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Well, holy smokes, the market is nervous yet again. Not sure if that's because Kevin extended his vacation or if it is because of SpaceX record issuance. So, what's going on with Google, the Fed, or worse, the Japanese carry trade? Yes, back to the Japanese carry trade talk. Boy, we've been talking that about the Japanese carry trade for almost 2 years now when we had that first real shock in August of 2024.
And here we are in June of 2026, still talking about it. Well, I've got some updates on all this for you, including the fact that Google just got included into the Dow Jones Industrial Index replacing Verizon, which is a really convenient time for Google because Google stock has been falling as of late given their record $70 billion of issuance that is starting to hit the market here in late June and is likely going to hit the market for the rest of the year.
Getting included in an index like the Dow Jones Industrial might be a nice opportunity for Google to get that liquidity they need to dump those shares on retail. As usual, the suits have it out for us, it seems. But, while Google is down 14% over the last 5 weeks, it is up about 1% in after hours. It doesn't make anyone feel better though given that the Nasdaq 100 rejected down 3.29% today, bounced off of 715 twice, actually, which we had in our alpha report as a critical threshold level, and now closing at 713.
Not great. Why is this happening? Part of the reason this is happening could be just again, not just Google issuance, but also SpaceX issuance, which was oversubscribed. So, it does somewhat suggest maybe issuance isn't actually that big of a deal. Here's basically what happened. SpaceX said, "Yo, we want to refinance $20 billion of debt we have by issuing bonds.
Anybody want it? So many people wanted it to the tune of nearly $90 billion, which is a great sign that there's still ample liquidity out there that you actually ended up seeing SpaceX accept $25 billion with a spread of 1.4 point a percentage points over equal duration treasuries. That sounds complicated.
Let's just simplify that into English, which is exactly what we like to do in our courses as well on building your wealth with real estate, stocks, property management entities, insurance, liabilities, social media, sales, you name it. You can always join those over at meetkevin.com. We've got a coupon expiring on June 30th.
It's coupon code Pope. Uh but, let's focus on explaining this simply really quickly. When you say equal duration treasury, what we're really trying to say is, "Hey, if SpaceX is issuing a 10-year bond, how much are markets demanding for a yield?" In this case, it landed around 5.9% for a 10-year. That is about 1.4% points over the equivalent 10-year, which is sitting at 4.5.
So, 4.5 for the US government risk-free debt, risk-free. SpaceX at 5.9, that spread is the extra that SpaceX investors are being paid for those SpaceX bonds. Uh that is one of the highest spreads we've seen in a while, which does suggest some uncertainty around SpaceX. Obviously, they're losing money.
They just got a triple-B rating, which is actually surprising that they got that even though they're uh losing money. One of the first ratings, I think it was Morgan Stanley rated them. I was actually surprised to see such a quick rating. Uh but anyway, not a surprise given also the fact that Morgan Stanley tends to underwrite a lot of debt for SpaceX and Elon Musk.
So, they're kind of all in cahoots together. Imagine that, the suits in cahoots. It almost rhymes. That's perfect. So, anyway, uh so basically, SpaceX paying even more than what Intel was raising at, which is somewhat surprising. But, uh it does indicate that even though investors are demanding a higher yield for SpaceX, there's still plenty of liquidity out there.
I mean, the fact that you had $90 of demand pretty impressive. So, there is still money out there. But, why then are we seeing all this volatility in markets? Because, yes, we expect more issuance and likely more volatility. In fact, UBS argues we could see as much as 200 to 350 billion dollars this year of IPO issuance with secondary offerings at 400 billion dollars or more.
Just a quick clarification on what that means. An IPO issuance would be like SpaceX. Hey, we did 85 billion dollars. Cool, that's a majority of that. But, then you're going to add OpenAI, Anthropic, and other IPOs like Allo wants to go public now, right? Everybody's trying to get money. Well, when it's easy to raise money like it is for SpaceX, everybody wants to join, right?
