I Owned a Minivan-Not My Finest Hour

In this episode of the Rosen Report, Eric Rosen discusses various topics. He provides a link to a CPR video and updates listeners on the condition of Hamlin, who is recovering. He also talks about the decline of negative yielding debt and compares the S&P return and 10-year treasury. Rosen then shares a personal story about owning a minivan and how it affected his image. He discusses the recent stock market rally and analyzes the nonfarm payrolls and ISM services data. He also emphasizes the importance of exploring higher-yielding cash alternatives. Finally, Rosen briefly mentions hedge funds' investments in private businesses. This is Eric Rosen, and you're listening to the Rosen Report. It's January 8th, 2023. As a follow-up to the Hamlin injury situation, I have a good link in the piece about how to perform CPR. It's a three-minute video that I really hope you watch. It might save someone's life. I was, at one point, certified in CPR, but back then you had to use both chest compressions and mouth-to-mouth. And now the video really goes over how to do chest compressions properly. I think it's worth a look. And the good news is, Hamlin is awake, holding hands with his family and able to speak, as he's no longer on a ventilator. Interestingly, while he still was on a ventilator and he was awake, he wrote on a chalkboard. His first words were, who won the game? So, really, the ultimate competitor who wanted to know who won the game. It was his first order of business, which I thought was kind of cool. Today, I go into very good detail on cash alternatives in light of the rate moves, and I strongly suggest you spend a few minutes on that part of the video. My picture of the day, I have two. We've written about this, and I've spoken about it extensively. At one point, there was over $18 trillion of debt in 2021 globally that had a negative yield. This means if you bought the bond, you would lose money by holding it to maturity. Let's say it yielded negative 1%. You'd lose 1% if you held that bond until maturity, and they'd give you less money back than what you paid for it. That's because central banks globally were basically almost all at zero rates. The big central banks were at zero rates for the most part, and there was no yield in the world. For the first time in years, we actually got to zero. There is zero trading at negative yields today. Japan, I think, was the last holdout. There was some stuff in Japan up until recently yielding negative. That's the first chart showing going from $18 trillion to zero in negative yield, which I thought was interesting. We didn't have any negative yielding debt in 2014, and then bang, we had it for many, many years. The second chart, I think, is very interesting, and it compares the S&P return and the 10-year treasury. There's a dot plot chart with 2022 really being a huge outlier all the way on the lower left quadrant, meaning that you lost money in the S&P and you lost money in 10-year treasuries. If you look at history, there's very few points in that quadrant of the chart. It's just an interesting depiction about how much of an outlier the performance in 2022 was. My piece today is another little bit of an embarrassing one, and I called it, I Owned a Minivan, Not My Finest Hour. Now, if you've been a reader and a listener of The Rosen Report for some time, you'll know that I have done a lot of things that are humiliating in my life, and I'm sure I will do many more. At the top of my list was when I owned a Toyota Sienna minivan. I think it was between 2011 and 2014 while living in New York City. I never thought I would be that idiot minivan driver, but indeed I was. How does a person go from driving a convertible Porsche or a 1963 220 SEB Mercedes-Benz convertible to a Toyota minivan? Well, the answer is simple. You become a dad, and again, embarrassing. I would wear dark glasses and a baseball cap to disguise my look while driving a minivan. And this is despite the fact that at one point in my life I was actually a pretty cool kid, and I lost all my mojo once I took title to that horrible car. I have some cool pictures of the old cars I used to have when I was cool. And let me be clear. It is impossible to look good in a minivan. You pick the coolest guys in town, Paul Newman, Steve McQueen, Marlon Brando, George Clooney, James Bond, James Dean, whoever it is. If they own a minivan and drive a minivan, they lose all their mojo. And so once hip and cool people own a minivan, it's over, and they lose all their game, and that's exactly what happened to me. My kids were three and five years old, and the sliding door made life so much easier. I broke down after renting one on a trip down to Miami. The kids got in and out of the car by themselves, and it sure was easy. Also, the high safety rating played a part, and you could throw all your junk strollers and plastic crap toys made in China in the back. But in hindsight, I think, what the hell was I thinking? All my street cred was shot in the name of convenience and safety. It is akin to a supermodel wearing a pair of flats at the Met Gala in front of Anna Wintour. It's just not the look you want, and it will upset the gods like Anna. We were in the Hamptons in 2001, and Hurricane Irene was brewing in the Atlantic. In my infinite wisdom, I took the kids to the beach while driving the minivan. And in the piece today, I have pictures of my kids with their hair flowing crazily in 50-mile-an-hour winds, and there's a couple of funny pictures. They could only be taken in a minivan because they're actually standing in the minivan with the sliding