Opening Comments
I took Jack to Memphis to see his golf coaches Friday to Sunday. We stayed in a Courtyard by Marriott. When I consider thread counts in sheets, I am not sure how much lower quality they could have been. It was like sleeping on 20 grit sand paper. It was not the unmitigated disaster of last summer’s Motel 6 debacle, but I received almost zero shut-eye for two nights. Additionally, as we were landing in Miami the pilot sharply pulled up the plane just as we were going to touch down. Turns out there was a plane on the runway right where we were landing. I have flown close to 2 million miles and this is only the 2nd time this has happened to me.
In my infinite wisdom, after arriving late from Memphis Sunday, I took the invite to fish Monday 80 miles away. It meant I had to wake up at 4am. Not a brilliant decision. Turned out we went for yellow-fin tuna, and the bite was slow. I did catch a small grouper and a 35 lb wahoo, which made up for the slow day. I slept 2.5 hours and did not get back home until 9pm. Bad idea despite being with a good group of people.
In the never ending legend of Johnny P (The Most Interesting Man in The World), I uncovered this photo. For those uninformed, he is STAND UP PADDLE BOARDING on GIANT waves at Jaws (Pe’hai) Hawaii. The cost of being wrong here is severe. Nothing could get me to attempt this feat. Again, I am not worthy.
Trying to mix it up today with a shorter version of the report after a long one last time. Thoughts? Get the word out and send it to friends. Remember to hit the like (heart) button if you enjoy reading.
Pictures of the Day-Russian Atrocities
WORDLED
Quick Bites
Markets, Musk Buys Twitter Stock
Rosen Inflation Stories
Lael Brainard on Fed Policy
Dimon on WFH (Shareholder Letter)
Forbes List
Smell Test
Other Headlines
Virus/Vaccine
Data-Case Growth in 10 states and the Northeast
Real Estate
General Comments-Florida Lack of Inventory
Miami Flip ($7 to 20mm) in a Year-Other Crazy Stories
NYC Record Sales
Bel-Air Spec House for Sale
Pictures of the Day-Russian Atrocities
There are many atrocities being cited in Russia. There has been a lot of misinformation out of the region for some time, but believe many of these are true. The bodies don’t lie. More stories of women and children being raped as well. These are true war crimes. On Monday, the US warned Russia will intensify its military operations in Ukraine.
WORDLED
For a while, I have been doing crossword puzzles on an app on my phone before bed. It helps keep my mind sharp and is better than TV. I had heard of the game, Wordle, but never played it. About a month ago, my sister-in-law visited with her kids. One of the kids was talking about the greatness of Wordle, and I decided to try it a couple weeks ago. I downloaded a Wordle App and I am the equivalent of Pavlov’s Dog on this thing. This is a picture of the app I use, but the most popular is the NY Times.
This picture outlines the rules:
For those uninformed, it is a word game. You need to try to guess a five-letter word and you have 5 tries to get it right. My strategy (no idea if correct) is I always start with the word, ROAST or STORE. Lots of common letters. If the letter turns grey, it is not in the word you are looking for. If it turns yellow, it is in the word, but the wrong location. If it turns green, it is in the right place. Below, “A” is in the word, but not in the correct location.
After ROAST, I tend do use the word, MUNCH. If I have now uncovered many letters, I try to solve the word. I struck out on MUNCH and am off to a bad start.
If I am still light on the letters, I use a word like PLEAD which worked like a charm and gave me all the letters I needed. The “P” and “D” are in the right spots.
I now have all the letters and just needed to re-order the yellow ones. The correct word is paled. You get points in the inverse of how many attempts it takes to solve the puzzle. The more tries, the lower the points. My record without missing was 214 points which equates to approximately 85 consecutive correct answers given I average about 2.5 points per round. The great run resulted in a bunch of bonus points to give me the ability to “knock out” letters on puzzles where I am struggling. You keep going until you miss one time by not getting the correct answer after 5 tries.
The biggest challenge is when you solve 4 of the 5 letters, and there is more than one option with only one guess remaining. I have lost on this issue a few times. Super frustrating.
This is one addicting game. I was playing on the plane and the woman next to me started going bonkers and wanted to learn. I showed her the game, and I was on an epic run of guessing correctly. She thought I was clairvoyant.
If you have not played, let this be a warning; it becomes addictive, so proceed accordingly. I did pay $2.99 to not watch ads. The ads drove me nuts and happen far too often. Sometimes, I get the word early as I am starting to see patterns. I am not sure what game will take over from Wordle, but I am sure something new will come out. In the meantime, I am addicted. I have been WORDLED. Here was a big win, as I solved it on the 2nd guess. This does not happen often.