Anyway, then secondaries are like Google going, "Hey, uh we're going to do the largest secondary ever and try to get our hands on an extra 80 billion dollars and Warren Buffett's company Berkshire Hathaway's going to anchor the first 10." Cool. Clearly there's appetite for that. Clearly there's appetite for SpaceX.
Will there be appetite for all this money? Who knows? My take is as long as the economy holds up, we can absorb all of this. The problem is we're now getting additional volatility because , the way you have to understand this, is basically American hedge funds go to Japan and they borrow money in Japan uh at cheaper rates.
Okay. Why? Well, if you could go borrow in Japan at 2.5% or 2.6% on the 10-year, why would you borrow here at 4.5%? Right? Most regular investors don't do that. But, companies like bigger hedge funds who have offices in Japan, they borrow money for 2 and 1/2% or 2.6% in in in Japan, they're borrowing that in yen.
That's a problem though when the yen weakens because when the yen weakens or you type in USD to JPY into Google and when that number goes up it means the yen is weakening. Problem with that is if you have debt in Japan, you have to spend more dollars to pay that off and that pisses you off. That means as a hedge fund you're losing money, right?
You're getting hurt on that trade. Okay, great. What's the problem here? Well, hedge funds don't like getting hurt. So what do they do? They sell. And what do they sell? They sell things that have run like freaking crazy. Micron is down 13% today. MU stock, the memory chip stock, 13%. I made a warning video on Friday and even yesterday, yesterday before this 13% sell-off, I said, "There's no way in heck I would touch Micron right now before earnings.
I would not buy call options on this at all because the risk of it plummeting is massive." I said that in my video yesterday, you go fact check me on it and we did our full update on it. It was either Friday or Saturday, might have been Saturday. We did a full breakdown on what to look for in earnings and why the company has the valuation it does.
Its valuation, if growth holds up, is actually not expensive. So I don't want to sound like I'm bagging on Micron. Just saying right now in the moment that we're in, not ideal because you've got the Japanese carry trade plus the issuance plus now the {quote} communications vacuum from Kevin Warsh, not ideal.
Now, when I talk about communications vacuum, it's actually kind of worth noting that we have this Alpha Wire we call it that you can use totally for free right now. We just did a massive update on it so there are even more news sources that should show up now and even more news sources that'll probably show up even later today.
But if you look at that, which you could see it on desktop or the Meet Kevin app if you want it. you just download the Meet Kevin app. Uh it's totally for free. You can use it for free, that is. Go in the Android app store, just type in Meet Kevin app, or the Apple app store. And I pinned a couple of wire notes.
So, the couple wire notes that I pinned were right here. Communication's a vacuum increases that investor volatility we're seeing. Greenspan echo as Warsh Fed goes quiet. And then there's a whole article around it. I put my little notes next to it. I did the same with the Ghoulsebee comment. And I'll read you those and explain those really quick.
But basically, a communications vacuum is we're going from the era of Jerome Powell telling us, "Hey, like we're going to be patient. We're good for now. We're going to wait and be data dependent." Which is what we expected Warsh to do. Instead, we got Kevin Warsh going, "Yeah, we're going to utilize tasks task forces to determine if we're going to make any changes.
And as far as forward guidance, we're not going to give you any." Great. So, basically, we are relying on the two-year Treasury, which is high, as a guide for what the Federal Reserve is going to do, since they usually follow the two-year Treasury. And this leaves us with a communications vacuum, which increases volatility along with the Fed the Japanese carry trade.
But here's the other problem. The Japanese carry trade gets worse when our Fed is hawkish. When our Fed is hawkish, and it implies rates are going to go up in the United States, as the rates go up in the United States, the US dollar strengthens because more people want those higher yields. That, in turn, makes the Japanese yen look even weaker.
It didn't help that the Bank of Japan governor is in the hospital, who's a hawk, and who replaced him at the last meeting was a dove. And so, of course, they sounded more dovish and gave even less guidance about hikes coming to Japan, which again accelerates the Japanese carry trade because the yen weakens even more.
