09 Jun 8th June 2026

Markets Year to Date

Friday was exciting. The Nasdaq dropped almost 5% in a single session. All the chipmaker maket darlings got crushed.

But that hides the real news which was employment numbers. They came in twice as strong as expected and they even revised the last two months up as well.

Normally, high employment would be good for stocks. But the market read this as a sign the Fed could put interest rates up.

The Fed has two goals. Maximum employment and low inflation. These employment numbers show that part of their mandate is clear. They can now focus on bringing inflation down.

And, as you know, they only have one tool – interest rates.

The market also knows most recessions are caused by central banks over doing interest rates. Hence the stock selling.

But the market has it wrong this time.

The Iran war is causing inflation. There also does not seem to be any end in sight. It is hard to see oil falling under $80 anytime soon. That will keep inflation high for some time also.

But the American economy is strong enough to absorb this. Yes the employment numbers might lead to demands for higher wages but these impacts are not enough to cause a significant shift in interest rates

There was a lot of talk about the 2yr rate making a new all time high over 4.15%. But let’s put that in perspective.

Yes 2yr yields are at a 12 month high. But they were higher back in 2023 and that did not cause a recession nor cause a problem for stocks.

The action on Friday was just a reversion to the mean. The big 10 chip makers are up more than 30 percent in the last two months. That is massive and cannot continue at that pace. At some point traders will take profits. That is all that happened. Traders took profits after an excessive move. Which triggered the machines to sell also.

So is this an opportunity to buy those chip makers now?

Depends on your time frame. If you want to hold for 5 years then whether you bought last week at the high or this week after the fall does not really matter. They will all be higher in 5 years.

If you are more short-term then I would say no. I can’t see these stocks suddenly recovering. The market needs some time to work this through after an excessive run.

I am still bullish stocks here. I have no fear of recession. But I also would not be surprised to see some more weakness over the next couple of months before we get the next leg of the bull market higher.

SpaceX

I have had a little rethink on SpaceX. Maybe there is a short-term opportunity here.

I still say the reason for the listing is so private equity can sell out. But they have a lot of shares and need a lot of volume to sell into.

When underwriters list companies they are looking for a specific outcome. That is, the IPO opens slightly higher and then continues to trade well after.

If the stock starts trading too high, it means they priced it too low and the next company will look at them as making a mistake.

If it opens lower then other companies look at them as failing in their job.

So they need it just right. That is why the price for the IPO is only set the day before listing. At this stage the talk is they will set it at $135.

That does not mean it will start trading at $135. It just means those that bought in the IPO bought at $135.

I say the goal of this listing is to get private equity out. They are only raising $70billion which is less than 5% of the market value. It is nothing. The point of the IPO is not to raise money.

The other piece of news that is interesting is the Nasdaq, which calculates the index numbers, have changed their rules.

Under the old rules a company must trade on the exchange for a full 3 calendar months before they can be considered for entry into the index.

The Nasdaq have just changed this rule and now a company can be added to the index after just 15 days as long as they meet certain conditions.

And, surprise surprise, SpaceX will meet these rules.

Assuming the market cap is $1.8trillion it will enter the index in seventh place with about a 4% weighting in the index.

Once it enters the index all the index funds will need to buy it. That will give private equity the opportunity to sell out.

Now, call me suspicious, but do you think the Nasdaq came up with the idea of this new 15 day rule on their own, or do you think someone pressured them into it?

Remember, we will have OpenAI and Anthropic listed shortly too.

On the topic of being suspicious, I wonder why Google, (strictly Alphabet) just signed a deal where they will pay SpaceX $920million a month to use SpaceX compute, just now. This did not happen before the IPO announcement or after. No, it happened during the capital raise timeframe.

In case you did not know, Google owns 5% of SpaceX from earlier investments in it.

A side effect of this listing, and being rushed into the index, is it will reduce the weightings of other companies. Tesla included. So while the index funds are buying SpaceX, they will be selling other companies.

The fallout will be interesting to watch.

In conclusion, the reason for my change of heart is a short-term trade. You buy on Friday when it lists. Hold until it gets added to the index, and then sell, at the same time as private equity is selling.

What I don’t know is how much this could pay off. I would be very surprised if you made more than 20% doing this. But you might make 10%. The question is, can you be bothered for 10% and is it worth the risk?

Warning

Stock values can go down as well as up. It is possible to lose 100% of your investment in a stock. Any advice given by Capital 19 is general advice only and does not take your personal circumstances into account and might not be suitable for you.