EDITOR'S NOTE
Inflation remains the hottest debate topic on Wall Street as its staying power could make or break a stock market at record highs halfway through 2021.
Some believe accelerating price pressures could derail the rebound for corporate America and its share prices. Others hold the view that inflation will remain temporary, and companies will be able to defend their profit margins. The S&P 500 rose to another record on Monday, bringing 2021 gains to more than 14%. 
The Federal Reserve is showing little concern about inflation despite the fact that its preferred measure — the core price index for personal consumption expenditures — rose 3.4% in May year over year, the fastest increase since the early 1990s.
The central bank is underestimating inflation and risking that the U.S. could fall into another recession, according to Mohamed El-Erian, chief economic advisor at Allianz.
“I have concerns about the inflation story,” he told CNBC’s Becky Quick during a “Squawk Box” interview Monday. “Every day I see evidence of inflation not being transitory, and I have concern that the Fed is falling behind and that it may have to play catch-up, and history makes you very uncomfortable if you end up in a world in which the Fed has to play catch-up.”
If inflation turns out to not be transitory, Goldman Sachs said it would be a headwind for valuation multiples as the Fed could hike interest rates faster and sooner to fight price pressures.
In such a scenario where inflation runs hot for a sustained period of time, Goldman advised clients to buy stocks with pricing power. At the sector level, Goldman said health care, energy, real estate and consumer staples tend to outperform in an inflationary environment. TOP NEWS
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