Category Archives: Billionaire

“Tail-End Of A Big Bull Market” – Wine, Diamonds, Classic Cars Are Now Money-Losing Investments For The Ultra-Rich

Luxury assets of the ultra-wealthy, if that were expensive wine, fancy diamonds, and rare antique cars all had a down year as the stock market ramped to new highs, reported The Wall Street Journal.

In the last decade, luxury assets performed exceptionally well as central bankers handed out free money to the elite class to hoard assets of their liking. And naturally, these people, with exceptional taste, bought things that the common man has only seen on television.

Now, these luxury assets are under performing – have been during the past several years – and is a symptom of late-cycle distress.

The froth has gone out of the market. People have realized you can’t just buy stuff and expect the value to go up,” said Andrew Shirley, a partner at Knight Frank and editor of the group’s Wealth Report.

The Journal blames the under performance on the global slowdown and the lack of Asian demand. Chinese buyers account for 33% of global luxury goods sales.

“There is a lot of uncertainty in Chinese markets and the riots in Hong Kong didn’t make it easy for people to come spend money in Hong Kong either,” said Eden Rachminov, chairman of the board at the Fancy Color Research Foundation.

Colored diamonds in 2019 lost about 1% in the first three quarters.

Fine wine was also another losing asset through Nov., lost 3.6%, according to the Liv-ex 1000 index.

And the biggest loser on the year were classic cars, lost 5.6%, according to Historic Automobile Group International’s (HAGI) Top Index.

HAGI founder Dietrich Hatlapa said the classic car market has been cooling following a massive rise in price after the 2008-09 financial crisis. He said classic car prices saw double-digit gains after the recession, rallying 50% Y/Y through 2013. “We are at the tail-end of a big bull market,” Hatlapa warned.

What’s becoming evident is that ‘Not QE’ and other monetary gimmicks deployed by central banks are failing to raise asset prices of some luxury goods in 2019. Perhaps the world is stumbling into a period where tool kits of central banks are becoming less responsive to stimulate asset price inflation, and if that is the case, then everyone will figure out that prices of luxury goods have been hyper inflated over the last decade with nothing but hot air.

Source: ZeroHedge

Wealth Of The Richest Surged By $1.2 Trillion In 2019

Ben Bernanke with Neel Kashkari

(ZeroHedge) At the same time that dipshits future Nobel Prize winners at the Fed like Neel Kashkari are walking around pondering why the inequality gap continues to widen in the United States, monetary policy has catalyzed another year of surging wealth for the richest in the country while keeping its boot on the neck of the poorest. 

In fact, as Bloomberg notesthe wealth of the 500 richest people surged 25% in 2019. And the riches are coming in atypical fashion.

Among those are social media giants like Kylie Jenner, who became the youngest self-made billionaire this year after her cosmetic company signed an exclusive partnership with Ulta Beauty. She sold a 51% stake in her company for $600 million. 

Similarly, the Korean family who helped popularize the Washington Nationals’ rally cry, “Baby Shark, doo-doo doo-doo doo-doo”, is now worth about $125 million.

Another great example is Willis Johnson, who made his $1.9 billion fortune by building a network of junkyards to sell damaged cars.

All of these are examples of just how much money made its way to the richest over the last 12 months. The Bloomberg Billionaires Index added $1.2 trillion, now placing their collective net worth at $5.9 trillion.

Only 52 people on the ranking saw their fortunes decline during the year. Jeff Bezos, for example, lost $9 billion – but only due to his divorce. 

Bloomberg noted the year’s biggest winners:

  • The 172 American billionaires on the Bloomberg ranking added $500 billion, with Facebook Inc.’s Mark Zuckerberg up $27.3 billion and Microsoft Corp. co-founder Bill Gates rose $22.7 billion.
  • Representation from China continued to grow, with the nation’s contingent rising to 54, second only to the U.S. He Xiangjian, founder of China’s biggest air-conditioner exporter, was the standout performer as his wealth surged 79% to $23.3 billion.
  • Russia’s richest added $51 billion, a collective increase of 21%, as emerging-market assets from currencies to stocks and bonds rebounded in 2019 after posting big losses a year earlier.

