There’s been a lot of fear lately that mortgage rates could rise back above 7% or even higher this year.
The driver being inflation related to $100+ oil, which increases the cost of just about everything.
But the so-called “odds” are still pretty split with only a 50% chance they rise above 6.8%, this according to Kashi, which offers and tracks prediction markets.
This doesn’t mean they’re right, but it shows you where pricing is resolving at the moment.
So perhaps there’s limited upside (in a bad way!) for the 30-year fixed, despite all that’s going on.
Will the 30-Year Fixed Rise Above 6.80% Again This Year?
At last glance, Kalshi’s “How high will 30yr mortgage rate get this year” market is at an even 50-50 chance for rising above 6.8%.
This is at any point over the next six months and change that are left in the year 2026.
That’s not much conviction given everyone has been screaming that mortgage rates could surge higher with inflation.
It uses Freddie Mac’s weekly Primary Mortgage Market Survey (PMMS) as the source.
As of last week, the 30-year fixed averaged 6.51%, per the PMMS, so it would have to move about 30 basis points higher to get above that 6.8%.
Kalshi currently sells a “yes” contract for this market for $0.47 each. So $100 worth at $0.47 would buy you 213 contracts.
The way it works is if you were to stake $100 on the 30-year fixed going above 6.8%, and it hits, you would earn $113 in profit.
In other words, those contracts become worth a dollar each if the 30-year fixed goes above 6.8%.
I’m not saying to do it, nor am I doing it, but I thought it was an interesting way of looking at probabilities based on public perception.
The 30-Year Fixed Was Above 6.8% in 16 of 52 Weeks Last Year
I actually looked back on mortgage rates in 2025 based on Freddie Mac data and found that there were 16 weeks where the 30-year fixed was above 6.8% last year.
That’s more than a quarter of the time, nearly a third in fact, when conditions were arguably relatively similar.
And mind you, we didn’t have the Iranian conflict and oil prices above $100, with renewed fears of inflation.
That’s not to say mortgage rates go back there, but it also wouldn’t shock me.
I’ve been saying for a while that rates could briefly touch 7% or even rise above 7% this year.
Of course, it depends on how Freddie Mac captures data.
Their weekly survey is often delayed because they collect mortgage rate quotes throughout the week (prior Thursday through Wednesday) and post them on Thursday.
This means they often don’t capture all the rate movement, especially if it’s brief.
For example, you could get a day or two when rates spike, but then they ease again and Freddie Mac never really captures it. Or it’s diluted by lower days.
Conversely, you’d see that rate movement on a daily mortgage index such as Mortgage News Daily’s.
In terms of when the 30-year fixed was last above 6.8%, it was the week of June 18th, 2025.
The big difference this year versus last though is that mortgage rate spreads have improved tremendously.
This means you need the 10-year bond yield to go even higher this year, all else equal.
It’s certainly still a real possibility, but it will be driven by what transpires in Iran.
If a peace deal or similar resolution is reached anytime soon, we might never get about 6.8%.
If the conflict drags on or worsens, something above 6.8% or even 7% is entirely conceivable.
The kind of good news here is that mortgage rates might have a bit of a ceiling at current levels, so the worst could mostly be behind us.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.
There’s a dynamic playing out in medicine right now that most physicians feel but few have named clearly.
The more years you put into your career, the less control you tend to have over it.
Your income is set by someone else. Your schedule is set by someone else. The terms under which you can leave, and where you can practice afterward, are set by a contract you signed years ago, possibly without fully understanding what you were agreeing to.
That’s not a burnout story. It’s a leverage problem. And the data suggests it’s getting worse.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial, legal, or investment advice. Any investment involves risk, and you should consult your financial advisor, attorney, or CPA before making any investment decisions. Past performance is not indicative of future results. The author and associated entities disclaim any liability for loss incurred as a result of the use of this material or its content.
