Markets After The Nasdaq Shock

June 8, 2026 | Season 8 | Episode 18

A single data point can flip the entire market narrative and Friday’s action proved it. We wake up to a rebound after a brutal Nasdaq drop, then zoom out to the real driver: a surprisingly hot May payrolls report that makes “no rate cuts” feel more plausible, even as Wall Street keeps trying to price a friendlier Federal Reserve path. We walk through what higher-for-longer yields mean for valuations, why global moves in the UK, Europe, and Japan matter for US rates and the dollar, and how that pressure lands hardest on the most crowded parts of the AI and chip-stock trade.

From there, we dig into a more mechanical force that many investors overlook: supply. When mega companies raise equity and monster IPOs hit the calendar, portfolio managers often have to sell something else to participate. SpaceX’s IPO is the headline, but the bigger takeaway is how fast major indexes and ETFs may be forced to buy it, potentially giving you exposure through funds like VTI and QQQ whether you opt in or not. We also flag the warning signs that show up when speculation spreads, including small cap and micro cap bursts that can rhyme with past bubble periods.

Then we layer in the catalysts that can reset expectations again, including CPI and PPI, earnings signals for AI data center demand, and geopolitics in the Middle East pushing oil prices and inflation fears higher. We close with the longer arc: reserve-currency confidence, foreign flows that shift away from Treasuries while staying in US equities, and why gold keeps showing up in the conversation. If this breakdown helps, subscribe, share it with a friend who watches markets, and leave a review. What do you think is the biggest risk from here: rates, liquidity, or geopolitics?

** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice. 

For full disclosures, ADVs, and CRS Forms, please visit https://heroldlantern.com/disclosure **

To learn about becoming a Herold & Lantern Investments valued client, please visit https://heroldlantern.com/wealth-advisory-contact-form

Follow and Like Us on Youtube, Facebook, Twitter, and LinkedIn | @HeroldLantern

Transcript

Market Volatility Sets The Stage

Alan Eppers 0:00

And now introducing Mr. Keith Lanton.

Keith Lanton 0:03

Good morning. Today is Monday, June 8th. And last week we certainly had a super volatile Friday in the financial market. So we'll talk about that with the NASDAQ selling off over four percent. We will speak about the rebound we're seeing this morning, and we are certainly seeing lots of developments happening very quickly here in the geopolitical world, specifically in the Middle East over the weekend. So we'll try and summarize all those different factors convalescing into what we have to wake up to this morning, the second Monday of June, just a few more weeks left of the second quarter of 2026. Most importantly, all of this into the contextual mindset of how to position our portfolios, how to allocate our assets and our resources, as we've been talking about over the last few weeks, with all that's going on in the bond market, in the stock market, and all the different political gyrations that are taking place here in the United States, specifically what's going on in the bond market, which is critically important to the mindset for equities, and that also translates to what's taken place in the foreign exchange market. We're gonna talk a little bit, as we often do, about history, about the United States being a reserve currency, and how the mindset of the United States possibly losing some of the investors that it gets overseas from a safety standpoint, although maybe gaining some investors on the equity side, seeing some substitution. And we'll talk about why foreign investors may be substituting some of their bond holdings for stocks, possibly even with a negative overall allocation, meaning that they are owning less U.S. assets, although owning more U.S. stocks, and what the ramifications are here in the stocks and the bond market, what the mindset may be behind that, what Ray Dalio, the former CEO and leader of one of the most successful hedge funds, Bridgewater had to say last week in his thoughts on financial markets and his concerns, and then we'll talk about this more short-term viewpoint from Barron's that over the weekend where they suggested that there may be some more gains here in U.S. stock market.

