Consultation opened, comment period closed February 27, rules came into effect May 1.
Three months, soup to nuts.
Fastest index overhaul in years.
(checking notes)
SpaceX announced it was listing on Nasdaq shortly after.
(re-checking notes)
Right. So. The Nasdaq-100 used to require a seasoning period - newly listed companies waited anywhere from three months to a year before getting swept into the index. The idea being: let the price actually get discovered. Let float build. Don’t force $527 billion in ETF assets to mechanically pile into something that went public last Tuesday.
That rule? *poof* Gone with the wind.
Effective May 1, any newly listed company in the top 40 by market cap enters the Nasdaq-100 after a grueling delay of 15 trading days.
The minimum float requirement? *poof* … also gone. Eliminated. A stock used to have 10% float to be able to be included. The quaint idea being that less float meant less price discovery. Instead, we now get a weighting multiplier of up to 3x. So a company that floats 3% of its shares gets treated as if it floated 9%.
~~~~
Frankly evidence seems to be accumulating that the "casino" of the markets is close to implosion. Time will tell - it always does.
As they say, markets can stay "crazy" long enough to use up all your capital betting against them. It is amazing how long bubbles can stay going, but eventually they do blow up. And this time, the government has little room for fiscal or interest rate intervention without blowing up the US$ and starting a perhaps even bigger financial crisis.
about "With the whole thing dependent upon the ability of a very small number of companies to raise colossal amounts of capital from lenders, venture capital and private equity. These three pools are now approaching exhaustion and the loss-making companies now must reach out to the wider financial markets to tap pension fund, mutual fund and the wider public’s investment pools. This is why we are seeing the rush of SpaceX, OpenAI and Anthropic toward initial public offerings. "
I'm not convinced by this framing. These people are not shortsighted, including the lenders, venture capital and private equity guys. From the get go the plan would have obviously been to go IPO asap when the timing suits. All the way along these IPO and funding issues would have been front and center on their mind and calculated in their planning and development. Loss-making companies is SOP for high capital tech firms.
Obviously there will be an adjustment, how hard that is is yet to be determined, and like in every "crash" the impacts are never uniform, eg in the 1987, dot com and gfc / covid crashes. Do you really believe these bros are that short sighted to have never expected future financing challegnes the dramas surrounding IPO raises?
about the tie in between these AI issues and Iran. Saying Iran would be "aware" and that this US finance stock market issues are in fact [playing a role in the gulf war thinking of both Iran and Trump/Bibi. I don't see it. Isn't this a very long bow to be drawing as you have above?
about - From Steve Hsu on Twitter top 9 openrouter api calls
Can you tell which large AI companies that data graph didn't capture?
The history of finance is replete with financiers and investors being carried off in one bubble that exploded after another. Three decades of government policies, from the "Greenspan put" to the mass deregulation of the financial markets, to repeated bailouts of the financial sector and QE and zero interest rate policies, have lead to an extreme risk taking environment. Together with major agency issues (e.g. private equity partners enriching themselves at the cost of their investors) and heavily skewed incentives as finance has become believing in an ever-present state put/rescue. Many of the people who are in finance never experienced the dot com crash a quarter of a century ago during their professional careers. Their whole professional careers have been in an environment of QE, bailouts and a lack of effective regulation..
OpenAI, Anthropic, and SpaceX are utterly garbage business models that represent the pinnacle of the three decades of march away from sound finance. They, and others in the AI sector, are burning cash in the tens of billions which has lead to them sucking all the resources of the venture capital sector (which is already stuffed full of illiquid investments that they cannot sell), the risk appetite of the lenders, and even private equity. The only way to keep moving is either a government bailout (so far not forthcoming), or to tap mainstream investors.
The way in which the regulations for the indexes (Nasdaq and Russell, the S&P was having none of it) and index funds to force feed these IPOs is scandalous, as is the massive shrinking of the time window before insiders can cash out, as are many of the terms of the SpaceX IPO. This is a desperate pump and dump from companies bleeding money in tens of billions with no path to profitability.
