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The Federal Reserve on Wednesday approved its first interest rate increase in more than three years, an incremental salvo to address spiraling inflation without torpedoing economic growth. After keeping its benchmark interest rate anchored near zero since the beginning of the Covid pandemic, the policy making Federal Open Market Committee said it will raise rates by a quarter percentage point, or 25 basis points. That will bring the rate now into a range of 0.25%-0.5%. The move will correspond with a hike in the prime rate and immediately send financing costs higher for many forms of consumer borrowing and credit. Fed officials indicated the rate increases will come with slower economic growth this year.

Over the past weeks, Russia rejected Ukrainian sovereignty, formally recognized the separatist regions of Luhansk and Donetsk, sent troops there, and then a day later invaded the entire country. Russian aggression and the declaration of war signals a rupture to the post-Cold War political order in Eastern Europe, and it could have devastating effects on Ukrainian civilians and the Ukrainian and Russian economies.

If you are one of the 92 million people tuning in this weekend to see the NFC Rams play the AFC Bengals, you might have an interest in this non-scientific fact. The Super Bowl Indicator is a spurious correlation that says that the stock market's performance in a given year can be predicted based on the outcome of the Super Bowl of that particular year.

“Nobody has a monopoly on good ideas” … this quote from entrepreneur Kevin O’Leary has always resonated with me. As you may know I’m a proud Alumni of The Wharton School, University of Pennsylvania and to this day I maximize the benefits and resources they provide. The Wharton School is committed to sharing its intellectual capital through the school’s online business journal, Knoweldge@Wharton. We have been granted permission to disseminate this business journal to anyone interested. Simply let me (or the office) know if you would like to hear what CEO’s and Wharton faculty have to say about the latest business and economic trends and we will enroll you in a complementary e-subscription. As of late, one of the most frequently asked questions I receive has to do with increased inflation and perceived interest rate hikes.

Please continue reading for more information on that subject.

Inflation hawks rejoice: the Federal Reserve has officially (and quite dramatically, it should be noted) executed a “pivot” on monetary policy, bowing to Wall Street’s demands that it get serious about soaring prices.

With the year 2022 approaching quickly I thought I’d share with you what we are doing on our end and other tactics that can be utilized to mitigate tax liability. Consider reviewing these options with your tax advisor prior to the December 31st deadline.

At the beginning of the year, we considered global cooperation and an improved understanding regarding the importance of public-private partnerships to be potential silver linings of the pandemic. While it is too early to see evidence of that shift, we are troubled by the continued inconsistency surrounding the distribution of vaccines, as well as a disjointed approach to balancing the economic and public health implications involved in virus mitigation. The great reopening, if one could call it that, will be discussed later in this note, relies on a foundation that assumes COVID-19 infection rates will continue to decline and severe social restrictions will be a thing of the past. Virus variants, such as Delta, are created from mutations, which are more likely to occur if the virus is allowed to spread.

A quick glance:

• U.S. economic activity is accelerating rapidly, and with expectations of even more fiscal spending on tap, a burst of rapid growth could persist into 2022.
• The risk is on in global markets, as inflows to equities and growing earnings resulted in strong equity gains in the first quarter, as bonds remain under pressure.
• The concept of a Goldilocks economy is not a new one, but the application of the term in the current environment is not as straightforward as it seems.

Following both an unprecedented campaign and Election Day, I wanted to share a few thoughts on the vote and the day after. As the pollsters scrape the eggs off their collective faces and the lawyers arm up, the one clear verdict coming from the elections last night is no one party won. While we don’t yet know who won the White House – and might not for several days, if not longer – we wanted to share our thoughts on the action so far:

3 things to know

• - U.S. equity markets (S&P 500) experienced their first monthly decline since March – although remained up 5.6% YTD – as rising Covid infections, declining expectations of further fiscal stimulus, and electoral jitters weighed on sentiment. Tech-focused indices in particular retreated meaningfully from summer highs
• - New coronavirus cases made headlines in various European countries while the pace decelerated in the U.S. In the U.K., Prime Minister Boris Johnson tightened restrictions by supporting work-from-home suggestions and ordering a curfew for restaurants and bars. While growth in virus cases persisted globally, developments continued on potential vaccines and therapeutics
• - U.S. political discord remained center stage, highlighted by disagreements over a Supreme Court nomination and rhetoric surrounding the first presidential debate.Despite the lapse of some Federal benefits in August, the possibility and timing of additional U.S. fiscal stimulus remained unclear even with widespread expectations for more support and many voicing potentially dire consequences in the absence of it

3 things to know

• - U.S. equity markets (S&P 500) fell to start September after surging over 60% since the March trough, though the index remained up 6.7% YTD. A pull-back in mega-cap technology companies, spurred by concerns of overcrowding, contributed to the correction
• - New coronavirus cases made headlines in various European countries even as the pace decelerated in the U.S. Growth in virus cases persisted globally, though developments continued on potential vaccines and therapeutics, bolstering investor sentiment broadly. Meanwhile, the ECB left policy unchanged and re-affirmed its accommodative stance
• - No U.S. fiscal stimulus was issued despite widespread expectations for more support. The U.S. Congress remained divided on the details even as some deceleration in growth momentum was evident and the window for passage continued to shrink in the lead-up to U.S. elections

3 things to know

• - The Federal Reserve announced the results of its policy framework review and indicated a preference to average 2% inflation over time, but stopped short of implementing a new inflation-targeting rule or preferring anything more than a “modest” overshoot of the inflation target. The other key conclusion from the framework review was an emphasis of the benefits of allowing the labor market to reach maximum employment, made official in the statement via a switch to an asymmetric unemployment objective
• - Growth in U.S coronavirus cases was relatively steady while India set a new record for single day infections. Daily new cases in most states across the U.S. continued to fall, but the level of new cases remained very high in several states in the South and Midwest. In India, more than 78,000 new cases were reported on Sunday, as the nation eclipsed the previous highest number of cases for a single day, which stood at 77,638 set in the U.S. back in July. Global deaths exceed 844,000 and cases rose above 25 million
• - Japanese Prime Minister Shinzo Abe announced he would step down due to worsening health issues. As the country’s longest serving leader, Abe had made it difficult for successors to raise their profile and so the party does not have a clear front-runner to replace him

3 things to know

• - Economic data were mixed across the globe as August PMIs in the U.S. and U.K. showed better momentum and outperformed those in Europe and Japan. The Eurozone August release indicated growth remained positive, but the speed of recovery had slowed with weakness concentrated in service sectors. The data releases broadly served as a reminder that the recovery would likely be uneven across the globe and its pace remained vulnerable to rising virus cases and potential renewals in lockdowns/travel restrictions
• - Growth in U.S coronavirus cases was relatively steady while new cases in Europe rose last week. Increases in U.S daily coronavirus cases were more stable and below the average rise in the week prior. In contrast, European data showed evidence of a resurgence even as national leaders continued to oppose a return to lockdowns. Of note, U.S. hospitals will return to reporting new cases to the CDC in a reversal of policy after a shift to the Department of Health and Human Services led to delays and data problems. Global deaths passed 800,000 and cases rose above 23 million
• - Upcoming U.S. elections were more of a focus as the Democratic National Conventionwas held last week and featured a wide-range of speakers across the political spectrum. The Republican National Convention is scheduled for the week ahead, with politics likely to be more of a focus in the lead-up to the elections in early November – potentially providing a source of volatility even as realized volatility has been lower recently across risk assets

