In the third episode of First Principles with Andy Constan, Andy breaks down the changing structure of markets as the IPO window reopens, AI CapEx accelerates, and corporate buybacks shift toward new equity supply. We discuss what the SpaceX IPO says about capital markets, whether AI spending can create disinflationary growth, why the consumer is still holding up, and what could challenge the current market bubble.

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Topics covered:

Why IPOs are central to the purpose of public markets
How Andy evaluates whether the SpaceX IPO worked
Why issuers may want IPOs to trade higher after pricing
The shift from stock buybacks to new equity issuance
Why AI CapEx is changing the supply and demand for shares
How hyperscaler spending is being funded through cash, bonds, and stock
The economic test for whether AI investment pays off
Disinflationary productivity growth versus labor displacement
Why the current economy is still supported by consumption
The role of wealth effects and consumer dissaving
Why falling oil prices may not eliminate inflation pressure
What Andy is watching in Fed policy, tariffs, AI CapEx, and equity issuance
How Kevin Warsh could approach rates, QT, and the Fed balance sheet

Timestamps:
00:00 Intro and key themes
04:18 How Andy reads the SpaceX IPO
08:27 Why underwriters and regulators want IPOs to work
13:00 Why issuers may want IPOs to trade higher
17:05 From stock buybacks to new equity supply
21:06 The 600 to 700 billion dollar shift in share supply
26:42 The economic test for AI tokens
32:09 Can AI create disinflationary productivity growth?
38:10 Is AI CapEx holding up the economy?
41:00 Wealth effects, dissaving, and the consumer
45:52 Oil prices, war, and inflation
49:07 Jalen Brunson, incentives, and long-term value
52:00 Fed policy, tariffs, and what matters this summer
55:36 Kevin Warsh, QT, and the Fed balance sheet
58:42 Closing thoughts

No information on this podcast should be construed as investment advice. Securities discussed in the podcast may be holdings of the firms of the hosts or their clients.

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

Excess Returns

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