The scale of their losses and financing needs is far beyond "SOP for high capital tech firms" and they have absolutely no path to profitability, unlike lets say Uber or Amazon. And of course the Iranian leadership understand the fragility of the US financial system, that's their job when strategizing. That fragility greatly increases the impact of a trie energy crunch as stockpiles start to deplete as the summer progresses.
You say I should be worried about this bubble. But I’m the guy who called Tesla overpriced at $125 pre-split — which would be ~$3,000 today. So maybe I’m not the best finance guru. Prices don’t matter. Only entry and exit do. Borrowing, fundraising, all of it — comes out in the wash.
And honestly, the only people who actually lost money in 1929 were already wealthy. So who cares?
On your other points:
“Never experienced the dot-com crash” — They can read. Or ask colleagues. If they’re ignorant, that’s their own fault. No sympathy.
“Sucking all the resources of venture capital” — Have they really drained global capital? I doubt it. IPOs are normal. Google’s IPO was a risk. Tesla raised money constantly. If AI bros go bust, everyone loses. If government bails them out, everyone loses except the VCs and founders. Situation normal.
“Fragility of the US financial system” — Sure, things can get worse. They likely will.
Here’s where we really differ:
You see a dangerous bubble. I see another log on the fire of a system that’s already a corrupt house of cards. It will collapse at some unknown point — AI bubble or not. Ma and pop investors? GenZ with degrees? They play at their own risk. If they go bankrupt and take down banks or the government with them — so what? That was always going to happen sooner or later.
The 1929 crash lead to the Great Depression, with 33% unemployment. A lot more people got hurt than just the rich folks. I worked with trading floors and investment banking, their timeframe is quite short-sighted, very few folks think longer-term than their next bonus.
With all of the growth in the US economy dependent on the AI bubble and the amount of wealth destruction that will follow a crash things could get very nasty. With most governments already heavily indebted as well as the private sector.
AI hasn't drained the public investment markets, only the private ones. The scale of these IPOs is far bigger than earlier ones in the amount of cash being raised in total. Google IPO was US$1.7 billion, Uber IPO US$8 billion, these guys are going after US$70-US$80 billion each.
Roger — I hear you, and I'm not dismissing the suffering that follows a crash. I get it. 33% unemployment is real. The next crash might produce 100% unemployment.
But you're still arguing inside the system. I'm asking: what if the system itself was always the problem? (It is!) And what if none of us can see the next pivot — AI with ads, AI running forums, AI buying the browsers we're typing on?
You say the scale of these IPOs is unprecedented. Fine. But Uber Intel MS and Google looked insane once too. Tesla raised money for years while people like me called it overpriced.
My point isn't "no one will get hurt." My point is: you don't know how this ends. Neither do I. So why are you so sure it's a bubble instead of a birth?
And if the whole system unravels completely why is that even a problem, when it's the integrated systems themselves - Capitalism Empire Energy Finance Nation States - that are the real cause of the deadly harm being down to people everywhere and to our life support ecosystems.
The world does not need a Stock Market or IPOs or a Capitalist imposed Regulatory system that is corrupt to the core.
PS: Has anyone stopped to run the numbers on what happens when “free AI apps” start running display ads — just like Google Search did back in the day?
Or when the AI bros buy out browsers, Dell, Microsoft… or even Google itself?
Or when AI manages discussion forums — under YouTube videos, replacing Substack, replacing the entire blogosphere?
I’m thinking outside the box here.We never see what's coming. Like who predicted Uber? Who predicted that a phone app would upend global transport, hotels, and food delivery?
Unexpected reform is the norm. The next floor always looks like a ceiling until someone walks up it.
(That's me remembering my Tesla call, by the way. 😅 Though my expectations for global collapse doesn't change. The timing is what's variable. )
I think the "author" of this post be encouraged to respond to the comments including this one from you and the others.
I think this IPO of SpaceX is a complete disaster in the making - whether planned as such or not remains to be seen, but fact of the matter - tis known already. A disaster for humanity.
I think this article adds some extra info - https://no01.substack.com/p/honest-graft
From the article:
~~~~
Nasdaq changed its index rules in February.
Consultation opened, comment period closed February 27, rules came into effect May 1.
