Bulls vs Bears EP123: MEGA IPO Season
Markets whipsawed from panic to euphoria in the span of five days — a May CPI print of 4.2% (the hottest in over three years) pushed the Dow below 50,000 mid-week, before a surprise Trump-brokered Iran deal sent oil tumbling 4% and chip stocks surging 8% on Thursday. Add the…
This week had everything. Scorching inflation data. A geopolitical whipsaw. The largest IPO since Alibaba. And by the time Thursday's session closed in the US, markets were pricing in a world that looked meaningfully different from the one investors woke up to on Monday. The week began in the aftermath of Freakout Friday — last Friday's brutal session in which the Nasdaq cratered 4.2% after May payrolls printed 172,000 jobs against an 85,000 estimate, repricing Fed rate hike odds from 67% to 100% by December. That sentiment carried into early this week, setting up a tense few days. Then Wednesday delivered the gut punch. May CPI came in at 4.2% year-on-year — the highest reading in over three years. Gasoline is up 40.5% annually, a direct consequence of the Strait of Hormuz closure now entering its fourth month. The Dow broke below 50,000 for the first time. Super Micro Computer collapsed 28% on a $7 billion equity raise. Even gold, typically the go-to in risk-off environments, shed 4.4% in a single session as a surging US dollar and margin calls overwhelmed safe-haven demand. The bright spots in the inflation report were real but limited. Core CPI came in at 2.9% year-on-year — slightly below the 3.0% estimate — with core goods actually declining month-on-month for the first time this year. But with headline PPI printing at 6.5% YoY (a 3.5-year high) and real wages negative for a second consecutive month, the Fed is in an extremely difficult position heading into next week's FOMC meeting under new Chair Kevin Warsh. Then Thursday changed everything. President Trump announced a comprehensive 12-nation Iran deal, with the Strait of Hormuz set to reopen upon signing. Oil dropped 4% on the news. Semiconductor stocks surged 8%. The Nasdaq posted its best single session in over two months. Micron — which had been down 13% mid-week — closed the week up more than 10%. Gold recovered 2.4%. The mood shifted from capitulation to cautious optimism in a matter of hours. The SpaceX IPO: Ambition Priced at 90x Sales Lost in the geopolitical noise was one of the most significant corporate events in years. SpaceX priced its long-awaited IPO at a $1.75 trillion valuation — a $75 billion raise that attracted more than four times demand, with 30% of shares allocated to retail investors. In Australia alone, over 30,000 CommSec accounts bid for stock. The bull case rests on Starlink's already-substantial recurring revenue, Falcon 9's near-routine launch cadence, and Starship's promise to compress the cost per kilogram to orbit by orders of magnitude. Baillie Gifford — which invested at a $31 billion valuation back in 2018 — points to exactly that metric as the long-term value driver. The bear case is equally hard to ignore. Short-seller Jim Chanos called the valuation unjustifiable on any reasonable assumptions, noting SpaceX trades at 90x sales versus Tesla's 14x. Morningstar puts fair value at $63 per share (below the IPO price), with its bullish "moonshot" scenario assigned just a 7% probability. Goldman Sachs estimates the initial ~30% float could grow to ~46% within a year — nearly $1 trillion of new equity supply entering the market by mid-2027. SpaceX begins trading tonight (Friday, 12 June) at approximately 11:30pm AEST. ASX 200: Resilience in the Storm Against all of this, the ASX 200 held up remarkably well. The index closed the week down just 0.81% — a fraction of the Nasdaq's 3.81% drawdown. Today's session is broadly positive, led by resources and materials on the back of the Iran deal. BHP surged 3.5% as oil's decline improves global manufacturing cost outlooks. Rio Tinto added 2.4% on copper and iron ore strength. Wesfarmers rose 2.56%, and Goodman Group gained 2.24% on continued AI infrastructure demand — Google backstopping a $35 billion Anthropic data centre deal supports the sector's thesis. The week's notable casualty on the ASX was REA Group, down around 15% since the Federal Budget. The Albanese government's announced abolition of negative gearing for existing properties (from July 2027) and a new 30% minimum CGT rate have hammered property-linked stocks. Citi cut REA's FY27 profit forecast 6% and trimmed its price target by 10% to $181.15. Westpac is reporting investor loan applications down 20% in three weeks post-Budget, and hedge funds have doubled short positions in Australian banks to record levels. What to Watch Next Week The calendar is dominated by two major risk events. The Fed FOMC meeting (June 16–17) is Kevin Warsh's first as Chair. Markets are pricing in a hold at 3.50–3.75%, but Warsh is widely expected to drop the easing bias entirely and signal that rate hikes are back on the table. With CPI at 4.2% and PPI at 6.5%, maintaining a dovish stance is no longer credible. The press conference will be the key moment — any hint of 2026 hike timing could reprice equities sharply. The Bank of Japan is also meeting, with a 25 bps hike to 1.00% widely expected. A wrinkle: Governor Ueda has been…
Read on MPC Markets Mosaic
