An alternative to buying SpaceX shares is to not

Also: Planet Nvidia, Chinese housing, AI auditing, London's falling, kidney marketing, cheap broadband, prophylactic smartphones, ill winds, and KFC coleslaw

How it used to work was that an investor would buy shares in a stock. Those shares would legally confer on the buyer certain fractional ownership rights to a corporation that usually failed, sooner or later, after which the investor might frame their stock certificate or keep it in a drawer, depending on how often they wanted to be reminded of their mistake.

Then, over the past four centuries, lots of things happened to weaken the link between a physical share certificate and its economic worth — electronic registration, fees pressure, a depository flood, etc. Latterly, it was stock derivatives.

From the mid-1990 or thereabouts, banks sold lots of over-the-counter contracts linked to equity values. These contracts were popular because they don't tie up as much capital as regular share ownership, could dodge taxes, and might be used to amplify or suppress price volatility. A few naysayers emerged but, as with commodity futures, the transfer of risk towards those who wanted it and away from those who didn't was seen as socially good and useful.

Whenever demand for risk is growing faster than the desire to hedge, however, things have often been left to spiral.

You may have seen this week that Polymarket, a Panama-based bookmaker, is going to offer event contracts on US private company valuations. Hyperliquid, a bookmaker of no fixed abode, already trades synthetic share-like instruments for private companies. Both these exchanges are closed to US residents, whose access to private markets and security-based swaps is restricted by law, but no one in authority right now seems to remember that. And when regulators show no inclination to apply the rules, why would anyone else? Nearly every form of securities trading now has an Agnes Harkness-sized wink attached.

It’s an odd backdrop for what's likely to be a record-breaking year for IPOs. SpaceX, OpenAI and Anthropic will sell shares to a public for whom not buying shares has never been easier. Any sufficiently motivated speculator already has plenty of ways to bet on their valuations. Unless the speculators are particularly excited about gaining second-class voting rights, or about the very distant prospect of receiving dividends, where’s their incentive to hold the underlying shares?

OK, let’s be honest, this is probably not today’s problem. For the moment, bookmakers offering security-like markets are insignificant to the Great American IPO Machine (and its latest preferred backstop, indexed passive flows).

On the other hand, every dollar riding on an offshore exchange won't directly support a new issue’s first-day pop, and nothing deflates a hype bubble like a couple of damp-squib debuts.

History also advises us to keep an eye on counterparty risk, particularly when things go south. How easy is that when it’s a pseudonymous counterparty on an unregulated operator’s blockchain? We’ll find out soon enough. A bull market provided cover for the US to lurch into its post-regulation era, but the latter is nearly certain to outlast the former.

In the meantime, how might IPO-ripe corporations encourage punters to keep punting on primary markets?

Here's one idea. Elon Musk often sells corporate keepsakes and gewgaws, from Tesla-branded tequila and short shorts to Boring Company flamethrowers. Maybe, for the next marketing promotion, SpaceX could issue stock certificates of the type investors might frame, or keep in a drawer.

A week on Alphaville

○ Is Nvidia too big to fail?

○ America needs to put the renminbi back on the international agenda, says economist supergroup Mark Sobel, Brad Setser and Robin Brooks.

○ Making sense of the US’s gigantic net international investment position.

○ A look at economic spillovers from China’s real estate crash.

○ Much more than you’ve ever wanted to know about the VAT treatment of dips in KFC meal deals.

○ Goldman Sachs secured top billing for SpaceX’s IPO and a lot of bankers will be very excited, for reasons that are not entirely ridiculous.

○ SpaceX paid sticker price for a lot-full of Cybertrucks.

○ The gambler’s fallacy, as applied to annual stock market performance.

○ Indonesia’s fuel subsidy regime is a mess that’s difficult to clean up.

○ A bitcoin miner spent $860k on armouring vehicles for its bosses, a fact for which we have very little context.

○ Hyperliquid’s tokenised contracts for difference promise a bright new future for the City, says City broker Panmure Liberum, which might be seen as a tad conflicted on the subject.

○ Frances Coppola dismantles a suggestion that the UK should issue euro-denominated debt.

○ A big El Ninõ season isn't something to fear unless it is, in which case it is.

○ One of the smartest arguments in favour of mandatory quarterly reporting is in an open letter co-signed by WallStreetBets, a Reddit forum for lunatics.

○ The Bank of England’s oil shock forecasts from August 2025 went stale very quickly.

○ The BoE’s Huw Pill did a metaphor.

○ The Economics Show talks to Alvin Roth about paying for kidneys.

○ FTAV’s merch shop has a new “lower-value human capital” range.

Best of Further Reading

○ LLMs are, among other things, lava lamps for information. Trippy things that happened when Andon Labs prompted four of them to each run a radio station.

○ Web developer Baldur Bjarnason has a long read on the current state of the tech industry, and why everyone hates it.

○ Deutsche Bank Research Institute has a bombastic note on Megatrends: AI vs the decade’s structural headwinds.

○ The Atlantic looks at the current state of ed-tech gamification.

Chart blast

○ Because who needs more accountants really?

○ Per this big read, London’s in a bad place (the UK).

○ Dominion Energy this week agreed to a $125bn all-share merger with Florida’s NextEra. Scale, Lex says, is a defence as opposition grows to hyperscalers outbidding households for electricity.

○ In the UK, as elsewhere, telecoms network capex is completely disconnected from broadband pricing power.

○ The above chart, from John Burn-Murdoch’s deep dig into fertility statistics, went viral this week among opinion-havers who only read the headline.