Quick Bites
Stocks fell for a second day on Wednesday and rates soared to new heights after the Federal Reserve gave more guidance on how fast it will tighten monetary policy to fight inflation, raising concerns it may slow the economy. The Dow fell 145 points, or 0.42%, to 34,497. The S&P 500 slid 0.97% to 4,481, and the Nasdaq sank another 2.22% to 13,888.82 after falling about 2.3% on Tuesday.
“It was a warning to anyone who thinks that the Fed is going to be more dovish in their fight against inflation,” said Quincy Krosby, chief equity strategist at LPL Financial. “Their message is, ‘You’re wrong. The big news is rates (10 year chart below) with the 10-year 26bps higher in 5 days and closed at 2.6%. Oil fell sharply today, -5% and closed back under $97/barrel, but nat gas remains over $6. Crypto was hit with BTC -4% to $44k and ETH -6% to $3.2k.
Elon Musk has asked Twitter users if they want an edit button to be added to the platform — hours after taking a 9.2% passive stake in the company, making him the largest shareholder. The rise comes hot on the heels of Twitter’s best day of trading since its IPO in 2013, with shares surging over 27% on Monday. Musk’s investment in Twitter comes after he said he was considering building a new social media platform. The Tesla CEO does not like that his tweets are scrutinized by regulators like the U.S. Securities and Exchange Commission. “Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy,” Musk tweeted March 26. “What should be done?” I have been incredibly critical of Twitter, Facebook, and others for inconsistent censorship. Louis Farrakhan, Ayatollah Khomeini and Putin (through his President of Russia account) are on Twitter, but Trump, Marjorie Taylor Greene (NUTCASE), Veritas Founder or the Hunter laptop is banned. These ridiculously biased rules have a substantial influence on elections and popular opinion. I want consistency and transparency in the media and hope the genius, Musk, does something about it. How amazing would it be to be so wealthy, that you can influence the direction of major companies with your own money? Musk joining the board of TWTR as well.
I am not sure I have written about a topic more than I have of inflation in the past year. I know a lot of write up discuss 6 to 8% inflation, but what I consume is far higher. Housing, cars, food, travel, rental cars, hotels, consumer products, restaurants… are up far more than “headline data” suggests. This week, I received this note from my landscaper. They are raising prices 20% due to increased labor costs. To be fair, if this were the Hamptons, it would be over $2,500/month. Also, I buy meats from a great butcher in Naples, FL called “Jimmy Ps.” All the meats are up 25-40+% and my hamburgers are up almost 60% since the pandemic. Regular grocery shopping is up 20% or more for my family. Renting a car is not the same insanity as last summer, but quite elevated. We bought a new TESLA and I confirmed with the company the Model Y, is up 44% in a little over two years. The new car cost me $18,450 more than it would have a couple years ago. My rep told me they are sold out of many units until 2023 and has some people waiting over 1 year for their car. Don’t get me started on gas prices. Prices averaged $2.48 in Florida pre-pandemic and are at $4.18/gallon today. This is an increase of 69%. A combination of the Fed leaving gas on the fire too long, cash from the government through non-stop stimulus and dumb energy policy, and this is what you get. No, I do not want to see Build Back Better pass. We have not started to see the impact of the Infrastructure Bill yet. This is a recent WSJ article “With Inflation Not Letting Up, Shoppers Cut Back on Staples.” This CNBC story (2nd and 3rd pictures), suggests more are concerned that higher prices will make them rethink financial choices. Interestingly, a reader, Matt, sent me Bank of America research suggesting that through March, consumer spending remains strong.
The Federal Open Market Committee “will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting,” Brainard said on Tuesday in remarks prepared for a speech to the Minneapolis Fed. “Given that the recovery has been considerably stronger and faster than in the previous cycle, I expect the balance sheet to shrink considerably more rapidly than in the previous recovery, with significantly larger caps and a much shorter period to phase in the maximum caps compared with 2017–19,” she added. This is a quote from my investing hero, Stan Druckenmiller, “Earnings don’t move the overall market; it’s the Federal Reserve Board… focus on the central banks and focus on the movement of liquidity… most people in the market are looking for earnings and conventional measures. It’s liquidity that moves markets..” Stan had a 31% annual return track record for 30 years before closing his fund. Rates moved sharply on the Brainard comments. Tuesday, we saw 2s/10s close inverted by 1bps, but Wednesday saw the trend reverse and closed at +3bps. The gray vertical bars are recessions and every time we went negative, we have seen a recession since 1980. Of note, the 3month/10yr remains upward. I was clear for months that low rates and continued QE were incredibly stupid. Why does the Fed seem to get it wrong so frequently? Of note, Wednesday, Philly Fed President, Harker, echoed concerns of Brainard and Daly regarding inflation. “Inflation is running far too high, and I am acutely concerned about this,” Harker told the Delaware State Chamber of Commerce. Add to this, the Fed plans to shrink the balance sheet by $95bn/month.