Jobs Surprise And Rate Fears

Keith Lanton 2:18

So, what triggered the last week where we saw a significant sell-off in markets on Friday, in particular after a very strong, some would say parabolic rise in some of the stocks, especially stocks that are helping build out the artificial intelligence trade, like the chip stocks, , we saw a dramatic move to at least take some of those metaphoric chips off of the table. And this started with a hotter than expected May payrolls print, meaning that more people were working, and that therefore caused markets to sell off. If you're just looking at things on the surface, well that certainly seems counterintuitive. More people are working and markets take a nosedive. Well, let's back up, try and at least try and put some rationality to what seems like an irrational statement. So may payrolls were up 172,000. The markets were expecting them to be up 88,000. And on top of that, we had previous payrolls for the past two months also being revised upward. Well, what the markets did is they got worried that the economy perhaps is running hotter than expected. This could mean that the Federal Reserve, now run by Chairman Warsh, who many had believed was going to come in there with the mandate to cut interest rates, well, that he may not in fact be able to do that. And therefore we may see rates stay the same, or in fact, even the market starting to price in a slight increase in interest rates. Put this in context. This morning we're looking at a 10-year treasury of 4.53% on the higher end of the range that it's been at. That's relatively unchanged from where it closed on Friday. Leading commentators from Goldman Sachs over the weekend said that they are pushing out their estimates of rate cuts to 2027. Previously, they expected at least one cut this year, so effectively no cuts now in 2026. And perhaps equally importantly, Goldman Sachs upping their target for interest rates here in the United States. They now see the two-year ending 2026 at 3.8%. Right now, that two year is about 4.1, so that would still be lower. And they see the 10-year at 4.4, down from this 4.53 we're seeing this morning. But that is up from their previous estimates. Previously they thought the two-year would be at 340, now they're at a 380. They thought the 10-year would be at a 410. Again, this is at year-end. They're now all the way up to 4.4. And the U.S. doesn't operate in a vacuum. You have to take a look at rates that are competing for US dollars. And if you take a look overseas and you take a look at the United Kingdom, well, they have a currency called the pound, also known in the bond market. Their bond market tenure is called the Gilt, and the Gilt overseas in the UK, we are seeing rates there north of 5% on their tenure. Also, expectations now that this week we have a European Central Bank meeting, and the expectation is that you will see rate hike this week from the European Central Bank, and there is now over a 95% probability that the Bank of Japan will raise their interest rates in June. So you can see all of the mechanations taking place where the expectations are that interest rates will be higher, and this is happening as markets were super concerned already about the significant rise in asset prices here in the United States, and suddenly the concern is that these companies that are doing these massive build-outs in order to have this tremendous opportunity in artificial intelligence could be facing higher expenses. Now, those higher expenses in terms of interest rates are important because if you're Alphabet, if you're Amazon, if you are Meta and you want to build out these mega factories, well, you need to borrow money in order to do that. If you can't finance it with your cash flow, original thought process was that these companies had such tremendous cash flow, which they do, that they would be able to finance these build-outs with their cash flow, but it turns out they're in such a heated arms race, the cost is getting more expensive because chip costs are going up, that they may have to issue debt, which in fact some of the companies have already done, like Oracle, like Alphabet, like Microsoft. So, what these companies have done is they've said to themselves, well, these interest rates are getting expensive. Perhaps they've said to themselves, I haven't seen this, but perhaps they've said to themselves, well, our stocks are pretty strong. They're doing pretty good. And you know what? We've got some big IPOs coming out. SpaceX is coming out with an IPO this Friday. Talk a little bit about that. On top of that, we've got some other mega IPOs expected Anthropics already filed. It's expected that OpenAI is gonna file for an IPO. So what did Alphabet or Google do? Well, what they did last week is they announced that they were gonna do an $85 billion capital raise. We talked about that that Berkshire Hathaway had participated in that capital raise. Initial reaction to that was somewhat tepid, somewhat concerned. And now with a week behind us, many participants are saying that this might have been a smart or a shrewd move from Google or Alphabet to raise equity, to get ahead of these big IPOs, to raise money when financial markets are willing to provide it and do it in the equity market as opposed to the fixed income market and thought process on Apple's, excuse me, Alphabet's move have been viewed differently a week later than they were last week. But what does this mean if you've got Alphabet coming to market, raising $85 billion, SpaceX with $75 billion, Anthropic OpenAI, potentially Amazon, potentially Microsoft, and then on Friday you have Meta coming out saying that they are also probably going to do an equity offering? So what does this mean? This means you have a lot of supply coming to the financial markets, and when you see that there is a lot of supply coming, well, what do you do if you're a portfolio manager and you're managing money for for investors, and even though you are getting inflows, they are not coming as fast as these large IPOs and your desire to participate in them and to and to invest money. Well, what you need to do is you need to free up some of your money. You need to sell some of your existing stocks, and that may have been somewhat behind the sell-off on Friday. We had such a significant run-up, stock prices are very high, you're a portfolio manager, you've got big gains, you've got new positions that you'd like to initiate. Well, this is an opportune time, perhaps take some of that cash off the table. You don't want to after all wait until you have the IPO on Friday for for SpaceX. You want to participate, and suddenly you've got to start selling on Wednesday or Thursday of next week. You don't know where things will be. Well, going into the weekend, Friday may have been a decent day, especially after that employment report, to take some money off the table, and that certainly may have been one of the factors influencing what was taking place in the financial markets.