Three months, soup to nuts.
Fastest index overhaul in years.
(checking notes)
SpaceX announced it was listing on Nasdaq shortly after.
(re-checking notes)
Right. So. The Nasdaq-100 used to require a seasoning period - newly listed companies waited anywhere from three months to a year before getting swept into the index. The idea being: let the price actually get discovered. Let float build. Don’t force $527 billion in ETF assets to mechanically pile into something that went public last Tuesday.
That rule? *poof* Gone with the wind.
Effective May 1, any newly listed company in the top 40 by market cap enters the Nasdaq-100 after a grueling delay of 15 trading days.
The minimum float requirement? *poof* … also gone. Eliminated. A stock used to have 10% float to be able to be included. The quaint idea being that less float meant less price discovery. Instead, we now get a weighting multiplier of up to 3x. So a company that floats 3% of its shares gets treated as if it floated 9%.
~~~~
Frankly evidence seems to be accumulating that the "casino" of the markets is close to implosion. Time will tell - it always does.
~
BK
As they say, markets can stay "crazy" long enough to use up all your capital betting against them. It is amazing how long bubbles can stay going, but eventually they do blow up. And this time, the government has little room for fiscal or interest rate intervention without blowing up the US$ and starting a perhaps even bigger financial crisis.
this is grand picture:
https://darkomulej.substack.com/p/how-a-civilisational-bet-became-your
thx for comprehensive status review
about "With the whole thing dependent upon the ability of a very small number of companies to raise colossal amounts of capital from lenders, venture capital and private equity. These three pools are now approaching exhaustion and the loss-making companies now must reach out to the wider financial markets to tap pension fund, mutual fund and the wider public’s investment pools. This is why we are seeing the rush of SpaceX, OpenAI and Anthropic toward initial public offerings. "
I'm not convinced by this framing. These people are not shortsighted, including the lenders, venture capital and private equity guys. From the get go the plan would have obviously been to go IPO asap when the timing suits. All the way along these IPO and funding issues would have been front and center on their mind and calculated in their planning and development. Loss-making companies is SOP for high capital tech firms.
Obviously there will be an adjustment, how hard that is is yet to be determined, and like in every "crash" the impacts are never uniform, eg in the 1987, dot com and gfc / covid crashes. Do you really believe these bros are that short sighted to have never expected future financing challegnes the dramas surrounding IPO raises?
about the tie in between these AI issues and Iran. Saying Iran would be "aware" and that this US finance stock market issues are in fact [playing a role in the gulf war thinking of both Iran and Trump/Bibi. I don't see it. Isn't this a very long bow to be drawing as you have above?
about - From Steve Hsu on Twitter top 9 openrouter api calls
Can you tell which large AI companies that data graph didn't capture?
thanks
The history of finance is replete with financiers and investors being carried off in one bubble that exploded after another. Three decades of government policies, from the "Greenspan put" to the mass deregulation of the financial markets, to repeated bailouts of the financial sector and QE and zero interest rate policies, have lead to an extreme risk taking environment. Together with major agency issues (e.g. private equity partners enriching themselves at the cost of their investors) and heavily skewed incentives as finance has become believing in an ever-present state put/rescue. Many of the people who are in finance never experienced the dot com crash a quarter of a century ago during their professional careers. Their whole professional careers have been in an environment of QE, bailouts and a lack of effective regulation..
OpenAI, Anthropic, and SpaceX are utterly garbage business models that represent the pinnacle of the three decades of march away from sound finance. They, and others in the AI sector, are burning cash in the tens of billions which has lead to them sucking all the resources of the venture capital sector (which is already stuffed full of illiquid investments that they cannot sell), the risk appetite of the lenders, and even private equity. The only way to keep moving is either a government bailout (so far not forthcoming), or to tap mainstream investors.
The way in which the regulations for the indexes (Nasdaq and Russell, the S&P was having none of it) and index funds to force feed these IPOs is scandalous, as is the massive shrinking of the time window before insiders can cash out, as are many of the terms of the SpaceX IPO. This is a desperate pump and dump from companies bleeding money in tens of billions with no path to profitability.
