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    Three questions for Jay Powell

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    Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

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    Zimbabwe’s retailers warn of store closures over exchange rate

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    Five months after its launch, Zimbabwe’s new gold backed currency ZiG, which stands for Zimbabwe Gold, is under pressure and has lost almost 80% of its value on the black market – where it trades between 20 and 26 ZiG to $1.Official guidelines require that formal retailers set prices based on the official exchange rate of 14.8 ZiG to $1 or face fines.But retailers, including OK Zimbabwe, Spar and TM Supermarkets – a local unit of South Africa’s Pick N Pay, argue that this overvalued rate is making their products more expensive than those in informal shops, driving away customers.”The situation is clearly untenable and will lead to company closures if authorities do not intervene with policy measures to protect the formal retail sector,” Retailers Association of Zimbabwe (RAZ) said in a letter addressed to the Ministry of Finance and seen by Reuters. The retailers said while they had to adhere to the official exchange rate as required by authorities, their suppliers are charging black market rates, forcing retailers to hike prices.”Implementing a pricing model that reflects real-time market exchange rate fluctuations can help us remain competitive while managing costs,” the retailers said.The treasury could not be immediately reached for comment.The ZiG is the country’s sixth attempt at a stable currency in 15 years and economists say its devaluation points to lack of public confidence in the new currency. More

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    Fed’s rate cut offers limited relief for US factories facing China competition

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    (Reuters) – Drew Greenblatt loves that the Federal Reserve has cut interest rates.But the half-point reduction, the first in what is expected to be a series of cuts, won’t help him win what he calls the “trench warfare” he’s fighting with one of his big customers.That buyer moved work out of China during the COVID-19 pandemic – placing about $800,000 in orders at Greenblatt’s small U.S. factory last year. Greenblatt bought robots and hired more workers to meet the new demand. Then orders stopped earlier this year.”When I asked why, they said they’d gone back to China, to save money,” said Greenblatt, president of Marlin Steel, a Baltimore-based maker of highly engineered wire baskets used in industrial and laboratory machines.Greenblatt’s problem underscores headwinds facing U.S. producers that lower interest rates won’t alleviate, including supply chain snarls, stubbornly high prices for many raw materials, simmering labor unrest in some sectors, and especially, China.U.S. Vice President Kamala Harris plans to roll out new economic policies on Wednesday that aim to help Americans build wealth, and set economic incentives for businesses to aid that goal, Reuters reported. The new policies come as undecided voters seek more information about how Harris would help them economically if she were elected president, the sources said.A key issue in the Nov. 5 election is how Harris and former President Donald Trump plan to respond to the competitive challenge posed by China. The Biden administration has proposed prohibiting key Chinese software and hardware in connected vehicles on American roads due to national security concerns.Greenblatt, the basket manufacturer, is hoping for more aggressive action on trade, and not just against China.”If they put on more tariffs, we’d have more shipments to our clients,” he said. “Instead, our clients are buying from countries that allowed their currencies to be subsidized.”‘CHALLENGING PICTURE’High interest rates make it costlier to borrow or fund ongoing operations and are often cited as a leading contributor to the broad slowdown at U.S. factories since early last year. After adding nearly 750,000 jobs in 2021 and 2022, U.S. manufacturers have shed about 7,000 jobs in 2023 and so far this year, according to the Labor Department. Production at U.S. factories surged in August, according to the Federal Reserve, amid a rebound in motor vehicle production, but data for July was revised lower, suggesting that manufacturing continued to tread water.A report last week from the Philadelphia Fed, meanwhile, pointed to rising supply chain aggravations and a pickup in input costs hitting factories in their region in September.”What the Fed can do is create expectations for short-term growth with a rate cut, which is powerful,” said Cliff Waldman, CEO of New World Economics, an economic consulting firm in Washington that focuses on the industrial sector. Lower rates could encourage companies to move forward with new capital projects.”But that’s really only a small part of the challenging picture facing U.S. manufacturing,” Waldman said.He noted that many producers continue to battle one another over who will absorb the higher costs due to inflation.  Add to this the disruption of global supply chains during the pandemic, which is still playing out.THE UNEXPECTEDFor Kevin Kelly, the latest headache is an unexpected surge in electricity prices. Emerald Packaging (NYSE:PKG), his family-run business, makes plastic bags for produce companies at its factory outside San Francisco and uses large amounts of power to run huge printing presses that put labels and images onto the bags.Kelly said his power bill in June jumped to $350,000 from $290,000 the month before because of higher-than-expected summer rates.  “We just didn’t see that coming,” he said. “We knew there were increases coming through and that the summer rates would be expensive, but we didn’t realize they’d be that expensive.”Utility rates in California are the second-highest in the U.S. after Hawaii, driven up in part by the cost of reinforcing the state’s power grid against wildfires.Kelly is rushing to install solar panels that should help offset some of those increases, albeit after the hefty cost of installing the system. He has also altered the factory’s work schedule, shutting the big machines down for two hours late in the day when rates are highest.”We have people cleaning the presses, doing odd labor around the plant during those two hours, so people are working, but it’s still reduced our output,” he said.Another jolt could come from a major strike at East Coast and Gulf of Mexico ports, which could hit on Oct. 1. Anything on the water now could get stuck on ships and force manufacturers to scramble for alternative ways to move goods, further adding to costs. More

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    FirstFT: China unleashes stimulus to spur growth