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The Shift That Happened Without a Vote
For most of the 20th century, physician ownership was the default. In the early 1980s, roughly 76% of physicians had an ownership stake in their practice.¹ That wasn’t a specialty move or an entrepreneurial detour. It was just how medicine worked.
Then the economics changed.
EHR mandates, rising overhead, declining reimbursements, and increasing regulatory complexity made running an independent practice harder every year. Medicare reimbursements lost nearly a third of their real value over 25 years.² The 2025 Physician Fee Schedule cut average payment rates by another 2.93%.³
Employment looked like the rational response. Let someone else handle the billing. Trade ownership for stability.
By 2012, 60.1% of physicians were still in private practice. By 2024, that number had dropped to 42.2%, an 18-percentage-point drop in just 12 years.⁴ And as of January 2026, data from the Physicians Advocacy Institute and Avalere Health shows that 82% of practicing physicians are now employed by hospitals or corporate entities.⁵
In roughly 40 years, the profession went from predominantly physician-owned to predominantly employed. Most physicians didn’t choose this direction so much as get swept into it, one contract at a time.
What Employment Actually Costs
The salary is real. So is the stability. But employment comes with three costs that don’t show up in the offer letter.
The first is clinical autonomy.
A survey of 1,000 employed U.S. physicians conducted by NORC at the University of Chicago and commissioned by the Physicians Advocacy Institute found that 61% reported having moderate or no autonomy to make referrals outside their practice or ownership system. Nearly half, 47%, reported policies or financial incentives to adjust patients’ treatment options to reduce costs. About 61% of employed physicians say they have moderate or no autonomy to make referrals outside their ownership system.⁷
The number that deserves more attention: 47% of employed physicians report adjusting patient treatment options based on their employer’s cost policies or incentives.⁷ That’s nearly half of employed physicians modifying clinical decisions based on administrative pressure. Most physicians trained with the expectation that clinical decisions would be theirs to make.
The second cost is satisfaction and wellbeing.
According to the Medscape Physician Burnout and Depression Report, 62% of physicians cite bureaucratic tasks as their primary driver of burnout, and 40% cite lack of respect from administrators and coworkers.⁸ The hours matter, but what erodes satisfaction fastest is the loss of professional agency, the feeling of expertise without authority.
Physicians in hospital-employed settings are nearly three times more likely to report job dissatisfaction than those in physician-owned practices, according to Bain and Company’s Frontline of Healthcare survey.⁹ Burnout rates in hospital-based specialties consistently perform below benchmark.
The third cost is financial, and it compounds over time.
Private practice physicians earn roughly 10% more on average than their employed counterparts. Over a 30-year career, that differential amounts to approximately $1 million in additional lifetime earnings (though the actual gap varies significantly by specialty, geography, and career path)¹⁰ .
But the income gap is actually the smaller problem.
The larger issue is equity. Every year an employed physician practices, they generate real value for their employer. Patient relationships, referral patterns, clinical reputation, volume. None of that value accrues to the physician. There is no ownership stake, no appreciation, no exit event. You are building the system’s asset on the system’s behalf.
The Non-Compete Problem
In 2024, the Federal Trade Commission attempted to ban non-compete agreements broadly. That rule was struck down in federal court. Non-competes remain fully enforceable in most states, and based on contracts being signed in 2026, the clauses are becoming more restrictive, not less.
For employed physicians, this creates a compounding trap. You spend years building a patient base in a community. You become known. Patients request you. And then, if you decide to leave, your contract may prohibit you from practicing within a specified radius, often 15 to 30 miles, for one to two years.
The leverage you built through years of practice is contractually non-transferable.
A Bain and Company survey found that 25% of physicians in health system-led organizations are considering changing employers, compared to 14% in physician-led practices.⁹ A significant portion of the employed physician workforce wants different terms. Most don’t have the financial position to act on that.
The Dependency Is the Problem, Not the Job
Employment is not inherently the issue. Plenty of employed physicians have built genuinely good careers and lives within that structure.
