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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Day bakur At podcast. Good Morning,

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Speaker 2: It's Tuesday, the seventh of October. I'm Caroline Hepkat in London.

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Speaker 3: And I'm Stephen Carolin Paris, where President macrl has given

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Speaker 3: his outgoing prime minister forty eight hours to negotiate a

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Speaker 3: deal to salvage the government as the political uncertainty hits

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Speaker 3: Francis stocks and bonds.

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Speaker 2: And in other news, Citadel's Ken Griffin says he's really

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Speaker 2: concerned that investors are starting to view gold as a

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Speaker 2: safer asset than the US dollar plus facing a fork

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Speaker 2: in the road, while the UK government's one point five

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Speaker 2: billion pound Jaguar land Rover bailout is a high risk move.

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Speaker 2: Let's start with a roundup of our top stories. France's

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Speaker 2: President Emmanuel Macaw has given his outgoing Prime Minister Sebastiana

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Speaker 2: Locornu until Wednesday to negotiate a last ditch deal to

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Speaker 2: event a deeper crisis. The decision buys the president a

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Speaker 2: little more time to decide his next steps, which could

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Speaker 2: include fresh legislative elections, something opposition groups are demanding. Lecornu

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Speaker 2: unexpectedly resigned yesterday, blaming gridlock among rival parties, including his

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Speaker 2: own centrist group Leah.

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Speaker 4: The various political parties continue to take a stance as

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Speaker 4: though each had an absolute majority International Assembly, and in

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Speaker 4: the end, I found myself in a situation where I

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Speaker 4: was ready to compromise for each political party one of

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Speaker 4: the others to adopt its entire program.

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Speaker 1: Don't think I.

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Speaker 2: Did, some out going Prime Minister Sebastiana and Lecorn, who

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Speaker 2: speaking there via Etan's later The government now faces the

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Speaker 2: very real prospect of missing an October the thirteenth deadline

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Speaker 2: to pass a budget. Failure to do so raises the

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Speaker 2: risk of emergency measures to avoid a shutdown in January.

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Speaker 2: France's gridlock is fueling a sell off for French assets

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Speaker 2: and driving up the country's borrowing costs relative to peers.

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Speaker 2: France's yield premium over a German ten year debt closed

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Speaker 2: at about eighty five basis points yesterday, the highest since

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Speaker 2: early January. The cat Garrt index also lost one point

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Speaker 2: four percent yesterday, as banks took the biggest hit. Meanwhile,

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Speaker 2: over in the US, President Trump says that he will

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Speaker 2: negotiate with Democrats over healthcare subsidies which could help resolve

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Speaker 2: the government shut down. Speaking to reporters, he predicted some

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Speaker 2: cooperation between the two parties. With the government shutdown in

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Speaker 2: its second week, we.

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Speaker 1: Are speaking with the Democrats, and some very good things

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Speaker 1: could happen with respect to healthcare. I'd like to see

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Speaker 1: a deal made for great healthcare.

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Speaker 5: Yeah, I want to see great health I'm a Republican,

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Speaker 5: but I want to see healthcare much more so.

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Speaker 4: Than the Democrat.

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Speaker 2: Donald Trump, speaking there previously, Republican leaders insisted that Democrats

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Speaker 2: needed to vote to reopen the government before they would

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Speaker 2: engage in negotiations over health insurance tax credits. Responding to

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Speaker 2: the apparent shift, Democratic leader Chuck Schumer said his party

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Speaker 2: is ready to make it happen if Republicans want to

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Speaker 2: collaborate on healthcare. Later today, the Senate will vote for

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Speaker 2: the fifth time on a stopgap bill to keep the

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Speaker 2: US government open through to the end of the twenty

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Speaker 2: first of November. Citadel's Ken Griffin says investors are starting

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Speaker 2: to see gold as safer than the US dollar. The

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Speaker 2: billionaire founder of one of the world's most profitable hedge

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Speaker 2: funds warned many are looking again at the US's safe

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Speaker 2: haven status.

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Speaker 5: As you see sovereigns around the world, central banks around

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Speaker 5: the world, as you see individual investors around the world go,

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Speaker 5: you know what, I now view gold as a safe

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Speaker 5: harbor asset in a way that the dollar used to

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Speaker 5: be viewed. That's what's really concerning to me.

