Murphy said the weaker dollar is luring some investors to emerging markets as an inflation hedge rather than silver and gold.
FRED KATAYAMA: Concerns over coronavirus aid sending stocks on Wall Street south Friday, one day after a slew of tech titans reported strong earnings. Let's get some market perspective from Chris Murphy. He's Co-Head of Derivative Strategy at Susquehanna International Group, joining us from Bala Cynwyd, Pennsylvania. Welcome, Chris.
CHRIS MURPHY: Thank you. It's great to be here.
FRED KATAYAMA: Are you concerned about that, the $600 stimulus checks, which were not-- which expired today? What might that mean for a consumer investor sentiment?
CHRIS MURPHY: Yeah, I mean, I think that will certainly have an impact and could be more of a focus now that the tech earnings are over. I think everyone's kind of focusing on these big tech earnings and not really looking as much about what was going on in Congress, but you know, that's obviously going to have an impact on paying rent, and things like that, and auto loans. And also there's been some anecdotal tie-ins to retail trading, Robinhood, things like that. Investors using some of those stimulus checks to get involved in the stock market. And that-- if that's the case, it will be coming at a bad time because August is historically the worst performing month for the S&P 500.
FRED KATAYAMA: Tech titans, Apple, Amazon, Alphabet, Facebook reported, for the most part, strong earnings yesterday. You're an option specialist. Are you seeing any unusual move at options today on any of those stocks, and if so, what implications do they have for equities going forward?
CHRIS MURPHY: You know, I'll tell you what. So the names-- of those four names, four of the most actively traded options on the planet. And there's so many trades going back and forth that a lot of times what happens is when you get to the earnings report, what the options are pricing in turn out to be fairly accurate in terms of the mood that you see in the stock. Apple and Facebook are moving maybe. They're both up slightly more than the options are pricing. Amazon and Google, pretty much right in line with the options pricing.
One more interesting thing in that tech space, and it's more of the same with big tech carrying the broader market. I looked earlier today. NASDAQ was around flat. It's bounced back a little bit, but if you take out just those three stocks, Facebook, Apple, and Amazon, it will be down close to 2%.
Similar in the SPX. It was down, you know, maybe 20, 30 basis points when I looked earlier today. If you were to take out just those three stocks, it will be down two or three times as much. So big tech continues to carry the broader market.
FRED KATAYAMA: Should invest-- is it too late for investors to pick up on those stocks?
CHRIS MURPHY: You know, they're-- they're the-- they're the ones that have been the most successful, and they're the ones that are benefiting the most from locking-- the lockdown and things like that. So, in my opinion, the best of breed stocks, I think you can continue to own them, you know, as they become bigger and bigger parts of. And you know, if you're in the S&P, you're in the NASDAQ in generally. You've got a lot of those stocks anyway.
FRED KATAYAMA: Would you add to those positions at this point?
CHRIS MURPHY: I-- you know, I think I will be fine. You know, I'm more of a, you know-- you know, slowly invest over time, and I would not stop working my way into those stocks right now.
FRED KATAYAMA: OK. Lastly, Chris, silver is on track for its biggest monthly gain on record. Gold is trading near record highs. Is there more upside ahead? I know they're all partially benefiting because of dollar weakness.
CHRIS MURPHY: Yeah, I mean, so like you said, we're looking at the options, and the options market are certainly pricing in a serious risk of more upside in these stocks. So, you know, the-- the-- what we call, you know, the upside call interest compared to the downside interest continues to increase as we're seeing more and more people getting involved in-- in chasing this rally in the precious metals.
FRED KATAYAMA: Not too late to get into those?
CHRIS MURPHY: You know, I think there's probably better inflation hedges out there, in my opinion. You know, even like, for example, with the weaker dollar, you know, people are starting to look at emerging markets again. And I think that, you know, we have seen historically when gold makes these huge moves or historically when we see these outsized amount of calls trading in gold and silver, you do see a near-term cooling off period. We have a couple of research reports out on that recently.
FRED KATAYAMA: OK, thanks a lot, Chris. Covered a lot of ground there. Appreciate it.
CHRIS MURPHY: Awesome. Thank you.
FRED KATAYAMA: Our thanks to Chris Murphy of SIG. I'm Fred Katayama in New York. This is Reuters.