IPO Wave And Liquidity Drain

Keith Lanton 9:19

Now that is somewhat a source of concern because if you look back historically at the markets, those who remember the dot-com era 1999-2000 may remember that as the number of initial public offerings picked up that markets got more and more heated and eventually like a like a like a sun or a star, what happens is eventually it burn so bright that that things burn out. So certainly some concerns when you start seeing all of this money being raised. And then the Wall Street Journal last week ran an article talking about small cap stocks. So you think that large caps have had a good year? Well, small cap stocks right now in 2026 are actually trouncing the giants. The Russell Micro Cap Index, this is before the sell-off on Friday, was up about 21% year to date. And what's driving this? Well, it's a mix of speculation in penny stocks and AI hope. You've also had big winners like in the energy space, Bloom Energy, the market capitalization of that stocks up to $83 billion. So these types of stocks are leading to massive gains in small stock indices. But this is another sign to be cautious. History warns us to be careful. The last two times that small caps have outperformed like this were in 2021 and 2023, and they ended in a painful bubble burst as per the Wall Street Journal. So when specular stocks start to win big, that is a sign that investors may not be thinking as straight as they necessarily should be. What else is going on this morning?

Small Caps Lead As Speculation Rises

Keith Lanton 11:08

Well, let's take a look at where we're at. Futures on the Dow right now up about 170 points, and futures on the SP are up 62, futures on the Nasdaq up 454, so a little more than a third of a recapture from the sell-off on Friday in the NASDAQ, which was the big loser. NASDAQ was down about 4.1%. Right now it's up about 1.5%. This morning, lots of attention is being driven to taking a look at Apple. Apple has a major corporate event going on this week, the Apple Worldwide Developers Conference. It's a five-day event beginning on Monday on the West Coast. And at this event, Apple is expected to bring forth their new conversational Siri Assistant, which will be powered by Google's PowerPoint Gemini Artificial Intelligence model. Apple CEO Tim Cook will deliver one last major update to the Apple ecosystem before he hands the CEO ship over to John Turnis. This event comes as the iPhone Maker stock has been performing strongly. It's up more than 20% since the end of March and had only a modest sell-off going into the event on Friday, despite many of the other large CapTech stocks taking much steeper losses. What does this indicate? Well, it indicates that expectations are high going into this event. So, therefore, with these high expectations, if there is disappointment, could lead to a sharper sell-off given that the stock has held its ground. So well, on the flip side, if Apple delivers, meets these expectations or even exceeds them, well, the markets may react favorably. We'll talk a little bit more about Apple. Barons wrote it up over the weekend with a cautiously optimistic note. What else do we have to look forward to this week? Oracle coming out with their earnings report on Wednesday evening, giving us a look and insight into the demand for the AI data center infrastructure. Thursday, Lenar, which is a home builder, will give us insight into the housing market and whether home builders are considering adding more supply, something that President Trump has been actively advocating for to meet some of this demand and help lower prices for homes. And then, of course, on Friday, SpaceX, Elon Musk's rocket company, will become the first of three monster initial public offerings expected this year. The other are Anthropic, which dropped its confidential IPO last week, and OpenAI, which is expected to file its paperwork any day now. With so much hype heading into the SpaceX IPO, it will be interesting to see how the market absorbs such a large influx of equity as we just spoke about. While Anthropic and OpenAI will no doubt be watching the market reaction closely. So with this many companies looking to raise stock, Jim Kramer on CNBC said on Tuesday, he said somewhat presciently that's typically not a great time to buy stocks. That was before Friday where we saw the big drop here, perhaps with portfolio managers freeing up some funds. But it's not just the equity market that we're looking to this week, the government is going to provide us with some insights. , May Consumer Price Index is coming out on Wednesday. Federal Reserve tends to prefer the core personal consumption expenditure index as its proxy for inflation, but the CPI is a close second. Economists are expecting the CPI to increase at 4.3% in the headline rate and 2.9% in the core rate. Now, this CPI may get a bit more attention than it usually does, and it often gets a lot of attention because of the strong jobs number on Friday. And the market on Thursday will shift its attention to the May Producer Price Index. This is the input cost that businesses face. Eventually, it often feeds into CPI, although sometimes businesses will absorb those costs for a period of time. The May Producer Price Index, we're looking for a six-tenth of one percent month-over-month increase on the headline number and a three point and a 0.3% increase for the key for the core rate. While both the CPI and PPI are closely watched, the market is more concerned with future expectations than with the past data. So markets will be keenly focused on the war in Iran, oil prices, which we're going to talk about, the developments there, which are coming fast and furious, and those factors, those inputs can seriously influence investor expectations on the future path of interest rates. Just to put things in perspective, this morning we are seeing oil up $1.28, up to $91.82 a barrel for West Texas intermediate oil. So let's take a look at what's going on here this morning.

