Reuters World News - Weekend episode: Jackson Hole and the Powell Rorschach test, Zambian rock returns and Europe reins in Big Tech

Episode Date: August 26, 2023

We check in on the state of the global economy at the annual economic symposium in Jackson Hole. Plus Europe's latest crackdown on Silicon Valley. And a Zamrock legend returns after 40 years. Visit the Thomson Reuters Privacy Statement for information on our privacy and data protection practices. You may also visit megaphone.fm/adchoices to opt out of targeted advertising. Our Standards: The Thomson Reuters Trust Principles. Learn more about your ad choices. Visit megaphone.fm/adchoices

It's the central bank holdown that reverberates around the world. The annual Jackson Hole Symposium wraps Saturday. In this special weekend episode, our economics reporter dissect what was said about the global economy and what that means for your mortgage rate. Plus, Europe's latest crackdown on Silicon Valley and the revival of Zambian Rock. I'm Kim Vinald in London. I'm Carmel Crimmons in Dublin. And I'm Howard Schneider in Jacksonville, Wyoming.

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at month in Shopify.es bar records. is the Federal Reserve, monetary policy, and the economy. He's also a frequent guest for the Reuters World News Daily podcast. He spent the last few days in Jackson Hole. Howard, set the scene for us. What's it like there? Going back to the 80s now, the Kansas City Fed once a year has set up this symposium for economists and policymakers around the world. And it couldn't be in a more beautiful place. It's across right on the steps of the Teeton Mountains near Jackson Lake, a public park Lodge here, National Park Lodge. I think that, in fact, it's set in a lodge like that with these

mountains in the background, gives it a very relaxed kind of feeling, even as the folks involved are very serious about the topics they're studying. How strong is the country vibe? Are there banjos and fiddles? Like, do people wear cowboy hats? So the Kansas City Fed has traditionally designated the Friday. This starts on Thursday night, runs all day Friday. They break it to and encourage people to go hiking or rafting or whatever. But Friday night is always designated as as Western nights. So indeed, they do have a country Western band that comes in place,

encourage people to dance. If you don't have a cowboy hat, they will hand them out to you at the door, a bowelot tie. So they very much sort of lean into the Western culture here. There have been years when they've done off-site trips, for example, a Horse Whisper to show how wild horses are trained out here,

things like that. Wild horses, I love it. Okay, we won't keep you from the Hodans. You were there for Jerome Powell's closely watched speech on Friday. This seemed to be his top line message. Although inflation has moved down from its peak, a welcome development, it remains too high. We are prepared to raise rates further, if appropriate. What were the big takeaways?

Powell gave a speech that I think one person who described it as a Roershawk test. You could sort of read into it what you wanted. To me, it was not long-term at all. He was not like talking about what might happen next year. He was very much describing a central bank that's still in the thick of an inflation fighting, kind of laying out the potentialities. there that a lot good has happened recently with unemployment staying low. Even as inflation's come down a lot from its peak last year, but that it wasn't clear that this was sustainable yet or

durable or that interest rates had necessarily risen to their peak. In fact, what I felt interesting, he leaned very clearly into this idea that the economy is outreformed. Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy. Now, what does that mean? It means that maybe it's not slowing as much as needed to actually cool inflation to get this last mile, as they call it, completed. But it didn't commit either way.

And I think what I was left with was, boy, watch the inflation data over the next few weeks, a couple of months to see if this continues down or stalls or even, God forbid, goes back the other direction. And we will keep at it until the job is done. So what might this mean for regular people? The bond mark, which sort of prices, ends up pricing the securities that form the backdrop up for home mortgages and auto loans and things like that have already increased quite a bit over the last month or two. So I wouldn't expect anything, Powell here said today to lead immediately

to an increase in consumer-related borrowing costs. But there is still the lingering idea out there that they feel unemployment needs to rise for the inflation fight to be completed. So anybody who's new to a job or in a lesser-skilled job or just in a weak industry or in a transitional industry, that's something to think about, something to be concerned about. It's not just Americans who do the talking at Jackson Hill, right? Christine Lagarde, the president of the European Central Bank, also spoke. On the policy front, she said they just may be a little bit further behind the U.S. and their progress on inflation, but she gave a pretty optimistic outlook that by the end of the year, she thinks inflation will prove to be continuing to slow.