What creates the trap is single-source dependency. One employer, one income stream, a contract that limits exit options, and no financial alternatives developed along the way.
When the system changes, and it will, the physicians who have options are the ones who built them while still employed. The physicians who don’t have options are the ones who treated financial security as something the employer was responsible for providing.
The risk of employment wasn’t eliminated. It was concentrated.
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Two Things That Actually Change This
The first is building income outside your employer, specifically while you’re still employed and before you need it.
Real estate. Private investments. A side practice. Consulting. Content. The vehicle matters less than the principle: every dollar of income you build outside your employment relationship increases your leverage within that relationship. You negotiate differently. You tolerate less. You make requests you wouldn’t otherwise make, because your answer to “what if they say no?” has changed.
This isn’t about accumulating a second full-time income before you can act. It’s about shifting from financial dependency to financial optionality. Those are different thresholds, and the second one is more reachable than most employed physicians realize.
The second is understanding what the alternative practice models actually look like.
Direct primary care operates on a membership model, removing the insurance intermediary entirely. The physician controls panel size, schedule, and patient relationships. It now accounts for roughly 9% of the family medicine workforce and is growing steadily.¹¹
Concierge medicine and cash-pay practices similarly remove the third-party payer layer, giving physicians significantly more control over how care is delivered and compensated. Telemedicine creates a flexible income stream that can be layered onto an existing schedule without a full structural change.
Locum tenens, which has grown 25% since 2020,¹² is underused as a transition tool. It allows a physician to test a different structural arrangement without fully committing to a change. For physicians considering an exit but uncertain about timing or direction, it offers optionality without permanence.
None of these are right for every physician. But most employed physicians have never seriously evaluated them, because employment was presented as the obvious choice and no one offered a clear alternative.
The Real Question
The employed physician trap isn’t about bad employers or unfair contracts, though both exist. It’s about what happens when the only plan is the plan someone else made for you.
Medicine is changing quickly. Reimbursements are declining. Private equity is consolidating practices at scale. AI is beginning to change how care is documented and, eventually, how it’s delivered. Contracts are getting more restrictive.
None of that is within your control. What is within your control is whether you’ve built financial alternatives by the time any of it affects you personally.
The physicians who still have leverage when things shift are, almost without exception, the ones who started building it years before they needed it.
That’s not a coincidence. It’s a strategy.
If you want to go deeper on any of this, including practice models, passive income strategies, and how other physicians have navigated these decisions, join us at PIMDCON this September 24-26 in Dallas. Details at www.pimdcon.com.
Disclaimer: I am not a CPA, attorney, or financial advisor. The information in this post is for educational purposes only and should not be construed as tax, legal, or financial advice. Please consult a qualified professional about your specific situation before making any decisions.
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Peter Kim, MD is the founder of Passive Income MD, the creator of Passive Real Estate Academy, and offers weekly education through his Monday podcast, the Passive Income MD Podcast. Join our community at the Passive Income Doc Facebook Group.
Pope Leo XIV called Monday for robust regulation of artificial intelligence and for its developers to work for the common good rather than profit, issuing a sweeping manifesto on safeguarding humankind as the technology impacts everything from work to war.
“Magnifica Humanitas” (Magnificent Humanity), Leo’s first encyclical, has been eagerly awaited ever since history’s first U.S.-born pope announced days after his election that he considered AI to be the biggest challenge facing humanity today.
In the text, Leo denounced the “culture of power” driving the AI race, especially in developing ever more sophisticated methods of remote warfare. He declared that it was “not permissible” to entrust irreversible, lethal decisions to AI systems, setting up another flash point between the American pope and the Trump administration, which has worked aggressively to deregulate AI development.
“Artificial Intelligence now demands to be disarmed, freed from logics that turn it into an instrument of domination, exclusion and death,″ the pope told a special Vatican presentation of the encyclical, one of the most authoritative types of teaching documents a pope can issue.
