Opening Comments
Pictures of the Day-Climate Change Summit Hypocrisy
Trying The Same Thing Over and Expecting a Different Result
Election Results
Quick Bites
Markets, Shipping Profits, Supply Chain Issues
Musk-Feed the World, Rivian
Polling Data-Biden vs. Trump
Manchin-$1.75 Trillion, Hospital Bills
Jes Staley Barclays, Screen Time for Kids
Holiday Travel Nightmare
Other Headlines
Virus/Vaccine
Data-Continued Improvement
Faster Spreading Delta
Zero Tolerance China
Real Estate
My General Comments
Sacremento/Miami Affordability
Wealthy Buying Caribbean/Mexican Luxury Properties
Opening Comments
The power of the Rosen Report network. I asked my readers for help in tracking down impossible-to-find parts for my boat engines. I called 37 different marinas and parts stores and they all were out with no real ETA for the items. Zero for 37 sounds closer to what my batting average would be if I were in Major League Baseball. A reader connected me with someone who had the parts, but make no mistake, this supply chain mess is a disaster. These common parts have been virtually non existent for months. Thank you Derren.
Late Tuesday, I received an update from JPM on the tax proposal. There is an informative link which outlines the tax proposal and according to this report, there is some good news from my perspective on estate taxes and the marginal tax rates absent for uber income earners. Check it out. This Bloomberg article suggests the SALT cap would be suspended for all taxpayers from 2021 to 2025 under the latest proposal, according to a Ways and Means Committee aide. The $10,000 cap would then be reinstated from 2026 to 2030.
I have an expanded Elections Results section today given the surprises on Tuesday night.
Pictures of the Day
Markets
I am all for a cleaner environment and believe every major country is guilty of abuse. However, I like to call out hypocrisy and the climate summit show is a perfect example. As hundreds of private jets ferry world leaders and top business executives to the UN's COP26 climate summit in Glasgow, Scotland, environmentalists are up in arms over the environmental damage caused by the travel. Scotland's Sunday Mail, citing aviation sources, reported that more than 400 private jets were expected. They are said to be shuttling more than 1,000 VIPs and their staff to the talks - which, according to the conference website, seek to "bring together world leaders to commit to urgent global climate action." This is not unlike when Leo DiCaprio attended former climate events in a private plane and actually took a jet to accept an award on on the matter. Bezos took a $65mm gas guzzler to the COP26 climate summit. Think of the statement it would have made if Bezos came on a fancy solar and wind powered sailboat! One good outcome of the meetings was COP26 leaders agreed to end deforestation by 2030.
Insanity=Trying The Same Thing Over and Expecting a Different Result
I have documented my inability to fix things in countless Rosen Reports and have made it clear that “Some Assembly Required” are my least favorite words in the English language. I am not proud of my ineptitude on these matters, but cannot lie to my loyal readers and suggest otherwise. Another “incident”occurred in the Rosen household due to my inabilities to fix simple things. I was trying to take out the broken water chiller under the sink which sends ice cold water to the faucet. One would think with a plug and two small attachments this would be a no brainer. Not so fast. I could not get these two “trick” attachments unplugged and caused a leak. Now, I had to turn off the water in my main sink in the kitchen. Given I cook almost every night and do not have use of the main sink or the dishwashers (run on same water supply as sink), it is a bit of a disaster. Oh wait, here is an idea, call a plumber. Yes, good luck with that as it takes a week or two. My wife is yelling at me about the fact that I can’t fix it, which is irritating and making me want to fix it just so I don’t have to hear about it anymore. “Why can’t you fix it? The plumber said anyone can do it,” she said.
These plugs do no pull out. You need a PhD from MIT in order to get them out of this machine. Only these two circled plugs and a power plug are on the chiller.
“Really, if ANYONE can do, why don’t you do it,” I said. I wish I had a picture of the look she gave me on that one.