So, basically two things are making the carry trade worse. One, Japan Bank of Japan isn't being as hawkish as they should and they had a fill-in who's dovish. Okay? It's kind of like getting a you know, if if you had like a you know, a a real dove like a Waller who's like or like a Myron. Imagine if Myron got up there instead of Kevin Warsh or Jerome Powell.
All right, boys, we need to cut rates 1 percentage point. Right? Like that'd be so dovish. It's kind of to a lesser extent what happened to Japan. All of that increases volatility is what I'm just trying to say. So, issuance, more volatility. Fed Warsh communications vacuum, increases volatility, which increases rates in the United States or rate expectations, which increases the Japanese carry trade, which again reiterates more volatility.
None of this has any economic impact. In fact, we sent a trade alert that we bought the dip this morning. And if you're not part of that, you can join us and you can see exactly what the we bought the dip in by going to meetkevin.com and you can join. Join the courses and you get lifetime access uh to the trade alerts, the alpha report, all the courses we mentioned earlier.
Uh and you can see that over at meetkevin.com. Now, what's also very important to remember is that we just had FedEx earnings and I always like to look at earnings to see if there were any hints of you know, problems in the economy. The answer is no. Their guidance pretty much okay. They've got some extra cost because of obviously the uh tariff issues.
But, the biggest thing that happened in their actual earnings that I saw was fuel. Their fuel costs were up 66% year-over-year in the first quarter, which makes sense because fuel prices were up about that. So, it's really not a surprise. If I adjust out and take out $500 million of that increase to the fuel cost, which is almost all of the increase, I left about a hundred million in there cuz they went from like 864 to 1434 million, right?
It's 1.4 billion. Anyway, if I adjust that out, I get roughly a stable margin at FedEx. With the higher fuel costs, their margin fell, and that's probably why FedEx is down in the after hours because their margin did go down. They're down like 6% in the after hours. But economically, uh it's not really a signal.
What was a signal this morning actually was we got the ADP weekly data, the first time we got weekly data for June uh since the uh June BLS data that we got was based on May's data, right? So, uh we just got the first week of June all the way through June 6th came in at 30,750. If I multiply that by four, which is a rough approximation since there are 30 days on average in a month, right?
Uh that puts us at a bullish 123K jobs per month. Keep in mind, I also pin that in the news wire service. So, like you could use that, and I'll What a lot of people are actually doing is they're downloading the app, they're signing up for the app, and they're using the news wire service to check the news instead of relying on something distracting like Twitter.
So, they're checking the news on there, uh and then I can pin things that I could add my comments to. In addition, after you sign up on the app, you could use that same login if you want, and you could go to have the desktop version of it, which I think is honestly pretty cool. Uh and then you could get the desktop updates on it.
So, stay tuned. We're going to have more uh news source updates coming in, so it's going to keep growing and getting better. It's in pretty early beta. We're excited about that. Now, another economic thing that uh happened, well, data point we got is we got the US global flash PMIs. They uh they were okay.
We got US business activity growth improved for a third month in June. Growth rate remained weaker than at the start of the year. Things, you know, because of this volatility we're seeing, we're seeing some uncertainty. Elevated uncertainty always ends up leading to lower growth forecasts, but still doing okay, at least on these flash surveys of four June at companies.
Still seeing inventory building at manufacturers, not sure how long that's going to last. And this is always a good one, the service sector continues to grow, but it is growing at a subdued pace, reflecting pushback from consumers over higher prices amid lower levels of consumer confidence. Now, some of that we expect to u-turn because gas prices are coming down.
In a weird way, the longer end of the Treasury curve is also coming down, so weakening some of those mortgage rates, which small note on real estate, I thought this was interesting. I might make a more detailed video on this, but UBS actually noted, quote, we expect overall real estate values to continue to appreciate.
I agree with that, maybe it's confirmation bias. Uh with further rental growth anticipated over the medium term. Medium term is usually 1 to 2 years. Uh unless interest rate costs rise significantly amid heightened volatility. They actually find US real estate, Singapore real estate, and Australia real estate attractive right now.
