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Hello and welcome to World Business Report from the BBC World Service.
I'm Roger Hearing, and on this edition, Donald Trump arrives on the doorstep of his own central bank to pile the pressure on the Fed to lower interest rates.
Also, the luxury goods industry, under severe pressure.
Profits at LVMH are down by over a fifth.
The rise of a new women's football club in the Netherlands.
And we take the temperature of the fandom at the world's most important Comic -Con convention as it opens its doors in San Diego.
But first, the US president doesn't often get closely involved in the workings of the central bank, the Federal Reserve.
But within the last few hours, Donald Trump has left the White House and been driven 10 minutes down across town to K Street to visit the Fed in person.
He's already been on their doorstep metaphorically, roundly criticising everything from the Fed's policy on interest rates to the amount they're spending on a big building renovation project.
And now he's gone to see it all for himself.
Well, here's a flavour of his encounter there with the Fed chairman, Jerome Powell, with the president initially reflecting critically on what he says is the the cost overrun of the renovation.
So we're taking a look, and it looks like it's about 3 .1 billion, one up a little bit, or a lot.
So the 2 .7 is now 3 .1.
I'm not aware of that.
It just came out. I haven't heard that from anybody since then.
It just came out. President Trump speaking there to Jerome Powell, And at this point, President Trump takes out a sheet of paper from his pocket, and he hands it to the Federal Reserve chair.
And here's how Jerome Powell responded seconds later when he'd finished reading it.
You're including the Martin renovation.
You just added in a third building, is what that is.
That's a third building.
It's a building that's being built.
No, it was built five years ago.
We finished Martin five years ago.
It's part of the overall work.
It's not new. Well, an awkward moment.
But later, the president was asked about his threats to fire Jerome Powell.
He said he didn't need to.
To do that is a big move, and I just don't think it's necessary, he told reporters.
Well, let's speak now to Nancy Marshall -Genza, who's a senior reporter at Marketplace in Washington, and she follows the Fed pretty closely.
Nancy, welcome to the programme.
Thanks for being with us.
A pretty extraordinary encounter there, face -to -face, in public.
Well, a sort of awkward moment.
extremely awkward and i would characterize this as a power play because as you said president trump kind of backed off his veiled threats to fire powell but he was still on powell's turf and powell was having to show him around this construction site and then they had that very odd very public disagreement so definitely a power play here from president trump this is is all about politics and that thing about the renovation i mean it might seem marginal but i think it's one of the ways he's trying to suggest he could actually fire paul he said he didn't need to but it's one of those bits where he's
saying oh your cost is overrunning your administration's not working that's a reason to get rid of you yeah i mean some people are speculating that the trump administration may be trying to lay the groundwork to fire paul The Banking Act of 1935 says top Fed officials can only be fired for cause.
Question is, would cost overruns on this project be considered cause?
The OMB director, Russell Vogt, sent a letter to Powell demanding explanations.
And some people have said this could be laying the groundwork for firing Powell, but it's really not at all clear.
All right. Well, Nancy, obviously, the main thing, the thing that he really cares about is interest rates.
And he's still pushing very hard for those to come down.
I mean, what's going to happen?
Is the Fed going to say, well, if he's coming to our house, coming in and wagging his finger, we might change our minds?
No, definitely not.
And as you probably know, the Fed is meeting next week on interest rates.
The other thing is, Roger, Chair Powell does not control interest rates by himself.
itself. There is a 12 -member committee, the Federal Open Market Committee, that votes on interest rates.
And you'd have to get a majority of them to vote to cut rates in order for that to happen.
So Trump is certainly piling the pressure on Powell.
But I really think the Fed is going to stand pat next week.
I do not think they're going to cut rates.
Yeah. So what does it say, though, about the operation of these two parts of the U .S. Constitution?
It's a very odd thing to see.
It is so odd. And the thing is, you know, if Trump were to actually fire Powell, it could really backfire on him and lead rates higher instead of lower, because really the Fed only controls short -term interest rates.
