SpaceX Underwater Buyer…Sanders Turns to Artificial Intelligence…Kashkari Calls for a Walk
Listen to the audio version of this article (generated by artificial intelligence).
SpaceX Fades Just as Data Predicted… The Political Flood Is Rushing into Your Portfolio… The Fed’s First Rate Hike Call and What It Means for AI Investors
Nearly three weeks ago, we urged readers to stay away from SpaceX’s IPO.
Who we have 6/11 digest:
Don’t do it – don’t buy SpaceX (Spex) Subscription tomorrow. Or, if you insist, at least do it with your eyes open.
Behind this warning was 45 years of history of US IPOs – more than 9,300 offerings, compiled and analyzed by Professor Jay Ritter of the University of Florida, who is considered the world’s foremost academic authority on IPOs.
In short, the average investor will not be able to buy SPCX at the IPO price. By the time they can get in, the stock will have already traded at an inflated price on day one (history shows an average of 19% on day one).
Data suggests that after the initial rise, the stock will see a significant pullback, leaving casual buyers underwater.
History likes to repeat itself – in more ways than one
First historical recurrence?
The SPCX rose 19.2% on its first day of trading – exactly in line with the 45-year historical average.
Second iteration?
The average investor who bought at the end of the first day’s rally or shortly thereafter and still holds on is already taking a loss.
according to CNBC On June 18, the five-day volume-weighted average price was around $182. As the price of SPCX moves near this level, CNBCHis conclusion at that time was:
The average investor who bought SpaceX shares on the open market after their debut saw almost all of their gains disappear…
The average post-IPO buyer is now close to breaking even.
As I write on Monday, with SPCX shares trading roughly 21% below their June 18 level, this average post-IPO buyer is now suffering a double-digit loss — just as history predicted.
Let’s move on to legendary investor Louis Navellier from last week Accelerating profits June issue:
Some investors have learned a hard lesson recently…
During the frenzy surrounding the IPO, people forgot an important fact: SpaceX won’t be profitable until at least 2028.
Too many investors are chasing companies that don’t deliver earnings growth, like SpaceX. Not a smart strategy, in my opinion.
Lewis has built his career – and track record – on the opposite philosophy
His approach focuses on finding companies with accelerating earnings and strong fundamental scores, the type of companies that don’t need a hype cycle to justify their pricing. When profits drive the story, the math works in your favor from the beginning.
Here’s Lewis as the math works today as he looks ahead to the start of the second quarter earnings season:
If you want to make money, you should invest in companies that make profits – for example, technology stocks.
According to our friends at FactSet, IT sector earnings estimates have been revised by more than 7% since the start of the second quarter.
The sector is now expected to deliver average earnings growth of 59.6% in the second quarter, up from estimates of 48.7% at the end of the first quarter.
Can we measure this earnings power and turn it into an expected return for the technology sector?
Yes – FactSet has already done that for us. It shows that based on earnings forecasts, analysts expect the IT sector to rise by 26.5% over the next 12 months.
Meanwhile, the earnings strength in the technology sector is notable. Here’s a FactSet with the data:
Overall, 62 out of 74 companies (84%) in the IT sector saw their average EPS estimates increase (since March 31).
Of these 62 companies, 23 companies reported an increase in their average EPS estimates of more than 10%.
FactSet Flags intel (Intech), SanDisk (Your support), micron (in), and nvidia (NVDA), Among other things, with increasing EPS leaders.
These names are unlikely to surprise anyone who follows the AI trade…
This is the exact point that Lewis makes in his latest research package.
When 50 million investors are working with the same tools and arriving at the same conclusions, the most obvious winners can quickly get crowded out.
The smart money – what Lewis calls “elephants” – tends to move before crowding peaks, and to position themselves quietly in the middle of the peak. the next Opportunity while everyone is still celebrating the last chance.
That’s the thesis behind his Precursor intelligence system, and has just recorded a free presentation that walks viewers through where institutional “elephant” money is currently moving. You can watch it here.
Now that we’ve come full circle on SPCX, tech profits, and where to get money now, I’ll give Lewis the final word:
Our AI and data center inventory has a three-year order backlog. Thanks to accelerating earnings growth These stocks should deliver impressive performance through 2029.
The AI and data center boom simply cannot be stopped!