They do not find Japanese, Hong Kong, or Continental Europe uh real estate attractive, and they also do not find the United Kingdom uh as region attractive for real estate. I don't know if that has to do with Kier Starmer uh or you know, bailing out. Who knows, maybe. That is, by the way, probably all still a symptom of Brexit.
A lot of people very frustrated by Brexit because Brexit promised lower immigration, and they actually ended up getting more immigration. Except instead of getting more immigration from other European countries, they actually ended up getting a lot of immigration from like Africa and the Middle East, uh refugees and otherwise.
It's a lot of people have been really frustrated about the impact of Brexit. Estimates are that their GDP probably shrunk by around 2 to 2.5% after Brexit, you know, over the years afterwards. Uh but it is what it is. And the Economist actually had a really good and blunt message. They're like, "Hey, listen, y'all got to get over the fact that Brexit happened.
We were against Brexit. It happened. Oh, well, it's over now. The best thing you can do right now is the United Kingdom needs to get people off of benefits, get them back to work, grow the country, stop over-regulating AI, and focus on capitalism." And I'm like, "Wow." That was pretty blunt from the Economist.
Well, they're pretty capitalist uh and uh they don't you know, which is interesting cuz it kind of you know, some people say this doesn't align, but they're also very anti-Trump. Uh they bag on them every day. It's It's hilarious. If you want a publication that just bags on Trump, the Economist is for you.
Go sign up. I don't have a link below. They're not sponsored. I I do think they're a great publication though and you know, you can read a publication even if you disagree with someone's politics. Okay. Then, this is interesting. UBS is the first investment bank that I've seen come out to actually agree with me, Kevin, on the Federal Reserve.
They basically have an entire institutional piece, which you can see in the data tab for free of the Meet Kevin app. They have an entire institutional piece that says, "Hey, Meet Kevin is right. We agree with him." Okay, maybe this is confirmation bias. It doesn't actually say that, but it does say the following.
We believe market pricing for rate hikes is somewhat aggressive. They say that we believe the Fed is more likely to keep rates on hold rather than hike them. I agree with that. Reiterate what I've said before. I think wages an anchor. Uh I think when you put all of this together, oh and the fact that they argue slower growth trends and disinflation in the second half should help us pivot towards lower policy rates in 27.
Okay, 2027. When I put all of this together, here's my read on all this. SpaceX, big liquidity suck, lots of volatility. It's a big suck. Then, you've got Japanese carry trade and the lack of communication from Warsh. That extra volatility. Economically, flash PMIs, weekly jobs data, earnings, so far, so good.
Even the bad Broadcom earnings like a week and a half ago, they weren't really that bad. You know, I broke those down in detail. You have a video on the channel somewhere. Like, they're not that bad. You can actually see my full Broadcom breakdown. I'll I'll do you I'll give you a quick solid here and give you a quick little summary on I go back to my Broadcom summary and in my opinion, I write down no signs of an AI slowdown.
This is an overblown sell-off likely as people pick up liquidity for the SpaceX IPO next week. See? I wrote, "I'm not a fan of the Broadcom balance sheet. It's not my favorite choice of a company, but I give credit where credit is due and it's overall quite exciting for AI hardware and I see little evidence of anything other than some loony Wall Street expectations being modestly missed on the timing of ASIC chip deliveries." Application-specific integrated circuits.
Specific chips made for specific customers. But anyway, if you want to see my full Broadcom note, if you are a course member, you join over at mekevin.com, you can not only see my stock notes like that, much more detail on there and my fundamental analysis, but you can also use this new tool that we released for course members.
We really haven't pitched it at all. It's our stock AI tool and it's designed to utilize sort of the Kevin mindset of stocks, our PEG ratios and how we look at stocks and apply AI for red flag analysis and our algo for where the best deals are in the market and you can now use that inside of the Meat Coven app. Thank you so for your very much for watching. I love you al.
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