3 things to know

• - U.S. President Trump signed executive orders aimed at continued economic relief after Congress failed to finalize an additional fiscal stimulus package. The signed actions aimed to extend unemployment benefits, defer student loan payments, cease evictions, and cut payroll taxes for Americans
• - Economic data were mixed across the globe as retail sales climbed in the U.S., but at a slower pace than expected, and the number of unemployment claims fell below one million for the first time since the start of the pandemic. Meanwhile, Q2 GDP estimates for the UK and Japan showed annualized rates of contraction of 20.4% and 26.6%, respectively – though there were signs of improvement in the later weeks of the quarter
• - European coronavirus cases continued to rise, stoking fears about a second wave of the virus. Germany and France each experienced their largest daily uptick in positive cases since lifting quarantine restrictions, while Spain continued to have one of the highest overall infection rate in the Eurozone. The UK also reported a rise in cases for the first time in nearly two months and added France, as well as additional countries, to its quarantine list

3 things to know

• - The U.S. experienced a better-than-expected July jobs report on Friday, as the economy added 1.8 million jobs last month, beating market expectations. The unemployment rate fell to 10.2% after three straight months of increased hiring. Despite the relatively positive report, only half of the jobs lost in the U.S. this year have been restored and Congress remained in a stalemate over additional fiscal stimulus
• - Rising U.S.-China tensions captivated markets much of the week, as the Trump administration unveiled a cascade of actions against Beijing, including sanctions against 11 Chinese and Hong Kong officials, executive orders banning dealings with Chinese companies, WeChat and TikTok, and a recommendation to delist Chinese companies from U.S. exchanges should they not comply with U.S. accounting rules
• - Coronavirus cases topped 19.4 million globally after an additional 2.4 million cases during the week. Many countries – UK, Germany, India, Brazil, South Africa – experienced rising infection rates, while other countries’ infection rates showed signs of stabilizing – even including the U.S. However, ballooning infection rates and a still-rising global death toll continued to weigh on investors

3 things to know

• - Equities ended the week mixed as U.S. indices increased on the back of positive earnings from tech titans – Amazon, Apple, Google, Facebook – while European stocks fell. Sentiment wavered as Q2 European corporate earnings broadly declined, Hong Kong postponed legislative elections and the U.S. Congress failed to make progress on another coronavirus relief bill as billions of dollars in US federal aid expired on Friday
• 
  - U.S. economic data varied as durable goods orders expanded by 7.3% and pending home sales increased for the first time in four months during June. But, the first estimate of the U.S. Q2 GDP growth rate showed that the economy contracted by an annualized rate of 32.9%, and weekly jobless claims increased for the second week (and 19thstraight week exceeding 1 million)
• 
  - Coronavirus cases passed 17 million globally as many countries – UK, Japan, Belgium, Germany, Spain – experienced rising infection rates. Country leaders reiterated their willingness to act quickly with stricter self-isolation rules and additional containment measures to stop the spread and ward off a potential second wave

Where do we even begin? Between the global pandemic, economic downturn then prompt upturn, and a nationwide quarantine, we can hardly choose the most notable highlights to touch on. Global stocks saw about a 25% decline overall in March as states began their mandated shutdowns, only to begin the attempt to normalize almost immediately in April with a 15% and 13% gain for Nasdaq and the S& 500, respectively. All the major US equity indices worked to rebound more than 15% for the second quarter with the Nasdaq leading to finish up 30.95%, the S&P up 20.5%, and the Dow Industrial Average under-performing among them at 18.51%. The markets continued with some expected volatility in May and June, however optimism among investors prevailed and the rally continued with almost all indices finishing positive for three consecutive months. Crude oil prices and gold both had strong showings in Q2, following the markets lead with a slow start but rallying towards the end. Even still, high-yield bonds experienced a mild dip, and Q2 earnings estimates fell 28.4% along with an ever-increasing unemployment rate as businesses struggle to stay afloat amid the pandemic shutdown.

