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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's pick for a new Federal Reserve Governor is questioned by the Senate ahead of a confirmation the White House believes could influence the Fed's interest rate policy.
Also, we look back at the life of Giorgio Armani, the giant of world fashion, who's died at the age of 91.
And after a raid on one of the world's biggest illegal sports streaming groups, how far can pirate streams be prevented?
But first, Donald Trump's choice for a new Federal Reserve governor has been in front of the Senate for confirmation of his place on the board of America's central bank.
The plan by the White House seems to be to get Stephen Myron, currently a presidential advisor, on board before the next Fed meeting on September 16th, in order to try to influence the decision on a possible cut in US interest rates.
Meanwhile, the Fed governor, the president claims to have sacked Lisa Cook, is now the subject of a criminal mortgage fraud probe by the Department of Justice.
We'll talk about that in a moment, but during Stephen Myron's confirmation hearing, Democratic Senator Elizabeth Warren grilled him about rising living costs and his allegiance to Donald Trump.
Fed Governor Waller, who President Trump appointed.
Private sector forecasters, small businesses and families are all telling us that the costs are up up, up.
Do you think those families and data experts are lying?
Senator, thank you for the question.
I believe your question is conflating relative price increases with inflation.
Do you think they're lying?
There has been no detectable increase in the aggregate price level as a result of tariffs.
You know, Dr Myron.
You have made clear that you will do or say whatever Donald Trump wants you to do or say.
And that may work in a political position, but it takes an axe to fed independence and will make life far more expensive for American families.
A flavor of some of the debates on Capitol Hill.
I asked Michelle Fleury, our New York business correspondent, if Stephen Myron is now likely to be confirmed by the Senate.
I think it is likely to go through.
If you look at the hearing that happened on Thursday, it largely fell along party lines.
So, even though Republicans may have some questions or are concerned about the independence of the Federal Reserve, they are also wary of crossing Donald Trump.
And I think that was reflected in the tone of the questions.
In fact you had one from Republican Senator Kennedy, who is from Louisiana, who basically picked up on an earlier comment from Democrat Elizabeth Warren about saying are you a puppet of Donald Trump?
Which allowed Mr Myron to basically repeat a pledge he made throughout the hearing, which is that he is determined to kind of preserve the independence of the Fed.
But here's the thing.
Many were sceptical, at least on the Democrat side, in part because Mr Myron has said that he intends to keep one foot in the White House even whilst he is at the Fed, that he intends to take unpaid leave from his current role rather than resign.
Because this is a temporary position in theory at the Fed, isn't it?
But it will be.
Potentially we'll see him in position for the next vote of the FOMC, the committee that decides about interest rates.
So that's it.
Donald Trump picked Mr Myron Stephen Myron, who is currently at the Council of Economic Advisors a key sort of economic advisory role within the White House to the president to be the replacement for a Fed board governor who unexpectedly resigned with about four and a half months left alive on her term.
So this is a temporary position.
And in fact, Mr. Myron said, if he was confirmed for longer, he would indeed resign.
But what the problem is here is that for Democrats it didn't dispel their concerns, which is that they are worried that if you're still effectively kind of potentially going back to a job at the White House, can you really be independent of a president who has made it very clear that he wants interest rates much lower and has been not shy, shall we say, of sort of expressing his views very loudly and very clearly?
It clearly is part of a move by the White House to get what it wants, if it can, out of the Fed.
And I suppose what's happened to Lisa Cook can be seen in the same context.
In theory, she's a serving Fed governor, though Donald Trump claims to have sacked her.
And she's now the subject of a criminal mortgage fraud probe by the Department of Justice.
Yes.
So you know, this campaign against the Federal Reserve started with Donald Trump pushing to see the Fed chair, Jerome Powell kind of moved out of his position.
But that was abandoned.
And the focus seems to have switched to Lisa Cook.
She is one of seven on the board of governors.
She was appointed by Biden.
And the pretext for it, because you cannot fire someone from the Federal Reserve without cause.
And so the cause in this particular case that the president is citing is alleged mortgage fraud.