Newly minted billionaires included Anthony von Mandl, the man behind “White Claw” hard seltzer and Hong Kong’s Lo family, who are in the business of producing soy milk. 

With the market hitting new highs every day and President Trump’s relentless pressure on the Fed to keep rates low, the gap will likely continue to widen heading into 2020 – a year politicians will undoubtedly spend bickering about proposed solutions to the problem, all the while failing to understand that the alarm is coming from the inside, right before their eyes. 

The gains are an obvious continued indicator of flawed monetary policy that everybody – except those at the Fed (and Steve Liesman) seems to understand.

As a result, currently, the 0.1% control the biggest share of the pie in the U.S. than at any time since 1929.

Source: ZeroHedge

A Record Number of Homes Closed for $100 Million-Plus During 2019

Six deals topped $100 million in 2019, despite a general slowdown across the U.S. luxury real-estate market. Here is a look at the top-10 home sales

Cartwell sold for $150 million in December – Jim Bartsch

In 2019, a small group of enormous real estate deals, while bearing little relationship to the overall market, had an outsize impact on the national conversation about wealth inequality and the rapidly expanding billionaire class.

A boom in ultrahigh priced deals in Palm Beach this year, including the $111 million sale of an oceanfront estate, raised questions about the number of wealthy New Yorkers fleeing to Florida in response to a 2017 change in federal tax law. A string of $100 million-plus deals completed in Los Angeles put the spotlight on high-end real estate on the West Coast.

Hedge-fund manager Ken Griffin’s roughly $238 million purchase of a New York penthouse, which set a price record for the nation, bolstered the arguments of legislators who support additional property taxes for the super rich.

These megadeals don’t necessarily speak to a broad surge in real estate values. In general, the U.S. luxury real-estate market faced a slowdown in 2019, thanks to oversupply in certain markets, tax changes and a general decline in foreign purchasers.

Read on for a closer look at the top 10 deals of the year, a record six of which topped $100 million, according to research by The Wall Street Journal and appraiser Jonathan Miller. Mr. Miller said he believes the previous record was three $100 million-plus deals, achieved in both 2014 and 2016.

1. 220 Central Park South, New York

Price: Roughly $238 million

Early in 2019, hedge-fund executive Ken Griffin closed on a roughly $238 million apartment. Emily Assiran for The Wall Street Journal

Mr. Griffin’s purchase of the roughly 24,000-square-foot Billionaires’ Row apartment “came to personify the issue of income inequality for many people,” said luxury agent Jason Haber of Warburg Realty of the deal. “Ken Griffin closed right when the legislature began their session. It was like throwing meat to the wolves.”

Soon after, the New York legislature expanded the so-called “mansion tax,” designed to target buyers of properties priced at $2 million or more, and increased property transfer taxes. The deal also helped reignite discussions around a pied-à-terre tax, which would tax multimillion-dollar second homes as a funding source for the city’s beleaguered subway system.

“It served as Exhibit A for why we should look at the possibility,” said Sen. Brad Hoylman, who sponsored the pied-à-terre tax bill.

The purchase was one of a string of record-breaking acquisitions by the billionaire in recent years In 2017, the Citadel founder bought several floors of a Chicago condominium for a record $58.75 million. He also bought a London home for about $122 million, and a piece of land in Florida for $99.1 million (see below).

To some extent, Mr. Griffin’s spending spree has made him a central figure in the debate about wealth inequality in New York. “Anyone who can afford to pay for a $238 million apartment can afford to pay a little more off the top to make the city a better place for everyone,” Sen. Hoylman said. Mr. Griffin has rarely spoken publicly on the issue. At an event this year hosted by Bloomberg News, Mr. Griffin criticized presidential hopeful Sen. Elizabeth Warren, saying he wished she spent more energy on education, rather than attacking “those of us who have been successful.”

The recently completed tower has quickly become New York’s new “it” building. Other buyers include musician Sting and hedge-fund executive Dan Och (see below).

Buyer’s agents: Tal Alexander and Oren Alexander of Douglas Elliman

Seller’s agent: Deborah Kern of the Corcoran Group

A view of Chartwell, which was purchased by Lachlan Murdoch. Jim Bartsch

2. Chartwell, Los Angeles

Price: $150 Million

Lachlan Murdoch, co-chairman of News Corp., which owns Dow Jones & Co., publisher of The Wall Street Journal, paid about $150 million for this Bel-Air estate in December, setting a record for the Los Angeles area, according to people familiar with the deal. Observers said it was the second-priciest sale ever recorded in the country for a single-family home.

