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After remaining dormant for most of 2017, market volatility returned with a vengeance in the First Quarter of 2018. Concerns over rising interest rates and inflation overcame positive news on economic growth and corporate earnings, triggering a selloff in both bonds and stocks in early February. The VIX index of implied equity market volatility spiked, startling some investors who had become complacent about downside risk.

Following the first negative quarter for domestic stocks since 2015, the second quarter of 2018 began on a sour note, with the S&P 500 Index falling 2.2 percent and the technology-heavy NASDAQ dropping 2.7 percent today. Consumer discretionary stocks were also notably weak performers while international stocks fared only slightly better than their domestic brethren. For their part, bonds offered small compensation for diversified investors, with U.S. Treasuries increasing only modestly in price.

As the economic cycle progresses, the next recession draws inexorably closer and brings with it the next downturn in the credit cycle.

The United States has been the world’s undisputed economic superpower for more than a hundred years. Yet in the long arc of history, that dominance has been relatively brief. For thousands of years, China stood as the world’s economic leader and a true global power. For that reason, many Chinese believe that the United States’ economic dominance is but a historical blip that will eventually see China return to its rightful place as the world leader.

More than any other segment of the population, the wealthy understand the power of leverage in today’s environment. Borrowing against an investment portfolio not only has the possibility of boosting returns, but it can also provide liquidity in a tax-efficient way. With relatively low current interest rates, investors may want to consider borrowing against their investment portfolios to fund major purchases and improve investment returns. Margin loans and non-purpose lines of credit are two effective ways to do this.

Investors awoke from their multi-year slumber in late January to a nasty reminder that stock prices are volatile. After a period of calm in the stock markets that rivals the longest in recorded history, a jump in average hourly earnings and the recent backup in bond yields refocused investor concern on the prospect of higher inflation down the road. That sent equity investors rushing for the exits, driving the S&P 500 down 10.2% in the span of just 8 trading days. Global markets followed suit, with the riskiest parts of the financial markets taking the biggest hit.

The Trump administration’s recent effort to impose tariffs on steel and aluminum imports into the United States has provoked a significant backlash among free-market economists, business leaders, and Republicans in Congress, among others. They worry that the imposition of protectionist measures designed to insulate domestic manufacturers from lower-cost foreign competitors could result in retaliation from foreign governments on other products that could expand into a full-blown trade war.

Over the past four decades, the economic and trade relationship between the United States and China has been dramatically transformed, growing from about $2 billion in 1979 to approximately $612.5 billion in 2017. This places it among the most important bilateral economic relationship in the international economy. Now, however, that relationship is fraught with tensions due to differentials in growth, trade frictions and enforcement of trade rules along the technological frontier.