Opening Comments
Michael Cembalest “The Thing”
You Can Check in but You Can't Check Out
Quick Bites
Markets, Mortgage Rates, Car Companies, Inflation/Gas Prices
Wall Street Bonuses, China, VP-Harris, Russia/Ukraine
Macklowe Art, Professor Suspended, Cop Attacker Re-arrested
Other Headlines
Virus/Vaccine
Data-Case Growth Continues
Vaccine Waning Effectiveness
New Vaccination Requirements in UK?
Australia Lawsuits
Real Estate
My General Thoughts
Miami Condo Buyers Starting to Come Back (International)
Midtown Condo Market Slow
Opening Comments
I received my largest number of “likes” from the last Rosen Report. Thank you for the support and please hit the “heart button” when you enjoy what you read. Jammed today and may have missed a late story or typo, but did my best to get most of the news out there.
I am 52 next week, coincidentally having a birthday on Thanksgiving. Unfortunately, I feel as though I am turning 82 at times. My latest ailment is a stress fracture in my foot which has prevented me from doing my normal activities. I wish I had a more dramatic story on how it unfolded, but I was literally walking on the driving range and felt something funny when I took a step. I thought I walked on a tee, but no. Getting old is for the birds and fear the boot is coming to a theater near me soon.
In the crazy car department story, I spoke with a young man who owns a dozen high-end cars he rents out in Miami. He bought some kind of Rolls Royce for $300k (used) rented it out for $1,500/day for 18 months generating $300k in cash flow and sold it for the same price he paid for it despite the mileage and wear and tear.
I heard another crazy story about a young adult making a ton of cash. A young man was a big Jets fan and hated Coach Ryan. He started a “Fire Coach Ryan” campaign and sold T-shirts and made some dough. He took the money and bought Bitcoin and other crypto currencies and has tens of millions while being only 22 years old. I have heard derivatives of this story so many times. No college degree. Oh, to be young and aggressive with no fear of failure or losing your life savings. Good on you, kid.
Michael Cembalest-”The Thing”
All my readers know I am friends with Cembalest and that I include is research in my notes. He is an incredibly bright and funny person and this “Eye on the Market” is no different. He agrees with me that wage inflation being transitory seems “more implausible each month.” Also discussed is energy markets and Aaron Rodgers. Here is one telling chart from the piece. What do you think the significantly lower spend from oil and gas producers will do to energy prices?
You Can Check in but You Can't Check Out
Having lived in NY for decades, when I drove on the LIE, I was accustomed to driving in the express lanes and having the option of getting out of it every few exits. This optionality is critical, as if there is an incident in a one lane express section, there is no where to go. Also, if you need to get off the highway, you want the ability to get access to the to the exit.
I had to go to Miami for a few reasons on Monday. I am looking at a couple “Opportunity Zone” real estate deals and I had a charity event. For those who have not driven on I-95 in South Florida often, it is a mess. The volume of traffic is overwhelming. There are a lot of accidents and the older drivers and tourists not knowing where they are going can be a disaster. Getting in the express lanes is key so I entered the fast lane as soon as it was available. My 1st stop was to meet someone on Biscayne Boulevard and 73rd Street. However, I forgot that the express lane is like a roach motel commercial from 1981 where you can check in, but you can’t check out. I blew by my exit on 79th Street because it is a roach motel and I could not get out of the express lanes. I had to go miles to the Miami Airport exit where I could get off and then take a bunch of back roads to get to my destination. I added about 15 minutes to my journey, but given I am a stickler for punctuality, I was not late as I left some extra time.
I went and saw the two areas in Miami for the Opportunity Zones, an economic development tool that allows people to invest in distressed areas in the US. The purpose is to spur economic growth and job creation in low-income communities while providing tax benefits to investors. I must admit that some developers have amazing vision of what a community could become and these transformations are remarkable.
I then went to a great charity event at a large home on North Bay Road in Miami. The homes on this road are arguably the most desired in South Florida and some are over $100mm. The charity was for the Community-Police Relations Foundation which was founded by Al Eskanazy. He felt there was a need and banded people together to make a difference. I appreciate when a citizen rallies troops for a good cause and makes an impact starting from scratch. The goal of the organization is to unite the community with law enforcement and first responders. Right now, the group is growing, and it is in South Florida, NYC and LA. For example, they have the police give out thousands of turkeys to families in need for Thanksgiving. They work with inner-city churches to have police officers give bicycles to kids in need. The police also give gift cards for food to families in need from funds raised through the CPR Foundation. Police Chiefs were there singing the praises of the charity and gave countless examples of the positive impact in various communities. Over 99% of funds raised goes to help others, as the expenses of the charity are extremely low. I was invited to the event by a Rosen Report reader who I met in the past few weeks after he reached out to introduce himself. I was impressed with the people involved and their passion to make a difference.
