DIASTOLE ECONOMIC AND MARKET COMMENT
November 25, 2024

December first is Sunday. This coming Sunday. Time to panic! Or not. Maybe after Thanksgiving?

The Dow Jones Industrials gained 2% last week, while the S&P 500 and the Nasdaq Composite Index both added more than 1.5%. There are a lot of factors fueling the stock-price hikes, one of the primary ones being that investors are now expecting inflation to rise if the Trump-proposed tariffs are enacted. So they’re selling bonds, causing prices to fall and yields to rise, in anticipation of further losses in the bond market. That frees up funds to go into stocks, and that’s just where they went.

The Federal Reserve meets again in three weeks to consider another rate cut. Will facts on the ground support such a move? We will know more after Wednesday’s PCE (personal consumption expenditures price index) reading. But we’ve already seen the October jobs report, which was generally considered weak. 29 states reported negative payrolls growth, according to ING economist James Knightley. That was more states than experienced a major strike or a hurricane. And it compares to 14 states reporting negative payrolls growth in September. A weak jobs report will incline the Fed to cut rates again, but we also have the November jobs report which will be out on Friday, December 6th and will figure into the Fed’s decision making.

Depending on which measure you prefer, overall inflation is somewhere between 2.3% and 2.6%, annualized. The Fed’s target rate is 2%. But it has the dual mandate of keeping inflation low AND keeping employment full, so the rate decision could still go either way. As usual, I expect that the Fed will quietly leak its decision in advance so that no one will be surprised. Fed Chairman Jerome Powell hates surprises.

It’s not just bond yields that are slowly and steadily climbing. Mortgage rates are too. Today, an average 30-year mortgage charges 6.98%. Not exactly the refinance level that so many recent homebuyers were hoping for - and another reason why the stagnation in the home market continues. Homeowners with attractive 2-3% mortgages are unlikely to move, with rates where they are now, contributing to a shortage of inventory and elevated prices for real estate. It’s very unusual for mortgage rates and house prices to climb at the same time. They usually move in opposite directions. But nothing is usual about this housing market.

According to the Washington Post and the Wall Street Journal, American businesses are stockpiling inventory in advance of the potential Trump tariffs. Tariffs could make Chinese goods unaffordable, and goods from other countries more expensive. American businesses are widely expected to pass on tariff increases to their customers. On the other hand, President-Elect Trump’s selection of Scott Bessent to head the Treasury Department is being welcomed by business leaders, as Bessent is seen as a moderating influence on the tariff question.

As we watch the Fed to see where they will move, we can be very grateful that we don’t live in countries that are beset with REAL inflation. Places like Argentina, which faces 193%, year-over-year, or Russia, whose government just raised rates to 21%. Yes, our inflation was very bad two years ago, and sadly, inflation over the last few years is cumulative, but it could be worse.

The world chess championship is about to get started on an island off the coast of Singapore. One problem? The world’s greatest player, Magnus Carlsen, won’t be there. Instead, he is going to face the second-best player in the world, Fabiano Caruana in a championship to name the number one player in Fischer Random chess. Fischer Random, named for American Bobby Fischer, is a game in which the pieces on the back row of each player’s board are placed randomly, making each game unique. There are 960 possible starting positions. Magnus Carlsen has created a new chess league, Freestyle Chess, and has already raised millions in venture capital and signed 25 of the world’s best chess players to join the tour. “People find it fascinating,” Carson said, “that top players are almost as clueless as they are at home.”

For the week ending on November 22nd, the S&P 500 finished at 5,969, the Dow at 44,296, and the Nasdaq at 19,003. The yield on the ten-year Treasury Note closed at 4.41%. U.S. crude oil cost $70.75 per barrel, N.Y. gold cost $2,698.70 per ounce, and one Euro was worth $1.05.

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) The Wall Street Journal, Morning Brew, Yahoo Finance, The New York Times, The Washington Post, USA Today, Bloomberg, CNBC, Barron’s, CNN, Artnet, The Economist, Market Watch, Reuters, and The Associated Press. If you have questions, please call us at 203.458.5220.

Perhaps you’ve heard about the banana that just sold to an art collector for $6.2 million. The banana is taped to a wall with duct tape, and originally sold in 2019 for $120,000. Of course, it’s not THAT banana, and not THAT duct tape - naturally due to aging and wear the two components of the art piece must be frequently replaced. Plus, the buyer, cryptocurrency entrepreneur Justin Sun, has announced that he will eat the banana. But since the artwork is really an idea and not a physical reality (beyond the ephemeral), and can be recreated by the buyer whenever he wants, it appears that Mr. Sun will be able to have his banana and eat it too.

