Elon Musk

SCIENCE & TECH: Jeff Bezos, Elon Musk and Mark Zuckerberg lose billions

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The world’s richest men suffered dents to their net worth after stocks had their worst day in two years on Tuesday.

Jeff Bezos’ wealth plunged by $9.8 billion and Elon Musk net worth dropped by $8.4 billion. Musk remains the world’s richest man with a net worth of $256 billion, according to Bloomberg’s Billionaire Index. Bezos is second at $150 billion.

The wealth of Mark Zuckerberg, Larry Page, Sergey Brin and Steve Ballmer all declined by more than $4 billion, while Warren Buffett and Bill Gates lost $3.4 billion and $2.8 billion, respectively.

The stock market cratered after the release of the release of Consumer Price Inflation, which dropped slightly in August to 8.3% from 8.5% in July, the Labor Department said Tuesday.

Elon Musk’s net worth dropping by $8.4 billion after Tuesday’s stock market plunge.

Getty Images

However, CPI rose 0.1% on a monthly comparison in August, after holding flat in July, according to government data Tuesday, a disappointing result amid widespread expectations that inflation would fall in the month.

The stock market immediately plunged on the news and the US dollar shot higher as data showed that US inflation slowed less than expected.

The Dow Jones Industrial Average fell nearly 1,300 points Tuesday as the news triggered a rout on the New York Stock Exchange. Tech stocks were savaged, dropping by more than 500 points, or 4.4%.

The price of bitcoin was also battered, dropping 7.34% to $20,161. The crypto is down 41 per cent for the past six months.

The price of ethereum plunged 4% to $2389 and has shed 30% this year.

Biden reacts to inflation report

President Biden struck a positive tone, saying the data showed progress in fighting inflation.

“This month, prices overall were essentially flat, gas prices were down, and wages were up – that’s good news for American families.”

However, he acknowledged “it will take more time and resolve to bring inflation down.”

Mark Zuckerberg
The wealth of Mark Zuckerberg, Larry Page, Sergey Brin and Steve Ballmer all declined by more than $4 billion.
Anadolu Agency via Getty Images

Fed to hike rates aggressively

But markets reacted negatively to the news that inflation was falling at a slower pace than economists had expected.

The surprise result means it is increasingly likely the Federal Reserve will hike interest rates aggressively.

Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, told the New York Post: “Inflation is the problem, but the key lies with the labor market.

“As long as unemployment is extremely low and consumers are confident in their spending, it’s hard to imagine a scenario where the inflation problem resolves itself.”

He indicated the Fed would need to make unpopular decisions in order to get prices under control.

“The Fed has the worst problem in the world — it’s a political problem, not an economic problem — and the only cure for the current crisis is one that is politically infeasible,” Zaccarelli said.

“If the Fed thought they were criticized too much by the previous administration (and they were), wait until they see the type of criticism they will be under as they deliberately create an economic scenario where unemployment jumps significantly.”

Jeff Bezos
Inflation is hitting Amazon founder Bezos’ wallet.
AFP via Getty Images

‘Substantially hotter than expected

“Both headline and core US CPI were substantially hotter than expected in August,” Monex market analyst Jay Zhao-Murray said.

He added that this was “leading currency and fixed income markets to embark on a swift and dramatic reversal from recent price action, where traders and investors had largely positioned themselves for a softer inflation print”.

He pointed to core inflation that excludes volatile energy and food prices, which is what Fed policymakers pay particular attention to. This rose by 0.6 percentage points month-on-month, compared to a 0.3-point gain in July.

While markets were already largely pricing in another 75-basis-point interest rate hike by the Fed at its next meeting, there had been hopes that passing the inflation peak would allow the Fed to relent.

However, the inflation figures were “hotter than expected in August and put a chill on some of the peak inflation/peak hawkishness/soft landing chatter”, Briefing.com analyst Patrick O’Hare said.

Stocks, which had rebounded in recent days on hopes that a peak in inflation would allow a rapid end to hawkish rate hikes and thus avoid a recession and attain a “soft” landing of the economy, abruptly turned lower.

World reacts to bad inflation news

Fed boss Jerome Powell has indicated the rate increases would continue until inflation is tamed.

Zhao-Murray said market expectations regarding the Fed’s next rate hike had hardened following the inflation data.

While some were forecasting the possibility the Fed would drop to a half-percentage-point hike, now a 0.75-point increase is seen as the floor and some are forecasting a one-point hike.

Market analyst Michael Hewson said Tuesday’s core inflation figures mean more aggressive rate hikes will be needed to tame rising prices.

“While the narrative of peak inflation may well be still valid, getting it down from these levels is likely to be a much tougher battle,” he said.

Inflation has soared around the globe this year owing to sky-high energy and food bills.

This has been caused to a large extent by supply constraints after economies reopened from pandemic lockdowns and in the wake of Russia’s invasion of Ukraine.

The dollar has soared as the Federal Reserve moved earlier and more aggressively than other central banks to raise interest rates and contain inflation.



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