Happy First Day of Autumn! And just like the leaves on the trees, interest rates are falling.
The Federal Reserve Open Market Committee announced on Wednesday that it was cutting the Fed-funds rate by 0.25% – to a range of 4%-4.25%. The Fed-funds rate is what big banks pay to borrow from the Fed. Then, presumably, the rate seeps through to mortgages and credit cards, and Treasury debt, and so on. In practice, those rates are also subject to the vicissitudes of the marketplace. For instance, the yield on the Treasury Note ROSE last week, as the price for the Notes fell.
Why were investors selling Treasury Notes? To put their money into the stock market, which was rising to yet more new record highs.
So – official interest rates down, and stocks up. Last week in a nutshell.
The Nasdaq Composite Index has closed at a record high 27 times this year, while the S&P 500 has 26 record highs, and the Dow Industrials has five. Also at a record high is Alphabet (parent of Google), which just crossed the $3 Trillion mark to join Nvidia, Microsoft, and Apple as the only companies worth that much.
Of course, if Tesla’s one-trillion-dollar bonus package for Elon Musk is approved, he could be the first individual trillionaire. Today’s he’s worth just $480.2 billion, according to Forbes. Ha! Loser.
Just kidding, of course. He’s still the richest man in the world, with a fortune at which one should not sneeze. But the rest of us are facing tariff costs of roughly $2,300 per year, with a tax benefit from the One Big Beautiful Bill that averages about $800 per household, per the Yale Budget Lab.
And with grocery costs and other consumer costs higher and still rising (thank you tariffs and inflation), and the labor market weaker, how are we avoiding a recession? American consumers in the top 10% of income distribution accounted for 49.2% of total spending in the second quarter – the highest level in data going back to 1989 (per Bloomberg). So, consumer spending is still supporting the economy, it’s just not ALL consumers. But back-to-school shopping did help boost retail sales for the third straight month in August.
Thanks to misplaced nostalgia (again, kidding), we are now facing another government shutdown at midnight on September 30th. Apparently passing an actual budget is out of the question, so a Continuing Resolution (CR) is being sought to extend spending for a month or two while Congress gets its act together, or not.
Publishers Clearing House has declared bankruptcy again, after being bought out of bankruptcy in July. And “The House” has announced that it won’t pay past winners. PCH owes an estimated $26 million in prizes , of which $1.9 million is due this year. Half of the unsecured creditors of PCH are past winners. Always take the lump sum if possible!
For the week ending on September 19th, the S&P 500 finished at 6,664, the Nasdaq at 22,631, and the Dow at 46,315. The yield on the ten-year Treasury Note was 4.139%. U.S. crude oil cost $64.36 per barrel, N.Y. gold cost $3,685.00 per ounce, and one Euro was worth $1.18.
Elizabeth E. Cook
Partner, Diastole Wealth Management
News and information presented here was gathered from sources believed, but not guaranteed, to be reliable, including (but not limited to) Barron’s, CNBC, The Wall Street Journal, Bloomberg, The Bureau of Labor Statistics, CNN, The Washington Post, Axios, USA Today, Yahoo Finance, Business Insider, Reuters, and The Associated Press. If you have questions, please call Diastole at 203.458.5220, or reply to this email to reach me, Liz Cook.
If you’ve always wanted an Aston Martin, but couldn’t afford one, you probably can’t afford the new Aston Martin baby stroller, which costs upward of $3,000. Sorry! But if you can’t live without one, go to the Aston Martin website and get on the waiting list to be notified of when you can enter an order. Maybe later this year? Maybe after you form a consortium to time-share your stroller?