Hello my friends. Today is May 23rd and this is Marcus Weekly. So, okay. So, as we report, nothing is happening yet, but the situation is very fluid and at any moment we could have changes in the geopolitical situation that define markets not just for next week, but maybe for the rest of the year. Now, there have been very big hints dropped that we could have a resumption of strikes against Iran probably imminently. So, this is a three-day weekend in the US, and the president likes to do things when markets are closed. Last week, we had Tulsi Gabbard, a very senior administration official who also opposes the Iran war, leave the administration. And of course, we had President Trump very publicly telling you that, yeah, he can't attend his son's wedding this weekend because he has to stay in Washington. In an interview, he said he has to deal with Iran stuff. And of course, he's been threatening to resume strikes on Iran for some time. At the moment, it seems like there's an impass in the negotiations where Iran wants a two-part deal. First, open a straight of Hamuz, then talk about nuclear, but the White House wants everything to be done at the same time. And so, if that's not resolved, we we could see some fireworks there. And that could be, I think, very very impactful on the global economy and on the financial markets. In addition, I'll also note that we have a carrier strike group moving into the Caribbean. President has talked about taking Cuba. Cuba is very weak right now. So, he will be able to take Cuba and that could happen this way as well. Uh, we also had the release of new UFO files last week. So, again, there's a lot to distract the public and so something big could be happening by the time this recording is released.

All right, so today again, let's talk about two things. First off, we have to talk about how the Fed is increasingly turning hawkish and how the market is now pricing in fully one rate hike this year. And secondly, let's talk about the upcoming SpaceX IPO... Starting with the Fed. So, this week we had Kevin sworn in as Fed chair. And of course, let's take a brief look at what the president said during the swearing in ceremony... So, president is telling you very clearly all the right words. We're going to have an independent Kevin. Do you believe that? Of course, no one believes that, but it it doesn't really matter. It doesn't matter because at the moment, the committee is really taking a big turn in how it's looking at inflation. So last week we had the publication of the Fed minutes and from the Fed minutes we can see that a majority actually supports rate hikes in the event that inflation continues to be elevated. Now also of course a lot of a lot of the people at the committee also supported changing the language of the statement such that uh to imply that a more neutral stance whereas the current language implies that the most the next move would be a cut and that garnered three descents. Uh many people actually would like to change language in the statement to be more neutral suggesting that the next Fed move could be a hike or a cut. Now, at the moment, we have our latest inflation forecast from the Cleveland Fed, and it's looking like inflation, either CPI or PC, is going to be above 4%. So, again, inflation is ticking upwards and will be above 4%. So, that's obviously much too high, twice as high as the 2% target. And should the street moves remain closed, we can easily see inflation continue to move higher, gas prices continue to move higher and that bleed into things like transportation costs that of course get added into food prices and so forth. So you could even see let's say a 5% CPI in the coming months unless things change... Governor Waller is perceived to be one of the more influential and central figures on the FOMC... he also supports moving the statement language to be more neutral. But he's not super hawkish. I think he's open to having rake hikes should inflation expectations become unanchored... the Fed is clearly clearly moving from easing towards more of a hawkish tilt and that of course is not good for financial assets.

The second thing I want to talk about is the upcoming SpaceX IPO which looks like it's advertised as going to be the largest IPO ever at the moment. We don't really know um just how large it's going to be because we don't really know the pricing. Uh it looks like people are talking about maybe a $ 1.5 to 2 trillion dollar total valuation... SpaceX actually has three business lines. One, of course, is there their business line of shooting rockets into space... But actually, they also have other two other lines. One is Starlink where they launch satellites into space uh for consumer and business internet... Starlink actually is the most profitable part of the SpaceX um business line. Another business line that Starlink space has of course is XAI. There was a merger between XAI and SpaceX not too long ago and XAI obviously is the AI for Twitter and also of course there's a lot of data center facilities that come with that as well. At the end of the day, when you look at the financials for um SpaceX, you can see that it actually loses money. So, last year it did about $20 billion in revenue and lost $4 billion in 2025. So, a company that would like to have a valuation of $ 1.5 to 2 trillion is losing $4 billion a year... Their pitch actually is again in typical Elon fashion to be very grandio. This is what they call their total addressable market TAM... Total TAM for everything here, maybe $29 trillion, right? ... Elon is a very very successful entrepreneur, particularly when it comes to the stock market, and he's shooting for a very, very aggressive valuation... the only thing in economics that works is supply and demand. This suggests that there's going to be a huge influx of equity supply... OpenAI and Anthropic are also very eager uh to file and go public... These are all headwinds that we should keep in mind of.