The longer -term rates are set by the market, and the Fed tries to guide them and, you know, with signals about what it's going to do.
But if the market it sensed instability and the Fed was not indeed going to be independent, investors would start demanding a higher interest rate to buy U .S. Treasury bonds because they would be anticipating inflation.
Yes, it's an interesting moment of the consequences and it seemed quite surreal, I have to say, to me looking in.
But Nancy, thanks so much for being with us.
Let's speak now to Loretta Mester, who's a former Cleveland Fed president who's joining us from Philadelphia.
Loretta, thanks so much for being with us.
What was your take seeing this interaction between Jay Powell and the president on Jay Powell's home turf.
Yeah, I mean, it's another episode in the continuing saga of the president trying to get the Fed chair to lower interest rates.
And that antagonism to the Fed and to Chair Powell, Now, no good can come of that because there's a large body of research that shows and experience that shows that in emerging market economies and in advanced economies, you want to have your central bank setting monetary policy, focusing on the goals that Congress or the Treasury has given it.
And those always include price stability.
You don't want the central bank to be looking at short run political considerations, for example, lowering interest rates to lower the cost of servicing the debt, which President Trump has mentioned as a reason why he wants lower rates or making it, you know, gin up the economy before an election, per se, and not care about the inflationary consequences of that.
So you really want to separate out monetary policy and allow the policymakers to make decisions independently from those short run, more politically driven goals.
Yeah, I mean, it's that principle.
It's that principle of independence, which is really important.
And a lot of it's been recognised across most of the Western world.
But nobody should think that today's going to the building project at the Fed is because of the building project.
I mean, in general, right, you want to have Congress hold the Fed accountable for their monetary policy decisions and also hold them accountable for other aspects, including building.
But that's not what today was about.
Today was another example of trying to put political pressure on the Federal Reserve.
And that's undermining credibility of the institution.
But it also is going to make it much more difficult for the next chair coming in.
And so, again, I don't believe it's something that is actually, even if you put yourself in the administration's shoes, it's going to be productive.
And I agree with your reporter who had said, look, it may not even, lowering interest rates today, especially as aggressively as the president has said he wants to lower them, will actually lead to lower long -term interest rates.
In fact, it may boost them because market participants are going to be worried about higher inflation and the loss of independents.
And they're going to demand higher interest for actually holding U .S. debt.
So it doesn't seem like a winning strategy.
No, and it does seem almost literally Donald Trump moving his tanks onto the lawn of the Fed in that way.
I mean, performative, as you say, but clearly intended to be taken as a bit of pressure.
pressure. In the end, is there a threat, do you think, to the independence of the Fed?
Well, I think they're trying to influence monetary policy decisions, but they won't be able to do that.
Jerome Powell and his Fed policymakers are not going to change how they go about their work.
They're going to focus on price stability and maximum employment, which are the goals that they've been given by Congress.
They're going to do sound analysis.
They're going to consider or the risks to both parts of those goals.
And they're going to set monetary policy to the best of their judgment, consistent with achieving those goals.
However, it certainly does complicate the monetary policy process because instead of talking about economic fundamentals, the Fed has to do more work to realign market expectations and the public's expectations with those fundamentals.
All right. So it's not helping.
OK, well, Loretta, thank you so much for speaking.
Just really appreciate your time.
I'm Loretta Mester there, former Cleveland Fed president.
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Now, LVMH is one of the biggest names in the luxury goods sector.
Think champagne, think jewellery, think handbags, and much more.
Well, the French -based company is going through hard times.
Net profits plummeted 22 % in the first half of 2025.
Now LVMH blames what it calls an unsettled economic and geopolitical backdrop.
But they say they are anticipating a good outcome soon from trade talks between the US and the EU, and that could, of course, have an effect on all this.
But what is the scale currently of the company's problem?
Joining me now is Pauline Brown, who's the former chair of LVMH North America and author of the book Aesthetic Intelligence.
Pauline, thanks for being with us.