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Speaker 2: In the wide ranging interview with Bloomberg's Fancis Lackwig, Griffin

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Speaker 2: also said the Trump administration had given quote a lot

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Speaker 2: of love too and a lot to hate. The US

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Speaker 2: government shut down on potential future rate cards have pushed

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Speaker 2: gold to another record high on Monday, close to four

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Speaker 2: thousand dollars an ounce. AI firms have continued their rally,

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Speaker 2: leading the US stocks to a record closed yesterday. Shares

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Speaker 2: in global semiconductor company AMD surched as much as thirty

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Speaker 2: eight percent after it signed a deal with open ai

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Speaker 2: to build infrastructure. Greg Brockman, president and co founder of

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Speaker 2: open ai, said they're still room for growth in the sector.

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Speaker 6: I think that the world continues to underestimate the amount

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Speaker 6: of demand for AI compute. Right that we've seen this

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Speaker 6: explosion of demand with things like CHATCHBT. You know, we're

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Speaker 6: at eight hundred million weekly active users now. This product

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Speaker 6: didn't exists three years ago, and we're in a position

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Speaker 6: where we cannot launch features, we cannot launch new products

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Speaker 6: simply because of lack of computational power. And we see

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Speaker 6: these models continuing to get exponentially better, and I think

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Speaker 6: we're just heading to a world where so much of

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Speaker 6: the economy is going to be lifted up and driven

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Speaker 6: by progress and AI.

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Speaker 2: So that was open Ais, Greg Brockman speaking there. The

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Speaker 2: deal also sets the stage for open ai to acquire

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Speaker 2: a large stake in AMD. Meanwhile, open AI's mentions of

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Speaker 2: other firms at is annual Developers event yesterday boosted shares,

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Speaker 2: with companies like Figma, HubSpot and Salesforce seeing gains. Now

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Speaker 2: to the UK, the Bank of England Governor Andrew Bailey

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Speaker 2: says that Britain has to spend more if it wance

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Speaker 2: to see any AI gains. The central banker told an

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Speaker 2: audience of investors that he believes AI could be the

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Speaker 2: answer to Britain's productivity woes if the country commits to

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Speaker 2: technological change. Blomberg's James Walcock has more.

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Speaker 7: The head of Britain's Central Bank, thinks AI might be

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Speaker 7: the edge of a technological breakthrough which will put a

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Speaker 7: rocket under economic growth. It's rare to hear such optimism

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Speaker 7: from a central banker speaking in Scotland rather than Silicon Valley,

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Speaker 7: but that positivity has an edge to take advantage. Bailey

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Speaker 7: says Britain needs the right infrastructure, the right mindset and

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Speaker 7: the right people. Currently, the UK spends less on improving

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Speaker 7: its capital than almost all other G seven piers. Andrew

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Speaker 7: Bailey says he hopes coming changes to pension fund rules

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Speaker 7: might change that. In London, James Wilcock, Bloomberg Radio.

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Speaker 2: And those are our top stories for you this morning.

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Speaker 2: Let's update you on the market. So gold was up

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Speaker 2: by one point nine percent on Monday. The run up

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Speaker 2: in bullion Goldman Sachs forecasting an even bigger game for

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Speaker 2: next year. Four nine hundred is their target for December

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Speaker 2: twenty twenty six. Asian equities climbing to a fresh record high,

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Speaker 2: Japanese shares extending their rally. You've got tech shares up

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Speaker 2: after that AMD deal. Also, you had a firm auction

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Speaker 2: for Japanese thirty year sovereign bond, so that helped stop

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Speaker 2: futures though in Europe expected to be very active, especially

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Speaker 2: for answer your stocks fifty futures though sinking this morning.

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Speaker 2: US stop futures are also in the red right now.

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Speaker 2: So those are the markets now, Stephen cal You're back

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Speaker 2: in Paris, I think, rather sooner than you or any

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Speaker 2: of us really imagined.

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Speaker 1: Good morning, Good morning. Yeah.

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Speaker 3: I don't think when we were here a month ago

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Speaker 3: that we thought we would be back so quickly to

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Speaker 3: see another prime minister on the brink of leaving the job,

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Speaker 3: being back in the job again and as heading towards

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Speaker 3: perhaps a deeper precipice of the political crisis here as well.

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Speaker 3: It all happened very quickly if you think about. The

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Speaker 3: cabinet was only named on Sunday night, and yesterday morning

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Speaker 3: we brought you the news Sebastian Lecorn who had resigned,

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Speaker 3: and then only for later in the day for him

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Speaker 3: to be given essentially a temporary reprieve, an extra forty

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Speaker 3: eight hours to try and do a deal with the

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Speaker 3: other parties as well.

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Speaker 1: Things moving pretty quickly here.

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Speaker 2: Yeah, absolutely, we were surprised when we broke the new yesterday,

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Speaker 2: weren't we. Well this forty eight hours, what is Lacurno

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Speaker 2: expected to be able to achieve in that time? And

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Speaker 2: Stephen crucy what happens if there's no deal.

