Steak and High Stakes-My Market Bet with Chris Burch.
12-22-24
Opening Comments
My last note was about some cooking tips and my massively overpriced pool lights. Thank you to those who reached out telling me how beautiful my overpriced lights were. I need to hear it. The most opened links were the school diversity conference which was a “festival of Jew hate,” and the Bari Weiss/Marc Andreessen interview where he outlines why he supported Trump despite being a life-long Democrat.
Steak Fails and Told-You-So Tales
I went out to dinner the other night with friends at Casa D’Angelo in Boca. The food is decent and worth a go. My friend told me he was taking his family to Pink Steak in West Palm for his wife’s birthday. I told him “Do NOT go. The place is awful and overpriced.” His wife planned the night, and he did not want to upset her. He made a key mistake and did not heed my advice. They went and were disappointed. For those who forgot, my review can be found here. The RR readers loved my line, “I wish they had let the chicken continue to roam free rather than serve me the undercooked dish that lacked flavor.” My buddy called me up the night after the big dinner and said, “Do NOT go, the food is awful and overpriced.” I wonder where he learned that. Pink Steak is so disappointing, and the bar is low in the Palm Beach area.
Happy Holidays. I hope everyone has a great time with family and friends and stays safe. If you’ve had an unforgettable vacation, dined at an incredible restaurant, or enjoyed a unique experience anywhere in the world, I’d love to hear about it – and don’t forget to share some photos!
Markets
US $ Strength
Shoplifting
College Sports Valuations
Bezos $600mm Wedding into Perspective
Bezos Saves $1bn in Taxes in Florida/$200mm Lot?
NYC Office Have/Have Nots-Great Data & Charts
Some Miami Buildings are Sinking
November Home Sales Data
Pictures of the Day-Me Surfing in April
I just booked my trip to the Kelly Slater Wave Pool in Fresno, CA for early April 2025. Coincidentally, I got sent some surfing pics of me from last April that I had not seen from the last trip. Given all my ailments and aging, I am not sure how many more of these exhausting trips are in the cards. As a result, I am going to milk the pics for as much airtime as possible to relive the glory days when I had hair and could surf. I love going for a couple days with the boys and having a blast surfing the perfect wave with friends despite the awful location. Johnny P, thanks for including me.
Steak and High Stakes-My Market Bet with Chris Burch
I was wrong. I did not believe we would have the MASSIVE equity rally we did in both 2023 and 2024. I sold my stocks too early. My good friend Chris Burch is the eternal optimist. He has such a positive view of things, and one of the reasons he is so successful is a glass-half-full kind of guy. He is a consumer brand genius that founded and invested in multiple companies. I think the guy has had six different investments with 100x his return. Unheard of. He is extremely generous philanthropically and with his friends, and he is someone you can count on if you are ever in trouble.
After last year where the S&P was +24% Chris bet me that the market would crush it again in 2024. I could not fathom that 2024 would be as good as 2023. We made a bet on the Russell 2000 with 17% as the line. If it returned less than 17%, I’d win. If it hit 17% or more, Chris would take it. I did not believe there was ANY chance I would lose. The bet was dinner anywhere. Chris has expensive taste, as do I. A loss could be a damaging to the savings account, but the crushed ego is even worse.
In August of 2024, the Russell 2000 was flat or up ZERO YTD. I looked like I was going to crush Chris. What happened next was frightening. The Russell (small caps) rallied massively as seen in the chart below. It was up over 21% YTD as of November 11th. Given history of the “Santa Claus Rally” that sees stocks perform well going into year end, I was sure I was going to lose our bet.
Chris was calling me almost daily to tell me how happy he was that I was going to lose our wager. He was suggesting ridiculous restaurants with insane wine lists. He was talking about fatty toro, caviar, fancy Bordeaux, and anything to get me riled up knowing my frugality. I was losing sleep fearing the ultimate bill and losing bragging rights. A typical call from Chris:
“Hey, bud. How are we doing on that bet?” Chris knew damn well where we stood. I would give him the YTD Russell 2000 return and be livid. Chris would laugh and I would be pissed. He would give me an extra ribbing before hanging up. Friends sure are fun. NOT!
Then, my least favorite Fed President Jerome “Inflation is Transitory” Powell, shocked the markets with his commentary on Wednesday. His call for fewer rate cuts in 2025 shook the markets, with the Russell taking the biggest hit – down 4.4% for the day. That brought its year-to-date performance to +10.9% as of 12/18. Thank you, Jerome.
