Hello and welcome to Alts Cafe
Highlights from the full issue:
- Macro: A bumper year for the US economy
- Real Estate: Commercial real estate continues to degrade
- Private Credit: Average loan sizes continue to expand
- Crypto: BTC tops $45k as an ETF edges closer
- NFTs: Donald Trump pays $2.4M in royalties
- Art: Picasso, Monet, Basquiat, and others break records at auction
- Vintage Autos: A $1.1M Aston Martin sells at auction
- Coins: The rise of Buffalo nickels
- Farmland: Pennsylvania makes aggressive moves to support its farmers
- Luxury: Prada buys more real estate on 5th Avenue
- Wine and Spirits: Pappy Van Winkle is selling at astronomical prices in the secondary market
- Film & Music: Lionsgate spends $375M to grow its catalog
- Precious Metals: Three states will classify gold and silver as money
- Collectibles: LEGO collecting is surprisingly popular in Australia
- Websites: 17 status file antitrust complaints against Amazon
Let’s go.
Table of Contents
Macro View
Because you haven’t added any specialist topics, you’ll only see this macro view today.
If you want a concise view of last week’s real estate, startups, crypto, PE, VC, luxury items, music and film investing, collectibles, art, wine and spirits, and/or vintage autos news, click this button.
Bullish News
- All three major US indexes posted double-digit growth in 2023
- The tech-heavy Nasdaq stood out, rising 43%, its best performance since 2020.
- The ‘personal consumption expenditures (PCE) price index fell last month, providing another sign of easing inflation.
- Holiday spending was up 3.1% over 2022.
- Southern cities like Houston, Dallas, Nashville, and Miami are poised to play increasingly large roles in the US Economy.
Bearish News
- California, already faced with a $32 billion budget deficit, is now getting hit by rising unemployment as well.
- Caught between fiscal discipline, an expensive green transition, and economic security, Germany and the EU face a trilemma in 2024.
- China’s economy was supposed to be the comeback story of 2023, but it continues to struggle due to a property crisis and record youth unemployment rates.
- Foreign investors recently purchased the lowest-ever amount of mainland stocks, reflecting waning confidence.
- Residual anger about high inflation has soured consumer’s view of the economy.
What are the odds?
What are we doing?
ALTS 1 Fund news:
Expect your Q4 report in the next couple of weeks.
Real Estate
Bullish News
- Investors converted 50 million square feet of office space in 2023.
- US Population Growth continues to be dominated by large southern cities.
- Texas continues to dominate, with six of the nation’s 15 fastest-growing cities in the Lone Star State.
- The ten US residential markets that are forecast to grow the most in 2024.
Bearish News
- Citing high mortgage rates and limited land availability, Zillow forecasts that home prices will drop in San Jose and San Francisco.
- Plunging commercial real estate demand continues to send prices lower.
- Zillow filed an antitrust suit against real estate listing services, alleging that they conspired to block rivals from accessing home-sale data.
- Massachusetts has fined almost every local housing authority in the state for keeping subsidized apartments empty without a good reason.
- Related: Boston housing affordability sunk below 5%
How to invest in real estate right now:
Don’t
Startups
Bullish News
- Anthropic, the OpenAI rival, is in talks to raise a $750m funding round led by Menlo Ventures.
- Revolut was approved to offer home loans in Europe.
- Greylock introduced a $1 billion fund to support AI Enhanced Cybersecurity, Infrastructure, Fintech, and Crypto initiatives.
- The focus is on Pre-Seed, Seed, and Series A founders.
- Saudi Fintech unicorn Tamara broke records with a US$340 million funding round led by SNB Capital and Sanabil Investments.
Bearish News
- 2024 may only yield around 400 new startups in Israel. That’s the lowest in 21 years.
- Total funding to Pacific Northwest startups fell nearly 60% year-over-year in 2023.
- Wall Street analysts expect BNPL leader Affirm’s stock to pull back as much as 40% in 2024. [Ed note: this is my top short pick this year]
- Tech giants invested more in AI startups than VCs by a wide margin in 2023.
