Aigail, it felt like broadbased selloff within the s p 500 all the way down to tech stocks. Abigail it was a broad selloff. A far more concentrated as you were just mentioning with the mega cap tech stocks. There was weakness for tech. The dow had been higher. That tells you the degree, the dow closing sharply as well. The closing pressure came for tech stocks. The worst day since march. The faang index down. Tesla down 9 . The stocks and chips also down 5. 7 . And you were mentioning that this was the correction folks were looking for. Tesla up out of the march low. Plus the stocks split for tesla and apple. People wondering when the hangover would come. Today seems to be the case. Perhaps a little bit too far, too fast. We also have bearish action. Broadcom put up a beat, but it was narrow. Beating sales by less than 1 . One of the tech fires that was really not that great. And doc you sign after a really bearish day. This stock up 227 on the year, 4. 6 bearish. Another case of too far, too fast. Investors all of a sudden taking chips off the table. Taylor tesla confirming the bear market territory. We will push that story forward and we will get more on tesla later. You pointed out that within the s p 500 tech sector, all 71 components were down and they were down a lot. What were you noticing . Abigail the degree of the selling action. The baby being thrown out with the bathwater, there is no reprieve. Every single tech stock is off. It points to the degree of rally for tech stocks. Up 35 contrast. This is where all the money is going. Today, not so much. The worst day since march. Nvidia, one of this years darlings up 120 on the year. That stock down sharply. Wall street analysts praising it. Emily and i have been talking about this chart this week. His tells the story if apple is so overextended, the frosty buy, the fundamentals of the company are great but shown by the fact that apple is 55 above the 200 day moving average. It is usually overextended. Oversi plunging down overbought territory. There is an uptrend Still Holding but it could be a shot across the bow that more volatility is ahead. Taylor push the story to tomorrow. A job day is quickly approaching at 8 30 a. M. Eastern after the initial highfrequency jobs data that we got this morning. The environment paints a weaker picture and it was the reopening stocks ending up in positive territory today. Abigail im glad you are bringing that up because it is interesting in terms of todays selloff. It feels like it was risk offrisk off. Look at the winners we had on the day. Carnival, norwegian cruise line. The recovery and reopening stocks. People shopping. If it was really a bad macroeconomic picture, the stocks wouldve been plunging along with tech stocks. And we are seeing again here. Bonds, haven bonds. Today, the 10 year yield is barely budging at the end of the day. Bonds, it was mild buying. If this was a fearful risk off selloff day, you wouldve seen a massive rally for bonds. That was not the case. We have to see what comes tomorrow with that. The fact that bonds and the yen are basically flat on the day. Amorrow, there could be little bit of a bright spot or some sort of relief after todays big tech wreck. Youre always invited back when you mention the bond market. Market pullback today by investors. Valuations in the technology landscape, we have extraordinary levels. It is not a surprise. Latecomers and the craziness in the 2020 summer of love for investors. It is not surprising we are getting a bit of a pullback. This is the time to start taking a little bit of it off. Taylor joining me is an equity derivative strategist. Amy, great to have you on a day like this. Underneath the headlines, what are you noticing about todays action as it relates to derivatives and options . What is it telling you about today . Amy it has been really interesting. And i think the first thing i would say is that we need to see a little bit more because clearly, this was all about tech. We have tested this before. The Market Options the last few weeks have been extremely nervous, and nervous in particular in tech. Stock price in tech continues to go up and their volatility goes up. It is not a normal relationship. It is normally inverse. The fact that we have upended 20 years to 30 years of that relationship at are starting to get that, it made me nervous. We spoke about it with your guys this morning about how when people are continuing to be more uncertain as tech goes up, this is usually something behind that. A lot of those relationships broke and it will be interesting to see if that continues to break. What is the relationship about participating in this rally via the call option . If i am on the other side of it and selling that option, im hedging the trade and buying the underlying stock so that when this starts to unwind, some of that hedging has exacerbated these moves. Can you walk us through the hedging underneath that you are noticing in this market . It is a great question. We refer to it by different names. We call it the gamma squeeze, the hammer, what have you. But it is a simple concept at the end of the day. Buy one call option, there is somebody on the other side that has told you that call option. That dealer needs to do a delta hedge or refer to the dynamic hedge. What they are doing is buying stock underlying to do that. The issue is that when you get into the relationship of spot and volatility being positively correlated instead of negatively correlated, that dealer is ting hit on to elements both elements, the volatility side and stock side. A point i would like to make about that, in the past few weeks, we have seen an extremely large buyer of tech calls for us in the market. That has exacerbated a lot of the single stock moves. We have seen it in salesforce,mazon, and today in the market we saw a bullish trade and options of facebook. In options of facebook. This would be one of the first days were the holder of those bullish options really got hit on the position. And secondarily, the choice made there was to reload. We will see what those investors