Azoria Capital has filed a lawsuit against Federal Reserve Chair Jerome Powell and other officials. They accuse them of breaching a 1976 law by holding private monetary policy meetings. Azoria wants a court in Washington, D.C., to order the Federal Open Market Committee (FOMC) to conduct these meetings in public, arguing that closed discussions hurt transparency and accountability.

Azoria’s Motives and Credibility

The lawsuit argues that private meetings prevent businesses from preparing for important changes in policy that could impact the market. Azoria also claims the Fed’s high interest rate policies are politically driven to sabotage former President Trump’s economic plans. However, some question Azoria’s credibility. James Fishback, a Trump supporter and former adviser to the Department of Government Efficiency, leads the firm. He launched an anti-DEI exchange-traded fund at Trump’s Mar-a-Lago Club last year, which began trading this month on the NYSE. We see Azoria Capital’s lawsuit as more of a political stunt than a real legal threat to the Federal Reserve. The big concern for traders is not the lawsuit itself, but the increasing influence of politics on monetary policy. This trend adds political risk that complicates economic forecasting. Traders should brace for more market fluctuations, especially around future FOMC announcements. The Cboe Volatility Index (VIX) is currently trading below 14, a historically low level, which makes options contracts relatively cheap. This may be a good time to buy protection against sudden policy changes or market reactions to political comments.

Historical Precedent and Current Market Outlook

Historically, political pressure on central banks, like during Nixon’s presidency, has caused policy mistakes and economic issues. While the Federal Reserve is generally independent, this history shows that perceived threats can still impact market sentiment. This adds importance to hedging strategies that guard against long-term uncertainty. Traders need to closely monitor the derivatives market for interest rates, where there is already a lot of uncertainty. The CME FedWatch Tool indicates markets expect just one or two rate cuts by the end of 2024, but this expectation can change quickly with new data. Fishback’s lawsuit introduces another unpredictable factor that could affect the timing and reasoning behind any decisions made by Powell. Looking ahead, a key concern is leadership at the central bank after the election. A new administration might appoint a different chair with new policy views, a risk not yet fully reflected in longer-term derivatives. This could lead to major adjustments in 2025, suggesting that strategies aimed at a change in long-term interest rates might be wise. Create your live VT Markets account and start trading now.

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Intel’s recent earnings report didn’t cause much change in its share prices. The company reported Q2 revenue of $12.9 billion, beating expectations of $12 billion. However, it showed an adjusted loss of $0.10 per share, while analysts expected a gain of $0.01. Intel faced $1.9 billion in restructuring costs due to a 15% workforce reduction, which weren’t included in the adjusted EPS. Additionally, $800 million in impairment charges and $200 million in one-time expenses led to a GAAP net loss of $2.9 billion. In different business segments, the client computing division generated $7.9 billion, exceeding the $7.4 billion forecast. The data center and AI segment earned $3.9 billion, also above the expected $3.6 billion. Looking forward, Intel’s Q3 revenue forecast ranges from $12.6 billion to $13.6 billion, with a goal of breaking even on adjusted earnings, while analysts expected a profit of 4 cents. Analysts highlighted ongoing challenges and competition from AMD and Nvidia, despite potential growth from Intel’s new chip processes and the enterprise refresh cycle. The muted stock response suggests a typical post-earnings volatility drop. The results were mixed, primarily due to significant one-time costs, which didn’t provide a strong reason for stock movement. This indicates that previous high volatility has now decreased sharply. Historically, implied volatility for the stock drops by over 25% after such announcements. This environment supports premium-selling strategies like short straddles or iron condors. These strategies can profit if the stock stays within a set price range as uncertainty diminishes. Analysts’ concerns about competition are well-founded. AMD has captured over 30% of the server CPU market, impacting Intel’s data center and AI segment. Additionally, Nvidia holds an impressive 80%-plus share in AI accelerators, keeping Intel on the defensive in this crucial growth area. Conversely, the rise in client computing revenue matches broader market expectations for a PC refresh cycle. Gartner predicts a 3.5% growth in PC shipments in the coming year, which could support the stock price. This makes us cautious about being overly bearish, despite the significant restructuring costs. Given these mixed signals, we expect the stock to remain stable. It has underperformed compared to the broader SOXX semiconductor index for almost two years, indicating a “show me” scenario for investors. Thus, buying protective puts during any price increase or selling covered calls against a long stock position could be smart strategies to manage the uncertainty.

