The SpaceX () IPO went very well. The shares IPO fixed price of $135, opened at $150 and closed Friday at $160.95. This morning it was $173.50. Elon Musk is the world’s first trillionaire. This has reinvigorated the tech trade. This morning semiconductors are up 3.8%, memory stocks +7%, software +2%. It’s of note that SpaceX employees invested an additional $1 billion into the IPO on top of their existing holdings. The success of such a huge IPO, now valued at $2.26 trillion, paves the way for the other outsized IPOs in the pipeline: and .
An agreement to end the conflict with Iran has been reached, and the market is seeing a relief rally. prices are down 5%, with WTI for July at $80/bbl. Gasoline is down 3%. Interest rates have followed: The has dropped 5bps to 4.03%, the down 4bps to 4.43%. Bets for a Fed increase have softened. Precious metals are higher; is pushing towards $4,400 after dropping below $4,100 last week when it sounded like things might heat up again in Iran. is back above $71/oz, after dropping below $63 last week. is only up modestly but leads YTD (+15.3%). is above $66.5K vs $61.5K last week. Prices are up significantly across most major asset classes on the ceasefire agreement.
The relief rally is being led by momentum (+2.6%) and growth (+2.3%) names as one would expect. Tech is up 3.2% while energy is down 3.6%. Defensive sectors like healthcare (-0.5%) and consumer staples (-0.4%) are the only weak sectors besides energy.
The next major event on the calendar is the first with Kevin Warsh as chairman this Wednesday. No one is looking for a , but his comments will be under a microscope to determine his sentiments regarding both the likelihood of an increase or cut in the near term, as well as his previously stated belief that the Fed’s balance sheet is too large and that “quantitative easing” should only be used in extreme circumstances and to let the market seek its own yield levels. Removing the “Fed Put” from the market’s calculus could prove quite to be quite powerful, but we won’t know until it’s tested.
As the trading day rolls on, stocks are modestly off their highs and moving sideways. The Iran agreement is set to be signed this Friday. As always, the devil is in the details, which are coming out slowly. We find the back near it’s all time high. The has hit a new all-time high. It is likely that we will get a further rally when the agreement is actually signed on Friday. There is also the potential for some meaningful profit taking once the Iran situation is in the rearview mirror, as many investors wanted to be long the market when the situation was resolved. This will be offset by other investors who found the situation impossible to predict and sat on the sidelines. The success of SpaceX has definitely helped keep the tech trade firm. The trend is clearly positive, but fingers remain crossed the Iran deal will hold.