- Canvas Ventures cofounder Rebecca Lynn said, ”The air will come out of the AI balloon” in 2024.
How to invest in startups right now:
2024 is going to be huge for pre-seed and seed stage companies.
Private Equity and Private Credit
Bullish News
- Public market exits by PE/VC firms were up big in 2023.
- Private credit is the flavor of the month among the world’s financial elite. [Ed note: I think there’s a PC bubble]
- The average loan size has grown to $195 million, reaching an estimated $1.5 trillion in loan volume globally.
- Apollo Global Management is expected to grow at a CAGR of 15%.
- The company also aims to double AUM and net income in the next 3 years.
- Franchise M&A experts are cautiously optimistic.
- David Tovey, a former BlackRock fund manager, is launching a new hedge fund, Covale Capital, in Q1 2024.
- The group plans to manage $1bn in assets by the end of the year.
Bearish News
- Inflows from PE and VC into domestic companies fell to a low of $27.9 billion compared to $47.62 billion in 2022.
- Apollo affiliate MidCap Financial helped precipitate a Nursing-homes implosion.
- PE firms anticipate a gloomy fundraising forecast for 2024.
- Moody’s predicts a deteriorating operating environment for global banking, citing increasing bad loans and geopolitical conflicts.
How to invest in PE and Private Credit right now:
If you’re long private credit now, I’d consider getting out.
Crypto
Here’s what you need to know:
Whispers of a BTC EFT getting approved this week have sent the cryptocurrency to the moon.
Bullish News
- Bitcoin smashed through $45k for the first time in two years as the cryptocurrency got closer to SEC approval.
- Japan has reportedly ended the imposition of unrealized gains tax on crypto assets held by corporations.
- Criminal proceedings against Nexo have been dropped due to insufficient evidence of money laundering and sanctions violations.
- Marathon Digital, Coinbase, MicroStrategy, and Grayscale Bitcoin Trust all increased by over 300% in 2023.
Bearish News
- Ethereum suffered the biggest DeFi losses in 2023, totaling $1.35 billion and accounting for nearly 70% of the year’s total losses.
- A medley of scams, including rug pulls, blockchain exploits, and flash loan attacks, account for the $2 billion in total crypto exploits in 2023.
- A judge ruled Terra and other tokens are securities, which contravenes the recent Ripple case.
- India’s Financial Intelligence Unit is trying to block Binance and Kraken, citing non-compliance with AML rules.
How to invest in Crypto right now:
It’s still accumulation season.
NFTs
NFTs were up 38% in 2024.
Bullish News
- Donald Trump’s ETH wallet transferred $2.4M in NFT royalties to Coinbase.
- Starbucks Korea plans to issue ’eco stamps’ NFTs to new customers starting this month.
- Sotheby’s sold $35 million worth of digital art in 2023.
- In the last 30 days, there have been 120,000 more NFT buyers than sellers.
- Sales volumes increased 72.7% to about $1.66 billion.
- NFT creator ThankYouX’s career is soaring with a new inertia exhibition at Sotheby’s.
Bearish News
- Why Ed Zitron thinks excitement around the Metaverse died.
- Got ‘Worthless’ NFTs? This company will buy them.
- The Bitcoin Ordinals debate (pure NFTs on the Bitcoin blockchain) has the potential to lead to a Bitcoin fork.
- Elon Musk criticized NFTs in their current implementation in his most recent Joe Rogan interview.
How to invest in NFTs right now:
Find something you love
Artwork
Bullish News
- Picasso, Klimt, Monet, Basquiat, and other record-breaking sales from 2023.
- In Pittsburgh, more than 100 artists and arts groups received holiday grants totaling $3.1 million, with individual recipients ranging from $10,000 to $95,000
Bearish News
- Several Blue-Chip artists stumbled on the auction block in 2023.
- Christopher Wool, Jeff Koons, and others faced significant drops in market value.
- There’s no end in sight for the museum exodus.
- Museum professionals continue to leave museums for higher salaries at commercial galleries.
- Two men were arrested for allegedly stealing a new Banksy artwork in London.
- 2023 in review: the art market endured a major correction.