Lachlan Murdoch. David Paul Morris/Bloomberg

While the price-tag was huge, the property was the latest in a line of homes to sell for a major discount to their original asking prices, marking the culmination of years of aggressive or arguably aspirational pricing for luxury homes across the country. The roughly 25,000-square-foot mansion came on the market in 2017 for $350 million, making it the most expensive listing in the nation at the time.

Designed by Sumner Spaulding around 1930, the property was owned by onetime Univision Chairman A. Jerrold Perenchio. It came with a Wallace Neff-designed five-bedroom guesthouse, a 75-foot pool, a tennis court and a car showroom with space for 40 vehicles. Mr. Murdoch didn’t respond to requests for comment.

Seller’s agents: Drew Fenton, Jeff Hyland and Gary Gold of Hilton & Hyland; Joyce Rey, Jade Mills and Alexandra Allen of Coldwell Banker Global Luxury; and Drew Gitlin and Susan Gitlin of Berkshire Hathaway HomeServices California Properties.

Buyer’s agent: Drew Fenton of Hilton & Hyland.

Spelling Manor in Holmby Hills sold for nearly $120 million. Jim Bartsch

3. Spelling Manor, Los Angeles

Price: $119.75 million

British Formula One heiress Petra Ecclestone sold Spelling Manor, a sprawling estate built for the late television producer Aaron Spelling, this past summer for $119.75 million, records show. The buyer hailed from Saudi Arabia, according to people familiar with the deal.

Petra Ecclestone. Jeff Spicer/Getty Images

The Holmby Hills property, designed in the style of a French château, is about 56,000 square feet, making it one of the largest private homes in the country. After Ms. Ecclestone bought it from Mr. Spelling’s widow, Candy Spelling, in 2011, she brought in more than 500 workers to do a three-month, multimillion-dollar renovation. The property has a two-lane bowling alley, a wine cellar, a beauty salon, a gym, tanning rooms and a tennis court.

The property is one of several significant Los Angeles area homes to have traded to buyers from the Middle East this year. In May, a Saudi buyer snapped up two neighboring Bel-Air properties for $52 million, The Wall Street Journal reported.

Seller’s agents: Kurt Rappaport and Daniel Dill of Westside Estate Agency; Jade Mills of Coldwell Banker Global Luxury and David Parnes and James Harris of the Agency.

Buyer’s agents: Jeff Hyland and Rick Hilton of Hilton & Hyland.

Read about the next seven featured properties by clicking on the article credit below…

By Katherine Clarke | Mansion Global who republished it from The Wall Street Journal

Does Gold’s Breakout Mean Silver Is On The Launchpad?

Gold and silver prices continue to push higher. They’re starting to get some attention from the mainstream, too. A new uptrend in gold is clearly underway, but silver’s performance has so far trailed gold’s. Let’s take a look at the price behavior over the past six-plus years of both metals to see if we can gain any insights about silver.

Ivanka Trump and Jared Kushner Report $135 Million in 2018 Income

In their second year of government service, Ivanka Trump and Jared Kushner reported income from their companies and investments of as much as $135 million, according to their annual financial disclosure reports made public on Friday.

Ivanka Trump and Jared Kushner reported an income range of $29 million to $135 million for 2018, down from a range of $82 million to $222 million in 2017.CreditCreditToby Melville/Agence France-Presse — Getty Images

All told, the couple’s real estate holdings and other investments were worth as much as $786 million, down slightly from 2017. Their total annual income was between $29 million and $135 million, a range that was lower than what they reported in 2017.

Mr. Kushner’s partial ownership of his family-run real estate business, Kushner Companies, has drawn criticism from ethics experts, particularly as the firm has solicited investments from foreign sources, including in the Middle East, where Mr. Kushner is a top White House liaison.

Although Mr. Kushner held on to the bulk of his stake in the company, which he once ran, he sold some of his assets to a trust controlled by his mother.

