On September 13, local time, just when Wall Street was filled with a "gloomy cloud" atmosphere due to sustained inflation, US President Biden held a celebration at the White House for his signing of the Inflation Reduction Act last month, which was quite surprising and ironic.
On the same day, the latest U.S. inflation rate for August reached 8.3%, higher than expected, and the three major stock indexes also plummeted across the board. By the close, the Dow Jones Industrial Average was down 1276 points, or 3.94 percent, the S&P 500 was down 4.33 percent, and the Nasdaq Composite was down 5.16 percent. The NASDAQ recorded the largest one-day decline since mid-March 2020, and the S&P 500 index and the Dow both recorded the largest one-day decline since mid-June 2020.
The analysis believes that the high inflation rate has once again intensified the market's concerns about the Fed's continued aggressive interest rate hikes, and investor sentiment continued to be under pressure on the day. As Biden celebrated the bill called "inflation cuts," but the reality is that inflation has not been effectively mitigated, people on social networks such as Twitter immediately reacted to such absurd scenes in the United States that day.
WHEN CNN and MSNBC delivered a speech praising the Inflation Cut Act on the day of live broadcasting Biden, they seemed to realize that "the timing was not right" and immediately cut off the signal during the live broadcast. CNN then began to report on U.S. stock information, and MSNBC focused on Trump's judicial dispute — the two media never gave the White House a live picture.
When asked later in the day about U.S. stock performance and inflation data, Biden simply responded that "the stock market does not necessarily reflect the overall economy," "the U.S. economy is still strong," and "don't worry about the latest inflation data."
Screenshot of fox news report
On August 16, local time, US President Biden signed the Inflation Reduction Act with a total value of $750 billion, which officially took effect. The hefty spending bill, which includes health care, clean energy and the fight against climate change, is funded by raising taxes on big businesses.
Another name for the Inflation Cut Act is the Climate Act. Because inflation is a particular concern for many Americans today, the Biden administration chose to use the name Inflation Reduction Act. However, many voices believe that the bill will not solve the problem of inflation, but will exacerbate inflation.
However, a month after the bill was signed into effect, Biden held a special celebration at the White House on Sept. 13. He said the Inflation Reduction Act is "the most important legislation passed by the U.S. Congress to combat inflation and one of the most important laws in U.S. history."
Biden held a celebration at the White House on the same day to sign the Inflation Reduction Act
At the same moment that Biden boasted, the much-publicized US inflation data for August had just come out. The US Department of Labor released the latest data showing that the US Consumer Price Index (CPI) rose 0.1% quarter-on-quarter in August, with the expected value falling by 0.1% and the previous value at 0.0%; It rose 8.3% year-on-year, 8.0% above expectations, and 8.5% in the previous value.
Excluding more volatile food and energy prices, the core CPI rose 0.6% month-on-month and 0.3% above expectations and previous values in August, and the core CPI rose 6.3% year-on-year and 6.0% above expectations in August, compared with 5.9% previously.
Inflation data, up 8.3% year-on-year, shows that the level of inflation in the United States has fallen again, but it is still at an all-time high, and the public is still worried about the rise in prices. This can be seen from the reaction of the market on the day.
U.S. Inflation Chart from The New York Times
On September 13, local time, the three major US stock indexes plummeted across the board. By the close, the Dow Jones Industrial Average was down 1276 points, or 3.94 percent, the S&P 500 was down 4.33 percent, and the Nasdaq Composite was down 5.16 percent. The NASDAQ recorded the largest one-day decline since mid-March 2020, and the S&P 500 index and the Dow both recorded the largest one-day decline since mid-June 2020.
The rise and fall of the S&P 500 since its peak on January 3 this year Chart from the New York Times
On the one hand, Biden held a celebration to hype the Inflation Reduction Act to fulfill the pre-election commitments of Democrats, and on the other hand, the market's "mourning" for the latest inflation data attracted the attention of many media and media people.
According to reports, on the 13th, CNN and MSNBC, the two media, noticed that Biden's speech in the White House touting the "Inflation Reduction Act" was "not the right time", and then cut off the picture of Biden's speech, and MSNBC turned to broadcast news related to Trump.
It is worth mentioning that on April 13, 2020, at the beginning of the outbreak of the new crown epidemic, then President Trump bragged about his "anti-epidemic achievements" at the White House briefing, and some media also cut off the live broadcast signal, and the media that took the lead at that time were CNN and MSNBC.
CNN was taking a screenshot of the live broadcast at the time
"Guys, I just read the CPI report. Let's host a rally about inflation, starting with a one-handed song about suicide sung by James Taylor. The irony of what Charles Cook, a veteran contributor to the Conservative American magazine National Review, was that Biden played Taylor's "Fire and Rain" at the celebration.
Josh Kraushaar, a senior political journalist for Axios News, tweeted: "At a time when inflation is still a major problem and the Dow Jones is down more than 1,000 points, this is not a good time to celebrate the Inflation Cut Act." ”
Pictured from Twitter The same below
Fox News contributor Katie Pavlich figuratively said: "Biden is at the White House celebrating a bill that would make inflation worse, while claiming it will reduce inflation, which basically belongs to musicians posing their recliners ready to play while the Titanic sinks into the abyss." ”
Ryan Saavedra, a senior correspondent for the conservative American media Outlet Daily Wire, posted a video of a Biden celebration in the lower right corner showing the decline in the Dow Jones index. "Note that the Dow Jones index shows that Americans' '401k plan' pensions are being lost."
With markets collapsing and inflation rising, Biden is having a celebration banquet at the White House. He had no idea what was going on. ”
"We can never forget the image of Biden talking on live television about how he single-handedly beat inflation, which caused the stock market to fall by more than 1,200 points. This is a historic moment for successive U.S. presidents. ”
Even Ed O'Keefe, a senior White House political correspondent at CBS, noted: "When President Biden and Democrats celebrated the Inflation Cut Act on the South Lawn of the White House, major stock indexes both closed down about 4 percent because monthly inflation data was worse than expected." ”
In response to the criticism of the internet, on the evening of September 13, local time, Biden, who has been to Wilmington, Delaware, briefly responded to the inflation data and market performance released earlier in the day. He said the stock market does not necessarily reflect the overall state of the economy, the U.S. economy remains strong, unemployment is low and manufacturing is good. He added that he was not worried about the inflation data released that day.
Still, the latest U.S. inflation data is seen as an important reference for the Fed's next move. According to the CME Group's FedWatch Tool, after the release of the data, the market completely ruled out the possibility of a 50 basis point hike, and the probability of a 75 basis point hike rose to 82%, and even an 18% probability of looking at a 100 basis point hike.
Brian Coulton, chief economist at Fitch Ratings, said core inflation, particularly service inflation and housing inflation, remained high, worrying the Fed, who realized that the risks of inflation being entrenched and deeply systemic were real and needed to be aggressively taken.
He expects the U.S. federal funds rate to rise to about 4 percent by the end of the year and remain there for a longer period of time, while the rate cut won't happen until at least the second half of next year or later. "I think the trigger for a shift in monetary policy is that the Fed needs to see a clear cooling trend in inflation – especially in the services sector – and be confident that this cooling is sustainable, which requires substantial data support." He said.
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