DIASTOLE ECONOMIC AND MARKET COMMENT
December 2, 2024

Thanksgiving was fun, wasn't it? A day off work or two. Turkey and pie. Wish we could do it every Thursday. (Kidding.)

So now you get to relax and think about your New Year’s Resolutions, and snuggle into the coming winter with nothing else on your… oops. Enjoy the holidays best you can, and if you happen to make extra cookies this year, remember the hungry mouths at Diastole!

Last week had only three and a half trading days and was the end of November trading, but the Dow Jones Industrials and the S&P 500 both managed to perform their best since the PRIOR November in 2023. The Dow was up 7.5% in for the month, the S&P was up 5.7%. The Nasdaq didn’t beat last November, but did manage to close up 6.2% for the month. Not bad.

Obviously stocks are still reacting to the Trump presidential win, which investors see as anti-regulation (except tariffs) and pro tax-cut. Those who are worried that tariffs may cause prices to rise aresome tariffs on Mexico, and Canada, and 100% tariffs on the BRICS countries, which include Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates. He is hoping to discourage BRICS countries from attempting to wean their trading practices away from the U.S. dollar.

Last Wednesday, the personal-consumption-expenditures price index (PCE) was released for November at 2.3% year-over-year. That was what was expected, and was widely seen as encouraging the Federal Reserve to cut rates this month. But the Consumer Price Index (PCI) came in higher, at 2.58% year-over-year. Will that be enough to stop the Fed from lowering rates in two weeks? The Fed’s target inflation rate is 2.0%.

A brief look at real estate. Sales of previously-owned homes are on track for their worst year since 1995. Yikes! We’ve often talked about mortgage rates steadily rising while home prices also rise. It isn’t what we normally expect from yields and prices, which are SUPPOSED to move in opposite directions, but we’re not in Kansas any more.

A Macy’s accountant who was responsible for small-package shipping expenses , managed to “intentionally” hide somewhere near $145 million in delivery expenses over the past few years. He didn’t take any of the money himself (or herself), but hid it on the balance sheet so carefully that external audits didn’t find it for three years. Was he planning on taking possession, or just having fun? Reports are that he no longer works for Macy’s, but say nothing about criminal fraud.

For the week ending on Friday, November 29th, the S&P 500 finished at 6,032, the Dow at 44,910, and the Nasdaq at 19,218. All three hit record highs last Tuesday. The ten-year Treasury Note closed at 4.178%. U.S. crude oil cost $68.18 per barrel, N.Y. gold cost $2,649.87 per ounce, and one Euro was worth $1.05. Bitcoin continues to flirt with the $100,000 level, but hasn’t quite made it, and closed Friday at $97,786.78.

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) The Wall Street Journal, The Washington Post, The New York Times, Barron’s, MarketWatch, The Economist, Bloomberg, Business Insider, Axios, Market Brew, Yahoo Finance, Market Brief, CNBC, CNN, Reuters, and the Associated Press. If you have questions, please call us at 203.458.5220.

Last week we discussed art collector Justin Sun’s intentions to eat the Maurizio Cattelan banana taped to a wall that he just purchased for $6.2 million. After doing just that he said, it was “much better than other bananas.” I cannot top that.

DIASTOLE ECONOMIC AND MARKET COMMENT
December 9, 2024

Please forgive the brief, bullet-pointed format today. I’m a little under the weather and my brain doesn’t seem to be up to paragraph-formation.

- We got the November jobs report last week on Friday. It showed that 227,000 net new jobs were created in the month. Also, the October jobs report, which was quite disappointing, was revised slightly higher.
- Federal Reserve watchers believe that these reports are good, but not so good that the Fed will fail to cut rates when it meets next week. We should know for sure right before the Open Market Committee makes its announcement on Wednesday the 18th - because they like to leak!
-The November consumer price index (CPI) will be released this Wednesday - the last bit of data before the FOMC makes its decision.
-Markets closed Friday at record-highs for the Standard & Poor’s 500 and Nasdaq Composite Index, and nicely high for the Dow Jones Industrial Average.
- Bitcoin finally closed above $100,000 - mostly on news that President-Elect Trump will appoint a crypto-sympathizer to lead the SEC, and will create a position for an AI & Crypto Czar.
- According to Adobe Analytics, last week’s Cyber Monday was the biggest American online shopping day on record. Sales topped last year by 7.3% for a total of $13.3 BILLION.
- South Korean President Yoon (coming off his martial-law debacle) and French President Macron (whose Prime Minister just stepped down) are both facing increasing calls to resign. But their situations can’t compare to Bashir al-Assad of Syria, who just fled to Russia as a rebel army took control of Aleppo and Damascus. A spokesman for Putin has said he will not meet with Assad. Ouch. I guess that corner apartment is now out of the question.