It gets better. A couple days later of no sink or dishwashers, and I had a brilliant idea. I am having stone work done on my patio and the contractor was outside. I say, “Marcel, do you think you can help me with this in the kitchen?” “Sure, I can do that,” he says. He then asked, “Did you turn off all the water?”
“OF COURSE I did, Marcel. I am not an idiot,” I said. Well, not so fast. I only turned off three of the four water valves and as Marcel took off the hose to the chiller, water went everywhere. I am talking about insanity and water was flying out like a fire hose. It took me 20 minutes to clean it up. Yes, Marcel finally was able to install the chiller after we stopped the leak and found the 4th water valve which I inadvertently left open. We had to clamp the hose shut in order to turn off the water. Yes, it was an unmitigated disaster.
I had turned off 1, 2 & 3, but did not see 4. Yes, 4 created a mess.
Why I even try to fix anything at this point is beyond me. Some say insanity is trying the same thing over and expecting a different result. Guilty as charged. I might need to be committed. If this happens, there will be no more Rosen Report for a while.
Election Results-What Did They Tell Us?
There were many surprises in Tuesday’s elections. To me, it was a major statement against Progressives and Biden’s first 9 months in office. There are too many elections to discuss, but from what I read and watched on TV, in many cases elections big and small were statements against the move so far to the left. VP Harris said, “What happens in Virginia will, in large part, determine what happens in 2022, 2024, and on." Well, that did not turn out as planned. The results of the election should force many politicians reconsider the Progressive agenda and make it harder for Biden to get his agenda passed in my opinion. I watched various stations and was taken aback by CNN commentators and how significant they felt the Virginia gubernatorial loss was for the Democrats. To my surprise, even liberal stations like CNN were saying the election night was making a strong statement against the Progressive movement. Wednesday afternoon’s CNN headline is “Biden arrives back in Washington to a political nightmare.”
In my opinion, Biden needs to pivot and move back to the center or I feel his term will continue to disappoint and the results of the this week’s election could be indicative of 2022. If I am Manchin, Sinema or other moderates, I would not support the Progressive agenda based on these election results or they are unlikely to win re-election. If this week’s elections were a blue wave, I would suggest something else. Here is a telling quote from a big Democrat. "If you’re a Democrat sitting on Capitol Hill and you’re from one of these swing districts in suburban areas, are you rethinking your vote on this reconciliation package?" David Axelrod said Tuesday night on CNN. "Are you thinking, maybe it’s best, we shouldn’t do it." Remember, Axlerod worked for the Obama campaign and as a senior advisor to the President.
I feel the combination of the border issues, crime, education, COVID mandates, Afghanistan/national security, inflation, defunding police, big government, supply chain issues, stimulus packages, energy policy/gas prices and overly woke teachings have come back to hurt the Democrats in this election. I would like to know what my readers think here. Some of the election results are outlined below:
A Republican, Glenn Younkin, won the Virginia Gubernatorial election against incumbent, Terry McAuliffe. Despite the fact that Biden won VA handily and the polls suggested McAuliffe would win easily, a Republican won without using Trump for help during the campaign. Will other Republicans follow suit and limit Trump’s use in campaigns? It is the first time a Republican won a state wide election in Virginia in over a decade. Also of note, in VA since 2002, it has been run by a Democrat other than the four years between 2010-14. McAuliffe said “I don’t think parents should be telling schools what they should teach.” Parents, revolted, rightly so, in my opinion. I had written extensively about Loudoun County, VA school rules which infuriated parents, but McAuliffe did win that county. Education was the biggest issue for VA voters according to surveys. Also of note, Republican Marine Vet, Winsome Sears, was elected Virginia Lieutenant Governor. For the Attorney General in VA, Republican Jason Miyares defeated the Democratic incumbent, Mark Herring. New Lieutenant Governor Sears below.
