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Chapter 1: What should we expect from SpaceX's trading debut?
We're counting down to the biggest IPO of the year, with SpaceX due to begin trading later today. Plus, the UK's defence secretary quits. We'll look at what it says about Europe's military readiness.
For Europe to get defence sovereignty, it really needs its traditional military powers, which is really Britain and France, to step up the plate. At the moment, it's only really Germany.
And Barclays forecasts that Harry's will outspend Swifty's. Confused? I promise you won't be in just a few minutes. It's Friday, June 12th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. We are just hours away from SpaceX's trading debut, the largest IPO ever.
Its size and value is set just shy of $1.8 trillion, and big firms and retail investors alike have their orders all lined up. But what'll happen when shares finally hit the market later today? After all, Tesla saw its stock jump 40% in its debut, and even much smaller moves from SpaceX could trigger a pause in trading, as our Caitlin McCabe explains.
I think everyone right now is really interested, obviously, in how the stock will perform today, but also just the mechanics and the plumbing around it. For most newly listed companies, a 10% swing in either direction prompts a five-minute pause in the stock.
This has been used recently, companies including the software company Figma, which debuted last year, and Cerebra Systems, which went public earlier this year. They both had their shares halted. So a very volatile launch could definitely see a repeat of that. But there are some options to help stabilize the stock if things start trading really erratically.
There is this thing that's known as the green shoe option. It essentially gives the so-called stabilization agent, which in this case is Morgan Stanley... a secret weapon to calm things down. So if the stock starts to fall severely, the bank will buy the shares in the open market, which will help buoy the stock price.
And finally, we'll be watching to see how this listing affects the broader market. SpaceX won't be included in any major index funds for several days, but there was some interesting data out from Vanda Research the other day It showed that retail investors have been selling shares of some of the really buzziest, most popular stocks in the market in the last few days.
You know, companies like Marvel Technology, Micron Technology, even Apple. And the thinking is that they're trying to amass dry powder in order to buy shares of SpaceX. So if the IPO is going really well, it's possible that retail investors and, frankly, other types of investors in the market will want to sell those shares. And that could stoke more volatility throughout the market.
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Chapter 2: How could SpaceX's IPO impact the stock market?
's Keir Starmer grapples with the surprise resignation of his defense secretary. The latest headache for European leaders balancing tough tradeoffs as they try to ramp up defense spending. We've got that story and more after the break. The UK Defense Secretary quit his job yesterday.
We don't normally cover personnel shakeups in Whitehall here, but read John Healy's resignation letter, and it's clear that it speaks to a larger trend that's playing out across Europe.
In it, addressing Prime Minister Keir Starmer, he wrote that, quote, "...you have been unable, and the Treasury has been unwilling, to commit the resources that the nation needs to defend the country at this time of rising threats." The journal's Alistair MacDonald covers the defense industry for us.
Alistair, this surprise resignation came on the same day that some officials have been expecting the U.K. to unveil its so-called defense investment plan. This is a sort of decade-long blueprint for making the U.K. Armed Forces battle-ready. Evidently, Healy didn't think it went far enough or actually accomplished that.
That's right, Luke. It was presented to him earlier this week, and in it, it promised only to increase military spending to 2.68% GDP by 2030. Of course, the UK has agreed with NATO that it will increase its spending to 3.5%. Healy's argument is very much that these are very uncertain times.
And he would point to what's been happening in Ukraine and broader security threats, as you've seen in the Middle East, where Europe's been a complete bystander. And so Europe's looking for this defense sovereignty. The idea is that for Europe to get defense sovereignty, it really needs its traditional military powers, which is really Britain and France, to step up to the plate.
At the moment, it's only really Germany. which is obviously a very large economy, the Nordics and Scandinavians and Poland, but the Nordics and the Baltics really increasing by a lot, but they're obviously much smaller economies.
Well, how much does this conundrum being faced in Britain mirror the situation across Europe? I mean, I note in your reporting, The UK military is facing this 28 billion pound hole in its military equipment budget. I'm curious if that is kind of the same.
Well, Europe is raising its defense spending quite considerably. Last year alone, Europe's defense spending increased by 16%. These come from figures from SIPRI, which is a thick tank. That outpaced the 3% increase in spending globally and an 8% real-term decline in the US. The problem for Europe, of course, is that it's not really the sum of its parts. It's not one whole wallet as the US's is.
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