Authored by Adam Sharp via DailyReckoning.com,
For years, Elon Musk has dreamed of turning X (formerly Twitter) into the “everything app”.
Now that X is part of SpaceX (SPCX), and the combined company just raised $112 billion, the time looks ripe.
Elon envisions X as a single place where you can bank, chat, earn, advertise, use AI, shop, and more.
X Money is a key part of that vision. And we just got the first idea of what it will look like.
The program just launched to a small group of users. To attract deposits, X is offering some pretty crazy (and likely temporary) perks:
6% APY on cash, no deposit limit
3% cash back on purchases (with exceptions)
$10 million FDIC insurance (by splitting deposits up between banks)
A 6% yield is not sustainable long-term (at current interest rates). It’s a teaser rate to get people to switch to X Money. Same goes for 3% cash back. That’s 3x higher than the industry average, and will almost certainly not last long.
These teasers may get a lot of people to switch. But it’s unclear how long the perks will last, and it’s currently only available to a small group.
X is not a bank. At least not yet. It’s more like a “neobank”, which manages the marketing and customer relationship, while licensed banks handle the deposits.
But for the user, it feels like a bank account and debit card. Deposits, yield, wire transfers, autopay, P2P payments, etc.
The WeChat ModelMusk’s desire to build the “everything app” may have been inspired by China’s WeChat.
WeChat is owned by Chinese tech firm Tencent. It started out as a simple messaging app. But Tencent rapidly expanded its utility, and today it is basically a digital operating system for the country.
In China, WeChat is used for payment, invoices, government interactions, making appointments, videos, shopping, games, chatting on social media, and much more.
WeChat Pay holds a massive 38% share of payments in China. More than a billion people use the app. It’s so ubiquitous that many Chinese people essentially run their lives through the app.
Largely as a result of WeChat’s success, Tencent has become a $488 billion tech giant.
This is what Musk is aiming for. If X Money succeeds, it could help justify SpaceX’s lofty valuation of $2.2 trillion.
SpaceX’s Huge AmbitionsX (formerly Twitter) has been the least-discussed part of SpaceX.
All the attention has been on rockets and AI. For good reason. Those are both very exciting areas.
But X deserves attention as well. Musk aims to turn the social network into a super-app, much like WeChat. Musk purchased Twitter for $44 billion. If he succeeds, it could be worth much more over the long term.
But running what is essentially a combination bank and social network is no easy matter. For one thing, it makes security far more important (and challenging). It’s going to require a massive customer support team. And that’s one area where Elon’s X has struggled.
X Money is going to be a critical part of building the “everything app”. And the team is going big on the launch.
Think about the 6% APYs X is offering on deposits. Let’s say that X Money attracts $10 billion in deposits over the first year.
Paying a 6% yield on that much cash could cost SpaceX $240 million a year in losses. That’s assuming their own internal return on cash is around 3.5%, plus bank fees and other transaction costs. This is why I assume the 6% APY is temporary.
And the 3% cash back? That appears to be on a debit card, which doesn’t have the same fee support as a credit card. So that could be another very expensive tool to attract users.
But the losses could be worth it. The market they’re targeting is massive. Payments, banking, and eventually – everything.
So will X succeed in becoming a “super app”? Honestly? I think it’s a long shot.
X Money would probably need to be wildly successful and run away with the market.
One problem is that Meta/Facebook (META) will copy anything that looks to be working. The company is notorious for it. And they have a much larger user base. Meta also already has WhatsApp pay and several payment integrations with Facebook.
Another problem is that American banks are extremely profitable, and in some ways act like a cartel. They won’t appreciate X stepping onto their turf, and may fight back. With lawfare, lobbying, or other means.
A Beautiful But Difficult ModelThe “everything app”, or the WeChat model has been the dream of every social media company in the world for a while. But it’s going to be very difficult to pull off at this stage of the game.
Then again, we should never count Elon out. If he’s going to go hard after this market, SpaceX certainly has a shot at winning it.
