by diastole-admin | May 18, 2026 | Uncategorized
The stock markets have pulled back slightly from recent record highs, while bond prices have also fallen, pushing yields higher. Why? Inflation has ticked up again.
It’s no surprise, with oil and gas prices rising, that many other costs are rising too. And of course, the dueling blockades of the Strait of Hormuz continue to snarl traffic. Remember the pandemic-era supply-chain issues? They’re back.
The ten-year Treasury Note now pays more than 4.5%. That’s significant because 4.5% is the psychological level at which investors may prefer to buy bonds rather than stock. It’s also the highest level in the past 10 months. The 30-year Treasury is now yielding more than 5% – the highest in almost two decades.
There’s a funny balancing act between bond prices and bond yields. They work in opposite directions, so that if one rises, the other falls. Bond investors are concerned with both the price of bonds and the yield of bonds. These days, with inflation surging, investors are likely to demand higher yields, meaning that the value of fixed-rate bonds will fall. So, investors who already own bonds must decide whether to keep them, thinking that they will hold until maturity (when the bond is redeemed for face value) or sell and buy new bonds, thereby locking in a higher yield. Of course there are floating rate bonds, too, and they make sense in volatile yield markets, but they pay less than market rates because the manager of the bond must make some money too.
The inflation news from last week came from two different reports. First, we received the Consumer Price Index (CPI), which showed that inflation in consumer prices rose by 3.8% over the past year. We can say it together: the Fed’s target inflation rate, at least through Friday, which was Chairman Powell’s last day in charge, was 2%. The next Federal Reserve Open Market Committee meeting, in mid-June, will be helmed by recently confirmed incoming chairman, Kevin Warsh, and we will see then if the targets have moved.
The second inflation report we received was the Producer Price Index (PPI) which tracks prices received by manufacturers for their goods. The annualized wholesale inflation rate rose to 6%. The estimate ahead of time was for 4.9%.
The problem for governments (especially ours) when interest rates rise, is that it gets harder to cover the interest payable on sovereign debt. Also, when times get tough for American consumers, the government may want to step in and spend more to help alleviate the problem, and that is harder to afford when interest rates are rising. According to Fortune magazine, “The U.S. Treasury pays $3 billion a day in interest on national debt [which is] nearing $39 trillion.”
The current administration has proposed a temporary removal of the gas tax, to bring gas prices down for consumers, but the gas tax is only 18.4 cents per gallon – hardly enough to make up for the increased gas prices that consumers are paying now.
Still, American consumers are holding up. Retail sales climbed 0.5% in April from March. That was less than the prior month, but still positive and the third consecutive monthly increase.
When Spirit Airlines went under, its jets were abandoned all over the country. But the airline leasing companies that actually owned them wanted them back. To the rescue were the airplane repo men – pilots who were willing to fly the jets back to the actual owners. Many of the pilots had been working for Spirit until just hours before. It took hours of coordination and voluminous paperwork to prove to the airports that the pilots had the right to fly the planes. Apparently, you can’t just climb the fence as the bad guys chase you and take off in a jet in which you conveniently found the keys.
For the week ending on May 15th, the Standard & Poor’s 500 finished at 7,408, the Dow Jones Industrial Average at 49,526, and the Nasdaq Composite Index at 26,225. The yield on the ten-year Treasury Note closed the week at 4.597%. WTI (American) crude oil cost $101.16 per barrel, while Brent (international) crude cost $109.33 per barrel. N.Y. gold cost $4,564.80 per ounce, and one Euro was worth $1.17.
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, The Wall Street Journal, Yahoo Finance, USA Today, Axios, Fortune, Bloomberg, The Bureau of Labor Statistics, CNN, CNBC, The Washington Post, and The Hustle. If you have questions, please call us at 203.458.5220, or email me, Liz Cook, at ecook@dwinvest.com. Thank you for reading.
