Morning Brew August 26 2025

Good morning!

The gloves are coming off in the fight for the independence of the US Federal Reserve! Yesterday, Donald J. Trump announced that he was firing Lisa Cook over alleged irregularities in a mortgage application. In response, Cook stated she would continue in her role as Trump neither has the cause nor the authority to dismiss her. Normally, Cook serves on the Federal Open Market Committee (FOMC) until 2038, making this a fairly blatant attempt to influence the committee.

Trump also threatened officials from the EU regarding the Digital Services Act, which marks an unprecedented move. Discussions about a possible tariff on furniture led to a decline of approximately 5% in the largest retail vendors' stock prices.

The US government’s stake in Intel was debated as either an astute business decision or, conversely, an example of socialist government intervention.

Traders spent yesterday digesting Friday's developments and positioning themselves for the week ahead. Tomorrow, Nvidia’s earnings report is likely to be the highlight of the week, closely contending with the Personal Consumption Expenditures (PCE) report on Friday. Nvidia makes up approximately 8% of the S&P 500, and its earnings have a significant impact on nearly everyone.

Charu explored strategies for managing risk related to Nvidia's earnings, offering simple portfolio strategies for all investors:

1. Long-term investors: Trim outsized positions, diversify through semiconductor/AI ETFs, or utilize covered calls to earn a premium while holding.
2. Active allocators: Substitute stock with call spreads to reduce capital at risk or rotate into baskets of semiconductors and cloud companies.
3. Traders: Capitalize on volatility with straddles or calendars; those looking to enter can sell cash-secured puts to target a lower entry price.

Overnight, gold and silver gained strength amid political uncertainty. The USD Index weakened, and yields rose, although the movements were moderate. EUR/USD stands at 1.1635, Gold at 3375, and Silver at 38.80. The 10-year yields are at 4.30, and the 30-year yields are at 4.93.

Today, the German IFO index, US durable goods orders, and consumer confidence reports are the main events. I anticipate political news will take center stage unless the data reveals massive surprises. Will Trumps erratic behavior influence investments in the US?

Tuesday, August 26
US: Durable Goods Orders, Consumer Confidence

• Earnings: Flughafen Zürich PetroChina,

Wednesday, August 27

• Australia: CPI
• Earnings: HP, Nvidia

Thursday, August 28

• EU: ECB Consumer Confidence
• US: Weekly Jobless Claims, GDP
• Earnings: Dell

Friday, August 29

• Japan: CPI
• France: CPI
• Swiss: KOF
• DE: Unemployment
• Canada: GDP
• US: PCE & University of Michigan
• Earnings: EMS Chemie, Alibaba