I ended up at dinner at a restaurant in Sofi called Red with a good group of people. However, I had another mess on my hands. Red has no valet parking. I drove around the restaurant 6 times looking for a spot. I found one muni spot and the parking app did not work and the one physical meter was broken with no other muni parking meters within a 1/4 mile. Every-time I tried to type in my license plate, only the #7 came on the screen. Yes, I was screaming at this inanimate object and calling it all kinds of inappropriate names. I believe I invented a few new curse words during this 10-minute exercise.
I left my spot and tried to park at Joe’s Stone Crab and other restaurants who refused my car as I was eating elsewhere. I finally found a place which took my car for $35 after over 30 minutes of frustration. With no valet parking and food dramatically overpriced, I cannot see how Red has any chance to make it. The room is nice and the wine list is long, but the food does not make the cut at this high-end steak joint. Add to this steak which range from $60-500 and you get the drift that there ain’t no bargains here. You should eat at one of the other good restaurants in Sofi, not named Red. If this place stays in business for another year, I will be in shock. For the price, it was the worst expensive meal I have ever eaten and even at half price, I would never return.
After dinner, I had to head back to Boca almost 50 miles north. I thought I would zip home at 10:30 on a Monday night since the express lanes going in that direction end long before my house, so I don’t need to worry about making the same mistake. I figured I would get home in no time. Well, due to heavy construction, I-95 got down to one lane and then closed forcing me to get off at Commercial Boulevard in Fort Lauderdale. I ended up on the Turnpike miles west of my house and then headed east home which took me almost 1.5 hours.
Between the express lane disaster, the parking mess in Miami and the drive home, and limping around in dress shoes with a stress fracture, the number of profanities I yelled may have hoovered around 642, but must admit I lost count.
Quick Bites
U.S. stocks took a dip on Wednesday as investors weighed a continuation of strong earnings reports from big-box retailers against lingering inflation concerns. The Dow fell 211 points, or 0.5%, and sat about 1.7% from its record. The S&P 500 slipped 0.2% to 4,688 and the Nasdaq lost 0.3% to 15,921. Both were less than 1% from their records. The Dow was dragged down by a 4.7% drop in Visa. The markets are coming off a more positive day in which all three of the major averages moved upward after economic data and corporate earnings signaled U.S. consumers are ramping up spending despite rising prices. The S&P 500 and Nasdaq are still higher for the week, while the Dow is lagging. “Markets appear to be contemplating inflation, growth, and margins as some of the nation’s largest retailers have reported October quarter results this week that while still good, revealed increasing margin pressures in the wake of supply chain issues and labor shortages,” Goldman Sachs’ Jeff Currie said in a note. I found the comment from GS CEO “Greed outpacing fear in world markets” an interesting one.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.20% from 3.16%. Refinance demand fell 5% for the week and was 31% lower than the same week one year ago. Mortgage applications to purchase a home, which are less sensitive to weekly rate moves, rose 2% for the week but were 6% lower than the same week one year ago. I believe this is good news. Rising rates will help to tame inflation and housing prices are out of control. Less refinancing will hopefully cool things down.
In my last report, I added a spreadsheet about car company valuations. Given Lucid, I added it to the page and updated market caps as of 11/16 closing prices. Note Rivian is up $30bn in a few days. However, Rivian stock was hit hard today and was -17%, while Lucid was -5% when I checked this afternoon.
American consumers withstood rising inflation to power a strong start to the holiday shopping season, with big retailers reporting higher sales and expectations for a solid finish to the year. Sales at U.S. retail stores, online sellers, and restaurants rose by a seasonally adjusted 1.7% in October compared with the previous month, the Commerce Department said. Consumers continued their stepped-up spending despite continued Covid-19 fears and inflation concerns. The elevated spending level suggests solid holiday sales this season, lifting the economy as a whole. J.P. Morgan said it was upgrading its growth expectations, raising its forecast for fourth-quarter U.S. gross domestic product to 5% from 4%.
