by diastole-admin | Oct 19, 2026 | Uncategorized
Two weeks ago, stocks were hitting record highs. Last week we saw the worst week in stocks since June. Chipmakers especially, and not the delicious kind, showed weakness with their longest slide since 2008. According to Barron’s, “The week ended with a dramatic rethink of the engine driving the bull market: the AI trade.” And I would agree with Barron’s, but every couple of weeks, or even days, we are seeing a “dramatic rethink”. Thus, the recent seesaw between AI-related companies and bond yields. Money out of AI means money into bonds (yields drop); money out of bonds and into AI (yields rise). You could almost hold your breath long enough to wait out a cycle. (Don’t try this at home.)
In a related story, Harvard’s endowment rose in value by 27.1% for the fiscal year ending on June 30th. How? SpaceX stock and other AI bets. The University of North Carolina’s endowment gained 37.8% – about HALF of which came from SpaceX stock. On the one hand, good for them, I hope it means more money for scholarships. On the other hand, HAVE YOU EVER HEARD OF DIVERSIFICATION? I worry for these universities that the stocks they rode up will be the same stocks they ride down. I hope not, but will they have the will to sell?
Elon Musk just announced, “Next year, I will give one of my SpaceX shares to every kid in America. This will be the first of many.” At current prices, this would cost Musk (or SpaceX) about $10.5 billion. Hardly a dent in the value of either one. But Musk is known for exaggeration, so I would wait to see the paperwork before counting your chickens.
Yields on government bonds are critical to managing our whopping government debt. The fiscal year for the government ends on September 30th, and during this past year, our annual deficit reached $1.99 trillion. That adds about $2 trillion to our overall debt, which is how we got to $40 trillion in total. And selling ten-year bonds at 5% costs us a lot more than selling them at 2%, which we did a few years ago.
U.S. consumer prices, as measured by the consumer price index (CPI) rose 3.7% in September, versus a year earlier. In September alone, prices rose 0.6%. According to the Wall Street Journal, high energy prices and their fallout are squeezing consumers. But we knew that. Oil prices around $100 per gallon are bad enough, but it costs an additional approximately $40 per barrel to transport the oil to the refineries.
Consumers are stuck not only with higher energy costs, grocery costs, credit costs, and travel costs, but also the loss of subsidies for health insurance and food assistance. Who is not paying more? The top 1%. They will pay approximately $12,560 less in taxes and other expenses this year versus the middle class paying $1700 more and the poorest 20% paying $750 more.
Home sales actually rose slightly in September – for the first time since Spring – due to a plateau in mortgage rates. Stubborn sellers are still sitting on (in) their homes, which keeps asking prices high. The mostly-Boomers who are waiting to sell are happy with their low-cost mortgages and won’t move until rates come down. Or will they? At some point, the dam will break and the housing market will return to some normalcy, but it’s hard to tell when that will happen when the Fed is contemplating more rate hikes, not reductions.
The next Federal Reserve Open Market Committee meeting is scheduled for next week. New Fed Chairman Kevin Warsh says he is not going to telegraph the Fed’s movements ahead of time, no matter how much we wish he would. Oh, how I miss Jerome Powell.
It’s that time of year when enormous pumpkins roam the earth again. Case in point, a 3,156 -pound pumpkin in Coventry, R.I., certified by the Guinness World Records as the largest pumpkin ever weighed. Picture one of those giant balloons walking down Fifth Avenue in New York. Now picture it squashing everything in its way, and you have an idea of how big this pumpkin is. Pumpkins grown for weight competitions are babied in very important ways (we see you, hand fertilizing) and can grow more than 50 pounds in one day.
For the week ending on October 16th, the Standard & Poor’s Index closed at 7,659, the Nasdaq Composite Index at 26,140, and the Dow Jones Industrial Average at 52,002. The yield on the ten-year Treasury finished at 5.098%. U.S. crude oil cost $100.71 per barrel, N.Y. gold cost $4,108.00 per ounce, and one Euro was worth $1.12.
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) Yahoo Finance, Morning Brew, Barron’s, Axios, The Wall Street Journal, Fortune, Bloomberg, Business Insider, USA Today, The Economist, CNN, PBS, CNBC, The New York Times, Forbes, Guinness World Records, and The Hustle. Please call Diastole at 203.458.5220 if you have questions, or email me, Liz Cook, at ecook@dwinvest.com. Thank you for reading!
