SpaceX’s Wireless Ambitions Face Doubts, Tokenized Stock Trading Pros and Cons, Rising American Debt Delinquencies, Stock Of The Week: Pepsi Co. & More

Prediction market company, Kalshi, kind of admits to gambling

If you’re unfamiliar with Kalshi, it operates a prediction market that allows people to wager on the outcome of an incredibly wide range of events. These include everything from football games to the words the Federal Reserve chairman might use in a speech and even the weather. Kalshi operates under the premise that these are event contracts, generally with a yes-or-no outcome, rather than traditional bets. Its markets are available nationwide to anyone 18 or older.

To me, one of the more interesting developments is Kalshi’s $2 million donation to the National Council on Problem Gambling (NCPG). From my research, I have been unable to find another brokerage or investment advisory firm that has made a comparable donation to the organization. Kalshi’s contribution is reportedly the second-largest the NCPG has ever received, behind the NFL’s $6.2 million donation in 2021.

The NCPG’s helpline received approximately 377,000 calls, texts, and chats in 2025, highlighting the scale of the gambling issue in this country. Kalshi also requested that the NCPG hire additional staff to implement so-called responsible trading programs and develop responsible trading training materials to distribute throughout its network.

I find this interesting because it raises a fundamental question: If prediction markets are simply a new form of financial trading, why is there a need for responsible trading programs specifically designed to address problem gambling?

From my perspective, Kalshi’s involvement with the NCPG raises questions about how the company views its own customers and the potential risks associated with its business model. While the company may not explicitly characterize its platform as gambling, I believe it recognizes that some of its users are engaging in behavior that closely resembles it.

The distinction between an event contract and a traditional bet may matter from a regulatory standpoint, but does it fundamentally change the behavior of the person putting money at risk?

I think that’s the bigger question here. Whatever terminology the industry uses, there is a meaningful difference between investing in a business based on its earnings and long-term prospects and wagering money on the outcome of a football game, a weather event, or a few words in a Fed chairman’s speech.

From my point of view, Kalshi’s donation comes at an interesting time, and I feel like it’s an admission that they are in the gambling business rather than the investment business.

SpaceX Is Making a Big Bet on Wireless, but I’m Skeptical It Will Become a Major Player Anytime Soon

SpaceX’s latest spectrum deal is another example of Elon Musk’s ambition to expand into industries far beyond the company’s original business. The deal involves SpaceX acquiring a portfolio of wireless spectrum from Grain Management, an investment firm focused on digital infrastructure. The transaction is subject to Federal Communications Commission approval and includes up to 14 megahertz of paired spectrum in the 800 MHz band, according to SpaceX. While the move into wireless communications sounds exciting, I’m skeptical SpaceX will become a major competitor to Verizon, AT&T, and T-Mobile anytime soon.

Earl Lum, founder of EJL Wireless Research, described the idea as “one of the top three dumbest ideas” he has encountered in his four decades in the industry. Lum argues that replicating traditional outdoor cellular coverage would require three-sector antennas with 5-watt power outputs. Installing this equipment on residential properties would mean rooftop poles and municipal permitting requirements similar to those involved in building conventional cell sites. In other words, SpaceX could end up dealing with many of the same headaches as traditional cell towers without gaining the same performance benefits. Alternatively, using lower-power, 1-watt indoor femtocells would restrict coverage largely to individual homes, making it difficult to create a seamless mobile network.

AT&T CEO John Stankey has pushed back on SpaceX’s small-cell strategy, arguing that a patchwork of residential femtocells cannot overcome the enormous infrastructure and capital requirements of a traditional wireless network. AT&T has characterized satellite-to-cell technology as a solution for the last 2% of coverage gaps, rather than a replacement for the networks serving the other 98%.

T-Mobile CTO John Saw echoed those concerns, emphasizing that strong wireless networks require infrastructure built site by site, from neighborhoods and office buildings to stadiums and subway tunnels. Verizon’s leadership has also pointed to the physical limitations satellites face when competing with terrestrial networks.