CA gas prices are through the roof. I recently wrote about one town approaching $8/gallon for regular. Now, state-wide, CA averages $4.68/gallon, an all-time high. Remember, oil has been near $150/barrel relative to $80 today, yet we are seeing high gas prices. This is a regressive tax on the consumer and despite wage increases, higher prices of all other goods and services are leaving Americans in despair. The result is plummeting consumer confidence despite high stock and housing prices.
Wall Street is set to see the biggest bonus increases since the Great Recession after a busy and profitable 2021, according to a report from pay consultancy Johnson Associates. Overall bonuses for investment banking underwriters are forecast to jump 30% to 35% from the year prior, while investment banking advisors and equities traders can expect a 20% to 25% year-over-year bonus increase. A sharp rebound in business activity this year has translated to unprecedented workloads for Wall Street professionals — and a competitive job market as companies fight to retain top talent and nab new hires. This is great news for NYC. Now, unfortunately, all your big bonuses will get taxed massively for crap services, lots of homeless, crime, filth and high cost of living. All you rich NYC folks, come on down to Florida and spend your money.
China is accelerating plans to replace American and foreign technology, quietly empowering a secretive government-backed organization to vet and approve local suppliers in sensitive areas from cloud to semiconductors, people familiar with the matter said. Formed in 2016 to advise the government, the Information Technology Application Innovation Working Committee has now been entrusted by Beijing to help set industry standards and train personnel to operate trusted software. The quasi-government body will devise and execute the so-called “IT Application Innovation” plan, better known as Xinchuang in Chinese. It will choose from a basket of suppliers vetted under the plan to provide technology for sensitive sectors from banking to data centers storing government data, a market that could be worth $125 billion by 2025. So far, 1,800 Chinese suppliers of PCs, chips, networking and software have been invited to join the committee. With ‘allies” like China, who needs enemies. They unleashed the virus, lied, bought all the PPE in sight, had the WHO lie, steal IP and copy goods, treat their people horribly and they suffer no consequences. I am not sure I could make it up. Could you imagine being responsible for millions of deaths and trillions of damages with no repercussions?
I purposely used a CNN article to highlight these points on VP, Kamala Harris. You know when CNN goes after their own, it it bad news. The article showcases a handful of headlines from a few sources, all of which are less than glowing about Harris. The general gist of all of these pieces is similar if not exactly the same: The Vice President is struggling in her role. She's frustrated. And some people in President Joe Biden's orbit are just as frustrated with her. Most of the polls have Harris’ unfavorable rating at 50% or higher now. A recent USA Today poll had Harris at a 28% approval rating, even lower than Dick Cheney’s all-time-worst levels. Her handling of the border, horrible cackle any time a tough question is asked and her performance with a French accent while in France have done nothing to improve her status with Americans. There are numerous stories of clashes between her staff and Biden’s and it does not appear to be improving. This CNN article gives ideas on how Harris can improve. One suggestion in the story was to make Harris responsible for the infrastructure bill. I do not see this happening. I think Pete Buttigieg is being groomed to be on the short list. I felt in the debates he was very impressive. Remember, there is a lot of time until the mid-terms, but the Democrats better re-think the strategy or there is going to be a big Red-Wave. This USA Today article suggests in recent days, the White House is “rallying” behind Kamala after all the negative stories.
NATO Secretary-General Jens Stoltenberg warned Russia on Monday that the western military alliance was standing by Ukraine amid a large and unusual concentration of Russian troops on Ukraine's borders. Stressing that the important thing now was to prevent situations from spiraling out of control, Stoltenberg urged Russia to be transparent about military activities, to reduce tensions and prevent an escalation. "We have to be clear-eyed, we need to be realistic about the challenges we face. And what we see is a significant, large Russian military build-up," Stoltenberg told a news conference with Ukraine's Foreign Minister Dmytro Kuleba in Brussels.
I wrote a fair amount about the Macklowe art collection and sale. I suggested it would go for higher than estimates and it did. The estimate for 35 lots sold at Sotheby’s this week was a high of $619mm yet the total price was $676mm. I feel the Macklowe’s taste in art was remarkable and many of the new collectors have horrific taste. A Mark Rothko for $82.46 million, an Alberto Giacometti sculpture for $78.39 million, and a Jackson Pollock painting for $61.16 million (a new record for the artist). This story has a link on the bottom with almost all of the lots sold. Some amazing works with a few crappy ones mixed in as well.