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In China, there is a rising demand for the repair of Nvidia’s high-end AI chips, like the H100 and A100. Despite a U.S. ban on their export, tech companies in Shenzhen are fixing hundreds of these GPUs each month, including those that were never legally sold in China. This increase in unauthorized repairs hints at substantial smuggling activities, with reports indicating that some of the buyers are from the Chinese government and military. The U.S. imposed these export bans to limit China’s technological development, leading to bipartisan efforts to improve tracking.

Nvidia’s Dominance Despite Trade Barriers

Nvidia can’t assist with these restricted products in China, so local repair shops are stepping in and charging as much as $2,800 for repairs. While there are legal options like the H20, Chinese companies still prefer the banned chips for AI training. Demand is also starting to shift toward Nvidia’s high-end B200 models. The ongoing demand for high-end GPUs in China highlights Nvidia’s clear technological lead, contributing to a stock price surge of over 150% this year. This underground market reflects a demand so strong that it persists despite international restrictions, reinforcing our belief that Nvidia has a robust competitive edge that is hard to penetrate. However, the recent bipartisan efforts in Washington to tighten export controls introduce regulatory risks. History shows that announcements of stricter regulations, including those made in October 2023, often lead to immediate but temporary drops in stock prices. We expect that any new legislative actions will cause similar short-term fluctuations as the market adjusts to this geopolitical risk.

Strategies for Market Fluctuations

This situation creates an opportunity for volatility-based trading strategies. We see it as a prime example for employing techniques like straddles or strangles, which can profit from significant price movements in either direction. The current high implied volatility in options reflects that the market anticipates big changes in the near future. Given the company’s recent earnings report showing record data center revenue of $22.6 billion, the overall trend remains strongly positive. For investors with a bullish outlook, we recommend bull call spreads to benefit from potential gains while managing risk in case of sudden regulatory changes. The reported underperformance of the compliant H20 chip in China further demonstrates that customers are willing to pay more for superior performance, legally or not. This suggests the lasting value of the product ecosystem, which is a positive sign for the long term. Even with some sales restrictions, the brand’s perceived value continues to grow. Create your live VT Markets account and start trading now.

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Goldman Sachs believes Apple will perform better than expected in its next earnings report. They anticipate strong revenue growth and improving profit margins. This positive outlook is driven by significant growth in services and solid sales across products like iPhones, Macs, iPads, and wearables. Additionally, gross margins are expected to exceed predictions, aided by lower tariff costs and currency factors.

Outlook And Considerations

Despite this optimistic view, Goldman Sachs advises caution due to uncertainties around trade policies and tariffs. There are also potential short-term risks linked to a drop in advertising revenue. Apple will announce its results after the market closes next Thursday. Based on the bank’s insights, we are preparing for a possible rise in Apple’s stock price. We plan to explore call options that expire a few weeks after the announcement to capture immediate movement and any potential growth afterward. This positive outlook is supported by recent independent data. For instance, official figures from China reveal that iPhone shipments jumped over 50% in May compared to last year, reversing a previous downward trend. This strong recovery in an important market adds credibility to the expectation of strong revenue growth.

Options Strategy And Consideration

However, we must be mindful of the high implied volatility that often comes before earnings announcements. The options market currently anticipates a stock move of about 4% to 5% after the report, making options purchases more expensive as they reflect this anticipated price change. Historically, even when Apple beats expectations, its stock has sometimes declined due to cautious future guidance. The significant rally after the last report in May was largely due to a record $110 billion share buyback, not solely because of the core results. This highlights that just the headline numbers aren’t everything for the market. Consequently, instead of simply purchasing expensive call options, a smarter strategy could be a bull call spread. By selling a higher-strike call alongside the one we buy, we can reduce our upfront costs and lessen our exposure to volatility changes after the report. This strategy defines our risk while allowing us to profit if the stock rises as Goldman Sachs predicts. Create your live VT Markets account and start trading now.

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The European Central Bank (ECB) has decided to keep interest rates steady. President Christine Lagarde highlighted a surprising 0.6% growth in the euro area for the first quarter, supported by consumer spending and a strong job market. She also mentioned some potential risks, like higher tariffs and geopolitical issues, but noted that resolving these could lead to positive outcomes. Inflation remains stable at around the 2% target, partly due to slowing labor costs.

