Diastole Wealth Management

Diastole Wealth Management We are an independently-owned Registered Investment Adviser with offices in Guilford CT and Cincinnati OH. We are conservative, long-term investors.

If you're interested in more information, call 800 475-1088. Diastole only transacts business in states where it is properly registered, or excluded or exempted from registration requirements.

10/05/2026

DIASTOLE ECONOMIC AND MARKET COMMENT
October 5, 2026

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 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 [email protected]. 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.

09/21/2026

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 [email protected].

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.

09/14/2026

DIASTOLE ECONOMIC AND MARKET COMMENT
September 14, 2026

Marked 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 [email protected]. 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.

09/14/2026

DIASTOLE ECONOMIC AND MARKET COMMENT
September 8, 2026

You are forgiven if you are not as excited as I am about the upcoming producer price index report (PPI) for August, which will be released on Thursday, and the consumer price index report (CPI), also for August, which will arrive on Friday. These are the last data points that the Federal Reserve Open Market Committee (FOMC) will have before it makes its next interest rate decision on Wednesday the 16th.

We know that the current presidential administration wants interest rates cut, but the data is leaning toward a rate hike. Inflation is still well above the Fed’s 2% target and is not falling on its own. A rate hike would make it less attractive to get credit, and thus would tighten economic conditions. But the Fed has a dual mandate: keeping prices low and keeping employment high. So where do we stand on employment? Thank you for asking! The August jobs report was released on Friday 9/4 and stunned with its strong numbers. 162,000 net new jobs were created versus 53,000 expected. And the unemployment rate was steady at 4.1%.

If the job market were weak, the FOMC might sit tight on rates, not wanting to hurt job creation, but the job market is strong, so it doesn’t stand in the way of a rate hike to fight inflation. Current odds of a rate hike next week stand at 52%-60%.

And speaking of inflation, a Brown University study has determined that U.S. consumers have now paid $100 billion in higher energy prices since the beginning of the war with Iran. That reflects higher gas costs, but also home heating fuel and diesel (which raises prices on food and other goods that are transported on trucks). This figure does not include the cost of the war itself, just the extra costs of energy over where they were when the war began. And FYI, U.S. crude oil now costs more than $90 per barrel.

The bond market was one of the biggest influences on stock markets last week. As the U.S. faces a ballooning debt, investors find that Treasury debt is less attractive. In the old days, Treasurys enjoyed a special consideration as one of the safest investments in the world. But now they have been downgraded, and investors expect to receive a competitive yield in exchange for loaning money to the U.S. With the general assumption that interest rates will have to rise to control inflation, and will rise on their own to reflect inflation, investors are selling bonds, causing prices to fall and yields to rise. If you hold onto a fixed-rate bond while rates are rising, your bond will lose principal IN THE SHORT TERM (i.e. if you sell it early). If you hold it to maturity you will receive the face value or par value you originally purchased.

Back to stocks. What do you think happens to stocks when bonds yields are rising? Stock owners consider selling stocks to buy bonds. For many investors, a 5% yield (such as you can get currently on a 30-year Treasury), in a safe investment, beats the odds that you will be first to find the next Nvidia. And this trend is happening around the world. We are not the only profligate spenders.

What is keeping markets near record highs when bonds are working against it? I’m afraid the answer is artificial intelligence (AI). Just a couple of years ago, you had to work pretty hard to use AI. Now you have to work pretty hard NOT to use AI. The hyperscaler companies are the ones that are providing AI to users. They are led by Meta, and Google, and Amazon, and Microsoft. But there are other companies that provide support for AI without actually providing AI. Nvidia is prime among these. It makes the microchips that AI requires. And Caterpillar, long a favorite among value buyers, is now an AI-adjacent play because of the role that it has in building AI data centers. There were people finding gold in the California gold rush, but the people who made the real money were the ones selling shovels and Levi’s.

AI also contributes to an excess issuance of corporate (non-government) bonds to raise money to build data centers. And those bonds provide competition for Treasurys. In a crowded bond market, higher yields are required to lure bond buyers.

Fortune Magazine no longer calls our situation a “K-shaped” economy - one where the rich get richer and everyone else gets poorer. Now they call it a “G-shaped” economy, in which the boomer generation holds onto $90 trillion, and all other generations wait to inherit.

Which reminds me that our website: 80trillionspeaks.com is live and exists only to provide an easy way for you to contact your elected representatives. No fee, no political bias, and no proselytizing, just a portal for you to communicate your concerns to the people who represent you in government. Check it out.

For the week ending on September 4th, the Standard & Poor’s 500 finished at 7,718, the Nasdaq Composite Index at 26,506, and the Dow Jones Industrial Average at 53,414. The yield on the ten-year Treasury Note closed at 4.784%. U.S. crude oil cost $93.87 per barrel, N.Y. gold cost $4,411.48 per ounce, and one Euro was worth $1.16.

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) The Wall Street Journal, The Washington Post, The New York Times, USA Today, The Financial Times, Barron’s, Yahoo Finance, Morning Brew, Bloomberg, Business Insider, 1440 Digest, Axios, Fortune, The Bureau of Labor Statistics, AP, CNN, and Reuters. If you have questions, please call Diastole at 203.458.5220, or email me, Liz Cook, at [email protected]. Thank you for reading!

Looking to spend a fortune on your teeth and not interested in another root canal? Look no further than Dyson’s CameraJet toothbrush. It’s $499 and uses AI to brush your teeth. Yay! It has a built-in camera which sends photos to your phone, and also to the AI model which looks for places where you need a little extra water flow or brushing. Yes, you have to use both hands, but admit it, your phone is already in the bathroom with you.

Holiday Party 2019
12/12/2019

Holiday Party 2019

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