EU leaders agreed to a historic deal on a €750 recovery fund following five days of lengthy discussions. The stimulus package will be comprised of €390 billion in grants and €360 billion in low-interest loans. The agreement came the same week that the eurozone experienced its fastest rate of business activity growth in more than two years, according to the IHS Markit survey, and the Flash PMI index for the region rose to 54.8 – well above the 50 level that marks expansion versus contraction

• - Equities generally ended the week lower as investors continue to rotate from growth to value-oriented stocks. Sentiment was challenged throughout the week as investors grew increasingly concerned about U.S. economic recovery – with billions of dollars of federal aid set to expire at month end – at the same time that U.S. virus cases passed a record 4 million. Interest rates generally fell, though credit spreads were broadly tighter on the week
• 
  - U.S. economic data were mixed as existing home sales jumped to a record pace and new home sales hit a 13-year high, but weekly jobless claims – often viewed as a leading indicator for economic activity – increased for the first time since March with 1.41 million new filings

For the first time in this generation, American citizens are experiencing a global pandemic that is uprooting not only our daily lives, but our economic climate as we know it. Between states on lockdown, consecutive best / worst weeks for the stock market, and the largest government economic stimulus plan in history coming to fruition (CARES Act), the first quarter of 2020 has arguably been one of the most eventful and historical quarters in world history.

If there was ever going to be a bright spot during this craziness, we’re very happy that it will come in the form of a tax relief. Following the President’s emergency declaration, the IRS announced last week that the deadline to file your taxes has been extended from April 15^th to July 15^th, allowing taxpayers to defer federal income tax payments within the same time frame. While this may seem like a small victory to some, millions of Americans just felt an enormous weight lift off their shoulders. Although if you’re owed a refund, the IRS is encouraging you to file as soon as possible. Additionally, our government is working to push through a stimulus plan that will also help Americans breathe a little easier as we maneuver our way through this unprecedented time.

As a domestic firm serving clients globally, we have been very fortunate to grow relationships with people from all over the world- and we would like to extend our support to you all during these truly unprecedented and scary times. Our number one priority is and will remain the welfare of our clients and their families in all aspects of their lives, as well as the health and safety of our employees, friends, and families. With that, we would like to reach out and assure you that we are fully equipped to continue marching forward in our commitment to serving you to the best of our ability.

“Stay calm, stay calm, stay calm…..okay now everyone panic,”- Clearly not eloquently speaking, this is our best description of the stock market movements this week. In our opinion, energy spent panicking over this market sell off is energy wasted- we are big proponents in the vicious economic cycle, and no good comes from making drastic decisions in an effort to get ahead of something we have no ability to control. At the time of this writing, the Dow held its biggest one-day point decline in history on Wednesday and dropped almost 1,500 points, and the S&P 500 closed under 3,000 at its lowest since early last fall- more than 10% lower than the record high we saw just last week. As the markets move into what stands to be the fastest correction in history in six trading days (another unfortunate record), what we have been writing and preparing for has finally come to fruition- we strongly believe we’re due some volatility after such a strong showing in returns in 2019.

In an attempt at stabilizing the US markets amidst the growing fears of the coronavirus, the Federal Reserve announced an impulsive interest rate cut by half a percentage point, bringing the new range to 1%-1.25%. This cut was the first in this range since the 2008 financial crisis and in the press conference announcing the adjustment, Federal Reserve Chairman Jerome Powell assured that the rate cut will provide a “meaningful boost to the economy.”

As investors scramble to cope with the volatility caused by the spread of the coronavirus, Wall Street dropped to a new low yesterday amidst the most daunting sell-off since 2008. At the time of this writing, all major US stock indexes are off about 8% in today’s trading session. Yesterday, the Dow dropped more than 1000 points into a bear market, 20% below the record high we saw in early February. This bear market took only 19 trading days to reach, the fastest in history by almost double the previous leader, July 15th, 1986 with 36 trading days. The S&P 500 and NASDAQ ended the day just short of bear market status, dropping 4.9% and 4.7% for the day, respectively. It’s been a rough ride these past few weeks, but we’re looking ahead and preparing for all scenarios.

