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Tuesday, June 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Ethan Swope /
Bloomberg via Getty Images | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SpaceX's bond boom is giving investors a portfolio headache | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Many investors who bought SpaceX stock at its IPO also took part in the
company's $25 billion bond offering shortly after. Analysts are warning they may not be as diversified as they think. Owning stock and bonds in the same company only counts as diversification if the two instruments respond differently to bad news, Christopher Della Fave, a capital markets executive at Post Oak Group, told CNBC. SpaceX's, he says, do not. In Della Fave's view, both the stock and the bonds rise or fall on Starlink's growth prospects and Starship's future as a rocket program. The
bond offering has also struggled since launch. Unrealized losses against comparable Treasury bonds had reached roughly $305 million, with the longest-maturity tranches drawing the most skepticism from the market. SpaceX reported a $5 billion net loss in the period leading up to its IPO, and capital spending had more than doubled year over year. The company raised the debt anyway, and investors bought it. What the bonds are ultimately worth depends on bets many of them have already made in the stock
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Are stocks and bonds still a safe combination? | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Bloomberg / Getty Images | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A major central bank says the AI spending boom looks all too familiar | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Bank for International Settlements, the coordinating body for the
world's central banks, is warning the AI investment boom could end in a crash and a recession. BIS General Manager Pablo Hernández de Cos points to the five largest hyperscalers, the cloud computing giants leading AI infrastructure spending, as a particular concern. Fierce competition among those firms may have pushed investment to levels that leave the sector exposed if AI returns disappoint, according to Hernández de Cos. Their combined capital expenditure on AI is on course to
exceed $1 trillion in 2025 and 2026. Hernández de Cos thinks the current boom rhymes with canal construction in the 1830s, railway buildouts in the 1840s, and the dot-com era of the late 1990s, all of which ended in reversals severe enough to tip economies into recession. A sharp equity correction today could hit harder than past downturns of similar scale, he argues, because household exposure to stocks has grown significantly relative to both wealth and
income. The BIS also flags risks in how the boom is being financed. Many AI firms have moved from internal funding toward debt and complex arrangements in which the same assets may be pledged multiple times. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Our best wishes on a safe start to the day. Send any news, comments, and more to [email protected]. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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