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 New York Times, The Washington Post, Barron’s, MarketWatch, The Economist, Bloomberg, Axios, Morning Brew, Yahoo Finance, CNBC, CNN, Reuters, and The Associated Press. If you have questions, please call us at 203.458.5220, or reply to this email to reach me, Liz Cook.

- Baseball player Juan Soto has left the Yankees and joined the Mets for a $756 million dollar/15-year deal. That’s $50.4 million per year or $138,082.19 per day. Same as I get!

DIASTOLE ECONOMIC AND MARKET COMMENT
December 16, 2024

Just a warning: I’m still under the weather (but improving), so if what I say here makes no sense, you’ll know why. And you may think I fever-dreamed the last story, but it’s completely true.

First: markets. Stock markets were mixed last week, with the Dow Jones falling 1.8% for the week, while the Standard & Poor’s 500 slid 0.6% during the period. The Nasdaq Composite gained 0.3%. Markets are circling the airport, waiting to land, which will come this Wednesday when the Federal Reserve announces its latest interest rate decision.

The Fed will no doubt consider the consumer price index (CPI), which rose 2.7% in the year ending in November. That was slightly higher than October’s rate. The Fed prefers the personal consumption expenditures price index (PCE) as a data point, which will be released this Friday - too late! It gives me a pang of sympathy for the Fed, as it makes decisions on incomplete data - every time. And the Open Market Committee has done an excellent job of keeping us out of a recession, although the lingering inflation stings.

One inflationary bright spot is the price of gas, which has been under $3 per gallon for the last week. And the dollar remains strong, which is great for people buying imported goods.

And then there’s bitcoin, which just closed above $106,000 for the first time, as President-Elect Trump touts his backing of all cryptocurrencies. But something else is going on with bitcoin, which has always been known: fewer and fewer bitcoins are being “mined”, and as of 2069, the maximum number of coins will have been reached and no more will be created. So - scarcity may be a big factor driving prices higher. Current supplies of bitcoin are approximately 19 million coins. The maximum EVER that will exist is 21 million. At least a tulip bulb could be planted.

Here’s one I bet you forgot about: the government will shut down on Friday unless a new funding bill is passed by Congress. This was kicked down the road from September, when Congress could not reach an agreement. And if it’s tough to agree this time, it could be kicked forward to March, because Congress needs to go on recess, for several weeks, like now.

Macy’s holds a soft spot in my heart for giving me my first ever credit card, when I was 20. But the store and its stock have not been performing well of late. Department stores are in trouble in an era of online shopping, and Macy’s market value has fallen to just $4.7 billion. But wait! It turns out that Macy’s owns up to $9 billion dollars in real estate, including the Macy’s in Herald Square, which is the world’s largest store. How will future generations of movie-watchers ever understand Miracle on 34th Street, if Macy’s disappears?

For the week ending on December 13th, the S&P closed at 6,051, the Nasdaq at 19,926, and the Dow at 43,828. The yield on the ten-year Treasury Note finished at 4.399%. U.S. crude oil cost $70.34 per barrel, N.Y. gold cost $2,672.23 per ounce, and one Euro was worth $1.05.

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: National Geographic, The Wall Street Journal, The New York Times, The Washington Post, USA Today, Reuters, The Associated Press, Barron’s, MarketWatch, The Economist, Bloomberg, CNN, CNBC, Axios, Market Insider, Morning Brew, Yahoo Finance, The Bureau of Labor Statistics, and The Hill. If you have questions, please call us at 203.458.5220, or reply to this email to reach me, Liz Cook.

Yes, it’s true: orcas in the Pacific Northwest are wearing dead salmon as hats. It makes me giggle to write that (could be the fever). They did this once before, in the 1980s, but then it disappeared as a fad. Scientists are not positive what causes this behavior (besides fashion, of course) but speculate that orcas are experiencing an unusual bounty of salmon in Puget Sound this year, and it may just be that they have more than enough to eat. But orcas, who have highly developed brains, are also known to play, and swimming with salmon hats may be a better joke than tipping boats over. Although that’s super fun, too.