“Stay calm, stay calm, stay calm…..okay now everyone panic,”- Clearly not eloquently speaking, this is our best description of the stock market movements this week. In our opinion, energy spent panicking over this market sell off is energy wasted- we are big proponents in the vicious economic cycle, and no good comes from making drastic decisions in an effort to get ahead of something we have no ability to control. At the time of this writing, the Dow held its biggest one-day point decline in history on Wednesday and dropped almost 1,500 points, and the S&P 500 closed under 3,000 at its lowest since early last fall- more than 10% lower than the record high we saw just last week. As the markets move into what stands to be the fastest correction in history in six trading days (another unfortunate record), what we have been writing and preparing for has finally come to fruition- we strongly believe we’re due some volatility after such a strong showing in returns in 2019.

After ending not only what was a banner year for Wall Street, December 31^st went down as the final trading day of the decade. Total index returns for the past ten years exceeded 300% with the S&P 500 leading at over 188%, spending 9/10 years up in the market. As the year that rounded out the longest bull market ever (2010-2019), 2019 posed huge returns and produced several milestones for the global markets.

As we move into Q4, it’s important to differentiate between an economic outlook globally, and an economic outlook domestically. Fears of a recession are fading as this fact settles into the minds of Americans and we can logically conclude that with the long-term slow down of global growth, U.S. markets will be affected accordingly. Results have been an inverted yield curve, interest rate cuts, and a stock market that is non-directional and increasing in volatility. These are not, in and of themselves, indicators of a recession from a domestic standpoint, however it is prudent to take them into account from a global standpoint.

Looking to get the attention of millions of people? Just say the word “recession.” Data from Google shows that searches for “recession” are at their highest level since November 2009, just a few months after the end of The Great Recession.

“Some $14 trillion in global sovereign/government debt now offers negative yields and the U.S. could soon be a part of that legion, according to Joachim Fels, a global economic adviser for Pimco.” With 25% of the worldwide market now trading at negative yields, there’s a lingering fear of the potential endangerment of the way the global economy is intended to function. Between the US-China trade conversations, a shift in demographics, and an immediate reaction to blame the global central banks, the amount of global debt with negative yields continues to grow behind an economy that seems to be getting slower by the hour.

At 2 PM EST today (July 31st, 2019), we received confirmation that The Federal Reserve has reduced the target range for its overnight lending rate 2% to 2.25%, or 25 basis points from the previous level. This is the first drop since December 2008, right around the time of the great financial crisis. With this 25 basis points cut comes problems as well as benefits, and various things that we finance professionals are keeping a close eye on moving forward.

The last few days of Q2 2019 were not typical of the end of a period. The trade summit between Presidents Trump and Xi on June 29 came one day after the final trading session of Q2 and the path of least resistance of the stock market is likely to weigh in the balance. The rise of tension that accompanied the trade dispute in mid-May led to selling in the stock market which has moved up and down over the past months as a result of the shift from optimism to pessimism over the impending trade deal between the world’s leading GDPs. While the “renewed” trade talks have already begun, we can continue to expect the fluctuation as we make our way to a peaceful but costly negotiation.

With Q1 behind us, our humanity has led to the perception of much smoother sailing moving into Q2. However, we believe this is all relative. In December 2018, panic ensued following the longest shutdown in government history in anticipation of the US-China trade deal. Index performance was the worst the market had seen since the 1930’s and served to close out one of the most volatile quarters in the 21st century. Historically speaking, we had every reason to believe the market would recover in Q1; but still our humanity got the best of us. Simply put, when things looked bad, investors were scared.

In the fourth quarter of 2018 the major indexes suffered their worst quarterly decline in roughly a decade and December went on the books as the worst month since the Great Depression. Plunging oil prices caused the energy sector to be the worst performer in the S&P 500 index, falling by nearly 24%. Technology, industrials, and consumer discretionary shares were also exceptionally weak, while the typically defensive utility sector was the sole segment to escape with a small gain, less than 1%.

