Friday's biggest repricing came from a lease that doesn't exist yet.
Bloomberg reported late Thursday that SpaceX wants space on at least 80,000 U.S. cell sites and is talking with Crown Castle. No company confirmed it. By the close, the three big carriers had lost about $28 billion of market value. The three big tower owners had gained about $7 billion.
A new tenant should be good news for landlords. The market paid them a fraction of what it took from the tenants who already pay the rent.
That's today's Sip.
First, the session.
3 MOVERS IN 3 MINUTES
1. Oil climbed again, and the oil-service names collected.
Brent rose about 3.3% to near $117, up more than 6% on the week, as Houthi forces claimed more attacks on Saudi targets. SLB (SLB) earned $0.64 a share excluding charges, above about $0.62 expected, on revenue up 6% to $9.45 billion, and rose 7%. Halliburton (HAL) gained 5% and Exxon Mobil (XOM) hit a 52-week high. American Airlines (AAL) fell about 4%.
The White House has said the U.S. won't strike Iran before the Nov. 3 midterms. Oil rose anyway. One reading is that the premium is about Gulf supply, not Washington.
2. Amex beat, raised and cut 5% of its staff. The stock fell anyway.
American Express (AXP) earned $4.68 a share adjusted, above about $4.50 expected, on record revenue of $20.1 billion, up 9%. It raised its full-year earnings forecast. It also plans to cut about 5% of its global workforce, roughly 3,500 jobs, with a $336 million restructuring charge. CNBC and Investopedia reported the cuts as preparation for AI.
The stock fell 3.7%. Truist's Brian Foran told Reuters that a drop that held would make this the ninth time in 11 quarters Amex fell on a beat. The adjusted forecast still tops out at $17.90, where the old range did. Investors have learned to discount a raise like that.
3. The inflation data pushed back on Thursday's bond rally.
This morning's test was whether the flash PMI would back the bond market's slowdown read. The composite came in at 57.6, exactly as expected. The prices did the talking: S&P Global said selling prices rose at the fastest pace since August 2022, and its chief business economist said consumer inflation is likely to rise further above the Fed's target. Michigan's long-run inflation expectations rose to 3.5%, above their 2024 range of 2.8% to 3.2%.
The 10-year yield rose about 4 basis points to near 4.99%, keeping most of Thursday's drop. Kalshi's October hike contract traded at 8 cents by early afternoon, from 6. Bitcoin sat near $81,200. The bond market noticed the prices. It hasn't changed its mind yet.
3 SIGNALS FOR TOMORROW
1. Moody's rules on France tonight. The decision is due after 4 p.m. Eastern, and most analysts expect a cut from Aa3, according to Reuters. France's 10-year yield sits near 5.04%. A narrower spread over Germany on Monday would say the downgrade was already priced. A wider one would say it wasn't.
2. Oil's weekend test. Polymarket's contract on the U.S.-Iran ceasefire holding through Oct. 24 slid to 88 cents from 93.5 cents this morning as Brent climbed. It runs through Saturday night. A quiet weekend makes Monday's open a clean read on how much of $117 is Gulf supply risk rather than strike risk.
3. Verizon goes first. Verizon (VZ) reports before Monday's open, with analysts expecting $1.27 a share. It's the first big carrier to speak since the SpaceX report, and it fell only 1.3% Friday. Any comment on a fourth network sets the tone for the group.
Now, back to the towers.
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The Sip
SpaceX wants 80,000 cell sites. The tenants paid more than the landlords made.
Bloomberg reported Thursday evening, citing people familiar with the matter, that SpaceX (SPCX) wants access to at least 80,000 U.S. cell sites for a wireless network and is in talks with Crown Castle (CCI). That's about half of the roughly 158,500 U.S. cell towers, by the Wireless Infrastructure Association's count.
No company has confirmed the talks. No lease has been announced. Friday repriced the industry anyway.
The landlords got the name, not the theme
Crown Castle rose as much as 16% and closed up about 9%. American Tower (AMT) touched a 52-week high, up 11%, and SBA Communications (SBAC) opened up 10%. Both closed up about 4%, giving back roughly two-thirds of their gains.
Crown Castle's CEO said on his Oct. 21 call, "You can assume that we're talking to all parties." Investors priced the landlord named in the story and discounted the rest.
The tenants' bill
AT&T (T) and T-Mobile (TMUS) each fell about 8%, T-Mobile to a 52-week low. Together they lost about $25 billion of market value, more than three times what all three tower owners gained. Verizon fell as much as 3.6% but closed down just 1.3%.
That ratio is the story. A fourth network is a new tenant for the landlords and a new rival for the companies that pay most of their rent. AT&T, Verizon and T-Mobile bring in about 85% of American Tower's U.S. and Canada revenue, by Yahoo Finance's calculation. The market's math says competition takes more out of the carriers than new leases put into the towers.
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Spectrum first, then steel
This is the second SpaceX shock to the carriers in weeks. Earlier this month SpaceX agreed to buy low-band spectrum, and AT&T and Verizon had their worst one-day falls in more than two decades, by Reuters' count. Airwaves, then sites. Each step makes a fourth carrier look less hypothetical.
The timeline is still long. Bernstein analysts said the competitive threat could take years to arrive, though the anticipation is likely to keep weighing on the sector, Reuters reported. Citi doesn't expect national SpaceX service before 2029, according to Barron's.
So the carriers are being priced for a rival that may not sell a phone plan for years. That's an overhang, not an earnings hit, and overhangs can lift quickly if talks stall.
What settles it
Verizon reports Monday morning and American Tower Tuesday morning. Listen for whether either addresses SpaceX directly. A signed lease would make Friday's carrier selloff look early. A denial from SpaceX or Crown Castle would make it look like a report trade.
Until then, the carriers are trading on a story with no signature on it.
AI CEO Issues Code Red: Prepare for Meltdown
The CEO of this AI company (click here to get the name, 100% free) just issued a CODE RED in an internal memo…
Warning his employees that they’re dealing with a critical situation.
Another company executive even implied they might need a government bailout.
And now Jim Rickards is predicting this company is about to go bust, in a full-blown AI meltdown that could be 10 times bigger than Lehman Brothers.
The Market Sips Takeaway
Friday priced a fourth carrier as a bigger cost to the carriers than a gain to the landlords. That's a read on a report, not a contract.
- What would confirm it: SpaceX or a tower owner confirms talks, American Tower names SpaceX as a prospective tenant on Tuesday, and AT&T and T-Mobile fail to recover next week.
- What would break it: a denial, carriers climbing back above Thursday's closes, or Citi's 2029 timeline becoming the consensus view.
- Where it shows up next: carrier pricing and promotions, tower-owner tenant concentration, and Deutsche Telekom, T-Mobile's majority owner, which fell 3.2% per Reuters.
SpaceX hasn't signed a lease. AT&T and T-Mobile already paid rent on one.
UNTIL THEN, SIP SLOWLY!
The Market Sips Desk
If SpaceX signs for 80,000 sites, who comes out ahead in five years: the tower owners or the carriers? Hit reply.
Rates Just Reset. Who Feels It First?
On January 2, the 10-year yielded 4.19%. By September 30, 5.29% — most of it in one quarter.
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