I think the more realistic near-term opportunity is for SpaceX to complement existing networks rather than replace them. Satellite connectivity could become a valuable backup and extend coverage, but that doesn't automatically mean SpaceX can compete on capacity, reliability, and performance across the broader wireless market. Especially considering the company’s still relatively small footprint. SpaceX’s roughly 80 MHz of spectrum holdings pale in comparison to established carriers. T-Mobile alone controls nearly 400 MHz, while the three major U.S. carriers collectively hold more than 1,020 MHz.

Another consideration is how much SpaceX is already investing in other businesses. The company is spending billions developing Starship, expanding and maintaining the Starlink satellite constellation, and building massive AI data centers through its combination with xAI.

None of these investments are necessarily bad decisions. Starship could transform the economics of space launches, Starlink has a compelling growth opportunity, and AI infrastructure could become a valuable business. However, each requires enormous amounts of capital and comes with significant execution risks. For example, Evercore projects SpaceX’s AI capital expenditures will approach $53 billion in the second half of 2026.

SpaceX has an impressive track record, and I wouldn't dismiss its ability to disrupt established industries. But I also wouldn't assume every new venture will be equally successful.

My takeaway is that investors may be getting ahead of themselves when assessing the threat to traditional wireless carriers. Acquiring spectrum is only one step toward building a competitive wireless business. SpaceX still needs to deploy infrastructure, attract customers, and compete on price and performance while managing several other massive investments. These are no easy feat and it takes time. Pivotal research analyst Jeff Wlodarczak states, “Our view is that Starlink mobile reaches a low-double-digit share of U.S. wireless over our forecast period (13% in 10 years).”

For now, I would be careful about assuming SpaceX will take substantial market share from Verizon, AT&T, or T-Mobile anytime soon. The long-term opportunity may be real, but the timeline, capital requirements, and eventual returns remain uncertain.

The Pros and Cons of Using Tokens for Stock Trading

Tokenizing stocks on a blockchain has some legitimate advantages, but there are also several drawbacks worth considering.

One of the biggest potential benefits is efficiency. Under the current system, a stock trade typically passes through a broker, an exchange, a clearinghouse, and other intermediaries before it is fully settled. This process can take time and requires coordination between multiple institutions. Blockchain technology could potentially eliminate some of these layers by allowing trades to settle directly on a shared digital ledger, reducing costs and enabling near-instantaneous settlement.

Another potential benefit is faster account transfers. The current Automated Customer Account Transfer Service, commonly known as ACAT, was introduced in the 1980s to replace older, paper-based transfer processes. Tokenization could eventually make transferring assets between financial institutions much quicker and more efficient.

Blockchain-based trading could also allow stocks to trade 24 hours a day, seven days a week, rather than being limited to traditional market hours. While that might sound appealing and has a potential benefit of increasing international access, I see some significant drawbacks.

First, around-the-clock trading could encourage people to become even more consumed by the stock market. Imagine people waking up at midnight or 1 a.m. to check their portfolios or react to price movements. Trading can already become an unhealthy obsession, and making the market accessible every minute of every day could make that problem worse.

Second, easier access and more frequent trading could encourage speculative behavior. Academic research and regulatory disclosures have repeatedly shown that short-term retail traders often lose money, with some studies reporting loss rates ranging from roughly 80% to 97%. At that point, the activity begins to resemble gambling more than long-term investing. And with loss rates that high, your odds of success may even be better in a casino!

By contrast, long-term investors who buy quality businesses and hold them for extended periods have historically had much better odds of success. Analyses of rolling 20-year periods have found that the S&P 500 has delivered positive total returns in every such period in the historical data examined.

Another concern is the potential for increased high-frequency trading. Blockchain technology could make it easier to execute transactions continuously and at extremely high speeds. While that may improve efficiency in some circumstances, it could also amplify rapid price movements and contribute to market instability. We have seen how quickly automated trading can interact with thin liquidity and trigger sharp market disruptions, including the flash crashes experienced in more recent decades. Extending trading into overnight hours, when fewer participants may be active, could also create conditions for sudden price swings because liquidity may be substantially lower.