One of those divested assets was his share in Kushner Companies’ flagship property at 666 Fifth Avenue in Manhattan. Last year, Kushner Companies struck a deal with Brookfield Asset Management for a roughly $1 billion bailout of the troubled property. Brookfield’s property arm is partly owned by the Qatari government.

Ms. Trump reported 2018 income totaling between $6.7 million and $10.7 million. She has resigned from her leadership roles at her fashion business and her family’s real estate and branding company since her father became president, but she retained stakes in some of those businesses.

Ms. Trump earned just under $4 million from the Trump International Hotel in Washington, which has become a magnet for visiting executives and foreign officials with interests before the federal government.

Ms. Trump reported another portion of an advance from Penguin Random House, for her book “Women Who Work,” this time totaling $263,500. She also reported donating it to the Ivanka M. Trump Charitable Fund. In 2017, she received about $289,000 from that advance.

The couple’s total income was between $29 million and $135 million in 2018, compared with a range of $82 million to $222 million in 2017.

The drop was due, in part, to their divestment of several assets that previously generated tens of millions of dollars in income for the couple, including the stake in 666 Fifth Avenue.

Last year, The New York Times reported that Mr. Kushner apparently had paid almost no federal income taxes for several years running.

Source: by Jesse Drucker and Agustin Armendariz | The New York Times

How A Hijacked Listing For One Of Los Angeles’ Most Expensive Homes Led To A $60MM Lawsuit Against Zillow

() It’s hard to overstate the opulence showcased in developer Bruce Makowsky’s $150-million spec house, dubbed “Billionaire.” Perched above Bel Air, the four-story mansion offers a world of pure imagination within its walls.

A Bel-Air mansion built on speculation is at the center of a legal dispute after a Zillow listing for the $150-million home was hijacked by an unknown user. (Berlyn Photography)

Jockeying for attention across 38,000 square feet are 12 bedrooms, 21 bathrooms, three kitchens, 130 artworks, a 40-seat movie theater, a $30-million fleet of exotic cars, two wine cellars stocked with Champagne, a four-lane bowling alley and a candy room filled with towering cylinders of sweets.

Image is everything when seeking nine figures for a single estate. What, then, happens when that image is allegedly tainted? That’s what a lawsuit filed by the self-assured, suede-jacket-wearing Makowsky against real estate company Zillow aims to find out.

Earlier this year, Zillow falsely showed that the mega-mansion sold for tens of millions less than its asking price. Makowsky sued for $60 million in damages, citing permanent harm to the property’s perception.

On April 19, Zillow filed to dismiss the suit, chiefly citing a section of the Communications Decency Act that protects web operators from being responsible for information published by its users. The hearing is set for June 24.

The sham began in February, when an unknown user with a Chinese IP address and fake phone number side-stepped Zillow’s security measures and toyed with the sale prices displayed on the mansion’s listing.

Zillow displays pages for roughly 110 million homes in the U.S., and it allows owners to go in and change information about their home when necessary. Usually, that means noting a recent remodel or added square footage that may affect a home’s value, but the feature also opens the door for false information.

On Feb. 4, Zillow showed that Makowsky’s home — which is on the market for $150 million — sold for $110 million. It never did. Over the course of the next week, the real estate site falsely reported sale prices of $90.54 million and $94.3 million, as well as a phantom open house that never took place.

Soon after, Makowsky’s attorney Ronald Richards pointed out the falsities to Zillow’s legal team in an email. After some back and forth, included in the lawsuit, Kim Nielson, senior lead counsel for Zillow Group, responded with this:

“Any home on our website can be claimed by the homeowner. There are a series of questions that must be answered, but if someone attempts to claim it enough times, they will know the questions asked (and be able to figure out what information they need to verify their identity).”

She added that not all claims are manually reviewed, which allowed the user to manipulate the listing details without proving their identity.

Later that month, a limited liability company owned by Makowsky filed the lawsuit seeking $60 million in damages. It claims that Zillow “admittedly published false information” and destroyed the property’s perception as an elite listing worth more than $100 million.

Makowsky himself has axed the price twice since bringing the spec house to market for $250 million two years ago. He most recently trimmed the tag to $150 million in January, saying that he was just trying to be realistic.