Old Dominion University announced it had put a professor on leave following comments attempting to normalize the phrase "minor-attracted persons." "Old Dominion University has placed Dr. Allyn Walker on administrative leave, effective immediately, from their position as assistant professor of sociology and criminal justice," Amber Kennedy, a spokesperson for the university, said in a statement on Tuesday evening. The Old Dominion professor wrote a book titled, 'A Long Dark Shadow: Minor-Attracted People and Their Pursuit of Dignity. I never thought we would find what it takes for a professor to be put on leave. Racist or anti-Semitic comments never seem to make the cut, but pedophilia comments are the dividing line. Finally. I was going to lose it if they allowed this person to continue to teach after suggesting “Minor-Attracted-People” are non-offending.
An ex-con who once tried to kill a Queens cop was arrested this week for randomly attacking another NYPD officer — only to be freed without bail, authorities and police sources said Monday. Accused repeat cop-attacker Isus Thompson, 38, could have been forced to cough up bail before being released from custody after his latest alleged assault on an officer. I am a believer in bail reform for 1st time, non-violent offenders. I am not a believer in bail reform for anyone who routinely attacks police officers. Until NYC gets this right, more wealthy people will leave for the sunny confines of South Florida bringing with them, their big incomes and healthy spending habits.
Other Headlines
Yellen warns U.S. Treasury won't have enough cash to last long after Dec. 3 debt deadline
Democrats Rebrand Build Back Better Bill to Counter Inflation Concerns
I struggle to see how you can argue spending trillions will lower inflation.
Crypto.com buys naming rights to Lakers' Staples Center in a $700 million deal
Bill Gates' TerraPower builds its first nuclear reactor in a coal town
CBP reports 164K illegal immigrant stops in October, more than double from 2020
Iran Resumes Production of Advanced Nuclear-Program Parts, Diplomats Say
Diabetes breakthrough: Blood biomarker predicts disease onset 19 years before diagnosis
Alzheimer's drug Aduhelm is a key factor driving up Medicare premiums
Jeff Bezos: Future Humans 'Will Visit the Earth the Way You Visit Yellowstone'
72% of hiring managers think it’s useful to have gender pronouns on resumes: Here’s what to consider
Man threatens to burn down NYC kosher bagel shop over Israeli flags
DC sees biggest homicide toll in 16 years following early morning shooting
Alex Jones found guilty in all 4 defamation cases the Sandy Hook families brought against him
NPR slammed over story highlighting 'disappointment' over Boston electing Asian woman mayor
Texas church under fire after chants of viral anti-Biden phrase caught on video
Shocking this video is in a church
Virus/Vaccine
Cases continue to grow with the two week change at +18% and now are approximately 86k/day after a recent low of 72k/day. The Delta peak was$155k/day for perspective. Hospitalizations are falling, but at a slower rate and dropped 3% for the two-week period at 47k. However, daily deaths dropped 15% and are now 1.1k. The Midwest is leading the charge on case growth followed by the Northeast. Also, surprisingly, the South is ticking up a little, while the West is stable to down slightly. The top 10 states in terms of case growth are in the Midwest or Northeast absent New Mexico and Nebraska. Vaccination rates are sticky at 59% for all ages who are fully vaccinated in the US. Also of note, Austrian cases hit another record.
Cases by region in the last 90 days. Look at the spikes in Midwest and Norheast.
This Jerusalem Post article is a bit concerning and reiterates how quickly the vaccine effectiveness wanes. Remember, I am double vaccinated, but if the suggestion is I need shots every three to six months for years, I am not willing to do it and feel the need for constant boosters will make less people participate. I sure hope this is the last wave, but am not convinced. The good news is new drugs are coming on line in months to help alleviate the symptoms. People vaccinated with two shots of the Pfizer coronavirus vaccine in January and February had a 51% increased chance of contracting the virus in July compared to those who were vaccinated in March or April, a new Israeli study published in Nature Communications has shown. The team of researchers from KI Institute worked with doctors from KSM Research and Innovation and used data provided by Maccabi Health Services to conduct a retrospective cohort study comparing the incidence rates of breakthrough infections and COVID-19-related hospitalizations between people vaccinated toward the beginning of the country’s campaign (January and February) and those vaccinated toward the later stages (March and April). The study included more than 1.3 million records. As noted, the risk of infection was significantly higher for people the earlier they were vaccinated, with an additional trend for high risk of hospitalization. The results, the researchers said, are consistent with other studies on the subject that show a decline in antibody levels and immune system compounds after four to six months.
