Opening Comments
Picture of the Day-The Beatles
Restaurant Review of the Flamingo
Quick Bites
Markets, Energy Prices
Stagflation (Yes or No), Dimon on Supply Chain/Crypto
Workers Quitting at Record Pace, US Infrastructure
China AI Wins, CA Toy Ruling, Superman’s Son is Bi-Sexual
Chicago Murders with No Charges
Other Headlines
Virus/Vaccine
Data-Continued Improvement
Moderna Antibodies
NY Religious Exceptions
Southwest Flight Cancellations
Real Estate
My General Comments
Douglas Elliman NYC Report and Good Charts
Chart of top 12 Most Expensive Zip Codes in US
Opening Comments
I spoke with a family who just moved down here for the school year as of late August. They have kids in elementary school and were living in NYC for ages. I asked them what they thought after six weeks and the kids adjusting to school. The wife said, “We are idiots for not doing this years ago. The kids love it and we love it.” They are selling the condo in NYC and making South Florida the permanent home. I have not spoken with anyone who has come down and been miserable. The funny part is this family who just moved has been here for the worst months of the season from a weather perspective. Just wait until November through May when it is a gem.
I am finally going into get some tests done that I have delayed due to the pandemic. I guess I am not the only moron trying to schedule something. The cardio was booked for five weeks and the GI for a colonoscopy was so busy, they could not even take my call. I have an appointment for the GI in 5 weeks and only then can I schedule a colonoscopy. I am sure there is a log-jam everywhere, but getting a real doctor in South Florida is NOT easy. We ain’t in NYC anymore where there are well-educated physicians growing on trees (Weill Cornell, NYU, Mount Sinai…). When I was in the hospital two years ago, I saw 19 doctors. 15 of those doctors went to medical schools effectively with Dr. Evil. I mean University of Bermuda and schools in third world countries type stuff. If someone has a good GI or cardiologist down here, I am all ears.
Jack and I are scheduled to go to Tennessee to see his golf coach next week. I am a bit concerned as we booked the flight on Southwest. We planned on flying to Nashville and driving to Memphis. Flights from down here are a bit limited. If anyone has an inside scoop on Southwest and the likelihood of us getting there, please let me know.
Picture of the Day
It remains the most analyzed break-up in rock history: the one that set the template. When the Beatles split more than 50 years ago and Paul McCartney, John Lennon, George Harrison and Ringo Starr went their separate ways, it was McCartney who shouldered most of the blame. But now McCartney is setting the record straight for good. “I didn’t instigate the split. That was our Johnny,” he has insisted in a candid and detailed interview to be broadcast later this month. Recalling what he sees as the “most difficult period of my life”, McCartney, who celebrates his 80th birthday next summer, reveals he wanted the group to go on, especially as after just eight years together, they were still creating “pretty good stuff”. “Abbey Road, Let It Be, not bad.” “This was my band, this was my job, this was my life, so I wanted it to continue.” I am a big Beatles fan and my son, Jack, fell in love with them when he was 10 when I brought him to a cover band, Strawberry Fields. Jack was memorized by the songs and on the way home, got him a Beatles songbook and at one point, he could play 100 Beatles tunes. Jack begged for a hollow body electric guitar so he could sound more like the Beatles. Not to self, that would be an impulse buy and don’t recommend it, but yes, Jack has a Dusenberg to show for his Beatles one-time love. The picture below was from 1969. Just think of how many more hits they would have had if they stayed together 15 years, instead of 8 years. For perspective, the Stones have been together since 1962, the Who since 1964, Aerosmith since 1970 and U2 since 1978.
Flamingo-Pricey, but Welcome Addition to Boca
For my wife’s birthday, we decided to give the new Major Food Group’s (Carbone, Parm, Grill, Lobster Club…) restaurant, the Flamingo in the Boca Resort a try. Any Rosen Report reader knows I am very critical of the food selections in South Florida, especially Boca and I feel there are a lot of positives with the Flamingo.