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Speaker 3: First of all, he has to try and get his

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Speaker 3: former partners back on boards. That was at the root

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Speaker 3: of his resignation yesterday morning. Essentially, they were unhappy with

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Speaker 3: the lineup of the cabinet, particularly the return of the

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Speaker 3: likes of Bruno la Mayer, the former Finance minister who

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Speaker 3: was appointed to the Defense Ministry, and that is where

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Speaker 3: Sebastian le'corn who felt he could go no further. He

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Speaker 3: couldn't advance on their key projectors, of course getting a

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Speaker 3: budget passed. So the meetings start this morning with the

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Speaker 3: center right parties, the current Interior Minister or outgoing Interior Minister,

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Speaker 3: depending on your point of view. Bingo Retio, who's the

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Speaker 3: leader of the Republicans, won't be there. He said he

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Speaker 3: wants to speak directly to the Prime Minister and doesn't

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Speaker 3: want to take part in a wider meeting. But essentially

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Speaker 3: he has to get them back on board first to

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Speaker 3: try and rebuild I suppose the point that he started

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Speaker 3: from when he became Prime Minister around a month ago.

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Speaker 3: From there, he then had to get back to the

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Speaker 3: substantive issue of trying to build some sort of consensus

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Speaker 3: around budget and spending plans.

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Speaker 1: Now.

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Speaker 3: In his resignation speech yesterday, so Astianaccorney talked about how

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Speaker 3: in private some parties were showing signs of perhaps some

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Speaker 3: flexibility on their red lines, but he had criticized opposition

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Speaker 3: parties but also the Centrist Macronus block members of for

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Speaker 3: not being on board with some of the key proposals

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Speaker 3: they had to make. So that's where the talks are

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Speaker 3: starting from today. He has until Wednesday evening. That's when

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Speaker 3: he said he will tell President Macron whether or not

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Speaker 3: sufficient progress has been made.

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Speaker 1: To be able to go forward.

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Speaker 3: The question of who is coming before the question of

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Speaker 3: what exactly they're going to try to agree on.

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Speaker 2: Yeah, absolutely, So where does this leave President Macaw? Mean,

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Speaker 2: how much is his future in doubt?

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Speaker 3: Look, the short term decision is going to be what

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Speaker 3: happens if there is no deal by tomorrow evening. The

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Speaker 3: likelihood or at least the option that would appear most

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Speaker 3: likely and that situation would be that there would be

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Speaker 3: fresh elections to the National Assembly. And that's something that

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Speaker 3: Emmanuel Macron is wielding as a threat over all of

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Speaker 3: the centrist parties from the center left to the center right.

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Speaker 3: Because he knows that none of those parties are, according

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Speaker 3: to current polling, set to do very well. In fact,

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Speaker 3: they could end up all losing quite a lot of

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Speaker 3: seats to the political extremes, and that would be the

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Speaker 3: fear that he's hoping will motivate them into coming to

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Speaker 3: some sort of agreement. For Macron himself, he does, of

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Speaker 3: course have the option of resigning. He's always ruled it

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Speaker 3: out before. There's no indication that that position has changed.

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Speaker 3: He still has a term that runs until twenty twenty seven,

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Speaker 3: and for now at least.

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Speaker 1: It doesn't look like he's going anywhere.

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Speaker 2: Yeah, okay, So then how should we read the market reaction?

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Speaker 2: I mentioned the stock drop and the widening yield spread.

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Speaker 2: How do you think that markets have reacted so far?

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Speaker 3: Look, so, Lacorney's resignation was a shock, and that's what

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Speaker 3: we saw playing out on markets yesterday. If we think

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Speaker 3: about the widening of the yel spread, we didn't we

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Speaker 3: got to levels that were close to what we saw

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Speaker 3: in December of last year when there was a real

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Speaker 3: budget deadline, where it looked like that France would go

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Speaker 3: into their emergency measures at the end of last year,

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Speaker 3: as they did very briefly before a budget was eventually agreed.

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Speaker 3: When you look at the stock sell off, it's on

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Speaker 3: stocks that are focused on the domestic French economy. This

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Speaker 3: isn't something that's having spell over into other economies just yet.

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Speaker 3: It's also and this is something that our own economists

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Speaker 3: that Bloomberg Economics have pointed out before, this is not

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Speaker 3: a fiscal crisis yet. This is a political crisis, and

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Speaker 3: that is how markets are reading it for now.

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Speaker 1: There still is time.

