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

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Speaker 2: This is the Bloomberg Day BACUT podcast. Good morning, It's Thursday,

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Speaker 2: the second of October. I'm Caroline Hepcitt in London and I'm.

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Speaker 3: Stephen Caroline Brussels. Coming up today, the US Supreme Court

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Speaker 3: pauses Donald Trump's efforts to fire FED Governor Lisa Cook

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Speaker 3: as the government shutdown delays key data. The Central Bank

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Speaker 3: relies on.

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Speaker 2: The world's most valuable startup, Open AI sells shares at

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Speaker 2: a record five hundred billion dollar valuation.

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Speaker 3: Plus why the global weight for gas turbines to power

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Speaker 3: AI risks a new energy crisis.

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

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Speaker 3: The US Supreme Court is refusing to allow President Trump

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Speaker 3: to immediately fire Federal Reserve Governor Lisa Cook. The court

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Speaker 3: order means Cook can remain in her position until at

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Speaker 3: least January, when judges are due to hear arguments in

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Speaker 3: her case. Bloomberg's International Economics and Policy Corus bond At

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Speaker 3: Michael McKee says the final decision may now come after

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Speaker 3: rulings in cases of other senior officials fired by Trump.

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Speaker 4: The court has suggested there may be some slack given

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Speaker 4: to the FED that isn't given to these other agencies.

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Speaker 4: It may be that they want to consider the cases

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Speaker 4: more or less sort of together at the same time,

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Speaker 4: to think about how one affects the other. That is

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Speaker 4: one reason that they may have punted on this for

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Speaker 4: the time being.

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Speaker 3: McKee AD's the Supreme Court means Cook will continue to

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Speaker 3: vote on interest rate decisions after the deferral. Legal analyst

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Speaker 3: a Bloomberg Intelligence gave Cook a sixty percent chance of

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Speaker 3: winning her case.

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Speaker 2: President Trump is planning to use the government shut down

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Speaker 2: to far federal workers. This week. White House Press Secretary

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Speaker 2: Caroline Levittz says layoffs will happen very soon, but she

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Speaker 2: declined to give details on which positions would be targeted.

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Speaker 2: That's as Chicago Fed President Austin Goolsby says, the lack

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Speaker 2: of official data during the shutdown is already proving challenging.

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Speaker 1: The data dogs are howling because you know, we're not

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Speaker 1: getting our usual supply of information. I will say, I

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Speaker 1: consider the Bureau of Labor Statistics job data to be

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Speaker 1: the absolutely best data source on jobs and statistics in

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Speaker 1: the entire world. If we aren't going to have those,

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Speaker 1: it's problematic.

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Speaker 2: Austin Goolsby speaking there. Meanwhile, the Trump administration also halted

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Speaker 2: eighteen billion dollars in federal funding for infrastructure projects in

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Speaker 2: New York City. Whitehouse Budget Director Russell Vote cited concerns

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Speaker 2: over diversity and equity policies for the cuts, but the

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Speaker 2: President warned earlier that he would use the shutdown to

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Speaker 2: target quote Democrat.

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Speaker 5: Things Open Aye.

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Speaker 3: It's completed to share sale that makes it the most

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Speaker 3: valuable startup in the world, surpassing Elon Musk's SpaceX. The

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Speaker 3: Chachipte makers employees sold roughly six point six billion dollars

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Speaker 3: worth of shares to a group of investors at a

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Speaker 3: record five hundred billion dollar valuation. The company is locked

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Speaker 3: into an increasingly bitter fight for top AI engineers, and

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Speaker 3: the share sale is seen as one way to offer

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Speaker 3: an incentive for those who stay araband.

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Speaker 2: Muslim leaders are pushing Hamas to accept the twenty point

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Speaker 2: peace plan for Gaza announced by President Trump this week,

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Speaker 2: saying the need to end the fighting surpasses concerns about

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Speaker 2: its finer details. One senior regional official told Bloomberg it's

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Speaker 2: important to focus on what he called wins in the plan,

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Speaker 2: including an end to the displacement of Gazans from the territory.

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Speaker 2: The official sees the aim of full Israeli withdrawal from

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Speaker 2: the Strip as a significant achievement, and said these are

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Speaker 2: the reasons the plan was swiftly endorsed by the foreign

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Speaker 2: ministers of Saudi Arabia, Jordan, the UAE and other countries.

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Speaker 2: Katar's Foreign ministry said Hamas is preparing its response to

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Speaker 2: the plan after President Trump earlier set a quote three

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Speaker 2: to four day deadline for the group.

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Speaker 3: Bloomberg understands the Germany's Chancellor of Frederic Martz, lashed out

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Speaker 3: at Hungary's Victor Orban during a meeting of EU leaders

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Speaker 3: in Denmark. Mertz accused the Hungarian Prime minister of derailing discussions.

