WSJ What’s News - Powell Says More Rate Cuts Coming, but No Need to Rush

Episode Date: September 30, 2024

P.M. Edition for Sept. 30. Fed Chair Jerome Powell said today that interest rate cuts can sustain a soft landing. And WSJ reporter Paul Berger on how a possible dockworker strike threatens to rattle the American economy five weeks ahead of the presidential election. Plus, Jeep owner Stellantis warns of a deteriorating global car market. The Journal’s Stephen Wilmot explains the automaker’s challenges. Tracie Hunte hosts. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

Three, two, one. What will the world look like 10 or 20 years from now? The Wall Street Journal's Future of Everything podcast is here to give you a peek. And we can't wait to show you what's coming. Subscribe now. Fed Chair Jerome Powell says more interest rate cuts are on the horizon, but he sees no need to rush. And starting tonight,

dock workers might walk off the job closing ports across the East Coast. There are very few unionized workers in the US today that hold such a tight grip on the US economy. Plus, why Jeep owner Stellantis is warning of a deteriorating global car market. It's Monday, September 30th. I'm Tracy Hunt for the Wall Street Journal.

This is a PM edition of What's News, the top headlines and business stories that move the world today. Let's start with an update on Hurricane Helene. The death toll from the storm continues to rise as rescuers scramble to reach isolated communities. So far, more than 100 people across six states in the southeastern US have been killed.

Homes and other buildings were washed away, and key infrastructure failed. Many roads remained closed, and cell phone service was spotty. A spokesman for Henderson County, North Carolina, said, quote, we have towns that literally aren't there anymore. President Biden said he would ask Congress for additional money for storm recovery and may ask lawmakers to return to Washington to approve funds.

I've heard dozens of stories from survivors, but how it feels to be left with nothing, not even knowing where, when you get back on track. I'm here to tell every single survivor in these impacted areas that we will be there with you as long as it takes. Vice President Kamala Harris scrapped campaign stops in Nevada to rush back to Washington, D.C., while former President Donald Trump planned to visit Georgia. Federal Reserve Chair Jerome Powell said today that the central bank would continue cutting interest rates to support hiring and preserve a growing economy.

Speaking at the annual gathering for the National Association of Business Economics in Nashville, Powell suggested officials didn't currently see a reason to lower them as aggressively as they did at their most recent meeting. This is not a committee that feels like it's in a hurry to cut rates quickly. It's a committee that wants to be guided, ultimately we will be guided, by the incoming data and if the economy slows more than we expect, then we can cut faster. If it slows less than we expect, we can cut slower and that's really what's going to decide it.

Fed officials will meet again on November 6th and 7th where a rate cut of at least a quarter point is expected. Officials will have two more months of employment data and one more month of inflation data before then. U.S. stocks capped off a strong quarter by edging higher today following Powell's remarks. The S&P 500 rose 0.4 percent, ending the month up 2% and the quarter up 5.5%. The tech-heavy NASDAQ composite also climbed 0.4%, while the Dow Jones ticked up less than 0.1%.

Stellantis, the owner of car brands including Jeep, Chrysler, and Ram, today became the latest automaker to warn of an increasingly tough car market. The auto giant cut its full year earnings guidance, saying it would accelerate costly plans to trim bloated U.S. inventories and face weaker demand across many of its markets. And according to global data, vehicle sales have shifted into reverse globally in recent months with August volumes down 4% year over year.

Stephen Wilmot is The Wall Street Journal's European Autos reporter, and he joins us now. Stephen, what challenges is Solantis facing? So it has two big problems that it flagged this morning. The bigger one is in the US, and there it has too many cars on dealer lots essentially, bloated inventories. And it's been addressing that problem for a while. Essentially what it's done is it's reduced its earnings guidance

in order to pave the way for reducing those inventories. And there are two ways it's going to reduce the inventories. It's going to ship fewer vehicles to its dealers on the one hand and it's also going to try and shift those vehicles on dealer lots more quickly by offering bigger discounts. So put those two things together and it hopes to clear the inventory problem that it has much earlier than it initially expected. The other thing which is flagged is the deterioration in the global industry. The last couple of months have been quite weak. So for the first eight months of 2014, vehicle sales globally are up 1%. But as you said, August was down 4%. Basically, it was a solid start for a year and then it's

been getting worse. And that's led to all sorts of companies, including those which don't have inventory problems like Stellantis, warning on their profits. So in a statement, Stellantis described what it called deterioration across the global car industry. Are they all facing similar issues? We've had all sorts of car makers coming out with profit warnings and they're all slightly different, but a lot of them have to do with China. Aston Martin flagged weak demand in China, Mercedes flagged weak demand in China, BMW flagged weak demand in China. That's not Stellantis' problem really, because it doesn't have much of a Chinese business. Stellantis' problem is much more global, so it's in Europe and it's also in South America

where it's the market leader. And it flagged, interestingly, Chinese competition. So that's a big theme in the car market at the moment. Chinese EVs arriving in particularly emerging markets like Brazil, which is a very important market for St. Atlantis. So it's facing really a perfect storm of problems, weakening demand, intensifying competition, excess inventories in the US, and all these things have come together. Stephen Wilmot is The Wall Street Journal's

European Autos reporter. Coming up, thousands of dock workers from Maine to Texas are preparing to strike at midnight. That's after the break. What then will the future reveal? There's one thing we know about the future. It's being built now. We all have a stake in the future reveal? There's one thing we know about the future. It's being built now. We all have a stake in the future.