door open, and you really couldn't do that in a normal car or SUV. So apart from taking fun pictures of kids during a hurricane, I really can't think of any other reason why owning that ugly car would make sense because I hate those things. And it seems like they've definitely lost their edge. I think a lot more people have SUVs now than minivans. And once I owned it, I really feel like I lost all my mojo. So do we have any lawyers in the house who want to help me sue Toyota for taking my mojo? There are no pictures of me behind the wheel for good reason because I will not publicly admit that I own a minivan. And when I did drive it, I looked like the Unibomber driving incognito. So if you can help me sue, I'm all ears because I think I have a good case. And please never tell anyone I owned or drove a minivan. This is a secret for Rosen Report readers only. On to QuickBytes. U.S. stocks really ripped higher Friday after a couple of data points that show signs of cooling, that not only inflation is cooling, but a few other things are going on, which I think is interesting. We're going to go into more detail on that in a second. The Dow was up quite a bit, 700 points. The S&P was up over 2%, and the NASDAQ was up over 2.5%. And the Treasury market was down 16 basis points for 10 years, so rallied quite a bit, with the two-year down 20 basis points given the economic data showing signs of slowing. So positive news in the stock market, and we're going to go over that now. So nonfarm payrolls increased by 223,000 for the month above Dow Jones' estimate of 200,000. Employment fell to 3.5% below expectations. So that's good. The prior two months were revised down 28,000 in total. So when you look at the last month versus the prior two months, they kind of are awash for expectations. However, the workweek fell from 34.4 to 34.3, and average hourly earnings grew by 0.3% month over month, less than expected in November, and was revised down from the previous month. So to me, the report was a little bit mixed, but stocks rallied on that as wage growth is slowing. And then in another economic release, the December ISM fell to 49.6 from 56.5. Now, that's big news. This services report measures business activity for the overall economy. Above 50 indicates growth. Below 50 indicates contraction. So not including COVID, this is the first time we've been below 50 since December of 2009. New orders plunged sharply. And so there's a lot of data here. And so all this tells me that we're seeing really significant resilience in the economy. I told you that I felt inflation peaked in June, and I continue to believe that. And I think the same thing, that Fed will be forced to pause, even though they're saying they won't. Fed President Bostick suggested that the Fed needs to save the course, and maybe they will for two or three more months. But I think they're going to be forced to pause and cut in 2023. This data only reaffirms my view, and I have some pretty good charts in there, especially showing ISM services crashing hard in recent months. I have written extensively about cash alternatives, and I think this is a very important point. We, Americans, are leaving tens of billions of dollars on the table by money sitting in our checking accounts or savings accounts with low yield. I outlined moves I made this week for my cash alternatives that pick up a lot of yield. And I used the data from J.P. Morgan, but all the Treasury data is anywhere. But whether you're Goldman Sachs, Barclays, or your local community bank, there are various cash alternatives you can go to, and you should think about where to put the cash. But now you can actually pick up yield by going into short-dated Treasuries. For example, as of Friday midday, a one-month Treasury was yielding over 4%. A three-month Treasury was yielding 4.6%. A six-month Treasury was yielding almost 4.8%. And a 12-month Treasury was yielding 4.72%. Well, checking was yielding almost zero, and savings was yielding under 2%. So you also have these money market funds that yield either side of 4%. So my point is, don't leave cash in a checking account unless you're going to spend it immediately. Leave cash in higher-yielding alternatives. You can actually earn money on your money. You're burning it otherwise. So take a few minutes to do it. And if you don't understand something, reach out to me, and I'll try to explain it. I'm not going to spend a lot of time on this point, and that is about just private marks on hedge funds. All these hedge funds in search of yield with zero interest rates started moving into the private business, private space, in many cases, whether it's private equity or venture or just private debt investments that are very, very illiquid. And this is what I did for over 30 years of my career. I was trafficked into liquids, and I feel I know more about this space than most people in light of the fact that that's what I did. It worked at J.P. Morgan in my hedge fund, and I do it today with my own money. So my big statement is I believe a lot of these funds don't have their privates marked at the right price, and I think it's going to be interesting to see where they mark at year-end. And if you are invested in these funds that have that, ask where these are marked. I think you have the right to know. And there's a Wall Street Journal article with some really good interactive charts you might want to check out. Finally, after 15 votes, McCarthy was elected Speaker of the House with 216 votes as some members of Congress voted present rather than for a candidate, which lowered the required votes to win from 218. However, McCarthy had