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Speaker 3: Although we talked about that October thirteenth deadline, which is

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Speaker 3: the legal deadline to present a budget to Parliament, there

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Speaker 3: is some flexibility of what do you do if you

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Speaker 3: go past that point as well. The European Commission in

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Speaker 3: Brussels will be watching closely as well. They're also expecting

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Speaker 3: to get spending plans from the French government. But ultimately,

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Speaker 3: there is a budget that runs until the end of

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Speaker 3: this year, and we saw what happened last year. If

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Speaker 3: you didn't have a new spending plan in place by

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Speaker 3: the end of the year, it's not a government shut down.

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Speaker 3: There are certain effects in terms of how tax credits

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Speaker 3: will roll over into the next year, but essentially the

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Speaker 3: lights stay on and no political party has ever expressed

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Speaker 3: an interest in trying to do block Anything that would

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Speaker 3: stop that happening, would stop welfare payments being paid or

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Speaker 3: taxes being collected as well. So we're not in a

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Speaker 3: fiscal crisis yet, but that doesn't mean that there won't

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Speaker 3: be market pressure on the politicians to get some sort

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Speaker 3: of deal done.

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Speaker 2: Yeah, really fascinating, Stephen cal Thank you so much for

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Speaker 2: your reporting life on Paris for us this morning. I

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Speaker 2: also really liked, and I know you've read it. Of course,

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Speaker 2: our colleague Lionel Laure opinion columnists talking about lame duck

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Speaker 2: Macro is now a French sitting duck, so he's got

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Speaker 2: a lot more in terms of his views on you know,

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Speaker 2: Manu and Macaw, the Last Chance man how he's going

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Speaker 2: to keep his presidency on the rails through to twenty twenty.

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Speaker 2: But for now, Stephen, thank you so much for being

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Speaker 2: with us. We're going to hear from you throughout the day. Thanks,

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Speaker 2: stay with us. More from Bloomberg Daybaquob coming up after this. Okay,

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Speaker 2: let's turn our attention to some business and news today.

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Speaker 2: You may remember that in late August Jaguar land Rover

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Speaker 2: was hit by a major cyber attack. It led to

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Speaker 2: them shutting down manufacturing sites across the world, and in

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Speaker 2: an unprecedented move, the British government stepped in there agreed

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Speaker 2: to guarantee a one point five billion pound emergency loan

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Speaker 2: to the company so that it could pay its suppliers.

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Speaker 2: But experts in our warning that that move could set

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Speaker 2: a risky precedent. Our global business reporter William Wilkes has

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Speaker 2: been writing about this. William, good morning. Just firstly on

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Speaker 2: the cyber attack. This has been rumbling on for weeks.

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Speaker 2: How sophisticated was this attack?

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Speaker 8: It seems fairly sophisticated.

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Speaker 9: A kind of disparate group of hackers managed to get

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Speaker 9: into Jaguar Landrover systems and disrupt everything from deliveries, software

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Speaker 9: through to kind of production. So it's difficult to compare

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Speaker 9: it yet, well, all the details aren't out comparing it

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Speaker 9: to other hacks, but there is certainly a deep degree

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Speaker 9: of sophistication and technical knowledge on behalf of the hackers.

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Speaker 2: So then in terms of the UK government having to

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Speaker 2: step in and the warnings around risks, what is that risk?

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Speaker 2: How do you see it?

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Speaker 8: So the government has stepped in to help the hundreds

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Speaker 8: of smaller smaller supplier to help Jaguar Lanrover, and it's

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Speaker 8: hoped that that helped will cascade down to smaller suppliers

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Speaker 8: to secure them and the risk there, there's a couple

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Speaker 8: of risks there. I think firstly, there's a kind of

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Speaker 8: a moral hazard risk. It seems possible that Jaguar Landrover

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Speaker 8: didn't have the very best in cyber defense practice and protocols,

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Speaker 8: and people asking the question, does the government then extending

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Speaker 8: alone incentivized companies not to do the best they can

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Speaker 8: to defend themselves if the government's always there to bail

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Speaker 8: them out. And then there's another concern that perhaps this

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Speaker 8: shows hackers that they can be more aggressive because the

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Speaker 8: companies will always pay knowing that the government in the

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Speaker 8: end will bail them out. So these hackers are used

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Speaker 8: ransomware that you know you have to send a payment

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Speaker 8: to them to unlock your software. And by making this loan,

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Speaker 8: has it made it more likely that companies will pay

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Speaker 8: up and pass the problem financial problem onto government.

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Speaker 3: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 3: stories making news from London to Wall Street and beyond.

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Speaker 2: I'm Caroline Hepka.

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Speaker 3: And I'm Stephen Carol. Join us again tomorrow morning for

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