Hello and welcome to Alts Cafe
This is a quick-fire look at what’s driving your alts week.
What’s on deck today:
- Jobs came in hot
- Real estate keeps getting worse [except these two weird industries]
- More than 3k VC-backed startups, which collectively raised over $27 billion, have failed this year
- Crypto keeps ripping
- Congress is coming after PE [your reminder elections are coming soon]
Table of Contents
Macro View
Bullish News
- The jobs growth rate in the US came in higher than expected, and unemployment was lower than expected. The vast majority of gains came in the healthcare and government sectors.
- But a rate cut just got a lot less likely.
- The lobbying group that claimed $45 billion worth of theft at American retailers made the number up.
Bearish News
- The UK’s economy is in real trouble.
- Bloomberg economists say a recession probably began in the US in October.
- A quarter of U.S. corporate profits this year will come from just a dozen companies.
What are the odds?
Get $25 to play around with invest on Kalshi using this link.
End of Year
4,602
16,083
Imminent Numbers
3.37%
1% chance
December & Beyond
175,846
3.86%
1.76%
74%
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
- Saudi real estate reservations more than doubled year over year.
- Mortgage rates have come down a bit.
- Over the last year, industrial and tourism CRE have both managed top 5% returns.
- NARRATIVE VIOLATION: The average California homeowner gained $51k home equity in 2023 while Texans lost over $8k.
Bearish News
- Multifamily is the next domino to fall in CRE.
- Because lending is down 55% this year.
- Proptech startup Veev, which mastered modular homes, is about to go bust.
- Median income earners spent 41% of their pay on housing this year, up from 21% in 2012. It’s 80% in Anaheim and San Francisco.
- CMBS distressed loans topped $2 billion, with offices comprising nearly 3/4 of that.
- Pending home sales are down 1.5% MoM to the lowest level ever.
- Redfin predicts home prices will fall 1% in 2024.
- But listings will pick up.
- And mortgage rates will remain above 6%. Fannie Mae thinks rates will reach 6.9% at the end of 2025.
- A San Francisco home purchased for $20 million three years ago just sold for half that.
- A private island for sale in Florida just got a $30 million price cut.
How to invest in real estate right now:
Don’t
Startups
Bullish News
- Softbank is buying a 51% stake in Irish startup Cubic Telecom for $514 million.
- Americans bought over one million electric vehicles in 2023.
- MIT has spun off a new startup called Liquid AI that aims to build general-purpose AI systems powered by a new type of AI called a liquid neural network.
- Robinhood and Coinbase’s split is good for challenger Fintechs.
- Smaller VCs consistently outperform their larger counterparts.
- European startups are doing just fine, thank you.
Bearish News
- At least 3,200 venture-backed companies have gone bankrupt this year. They raised a cumulative $27.2 billion.
- And Carta says 87 of the firms on its platform that raised at least $10 million had shut down this year as of October — double the amount for all of 2022.
How to invest in startups right now:
Go with an emerging VC manager.
Private Equity and Private Credit
Bullish News
- RRJ Capital, the private equity firm founded by former Goldman Sachs banker Richard Ong, is seeking to raise as much as $2 billion for a new fund that focuses on private credit in Asia.
- Led by alternative-asset behemoths like Apollo Global Management and Blackstone, private credit has arguably become the most powerful transformational force in the financial world since the 2008 economic crisis.
Bearish News
- Even distressed debt funds are finding China uninvestable.
- Congress has introduced a law that will make it illegal for PE companies to own single family homes.
How to invest in PE and Private Credit right now:
I feel a credit bubble
Crypto & NFTs
Here’s what you need to know:
[Note: because I’m travelling Sunday to Tuesday, I’m writing this Saturday. Prices will be a couple days out of date. I hope nothing important happens.]
Crypto continues to rip…to.
Sentiment is actually down slightly on last week.
Outstanding seven days for NFTs as they outpaced ETH.
Bullish News
- A federal judge accepted Binance founder Changpeng “CZ” Zhao’s guilty plea to one count of violating the Bank Secrecy Act.
- Binance founder and former CEO Changpeng Zhao (CZ) can’t return to the United Arab Emirates before sentencing.
Bearish News
- JPMorgan CEO Jamie Dimon said that if he had the power, he would shut down the entire crypto industry.
How to invest in Crypto & NFTs right now:
It’s still accumulation season.
That’s all for this week
Cheers,
Wyatt
Disclosures
- This issue of Alts Cafe was brought to you by our friends at Alto.
- 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.
