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SpaceX fades just as the data predicted… the political flood accelerating toward your portfolio… the Fed’s first hike call and what it means for AI investors
Almost three weeks ago, we urged readers to stay away from the SpaceX IPO.
From our 6/11 Digest:
Behind the warning was 45 years of U.S. IPO history – more than 9,300 offerings, compiled and analyzed by University of Florida professor Jay Ritter, who is the world’s foremost academic authority on IPOs.
In short, the average investor wasn’t going to be able to buy SPCX at its initial IPO price. By the time they could get in, the stock would already be trading at an inflated first-day price (history shows an average 19% first-day bump).
The data suggested that after its initial surge, the stock would experience a meaningful pullback, leaving average buyers underwater.
History likes to repeat itself – in more ways than one
The first historical repeat?
SPCX popped 19.2% on its first trading day – matching the 45-year historical average almost exactly.
The second repeat?
The average investor who bought at the tail end of that Day 1 surge or shortly thereafter and is still holding is already sitting on a loss.
According to CNBC on June 18, the five-day volume-weighted average price sat around $182. With SPCX’s price hovering near that level, CNBC’s conclusion at that time was:
As I write on Monday, with SPCX shares trading roughly 21% below that June 18 level, that average post-IPO buyer is now sitting on a double-digit loss – just as history predicted.
Let’s jump to legendary investor Louis Navellier from last week’s Accelerated Profits June issue:
Louis has built his career – and his track record – on the opposite philosophy
His approach centers on finding companies with accelerating earnings and strong fundamental grades, the kind of businesses that don’t need a hype cycle to justify their price. When earnings drive the story, the math works in your favor from the start.
Here’s Louis with where the math is working today as he looks ahead to the start of Q2 earnings season:
Can we quantify this earnings strength and turn it into an expected return for the tech sector?
Yes – FactSet has already done it for us. It shows that, based on earnings forecasts, analysts predict the Information Technology sector will climb 26.5% over the next 12 months.
Meanwhile, the earnings strength across the tech sector is remarkable. Here’s FactSet with the data:
FactSet flags Intel (INTC), Sandisk (SNDK), Micron (MU), and Nvidia (NVDA), among others, as EPS increase leaders.
Those names aren’t likely to surprise anyone who’s been following the AI trade…
This is the exact point that Louis makes in his latest research package.
When 50 million investors are working from the same tools and arriving at the same conclusions, the most obvious winners can get crowded fast.
The smart money – what Louis calls “the elephants” – tends to move on before that crowding peaks, quietly positioning themselves in the next opportunity while everyone is still celebrating the last one.
That’s the thesis behind his Precursor Intelligence system, and he just recorded a free presentation walking viewers through where institutional “elephant” money is moving right now. You can watch it here.
Coming full circle on SPCX, tech earnings, and where to have money now, I’ll give Louis the final word:
Perhaps not if a growing chorus of politicians in Washington get their way…
At the start of the year, as our analysts were unveiling their 2026 market predictions, I made a call of my own
That prediction has been validating in stages all year.
For example, in January, California’s Billionaire Tax Act began collecting signatures. It’s now headed for the November ballot (I’ll note that the bill contains language that critics – including the Wall Street Journal – say allows the legislature to expand eligibility without voter approval).
Then, at the start of the month, Senator Elizabeth Warren, D-Mass., published an op-ed in Time calling for new taxes on AI and higher capital gains rates.
And now, for the biggest one yet…
Just over a week ago, Senator Bernie Sanders, D-Vt., introduced the American AI Sovereign Wealth Fund Act. It would impose a one-time 50% tax on the equity of every major AI company with annual revenues of more than $200 million, with those shares going into a government-managed fund.
To be clear, this isn’t a 50% tax on profits – it’s a 50% tax on equity.
I feel like “tax” isn’t the right word to use there…
Recognize the direction
Now, let’s be realistic: This bill won’t pass under the current Congress.
But my prediction back in January was never about passage. It was about political trajectory – and where that trajectory is pointing.
Last week, three Democratic Socialists swept their New York primary races, all backed by NYC Mayor Zohran Mamdani, whom we flagged back in January as a signal worth watching.
One of those NYC winners – Darializa Avila Chevalier – had a 2019 social media post calling to “seize the means of production.” She won anyway.
None of this requires you to have a political opinion. What it requires is that you follow the trajectory – from California wealth taxes, to Warren’s op-ed, to Sanders’ equity seizure proposal, to three Democratic Socialists of America candidates headed to Congress (their districts are overwhelmingly blue) – and ask yourself…
What does the political landscape look like heading into the 2026 midterm and 2028 presidential election cycles? And what does that mean for your investment plan?
There are no right or wrong answers. No political commentary. Just a recognition of the shifting social/political landscape to navigate.
Bottom line: My 2026 January prediction was for a legislative wave. But only six months into the year, we’re already watching a flood.
The first Fed official to call for a rate hike just put his name on it
This past Friday, Minneapolis Fed President Neel Kashkari delivered a notable statement at the Aspen Ideas Festival:
He’s the first voting FOMC member to say that publicly, and by name – though he’s not alone.
The Fed’s June dot plot showed nine of 18 officials already expect at least one hike this year. So, the hawkish view has already been growing inside the building – Kashkari just walked it outside.
His reasoning goes beyond the Middle East…
Yes, he cited oil prices and the Strait of Hormuz disruption. But he also flagged something worth noting for anyone invested in the AI trade:
In other words, the AI capex boom isn’t just an investment story. It’s now showing up as an inflationary pressure that a voting Fed member is explicitly citing as a reason to raise rates.
Set that against what we covered last Thursday…
Federal Reserve Chairman Kevin Warsh’s preferred inflation measure – the trimmed mean PCE – has sat in a remarkably narrow band of 2.3% to 2.4% for six straight months.
This is the analytical tension at the heart of Fed policy right now: Kashkari is reading the headline noise; Warsh is trying to strip it out.
This is the fault line dividing the wider FOMC today…
For example, New York Fed President John Williams thinks current policy is well-positioned. But Chicago Fed President Austan Goolsbee has expressed concern about inflation while declining to speculate on the Fed’s next move.
Bottom line: The FOMC is no longer of one mind.
So, what does this mean for investors?
Well, the next two or three inflation reports will carry more weight than usual. And the range of outcomes – hike, hold, or eventual cut – is genuinely open.
Given that Wall Street hates uncertainty, it might make for a bumpy run.
We’ll keep you updated.
Have a good evening,
Jeff Remsburg
(Disclaimer: I own MU)