SpaceX just raised $87 billion in its IPO, then another $25 billion in bond sales. That is a massive war chest.
SPCX has big aspirations. And with a $2.2 trillion market cap, it has a lot of growing to do in order to justify that lofty price.
X Money is a calculated risk by SpaceX. One that could pay off big.
I don’t have a position in SpaceX, but it’s going to be fascinating to watch.
Tyler Durden Wed, 07/01/2026 - 12:25As we've been noting of late, the Democrats have a problem: socialists are on the move. The latest - in a striking upset, democratic socialist Melat Kiros defeated 15-term U.S. Rep. Diana DeGette in Tuesday's Democratic primary for Colorado's 1st Congressional District. The victory extends a recent winning streak for the party's left wing and hands Republicans fresh ammunition heading into the fall campaign.
Democratic socialist Melat Kiros (L) ousted 15-term Rep. Diana DeGette in Tuesday's Democratic primaryKiros, a 29-year-old former attorney, defeated the 68-year-old incumbent who has represented the Denver-based seat since 1997. DeGette, a member of the Congressional Progressive Caucus, had long been viewed as secure in the solidly Democratic district. Kiros's win, backed by Sen. Bernie Sanders and the Democratic Socialists of America, came just one week after the DSA notched several high-profile primary victories in New York City.
The result is likely to intensify internal Democratic tensions. While party leaders sought to minimize last week's New York outcomes, Kiros's success in a Western swing state makes it harder to dismiss the pattern as a purely local phenomenon confined to deep-blue urban strongholds.
According to Axios, Dems are freaking out.
Rep. Diana DeGette (D-Colo.) was a staunch progressive, not a moderate, these members are privately fuming. So why did she become a target of the left?
Kiros drew scrutiny during the campaign for a letter she wrote criticizing the view that calls for the elimination of Israel constitute antisemitism. Despite those comments, she built a strong coalition among younger, college-educated voters who have moved into the district in recent years. With most votes counted, she held a roughly four-point lead when major outlets called the race.
GOP strategists quickly framed the outcome as evidence that the party's left flank is expanding its influence beyond traditional strongholds, according to The Hill. A spokesperson for the House Republican campaign arm said the result showed "the socialist takeover of the Democrat Party is no longer confined to deep-blue strongholds," arguing it would complicate Democratic efforts to flip the House.
Other Anti-Incumbent Signals In ColoradoVoters delivered additional rebukes to establishment figures on Tuesday. In the Democratic primary for governor, state Attorney General Phil Weiser defeated U.S. Sen. Michael Bennet, who had been considered the early frontrunner. Weiser, while a mainstream Democrat, ran an insurgent-style campaign that emphasized his record of suing the Trump administration 66 times and criticized Bennet for confirming some of President Trump's Cabinet nominees. He also portrayed the senator as too aligned with wealthy donors.
Bennet will keep his Senate seat and faces re-election in 2028.
In the U.S. Senate primary, Sen. John Hickenlooper successfully turned back a challenge from progressive state Sen. Julie Gonzales.
General Election Landscape Takes ShapeTuesday's results also clarified several November matchups that could affect control of the House.
Democrats currently need a net gain of three seats to retake the House majority.
The Colorado results add to a growing body of evidence that primary voters in 2026 are rewarding candidates who position themselves as outsiders - whether on the left flank of the Democratic Party or as critics of Washington incumbents more broadly.
Colorado's results come on the heels of last week's Democratic primaries in New York City - which turned into a referendum on the Democratic Party itself.
Three socialist-backed candidates, backed by New York City Mayor Zohran Mamdani, won their races. The Democratic establishment got slaughtered, and the man left holding the wreckage is House Minority Leader Rep. Hakeem Jeffries (D-NY).
Every candidate Jeffries backed went down. That alone would be a bad night. What made it worse was the scene at the victory party for socialist-backed winner Claire Valdez, where the crowd erupted in boos when Jeffries's image appeared on screen, then broke into a chant: "You're next," a clear sign that his leadership position won't protect him from being a target of the Democratic Socialists of America Party.
