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Hello and welcome to World Business Report from the BBC World Service.
I'm Rahul Tandon. Plenty coming up on this edition.
We're going to bring you the latest on the so -called Sandal scandal.
I think what's interesting to me is that the company is now apologising that it is trying to make amends and that India for the first time really in modern history has a voice in this dialogue.
And we'll hear from a renewable energy business on how changes to government funding in the US may affect them.
But let us start by bringing you the latest on those continuing tensions between President Trump and the chairman of the US Federal Reserve, the country's central bank, Jerome Powell.
This is what Donald Trump has had to say today.
I think he does a terrible job.
He's costing us a lot of money and we fight through it.
It's almost the country's become so successful that it doesn't have a big impact.
But it does hurt people wanting to get a mortgage.
People want to buy a house.
He's a terrible, he's a terrible Fed chair.
I was surprised he was appointed.
I was surprised, frankly, that Biden put him in and extended him.
Now, there's been lots of speculation that he's about to sack Jerome Powell.
This is what President Trump had to say about that.
And that goes for his board, too, because his board is not doing the job because they should try and rein this guy in.
So he's doing a lousy job.
But no, I'm not talking about that.
We get fortunately we get to make a change in the next, what, eight months or so.
And we'll pick somebody that's good and we'll pick somebody.
but I just want a fair job.
We want to see lower interest rates.
Our country deserves it.
So it's been quite a day.
Let's get the latest from our North of America business correspondent, Michelle Fleury.
Talk about a jolt for financial markets.
U .S. stocks went on a roller coaster ride after a White House source said President Trump was ready to fire Fed Chair Jerome Powell, a move that would mark a major departure from tradition.
But just hours later in the Oval office, the president backed off, calming US financial markets.
Now, this isn't the first time Donald Trump has clashed with Jay Powell.
He spent months venting frustration over the Fed's decision not to cut interest rates, something that Mr Powell has said is partly due to uncertainty caused by Mr Trump's own tariff policies.
And while the president hasn't outright said he'll fire Mr Powell, and legally it's not even clear if he can, he did admit to floating the idea with lawmakers.
Mr Powell, for his part, has made it clear that he plans to stay on until his term ends next May.
But tensions are clearly still simmering.
The White House is now targeting a two and a half billion dollar renovation of the Fed's Washington headquarters.
And critics say that's part of a broader pressure campaign, possibly laying the groundwork for trying to push Mr Powell out before his term is up.
Let's bring in Susan Schmidt, portfolio manager, Manager Exchange Capital Resources in Chicago.
Quite a day for the market, Susan.
Just sum up what we've seen.
Quite a day. We've heard this rhetoric from the Trump administration before.
President Trump is very unhappy with interest rate levels, currently at 4 .5 % set by the central bank, and would like Chairman Powell to lower those interest rates.
Chairman Powell has been steadfast in his comments saying that they are going to wait and see what the economic data shows and act when they feel appropriate.
And those two different trains of thought keep dominating the headlines in the US and investors keep swinging back and forth as we see the Trump administration and President Trump with his loud comments really coming out and trying to provoke Chairman Powell seemingly into action.
Stay with us, Susan.
You're going to be with us as always throughout the program.
program. Let's bring in Claudia Sam, our chief economist at New Century Advisors.
She has worked at the Federal Reserve.
And Claudia, thanks for joining us on World Business Report.
Let's start with a principle here, which is important, isn't it?
Which is that the Federal Reserve, the US Central Bank, is independent from the president when it makes decisions.
That is an important concept, isn't it?
Yes, it is independent, particularly in the decisions about monetary policy.
So what's at issue here?
The interest rates.
And we're actually seeing the reason for that independence unfold before our eyes because the Federal Reserve has a mandate both in keeping unemployment low and inflation low.
And presidents, administrations tend to want low interest rates, even if it ends up with some inflation.
So that's why the president isn't in charge of interest rate policy.
It's the independent agency.
And that has worked well in the United States.
work well in a lot of other countries in terms of containing runaway inflation.
