Alternative Investing Report - February 3, 2025

*as of 2/2; Sources: S&P, BTC, FTSE, DJRE, CL50

On Saturday, President Trump signed an executive order imposing tariffs on goods from Canada, Mexico, and China, inviting a trade war and potentially upending the global economy. Starting tomorrow, there will be a 25% tariff on all goods from Canada - 10% for their oil and gas - and eventually a 25% tariff on all goods from Mexico and a 10% tariff on those from China. The three countries responded with outrage, and have announced retaliatory tariffs, lawsuits, and other countermeasures. The President acknowledged that the tariffs could cause “short-term pain” for American consumers, who are expected to pay more for a wide range of products, including food, energy, cars, electronics, and lumber. Trump has also threatened to institute tariffs on the EU, which would further exacerbate these issues.

➨ TAKEAWAY: Markets worldwide have reacted negatively to the specter of a trade war. Asia-Pacific stock markets have fallen 2-3%, European markets are set to fall, and it is likely that the U.S. equities markets will be in for a rough day today. The crypto market crashed (more on that below), though gold prices, which tend to do well in times of turmoil, ticked up. The National Association of Homebuilders wrote a letter urging Trump to reconsider and exempt homebuilding materials, worried about housing affordability. Investors are likely to move capital to less risky asset classes until the effects of the tariffs become clearer - or until they are lifted - which could take months.

Monday February 10 at 12 PM ET - join a briefing covering Elon Musk’s neurotechnology company Neuralink. Vincent’s Slava Rubin and Sacra’s Jan-Erik Asplund will discuss the company’s growth, strengths, challenges, IPO prospects, and much more. Presented by Upmarket.

The first effects of the Trump tariffs were felt by the crypto market over the weekend, as the total crypto market cap fell by 11% on Sunday and is down nearly 17% over the past three days. Bitcoin dropped below the $93,000 mark, three days after crossing $105,000. Ethereum, Ripple, and most major altcoins fell by more than 20%, reaching back to pre-election levels. Dogecoin and other memecoins saw 25-30% drops, and the Trump-backed Trumpcoin is down 30% in the last week and 75% from its peak.

➨ TAKEAWAY: Because crypto trades around the clock, it is the proverbial canary in the coal mine, showing that investors are quickly shedding risk due to the uncertainty that Trump’s tariffs are injecting into the market. As has been the case recently, even though they lost significant amounts of value, Bitcoin and Solana showed the most resilience, as investors view them as least risky. There are also those who believe that a sustained trade war could be good for Bitcoin in the long-run, if it is truly is “digital gold,” as gold itself is an asset investors flock to in times of uncertainty.

🚘 F1 car record auction sale: A silver 1954 Mercedes “Streamliner” used in F1 races sold for $53 million at Sotheby’s, just above pre-sale estimates, setting a new record for a grand prix car.

💵 Private equity surpasses private credit: For the first time in two years, private equity funds outperformed private credit funds, returning 3.09% in Q3 of last year, narrowly beating private credit’s 3.06% result. This could entice more investors to reallocate their portfolios as the private credit boom shows signs of slowing down.

🤖 OpenAI seeks $340 billion valuation: The AI startup is looking to raise $40 billion at a valuation that would more than double its previous $157 billion mark from only four months ago. This new price comes as the company released its “Deep Research” agent to assist people with in-depth research more complex than a simple web search.

🎨 Not a Van Gogh, for now: A painting bought for $50 at a garage sale was denied attribution by Amsterdam’s Van Gogh museum, contradicting a prior report and ensuring it is not officially recognized as the work of the Dutch master, and the artwork is likely worth a lot less than anticipated.

🏡 2025 luxury real estate trends: The U.S. luxury market is expected to continue to outperform the real estate market as a whole, though 2025 is likely to bring a more balanced market between buyers and sellers as more inventory goes on market.

🚀 Cloudastructure goes public: The cloud-based video surveillance company is now trading on Nasdaq (symbol: CSAI) after raising over $32 million on retail investing platforms such Republic and WeFunder, starting at a valuation of $7 million. The offering initially priced the company at a valuation of $600 million, but the share price has already dipped by nearly 50% in two days of trading.

This week: One-quarter of S&P 500 companies will report earnings, including Alphabet, Amazon and Disney.

Wednesday: Christie’s Old Masters auction, featuring fifteen paintings with pre-sale high estimates above $1 million or more.

Friday: U.S. jobs report released; Sotheby’s will auction the Joachim-Ma Stradivarius violin with an estimated value of $12 million - $18 million.

Sunday: Super Bowl LIX between the Kansas City Chiefs and Philadelphia Eagles at 6:30 PM ET.