Exchange Rate Fluctuations

Lagarde affirmed that the ECB’s decisions will be based on current data and that there is no fixed plan for future rates. Small changes in inflation won’t lead to immediate actions, and retaliatory tariffs could still happen. A report from ECB sources suggested that rates are expected to remain the same in September after previous reductions from 4.5% to 2.15%. In the foreign exchange market, the EUR/USD fluctuated, hitting new lows at 1.1729 and highs at 1.1787, closing near the day’s low at 1.1749. The GBP/USD also finished close to its daily low, around the 100-hour moving average. The USD/JPY saw a rebound, aiming for the falling 100-hour moving average at 147.106. In the stock market, the Dow dropped by 316.38 points, while the S&P 500 and Nasdaq both made small gains, reaching record highs. European markets had mixed results, with declines in France and Italy, but gains in Spain and the UK. In other financial news, yields rose for shorter-term bonds, while the 30-year yield fell by one basis point. US initial jobless claims fell to 217,000, showing a downward trend. Crude oil prices increased, with futures settling at $66.03 per barrel as sellers withdrew. New home sales were similar to existing home sales from the previous day, indicating a decline.

Policy Divergence and Market Movements

With the ECB’s choice to keep rates steady, we believe the growing difference between European and US monetary policies will impact currency markets. The ECB’s current deposit rate is 4.0%, while the Federal Reserve’s target is higher, at 5.25% to 5.50%. This discrepancy supports a stronger dollar against the euro. Thus, we recommend considering put options on the EUR/USD, aiming for a drop below the 1.1725 support level. The split in US stock indices, where the Nasdaq is reaching new highs while the Dow struggles, indicates a market rotation we should take note of. This situation is similar to 2023 when the tech-focused Nasdaq significantly outperformed the Dow Jones for months. A pairs trade that involves going long on Nasdaq 100 futures and shorting Dow futures could leverage this market trend. The economic data presents a mixed picture, suggesting a need for caution and potential hedging. While markets are hitting record highs, the S&P Global US Manufacturing PMI has fallen into contraction at 49.5. Reports from late 2023 and early 2024 have consistently shown similar weakness below the 50.0 mark. We believe buying VIX call options is a cost-effective strategy to protect against possible downturns if this manufacturing weakness starts to impact broader market sentiment. Despite this, the strong labor market, evidenced by initial jobless claims dropping to 217K, continues to support the US economy and the dollar. This number is reliable, with actual claims often falling between 200k and 220k in recent months, indicating a tight job market. This situation is likely to prevent the Federal Reserve from making rate cuts, which further supports our bearish outlook on the EUR/USD. In commodities, the recent rebound in crude oil from a crucial technical level indicates a shift in momentum. This upward trend is backed by strong fundamentals, as recent Energy Information Administration (EIA) reports have shown declines in US crude inventories, demonstrating robust demand. We see an opportunity to buy call options on WTI crude oil, targeting a test of the next major resistance level near the 200-day moving average. Create your live VT Markets account and start trading now.

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Trump toured a Federal Reserve renovation alongside Powell and the media. While Trump seemed relaxed with the press, Powell appeared a bit uncomfortable. Trump spoke about several topics, including his desire for lower interest rates. He stated there was no reason to dismiss Powell and mentioned a constructive conversation they had. Trump expressed confidence that Powell would take the right actions and indicated there was no pressure on him, even though he had three possible replacements in mind.

Housing Prices and International Negotiations

Trump commented on housing prices, suggesting they should drop, even though lower rates could lead to higher prices. He also mentioned international affairs, noting that Europe is keen on making a deal and that discussions are ongoing. During their talk, Powell informed Trump that the economy is doing well. Trump added that the Federal Reserve’s role has become costly and chaotic. This public dialogue signals growing uncertainty in policy. Conflicting messages about pressure and potential successors make it tough to predict the Federal Reserve’s next steps. We should brace for more market volatility in the upcoming weeks.