In NJ, the incumbent Democrat, Phil Murphy, was expected to win handily against Republican, Jack Ciattarelli. With apprxoimately 90% of votes in, the race is within a 16,000 votes in favor of the incumbent and remains too close to call. Biden crushed Trump in NJ in 2020 and Murphy won the governor’s mansion handily as well in that election. Even if Murphy wins as appears to be the case, it is a major statement made by the voters in NJ. In a separate race, the NJ State Senate President, Steve Sweeney, Democrat, was is in a tight race with a Conservative truck driver, Ed Durr, who spent $153 on his campaign. Sweeney has served in the state senate since 2002 and was behind by Durr by a couple thousand votes as of late Wednesday afternoon. This race is reminiscent of the time Eric Cantor lost the Republican primary to Dave Brat, a Tea Party candidate and professor and Randolph-Macon College. Ed Durr pictured below.
In Minnesota, there was a vote to defund the police and replace them a new “Public Safety” department. 56% of the vote was “No,” which ended the debate in my opinion. The fact that 44% voted to remove the police department is quite concerning from my perspective. The growing calls to defund the police need to be heard and clearly many have lost faith in their perspective departments. I am just not of the opinion that defunding the police is the answer.
The great news for NYC is there is a new sheriff in town, Mayor-elect, Eric Adams. The reign of DeBlasio is finally coming to a close and I believe virtually everyone is thankful that Adams will help to fix all the issues inflicted by DeBlasio. Adams ran on public safety, something sorely needed in NYC. On Wednesday, Adams vowed to “revisit” the COVID vaccine mandate. For District Attorney in Manhattan, Democrat, Alvin Bragg, a Progressive won handily. How well will Adams and Bragg work together as Bragg ran on dialing back prosecutions dramatically.
There were so many other local elections in Buffalo, Long Island and other locals which appear to have gone against Progressives, much to the surprise of the pollsters. The Buffalo Mayor race saw the incumbent, Byron Brown lose in the primaries only to likely win via a write-in campaign against Democratic Socialst, India Walton. In Seattle, a Moderate, Bruce Harrell, appears to have a lead against the Progressive, Lorena Gonzalez. We know how far left Seattle has been historically which brought us the CHOP/CHAZ zone. However, in Boston, Michelle Wu will be the first Asian Mayor and from what I read she Progressive.
Quick Bites
Stocks rose to new records on Wednesday after the Federal Reserve made its long-anticipated announcement to slow the monthly bond purchases the central bank implemented during the pandemic. Major averages climbed steadily into the green as the central bank said it will begin to scale back the bond buying later this month and reiterated that it would be in no rush to raise interest rates after finishing the taper next year. The Dow Jones Industrial Average rose 104 points to 36,157, after being down more than 160 points earlier in the session, and closed at a new record. The S&P 500 traded up 0.65% to 4,660 to a new all-time high. The Nasdaq added 1% to 15,811 and closed at a record. This is the fourth session in a row that all three major averages closed at new highs. The Russell 2000 rose 1.8% to 2,404 and notched a record close. The small-cap benchmark is up 4.7% this week.
I have written about supply chain to the point of irritation, but thought this tidbit was compelling. The story below shows how bad the supply chain issues are today. I have written about incredibly high shipping rates which were up as much as 8-fold since pre-pandemic at one point for some routes from China to the US. Shipping company A.P. Moeller-Maersk is reaping the benefits of global supply strains that have pushed up ocean freight rates near record levels and caused backlogs at U.S. ports. The company reported a profit of $5.44 billion for the September quarter, more than five times the profit it had a year ago. Put another way, Maersk made almost as much money in three months as Amazon and UPS combined. Amazon reported a third-quarter profit of nearly $3.16 billion and UPS posted a profit of $2.33 billion.
