Alternative Investing Report - October 11, 2024

_{*as of 10/10; Sources: S&P, BTC, FTSE, DJRE, 30Y Mortgage}

Mortgage rates have risen by nearly half a point in the past week, with the average 30-year fixed rate sitting at 6.62%. This led to total mortgage application volume declining by 5% last week, with refinancing activity hit particularly hard, dropping by 9%. Prior to the rise of rates, pending home sales rose by the highest rate since 2021, but that may slow down now with the increase in rates.

➨ TAKEAWAY: Since the Fed cut interest rates by half a point in September, most people expected mortgage rates to continue dropping, but that cut had mostly been priced in. With strong jobs data last week potentially leading to smaller interest rate cuts the rest of the year, the mortgage market reacted. Mortgage rates are tied closely to the 10-year Treasury bond yield, and a stronger economy tends to push that yield higher, and mortgage rates with it.

The Consumer Price Index (CPI), a measure of inflation, rose by 0.2% in September and is up 2.4% year-over-year, both 0.1% above expectations. However, the results are below August’s 2.5% number, and annual inflation is at its lowest point since February 2021. A separate report showed that weekly jobless claims hit a 14-month high, due partially to Hurricane Helene and the Boeing strike.

➨ TAKEAWAY: There was nothing in the CPI report to dissuade the Fed from continuing to cut interest rates, as inflation is still inching towards its 2% target. Last week’s strong jobs report gave rise to speculation that the Fed would hold rates steady, but the rise in jobless claims could offset that. Indeed, the futures markets still believe there is an 86% chance of a quarter-point reduction in November.

In this episode of Smart Humans, Slava Rubin talks with Everywhere Ventures founder Jenny Fielding about angel investing, global innovation, and the importance of believing in yourself.

📉 Exit losses: Since 2022, 70% of VC-backed exits came at a loss for investors, the highest rate since at least 2009, as firms and investors have become more willing to take a loss in exchange for liquidity.

🪙 Another XRP ETF: Canary Capital filed to create a Ripple (XRP) exchange-traded fund, which marks the second proposal for an XRP ETF in a week, but they would need SEC approval, which could be a long ways off.

❗ Shrunken heads: An English auction house removed a number of controversial items, including human skulls and shrunken heads, from its latest auction after a public outcry - a good reminder to try not to invest in anything that future generations might find distasteful.

🏢 CBRE and clean energy: The world’s largest commercial real estate brokerage acquired NRG Energy’s renewable advisory group to advise its clients on incorporating clean energy systems into their buildings.

🚀 Repeat founders: Around half of all founders of unicorn companies have started a company previously, which is likely a mixture of experience leading to better outcomes and VC firms’ reticence to invest into first-time founders.

🪙 VanEck crypto fund: The asset manager is stepping into the world of digital assets as part of its new $30 million pre-seed and seed stage fund, as it heads towards a goal of putting 15% of its AUM into crypto.

Monday: 📊 Jobs report, 🚀 Q3 VC activity
Tuesday: 🪙 FTX settlement, 🏡 Housing supply
Wednesday: 🏡 Florida real estate, 🧑‍⚖️ Epic Games v. Google
Thursday: 🎨 Art auctions recap, 🪙 Crypto adoption

Have a great holiday weekend!