about 1 year ago • 2 mins
Data out this week showed Elon Musk has been dethroned as the world’s richest person.
What does this mean?
Once upon a time, Elon Musk was worth a cool $340 billion, but it's been a rough year for the love-him-or-hate-him tycoon. Central banks around the world have hiked interest rates like there's no tomorrow, which hit high-flying companies like Tesla particularly hard. After all, the value of any stock is the value of its future earnings discounted back to today, and those earnings – which Musk’s companies are all about – drop when interest rates rise. That’s helped topple Musk's fortune by over $100 billion since January, leaving him with a measly net worth of $164 billion – poor guy. And now that Musk’s poor as a church mouse, French magnate Bernard Arnault has claimed the title of “World’s Richest Person”. Arnault owns about half of the luxury fashion house LVMH, and his empire's surfed a wave of strong post-pandemic demand for highfalutin goods, bringing the Lord of Luxury’s fortune to a staggering $171 billion.
Why should I care?
Zooming in: Home is where the Hermès is.
You might assume that it's jet-owning, penthouse-dwelling socialites driving the luxury boom, but that’s not the whole story. According to Morgan Stanley, record numbers of young adults are living at home with Mom and Pops these days, and they’re snapping up premium goods left, right, and center. Not paying rent means they’ve got cash to burn on tempting, big-label treats – but that’s got to feel like a poor tradeoff when bedtime rolls around.
The bigger picture: Decreasing increases.
Tech billionaires will probably buy themselves some high-end treats this week too, as they celebrate the news that pesky rate hikes are finally easing up. Sure, the Federal Reserve increased rates to their highest level since 2007 on Wednesday, but that 0.5-percentage-point increase was a slowdown from the last four hikes of 0.75.
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