A real estate turnaround in 2024?

Hello and welcome to Alts Cafe

This is a quick-fire look at what’s driving your alts week.

Today is the 22nd anniversary of the attacks of September 11th 2001. No matter who you are, where you were, or how you feel about them, those attacks changed everyone’s lives profoundly. Please spare a thought for the 2,977 people who were murdered that day as well as all those who have perished since then.

What’s on deck today:

  • It looks like the Fed may not hike rates again in 2023
  • The smart money thinks CRE will turn around early 2024
  • Seed funding is collapsing
  • Introducing our new section covering PE and private credit
  • Are NFTs dead?

If you’ve not already self-certified as an accredited investor (assuming you are one), make sure to do that if you want to get exclusive investment opportunities.

I’m an accredited investor

Wyatt

Macro View

Great week for markets last week with prices up and volatility down.

Bullish News

  • Consumer spending in July ​rose​ sharply over the month
    • But real disposable income fell slightly
    • And the gap between consumer spending and income drove a drop in the personal saving rate
  • The Fed is looking to ​double​ its growth outlook.

Bearish News

Forecasts

📉

48%

​Chance of Fed rate hike in 2023​

📈

3.61%

​August YoY inflation​

📈

2.34%

​What will the national average house price increase be in 2023?​

As you’ll see below, Zillow expects house prices to rise 5.8% through the end of the year, which is quite different to what the market on ​Kalshi​ is predicting.

What are we doing?

​ALTS 1​ Fund news:

We’re considering exiting one of our art pieces. If you’re interested, please let me know.

Real Estate

Bullish News

  • Barclays ​thinks​ there’s no risk of systemic financial crisis due to the collapse of China’s real estate market.
  • Zillow thinks home prices will ​rise​ 5.8% through the end of the year
    • But home sales will be down 17% YoY
  • There’s $205 billion ​waiting​ to invest in distressed CRE assets as soon as they hit bottom.
    • And analysts ​think​ that’ll happen early 2024.
  • China’s Country Garden ​stays​ alive…for now.

Bearish News

  • US apartment ​rents​ in August were just 0.28% higher than August 2022 compared to 11% a year ago.
    • Because the number of new units being built is at a 50-year high, with more than 460,000 being completed this year.
    • But rents are ​holding​ strong in the suburbs.
  • The typical age to buy a first home in the US has ​jumped​ to 36 years old, the oldest ever on record. That’s up from 33 in 2021.
  • WeWork is trying to ​renegotiate​ all its leases to stay afloat, but it probably won’t be enough.
  • The ​WSJ​ says regional banks have more exposure to commercial real estate than previously thought.
  • One in eight SF home ​owners​ are selling for a loss, 4x the national rate.
  • Goldman ​thinks​ remote working will stabilise around 20% to 25%, 10x the pre-Covid rate.
  • Housing ​affordability​ is at its lowest point since 1984.

How to invest in real estate right now:

Wait until early 2024, apparently.

Startups

Bullish News

  • It was a good week for Indian ​startups​‘ fundraising ​despite​ a tough year.
  • There’s now a ​startup​ to help other startups wind down much more quickly and easily, which should extend runways slightly.
  • Global venture funding ​was​ $22 billion in August 2023, up around 19% MoM
    • But that’s down 16% from the $26.2 billion invested in July 2022
    • And seed stage investing is down nearly 50% YoY
  • More than 25% of VC ​money​ has gone to AI companies in 2023.
  • A dog food subscription box ​company​ is raising $354 million. How very 2013.

Bearish News

  • Michael Kim of Cendana Capital (VC fund of funds investing in seed stage managers) ​predicts​ seed rounds will return to the $1.5m range.
  • Arm, the British chipmaker, is ​set​ to IPO at a valuation around $52 billion, which is $18 billion less than Softbank targeted only a month ago.
  • The recent surge in IPO chatter hasn’t ​helped​ the secondaries markets much.
  • Rent the Runway is ​circling​ the drain.
  • A variety of VC firms are ​trying​ to sell off portions of their portfolios.
  • ChatGPT traffic ​fell​ for the third month running.

