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🍋 Blackstone is the new FTX

🍋 Blackstone is the new FTX

Investors are now rushing to exit Blackstone’s $69 billion fund (nice). The only problem...Blackstone probably doesn’t have the money to cover withdrawals.

December 02, 2022

'The best traders are not right more than they are wrong. They are quick adjusters. They are better at getting right when they are wrong." — Lloyd Blankfein

Good Morning! Things are starting to get a little better for the economy. The Commerce Department announced yesterday that consumer spending increased in October.

Ye pulled out of his Parler acquisition. Elon switched to working for Tesla for a day and led an event to kick off deliveries of the company’s Semi, a heavy-duty electric truck.

And the crypto world continues to make waves after the FTX fallout. Tether has reportedly been loaning $6 billion of its coins to customers, and Congress wants more crypto oversight.

Today is the last day to enter the 4-day getaway to London (which includes $500 towards travel and an experience by VinePair). Enter here. (you have a 19,467 times better chance of winning this than the Powerball lottery lol)

1. Story of the Day: Blackstone is the new FTX

You probably know Blackstone as the largest private equity firm. But the firm doesn’t only do traditional LBOs. Over the last decade, Blackstone has also grown its real estate business and become the world’s largest institutional landlord.

But after a wild Covid boom, it looks like rough times are ahead for the real estate market. Investors are now rushing to exit Blackstone’s $69 billion fund (nice). The only problem…Blackstone probably doesn’t have the money to cover withdrawals.

Blackstone pulled an FTX yesterday and told investors they’re limiting withdraws from their real estate fund. That could be a bad sign for the entire real estate industry.

Real estate is an asset class relatively harder to trade and value as is. But on top of that, commercial property is feeling the squeeze from inflation and interest rates. Blackstone has historically done really well in the real estate market, but the liquidity crunch could be here to stay.

Takeaway: News of liquidity crunches is scary, especially after the FTX debacle. The announcement makes it seem like the already faltering real estate market could be even worse than we think. Blackstone will be fine tho (it's not run by SBF lol). Fund returns are outperforming those of the S&P 500 Index. For this year through October, a major share class of the fund delivered 9.3% net returns. The fund is also heavily concentrated in urban warehouses / rental housing, areas Blackstone believes will provide strong cash flows in a downturn.

2. Markets Rundown

If you want access to Wall Street insider interviews, industry deep-dives, and investment ideas, check out our Insiders newsletter.

Stocks closed mixed as investors wait for November jobs data.

Movers & Shakers

(+) Okta ($OKTA) +26% because the identity management software provider lost less money than expected.
(+) Five Below ($FIVE) +17% after the retail company beat earnings estimates.
(–) Salesforce ($CRM) -8% after the company's CEO stepped down.

Private Dealmaking

Frore Systems, a device cooling chip manufacturer, raised $100 million
Joy, a wedding planning platform, raised $60 million
XanPool, a cross-border payments infrastructure startup, raised $41 million
Acerta Analytics, a Canadian analytics platform, raised $10.4 million
Carlyle raised $8.5 billion for its new illiquid credit fund
Blackstone will sell its stakes in MGM Grand and Mandalay Bay for $5.5 billion

A Message from Bright Cellars: Wine You Are Guaranteed to Love

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4. Book of the Day: Go For Stupid

In Go For Stupid: The Art of Achieving Ridiculous Goals, Steve teaches you how to ignore what everyone else thinks and go for big, stupid, ridiculous goals.

From organizing a private dinner in front of Michelangelo’s David to securing a tour of SpaceX led by Elon Musk himself, his accomplishments always start with the same questions: How far can I take this? What would make this a stupid achievement?

Steve examines famously stupid goals in history, the key habits of successful people, and lessons from his own career to help you let go of your fear and get out of your own way.

If you do something amazing, you will be ridiculed until you are revered. Stop overthinking and go for ridiculous, stupid goals.

Once you "go for stupid," you open the door to the life you always dreamed about.

“What would you achieve if you weren't afraid of being laughed at?”

5. Short Squeez Picks

How to stay on your ‘A’ game in a hybrid working world
Which connections really help you find a job?
How creative problem solving can help you solve complex challenges
The difference between a good and great leader

A Message from York Athletics: Your New Go-to Shoe at 30% Off…Yes, 30% Off

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