It has been one of those years with no place to hide; a bad-news year for stock investors, bond investors, and just about anyone invested in crypto. But except for crypto, where problems continue to deepen, November delivered a measure of hope to those who held steady. Stocks and commodities rose for the second month, and the bond market reacted positively to news of lessening inflation. Not only that, the Dow managed to climb out of bear territory. 

A soaring market is not always enough to erase fear. We witnessed that earlier this month, when a stupendous one-day rally raised the S&P 500 by over 800 points but did little to quell investors’ concerns about inflation, interest rates, or recession. We live in highly unpredictable times. With slurries of unsettling news flowing into the markets from all directions, what can we read in the turbulence?

There’s no way to sugarcoat this past quarter. Markets finished the month uniformly lower and ended September in retreat. In fact, it was the worst monthly drop since March 2020, when the rapid spread of Covid sent the economy into a full shutdown. Despite gloom in the markets, life was its usual mixed bag including moments of hope and joy.

In August, stocks slumped and global bonds declined as tighter central bank policy, recession fears and high inflation spooked investors. July’s rally fizzled early in the month, and the S&P 500 ended August down 4%. Meanwhile, the U.S. dollar surged to a nearly 20-year high against a basket of global currencies. What does this steep climb portend for the global economy and your portfolio?

The economy seemed to be moving in opposite directions in July. While economists were debating whether we had entered a recession, employers were filling jobs at a blistering pace. By the end of the month, with job growth more than double the forecasts, investors put recession fears on hold to worry anew about inflation. “Markets are a very complicated Impressionist painting,” Pimco CEO Emmanuel Roman said in a Financial Times interview (15-July). “Different pieces contribute to the story.” Only, this story isn’t following any previous script.  

Markets tumbled and then ended June 2022 with a second consecutive quarterly loss. There was negative news on every front: surging inflation, hawkish central banks, rising interest rates, record-low U.S. consumer confidence and slowing economic growth. Little wonder that performance was slammed across the board. Most stock indices logged double-digit Q2 declines, while bond losses varied depending on sector and maturity.

It’s been a while, but bears are on the prowl again, showing up with increasing frequency in financial news. Through mid-May, the S&P 500 index was down for seven consecutive weeks, the longest losing streak since the dot-com bubble burst two decades ago. Stocks briefly descended into dreaded bear market territory, but strong gains in the week ending 27-May created some breathing room. The S&P 500 Index finished May with relatively flat returns. Still, anxiety was palpable as investors awaited the next inflation report.

Stocks saw a sharp pullback in May as the Federal Reserve made it clear that it would aggressively fight inflation by approving the biggest interest rate increase since 2000. The Fed plans to shrink its massive bond holdings, and signaled that it will work to cool the economy and tamp down the fastest rise in prices seen since the early 1980s.

The first quarter of 2022 whiplashed investors, with each day bringing a raft of bad news to process. War erupted, inflation soared, bonds tanked, and supply chains were further stressed as rising oil and gas prices smashed into economic recovery. Extreme volatility was the norm: Occidental Petroleum soared 95% in the quarter, while Meta Platforms, Facebook’s parent company, racked up the biggest single-day loss in history for a US company ($232 billion). If you’re feeling unsettled about the markets, you’re not alone.

In early 2022, the economic outlook appeared to be improving despite ongoing challenges. While Covid-19 and its variants proved impossible to eradicate, new strains appeared to be less deadly. Job creation and unemployment data were encouraging. Inflation topped the list of concerns for investors as prices continued to rise amid mismatched supply and demand. But everything changed on February 24, when Russia invaded Ukraine, layering an urgent humanitarian and geopolitical crisis on top of a fragile world economy.