Now, so far, those allegations have not been proven.
And we learned on Thursday that the Justice Department has apparently opened an investigation.
This is all going on in the background.
Lisa Cook herself is suing both the Trump administration but also the Federal Reserve to stay in place.
All of this, of course, as you say, because we've got interest rate policy meeting coming up on September, the 16th and 17th.
So there are questions.
Will Stephen Myron be in place by then?
And will Lisa Cook still be in her job at that point?
Michel Fleury there in New York.
Well, let's take up some of those questions.
Claudia Sarm is chief economist at the New Century Advisors and a former Federal Reserve economist herself, who joins us now from Washington.
Claudia, thanks for being with us.
First of all, Stephen Myron.
What do we know about him and his views on the kind of things the Federal Reserve is going to have to decide?
Well, unfortunately for anyone who listened to today's hearing, as I did, we learned nothing about Stephen Myron's views on monetary policy, which typically we would learn about at a hearing like this for the position.
What does he think about... you know, interest rates and, you know, the technicals, the data.
He wasn't asked a single time to explain how he thinks about monetary policy.
So we really don't know much about that.
I mean, he has worked, there's previous writings and he is a serious, thoughtful candidate for this position.
I don't think that's the issue.
It's just.
What we learned a lot about were the concerns around Federal Reserve independence, which basically boils down to who's in charge of setting interest rates in the United States.
Yeah, which is obviously a crucial thing.
And the likelihood is if indeed he is confirmed, it seems he will be 16th of September, the next meeting of the FOMC, the committee that decides interest rates.
Pretty clear he's going to vote to lower rates, isn't it?
Yes, yes.
I would fully expect him to vote to lower interest rates at all the three meetings that are still left in this year.
And that isn't a game changer in terms of you know, the majority of the FOMC.
There's 12 members on the FOMC.
He'd just be one vote.
You know, but again, it's really important to look at his confirmation hearing, particularly this issue about him staying on at the White House as he goes to the Federal Reserve.
This is just a long running now pressure campaign by the White House to gain more and more control over Interest rate policy.
It won't be a game changer in September, but it just.
It fits in this, this direction we've been headed in during this the Trump administration.
I think that's what gets people really concerned about where is this headed?
Donald Trump says he sacked her.
She's suing on that, legally speaking.
And now, it seems, she's also the subject of Department of Justice criminal investigation over her mortgage arrangements.
Again, you see that as part of a patent.
Right.
And it is the case that you know, when the Federal Reserve Act was set up, there were protections so that this didn't happen, so that you didn't have governors who were in fear of being removed just because the president wanted to have more control over a rate policy.
Do you think that the independence then of the Federal Reserve is under actual threat?
Do you think we might be talking about a situation in which the Federal Reserve is no longer seen as an independent central bank before long?
It is absolutely under threat.
Last week was a big escalation where it moved from just words.
President Trump has said he wants interest rates lower.
He's called Federal Reserve Chair Jay Powell names.
He has threatened to fire him, talked about the construction.
There have been a lot of words.
But last week in trying to actually remove Lisa Cook from her position, it moved to actions.
And then this week making the action of we're going to send someone to the Fed but keep them at the White House at the same time.
Like we've moved over into a space where words are becoming action.
I think that makes it a much more serious risk.
And we saw no pushback whatsoever from Senate Republicans and part of their job.
And this is one of the safeguards with the Fed is really to vet the candidates that come in.
Presidents always have influence over who comes in.
But then the Senate checks to make sure.
Are you qualified?
Are you going to go do the job as we intended and not just follow the president?
So you don't think that the legislators are doing that?
Because, I mean, as you say, historically, the president nominates members of the board.
The Senate looks at them and generally confirms them.
So in a way, there is political control anyway.
Is this really that different?
There's political influence, right?
The president nominates.
Of course, he's going to pick somebody that he agrees with their positions.
The Senate confirms.
That's another check.
These are long terms.
And you're not supposed to be able to get fired because the president doesn't like what you do.
