Last week, US Federal Reserve chairman Jerome Powell made an opening speech at the Kansas City Fed’s annual economic policy forum held in Jackson Hole, Wyoming. When he stepped away from the lectern, a market rout had been instigated.
You see, across his eight-minute address, Powell left the money printers unmanned and reiterated a tough stance against inflation. The world received hard confirmation of the US central bank’s intentions to continue raising interest rates, which will remain elevated as a countermeasure.
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“Restoring price stability will likely require maintaining a restrictive policy stance for some time,” said Jerome Powell.
“The historical record cautions strongly against prematurely loosening policy.”
Powell added: “While higher interest rates, slower growth, and softer labour market conditions will bring down inflation, they will also bring some pain to households and businesses.”
“These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”
It didn’t take long before the alarming lack of optimism spooked the markets.
The Dow Jones Industrial Average declined by 1,008.38 points (or 3.03% to 32,283.40) with further losses until the close. The S&P 500 slid by 3.37% – the biggest drop since mid-June – while the NASDAQ copped a 3.94% loss right on the chin.
As for the ASX, shortly after this morning’s opening bell, the domestic share market was already down 2% (which roughly translates to $45 billion).
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In terms of specifics, the billionaire ruling class has been feeling the burn, particularly those involved with tech. According to Brian Chappatta of The Australian Financial Review:
“Elon Musk saw US$5.5 billion (AU$8 billion) erased from his wealth. Jeff Bezos lost US$6.8 billion (AU$9.9 billion), the most of anyone on the Bloomberg Billionaires Index. The fortunes of Bill Gates and Warren Buffett declined by US$2.2 billion (AU$3.2 billion) and US$2.7 billion (AU$3.9 billion), respectively, while Sergey Brin’s was knocked below US$100 billion (AU$145.8 billion).”
Looks like Dr Michael Burry was right again.
You can check out the speech US Federal Reserve chairman Jerome Powell made at Jackson Hole below.