The call on Thursday and Friday was from me to Chris and went something like this: “Hey Chris? How is that bet looking?" Chris responded, “Buddy, it does not look good for me.” I then started describing the Michelin Star restaurants in Miami that Chris might take me to when I win. “Let’s start with Clase Azul and then a nice 1982 Bordeaux,” I said. He got a little taste of his own medicine.
It is now Friday, December 20th and YTD, the Russell 2000 is +10.6%. We have six more trading days in the year. I feel pretty good about my bet, and Chris on the other hand is not feeling it. Anything is possible. Just don’t be surprised if late on the 31st before the close you see a big sell order if Chris is getting close to winning. I want that damn dinner that comes with bragging rights.
I’ll be sending updates to follow. Trust me. When I win, there will be pictures of the dinner with me smiling and Chris frowning. I am contemplating calling Bravo and getting the film crew of The Real Housewives to film our dinner for the world to see. I want everyone to hear my friend complain as I wallow in the win. Chris, is that too much? If for some crazy reason I lose, you will never hear of this bet again other than when Chris tells the story at his lavish parties.
Quick Bites
I sent out Wednesday’s note earlier than usual and the markets had just started to sell off. The first chart shows how pronounced the carnage was on Wednesday. I have never seen the VIX +74% in hours. Powell disappointed investors with his comments about the cut being a close call and suggested that 2025 will see two cuts (less than hoped by the markets). However, stocks recovered on Thursday morning but sold off in the afternoon. I felt the bounce on Thursday would be more pronounced after such a vicious sell-off. On Friday, we saw the bounce I thought we would get on Thursday after the PCE came in at +2.4%, less than expected. Despite the rally, all the indices closed lower on the week with the S&P -2% and Nasdaq -1.8% for the week. The 10-Year Treasury is now +94bps since the Fed cut in September with a yield of 4.53%. Bitcoin was not immune from the volatility. After hitting $107k, Bitcoin fell to $92k before finishing at $97k.
The US $ continues to climb. Since the first rate cut in September, the US $ is +8% vs the DXY basket. A stronger dollar is good for US consumers who benefit from cheaper imports and less expensive travel. However, a stronger US $ can hurt U.S. companies that depend on foreign markets for sales and make US exports less competitive globally. Also, the strong dollar is not good for US exports. The hawkish Fed comments Wednesday sent the US $ sharply higher along with interest rates.
The average number of shoplifting incidents jumped 93% in 2023 compared with pre-pandemic times and monetary losses for retailers have risen 90%, according to the nation's largest retail trade group. With its "Impact of Retail Theft & Violence 2024" study, the National Retail Federation (NRF) is highlighting the severity of this issue. For instance, despite the continuous efforts by retailers to combat such crimes and a growing number of states that have updated their laws to prosecute organized retail crime as felonies, the number of retail theft incidents continues to climb. According to the data from the report, conducted in partnership with the Loss Prevention Research Council, incidents have jumped 26% in 2023 from the prior year. "This isn't what we were used to. This isn't the shoplifting I was apprehending 30 years ago," David Johnston, NRF vice president of asset protection and retail operations, told FOX Business. "These are people who are shoplifting because they know when they have an outlet to sell this merchandise to." Retailers have shut down, jobs have been lost, law-abiding shoppers are paying higher prices, and in some stores, many items are now kept under lock and key. There must be consequences for shoplifters. There are so many stories of serial shoplifters arrested dozens or even over 100 times. Broken system. This Newsweek article from March outlines California stores that closed due to crime.
College sports is big business, and this CNBC article outlines the top 75 college sports programs. With major college sports programs collectively generating billions in revenue each year, private investors are looking to get a piece of the action. But how much is a college sports program worth? It’s a question CNBC set out to answer after speaking with people in the private equity world who are seeking to invest in college sports. Below, CNBC ranks the 15 most valuable college athletic programs. The rankings exclude military academies and are limited to schools that participate in the NCAA Football Bowl Subdivision, or FBS, which tend to attract top players. In aggregate, the SEC is worth $13.3 billion, an average of $832 million per school; followed by the Big Ten at $13.2 billion, an average of $734 million per school; the ACC at $9.6 billion, or $562 million per school; and the Big 12, at $6.7 billion, or $420 million per school.
