This Week in Review | IPOs, US Inflation, ECB Rate Hike (June 12, 2026)

The episode opens with a discussion of SpaceX's IPO, described as the first of several anticipated mega-IPOs in 2026. The analysts explain that IPOs increase equity supply by instantly adding shares to the market, which can put downward pressure on stock prices if demand doesn't keep pace. They note that record stock buybacks — exceeding $500 billion in April and May alone, led by tech — could partially offset the supply increase, though they caution that buybacks are often executed slowly or below authorized levels and may not fully counterbalance large new issuances. They also observe that equity supply growth has been largely confined to the US, while overseas developed markets have seen shrinking supply, which contributes to their bullish outlook on non-US developed markets in 2026. Beyond supply dynamics, the SpaceX debut is framed as a sentiment indicator: high enthusiasm for new listings could signal investor euphoria and a maturing bull market, though they note such conditions can persist for years. They advise staying disciplined and diversified, pointing out that most IPOs outperform on debut but subsequently trail the market over the following years.

The second segment addresses the May US CPI report, which showed headline inflation rising 4.2% year-over-year — the highest since April 2023 and the third consecutive month of increase. Energy prices, particularly gasoline up 40.5% year-over-year, accounted for over 60% of monthly inflation gains, attributed to the ongoing Iran war. Despite acknowledging the real burden on consumers, the analysts argue that sustained broad inflation is unlikely because consumers tend to substitute cheaper alternatives and cut back on luxuries, and because global money supply growth remains relatively tame. They also note that the reading matched analyst expectations, meaning markets had likely already priced in the data, with University of Michigan one-year inflation expectations already sitting at 4.8% in May. They conclude that stocks have historically performed well across various inflationary environments and recommend staying invested rather than reacting to a single month's data.

The third segment covers the ECB's decision to hike its key policy rate by 25 basis points to 2.25% — its first rate hike in nearly three years — in response to eurozone inflation driven by the Iran war. The move was widely anticipated based on signals from April's ECB meeting minutes. The analysts argue the hike is unnecessary, suggesting the ECB is overly influenced by the 2022 inflation experience following Russia's invasion of Ukraine. They reiterate that sustained inflation requires rapid money supply growth, which is not occurring. Their primary concern is not inflation itself but the risk that central banks could overshoot by hiking rates unnecessarily, potentially inverting the yield curve — though they note bond markets are reacting as expected and that inversion is not an immediate threat.