Investors who understand this reality and organize their portfolios accordingly will see big profits in the months (and years) to come.
Maybe not if a growing group of politicians in Washington get their way…
At the beginning of the year, while our analysts were revealing their market forecasts for 2026, I made a call of my own
This year will bring a wave of controversial new legislative proposals targeting investment wealth – proposals that may not pass immediately, but will introduce a new layer of political risk that investors will have to take into account.
This prediction was validated in stages throughout the year.
For example, in January, California’s Billionaire Tax Act began collecting signatures. It’s now on the ballot in November (I’ll note that the bill contains language that critics — including Wall Street Journal (For example, it allows the legislature to expand eligibility without voter approval.)
Then, at the beginning of the month, Senator Elizabeth Warren, Democrat of Massachusetts, published an op-ed in time Call for new taxes on AI and higher capital gains rates.
And now, for the biggest one yet…
Just over a week ago, Sen. Bernie Sanders, D-Va., introduced the AI-Based US Sovereign Wealth Fund Act. It imposes a one-time tax of 50% on the shares of every major AI company with annual revenues of more than $200 million, with those shares going into a government-run fund.
To be clear, this is not a 50% tax on Profits – It’s a 50% tax on justice.
I feel like “tax” is not the right word to use there…
Trend recognition
Now, let’s be real: This bill will not pass under the current Congress.
But my January predictions were never about traffic. It was about the political path – and where that path pointed.
Last week, three Democratic Socialists swept their New York primary races, all with the support of New York City Mayor Zahran Mamdani, whom we pointed to in January as a sign worth watching.
One of those New York Prize winners – Darialisa Avila Chevalier – had a social media post in 2019 calling for “seizing the means of production.” She won anyway.
None of this requires that you have a political opinion. What it takes is for you to trace the trail – from California’s wealth taxes, to Warren’s op-ed, to Sanders’ stock takeover proposal, to the three Democratic Socialists of America candidates heading to Congress (their districts are overwhelmingly blue) – and ask yourself…
What does the political landscape look like as the 2026 and 2028 presidential elections approach? What does this mean for your investment plan?
There are no right or wrong answers. No political comment. Just an acknowledgment of the changing social/political landscape that must be navigated.
Bottom line: My January 2026 prediction was for a legislative wave. But just six months into the year, we’re already seeing flooding.
The first Fed official to call for higher interest rates put his name on it
Last Friday, Minneapolis Fed President Neel Kashkari delivered a landmark statement at the Aspen Ideas Festival:
In March, I had predicted one rate cut by the end of the year.
In June, I changed that to one rate hike by the end of the year.
He is the first voting member of the FOMC to say so publicly and by name — though he is not alone.
The Fed’s June plan showed that nine of 18 officials already expect at least one hike this year. So, the hard-line view was already growing inside the building, and Kashkari just walked out.
His thinking goes beyond the Middle East…
Yes, he cited oil prices and the disruption of the Strait of Hormuz. But he also pointed out something worth noting for anyone investing in AI trading:
…Hundreds of billions of dollars a year in data centers and all the associated infrastructure — anything that touches those sectors, the prices go up dramatically.
In other words, the AI capex boom is not just an investment story. It is now emerging as inflationary pressure that one voting Fed member clearly points to as a reason to raise interest rates.
Put that against what we covered last Thursday…
Fed Chairman Kevin Warsh’s preferred measure of inflation — adjusted average personal consumption expenditures — has remained in a remarkably narrow range of 2.3% to 2.4% for six straight months.
This is the analytical tension at the heart of Fed policy right now: Kashkari reads the headline hype; Warsh tries to strip it.
This is the fault line that divides the FOMC more broadly today…
For example, New York Fed President John Williams believes current policy is in a good place. But Chicago Fed President Austin Goolsbee expressed concern about inflation while refraining from speculating on the Fed’s next move.
Bottom line: The FOMC is no longer single-minded.
So, what does this mean for investors?
Well, the next two or three inflation reports will have more weight than usual. The range of outcomes – raising, suspending, or ultimately lowering interest rates – is truly open.
And since Wall Street hates uncertainty, it could be a bumpy ride.
We will keep you updated.
I wish you a good evening,
Jeff Remsburg
(Disclaimer: I own MU)
