The day at a glance | August 19, 2021

The Top

*Concerns about growth increase at a global level.

*Mexico`s economy grew an annual 9.9% in July, according to the Timely Indicator of Economic Activity.

*The majority of the FED`s members back the withdrawal of stimuli this year.

*Chinese authorities published a plan that considers greater regulations for the next 5 years, which will affect industries beyond tech.

*Biden announces plan to distribute third dose to reinforce protection for vaccinated people without the approval of regulators such as the CDC and FDA.

*AMLO backs increasing interest rates in light of inflation.

*United Kingdom study confirms lower rates of efficacy against the Delta variant and show that the protection of vaccines decreases after 90 days.

 

Economic environment

Concerns about growth. Markets have started to raise more serious concerns regarding the global economy`s recovery. The Delta variant`s spread continues at a worldwide level after 8 consecutive weeks of an acceleration in recorded cases, and expectations of its economic impact have increased more than anticipated as recent United Kingdom studies have confirmed lower efficacy rates against the variant. Additionally, China has logged a greater than expected slowdown and forecasts regarding expected growth in the US for the 3Q21 have been reduced, largely due to the extension of supply chain disruptions and higher prices caused by the pandemic. This has started to raise doubts about the viability of the FED`s plans to withdraw stimuli as soon as this year, after yesterday`s published meeting minutes – and recent public speeches given by some of the FED`s members – confirmed that the majority of its members are in favor of starting said process at the end of 2021. Some members even consider that withdrawing stimuli relatively fast is necessary due to important inflationary risks that are poised on the horizon. In this sense, the global economy seems to be headed towards a “stagflation” scenario, in which growth is low and prices are high, due to the limitations that have been triggered by the virus.