Retail spending comes in fairly strong… what will it mean for the Fed?… Trump doubles down on semiconductor tariffs… how to make 275% gains on Ethereum… why momentary caution might be wise
U.S. consumers appear to be adjusting to, or at least shrugging off, tariffs and the threat of higher prices to come.
This morning, the Commerce Department released July’s U.S. retail sales figures, revealing a 0.5% increase. While that was just shy of the 0.6% forecast, it marked the second straight monthly gain following declines in April and May.
Auto sales were a bright spot, climbing 1.6% in July as buyers likely rushed to beat potential price increases due to President Donald Trump’s tariffs on imported cars. Home furnishings and furniture stores also did well, rising 1.4%.
However, the broader picture is more nuanced. Excluding auto sales and gas, spending was up just 0.2% in July. And in some categories, sales fell.
For example, at electronics stores, spending was down 0.6%. And restaurant sales dropped 0.4% – not a great sign of consumer health.
Overall, the report suggests U.S. consumers are hanging in there, though they don’t get a clean bill of health. They’re still spending, but more cautiously.
This report doesn’t make the Federal Reserve’s balancing act any easier…
This week’s hot inflation reports – and now, reasonably strong consumer spending – might temper the Fed’s eagerness for immediate, aggressive rate cuts in September.
In yesterday’s Digest, we highlighted legendary investor Louis Navellier, saying:
I’ll be honest with you, you really don’t want a good retail sales report, because it could cause the Fed to pause or hesitate or only cut 25 instead of 50.
But let’s see what it says.
Based on the strength of today’s data, we can pretty much throw a 50-basis point cut out the window. But we’ll be listening for commentary from the various Fed members and keep you updated.
Overall, consumers remain in fair shape. Looking forward, their ability to keep spending will be a key factor to watch as interest rate and tariff-drama unfolds.
Speaking of tariff drama…
This morning, President Trump doubled down on his plan to impose tariffs on steel and semiconductor imports.
From Yahoo! Finance:
President Trump said he would unveil tariffs on semiconductor imports over the next couple of weeks as he prepares to expand his tariff agenda to different sectors.
“I’ll be setting tariffs next week and the week after on… chips — chips and semiconductors,” he told reporters Friday.
Trump has already suggested he could set tariffs on chip imports around 100%. On Friday, he floated an even bigger number.
“I’m going to have a rate that is going to be 200%, 300%,” he said.
You’ll recall that the president previously threatened a 100% tariff on semiconductor imports, though with a proposed exemption for companies that build manufacturing infrastructure in the U.S.
This strategy (also applied to pharmaceuticals) is intended to encourage domestic manufacturing by making it more attractive for companies to build domestically rather than relying on imports.
Trump’s overall goal is to reindustrialize the U.S. and strengthen its domestic supply chains. The potential downside for businesses is huge expense, uncertainty, and potential disruption of global supply chains.
For investors, steep tariffs on semiconductors could be a massive headwind unless substantial exemptions are provided.
We’ll keep tracking this and will report back.
Be aware of what’s happening with Ethereum right now
Between July 17 and this past Tuesday, the cryptocurrency Ethereum (ETH) jumped 25%.
Over that same period, subscribers to Advanced Notice, the options trading service from veteran trader Jonathan Rose, made 275% with their Ethereum call spread.
If you missed this move, Jonathan remains very bullish on Ethereum and believes there’s more juice left in this trade.
Let’s dig in here and discuss the right positioning for today.
To begin, Jonathan is not a “crypto guy”
Rather, he’s a professional trader who seeks out opportunities wherever they are. And today, that has him interested in Ethereum.
To make sure we’re all on the same page, Ethereum is the world’s second-largest cryptocurrency by market cap, just behind Bitcoin (BTC). But unlike Bitcoin, ETH’s role extends far beyond simply acting as a digital currency. It serves as the backbone for most crypto platforms, decentralized applications, and smart contracts.
But there’s another key factor that’s helping drive Ethereum’s value higher. Here’s Jonathan with the details:
Most currencies fall into two camps – sound and ultrasound.
Sound money simply holds its value like gold. When we say a currency is sound, we mean it maintains a fixed or predictable supply.
Bitcoin is the perfect example. It has a fixed supply of 21 million coins. That scarcity drives its value as “digital gold.”
ETH works completely differently. This is where ultrasound money comes in.
Instead of maintaining a fixed supply, ultrasound money actually shrinks over time.
We won’t get into the full mechanics here, but the important takeaway is that Ethereum has a built-in scarcity feature that can make each token more valuable as demand for the network increases.
And here’s Jonathan with why this value creation is especially important today:
The value of the dollar is under increasing pressure. It’s not collapsing – but it’s quietly eroding.
Meanwhile, central banks are trapped. They want to cut interest rates to stimulate growth, but every time they ease up, inflation threatens to flare back up.
It’s a lose-lose scenario: keep rates high and strangle the economy, or cut them and risk another wave of rising prices…
This is where Ethereum’s unique properties become very appealing.
ETH offers something no other asset can match. Sound money principles + yield generation + platform utility.
It’s truly unmatched in the digital asset economy. And it’s increasingly competitive with traditional financial instruments.
