It’s Fed Week! Yay! 40% of traders believe that the Fed will raise rates, while the rest of them think the Fed will neither raise nor lower rates. I’m with the latter group. But we have to remember that the Federal Reserve Open Market Committee, which makes the decision, is not a monolith. Each member gets one vote on rates, including new chairman Kevin Warsh.
Meanwhile, the yields on Treasurys are rising, pushed by lowering prices for the bonds. So even if the Fed doesn’t raise rates, the marketplace is already doing so, anticipating that a hike is bound to come sooner or later. There’s just too much inflation for it not to happen, investors think. So, they bid lower for the Treasurys, and prices fall, pushing the yields higher.
Mortgage rates also rose, to a level not seen in a year. The average 30-year mortgage last week had a 6.58% rate, according to Freddie Mac, and 6.85% according to Mortgage News Daily.
Most stocks were barely lower last week (the Dow Jones Industrials and the Standard & Poor’s 500) except for the tech heavy Nasdaq, which fell more than 2%. You can correctly extrapolate from this that tech stocks had a tough week. And, in fact, Alphabet posted blockbuster earnings, but the stock still fell because investors don’t like the emphasis by big tech on building out AI capabilities. The same reasoning hurt Intel and American Express.
Even still, ownership of stocks has surpassed ownership of real estate as the main driver of U.S. wealth. This is the first time it has happened since World War II. The fact that home ownership remains out of reach for many first-time buyers is one factor. Stocks near their all-time highs is another factor. And of course, the 401(k) retirement plan has opened up stock ownership for a whole new swath of Americans.
Cars, which always need something, rarely contribute to one’s net worth. But these days used electric vehicles are GAINING in value as Americans look to cut costs and avoid buying gasoline. The average price of a gallon of gas is supposed to be slightly over $4.00, but I find that I am always paying at least $5.00, as are my neighbors. An electric vehicle does start to sound like a smart idea. And if you charge it at home, your cost for “filling the tank” is around twelve dollars. But if you charge it on the road, the cost could be almost as much as a tank of regular gas. Wow. If most people are anything like me, they’re waiting for their current car to finally die, and then they’ll move to an EV or a hybrid.
And speaking of moving, billionaires are leaving California due to its proposed “billionaires’ tax” and leaving New York City in part because of its “pied-a-terre tax” and are finding themselves in Florida, which has no personal income tax. Thus, the real-estate market in Florida – specifically Miami- has now surpassed sales in New York City and the San Francisco Bay Area. In the first six months of this year, 24 residences sold for over $30 million in Miami-Dade County.
It is unclear today whether the war with Iran is on or off. But what is clear is that when the United States bombs Iran, it retaliates by hitting our bases in the region, and our allies. According to the Wall Street Journal, both Bahrain and Kuwait secretly sent jets to attack sites inside of Iran in return. The uncertainty is weighing on markets as well, as the war is expected to push inflation higher, to say nothing of the absolute cost of our engagement. Last week, U.S. crude oil topped $90 per barrel, while international crude passed $100 per barrel. With the lack of bombing over the weekend, both prices have fallen.
Gambling is now America’s favorite pastime, surpassing movies, arts, books, museums, and music, combined. In 2025, Americans placed approximately $166 billion in wagers on sporting events. I’ll bet you thought I would make a joke here.
For the week ending on July 24th, the S&P 500 finished at 7,411, the Dow at 51,947, and the Nasdaq Composite Index at 24,975. The yield on the ten-year Treasury closed at 4.679%. U.S. crude cost $84.33 per barrel, N.Y. gold cost $4,090.10 per ounce, and one Euro was worth $1.14.
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, The Wall Street Journal, CNBC, Axios, Fortune, The Washington Post, Bloomberg, CNN, Reuters, AP, and Pew Research. If you have questions, please call the Diastole office at 203.458.5220, or email me, Liz Cook, at ecook@dwinvest.com. Thank you for reading.
One reason why investors may be turning against AI spending is that AI is not behaving. Open AI just announced that its AI broke out of a “secure” test environment and hacked another, separate company in order to cheat on an evaluation (thank you to Fortune magazine). The solutions to the tests that the AI models were undergoing were maintained by a company named Hugging Face. And guess which company the AI broke into? Yes, Hugging Face. About one hundred years past taking the teacher’s carbon paper out of the trash, and yet somehow similar. It was not thought that the AI which went rogue even had access to the internet. OpenAI is now working with Hugging Face to solve the problem, which makes me feel oh so better.