Economist Steve Hanke has issued a warning about a stock market bubble, pointing to a $10 trillion rally driven by Big Tech. The surge, according to Hanke, is accompanied by record-high call option volume, a signal of speculative frenzy.
Hanke's caution comes as major technology stocks continue to power market gains, raising concerns about overvaluation. The economist highlighted the sheer scale of the rally, which he described as a $10 trillion phenomenon, without providing a specific timeframe.
Call options, which give investors the right to buy shares at a set price, have surged to all-time highs in volume. This spike is often seen as a measure of bullish sentiment, but Hanke interprets it as a potential warning sign of unsustainable exuberance.
The warning taps into broader debates about market froth, particularly in the tech sector. While some analysts argue that strong earnings justify high valuations, others point to concentration risk and speculative behavior as red flags.
Critics of the bubble thesis contend that the rally reflects genuine economic strength and innovation rather than speculation. They note that call option activity can also be driven by institutional hedging strategies, not just retail speculation.