Week Ahead For Tech And Data

Keith Lanton 16:03

The most recent news flow coming out of Iran saying that they are they announced the end of the military options against Israel, but warrants Lebanon strikes could trigger escalation. So, what took place over the weekend is last week President Trump was very frustrated with the fighting between Israel and Hezbollah, and Iran stating that they were not interested in a peace deal until there was also peace in Lebanon between Israel and Hezbollah. The Lebanese government in Israel had agreed to a peace deal, but Hezbollah did not agree to that deal, and the Israelis continued strikes against the targets of Hezbollah in southern Lebanon. The Iranians had said that they would consider it a red line if Israel advanced those strikes up towards Beirut. Over the weekend, Israel struck around Beirut, and Iran responded with lobbying lobbying missiles and drones at Israel for the first time since the ceasefire was announced a couple of months ago. Israel responded and attacked some Iranian energy infrastructure. Iran then said that this could put into play energy infrastructure in the entire Middle East, so implying that they could seek targets not just within Israel, but targets amongst the other oil-producing countries within the Middle East. , this caused some of that spike that we're seeing in the oil price. But this morning President Trump's in a truth post social saying that he would like to see a cessation to all of this escalation. And now Iran announced that this comment about ending military operations against Iran. Some of this commentary is leading to some of the strength that we're seeing this morning in the equity markets. Some of it is also buying the bounce after the weakness from Friday. Also, Nvidia CEO Jensen Wong saying the recent telephone tech is a good buying opportunity, that according to Bloomberg. We also had Marvell, which was one of the poster childs for some of the chip stocks and their appreciation trading higher on news that it will join the S P 500, that stock up 22 points or a little over 8%. Apple going into the conference, the Worldwide Developers Conference, is trading up optimistically a little over one point. Speaking about President Trump and incoming Chairman Kevin Walsh, he said he doesn't want to have a big influence on Chairman Walsh, although he did add there is, quote, no reason to increase interest rates and says rates should be lowered. Other geopolitical news this morning is that in Los Angeles that Karen Bass and Nitya Rahman will advance to a runoff for a Los Angeles mayor. Spencer Pratt was eliminated from contention. Bloomberg reporting that American forces have witnessed 1,000 commercial vessels transiting the Strait of Hormuz since the ceasefire, reporting that TRIPS ships are turning off their transponders to avoid detection. Also, this morning, President Trump announcing that TrumpRX.gov is adding another 160 prescription drugs at highly discounted prices for a total of 800 of the most commonly used prescriptions that will be available on Trumprx.gov. Politico reporting that the Trump administration is in discussions about creating a petroleum reserve in California. And Bloomberg reporting a second case of the New World Screwworm parasite was discovered in Texas. This is a particularly odious infection for cattle and livestock. This screw worm, in several decades ago there was a significant infestation that led to a serious diminishing of the herd here in the United States. So this screw worm infestation will get lots of attention. This is when a certain type of fly lays larva eggs within a wound of cattle, could could be other mammals as well, and and then these larvae lead to infection and if untreated lead to death of the animal. Canada announcing that they will not be allowing import of U.S. cattle into Canada given the seriousness of the screw worm and their concerns that it could spread to their herds. Alright, so we talked about markets last week, volatility.