The S&P 500 has officially crossed over into correction territory (1), which is generally defined as a decline of -10% to -20% over a reasonably short period of time, generally a few weeks to a month. The breadth of the market has deteriorated immensely with many stocks down 40% or more over the last quarter (2). As I have written recently, little has changed fundamentally over the past weeks with regards to interest rate expectations, earnings expectations and the potential length of a trade war with China. Yet, the market is acting like all three of those factors turned sharply negative overnight: in my view, they did not. I suggest avoiding the urge to get caught up in day to day movements, and instead focus on economic data releases, earnings reports, and other economic fundamentals.

Normally I'd start this note by looking back at the behavior of the market and economy over the prior quarter but given the tumult and maelstrom of October it seems more appropriate to look at recent developments first. It seems the market has finally realized that interest rates are likely to rise more and faster than expected and the "I" word (inflation) along with uncertainties of a trade war with China caused the market to do its customary October sell off.

On November 6, 2018, U.S. voters will determine whether Republicans maintain control of both chambers of Congress. Up for election are all 435 House seats and 35 of 100 Senate seats. At stake for investors is the impact the midterm elections could have both on corporate earnings and on the U.S. economy. It’s interesting to note that according to Bloomberg since 1946, the S&P 500 has never declined in the 12 months following midterm elections. Furthermore, the S&P 500 has seen an average fourth-quarter return of 7.9% during midterm election years. That being said, I feel comfortable saying we should expect heightened volatility during and after this election season given the current administration and sitting President.

Market pullbacks and violent spikes in volatility can be unnerving, as they were last week when the Dow Jones Industrial Average fell more than 800 points on Wednesday, October 10th, and more than 540 points on Thursday, October 11th. As we wrote in the first quarter of this year after a swift decline in U.S stocks, it is important for our investors to not panic and let their emotions take over when turbulence hits portfolios. Rather, these periods should be used as a reason to analyze and assess investment objectives and investment time horizons for each asset class.

As expected (and stated in our Q4 2017 report) volatility has made its presence known as stock and bond markets around the world suffered losses during the first quarter of 2018. The S&P 500 had a 1% single day swing 23 times during Q1. This occurred only 8 times in total during 2017. The CBOE Volatility index (VIX) catapulted 81% during the first quarter and posted a 20% plus jump during 6 trading days – the most ever for a quarter. A strong start to the year, in the U.S. equity markets, with a string of record high closing prices in January quickly retracted to end the quarter in negative territory with the S&P 500 index down 0.8% and the Russell 2000 down 0.1%. The only two equity market sectors to post positive Q1 returns were Technology (+3.53%) and Consumer Discretionary (+3.10%). Fixed Income markets suffered similar results with the Bloomberg Barclays U.S. Aggregate Bond Index down 1.46% and the ICE U.S. Treasury 20+ year Bond Index down 3.36%.

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act. Although massive changes are set to take place, most will not impact 2017 returns. In fact, the bulk of the individual tax provisions are temporary and set to expire in 2025. These provisions will revert back to the 2017 rules unless they are extended by a future Congress. That is not the case on the corporate side, as most of those changes were made permanent. The bill fills more than 1000 pages so our overview below will be somewhat brief in comparison.

Threats of a nuclear conflict between the U.S. and North Korea, increased tensions between right and left here at home and the aftermath of the spate of major hurricanes would in a typical environment likely lend to a pullback in risk assets and a flight to quality. However, the rally in U.S. equity markets continued in the fourth quarter at a pace consistent with what investors experienced in the first three quarters of the year. A strong earnings season, continued healthy economic growth and U.S. tax cuts have helped equity markets. Over the year, we saw a synchronized global growth acceleration, unemployment rates continued to decline and stabilization in emerging market currencies. As economic slack continued to diminish, several central banks modestly tightened monetary policy, although some emerging markets (EM) central banks were able to cut interest rates in response to lower inflation. It was also a quarter when downside political risks failed to materialize and the major upside political risk, in the form of U.S. tax cuts was delivered, as a result risk assets remain in demand.

