THE S&P 500 WAS UP 0.8% last week. It was a wild ride, with the Volatility Index climbing to almost 40—the highest level in 15 months—as investors grappled with the threat of rising interest rates. The Federal Reserve is steadfast in its plans to aggressively raise short-term interest rates. Bank of America Global Research was the buzz of Wall Street on Friday morning, with its economic team saying it now expects the Fed to hike rates by a quarter-point at all seven remaining meetings this year.

THE S&P 500 JUST HAD its worst week since March 2020’s COVID-19 crash. Ironically, the decline happened as coronavirus cases were finally dropping after the December surge. Vanguard S&P 500 ETF (symbol: VOO) fell 5.7%, while Vanguard Small-Cap ETF (VB) lost 7.3%.
Returns were not as bad overseas. Vanguard FTSE All-World ex-U.S. ETF (VEU) dropped 3.1%. Coming as a surprise to some index fund investors, Vanguard FTSE Emerging Markets ETF (VWO) is actually positive so far in 2022.

OVER THE PAST 25 years, the Federal Reserve has become more transparent than ever. Much of this is the result of political pressure. Still, the Fed has taken it further, believing greater transparency to be a good thing in helping the public understand the likelihood of future policy changes. Talking more may have helped us move past the 2008 financial crisis. But it isn’t helping us now.

Congress created the Federal Reserve in 1913.

LAST WEEK SAW additional gains for value stocks, while shares of once highflying growth companies continued to struggle. Meanwhile, foreign markets again rallied. Vanguard FTSE All-World ex-U.S. ETF (symbol: VEU) rose more than 1% last week, even as Vanguard Total Stock Market ETF (VTI) slipped 0.5%.
Let’s further unpack these trends.
The Nasdaq Composite has endured its worst start to a year since 2009. At the same time, blue chip stocks and some of last year’s losers are suddenly in favor.

MINUTES FROM the latest Federal Open Market Committee (FOMC) meeting, which were released last Wednesday, roiled financial markets. Stocks fell sharply, with both the Nasdaq Composite and Russell 2000 falling more than 3% that day. On the week, the Nasdaq was down 4.5%, the S&P 500 down 1.9% and the Dow Jones Industrial Average 0.3% lower. What did investors read in the minutes that gave them such pause?
For background, FOMC minutes are released three weeks after the meeting itself.

ARE LONG-SUFFERING value investors and those with a large allocation to foreign stocks finally about to get some relief? The new year has seen significant relative strength by both areas of the market. Meanwhile, after peaking in the first half of 2021, highflying small- and mid-cap growth companies continue to get hammered. Mega-cap tech shares have also lately succumbed to selling pressure.
What’s worked thus far in 2022 are the boring old large-cap blue chip names.

DECEMBER WAS a month to remember for the stock market. The S&P 500 returned 4.5%, while small caps were up a slightly weaker 3.4%. Foreign stocks rallied 3.7%, but emerging markets continued to lag, eking out a 1.5% return.
It was a stellar year for the bulls. The U.S. stock market posted a 25.7% return, as measured by Vanguard Total Stock Market ETF (symbol: VTI). Vanguard Small-Cap ETF (VB) started the year hot, handily beating large-company stocks,

AS 2031 WINDS DOWN, it’s time to look back at the major investment stories and themes that characterized the year and to look ahead to 2032.
Stocks had another banner year in 2031. Emerging markets led the way yet again, with the MSCI Emerging Markets index soaring 31%. This is the fourth year in a row that emerging markets were the top performer. Since 2022, emerging markets have returned 25% a year for more than a seven-fold gain.

MARKET STRATEGIST and economist Ed Yardeni says the current bull market is “the most hated and feared bull market that any of us have experienced, maybe in history.” This quote came from an interesting interview published in ThinkAdvisor, a magazine for financial professionals.
Worried about today’s lofty stock prices? You may find Yardeni’s views comforting. When asked about his market outlook, he commented on the strength of the current bull market, which started in 2009.

QUANTITATIVE EASING, or QE, has been the Federal Reserve’s policy of choice since interest rates reached their lower bound of 0%. The brainchild of then-Fed Chair Ben Bernanke, QE was launched in the midst of the 2008 financial crisis. Quantitative easing is simply a euphemism for bond purchases—Treasury bonds and mortgage-backed securities—by the Federal Reserve.
In theory, QE should lead to lower interest rates, as reflected in bond yields. Bond prices are, of course,

NO DOUBT ABOUT IT, cryptocurrencies have had a raucous 2021. From bitcoin and ether’s fast start in January, to the rise of dogecoin in April and then the shiba-inu October shenanigans, folks owning seemingly any digital currency likely experienced big gains if they were owners since early 2021.
What if folks got in later in the year? Despite being all over the financial press and having inked all sorts of sponsorship deals—including the naming rights to what was once the Staples Center in Los Angeles—total crypto market cap today is pretty much unchanged from the peaks reached in May and September,

THE HOLIDAYS MARK a festive period for stock market bulls. The final two weeks of the year and the first several trading sessions of January have historically seen unusually strong gains for the S&P 500 stocks, according to research from Bank of America. Since 1928, the final 10 trading days of December have averaged gains of 1.19% and the first 10 sessions of January have returned 0.72%.
Why has the S&P 500 performed well during this stretch?

LAST WEDNESDAY, the Federal Reserve’s policymaking committee concluded its quarterly meeting with two big announcements. First, the Fed is going to scale back its monthly purchases of Treasury securities. Because these multi-billion-dollar purchases have helped keep interest rates low, the Fed’s objective here is to let interest rates begin to rise. That was the first announcement.

The second is that the committee expects to raise its benchmark rate by nearly a full percentage point next year.

INFLATION CONTINUES to sizzle. November’s Producer Price Index (PPI) rose 9.6% from a year earlier. Even after removing food and energy, PPI was up 7.7%. Both figures are the highest since 2010, when such data were first compiled.
This follows last week’s Consumer Price Index report, which showed inflation climbing 6.8% over the past 12 months. Since consumer prices lag producer prices, we can expect little relief from inflation in 2022.
All this must be foremost on the minds of Federal Reserve members as they meet this week.

NATIXIS INVESTMENT Managers just released its 2022 institutional investors’ outlook. The firm surveyed 500 portfolio managers, asking their thoughts on what the next year might look like in the financial markets. The managers—who oversee $13.2 trillion of assets—were generally optimistic, but didn’t expect the recent torrid pace of stock market gains to continue.
The survey found that 35% of institutions plan to decrease exposure to U.S. stocks, allocating more to developed European and Asian markets,