Weekly Investment Update

Equity markets surged higher last week as earnings season got off to a great start. Several large banks reported strong earnings, which helped push equity markets higher. Goldman Sachs reported that their year-to-date revenue in 2021 is already the highest annual revenue recorded in firm history, and there is still a quarter of the year left[1]. The S&P 500 (a proxy for large-cap US stocks) was up 1.8% for the week and the MSCI ACWI index (a proxy for global large-cap stocks) jumped 2.2%[2].

An important footnote to the strong bank earnings reports last week was the broad agreement by bank leadership that inflation, and wage inflation in particular, remains a concern. Goldman Sachs CEO David Solomon commented, “there’s real wage inflation across all aspects of the economy right now”[3].

As one can see below, the US Consumer Price Index, a commonly used gauge of inflation, has risen to levels not seen in more than a decade.  The Federal Reserve’s stance that inflation will be short-lived is being called into question more often recently, especially in areas like wage inflation.

Line graph depicting US Consumer Price Index Y0Y and 10 Year Treasury Rate from 2021 to 2021

Prices & Interest Rates

Representative Index Current Year-End 2020
Crude Oil (US WTI) $82.00 $48.52
Gold $1,767 $1,893
US Dollar 93.95 89.94
2 Year Treasury 0.41% 0.13%
10 Year Treasury 1.59% 0.93%
30 Year Treasury 2.05% 1.65%
Source: Morningstar, YCharts, and US Treasury as of October 16, 2021

Asset Class Returns

Category Representative Index YTD 2021 Full Year 2020
Global Equity MSCI All-Country World 14.8% 16.3%
Global Equity MSCI All-Country World ESG Leaders 16.4% 16.0%
US Large Cap Equity  S&P 500  20.4% 18.4%
US Large Cap Equity  Dow Jones Industrial Average 17.0% 9.7%
US Small Cap Equity  Russell 2000 15.6% 20.0%
Foreign Developed Equity MSCI EAFE 10.4% 7.8%
Emerging Market Equity MSCI Emerging Markets 1.2% 18.3%
US Fixed Income Bloomberg Barclays Municipal Bond 0.7% 5.2%
US Fixed Income Bloomberg Barclays US Agg Bond -1.7% 7.5%
Global Fixed Income Bloomberg Barclays Global Agg. Bond -4.2% 9.2%
Source: YCharts as of October 16, 2021

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