We've heard very strong statements from the president today, President Trump, but we've heard him make those statements before.
Did today feel different?
Today felt a little more real, to be honest. And yes, it's true.
We've had these statements.
I think there was an aspect of reporting the firing would be imminent.
We're seeing on major major news organizations, you know, it certainly was a pretty wild, you know, hour or so between those reports and then the president speaking.
And even though he dialed it back to, you know, doesn't have enough planning on firing Powell, the mentions of, well, you know, but if there's fraud, he might have to go.
It does tie into this that it appears with the building renovation, conservation there may be an attempt to put together a reason for cause to fire Powell which which would be allowed under the law if the cause is considered you know up to the the standard I want to bring Susan Schmidt back in here Susan it's speculation but it seems quite clear that the president would like to Jerome Powell to go if that happens before the end of his term.
How can you, will that have a huge impact on the markets?
Investors will not like that.
So it's very important for investors that there is this separation and that the Federal Reserve and the Central Bank of the U .S. is completely separate from the presidency and the White House and the administration.
And if we see that breakdown, I think investors will be very concerned because it takes away that power that the Federal Reserve has to help moderate the economy.
Remember that politicians want to have the economy working well to ensure their next election goes well and that they have a better chance of winning.
That doesn't necessarily lead to longer term stability in the economy.
And so there's a reason to have these two forces very separate and independent.
That's what we're seeing now is President Trump obviously wants to have the economy start accelerating.
Lower interest rates could help that and he's pushing for it.
Chairman Powell isn't having it yet.
Claudia, if we look at this situation, it's fair to say though, maybe Donald Trump's putting a little bit more pressure on, but presidents in the past have expressed opinions on whoever's in charge of the central bank in the US, haven't they?
This isn't not unusual to have political statements being made.
Correct. Many presidents have expressed, you know, we want interest rates lower.
We're not happy with the Fed.
The Fed is a very easy target because it doesn't fight back.
Right. It's a very easy punching bag.
It always gets blamed if something goes wrong in the economy.
I mean, frankly, I think that would be a really good thing to have Powell stay in place because they can keep beating up on the Fed.
But what there's is an aspect of this that the threats that are being made in public with a lot of attention.
I mean, today we saw market movements.
They were modest and they unwound.
But this is really this is very serious.
And it is, you know, applying pressure.
And to me, what has been most disconcerting in recent weeks is the president has emphasized again and again how much the Fed is costing us in terms of our federal borrowing.
And there is a period during World War II, the Fed coordinated with Treasury to keep borrowing costs low because of war.
So it's like the Trump keeps touching on historical points, things that could happen, the logic of it.
So it's just it's really hard to get a sense of what the game plan is.
OK. But final question to you.
Yes or no. Will he go before the end of his term, do you think, Jerome Powell?
i don't know i think the odds are the odds are probably pretty close to 50 50 i mean we got a lot of ground to cover before may of next year that is true and i'm sure we'll be talking to you about it again thank you so much for joining us here on the program let's return to the story that's been dubbed scandal sandalgate even sandal scandalgate prado sparked outrage at the milan fashion week when its models wore Kolhapuri -style sandals without crediting their famous origins in India.
Remember this recent report from our very own Devina Gupta.
Pradas call them luxury footwear without crediting its Indian origin and that sparked accusations of cultural appropriation.
I'm in the western Indian city of Kolhapur where they've been handcrafted for centuries and get their name from the city and are called Kolhapuri chappals.
And unlike Pradas' expensive luxury tree tag.
A pair of them just costs about eight dollars.
That led to an angry reaction from Lalit Gandhi who's president of the Maharashtra Chamber of Commerce.
And it got a label of Prada.
Definitely the value is increased many folds.
We want the sum share of that profit to be shared with the artisans.
Well now a team from the luxury fashion house Prada has been meeting shoemakers in the the Indian city of Kuala Lumpur after those accusations of cultural appropriation.
Pauline Brown is the former chair of LVMH in North America.
Well, the most interesting part to me is not that the inspiring or appropriating or worse yet, stealing of the Indian designs happened.