I have switched my usual TV watching from news and business to Hallmark now that we’re in the fourth quarter of the year. And no, it is NOT too soon. In fact, here’s some business advice from the latest warm-hearted show I watched: if your father looks like Santa, you pretty much have to take over the family’s toy business. And doesn’t your old childhood playmate look nice all grown up and wearing red?
by diastole-admin | Oct 5, 2026 | Uncategorized
Bad news is good news is back! On Friday, we got the September jobs report, and it was dismal. Only 29,000 net new jobs were created for the entire month. But stocks rose. Why? Because a weak job market may keep the Federal Reserve Open Market Committee (FOMC) from raising interest rates at their meeting later this month. But the Fed has a dual mandate: to keep employment full and to keep inflation under control. It is one of the difficulties of the job to determine which concern is most important at any given time.
Inflation is running about 3%, based on last week’s personal-consumption expenditures index. The PCE is the Fed’s preferred inflation indicator. Which would you prioritize right now: creating jobs, or reducing inflation? It is likely that the FOMC will balance on the razor’s edge and make no change at all. After this month’s meeting, there is only one meeting in December on the FOMC’s calendar for the year.
Meanwhile, the Fed’s target rate is 3.75% to 4.00% for big banks who are borrowing from it. But the Fed doesn’t control all interest rates. Treasurys are priced in the marketplace, and currently the ten-year Treasury Note is paying more than 5.25% The five-year Treasury yield is 5%, and the two-year yield is 4.8%. So – investors are demanding more yield (as evidenced by their demanding higher yields at the Treasury auctions). Banks are still in the green because they can borrow at 4% and loan (mortgage money) at more than 7%. But banks borrow from individuals, too. Remember CDs. Borrowing at 5% or more and lending at 7% isn’t quite as attractive.
There’s been talk about the flattening of the yield curve. That’s what happens when short-term yields approach the levels of long-term yields. In normal times, short-term yields are considerably lower than long-term ones. When the yield curve inverts, meaning short-term yields are actually higher than long-term yields, it is considered to be a sign of a coming recession. Our yield curve now is flattening but is not inverted. We are watching it. (And remember that a recession is ALWAYS coming – we just don’t know when.)
In the third quarter, the Standard & Poor’s 500 rose 2%, while the Nasdaq Composite Index rose 2.5%. The Dow Jones Industrials fell 2.7% during the period. Big tech companies were responsible for most of the gains in the market – which is why the Dow, which doesn’t hold big tech, failed to gain ground. But how are the tech/AI companies continuing to soar when developing AI is really expensive and the cost of borrowing keeps rising? Many investors see an AI subscription model coming, where you will pay so much every month to use your favorite AI tool. Just like Netflix. But will that create enough revenue to keep building data centers and computing power?
Perhaps that’s why analysts are starting to talk about current market conditions as a race or war between rising interest rates and AI rollout. One or the other is going to have to give at some point. One indication that AI might be the first to blink is that AI hyperscalers (a fancy word for big AI tech companies) have begun to adopt some sketchy accounting practices, wherein hyperscaler #1 loans money to hyperscaler #2 which then turns around and signs a licensing deal with #1. Somehow both companies put assets but not debts on their balance sheets. The last time we saw a lot of this? Enron.
Looking around the developed world, we see interest rates rising everywhere. The U.S. ten-year briefly hit 5.34 – a level not seen since 2002. The French ten-year also rose to its highest point since 2002. Great Britain’s 30-year yield surpassed 6%, which it hasn’t done since 1998, and Japan’s ten-year remains at a 30-year record. Individual investors demand that sovereign debt of similar countries remain near parity with each other. If there is an outlier, it will be bought (if its yield is high) or sold (if the yield is low).
In parts of Alaska, regular gasoline now costs more than $9 per gallon. Where I am in Connecticut, our gas is approaching $5 per gallon. Diesel has risen by 70% to the mid six-dollar range. And that affects everything that we all buy. The G7 countries have agreed to make diesel and crude oil available from their emergency reserves, in the hope that it will bring prices down. But the 100 million barrels they’re contemplating are <ahem> just a drop in the bucket.
Elizabeth E. Cook
Partner, Diastole Wealth Management
News and information presented here were gathered from sources believed, but not guaranteed, to be reliable, including (but not limited to) Barron’s, Yahoo Finance, Morning Brew, The Wall Street Journal, Bloomberg, Business Insider, CNBC, Interactive Brokers, Axios, Reuters, Fortune, and AP. If you have questions, please call Diastole at 203.458.5220, or email me, Liz Cook, at ecook@dwinvest.com. Thank you for reading!