Makowsky made his fortune selling handbags on QVC before shifting to high-end real estate about eight years ago as the head of BAM Luxury Development Group. (Cindy Ord / Getty Images)

Taking aim at Zillow’s security process, the lawsuit alleges that Zillow has no safeguards in place to stop trolls or criminals from claiming a property and posting false information.

A spokeswoman for Zillow declined to comment on the pending litigation but stressed that it goes to great lengths to display current and accurate data on its website, which is largely sourced from public records.

The complaint also stresses Zillow’s market power. The website leads the real estate industry with an estimated 36 million unique monthly visitors, and Makowsky said multiple colleagues called to congratulate him on a sale that never happened.

But of those millions of monthly visitors to Zillow, few are searching for homes priced in the nine figures other than for aspirational reasons. Fewer have the actual means to afford it.

Only a handful of local L.A. residents, and a small market outside of that, have the ability to buy homes listed for north of $100 million. As of 2017, there were 680 billionaires in the U.S, according to the research firm Wealth-X, and about 2,750 worldwide.

Jerry Jolton, an agent with Coldwell Banker Residential Brokerage, said three things need to come together to sell a home in the $100-million arena: luck, timing and the right client.

“We’re dealing with a very exclusive group of people who’ve attained such wealth,” he said.

Oftentimes, developers eye international wealth when floating a nine-digit listing. However, Jolton said foreign buyers account for only around 21% of L.A.-area homes sales over $20 million.

Beyond visitors to online listing services, Makowsky faces another challenge in his pursuit of a high-dollar deal: comparable sales in the tony Westside area.

Michael Sahakian, also with Coldwell Banker, sold the property that now holds Makowsky’s mansion back in the ’90s. While noting the estate’s opulence, he said its placement in East Gate Bel Air — one of the city’s most exclusive and pricey pockets — will make selling it a challenge.

Most homes there sell for around $2,000 to $3,000 per square foot. For context, Makowsky’s estate is on the market for $3,947 per square foot.

Still, because an acre of East Gate goes for around $20 million, it’s rare for a home larger than 30,000 square feet to go up for sale.

Makowsky, in his early 60s, made his fortune selling handbags on QVC before shifting to high-end real estate about eight years ago as the head of BAM Luxury Development Group.

His development brand is largely a reflection of his own extravagant interests and tastes; many of the lavish furnishings, finishes and other accouterments incorporated into his projects are sourced from his travels around the world. Custom furnishings produced by high-end brands such as Fendi, Bentley and Louis Vuitton often play an integral role in his homes.

Among his notable projects was a testosterone-infused showplace in Beverly Hills that featured a $200,000 sculpture of a giant blue hand grenade and a replica of James Dean’s motorcycle. Originally listed at $85 million, the 23,000-square-foot house sold in 2014 to Minecraft creator Markus Persson for $70 million.

Source:

Wealth Of Top 1% Surpasses $100 Trillion: More Than Global GDP And All Central Bank Balance Sheets

Back in March, when looking at the latest political wave sweeping across Europe, Deutsche Bank’s Jim Reid wrote a report which observed that “it’s hard to get away from the fact that populism is currently going through an explosion in support at present” of which today’s vote of no confidence of Swedish prime minister Lofven was just the latest example. DB focused on Europe, as shown in the following chart, and noted that high double-digit youth unemployment has become a hotbed for anti-establishment sentiment, which has everything to do with the economy, and lack of opportunities.

https://www.zerohedge.com/sites/default/files/inline-images/populism%20db.jpg

The German bank then warned that the “liberal world order” is in jeopardy, and concluded rather ominously:

As of now the rise in populism hasn’t yet destabilised markets however we find it difficult to get away from the fact that uncertainty levels are bound to remain high while such power brokers remain in major elections. Indeed the unpredictability of  Trump’s policies is such an example, with the recent tariff threats which have subsequently escalated market concerns about a trade war being one. At a time when global central banks are moving towards an unprecedented era of tightening and dealing with years of massive asset purchases, risks from rising populist support has the ability to seriously disturb the prevailing equilibrium of the last few years and subsequently markets.

Fast forward to today, when Bank of America strategist Barnaby Martin tackles the thorny issue of ascendant populism, which he attributes to the “lost decade” following Lehman’s collapse and what he dubs the “era of hubris” – a time when the richest 1% has seen its collective wealth surpass $100 trillion.