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    This article is an on-site version of our FirstFT newsletter. Subscribers can sign up to our Asia, Europe/Africa or Americas edition to receive the newsletter every weekday. Explore all of our newsletters hereGood morning. Today we’re covering:Hundreds killed in Lebanon’s deadliest day since 2006US energy secretary likens scrapping IRA to self-harm The rise of antimicrobial resistance drugsBut we start with a swath of new stimulus measures unveiled this morning by China’s central bank.The measures include cuts to the People’s Bank of China’s benchmark interest rate, government funding to boost the stock market and aid share buybacks, as well as more support for the stricken property sector.The package of measures sent China’s CSI 300 of Shanghai- and Shenzhen-listed shares up 4.3 per cent. Hong Kong’s Hang Seng index rose 3.9 per cent, led higher by mainland Chinese companies listed in the territory. Shares in Europe also rose. China’s economy has slowed this year as a prolonged downturn in the property sector has weighed on consumer sentiment and curbed spending. Economists are sceptical that growth will hit the government’s 2024 target of 5 per cent, down from 5.2 per cent last year. “In our view, this signals a new round of policy easing ahead to support the real economy,” Goldman Sachs said in a note to clients this morning.Here’s what else I’m keeping tabs on today: US Congress: Novo Nordisk chief executive Lars Fruergaard Jørgensen testifies in a hearing focusing on prices for weight-loss drugs Ozempic and Wegovy. The cybersecurity and infrastructure protection subcommittee holds a hearing into July’s global IT outage. Adam Meyers, senior vice-president for counter-adversary operations at CrowdStrike, the company at the centre of the outage, testifies.Monetary policy: US Federal Reserve board governor Michelle Bowman speaks about the economic outlook and monetary policy at the Kentucky Bankers Association annual convention in Hot Springs, Virginia.FTX: Caroline Ellison, a former executive of bankrupt cryptocurrency hedge fund Alameda Research who testified against founder Sam Bankman-Fried, is scheduled to be sentenced on fraud charges.UN: US President Joe Biden will address the UN General Assembly for the last time as president. Brazilian President Luiz Inácio Lula da Silva will open the 79th session of the general assembly later today in New York.Five more top stories1. Israeli air strikes against what it said were Hizbollah targets yesterday killed almost 500 people in Lebanon’s deadliest day for decades. The “new phase of the war” heightened concerns about escalating hostilities in the Middle East and spread panic across Lebanon. The death toll was the highest since Israel launched a ground offensive against Hizbollah in 2006. ‘Leave your homes now’: The strikes came hours after Israel sent warnings via texts and phone calls. Raya Jalabi reports on yesterday’s chaotic exodus from Beirut.Netanyahu’s popularity: The Israeli prime minister’s standing in national polls has recovered from post-October 7 lows after he launched more aggressive operations in Lebanon and Iran.2. The US Department of Justice is preparing to file an antitrust lawsuit against Visa, accusing the payments company of anti-competitive behaviour. Federal prosecutors are set to file a lawsuit as early as today, said a person familiar with the matter. Here’s what to expect. 3. German Chancellor Olaf Scholz has opposed a UniCredit takeover of Commerzbank after the Italian lender said it was raising its stake from about 9 per cent to 21 per cent. The emergence of UniCredit as a major shareholder has ignited political opposition in Berlin against a cross-border tie-up. Here’s what’s driving the uproar.4. Sheikh Mohamed bin Zayed al-Nahyan, the United Arab Emirates’ leader, met US President Joe Biden in Washington yesterday to advance artificial intelligence co-operation as the Gulf nation tries to secure easier access to US-made technology. The meeting underscores the UAE’s ambitions to become a leader in the new emerging technology. 5. Boeing has offered staff a 30 per cent pay increase in an attempt to end a debilitating strike, sparking anger from union leaders who accused the aircraft maker of circumventing normal bargaining by taking the offer directly to workers. The manufacturer has said the offer is only good if union members vote in favour by Friday. Read the latest on the fractious talks.Today’s big readHuawei’s Qingyun L540 laptop features a Chinese-made operating system More

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    An East Coast Port Strike Could Shake the Economy

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    Businesses are preparing for a strike by dockworkers on the East and Gulf Coasts, which could begin Oct. 1 if negotiations don’t yield a new contract.With dockworkers on the East and Gulf Coasts threatening to strike on Oct. 1, businesses have been accelerating imports, redirecting cargo and pleading with the Biden administration to prevent a walkout.Some importers started ordering Christmas goods four months earlier than usual to get them through the ports before a labor contract between the operators of port terminals and the International Longshoremen’s Association expires next Monday.Many shipments have been diverted to West Coast ports, where dockworkers belong to a different union that agreed a new contract last year. The ports of Long Beach and Los Angeles say they are handling at least as many containers as they did during the pandemic shipping boom of 2021-22.Despite those measures — and all the problem-solving skills that supply chain managers developed during the turbulence of recent years — a short strike could lead to significant disruptions. JPMorgan transportation analysts estimate that a strike could cost the economy $5 billion a day, or about 6 percent of gross domestic product, expressed daily. For each day the ports are shut down, the analysts said, it would take roughly six days to clear the backlog.Chris Butler, the chief executive of the National Tree Company, which sells artificial Christmas trees and other decorations, said his company had brought in goods early and made greater use of West Coast ports. But he estimated that 15 percent of his goods would still be stranded by a port strike.“I’m very unhappy,” said Mr. Butler, who is based in northern New Jersey. “We’re doing everything we can to mitigate it. But there’s only so much you can do when you’re at the mercy of these ports.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More