📰 This Week…

• Consumer confidence drops.

• SREIT limits investor redemptions.

• A French AI company raised $220M… for their seed round!

• Colorado takes a step forward with AI regulation.

• The National Music Publishers’ Association writes to congress amid anger over Spotify “bundled” subscriptions.

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: 6.94%

  • (-1.1% WoW, -3.2% MoM, +5.6% 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, -7.2% YoY)

💸 Economy

• Consumer sentiment reached the lowest level this year. The index’s reading of 69.1 was about a 10% drop from April’s 77.2. (University of Michigan)

• With sentiment poor, why does consumer spending remain strong? Sentiment may be poor because things like buying a house are out of reach for many. Instead of saving for them anyway, consumers are just spending to enjoy today. That keeps spending strong, even though consumers feel worse about the economy. (Fortune)

Bottom Line: While consumer sentiment is still weak it may not have as much of an impact on consumer spending, which still remains strong.

🏠 Real Estate

• Redfin’s CEO is expecting an improvement over the second half of 2024. This is dependent on a cut to interest rates though. In his view, the mortgage markets have already priced in this cut. (Fortune)

• Commercial real estate is also challenged in Europe. In the first third of the year, investors withdrew over €10B from real estate funds. These redemptions may strain available liquidity. That could force the funds to sell assets, complicating the market. (Fortune)

• The housing market is booming - in California. The median home price just reached $900K for the first time. The surge in being partially attributed to the rise of highly valued AI companies. (USA Today, Yahoo! Finance)

• Starwood Real Estate Income Trust is moving to limit investor redemptions. The new restrictions translate to about $400M of allowable withdrawals per year. Starwood is trying to avoid needing to sell properties at the bottom of the market to meet the requests. (The Wall Street Journal).

• Arrived Homes launched a private credit fund. The fund is open to non-accredited investors and targets a 7-9% return. (Arrived)

Bottom Line: More voices suggest the housing market might improve this year. California set a new median sales price record. Commercial real estate funds continue to struggle around the globe.

💡 Startups

• AI companies continue to rake in funding:

  • Scale AI announced they received $1B in new funding. This doubles their valuation to $13.8B. Scale AI provides training data for AI. (Inc., TechCrunch)

  • DeepL raised $300M at a $2B valuation. This company specializes in language translation. (CNBC)

  • Helsing raised $400M with a $4B valuation. Helsing is a European-based AI company that works with the military. (Forbes)

  • We’ve written about Suno before. They’re working on using generative AI to create music. They also just raised another $125M in funding. (Billboard)

  • A French AI company, H, has raised a shocking $220M for their Seed round. The hefty sum is due in large part to the founding team. They’re high-profile veterans of Google’s DeepMind. (TechCrunch)

• Colorado takes a lead on AI regulation. Earlier this week they passed the first law related to discrimination in AI systems. The law focuses on “high-risk” areas such as health care, lending, and employment decisions. (Forbes)

• They’re not the only ones doing well though.

  • Rapport Therapeutics has filed for an IPO. The company has raised about a quarter billion dollars in private markets. This includes investment from Johnson & Johnson. (Reuters)

  • The recent increase in cryptocurrency prices has been good news for blockchain companies. Crypto startups saw a 40% increase in funding compared to the last quarter of 2023. (Inc.)

  • Navan is a company focused on managing business travel. According to the CEO, this $9B unicorn is about to reach profitability. They also have a future IPO in sight as well. (CNBC)

  • Grafana Labs is reportedly in talks to raise $300M+ at a $6B valuation. (Forbes)

• Lux Capital’s co-founder believes that the number of VC firms will be cut in half over the next few years. This will be due to his belief that many will fail as investors lose interest in small funds. (MarketWatch)

• Things at a weapons startup with $85M in funding and run by a 19-year-old aren’t going well. It’s a story that’s more interesting than surprising. (Forbes)

Bottom Line: AI companies continue to pull in vast sums from investors. There are other corners of the startup ecosystem doing well too. After years of expansion, the number of venture funds could shrink in future years.

🎵 Music Royalties

• The Spotify “bundling” dispute continues. The National Music Publishers’ Association (NMPA) has written to congress requesting changes to copyright law. The NMPA wants mechanical royalty rates to be negotiated in a free and open market. NMPA believes that change would give songwriters more power in negotiations. (Billboard)

• The US Department of Justice and 30 states have filed a lawsuit against Live Nation. They believe the company holds unlawful control of the live entertainment market. (Billboard)

Bottom Line: More fallout from Spotify reclassifying most of their subscriptions as “bundled” packages. DOJ files suit against Live Nation.

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