Tyler Durden Wed, 07/01/2026 - 12:05If you're wondering why the Nasdaq is suddenly tumbling this morning, wonder no more...
Nasdaq moves lower after Meta announces it has capitulated in the race to build a leading frontier LLM it is to build a cloud business to sell its excess AI compute, weighing on cloud peers like AMZN, ORCL, MSFT, neoclouds like Coreweave and Nebius (who will now be racing to the bottom for customers) and chip and memory names like NVDA, MU, INTO, as demand for their products is now likely to be much less thanks to the excess META capacity on offer.
As Bloomberg reports:
Meta, which has been rushing to secure expensive data centers and other infrastructure to fuel its own artificial intelligence ambitions, is forming a business to generate revenue from excess computing power sold to outside customers, according to people familiar with the matter, who asked not to be named as the details aren’t public.
One potential plan includes selling access to various AI models that are hosted on Meta’s existing AI infrastructure, an approach similar to AWS’s Bedrock offering, the people said.
Meta would run the data centers and chips that power the models, including its own Muse Spark models, and charge developers to access them.
The report also notes that the company is considering selling access to “raw” computing capacity, taking a chunk out of the business of neoclouds like CoreWeave. Ironically, META just signed multi-billion deals with CoreWeave and Nebius, and now it is turning around to compete with the very suppliers it is paying.
Development of these new business lines is part of Meta Compute, an internal initiative to build and manage the company’s AI infrastructure efforts, according to a person familiar with the plans. Meta Compute is led by Santosh Janardhan, Meta’s head of infrastructure; Daniel Gross, a leader inside the Meta Superintelligence Labs AI unit; and Meta President Dina Powell McCormick.
Despite the complexities, Meta Chief Executive Officer Mark Zuckerberg has signaled to investors that he’s open to selling excess computing infrastructure, or even a so-called API service where customers would pay for AI usage — a business that’s usually measured in “tokens,” or the amount of data used and generated for a customer query.
“It’s definitely on the table,” Zuckerberg said during a call with shareholders in May.
“Almost every week there are different companies that come to us from the outside asking us to both stand up an API service or asking if we have compute that they could buy from us at some premium to what we’ve bought it at.”
This move comes after SpaceX started leasing its 'excess compute' (which is struggling now that it has competition in selling 'compute'):
...raising questions about the potential for cutting CapEx which has perhaps overshot token demand...
...did META just shatter the market’s central premise has been that compute is scarce...
As Goldman Sachs 1-Delta desk-head, Rich Privorotsky, has been warning:
“The market’s central premise has been that compute is scarce.
If scarcity persists, prices should remain firm and justify continued capex.
If supply rises and rental prices continue to drift lower, that is a direct challenge to the shortage narrative.
The first place that pain shows up is hardware.
ORNN H100 index rolling over last couple days worth watching.
The beneficiaries are the companies selling the complete platform and monetizing usage rather than simply selling picks and shovels. My working conclusion remains that hyperscalers are the structural winners through this phase.
The first moment they demonstrate they can deliver equivalent output with lower spend, the market will reward them.
The bigger risk sits further upstream in the hardware and infrastructure stack where expectations remain built around persistent scarcity."
Simply put, confessions of 'excess capacity' will crush the hyperbolic dreams of the CapEx cycle that underpins so much of the market's recent incredible performance.
And the pivot to rewarding CapEx cutters begins...
"Lots of underperformance in hyperscalers. Everyone still appears convinced they must keep spending simply to remain competitive, while token cost compression/advent of neoclouds puts pricing pressure on core business. If token prices continue to compress alongside falling compute costs, the benefits may accrue to users faster than providers.
Ironically, the first hyperscaler to signal that it can slow the pace of spending will likely see its share price rewarded.
If that happens, others will take notice.
