Hello and welcome to a special Twilight Zone week edition Alts Cafe
This is everything you need to know about what’s going on in the world of alternative assets, best enjoyed with your morning coffee.
Let’s go!
Table of Contents
Macro View
It was a rocky week as the markets posted their biggest gains in a month on Wednesday only to give it all back Thursday.
So no Santa Claus rally last week as markets tumbled. Perhaps this week will be better.
Bullish News
- Consumer confidence bounced back in December to the highest level since April, reversing consecutive declines in October and November.
- Gas prices in America are down to $3.11.
- The US economy grew 3.2% in the third quarter against an estimated 2.9%.
- U.S. companies borrowed 9% more to finance their equipment investments in November from a year earlier.
Bearish News
- Jobless claims ticked up only slightly to 216k last week. Rate hikes will continue until unemployment gets much worse.
- The EU will have to sell off over 400b Euros worth of debt next year to private buyers.
- Chinese business confidence falls to lowest in almost a decade while Covid rips through the country.
- The west African nation of Ghana is set to default on most of its external debt as their economic situation worsens.
What are we doing?
ALTS 1 fund news:
We make a big acquisition last week. Delighted!
Happy to announce we've pulled the trigger on this bad boy for ALTS 1
— Alts (@AltAssetsClub) December 20, 2022
We love Messi but Pele is the 🐐
Pop = 1
Highest graded copy 🤘 pic.twitter.com/STF82R3hqY
Crypto
Here’s what you need to know:
Is the decoupling here? Longterm (several weeks at least) readers will recall crypto and and equities were going in opposite directions before FTX dropped.
Now it looks like things are going that way again:
Crypto is slow and steady ticking up most weeks despite the macro environment. It feels like a lot of mainstream investors have been flushed out, which is driving the divergence.
SBF, who only has $100k to his name, was released on $250m bond. His (alleged) co-conspirators, Gary Wang and Caroline Ellison, have already plead guilty.
Binance seems to have slogged through the week’s concerns about its viability, liquidity, and lack of transparency and come out with another win.
Binance US is buying bankrupt Voyager Digital’s assets for $1B. Recently, FTX offered a higher price, but things didn’t work out.
Meanwhile, Coinbase’s market cap is now lower than $DOGE (how…is that possible?)
Bullish News
- Jair Bolsonaro, the president of Brazil set to leave office on Dec. 31, has signed a bill aimed at legalizing the use of crypto as a payment method within the country.
Bearish News
- The $9b SPAC listing for Bullish was scrapped.
- Core Scientific, one of the largest publicly traded crypto mining companies in the US, is filing for bankruptcy.
- Indian regulators are making more noise about the dangers of crypto.
What to do with that info:
I’m cautiously bullish?
With AI taking centre stage over web3 and crypto, now could be a good time to begin accumulating.
Real Estate
Here’s what you need to know:
Florida was the fastest growing state in America in 2022, its population up nearly 2%. All real estate continues to be local.
Speaking of local issues, a recent issue of Briefcase laid out a compelling argument against rent control.
Bullish News
- Tenuously bullish…square footage in suburbs is now more valuable than its urban counterpart.
Bearish News
- Home sales fell –7.7% MoM in November and –35.4% YoY.
- Everyone expects 2023 to be worse (though I don’t think they’re bearish enough)
- Homebuilder sentiment dropped for the 12th straight month to the lowest level since 2012.
- Regionally, sentiment was strongest in the Northeast and weakest in the West, where prices are highest.
- About 62% of builders are using incentives to bolster sales.
- Single-family home prices increased at an annual rate of 13.8% in Q3 2022, down from the previous quarter’s revised 19.1%.
What to do with that info:
The smartest real estate investor I know says he’s not touching the market for two years.
NFTs
Here’s what you need to know:
It was a solid week for blue chip NFTs as they followed crypto up. Bored Apes led the way with only Moonbirds and The Currency off slightly.
More and more physical items at top-tier auction houses are being sold with an accompanying NFT. It’s sort of an odd strategy, I think. More of a gimmick, really.
The latest was the original mechanical E.T. robot / doll from the film, which sold for $2.6m last week.
Bullish News
- NBA legend Scottie Pippen’s NFT drop sells out in record 77 seconds. They’re sneakers available to wear in the metaverse.
- The Philippines continues to top the charts for NFT adoption 🇵🇭
- Amazon is launching a series called NFTMe, which is a documentary covering the NFT space.
Bearish News
- FC Barcelona is facing regulatory trouble for running misleading NFT ads.
What to do with that info:
If you like crypto right now, you’re going to love NFTs.
Startups
Here’s what you need to know:
It was a quiet week for startups as the year ended with a collective groan.
TechCrunch featured a breathless look at what AI will bring in 2023 and lamented 2022.
I’ll talk about this more in my lookahead to 2023, but it certainly feels a lot like all the instant AI experts telling us how its going to change the world really liked Bitcoin at $68k and Bored Apes at $6m.
Bullish News
Bearish News
- Leveraged buyouts were down 40% in 2022 overall (56% in Q4 alone) which has left nearly $2t in dry powder for future deals.
- TuSimple, the self-driving truck company, laid off 25% of its employees.
- German VC activity was down 46% in 2022 🇩🇪
What to do with that info:
I can feel all the pent up demand to deploy capital. Investors are BORED with the bear market and are looking for somewhere to put their money.
Are you that receptacle?
That’s all for this week. Hope you enjoyed your coffee and this edition of Alts Cafe.
Any comments, questions or concerns – let us know.
Cheers, Wyatt
