Opening Comments
Short note today as travel is taking its toll and writing from a laptop is shockingly challenging to edit. Please keep story ideas coming, as it is harder to do this on a laptop with intermittent WiFi. Thank you to all who contribute ideas regularly.
Jack and I got to Palm Beach airport on Monday at 6am for a 7am flight. Palm Beach airport is amazing as it is small enough where I had never had a problem catching a flight or getting through security. Let me tell you, it was insanity at the airport on Monday morning. I almost always fly JetBlue and am a TrueBlue Mosaic Frequent Flyer, but we took American and the line was 40 deep. There was a shorter line for 1st class that I jumped in despite flying coach. We got to the counter at 6:30am and had 5 checked bags. The airline rep tried to suggest she would not help me because we were not first class. YEAH RIGHT! They charge $150 for the 3rd checked bag now and an extra $100 if your bag is 1lb over 50 lbs. Wow, flying has changed. She told me we were late to check in and the bags may not make it. Mind you, if we don’t have Jack’s golf bag, we are kind of screwed. I paid a ton of extra fees as my wife likes to test my bad back by making suitcases weigh 200 lbs.. Mr. Olympia needs a back brace to carry one of these bricks. Jack and I ran through the airport and thankfully, I have CLEAR or there is no chance we would have made the flight. We were among the last people to get on the plane. Note to self, between 2,800 flight cancellations, limited staff and vacation season, get to the airport extra early.
Picture of the Day-Migration Patterns
SuperDooperLooper
Quick Bites
Markets
Dimon Market Comments
Yellen Admission
Gas Prices
Gallup Poll-Economic Confidence
Ford EV Pick-up Truck
Supreme Court Ruling on Social Media
Chicago High Schools Grading Based on Color
Other Headlines
Virus/Vaccine
Data
Real Estate
General Comments/Mortgage Rates
$100mm Miami Estate
Hamptons Rental Market Cooling
Amazon Overserved on Warehouse Space
Picture of the Day-Migration Patterns
This link has a nice interactive chart about data. The nation’s most-recent winners of migration from other states are Florida and Idaho according to the latest migration data released by the IRS. Florida, the nation’s perennial winner, gained the most people and income overall in 2020, while Idaho gained the most of both on a percentage basis. On the other end of the competition are states that have become perennial losers. States like California, New York, Illinois and New Jersey once again experienced some of the nation’s biggest losses of both residents and their money. Obviously, the states with the larger populations have bigger numbers, but note the migration from Blue to Red states. The impact of uber wealthy people leaving hits tax receipts as well as the multiplier effect on spending to help stimulate the economy. Other amazing charts in the link. What are the consequences of these substantial shifts in tax collection ability? At what point will taxes need to be raised in the hardest hit states? What services will need to be cut?
SuperDuperLooper
Jack and I ended up in Hershey, PA, home of the Hershey Park theme park, as Jack had a practice round. I understand it was Memorial Day, but virtually every restaurant was closed, and the park was packed. We found a Houston’s for dinner and it was awful with limited staff. It took 20 minutes to take our order and the kitchen must have gotten half of the restaurant orders wrong. Jack wanted dessert. We are in HERSHEY, PA, home of Hershey candy. One would think there would be ice cream or candy stores open on a holiday weekend around Hershey Park. We drove down Chocolate Avenue (no joke) and everything was closed at 7pm on Monday. I remembered an ice cream store across from our Springhill Suites and gave it a try. Apparently, it was the only ice cream store opened Monday. It was a 20-minute wait and lines out the door. When we finally got to the counter, the young lady said, “This is the busiest day we have ever had and we are out of about half of our flavors.” Jeeze. Wonder why? Every other competitor was CLOSED. Although the crowd was a bit rough (lots of mullet haircuts, tatts, smokers and pick up trucks), the little ice cream shop raked it in because they were the only game in town.
The Hershey experience reminded me of a short trip we took as a family to Hershey Park about five years ago. My daughter, Julia, LOVES rollercoasters and all scary rides. My wife, Jill, and son, Jack, have zero interest, so I am stuck going on the craziest of all rides. The older I get, the scarier these rides become. I suppose the names should kept me away, but I am slower than most. The SuperDooperLooper was one I could have done without. I nearly wet my pants and my Julia was laughing hysterically.