She didn't make any comment about interest rates, but they're pretty much in the same spot and maybe being near the end over there of their rate hikes as well. Your team has done some reporting on the views by some economists that there may be a shift in the target 2% inflation rate in the future. What did Powell and Lagarde have to say about that? Both of them in their own way lean very directly on the idea, against the idea that the 2% inflation target ought to be raised. Look, Powell was very direct. 2% is the target and we're going to hit it. Lagarde in comments she made just now said halfway through a process is no time to discuss shifting the goal.

That does not anchor expectations. she called that a deceptive, quote-unquote, idea. So, yeah, there's no appetite on either side of the Atlantic right now among these two major central banks to do anything other than adhere to that 2% inflation target. What about China? How much is it weighing on the mood of economists there? In general, when I've asked Fed officials or others about China and the slowdown there, the sluggish growth, they haven't read too much about that into U.S. growth yet.

Now, I think one of the things that's developing right now is the drag on German exports, If they start to slip into recession or grow slower, that could eventually spill over globally. There's a lot left to understand about this, but no real alarm bells at this point. The European Union has big tech in its crosshairs. Under new rules, large online platforms will have to do more to tackle illegal content or face multi-billion euro fines. Martin Coulter in London has been looking into how Silicon Valley has been preparing for the new regime. So Martin, what's changed for big tech? So a lot has changed for big tech.

As of this week, the DSA or Digital Services Act is rolling out across the European Union. And with that coming into effect, big tech companies like TikTok, Facebook, Instagram, Twitter, all have new obligations in terms of how they keep harmful content off their platforms. There are also new rules in terms of how they track users and whether or not they're allowed to serve them targeted advertising. And on top of that, they're going to be expected to share some pretty sensitive internal data with regulators and researchers so that they can test that they are sticking to the new rules.

Have they done enough to keep Europe happy? So it's difficult to say at the moment a number of them have taken part in stress tests, which have been run by the EU, to try and get a sense of how prepared they were for the law to come into effect. In pretty much every case, the EU said that more work needed to be done. Companies like Amazon and Google have set up these new reporting features to help users flag harmful content on their websites,

and they've changed their advertising practices. But we've also seen research showing that a number of these platforms are still struggling to keep harmful content off their platforms. There's a lot at stake, right? Yeah, so anyone found to have breached the DSA faces a fine worth up to 6% of global terms. So for a company like META, that could check out at something like $7 billion. Any company that is deemed a repeat offender risks being banned from operating in the EU altogether. Are these rules likely to influence laws elsewhere in the world?

So it's possible. The EU is seen by many as a kind of world leader in tech regulation. And there's no doubt that the laws that it's passed and that it's trying to pass will have an influence abroad. The UK is one example. They've been working on quite a controversial online safety bill for some time now. Singapore passed a similar piece of legislation at the end of last year. There have also been conversations about similar laws, maybe trying to pass through Congress in the US, but we wait to see.

It's an album 40 years in the making. The Zambian psychedelic rock band Witch, aka we intend to cause havoc, mesmerized audiences in the 1970s. But after four decades in near obscurity, they're back with a new record called Zango. The revival of the band is led by its 71-year-old lead vocalist Emmanuel Jagari Chanda. In the 1960s and 70s, Gagari and his contemporaries found a way to fuse Western rock with traditional Zambian music. We wanted to play pop music, we wanted to play rock and roll. But we're Africans, we are Zambians.

So in the end, it was Zambian type of rockin'clock. Hence, Zambro. But Zamrock had all but died by the mid-1980s, amid an economic downturn and political turmoil. The HIV-AIDS pandemic also left its mark. The band disbanded in 85. But in the 2010s, newfound interest for the genre rose in the West, thanks to the internet and music producers searching for sounds.

With a new record and a world tour, Gagari wants to make the little-known Zamrock genre world-famous. Something different. It's unique to Zambia. So my prayer would be, can this thing grow to a level where whoever comes to Zambia says, where can I listen to Zamborok? Do you still have bands that are still play Zamrock? That's the kind of legacy that I would like to live.

That's it for this weekend episode. We'll be back with our daily headline show on Monday. To make sure you know what's going on in the world, listen in for 10 minutes every weekday. And don't forget to subscribe on your favorite podcast player or download the Reuters app.