For long-term investors, these changes may not make much of a difference. Our investment strategy is built around buying quality businesses at attractive valuations, collecting dividends, and holding investments for the long run. We might make four or five trades in an entire year. Other market participants make that many trades in an hour.

Ultimately, I see potential benefits to blockchain technology when it comes to settlement efficiency, reducing unnecessary intermediaries, and transferring assets between institutions. Those are worthwhile goals. But faster technology does not automatically lead to better investment outcomes.

The important question is whether tokenization makes the financial system more efficient or simply makes it easier for people to speculate more frequently. For investors focused on building wealth over decades, the ability to trade around the clock is far less important than the quality of the businesses they own, the prices they pay, and their willingness to remain patient.

American Debt Delinquencies Are Worth Keeping an Eye On

While many economic indicators continue to look healthy, there are some underlying trends that deserve attention. One of them is the rising percentage of American families falling behind on their debt payments.

According to a recent Federal Reserve survey, nearly 20% of American families fell behind on debt payments in 2025, up from approximately 12% in 2022. That is the highest level since 2010, following the Great Recession. The percentage of families that were at least two months behind on payments also increased, suggesting that some households are dealing with more than just temporary financial setbacks.

On the surface, the broader economic picture still looks relatively strong. Real median family income increased 7% between 2022 and 2025, while median net worth also rose and for those in the top income group they saw an impressive median increase of 31%. Consumer spending has remained resilient, and economic growth has continued despite concerns about higher interest rates and the cost of living.

However, rising delinquencies suggest that not every household is experiencing the same economic conditions. Higher-income families and those who own appreciating assets may be in a relatively strong financial position, while households carrying significant debt are having a harder time keeping up with payments.

This is not necessarily a sign that the economy is heading toward a recession. Delinquencies can rise even when the overall economy is growing, and there are plenty of reasons to believe the consumer remains in reasonably good shape. Still, it is worth watching whether this trend continues, particularly with borrowing costs remaining elevated and many households still dealing with higher prices than they faced just a few years ago.

The key is to look beyond the headline economic numbers. Strong GDP growth, rising incomes, and resilient consumer spending can coexist with growing financial stress among certain segments of the population.

I wouldn't overreact to these figures, but I also wouldn't ignore them. If delinquencies continue to climb, it could eventually weigh on consumer spending and become a more meaningful headwind for the economy. For now, it's another data point worth monitoring as we try to assess the underlying health of the American consumer.

Inflation Is Moving in the Wrong Direction, and the Fed Has a Problem

If you were hoping inflation would continue moving toward the Federal Reserve’s 2% target, the latest economic data are not encouraging. September’s consumer price index (CPI), producer price index (PPI), and retail sales reports all point to an economy that is still holding up, but one facing renewed inflationary pressure.

Let’s start with consumer inflation. The CPI increased 0.6% in September, up from 0.4% in August. On a year-over-year basis, inflation accelerated to 3.7%, compared with 3.4% the previous month. That puts inflation considerably above the Fed’s 2% target and moves it in the wrong direction.

Energy is a major part of the problem. Gasoline prices increased 9.1% in September alone and are up 34.2% over the past year. Overall energy prices rose 5.2% during the month and are up 20.4% year over year. More than half of September’s monthly CPI increase came from gasoline alone.

There is some good news in the details. Grocery prices were unchanged in September, while the cost of food purchased at home actually declined 0.1%. Core CPI, which excludes food and energy, increased 0.3% for the month, matching August’s increase. However, core inflation also accelerated to 2.6% annually from 2.4%. Shelter costs increased 0.4% during the month and 3.2% over last year and is another reminder that inflationary pressure has not disappeared from the broader economy.

The distinction between headline and core inflation matters. Higher gasoline prices can push headline inflation up quickly, and those prices can eventually reverse. However, if elevated energy costs feed into transportation, shipping, manufacturing, and other business expenses, the impact can extend well beyond the gas station. That is where a temporary energy shock can become a more difficult problem for the Fed.

