Insights 
VT 
Trump has extended the tariff suspension on China for another 90 days by signing an executive order. This decision maintains all other elements of the agreement unchanged.
In other news, Japan’s Nikkei and Topix share price indexes have reached all-time highs. Meanwhile, Singapore’s Q2 GDP grew by 4.4% year-on-year and 1.4% quarter-on-quarter.
Monetary Policies and Market Responses
The Bank of England is projected to cut rates multiple times, impacting the GBP against EUR and USD. UK retail sales saw an increase in July, attributed to warm weather and rising food prices.
Financial markets were relieved by the pause in tariff hikes, yet unresolved issues persist. Nvidia and AMD could face a new 15% export levy on China AI chips, potentially affecting profit margins.
UPS stock is down 31% year-to-date but has a 7.56% yield following a Q2 miss. It trades at 13.1 times forward P/E, below the sector median, with analysts projecting a 24% upside.
The US economy shows signs of recession, with Moody’s economist citing declining payrolls and job cuts in 53% of industries. Upcoming US CPI data could further challenge the Federal Reserve’s strategies.
With the China tariff can kicked down the road for another 90 days, we expect a short-term drop in market volatility. This temporary calm presents an opportunity to sell near-term options premium on broad market indices. However, the underlying trade dispute remains unresolved, suggesting we should look to buy volatility further out, perhaps with VIX calls or index puts dated for late November 2025.
The US economy is showing clear signs of weakness, supporting the recession warning. The latest jobs report from last week showed non-farm payrolls grew by only 95,000, missing estimates and marking the third straight month of slowing growth. With 53% of industries now cutting jobs, we see downside risk for the broader market that this temporary trade truce cannot hide.
US CPI Data and Its Implications
All eyes are on the US CPI data being released today, August 12th. Last month’s core CPI reading in July 2025 was a stubborn 3.9%, and another high number would force the Fed to ignore recession signals and remain hawkish. To play the expected sharp move, we are considering straddles on the SPY ETF to profit from a big swing in either direction post-release.
The new 15% export levy on AI chips is a direct threat to Nvidia and AMD’s margins. We saw how their stocks reacted to the initial export controls back in late 2023, and this new tax adds significant financial pressure. We view this as a clear signal to buy puts on these individual names or on the broader semiconductor ETF (SOXX).
For currency traders, the path of least resistance for the British Pound is down. The UK’s Q2 2025 GDP was confirmed at a slight 0.1% contraction, and with inflation still hovering over 3%, the Bank of England is trapped. We believe the BoE will be forced to cut rates to stimulate growth, making short positions via puts on GBP/USD or calls on EUR/GBP look attractive.
While Japanese stocks hit all-time highs, we are growing cautious. The rally has been fueled by a weak yen and the Bank of Japan’s slow pace of rate normalization, with their policy rate still at only 0.25%. This may be an opportune time to buy cheap, out-of-the-money puts on the Nikkei 225 as a hedge against a potential pullback from these elevated levels.
