Hello and welcome to Alts Cafe
This is a quick-fire look at what’s driving your alts week.
What’s on deck today:
- The CPI came in hot
- 84% of Americans say it’s a bad time to buy a home.
- OpenAI blew past $1 billion run rate
- A mixed bag for PE
- SBF is getting stomped
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Wyatt
Table of Contents
Macro View
Look at that volatility…
Bullish News
- Analysts are predicting an extended rate pause from the Fed.
Bearish News
- September’s CPI came in hotter than expected at 3.7%.
- Retail investors are putting all their money into treasuries, which is depressing prices everywhere else.
- Everything is going wrong in China
Forecasts
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6%
Chance of Fed hikes rates in November
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86%
Chance mortgage defaults will rise in Q3
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2.34%
National average house price increase in 2023
More and more investors think the Fed will pause in November, while the likelihood of mortgage defaults has increased.
Meanwhile, projected CRE delinquency rates are above 1%, up from 0.84% a couple weeks ago.
What are we doing?
ALTS 1 Fund news:
No change
Real Estate
Bullish News
- A recent survey by ResumeBuilder.com says 9 in 10 companies will return to the office by the end of 2024. This is nonsense, but it might juice office CRE temporarily.
- Japanese CRE is having a bit of a moment.
- And so is Canada.
Bearish News
- Median rents nationwide in the US are down 1.2% YoY, while vacancy rates are up to 6.4%.
- And rents are down MoM in 85 of the 100 largest cities and in 71 of the top 100 YoY.
- China’s largest home developer, Country Garden, is set to default on its debt.
- 84% of Americans say now is a bad time to purchase a house, a record high.
- Texas has the highest office vacancy rate.
How to invest in real estate right now:
Get huge in Japan?
Startups
Bullish News
- Startups in Asia raised a total of $22.3 billion compared to $24.4 billion in the same quarter last year, which seems to indicate the bleeding may have stopped.
- According to CEO Sam Altman, OpenAI is generating revenue at a pace of $1.3 billion a year.
- Dubai is the fastest-growing VC ecosystem in the world right now.
- And 2/3 of the hottest hubs are in Europe.
- Terms for investors in Chinese VCs are getting more favourable.
- California is trying to increase founder diversity.
- Because “founders with greater gender and ethnic diversity achieve 30 percent higher returns for investors upon exit than their White men founder counterparts.”
- Atlassian is buying Loom for $1 billion in a big win for Sequoia, Kleiner Perkins and a16z.
Bearish News
- Recent IPOs have been welcome, but VC is nowhere near out of the woods.
- Deep dive from The Information on the challenges Canva faces going forward.
- Why so many streaming services are struggling.
- Crumbl, which makes what I’m told are excellent cookies, has convinced people it’s a tech company.
How to invest in startups right now:
The VC market will stay investor friendly until IPOs really come back — probably sometime in late 2024.
Private Equity and Private Credit
Bullish News
- The recent Exxon deal could be a boon for PE dealmaking.
- And here are ten funds tacking energy transition.
- JPM is launching a private markets fund to the mass affluent space with a $25,000 investment minimum, no capital calls, tax reporting and potential for quarterly liquidity.
- Hillhouse is launching a $1 billion Asia-focussed private credit fund.
Bearish News
- PE exits are awful.
How to invest in PE and Private Credit right now:
Wait, probably.
Crypto & NFTs
Here’s what you need to know:
A rough week before ETF mania this morning (price data as of yesterday)
Getting more fearful.
Can anything save NFTs?
Bullish News
- Bitcoin jumped some 4.5% in the Asian morning hours Monday amid hopes that a bitcoin ETF could get approved soon.
- SBF’s trial is not going well for him. My favourite factoid: FTX tried a lawyer, Thai prostitutes and finally a $150 million bribe to get frozen funds unlocked.
Bearish News
- ETH’s 4% tumble last week led to $100 million worth of liquidation losses.
- ETH staking yields have dropped to 3.5% from above 5% in the last few months.
How to invest in Crypto & NFTs right now:
It’s accumulation season.
That’s all for this shortened week
Cheers,
Wyatt
Disclosures
- This issue of Alts Cafe was brought to you by our friends at BV Capital and WebStreet.
- 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 bucks.
