By Salvatore Bruno via Iris.xyz

“Life can only be understood backwards, but it must be lived forwards.”

Words of wisdom from the Danish philosopher, Soren Kierkegaard. Ditto the markets. So now that we’re closing in on the final days of 2018, we can start to try and make some sense of the year almost past.
To start: never a dull moment. Markets have grappled with tariffs and a potential trade war with China, rising interest rates, big swings in the price of oil, and political uncertainty in the run-up to the mid-term elections. But for all that, underlying economic growth remained strong. In spite of this, multiple asset classes have seen negative returns, including gold, bonds, and oil—an unusual circumstance. Stocks, as measured by the S&P 500, have been in and out of positive territory, most recently down -4.77% through December 18, 2018. Investors can be forgiven for feeling a little whipsawed.

One point that has been driven home yet again: the difficulty of making accurate, short-term market forecasts. The dollar has bounced around, with the Wall Street Journal Dollar Index starting the year at $85.62, declining to $83.53 in April, and then heading up, getting as high as $91.10 in November before dropping again. The Fed looked likely to continue its cycle of tightening well into next year, until it didn’t. Fed Chair Powell set off a serious rally when he indicated in a speech that the Fed’s benchmark rate of 2.0-2.25% was “just below” neutral, suggesting fewer rate increases for 2019 than investors had been expecting.

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