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Chapter 1: What are the details of SpaceX's IPO and its significance?
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That's how many bottles of wine are in Joseph Stalin's wine vault, which the Georgian government unsealed for the first time last month. That, I don't know if you heard, but an alien race of women have been abducting men with especially large dicks. So you're safe. And also, this spaceship is just fucking amazing.
Thank you. Thank you.
Ed, I couldn't find a joke about Stalin that wasn't really, really bad.
Yeah, I can imagine.
Really bad.
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Chapter 2: How does scarcity influence the demand for SpaceX shares?
I mean, we're recording this before Game 5, so who knows what will happen by the time this episode goes out. But vibes are electric here. I mean, this is a whole nother reason to be in New York. It's just unbelievable. And if we continue this, if the Knicks continue to be as dominant as they appear to be, I really think that this just changes the meaning of summers in New York.
I mean, this is like... everyone on the streets on a random Wednesday night until two in the morning, you can either be upset about that or you can love it. But the point is, I mean, this city is on fire right now and it's all because of the Knicks. So you're missing out. I so fucked up. I was supposed to be there this whole week. I told you this, right?
I was invited to the Chanel party, to the Tribeca Film Festival, to game two or three of the Knicks. I was gonna have such a good time and I had all these cool business meetings lined up and then
I got a little bit drunk, and I saw one of those fucking TikToks saying that 90% of the time you spend with your kids is over by the time you're 18, and I freaked out, bombed to the airport, went home, walked in thinking I was like MacArthur returning to his loving family or Phil Dumphy from Modern Family. I walk in, my two boys are there, and literally this is what I got. That's it. They nodded.
They kind of turned their head and looked up like, hey, bro, but no hey, bro, nothing. Literally nothing. And then what'd you do? Did you punish them? You got to punish them for that. I have never punished my kids once. I threatened to punish a lot. I threatened to punish. That's it. I'm taking your phone away. And then I realized they use their phone to order food for me. To order the five guys.
Yeah, such that I don't starve. And it's how they get on the subway with their phone now. Anyways, but yeah, I don't. They didn't appear to miss. I fucked up. I would love to be in New York right now. Well, you learned your lesson. Basketball and sexy parties over kids every time. 100%. What am I thinking? And now you know and can take this forward.
You have some learnings and you can change your behavior. So there's always a silver lining to messing things up. I'm going to overwhelm my imposter syndrome with sincere incompetence. I like that. I like that. That was clever. I'm going to think about that too. All right. Well, we have a lot to get into here. Shall we get into our stories? Let's do it.
Now is the time to fly. I hope you have plenty of the wherewithal.
The biggest IPO in history has finally arrived. SpaceX began trading under the ticker SPCX at $150, an 11% jump from its IPO price. And as trading began, shares rose to around $160, which is... close to 20% up from the original IPO price. The debut marks a historic milestone for Elon Musk, whose net worth has now surpassed $1 trillion.
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Chapter 3: What are the implications of Elon Musk becoming a trillionaire?
But let's start with your initial reactions to this stock finally going public. Well, if Elon Musk had a dollar for every racist and stupid tweet or thing he's ever said... Oh, wait, he does now. He does now, Ed.
You know, I try to get excited about this because a lot of people, you know, you could argue a lot of people have been made... I talked to someone here in Stockholm who works for one of the investment banks taking them out. And he reminded me, he's like, look, it's great for economic growth. There's supposedly...
more than a dozen or a dozen and a half people just in Texas who no one's ever heard of who became billionaires today. And they'll go start companies, make investments, buy things, fuel the economy. And you also see people excited about the markets, more capital flowing into the US markets. They're gonna spend that money, economic growth, GDP.
The problem I have is where I come back to earth here is that who is funding all this and where is that money coming from? And I still would argue this is the greatest transfer of wealth we've seen, at least in a short time, from retail investors to a small concentration of people since crypto. And I'm a boomer. I just look at this and I think it doesn't make any sense.
And what I think we have here, and it hasn't gotten enough discussion, is the greatest and most scaled example of manufactured scarcity. I was walking around Stockholm today and I walked by an Hermes store. And they purposely have a line. I looked in the store, it wasn't that busy, but they purposely create a line to create the sense of scarcity.
And then if you go in and try and buy a Birkin bag, they put you on a waiting list and they tell you, oh, no, no, no. And these are not complicated things to manufacture. but they want to create the illusion of scarcity or manufactured scarcity.
And what I don't think people are focused enough on here, and there's been news on it, but it's really, I think, the whole shooting match, is that Musk threatened not to go public on the NASDAQ unless they waive the 12-month requirements for him to be included in the NASDAQ 100. So they backed down, they blinked. The S&P said no, the Dow Jones said no, but the NASDAQ blinked.
And the result is they're immediately included in these indices. If it's at $2 trillion and there's $50 trillion of market cap in the NASDAQ 100, that means all the indices that track the NASDAQ 100 now have to put 4% of their assets under management into SpaceX stock, creating anywhere between $20 and call it $50 billion in additional demand that no IPO benefits from.
