Despite the Christmas holiday, last week brought some important economic news. With another holiday on the horizon, this week won’t be as busy, but there are still a couple of economic reports worth paying attention to.

As we approach the new year, hiring is strong and both business and consumer confidence remain high. With these solid fundamentals, the financial markets are likely to respond. Earnings should go up, so we should expect to see rising stock prices as well.

Are we still experiencing normal market volatility? I discussed this and more on CNBC's Power Lunch today. 

Brad here. Today, we have another detailed look from one of our great investment analysts, Nicholas Follett. Just as with Anu’s take on emerging markets yesterday, Nick provides an in-depth discussion of one of the most popular asset classes out there—including why you might be interested and what you need to watch out for. He goes into a bit more detail than we normally do here, but consider this an example of what really goes on at Commonwealth as we dig deep for our clients and investors. Enjoy!

Brad here. As part of my Next World series on this blog, I have been discussing the themes and implications with Commonwealth analysts to try to determine what it will mean, over time, for how we invest. Anu Gaggar, our international analyst, put together this piece, which I think is worth sharing. Take it away, Anu!

Last week was a busy one on the economic front, with several reports on housing, a look at durable goods demand, and the consumer income and spending report. This week is a short one, due to the Christmas holiday, but there are a couple of economic reports worth paying attention to.

Of course, here I am riffing on the famous headline published after President Ford refused to bail out New York City (see below). Yesterday, there is no doubt that markets were expecting a bailout from the Fed—and threw a tantrum when they didn’t get it.

It’s that moment you’ve all been waiting for—the 2018 Bubble of the Year Award (“the Bubby”)! This long-standing tradition (as of last year) brings together the strongest and weakest investment stories for a no-holds-barred match to see which stands out as the bubble of the year. This year, we have several strong contestants.

Several weeks ago, an advisor asked me to take a deep look at debt in the economy. I thought this was a great idea, both timely and important. In fact, I meant to get to it sooner but, well, things happened. When I did start to investigate, I realized that “debt” was many different topics, deserving of several posts. So, here we are, beginning a series that will resume in January. Fortunately, the news is not actually all that bad in most areas. Even in the ones where it is very bad (e.g., U.S. government borrowing), there are reasons to, if not be cheerful, than at least not to despair.

Last week was a busy one on the economic front, starting with prices. This week will also be active, with several reports on housing, a look at durable goods demand, and the consumer income and spending report.

Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for December? Let’s take a closer look at the numbers.

The good news is that confidence continued to be strong last month. Business sentiment remains close to a 21-year high, and consumer confidence remains very close to an 18-year high. Although job growth declined, it was after a very strong month, and it remained at healthy levels. Longer-term interest rates, which had been a concern after a spike, also moderated. Overall, the economic news remains solid, which should support continued growth.

What can we expect from the market in 2019? I discussed this and more on CNBC's Power Lunch today. 

Both October and November were roller-coaster months. October took us down, and November took us further down only to bounce and finish slightly up. Now, as we move to the end of the year, we are seeing more downward movement, although there are signs that may be passing. As investors, we should probably be checking for whiplash, as this has been a wilder ride than we have seen in years.

We are now in the third month of the stock market decline, with the S&P 500 getting close to correction territory (i.e., down 10 percent from the peak). Although there have been three attempted rallies, in each case the market has declined again. From a technical perspective, important trend lines have been broken, which increases the risk that the decline could get worse. Is it time to worry?

Last week was a busy one on the economic front, with several key reports. This week’s data starts with prices and whether they indicate that inflation is picking up.

We closed the last post in this series with the observation that, even if the U.S. “won” the trade war, there would be collateral damage—both here and throughout the world. That turned out to be a timely point, as we have seen in the financial markets over the past week.

As we approach year-end and you look at your investment statements, there is bound to be much discussion about how your investments performed. As has become usual in the past couple of years, there will be questions about and comparisons between what we expected and what we actually got. In other words, with the economy doing well, why aren’t your investments doing better?

Yesterday’s market drop reversed all of Monday’s gain and then some, reportedly on growing doubts regarding the exact terms of the trade war truce announced by President Trump. That might be the case, but I suspect the headlines pointing out that part of the yield curve had inverted played a bigger role in the decline. This inversion is usually a sign of economic trouble, so it would make sense for the market to pull back. The problem is that, while technically true, the inversion we saw typically indicates that trouble will show up in a couple of years—if it does at all. If the market was reacting to the inversion, it was overreacting.

November was a rocky month. Concerns surrounding the midterm elections, the trade conflict between the U.S. and China, and the economic slowdown resulted in market turbulence. Still, the financial markets bounced back. Here in the U.S., the Dow, the S&P 500, and the Nasdaq all had some gains. Abroad, the emerging markets rebounded strongly. Even bonds made money, despite interest rate turmoil.

Last week was a busy one on the economic front, giving us a wide range of views on where the economy is going. This week will also be busy, with several key reports.