Martin begins by reminding us that a decade ago, “the collapse of Lehman Brothers sent shock waves through financial markets” to which the response was an unprecedented amount of central bank support, both in terms of its size and creativity.

And as we have observed on countless occasions, with central banks as a tailwind, financial markets have outperformed real assets over the last decade. Even so, the dichotomy in many cases is staggering:

Note that the cumulative total return on ICE BofAML’s Global Broad Market bond index since ‘08 is 50%…yet the growth in house prices globally over this time has been just a miniscule 1%.

https://www.zerohedge.com/sites/default/files/inline-images/wealth1.jpg?itok=Wotf47FS

Simply said, the last decade has seen those who hold financial assets become richer, as markets have lurched higher; meanwhile those without such assets – the vast majority of the middle class – have been increasingly left behind, however, even as wage growth remained stagnant and indebted governments have struggled to provide strong social support. As a result, a great wave of populism emerged as “issues such as wealth and income inequality have started to polarize societies much more.”

The next chart shows in staggering fashion just how “rich” the rich are today, especially when compared to some other big numbers and markets. According to BofA estimates the wealth of the top 1% globally has surpassed $100tr now…a number greater than the sum of the big-4 central bank balance sheets, current world GDP and the cost of the ‘07/’08 global financial crisis, for instance.

https://www.zerohedge.com/sites/default/files/inline-images/wealth2.jpg?itok=w_K7x8xk

The great divide between the haves and the have nots has manifested itself not only in terms of accumulated wealth, but income as well, as the wealthy have had greater income-generating opportunities at their disposal, mostly due to access to better technology and education. It is therefore mostly the wealthy that have been able to reap the benefits of globalization, and perhaps the reason why the “not so wealthy” have been eager to tear apart the globalist system, and willing to listen, follow and vote for any populist leader who promises that.

Meanwhile, the top 1% richest in the world have witnessed impressive income growth since 1980 – in many cases, multiples of that seen by the less well-off in society. Also notice what Martin calls the “hollowing out” of the middle class over this period – where income growth has been the weakest- as “many have simply found their jobs replaced by either highly-skilled or low-skilled workers.”

https://www.zerohedge.com/sites/default/files/inline-images/wealth3.jpg?itok=XOdApfX7

Which brings us back to the core topic: the rise of social discontent, manifesting itself in growing populism. Observing the growing wealth and income inequality, Martin writes that these have been “important factors (albeit not the only ones) contributing to the rise in voters’ frustrations and resentment across the world.”

The result, as Deutsche Bank showed back in March, has been for the electorate to increasingly embrace “populist” or “anti-establishment” parties in hope of better times…and to shun mainstream left or right institutions.

As the next chart shows, the growth of populist voter tendencies has been clear since the late ‘80s, with the trend increasing in the post-GFC era. 

There are few signs as yet of it fizzling out. At the end of 2017, ten governments in Europe included one or more authoritarian populist parties, according to Timbro. Average voter support for far left populist parties has also notably risen since 2011.

https://www.zerohedge.com/sites/default/files/inline-images/populist%20parties%20vote.jpg?itok=RzSfeqW3

In his conclusion, Martin echoes DB’s Reid, saying that “the continued rise in income and wealth inequality globally suggests that populism is here to stay” and yet it remains to be seen how effective it will be at tackling inequality and placating voter frustrations.

Meanwhile, even economies that have witnessed strong growth in recent times have struggled to generate “inclusive growth” instead becoming the world’s new breeding grounds of pervasive inequality. As the next chart shows, income inequality in China has jumped dramatically since 1990 despite very strong economic momentum.

https://www.zerohedge.com/sites/default/files/inline-images/china%20inquality.jpg?itok=bAEzzulj

What is ironic, is that since 2008, the Chinese government – which is terrified of a middle-class revolt – has introduced measures specifically aimed at reducing inequality. But as chart 4 highlights, while this has slowed the rise in income inequality in China, as yet it has not meaningfully reduced it. Will China be ground zero of the next social revolution as the people decide their “communist” leaders have betrayed them and take matters into their own hands.

Source: ZeroHedge