I had not thought of all the downstream impacts of the supply chain issues, and this article articulates some of it. Turmoil in the auto industry, a powerful engine of the global economy, is threatening growth and sending tremors through companies and communities that depend on carmakers for money and jobs. For every car or truck that does not roll off an assembly line in Detroit, Stuttgart or Shanghai, jobs are in jeopardy. They may be miners digging ore for steel in Finland, workers molding tires in Thailand, or Volkswagen employees in Slovakia installing instrument panels in sport utility vehicles. Their livelihoods are at the mercy of supply shortages and shipping chokeholds that are forcing factories to curtail production.
Elon Musk hit back at a suggestion that he and other billionaires should “step up now” to help solve world hunger, pointing the finger instead at a prominent global food program. Musk lashed out after David Beasley, director of the United Nations World Food Program, told CNN that just a sliver of Musk’s and other billionaires’ wealth could help solve world hunger, saying, “$6 billion to help 42 million people that are literally going to die if we don’t reach them. It’s not complicated.” Musk responded on Twitter: “If WFP can describe on this Twitter thread exactly how $6B will solve world hunger, I will sell Tesla stock right now and do it.” Many people hate on the uber wealthy. I love that Musk put his cards on the table. How awesome would it be if they proved $6bn would eradicate world hunger and Musk did it? I call B.S. on the $6bn, as it seem too low, but could you imagine being one person who ended world hunger? Let me get this right, would it be better of the government to tax the hell out of him and used it on idiotic programs? Most of the uber wealthy are doing remarkable things to change the world. I don’t understand the hate of their success. Elon, I am available for adoption. Just don’t ask me to fix anything in the house or on your plane.
Rivian Automotive Inc. is seeking a valuation in a range just above $60 billion in its initial public offering next week, one of the biggest and most-anticipated deals yet in a blockbuster year for new issues. The Amazon.com backed electric-vehicle startup plans to sell shares between $57 and $62 apiece, the company said in an updated regulatory filing on Monday. At the high end of the range, that would give Rivian a valuation of over $60 billion on a fully diluted basis, as The Wall Street Journal first reported Monday. For perspective, GM market cap is $80bn and Ford is $72bn. Both these companies are over 110 years old, while Rivan was founded in 2009.
I felt like given recent polling data, comparisons to former presidents would be interesting. “Americans have lost their confidence in President Joe Biden and their optimism for the country.” That, according to Chuck Todd, is the top takeaway from a just-released NBC News poll out Sunday. Breaking down the numbers on Meet the Press, Todd pointed to data from the survey that he deemed “shocking.” “Just 22 percent of adults say [the U.S. is] headed in the right direction,” Todd reported. “A shocking 71 percent say we’re on the wrong track.” The number of Americans who believe the country is on the right track is down 14 percent from April, and 7 percent since August. The majority of those declines have come from Democrats. Only 41 percent of Democrats believe the country is headed in the right direction, down from 64 percent in April. As for President Biden, his approval rating stands at 42 percent according to NBC, down 7 points from August. The poll shows a majority of Americans disapprove of the president’s job performance, with 54 percent giving Biden a thumbs-down for his first nine months in office. I want to put into perspective Trump’s ratings in late Oct/early Nov of 2017. His overall approval rating was 38% and disapproval was 56%. Trump’s Republican approval rating was 88% and Democratic approval rating was 6%. Remember, Trump was hated, the media despised him and Biden is viewed as Mr. Nice Grandpa. My point is they are polling shockingly similarly for very different reasons. I do not feel Biden is accomplishing as much as I thought he would and feel he has made some major mistakes despite the fact that his party controls the House and Senate (kinda). The polling is telling us more voters across party lines are losing faith, and Tuesday’s elections largely suggest the same. There is a year until the mid-terms, so Biden has some time to get some wins under his belt. As Rosen Report readers know, I always pull for the pilot as the cost of rooting against the President is too high. This link shows how Biden stacks up against prior presidents at this point in his presidency. He is losing to all except Trump, so clearly, Biden and his predecessor are hardly viewed positively at this point in their tenure. I like this chart from 538, which is run by Nate Silver, a left leaning pollster. Of the past 12 presidents, Biden is only beating Trump (5pts) on approval rating at the same time in his presidency. All others are decently higher than Biden with GW Bush double Biden. You can see more presidents in the link. Tuesday elections suggest to me that voters are losing faith.
