background checks. I hope this agreement is not just lip-service, given the severity of the issue at hand. I commend both sides for finding common ground on something. We are such a nation divided, we need to celebrate a win which should save lives.
The world of politics is revolting to me, as most involved tend to be disgusting individuals who over-promise and under-deliver. I believe a majority find ways to enrich themselves and push the envelope to do so. I want to remind people about the last gubernatorial election in Florida where DeSantis barely beat Gillum, With 8.1mm votes between them, DeSantis won by 33k votes. Gillum was caught throwing up in a hotel room full of crystal meth with a male prostitute in 2020. Gillum is married with 3 kids. Now, Gullium is in serious legal trouble and was arrested. The 21-count indictment unsealed Wednesday doesn’t involve the 2020 incident or any drug allegations but instead relates to Mr. Gillum’s financial dealings with a political consultant, Sharon Lettman-Hicks, 53. There are too many indictments to list, but include fraud and misappropriation of funds for personal use. People hate DeSantis and I am fine with that. Just understand that Gillum was the alternative, so it would be impossible to suggest that Florida did not dodge a bullet. Below is the approval rating for Congress which stands at a whopping 18%, so most people agree with me that politicians are not doing a good job.
Other Headlines
Morgan Stanley, Goldman Strategists See More Stock Market Losses
Already strained supply chain at risk in ongoing port labor talks
Labor talks with union workers at 29 ports could spell more trouble.
Daimler Trucks says it's facing enormous supply chain pressure
Elon Musk clarifies Tesla layoffs after ex-employees sue company
Musk said Tesla will reduce its salaried workforce by 10% in the next three months, while also growing the number of hourly employees. Layoffs will affect around 3.5% of Tesla’s overall workforce, Musk said, adding the actual amount was “not super material.”
Americans are starting to pull back on travel and restaurants
UK inflation hits new 40-year high of 9.1%
Energy and food prices cited as biggest drivers.
Texas city council votes to increase minimum wage for city workers to $22 per hour
American Airlines ENDS service to three destinations due to 'regional pilot shortages'
Toledo, Ithaca and Islip are mentioned. I spoke with flight attendants this week who told me so many flights have been cancelled as they are short on crews. She said many people retired during the pandemic and they have not replaced them.
5 US cities already on track to break their 2021 homicide totals
The article lists, LA, DC, Baltimore, Milwaukee and Atlanta.
What an unmitigated disaster. Armed and shielded cops waited an hour to go in? People must be held accountable.
Chicago police are no longer allowed to chase people on foot just for running away
I’m a broken windows believer. I feel the cops keep getting tools taken away and crime is soaring. The vilification of police must stop. Yes, there are bad apples. What about the clergy. How many tens of thousands of molestations have taken place? No one is cancelling them.
‘Hypocritical’ defund NYPD advocate moved out of Harlem for ‘safety issues’
It is like when Leo DiCaprio arrives at a climate summit in a private jet or AOC is seen being chauffeured in a gas-guzzling Suburban. The assemblywoman is leaving Harlem due to being robbed and safety issues and wanted to defund the police. You cannot make this stuff up.
British man turned away from giving blood after refusing to answer if he was pregnant: report
In an effort to make a tiny minority feel comfortable, we are doing a great job of offending the masses. If I go to give blood and they ask me if I am pregnant, I am leaving. The man was 66 years old and has given 125 pints of blood in 5 years.
Will swimming's transgender ruling lead to wider change in sports?
I sure hope so. Having biological males compete against biological females under the auspice of fairness is absolutely offensive. The swimming policy is the strictest from any Olympic sports body and effectively bars any transgender women who have gone through male puberty from competing in women's events.
DNC slashes price for photo op with Kamala Harris by $10K
The price fell from $15k to $5k according to the article. I question why someone would pay for a picture with VP Harris. She has been awful and has no support in DC from what my insiders tell me.
Biden can’t escape questions on his age
I truly hope Biden does not run in 2024. He lacks the capacity or ability. I do not want to see Biden, Harris or Trump on the ticket. In a Harvard poll, 62% of respondents believe Biden is too old to be President, and another YouGov poll has 64% not wanting Biden to run again.
Connecticut boy Dominick Krankall wasn’t burned deliberately by bullies, video shows
I had a bullet a couple months ago about multiple media outlets reporting a boy being doused with gasoline. Turns out to have been false. I wanted to correct the record. The boy was kicking a flaming soccer ball and playing with other boys as well.