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Speaker 3: The class took place during a discussion over how the

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Speaker 3: EU can better defend itself against Russian threats and support Ukraine.

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Speaker 3: It's the latest sign of frustration with Orban, who has

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Speaker 3: wielded his veto to hinder sanctions against Russia. Meanwhile, Danish

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Speaker 3: Prime Minister Meta Frederickson said Europe is in the middle

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Speaker 3: of a hybrid war waged by Moscow, and the continent

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Speaker 3: must arm itself.

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Speaker 6: I think it is serious.

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Speaker 2: I think the war in Ukraine is very serious.

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Speaker 7: When I look at Europe today, I think we are

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Speaker 7: in the most difficult and dangerous situation since the end

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Speaker 7: of the Second World War, not the.

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Speaker 6: Cold War and War.

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Speaker 3: Denmark's Prime Minister Meta Fredericson, speaking there as the country's

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Speaker 3: capital hosted EU leaders yesterday, around forty eight years from

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Speaker 3: the wider European political community will join a second summit today.

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Speaker 2: Unions in France are holding another day of anti austerity protests.

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Speaker 2: Demonstrators are aiming to maintain pressure on the Prime Minister,

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Speaker 2: Sebastian Locurnu as he pulls together a budget proposal. Bluebog's

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Speaker 2: teamer at a Bio has more.

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Speaker 8: Walkouts are planned and sectors including education and transport today,

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Speaker 8: as French protesters seek concessions on labour from the government.

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Speaker 8: Unions called for the latest round of action after meeting

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Speaker 8: with Prime Minister look Anew last week, citing a lack

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Speaker 8: of clarity around his budget plans. The strikers are expected

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Speaker 8: to be less disruptive than the last round of protests

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Speaker 8: held in September, but some flight disruption is anticipated. Lak

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Speaker 8: A New is aiming to reduce the deficit to about

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Speaker 8: four point seven percent of economic output in twenty twenty six,

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Speaker 8: and has left the door open to measures that could

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Speaker 8: affect the richest, saying it's impossible to not hear the

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Speaker 8: French people's demand for tax justice. Yes in London, Tea

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Speaker 8: added Bayo Bloomberg Radio I.

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Speaker 3: Meanwhile, the shape of the upcoming budget in the UK

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Speaker 3: is starting to become clearer after Labour's party conference. The

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Speaker 3: Chancellor laid the ground for raising taxes and improving welfare

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Speaker 3: for children at the annual gathering. Blog James Wilcock was there.

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Speaker 7: There is a roughly thirty five billion pound fiscal hole

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Speaker 7: to fill in the autumn budget, and the Chancellor also

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Speaker 7: has a shortage of political capital for major spending cuts.

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Speaker 7: Judging by their public hints for ministers, higher levies on

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Speaker 7: gambling companies, are potential freeze on income tax thresholds, and

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Speaker 7: a renewed push to cub welfare spending all seemed to

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Speaker 7: be on the cards, But the big decisions will start

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Speaker 7: after this Friday, when the Office for Budget Responsibility delivers

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Speaker 7: its first fiscal forecast to the government in London. James Wilcock,

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Speaker 7: Bloomberg Radio and.

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Speaker 2: Those are our top stories this morning in the markets.

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Speaker 2: Asian equities rallying, hangsaying, indegs up by one point eight percent,

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Speaker 2: lots of AI drivers, Samsung and sk Heinix doing a

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Speaker 2: deal with Open AI. We have seen record highs for

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Speaker 2: benchmarks in the US. Also, the Country World Index and

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Speaker 2: large cap eurostos fifty shares have saw record cloths yesterday

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Speaker 2: for the first time since March. And stop futures are

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Speaker 2: very strong now for Europe this morning, up almost six

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Speaker 2: tens of one percent on the Ustox of fifty futures.

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Speaker 2: US futures. Also in the green treasuries holding gains. They're

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Speaker 2: shrugging off the shutdown in the US. The dollar is flat,

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Speaker 2: Gold steadying, but we've seen a five day rally in

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Speaker 2: Goldman Sachs still very bullish on gold.

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Speaker 3: Those are the markets in a moment. More on Lisa

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Speaker 3: Cook and the data challenges at the FED, plus why

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Speaker 3: there's a shortage of turbines for natural gas power plants.

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Speaker 3: But another story that I've been reading this morning, which

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Speaker 3: really I think someone just got inside my brain and

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Speaker 3: wrote something based on it. It's about the economics of musicals.

