Dow Jones cliff-like plunge!Bauer admits: Inflation is not temporary | Anue Juheng-US Stocks

Is US inflation temporary or permanent? Fed Chairman Ball admitted on Tuesday (30th) that it is time to give up the term “temporary” regarding inflation, and that the Fed is considering ending its debt reduction (Taper) months ahead of schedule. Ball These remarks caused waves in the US stocks, US debt and gold markets.

Bauer’s comments indicate that the Fed’s focus has shifted to responding to inflation and its negative effects, rather than the new crown variant virus causing more potential disruptions to the economy. Before the U.S. stock market deadline on Tuesday, the panic index VIX rose by more than 15%, the Dow Jones disk plunged more than 500 points, tentatively at 34,613.61 points, gold plunged directly, and the 10-year U.S. Treasury yield converged part of the decline, tentatively reported 1.47%.

Fed Chairman Bauer mentioned in the hearing of the US Senate Banking Committee on Tuesday that the new crown pneumonia variant virus strain Omicron may have a negative impact on employment and inflation. As the risk of inflation increases, he is considering ending it a few months earlier. Reduce the Taper plan.

The new crown variants increase the uncertainty of inflation. Bauer said: “Greater concerns about the virus may reduce people’s willingness to work, which will slow the progress of the labor market and exacerbate supply chain disruption.”

Bauer mentioned that although the Fed expects inflation to drop significantly next year, it seems that the factors driving inflation will continue until next year.He also said: “With regard to inflation, it is time to abandon the term “temporary”.”

Bauer explained that temporality is defined differently for everyone, and as far as he is concerned, this means that it will not leave a permanent mark on the price. The Fed will use all tools to prevent inflation from becoming entrenched.

Despite Omicron’s aggressive approach, Bauer said on Tuesday that the Fed’s plan to reduce the purchase of debt (Taper) may accelerate, and this issue is expected to be discussed at the December FOMC meeting.

According to the current plan, the Fed will reduce its debt purchases by US$15 billion a month starting in November, and it is expected to end Taper in June next year.

He said: “The economy is very strong and inflationary pressures are higher, so in my opinion, it is appropriate to consider speeding up the pace of ending asset purchases… Maybe a few months in advance.”

The National Institutes of Health (NIH) confirmed that the number of Omicron mutations is far more than that of Delta variants, and can almost be regarded as “another completely different virus.”

Leuthold Group chief investment strategist Jim Paulsen said that the stock market is focusing on Omicron-related news, Omicron may invalidate existing vaccines, and a new and improved vaccine is needed, which may take several months to develop.

Jim Cramer, a well-known foreign financial program host, said that he had to assume all the circumstances, including the discovery of Omicron infection in the United States, the ineffective or useful vaccine, and the lack of immunity of those infected patients, all of which led to the sell-off of US stocks.