Alternative Investing Report - October 7, 2024

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_{*as of 10/6; Sources: S&P, BTC, FTSE, DJRE, CL50}

The latest nonfarm payrolls report showed that 254,000 jobs were created in September, well above the forecast of 150,000 and a big jump from the 159,000 created in August. As a result, the unemployment rate trickled down from 4.2% to 4.1% and the “underemployment” rate fell for the first time this year. Average hourly earnings were up 0.4% monthly and 4% year-over-year, both slightly ahead of expectations.

➨ TAKEAWAY: This was a shockingly strong jobs report, and shows the economy is in a good position, lessening the need for quick Fed intervention. Last week, Fed chair Jerome Powell indicated that quarter-point rate cuts were likely at the two remaining Fed meetings this year. The report strengthens the idea that large cuts are not necessary right now. In response, 30-year mortgage rates jumped by 27 basis points on Friday, as the market had baked in the possibility of bigger cuts.

U.S. startups raised $37.5 billion in funding in Q3, an 8% gain year-over-year, but down from $55.5 billion in Q2. Globally, startups received $70.1 billion in funding, the lowest quarterly total since 2017. U.S. exit value fell dramatically, from $25.2 billion in Q2 to $11.2 billion in Q3, and the number of exits was the lowest since the pandemic. Global exit value also saw the 2nd lowest quarter since 2018. By all metrics, VC activity remains down significantly since its 2021 peak.

➨ TAKEAWAY: The lack of exits has had a chilling effect on both deal activity and VC fundraising, as firms and investors are wary of putting money into startups when very few are getting distributions out of prior deals. Venture firm CRV even took the notable step of returning $275 million of uninvested capital to investors rather than investing it. The recent Fed Rate cut could spur more activity in Q4, which will be needed to jumpstart the flagging market.

🪙 Who is Satoshi?: An HBO documentary airing Tuesday may reveal the true identity of anonymous Bitcoin creator Satoshi Nakamoto, still crypto’s greatest mystery.

🏡 Buying demand improving: September was the first month this year where pending home sales didn’t decline, and Redfin’s Homebuyer Demand Index rose by 9% to its highest level since April.

⚾ Top sports cards sales: The private $1.7 million sale of a Wilt Chamberlain rookie card led the way in September, while eight of the nine top auction sales came from Sotheby’s “Holy Grails,” the debut of its partnership with Fanatics.

🎨 Artists for Kamala: Contemporary artists like Jasper Johns, Jeff Koons and Shepard Fairey donated artwork for an auction ending Tuesday to benefit the Harris campaign, with some of the works being the political type that draws more attention in election years.

🚀 Crypto funding inches up: VC funds invested $659 million into crypto-related startups in September, a 3% monthly increase, with the biggest growth coming in the blockchain gaming sector.

🏡 Luxury insurance issues: Home insurance premiums for mortgage loans over $1.5 million have increased by 130% since 2020, compared to a 12% increase for loans between $400,000 and $800,000. This increase is quickly becoming an factor in the luxury real estate market, as some sellers will have to lower prices to make up for surging insurance costs.

Monday: Anniversary of the brutal October 7th terror attacks that sparked the ongoing violence in the Middle East. The U.S. Supreme Court begins its next term.

Tuesday: The NFIB Small Business Optimism Index is released.

Wednesday: Christie’s 20th/21st Century London Evening Sale, featuring a Jeff Koons sculpture estimated to sell for $8.5 million - $13 million; Sotheby’s London Contemporary Evening Auction, featuring a David Hockney painting with an estimate of $9 million - $13 million.

Thursday: September inflation reports released, including Consumer Price Index (CPI) and Core CPI; Phillips London Modern & Contemporary Art Evening Sale, featuring a Yayoi Kusama “Pumpkin” sculpture with an estimate of $2.5 million - $4 million.

Friday: Yom Kippur begins at sunset; Producer Price Index (PPI) released.