A 59,000-year-old Neanderthal tooth recently discovered showed signs of dental surgery. And in 1637 France, Cardinal Richelieu grew tired enough of watching his dinner guests pick their teeth with their knives that he ordered all his dinner knives to be rounded off. Thanks to him, we use rounded knives to this day. Except for dental surgery by Neanderthals!
by diastole-admin | May 11, 2026 | Uncategorized
According to Fast Company magazine, “51% of U.S. employees have cried at the office within the last month.” I am not one of them, but I understand the urge. It’s difficult to understand what’s going on, and AI keeps asking if it can help.
Let me share what is so confusing.
We are in a war with Iran and are both exchanging fire and claiming that we are in a ceasefire. Oil prices are rising as the Strait of Hormuz remains closed. At the same time the stock market is surging. Analysts say it is because earnings this quarter were so positive, but what about inflation? It’s moving in the wrong direction – heading upward, while the Federal Reserve is wanting downward. Kevin Harsh is expected to be confirmed this week as the new Fed Chairman. He has aligned himself with the administration’s call for interest rates to be cut, but that would only cause inflation to worsen. Tech companies are laying off workers, but unemployment is not rising.
I assume that it will all make sense in hindsight, but it would be nice if clarity came sooner. In the meantime, we continue to maintain that a conservative asset allocation across investment classes and sectors is your best route to steady gains.
Among other signs of nonsense, GameStop is proposing to pay $56 billion in cash and stocks to buy eBay – a company that is much larger and richer than GameStop.
In other upside-down news, corporate spending on AI now exceeds consumer spending, and corporate stock buybacks exceed individual investors buying the dip. Corporate spending is clearly on the rise, while individuals are cutting back. It’s the K-shaped economy in action.
Greg Ip of The Wall Street Journal calculates that “the AI economy grew at an annualized rate of 31% during Q1, while the non-AI economy added just 0.1%.”
But as you all know from your social media feeds, those big companies that are leading the markets and leading the AI revolution are NOT leading in paying federal income taxes. As it stands now, the U.S. Treasury will have to borrow more than $166 billion every month just to keep functioning – about $2 trillion for the year. And a trillion is nothing to sneeze at.
A Reddit poster put it in perspective: One million seconds is about 11 days. One billion seconds is about 31.5 years. One trillion seconds is over 31,709 years. Our federal debt is now almost 39 trillion dollars.
While the April jobs report showed 115,000 net new jobs created in the month, the share of American men working or looking for work sunk to the lowest level since 1948 (except for the Covid era). Traditionally female jobs in healthcare and education are still hiring, while traditionally male jobs like manufacturing, transportation, and mining have been cutting workforces. According to the Washington Post, “Among men 16 years and older, 67 percent were working or looking for a job in April, down from 73.5 percent two decades earlier.”
For the week ending on May 8th, the Standard & Poor’s 500 finished at 7,398, the Nasdaq Composite Index at 26,247, and the Dow Jones Industrial Average at 49,609. The yield on the ten-year Treasury Note closed at 4.364%. U.S. West Texas Intermediate crude oil cost $96.82 per barrel, while international Brent crude cost $103.08 per barrel. Although oil is produced in various countries and by various methods, pricing is established worldwide. New York gold finished last week at $4,735.45 per ounce. 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) Yahoo Finance, Barron’s, The Wall Street Journal, Bloomberg, Axios, CNN, USA Today, Fortune, CNBC, The Bureau of Labor Statistics, The Washington Post, Fast Company, Reuters, The AP, Morning Brew, and Business Insider.
According to Business Insider, the deepest hole humans have ever dug was apparently not the one I made in my backyard when I was nine. No – it is the “Soviet-era Kola Superdeep Borehole which is just 12.3 kilometers deep. That’s only 0.2% of the distance to the planet’s core.” As the president goes to China this week to ask its help with negotiating an end to the Iran war, one must be surprised that the quickest way there is to FLY, not to slide down a tunnel. Not the world I anticipated when I was nine.
by diastole-admin | May 4, 2026 | Uncategorized
Stocks had another good week and the Standard & Poor’s 500 and Nasdaq Composite Index both ended at new record highs. Year-to-date, the S&P is up 5.6%, while the Nasdaq is 8% higher. The Dow Jones Industrial Average is up about 3% for 2026 but is below its record high. Meanwhile, bond prices slid and yields rose, with the yield on the ten-year Treasury Bond up to 4.378%. Bond prices and yields move in opposite directions.
