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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:
Don’t you do it – don’t you buy the SpaceX (SPCX) IPO tomorrow. Or, if you insist, at least do so with your eyes open.
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:
The average investor who bought SpaceX shares in the open market after its debut has seen nearly all of their gains disappear…
The average post-IPO buyer is now approximately breaking even.
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:
Some investors learned a tough lesson recently…
During the frenzy around the IPO, folks forgot one important fact: SpaceX will not be profitable until at least 2028.
Too many investors chase companies without earnings growth, such as SpaceX. Not a smart strategy, in my opinion.
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:
If you want to make money, you have to invest in companies with earnings – e.g., technology stocks.
According to our friends at FactSet, the Information Technology sector had its earnings estimates revised more than 7% higher since the start of the second quarter.
This sector is now expected to achieve 59.6% average earnings growth in the second quarter, up from estimates of 48.7% at the end of the first quarter.
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:
Overall, 62 of the 74 companies (84%) in the Information Technology sector have seen an increase in their mean EPS estimate [since March 31].
Of these 62 companies, 23 have recorded an increase in their mean EPS estimate of more than 10%.
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.
Coming full circle on SPCX, tech earnings, and where to have money now, I’ll give Louis the final word:
Our AI and data center stocks have a three-year order backlog. Thanks to accelerating earnings growth, .
Simply put, the AI and data center boom cannot be stopped!
Investors who understand this reality and align their portfolios accordingly stand to profit handsomely in the upcoming months (and years!).
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
This year will bring a wave of new, controversial legislative proposals aimed at investment wealth – proposals that may not pass immediately, but will introduce a new layer of policy risk investors will have to price in.
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:
In March, I had penciled in one rate cut by the end of the year.
In June, I’ve changed that to one rate hike by the end of the year.
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:
…hundreds of billions of dollars a year into data centers and all of the associated infrastructure that goes with that – anything that touches those sectors, the prices are skyrocketing.
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)
