Alternative Investing Report - October 10, 2024

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_{*as of 10/9; Sources: S&P, BTC, FTSE, DJRE, CL50}

Two major London art auctions took place yesterday, with Sotheby’s Contemporary Evening Auction and Christie’s 20th/21st Century Evening Sale. The Sotheby’s auction saw 18 of 22 lots sell overall, five above the estimate, and two below. The centerpiece was David Hockney’s 1968 painting “L'Arbois, Sainte-Maxime” which sold for over $17 million, well above the high estimate of $13 million. The Christie’s auction saw $107 million of sales, led by Lucian Freud’s “Ria, Naked Portrait,” which sold for $15.4 million. Overall, 46 of the 52 lots sold, with 17 going above estimates, and only one below.

➨ TAKEAWAY: The results of both auctions were promising, with strong sell-through rates and a high number of lots that exceeded expectations. During the recent downturn in the art market, modern and contemporary art did perform the strongest, so it’s not quite time to say the art market is on the way back up. But these results are encouraging, particularly as they come after the Fed rate cut is bringing back a lower interest rate environment.

Over 7.5% of the world’s population now uses digital currencies, and that number is expected to exceed 8% by next year. Two primary factors in this rise are growing institutional interest and increased global economic uncertainty. The main roadblocks to more widespread adoption are regulatory issues and the proliferation of scams and hacking incidents, which create negative publicity for the asset class in the mainstream.

➨ TAKEAWAY: On the one hand, crypto is one of the fastest growing technologies ever, but on the other, the relatively low percentage of people using it shows how much bigger it could potentially get. While it may not seem like it, crypto is still in its early days, and digitally native younger generations could drive quicker adoption in the future.

🪙 Satoshi revealed?: An HBO documentary claims that pseudonymous Bitcoin creator Satoshi Nakamoto is actually developer Peter Todd, but Todd has denied it. Satoshi’s identity is not only an interesting mystery, but the founder’s untouched Bitcoin wallets also contain somewhere around 1 million Bitcoins, worth ~$60 billion. If those coins are ever moved, it could cause a huge market disruption.

🏡 Low climate-risk cities: Nine of the ten U.S. cities with the lowest risk of climate disasters are in the Great Lakes region, led by six cities in Ohio.

🚀 General Catalyst’s continuation fund: The prominent VC firm is launching a $800 million - $1 billion continuation fund, which will consist of stakes in companies that they have already invested into, such as Stripe and Circle. This will give their earlier investors a chance to sell their shares, as VCs search for ways to offer more liquidity options.

🚘 Barrett-Jackson fall auction: The first ever fall offering from the collector car auction house in Scottsdale kicks off this week, with seven-figure cars owned by Canelo Alvarez and Sammy Hagar among the lots.

🏢 Industrial construction down: Industrial square footage under construction fell by 43% in Q3, the biggest drop since 2008, as vacancy rates rose due to increased construction completions in the last year.

💵 Infrastructure funds: Investment manager Hamilton Lane is launching two evergreen infrastructure funds aimed at giving individual accredited investors access to power, transportation, data, and telecommunications assets.

The Nobel prizes for both physics and chemistry were awarded this week, and they both went to AI pioneers. The physics prize went to John Hopfield and Geoffrey Hinton for their work on machine learning that has led to the AI boom. Hinton is often called the “godfather of AI” and has been vocal about potential dangers that AI creates. The chemistry prize went to Demis Hassabis, John Jumper and David Baker for their work on an AI model that calculates the structure of human proteins. The results mirror what has been happening in the AI industry, with revolutionary scientific breakthroughs hand-in-hand with warnings about the future of the technology.