I believe they did a remarkable job renovating the space and it looks amazing. However, I was a bit surprised the bar only has 7 seats for such a large resort (over 1,000 rooms and thousands of members). The crowd was mixed between families and older groups, but it did not feel like a retirement home. They have ample seating outside which will be great as the temperatures cool. The one downside of going to any restaurant is the lack of judgement of the patrons. An older woman seated near us must have taken a bath in cheap perfume. When she walked by there was a visible cloud of horrific perfume in the air for 5 minutes. The stench did not whet the appetite.
The service was solid and they brought fresh croissants out of the oven which were very tasty. The menu has a variety of choices and we started with a tuna crudo, snapper ceviche and the smoked salmon on rye toast. All were very good and the presentation was fantastic. My one complaint was the portion of the tuna and ceviche were tiny for approximately $20. I ate my tuna in 3 bites and it was delicious. I took pics with the phone and they are not amazing quality given the darker room, but you get the idea. Major Food Group is opening up a few other restaurants within the Boca Resort and am excited to give them a try as well.
Tuna Crudo
Snapper Ceviche
Salmon
For entrees, we had lamb chops, the grouper special and a cheeseburger. The lamb chops were $52 and came with no sides. They were good, but to me, overpriced for the quality of meat. The grouper special was amazing and came over a bed of crushed fennel which looked and tasted great, but as you can see, the portion was tiny despite the large price tag. We also had a burger which was good, albeit small for $30. The sides were $12 and all were devoured (garlic broccolini, sauteed mushrooms and onion rings).
Lamb Chops
Grouper over fennel
Cheeseburger
The wine list was strong, but very expensive. They allow corkage for $45/bottle. Drinks are in the $20 range and they have a host of wines by the class from $15-30.
For the Boca area, the Flamingo is a welcome addition to the paucity of choices down here. However, I feel the Flamingo falls short of most other Major Food Group’s NYC restaurants, but I’ll take it and assume it will get better with age. The presentation and room is akin to a good NYC eatery. It is already a tough ticket to get a seat despite opening recently. Just wait until the crowds come from November-May. Make a reservation well in advance and be prepared to have a good meal in a nice setting, but you may get a bit of indigestion when you receive the bill given the portions. Spending $290 with 2 glasses of wine, three appetizers three entrees and two sides in Boca is hard to do and still leave hungry. And to be clear, given we are members, we received a 15% discount and it was still that expensive.
I have also spoken with a handful of locals who have eaten there and they were a bit more impressed than I was, but have not had the pleasure of the dining experiences in in NYC as I did for almost 25 years.
Food B+
Service A-
Ambiance A-
Wine List B+
Quick Bites
The S&P 500 snapped a three-day losing streak Wednesday as investors digested third-quarter earnings and insights into when the Fed might taper its asset-purchase program. The broad index closed 0.3% higher at 4,363, fluctuating between gains and losses throughout the session. The Nasdaq ticked up 0.7% to 14,571, also breaking a negative streak. The Dow was flat at 34,377 after shedding more than 260 points at its intraday lows. Minutes released Wednesday afternoon from the Federal Open Market Committee’s September meeting showed the central bank could begin tapering its asset-purchase program as soon as mid-November. “Participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate,” the minutes said.
The cost of energy was dirt cheap in the spring of 2020 as roads and airports sat nearly empty during the height of the Covid-19 pandemic. Energy demand is back today as the world economy reopens -- but supply simply hasn't kept up. That's why US oil prices have skyrocketed $120 since crashing to negative $40 a barrel in April 2020. US oil prices finished above $80 a barrel on Monday for the first time in nearly seven years. On Tuesday, crude gained 1.5% to end the day at $80.52. Wednesday, oil fell slgightly, but remained above $80.5. Prior to this week, the last time oil closed above $80 was October 31, 2014. All of this is leading to sticker shock for many Americans filling up at the pump -- at a time of the year when gas prices typically cool off. The national average price for gasoline hit a fresh seven-year high of $3.27 a gallon on Monday, up by 7 cents in the past week alone, according to AAA. Gas has nearly doubled since bottoming at $1.77 in April 2020. To me, this is partially due to the incredible snap back in demand due to reopening, but Biden’s policies do play a role in the price increases in my opinion.