Middle East Escalation And Oil Spike

Keith Lanton 20:58

One of the commentators last week talking about financial markets was Ray Dalio, again mentioning founder of Bridgewater Associates on a Bloomberg television interview. Ray Dalio issued a warning. This was on Wednesday, suggesting that U.S. equity markets were nearing bubble territory, comparing the levels of financial markets to two of the worst financial crashes that we've seen, the late the late bubble that we saw in 2000 and also the bubble that was the market crash that was led to or precipitated the Great Depression. So saying that that his bubble indicators which measure sentiment, concentration, and valuation were all at or near extreme levels. But he was careful to say that the forming of a bubble, which is what he's saying is taking on place right now, is separate and distinct from The what he calls the pricking of a bubble, which that's the point when things come down in price. He said that the pricking of the bubble that only occurs when investors need to need cash in order to cover debts or tax obligations. So the build of a bubble and the fact that there is a bubble doesn't mean it's necessarily going to prick at the exact same time. But nonetheless, at some point there will be a pricking of the bubble if in fact there is one, and that obviously is something to be concerned about if that thesis is something that you feel is accurate. He went on to explain why he feels this. He said that we are past the point of no return. He's specifically talking about the amount of debt that the United States is accumulating, comparing the amount of interest rate payments that the United States must pay to the plaque in the circulatory system and saying that the amount of debt that we have in the debt service is squeezing the blood flow from the economy. He said that there are signs of this and they are early signs. He said if you look at the bond market, long-term rates are rising relative to short-term rates. If you look at the currency market, we're experiencing weakness in the dollar. And if you look at alternative assets like gold, you're starting to see increased desire for holding the alternative asset of gold. We'll talk a little bit more about that. Barron's positive on gold over the weekend. And he said that eventually, and this is a big word, eventually, that the rise in in interest rates and the concern about the economy could feed into the equity market, although we'll talk about why sometimes the equity market can act differently than the bond markets when the bond markets are in a moment when investors are losing confidence. Dalio suggesting that there is a transformative power of artificial intelligence, , but he does view it as a as a double-edged sword. He said that artificial intelligence is certainly a transformative technology, but he drew parallels to the railroads, which in the late 1800s were also a transformative technology, and he said transformative technologies often lead to massive capital misallocation, , meaning that so much money pours into it because so many people see the tremendous opportunity, and that leads to overinvestment in a transformative technology, kind of like what we saw in the Internet era, despite the fact that the Internet went on to become everything and more than the markets were anticipating in 1999. It didn't stop a flush out from occurring, and we could see a similar potential flush out as the result of overinvestment of artificial intelligence. Perhaps more importantly, Ray Dalio recently spent 10 days in China and he added to some of the geopolitical discussion with respect to what's taken place in Asia as well as the United States. He said after talking to leading Asian politicians and academics, he said that the general thought process is that the United States is no longer able to project military force over multiple theaters simultaneously. So it doesn't mean that the United States is necessarily weaker. In fact, the United States may actually be a lot stronger militarily than we were before, but the rest of the world is also getting stronger, and it's getting more difficult for the United States to be able to operate in multiple theaters at once. So the United States right now obviously significantly engaged in the Middle East, and then the question becomes how significantly could the United States be engaged in Asia should there be an event in Asia? So he therefore flagged what some would say is an obvious potential flashpoint being Taiwan. So if the Chinese were to do something, which he was not necessarily predicting, but just throwing it out there for thought, food for thought, and not saying it's impossible, but if the Chinese were to do something like just impose a blockade on Taiwan and their ability to import and export from Taiwan, and that would certainly affect the chip market, well that's something that would potentially be devastating for financial markets. He said that he thinks that the window for the greatest risk in financial markets is sometime between the midterm elections in 2026 and the presidential elections in 2028.

Dalio On Debt And Bubble Risk

Keith Lanton 26:30

If you want to go back and look at some historical context, perhaps you go back to the British pound and the the power of Great Britain going into certainly World War I and the end of the era of the of the strength or the preeminence of the British Empire, which some would say is defined by World War II, but perhaps occurring a little bit later in terms of recognition from the rest of the world. When you look at the British pound, the British pound basically traded somewhere between 450 and 480, between 1800 and 1910 to the U.S. dollar. Today the British pound is at about 1.35, so about 70% weaker than it was back when Great Britain was a preeminent world power. So you certainly want to keep an eye on the dollar to get a read on what the rest of the world is thinking about the preeminence of the United States, the safety of our treasuries and our securities, and what we are seeing, albeit on a limited scale, is diversification into into other assets like gold.

