Four years ago, the S&P 500 reached its lowest level of the 2022 bear market in October. At the time, inflation was climbing at its fastest pace since the 1970s, the Federal Reserve was raising interest rates rapidly, and recession fears were widespread. Sentiment among consumers, businesses, and investors was deeply negative, and it was difficult to imagine conditions improving.

As interest rates have risen to multi-decade highs, one of the implications that has received less attention is the strengthening U.S. dollar. The dollar affects all aspects of financial markets, the economy, and everyday life. Its value impacts the cost of imported goods, foreign travel, the revenues of U.S. businesses that operate around the world, and portfolios with international assets. In addition, the dollar is affected by the outlook on U.S. economic growth, interest rates, and concerns around the national debt. In other words, many factors impacting global financial markets are reflected in the dollar.

The third quarter was mixed for investors with two major drivers impacting portfolios. On the one hand, interest rates rose to 20-year highs, while on the other hand, exceptional corporate earnings continued to support stocks. Amid these major trends, oil prices climbed back above $100 per barrel, the Fed raised rates for the first time in three years, and concerns over AI grew as November’s midterm election approaches.

Janet Yellen, the former Federal Reserve Chair, often said that "monetary policy is not a panacea."1 Just as there is no cure for the common cold, except to let it run its course and address the symptoms, the Fed’s tools often cannot fix the underlying issues in the economy. In theory, monetary policy is meant to help ease these challenges, especially when it comes to the job market and inflation. In practice, however, the Fed does not control the economy directly, but instead responds to the economic environment.

Nelson Mandela famously said that “education is the most powerful weapon which you can use to change the world.” For many families, investing in a child’s education is a central financial planning goal, but the cost of doing so has grown rapidly. For this reason, grandparents often like the idea of helping fund a portion of their grandchildren’s education, especially because it creates a legacy that lasts longer than traditional gifts.