That is the reflexivity that ultimately stalls the capex cycle… not a lack of demand, but investors deciding that incremental returns on the next dollar of spend are no longer attractive.
Watch hyperscalers share price as leading indicator."
Don't say you weren't warned.
UBS traders see it a similar way, noting that reports that META may build out a cloud business to monetize excess compute capacity is shifting the narrative...
...being interpreted as a sign that capex expectations are no longer skewed to the upside, allowing focus to shift toward free cash flow stabilization and a potential incremental revenue stream at what are seen as near-trough valuation multiples.
The reference to excess capacity is creating some unease around underlying AI demand and has negative read-throughs for neocloud players, while also raising questions around the durability of compute and memory bottlenecks.
Into earnings, the key question is whether in-line 2Q and 3Q guidance alongside reiterated full-year capex would be sufficient to sustain the current re-rating.
In semis, price action suggests investors are linking the announcement to a potential moderation in future capex growth and a shortening in the duration of above-trend demand, even if some argue hyperscalers could absorb incremental capacity.
Neoclouds are seen as clear losers on the development.
For hyperscalers, the read-through is more mixed, with a new potential competitor emerging but also some expectation of cost relief if supply constraints ease. Early conversations suggest concerns around overbuild remain more company-specific rather than indicative of a broader industry shift, particularly given relative positioning in AI investment cycles.
META shares are notably higher on the news...
Chipmakers are hurting...
The writing had been on the wall...
...and Premium Subscribers can read the full notes we have published over the past month here:
'How Far Can The Rubber Band Stretch?': Goldman 1-Delta Desk Says 'This Is The Breaking Point'
Will 'Rampart' Wreck The Hyperscaler 'To The Moon' Narrative? Goldman 1-Delta Desk Deep-Dives
Buckle Up!
Tyler Durden Wed, 07/01/2026 - 11:52Authored by Simon Duff via BondVigilantes.com,
SpaceX’s IPO was a gargantuan event by any measure: US$75 billion proceeds raised, over US$2 trillion enterprise value, and an almost US$29 trillion total addressable market to feast on. Few other companies can rival its industrial span and potential seismic impact on consumers and competitors. SpaceX’s valuation is driven by its sci-fi AI segment replete with space-based data centres and moon bases. However, its more immediate impact maybe felt in the more down to earth world of telecom.
SpaceX’s cash cow is the Connectivity segment where it operates a constellation of 9,600 low earth orbit (“LEO”) satellites under the Starlink brand.
These provide broadband and in-fill mobile voice & data services to consumers in predominantly remote areas where terrestrial broadband and mobile networks are patchy or absent.
In addition, Starlink offers broadband services to ships and aircraft where terrestrial networks are entirely absent.
In 2025, the Connectivity unit generated US$3 billion free cash flow (EBITDA less capex) from almost 9 million broadband and over 6 million mobile global subscribers and from its corporate contracts with airlines and ship operators.
By way of comparison, the 5 largest US telecom & cable players generated almost US$111bn free cash flow (EBITDA less capex) and had approximately 95m broadband subscribers and 275m mobile postpaid subscribers.
Looking at those stats you would be forgiven for thinking that US telecom & cable operators don’t have all that much to worry about. The problem is that this is just the beginning for controlling shareholder and CEO Musk who has proved himself a visionary with Olympian levels of ambition and matching access to capital.
Using the latest and largest Starship rockets, Musk plans to launch 10,000 next generation V3 satellites from late 2026. Each of these satellites will have 1 terabit of capacity, which is 10x the capacity of the current V2 satellites. This ramped capacity will boost current median download speeds (225Mbps) to levels on a par with fibre and cable terrestrial alternatives. It will also allow pricing to come down (vs the current US$66 average cost per month). True, there are issues around the need for “line of sight” from the dish to the satellite in dense urban areas and practical difficulties around installation in multi dwelling unit (MDU) housing blocks. But these are portions of the market and hence a break rather than a block on roll out and uptake.
