All data is for the week ended August 13, 2021
Stocks
Equities rose for the S&P 500 (up 0.75%) while the Russell 2000 declined 1.06% and the NASDAQ eased by 0.07%. Overseas, the international developed markets index (MSCI EAFE) gained 1.56% and the emerging markets index (MSCI EM) declined 0.84%. Large caps value stocks were the best performing style in the US. By sector, materials and consumer staples were the best performers while energy and real estate were the laggards.1
Fixed Income
The yield on the 10-year treasury bond declined following a sharp drop in consumer sentiment (see Economic Data below) on the expectation that the Covid-19 variants may be a bigger drag to economic growth than previously expected.1 Investors believed this would preclude the Federal Reserve from pulling back on its asset purchases which have been keeping interest rates subdued.
Commodities
Last Monday gold (a Precious Metals and ETF Endowment Series holding) traded at its lowest since the end of March, before adding 3.00% over the rest of the week on higher inflation than expected. (See Economic Data below.) Gold closed Friday at $1,785.10 per troy ounce, up 0.80% for the full week.2
Oil prices rode a rollercoaster last week, dropping toward the end of the week as the International Energy Agency lowered its demand outlook based on accelerating cases of the Covid variant.3 The IEA cut its demand forecast by 100,000 barrels per day and noted this coincides with planned supply hikes from OPEC+ and President Biden’s urging them to increase supplies further.4 By week’s end the price of West Texas crude oil was only down 0.23%.5
Economic Data
Consumer price inflation was 5.4% on a year over year basis, ahead of expectations and remaining at a 13-year high due to continued supply constraints. The most notable category was used cars where inflation nearly came to a screeching halt in July after rising 10.5% in the June report. After excluding volatile food and energy, core inflation was 4.3%.6
US wholesale price inflation accelerated to 7.8% in July on a year over year basis from 7.3% in June, ahead of expectations as prices for services such as travel led the gains. Widespread shortages of labor and materials continue to pressure producer prices upward.7
Consumer sentiment fell to the lowest point since the height of the pandemic last year, to 70.2 in August from 81.2 in July, well below the consensus estimate. Confidence faces a growing headwind from the Covid-19 variants and resumed mask mandates.8
There are now 1.3 million more job openings than unemployed persons in America.9 There have never been this many job openings (10 million) in the US as there were at the end of June (latest report).10
Company News11
MercadoLibre Inc. (MELI), a G33 holding, shares rose 5.43% followingtheir report that revenues and earnings far expected expectations for this Latin America e-commerce giant. Results were driven by a 47.4% year over year increase in unique active users.12
Munich Re (MURGY), a G40i holding, reported results that were ahead of expectations. Additionally, pricing trends and demand were stronger than expected for this global reinsurance firm. Capital positions were above consensus. Share rose 7.45% for the week.13
Sysco Corp. (SYY), a G50 holding, shares rose 7.47% for the week. The foodservice operator announced revenues and earnings that beat expectations and management noted accelerating growth in the final month of the quarter. Management also expects to gain market share in the new fiscal year as well as accelerate that in the coming years.14
Did you know…
Carrots were only available in purple and white until the 17th century when Dutch farmers succeeded in growing the first orange carrots in honor of the ruling House of Orange-Nassau.
Mariann Montagne, CFA
Portfolio Manager
Sources:
1 JP Morgan Weekly Market Recap 8-16-21
2 Apmex
3 International Energy Agency 8-8-21
4 UPI, “White House Urges OPEC to Increase Oil Output” 8-11-21
6 US Bureau of Labor Statistics 8-11-21
7 US Bureau of Labor Statistics 8-12-21
8 University of Michigan Consumer Sentiment 8-13-21
9 Bureau of Labor Statistics Job Openings 8-6-21
10 Bureau of Labor Statistics Employment 8-6-21
11 All weekly changes in company stock prices: Yahoo Finance
12 MercadoLibre Inc. press release 8-4-21
13 Munich Re press release 8-10-21
14 Sysco Corp. press release 8-10-21
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