What Jonathan saw that made him want to play Ethereum as a shorter-term trade
So far, we’ve focused on Ethereum’s longer-term value. But what about as a short-term trade?
Let’s return to Jonathan’s July 17 trade alert:
Ethereum’s starting to wake up.
Not only are we’re seeing a clear spike in search interest across the board, but there’s a massive spike in options volume in the Ethereum ETF, ETHA…
Right now, the options market is still pricing in cheap volatility… It’s a great spot to position for a breakout.
Jonathan’s reference to “cheap volatility” is important to highlight. It’s a powerful strategy seasoned traders use to pull money out of the market – one that most investors don’t even know exists.
A handful of factors go into how an option is priced – obviously, one is the price of the underlying stock. But another factor is volatility.
Now, volatility can be priced cheaply (when traders expect calm market conditions) or expensively (when traders expect exaggerated price fluctuations).
So, when you buy volatility cheaply – and the expectation of volatility then surges – that alone can increase the value of your option, even if the stock price itself doesn’t move all that much.
Jonathan’s reference to “cheap volatility” reflects his awareness that Ethereum’s volatility was priced attractively low when he recommended the trade.
The tailwinds that resulted in the 275% gain, and how trading conditions are shaping up right now
Here’s how ETHA’s three-month chart looked on July 17.
So, the trade setup featured:
- Clear bullish price momentum
- The spike in Ethereum search interest that Jonathan had spotted
- Outsized option volume
- Cheaply priced volatility
It was a powerful series of tailwinds.
And since July 17, everything went “up.” ETHA’s price, interest in Ethereum, option volume, and, importantly, volatility all moved higher.
Let’s zero in on that last one…
How to make money even if the stock doesn’t move much
When I profiled this trade at the beginning of August, I highlighted how to track implied volatility (IV), which is a way that you can determine if volatility if priced high or low. Plenty of websites (I chose MarketChameleon) carry this data.
In that Digest, the Grayscale Ethereum Trust ETF (a proxy for Jonathan’s ETHA trade since I was reserving ETHA for his subscribers) had implied volatility of 61.3.
This was in the 5% percentile rank, which meant that 5% of the time, the IV was lower in the last year than the level at that time.
Here’s what I wrote:
If IV was lower just 5% of the time over the last year, that means IV was higher (or the same) 95% of the time.
It’s just another way to “buy low, sell high.”
Turning to ETHA, where is its IV in the wake of Jonathan’s 275% winner?
Back to MarketChameleon from yesterday:
ETHA implied volatility (IV) is 78.5, which is in the 99% percentile rank.
This means that 99% of the time the IV was lower in the last year than the current level.
Clearly, volatility is now priced expensively – right as Jonathan’s Advanced Notice subscribers cash in on their option.
To be clear, Jonathan remains bullish on Ethereum, but for the moment, volatility is priced as a headwind to buyers, not a tailwind.
Here’s Jonathan’s bottom line:
We’re closing out our ETHA call spread here – not because our view on Ethereum has changed, but because we don’t want to get too far out over our skis.
I’m still extremely bullish on ETH long term and will be ready to jump back in on any meaningful pullback.
This exit is about locking in a sensational gain while the market’s giving it to us, freeing up capital for the next high-probability opportunity.
If you’re interested in this style of trading but gun-shy about options, Jonathan has you covered
Here he is with some perspective:
Most traders see options as pure gambling. And honestly?
I get it.
Options can be risky. They’re fast-moving. They have their own language. And if you’re following the wrong advice… they can blow up an account before you even understand what you’re trading.
I’ve been a professional trader for over 27 years. I’ve seen the good, the bad, and the outright irresponsible when it comes to options education.
On the flip side, I’ve also seen what happens when people are finally shown the right way to approach options – not with hype or hero trades, but with structure, clarity, and real risk management.
That’s exactly what I’ve been building over the past 10 years with Masters in Trading – a place where people don’t just take trades – they understand why they’re taking them and how to express that opinion through options. Where confidence replaces fear. And where you don’t have to learn everything the hard way.
This isn’t just lip service.
Here are testimonials from Jonathan’s followers:
Bringing it all together
First, for more on trading Ethereum, click here to check out Tuesday’s free MIT Live broadcast. It dives into loads of details we haven’t covered today.
And there’s even more great – free – info in Wednesday’s MIT Live broadcast right here. You’ll learn how one of Jonathan’s members made $150,000 in profit in just five days – and how you can spot those opportunities.
Second, to get a better sense of Jonathan and his trading style – again, totally free – sign up to tune in to his Masters in Trading Live broadcasts, every day the market is open at 11 a.m. ET.
Third, for a deeper dive into how options, Jonathan’s strategies, and an entire community of traders just like you come together, check out his Masters in Trading Options Challenge.
Here’s Jonathan with more on that:
If you’re ready to learn the right way – with zero pressure, fixed risk, and a community that supports you – I’d love to see you inside the Challenge.
You’ve got nothing to prove. You’ve just got to be willing to learn.
And once you see how simple it can be, you’ll never look at options the same way again.
Have a good evening,
Jeff Remsburg