The scale of their losses and financing needs is far beyond "SOP for high capital tech firms" and they have absolutely no path to profitability, unlike lets say Uber or Amazon. And of course the Iranian leadership understand the fragility of the US financial system, that's their job when strategizing. That fragility greatly increases the impact of a trie energy crunch as stockpiles start to deplete as the summer progresses.
Thanks for the detailed reply, Roger.
A few things still confuse me though.
You say I should be worried about this bubble. But I’m the guy who called Tesla overpriced at $125 pre-split — which would be ~$3,000 today. So maybe I’m not the best finance guru. Prices don’t matter. Only entry and exit do. Borrowing, fundraising, all of it — comes out in the wash.
And honestly, the only people who actually lost money in 1929 were already wealthy. So who cares?
On your other points:
“Never experienced the dot-com crash” — They can read. Or ask colleagues. If they’re ignorant, that’s their own fault. No sympathy.
“Sucking all the resources of venture capital” — Have they really drained global capital? I doubt it. IPOs are normal. Google’s IPO was a risk. Tesla raised money constantly. If AI bros go bust, everyone loses. If government bails them out, everyone loses except the VCs and founders. Situation normal.
“Fragility of the US financial system” — Sure, things can get worse. They likely will.
Here’s where we really differ:
You see a dangerous bubble. I see another log on the fire of a system that’s already a corrupt house of cards. It will collapse at some unknown point — AI bubble or not. Ma and pop investors? GenZ with degrees? They play at their own risk. If they go bankrupt and take down banks or the government with them — so what? That was always going to happen sooner or later.
So my real question is: What’s the problem?
I don’t see one. Do you?
The 1929 crash lead to the Great Depression, with 33% unemployment. A lot more people got hurt than just the rich folks. I worked with trading floors and investment banking, their timeframe is quite short-sighted, very few folks think longer-term than their next bonus.
With all of the growth in the US economy dependent on the AI bubble and the amount of wealth destruction that will follow a crash things could get very nasty. With most governments already heavily indebted as well as the private sector.
AI hasn't drained the public investment markets, only the private ones. The scale of these IPOs is far bigger than earlier ones in the amount of cash being raised in total. Google IPO was US$1.7 billion, Uber IPO US$8 billion, these guys are going after US$70-US$80 billion each.
Roger — I hear you, and I'm not dismissing the suffering that follows a crash. I get it. 33% unemployment is real. The next crash might produce 100% unemployment.
But you're still arguing inside the system. I'm asking: what if the system itself was always the problem? (It is!) And what if none of us can see the next pivot — AI with ads, AI running forums, AI buying the browsers we're typing on?
You say the scale of these IPOs is unprecedented. Fine. But Uber Intel MS and Google looked insane once too. Tesla raised money for years while people like me called it overpriced.
My point isn't "no one will get hurt." My point is: you don't know how this ends. Neither do I. So why are you so sure it's a bubble instead of a birth?
And if the whole system unravels completely why is that even a problem, when it's the integrated systems themselves - Capitalism Empire Energy Finance Nation States - that are the real cause of the deadly harm being down to people everywhere and to our life support ecosystems.
The world does not need a Stock Market or IPOs or a Capitalist imposed Regulatory system that is corrupt to the core.
PS: Has anyone stopped to run the numbers on what happens when “free AI apps” start running display ads — just like Google Search did back in the day?
Or when the AI bros buy out browsers, Dell, Microsoft… or even Google itself?
Or when AI manages discussion forums — under YouTube videos, replacing Substack, replacing the entire blogosphere?
I’m thinking outside the box here.We never see what's coming. Like who predicted Uber? Who predicted that a phone app would upend global transport, hotels, and food delivery?
Unexpected reform is the norm. The next floor always looks like a ceiling until someone walks up it.
(That's me remembering my Tesla call, by the way. 😅 Though my expectations for global collapse doesn't change. The timing is what's variable. )
I think the "author" of this post be encouraged to respond to the comments including this one from you and the others.
I think this IPO of SpaceX is a complete disaster in the making - whether planned as such or not remains to be seen, but fact of the matter - tis known already. A disaster for humanity.