In addition, traditional IPO rules are that you have to issue at least 10% of your shares. They didn't, they issued 5%. So massive artificial demand or demand that no one else has benefited from, from constrained supply that no one else has been able to manufacture. And what you have is a pop, a 20% or 25% pop on what I think is manufactured scarcity.
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Chapter 4: How does inflation impact the current economic landscape?
I thought it was going to be 25% immediately. And I saw a world in which it could go even higher than that. We looked at an 11% jump right at the opening. But again, the question becomes, what is it going to look like over the next five, six, seven, eight months? What's going to happen as the lockup periods expire?
And we could also note that it has some kind of funky lockups compared to traditional IPOs, which usually there's an 180-day cliff. And instead, SpaceX has opted for this rolling release valve where they essentially let you sell your stock in days. what is essentially 20-day increments. It starts off to 70 days and then 90 days and then under 20 days.
It's a kind of complicated setup, which is designed to make it easier to sell your stock over the short term. And my assumption is we're going to see unprecedented selling. Because I think everyone knows this thing is very hot right now. It's in demand, big day on the IPO, and that is somewhat what we're seeing. But then over time, they're going to start to realize, okay, now I want to cash out.
Now I'm going to sell. And so my expectation is that the stock is going to get cut in half over the next six months as the lockup periods expire and as all of the hype and the excitement starts to wear off. There's just so many things here that lead to a transfer of wealth and power from the little guy to the big guy.
So, for example, $3.75 billion was reserved to give to, like, friends and family with no lockup. So why wouldn't they give those to, I don't know, journalists who say nice things about SpaceX or to Trump Don Jr.? Hey, we have worked with our bankers. We think there's going to be a 20% pop here. you know, would you like an easy $2 million, put $10 million in?
Not that I'm recommending this, but you can sell in the first trade if you want. We think there's going to be at least a 20% pop. And meanwhile, the retail investor who might be subject to these weird lockups is crazy. What you're effectively doing is creating a different class of stock. You're not supposed to do that. My understanding of securities law is that
When one class of stock has different trading rights than another, and you're not an insider, you've created a different class of shares. By the way, I just want to just to clarify, the retail investors actually can sell if they want to via these brokerage apps. But supposedly, if they do sell, then apparently they're going to be not allowed to buy into future IPOs.
So you're allowed to, but the platforms are setting it up to discourage you from doing that. So call it a soft lockup. Soft lockup, yeah. But when you create different conditions on the sale and purchase of a stock, you're creating a new equity unless you're an insider. Somehow, I thought that was illegal according to the SEC, but supposedly that's not legal. We don't have much of an SEC anymore.
Yeah. Yeah, so this is, again, you know, it just feels like look out below. The thing I wasn't anticipating, and I'm curious to get your thoughts on it, I would have thought that the other guys would have traded up in sympathy. And according to Mia here, Rocket Lab, Echo Star, and Space Mobile have declined 10%, 12%, and 14% respectively.
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Chapter 5: What are the latest trends in inflation data and their effects?
And in the buildup to this IPO, we saw the same thing with many of the tech names. So I think, and this is exactly what we said, I think that when you have open AI going public as well, Anthropic going public, I mean, we'll see when they go public. It seems like they're going to go public very soon, perhaps around the same time. You're going to see the same dynamic.
In order to fund that, in order to keep up with supply, as we said, this is Econ 101. When there is more supply, that results in lower prices overall. When we see that massive injection of supply, suddenly investors are going to have to think, okay, how do I get in? I'll trim my position in Tesla, I'll trim my position in these tech companies, and that way I can get into these stocks.
So that is exactly what we're seeing right now in the space market itself. You also mentioned the idea of different classes of shares here, which I think is very important and it's especially important as it relates to Elon Musk. who will retain 82% of the voting power of this company, which is now one of the top 10 most valuable companies in the world. It's more valuable than Tesla.
He owns 82% of the voting power. He picks the board. He cannot be fired by anyone other than himself. He has also required shareholders to unconditionally waive the right to jury trials and class action lawsuits because he has PTSD from being sued by Tesla shareholders. And of course, he is also incorporated in Texas.
And as we've discussed on the show, the Texas Business Court is famously weak on protecting shareholders. It's very pro-founder, it's very pro-CEO, it's very pro-insiders. 82% of the voting power, I mean... Maybe that makes you confident because you really trust Elon.
But if you don't trust this guy, if you don't trust his judgment entirely, if you think that he's spending the majority of his time on ketamine or whatever you think, That's a terrible number to see. I have noticed that some pension funds are opting out because of that number. What do you make of that from a governance perspective?
Well, so corporate governance is based on governance, and that is it's supposed to be one share, one vote, like one man, one vote, right? That's the idea, that if you want to attach economic sacrifice or risk to governance,
So ideally what you want in a company is that if 51% of the shares vote for a certain action to fire the CEO or to sell the company or to put in place certain initiatives, that they, given that they've put 51% of their capital at risk, that they get 51% of the vote. Dual-class shareholder companies basically separate ownership from authority.
And it initially was invented by owners of newspapers and media companies who said, we're worried that a bad person's going to come in and use their economic power to buy a great media company and use it for their bad actor means. Google's founders were the first to demand a dual-class shareholder company and want to maintain control with a minority position.