Derivative Trading Strategies

Given this outlook, derivative traders might want to buy options instead of committing to a specific market direction. With the CBOE Volatility Index (VIX) currently low, below 15, buying puts or calls is relatively cheap. This approach could lead to profits from a significant price movement, whether it goes up or down. This situation echoes events from the last administration. Public comments in late 2018 led to a nearly 20% drop in the equity market and a spike in volatility. It serves as a reminder that political language can directly impact and disrupt the market. Powell’s confidence about the economy should be weighed against hard inflation data. The latest Consumer Price Index report shows inflation is still above the central bank’s 2% target. This reality forces the Fed to maintain a tough stance to uphold its credibility, conflicting with any political push for lower rates. We see any mixed signals as a challenge to the Federal Reserve’s independence, which is crucial. Any hint that policies are influenced by politics could unsettle inflation expectations and lead to long-term instability. Currently, the market is anticipating a pause in rate changes, according to the CME FedWatch tool, but the possibility of a more aggressive approach remains high to reaffirm authority. Talks about a deal with Europe or the need for lower housing prices add to the market noise. For us, these points are less important compared to the main conflict between political pressure and data-driven monetary policy. We will be vigilant for signs of rising tension, as this will likely drive option premiums. Create your live VT Markets account and start trading now.

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The United States has a significant trade deficit with China. However, some recent comments indicate that trade relations between the two countries are currently stable. Negotiations to manage trade terms are ongoing, and officials are generally content with how things stand right now.

Trade Deficit Concerns

We believe the remarks from a former Treasury official do not reflect the reality of the situation. The U.S. goods trade deficit with China reached a staggering $279.4 billion in 2023, according to the U.S. Census Bureau. Such a large gap is not a sign of stability; it creates ongoing economic and political tension that could escalate at any time. This overly optimistic perspective stands in stark contrast to the current administration’s statements. Officials, including Janet Yellen, have recently traveled to China to discuss concerns about the economic risks of China’s excessive industrial capacity. Additionally, the White House is considering implementing new tariffs on Chinese electric vehicles and solar products. These actions indicate that conflict is brewing rather than calm, which could lead to unexpected market shifts.

Preparing for Volatility

This situation signals it’s time to prepare for increased market volatility. We should consider buying long-dated call options on the VIX or straddles on broad market ETFs like the SPY. This approach allows us to benefit from significant market changes, regardless of whether the news drives prices up or down. History shows that markets often respond sharply to unexpected trade developments. During the height of the 2018-2019 trade war, sudden tariff announcements caused the VIX to rise above 20 multiple times, impacting traders who were caught off guard. Ignoring hard facts in favor of reassuring statements is a mistake we must avoid. A more direct strategy is to hedge against the most vulnerable sectors. We should consider purchasing protective put options on semiconductor ETFs and major industrial companies that rely heavily on Chinese supply chains. These will likely be the most affected if official statements turn out to be empty and new trade barriers are put in place. Create your live VT Markets account and start trading now.

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Major U.S. stock indices had mixed results in their latest session. The Dow Industrial Average fell by 316.38 points, or 0.70%, closing at 44,693.91. On the other hand, the S&P 500 rose slightly, increasing by 4.44 points, or 0.07%, to 6,363.35, while the NASDAQ gained 37.94 points, or 0.18%, to finish at 21,057.96. Chip stocks were on the rise. Nvidia increased by 1.72%, Broadcom by 1.77%, and AMD by 2.19%. However, Intel’s performance was less stable. After releasing its earnings after market hours, its shares fell by 3.66%, though it slightly rebounded afterward, trading up nearly 1%.

Market Trends

We are noticing a split in the market, with industrial stocks pulling back and tech-focused indices remaining strong. So far this year, the tech-heavy NASDAQ 100 has risen more than 25%, while the Dow Jones Industrial Average has gained only about 4%. This difference indicates that traders should be careful with broad market investments and instead concentrate on specific sectors. The current mixed signals often lead to increased volatility, even though the CBOE Volatility Index (VIX) has stayed low, hovering around 14-15. This environment may be a good chance to buy protection or make speculative trades at a lower cost. Options strategies that benefit from price swings, like long straddles or strangles, could work well on indices before upcoming economic data releases. In the technology sector, it’s important to choose wisely. The iShares Semiconductor ETF (SOXX) is up more than 40% this year, but individual company performances can vary greatly after earnings reports. We recommend using call spreads on leading companies in the sector to take advantage of potential gains while also managing risk.

Economic Uncertainty

Historically, this type of market shift happens during times of economic uncertainty or changes in Federal Reserve policy. The industrial average’s inability to maintain its record high signals that “old economy” stocks may be more at risk of a slowdown. Therefore, buying protective puts on an industrial-focused ETF could effectively shield our technology investments. Create your live VT Markets account and start trading now.

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In Japan, the Consumer Price Index (CPI) for June 2025 was still higher than the central bank’s target. Today, we’ll get preliminary inflation data for July in the Tokyo area, which gives us a sneak peek before the national figures come out in about three weeks.