Experts in the tech industry, academia and Catholic morality said the document will likely become a benchmark in the debate over AI, a point of reference for policymakers, researchers and ordinary folk alike. It comes as the near-daily developments in the technology trigger concerns over AI replacing human jobs and even human intelligence.
Taylor Black, a Microsoft AI executive and director of Catholic University of America’s AI institute, said the document would prompt people “at the forefront of these tools” to ask questions such as “What does it mean to be human?”
Pope calls out AI companies even as he hosts Anthropic
The Vatican launch also included remarks by the co-founder of Anthropic, which is currently locked in a legal battle with the Trump administration over access to its AI technology. The Vatican decided to involve Anthropic as part of its decade-long effort to engage Silicon Valley in dialogue over the human cost of AI.
And yet in his text, Leo repeatedly blasted the concentration of power and data in the hands of so few people in the private sector as a danger, especially to children and the most vulnerable, and called for external regulation of their work.
“It is not enough to invoke ethics in the abstract; robust legal frameworks, independent oversight, informed users and a political system that does not abdicate its responsibility are required,” he wrote. “A more moral AI is not enough if that morality is determined by a few.”
Leo appealed to AI developers and political leaders responsible for regulating them to slow down and reflect on what they are doing. He urged them to use ethical and spiritual guidelines to make the choice to work not for their own profit or power, but the betterment of humanity.
AI competitors OpenAI and Anthropic are the second- and third-most valuable U.S. private companies, each valued at hundreds of billions of dollars, more than the GDP of many nations. Both companies are heading toward near-trillion dollar IPOs.
Anthropic co-founder Christopher Olah welcomed Leo’s criticism and concern. He said such external checks were fundamental to the technology “going well” for humankind since there is so much at stake — “a real possibility that AI will displace human labor at a very large scale.”
“We need more of the world — religious communities, civil society, scholars, governments — to do what His Holiness has done here: to take this seriously, to look closely, and to push events in a better direction,” Olah said. “We need moral voices that the incentives cannot bend.”
Experts say the text will become a benchmark
In a methodical text, the math major pope traced the history of the Catholic Church’s social teaching and applied its core concepts — justice, solidarity, the dignity of work and the universal destination of resources — to the digital revolution.
“I am convinced that this will prove to be a defining document for our era, a profound and prophetic document,” said Paolo Carozza, law professor at Notre Dame Law School and chair of the Meta Oversight Board.
“Pope Leo is offering a clear, comprehensive, and coherent voice urging us to take responsibility for constructing a world in which technology will serve humans rather than degrade them,” he said.
In its strongest chapters, Leo denounced how AI had helped accelerate the “normalization of war” by desensitizing people to its cost. He didn’t name specific conflicts, but cited “opposing imperialisms, between powers that wish to preserve their supremacy, and those that aspire to seize that supremacy.”
He demanded transparency and accountability by AI developers so that the chain of decision-making command in ordering strikes with AI weaponry is always known. He declared that the Catholic Church’s “just war” theory, which provides specific criteria for when force can be justified, was now “outdated” given the technological advances of warfare.
A text in the church’s social justice tradition
Leo signed the text May 15, the 135th anniversary of the publication of “Rerum Novarum” (Of New Things), the most important teaching document of Leo’s hero and namesake, Pope Leo XIII. That document addressed workers’ rights, the limits of capitalism, and the obligations that states and employers owed workers as the Industrial Revolution was underway.
It became the foundation of modern Catholic social thought, and the current pope cited it at the start of his pontificate in relation to the AI revolution, which he believes poses the same existential questions that the Industrial Revolution posed over a century ago. “Magnifica Humanitas” thus becomes the latest chapter in a century-long history of popes adapting “Rerum Novarum” to the social questions of their times, often dwelling on the dignity of work for human flourishing.
AI is evoking both existential fears and utopian vision amid an intensifying debate on whether it will become a catalyst that enriches humanity or a technological toxin that dulls human intelligence while wiping out millions of high-paying jobs.
