Welcome back to Stacking Equity, where we break down the major financial and tech news with more anticipation than an Alabama sorority house on rush week and less controversy than Southwest's new seating policy.

Trump vs. The Fed – Two Truths of Monetary Power

Last month, we joked that the peak of Fed/White House tension was two old guys in hard hats awkwardly feuding on national TV. Well, Trump decided that wasn't nearly dramatic enough - so now he's upped the ante by accusing Fed Governor Lisa Cook of mortgage fraud.​

Now, depending on your source of reading, you may see headlines that make you think J.Powell is trying to hold back our "hottest economy ever," or they could make you panic that we are one step away from the Fed being taken over by authoritarian rule. Either way, let's pump the brakes and sort out what's real, what's noise, and why it matters for your money.

Mortgage Fraud or A Fraudulent Claim?

First, I want to address the issue with Cook, as it has been blown up more than the Cracker Barrel logo. The key term that has swayed the public discord is mortgage fraud, which paints a seriously negative narrative. With 2008 still fresh enough for most, it's unsurprising if your mind jumps to liar loans, inflated incomes, and Wall Street packaging toxic debt like subprime party favors. That was systemic and dangerous. It was deliberate, and there is no denying that it was the cause of the Great Recession.

These Cook allegations? Not even close. At worst, it's a gray-area case of "occupancy fraud," where someone gets better mortgage terms by claiming the property is a primary residence instead of a secondary residence. This could be done deliberately (often for use as a rental/Airbnb or to flip it), in which case, there is no other way to put it than fraud. But it can also happen circumstantially without intention. Either way, it's essential to understand the impact - the only victim is the bank/lender earning a little less interest, not the entire financial system teetering on collapse.

I won't take a hard stance on Cook's intent, but it's clearly being overblown, and even her lender has raised an issue with it, so calling for her job seems extreme.

The Bigger Battle: Who Gets to Call the Shots?

The real story isn't Cook's mortgage application. It's about independence - the idea that the Fed sets interest rates based on data, not political pressure.

At Jackson Hole this past week, Powell stated that inflation isn't sprinting back to 2% anytime soon. While the economic data looks solid, he said there seems to be some potential cracks in the labor market. Translation: stop expecting rate cuts just because it feels good – instead, they are going to let the stats dictate their actions.

But Donnie Economics - and honestly, any president - wants rate cuts because they juice the short-term economy - politically convenient, but potentially inflationary. This is why the Fed was designed to operate independently in the first place.

The Two Truths of Monetary Policy

1. Political pressure on the Fed is a real concern. This isn’t the first time the Fed has faced off against the White House. If presidents could dictate rates, we’d have short-term sugar highs and long-term inflation headaches.
2. There is no need to panic. Sure, seeing the separation of powers being pushed this hard is a bit concerning. Still, the Fed has multiple governors, institutional guardrails, and market realities, making a complete political "takeover" almost impossible.

Why It Matters for You

That is how you should generally take this whole fiasco.

However, as a consumer, investor, and/or homeowner, there are a few key takeaways to have on your mind:

• Don't let fear-based headlines push you into rash moves - this isn't a systemic warning indicator that 2008 is happening again.
• Understand that it is true that if politics ever drives rate cuts too aggressively, inflation risk rises - meaning mortgages, borrowing, and investment returns all feel it.
• The market's lack of reaction isn't because they are ignoring risks - they are weighing them against current strong fundamentals and assuming our government institutions will use the series of checks and balances that are in place. Historically, markets rarely price in political risks until they become real and unavoidable. Our job is to stay disciplined, watch for real changes in policy/data, and not get whipsawed by every headline.
• Finally, while the Fed isn't a perfect entity, its independence has survived battles with presidents on both sides from Truman to Nixon to Obama. There is reason to think it doesn't survive this too.

The Cook story is political theater. The real lesson is knowing where politics and monetary policy intersect - and that guardrails are there to keep your money safer than headlines suggest.

-1-

Private Equity in Your 401(k) – Innovation or Extra Risk?

The Department of Labor recently signaled that 401(k) plans may soon be able to allocate money into private equity (PE) and hedge funds. On the surface, it sounds exciting: average investors finally get access to the same strategies as institutions and the ultra-wealthy.

But let’s be clear - this isn’t the same as adding an S&P 500 index fund.

The Importance: Private equity had its glory days. Early funds delivered outsized returns that justified sky-high fees (the classic “2 & 20” structure). But the industry thrived on scarcity - fewer investors, less capital, more focus on finding winners. Today, it's oversaturated: too many funds chasing too few deals, often with heavy leverage.

Translation: higher risk, thinner performance edge.