I think that happens and always has really since colonial times.
I think what's interesting to me is that that the company is now apologizing, that it is trying to make amends, and that India, for the first time really in modern history, has a voice in this dialogue, and that people, whether they're in India or not, really care.
This sort of incident has happened.
Dolce & Gabbana got in a problem with Chinese a few years ago.
If we go all the way back to the early 1900s, Paul Poiré had his incident with what he called Orientalism -inspired fashion.
That was his coining.
In none of those prior cases did we see the reaction by the consumer base well beyond the borders of the country that was hit or the culture that was hit express such outrage.
I suppose when it comes to the world of fashion, how easy is it to tell if something has been copied or something has been inspired from?
No aesthetic trend ever happens in a vacuum.
It is always inspired by something.
In this case, I think that the reason it was just such a clear cut example of more than inspiration is that there was absolutely no adaptation of a sandal design that goes back to the 12th century that is so iconically not just Indian, but associated with this one region, a very specific area of India called Kolhapur.
Or anybody who has been to that area will be very familiar with the sandals.
Anyone who has those sandals knows that they sell on the street from anywhere from $10 to $30.
And they were being worn as is, as they're sold on the street.
Yeah, I've been to that area.
I've worn the kolhapuri chappals as they're known in India.
Now, the fact that we have a team from Prada visiting that area shows that they're trying to deal with the fallout from this because it could have a financial impact on them.
India, a huge growing market, the middle class there.
If people say, hey, we don't want to buy Prada products anymore, that affects the company, doesn't it?
Yes. Well, and I think it's saying a lot about how far and how fast India has come in very few years.
You know, it is the fastest growing luxury market in the world.
It's still a relatively small one.
It's a fraction the size of China, I should say, which has grown enormously in the last decade.
In the case of India, though, it is expected to double in the next 10 years.
If you look at the base of high net worth, it's the fastest growing in the world.
There's a lot of modernization happening.
There's also a lot of cultural pride that is being expressed here.
So I think if not for the advances in the economic might that India is starting to show, we probably wouldn't be talking about this issue.
And do you think Prada's now done enough to deal with the so -called sandal scandal?
Well, definitively not, because they've done nothing.
All they've really done, which isn't really an action, it's a statement, is they've expressed regret.
And then as recently as a few days ago, there was a meeting in the region where the sandals are sourced in Kalapuri.
The meeting was attended by Lorenzo Bertelli, who's the son of the founders, and he runs corporate social responsibility.
So I think he should be there.
And there were some commitments that were made.
But in terms of what was actually done, well, there was no commitment made.
We're going to now buy this many sandals or we're going to pay this much for them or we're going to credit you in this way.
So I think the conversation is really just beginning.
Pauline Brown there with that conversation, according to her, just beginning.
Susan, an important story, this, because it shows the growing power of consumers in those emerging markets to say to some of those bigger companies for more developed economies that, hey, you can't just come in and take our products anymore.
Very accurate. And I think it shows the sensitivity that these larger companies have to the market that they anticipate to be there, to be developed, so that 10 years forward, Prada wants to be one of the luxury brands that's highly regarded worldwide.
They want exposure in India, this large growing market.
This is where many of these companies saw the majority of their growth was in China in the last decade.
And so again, India now, again, bringing that middle class forward, starting to buy luxury goods more so and becoming a bigger presence for these companies.
These companies want those luxury sales.
They want to be brand savvy and very brand prominent globally.
And that means making sure that these large countries and large growing populations are on board and supportive.
It's a story we will keep an eye on.
You're with World Business Report here from the BBC World.
I'm Rodney Williams. And I'm Travis Holloway.
Welcome to the Wealth Break podcast, a real conversation about finance.
Let's be honest. Building wealth doesn't look the same for everyone.
I feel like sometimes being broke is a cycle in that we might have to revisit that.
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What happens when it doesn't go right?
How do you cope with it?
Because wealth isn't just about money.
It's about creating a life where you thrive and help others do the same.