(When you buy a bond, you are, for the most part, buying the cash flow that that bond provides. When you pay more for a specific bond, you are receiving cash flow that is a lower percentage of your purchase price. Therefore, the more you spend on a bond, the lower the yield of that bond. It works in reverse, too. If bond prices go down, you are spending less money to receive the same yield, and the percentage return is higher. But always remember that if held to maturity, a fixed-rate bond will be worth its face value.)
But we have to ask the same question as last week: with everything that’s going on, why are stock prices so high? Whence comes this optimism?
Apparently, we have entered the way-back machine, and the current rally is largely about artificial intelligence, which was moving markets up last year, before it started moving markets down. AI is either the end of civilization, or the hope of all people for the future. You choose!
Consumer spending, as always, is leading the economy. But the economy IS K-shaped. The wealthier you are, the more likely you are to spend. Many people also received their tax refunds recently, but with war-related inflation building across the country (and the world) one must ask how long the economy and the stock market can remain strong.
Last week we received the updated personal consumption expenditures index (PCE) for March. The data showed that the PCE climbed by 0.7% in the month of March and was 3.5% higher for the trailing twelve months. This shows that inflation is rising rather than falling. 3.5% is considerably higher than the Federal Reserve’s 2% inflation target, but not wholly surprising given how oil, gas, and related prices have risen since the end of February when the Iran war started.
And speaking of the Fed, it is likely that Kevin Warsh will be confirmed as President Trump’s pick for Fed Chairman, which made last week’s Open Market Committee the final one that Chairman Powell will chair. But in a surprising move, Powell has indicated that instead of leaving the Fed when his term as chair is over, he is going to stay on. His appointment tenure lasts until 2028. Not coincidentally, the Department of Justice has announced that its investigation into Powell could be resurrected at any time.
Think kids and grandkids are expensive? You are right! According to an analysis by Lending Tree, the national average for the cost of raising a child for 18 years is now $303,418. That doesn’t include college! The total is up 1.9% from last year.
The United Arab Emirates (UAE) withdrew from OPEC as of last Friday. OPEC watchers are still trying to figure out exactly what this means, but it seems obvious enough that the UAE was stunned when Iran started bombing it in retaliation for the US actions against Iran. Iran is an OPEC member. Other factors may also be in play.
We know that Iran is having trouble getting its oil to market with the Strait of Hormuz blockaded by the U.S. Some watchers have suggested that Iran’s oil capabilities are going to explode. Not so far. What HAS happened, though, is that Iran has so much unsold oil that it is now storing the oil in derelict tanks and tankers. Before the U.S. blockade, Iran was shipping about two million barrels each day. Now it’s down to one-quarter off that and is trying to get oil to China by railway.
For the week ending on May 1st, the S&P finished at 7,230, the Nasdaq at 25,114, and the Dow at 49,499. The yield on the ten-year Treasury Note closed at 4.378%. Contracts on WTI (American) crude oil were selling at about $102.31 per barrel, while Brent (international) crude contracts were going for $110.76. New York gold was bid at $4,574.20 per ounce, and one Euro was worth $1.17.
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) Morning Brew, Barron’s, The Wall Street Journal, The Economist, CNBC, Axios, Bloomberg, The New York Times, Business Insider, USA Today, CNN, The AP, Fortune, CBS, Reuters, Yahoo Finance, and The Hustle. If you have questions, please call us at 203.458.5220, or email me, Liz Cook, at ecook@dwinvest.com.