Stocks Hit New Highs:
Global equity markets posted gains during the third quarter of 2017, with major U.S. market indices hitting a series of new highs.    The U.S. enjoyed a goldilocks like environment last quarter- not too hot, not to cold (characterized by continued low unemployment and inflation, reasonably strong economic growth, and relatively healthy corporate profits).   Positive business and investor sentiment also helped support stocks and push them gradually higher over the quarter.

Global equity markets ended the second quarter of 2017 higher, building on their first-quarter gains. Those gains were driven by several factors that included generally positive economic and corporate profit results in the U.S., continued confidence the U.S. government will promote more pro-business policies going forward and greater stability and growth in many international markets. For the quarter, the S&P 500 was up 3.09%, with the international equity markets up even better at 5.99% (S&P Global Ex-US BMI index). Those results were driven mostly from developed Europe.

Despite recent turbulence in the stock market, the major indexes wrapped up the First Quarter of 2017 on a positive note. For the three months ending March 31st, the S&P 500 and Dow Jones were up 4.65% and 3.93%, respectively, while the NASDAQ had its best quarter since late 2013, achieving an 8.89% return. Despite some bouts of volatility, such as the Dow posting its longest losing-streak since 2011, the quarter was mostly marked by gains. In February, the Dow closed at an all-time high for a record-setting 12 days straight.

When the Dow Jones Industrial Average (DJIA) was first published in 1896 by Charles Dow, the index stood at a level of 62.76. On Wednesday, 121 years later, the DJIA closed above 20,000 for the first time in its history! After inching closer over the course of several weeks and climbing within fractions of a point from 20,000 last Friday, the Dow opened on a strong note Wednesday and charged higher as the day went on.

From crashing oil prices that fueled Wall Street’s worst-ever start to a year, to unpredictable political events like Brexit and the election of Donald Trump, the year in stocks was not for the faint of heart.

The U.S. stock market began 2016 with the worst start to a year in history.

The 3^rd Quarter began with a sharp upward move in risk assets, a surprising development given the UK’s decision to leave the E.U. at the end of the 2^nd Quarter of 2016. For the most part, these gains were maintained, and July and August were both characterized by exceptionally low levels of volatility. Investors spent most of the summer confident that growth would remain slow-but- steady, and that monetary policy would remain accommodative. Although some of these gains were given back in September, due largely to concerns about the trajectory of monetary policy, equities generally performed well.

The final days of the second quarter were marked by a decline that averaged 5.0% in U.S. markets as they reacted to the results of the historic United Kingdom referendum to exit the European Union. (Source: http://money.cnn.com/2016/06/26/investing/markets-brexit-reaction-monday/) The surprise Brexit vote sparked concerns of future economic and political uncertainty in the U.K. The negative market action lasted two days and was followed by an immediate rally recovering most of the decline by the end of the quarter.

Equity markets began 2016 on the back foot falling 6% in the first week of trading. The selloff continued with the S&P 500 falling another 5% before bottoming out in early February. At the peak of pessimism on Feb. 11th, all of the major U.S. stock indexes were down more than 10% for the year. That day the Dow Jones industrial average closed nearly 15% off its May 2015 record high, the S&P 500 was down 14.2%, and the NASDAQ composite was down 18.2%. This was the worst start to a year in stock market history. (www.finance.yahoo.com)

The Federal Reserve raised its key interest rate for the first time in almost a decade yesterday from 0% to 0.25%. While the rate hike is a small one, Janet Yellen has stated that she feels confident about the fundamentals driving the U.S economy, the health of U.S. households, and domestic spending. She noted pressure on some sectors in the economy, particularly in manufacturing and energy, but went on to say that the underlying health of the U.S. economy is quite sound. Yellen assured that future tightening would be gradual, dependent on higher inflation and the quality of economic data. 

Recently, as I was listening to a broadcast of Bloomberg, I was reminded of the many challenges we are facing in the market today.   We seeing renewed political tension, domestic and international elections, potential changes in interest rates, and continued confusion with regard to fiscal policy, all of which are violently moving the currency markets. 

Recently, as I was listening to a broadcast of Bloomberg, I was reminded of the many challenges we are facing in the market today.