In the span of just eight minutes, Jerome Powell sparked a market rout that slashed the fortunes of America’s richest people by $US78 billion ($112 billion).
Elon Musk’s saw $US5.5 billion erased from his wealth. Jeff Bezos lost $US6.8 billion, the most of anyone on the Bloomberg Billionaires Index. The fortunes of Bill Gates and Warren Buffett declined by $US2.2 billion and $US2.7 billion, respectively, while Sergey Brin’s was knocked below $US100 billion.
Powell used his speech at the Kansas City Fed’s annual policy forum in Jackson Hole, Wyoming, to reiterate that the US central bank will keep raising interest rates and probably leave them elevated for a while to reduce inflation. He was seen as pushing back on a recent rally in US stocks that was fuelled by speculation that policy makers would soon reverse course from their aggressive monetary tightening.P 500 tumbled 3.4 per cent, its worst day since mid-June. The tech-heavy Nasdaq 100, which counts Microsoft, Amazon.com, Tesla and Alphabet among its biggest components, plunged more than 4 per cent.
Few billionaire fortunes have been spared this year. The world’s 500 richest people lost $US1.4 trillion in the first half of 2022, the steepest six-month drop ever for the wealthiest people on the planet.But US stocks in July posted their strongest monthly advance since November 2020, leading investors to wager that the worst of the market rout was over.
Instead, Powell’s speech served as a reminder that valuations of giant technology companies remain high by historical standards after an unprecedented run-up during the Covid-19 pandemic when interest rates were pinned near zero.
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