Bloomberg UK Politics: Reeves Goes To Washington
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Yahoo
26 minutes ago
- Yahoo
Options Traders Brace for Big Tech Selloff With ‘Disaster' Puts
(Bloomberg) -- Options traders are increasingly nervous about a plunge in technology stocks in the coming weeks and are grabbing insurance to protect themselves from a wipeout. The tech-heavy Nasdaq 100 Index is up almost 40% since its early April plunge triggered by President Donald Trump's sweeping tariffs. The rally has been propelled by big tech, with the Bloomberg Magnificent 7 Index — which contains the likes of Nvidia Corp., Meta Platforms Inc. and Microsoft Corp. — soaring nearly 50% since its April 8 bottom. Chicago Schools Seeks $1 Billion of Short-Term Debt as Cash Gone A Photographer's Pipe Dream: Capturing New York's Vast Water System A London Apartment Tower With Echoes of Victorian Rail and Ancient Rome Why New York City Has a Fleet of New EVs From a Dead Carmaker Princeton Plans New Budget Cuts as Pressure From Trump Builds The concern, however, is that those gains are hiding areas of weakness lurking beneath the market's surface. And there are potential triggers for a drop coming up, from Federal Reserve's Jackson Hole symposium starting in a few days to Nvidia's earnings next week. Traders are 'less concerned' about a 'normal run-of-the-mill pullback' and seem to be more worried about a repeat of the April selloff, said Jeff Jacobson, head of derivative strategy at 22V Research Group, who thinks a shallower dip is more likely. Traders are buying 'disaster' puts on the Invesco QQQ Trust Series 1 ETF, which tracks the Nasdaq 100 Index, Jacobson said. Put options give investors the right to sell the underlying security at a certain price, and are popular as a way of protecting against a market drop. A measure showing the difference between the cost of hedging against a sharp downturn and a smaller one is at an almost three-year high, Jacobson said. Fears of a bubble are mounting, as tech stocks follow a pattern that is 'surprisingly similar' to the dot-com bubble of the late 1990s, Torsten Slok, chief economist at Apollo Management, wrote in a note to clients on Monday. Meanwhile, Michael Hartnett, chief investment strategist at Bank of America Corp., has been warning of a bubble forming in risk assets since December and predicts that US stocks will drop after the Fed's Jackson Hole symposium ends on Friday. Myriad Risks 'The market's had such a big run,' Jacobson said. 'A myriad of things' could send big tech tumbling. For example, there are worries about the impact of artificial intelligence on software companies, which has helped push Salesforce Inc.'s share price down 27% this year. And the Magnificent 7 rally could come to an end if tariff-driven inflation forces the Fed to curtail interest rate cuts that the market has already priced in. 'It could be a rotation out of those the Mag Seven names into some of the other areas that have lagged,' Jacobson said. 'It could be 'sell the news' when you have Nvidia earnings in the next few weeks. We could even get a 'sell the news' out of Jackson Hole.' The elevated put skew indicates that traders are hedging against a repeat of the tariff tantrum in April, according to Jacobson. He sees that fear as overblown. While the Nasdaq 100 sank more than 20% from its Feb. 9 high to its April 8 low, that kind of move is extremely unusual. Over the last 18 months, the average selloff in the Nasdaq 100 has been around 12.5%, Jacobson said. To bet on a correction in the ETF, Jacobson suggests a number of trades including buying a put ratio spread, in which cost of insuring against a shallower drop is partially funded by selling insurance against a deeper, April-style plunge. Specifically, Jacobson encourages traders to buy $570 puts in QQQ that expire on Oct. 17, and that they fund the trade by selling twice as many $515 puts in QQQ. The trade should make money if the index falls by roughly 2% and no more than 11%, he said. The $515 level is the ETF's 200-day moving average, which he believes will act as a floor in the event of a pullback. Not everyone on Wall Street is convinced that investors should be shorting the best performing of the major US equity indexes over the last decade. JPMorgan Chase & Co. cross-asset strategists, for instance, suggest shorting the small-capitalization Russell 2000 Index and going long the Nasdaq 100. Jacobson, however, is more pessimistic about big tech's immediate future. 'Clearly, there's a possibility, right?' he asked rhetorically. 'You have just a, such a strong concentration in these names. It wouldn't take much.' Foreigners Are Buying US Homes Again While Americans Get Sidelined What Declining Cardboard Box Sales Tell Us About the US Economy Women's Earnings Never Really Recover After They Have Children Americans Are Getting Priced Out of Homeownership at Record Rates Yosemite Employee Fired After Flying Trans Pride Flag ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
28 minutes ago
- Yahoo
Oracle will reportedly power a giant data center with gas generators
Bloomberg has published a deep dive into operations at Oracle, chronicling the software giant's rise in cloud computing and current push into powering artificial intelligence projects. The publication reported that Oracle has promised to develop tens of billions of dollars in data centers, which have become a hot business. Notably, Oracle landed a deal to back operations at OpenAI, in a partnership that will give the AI company 4.5 gigawatts of computing power. According to Bloomberg, that's enough energy to power "millions of American homes." So far, Oracle has seemed willing to throw money at its AI data center projects, no matter how expensive or irresponsible the needs might be. For instance, a source said the company plans to spend more than $1 billion a year powering a single data center in Texas with gas generators rather than waiting for a utility connection to be built. When completed, this data center is expected to be one of the largest known sites, with computing power of 1.4 gigawatts. In addition to the huge monetary cost, such a project can also have negative human and environmental impact. The Elon Musk-owned xAI is under fire after a supercomputer for its artificial intelligence operations became a primary source of air pollution in Memphis thanks to methane-powered turbines. Other majors, including Google, Microsoft and Meta, have chosen to try nuclear power for their data center projects, which comes with its own potential complications and risks. Purely on the financial side, Oracle's decision to invest so much so quickly meant the company reported its first negative annual cash flow since 1990. Should the current rates of AI investment turn out to be a bubble, it could be very bad news to have many billions of dollars on the line.
Bloomberg
34 minutes ago
- Bloomberg
Plug Power CEO Sees "Robust" Market for Hydrogen, Green Energy
Andy Marsh, Chief Executive Officer of Plug Power, discusses his company's most recent earnings report and explains why he sees continued growth ahead in the green energy sector. Andy speaks with Tim Stenovec and Emily Graffeo on Bloomberg Businessweek Daily. (Source: Bloomberg)
