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- [00:00]
A
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B
On a Monday, the realization that a weaker job market is not to be celebrated, even if it means lower interest rates. I'm David Brancaccio. We're starting the week with a bit of a headache after a strong hint last week that interest rates are going down slightly three and a half weeks from now. Economist Julia Coronado is founder of Macro Policy Perspectives and teaches at the University of Texas. Good morning.
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C
Good morning.
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B
I'd sum up the mood on Friday when the Dow reached a record high as yay, interest rates are going down. That could help corporate profits and spur demand. This morning it feels different.
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C
We're looking at a little bit of a Jackson Hole hangover. On Friday, the Fed chair told us that because he was worried about the labor market getting weaker, that the Fed would likely proceed with at least one small rate cut in September. That's good news. Maybe, but it also means that the economy is getting weaker.
- [01:29]
B
I love these market players. Hey, the labor market is getting weaker. We're going to celebrate this is what you're pointing out. That irony.
- [01:37]
C
Exactly. Ultimately, the economy is a big ocean liner. Lower interest rates might help, but the Fed is also telling us that they can't go really fast because inflation is also going up. So they're really kind of in a tough spot. That doesn't mean long term interest rates like mortgage rates are going to come crashing down. That is not happening in the markets that we're looking at this morning.
- [02:01]
B
And the tariff policy that we're living under now can be inflationary with an import tax driving up prices. But it also, as you've been hearing from businesses, makes them more reluctant to hire more people. And then you have that labor market effect.
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C
There's so much uncertainty about the future and about policy that firms have been very reluctant to take on new workers. And that is why we see the weak labor market and immigration policy.
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B
Right. It shrinks the labor force. And so that makes the headline number look a little stronger than it might actually be.
- [02:37]
C
That's right. The unemployment rate hasn't gone up. We have fewer workers and less growth because of restrictive immigration. But the unemployment rate is still fairly low. There's not a lot of unemployed people. If we choose restrictive immigration and slow growth, then that's not something that lower interest rates does anything to change.
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B
Economist Julia Coronado is also a professor at the University of Texas, Austin's business school. Thank you very much.
- [03:04]
C
My pleasure.
- [03:06]
B
As we've been reporting, what was once the biggest name in China, property development, was kicked off the Hong Kong Stock exchange as of today worth $51 billion. Eight years ago. And Evergrande ran into trouble when China's government worked to deflate that country's housing market bubble. Evergrande ended up under a mountain of debt. Property values in China have been falling and falling down 2.8% in the year through July.
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D
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- [04:09]
B
Rare earth minerals are in so many things that have an on off button and they've been a sticking point in US China trade relations with. On Friday, China said it is tightening controls on mining and processing of rare earths. But one project in Australia is hoping to ease the bottleneck. The BBC's Asia business correspondent, Suranjana Tiwari got access to one of those sites.
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E
This is Western Australia's mining territory and I've been given exclusive access to a stockpile of rare earths belonging to a company called Iluka Resources. I'm standing in the middle of a massive pit and there are mountains of what looks like worthless dirt everywhere. But in reality, this is the source of those rare earths, the critical minerals. Now, Iluka Resources says Here there are 1 million tons off the stockpile and that's already worth more than US$650 million. Australia has some of the largest reserves of rare earths in the world. But the process of extracting those minerals from the earth is expensive and complicated. One country produces almost all the world's supply. Dan McGrath is head of rare earths for Iluka Resources.
- [05:28]
F
Originally, back in the 90s, where rare earths were produced in France and other places, those operations relocated to China. So China has since then very deliberately and overtly sought to control the rare earth market.
- [05:44]
E
The Australian government is loaning Iluka $1 billion to build a refinery. It wants to reduce China's control of pricing and supply. The refinery won't be online for two more years, but Beijing's recent restrictions on exports upended operations for major automakers and defense manufacturers globally, with some having to pause production altogether.
- [06:08]
G
We know there are other governments around the world that want to participate.
- [06:12]
E
Government intervention is a strategic decision, says Australia's Resource Minister, Madeleine King.
- [06:17]
G
The open international market in critical minerals and rare earths is a mirage. It doesn't exist. And the reason it doesn't exist is because there is one supplier of these materials. We can either sit back and do nothing about that and let that remain the case, or we can step up and to take on the responsibility to develop a rare earths industry here that competes with that market.
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E
In China, environmental damage from years of processing rare earths has led to chemicals and radioactive waste seeping into waterways. That's something Australia will have to contend with, too. I spoke to critical mineral expert Professor Jacques Eckstein from Curtin University in Australia.
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H
We've got mechanisms to handle that, We've got a legal environment and a framework to work with it, to at least deal with it responsibly.
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E
Australia seems to have a lot going for it in the rare earths race as it tries to be a more reliable and cleaner source, and one that crucially, is independent of China.
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B
Suranjana Tiwari with the BBC in 2024, the US imported 80% of its rare earth supply. I'm David Brancaccio. You're listening to the Marketplace Morning report from APM American Public Media.
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I
Poetry has the power to connect our inner universe and the outer world. I'm Maggie Smith, poet and host of the Slowdown, a podcast from American Public Media. Each weekday, find time to take a breather from your to do list, or doom scrolling for that matter, and take in a moment of reflection with a hand picked poem. Listen to the Slowdown wherever you get podcasts.