US Commerce Secretary Howard Lutnick discussed US economic data on CNBC. He mentioned that staff changes could lead to better economic numbers. Lutnick talked about tariffs, stating that the significant tariffs from the Trump administration are still in place. He pointed out that there is still the ability to adjust these tariffs.

Impact On Market Reactions

His remarks may influence how the market reacts to economic reports, particularly the Non-Farm Payroll report. Observers might be careful about the potential outcomes. Although officials say US economic data will improve, we need to consider the weak jobs report from today. The Non-Farm Payroll number for August 2025 was only 110,000, falling short of the 180,000 consensus estimate. This shortfall confirms the cautious outlook and suggests that any negative news could have a big effect. The administration’s strong stance on keeping significant tariffs creates a tricky situation of slow growth and ongoing inflation. The last Consumer Price Index showed inflation stubbornly at 3.7%, well above the Federal Reserve’s target. This puts the Fed in a tough spot and indicates continued market volatility, as reflected in the VIX rising over 19 this past week.

Strategies For Navigating The Market

This policy creates a clear divide between sectors, making it a good time for relative value trades using options. We should consider long call options on domestic industrial and manufacturing companies that are protected by tariffs and may benefit from government support. Conversely, buying put options on multinational retailers and automakers that depend on global supply chains could serve as a hedge against margin compression. The current environment is similar to what we saw in 2018-2019 when tariff announcements caused sharp swings in equity markets. During that time, traders positioned for increased volatility did well, regardless of the market’s actual direction. We expect a similar trend, where trade policy risks will strongly influence short-term price movements. Given this situation, it makes sense to buy some downside protection through put options on the broader S&P 500 or Nasdaq 100 indices in the coming weeks. For those holding long stock positions, writing out-of-the-money covered calls can effectively generate income from higher options premiums. This strategy allows us to profit from uncertainty while waiting for the promised economic improvements to show in the data. Create your live VT Markets account and start trading now.

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