Years Ago, Her Art Sold for $400 at the Beach. Now It Fetches Up To $1.6 Million at Auction
I am not a fan of Anna Weyant’s work. She is dating the most powerful man in the art world, Larry Gagosian. 50 year age difference. Makes complete sense. More true love in the air. What would I say if my 27 year old daughter came home with a man 50 years her senior and far older than I am?
Sharks getting closer to crowded beaches than you might think, study warns
I see sharks very close to shore all the time in South Florida and catch them while fishing in as little as 50 ft of water, so I can tell you first hand, the article has truth.
Virus/Vaccine
Given the Juneteenth holiday, the data is skewed and I won’t spend a lot of time on it.
Real Estate
The market is clearly slowing. In my community in Boca Raton, there are now 23 homes for sale relative to 4 late in 2021. For perspective, there were 71 homes on the market in 2017 when I bought and historically, there have been between 55-70 on the market in Royal Palm. Homes are sitting longer and getting price slashed. Just this week, a beautiful new construction on the water which was listed for $35mm was cut by $7mm+ to just under $28mm!
I spoke with a big broker in the area who told me homes are not getting much traffic by foot or over the phone. Part of this can be explained by the seasonality with summer, the slow season. However, inventory is building, homes are sitting longer, price reductions from aspirational levels and spec builders are getting nervous. We have not seen 20%+ price reductions in my recent memory and we just saw one and expect others to follow. The calls and foot traffic have dwindled to a trickle. One listing has been over a month with almost zero showings. Late last year, it would have been under contract in a week in a bidding war.
Sales of previously occupied U.S. homes slowed for the fourth consecutive month as climbing mortgage rates and record high prices discouraged house hunters. Existing home sales fell 3.4% last month from April to a seasonally adjusted annual rate of 5.41 million, the National Association of Realtors (NAR) said Tuesday. That annual sales pace was higher than what economists had expected, according to FactSet. Sales fell 8.6% from May last year.
After climbing to a 6.49 million annual rate in January, sales have fallen to the slowest pace since June 2020, near the start of the pandemic, when they were running at an annualized rate of 4.77 million homes. Even as home sales slowed, home prices kept climbing in May. The national median home price jumped 14.8% in May from a year earlier to $407,600. That’s an all-time high according to data going back to 1999, NAR said.
Bloomberg article on the global housing slowdown. A world economy already contending with raging inflation, stock-market turmoil and a grueling war is facing yet another threat: the unraveling of a massive housing boom. As central banks around the globe rapidly increase interest rates, soaring borrowing costs mean people who were already stretching to buy property are finally reaching their limits. The effects are being seen in countries such as Canada, the US and New Zealand, where once-hot residential real estate markets have suddenly turned cold. It’s a sharp reversal from years of surging prices fueled by rock-bottom mortgage rates and government stimulus, along with a pandemic that popularized remote work and sent homebuyers on the hunt for bigger spaces. An analysis by Bloomberg Economics shows that 19 OECD countries have combined price-to-rent and home price-to-income ratios that are higher today than they were ahead of the 2008 financial crisis — an indication that prices have moved out of line with fundamentals.
Despite my belief that housing has peaked, IN NO WAY DO I BELIEVE WE ARE IN FOR 2008 AGAIN. This CNBC article in entitled “Here’s why this housing downturn is nothing like the last one,” and I agree with a lot of the points. Also, there were some insane price moves over the past 18 months which are not sustainable. As quickly as mortgage rates are rising, the once red-hot housing market is cooling off. Home prices are still historically high, but there is concern now that they will ease up as well. All of this has people asking: Is today’s housing market in the same predicament that it was over a decade ago, when the 2007-08 crash caused the Great Recession? The short answer is: no. America’s housing market is in far better health today. That’s thanks, in part, to new lending regulations that resulted from that meltdown. Those rules put today’s borrowers on far firmer footing. For the 53.5 million first lien home mortgages in America today, the average borrower FICO credit score is a record high 751. It was 699 in 2010, two years after the financial sector’s meltdown. Lenders have been much more strict about lending, much of that reflected in credit quality. At the same time, leverage, which is how much debt the homeowner has against the home’s value, has fallen dramatically. Good stats in the link for those who want more specifics.
Other R/E Headlines