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Podcast which discusses economy, markets, politics, world affairs, real estate and general news. It is a supplement to my newsletter, The Rosen Report.
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Podcast which discusses economy, markets, politics, world affairs, real estate and general news. It is a supplement to my newsletter, The Rosen Report.
Comment
Podcast which discusses economy, markets, politics, world affairs, real estate and general news. It is a supplement to my newsletter, The Rosen Report.
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Eric Rosen discusses his recent visit to Delray Eye Associates, a clinic in a retirement community in Florida. Despite the predominantly elderly clientele, he was impressed with the quality of care and hopes to be as mobile as the older patients when he reaches their age. He also shares his positive experiences at Moraya, a restaurant in New York City, praising the food, service, and ambiance. However, he expresses disappointment with the Michelin rating system's decision to downgrade the restaurant. Eric then provides updates on wholesale prices, inflation, and the economy. He mentions proposed wealth taxes in several states, expressing concern that such measures may drive wealthy individuals to relocate. He concludes by stating his opposition to discrimination and discussing a controversial proposal for reparations in San Francisco. This is Eric Rosen, and you're listening to the Rosen Report. It's January 18th, 2023. You know, as we all age, we spend a little bit more time than doctors, and at 53 years old, I think I spend more than my fair share due to constant injury. I had to go for my annual eye exam, and I went to a place called Delray Eye Associates, which is only about 20 minutes from my house, and it is located in the retirement center of Delray, right on the border of Boca, and it's on Military Trail, where there's dozens of these communities 55 and older, and I'm not exaggerating. I was the youngest person there by at least 30 years, and I'm 53 years old. When they call your name, they then ask you for your name and your birthday, and the person in front of me said, June 15th, 1930, and the guy before him said, December 10th, 1932. So yes, it's got a lot of people with walkers and wheelchairs and canes and Velcro shoes, but I got to tell you, I hope I can walk like some of these people at 92 years old, because the way I'm going, I will not be able to do that in five years, let alone 40. So if you do need eye care, I do think it's a very good place, it's called Delray Eye Associates, and it's one of the few places in South Florida where the doctors actually went to real schools, as opposed to the schools you've never heard of, where most doctors down here have went. I'm going to switch up my piece a little bit today on the podcast and just go over fewer items and go into a little bit more detail. I did think the picture of the day was pretty funny. There was someone who made a bet on the Chargers game against the Jaguars. When the Chargers were up 27-0, a man bet $1.4 million that the Chargers would win. If he was correct and won the bet, he would have made $11,200. Instead, the Chargers lost the game, despite being up huge, and he lost $1.4 million. Never let this moron manage your money. What a bad bet. Betting $1.4 million to make $11,000, and he lost. Oops. Today's main theme is called Moraya Has Lots of Flava. Now I've written little pieces about Moraya before, maybe a sentence or two, but I've never gone into the detail of Moraya. I have suggested that Moraya is a top ten restaurant for me in New York on more than one occasion. I've been there almost 40 times since it opened in May of 2009. It is right off of Columbus Circle on 59th Street, so Central Park South. With all the times I've been there, I don't ever recall being disappointed. I've been there for celebratory dinners and anniversaries and birthdays, a few closing dinners when a large investor came into my fund. We ended up going there, which is a fun memory there. I've sent dozens of readers there, and I've never had anybody upset. Just last month, I was in New York City, and my friend Nick and I went over there and had lunch. It was quite casual for lunch, and we sat at the bar, which I really enjoy. The other thing I'd say is all the waiters and bartenders are very, very attentive and knowledgeable about the menu. The bar is a great place to go, and we started with something called crudo, which literally means raw, and it's similar to sashimi in a Japanese restaurant. We started with the elephant crudo as well as the tuna, and it's just delicious. It's fresh. It's every bit as good as a very, very, very good Michelin star sushi restaurant, and it's a great way to start a little bit lighter. For the main courses, I always, and I repeat always, I would say if I've been there 38 times, I've always gotten the same one dish, which is the fusilli with red wine and braised octopus with bone marrow and homemade breadcrumbs. I believe it's the best thing on the menu, and I believe it's the top three pasta dish for me in New York City, which is really saying something given I've been to all the major Italian restaurants. I just got to tell you, the combination of textures and flavors are overwhelming for