Okay, what do you read into that massive drop in profits with LVMH?
Well, two things. Number one, if you look at the top line before we look at the bottom line, it's continued to see erosion.
The market was expecting that.
It was actually a little more severe than the market expected, but close to in line.
What was not close to in line is that there was a lot of spending to get less deceleration than they've seen the prior quarter, but still deceleration.
So what do I make of that?
I make that they're using their resources to try to stem the bleeding, but that it is bleeding and the momentum is still moving in the wrong direction.
And is that bleeding mainly from the whole tariff issue?
No, no. In fact, if anything, I think that was a little bit of relief today with the U .S. being a big market, an important market.
It looks like it'll be, if things go through as planned, at about 15 % level.
So not as bad as was threatened, still more than anyone would like.
And this is not a time in the luxury industry's health that they can take any amount of taxation above and beyond what they've been dealing with.
So I wouldn't say, but I would say the issues of the last quarter go much deeper and broader than any geopolitical issue.
OK, well, give us a sense of what those issues are.
I mean, essentially, these are things that people buy to show off the wealth they have in good times.
Is it the problem that they don't have that wealth in the way they did?
Well, the aspirational customer, which is where a lot of growth has come over the last 10 years, does not have the wealth, you're right.
But the more stable buyer, buyer, which is call it the top 10 percent in some cases, in some brands like Allure Piana, even the top 1 percent of socioeconomic, their wealth is is not terribly affected.
In fact, in some cases, if they're in Silicon Valley, your wealth has never been better.
So I don't think it's a wealth.
It's a it's a wealth issue per se.
I think it's a confidence issue.
I also think it's a perceived value issue.
So a lot of the luxury brands, not just LVMH's brands, during the sort of pandemic period really into about two years ago, they took price up quite aggressively and they did because the demand was strong.
But they took it to a point where now even very wealthy customers are saying it is not worth spending 50 % more on a bag that I could have gotten for a significantly lower amount just five years ago.
But what about the tactics that are being used to deal with this?
I know the leader of LVMH, the CEO, took, you know, opening a factory in Texas, pushing to create things in the US, which in terms of the tariff environment is certainly going to help.
Is that a way forward?
No. Number one, that is a helpful headline in certain, you know, tense political moments.
The reality is that any US production is still nominal for the company.
And if you look at the actual performance of those US -based manufacturing operations, they haven't delivered at the level that the company would hope for all sorts of reasons that extend beyond, you know, beyond simply the economics.
economics. Yeah. Pauline, thank you so much for being with us.
Pauline Brown, the former chair of LVMH North America.
Well, let's have a look at what was going on in terms of the markets in response to this and, of course, many other things happening.
Joining me now is Kuei Onwen, who is chief investment officer of Equity Strategies for Research Affiliates.
Kuei, thanks for being with us.
I mean, actually, one of the things that caught my eye today was full up really on something we were chasing earlier in the week.
Tesla, their share price is really really taking a battering at the moment isn't it?
Well sure I mean this is a company that's facing increasing competition they are having difficulty scaling as much as they should be and I think that people are looking at Elon Musk's multiple distractions you know and it's not just the politics it's all the other companies that he has to pay attention to as well and wondering you know know what does the future hold also at a time when ev incentives are going away in the us so it's a it's a tough it's a tough uh road to hoe for them you know with all of that happening yeah and also as you say the many uh things he has uh under his control one
of them of course being starlink uh the the internet service and that had a very embarrassing day massive outages and i think they got back something up back up and running now but again it all it all eats away at the image of confidence that is what he lives on oh absolutely I mean I think Elon Musk the success of all of his companies is really his ability to sell a vision and a dream and to gather the vast amounts raise the vast amounts of capital that he needs for all of these types of companies I mean Starlink was not a capital efficient project let's say and Starlink in some ways is is a victim
of its its own success.
You know, the more people use it, the more likely it is going to have these issues and the more operational investment and improvements it needs.
And it's very, very difficult to, you know, continue to have that kind of capital investment into that kind of system.