The world’s shortest airline passenger flight operates between the Orkney Islands and Papa Westray in northern Scotland. The length of the flight? 1.7 miles and one minute. Hardly worth the beverage service!
by diastole-admin | Apr 27, 2026 | Uncategorized
April 27, 2026
Despite many of us thinking that the stock market is just plain wrong (what about the war in Iran, rising inflation, and governmental incompetence?), stocks continued to rise last week. Both the Standard & Poor’s 500 and the Nasdaq Composite Index closed out the week at record highs, and the Dow Jones Industrial Average finished just about 2% below its record.
But why? We are facing so many challenges.
Well, as one economist on t.v. said: there are other things going on. We are in the middle of earnings season and companies are performing well. Oil and gas are rising in price due to the blockade of the Strait of Hormuz, but energy companies are profiting. Inflation is hurting American families, but higher prices are contributing to corporate coffers. See a trend here? It’s a good reminder that the stock market is not the economy, and companies operate for the benefit of their owners (shareholders), not the public.
More examples of this: large layoffs were announced last week by Meta (Facebook), Nike, and Microsoft (which is offering voluntary retirement to thousands of workers). And of course there are the airlines. Spirit Airlines is near a deal with the federal government to receive $500 million in exchange for a 90% share of the airline once it emerges from bankruptcy. Does the benefit to Spirit passengers outweigh the cost to taxpayers? And once this deal was publicized, along came a group of other budget airlines, including Frontier and Avelo, who are seeking $2.5 billion in government assistance in exchange for warrants that could be converted to equity ownership. Airlines are in trouble due to the doubling of the cost of jet fuel.
Retail sales rose 1.7% in March, largely due to the war-driven increase in gas prices. When excluding gas-station sales, retail sales rose 0.6% for the month. Which leads us to the Federal Reserve (all roads lead to the Fed). The Department of Justice has dropped its inquiry into Fed Chairman Jerome Powell, which leaves open the possible confirmation of Kevin Warsh to be the next Fed Chair. But the door is not completely closed on the Powell inquiry, so it remains to be seen what Powell will do. He has the choice of leaving the Fed next month, or staying on the until 2028, although not as chairman. As for the Fed’s Open Market Committee meeting this week, all experts expect no move on interest rates.
According to CNN, consumer sentiment, as measured by the University of Michigan, hit a record low this month. “That means the average person says they feel worse about the economy today than they did in the depths of Covid, the Great Recession, 9/11 or any other time in the post-WWII era.” Yikes. Objectively, things are not worse now than they were then, but the fact that people feel that they are is a sign of the K-shaped economy, in which rich people get richer, and poor and middle-class people struggle.
But according to Goldman Sachs, the K-shaped economy will really hit us in the second half of the year. Yikes again.
And speaking of inflation, the average price of a cocktail in the U.S. is now $13.61. But in places like New York, cocktails can top $30. As a result, partiers are now “pre-drinking” before they hit the bars to save money. And flasks are making a return.
For the week ending on April 24th, the S&P closed at 7,165, the Nasdaq at 24,836, and the Dow at 49,230. The yield on the ten-year Treasury yield finished at 4.310%. West Texas crude oil cost $96.34 per barrel, while international Brent crude cost $107.88 per barrel. New York gold was bid at $4,705.35 and one Euro was worth $1.17.
Elizabeth E. CookPartner,
Diastole Wealth Management
News and information presented here was gathered from sources believed, but not guaranteed, to be reliable, including (but not limited to) Morning Brew, Yahoo Finance, Barron’s, USA Today, The Hill, Axios, Bloomberg, CNN, Business Insider, CNBC, The Wall Street Journal, Brookings, Fortune, Reuters, and The Guardian. If you have questions, please call Diastole at 203.458.5220, or email me, Liz Cook, at ecook@dwinvest.com. Thank you for reading!
In 2005, the average American spoke 16,632 words each day. As of 2019, that was down to 11,900. That’s a 28% decline in speaking. Apparently what we used to say, we now type. Or else everyone is suddenly very very shy.
And in a related story, for $349 you can buy a Poetry Camera, which will spit out an AI-generated poem instead of a picture each time you click. For $349, I’ll write you a poem, and we’ll read it out loud together so as not to lose more words.