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Chapter 6: How is FIFA's World Cup ticket pricing strategy affecting fans?
I hope he goes to Mars and then Houston says, this is an incredible step for mankind and then cuts off all communication from him. I don't know. So the question, rather than preaching, I think he asked people, where are they actually putting their money? I haven't shorted a stock in a long time.
And I don't think I'm going to short SpaceX because it's a meme stock and it's just, you know, and I wouldn't recommend that to anybody because I shorted GameStop during the meme phenomena and I shorted it at $400. And the next morning it went to 600 and I was sitting there going, but it makes no sense. It's like the markets like hold my beer on what makes sense or what doesn't. Right.
And fortunately I had the capital to hold on and ended up making money. What I am considering doing is looking at all these other, I thought all these different AI and space companies were all gonna trade up. I think there's a lot of crap out there. I think there's a lot of AI companies trading for a billion or 3 billion that are basically
I think there's that one food delivery thing that has these little robots. All Buds, the new AI company. Whatever it is, right? I think there's a lot of, for the first time, and again, not financial advice is what I'm, I'm getting a list of kind of a dozen companies that have benefited from this AI, you know,
IPO mania, and I'm going to create a basket and do some long-dated puts, out-of-the-money puts. Because this does feel, I am now confident saying, this absolutely feels like 99 again. I mean, this does feel... This changed the game. This SpaceX IPO changed the game, for sure.
100%. Your thoughts, Ed?
No, I think that's interesting. I personally... won't because I'm afraid of shorting and I just think that it's such a difficult game to win. But I do want to see your basket and maybe I'll change my mind once you send it to me. We'll be right back after the break. And if you're enjoying the show, send it to a friend and please follow us on YouTube, Spotify, or wherever you get your podcasts.
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Chapter 7: What are the economic implications of the World Cup on local markets?
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Inflation rose 4.2% in May from a year ago, marking the highest reading in three years. Meanwhile, real wages fell for the second straight month, meaning Americans are once again seeing prices rise faster than their incomes. That puts even more pressure on the Federal Reserve ahead of Wednesday's interest rate decision.
It'll be the first meeting with Kevin Walsh serving as governor, and investors are increasingly betting that the Fed may need to stay aggressive on Kalshi. The odds of a rate hike before 2027 have climbed to roughly 50%, and if you remember at the start of the year, the odds were in the single digits. So, Scott, this inflation report, we're up to 4.2%.
I'll just point out that before we had the tariffs, essentially the inflation that Trump inherited was 2.3%. Then we put on the tariffs and it rises to 3% within a year. And then we add this war in Iran on top of that. and a strait that remains blockaded. And we keep on hearing about a deal, but then we also see that we're striking Iran, striking missiles in Iran.
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Chapter 8: What predictions can be made about the future of SpaceX and inflation?
I'm like, I don't even agree with what I'm saying, but it's too late. You've crossed the chasm. You've staked your reputation in that moment at dinner on whatever your point was, right?
The problem is when you're supposed to be a leader, you're supposed to be able to have the maturity and be a fiduciary for other people's responsibility to basically not fall into the trap of the dominion of failure and go, you know what? I fucked up, I was wrong. And my intentions were good, but I was wrong. We need to change policy.
A step back from the wrong direction is a step in the right direction. There is no getting around that anyone like myself that was supportive of military action in the beginning, based on how this has played out and the incredible incompetence and lack for coordination of our allies, lack of respect,
for briefing Congress, our inability to trust that Trump would understand anything about game theory and basically saying, I'm out of dodge, but you better do what I say as he's leaving, realizing that not only does he have no cards, but his cards are turned upside down and they can see our cards. This has been a fucking disaster.
And anyone advocating for it has to, like myself, I remember having Fareed Zakaria on and Fareed and I agreed that this was worth the risk. Looking back on how this has been executed, this has been a mistake of epic proportions. It has left us with literally no good options at this point. I understand the calls to withdraw immediately, take our licks.
My attitude is at this point, it's quite frankly, It's hard to leave right now. And this is the quagmire because we're gonna end up with less than nothing if we don't show a willingness to at least go some distance. At the same time, I understand the calls of like, let's just take our licks and get out. But just to summarize here, this has been an unmitigated disaster.
And one of the unfortunate thing about our politics and our systems, and quite frankly, the public, is that the public appears to want leaders that will double down on something wrong rather than ever say, ever acknowledge, Yeah, we think we made the right decision given the information we had at the time. It was the wrong decision, and we're changing course.
No politician ever gets rewarded for that type of maturity right now. And so what do we see? Everyone just doubles down, doubles down, and goes further down into the dominion of failure. 100%. And this is what Trump's philosophy is all about. His slogan is, or at least from reporting, and if you go watch the movie The Apprentice, you know this, his slogan is never admit defeat.
The Roy Cohn method of communications. That was who he learned it from. And now it does appear that that philosophy is governing global geopolitics, and as a result... the entire economy of America. And I think it's such an important and good point, this dominion of failure point, because, I mean, we should, I think it's such a respectable thing to change your mind and to
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