I recall Fahrenheit being my least favorite and the 58mph top speed needs to be checked. I am pretty sure we were doing 80mph. I nearly stained my shorts on this one.
Julia, at years 52 old, I am not sure how many more of the crazy rides are left in me, but we will find another park to do it. I have my new GoPro which will take some video for all to see. But if I start crying, I will edit that part out before hitting send.
Quick Bites
U.S. stocks pulled back Wednesday amid worries about the health of the economy, as Wall Street turned the page to another month following a volatile May. The Dow shed about 180 points or 0.5%. The S&P 500 eased 0.8%. The Nasdaq retreated 0.7%. The major averages each opened higher, but turned lower as concerns mounted about economic growth. Weighing on investor sentiment, JPMorgan CEO Jamie Dimon on Wednesday said the economy is headed for a “hurricane (see below).” Oil remains elevated as the EU Russian oil ban takes hold and the China lockdowns are coming to a close. Oil was +4.3% in 5 days and is over $115/barrel, while Natural Gas is back up to almost $5.8 and I remain concerned for the reasons mentioned previously. The 10-Year Treasury is up to 2.92% or +7.5bps. Crypto was hit today with BTC-5.3% and ETH -6.5%.
Jamie Dimon says ‘brace yourself’ for an economic hurricane caused by the Fed and Ukraine war on Wednesday afternoon. Coincidentally, I am seeing Jamie tonight for a JPM dinner. There are two main factors that has Dimon worried: So-called quantitative tightening, or QT, is scheduled to begin this month and will ramp up to $95 billion a month in reduced bond holdings. he other large factor worrying Dimon is the Ukraine war and its impact on commodities, including food and fuel. Oil could hit $150 or $175 a barrel, he said. “You’d better brace yourself,” Dimon told the roomful of analysts and investors. “JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.” The Fed will allow $47.5 billion in bonds roll off its balance sheet in each of the next three months only to increase to $95 billion thereafter. This is a big change from Quantitative Tightening which we have seen for years. This impacts market liquidity and I agree with Dimon that it is a big concern.
Any Rosen Report reader knows I have been incredibly critical of the Fed and how they have gotten things so wrong after heroic efforts early in the pandemic. I appreciate when a major figure takes blame and Janet Yellen is finally doing just that. “I was wrong about the path inflation would take,” Yellen said in an interview that aired Tuesday on CNN. “There have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that at the time I didn’t fully understand.” Now if we could just get politicians to admit fault as well. Powell and Biden met today to discuss inflation.
After more than two years of largely staying home due to the pandemic, most Americans are ready to hit the road. Yet inflation and record-breaking gasoline prices are weighing on would-be vacationers, even more than Covid concerns, according to a report by Morning Consult. Roughly 60% of Americans said they would take more trips this year compared with last year, although higher prices are now causing travelers to scale back their plans and go shorter distances, the survey, commissioned by the American Hotel & Lodging Association, found. One-third are likely to cancel altogether. Virtually every day we have new highs for gasoline and peak driving season is here. Nine counties in CA are between $6.30 and $6.95/gallon on average! A Chevron in LA is over $8/gallon!
Gallup's Economic Confidence Index measured -45 in May, down from -39 in each of the previous two months. It is the lowest reading in Gallup's trend during the coronavirus pandemic, and likely the lowest confidence has been since the tail end of the Great Recession in early 2009. Gallup's Economic Confidence Index is a summary measure of Americans' perceptions of current economic conditions and their outlook for the economy. It has a theoretical range of +100 (if all respondents say the economy is excellent or good and that it is getting better) to -100 (if all say it is poor and getting worse). These charts need to change in order for the Dems to have any chance of lessening the upcoming Red Wave. Since 1990, only the Global Financial Crisis has a lower Gallup Economic Confidence Index.