Consumer prices increased slightly more than expected in September as food and energy price rises offset declines in used cars, the Labor Department reported Wednesday. The consumer price index for all items rose 0.4% for the month, compared with the 0.3% Dow Jones estimate. On a year-over-year basis, prices increased 5.4% versus the estimate for 5.3% and the highest since January 1991. Let’s be clear, last year was a low bar, so I do not get too caught up in they
Stagflation fears may be rising, but strategists at some of Wall Street’s biggest banks say it’s a good time to buy the dip in stocks. “Despite near-term uncertainty, we expect the equity market will continue to rally as investors gain confidence that the current pace of inflation is transitory,” Goldman Sachs Group Inc. strategists led by David J. Kostin wrote in a note to clients. Strategists at JPMorgan Chase & Co. led by Mislav Matejka concurred, writing that stagflation fears will start to fade. In a second story, closely followed innovation investor Cathie Wood said the migration trend playing out in her own company is further evidence that investors should fear deflation instead of inflation. Wood — founder, CEO and CIO of Ark Invest —is moving her investment firm’s headquarters to St. Petersburg, Florida on Nov. 1. The disruptive innovation investor said that individuals and companies flocking to more affordable areas of the country should keep inflation at bay. I have made it clear that I am worried that it is not all transitory, but some smart folks are taking the other side and wanted to be sure I shared their informed view. The IMF seems a bit more concerned that JPM, GS and Wood. Central banks such as the Federal Reserve should be prepared to tighten policy in case inflation gets out of control, the International Monetary Fund warned in a report Tuesday. While the IMF said it largely concurs with assessments from the Fed and many economists that the current global spate of price increases eventually will ease, it noted there is “high uncertainty” around those forecasts.
Global supply chain hiccups caused by the coronavirus have put a damper on economic growth, but the problem will be a fleeting one, JPMorgan Chase CEO Jamie Dimon said Monday. “I should never do this, but I’ll make a forecast,” Dimon said at a conference held by the Institute of International Finance. “This will not be an issue next year at all. This is the worst part of it. I think great market systems will adjust for it like companies have.” I agree partially. I do not believe we will be in this same position 9 months from now, but I do not think we will be back at pre-pandemic supply chain functioning either. The other Dimon story was on Crypto. Dimon said that cryptocurrencies are going to be regulated as anxiety around stablecoins and the asset class more broadly has been growing in Washington. “No matter what anyone in the room thinks, nor what any libertarian thinks, nor what anyone thinks about it, government’s going to regulate it.” “I personally think that Bitcoin is worthless,” Dimon said.
Workers left their jobs at a record pace in August, with bar and restaurant employees as well as retail staff quitting in droves, the Labor Department reported Tuesday. Quits hit a new series high going back to December 2000, as 4.3 million workers left their jobs. The quits rate rose to 2.9%, an increase of 242,000 from the previous month, which saw a rate of 2.7%, according to the department’s Job Openings and Labor Turnover Survey. The rate, which is measured against total employment, is the highest in a data series that goes back to December 2000. I do believe wage increases will be sticky. I spoke with a 19 year old who was making $10/hr at a tackle shop. He was approached by another at $16/hr to start and was told quick raises are coming if he proves himself. The demand for talent is at every level.
I thought this CNN article about infrastructure was interesting. Today, one-in-four pieces of all critical infrastructure in the US — including police and fire stations, hospitals, airports and wastewater treatment facilities — face substantial risk of being rendered inoperable by flooding, according to a new report released today by the First Street Foundation, a nonprofit research and technology group that assesses the threat posed by flooding across the country. The report also found nearly 2 million miles of road — 23% of US roadways — are already at risk of becoming impassable due to flooding.
