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The Rosen Report: SuperDooperLooper

June 10, 2022
Eric Rosen

Opening Comments

Short note today as travel is taking its toll and writing from a laptop is shockingly challenging to edit. Please keep story ideas coming, as it is harder to do this on a laptop with intermittent WiFi. Thank you to all who contribute ideas regularly.

Jack and I got to Palm Beach airport on Monday at 6am for a 7am flight. Palm Beach airport is amazing as it is small enough where I had never had a problem catching a flight or getting through security. Let me tell you, it was insanity at the airport on Monday morning. I almost always fly JetBlue and am a TrueBlue Mosaic Frequent Flyer, but we took American and the line was 40 deep. There was a shorter line for 1st class that I jumped in despite flying coach. We got to the counter at 6:30am and had 5 checked bags. The airline rep tried to suggest she would not help me because we were not first class. YEAH RIGHT! They charge $150 for the 3rd checked bag now and an extra $100 if your bag is 1lb over 50 lbs. Wow, flying has changed. She told me we were late to check in and the bags may not make it. Mind you, if we don’t have Jack’s golf bag, we are kind of screwed. I paid a ton of extra fees as my wife likes to test my bad back by making suitcases weigh 200 lbs.. Mr. Olympia needs a back brace to carry one of these bricks. Jack and I ran through the airport and thankfully, I have CLEAR or there is no chance we would have made the flight. We were among the last people to get on the plane. Note to self, between 2,800 flight cancellations , limited staff and vacation season, get to the airport extra early.

  • Picture of the Day-Migration Patterns

  • SuperDooperLooper

  • Quick Bites

    • Markets

    • Dimon Market Comments

    • Yellen Admission

    • Gas Prices

    • Gallup Poll-Economic Confidence

    • Ford EV Pick-up Truck

    • Supreme Court Ruling on Social Media

    • Chicago High Schools Grading Based on Color

  • Other Headlines

  • Virus/Vaccine

    • Data

  • Real Estate

    • General Comments/Mortgage Rates

    • $100mm Miami Estate

    • Hamptons Rental Market Cooling

    • Amazon Overserved on Warehouse Space

Picture of the Day-Migration Patterns

This link has a nice interactive chart about data. The nation’s most-recent winners of migration from other states are Florida and Idaho according to the latest migration data released by the IRS. Florida, the nation’s perennial winner, gained the most people and income overall in 2020, while Idaho gained the most of both on a percentage basis. On the other end of the competition are states that have become perennial losers. States like California, New York, Illinois and New Jersey once again experienced some of the nation’s biggest losses of both residents and their money. Obviously, the states with the larger populations have bigger numbers, but note the migration from Blue to Red states. The impact of uber wealthy people leaving hits tax receipts as well as the multiplier effect on spending to help stimulate the economy. Other amazing charts in the link. What are the consequences of these substantial shifts in tax collection ability? At what point will taxes need to be raised in the hardest hit states? What services will need to be cut?

SuperDuperLooper

Jack and I ended up in Hershey, PA, home of the Hershey Park theme park, as Jack had a practice round. I understand it was Memorial Day, but virtually every restaurant was closed, and the park was packed. We found a Houston’s for dinner and it was awful with limited staff. It took 20 minutes to take our order and the kitchen must have gotten half of the restaurant orders wrong. Jack wanted dessert. We are in HERSHEY, PA, home of Hershey candy. One would think there would be ice cream or candy stores open on a holiday weekend around Hershey Park. We drove down Chocolate Avenue (no joke) and everything was closed at 7pm on Monday. I remembered an ice cream store across from our Springhill Suites and gave it a try. Apparently, it was the only ice cream store opened Monday. It was a 20-minute wait and lines out the door. When we finally got to the counter, the young lady said, “This is the busiest day we have ever had and we are out of about half of our flavors.” Jeeze. Wonder why? Every other competitor was CLOSED. Although the crowd was a bit rough (lots of mullet haircuts, tatts, smokers and pick up trucks), the little ice cream shop raked it in because they were the only game in town.

The Hershey experience reminded me of a short trip we took as a family to Hershey Park about five years ago. My daughter, Julia, LOVES rollercoasters and all scary rides. My wife, Jill, and son, Jack, have zero interest, so I am stuck going on the craziest of all rides. The older I get, the scarier these rides become. I suppose the names should kept me away, but I am slower than most. The SuperDooperLooper was one I could have done without. I nearly wet my pants and my Julia was laughing hysterically.

I recall Fahrenheit being my least favorite and the 58mph top speed needs to be checked. I am pretty sure we were doing 80mph. I nearly stained my shorts on this one.

Julia, at years 52 old, I am not sure how many more of the crazy rides are left in me, but we will find another park to do it. I have my new GoPro which will take some video for all to see. But if I start crying, I will edit that part out before hitting send.

Quick Bites

  • Gallup's Economic Confidence Index measured -45 in May, down from -39 in each of the previous two months. It is the lowest reading in Gallup's trend during the coronavirus pandemic, and likely the lowest confidence has been since the tail end of the Great Recession in early 2009. Gallup's Economic Confidence Index is a summary measure of Americans' perceptions of current economic conditions and their outlook for the economy. It has a theoretical range of +100 (if all respondents say the economy is excellent or good and that it is getting better) to -100 (if all say it is poor and getting worse). These charts need to change in order for the Dems to have any chance of lessening the upcoming Red Wave. Since 1990, only the Global Financial Crisis has a lower Gallup Economic Confidence Index.

