Although markets have performed well this year, some investors may be nervous about upcoming events such as the presidential election, the Fed’s next rate decision, and the state of the economy. Along with the uncertainty of the past few years, it’s no wonder that gold prices have also risen to record levels above $2,600 per ounce.

Oil prices play an important role in the global economy, directly influencing the cost of gasoline at the pump and indirectly impacting the prices of all goods and services. The price of oil has also been an important factor influencing global markets and inflation trends over the past few years. Historically, the relationship between oil and the economy is a two-way street: low or stable oil prices stimulate the economy, and a growing economy increases the demand for oil, and vice versa.

As we begin the final quarter of the year, financial markets and the economy have defied the expectations of many investors. Rather than falling into recession, the economy has grown steadily, albeit at a slower pace, and inflation rates have fallen toward the Fed’s target. As a result, the macroeconomic environment has shifted to a monetary easing cycle, propelling the S&P 500 and Dow Jones Industrial Average to new all-time highs and boosting bond returns. The first three quarters of the year are a reminder that it’s often best to focus on the longer-term trends rather than events in the rearview mirror.

The conflict between Israel and Hezbollah has escalated in recent days, raising the risk of a full-scale war and marking another chapter in Middle East instability. These events are unfolding against a backdrop of existing global uncertainty, including the war between Russia and Ukraine, tensions between China and Taiwan, unrest in the South China Sea, disruptions in the Red Sea, and persistent threats from North Korea and Iran. These events are complex, create tragic humanitarian crises, and unfortunately have no simple solutions.

The Federal Reserve's interest rate decisions remain a focal point for markets. While the timing and size of rate cuts are the subject of debate, why the central bank is cutting rates and how the full rate cut cycle might play out are far more important. This is because the implications are not as straightforward as they might seem, and market expectations have shifted dramatically over the past year. What should investors know about how rate cuts have historically impacted the economy and markets?