So that gives you some protection to then you're at the Fed, you do what you think is the right thing for the data and for the people, right?
So it's all set up to kind of work in a way.
It's not perfect.
And sometimes politics do get in more than they should.
And there are certainly episodes in history in the US and around the world where it happens and it does bad things, causes high inflation, like things go off the rails.
But the idea here is there are safeguards.
We're just not watching the –
There's a lot of words.
Everybody's saying Fed independence is important, but there's not a lot of action behind it right now.
It's an interesting moment.
Claudia, thank you for being with us.
Claudia Assam there on the line from Washington.
Well, let's see how all this has been playing.
In the markets, Kerry Leahy, economist at Columbia University in New York, joins us now.
Kerry, thanks for being with us.
Well, all this pressure on the Fed obviously affects what the market thinks will happen on September, the 16th, when the vote is on interest rates.
So what is the market reading into it?
Well, right now they're reading into it that you have a higher probability of a 25 basis point or one quarter percentage point rate cut this month than you did a day ago or a week ago, because the markets are generally up and it really wasn't based on too much earning news.
The earning news was pretty good.
So I think the market is comfortable.
Where you are seeing the nervousness is the so-called spread between what you earn in the 30-year treasury market and the 10-year treasury market, which is an inflation indicator.
And that has gapped about 25 basis points in the last six weeks when things got heated up in the political economy side.
So there is some nervousness in the marketplace, even though the overall level of rates is low.
The spread between the 10-year and the 30-year is telling you.
There are at least some people who trade the market actively who are getting some indigestion.
OK, what about the other data that's coming in?
Because we are at an interesting point of the month, because we've had a private employment report, the economy adding 54000 jobs, rather fewer than expected last month.
And, of course, we've got the tally of new jobless claims slightly higher than forecast, all suggesting that the job area is getting a bit softer.
And of course, you've got non-farm payrolls the really key data on employment coming out tomorrow.
So how is all that being read?
Well, once again, favorably.
Normally you don't want to stick your neck out on the afternoon before the jobs report.
But the market was up and up quite substantially, about three quarters of a percentage point.
So the market's saying you're having the best of all possible worlds.
You're getting a slowdown in both the supply and demand markets for labor.
So even though both are much, much weaker than they were, softer than they were three, six or nine months ago, the unemployment rate hasn't gone up.
So the market, so the labor market, is still okay.
Then finally, if that is actually the case, the fed is in its, in its wisdom, is going to think maybe it's a good time to lower rates.
The inflation numbers are not that bad.
That could change with the next number.
That happens the day before they meet.
But But generally, the market's saying what's happened in the last week on the ADP and elsewhere is telling us the Fed's more likely to cut rates 25 basis points.
No 50, but 75 by perhaps the end of the year.
And the one word we haven't really used in this conversation, of course, is tariffs.
And it was interesting hearing what Stephen Myron was saying on Capitol Hill, saying that there weren't real problems coming from the tariffs as far as ordinary Americans are concerned.
Again hard tariffs, and we now know pretty much where everyone stands, I guess, unless things change again.
Are they affecting the way markets are looking at the economy?
Yes, they are, but they are taking the favorable view that both conservatives and liberals on the Federal Reserve are taking, that it's going to be a one-off effect that will not roll its way into wages.
Meaning if workers wake up six months from now and say gee, my purchasing power is down because of those darn tariffs, I'm going to demand from my boss a raise to make up for that.
They don't think that's going to happen, mainly because workers don't think they have the leverage.
Right.
Kerry, thank you so much for being with us once again.
Kerry Leahy there, economist at Columbia University, joining us on the line from New York.
You're with World Business Report from the BBC World Service.
Now, he was one of the biggest names in global fashion.
Giorgio Armani has died at the age of 91.
The Italian fashion designer and billionaire brand owner originally worked briefly as a window dresser before going on to dress some of the most famous people in the world.
Let's talk now to Oscar Sand, who worked with him.
She's now an academic director of Master in Luxury Management.
ESSEC Business School in Paris.
Thanks so much for being with us.
Now, you spent years working with Giorgio Armani right next to him.
