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Weekly Newsletter
🚀 SpaceX Debuts With Record IPO
💰 Elon Musk Becomes World’s First Trillionaire
📅 SpaceX Post-IPO Timeline
📊 Key Takeaways From This Week’s Earnings
🏦 ECB Hikes For First Time Since 2023
QUOTE OF THE WEEK:
“I think over time, certainly space becomes a market for power. You do have 24/7 solar power in space. We use that already for space programs and satellite programs, so it's a known quantity and a known entity. We only use probably less than 1% of the sun's solar power on Earth, so we could use a lot more when we're in space.” - James West, Melius Research Managing Director and Head of Energy and Power Research
KEY US ECONOMIC EVENTS NEXT WEEK:
MARKET CLOSE:
WEEKLY MARKET WRAP:
Good Afternoon. All major indices recorded ~0.7% gains for the week. This is great news as the largest IPO in history debuted this week and markets ended positive despite investors getting out of some of their winning positions to invest in SpaceX.
Below are the key things to note this week:Not too bad news on inflation:
Core CPI rose 0.21% m/m (SA), down sharply from the prior month's pace, suggesting limited pass-through from higher energy prices into underlying inflation. Inflation breadth improved modestly, with price pressures becoming slightly less widespread. Roughly one-third of the CPI basket is still rising above 4% y/y, while about half remains above 3% y/y.
FOMC next week:The FOMC meeting is scheduled for next week. The Fed will for sure keep rates unchanged next week and the probability of rate cut this year seems 0 with inflation above fed target and good economy. It will be good to see what new Fed chair has to say in his first FOMC press conference.
Elon Musk Becomes First Trillionaire:
In Oct 2024, I wrote about possibility of Elon Musk becoming worlds first trillionaire by 2027. However, thanks to the successful SpaceX IPO, he achieved that milestone well before it this week. This again hilights the importance of equity exposure. Elon Musk is one of a kind but we can bet on entreprenuers like him by buying good stocks/businesses and benefit by the compounding.
For the week:
CNN's Fear & Greed Index now stands at 34 (Fear) out of 100, down 8 points from last week. Details here
The top five trending stocks on Reddit are SpaceX, SPY, Virgin Galactic, Microsoft, and Micron. Read More
Liquidity:
Banking Reserves + ON RRP: Banking reserves remain at approximately $3.11 trillion. ON RRP balance remains immaterial.
Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) is $0.
Here is a summary of this week’s key economic releases:
Target Rate Probabilities for June 17th FOMC Meeting:
CME Fed Watch
CURATED INSIGHTS & ANALYSIS:
SpaceX: The Real Test Starts Next Week:
Primal Thesis
SpaceX cleared its first hurdle with exceptionally strong demand despite being one of the largest and most anticipated IPOs in market history. Retail investors received roughly 20% of the allocation—an unusually large share by IPO standards—even as institutional demand reportedly overwhelmed the book. The stock avoided the stabilization measures often seen during major listings, a successful debut that could help reopen the IPO window for other late-stage private companies.The more interesting story, however, is not the IPO itself but the market mechanics that follow. Options trading is expected to begin shortly, introducing a new layer of price discovery. Investors can now express views not only on direction, but also on timing and volatility. Historically, many IPOs experience heightened volatility once options markets develop and traders gain additional tools to express both bullish and bearish views.
The key question is no longer IPO demand. It is whether future demand can absorb future supply.
SpaceX is expected to enter several major indexes within days and weeks of listing, creating incremental demand from passive funds and ETFs. At the same time, the company has a relatively small tradable float compared to its roughly $2.1 trillion valuation. Unlike traditional IPOs with a single lockup expiration, SpaceX's lockup structure includes multiple release windows tied to time, price, and performance milestones. Retail-related restrictions begin first, followed by insider selling windows expected to open roughly 35 to 90 days after the IPO.
Forced Index Buying vs Tradable Float
Primal Thesis
The key debate is not SpaceX's $2.1 trillion valuation but its much smaller tradable float. BNP estimates roughly $30 billion of near-term passive buying from index inclusions, while the current float is estimated at approximately $85 billion, or about 4% of the company. In other words, the expected passive demand represents nearly one-third of the shares available for trading. Whether the estimate ultimately proves too high or too low, the broader point remains: flows are large relative to supply. The setup becomes even more interesting because passive inflows arrive before meaningful lockup-related supply enters the market.
The timing adds another layer of complexity. IPO settlement coincides with corporate tax payments, Treasury settlement activity, and a Federal Reserve meeting week. None of these events is unusual on its own, but together they create an early test of market liquidity just as investors digest one of the largest technology listings in history.
For now, demand appears to have the upper hand. However, the next phase will likely be determined less by IPO enthusiasm and more by the interaction between passive inflows, lockup-related supply, and the company's first earnings report. The first few trading days rarely tell the full story. The next few months will.
Key takeaways from this week’s earnings:
Pricing the AI bill, not the revenue
The market is no longer willing to pay for AI revenue. It is watching the AI bill. Oracle's RPO surged 363% to $638 billion, yet the stock fell. Investors already know demand is there. The question is whether Oracle can convert that demand into cash while spending roughly $95 billion on capex and raising additional capital to fund the buildout.A beat is no longer enough
Oracle and Adobe both beat expectations and raised guidance. Both sold off. When expectations are stretched, investors need something incremental. Strong results are becoming the starting point, not the catalyst.Housing is bending, not breaking
Lennar cut delivery guidance and reported lower earnings, but incentives fell to 12.9% from 14.1% last quarter. That suggests pricing pressure may be easing, and margins could be finding a floor despite affordability challenges.The consumer is healthy; pricing power is not
Casey's delivered a strong quarter while Smucker lowered its sales outlook as coffee prices normalized. Consumers are still spending, but the pricing tailwind that supported earnings growth over the last few years is fading.The market is asking a different question
For the last two years, investors rewarded growth. Today, they are focused on what that growth costs, who is funding it, and how concentrated it is. Backlogs and bookings are no longer enough. Investors want cash flow.