Gold Bid And Foreign Flows Shift

Keith Lanton 27:39

So speaking about gold, Barons over the weekend said the movement to gold by neat other nations has happened before, and suggesting that it's not good for the dollar. But if you're thinking about your portfolio, suggesting that maybe now may be a good time if you haven't already started an allocation to gold or you've been under-allocated to gold, that this may be a good time to think about adding to your gold, suggesting that the flight from U.S. government to s gov U.S. government securities to gold appears to be a reaction to policies here in the United States and Washington specifically, growing concerns about the U.S. budget deficit, which are running at about 6% of GDP, and perhaps equally significant, the fact that the United States' relations with our traditional allies and the traditional treaties seem to be not as strong as they once were. So the NATO relationship is something that is of concern as well as relationship with individual countries in Europe and our neighbors in Canada, Mexico, some in South America. Some of that is changing the geopolitical context, and the Barons is suggesting that many countries held on to their dollars in U.S. securities as a reflection of a quid pro quo unset agreement that the United States would provide a defense shield, that we were engaged in a symbiotic relationship, therefore these countries had a vested interest in holding our securities and our and our dollars, and that perhaps as these ties are not as strong, that's another factor weighing on the price of of gold to the upside and U.S. treasuries to the downside. What we are seeing is that many foreign countries are increasing their allocations to gold. Overall, gold made up 27% of central bank reserves at the end of 2025. That's up from 20% in 2024. Share of central bank reserves for treasuries slipped to 22% in 2025 from 25% in 2024. There have also been visible shifts into gold by countries that have been the target of U.S. financial sanctions in recent years. Clearly Russia has been increasing their gold as well as China. What's interesting is that Poland, which is kind of at the forefront of the spear of NATO facing the Soviet Union, somewhat interestingly, Poland has been one of the largest purchasers of gold and has been a minimal purchaser of U.S. . treasuries, Poland's increase in gold reserves up to almost 320 tons. This as a foreign investors become increasingly wary of treasuries, but I just mentioned that that foreigners have been pulling back from treasuries, but they have, although not to the same extent, but they have been increasing their exposure to U.S. equities. So foreign holdings of the U.S. equity securities are up from about $29.5 trillion to $33 trillion, perhaps some of that reflective of a rise in equity prices, but nevertheless foreigners holding more U.S. equities. And that also could be a reflection of concerns about holding debt, feeling that that again, if you're holding debt and you're only earning a fixed rate of four or five percent, you think the currency is going to depreciate more than four or five percent. Well, it doesn't make a lot of sense to hold that unless there's some other benefit to you. On the flip side, if you think that the equities that you're holding will appreciate more than the depreciation of the currency, well, then it makes sense to hold the equities. So it's very possible that that's some of the thought process behind some of our allies changing some of their allocation not only to gold but to equities. All right, let's talk another big event this

