Hello, TradeWatch readers.
President Trump is stirring things up again, this time with a potential executive order to allow crypto in 401(k)s, sending Bitcoin and related stocks soaring.
As markets react to this potential regulatory shift, the question arises: will this open the floodgates to broader adoption of alternative assets in retirement accounts, or expose investors to undue risk?
In today’s financial recap:
Bitcoin rallies on Trump’s 401(k) crypto push
Bitcoin and crypto-related stocks surged, with Bitcoin (BTC-USD) rising more than 2% and ether (ETH-USD) and XRP (XRP-USD) both up more than 4%.
President Trump’s executive order, expected to be signed around 12:00 p.m. ET on Thursday, directs the SEC to facilitate the inclusion of alternative assets in 401(k) plans, according to Reuters.
Large-scale alternative assets firms, including BlackRock and KKR, anticipate this movement will grow the multitrillion-dollar retirement account industry to a broader mix of funds they manage.
Bottom line: This executive order would open retirement investment to more speculative assets, potentially benefitting investors and alternative asset firms alike. The move, by directing the SEC to act, signifies a major regulatory shift towards broader investment options for retirement savers.
Bitcoin Variety of Alternative Investments in 401(k) Accounts
The TradeWatch: Major cryptocurrencies climbed following anticipation of President Trump’s upcoming executive order, poised to broaden 401(k) investment options to include alternative assets.
Unpacked:
Bitcoin and crypto-related stocks surged, with Bitcoin (BTC-USD) rising more than 2% and ether (ETH-USD) and XRP (XRP-USD) both up more than 4%.
President Trump’s executive order, expected to be signed around 12:00 p.m. ET on Thursday, directs the SEC to facilitate the inclusion of alternative assets in 401(k) plans.
Large-scale alternative assets firms, including BlackRock and KKR, anticipate this movement will grow the multitrillion-dollar retirement account industry to a broader mix of funds they manage.
Bottom line: This executive order would open retirement investment to more speculative assets, potentially benefitting investors and alternative asset firms alike. The move, by directing the SEC to act, signifies a major regulatory shift towards broader investment options for retirement savers.
BoE Cuts Rates Amidst Divided Vote
The TradeWatch: The Bank of England (BoE) has lowered interest rates to 4% in a 5-4 vote, signaling a cautious approach to monetary expansion amid concerns about inflation and cooling labor market conditions.
Unpacked:
The BoE’s decision marks their fifth interest rate cut since August 2024, reflecting ongoing efforts to stimulate the economy.
A split within the Monetary Policy Committee (MPC), with four members favoring holding interest rates at 4.25%, highlights the uncertainty surrounding the economic outlook.
Despite the rate cut, the BoE has raised the Gross Domestic Product (GDP) forecast for the current year to 1.25% and one-year forward Consumer Price Index (CPI) projections to 2.7%.
Bottom line:
This rate cut reflects a cautious approach by the BoE, balancing the need to stimulate economic growth with concerns about rising inflation. The narrow vote indicates deeper strategic considerations and ongoing debate within the committee.
AUD Surges on Robust Trade Data
The TradeWatch: The Australian dollar (AUD) is strengthening, reaching near 0.6540, after unexpectedly strong trade balance data was released, signaling economic resilience. This impacts investor expectations for the Reserve Bank of Australia’s (RBA) upcoming policy meeting, as detailed in this report.
Unpacked:
Australia’s trade surplus increased to 5,365 million month-on-month in June, significantly exceeding expectations and the previous reading, according to the Australian Bureau of Statistics (ABS).
Exports rose by 6.0% while imports fell by 3.1%, indicating a strong inflow of foreign funds that favors the Aussie Dollar.
Investors anticipate the Reserve Bank of Australia (RBA) may cut its Official Cash Rate (OCR) by 25 bps to 3.6% at the upcoming policy meeting.
Bottom line:
The surge in the AUD reflects a positive shift in Australia’s economic outlook fueled by trade data. This development could influence monetary policy decisions and provide opportunities for investors tracking currency movements.
Toyota Projects $9.5 Billion Hit from U.S. Tariffs
The TradeWatch: Toyota has slashed its profit guidance for 2025, projecting a $9.5 billion loss due to aggressive U.S. tariff policies, which impacts its operational strategy and financial outlook. A recent statement from Toyota highlights these financial concerns.
Unpacked:
Toyota attributes the revised forecast of 3.2 trillion yen, down 16.3% from prior forecasts, to the impact of U.S. tariffs and other factors on operating income.
Exports from Japan to the U.S. faced an initial 25% tariff, now adjusted to 12.5%, while exports from Canada and Mexico continue to face a 25% tariff.
To counter these financial headwinds, Toyota plans to make improvement efforts through cost reductions and supply chain optimization, while continuing to make comprehensive investments totaling 470 billion yen.
Bottom line: Toyota’s experience underscores the tangible financial risks introduced by tariff policies, demonstrating how these measures can impact even the largest global manufacturers as they manage operational costs and supply chains. Investors should therefore pay close attention to how trade policies can impact specific market sectors and company bottom lines.
The Shortlist
Diageo signaled that tariffs are a wet blanket, even for the largest of importers, signaling potential headwinds for other companies importing into the U.S.
Acorn reported Q2 earnings with strong revenue figures that reflect resilience in challenging market conditions.
AUD/USD showed movements reflecting the strength of Australian trade data and its impact on investor expectations regarding RBA policy.
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Cheers,
— Michael & the TradeWatch.io editorial team