FRONT PAGES:
May CPI 4.2%, PPI 6.5% — Both Hottest in 3+ Years: Headline CPI rose 0.5% MoM and 4.2% YoY Wednesday — highest since April 2023 and a fourth straight monthly acceleration (2.4% Jan → 3.3% Mar → 3.8% Apr → 4.2% May). PPI followed Thursday at 1.1% MoM and 6.5% YoY — highest since November 2022. Both reads were energy-driven (gasoline +40.5% YoY at retail, +23.4% at wholesale); the bright spot was soft core (CPI 0.2%, PPI 0.4%). CME FedWatch now prices ~0% chance of a 2026 cut and >70% odds of a hike by year-end. Goldman has pushed its expected cut to 2027. Read
ECB Hikes for First Time Since 2023: The ECB raised its deposit rate 25 bps to 2.25% Thursday — the first hike of the cycle — explicitly citing the Iran war as the inflation driver. Lagarde flagged "robust" support across scenarios and signaled at least one more hike possible. Staff projections revised: 2026 headline inflation to 3.0% (from 2.6%), 2027 to 2.3% (from 2.0%); GDP cut to 0.8%/1.2 %. First DM central bank to actively tighten since the war began; widens the policy gap with the BoJ and BoC (which have held with a hawkish twist). Read
Trump Cancels Iran Strikes; Crude Sheds Nearly $10: Trump posted Thursday afternoon June 11 that he had canceled "scheduled strikes and bombings against Iran this evening" — hours after threatening to hit Iran "VERY HARD TONIGHT" — claiming approval at "the highest level of Iranian leadership" for a draft pact extending the ceasefire, reopening the Strait of Hormuz, and launching 60 days of nuclear talks. Iran's Fars denied any final agreement had been reached. Brent ended the week near $84, down nearly $10 from the weekly peak; gold sold off sharply. Read
OpenAI Files S-1, Weighs Steep Token Price Cuts vs Anthropic: OpenAI confidentially filed its IPO prospectus Monday — a week after Anthropic — at an $852B valuation, targeting a Q4 listing at potentially $1T+. The WSJ and Bloomberg reported Thursday that OpenAI is mulling drastic API token price cuts to counter Anthropic, whose run rate scaled from $9B to $47B in five months and which (per the Ramp AI Index) now has more paying customers than OpenAI. ChatGPT's share of generative-AI web traffic has slipped from 77.6%; OpenAI lost $1.22 per $1 revenue in Q1. The two are projected to spend $65B combined on compute in 2026. Read
Cook Out Sept 1; Apple Pays Google $1B/Year for Gemini Siri: Tim Cook used Monday's WWDC keynote — his last as CEO — to confirm John Ternus takes over September 1. Apple's headline reveal: a rebuilt Siri AI running on a custom 1.2T-parameter Gemini model, reportedly costing Apple ~$1B/year. The candid admission of an AI model gap is itself the headline: $3.4T Apple now pays Google to be its model layer, tightening the Apple-Google partnership and turning iOS into the largest Gemini distribution surface. Read
EARNINGS UPDATE:
Oracle. Non-GAAP EPS $2.11 versus $1.96; revenue $19.2B, up 21%. Total cloud revenue rose 47%, and OCI infrastructure jumped 93%; remaining performance obligations exploded 363% to a record $638B on large AI contracts. But capital spending is guided toward roughly $95B next year, free cash flow ran deeply negative, and about half the backlog ties to OpenAI. Shares fell about 8%.
Adobe. Non-GAAP EPS $5.96 versus $5.82; record revenue $6.62B, up 13%. AI-first ARR tripled past $500M, and total ARR reached $27.1B; Adobe raised its full-year revenue and EPS targets. Even so, a surprise CFO departure — leaving its top finance and CEO roles unsettled — plus a freemium-driven deferral of subscription revenue sent shares down nearly 7%.
Lennar. Diluted EPS $1.24, about $1.31 excluding mark-to-market; revenue $7.94B, just shy of estimates. The builder delivered 20,519 homes; gross margin improved sequentially to 15.6%, and sales incentives eased to 12.9%, a tentative positive. But it trimmed full-year delivery guidance to 82,000–83,000 homes on rate pressure, and shares fell about 5%.
Casey’s General Stores. Diluted EPS $4.37, up 66% and well past $3.36; revenue $4.57B, a clear beat. Inside, same-store sales rose 5.5%, and fuel margins jumped to 46.9 cents a gallon; full-year EPS hit a record. The dividend was raised 14% for a 27th straight year, and Casey’s joined the S&P 500. Shares held near record highs.
Chewy. Net sales $3.36B, up 7.7% and a slight beat; GAAP EPS $0.23, roughly in line. Adjusted EBITDA rose 31% to $253M with margin up 130 basis points; active customers reached 21.5M, and Autoship was 84% of sales. Shares, down sharply over the past year, bounced about 3% on the print.
J.M. Smucker. Adjusted EPS $2.77, up 20% and past $2.64; net sales $2.3B, up 6%. Coffee and Hostess drove profit growth alongside continued momentum for Uncrustables. But the FY27 outlook calls for sales to fall 3–4% as coffee prices deflate and the company leans away from price increases. Shares held near recent highs.
EARNINGS PREVIEW:
Date | Symbol | Name | Time |
18-Jun | ACN | Accenture Plc | Before Open |
23-Jun | FDX | Fedex Corp | After Close |
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