AI drives market divergence
Sep 27, AI sector divergence and energy stock swings, plus rising bond yields, push hedge funds toward volatility dispersion trades.
Stronger-than-expected PMI boosts rate-hike bets and sends Treasury yields surging; BTC retreats and stabilizes around $84K
🔍 Key Insights
📊 Market Overview
The preliminary U.S. September PMI came in at 58.4, marking the fastest expansion since 2021, while the Input Prices Index reached its highest level since October 2022. This sharply increased market expectations for further Fed tightening, with CME data showing the probability of a 25-bp rate hike in October rising to 69.7%. Higher rates d
the "AI companies facing rising bond yields" framing misses the actual problem: these firms don't have the cash flow to service debt at 5% yields because the revenue model still doesn't exist. it's not a rate environment issue. it's that $NVDA sales and MSFT licensing deals don't turn into profits fast enough to justify the leverage they're already carrying. bond markets are finally pricing that in.
The week’s biggest sweep check went to $META at $353.6M, with #TSLA next and chips still owning the middle of the tape. ↗️ Sweep premium: META $353.6M, TSLA $234.2M ↗️ Semis: #NVDA $197.7M; MU, INTC, AMD all cleared $129M ↘️ Put flow: AMD 58% puts; MU/INTC stayed elevated ↘️ AAPL: $103.7M sweep premium, 0.7x momentum
The week closed with $2.68B in net bullish option premium across 18,687 trades, as $META, #NVDA and #TSLA drew the biggest checks while semis carried the cleanest hedges. ↗️ Weekly flow: $7.52B calls vs $4.85B puts ↗️ Mega caps: META $468.1M, NVDA $298.8M, TSLA $267.2M ↘️ Semis: AMD 58% puts on $171.7M; TSM 67% puts on $68.9M ➡️ SPX: built from ~$7,665 to ~$7,740; $7,740 is the level to watch next week
Premium Rates and Returns of Domestic U.S. Stock Funds [September 27] The latest premium rates for the U.S. index funds I recommend remain near historical highs. - Bosera S&P 513500: 9.1% - Harvest NASDAQ 159501: 14.9% - Cathay NASDAQ 513100: 12.8% The returns for these three funds year-to-date are: - Bosera S&P 513500: 10.4% - Harvest NASDAQ 159501: 24.1% - Cathay NASDAQ 513100: 21.4% My consistent advice has always been: ignore the premium and buy, buy, buy with confidence. Have you invested in these funds? What has your return been? Feel free to share your experience! If you're still holding back, what are you waiting for?
MARK NEWTON SAYS SEPTEMBER’S BEARISH REPUTATION ISN’T MATCHING THE MARKET @MarkNewtonCMT sees underlying strength despite higher oil, rates and seasonal pressure: - Markets entered September up 12.5% and remain only 2.5% below all-time highs - Crude has surged and rates pushed toward 5%, yet equities have remained resilient - Profit growth is the strongest in 30 years, the economy remains solid, and technical trends matter more than oil or rates alone @FundstratDirect
Wall Street just had a rather unusual session. Oil prices remained high, bond yields continued to exert pressure, yet money kept flowing into AI stocks. Dow +0.93% S&P 500 +0.51% Nasdaq +0.48% Microsoft and other tech giants drove the market higher, while the S&P 500’s forward P/E ratio fell to its lowest level since 2023. The current market is sending a clear message: Macroeconomic conditions aren’t ideal, but capital still won’t leave AI.
How did the Nasdaq-100 finish the week up about 3% with the 10-year at its highest since 2007? Most of the index never borrows at the 10-year. The ones that do had a different week. Oracle fell 3.4% Thursday on a force majeure notice about a data center it rents.