me, and it is as good as a pasta dish can get, and I'm going to try, and I repeat try, to make it myself. I've been online studying this for a week, trying to do research to really try to make it right because it's a big endeavor. I'm going to try and make it, and if I do, it will be one of the more aggressive things I've tried to make because there's a lot going on in this dish, and I'm really excited about it. We also got some nocchetti with shrimp and chili and rosemary, and they were both fantastic, but the fusilli always steals the show, and they just have something for everybody. The food's always fresh, and the presentation is fantastic. On desserts, which there's plenty, I always get the spiced donuts with chocolate sauce. It's delicious, but the desserts are very well presented and beautiful. As I said, the staff is so knowledgeable. It's great. The wine list is very full and expensive. They have wine by the glass for as much as $200 because they will actually open up a high-end wine using the Coravin and charge you up to a couple hundred dollars for a glass, but most glasses are $30, so again, not cheap. My problem is Michelin has taken away the stars. They had two stars. It went to one star, and now they just went to zero in the last few months. I think part of it is Michelin does not like when you open up multiple locations, and they are opening up multiple locations, and I know they're in the process of opening something in Palm Beach, which is something I can't wait to go to, but I got to tell you, I don't know what the hell the people at Michelin are talking about because I've never had a bad meal here, and it is delicious, and I strongly recommend you go to check it out. You won't be disappointed. On to quick bites, wholesale prices came out on Wednesday, and they fell half a percent in December, which was far better than the 0.1% expected. As I've been saying since June, inflation data is consistently cooling. It is higher than pre-pandemic levels, but it is going in the right direction, and as a matter of fact, Treasury markets are really starting to come down. The 10-year Treasury fell 16 basis points to 3.37%, and the 2-year fell 11 basis points to 4.08%, so we are seeing a material reduction in inflation and in rates. Having said that, there's been other disappointing data around manufacturing and other things, retail sales, that have been worse, which suggests that we are going into recession, and interestingly, Fed President Bullard reiterated his desire to remain hawkish despite the improved inflation data and some of the slowing economic data, and as a result of his comments, the market sold off pretty sharply on Wednesday. Dow fell 614 points, S&P fell over 1.5%, and the Nasdaq fell about 1.25%, snapping its seven-day win streak. I think despite improving inflation, some of the talk from the Fed is they're going to still be aggressive, so it's something to watch. I have some very good charts in this section that you can take a look at when you open the piece. There's a piece from the WAPO Washington Post that's entitled, Billionaires in Blue States Face Coordinated Wealth Tax Bills. There are seven states, California, Connecticut, Hawaii, Illinois, Maryland, New York, and Washington all proposing various taxes, and you can open up the links. If you don't have WAPO, I put another link in there that outlines some of the taxes, and they range from wealth taxes to increased income taxes to increased capital gains taxes depending upon the state that you're looking at. California proposal would stay in effect for years after the resident moves out of the state, so leaving wouldn't even get you out of it. New York is trying to add on an additional 7.5% capital gains tax for married couples with incomes over $550K, and an additional 15% tax for couples with over $1.1 million of income. So these are not hardly billionaires, but obviously wealthy people. I'm just not convinced that $550K for a couple is really uber wealthy in New York City given how expensive it is to live there. My problem with this is just like AOC bragged about crushing Amazon and their headquarters there, she didn't understand the multiplier effect. When you do this to wealthy, they have options, and we've seen from census data the people leaving California, Illinois, New York, Connecticut, New Jersey, going to Florida, Texas, Tennessee, and Nevada. And we see it time and time again, and listen, if they do this, it's just going to push more people out. I'm long real estate in South Florida, so I've been making investments in real estate in South Florida, so that's good with me because you're going to push the wealthy down here. I will say that I do believe the budgets in many states are in serious trouble, and they have a choice to make. They either have to raise taxes, either sales taxes or income taxes, or have authority measures and cut spending because you can't have it both ways. And if they're going to go the way of raising taxes on the wealthy, I think they're going to find more people will find alternatives, and of course Elizabeth Warren is in the mix and she sent out a tweet on the topic, which you can see in my piece. The last quick bite, I want to make sure that I'm crystal clear. I do not condone discrimination of any kind. I don't care if it's race, religion, sexual orientation. I think