  • This is a fascinating story entitled, “ How Ford’s Electric Pickup Can Power Your House for 10 Days .” Spend an afternoon driving the Ford F-150 Lightning around the vineyards and redwood-shaded back roads of California wine country and the pickup’s considerable power is apparent. What makes the electric version of America’s best-selling vehicle a potential game-changer, though, is not its acceleration (zero to 60 miles per hour in 4.3 seconds) or its range (up to 320 miles on a charge). Rather it’s the technology that taps the Lightning’s battery pack to power your home or the electric grid itself during increasingly frequent climate-driven blackouts. The extended-range Lightning’s 131 kilowatt-hour lithium-ion pack boasts almost 10 times the capacity of a Tesla Powerwall, an $11,000 home backup battery that can’t be driven to the supermarket. The Lightning is “a mini powerplant for your home,” says Jason Glickman, executive vice president for engineering, planning and strategy at California utility PG&E Corp. “It can support the grid on a hot summer day, when we have demand spiking.” I am going to look into getting this truck when the market simmers down.

  • The Supreme Court on Tuesday blocked a controversial Texas social media law from taking effect, after the tech industry and other opponents warned it could allow for hateful content to run rampant online . The decision does not rule on the merits of the law, known as HB20, but reimposes an injunction blocking it from taking effect while federal courts decide whether it can be enforced. The Supreme Court is likely to be asked to take a look at the constitutionality of the law in the future.

  • Oak Park and River Forest (OPRF) High School administrators in Chicago will require teachers next school year to adjust their classroom grading scales to account for the skin color or ethnicity of its students. In an effort to equalize test scores among racial groups, OPRF will order its teachers to exclude from their grading assessments variables it says disproportionally hurt the grades of black students. They can no longer be docked for missing class, misbehaving in school or failing to turn in their assignments, according to the plan. “Traditional grading practices perpetuate inequities and intensify the opportunity gap,” reads a slide in the PowerPoint deck outlining its rationale and goals. Please open the link to read for yourself. The consequences of these policies are detrimental to all parties involved. The students receiving the easy grading will be harmed as they will be ill prepared. Those not getting the benefit will not get into the colleges of their choice potentially. No winners here. I am adamantly opposed. Please read the attached article.

Virus/Vaccine

  • Big improvements in case growth over the past 10 days. We were seeing 60% case growth and it is down to 14%. However, hospitalizations and ICUs are still seeing increases. Deaths are growing faster, but lags the cases and expect them to fall in the next few weeks. Deaths fell to 302/day on 5/16 and are up to 374/day. The chart is a day old due to Memorial Day data noise.

Real Estate

  • My quick comment is on mortgage rates which continue. Mortgage rates rose sharply this week, after pulling back over the last three weeks. The 30-year fixed hit 5.36% Monday and then moved higher again Tuesday to 5.47%, according to Mortgage News Daily The 30-year mortgage rates are up over 250bps since August 2021. For perspective, on a $1mm mortgage the annual cost is $25k or over $2k.

  • In Florida’s Golden Beach, a Large Oceanfront Home Asks $100 Million

    • If the 32,000-square-foot estate fetches near its asking price, it would be the priciest property to ever trade in Miami-Dade County

  • Interesting CNBC article about Hamptons rentals coming under pressure after an insane two-year run. Makes sense to me, as housing everywhere is coming down. The rental market in the Hamptons is facing an unexpected chill this summer. After two years of strong demand and soaring prices, the supply of rentals in the Hamptons is surging, leading to a wave of last-minute price cuts. Median rental prices in the first quarter fell 26%, according to Jonathan Miller, CEO of Miller Samuel. Brokers say some owners are slashing prices by 30% or more just to fill their properties. “There is a tremendous amount of inventory and people are not renting it,” said Enzo Morabito of Douglas Elliman. “And it’s across all segments, from the very low to the very top of the market.” The weakness marks a dramatic and rapid reversal for one of the country’s highest-priced and most sought-after real-estate markets. In 2020 and 2021, renters were scrambling to find summer rentals and paying record prices months before the season for fear of missing out. Now, brokers say there are hundreds of rentals still available for the summer. Morabito said he represented one waterfront rental that was asking $70,000 a month, but a potential renter offered just $45,000. Brokers say weaker demand is partly the result of increased travel. Wealthy New Yorkers who spent the past two summers cloistered in the Hamptons are planning to travel to European and other countries this summer as Covid recedes. Europeans and other international renters, however, have not returned to the Hamptons. The war in Ukraine, rising inflation and a falling stock market may also be weighing on the summer spending plans of the elite — especially since the Hamptons market is so closely tied to the fortunes of Wall Street. “There are a lot of questions in the air, about the economy, both locally and nationally,” said Harald Grant with Sotheby’s International Realty. “It all effects the market.”

  • Amazon’s decision to throttle back on its e-commerce operations threatens to slow the growth of the industrial-space sector, one of the hottest areas of commercial property. For now, demand from other retailers is expected to pick up the slack, supporting warehouse occupancies and rent levels, analysts say. Rents, occupancy levels and sales volume of industrial real estate were already rising before Covid-19. They have soared even higher during much of the pandemic, as retailers led by Amazon, Walmart Inc. and Target Corp. gobbled up record amounts of space at warehouses and distribution centers. These growth trends are slowing in some markets, in part because Amazon is now subleasing warehouse space after reporting in April its slowest growth in about two decades. Amazon is one of the largest users of U.S. industrial space, owning or leasing some 374 million square feet at the end of 2021, according to MWPVL International Inc. Property owners in some markets might also face new competition from Amazon’s plan to sublease at least 10 million square feet of warehouse space, and possibly as much as triple that amount over time, as well as a flood of new supply from developers responding to the strong industrial market. I am definitely hearing about Amazon subletting and am being told the number is much larger than the 10mm square feet. This sea change will have a major impact on the red hot warehouse space.

Eric Rosen
The Rosen Report