“The pursuit of greater profits cannot justify choices that systematically sacrifice jobs, because the human person is an end, not a means, and the economic order must remain subordinate to human dignity and the common good,” Leo wrote.
Leo extended his concern for upholding human dignity in labor to issue the first-ever papal apology for the Holy See’s own role in legitimizing slavery by giving European sovereigns explicit authority to subjugate and enslave “infidels.”
A decade-long dialogue with Silicon Valley
Vatican officials declined to say who contributed to Leo’s encyclical. But Vatican and church officials have been engaged in a dialogue with Silicon Valley tech firms for a decade.
The decision to include Anthropic at the Vatican launch was criticized by some who considered it a papal stamp of approval of the AI firm, which is currently suing the Trump administration after it ordered all U.S. agencies to stop using Anthropic’s technology for its refusal to allow the U.S. military unrestricted use of it.
Brian Boyd, U.S. faith liaison for the nonprofit Future of Life Institute, read the inclusion of Anthropic’s co-founder Olah as a recognition of its prominence in the field and as similar to a papal audience with a head of state: not an endorsement.
Anthropic is an “enormous corporation that is taking onto itself an enormous risk and responsibility,” Boyd said, adding that the company has “demonstrated genuine goodwill and integrity and interest in dialogue.”
___
Winfield reported from Middletown, Connecticut, and Huamani reported from Los Angeles. Associated Press writers Kelvin Chan in London and Colleen Barry in Milan contributed to this report.
___
Associated Press religion coverage receives support through the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content.
For some, rising gas prices are just an inconvenience to grumble about. For others, they mean making difficult choices about what they can afford to spend this month.
If your budget is already pared down to the essentials, you might even find yourself skipping necessary retirement healthcare expenses to keep your bills manageable. But there might be other ways you can keep costs down while still getting the care you need. Try the following four things.
Image source: Getty Images.
1. Look into government assistance programs
There are government programs that can help you with your medical costs. You’re probably already on Medicare if you’re 65 or older, but you may also qualify for Medicaid. This can further reduce your out-of-pocket expenses without sacrificing care.
Medicare’s Extra Help program is another option that could help you keep prescription drug costs manageable. It helps you pay for prescription medication deductibles and copays. You will qualify for this automatically if you’re on Medicaid or receive Supplemental Security Income (SSI) payments.
2. Use coupons on prescription medications when possible
Websites like GoodRx can help you find coupons that lower your out-of-pocket prescription drug costs. Sites like these are free to use, so they’re worth checking before you pay full price for your prescriptions. This strategy can be especially effective if you also switch to generic medication, as these are often cheaper than name-brand drugs.
3. Explore telehealth options
Telehealth services can be much cheaper than in-person doctor visits, and they may save you time and travel costs as well. They’re not for every medical condition, though. If you have an issue that requires in-person testing, you’re better off with a traditional doctor visit.
4. Talk to your hospital about financial assistance
Hospitals often have financial assistance programs to help you if you’re unable to pay the full out-of-pocket costs for your medical care. You will need to provide details about your household finances as part of the application process.
If financial assistance isn’t an option for you, look into payment plans. These can help you spread your expenses out over time, so you don’t have to pay for a huge bill all at once. These strategies won’t eliminate your out-of-pocket healthcare costs, but they can help make them a little easier to stomach.
If you’re ever struggling to pay a bill, contact the healthcare provider right away to discuss your options. Acting promptly is usually better than waiting until the due date has passed.
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A new benefit appears to be coming to eligible Delta SkyMiles American Express cards starting June 4, 2026.
According to a post shared by reliable aviation source xJonNYC, Basic Card Members will receive a free second checked bag on Delta and Delta Connection-operated flights within the U.S., including Alaska, Hawaii, Puerto Rico, and the U.S. Virgin Islands. Codeshare flights will not qualify.
With fees going up, a second checked bag free could actually save families a decent chunk of money on trips.