it's awful. I grew up, I'm a Jew. I have heard and seen my fair share of inappropriate comments and harmful things that have been said to me in my life, and I do not condone discrimination of any kind for any reason ever. However, the draft proposal from the San Francisco Reparations Committee, I'm not sure I can really buy off on. The proposal suggests $5 million to each black longtime resident, total debt forgiveness for their mortgage, for any credit card debt, anything else, and income supplements for low wage earners. The $5 million lump sum payment for each eligible resident is in addition to the debt forgiveness due to decades of harm caused to the black community, which is outlined in the draft that I have the link in the draft. This has nothing to do with slave reparations according to the draft outline, which I read. To be eligible, you must be 18 years old, identified as black on public documents for 10 years, be born in San Francisco between 1940 and 1996, and lived in San Francisco for at least 13 years. Page 30 of the link gives all the conditions for eligibility. Based on my quick math, I think this is going to cost almost $100 billion. I could be off a little bit, but it's definitely in the many tens of billions. And just for perspective, the entire budget, annual budget for the city of San Francisco is $14 billion. And the mayor just claimed that there's a $700 million budget deficit over the next two years, yet they want to spend almost $100 billion for these reparations for the harm caused to the black community. And I'm not here to argue that the harm wasn't caused to the black community. I'm just here to say, I don't know how they're going to possibly pay for it. On top of this, remember, there's a lot of wealth leaving San Francisco. You have significantly lower commercial real estate valuations, which drives real estate taxes on the commercial side. Tech valuations have been crushed. IPOs are not happening. And the budget's already compromised. So I just say, where is the $80 to $100 billion going to come from? I don't know, but it will be interesting. I can't imagine this goes anywhere, but that is what was proposed. Under other headlines, the richest 1% of people amassed almost two-thirds of the new wealth created over the last two years. And I just find it ironic, all these policies and free money were given to help the little guy, but they actually helped the big guy on a disproportionate basis. And it also drove inflation to stratospheric heights. A total of $42 trillion in new wealth has been created since 2020, with $26 trillion or 63% of that being amassed by the top 1%. So unintended consequences of the various Fed and government policies. The New York oil tycoon who lost billions with Enron invested with Bernie Madoff and then invested with FTX. How the hell this guy has billions of dollars is beyond me, but whatever he's investing in, I'm running the other way. Mark Swan, author, says and argues that Bill Gates could have billed in a trillionaire had he held on to his Microsoft shares. Now, I disagree. I believe in diversification, but I'm a bit conservative. Gates' net worth is plenty big. He's donated billions to charity. And yeah, he could have put all of his eggs in one basket and had a higher net worth, but look at what happened to Tesla. Look at what happened to Meta, Facebook. You can have a lot of your net worth in something, but you can't have all of it. And to me, I think you should diversify, and if you're worth many, many billions of dollars, you should be giving your money to causes you believe in and try to make a difference in the world. So I am not of the same opinion of Tlaib, even though I think he's a very smart guy and I like what he normally says. I disagree with him. Here, EVs made up for 10% of all new cars sold last year, 7.8 million EVs sold globally, which is up 68%, and new car sales globally was 80.6 million units. So they're on the right direction, they're going the right way. And as I've said multiple times, there's limits to how many EVs can be produced and how many EVs we can charge in various places in the world, given the limitations we've talked about. Elon Musk threw some shade at the World Economic Forum in Davos, and I'm on Musk's side here. I've been critical of Musk recently, but I agree with him 100%. There's a bunch of uber-wealthy people flying on private jets, trying to tell everyone to be mindful of climate change. Last year, in 2022, there were 1,040 private planes that came in, and many of these were short-haul flights, which they could have used rail or driven. So my friend and hedge fund mogul Dan Loeb, a one-time fixer of Davos, who stopped going a few years ago, joked, I remember when going to Davos was prestigious and elite. I'm sure it's fun, however, and there's a great picture of a bunch of fancy private planes. So I am not a big fan of what is coming out of Davos and the hypocrisy that is coming out of there. New car inventories are building up, which should bring back some incentives. So new vehicle supply rose 37% in September and 66% above a year ago, so that's kind of interesting. 