If you need a reminder that markets don’t behave according to predictions, look to the first five months of 2023. A string of U.S. banks went under, and a debt ceiling fight threatened to undermine the financial credibility of the United States. A wave of interest rate hikes failed to stamp out inflation, leaving a smoldering fire ready to reignite. Dire warnings about corporate earnings filled the airwaves. And yet the S&P 500 gained about 14 percent through mid-June, mostly on the back of risky tech assets. Let’s unpack the issues, then take a look at May markets.

With the clock ticking, the U.S. government could default on its debt obligations within the next four to six weeks. Unlike most catastrophes, this one is predictable and preventable. A default would wreak havoc on global markets and deeply undermine the reputation of the U.S. as a haven for investors. Many believe it would tip the country into recession. Let’s look at what the markets are saying about the scene now unfolding in the U.S. Congress.

Markets showed their resilience in the first quarter despite being rocked by a variety of unanticipated events. Investors who ignored the bad news and kept their focus on long-term outcomes were rewarded. In fact, the first three months of 2023 offered textbook lessons on the upsides of turbulence and benefits of long-term thinking.

Following a January rally, markets slumped in February after new reports signaled stubborn strength in the U.S. economy and job market. Investors hoping to see slower, smaller interest rate hikes had their hopes dashed when Fed Chair Jerome Powell indicated that additional tightening was likely necessary. Uncertainty deepened, even as the impacts of rate hikes began gathering like clouds over the economy, notably in construction, commercial real estate, and by early March, banking. We’ll look at the Fed’s tightrope act followed by a brief review of February markets.

After a disappointing 2022, investors searched for rays of economic sunshine in January. And they got what they wanted when new data showed cooling inflation and better than expected growth in the final quarter of 2022, despite the pressure of high interest rates and widespread fears of a looming recession.

The news drove markets higher on hopes that the Federal Reserve would scale back or end interest rate increases earlier than expected. Not so fast, warned Chairman Jay Powell, noting that the Fed is still very much in a wait-and-see mode and willing to move aggressively if needed. Still, there’s reason to cheer declining inflation and rising rates. We’ll offer our perspective following a look at January numbers.

This month we begin with a wrap-up of 2022, a painful year for investors. Then we introduce you to a hidden risk of which you may be unaware—the precarious condition of private equity markets. “There is no good idea that too much money can’t destroy,” wrote Ruchir Sharma in a December opinion piece in the Financial Times. We’ll lift the lid on the private equity engine to take a look inside. First, a look at the numbers.

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?