The Impossible Catch, just like a fiction

 

On Saturday, the Federal Aviation Administration (FAA) gave SpaceX an extremely delayed approval to launch its fifth Starship test flight. We’ve been tracking this saga in The Bleeding Edge – Starships are Meant to Fly. The FAA delays were intentional and almost certainly politically motivated. SpaceX didn’t waste a minute once it had approval. Why chance it? In less than 24 hours from the approval, Starship 5 launched by Sunday morning. I don’t think words can capture the sheer wonder of what was accomplished yesterday. So, I’ll just show you what happened below: Super Heavy Booster Is Caught Returning to Launch Pad | Source: SpaceX What we see above is the SpaceX Super Heavy booster landing from the fifth Starship test launch. The Super Heavy booster is the first stage of the Starship launch system. It stands 71 meters (232 feet) tall and weighs 250 tons. SpaceX’s Starship system is comprised of two stages: the Super Heavy (the booster, or first stage) and the Starship (the actual rocket). The short video above shows the Super Heavy booster returning to Earth, precisely to a launch pad, where it positions itself between two mechanical arms – the Mechazilla tower – whereby it is then “caught” safely in midair. Now, it can eventually be reused. Awe-inspiring. Even Elon Musk’s team at SpaceX originally thought he was crazy for suggesting a feat so seemingly impossible. And just about the rest of the aerospace industry thought it was a joke, destined to end in a fireball. And yet, SpaceX got it right. On the first try. What was the point? Why try something so difficult in the first place? Why not just send the first stage to the ocean, like everyone else? The Purpose of Reusability Just like the Falcon 9 (SpaceX’s partially reusable, two-stage rock design), SpaceX has been designing for dramatically lower costs. The goal is to get payloads into orbit as cheaply as possible. The most important element of that is reusability. Musk realized that if they were to design legs for the Super Heavy – to land it in a way similar to the Falcon 9’s first-stage landing – they would have to be very large and very heavy. So why not just remove the legs entirely? Doing so saves a lot of weight in the first stage. It’s better to catch the first stage than to have it land. So that’s precisely what the SpaceX team figured out how to do. Below is a picture of the 250-ton Super Heavy, after having been caught by Mechazilla. If we look closely at the picture, we can see one of two metal protrusions on either side of the Super Heavy that rests upon the Mechazilla arms. The utility of catching the Super Heavy in midair isn’t just about reusability, though… Musk was thinking far beyond that. He was thinking about how to most efficiently turn around a Super Heavy booster… And get it ready for its next flight. Ready for Another Launch Within an Hour Here’s what that same Super Heavy booster looks like right now. Super Heavy Resting on Launch Mount | Source: Elon Musk The Mechazilla arms simply rotated and placed the Super Heavy on its launch mount. The whole system is designed so that the Super Heavy can be caught, placed on its launch mount, refueled, remounted with a Starship on top, and launched again. All within an hour. In previous versions of The Bleeding Edge, I’ve used an animation of the Mechazilla at work. In today’s issue, all of the images and GIFs in this issue are real. And they’re historic. This isn’t about Elon Musk and his team pulling off a seemingly impossible engineering feat… This is about single-handedly opening up the entire solar system and its resources for exploration and progress. This is about human progress, and what took place this past weekend ultimately enables the human race to become a multi-planetary species. And it wouldn’t be possible without the technology and the costs to make it economically viable. When the Falcon 9 first started flying in 2010, it cost about $10,000 per kilogram (kg) to get payloads to low Earth orbit (LEO). That cost quickly dropped to around $2,500 on average, and today is as low as $1,520/kg. This alone ignited the space economy. Without these low launch costs, a business like SpaceX’s Starlink simply wouldn’t be economically possible. The Starship, once commercialized, will drop those costs – per kg – by more than 90%... to less than $100 per kg. Just imagine the impact this will have on the space economy. Jeff Brown

The smart market players are forecasting a dire picture

Bond investors are considered as much smarter than stock investors as they are especially attentive to fundamentals and much less influenced by sentiment. That's why bond investors can better forecast the long term trend for the stock market, based on their assessment on the economy prospects. Therefore, when they make a move, you better take a good notice of that. 

Since the Fed has made a surprising larger rate cut at the last meeting, logically you would expect the long-term interest rate that is controlled by the market should also come down, if the bond investors also stand along with the Fed. Not this time. Actually, the 10 year interest rate has shot up 10% since the Fed 50 PB cut over the past couple of weeks, which suggest they think the Fed is wrong about the inflation. In other words, bond investors are telling us inflation will come back again, which won't be great for the overall economy. If so, don't bet on a great stock market if the economy is doing poorly.  

 Here is the TA chart for the 10-year treasury rate, which suggests that it will go up towards 4.5% in the weeks ahead.

  

 

With the bulls finally pushing SPX above 5800, a top is settled in. Betting on the downside will be more profitable than the upside moving forward from here. That's what we did today by playing with the SPY puts.