Hello and welcome to Alts Cafe
This is a quick-fire look at what’s driving your alts week.
What’s on deck today:
- A four week rally in equities – is the risk trade back on?
- All bad news in real estate.
- Is there a private credit bubble?
- Binance gets rekt.
Table of Contents
Macro View
It was the fourth winning week in a row for US markets.
Bullish News
- American consumers spent a lot – $9.8 billion – and traveled a lot (+3% YoY) last week.
- The WSJ ​thinks​ investors are back on for the risk trade. I disagree.
Bearish News
- An unprecedented number of young Americans are ​applying for credit card rate increases​.
- American consumer ​spending​ is about to fall off a cliff.
- One of the ​world’s largest icebergs​ is on the move in Antarctica after lying dormant for more than three decades.
Forecasts
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📈
99%
​Chance the Fed will hold rates steady in December.​
📈
97%
​Chance credit card defaults will rise in Q3​
📉
1.95%
​National average house price increase in 2023​
The markets aren’t expecting any surprises in December.
What are we doing?
​ALTS 1​ Fund news:
We’re drawing up the paperwork for our art acquisition.
Real Estate
Bullish News
- Nothing of note.
Bearish News
- During the first nine months of 2023, ​only​ one out of three expiring securitized office mortgages were paid off.
- Home sales fell to a 13-month ​low​ in October.
- California housing ​affordability​ declined for the second straight quarter and dropped to the lowest level since 2007.
How to invest in real estate right now:
Don’t
Startups
Bullish News
- Airbnb ​acquired​ stealth AI company GamePlanner.ai for $200 million.
- Neuralink has quietly ​raised​ another $43 million.
- How AI could ​power​ the climate breakthrough the world needs.
- The ​share​ of U.S. venture funding going to companies in the San Francisco Bay Area hit a multiyear high this year, boosted largely by the AI boom.
Bearish News
- 1/3 of startups have ​less​ than twelve months of runway.
- 64% of finance execs think valuations have not yet hit rock bottom, with half of those predicting it will take a while until they do.
- About half of finance executives reported high odds (over 50%) that their next round will be a down round.
- TikTok owner byteDance has ​started​ laying off swathes of employees in its gaming division.
- Unsurprisingly, Israeli VC deals have ​declined​ sharply since October 7th.
- In completely unpredictable news, ChatGPT is obliterating lots of GPTWrapper ​shitcos​ as it continues to build out its own capacity.
How to invest in startups right now:
Pick up great copmanies raising down rounds.
Private Equity and Private Credit
Bullish News
- Multistrategy hedge fund Third Point is ​loading up​ on private credit.
- Nomura is ​looking​ to put down $1 billion from its own balance sheet over the next 18 months to participate on private lending deals.
- Avenue Capital Group is ​raising​ between $600 and $800 to invest in environmental impact private credit.
- Private credit funds are ​providing​ a record €4.5 billion ($4.9 billion) loan to back the buyout of Adevinta ASA.
Bearish News
- Private equity firms are ​resorting​ to buying back companies they only recently took public in a bid to salvage investments that have struggled to perform on stock exchanges.
- Saudi Arabia ​raised​ $11 billion through a syndicated loan, the biggest globally by a government this year, as it looks to finance a budget deficit amid weaker oil revenues.
How to invest in PE and Private Credit right now:
Do you smell that? It’s a private credit bubble.
Crypto & NFTs
Here’s what you need to know:
Markets pulling back slightly over the weekend.
Getting nervous here.
NFTs are quietly up over 20% this year.
Bullish News
- Changpeng Zhao ​pled​ guilty to fraud and stepped down as Binance CEO.
- He’s ​asked​ permission to
fleetravel outside the country ahead of his sentencing. - Investors have ​pulled​ nearly $1 billion out of Binance.
Bearish News
- The SEC ​charged​ Kraken with operating its crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing agency.
How to invest in Crypto & NFTs right now:
It’s accumulation season.
That’s all for this week
Cheers,
Wyatt
Disclosures
- This issue of Alts Cafe was brought to you by our friends at ​Overlooked Alpha​.
- We hold BTC and ETH in our ​ALTS 1 Fund​.
- There are a couple of affiliate links above. If you click them, we may get a couple of bucks.
