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The story of the financial markets for May was—let’s all say it together now—volatility! That should come as no surprise because volatility has been the story for most of the year, and it’s likely to continue to be the story for some time to come. Once again, the last few days of the month were typical of the year overall. On May 29, the markets plunged on fears over political turmoil in Italy and renewed worries over trade, with the Dow Jones Industrial Average shedding nearly 400 points. On May 30, worries eased, and the Dow gained back nearly all those losses, only to lose half of them again on May 31 with a 221-point drop. Talk about a roller coaster!

The dramatic market volatility I discussed in last month’s newsletter continued throughout April as the yield on the 10-Year Treasury rate topped 3 percent for the first time since 2014. Fears of rising interest rates and inflation helped drive the volatility along with uncertainty about how aggressive the Federal Reserve might be in its efforts to “normalize” monetary policy under new chairman Jerome Powell.

Though Powell took a “dovish” tone in an April speech in Chicago and expressed optimism that inflation will stabilize at around 2 percent, Wall Street remains nervous.1 That’s because some analysts believe there are several factors that could push inflation higher than the Fed’s target—and even Powell has admitted that if that happens, it could force the Fed to “raise short-term rates too quickly and cause a recession.”

The markets remained high in April but were also largely disconnected from economic reality. Reported corporate earnings reflected an annualized growth rate of just 0.7 percent for the first quarter of 2017.* That’s down from 2.1 percent growth in the fourth quarter of 2016, and even though both of those are positive numbers, neither is anywhere near 4 percent. Annual GDP growth of 4 percent is what Donald Trump has promised if his tax plan and other economic policies are approved—and Wall Street remains irrationally optimistic that he can, and will, deliver.

As expected, the historic stock market drop that kicked off February gave way to a month of high volatility—a pattern I believe will continue. Though the markets regained some of the losses suffered in that 10 percent correction in the first week of February, they closed lower in a turbulent session on the final day of the month.

Your SIS newsletter is coming to you a bit later this month because just after we prepared the letter at the end of January, the markets took a dramatic turn in early February, which I wanted to touch upon. The year-to-date stock market numbers above were severely impacted after the first few trading days in February when the major market indices all suffered historic drops.1 Concerns over inflation, debt, and rising interest rates were all cited as factors in the steep sell-off.

Throughout 2017, the stock market was driven mainly by hope and optimism over the Republican tax plan. The plan was finally signed into law in December, which reasonably should have given the market its biggest monthly boost of the year. Yet, each of the major indexes finished with smaller gains than in November. In fact, on the very day the Senate finally approved the tax bill, the market experienced a slight pullback, which was probably an acknowledgment that the tax plan’s value has already been priced into the market.

The Trump “Bump” reached a new apex on the final day of November when the Dow Jones Industrial Average spiked 1.6 percent and surpassed the 24,000 mark for the first time. The S&P 500 also rose 1 percent and the Nasdaq a little less than 1 percent.1 The spike was further evidence of the rally that’s been underway since Trump’s election. The rally is based mostly on hope and optimism around the GOP tax bill, whose approval looked more likely on November 30 after Senator John McCain pledged his support.

It was another month of record highs for the stock market, whose laser focus on economic optimism continued to allow it to shrug off bad news and ominous headlines almost daily. A month that opened with lingering worries over North Korea and ended with another horrific terrorist attack in New York City also saw an escalation in the Russia investigation and more rifts between Trump and some Republican lawmakers.

Gains in technology stocks drove the S&P 500 to another record high on the last day of trading in September, although the Dow fell slightly. While it was another relatively calm month for the markets, we did see signs of nervousness creep in over everything from escalating tensions with North Korea to another Federal Reserve meeting.

For the most part, Wall Street continued clinging to its optimism over Donald Trump’s economic policies in August despite another tumultuous month for his administration. At the same time, we did see signs of worry creep in that Trump’s entire domestic agenda—including his tax plan—could be jeopardized by all the turmoil and distractions. Following the North Korea crisis and the fallout over Charlottesville, the Dow had its biggest one-day fall in over three months.1 We saw a similar slide back in March when Trump’s healthcare plan hit a brick wall. These are signs Wall Street knows it ultimately needs real reform to sustain its optimism, not just hope and promises.