China has won the artificial intelligence battle with the United States and is heading towards global dominance because of its technological advances, the Pentagon's former software chief told the Financial Times. China is likely to dominate many of the key emerging technologies, particularly artificial intelligence, synthetic biology and genetics within a decade or so, according to Western intelligence assessments. Nicolas Chaillan, the Pentagon's first chief software officer who resigned in protest against the slow pace of technological transformation in the U.S. military, said the failure to respond was putting the United States at risk. I do not care for the Chinese government, their role in the pandemic, constant hacking, stealing of IP, treatment of its citizens, Taiwan and just constant lies. They seem to be winning an awful lot and not paying a price for killing millions, creating trillions of damage and disrupting lives for years. Sounds “like a perfect crime. Women don’t wear ties.” Can anyone name the line from this remarkable 1980s movie? One of my all-time favorite movies with a great score. In a related link sent from an avid reader, there is something else called, “Killware.” It is not specifically tied to China, but it is a more aggressive form of hacking with the goal to hurt people, not necessarily for financial gain. This USA Today article discusses the attack on a Florida water system which intended to distribute contaminated water to residents. Scary stuff.
According to the Los Angeles Times, “California became the first state in the nation Saturday to adopt a law requiring large retail stores to provide gender-neutral toy sections under a bill signed by Gov. Gavin Newsom. The new law, which takes effect in 2024, says that retail stores with 500 or more employees must sell some toys and child-care products outside of areas specifically labeled by gender. Retailers can continue to offer other toys and child-care goods in traditional boys and girls sections if they choose to.” I am opposed to forcing retailers to have gender neutral sections. If a retailer believes the customer demand is there, great. Shelf space is a big asset for brick and mortar and the use of it is being dictated by the government now in CA. No one forces grocery stores to carry gluten free or organic products today. Why do they do it? Because the demand is there. The government is over-reaching in my opinion. Won’t be the first time and seems to be more common as of late.
The wokeness does not end. The new Superman, Jonathan Kent — who is the son of Clark Kent and Lois Lane — will soon begin a romantic relationship with a male friend, DC Comics announced Monday. The former Superman actor, Dean Cain was critical of the decision, but I found his interview interesting on the topic as to why. You can find it here. According to Cain “They’re talking about having him fight climate change and the deportation of refugees, and he’s dating a hacktivist. Maybe instead of Superman, he should be called Wokerman.
It will be rare that I would agree with Lori Lightfoot as I believe she is a horrible mayor, but in this case, I am with her on wanting murderers convicted, not released. People who murder won’t be charged? Wow, Chicago is a lovely place to live today with sky-high crime, murder, carjackings and limited consequences for it. I was born in Chicago and lived there after college and attended the U of C for B-School. My sister is in her 60s and never lived anywhere but Chicago. She is ready to leave as it has become too challenging. She lives in a nice area and claims to hear gunshots constantly. There is an outcry from Lightfoot and some Chicago aldermen after men linked by police to a deadly gang shootout in Austin last week were released from custody. Prosecutors declined to charge each of them with a pair of felonies, including first-degree murder. The mid-morning gunfight, which left one shooter dead and two of the suspects wounded, stemmed from an internal dispute between two gang factions, the Chicago Sun-Times reported.
Other Headlines
Norway town rocked by night of carnage: Man goes on bow & arrow killing spree
Walgreens closing 5 more San Francisco stores due to 'ongoing organized retail crime'
More than half of Bay Area residents plan to leave permanently
Almost 20% of US households lost entire savings during covid
Letter to WH suggests dad of ‘sexually assaulted’ girl a ‘domestic terrorist’
Movin’ on out De Blasio booting Founding Father Jefferson from City Hall
Social Security cost of living adjusting will be 5.9% in 2022, biggest hike in 40 years
Virus/Vaccine
It has been weeks of continued improvement across the board. Cases are now down 48% from the peak of the Delta wave. Hospitalizations are down 51% and deaths are down 7% from the peak of the Delta wave. There is a little noise in the death number as Arkansas added 289 to the total this week, so I believe the actual death rate is lower than shown in the chart which shows a little spike due to the addition.