How to invest in Artwork right now:
We’re excited about overlooked 20th-century artists and anything coming out of Saudi Arabia right now.
Vintage Autos
Bullish News
- A rising demand for used cars means new cars are only losing 40% of their value after 3 years.
- Classic go-karts that look like real cars are unbelievably hot right now.
- A new motor club in Utah amassed $33 million worth of rare, luxury, sports, and otherwise interesting cars.
- This 1-of-1 Aston Martin was auctioned for US $1.1 million.
- The DB2/4 was once owned by American businessman Stanley H. ‘Wacky’ Arnolt II.
Bearish News
- Experts characterize the 2024 collector market as “stable but retreating”
- The used electric car market in the US is at the whim of Tesla.
- The 5 Worst American Cars for your money, according to ChatGPT.
How to invest in Vintage Autos right now:
There’s an oddly growing market for cars from the 1980s. I don’t know why.
Rare Coins
Bullish News
- Buffalo nickels in circulation from 1913-1938 have become valuable collectibles due to rarity and minting errors
- Some pieces are selling for more than $200,000.
- Check out this old escudo coin worth €85,000. Do you have one?
- Coin collecting has seen a resurgence thanks to TikTok.
Bearish News
- Legend Rare Coin Auctions ceased operations.
- The Encore Emporium was robbed overnight, leaving everything intact except an entire box of collector’s coins.
How to invest in Rare Coins right now:
Check your pockets for an escudo.
Farmland
Bullish News
- Japan’s agriculture ministry plans to ease restrictions on investment in farmland entities.
- Farmland specialists anticipate good yields, strong income, and land shortage contributing to strong farmland values in 2024.
- From newly signed state laws to a booming organic sector, Pennsylvania’s $132.5 billion agricultural industry is worth watching.
- The state invested $8.7 million to preserve 2,553 acres on 30 farms.
Bearish News
- The purchase of 300 acres of farmland in North Dakota by the Fufeng Group, based in Shandong, China, has aggravated ongoing concerns about foreign ownership of American land.
- Minnesota dairy farms have decreased by 146 permits since the start of the year, signifying the sector’s decline amid economic pressures.
- The Nebraska Pork Producers President says 2023 market conditions were worse than 1998.
How to invest in Farmland right now:
Buy up Chinese farmland.
Luxury Goods
Bullish News
- It’s been a monumental year for watches.
- With record-breaking pieces at auction, the year has seen enthusiasm for watches bounce back in full force.
- Prada bought another Fifth Avenue Building for $410M.
- The luxury brand has added 720 Fifth after buying 724 for a total of $835 million invested.
- Economic growth in the Asia-Pacific and LAMEA regions has significantly benefited the luxury goods market.
Bearish News
- Macroeconomic headwinds and shifting consumer preferences are making things tough for luxury brands like LVMH and Gucci-owner Kering.
- Luxury retailers like Saks Fifth Avenue continue to struggle with declining sales.
How to invest in Luxury Goods right now:
Perhaps watches are a timely investment.
Wine and Spirits
Bullish News
- It was a landmark year for the Irish whiskey industry.
- Fine wines are becoming increasingly recognized as a lucrative and diversified asset class.
- There was a 149% price increase over the past decade, and Burgundy wines have done particularly well.
- The Kentucky “Bourbon Boom” continued with several new projects opening in 2024.
- Bourbon brands like Pappy Van Winkle are selling for astronomical prices in the secondary market.
- Also, a bottle of scotch recently sold for $2.7 million.
- Whiskey barrels are emerging as a potential safe haven for Israeli investors.
Bearish News
- Nonalcoholic sales rose as consumers embraced mindful drinking, leading to global market projected at $30 billion by 2025.
- Thieves hijacked a shipment of $400,000 worth of tequila following its entry into the U.S. from Mexico.
- Champagne may be in short supply soon, according to ClimateAI, a climate resilience platform based in San Francisco.
- More Americans are gifting cannabis instead of wine and spirits during the holidays.
How to invest in Wine and Spirits right now:
There are three spots left on our investor trip to Tequila in February. Join us, won’t you?
