Andy Constan on the SpaceX IPO, AI CapEx, and the End of the Buyback Tailwind

**SPEAKER_1** (0:00)
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**SPEAKER_2** (0:30)
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**SPEAKER_3** (1:00)
We are excited to announce the launch of a new podcast, First Principles with Andy Constan. There are a lot of shows out there that give you opinions on what is going on in markets, but the goal of this show is to go deeper. We want to focus on the lessons and frameworks behind what is happening, so we can all develop a better understanding of what actually drives markets and the economy. In this episode, we discuss the SpaceX IPO and what the rise of new issuance and IPOs means for markets. We also get Andy's take on AI and the economy. If you would like to continue receiving new episodes of First Principles, you can subscribe on all major podcast platforms using the links in this episode description. Thank you for listening. We hope you enjoy the new show.

**Andy Constan** (1:31)
That's $600-700 billion of shift from share reduction to no share reduction. So that's a big deal. That's a question, which is, are the tokens going to create disinflationary productivity growth, meaning more output for the same costs?
If so, nobody loses their job, and so they can buy the output, and the output can be worth the token spent on it. If oil comes down, that will increase consumption on other goods, which is inflationary of those goods, while, so, core will go up relative to headline, which will come down. There's no sign that the bubble is about to pop. So, consumer dis-saving still has room to go. Now, the thing is, dis-saving can only go so far.

**SPEAKER_5** (2:32)
Welcome back to another First Principles episode with Andy Constan. You can learn more about Andy and his research on his Damp Spring substack, and also on his personal or company's website, dampspring.com. Today, Andy, we're going to work through a wide variety of topics with you, including the recent wave of IPOs or at least the SpaceX IPO and the future IPOs that are in the pipeline, and how investors should be thinking about that, and how you think about it. I think we'll get into AI and its impact on growth and corporate earnings, and then just generally wrap up with some of your thoughts on the current macro backdrop and how you're viewing these major asset classes today. One of the interesting pieces that you wrote recently was this piece on IPOs where you were kind of making the point or the argument that in the IPO machine, you were sort of, I guess, a little bit tongue in cheek, but maybe not saying, everybody lies. All the players in the system are sort of in there, from the issuers to the banks to the founders to the institution to retail investors.
Everybody wants the deal to happen. People want to raise money. They want to see the stocks rally afterward. But I thought it would just be interesting to hear your view as sort of set up this idea, you know, of what happens in this IPO process and why all the players want this to work for them.

**Andy Constan** (4:01)
Sure.
So, I mean, I think the big takeaway on IPOs is it really, it reaches the core reason for why markets exist.
There's nothing more important. We talk, you know, we all enjoy talking about trading and as investors were constantly thinking about all the possible securities we could own. But when it comes right down to it, the purpose of markets is to connect those who need money to those who have money. And so in particular, the ability for a company to raise equity capital when they have historically been private has been a critical aspect of the company being able to realize its potential. Without equity capital, private companies just have limited access historically, limited access to investors. So the IPO stands as the sort of the essential aspect of markets. And so it becomes an important thing to watch. Things have changed a lot since then, obviously, in terms of what gets IPO'd and how the private markets work. But at the base point, that's what the markets are for. And so you have to start to ask yourself, so what is a good IPO look like? And there are so many constituents that matter.