If you bemoan the sheltered lives that children live these days – in contrast to the wild adventures that you had as a child, worry no more. At The Yard on Governor’s Island in New York City, the untamed childhood is back. No parents are allowed, and children are free to roam, climb, and play with tools on the playground. After school programs are available for about $650 per week, and there is a summer camp as well. There are a few rules: “No hitting each other, no cursing, no throwing or dropping of anything heavy.” Which, actually, would make good rules for adult workspaces.
by diastole-admin | Sep 21, 2026 | Uncategorized
DIASTOLE ECONOMIC AND MARKET COMMENT
September 21, 2026
Warren Buffett continued his slow departure from Berkshire Hathaway last week when he stepped down from his position as chairman of the conglomerate. His son Howard will succeed him as chairman, while Warren moves to chairman emeritus but remains on the board. He appointed Greg Abel to serve as CEO less than a year ago. Warren Buffett is now in his 90s, and has provided a 19.7% compounded annual return to shareholders over his more than 60 years at the helm of BH. That’s almost twice the return of the Standard & Poor’s 500. Berkshire Hathaway class A shares are selling for about $763,600 apiece. Not a typo.
Since 2006, Buffett has donated roughly $66 billion worth of stock to charity. His remaining fortune (currently around $150 billion) will be donated to charity by his three children by the end of 2034.
The Federal Reserve Open Market Committee (FOMC) met last week and voted unanimously to raise interest rates by one quarter of one percent. Everybody anticipated this move because inflation is stalling/rising instead of falling, while the labor market is still solid. That led the FOMC to address inflation while its other mandate (full employment) takes care of itself. Economists now expect at least one more rate hike this year. And while stock markets fell on Wednesday when the rate hike was announced, markets ended the week stronger.
Bond rates rose last week as prices fell. Bond prices and yields move in opposition to each other. The yield on the ten-year Treasury reached and passed 5%, which is a significant psychological level, before sinking again to just below that mark. At 5%, investors begin to wonder if they would be better off selling stocks and buying Treasurys. Also, the ramifications of higher interest rates for borrowers are serious. And who are our biggest borrowers these days? AI hyperscaler companies who are borrowing for construction costs on huge data centers, and even for the costs of outfitting and running the centers.
Meanwhile, the price for American oil has fallen from over $100 per barrel to around $94. Of course, the reduction has not worked its way through to gas prices yet, but one can hope. Farmers are still struggling with the cost of diesel fuel, which drives their big equipment, AND the cost of fertilizer which is expensive and harder to buy because so much of it travels through the Strait of Hormuz.
U.S. consumers have spent approximately $107 billion EXTRA for gasoline and diesel during the war with Iran and disruptions from the Russian war in Ukraine. American oil executives are warning that commercial fuel stocks are depleted and strategic crude reserves are running low. Unfortunately, tax credits and tax breaks for electric vehicles and green energy have been ended. Retail sales rose 1.2% in August – largely due to the higher fuel prices, but also because groceries and shelter continue to rise in price. Standard 30-year mortgage rates are back up around 7%.
Iran has bombed many U.S. facilities in the Mideast, as well as facilities owned and operated by our allies. But now Amazon Web Services (AWS) says it can’t restore some of the data that was lost in the bombing raids at their own data centers in the Persian Gulf. Data stored by AWS in all its data centers in Bahrain, and some of them in the U.A.E. are now unrecoverable. Who has the back-up floppy disks?
For the week ending on September 18th, the S&P 500 finished at 7,647, the Nasdaq Composite at 26,508, and the Dow Jones Industrials at 51,681. The yield on the ten-year Treasury note finished at 4.95%. U.S. crude oil cost $93.50 per barrel, N.Y. gold cost $4,370.10 per ounce, and one Euro was worth $1.15.
Elizabeth E. Cook
Partner, Diastole Wealth Management
News and information presented here were gathered from sources believed, but not guaranteed, to be reliable, including (but not limited to) Barron’s, USA Today, The Wall Street Journal, Axios, Bloomberg, CNBC, Business Insider, Yahoo Finance, and WYNC.If you have questions, please call Diastole at 203.458.5220, or email me, Liz Cook, at ecook@dwinvest.com.
New York City is installing 17 new public restrooms on its sidewalks. Two have arrived already and the rest are coming. The bathrooms are AI powered robotoilets that will require a phone app to use. They look bright and clean (for now) but have one downside: there is a ten-minute time limit and the door will open automatically when time is up. Read that again. You’re in the public toilet, on the sidewalk, and after 10 minutes the door automatically opens up. On the sidewalk. In New York City. Just saying.
by diastole-admin | Sep 14, 2026 | Uncategorized
Marked <safe> from murderous AI bots today. Hope you are too. Wouldn’t it be funny if, when AI misbehaves, it goes after the billionaires who own it? Not funny for them, though.