Why Tokyo CPI Matters

The Tokyo CPI serves as a sub-index for the national CPI and shows changes in prices for goods and services in the Tokyo metropolitan area. Since Tokyo is the largest city in Japan and a major economic hub, trends in its CPI often reflect the national CPI trends. Typically, Tokyo’s CPI readings are a bit higher than national figures, mainly because of rising living costs like rent. On July 25, 2025, the Asian economic calendar will keep a close watch on this data release. The calendar provides event times in GMT, with ‘prior’ results in the right-most column. If available, the expected median consensus will be noted next to the prior results. This helps us see how current data compares to past periods and expectations. Given the upcoming inflation data, we think that traders in derivatives should brace for increased market volatility. The Tokyo CPI is a strong early indicator of national price trends. A higher reading could pressure the Bank of Japan more. Last month’s data was already above the central bank’s target, as noted by Sheridan. We expect that if inflation figures are strong, the Bank of Japan might consider a more aggressive policy approach. Japan’s core inflation has been above the central bank’s 2% target for over two years, reaching 2.5% in May 2024. This consistent overshoot makes further interest rate hikes likely in the near future.

Market Reactions to Inflation Data

Historically, even minor changes in central bank guidance have led to a significant appreciation of the yen. Governor Kazuo Ueda has stressed that policy decisions depend on data, making this upcoming release crucial. We anticipate that a high CPI number will lead to a sharp adjustment in interest rate expectations. To prepare for this potential change, we are buying derivatives that will benefit from higher volatility and rising interest rates. This includes purchasing call options on the Japanese Yen (through USD/JPY put options) and considering interest rate swaps that offer a fixed rate. These positions are set up to take advantage of the market’s reaction when the central bank needs to act decisively. Traders should also explore opportunities in the Japanese government bond market. We are looking into put options on JGB futures, which would increase in value if the central bank hints at faster policy normalization, leading to rising bond yields. Currently, the market may be underestimating how quickly Ueda may need to respond if inflation continues to be persistent. Create your live VT Markets account and start trading now.

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The European Central Bank (ECB) has decided to keep its key interest rates the same after their July meeting. The rates for the main refinancing operations, marginal lending facility, and deposit facility are still at 2.15%, 2.4%, and 2%, respectively. ECB President Christine Lagarde pointed out that the economy is growing slowly, influenced by higher tariffs and a stronger Euro, which makes it tough for businesses to invest. However, a strong job market and rising real incomes are helping boost consumption. Investments in defense and infrastructure are expected to further support growth.

Inflation Outlook

The ECB mentioned that inflation is stabilizing around the 2% target, but there are still uncertainties regarding the inflation outlook. The bank plans to base future monetary policy on data, without promising a specific direction for rates. The EUR/USD pair responded minimally to the policy news, trading at 1.1755, down 0.15% for the day. The Euro showed mixed results against major currencies, gaining strength against the US Dollar but losing ground against the Canadian Dollar and Swiss Franc. The ECB is not committing to more rate cuts this year due to uncertainties like possible US tariffs and the strong Euro. Markets are looking for any clues about future rate decisions, especially regarding changing inflation. Given the ECB’s data-focused approach, traders should prepare for increased volatility rather than a clear trend. The central bank’s uncertain rate path creates unpredictability, which often leads to higher premiums on options contracts. This situation favors strategies such as long straddles or strangles on Euro-related assets.

Market Volatility and Strategy

Ms. Lagarde’s cautious views on inflation are supported by recent data, which we see as a key market influencer. Eurozone inflation rose to 2.6% in May 2024, moving away from the target and making rate cuts less likely in the near future. Thus, we expect the EUR/USD to remain within a stable range, with notable price movements around key data releases. The commentary about modest growth aligns with the latest Eurostat report, showing a 0.3% GDP increase in the first quarter, indicating limited upside for European stocks. As a result, any rises in indices like the Euro Stoxx 50 may be restricted. We believe selling out-of-the-money call options on these indices could be an effective way to generate income. Historically, when central banks hesitate, markets tend to move sideways until a new catalyst arises. Current implied volatility on the Euro, as seen in derivatives pricing, is relatively low compared to previous uncertain times. This means buying volatility is currently affordable and offers a favorable risk-reward opportunity ahead of the next inflation report or policy meeting. Create your live VT Markets account and start trading now.

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