At roughly 128% debt-to-GDP, the United States sits alongside France, Italy, and the United Kingdom — not in isolation. Japan stands out at over 230% debt-to-GDP, yet faces no immediate funding stress. Why?
Because foreign dependence — not absolute debt — is the real constraint.
China: roughly 102% debt-to-GDP, with about 3% foreign-held
Japan: roughly 230% debt-to-GDP, with about 12% foreign-held
United States: roughly 128% debt-to-GDP, with about 22% foreign-held
The United States is unusual: it carries a large debt load, yet remains overwhelmingly domestically financed.
That composition matters far more than the headline number. The foreign debt also reduced in percentage from 2019 to 2025, as seen in the following figure.
By Vince Golle and Craig Stirling (Bloomberg) — The Federal Reserve’s favoured top-line inflation gauge is rapidly approaching 4% as a war-driven spike in energy costs generates unease that price pressures will broaden. Government data on Thursday are expected to show the personal consumption expenditures price index jumped 3.8% in April from a year ago. …
His name is Antonio Gracias, a handsome private equity investor from Detroit. The two met through the Silicon Valley web at the turn of the century, and soon Gracias—at 55, just one year older than Musk—lent Musk $1 million in his early days at Tesla, when the company was teetering on the edge of bankruptcy.
The two have been best friends ever since. Gracias was a groomsman at Kimbal Musk’s wedding, the families have vacationed together, spent the holidays together, and even traveled to David Copperfield’s private island in the Bahamas.
And Gracias trailed Musk through all of his ventures. He’s sat on the boards of Tesla—where he spent eight years as lead independent director—SpaceX, SolarCity, Neuralink, and The Boring Company. His firm, Valor Equity Partners, was one of Tesla’s earliest institutional investors and has put money into nearly every Musk company.
Gracias even followed Musk into the federal government, taking a role at the Department of Government Efficiency before resigning in July amid scrutiny over managing $2 billion in public pension assets while serving as a government employee.
Now, with SpaceX preparing for the largest IPO in history, Gracias’ loyalty is about to pay off.
His Valor entities collectively hold more than 500 million shares of SpaceX Class A stock—roughly 7.3% of the company, making him the second-largest individual shareholder after Musk. At the $1.75 trillion valuation Bloomberg and Reuters have reported SpaceX is targeting, Gracias’ stake will be worth around $90 billion. At $2 trillion, it climbs past $140 billion. Either way, the IPO will make him one of the 50 wealthiest people alive.
He’s also earning it.
Three leases, $20 billion, one board member
Last October, SpaceX’s S-1 shows, an xAI subsidiary called CTC signed an equipment lease agreement with Valor for AI infrastructure hardware—specifically, the GPUs needed to power xAI’s data centers. (xAI was a separate Musk company at the time; SpaceX absorbed it in February.) In January, CTC signed a second lease with Valor. In April, a third.
Together, the three agreements obligate the company to pay Valor close to $20 billion over their terms. And SpaceX guarantees the payments—meaning if the xAI subsidiary can’t cover them, SpaceX itself is on the hook. That guarantee is unusual on its own: It suggests xAI couldn’t get this kind of financing on its own credit, and needed its parent company to step in. Indeed, the new filing shows xAI was ridden with debt, including secured senior notes at a 12.5% interest rate—distressed-borrower pricing that shows the company was struggling to access typical financing routes.
Once SpaceX goes public, all that liability transfers to public shareholders, who will inherit billions in obligations from a deal struck while the company was still private.
So far, the Valor entities have collected roughly $885 million from the leases in 2025, and another $857 million in just the first two months of 2026.
The structure is unusual enough that SpaceX’s auditor, PwC, refused to treat it as a normal lease, and instead called it a “failed sale leaseback.” In a typical sale-leaseback, one party sells an asset to another, then leases it back. Here, that meant CTC—the xAI subsidiary—”sold” the GPUs to Valor, then leased them back for use in its own data centers. For the deal to count as a real sale, Valor needed to actually obtain control of the GPU. But the terms of the arrangement, in PwC’s view, meant CTC retained effective control of the assets, making Valor just like a regular lender, with the GPUs serving as collateral.