This is a fascinating story entitled, “How Ford’s Electric Pickup Can Power Your House for 10 Days.” Spend an afternoon driving the Ford F-150 Lightning around the vineyards and redwood-shaded back roads of California wine country and the pickup’s considerable power is apparent. What makes the electric version of America’s best-selling vehicle a potential game-changer, though, is not its acceleration (zero to 60 miles per hour in 4.3 seconds) or its range (up to 320 miles on a charge). Rather it’s the technology that taps the Lightning’s battery pack to power your home or the electric grid itself during increasingly frequent climate-driven blackouts. The extended-range Lightning’s 131 kilowatt-hour lithium-ion pack boasts almost 10 times the capacity of a Tesla Powerwall, an $11,000 home backup battery that can’t be driven to the supermarket. The Lightning is “a mini powerplant for your home,” says Jason Glickman, executive vice president for engineering, planning and strategy at California utility PG&E Corp. “It can support the grid on a hot summer day, when we have demand spiking.” I am going to look into getting this truck when the market simmers down.
The Supreme Court on Tuesday blocked a controversial Texas social media law from taking effect, after the tech industry and other opponents warned it could allow for hateful content to run rampant online. The decision does not rule on the merits of the law, known as HB20, but reimposes an injunction blocking it from taking effect while federal courts decide whether it can be enforced. The Supreme Court is likely to be asked to take a look at the constitutionality of the law in the future.
Oak Park and River Forest (OPRF) High School administrators in Chicago will require teachers next school year to adjust their classroom grading scales to account for the skin color or ethnicity of its students. In an effort to equalize test scores among racial groups, OPRF will order its teachers to exclude from their grading assessments variables it says disproportionally hurt the grades of black students. They can no longer be docked for missing class, misbehaving in school or failing to turn in their assignments, according to the plan. “Traditional grading practices perpetuate inequities and intensify the opportunity gap,” reads a slide in the PowerPoint deck outlining its rationale and goals. Please open the link to read for yourself. The consequences of these policies are detrimental to all parties involved. The students receiving the easy grading will be harmed as they will be ill prepared. Those not getting the benefit will not get into the colleges of their choice potentially. No winners here. I am adamantly opposed. Please read the attached article.
Other Headlines
Biden plots inflation fight with Fed chair as nation worries
25% of Americans are delaying retirement due to inflation, survey finds
Elon Musk Tells Tesla Workers to Return to the Office or Leave the Company
"What this means is that it will no longer be possible to buy, sell, transfer or import handguns anywhere in Canada," Trudeau said in a news conference.
Lawmakers to expand restrictions for semiautomatic weapons in New York
Florida teen arrested for picture of guns with caption: ‘Hey Siri, directions to the nearest school’
Mugshot released for 10-year-old Daniel Issac Marquez, who threatened to shoot up his school
This is one hell of a scary picture. To think a 10-year-old threatened to shoot up a school. His father had guns in the home, but has refused to comment. I love that they made an example out of this boy.
Clinton campaign lawyer Michael Sussmann acquitted on charge of lying to the FBI
NYC crime crisis: Shocking video shows man randomly stabbed in Manhattan
This is the Upper East Side where I lived. I have two friends on this block. There are townhomes in the tens of millions here. Rampant crime without consequence is ruining NYC.
Los Angeles: Shameless Sephora robbers empty shelves, fill trash bags in front of shoppers
Mona Lisa attacked by cake-throwing climate activist in bizarre demonstration
The eco-warrior was shouting, “Think of the earth,” when he was tackled. Hello, you idiot. The painting is covered in bullet proof glass.
Sperm donor fathered 15, never shared he has genetic disease
How irresponsible can you be?
I’m turned on by planes and one day want to marry my toy Boeing
What is wrong with people? I try to be supportive, but the absurdity never ends. I am sure there will be a national holiday for this woman the way things are heading. Read the article to find out what she calls her toy planes.
Top-Paid LA Lifeguards Earned Up To $510,283 In 2021
I appreciate the role lifeguards play and having surfed around the world, I have seen them in action more than most. However, I do not believe they should be getting paid more than doctors, for example. We are getting to levels where I come out of retirement to go to a lifeguard booth. Maybe there is a reboot of Baywatch with me as Hasselhoff? This article suggests 1/3rd of public pools may not be able to open due to the lifeguard shortage.
DeLorean Shows Off Electric Car, Says It Will Arrive in 2024
This car looks amazing and goes 0 to 60 in 2.9 seconds.
