Powell's 8-min speech at Jackson Hole erases $78 bn from richest Americans

In the span of just eight minutes, Federal Reserve Chair Jerome Powell sparked a market rout that slashed the fortunes of America’s richest people by $78 billion.

Elon Musk’s saw $5.5 billion erased from his wealth. Jeff Bezos lost $6.8 billion, the most of anyone on the Bloomberg Billionaires Index. The fortunes of Bill Gates and Warren Buffett declined by $2.2 billion and $2.7 billion, respectively, while Sergey Brin’s was knocked below $100 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 fueled by speculation that policy makers would soon reverse course from their aggressive monetary tightening.  

The S&P 500 tumbled 3.4 per cent, its worst day since mid-June. The tech-heavy Nasdaq 100, which counts Microsoft, Amazon, 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 $1.4 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.

Losses loomed for Asia’s stock market on Monday as investors absorbed Federal Reserve Chair Jerome Powell’s stern message that interest rates are going higher for longer in a painful fight against inflation. Futures shed almost 2 per cent for Japan and 1.5 per cent for Australia after a 3.4 per cent plunge in the S&P 500 index. The slide was sparked by Powell’s rebuttal of the notion that the trajectory of monetary tightening could soon be tempered.

Friday’s US slump further shriveled a global bounce in shares from June bear-market lows.