What’s Going On Between Trump and the Fed?
As the economy enters the second half of 2025, President Donald Trump is placing renewed pressure on Federal Reserve Chair Jerome Powell to aggressively cut interest rates, arguing that current rates are unnecessarily restrictive and harmful to economic growth. Trump has publicly criticized Powell, calling him “not a smart person”, and has suggested cutting rates by up to three percentage points to stimulate the economy.
This public campaign, combined with growing tension over Fed independence, is fueling concerns across both parties and throughout the financial community. For passive investors in alternative assets, these developments present both potential opportunities and real risks—particularly in interest-rate–sensitive sectors like real estate, car washes, and flex space.
Why This Matters for Passive Investors
1. Interest Rates Drive Valuations
Fed interest rate policy plays a critical role in alternative asset performance. Lower rates typically:
- Make borrowing cheaper
- Drive up asset valuations
- Increase investor appetite for income-generating real assets
But if rate cuts are politically motivated and not aligned with inflation data, the long-term results can backfire, triggering inflation, currency devaluation, or a loss of global confidence.
2. Credibility Is Everything
A central bank that appears politically influenced may lose credibility. That could lead to:
- Volatile market reactions
- Higher long-term inflation expectations
- Uncertainty around pricing assets and forecasting returns
For investors in real estate syndications, flex space, or car wash operations, this uncertainty can affect exit cap rates, financing conditions, and overall cash flow reliability.
How Car Wash & Flex Space Investments Fit In
At QC Capital Group, we believe that well-selected real asset investments remain compelling in all rate environments, particularly when backed by:
- Strong fundamentals (e.g., recession-resistant demand for services like express car washes)
- Short-term leases (as seen in flex space) that adjust to inflation
- Low correlation to public market volatility
However, these benefits can be muted if inflation surges uncontrollably or if borrowing becomes unstable due to erratic Fed policy shifts.
What Passive Investors Should Do Right Now
Here are five ways passive investors can position themselves amid rising political noise around interest rates:
1. Diversify Across Time Horizons
Seek investment opportunities (like QC Car Wash Fund II and QC Flex Space Fund) that offer a mix of immediate cash flow and long-term appreciation.
2. Focus on Real Assets with Pricing Power
Car washes, for example, can adjust pricing quickly, offering a natural hedge in inflationary environments.
3. Monitor Macro Indicators
Keep an eye on:
- Fed announcements and interest rate forecasts
- Inflation metrics (PCE, CPI)
- Trade and tariff developments that may impact input costs
4. Choose Operators Who Stress-Test Scenarios
At QC Capital, we build in multiple economic scenarios, including rising or falling rate environments—to protect investor capital and ensure resilient underwriting.
5. Stick With SEC-Compliant, Transparent Sponsors
Uncertainty favors clarity. Choose experienced investment sponsors who communicate regularly, provide clear disclosures, and maintain strict SEC compliance—especially as the political and rate environment grows more complex.
Whether you're investing in a cash-flowing car wash portfolio or a flex space property fund, it’s more important than ever to understand how macro policy moves impact your passive investment strategy.
The Fed may or may not cut rates in the coming months, but either way, the underlying fundamentals of well-structured real assets remain strong. Passive investors who remain informed, diversified, and focused on long-term performance, not political headlines, will be best positioned to thrive.
Ready to diversify into alternative assets like car washes or flex space?
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