Ukraine War: Biden Says US Will Provide Zelenskiy Advanced Rocket Systems
Ukraine Fires Own Human Rights Chief For Perpetuating Russian Troop 'Systematic Rape' Stories
Concerning development that suggests many of the rape accusations were false. News out of the Ukraine war is horrible enough without falsehoods.
Virus/Vaccine
Big improvements in case growth over the past 10 days. We were seeing 60% case growth and it is down to 14%. However, hospitalizations and ICUs are still seeing increases. Deaths are growing faster, but lags the cases and expect them to fall in the next few weeks. Deaths fell to 302/day on 5/16 and are up to 374/day. The chart is a day old due to Memorial Day data noise.
Anger, feelings of hopelessness even as Shanghai aims to end Covid lockdown
The city is set to end lockdown Wednesday, but two months of stringent restrictions have taken a toll on the economy, public health and trust in the government.
Real Estate
My quick comment is on mortgage rates which continue. Mortgage rates rose sharply this week, after pulling back over the last three weeks. The 30-year fixed hit 5.36% Monday and then moved higher again Tuesday to 5.47%, according to Mortgage News Daily The 30-year mortgage rates are up over 250bps since August 2021. For perspective, on a $1mm mortgage the annual cost is $25k or over $2k.
In Florida’s Golden Beach, a Large Oceanfront Home Asks $100 Million
If the 32,000-square-foot estate fetches near its asking price, it would be the priciest property to ever trade in Miami-Dade County
Interesting CNBC article about Hamptons rentals coming under pressure after an insane two-year run. Makes sense to me, as housing everywhere is coming down. The rental market in the Hamptons is facing an unexpected chill this summer. After two years of strong demand and soaring prices, the supply of rentals in the Hamptons is surging, leading to a wave of last-minute price cuts. Median rental prices in the first quarter fell 26%, according to Jonathan Miller, CEO of Miller Samuel. Brokers say some owners are slashing prices by 30% or more just to fill their properties. “There is a tremendous amount of inventory and people are not renting it,” said Enzo Morabito of Douglas Elliman. “And it’s across all segments, from the very low to the very top of the market.” The weakness marks a dramatic and rapid reversal for one of the country’s highest-priced and most sought-after real-estate markets. In 2020 and 2021, renters were scrambling to find summer rentals and paying record prices months before the season for fear of missing out. Now, brokers say there are hundreds of rentals still available for the summer. Morabito said he represented one waterfront rental that was asking $70,000 a month, but a potential renter offered just $45,000. Brokers say weaker demand is partly the result of increased travel. Wealthy New Yorkers who spent the past two summers cloistered in the Hamptons are planning to travel to European and other countries this summer as Covid recedes. Europeans and other international renters, however, have not returned to the Hamptons. The war in Ukraine, rising inflation and a falling stock market may also be weighing on the summer spending plans of the elite — especially since the Hamptons market is so closely tied to the fortunes of Wall Street. “There are a lot of questions in the air, about the economy, both locally and nationally,” said Harald Grant with Sotheby’s International Realty. “It all effects the market.”
Amazon’s decision to throttle back on its e-commerce operations threatens to slow the growth of the industrial-space sector, one of the hottest areas of commercial property. For now, demand from other retailers is expected to pick up the slack, supporting warehouse occupancies and rent levels, analysts say. Rents, occupancy levels and sales volume of industrial real estate were already rising before Covid-19. They have soared even higher during much of the pandemic, as retailers led by Amazon, Walmart Inc. and Target Corp. gobbled up record amounts of space at warehouses and distribution centers. These growth trends are slowing in some markets, in part because Amazon is now subleasing warehouse space after reporting in April its slowest growth in about two decades. Amazon is one of the largest users of U.S. industrial space, owning or leasing some 374 million square feet at the end of 2021, according to MWPVL International Inc. Property owners in some markets might also face new competition from Amazon’s plan to sublease at least 10 million square feet of warehouse space, and possibly as much as triple that amount over time, as well as a flood of new supply from developers responding to the strong industrial market. I am definitely hearing about Amazon subletting and am being told the number is much larger than the 10mm square feet. This sea change will have a major impact on the red hot warehouse space.