Please take it as a given that we have discussed the AI whistleblowers, the alarm registered by the titans of big tech, the accounts of AI gone rogue, the way that AI data centers are causing noise and water problems, to say nothing of using up all the electricity. Despite my lighthearted tone, this is a serious issue. One of the problems with solving it is that it will require Congressional action, and that’s hard to come by these days. My first take would be to unplug everything,
So, in addition to AI fear and fear mongering (does Sam Altman of OpenAI REALLY want more regulation?) most of last week’s news was about war and inflation. And bonds and inflation, and gas and inflation, and inflation. We received two important inflation numbers: the Producer Price Index (PPI) and the Consumer Price Index (CPI). The PPI indicated that wholesale prices rose 5.4% over the trailing-twelve months ending in August, while the CPI showed consumer prices 3.4% higher over the last year. The Fed’s inflation target is 2%, and we are not close to it. Diesel fuel has surpassed six dollars a gallon, on average, and the ten-year Treasury Note is yielding exactly one hair below five percent, a psychologically important level.
So, thoughts automatically turn to the Federal Reserve’s Open Market Committee (FOMC) which will announce its next interest-rate decision on Wednesday at 2:00 p.m. Fed Chairman Kevin Warsh indicated earlier that interest rates would rise naturally by way of market forces. In other words, bond buyers may sit on their hands until yields are high enough to attract them. Alternatively, the Fed could raise the Fed-funds interest rates on Wednesday, thus forcing large banks to charge more on their loans. Raising rates is considered “hawkish” and tightens credit, making it more expensive to borrow. When money is tight, people spend less and inflation eases.
Right now, the odds of a rate hike on Wednesday are above 80%. It would be closer to 100%, except that we know the president is advocating for LOWER rates, which puts newly installed Chairman Warsh in a particularly delicate position. At the same time, Treasury Secretary Scott Bessent is proceeding with his higher Treasury-bond buybacks, in the hopes that increased demand will push bond prices higher, and therefore yields will be lower. (Bond prices and yields move inversely.) So far it hasn’t worked.
The news from Saudi Arabia is disturbing. Not only have the Houthis (aligned with Iran) partially blocked the shipping route through the Bay al-Mandab Strait in the Red Sea, but the Saudi Arabian pipeline that brings their oil across their country (i.e. from the Persian Gulf to the Red Sea) has been attacked by drones. About one third of the world’s oil supply used to pass through the Strait in the Red Sea and the Strait of Hormuz in the Persian Gulf. Iran is now able to shut down oil exports from both sides of the Arabian Peninsula.
Home mortgage loans have passed 7% in recent days, their highest level in over a year. Not surprisingly, home sales dropped again. But you’ll never guess which sector of real estate is having a bumper year. Go ahead, guess. Oh wait. I’ll tell you. It’s malls! Over the past year mall values jumped 13% – more than double the overall commercial market’s gains. OMG! Why? (Personal confession: I haven’t been in a mall in several years, and the mall closest to my house has recently converted to industrial use.) It turns out that many mall managers made good use of the time during and after Covid to revamp their properties. More high-end tenants, more restaurants, and more retailers aimed at tweens and teens have helped the mall recovery. Maybe I’ll go.
At a recent speech in Texas, the president announced that he would pay every adult in the country $5,000 if the Republicans hold both houses of congress in the midterms. To put it in perspective, the money required for that would be more than we spend on defense in a year.
We are finishing the hottest summer on record. The previous record was 1936, in the dustbowl.
For the week ending on September 11th, the Standard & Poor’s 500 finished at 7,657, the Nasdaq Composite at 26,333, and the Dow Jones Industrials at 52,573. The yield on the ten-year Treasury Note closed at 4.97%. U.S. crude oil cost $103.55 per barrel, N.Y. gold cost $4,311.20 per ounce, and one Euro was worth $1.15.
Elizabeth E. Cook
Partner, Diastole Wealth Management
News and information presented here were gathered from sources believed, but not guaranteed, to be reliable, including (but not limited to) Barron’s, The Wall Street Journal, The Economist, Axios, Bloomberg, Fortune, The Bureau of Labor Statistics, Reuters, CNBC, USA Today, Yahoo Finance, Morning Brew, CNN, and AP. If you have questions, please call Diastole at 203.458.5220, or email me, Liz Cook, at ecook@dwinvest.com. Thanks for reading!
Apple just introduced its first foldable iPhone, called Duo. You can use more than one app at a time on its larger screen. Chris Welch, in his review for Bloomberg, said, “Opening it doesn’t simply give you a bigger iPhone screen; the software changes with it, making the device feel closer to an iPad.” It is my understanding that next year the bigger iPhone will come in a harvest-gold version that will hang on your kitchen cabinet.