The FDA on Tuesday said a booster dose of Moderna’s coronavirus vaccine enhanced virus-fighting antibodies, while maintaining an ambivalent tone about whether a third dose is currently needed. The agency’s review came just after Moderna submitted to the FDA a briefing suggesting that a booster of its vaccine could protect against breakthrough infections from the delta variant.
New York must allow religious exemptions to the state's COVID-19 vaccine mandate for medical workers, a federal judge ruled Tuesday. U.S. Northern District Justice David Hurd of Utica granted a preliminary injunction temporarily barring New York state and employers from enforcing the COVID-19 vaccine mandate against medical workers claiming a legitimate religious exemption. I am sure there will be no games played here. How many non-religious people will be claiming religious exemptions?
More than 2,000 Southwest flights have been canceled over the past few days, frustrating customers and sparking theories on social media. The problems began last Friday, with the airline attributing the mass changes to severe weather and air traffic control issues, which the Federal Aviation Administration (FAA) later confirmed in part. The timing of this latest string of cancellations attracted significant attention on social media, as they began after the Southwest Airlines Pilots Association asked a federal court to block the airline’s COVID-19 vaccination mandate. “To be clear: None of the information from Southwest, its pilots union, or the FAA indicates that this weekend’s cancellations were related to vaccine mandates,” the FAA tweeted Monday. Let me put this into perspective. On Sunday, Southwest cancelled approximately 30% of its flights and AA cancelled 2% while Spirit (worst airline ever) cancelled 4% on Sunday. I put this story in the virus/vaccine section for a reason. The statistical difference between 30% and 2-4% is quite severe. I question how much of the vaccine mandate is playing a role in the flight delays. I do not know the percentage of delays we can base on the mandate, but I do not believe it is zero. After reading a WSJ article, it is clear pilots have been frustrated by a host of issues which clearly contributed to these disruptions.
Real Estate
I connected with a South Florida developer who specializes in townhomes. He told me that pre-pandemic, he could build for $300/ft and it is now $450/ft context. However, he is starting to see some inputs move down slightly in pricing and beginning to shorter wait times.
The following is from Douglas Elliman and a big NYC broker named Lauren Muss and gives details on the NYC market. There are some very good graphs at the end and are worth a look. The first 5 graphs are NYC related and last shows most expensive zip codes in the US. I will repeat myself when I say there is no price for me to ever live in a co-op again. Far too much headache and hassle. Buy a condo if you are going to live in NYC. Whatever you think the illiquidity discount is for a co-op, it ain’t big enough.
As New York City's luxury market continues its strong rebound from the depths of the Covid-19 pandemic, signed contracts above $4M have been averaging 30 per week. The year 2021 has already broken a record for luxury sales volume of $11,256,284,299 set in 2014, with a year-to-date volume of $11,384,322,930. Sales levels have surged annually at a record rate to the highest total in more than 32 years. Listing inventory fell sharply from prior-year quarter, but remained above the third quarter decade average.
Condos represented 20 of the 27 contracts signed in the last week of September, as coop deals show a decline after the first two quarters average of 8 coop deals per week. All coop sale indicators moved above the prior-year level and from the same period two years ago. Condo listing inventory declined from year-ago levels, but was consistent with the same period two years ago. New development sales more than tripled from the prior-year quarter, and nearly doubled from the same period two years ago. Townhouses have remained consistent throughout the year, averaging 4 deals per week in each quarter. Although the market has begun to cool compared to the first half of the year, it has increased by 26% when compared to the last pre-pandemic quarter in 2020. During the week ending October 10th there were 46 contracts signed above $4M -- more than double the previous week's total, and the biggest total of signed contracts since the week of April 19-25, 2021, when 56 contracts were signed. Condos continued to outsell coops 32 to 7, and 7 townhouses were also in the mix.
Top 12 Most Expensive Zip Codes in the US based on median home value as of July 2021. NYC dominates the list below.