90% of online content could be generated by AI by 2025, an expert says. You have to spend time on ChatGPT. Every day I'm spending 10 to 15 minutes on it, and it is really amazing. I'm really enjoying it. It gives some woke answers every now and then, but I'm trying to wean myself off of Google and use ChatGPT a little bit more. I wrote a story that bothered me a few weeks ago in an offer you can refuse about this Virginia school that was not, in the name of equity, was not giving kids recognition for national merit notifications in the name of equity, which hurt their chances, the kids who studied so hard, chances to get into a better college for scholarships. There are now four other Virginia schools who admit to withholding national merit notifications. There's never one cockroach. So now there's five schools in Virginia. I wonder how many schools in the United States have been holding back national merit scholarships or national merit scholar notifications, which has helped kids back from getting into better schools and getting scholarships they otherwise would get. So spend some time on that story. It's very frustrating. If it were my kid, I would personally spend $1 million to sue the school board and make it public and sue people individually who held it back. That's what I would do. There's a crazy obituary. This sick dad, Michael Haight, killed his wife and five kids. And there's an obituary that praises him, and I read the obituary, as a loving, doting father who was a family man who never missed a ball game with his kids and went to church. He killed his family and then killed himself. I'm pretty sure that makes it that you cannot have a nice obituary. So I don't know who wrote the obituary, it didn't say, but whoever did is sadistic because the guy killed everybody in his family and himself. And the police said there is no murder suspect other than the father. So that's pretty concerning. I'm only going to talk about one crime headline, there were six or seven in my piece. But a teacher died after being tased by an LAPD officer. And I watched the entire video, I read four or five stories on it. This man got in an accident and ran, and the police followed him and asked him to sit down. He did, and then he got up and he wanted to go to another place. They said, okay, sit down, sir, sit down. Other police came. He ran. They held him down, and he was fighting so aggressively that they tased him. And he later died four or five hours later at the hospital. And they found cocaine and cannabis in the system. Now, any time a person dies in police custody, I want to investigate and look into dramatically. The other twist is this gentleman, Kenan Anderson, is related to a founder of the BLM movement. And so it is getting a lot of press. I was shocked to see that the taser deaths by race, it's almost 400 between 2010 and 2020. I thought tasers were being used to reduce the likelihood of death, so you don't have to use a gun, yet it's causing far more deaths than I thought. So I just thought that was an interesting story. I've got some good stuff in real estate. There's some pretty good stories here today. Miami is to escape the home price correction of 2023 in one article that I've attached. Well, places like Austin will get hammered, so says Goldman Sachs. The paper suggests peak through trough of 10% in the U.S. between June 2022 and the end of 2023 for Case-Shiller home prices. This is after a 41% increase between March of 2020 and June of 2022. So it goes through state by state. The double-digit losers are Austin down 15%, San Francisco down almost 14%, San Diego 13%, Phoenix 13%, Denver over 11%, Seattle 11%, Tampa 11%, and Las Vegas 11% according to the article. So you can take a look. There's a good chart. Article on San Francisco commercial real estate vacancies are hitting record highs. It's now over 27% commercial real estate vacancies in San Francisco, and a bunch of leases are due in the next 24 months, so that is scheduled to go well over 30%. There are some submarkets within San Francisco that have over 40% vacancy. According to the article, there was only 3.7% vacancy in San Francisco in 2019. So COVID, work from home, crime, the tech crash are all leading to some big problems in San Francisco. So a lot of defaults are likely to happen. So it's going to be interesting to see how that plays out. Homebuilder sentiment rose in January for the first time in a year. I have a good chart there, and it's because of lower rates. Rates have fell quite a bit for mortgages, so that's great. We've seen some real estate funds under pressure given the fears of real estate in what had been a rising rate environment. JP Morgan and Morgan Stanley are among fund managers facing withdrawal requests as property values decline, so there's a story about that. There's a good article about Miami's newest branded hotels, and there's many very high-end ones, St. Regis, Baccarat, and others, and there's an article that discusses it. Lastly, on the vaccine, the data is improving from really bad levels, but death rate continues to be high. It's gained 73% in the last couple of weeks, but I think that's going to start coming down because positivity is going the right way, hospitalizations and cases are slowing down. Everything is starting to move the right way, but even deaths, which are up a lot, their growth is less than it was a few days ago. With that, I want to thank you for listening to the Rose Report. I kept it to 20 minutes, and I hope you have a good day.
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