The Week the Sky Went Public

This was the week markets had to hold two contradictory truths in their heads at once. The first: inflation remains a problem, with May CPI clocking 4.2% — a three-year high driven almost entirely by a 23.5% year-over-year spike in energy costs. The second: an Iran deal might actually arrive. WTI crude fell roughly 6% on the week as negotiators signaled the most concrete progress since the ceasefire framework collapsed in early June. The collision of those two currents — sticky headline inflation priced into the bond market, but the oil-shock component possibly about to deflate — is exactly the puzzle Warsh walks into on Monday.

Then there was SpaceX. The $75 billion IPO — the largest in history — landed on Friday like a controlled Falcon 9 burn: precise, enormous, and impossible to ignore. SPCX opened at $150, briefly cleared $175 intraday, and closed at $160.95, up 19.2% from its $135 offer price. Elon Musk became, briefly, the world's first acknowledged trillionaire. The market did not need to choose between the geopolitical macro and the tech narrative this week — it got both, at the same time, in the same five sessions.

The headline number looks alarming until you strip it apart. Core CPI at 2.9% year-over-year actually suggests that domestically-driven inflation is behaving — shelter decelerated, food was tame, transportation services fell 0.6% on the month. What's running hot is almost entirely the energy component, which means May's 4.2% print is less a structural inflation story than a Strait of Hormuz story in disguise. If the Iran deal closes and oil normalizes, June CPI could undershoot meaningfully.

That is the setup Warsh inherits. He can read the data the same way everyone else can: the war premium is in the headline, not the core. But with energy still embedded in every supply chain input cost — freight, manufacturing, ag — the Fed cannot simply wave it away. EY's economists put it directly: risks of higher and more persistent inflation remain salient with every day that passes without Hormuz normalizing.

The numbers are large enough to require context. SpaceX raised $75 billion at $135 per share — a fixed price, not a range, which itself was unusual. At $135, the company was valued at $1.77 trillion. By the open on Friday, it was worth more than $2 trillion. By intraday peak it briefly cleared $2.25 trillion. It closed at a $2.1 trillion market cap — above Tesla's ~$1.5 trillion, above every U.S. company except the top handful of mega-caps.

The company that went public is no longer just a rocket manufacturer. SpaceX's February acquisition of xAI folded in Grok's AI models, xAI's data centers, and the X social network. The prospectus disclosed $41.3 billion in cumulative losses since 2002 — a figure that would sink any industrial company but is treated as an R&D ledger by a market that prices Starlink's recurring revenue and the Starship platform's long-duration optionality. Wedbush's Dan Ives framed it as a watershed for the AI infrastructure cycle. Goldman Sachs led the deal. The underwriting syndicate included Morgan Stanley, Bank of America, Citi, and JPMorgan.

The week's geopolitical arc ran from strikes to signatures. Monday and Tuesday brought fresh U.S. strikes on southern Iran — described by officials as the most serious ceasefire breakdown yet. Then Wednesday flipped the script: Trump called off evening strikes, and markets did the math quickly. VIX fell nearly 12% in a single session. By Thursday, both U.S. and Iranian negotiators — with Pakistani mediation — confirmed they had agreed on the final text of a draft peace deal.

The memorandum of understanding, as reported Friday, would reopen the Strait of Hormuz immediately without tolls and restore prewar shipping within approximately 30 days. WTI crude fell toward $84–85 on the week, down from above $90 as recently as Tuesday. Brent tracked lower to the $87 range. The catch: neither side has signed. Israel is pressing the U.S. to prevent unfreezing Iranian assets. Iran's Foreign Minister described terms that appear to differ from the U.S. version. The U.S. military shot down two Iranian drones targeting Hormuz vessels as recently as Thursday night.

The deal is close. It is not done.