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That's odoo .com. Now, let's move to Russia, where the country's labor minister, Anton Kochekov, has said there could be a labor shortage of 11 million people by 2030.
That could have a major impact on the country's economy.
To find out more about it, I've been speaking to Alexey Rashko, a Russian demographer.
Since 1987 till 1999, so just in 12 years, the number of newborns in Russia halved.
Those people now in the workforce and, of course, we see a severe shortage, but it's not only the Russian problem.
Why has the birth rate fallen so much?
Why don't people want to have children?
Is it the expense? Since 2014, we have seen a quite noticeable drop drop of real disposable income in Russia.
So people started to live a bit poorer up to 10%.
It's a lot in this time.
This situation continued for several years.
So from 2016 to 2018, incomes have not been rising almost at all.
And after that, that started to gradually recovering.
Then we got pandemics, and then we got war.
And only in 2023 or even 2024, the real disposable possible incomes of population came back to the level of 2013.
But now they're on the rise.
But now it's war. Of course, war is not a very, very good time for making babies.
The shortage of 11 million people that the Labour Minister has talked about, how is Russia going to fill that gap?
It's impossible to fill that gap.
In current situation, with current politics, it's completely impossible to fill that gap.
No one will fill that gap, actually.
Not any country. I mean, obstacles to migration and in where the conservatives take power, they of course limit migration because the population asks them to do that.
How would that issue go down in Russia?
Same, same. I mean, it's the same thing.
And by the government, the state propaganda is increasing this xenophobia rhetoric.
It's just putting these into minds of Russians in huge quantities.
I mean, it's a total propaganda of dangerous migrants, dangerous foreigners, Islamization of Russia, so on and so forth.
Of course, the Russian population getting more xenophobic by each month, probably, or staying in a quite high xenophobic level.
So if it's not going to be migration, how do you tackle the problem?
problem. You could provide incentives for people to have children, but that costs money and Russia's spending a lot of money on the war.
So do they have the money to do that?
Theoretically, yes, they could do it easily if they knew how to do it.
If they would listen to demographers, they could easily increase fertility rate at least by 10 percent, but they don't want to to listen to anybody they just are staying in their dreams in their dreams of glorious past and they totally unadequate to the current situation they just don't understand what's going on they don't understand the demographic transition theory the second demographic transition they don't understand they even don't want to analyze their own statistics which they have closed and it's a big news that russia closed its demographic statistics almost entirely.
So you won't see any new statistics from Russia on birth, death, migration.
No, it's classified.
But from what you're saying, the money is there if they wanted to do something about it.
The war hasn't impacted to that extent that there isn't enough money for this.
Russia spends one and a half trillion rubles each year to conquer child poverty.
And it's do this quite successfully.
The child poverty is really went down.
Maternal capital now requires half a trillion rubble.
And of course, because it's for first children, it doesn't rise fertility, it's obsolete.
So if Russian government knew how to actually rise fertility, they should just relocate funding from one direction to another direction, modify the maternal capital program, and they will get 10 % increase in fertility.
But they don't want to do this.
They don't want to hear professionals.
They just don't understand the situation.
I mean, in details.
Let's bring Susan back in on that story there.
It's a fascinating one because that demographic problem, not something that only Russia is getting to grips with.
We have countries like Japan and South Korea, which are facing a similar problem.
them? We do. This is not specific just to Russia.
And in fact, we have China now starting to face this if you advance several decades.
And so you have this population where your older aging population is going to be more numerous than the younger working population.
And when you get to that imbalance, how do your support systems within the government handle it?
And so you have more going out in retirement, retirement benefits supporting the older population, you have fewer people actually at work contributing.
And so it makes for a difficult problem.
Thus far, I think there's a lot of hope being put on increased productivity.
When we talk about AI, that's something, of course, that could contribute.
Technology thus far has eased some of those concerns.
Japan has benefited from increased technology.
We've seen that adopt.
And it's something that countries and governments really do need to be very aware of to try and manage that transition, because populations go in waves.
We see that and governments have to balance themselves to be able to work through the changing labor size.