are doing because there is a reactivity that has to happen from the dealer side. What is the theory out there that if you seek racks and some of the big tech names, it has the opportunity to pull down the rest of the market and perhaps maybe we saw pockets of that today . Or can the rest of the market hang in there despite some big tech pullback . It amy u know, you know, it becomes a waiting game. 50 , the queue is 50 . It takes eight names to bring down the whole index. I think is very interesting and i think is part of what is happening, the recent vaccine headlines have full hold forward the timeline. We had the view that when the vaccine became really real, you would finally see a break in the momentum trade, the mega cap tech trade against value. By the vaccines are saying november 1, prior to the u. S. Election, we might actually get something thats accessible to a portion of the population. It has sort of fast forwarded the recovery. The commentator earlier was saying that a lot of cyclical recovery has been done well. I think the story is really all about tech and not necessary necessarily the full market. Onlyr push this to us not with jobs day but the election. A lot has been written about option plays within the vix where the october contract that plays to the volatility is much more expensive than the first and third month. Are you seeing heightened volatility in that october contract that encapsulates the november election much higher than anyone else . Any other month . Hump is definitely there in the markets. November is pricey as well. And obviously today, things came up with it. What i think is interesting about that is when i actually talk to investors and we speak about hedging their portfolios, a lot of them are actually looking at longer data. Looking attually these more in december through january. And part of what a lot of people have pointed out is that this election is going to be tricky. Its not one where people believe we will have an answer on november 3. There is a lot of mechanics. Without theoff premium to see how that plays out. I dont know if people believe it is something. Taylor thank you for those wu silverman. And tech stocks taking a beating this week, is that part of a selloff story . We will discuss it next. This is bloomberg. Inlor tesla stopping short his tracks. The electric automakers saw shares fall for three straight days. They are down nearly 20 from monday. Are investors questioning the companys rapid growth . Is it due to the recent stock offerings . Is it part of a broader tech selloff . We are joined by a Senior Investment analyst. It david, great to have you. Walk me through this. Tesla in bear Market Correction territory. David absolutely. Three things are happening with tesla. Number one, a couple of days ago, they issued some equity. Think it was a good decision. The stock was a little higher today. They are using that capital to invest in their factories. I think it was a good reason for doing that. What investors have taken it the wrong way. Gifford, theyy trimmed their exposure in the tesla position from 6 to 4 or 5 . That is just wealth management. James anderson is one of the pms and is still very bullish on the company. I think its a combination of that, and people trimming some of their exposure and taking some profits. I think the story looks fundamentally good. Taylor you nailed it. Those errors, how to not lose money as part of Risk Management control. Talk to me about the fundamentals that are still intact for you. Tesla, you see a lot of Value Investors saying that tesla is overvalued. In our opinion, we think the story can grow 50 per year for the next 10 years. Inhave a huge opportunity the vehicle market. We think they can sell 10 million to 15 million vehicles. A robotic vehicle would be a self driving vehicle. That will push the valuation of those vehicles higher. Ad on the other side, we have huge opportunity as big as the vehicle business. On top of that, you have insurance and older opportunities. In those used applications. You can look 10 years from now and tesla could be growing at a doubledigit rate. It is a great opportunity as investors will buy the pullback. Taylor how much is the stock dependent on a successful battery day . David it has been going out because there is a little bit of analysts wanting to know a bit more about how powerful those batteries are. Especially because they are going to be building more trucks, semitrucks. In those batteries are going to need more power. As an investor, you need to know what is in the chemistry. There is a little bit to that. And not too much. Look at wall street, 75 of analysts are bearish on the stock. Dont think it is priced that high. If you have a three year to five your target, if you hold it for that time, i think you will do ok. Taylor david, talk to me more broadly outside of tesla. The theme of a bit of rotation. Out of momentum, the timeline stocks. Do you see that trend starting . David Growth Stocks have done well for a reason. They are making us more effective, more efficient. I like to say that apple, facebook, amazon, and those guys are becoming Consumer Staples stocks because we are consuming their technology at a higher rate. That is why they have done so well. I think the pullback is an opportunity to buy those names. The names are not being disrupted. They are ok and i think it is healthy to have those pullbacks. Tohink it is an opportunity buy those names that are high quality. David yepez, senior analyst. Thank you as always. Coming up, an exclusive conversation with bill ackman. How his talk to take airbnb public happened. And we will hear from nick clegg, facebook Vice President of Global Affairs and commit occasions about the companys new political ad policy ahead of the crucial november election. This after Ceo Mark Zuckerberg talked to cbs this morning. This is bloomberg. What is sensitive is having us be the ultimate deciders of what is right and wrong at a and false. There are a number of cases where we can rely on other authorities. The u. S. Justice Department Planning