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Diastole Wealth Management, 58 Boston Street, Guilford, CT (2026)

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06/01/2026

DIASTOLE ECONOMIC AND MARKET COMMENT
June 1, 2026

You’ll want to check to see if today’s Comment was written last week or last month, but NO, it is today, and markets are once again at record highs. Inflation is rising, and so is the national debt, but oil prices are slightly down, the SpaceX IPO is coming, the ceasefire is holding in Iran (with the exception of the “fire” part), and AI is going to kill us or save us. All of that is apparently enough to keep stocks moving higher. Bonds are also moving slightly higher, causing yields to fall just a bit. The ten-year Treasury Note is now yielding just below 4.5% - a critical level at which investors start to abandon stocks for bonds.

With all that said, normally we could proceed to the more amusing part of our Comment, but NO, there’s more!

SpaceX is expected to start trading on June 12th, but a glance at its prospectus reveals “just how much the IPO depends on expectations for future growth and investor servility to Musk - not the current underlying business.” (Axios) About 85% of the money raised by the IPO could go directly to Musk (who owns 85% of SpaceX stock), increasing the chances that he will become the first trillionaire anywhere in the galaxy. But part of his compensation is dependent on whether SpaceX maintains “a permanent human colony on Mars with at least one million inhabitants.” So there’s that.

At the same time, Musk lost his lawsuit against OpenAI, when the jury determined that Musk’s lawsuit was brought after the statue of limitations had expired. That leaves OpenAI free to file for its own IPO.

The Federal Reserve Open Market Committee (FOMC) will meet again in two weeks - for the first time under the chairmanship of Kevin Warsh. At the FOMC meeting in April, Fed officials shifted their focus from upcoming rate cuts to upcoming rate hikes, as a result of rising inflation.

And that inflation was reflected in the Personal Consumption Expenditures Index (PCE), which rose by an annualized 3.8% in May. The Fed’s target for inflation is 2%. But our GDP (the sum of all goods and services produced in the U.S.) was revised downward from 2% in the first quarter, to 1.6% (annualized).

Interest rates are higher than they were last year because of inflation. and borrowing costs for the U.S. have tripled since 2021 to more than $1 trillion per year. Over the next year, $10 trillion in U.S. debt will come due and have to be refinanced with new bond issues. Rising yields will make that difficult for the U.S. to afford.

“Exxon warns oil inventories will hit dangerously low levels in weeks, forcing prices to shoot higher.” according to CNBC. That contradicts the oil prices that have slid lower recently. But even after the Strait of Hormuz is open, it is expected that the oil shortage will last until shipping is unsnarled.

According to the Wall Street Journal, “The summer is expected to be the worst for teen employment since 1948, as accelerating inflation and higher fuel prices squeeze the businesses that typically hire them.” My suggestion: apply for a job that AI can’t do. Dairy Queen might be hiring. (Yummmmmm, Dairy Queen!)

And recently, 274 climbers successfully scaled Everest - setting a record for a single day. Nothing says life goals like tramping one step at a time, carrying your own oxygen, with just a few seconds to admire the view.

For the week ending on May 29th, the Standard & Poor’s 500 finished at 7,580, the Nasdaq Composite Index at 26,972, and the Dow Jones Industrials at 51,032. The yield on the ten-year Treasury Note closed at 4.453%. U.S. (WTI) crude cost $89.81 per barrel, International (Brent) crude cost $85.58 per barrel, New York gold cost $4,514.49 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) Morning Brew, Barron’s, Yahoo Finance, The Wall Street Journal, CNBC, Bloomberg, Axios, USA Today, CNN, The AP, The Washington Post, Business Insider, The New York Times, Reuters, Fortune, The Atlantic, The Hustle, and Popular Science. If you have any questions about what you’ve read, please call us at 203.458.5220, or write to me, Liz Cook, at [email protected]. Thanks for reading!

According to Popular Science, three of the buttons you might push most in your life are actually “placebo” buttons - put there to make you feel better, but not actually doing anything. New York has approximately 1,000 crosswalk buttons, of which only about 100 work. Pressing more than once does not help. Likewise the elevator “close door” button, which won’t close the doors until a specified amount of time has passed. But the winner might be the lie of the office thermostat. According to a single HVAC installer, up to 90% of office thermostats are not working, to say nothing of stores, nursing homes, and restaurants. Side note to Diastole employees: our thermostats work. Don’t make the A/C too cold!

05/18/2026

DIASTOLE ECONOMIC AND MARKET COMMENT
May 18, 2026

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 [email protected]. 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 of his dinner knives to be rounded off. Thanks to him, we use rounded knives to this day. Except for dental surgery by Neanderthals!

05/11/2026

DIASTOLE ECONOMIC AND MARKET COMMENT
May 11, 2026

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 Q!, 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. If you have questions, please call us at 203.458.5220, or email me, Liz Cook, at [email protected].

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.

05/04/2026

DIASTOLE ECONOMIC AND MARKET COMMENT
May 4, 2026

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 its 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 [email protected].

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!

12/12/2019

Holiday Party 2019

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