Jeff Bezos and Lauren Sanchez are getting married in Aspen in a $600mm wedding. No typo. $600mm. The wedding will be held at Matsuhia, a sushi restaurant. Bezos has a net worth of $239bn according to Forbes. The wedding will cost him .25% of his net worth which does not seem alarming, but $600mm? For perspective, the median net worth in America is $176k. Bezos has a net worth of almost 1.4mm times more than the US average net worth and his wedding will be almost 3,500 times more than the average net worth. What the hell do you get for $600mm? I may call his wedding planners to ask for ideas on where Chris should take me when I win our dinner bet.
Election/Politics
Government shutdown averted after Senate passes bipartisan House stopgap funding bill
Below was the Trump/Musk commentary about blocking the prior deal.
Trump joins Elon Musk in opposing House GOP’s government funding bill
Musk is clearly making his views known and influencing outcomes. He is right that the status quo is not the path forward. I fear his political inexperience may cause some collateral damage. We must have entitlement reform and reduce our $2 trillion annual deficits. I fear Trump may grow tired of the spotlight on Musk. Also, Musk has quite a few other jobs and TSLA shareholders are getting angry at his lack of focus. I love Musk. I am not convinced that spending this much time on politics is in the best interest of his shareholders. This article suggests Musk crashed the Bezos/Trump dinner. Non-zero chance that Musk outstays his welcome.
Trump calls for abolishing the debt ceiling
Not convinced this is a good idea. Both parties spend too much. Congress is not to be trusted. If we run $2 trillion deficits with a debt ceiling, what will it be without one?
Appeals court disqualifies Fani Willis from Trump Georgia case
How the White House Functioned With a Diminished Biden in Charge
I got hate mail and cancels for calling out Biden’s cognitive decline years ago. This WSJ article is a damning indictment of the protections and processes to hide the truth from the public. This Post article suggests aides were covering up the mental decline since Day 1 of the Presidency. Even CNN’s Chris Cillizza offered a confession and apology about not covering Biden’s mental decline. This article suggests a mentally fatigued Biden skipped a call from a concerned politician before the Afghanistan pull out that was a complete debacle. Billions of defense equipment were left behind and 13 US service men and women were killed with another 45 wounded.
Very different protocol from Tom Homan than the current administration.
Kamala Lands $20 Million Book Deal And People Have Questions.
Seems a bit aggressive to me.
Biden forgives $4.28 billion in student debt for 54,900 borrowers
That equates to $78k per borrower.
Middle East
After Yemen strikes, Netanyahu says Israel hitting Houthis on behalf of ‘entire world’
Thousands of Jews have left Israel since the October 7 attacks
Netanyahu won’t attend Auschwitz liberation anniversary event, fearing arrest by Poland
Other Headlines
Wall Street’s Market Forecasts Are Out for 2025 — Be Dubious
Micron shares plunge on weak second-quarter guidance
The stock was $157/share in June and is now $90.
Novo Nordisk shares plunge 20% after disappointing trial results
CFPB sues JPMorgan Chase, Bank of America and Wells Fargo over Zelle payment fraud
Amazon workers strike at multiple facilities as Teamsters seek labor contract
It is not as though it is the holiday season with peak deliveries!
Feds raid migrant Tren de Aragua gang house in NYC — after tracking GPS ankle monitor to hideout
‘Real deal’ illegal migrant terror suspect, 18, nabbed in NYC months after he was released at border
Luigi Mangione canonized as a 'saint' by crazed online fans after death penalty bombshell
What the hell is wrong with people? He is a murderer.
SJSU responds to volleyball player mass exodus after trans athlete scandal
Turns out teammates don’t like playing with a man on the volleyball court. I hope this idiotic chapter of America is behind us. End biological men playing sports with women.
Volleyball player claims she suffered brain bleed after being struck unconscious by trans opponent
Biological men should not play in women’s sports. It is something I have said repeatedly.
German woman given harsher sentence than rapist for calling him ‘pig’
Germany is in serious trouble on almost every front. What kind of idiotic country does this? The rapist gets a lighter sentence than the person who called him a pig. To be clear, he raped a 15-year-old girl. If I was giving out the sentence, he would never be able to do this again.