Just tell us, what sort of a man was he?
Mr. Armani was a genius, a legend, and very hardworking.
And every morning.
If you work with him, if you are fortunate to work with him, then you know that every morning at nine o'clock sharp he'll be in the office.
And even until just a few months ago.
When I first joined his first Paris haute couture fashion show in Paris and I was there and I was really, really impressed by the way he worked.
He basically spent three days long in the backstage preparing the fashion show.
The first day he prepared all the garment, the pieces, the look, the accessory, doing all the mix and match.
The second day, he tried on the model, he kept changing, you know, find the perfect match.
And the final day he rehearsed everything on model, under the exact catwalk, under the exact music and lighting.
The moment I saw him, I was feeling like such a famous designer, and he handled everything by himself.
He clearly was someone who really wanted, as you say, to be very hands-on.
Is it possible to say what it was that he brought?
Because he obviously had a magic, a real magic that he brought to the way people looked, the way people dressed.
Is it possible to get a sense of what it was, what his unique vision was?
In my opinion, his vision is to create a fashion world that is suitable for anyone.
It's not just for the rich, but for people who love fashion.
And I think you know his vision of elegant is not about, in his way, elegant is not really about being noticed.
It's more being remembered.
It's very subtle, but it's very, you know, very, very strong and powerful.
And if there was one dress, one garment that really summed all that up, what would it be?
And his deconstructed jacket.
You know the way that he changed a very structural jacket and becoming very relaxed and the silhouette that is really Armani.
And also the color, the beige, the gray.
This is, you know, really significant and very obvious Armani tone and Armani style.
Beige and grey, you think on the surface, that's in a way restrained.
Was that part of it that it wasn't out there, it wasn't loud, it was restrained and subtle, but very effective.
Yeah, yeah, yeah, yeah.
This is, you know, it's signature colour.
And if you walk into any Giorgio Armani flagship store in the world, you will see that particular beige and grey colour tone in every single shop corner in the world.
Same tone, same style, very consistent.
Now, it wasn't just in terms of clothes.
Of course, he expanded his business into well, all kinds of things accessories furniture, perfumes.
He created costumes for films as well.
He widened out really into having such a huge effect.
Do you think it was right to spread his talent in those sort of areas?
Because people would say well, he's very good at making clothes, but is it right to go into all these other areas as well?
Absolutely.
I think he was the pioneer of developing a fashion brand, evolving or transforming a fashion brand into a lifestyle brand.
If you look into the world now LVMH Group, many different brands like Bvlgari.
They all step into hotel business, cafe and restaurant, but he was the first one.
He was the first to create restaurant in the world.
He was the first to create Emperor Amani Cafe and he was pretty much the first one to create the Amani Hotel in the world.
Was he an easy man to work with?
Because often we think of these people.
Very few of us meet him you obviously did as people who are a bit removed from modern life and perhaps a little difficult, because their talent shines and sometimes it's not recognised as it should.
Was he an easy man to work with?
If you're good, he was very easy.
I mean, in a way, what I think is.
You know, he is very as I mentioned, he was very much into detail.
And then he was very demanding.
All of us in the office, we were kind of, you know, scared of him.
But we all love him so much because he's such a, you know, big heart and he's so nice to the people that who work for him, loyal with, loyal to him, who take care of.
You know he took care of a lot of stuff in in the company and one of, for example, one of my uh ex-colleagues that he worked in a money office for ages in milan for his whole life and he got cancer at the, you know, at the mid 50 and mr money went over to him and said to him that don't worry, he will take care of everything.
You know the the the, the operation fee and his, his life.
And he was really, you know, uh fortunate and also very blessed to have him next to him and support him for the whole time that, you know he was facing the cancer.
A remarkable man for so many reasons, clearly.
Absolutely.
Oscar, thank you so much for giving us a sense there of what Giorgio Armani was like.
Giorgio Armani, who has died at the age of 91.
Now, do you watch football?
Do you watch sport on TV or on your computer?
Well, around the world, those who won't or can't pay to view sport watch it illegally on pirate streams.
