It's been a while, but we're bringing back The Week Ahead, a weekly overview of what's in store for the next seven days. Our normal newsletter writer, Terry Oldreal, is still having some issues with the wifi at his halfway house. So Jack from Jabroni Capital is stepping in to help out.
We're already a day behind because of the long weekend, so let's cut to the chase. From a potential SpaceX IPO to Spencer Pratt's mayoral campaign, and everything in between, here's a look at what's shaping markets this week.
This is opinion, not financial advice. See full disclaimer below.
Americans generally pay attention to politics that are either happening nationally or at the local level. Last year, during the mayoral race in New York City, though, that pattern broke, and individuals from all parts of the country began to follow the race between Andrew Cuomo, Curtis Sliwa, and Zohran Mamdani, who eventually ended up winning. Our prediction market had over $121 million traded on just the winner of that race alone.
But attention and media spotlight have shifted now from a mayoral race in a major East Coast city to one in a major West Coast city: Los Angeles.
The California primary election is actually next week, but this will be the final full week of campaigning. Incumbent Karen Bass (D) is the front-runner for the time being according to our prediction market, but the race has been significantly more volatile due to the involvement of individuals like Spencer Pratt (Independent) and Nithya Raman (D) which are increasing the odds of a run-off occurring.
The major issues that people in Los Angeles care about are homelessness, public safety, cost of living, and recovery from the 2025 Palisades wildfire, all of which intersect in a complicated manner. The options they are given at the ballot box, though, is between an incumbent who wants to continue course, hopefully leading to steady improvements, and an individual lacking prior experience in politics who wants to reshape the way the city is run in order to give the citizens results faster.
While voters are paying attention to what the candidates are saying, most political analysts are paying attention to the possibility for a runoff.
If no candidate wins a majority of the vote, then the top two would advance to a runoff where only those two candidates are on the ballot. Right now it’s looking like it would be between Karen Bass and Spencer Pratt, though a Bass-Raman runoff is still a possibility and would be the most interesting.
Instead of a political insider vs outsider like the Bass-Pratt runoff scenario, Bass-Raman would be an intra democratic fight over whether or not Bass has stayed too close to the City Hall establishment and prevented more progressive policy and leadership from moving forward.
Looks like I’ll be spending the summer biking to work.
The pain all of us are experiencing when we go to fill up our cars can be tied to the abnormally low traffic level in the Strait of Hormuz.
I think there’s been about a thousand negotiations and agreements so far that have all somehow managed to disappear.
For months we’ve been hearing that negotiations are moving along and that a peace deal has almost been formalized. But let’s be optimistic and say that things do work out for the better, and the conflict stops.
There’s still the question of when traffic in the strait will normalize. And there is still an enormous operational bottleneck:
Mines.
The IRGC deployed naval mines in the Strait of Hormuz following the outbreak of the conflict. We will eventually have to get those mines out of the water so boat captains don’t have to play a real life game of minesweeper in order to deliver your package from China.
And there are now reports that the precise location of some of those mines has been lost.
Misplacing your wallet is one thing, forgetting where you put an explosive capable of destroying even the most equipped billion-dollar aircraft carriers is another.
For better or for worse, there is fortunately a history of important military devices getting lost where nothing happened. For example, the U.S. lost and never recovered six nuclear weapons. There are also multiple lost (and armed) Soviet nuclear submarines still sitting on the ocean floor.
“Drake, where are the Naval mines?”
But unlike the lost nuclear submarines and warheads, the naval mines are in one of the most heavily trafficked waterways on earth.
The point is, even if the conflict ends tomorrow, which we hope it will, actually opening the strait may require significantly more work.
We aren’t going to speculate too much on when traffic will return to normal. After all, that’s what the prediction market is for, so we’ll let you take a look at it.
While we’re sure you’d love us to focus on another political story, we’re going to look at something a little more entertaining and perhaps something that you’ll find interesting: what companies are going public.
The IPO most talked about as of late has been SpaceX. Elon’s rocket company is looking to raise $75 billion at a 1.75 to 2 trillion dollar valuation, making it the largest IPO by a huge margin. A raise at this valuation would place the company alongside Broadcom and TSMC. SpaceX’s IPO is important for two main reasons, though:
It is a GIANT liquidity event.
Private markets would likely get repriced.
Buyers would include the standard hedge funds and other institutional investors, but with Elon Musk's internet persona, retail and the likes of WallStreetBets could show up with a hard hand on the buy button.
The issue with buying stock is that you need cash to do it, and unless you’re stuffing it under a mattress, if you have it invested, you’d have to sell some other positions in order to purchase the SpaceX IPO. Large swaths of people selling off stock at the same time can sometimes make the market do funny things, but as far as we’re concerned, we’ll just have to see how it pans out.
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