4 money experts reveal how to reflect on your personal finances — and set goals for 2025
CDC Confirms First Severe Human Case of Bird Flu in the US. Here's What You Should Know
Keep an eye on this story. Newsom declared a state of emergency after a case in Louisiana where the patient was exposed to sick birds in a backyard flock.
Why Americans are outraged over health insurance — and what could change
What’s the best treatment for ADHD? Large new study offers clues
The Six Mouth-Watering Trends Coming to Your Restaurant Table in 2025
The 11 Top New York City Restaurants to Book in 2025
I cannot believe I am writing this, but I have been to ZERO of the restaurants listed above. Looks like I need to get to NYC soon.
What moron will spend over $100 on a bottle of water (tip and tax)?
5 phrases the most mentally strong people use to spark happiness in hard times
Arrivederci! Why young Italians are leaving in droves
More than a million Italians have left in the past 10 years -- a third of them aged 25 to 34. Those leaving blame low salaries and little recognition for their skills. The proportion of graduates leaving in particular is on the rise. While migration has become a hot-button issue, for every young foreigner who comes to settle in Italy, nearly nine young Italians leave. The youth unemployment rate is also higher than the European average, at 17.7% in October, compared to 15.2% across the EU.
Archaeologists Found a Skeleton Wearing an Amulet That May Change the History of Christianity
Interesting story about when it may have started.
Bulletproof plastic? New material comparable to steel finally on horizon
Passengers panic as American Airlines flight ‘floods’ in midair: ‘New fear unlocked’
I would crap my pants.
Real Estate
I speak with many wealthy people about moving from the NY Tri-State area, California, Illinois, DC and other places down to Florida. Everyone has a different reason for the move but there are common themes (quality of life, crime, policies, weather, taxes, cost of living, homelessness…). This Fortune article, “Jeff Bezos saved around $1 billion in taxes by moving to a ‘billionaire bunker’ in Florida,” shows how much the uber wealthy save by moving to a tax-efficient state. The lot next to Bezos on Indian Creek is listed for $200mm for 1.84 acres. Bezos spent $150mm on 4 acres in late 2023. Yes, the new lot is massively overpriced - but if Bezos does not want a neighbor, maybe he pays up? Definitely not worth the asking price, but when you are worth $200bn, does it matter? The $200mm asking price lot sold in 2018 for $27.5mm, 2012 for $19.2mm, and 2001 for $10mm. Let’s not forget about the 1990 sale for $2.5mm.
There seems to be a dichotomy everywhere between haves and have nots. It is no different in the NYC office market. The Bloomberg article, “NYC’s Top Offices Spark a Wall Street Frenzy as Others Sit Empty,” outlines the stark contrast between the hottest office buildings and those that are struggling. The richest financial companies are battling for space, bidding each other out and driving rents into the stratosphere at the best of the best towers. For properties at the other end of the spectrum, the picture is much bleaker, and the difference has never been so stark. “There’s a distinct gap in Midtown right now: really serious competition for space at some buildings, versus other buildings where landlords can’t find tenants to take space at any price,” said Mary Ann Tighe, CBRE’s chief executive officer for the Tri-State region. In one of the starkest contrasts, the Seagram Building, the midcentury icon on Park Avenue and 53rd Street, is completely full, with asking rents as high as $275 a square foot, according to landlord RFR. Four blocks to the southwest, roughly a quarter of the space is vacant at 425 Madison Ave., a 19-story building completed in 1927. Its asking rents — under $37 a square foot — are less than half the Manhattan average, Savills data show.
This Fox article is about buildings in Miami that are sinking. Miami’s barrier islands are home to many tall luxury buildings, and, according to a study recently published in Earth and Space Science, about three dozen are sinking. Thirty-five luxury condos and hotels across Florida's Sunny Isles Beach, Surfside, Miami Beach and Bal Harbour have faced subsidence in the past handful of years, the study found. The sinking of the high-rises amounted to 2-8 centimeters over a multiyear span running 2016 through 2023, according to the researchers. High-rises expect to see "up to several tens of centimeters" of settlement "during and immediately after construction," the University of Miami Rosenstiel School said in a Friday post on its website. Builders constructed a "majority" of the affected condos and hotels after 2014, according to the study. I am not overly concerned today, but this is something to watch.
November home sales surged more than expected, boosted by lower mortgage rates.
© 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™ #746 ©Copyright 2024 Written By Eric Rosen.