Obviously, the incumbent operators will not sit there like lemons waiting to be squeezed. Instead they can try to lock in their bases via converged broadband and mobile bundles, often at a discount (as both AT&T and Verizon’s recent offers implied). Or they can simply cut their standalone broadband pricing. Either way, the risk is broadband subscriber losses, or revenue per subscriber decline, or a combination of both. And this would be in a market that no longer benefits from immigration or housing build tailwinds that historically increased the total available economic pie in the US. Most exposed to this risk are the US’s dominant broadband providers: the cable operators. Both Comcast and Charter equity have fallen approx. 30% & 70% in the last year, respectively, with the pace of decline picking up notably as the SpaceX IPO bandwagon rolled into town.
However, does Musk stop there?
If we can think of an incumbent bundled defensive play then we are pretty darned sure that Musk can too. So how would he counter the incumbents’ counter? In short, by going mobile. At present, the party line from the telecom operators is that Starlink’s “direct to device” (D2D) service is a pure complementary in-fill service to supplement mobile operators’ existing coverage and nothing more. However, their behaviour suggests otherwise. All three players (Verizon, AT&T and T-Mobile) have been clear that they will not offer Starlink a “virtual network” agreement enabling Musk to re-badge and re-sell their mobile service.
Similarly, all three were swift to announce a D2D JV that would enable them to present a united front to Starlink on future negotiations.
Assuming the US mobile players hold this line and are allowed to do so by regulators, then Starlink has two options if it’s serious about offering mobile beyond remote areas: build or buy a terrestrial network. To build its own mobile network Starlink would need spectrum and terrestrial infrastructure (towers, fibre backhaul, network radios). Starlink already has access to 65 Mhz of terrestrial spectrum (different from the spectrum it uses to offer broadband) that was acquired from Echostar. Although dwarfed by the incumbents’ spectrum holdings, Starlink’s network would be relatively empty and upcoming auctions offer the chance to supplement these holdings. Furthermore, Echostar (a 3% SpaceX shareholder) could play a complementary role as either an acquisition target or partner that brings with it a range of network related assets/agreements that could facilitate a Starlink mobile network roll out. Not least of which is a multi-year AT&T national roaming deal that AT&T has been tight-lipped on confirming or denying a change of control break clause to prevent Starlink exploiting this valuable contract.
And Echostar is not the only option. When Musk was recently asked if he could consider buying Verizon he said that “it was not out of the question”. To be clear, Verizon’s market capitalisation is less than 10% of SpaceX’s and also brings with it valuable FCF (YE25: US$20bn). Lastly, we don’t think it is any co-incidence that the rumour mill has been spinning with regard to German incumbent Deutsche Telekom buying out its 54% owned subsidiary, T-Mobile USA. If Musk is going to be on a shopping spree you probably want to own 100% of what he might want to buy and T-Mobile USA offers the best mobile network, deepest mobile spectrum portfolio and the least “redundant” broadband exposure of all the US players. Unfortunately AT&T is probably overly endowed in this latter area with 38m fibre homes passed and hence unlikely to be of interest to SpaceX. All in all, we see the potential for a single mobile player being acquired as cold comfort to the US telcos relative to the potential step change in the competitive dynamic across the broader ecosystem.
And who is best insulated from all this potential disruption?
From an industrial perspective, towers look well positioned.
If the US goes to four networks, demand for space on the towers will increase whilst, if SpaceX acquires an incumbent, tower demand should at least remain steady no matter how squeezed the incumbent operators’ margins become.
From a geographical perspective, a combination of Europe’s lower pricing from years of fierce competition & regulation, SpaceX’s lack of terrestrial spectrum, and Europe’s higher urban and MDU density make it a much harder market to attack.
Ironically, European telcos that have long played second fiddle to their US counterparts on competitive dynamics, growth rates and FCF generation might now heave a sigh of relief and actually be thankful for the harsh regulation and competitive dynamics they previously railed against.
Tyler Durden Wed, 07/01/2026 - 11:45