to file an antitrust lawsuit against google as soon as this month according to a New York Times report. This after attorney general william barr turned down a request by career lawyers that said they need more time to build the case. To garrett who has been covering google for us. How soon do we think the timeline could be . Sure if it isot sooner, but we are seeing, at least according to this report, a little more clarity. Known now, we have there have been various reports about this split in the justice department. Career lawyers, people working there for years are saying that we need more time to really get all our ducks in a row before we launch our case against google. Barr appointed by President Trump says you guys have done enough work and we launch the case now. It raises the question of how mucks much politics plays into this. Politics plays into all these decisions, but you can be assured that if a case does come before the president ial election, google will be arguing that this case is politically motivated, a witchhunt, and not ready to go. Trumpabout president trying to score some points against big bad tech before the election. Taylor through your research and analysis, what does more time by them if anything . Gerrit i think more time to really sift through the documents that they have requested from google, googles partners and competitors. Focusing on cases Advertising Technology which is an immensely complicated space. Even people that work for years often have trouble describing it in plain turns. Plain and simple terms. Thinkare areas they google is being anticompetitive. And now they have to go through millions of documents to find the emails when a merger discussion with happening. Can a google executive slip up and Say Something to prove the company was doing something anticompetitive . Feel as ifke they they havent had enough time to do that. Taylor what is the end result in your opinion . What will it look like and what will it be . Gerrit i dont know. I think its possible google could be forced to sell some of their Advertising Technology business. It would really shakeup that market. I think its possible google could just pay a fine if this case will be rushed. Paying fines in the european union. But we dont know yet. It is still very much up in the air. Taylor thank you as always. Thank you for covering google and that story for us. Stay with us. The chip industry could see some major changes. All of that next. And looking at a pretty bad day within the equity markets. A pretty big selloff. Tech leading the way. You have the likes of tesla, apple, amazon leaning into the downside as we wrap up a volatile thursday. Stay with us. Much more next. This is bloomberg. Give you my world how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with xfinity mobile. Taylor this is bloomberg technology. The Chinese Government reportedly planning to policies to support its domestic semiconductor industry. One is sparking a milliondollar route among ships stocks in the u. S. , but a surgeon Semi Conductors in companies over in china. Surge in Semi Conductor companies in china. Scott joins us. Leading up to this, it is that ever approaching september 15 deadline which bytedance has to sell the u. S. Business of tiktok to the u. S. How do you see that playing out . Scott i think, taylor, but the announcement by the chinese with the announcement by the chinese that they are going to assert their rights to regulate that technology, it is going to be hard for a deal that is fully consummate by the 15th. Will the Trump Administration be willing to extend their deadline, or are they going to go forward . If they do, we are going to play cat and mouse with users of tiktok and the u. S. Government. Taylor he is china doing the right thing by flexing their powers . Scott i think the chinese have been amazingly restrained in responding to the u. S. Actions in all these tech spaces. I think what they are trying to trump stormhis pass them through the fall and see what awaits in january. January is a long time away, so they could do nothing. This is just a way to remind ifks that they exist, but they were to retaliate and go toe to toe with the Trump Administration, there would be tougher things the chinese would roll out. Taylor talk about how that view folds into the world of wechat. Know chat users asked a judge announced wechat users asked a judge to announce a what would flex this muscle and perhaps lose out on business in the u. S. . Scott good luck with them getting the evidence in court on National Security issues. But they do have some possibilities they are going to be able to slightly slow this down a little. I think at the end of the day, National Security justifications, whether purposely defended or not, the real big question on tencent will become, will be Trump Administration just block we chat in the united states, or will they try to restrict u. S. Ininess with wechat china, including airlines and hotels that use wechat to do business in china . It would have big ramifications. Either way, we will be looking at this down the road to see how the chinese respond. They are not going to sit passively forever. Taylor today, at least within the chip and memory chip sector, taking out an active approach, doubling down on investments for their own chipmakers to further isolate u. S. Chipmakers over there. They are taking a very active approach in that sector. Mid1990s, the china has wanted to build a Semi Conductor industry and has thrown hundreds of billions of lotars at it, established a of cooperative relationships with american, european, japanese, korean chip companies, and they have caught up some, but they are still really far behind. There is growing concern that they want to develop that independence. Obviously they need to invest fast. Will they be able to develop that kind of independence . It is unlikely. Therefore, it is a hedge against further decoupling, but chinas tech sector is only going to grow in a globalized economy, and the chinese will have to figure out how to repair the relationship with