For retirement savers, that creates a few problems:

• Liquidity risk: Unlike stocks and bonds, PE investments are illiquid. You can't just sell when you need cash.
• Fee drag: Higher fees eat into compounding - not great for long-term retirement growth.
• Complexity creep: The more exotic your retirement portfolio, the more likely you are to take risks you don't fully understand.

So yes, the door is opening to new opportunities. But for most investors, the old-school playbook still wins: low-cost, diversified, liquid investments that grow steadily over time.

Private equity has its place, but for most, your 401(k) probably isn't it.

-2-

U.S. Takes 10% Stake in Intel - Strategic Move or Taxpayer Stock Pick?

The U.S. government announced it has taken a 9.9% stake in Intel, converting $11.1 billion in CHIPS Act funding into equity. On paper, this is about strengthening U.S. semiconductor independence. However, it also made Uncle Sam one of Intel’s largest shareholders.

The Importance: Let’s be clear - this is not a bailout. Bailouts are when companies (think big banks in 2008) need cash to avoid collapse, and the government steps in to prevent systemic fallout. Intel isn’t on life support. Instead, this is something new: the White House turning subsidies into direct ownership. That looks less like industrial policy and more like a sovereign wealth fund experiment.

And sure, Trump has floated the idea of creating a U.S. version of Saudi Arabia’s PIF. But do we really want Washington playing stock picker with taxpayer dollars? The government doesn’t exactly have a flawless track record with money management (read with hard sarcasm).

The stakes are high - semiconductors are critical to the economy and national security. But with politics now sitting on Intel's cap table, investors should keep an eye on how much strategy gets dictated by long-term vision versus short-term political wins.

And if you need a visual, think back to when the NBA owned the Hornets and stepped in to veto Chris Paul's trade to the Lakers. Everyone knew the league wasn't a perfectly level playing field - but that move made the tilt obvious. Same idea here: we've always had backroom influence, but now it's right in our faces.

34%

I’ve mentioned in past issues how the indexes have become increasingly top-heavy. The growth of the Magnificent Seven — Apple, Microsoft, Nvidia, Amazon, Meta, Alphabet, and Tesla — has accounted for the majority of 2025’s positive returns, while the rest of the market has been relatively flat. Well, that growth now has the Mag 7 making up over one-third of the entire index.

And it doesn’t stop there. Add Broadcom, Berkshire Hathaway, and JPMorgan Chase to the mix, and the concentration of just 10 companies jumps north of 40% - a level not seen since the dot-com boom.

Takeaway: While the S&P 500 is often treated as a proxy for the “overall market,” it’s anything but right now. This is why we don’t believe in using it as the sole portfolio solution.

• · Diversification Mirage: The S&P 500 is marketed as a broad slice of America’s economy, but right now it’s more like a portfolio riding the fate of a handful of mega-caps.
• Volatility Risk: When one of these giants stumbles, the entire index feels it. Nvidia’s August selloff was a case study in how quickly concentrated bets can rattle markets.·
• Planning Lens: For long-term investors, this concentration risk doesn’t mean abandoning index funds, but it does mean understanding what you really own. If 40% of your “diversified” index is tied to just 10 names, you may not be as spread out as you think.

The bottom line is that the S&P 500 today looks less like a diversified index and more like a seven-piece combo meal. It's great when it’s hot, but you probably don’t want your whole diet built around it.

-1- Quick Hits

• 529 Plans: Back-to-school = good time to check contributions.
• IRA/401(k): Still time to max out before year-end.
• Beneficiaries: If life has changed this year, review your designations.

-2- Tax Planning Season

September is the sweet spot to review your tax picture before the year ends. A few ideas to have on your radar:

• Roth Conversions: Converting in a lower-income year can reduce your tax bill over time.
• Charitable Bunching: Grouping deductions can help maximize your tax benefit.
• Tax-Loss Harvesting: Market volatility this fall could create opportunities to offset gains.

(Talk to your tax professional before making changes - these are just planning ideas.)

-3- Open Enrollment = Don’t Simply Check the Same Boxes

Fall is benefits season at most companies. Instead of just clicking through quickly, take the time to review:

• HSA vs. FSA: HSAs can be triple tax-advantaged if you’re eligible. FSAs are “use it or lose it.”
• Insurance Coverage: Double-check life and disability coverage, especially if your household has grown.
• Dependent Care Accounts: Pre-tax savings for daycare/after-school programs can be overlooked.

​

That's it for this month.

We’ll close this out like Taylor’s Instagram post — short and a bit awkward.

Yes, America's Sweetheart now has a finance - @KillaTrav.

Got feedback or questions? Hit reply — we read every one. And if you’re enjoying what we’re putting out, don’t be afraid to spread the love and share it with others.

Until next time, keep stackin’.

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