Can I talk to you about a story that's just dropped in the last couple of hours?
President Trump says Coca -Cola will start using cane sugar in its recipe for his famous soft drink for the American market.
The exact formula has been a A closely guarded secret since it was launched in 1886.
Cane sugar slightly more expensive than corn syrup, which is used at the moment.
It's a fascinating story, this one.
You know, it's true.
We haven't heard from Coca -Cola yet because it shows Donald Trump's not only putting pressure on countries, but companies as well.
That's right. Well, this is not unusual for President Trump.
Remember that when he was first elected and before he took office, He was tweeting at the time about Boeing and the price of his new Air Force One jet and the contract that was being done on that and various other companies in the U .S. And so he's he's quite used to calling out large companies and commenting.
And it is, I think, consistent with his style that when, as we know, President Trump does enjoy Coca -Cola along with other fast foods.
And it's something near and dear to his heart and something that he feels he needs to comment on.
He certainly does. Let's see what Coca -Cola have to say about this.
We talk a lot down with you on this program about renewable energy.
Well, let's move to the United States now, because with the passing of Donald Trump's big, beautiful bill, we've talked about that a lot.
Many of the President Biden's subsidies for renewable energy, well, it looks like they may be coming to an end.
So what will that mean for companies in the sector?
Greg Felton is the CEO and co -founder of Alters Power Works in the solar power industry, providing power.
And he's based in Connecticut near New York.
What's in question is the growth vector.
So when you think about new generation that you were bringing online, those new assets, new projects, were or have historically been supported by the federal government with an investment tax credit representing approximately 30 % of the cost of that solar project.
So the government would provide an incentive in the form of a tax credit.
And that was under the old Inflation Reduction Act designed to be in place for 10 years.
With the new legislation, the one big beautiful bill, that law essentially is designed to sunset the tax credit.
If you lose those tax credits, what would that mean for you as a company in terms of future projects?
Would you have to reconsider them?
Yeah, I think for us in particular, for Altus in particular, growth would be slowed in terms of new development.
But we as a company do grow in a couple different ways.
One is that we participate in the creation of new assets, that's new development projects, but we also acquire projects from others that have been built.
So our focus has been a mix.
I'd say it's fair to assume that we would do much more acquisition of assets already in operation, which are not subject to new limitations, but we'd have less as an industry and presumably Altus as a participant in this industry, we'd have less activity in terms of true new development or new generation that's coming online.
What about the renewable energy industry as a whole?
Is this a critical moment for the industry?
It is. It is without question in a very critical moment.
The law is highly consequential.
There are industry participants who will fail, who will not survive.
And so there's going to be significant volatility.
And bear in mind that there are many projects that are already in motion where developers have spent years developing these sites, investing time and capital.
And that's where the real impact is going to be felt.
Someone said there comes a point where the renewable sector has to survive without subsidies and tax credits.
Without question. I think that's a fair comment.
And I think the question is simply one of how do you provide the industry with appropriate visibility as it relates to the policy and, frankly, an off -ramp that allows the industry to evolve into that new environment.
So how far are we from that environment then?
Are we five years, 10 years?
Right now, what you have in the law is a cliff, meaning one year you have the tax credit and the next year you do not.
And that is a very difficult environment for businesses to adapt to, particularly businesses that have multi -year development cycles that are reliant on many stakeholders to bring these projects from concept into operation.
So very, very difficult to run a company or any business in this sector with that type of cliff scenario.
So, you know, get to your zero tax credit environment, but get there over a series of years rather than through a cliff model.
Greg Felton there. Susan, final thoughts.
I mean, briefly, if you don't mind, there are challenges ahead, aren't there, for the renewable industries in the US if a lot of those tax credits are withdrawn.
There absolutely are.
And we're seeing that as recently as data from Tesla coming out, the number of cars that have been sold by Tesla dropping significantly, largely because those tax credits are going away, continues to be an issue.
The need for power, however, also continues.
And that will help offset that.
It must be met if people want to build data centers and support the AI initiative.
That's it from World Business Report.