I was screaming to stop QE last year. WHY WERE THEY BUYING ASSETS UNTIL MARCH 9th 2022 with the inflation backdrop we have had for a year?
“People don’t like commuting, but so what?” JPMorgan Chase CEO Jamie Dimon said a year ago. Since then, leverage has shifted to workers as it became clear they would ditch any employer that chains them to their desks five days a week. In turn, Dimon has softened his stance, recognizing the staying power of remote work. “It’s clear that working from home will become more permanent in American business,” Dimon acknowledged in his annual shareholder letter Monday. He then revealed how that trend will affect the real estate of his firm, the city’s largest commercial tenant. The company expects to have about half of its employees work in-person full-time. That includes retail bank branch workers, security and facility workers, and others whose jobs cannot be done remotely. Meanwhile, approximately 40 percent will be able to embrace a hybrid work model, coming into the office a few days a week. The remaining 10 percent of employees will be able to work from home full-time. Last year, the company cut its commercial footprint in the city by 400,000 square feet, a year after downsizing by 300,000. The bank rents 8.7 million square feet in the city, but is still looking to shed. It has been looking to sublease 700,000 square feet at 4 New York Plaza in the Financial District. I called the WFH situation 18 months ago in the Rosen Report and continued to suggest it would be one of the largest long-term impacts from the pandemic. Major companies have commuted to WFH or some hybrid model. What is the long term impact on office space in major cities? What about the restaurants and support retail in and around these buildings if only 1/2 of the employees are showing up on any given day?
The new Forbes list came out. Unfortunately, I missed the list by a couple zeroes this year. Some interesting names. Here are the top 10, but see the others in the link. If you click on the specific name, more information appears.
When the story broke about Leon Black, founder of Apollo, and his payments to Jeff Epstein, I made comments about not passing the “smell test.” Black paid Epstein $158mm between 2012-2017 despite knowing Epstein plead guilty to sexually abusing an underage girl. Epstein did not graduate college, was not a lawyer, yet Black paid him a huge sum of money for trust and estate advice? I am not convinced anyone in history has spent $100mm on trust advice. Remember, Black has access to the best lawyers and advisors in the world. The conclusion for me is clear about why Black paid Epstein an obscene amount of money for services in which Epstein was not certified. The same is true on Hunter Biden. I have sat on boards and let me tell you, despite being well educated, successful and having a great network, major board seats and advisory roles which pay MILLIONS just don’t fall on your lap. What company in their right mind would pay a known crack addict, kicked out of the military, who left his wife for his dead brother’s wife, who had kids out of wedlock and does not pay child support and smoked Parmesan cheese to sit on a board or give advice? What did these companies get in return for the millions they gave to a reckless train wreck? Oh yeah, these were companies in the Ukraine and China where he has zero expertise and does not speak the languages. The smell test fails yet again. Despite the media trying to block this story for 18 months, the truth needs to come out. The last election was run on character and having an adult in the room. Did Joe benefit? Hard to believe Joe is not “the big guy.” Companies who hired Hunter, I am available for consulting or board work. I have a strong work ethic, built and ran multi-billion dollar businesses, launched a hedge fund, attended the University of Chicago for business school and have stellar references. I am available to advise you and sit on your boards and I will do it for 75% of the prices you paid Hunter. Talk about the deal of the century!
Other Headlines
Yellen warns that war in Ukraine will have ‘enormous’ global economic impact
JBlue is my favorite airline and Sprint is my least favorite. I am a bit nervous about this deal.
There’s no shortage of aspiring Goldman bankers as record 236,000 students apply for internships
Goldman said 236,000 people applied for internships globally at the bank, including 79,000 in the Americas, according to data provided to CNBC.
Black Lives Matter Secretly Bought a $6 Million House
Allies and critics alike have questioned where the organization’s money has gone.
NYC pregnant woman robbed on sidewalk, thrown to the ground by attacker
Watch the short, disturbing video in the link. After leaving NYC, I would spend at least a 4 weeks+ a year there. In 2022, I am not sure if I will spend a week in total in NYC.
Scourge of Gramercy Park: Homeless man terrorizes NYC neighborhood
Why is this good for the neighborhood, local business, residents? He needs help and should not be on the streets.
This was an historic collapse by UNC. Congrats to the Jayhawks for an amazing comeback.
Tiger Woods plans to play the Masters and thinks he can win
Great for golf. What a competitor despite so many off the field issues.
I am not much of a social media person and fear the impact of it on our children and adults alike.
California city to give universal income to transgender, nonbinary residents regardless of earnings
Transgender residents in Palm Springs, California are eligible to receive a UBI of up to $900 per month solely for identifying as transgender or nonbinary — no strings attached.