In the UK, ministers are set to require three vaccinations from those eligible for booster jabs in order to qualify as being fully vaccinated in areas where people must prove their status, such as travel or avoiding mandatory isolation. Downing Street sources said the intention was to end up in a place where three jabs, rather than two, was the requirement to obtain a Covid pass showing full vaccination – though currently only over-40s are eligible for the booster.
Australia’s government may face a more than A$50 million ($37 million) bill related to its Covid-19 vaccination program, as thousands of people register for compensation for health issues related to their inoculations, the Sydney Morning Herald reported. More than 10,000 people have registered for a government program to be compensated for lost income after being hospitalized for rare but significant side effects from the jab, the paper reported, citing official data. Compensation starts from A$5,000, meaning the program would cost at least A$50 million should each claim be approved. The article suggests issues related to the Pfizer and AstraZeneca vaccines.
Real Estate
Again, I was in Miami this week and would tell my Rosen Report Readers that I enjoy visiting, but it would be hard for me to live there. It is very crowded and incredibly expensive. Any home I would like to buy is priced at stratospheric levels and the traffic on a Monday night (not in full season) was pretty thick. I will go down there for dinner or for Art Basel or party, but I don’t think I could live there today. I left NYC to get away from concrete, traffic and crowds and despite good restaurants and far more culture than the sticks in Boca, I would rather visit than live there. I went to an AMAZING house on North Bay Road for a party and I would love a house like that one, but I presume the price is well-over $75mm. Well over an acre, the land alone is over $40mm! Based on the renewed foreign demand, Miami seems to be on track for continued gains. Another house was on MLS for 1 hour and was asking $29mm. It likely sold in advance. The house is on Sunset Island and is new construction. It is 6,600 ft on a canal with no view. Shockingly, one broker told me he had multiple people who would have bid on it had it not sold so quickly. Below is the $29mm house. One of the worst designed houses ever in my community sold for $10mm. Yes, the market is hot.
Home sales in Miami-Dade County reached 9,962 in the third quarter, the second-highest total on record and a more than 35% increase from the same period last year, according to the Miami Association of Realtors and Multiple Listing Service system. The record was set in the previous quarter, when Miami recorded 11,553 total home sales.
In a break from the past, Miami’s recent boom has been largely powered by domestic buyers. Jon Paul Pérez, president of the real-estate firm Related Group, said international buyers, primarily from Mexico, Colombia and Argentina, accounted for more than 80% of the developer’s Miami sales before 2020. During the pandemic, however, sales have been split about evenly between domestic and international buyers, he said.
Having lived in NYC for a long time and spent time throughout Manhattan, I can tell you that Midtown is the last place I would ever want to live and this Bloomberg article talks about how sales are lagging in the area. I am told the sales of the Waldorf are going slowly. No wonder things are slow, they are trying to get $1.8mm for a 525 square foot studio. Midtown is getting left out of a boom in sales of new condos in Manhattan. The stretch of the east and west 50s that includes the towers of Billionaires’ Row is the only section of the borough where new-development sales are lagging behind their pre-pandemic performance. In the first 10 months of the year, the number of contracts declined 5.9% from the same period in 2019, according to data from Marketproof Inc.
With its proximity to Broadway theaters, Fifth Avenue shopping and New York’s premier office district, Midtown became the center of a boom in ultra-luxury condo projects that drew in the global elite. Those overseas investors -- once quick to spend millions on super-sized apartments they’d use only occasionally — disappeared, limiting demand for the area’s towers while new buildings in other Manhattan neighborhoods are selling out. “The pandemic-period buyer is mostly New Yorkers betting on the home team,” said luxury broker Donna Olshan, who tracks contracts at new developments. “And they prefer downtown, the Upper East Side.” It’s not helping that Midtown, where vibrancy relies on office workers filling skyscrapers and tourists packing stores and cultural attractions, has been critically short on both. At the end of September, nearly 30% of 311 storefronts were vacant in the retail corridors near Grand Central Terminal and Midtown East, roughly double the historical rate, according to a report by the Real Estate Board of New York. And only 28% of Manhattan’s office workers were at their desks on a given weekday as of the end of October, a study by the Partnership for New York City found.