When Joe Manchin stepped to the podium in the US Capitol on Monday afternoon, the hope among Democrats was that he was going to announce that he supported the $1.75 trillion social safety net bill -- a moment that would virtually ensure passage of the bulk of President Joe Biden's first-term domestic agenda. “As more of the real details outlined in the basic framework are released, what I see are shell games, budget gimmicks that make the real cost of the so-called $1.75 trillion bill estimated to be almost twice that amount, if the full time is run out, if you extended it permanently," Manchin told reporters Monday afternoon. It is important for President Biden to have some wins and he needs to get some of his agenda passed in a hurry. However, I believe Tuesday’s elections were a big vote against the Progressives and in my mind will make moderates (Manchin & Sinema) move away from the left and reconsider supporting the various initiatives.
In the last Rosen Report, I wrote about the absurdity of prescription drug prices in the US relative to other countries. This story is just as concerning and upsetting. A Georgia woman spent seven hours waiting for emergency room staff to check out her head injury, and left before receiving any treatment. But the real headache began when the hospital billed her almost $700 for the visit a few weeks later. “I didn’t get my vitals taken, nobody called my name. I wasn’t seen at all,” Taylor Davis said. She went to Emory Decatur Hospital ER in July for a head injury, and waited as long as she could stand it. “I sat there for seven hours. There’s no way I should be sitting in an emergency room … for seven hours,” she said. So she went home and was charged $688.35 for the ordeal. I have had substantial bills for my wife’s broken wrist and my Dengue Fever treatment and I felt we were massively overcharged, but at least we received treatment. The healthcare system from insurance to hospitals to prescription drug prices is a complete mess in the US. Let’s not forget the opioid crisis.
Jes Staley stepped down as chief executive of Barclays PLC under pressure from regulators about how he characterized his relationship with the convicted sex offender and financier Jeffrey Epstein. Barclays said Mr. Staley stepped down “in view of the conclusions” made by U.K. regulators in its long-running investigation into what Mr. Staley told the bank about his association with Epstein and what it told regulators about the relationship. The probe concluded that Mr. Staley provided an incomplete picture of his relationship with Epstein, which the board passed on to the regulator. The bank said the investigation didn’t find evidence that “Mr. Staley saw, or was aware of, any of Mr. Epstein’s alleged crimes” and said Mr. Staley was planning to contest the conclusions made by regulators. I have no idea of Staley’s involvement with Epstein. I know Jes, as he was my boss at JPM for a short time. I have no incredible inside scoop on who was involved with the pedophile, Epstein. The only thing I have a very high degree of confidence in is the fact that many powerful people were involved with Epstein and I believe many gave him countless millions to silence him. From all that I have read on this topic, I strongly believe that Epstein had lots of video footage of his “friends” in compromising positions. I want to know who has these tapes which clearly existed at one point and when Epstein “committed suicide,” why were the tapes not released by his lawyers? Why is Maxwell not spilling the beans? Clearly she has a lot of inside information here.
Children’s screen time has doubled during the pandemic — and it hasn’t gone down since, according to new research. Researchers from the University of California-San Francisco say youngsters are spending almost eight hours a day looking at smartphones, tablets, and televisions, compared to less than four hours before COVID. This figure does not include the time spent on computers for school work. I have consistently been concerned about screen time with children. We were the last holdout for smart phones for our kids. Jack made the high school golf team in 7th grade, and the coach made it clear he needed a phone. Well, son of a… Instagram is all consuming for kids. Jack does spend a lot of time on the course, which limits his time, but when he is not golfing, he is on Instagram. Social Media is horrible for kids in my opinion and feel it gives young girls a complex as what they see on the screen is not real and they do not comprehend it.
