So what went wrong, and then what went right? The short answer is Europe and the United States, respectively. The large economies of Europe outside of Great Britain can best be described as bad and worse. Germany, which had been holding the whole thing together, is teetering on recession. France has seen disappointing growth for years and remains stagnant. Italy is, by all indications, once again experiencing recessionary conditions, and the better performance recently of Spain and the peripheral countries is simply not enough to counter the “big three” when they are all doing poorly at the same time.

The bad news from the Euro-zone sent U.S. and international stock markets plunging. The Dow Jones dropped from an opening high of over 17,000 on Monday, October 6th, to a low well below 16,000 by Wednesday, October 15th.

But almost as soon as the panic over the state of the European economy took hold, good economic news started filtering in about the state of the U.S. economy. This good news included a report that home sales had surged in September and the stunning news that the U.S. economy is growing at an annualized rate of 3.5%, and actually grew at 4.6% during the second quarter. While the October jobs report is not yet out, it too is expected to show more strength in the economy.

All of this was more than enough to get the markets back in gear. As I write this article, the Dow Jones is once again above 17,000, closing Friday, Oct. 31 at just under 17,400. The combination of a growing economy and a still cautious Fed seems to be a winning formula for investors, and represents the Goldilocks phenomenon of just enough good news, but not so much to trigger a spike in interest rate from the Fed. The Fed seems more than willing to maintain its accommodating position and, for now at least, maintains that it intends to keep rates low well into 2015.

Equally encouraging, it seems that it is not just the markets that are feeling better about the economy. The widely followed Michigan Consumer Sentiment Index registered its highest reading in October since 2007, at 86.9. This is an indication that more Americans are beginning to believe that the good economic news we’ve been hearing about is beginning to make a difference in their lives as well. The disconnect between economic indicators and American sentiment has been a troubling and paradoxical hallmark of our slow climb out of recession. Even as the national economy has improved and picked up momentum, many Americans continued to believe that it was somebody else’s recovery. The Michigan numbers suggest that this is finally beginning to change.

So the economic trend is good – again – for now at least. Who knows what the next big fear will be? Wars still rage in the Middle East; Ebola continues to ravage West Africa with isolated cases popping up in the United States; Europe isn’t getting any better; Putin’s Russia is acting more and more like the Cold War Bear we thought we’d left behind with Perestroika; and don’t forget climate change…

And yet, life goes on and the Dow just seems to keep climbing. How long can it last? With any luck, it’s got further to run. Happy Holidays and Happy New Year. It’s certainly nice to close 2014 out on a good note. Two month to go, but it’s certainly looking good for a strong finish to the year.