Music and Film
Bullish News
- A Star Wars Han Solo prop sold at auction for a record-breaking $550,000.
- Avenged Sevenfold minted one million NFTs for an alternate reality game and album announcement.
- UK vinyl sales increased 11.7% in 2023 compared to the previous year, reaching their highest point since 1990
- Artists such as Ed Sheeran, Lana Del Rey, Taylor Swift, and The Rolling Stones led the surge.
- Lionsgate closed its acquisition of Entertainment One (eOne) from Hasbro for $375M in cash.
- The deal grants Lionsgate rights to a range of film and TV titles, including ‘Yellowjackets,’ ‘The Woman King,’ ‘Green Book,’ and ‘Spotlight’.
Bearish News
- Legendary music producers Jimmy Jam and Terry Lewis are worried AI will destroy artists’ ownership of their IP without proper authorization.
- Reggae legend Max Romeo has tapped his third lawyer in just over a year as he fights a $15 million lawsuit against Universal Music Group and Polygram Publishing.
- The suit concerns allegedly unpaid royalties dating back nearly five decades.
How to invest in Music and Film right now:
I don’t think the music industry will win the fight against AI. It’ll have to make adjustments similar to the Napster tsunami.
Metals and Gems
Bullish News
- A New Jersey Senate Committee passed a bill moving toward treating gold and silver as money.
- The Legislation will relieve tax burdens and facilitate gold & silver transactions.
- Oklahoma and Missouri made similar moves.
- Costco sold more than $100 million worth of gold bars in just four months.
- The global battery metals market is estimated to grow to more than $28 billion by 2033.
- The largest jewelry company in the U.S. forecasts growth in marriage proposals to 2.5 million engagements after a pandemic-triggered decline.
Bearish News
- China banned the export of technology to extract and process rare earth metals, impacting applications in electric vehicles and wind turbines.
- A federal investigation is looking for at least $75 million in missing silver and gold from a Delaware warehouse. [ed note: check Costco’s warehouse]
- “Most of these investors were elderly people,” says the court-appointed receiver overseeing the depository.
How to invest in Metals and Gems right now:
Buy shares of Costco.
Collectibles
Bullish News
- The top 5 most expensive Hot Wheels sell for more than $175,000.
- Almost five million Australians identify as LEGO collectors.
- As the Pokémon franchise reaches its 25-year milestone, experts predict a significant boost in card values, reinforced by historical demand patterns.
- Singapore’s vintage toy market is on the rise. Local arcades are boosting the value of vintage toys as collectibles.
- A man discovered a goldmine of more than 600 valuable 1920s baseball cards while cleaning out his late father’s northern California home.
- ASICS‘ first sneaker collab of 2024 goes hard.
Bearish News
- Bill & Ted’s Excellent Retro Collection is delisted from digital marketplaces after just 10 months due to expiring IP licensing.
- In 2023, big shoemakers rereleased old designs. Sambas and Air Jordans were everywhere, but sales overall stagnated.
How to invest in Collectibles right now:
I’m bullish on Pokemon in 202
Websites and Domains
Bullish News
- London-based Olsam Group, an e-commerce platform, has acquired Amsterdam-based Dwarfs, an e-commerce aggregator.
- The united entity will receive an enlarged credit facility and aims to surpass $100 million in annual revenue by 2024.
- Silicon Valley Domains is becoming the most sought-after domain name broker, fueling Asia’s global dominance.
- We’re seeing more investing websites
- The FTC and 17 states filed a landmark antitrust complaint against Amazon.
- They allege that Amazon has monopoly power in online superstore and marketplace services markets
Bearish News
- High-value domain sales were down in 2023.
- Fulfillment by Amazon (FBA) announced a new low-inventory-level fee.
- Separately they launched an AI tool to help merchants avoid that fee.
- A large swath of exceptional domain names in the NameFind portfolio appears to have been sold, including some of its top one-word, two-word, and short acronym .com domain names.
How to invest in Websites and Domains right now:
Buy a domain; build a company.
That’s all for this week
Cheers,
Wyatt
Disclosures
- This issue of Alts Cafe was brought to you by our friends at Tuttle Capital.
- 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.