Now, Kwe, at the beginning of the program, as you heard, we're talking about the visit of Donald Trump to the Fed, confronting, of course, Jay Powell on his own turf, and all all the issues of pressure regarding interest rates.
And we know we've got a meeting of the FOMC, Free Market Committee, coming up next week.
Interest rates very much in focus.
What would the market actually want now, right now?
Do they want a big cut or are they content with the way the Fed's handling it?
You know, I think the markets, well, equity markets would always love a big cut.
But I think that the meddling by the White House is making it more difficult for the Fed to cut, and also making it more difficult for the markets to celebrate a Fed cut.
You know, at the same time, what we're seeing is they're sitting around, they're waiting.
The economic data has actually been pretty good on the growth side.
And we're still waiting to see whether or not inflation really comes through because of the tariffs.
So in some ways, sort of a wait and see attitude that they're taking is justified.
to fight. Quite interesting times on all that, of course.
Thanks so much for running us through that quay and when there of equity strategists for research affiliates.
They're joining me here on World Business Report.
Now, women's football is dominating the sporting agenda at the moment.
This weekend's international champions will be crowned in both Africa and Europe.
But soon it will be back to the club game where women's teams must compete for investment and coverage with the men.
Now in the Netherlands there's a new women's team and as Matthew Kenyon reports, its founders believe it can be a successful business too.
I'm in a bar in Rotterdam surrounded by football fans.
It is in some ways the traditional Dutch sporting experience.
Everyone's decked out in orange, the beer is flowing.
This is Bar Lainey.
It's named after the first woman to score an international goal for the Netherlands and she's sitting over there actually and it is thought to be the only bar in europe focused on women's sport for now bar laney is a pop -up once the current women's euros football competition comes to an end it's going to close but the founders are hoping that the enthusiasm for women's football that they've captured here is going to translate into the long term and that's true of the founders of of another institution as well, an altogether bigger and perhaps riskier investment.
Because at the start of the new Dutch women's domestic season in September, there's set to be a new name on the fixture list, a women's only top -flight club called Hera United.
I believe you always should ask why are we doing things like this?
And it's the same in football.
why do boys get good balls get a referee get good coaches and why girls not just by asking the question everybody goes like hmm this is barbara barrent one of the co -founders of hero united we accept the status quo well some people don't start questioning it and then you already see the change we're talking in an office in amsterdam's historic olympic stadium where where Hira United have their headquarters and will play some matches.
Susan von Tienen is another co -founder.
She's responsible for the business side.
It's not only about building the business of football, it's about that we are actually creating a movement, that is that we stimulate every girl to be a Hira.
And then I think that also resonated with the investors.
They also have seen, if you love football, you can see the impact also from the Euros on massive groups.
And we believe if we can give that attention to female football, it has a ripple effect of both the girls playing football and being stimulated, but also of partners and broadcasters and everyone in it.
In the men's game, obviously, a vast amount of money comes pouring in from television rights and media rights more generally.
That's not the case in the women's game.
So where does the money come from?
Is it individual sponsors that you have to go around and knock on people's doors and say, we want you to sponsor us?
Yes. So I think the business case there is built similar to the men's game.
and we also look at other countries and obviously also depending on the country, depending on the club, somewhere around 10 to 30 percent comes from media rights and we have to fix that.
The moment is not now yet but as I worked at ESPN and also at Disney and I think also if you look around the globe there is potential and the only way is up.
The time scale has been astonishingly tight.
They first started thinking about this in 2023 and have only a few weeks left to the start of their inaugural season and Hira hasn't just been a financial challenge.
They had to get a change in rules from the Dutch football authorities to allow a single sex club to join the professional ranks and of course they had to get a team together so they've done a deal with one of the traditional professional clubs Telstar to take over their women's setup.
top. What we're basically doing is showing the rest that by focusing on this women's and girls game, you can really build a solid business case.
And actually, we can hand it over to other clubs if they want to follow our example.
