What a time to be alive. Before I go into Greenland, gold prices, or Australia’s unemployment rate, let’s instead turn to SpaceX, the one company owned by controversial founder Elon Musk that he apparently isn’t allowed to meddle with (according to reports from late CY24, anyway.)
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According to reports now carried by FT, Bloomberg, and Reuters, SpaceX has lined up four of the major investment banks to carry out an IPO that could be worth US$1.5T (that’s trillion with a T) – the largest IPO in history.
Among the tapped shoulders are included Bank of America, Goldman Sachs, JPMorgan and Morgan Stanley. Talk about an all-star cast right there.
The fact that a space-exploring-venture is on the verge of becoming history’s biggest-ever-IPO makes a kind of poetic sense. The first trading stock ever issued was to facilitate the building of Dutch East Indian Company ships; some 400 years later, the biggest IPO in history is to build spaceships.
Whatever you think about Musk, you can’t deny a curious symmetry. None of this really matters for the rest of this article; I just thought that was interesting. And, of course, we can probably expect that listing to go gangbusters.
Let’s turn to perhaps more pressing matters now, though.
EU reminded it does have a heartbeat
Let’s talk about the Greenland fiasco. When I wrote last week’s end-of-week wrap for Week 3, I noted we’d just learned EU troops were travelling to Greenland in an apparent bid to get an idea of what risk China and Russia posed.
That was the story given by Finland’s President to Bloomberg Surveillance hosts live from Davos early in the week, but I don’t think anybody really believed that. Nor did Trump, who wasn’t too concerned by the fact.
What did concern him, perhaps, was Macron’s speech to the Davos conference, where he basically said the EU should isolate the U.S. from trading with it. The same day, Denmark then moved to ditch all holdings of U.S. Treasuries from its national pension fund, which symbolically may have been enough to give Donny pause.
(Canadian leader Mark Carney also gave a speech at Davos, which was decidedly more anti-American, and since then, Trump has withdrawn his invitation to Carney to join Trump’s “Board of Peace,” whatever the hell that means.)
Long story short, the move to take Greenland has cooled down for now; it appears that Europe banding together might have given Trump pause. It also appears Trump might be focusing his attention on Carney (again) this week, and honestly, looking at his recent posts on ‘Truth Social’, this finance journalist is left once again wondering if the US President has a coke habit, or at least maybe adderall.
(At time of writing, he’s made about a dozen Truth Social posts in the last six hours.)
Gold prices near US$5K/oz
On the back of all this geopolitical macro – or, in other words, what could still easily turn into a trade war between the U.S. and the EU – gold is continuing its record run, nearing US$5,000/oz for the first time. At time of writing, it’s US$4,950/oz; silver is also following up close behind, not far from US$100/oz itself.
That chart, please note, is just the last twenty-four hours. It is not even too outrageous to use the word ‘insane’ here, especially seeing as it looks like we just evaded a trade war. The world wants gold, and nobody is worrying about the top being in. For reference, here’s the last twenty-four hours for silver:
Clearly, the market’s fully expecting more chaos as the year unfolds. God knows what the next big catalyst will be. At the time of writing, the U.S. has just exited the World Health Organisation (WHO). So, there’s that.
Australian unemployment back to 4.1%
The other big thing this week worth noting is far more local: We got fresh labour market data from the ABS this week, and wouldn’t you know it, Australia’s unemployment rate has gone back down to 4.1% (previous readout 4.3%).
That adds more fuel to the flames of belief that the RBA will pause next month, if not hike them – and many are expecting the hike scenario to be what we get.
While low unemployment sounds good, for the job of tackling inflation, it provides a complication: More people employed implies more people getting paid with discretionary income to go out into the economy and buy goods and services, thus providing the underlying force that results in natural inflation.
And that means that if everybody is employed, the RBA has no real incentive to cut rates right now (especially seeing as the other half of its dual-mandate is to ensure unemployment doesn’t get out of control; for as long as the rate stays where it is, the RBA has no need to spring for a rate cut.)
Of course, as State Street analysts pointed out, the rate of job growth in Australia is slowing. We could be at peak capacity right now, which would make sense in a world where everything is expensive.
But in the meantime, when it comes to Aussie Reserve Bank rate cuts, we’ve got a while longer yet to wait. Potentially a good while, too.
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