📰 This Week…

• This investment was actually a Ponzi scheme according to the CFTC

• Mainvest announces they are shutting down operations

• OpenAI unveiled GPT-4o

• Spotify and the music industry have resumed not getting along

• Hints inflation may finally be starting to slow down again

• There’s a rush to sell older condos in Floria

And so much more!

📊 Markets

• Interest Rates, Federal Funds: 5.33% 

  • (+0% MoM, +10% YoY)

  • Next FOMC meeting starts June 11

• 30 Year Mortgage Rates: 7.02%

  • (-1% WoW, -1% MoM, +10% YoY)

• Single Family Home Price Index: 423 

  • (+1.2% MoM, +7% YoY)

  • April report, data is through February

• Commercial Real Estate Index: 121.8 

  • (+0% MoM, -17% YoY)

🚨 When It's Actually Fraud

People can be quick to flag something as "fraud" or a "scam" when it doesn't go as they expected or hoped. Oftentimes, businesses have legitimate intentions, even if their execution falls short.

But sometimes it’s actually fraud.

If you’ve explored alternative investments in the past, you may have come across Agridime.

They advertised a passive “investment” offering around cattle. Agridime promised investors guaranteed returns of at least 15% or more per year. They sold these “cattle” investments starting from $2000 - all with no account or KYC required.

Turns out, it was a Ponzi Scheme. At least, according to a lawsuit from the Commodity Futures Trading Commision.

There were no cattle purchased. The company used money from new customers to payout returns to previous investors. All the while the company’s owners and management team were paid $11 millions dollars.

Now, thousands of investors are on pace to lose most of their $191M in investments through the company.

Sources: Fortune, Agridime Receivership, North Dakota Monitor

Shockingly, it still has 3+ star reviews from some companies:

Bottom Line: Agridime promised strong returns. Unfortunately, according to the CFTC, it was all a fraud. The collapse of their Ponzi Scheme is likely to wipe out most of the $191M owed to investors.

💸 Economy

• The Consumer Price Index (CPI) rose 0.3% in March and 3.4% year-over-year. This broke a 3-month string of inflation exceeding expectations. “Core” CPI (food and energy excluded) reached its lowest level in 3 years. (CNBC)

• The Chief of the International Monetary Fund is worried about AI. She expects AI to affect 40% of jobs. The impact on the job market could be substantial with potential for less hiring and lower pay. (Business Insider)

• Generally, consumer spending continues to be strong. There are signs of weakness though. People are holding off on expensive household items like mattresses and pools. (CNBC)

Bottom Line: Some signs inflation could be starting to cool after 3 months of hotter-than-expected reports. AI could have a complex, but severe impact on the job market. Consumer finances and consumer spending may be weakening.

🏠 Real Estate

• Rents in parts of the Sun Belt are falling. Some of the hottest areas from the Covid migration are falling the fastest. Austin, Nashville, Jacksonville, and Miami are all down 5% or more. Meanwhile, some of the Midwest and Northeast are seeing rents rise. Minneapolis, Cincinnati, Chicago, NYC, and Washington D.C. are up over 5%. (Redfin)

• Commercial real estate funds continue to bleed capital. Investors pulled out billions from both Blackstone’s and Starwood Capital’s funds. That's just in a single quarter. Redemptions put selling pressure on funds with illiquid assets like real estate. This selling pressure comes as they are telling investors now is the time to start buying again. (Business Insider)

• Pressure in commercial real estate is increasing. Office loans delinquencies reached their highest level in 6 years. (MarketWatch)

• Trouble in the Florida condo market. New safety laws are requiring older buildings to undergo expensive repairs. In some cases, the bills can reach more than $100K per unit. This is causing people to “dump” condo units onto the market and pushing prices down. (The Wall Street Journal)

Bottom Line: Rents are uneven across the country. A partial factor is the new construction that happened in the Sun Belt. Commercial real estate funds can’t keep their investors. Office loan delinquencies are rising. Expensive repairs are crushing the market for older Florida condo units.

💡 Startups

• News from OpenAI:

  • GPT-4o is rolling out. The latest model can process audio, text, and visual elements. So, you can now talk with ChatGPT if you want. (OpenAI)

  • The company has removed a team focused on AI safety and mitigating long-term risks from the technology. (CNBC)

  • Co-founder Ilya Sutskever is leaving the company. (CNBC)

  • OpenAI and Reddit have a new partnership. OpenAI will get permission to use Reddit data for training. (Ars Technica)

• CoreWeave has pulled in even more money - another $7.5B in debt. The cloud computing company already raised $1.1B in equity funding a few weeks ago. (The Wall Street Journal)

• Minstral AI is reportedly getting close to landing $600M in funding. That’s at a $6B valuation, a whole 3X its valuation just 6 months ago. (The Wall Street Journal)

• Alternative investing platform Mainvest is shutting down on June 14th. Profitability challenges as well as the impact from the failure of Synapse were cited as reasons. (Email, Mainvest)

• Raspberry Pi is set to IPO in London. The maker of cheap miniature computers could be valued at up to $630M. (Forbes)

Bottom Line: OpenAI continues to push boundaries - both in AI technology and in safety. Huge sums of investment money are still flowing to AI companies. The “AI war” is allowing them to grow valuations at unbelievable speed.

🎵 Music Royalties

• Sony is making it clear that none of its music should be used to develop AI. They sent warning letters to over 700 companies. (Art Technica)

• Spotify got a cease and desist letter from the National Music Publishers Association. It demands Spotify stop hosting unlicensed lyrics, podcasts, and music videos with their music. It also suggests things might escalate into a copyright dispute in court. (Billboard)

• The Mechanical Licensing Collective is suing Spotify. The dispute is over Spotify’s reclassification of most users as in a “bundled service.” Bundles pay lower royalty rates. (Billboard)

Bottom Line: Sony doesn’t want its music used to train AI. Spotify is getting into legal disputes with the music industry again. This time it’s about trying to skimp on royalties and licensing of things like music videos and lyrics.

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