Big Tech’s Growth Comes With a Big Bill


Says disappointing second quarter report raised a big alarm among investors Tuesday as the shares tumbled as much as fourteen percent their biggest drop in two years the results. Were seen as, a, specially, surprising because of Netflix is massive growth last year which showed no signs of slowing down but overall, big tech shrug off the news the NASDAQ one hundred. Index hitting a new record Tuesday and looking at the bigger picture you can see from this chart in the library large cap. Tech has easily outperformed the s. and p. five hundred in the last few years so, do net flicks is results signal that there should? Be more cautious going into this earnings season here all this answer that question we are joined, by Michael Pervez weeded and Cho's? Chief global strategist and our very own Bloomberg opinions share Lovie days. So Michael first of all should? The rest of the investment. Community be concerned about? Other big tech companies. Not living up. To expectations, over the next couple of weeks as they report Yeah Step back for a. Second you realize how important thing is to the tech sector and how important the tech sector of the overall market anyone needs to sort of care about how the performance is going to. Be I've been continuing to overweight tack for a few years now including this year for all sorts of. Reasons but having said that right now if you look at the FANG index market cap weighted basis it's actually, at a higher than it was. Back in late January before all the volatility. Erupted there and start prices not the index for the FANG is not quite as overextended above workings of poor. As it was back then but it is certainly up there so I think Regardless, of what you might think about. The individual companies It seems like right now for the earning season for the other, guys that are going to be coming later. This week it's really the stars up to pretty perfectly so. A lot, of caution is going. To be needed here but again longer term I would I would expect that any dip in Amazon and Facebook. And Google will be pretty aggressively bought well and share there's still a question, of whether net flicks is subscriber Bizet a speed bump or is it part of a longer term trend yet in the sleeping, was it wasn't just the weakness in the second, quarter, subscriber, numbers, networks also forecasting. Decline in third quarter subscriber numbers subscriber editions and. Look maybe the company is being conservative, with its forecasts seeing what happened. With its second quarter falling shy of its own guidance but it's interesting that you're talking about, sort of two soft quarters in a row for Netflix Which makes it a little bit harder to argue the blip scenario Now Michael we at an analyst at Bernstein. In a note saying crowded trains are typically already priced for. Perfection and as such socks don't react much to incremental positive news while negative news has a much more pronounced effect and we yet we've seen these stocks run up and up and up even in the midst of. Folic volatility around Facebook and. Controversy around the Cambridge Analytica data scandal? Even, Facebook has bounced back so what should investors be skeptical about look I think there's a fair amount of caution that's that's been coming, with this rally since the Facebook scandal erupted back. In late March and you, can see that in the, options market if you look at put call skew for the axe That actually has as way as much stronger than it is, for the put calls skew. For the SPX for example additionally if you just look at the the level of. NDA, x., volatility relative to fix it is in that spread is, in the top ten percent and it's been. That way for some time so what you're seeing here is that people are playing this recovering from the Facebook scandal that rally but they're they're they're going into it with a fair amount of protection which I think is healthy and may mean that whatever dips we get over. The next few weeks out. Of earning season are not quite as? Dramatic, here that side amidst the tech you for you if you take a closer look at the numbers of some of these companies evaluations, are still incredibly take a listen to rob are..

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