to give numerous concessions to secure the needed votes to win. For example, now a single member can make a motion to vacate, which will trigger a vote to remove the Speaker. I don't think this is a good idea. I believe there will be unintended consequences for something like this. A new mandate will require a 72-hour period between posting a bill and voting. I like this because historically they drop 10,000 pages on your desk and say you have 12 minutes to vote. How the hell can anyone read that? So I like that. They're trying to have a constitutional amendment to impose term limits. I like it, but I don't believe it will pass. The Never Kevin Group also negotiated for seats on various committees and subcommittees that they would likely not have received otherwise. There will also be some spending restraints and other things. McCarthy also pledged to tackle immigration, woke education policies, and the IRS funding. I'm also convinced that there are many closed-door concessions we will uncover in coming months. This is politics as usual in America. I think it made the Republicans look weak and definitely not united. But I do fear some of these concessions will backfire with some unintended consequences. But finally, at least this chapter is behind us. On to other headlines. Citadel posted record revenues for the hedge fund and securities operations. The hedge fund is said to have taken in $28 billion in revenue for 2022. So I said previously that I thought Ken Griffin was the CEO of the year, and I continue to think that. Stitch Fix plans to cut 20% of jobs as CEO steps down. Bed Bath & Beyond shares plummet. Stock was down 25% on news. Samsung expects a 69% drop in operating profits. Quarters down 69% was blamed on falling sales of smartphones and home appliances. Walgreens suggested maybe we cried too much at the end of last year about theft. Shrinkage was about 3% of sales last year, but now that number is closer to the mid-twos in recent months. So they're seeing more improvements in shrinkage, and I don't know if that's because they continue to hire more security, or it's because they closed the worst stores. We know it's not because the worst offenders are in jail. We'll talk about that in a second. But shoplifting continues to be an issue. In 2021, it cost retailers almost $100 billion. Maybe it's a little less in 2022. I have not seen the numbers. Constellation Brand shares tumbled as high-fiber costs hit beer supply chain, which I thought was interesting. People are turning off on beer because it's too expensive. Stock was down 10%. ChatGPT creator in investor talks at $29 billion valuation, which is very interesting. I do think this is an amazing innovation, and I have, again, the video that I had in my prior piece. It's a 17-minute video that explains ChatGPT, and I really feel strongly you need to listen and learn about it. And on that same note, artificial intelligence is about to defend a human in court for the first time ever, where the person using AI is going to have something in his ear to hear the AI robot, if you will, tell, I don't know if it's a man or a woman, him or her, what to say, which would be interesting. I think that's in February. This is about Americans and work. The most chilling metric of all, Mike Rowe, is that 7 million American men are done looking for work and have punched out. And so these prime-age men between 25 and 54 are sitting out of the workforce, which is leading to some of the wage issues and the inability to find workers for largely blue-collar work. So that is a concern. Amazon has slashed more than 18,000 jobs, so that's concerning. But remember, they hired 800,000 people in 2021, so not a big deal. So let's see. I talked about beer sales. Fertilizer prices fall to the lowest in 19 months. There's a good chart. This is a concerning one. Car owners are strained as more loan payments soar to $1,000. Almost 60% of consumers who finance a new car in the fourth quarter have monthly payments at over $1,000, which that's a concern. It was 6.7% in the fourth quarter of 2020. And so the other thing to think about is think of how much used car prices have crashed. I have the Mannheim Used Vehicle Index, which is crashing. So if you bought a used car for $50,000 and now it's worth $35,000 or $40,000, are you likely to keep making the payments or give it back to the bank? So I'm a little bit concerned about what the ramifications are for that. Evacuations were ordered as California storm knocked out power. Remember, if you have an EV, that's an issue. And also remember electricity sources. 38% of electricity is sourced from natural gas, 22% coal, 20% renewables, and 19% nuclear. So we are going to be reliant on fossil fuels for a while. I thought this story was very interesting. I'm a psychologist in Finland, the number one happiest country in the world. Here are three things we never do. One, don't compare yourself with your neighbors. Two, don't overlook the benefits of nature. And three, don't break the community circle of trust. And in a test, wallets were dropped in countries all over the world. And in Helsinki, Finland, where 12-foot wallets were dropped, 11 of them were returned. Just call me crazy. I don't think if you dropped 12 wallets in New York City, L.A., San Francisco, Chicago, or Miami, for that matter, 11 out of 12 would be returned. I know my pickleball is exploding popularity. I don't care for the game, but, oh, my God. Down in Florida, you cannot get a pickleball court. It is crazy. The Mediterranean diet, named the best diet for 2023, and it goes into details about what you should be eating. I thought this article was interesting, that China reopens to the world as international travel restrictions end. I don't know who wants to go to China and break out of cases right now, but I guess, theoretically, you can, and you don't have to be quarantined. And then this was concerning. An Iranian attack drone found to contain parts from more than a dozen U.S. companies. So I don't really understand the ramification of that, but are they suggesting they're buying the parts from the U.S. and building them in Iran? I don't know, but either way, not ideal. Just three short crime headlines. I have more in the piece, but I only want to talk about three. 