How to invest in startups right now:

Stay away from AI

PE & Private Credit

Bullish News

  • Private credit firms have ​muscled​ in on $10 billion worth of debt refinancing.
  • Two former Goldman Sachs ​partners​ have launched 5C, which describes itself as a credit-centric alternative investment firm.
  • Private equity sports investment is on the ​rise​. As leagues have eased ownership rules, dealmakers spy opportunities to gain outsized returns and cultural influence.
  • Management fees are on the ​decline​ due to a more competitive fundraising environment.
  • PE investment in European software companies is set to ​outpace​ 2022 numbers.
  • September is off to a ​banging​ start with $36 billion of new bonds priced after Labor Day.

Bearish News

  • Private debt fundraises in the real estate space ​hit​ a ten year low in the first half of 2023.
  • Much of the ​brisk​ trade around PE in Q2 was down to GPs swapping stakes.
  • US high-yield retail funds ​reported​ net outflows of $1.27 billion for the week to Aug. 23, as investors pulled assets from the funds for a fifth straight week.
  • The FDIC is trying to ​flog​ $33 billion of private debt mostly tied to NY multifamily real estate.
  • Debt ​defaults​ are set to rise.

How to invest in PE and Private Credit right now:

Wait, probably.

Crypto & NFTs

Here’s what you need to know:

Crypto continues its slide

While sentiment is marking time until the BTC ETF announcement

And NFTs are just along for the ride

Bullish News

  • Multi-billionaire Ricardo Salinas has 60% of his ​liquid​ net worth invested in crypto.
  • JPMorgan is ​looking​ into blockchain-based digital deposit tokens.
  • Justin Bieber is ​tokenising​ his recent song “Company.” NFT owners will get a 1% share of streaming royalties for around $56,000.
  • Visa is ​teaming​ up with Solana and Circle to expand its stablecoin settlement capabilities.
  • Coinbase has raised $57 million to ​launch​ a crypto lending service for institutional investors.
  • Citizens of Turkey, Lebanon, and Cyprus have all ​resorted​ to Bitcoin as a safe haven to combat inflation and interest rates.
  • Christie’s will ​auction​ off some Keith Haring NFTs.
  • El Salvador is introducing Bitcoin ​education​ to its schools next year.
  • You can now ​pay​ with crypto at the Colorado DMV.
  • The London Stock Exchange is ​looking​ into blockchain-based markets.
  • Former SEC chair Jay Clayton ​says​ the BTC ETF will be approved.

Bearish News

  • NFT had their ​lowest​ trading volume in over two years last week.
    • And decentralized exchange volumes have ​fallen​ to their lowest level since 2020
    • And Google ​searches​ for “crypto” and “bitcoin” hit a multi-year low
  • Ryan Salame, a top FTX ​executive​ who played a key role in the exchange’s political fundraising operations, could forfeit over $1.5 billion after pleading guilty.
  • Genesis’ U.S.-focused spot crypto trading ​business​ will shut down later this month.
  • North Korean hackers ​stole​ over $40 million from Stake.com, the crypto casino.
  • Binance’s global product head ​quit​. It’s unclear if anyone is still working there.

How to invest in Crypto & NFTs right now:

It’s accumulation season.

That’s all for this week. I hope you enjoyed your coffee and this edition of Alts Cafe.

Cheers,

Wyatt

Disclosures

  • This issue of Alts Cafe was brought to you by our friends at ​JKBX ​and ​RADD​.
  • We hold BTC and ETH in our ​ALTS 1 Fund​.
  • There are a couple affiliate links above. If you click them, we may get a couple bucks.

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Author

Picture of Wyatt Cavalier

Wyatt Cavalier

With a background in finance & intelligence analysis, Wyatt has an unhealthy obsession with finding the best blue chip investment opportunities. His previous newsletter, Fractional, resonated deeply with subscribers, bringing actionable insights and unconventional trading strategies. His rare book collection specializes in banned editions. He currently lives in Spain with his beautiful wife, three young boys, and dog Monty.

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