October saw energy prices rise due to supply and demand related issues. Natural Resource Equities reaped the benefits of higher prices, increasing 8.9% during the month. Heightened inflation continues to persist as the CPI increased 6.2% YoY as of the end of October. The Fed believes that as the job market strengthens, inflation will start to normalize. The Fed also announced tapering of its $120 billion-per-month bond buying program. Heightened inflation may force the Fed to raise interest rates sooner than anticipated.

1. Is inflation transitory, or is it going to be more sustained?

The inflation we have experienced in the past year appears to be largely a consequence of rapidly returning demand and a supply chain that hasn’t been able to ramp up supply nearly as quickly. Some portion of inflation is likely to be relieved as covid-induced kinks in the supply chain get worked out. We expect that greater vaccination rates and new therapeutics should allow for a greater re-opening. One piece that we are concerned about may not be as easily resolved is the upward pressure on wages and the growing collective demands of workers.  

House Passes Substantially Altered Version of Build Back Better Act

Our Advice: Keep Calm and Carry On (with Planning)

Early on November 19th, the House passed a leaner version of the original H.R. 5376, the Build Back Better Act, that removed many of the more controversial and broader individual income and transfer tax changes included in earlier draft legislation. The new tax architecture relies heavily on international and corporate minimum taxes, as well as select provisions targeting high earning individuals and trusts, as revenue raisers.