Puppy love: 7 in 10 people really do consider their dog their best friend
Roblox unveils new humanoid avatar clothing you’ll be wearing in the metaverse
I am just too old and too stupid to understand this. Spending hundreds of thousands or millions on R/E in the metaverse and now buying clothes.
Readers love UFO articles. This one is a doozy. Lots o new info due to Freedom of Information act. No, I have never knowingly been abducted, but do believe it is small minded to think we are the only life in the universe. A lot of info here and a lot still withheld.
Top US general: Potential for ‘significant international conflict’ is increasing
Vladimir Putin recruiting 'Dad's Army' of oldies to prop up creaking Ukraine invasion
Virus/Vaccine
Cases were only -1% after many weeks of far more significant declines. Approximately 10 states are seeing an uptick in cases despite the fact that overall, cases in the US are shrinking. The Northeast (red line in 2nd chart) is the only region we are starting to see case growth again with VT, RI, NY, MA, ME, NJ all on the rise, albeit from depressed levels. We were scheduled to attend a birthday party to watch the NCAA Basketball finals on Monday, but it was cancelled as the birthday boy tested positive for COVID. We know quite a few people who tested positive recently and even Julia’s school has seen cases levels pop in the past week. Hospitalizations and deaths still declining at a healthy rate.
Real Estate
I have written a bit recently that I feel the Florida market needs to cool down. I do not mean crash, but the pricing and inventory have become so out of whack that there is nothing to find for rent or buy at any reasonable price. I am always trying to help readers relocate and I have a few right now that have gotten the kids into a good school and cannot find a home. One called me Monday to say, “What I am seeing is more expensive than NYC.” Now, I do not necessarily agree with that statement, but do agree things are getting stupid. She found a small 3 bedroom in a “B” building for $28k/month. It was 2,000 ft. My point is that the lack of housing coupled with school challenges is starting to keep people from moving down to the Sunshine State. If someone has a nice 3 bedroom+ home or apartment in the Boca area, I have a family potentially relocating from NYC. The only thing holding them back now is housing. It is really that tight. I recommended another building to a reader looking to rent. She loved it (Via Mizner). She put her name down on the list and they emailed her with availability. She scrambled to fill out the form, but by the time she submitted, it was gone. The 30 year mortgage rate closed at 5.02% this week. Hopefully, we start seeing R/E cool down a little. These surging rates pushed mortgage demand down 40% from a year ago.
In another crazy Miami flip story. Famed developer, Steve Witkoff, sold a .6 acre plot of land at 6455 Pine Tree Drive Circle for $20mm after paying close to $7mm for the corner lot in early 2021. The number of “flips” for high end property from Jupiter to Miami are literally mind boggling. I wrote of a land flip in 9 months on Palm Beach Island from $20 to $39mm. House flips where you triple your money are not folklore. Prices are just getting stupid. $20mm for a lot? This link shows the listing history of the property. Too large to fit on an easy picture. The views are not good and the water is shallow, so you cannot have a large boat behind the house. If the lot were on North Bay Road it would be worth at least $35mm. In another Miami story, a 10,000 ft lot on Venetian Islands just sold for $14mm. The seller paid $9.6mm a year ago and was a record price at the time. In yet another crazy story, a Continuum Condo sold for $6.3mm a week ago and is now under contract for just under $9mm for 2,100 feet on the 31st floor (4,000 ft). The price move was 43% in a week! Nothing to see here folks. A broker told me he has had 3 other broker calls asking for $60-100mm homes from Miami to Palm Beach, but there is nothing interesting for them to buy.
Manhattan real-estate sales topped $7 billion in the first quarter, marking the strongest-ever start to a year as the market shows no signs of slowing, according to new data. The average price of a Manhattan apartment jumped 19% over the previous year’s period, to $2,042,113. Rising interest rates also have less impact on wealthy buyers, who dominate the Manhattan market. As rates go up, they simply pay more cash. The biggest price gains are at the top. Prices for apartments with four or more bedrooms jumped 31% over last year, to $6.5 million. As buyers droves prices higher, only 20% of apartments sold went for less than $1,200 a square-foot, the lowest percentage on record, according to Corcoran.
It’s a house for all different tastes: A Bel-Air spec house asking $24.995 million has a wine room as well as Champagne and tequila bars. The nine-bedroom, roughly 14,500-square-foot home was developed by Jacques Wizman, a former fashion executive who transitioned to real-estate development. Mr. Wizman said he purchased the lot for $3.225 million in 2017 and spent an additional $20 million on the project, which was recently completed. In addition to the wine cellar and bars, the house has a spa, hair salon, gym and theater. The primary bedroom suite has a sitting room, fireplace, two terraces and a walk-in closet, said Mr. Wizman. Outside, the half-acre lot has a swimming pool, two pizza ovens and fire and water features, he said. Lots of great pictures in the link.
nice piece!