In other words, SpaceX and xAI structured the deals in a way that, if accepted, would have kept the financing off SpaceX’s balance sheet. But it appears as if PwC refused. The auditors concluded the transactions were loans in substance, not leases, and forced SpaceX to record the debt anyway. The $9 billion now sits on SpaceX’s balance sheet as related-party debt payable to the firm of one of SpaceX’s own directors.
Neither Valor Equity Partners nor SpaceX responded to Fortune’s request for comment.
‘That’s the worst’
The arrangement alarmed two top corporate governance experts who Fortune spoke with.
Nell Minow, a chair of ValueEdge Advisors, called the Valor leases “deeply troubling”—both for what they suggest about SpaceX’s numbers and for what they suggest about its governance. Asked where the arrangement falls on the spectrum of related-party deals she’s seen across four decades of corporate governance work, Minow didn’t hesitate.
“That’s to me, that’s the worst,” she said. “They wouldn’t know an arm’s-length transaction if they saw one.”
An “arm’s-length transaction” is the standard corporate governance jargon for a simple test: Would the terms hold up if the two parties were strangers, with no shared interest in cutting each other a favor? It’s how public companies prove to investors that insiders aren’t quietly enriching themselves through company business—and it’s exactly that assurance that SpaceX’s S-1 doesn’t give for the Valor deals, she suggests.
Robert Willens, an accounting and tax expert at Columbia Business School, spotted that same gap. Public companies typically include a sentence in their related-party disclosures promising the terms are “no less favorable” than what an unaffiliated party would have gotten. SpaceX uses exactly that language in the section of the S-1 describing its dealings with Tesla, another Musk company. But it doesn’t use it in the section describing the Valor leases.
“If they don’t say it explicitly, you have to be led to believe that maybe they’re not being as careful as they are in the first agreement, and that they very well might be agreeing to terms that are less favorable than they would be with an unrelated party,” Willens said. “They know how to say it when they want to say it.”
If the Valor terms aren’t arm’s-length, Willens said, the lease payments could function as a “disguised dividend”; extra money flowing to Gracias not because the GPUs are worth what Valor is charging, but because he’s a powerful insider. The S-1 also doesn’t disclose whether Gracias recused himself from the board’s approval of any of the three deals, an omission both Minow and Willens said is notable for a $20 billion related-party transaction.
Public capital, private control
Minow said the arrangement is typical of SpaceX, which wants “the access to capital of a public company” but “the control of a private company.” It will actually be a “controlled company” under Nasdaq rules—exempt from requirements that a majority of its board be independent. Gracias himself is being seated on the compensation and nominating committee. The company reincorporated in Texas in 2024 after Musk personally lobbied state legislators to weaken shareholder protections; shareholder disputes are now subject to mandatory arbitration; and under SpaceX’s charter, Musk can only be removed from his leadership positions by holders of Class B stock, the majority of which he controls.
And all of it is happening just as Nasdaq has changed its rules to ensure millions of Americans will own SpaceX whether they want to or not. In March, the exchange rolled out a new “Fast Entry” rule letting large IPOs join the Nasdaq 100 after just 15 trading days; down from a typical period of three months to a year. For comparison, Facebook waited seven months, while Airbnb waited a year, and Tesla waited three. Reuters reported that fast index inclusion was a condition of SpaceX’s Nasdaq listing.
The consequence: Every fund tracking the Nasdaq 100—including the $385 billion Invesco QQQ and trillions in other ETFs and retirement accounts—will be forced to buy SpaceX stock weeks after it lists, regardless of price or governance. Goldman Sachs analysts estimate the rule change could trigger up to $60 billion in forced buying across the Nasdaq 100 ecosystem.
“I wish they were as good at engineering,” Minow said of SpaceX, “as they are at cutting off every possible avenue of independent oversight.”
