The internet is full of myth and mystery – fact and fiction so you need to take your own grain of salt to this origin to “The Dog Days of Summer”: Ancient Greeks noticed that Sirus—which they dubbed the “dog star” as it is the brightest star in the constellation Canis Major—appears to rise alongside the sun in late July. They believed the combined power of the stars is what made this the hottest time of year. That seems as logical as Facebook overtaking Twitter or the DOW at 28,824 at the dawn of Covid and 33,944 today with today’s 10 Year T at 4.01% vs. 1.79% on Jan 15 of 2020, that same dawn.
What I want to comment on today are the capital markets influenced by those same T’s. By some measure, in 2020 over $150 Billion was deployed in venture capital vs. $76 Billion in Q1 of 2023 which some say was a decline of over 53% from 2022. And with the stats from 2019 at $150B or 2021 at $345B it’s been quite a ride. In 2023 if you take out the big deals like Open AI and Stripe, US funding dropped around 7%, and global funding fell about 9%. Kinda makes it tough to be a startup today.
So, what’s hot: PRIVATE CREDIT as a replacement for the banks becoming increasingly conservative. The amount of private debt has grown rapidly to about $1.5 trillion globally as of September 2022, from just over $300 billion at the end of 2010 and when you add the private credit market’s ability to transact in problem situations – the coming commercial real estate crash being one example in my crystal ball – you can see that checkbook growing dramatically. It will mean that we will have to pay more for money – the fuel for darned near everything. But remember, it all rolls downhill to the final consumer paying more for whatever it is we all make and sell. Ahhhhh, inflation rears its’ head yet again. https://www.cliffwaterdirectlendingindex.com/ is an interesting place to look by the way.
I do like fun facts: The dollar bill is 6.14” long so 1.5 trillion of ‘em would be 145,359.85 miles long or 5.8 laps around the earth. Or, more importantly, enough to pay off about 84% of the student loan debt in America. Gee, what might that do to improve US productivity?