Sports broadcasting is, of course, big business, with the total value of media rights across the world passing the 60 billion mark last year, with rising costs of rights deals being passed on to fans at home and compounded by the need for subscriptions to multiple platforms showing different matches.
Well, many people have resorted to illegal streams to get around that.
Well, now police have shut down the world's largest sports piracy site StreamEast, which recorded more than a billion visits in the past year.
The Alliance for Creativity and Entertainment said it worked with police in Egypt to close down the site, which had been visited more than 16 billion times.
But will closing a site like that down actually make any difference when there are so many other pirate streamers out there?
Let's talk to Erin Cohen, who's founder and chief problem solver at Video Valet.
That's a company that provides legal solutions for streaming live sports and television.
He joins us now from Beverly Hills.
Eric, thanks for being with us here on World Business Report.
How big a challenge is illegal streaming for the sports and TV industry?
Well how big of a challenge it is.
You know 16 billion uses in one year alone were accessed on StreamEast.
And yet, as you pointed out, it's still a $60 billion industry.
So...
It's really extraordinary the amount of income.
And you can see that four of the six largest companies in the world are the ones that are in this feeding frenzy for these professional sports deals.
Hardly surprising in that situation, because I mean to do that to get that income.
You charge a lot of people money for subscriptions.
A lot of people don't want to, or can't perhaps pay that, and will go to something that's fairly easy to do, which is to go on to a pirate site like this one that's been closed down.
So closing something like Stream East, is it going to make much difference?
Because these people are going to continue putting this stuff out and these big sports people are going to lose money.
Well, that's a good question.
It's an excellent question.
We don't know, because it's so analogous to back in the day what happened with Napster, where people just it was the norm to go ahead and download music.
And this was a music site that put it out there illegally.
Yes, I'm dating myself.
But exactly, Napster was a way that everybody had become the norm to go ahead and get music by downloading it without any consideration for the copyrights or legality.
And what happened was it was shut down just like StreamEast was.
However...
What happened at that point in time was Steve Jobs put together a coalition that gave consumers the ability to purchase songs at 99 cents and brought this splintered framework that was the music industry together.
So on one hand, it is people that are looking to save money.
But what I think is missed in the story is just how complex trying to go ahead and watch your favorite football matches.
Basketball matches are due to the ever-changing environment.
At Video Valet, we do that for ultra-high net worth individuals, as they're flying on their private jets, so that they don't have to go ahead and deal with those issues.
But of course, most of us don't have that kind of luxury.
So I suppose the point then is you talked about how something like Napster had been undermined by providing reasonably cheap access.
Is it now time to have some kind of Spotify, if you like, or something of that kind, for watching sport on TV, for streaming sport?
And then the cost being quite low would undermine the piracy.
Well, that is a great question.
And because the players are Amazon and Apple and Google and all the other conglomerates, they would all have to get together and have an essential kumbaya on how they're going to come together.
And I think that they're making so much money that there's really no interest in that.
If they're making that much money, then they don't really care about the piracy, I guess.
Well, they do because they, because and this is you know I woke up reading this story and I was irate because we offer a legal solution for all of this and for the norm and the acceptable nature of somebody to go ahead and be able to access all of that content for free, with impunity or any consideration or concern for royalties or licensing.
That's not okay.
So what really was going to end this and what is going to stop this is when there's accountability, or at least the fear of accountability from the users by streaming this illegal content.
But how is that even possible?
I mean, you can raid something like Stream East, but there are more going to be happening.
People's living rooms are not going to be invaded by police saying you shouldn't be watching pirates.
Well, I can tell you that, again, people were downloading movies.
And then, all of a sudden, the same people who were behind breaking the Stream East sports streaming started to go ahead and you would get letters from your Internet provider saying hey, we know you downloaded a movie and we're going to fine you.
You don't have to fine everybody to go ahead and put that back potential fear in.
But when i tell you that the actual sports team owners management will go ahead, mr lebron james, all right eric, we're gonna have to leave it there.
Thanks for talking to us.
