SPACE X debuted Friday as the largest public offering at $75 billion, and oversubscribed a company now valued as $1.75 trillion…and growing each day. At close Friday, last week, its raw value was $2.1 trillion. For several days investors and traders have been preparing, rotating, adjusting portfolios and pivoting capital in order to buy this supposedly “once-in-a-lifetime massive offering in this artificial intelligence era. One investor, a 20 year old, requested 10 shares of SPACE X on the initial IPO, only to receive 1. He purchased 9 more, happy to be involved! Under the stock symbol SPEX, the IPO was priced at $135.00, heavily over subscribed, it closed the day up 20%. The next session another 20% up, now trading over $200.00 a share. “Everybody is selling something to be able to buy the IPO,” said Slovik Kolosnik, a portfolio manager at Leader Capital. Brent Crude, the world’s oil barometer, dropped 2.92%, to $90.38 a barrel while West Texas Crude fell to $84.29 a barrel. Many oil analysts are calling for severe drops as a permanent solution for the U.S. Israeli/Iranian war is finalized. (Several prominent ‘Hawks’ are unhappy with President Trump’s stance on the wording of the final peace agreement, calling his actions weak and conciliatory). President Trump posted on Social Media that he was “canceling strikes on Iran” as negotiations were at 80% to 85% chance of “finding a deal.” Stocks were positive Friday as indexes were higher, reflecting a “near settlement.”
Oil dropped and stocks surged Monday as investors and traders were optimistic after President Trump’s announcement: “a deal to end the war with Iran and reopen the Strait of Hormuz has been reached.” Oil prices immediately back-tracked, as Brent Crude fell 4.8% to $78.00 a barrel, with expected pump prices to drop significantly. European natural gas, exceedingly high the past 12 months, “tumbled,” giving relief to many regions severely affected. U.S. stocks churned higher with the Dow Jones Jones Industrial Average climbing 0.9% or 468 points, hitting a new record for the 16th time this year. Heavy burying of techs, AI and semiconductor stocks drove the Nasdaq Composite to yet another record high while the PHL Semiconductor Index gained 5.5%. The ‘bread-and–butter’ S&P 500 added 1.7%. “The market is interpreting this as the economy is going to get better,” said Joseph Brusuelas, chief economist at RSM. Market focus is building in anticipation of the release of the Federal Reserve report due Wednesday, the first release since the hire of Kevin Warsh as Chief. Early expectations of a rate cut have turned to a possible rate increase brought on by the excessive rise in energy prices and ‘more than creeping inflation numbers.’ Tuesday’s session was all about SPACE X as the booming IPO continued to appreciate, up 50% the first few days, with a valuation exceeding Amazon, presently “the 5th largest company.” Indexes were hesitant Tuesday, with both the S&P 500 and Nasdaq dropping 0.6% and 1.2% respectively after a vigorous Monday. The Dow Jones see-sawed early in the session, finishing up 0.6%
Wednesday opened strong as the Dow Jones Industrial Average marched to a record high of 52227, up 270 points before Fed Chief Kevin Warsh’s decision. The Federal Reserve decided to “hold rates steady in the range of 3.5%-3.75%” as per Chief Warsh. His comment: “the committee will deliver price stability,” was interpreted by the street as…negative. Stocks slid downward, with all three indexes losing near 1%. The bond market was stronger as the 10-year Treasury note edged up to 4.5%, while the 2 year Treasury note finished up at 4.2%. Benchmark Crude closed Wednesday at $76.79 a barrel.
RUMBLINGS ON THE STREET
Callie Cox, chief market strategist at Ritholtz Wealth Management, WSJ – “The Fed is at a point where it can’t ignore inflation. I’m not surprised the world has shifted to a higher interest rate mindset.”
Kevin Warsh, Federal Reserve Chief, WSJ – “We have the capability and commitment to deliver on our price stability objective. That’s exactly what we’re going to do.”
Bob Eliott, Unlimited Funds Chief Executive, WSJ – “Today’s equity market faces one of the biggest shifts in supply we have seen in some time. Asset markets may be in for a tough second half digesting this supply.” (Referring to the reduced shares available due to buy–backs and fewer IPO’s)
