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RiskReversal Recap: Friday, August 22nd
RiskReversal Media
August 22, 2025
MARKET WRAP
Stocks ripped to new highs after Fed Chair Powell’s Jackson Hole speech all but confirmed that a September rate cut, and likely at least one more before year end, is still very much on. Uncertainty on the path forward for the Fed had put pressure on stocks for much of the week leading up to the main event. On the day: SPX +1.5%, QQQ +1.5% and IWM with a whopping +4%.
Elsewhere, yields got slammed with the 10YY now 4.26%. It was a little more confusing in the 20YY as it had two way volatility post Powell, before ending lower as well. Gold rebounded as the dollar declined, DXY is now $97.74. The VIX got crushed, ending the week 14.22 and at the lows of 2025.
Notable Gainers: AMZN +3%, INTC +6%, MSTR +6%, CAT +4.2%, HD +4%, GS +3.6, AXP +3.5%
Notable Losers: VZ -1.5%, WMT -1%, INTU -5%, CSX +3.6%, WDAY +2.7%, TMUS +2.4%
After hours: INTC, which had a wild week is adding to today’s gains after hours following an announcement of a 10% stake by the US govt.
RiskReversal Pod: Dan and Guy host Stuart Sopp, CEO and co-founder of Current to talk the US consumer, the gig economy, the impact of tariffs on companies like Walmart and Target, investment opportunities, energy inflation, the potential risks of stable coins and more.
MRKT MATRIX: TODAY’S TOP STORIES
Dow surges more than 800 points to post record close as Powell speech fuels rally (CNBC)
Powell Opens Door to Interest Rate Cut, Citing Labor Markets (Bloomberg)
Trump immigration policy may be shrinking labor force, economists say (CNBC)
The Biggest Retailers Are Thriving in the Tariff Economy (WSJ)
Nvidia Asks Suppliers to Halt H20 Work, Information Says (Bloomberg)
How Trump Will Decide Which Chips Act Companies Must Give Up Equity (WSJ)
Google scores six-year Meta cloud deal worth over $10 billion (CNBC)
Apple Explores Using Google Gemini AI to Power Revamped Siri (Bloomberg)
German Steel Boss Sees ‘Really Bad’ Mood Lingering Across Economy (Bloomberg)
Germany’s Steeper Economic Slump Tests Merz’s Growth Push (Bloomberg)
Bitcoin-Volatility Collapse Forces Risk-Loving Traders Elsewhere (Bloomberg)
WHAT’S NEXT?
The Week That Was
Much of this week’s volatility had been tied to uncertainty about the Fed’s path, with odds of a September cut slipping as low as 70% after snapping above 90% following the most recent CPI print. Powell’s comments flipped that narrative back around, sending odds back above 90% intraday before settling around 83% by the close. Stocks gapped higher on the speech release and largely held those gains into the close. Implied volatility got crushed in the process, with the VIX dropping to its lowest levels of the year. Of course, it’s not all clear skies ahead. Between now and the September FOMC we’ll get PCE, NFP, CPI, and PPI — plenty of data releases that could complicate the narrative (and what may explain the Sept rate cut odds coming back towards 80% late in the day). On the week, the S&P finished higher by a modest 0.3%, but today’s rally left the index more than +2% above the weekly lows, and perhaps adding a fresh injection of FOMO momentum as we approach the SPX 6500 level.
Next Week
The next real tests come late next week with NVDA earnings, followed by August PCE. As far as risk pricing, we’re heading into next week with some of the lowest implied vols you’ll ever see. SPX vol is sitting in single digits for the days leading up to NVDA’s report. One could argue that the options market is already overreacting to today’s move and potentially mis-pricing both the potential for moves over the next two weeks, as well as into year end. We’ll discuss that more, alongside a preview of next week’s catalysts in Sunday’s note.
TODAY’S EPISODES
Watch RiskReversal Podcast’s newest episode:
In this episode of the RiskReversal Podcast, hosts Dan Nathan and Guy Adami are joined by Stuart Sopp, CEO and co-founder of Current. They discuss various economic topics, starting with the state of the US consumer, particularly those living paycheck to paycheck and heavily involved in the gig economy. They explore the effects of recent retail earnings, the impact of tariffs on companies like Walmart and Target, and the evolving job market. The conversation shifts to international economic issues, including interest rates in Europe and the UK's post-Brexit economic challenges. The Fed's monetary policy and its potential consequences are also examined. The episode concludes with a discussion on investment opportunities, energy inflation, the potential risks of stable coins, and the future of AI. Sopp provides insights into Current's growth, consumer behavior, and how the company leverages technology to better serve its customers.
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