The producer price index released Thursday may be even more concerning. PPI, which measures prices received by domestic producers, jumped 1.3% in September, its largest monthly increase since March 2022. Producer prices were up 6.3% over the past year, its largest gain since December 2022. Energy was a major contributor, but the report also showed increases in services, freight transportation, and other business costs. That raises the possibility that inflation is spreading beyond the initial energy shock and that businesses may eventually pass more of those costs on to consumers.

The other important piece of the puzzle is consumer spending. Retail sales increased 0.8% in September, beating expectations and suggesting consumers are still spending. Looking year over year the numbers were quite impressive given the fact that we saw a 6.3% gain. Gas stations were a large contributor as sales surged 28.1%, but even if we exclude them from the headline number, sales still grew by an impressive 4.5%. Two major categories that stood out to me were nonstore retailers where sales climbed 8.2% and food services and drinking places where sales grew 7%. Health and personal care stores was the only major category that saw a decline as sales fell 1.2% year over year.

That creates an uncomfortable combination: inflation is accelerating while the consumer appears to still be quite strong. The bottom line is that I would be careful about assuming inflation is going to fall back to the Fed's 2% target anytime soon. September's reports do not guarantee another inflationary wave, and energy prices can move in both directions. However, the combination of rising consumer prices, a sharp increase in producer prices, and healthy retail sales is not an ideal economic backdrop for the Fed.

AI Boom Faces a Growing List of Risks

There are several developments in the artificial intelligence industry worth watching, and not all of them are positive. Between growing concerns about the safety of AI models, mounting debt among data center operators, questions about whether revenue growth can justify current valuations, and the possibility of future memory chip oversupply, the industry is facing a number of challenges that investors should not ignore.

First, Anthropic outlined how AI models could potentially infiltrate internet-connected devices, such as smart ovens and Android TV boxes, harness their computing power to run themselves, and spread to other devices. While these capabilities could eventually lead to useful applications, they also highlight some of the security risks associated with increasingly capable AI systems. The more autonomy these models gain, the more important it becomes to understand what they can do, what access they have, and whether their actions can be controlled. Anthropic warned in a blog post that the AI model could be “challenging to shut down” because it would have “no centralized point” that could be switched off.

At the same time, OpenAI is facing a lawsuit from eight states over concerns about ChatGPT's safety. These legal challenges highlight the growing pressure on AI developers to demonstrate that their products have appropriate safeguards. I believe AI has tremendous potential, but the technology is advancing quickly enough that safety, accountability, and the ability to manage unintended consequences need to remain part of the discussion.

There are also growing financial concerns surrounding the AI boom. CoreWeave, a major provider of cloud computing infrastructure for AI, has seen the cost of insuring its debt against default rise to distressed levels. Yields on CoreWeave’s debt have also continued to rise, with the yield to maturity on its 9.75% bond maturing in 2031 climbing to 15.78%this past week. This is worth watching because the AI infrastructure buildout requires enormous amounts of capital, and companies are taking on substantial financial obligations in anticipation of continued demand. If revenue growth or customer demand falls short of expectations, highly leveraged companies could find themselves in a difficult position.

Anthropic's latest reported revenue figures add another layer to the discussion. The company generated $16.8 billion in revenue during the third quarter, up from $11.6 billion in the second quarter and $4.7 billion in the first quarter. Those are impressive numbers, but the rate of sequential growth slowed in the third quarter. DA Davidson analyst Gil Luria described the results as "not what anyone wanted to see," reflecting concerns that AI revenue growth may not be accelerating quickly enough to justify the enormous gains investors have priced into some chipmakers.

The broader question is how much businesses and consumers will ultimately spend on AI, and whether that spending will generate enough economic value to support the infrastructure being built today. AI demand could continue expanding as adoption spreads beyond a handful of major developers. But even if demand grows substantially, it may not reach the extraordinary levels some investors currently expect.

