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Trump 401K Order and Fed Pick -3

10:18 08-Aug-25


Trump has signed an executive order directing the Secretary of Labor and SEC to coordinate with the Treasury and other regulators on allowing alternative assets in 401K plans.  Private equity, real estate, and digital assets are specifically mentioned.  I've always called 401Ks and other retirement plans the "zombie capital" that drives stock indexes, and think competition will be a substantial negative for them, at least initially.  I am most interested on how holding real estate in a tax deferred account would work, since it has been the only asset class that can be competitive, when ignoring associated debt and adding in rental income, with stocks over the long term.  Supposedly we have 180 days before we'll find out.  Surprisingly, Bitcoin and Ethereum haven't moved much on the news.  Following the initial bump, I see at least gradual attrition in store as fundamental performance begins to become evident.

We'll also have to wait on Stephen Miran being an actual voting member of the Fed.  Trump has nominated his current CEA chair to replace Kugler on a supposedly temporary basis.  However, confirmation by the Senate will be required and that body doesn't reconvene until early September.  That probably doesn't leave enough time before the September 17th rate decision, especially considering that Congress will need to enact new appropriations legislation before September 30th to keep the federal government funded.

Even so, I have been pushing back against the market pricing in a rate cut from the Fed for six months now.  However, I think it is finally right about the September 17th meeting, and we'll probably get even more certainty at Jackson Hole in 15 days.