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. Follow First Principles on Spotify Follow First Principles of Apple Podcasts 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 

# Full Transcript

**Podcast:** Excess Returns 

## Transcript

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[SPEAKER_C] 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.

[SPEAKER_D] That's, you know, $600, $700 billion of shift from share reduction to no share reduction. And so that, that's a big deal. That's a question, which is, are the tokens gonna 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 tokens 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 dissaving still has room to go. Now the thing is, dissaving can only go so far.

[SPEAKER_E] 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 the 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 sort of how investors should be thinking about that...

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

Transcript

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

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.