Another risk is the potential for memory chip oversupply later this decade. Manufacturers are expanding production to meet AI-related demand, but the additional capacity could eventually exceed what the market needs. China's ChangXin Memory Technologies, or CXMT, has also announced progress on a new memory architecture designed to increase density, highlighting the potential for intensifying competition. Elon Musk has separately suggested that China will produce enormous quantities of RAM by 2028.

This is a familiar challenge in the semiconductor industry. When demand surges, manufacturers invest heavily to increase capacity. If too many companies make similar investments at the same time, the industry can move from shortages to oversupply, putting pressure on prices and profit margins. The current AI boom does not eliminate that risk.

Finally, executives at Broadcom and Intel have warned that financing could become a significant bottleneck for AI expansion. Broadcom CEO Hock Tan has argued that access to capital could become a bigger obstacle than chip availability or electricity. That makes sense when you consider the cost of building data centers, acquiring specialized equipment, securing power, and developing the infrastructure necessary to run increasingly sophisticated AI models.

Investors need to distinguish between the long-term potential of AI and the prices being paid for companies associated with it today. A transformative technology does not guarantee that every company involved will be profitable, that every infrastructure investment will earn an adequate return, or that current stock valuations will prove justified.

I would be particularly cautious about assuming that today's shortages will last indefinitely, that revenue growth will always accelerate, or that companies can finance unlimited infrastructure expansion without consequences. Competition, debt, capital requirements, and overcapacity are all real risks.

Stock of the Week: PepsiCo (PEP)

PepsiCo (PEP) recently reported better-than-expected third-quarter earnings and revenue, but the company’s results highlight a growing problem: its international business is performing well while its North American operations continue to struggle.

The company reported adjusted earnings per share of $2.34, beating analyst expectations of $2.29. Revenue increased 5.6% year over year to $25.27 billion, also topping estimates of $24.96 billion. Net income rose to $3.05 billion from $2.6 billion a year earlier.

However, the stronger-than-expected quarter wasn’t enough to prevent management from lowering its full-year earnings outlook. PepsiCo now expects core earnings per share to grow 2.5% to 3.5%, down from its previous forecast of 5% to 7%. The company expects full-year revenue growth of approximately 6%, toward the upper end of its previous guidance.

International markets remain a bright spot, accounting for 41% of PepsiCo’s net revenue so far this year. The company reported volume growth across nearly all of its international business units, helping offset weakness in North America.

The domestic business remains the bigger concern. North American beverage volume declined 2%, while food volume was flat. PepsiCo has been working to improve demand through product innovation, increased marketing and lower prices on popular snacks such as Lay’s and Doritos. Earlier this year, the company cut prices on many of its snack products by as much as 15% to appeal to consumers who have become more price-sensitive.

So far, the pricing strategy appears to be helping its snack business recover. Management said snack volume has shifted from low-single-digit declines last year to low-single-digit growth this year. However, demand was weaker than expected during the latest quarter, suggesting the turnaround still has work to do.

There is also a potential headwind on the horizon. Management expects a new wave of inflation driven by higher energy prices and indicated that price increases may be necessary. PepsiCo will need to balance protecting its margins with keeping its products affordable enough to maintain demand. Raising prices too aggressively could undermine the progress it has made in winning back consumers.

The company is also planning cost reductions to eliminate redundancies and discretionary spending, freeing up money for innovation and marketing investments.

Looking at the numbers, the stock offers an attractive 4.6% dividend yield. However, the company pays out 72.7% of its earnings and 77.5% of its free cash flow in dividends, leaving less room for future dividend growth. The stock has struggled considerably as it has fallen 17% over the last 5 years while competitor Coca-Cola has climbed 72%. With the stock’s decline, it now trades at around 15x expected December 2027 earnings. Based on those earnings, our target sell price would be $143.42. Even though that is above the current price of $131.55 I would not be a buyer at this level. The debt/equity looks concerning at 230% and the lack of growth is not appealing to me at this multiple. EPS is expected to climb just around 3% this year and 3% next year. My belief is there may be a better entry point for this stock down the road, and the risks just aren’t worth buying at this level.