This is a WSJ article on holiday travel and suggests to expect delays and cancelled flights. The suggestion is oversold flights and staffing shortages may result in customers being stranded for extended periods of time. When my family lived in NYC, we traveled for the winter break, spring break and every long weekend between November and May. We would do the Caribbean, Costa Rica, CA, FL or anywhere warm. Now that we live in South Florida, we do not travel much in winter, and it seems like that is a good idea based on the article. Another thing about living down here is we spend a great deal less money on vacations as a family relative to our time in NYC.
Other Headlines
The Fed is about to set its post-crisis policy course — with a high level of uncertainty ahead
Zillow Shuts Down Home-Flipping Business After Racking Up Losses
Jeff Bezos hired this applicant for an Amazon job ‘on the spot’—here are his 2 interview questions
Pelosi adds 4 weeks of paid family and medical leave back into social spending bill
Bed Bath & Beyond shares soar more than 80% in after-hours trading
SPAC Issuance Jumps to Highest since March as Deals Rush to Market Before Year-End
Virus/Vaccine
The data improvement continues across the board in the US with respect to COVID-19 as seen in the chart below, but case improvement is less than it has been in recent weeks. Although cases are down over the past two weeks, as you can see in the chart, we are seeing a bump in cases in the past few days.
A potentially faster-spreading "sub-lineage" of the coronavirus Delta variant named AY.4.2 has been spotted by labs in at least 8 states, and health authorities in the United Kingdom say they are investigating a growing share of cases from this strain of the virus. Labs in California, Florida, Maryland, Massachusetts, Nevada, North Carolina, Rhode Island and Washington state, plus the District of Columbia, have so far spotted at least one case of AY.4.2. While it may spread somewhat faster, health authorities have not found evidence of more severe illness caused by the variant, and they say current vaccines remain effective against it.
This is a perfect example of zero tolerance for COVID. More than 30,000 visitors to the Shanghai Disneyland theme park were kept within the park’s gates on Sunday and forced to undergo Covid-19 testing after a customer tested positive for the virus, a move that underscores China’s eradication efforts. Leaders there have taken stringent measures to contain pockets of the coronavirus in the country, despite criticism from business groups and a close to 80% vaccination rate.
Real Estate
A house in my neighborhood by my same builder and on my block is being built with a listing price of $15.5mm. They broke ground and presume it is a year away from completion. It will be very interesting to see the clearing price for this house and will bring up the value of mine in a big way. For perspective, I paid $6.3mm for my house in 2017. The new house is about 10% larger than mine, but mine has about 30% more land if the broker data is correct. The builders do a fantastic job and in my opinion really stand behind their work. To be clear, I have become friendly with the Compson team and they have always done right by me and would recommend them highly. They just built a 10,000 sq. ft. house on just shy of an acre and it came out incredibly well.
3715 S Ocean Blvd. sold for $30.25 million, setting a sales record in Highland Beach, Florida. It was the second time the property sold this year, and its value rose $8.7 million in just seven months. The gains in the average price of a single-family home in Highland Beach has outpaced every market in South Florida, New York and Los Angeles.
Sacramento, California, is at the top of the list for the United States’ least affordable new homes markets. A new study examining household incomes and comparing them with median new home construction mortgages found the California capital tying with Miami, Florida. Eighty percent of households in the Sacramento region, same as Miami, are priced out of new homes, the study from real estate-technology firm, Knock, found. The median new construction home price in the Sacramento region is $650,000, which means residents need an income of about $128,000 to afford an average down payment of $39,000. The median household income in the area is $76,706, according to the report.
Interesting NY Post article on wealthy buyers snapping up luxury villas in the Caribbean and Mexico. Baker’s Bay, Silversands, Rosewood Residences and others were mentioned. Any Discovery Properties (Bakers, Yellowstone…) are amazing from a service and member perspective, but come at a hefty price tag for the property and the annual dues/maintenance. Meldman, Discovery CEO, is a genius.