327 crooks made up 30% of shoplifting arrests in 2022 in New York City. Why are repeat offenders given so many chances? Why do we keep doing the same things? How many times were they not caught? So these people are just wreaking havoc on communities. Twelve terrorism suspects were nabbed seeking to cross the border, according to DHS data. So with five million illegal immigrants coming into the U.S. in the last two years, how many do you think terrorists got through? No one's concerned about that? Wide open borders, porous borders, are an issue. And then the last story, bleeding blue. Cops flee NYPD in biggest exodus since 9-11. Almost 4,000 cops retired or resigned in 2022. I wonder why. You think vilifying cops, not empowering them, they're not allowed to arrest people, and when they do, they get out ten minutes later with no bail and no bond? You know, we know why this is happening, and it's because they're being vilified. I am adamantly opposed to 4,000 cops retiring and leaving, and it leaves those tax-paying, law-abiding citizens in danger. On to real estate. I spoke with Devin Kaye from Douglas Elliman in Miami. He has been incredibly busy over the past few weeks, selling roughly 20% of the residents in Shell Bay. Shell Bay is in Hollandale, Florida, and it has a 108-unit condo, before combinations I think are already down to 104, an aubergine hotel being built, a country club, a marina, a yacht club, fine dining, including Le Bill Bouquet and many other things. Places have gone for over 2,000 foot, despite not being in the heart of Miami, and if it was, it would be probably over 5,000 foot on the ocean if you had all these different amenities, including a golf course that you really can't get into. And so the Rob Report article outlined all the amenities. Shell Bay has taken members for as much as $1 million for membership, and I'm told the price is going up to $1.25 million in coming months, given the strength of sales in the condo units. I spoke with people involved in the project, and it sounds incredibly high-end. It's really going to be amazing, even though it's not in my ideal location. The level of product being built surpasses buildings selling for 4,000 or more foot on the ocean. There's a wine tasting room, rooftop pool, world-class racquet club, including tennis courts, pickle ball, paddle racquet ball, and over 15,000 square feet of wellness and fitness, spas, sports simulators, lounge, teen's lounge, bowling alley, and many other amenities. So it looks pretty cool, and I got some great pictures. Back to Boca Raton and My Community Royal Palm, I looked at all the sales data now, and I have a good chart showing total volume, average, median, home price, low, and high over the last six years. When I bought down in 2017, the average house sold for $3.6 million. Now it's $7.8 million. Today, these are our home prices for sale. Listen to this. When I bought in 2017, the full year 2017, one house sold for over $10 million. It sold for $12 million, one house. Today, there are homes for sale for $14 million, $16.5 million, $17 million, $18 million, $22.5 million, $22.8 million, $25 million, $25 million, $28 million, $29 million, $32 million, $35 million, $39.5 million, $40 million, and $41.5 million. When I moved down in 2017, if you tried to get $20 million for a house, they might have put you in a loony bin. Now it is very, very common. So I have some links that show everything, and it's just remarkable how much prices have gone up down in South Florida. When I moved down, you could buy a cheap lot. The cheapest lot was $1.2 million, and now the cheapest lot is over $3 million. In 2015, you could buy lots for $700,000, and those same lots would be over $3 million today. So really, really remarkable. I have some pictures of some important houses or some expensive houses. A reader sent me this great chart, which you've got to see, and it talks about Florida employment versus U.S. It just shows that historically, employment in Florida lagged because it was a retirement community where a lot of people came to retire and not work. Now you can see that Florida is really growing in employment because of the Great Migration, because of the sound policies and the pro-growth policies and the pro-business policies and the lack of tough regulation. So it's a pro-Florida chart and explains graphically what is going on. And then we have a few other things in the real estate section you can look at. And then lastly, I'd like to talk about virus and vaccine. We had a couple-week period that looked a little better because of the holidays and people not getting tested and showing up at the hospital, but all that data is deteriorating, as I suggested. And on that front, the Northeast is really seeing a lot of cases in the last week or so. So it's a little bit concerning. I hope you enjoyed the Rose Report. Please spend time on your cash alternatives. There's no excuse to not get more yield. Have a good day, and we'll speak to you soon. Thank you.