The future. The future. The future. And the Wall Street Journal's Future of Everything podcast is here to give you a glimpse of what's on the way. I'm Danny Lewis. Join us as we dig into how science and technology are shaping the future. That is where you and I are going to spend the rest of our lives.

Subscribe wherever you get your podcasts. Dockworkers at ports from Maine to Texas are preparing to strike at midnight, blocking the movement of a swath of US trade. The International Longshoremen's Association, which represents 45,000 dock workers at East Coast and Gulf Coast ports, is threatening to shut down some of the country's main gateways for imports of food, vehicles, heavy machinery, construction materials, chemicals, furniture, clothes, and toys. Paul Berger covers logistics and supply chain for The Wall Street Journal, and he joins us now. Paul, I want to get a sense of the scale here. Just

how much of the US economy would be affected if this strike would happen? The effect of the strike would be enormous. Something like 60% of all of the imports that come into the country by ocean in containers come in through these ports. So you would see disruptions to deliveries of everything from food to furniture to auto parts. The folks most affected by this would be businesses at first. A lot of them have had plenty of warning that this strike could be coming and so a lot of retailers and manufacturers have actually pulled in goods early so that they have extra supply on hand. But no one's expecting a long strike. So the longer this goes on, the more risk

there is that stores could start running out of certain products. And that of course would be really harmful to businesses. Given the stakes involved, is the Biden administration expected to step in? So US retailers and manufacturers have been calling on the administration to step in for some time. The administration, of course, is quite well known to be pro-union and the administration has been mainly monitoring and trying to encourage the two sides to get to the bargaining table. The one trump card that the Biden administration does hold is a federal law that could force the dock workers back

to work, but the administration has said at least so far that they're not considering invoking the law. And of course, all of this is happening just weeks before the presidential election. How will this all play into that? Obviously, it's clear the administration needs union support. And so I think the administration

finds itself in a in a difficult situation because on the one hand, it doesn't want to alienate the union. But on the other hand, there are a lot of American businesses and consumers out there that will be affected by the strike, especially if it goes on for some time. Union dock workers are among some of the best paid blue collar workers in the US, some making between 150 to $250,000 a year. And now they're asking for a 77% raise over six years. What's behind that demand? There's a couple of things behind the demand. The first thing is that although there are a lot of dock workers that make six figure salaries, there are of course a lot of other dock workers that aren't making those kinds of salaries

simply because they work at ports that don't get as much cargo. But also one of the things that lies behind this dispute that's really interesting is the fact that there are very few unionized workers in the US today that hold such a tight grip on the US economy. They are out there in all weathers doing work that is quite dangerous. People do get killed by machinery and equipment falling on them. The other thing that's pushing it is that the companies that they work for, which are mainly ocean shipping lines that are based in Asia and Europe,

have made tens or hundreds of billions of dollars over the last few years because of the supply chain disruptions that we've seen. And so the head of the union basically says he wants to get a cut of those profits for his workers. That was Wall Street Journal reporter Paul Berger. The Federal Trade Commission today alleged John Hess, the chief executive of Hess Corporation, had private talks with the organization of the petroleum exporting countries that could have pushed up oil prices.

Hess's board of directors said the allegations against the CEO are without merit. The allegations were attached to the antitrust enforcers' approval of a $53 billion mega-merger of Chevron and Hess, in which the companies agreed to block John Hess from joining Chevron's board. The FTC approved the deal and the prohibition on a 3-2 vote divided on party lines. It is the second time this year antitrust enforcers have accused a chief executive of one of the largest U.S. drillers of having improper communications with the global oil cartel and barred them from joining a board of directors. In May it extracted the same unusual concession in a merger involving Exxon Mobil. And New

York City Mayor Eric Adams asked a federal judge today to throw out a bribery charge included in his indictment last week saying the Justice Department didn't have enough evidence to prove it. The motion, which accused prosecutors of being overzealous and misapplying the law in their pursuit of Adams, came unusually fast and signaled the mayor's plans to mount an aggressive push against the charges.

Lawyers for Adams said they plan to challenge the other four counts in the indictment and that they want to go to trial quickly. A spokesman for the US Attorney's Office in Manhattan declined to comment. And that's what's news for this Monday afternoon. Today's show was produced by Anthony Bansi and Pierre Bienneme with supervising producer Michael Kosmitis. I'm Tracy Hunt for The Wall Street Journal.

We'll be back with a new show tomorrow morning. Thanks for listening.