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Integrated Insights -- Week of August 16, 2021

Integrated Insights -- Week of August 16, 2021

August 16, 2021

Looking past inflation figures and Delta variant trends, stocks last week found a way to climb higher and set fresh record highs in the process. U.S. stocks drifted mostly higher with the Dow Industrials and S&P 500 both posting four consecutive daily all-time highs, a feat not seen since October 2017. Despite an ominous backdrop of the spreading Delta coronavirus variant, last week’s gains were backed by extraordinarily solid second quarter earnings data.

Inflation remains a key concern. Consumer prices climbed at their fastest rate since August 2008, rising 5.4% year-over-year. But this elevated rate was expected by most economists. The core inflation rate (excludes the more volatile food and energy prices) came in 4.3% higher, substantially lower than anticipated. This deceleration in core inflation was largely attributed to a slowdown in price increases in used cars and apparel.  Perhaps more unsettling was the following day’s Producer Price Index (PPI). The PPI, which can be an indicator of future consumer prices, came in at the highest rate since tracking began, surging 7.8%. Inflation concerns will remain a concern to keep track of as the economic rebound continues on.

Here's what we are reading this week:

Weekly Commentary -- Don’t ignore climate risks in portfolios -- BlackRock

  • The BlackRock team believe ignoring the effects of climate change on portfolios is not an option, and the window for investors to position portfolios may be shrinking.

  • The U.S. Senate passed a $1.2 trillion infrastructure bill that now awaits a House vote. Congress will take up the $3.5 trillion spending plan after recess.

  • Investors will focus on the minutes of the Federal Reserve’s July policy meeting for details of any deliberations on asset purchase tapering.

Healthcare Coming at Breakneck Speed? -- Capital Group

For scientists and companies alike, the obvious question is whether this breakneck pace can be repeated. While we may not see the same level of government spending on drug development as on COVID-19 vaccines, the speed of science has taken a great leap forward. ”We can sequence tumors, compare their mutations to the map of the human genome and identify and match therapies to specific mutations,” Wolf (Capital Group analyst) says. Indeed, therapies derived from genetic testing have the potential to extend lives and generate billions of dollars in revenue for the companies that successfully develop them.

BlackRock's take on current inflation issues -- BlackRock Student of the Markets