But we want to show by investing first, how you can create all these things, how you can get sponsorships, different sponsorships, because it's a different group also that goes to women's football.
So we want to really set this example by being something something different, hoping that the whole women's football will benefit from this.
And maybe one day, in the not -too -distant future, Bar Lainey in Rotterdam will be packed out with fans watching Hero United in the Women's European Champions League.
A dream, perhaps. Matthew Kenyon reporting there from the Netherlands.
Now, Comic Con 2025 is kicking off in San Diego.
It's the world's largest fan convention, emphasizing comic books and comic book culture, with comic book fans gathering to meet creators, experts, and each other.
Now, it brings over $180 million into the city, and it's often the occasion for the announcement of new films, games, TV shows, projects.
Let's talk now to KJ Matthews, Los Angeles -based entertainment news journalist. KJ, thanks for being with us.
What are we expecting?
Because this is often a time where you get some interesting news, films, all that kind of stuff.
What are we going to hear?
Of course. You know everybody's waiting for Comic -Con.
This is the largest convention, especially for all the Comic -Cons that happen around the world, but the largest one in San Diego, California.
This year, you can expect George Lucas, Mr. Star Wars himself, the creator of Star Wars.
This will be his first time appearing at Comic -Con.
Can you believe that?
He's going to be discussing the opening of his new Lucas Museum of Narrative Art, based in Los Angeles, which is supposed to open sometime early next year in 2026.
So he's going to be there.
And you know, over the years, you've probably seen all the pictures of people that show up in various Star Wars characters throughout the years.
So I am sure when he makes his appearance and he walks through the hall and walks on stage, you'll have a long line of people wanting to either speak to him, get his autograph, hear what he has to say.
So Of course, you're also going to have the creators of South Park, Trey Parker and Matt Stone.
They've been coming over the years.
So it's not their first time coming to the San Diego Comic Con, but they'll be at the convention for the first time in nearly a decade.
They're joining the Beavis and Buttheads, Mike Judge and Digman creator Andy Samberg for a panel that's happening on Thursday, which is the first day.
So a lot happening there as well.
And, of course, you're going to see some movies that are supposed to be coming out later in the year.
You know, they're going to be talking about Alien Earth, which is planned, and I think Badlands is planned as well.
So a lot of different movies scheduled to have their premiere there.
You're going to have the cast of people, the characters there as well, and the actors.
So, yes, look for that as well.
It'll be fun. But, KJ, one of the things I think I saw was that Marvel aren't making that big a splash this year.
Some suggestion they've got other projects they don't want to reveal them, something like that.
Yeah, that's the case.
You know, everybody's scaling back this year.
I think, you know, the numbers are they're saying that there's still going to be more than one hundred and thirty five thousand people over the four days for the San Diego Comic Con.
I mean, still bringing in one hundred and sixty million dollars as a regional impact.
And it's still bringing in three million dollars in tax revenue from the convention, you know, to go to local much needed services.
Services. However, however, with all that said, yes, some of the studios have scaled back.
You know, it could just be an economic time that we're in.
But look, San Diego isn't complaining.
They'll take the tax money and the hotels being crowded and the restaurants having a line around the corner any day.
Yeah. Now, KJ, you've been to a number of these things.
Are they fun? I mean, are they more than just, you know, a way of selling stuff?
You know, I'll say the first First time is the best time.
I went years ago my very first time, and I loved it.
You know, there's all these people that line up, I feel like, at the crack of dawn with all their costumes on and their cosplay, and it's fun.
It really is fun to see them.
They're all dressed in sci -fi and fantasy and superheroes and anime.
So the thing I like about San Diego Comic Con is that you get the true fans, the people that buy these tickets, that pay for the hotels, that fly in to San Diego.
it's because they're the biggest fans of these franchises and then you know all these characters and stuff so you are getting true bonafide fans that are coming there and that's exciting to see of course always thanks so much for being with us kj uh looking there at the comic con which is just opening now in san diego well if you're there and you're listening have fun bye Bye.
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