Yesterday, I appeared on Fox Business’ Morning with Maria to discuss the markets, inflation, consumer spending, and what’s ahead for the fourth quarter. Listen in to hear more.

After inflation, which we talked about yesterday, the next biggest set of questions I get focus on what the effect of the new tax law will be and whether the higher tax rates in it will derail both the economic recovery and the market. People generally make a good argument about how it will hurt confidence, take money out of consumer and business spending and investment, and generally take us back to a state of depression. I understand the arguments. But two things are missing that would make them convincing: facts and context.

One of the most urgent and consistent questions I have been getting recently is around inflation. With the headline numbers high—and they are high—the concern is that we are moving back to the 1970s and that inflation will stay at the current 5 percent or run even higher. That conclusion seems reasonable, given the large federal deficit and spending over the past couple of years. When combined with the signs of slowing growth, it could point back to stagflation. The 1970s are calling. Maybe disco will come back as well?

Last week was relatively quiet in terms of economic updates, with only two major data releases. Initial jobless claims continued to decline to start September, while producer prices increased by more than expected in August. This will be a busier week for updates, with reports to come on consumer inflation, industrial production, retail sales, and consumer sentiment.

China’s recent regulatory crackdown and the consequent impact on its financial markets have caught the attention of worldwide media and investors. (A recent post by my colleague Peter Roberto explores the regulatory backdrop.) Given the current environment, I’ve been receiving numerous questions asking if now is the time to double down on Chinese equities. Potential investors are wondering if the recent bounce in some of the hardest-hit stocks could be a sustained run. My belief is that, over the shorter term, headline risks remain elevated for Chinese equities. In the long term, continued economic growth in China may present attractive opportunities for value creation. To avoid potential landmines, however, active management is critical.

My colleague Sam Millette, manager, fixed income on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Market Risk Update. Thanks for the assist, Sam!

My colleague Sam Millette, manager, fixed income on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Economic Risk Factor Update. Thanks for the assist, Sam!

There were a number of important economic data releases last week, with a focus on consumer and business confidence and the August employment report. The employment report showed that the pace of hiring slowed during the month, as rising medical risks served as a headwind for faster job growth. This week will be relatively quiet, with only two reports due to the holiday-shortened schedule.

Brad here. One of the key pieces of news to hit my desk this week was that the social security trust fund was projected to run out of money a year earlier than expected. Not only will this affect everyone who is retired now, but it will also affect those who plan to retire around the time that money runs out (like me). So, it’s personal. That said, I went to our Advanced Planning group for guidance. David Haughton, advanced planning consultant, prepared a summary on what is happening—and what isn’t. Thanks, David. While I am still not happy about the news, I appreciate the clarity and context he provides around the facts of the situation.

August was another great month for the financial markets. Here in the U.S., the markets continued to hit new highs, with the Dow up by 1.5 percent, the S&P up by more than 3 percent, and the Nasdaq up by more than 4 percent. Abroad, developed markets also did well, going up by 1.76 percent. Emerging markets bounced back significantly at month-end with a gain of 2.65 percent.