SpaceX IPO And Index Fund Impact

Keith Lanton 31:56

week. Let's talk SpaceX, SpaceX IPO coming out on Friday. SpaceX announced that they are going to set their price at $135 per share. This will value SpaceX at $1.8 trillion. So, what does this mean for your portfolio? Let's say you're thinking about, well, I may not buy any SpaceX on the IPO, but perhaps some of my funds will. Specifically, there's been lots of talk what index funds may do with respect to SpaceX's IPO and how much of your index fund could you wind up owning in SpaceX, whether you think it's a wonderful investment or not, you may wind up owning some of it either way. So let's talk about one major ETF, and that is the Vanguard Stock Market Total Return Fund. Symbol is VTI. What is Vanguard Total Stock Market Index Fund going to do? Well, it is going to include SpaceX in its holdings, but only relative to its float, and they will include it within their holdings within five days. So what does that mean? Well, that means that if you own VTI within a few days, you'll probably have exposure of about 0.2% to SpaceX if you in fact own that specific ETF VTI. The NASDAQ and the FTSE Russell are fast tracking the inclusion of large IPOs like SpaceX. So the FTSE Russell, the Russell like 2000, for instance, has reduced the waiting period to be included in the Russell Top 500 index from a year to five training days. That will put the Russell Top 500 index in direct competition with the S P 500. So what did the S P 500 do? Well, after much wrangling, the SP rejected a fast track proposal for the S P 500. So they will not be shortening the 12-month time period for IPOs to be included in the SP 500. They were considering shortening that period. Perhaps, equally or more importantly, they will not be eliminating the rule that IPO companies must have four consecutive quarters of profitability before being included in the index. This was somewhat controversial. Originally, Tesla was not in the SP 500 for a long time because they did not achieve four consecutive quarters of profitability. Some SP 500 investors were frustrated with this. Others were happy about it, pointing that this change to the S P 500 to require four consecutive quarters of profitability was put in place after the 2000.com crash where companies were included in the index that were not profitable. SP deciding to stick to that rule and not include companies that are not profitable for four consecutive quarters into the SP 500. So SpaceX will not be in the SP 500 for at least one year and or until they achieve four consecutive quarters of profitability. On the flip side, the NASDAQ 100, also known as QQQ, is one iteration of the Nasdaq 100. There are others, will apply a multiple of three times the float weighting to SpaceX. And this is the same rule that will apply to other big IPOs like Anthropic and OpenAI. So that will probably put the initial SpaceX waiting in the QQQ exchange traded fund at 0.6 to 0.7%. NASDAQ also reduced its waiting period from three months to 15 days. So in 15 days, NASDAQ, QQQ will start purchasing or owning the SpaceX initial public offering or IPO. Now keep in mind that's the initial waiting as stock gets sold, as as more company, as more shares unlock. Initially, when a company comes public, lots of private investors can't sell their stock or employees can't sell their stock. Over time, over the first six months to a year, that stock unlocks, meaning that they can sell stock, and the flow typically increases and increases significantly. As that float increases, these index funds will increase their ownership and holdings as well. So what we are talking about here now, when we're talking about BTI at 0.2% and QQQ at 0.5 to 0.6%, what we're talking about is what that ownership will be the first 15, 5, 15, or 30 days. As time goes on, that percentage will increase. All right.

Apple WWDC And The AI Siri Bet

Keith Lanton 36:32

Last but not least, we'll conclude talking about Apple. Their Worldwide Developer Conference is on, and the pressure is on as well. Last time Apple held the Worldwide Developers Conference in 2024, when they rolled out Apple Intelligence, markets were disappointed, but markets right now are willing to give Apple a do-over and are giving them the benefit of the doubt. UBS analyst David Vogue expects Apple to present an AI-powered Siri that will be able to understand personal data, analyze on-screen content. He expects Apple to launch an independent Siri app that functions similarly to other AI apps by acting as an interface for text, voice, and attachments. Any AI progress will come against a difficult backdrop. Public sentiment around AI has shifted quickly. Many are now worried about job loss and privacy. Those concerns are outweighing the benefits that many see from productivity enhancements. Half of all adults say increased the use of AI in their life, is making them feel more concerned rather than excited. But that negativity could actually be a boom for Apple, which has long marketed itself as a company that prioritizes user safety and privacy. Users already share large amounts of data with Apple from passwords to credit cards to face ID and health information. Apple has another edge in the AI race. It is spending hundreds of billions on capital expenditures, but is not spending hundreds of billions on capital expenditures to be an AI hyperscaler. This playbook is a playbook that Apple has chosen not to follow and that Wall Street was originally dubious on and is now willing to give Apple the benefit of the doubt, and actually is something that is now adding to Apple's valuation. So Wall Street will be carefully looking at Apple and how they leverage help, how they ask for help. So in this case, using Google to power their devices as they do to power their devices across search. And the street will be looking at how they integrate this partnership into their AI offering here at the Worldwide Developers Conference. And this being the keynote, last keynote from Tim Cook, expectations are high that he will deliver on some of the promises that Wall Street is banking on.

Where To Find The Show

Keith Lanton 38:54

That's everything I've got. Thank you for listening to Mr. Keith Lanton. This podcast is available on most platforms, including Apple Podcasts and Spotify. For more information, please visit our website at www.heroldlantern.com.

Disclosures And Risk Reminder

Sophie Cohen 39:13

Opinions expressed herein are subject to change and not necessarily the opinion of the firm. Pest performance is no guarantee of future results. The information presented herein is for informational purposes only and is not intended to provide personal investment advice. It is important that you consider your tolerance for risk and investment goals when making investment decisions. Investing in securities does involve risk and the potential of losing money. The material does not constitute research, investment advice, or trade recommendations.