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Speaker 3: Allison Tregger from Greenberg Opinion has been writing about how

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Speaker 3: big Broadway musicals are failing at an alarming rate. None

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Speaker 3: of the eight teen shows that opened last year has

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Speaker 3: so far turned a profit. This is a problem the

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Speaker 3: industry is facing rising costs, Audiences have never really come

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Speaker 3: back stronger after the pandemic as well, and she says

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Speaker 3: this is effecting the creativity and the ambition of new

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Speaker 3: shows as well. But what I found really interesting in

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Speaker 3: Alison's piece is the contrast with London's West End. She

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Speaker 3: says that the producers she spoke to say the smaller

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Speaker 3: theaters and the bigger local audience, more Londoners going to

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Speaker 3: shows mean that people can be more patient to wait

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Speaker 3: for profit, but also can allow for more experimentation. And

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Speaker 3: I think that kind of bears out when you see

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Speaker 3: some of the shows, big international shows that are opening

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Speaker 3: in London first, giving I suppose producers a chance to

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Speaker 3: see if it works.

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Speaker 2: Stephen, you and I have seen a shocking number of musicals.

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Speaker 2: I think it is fair to say, for reasons that

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Speaker 2: I shan't explain on the radio, but London does have

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Speaker 2: I think some of the same Broadway issues in the

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Speaker 2: sense that we've seen a lot of movies turned into

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Speaker 2: moving musicals in London, Missus Doubt find Elfin, Back to

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Speaker 2: the Future, Totoro actually, all of which I really did

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Speaker 2: quite enjoy. Luckily though, London does have a lot of

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Speaker 2: interesting fair lots of different theaters as you say, so

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Speaker 2: it's not just the big ips, it's also the kind

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Speaker 2: of unknown new place I really want to see punch.

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Speaker 3: Oh yeah, I've had great thing, yes, because based.

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Speaker 2: On news a real not life terrible news event.

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Speaker 3: Well, and if you think about Operation Men's Meat, which

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Speaker 3: was a film Whien He Go Back? I mean that's

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Speaker 3: been massively successful. London has opened on Broadway and done

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Speaker 3: very well there as well, and that's an interesting idea

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Speaker 3: of something it's a very British story having huge success

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Speaker 3: also on Broadway anyway. Alison Tregger's Peace you can read

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Speaker 3: at Blomberg dot com for its lash opinion.

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Speaker 2: Right, let's speak you more. Now on the Federal Reserve,

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Speaker 2: Lisa Kirk will be staying on as governor for now

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Speaker 2: after a Supreme Court ruling yesterday. This as the Chicago

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Speaker 2: Fed's Austin Gilsby warning that the lack of data publications

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Speaker 2: during the US government shutdown will make the Central Banks

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Speaker 2: job harder. Bloomberg opinion columnists Daniel Moss joins us now

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Speaker 2: for more. Good Morning, Daniel. Donald Trump has been prevented

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Speaker 2: from firing Lisa Cook whilst her case makes its way

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Speaker 2: through the corpse various court rulings and decisions. Should we

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Speaker 2: see this as a reprieve for FED independence?

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Speaker 6: Reprieve is a fair description. They're not out of the woods,

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Speaker 6: and the Trump team will try again to undermine the FED.

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Speaker 6: It's only a couple of months ago, though in Trump

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Speaker 6: world it seems like a very long time ago that

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Speaker 6: the President toured the FED renovation site with j Powell.

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Speaker 5: We all remember the.

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Speaker 6: Videos of them wearing hard hats. So they tried that

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Speaker 6: one and that didn't work. Then they turn their sites

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Speaker 6: on Cook. So these guys are not giving up.

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Speaker 4: It is a.

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Speaker 6: Public institution which is not cowtowing to him and over

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Speaker 6: which he does not have direct control. This is a

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Speaker 6: source of frustration. He's going to keep coming back. But yes,

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Speaker 6: this is a reprieve. That's why I say it's not

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Speaker 6: a solution, it's a reprieve.

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Speaker 3: Does it change the likely trajectory for their fads rates

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Speaker 3: from here though?

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Speaker 6: I don't believe so. They've indicated their inclined to cut

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Speaker 6: a couple more times in coming months, and you know,

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Speaker 6: there's nothing in the data to suggest that that's being

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Speaker 6: blown off. Course, doesn't mean there's going to be a Cutok,

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Speaker 6: We've got to go back to the start of the year.

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Speaker 6: We may well end up in terms of the federal

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Speaker 6: funds rate where we thought we would be at the

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Speaker 6: start of the year. So the first dot plot published

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Speaker 6: this year, I believe, well, maybe it was in December.

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Speaker 6: The December FOMC meeting projected a medium reduction twice to

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Speaker 6: twenty five base point cuds. Well, okay, we've just had one,

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Speaker 6: probably get another for the end of the year, so

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Speaker 6: we'll end up with two or three, which is basically

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Speaker 6: where we were starting. So I'm not sure this changes

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Speaker 6: a lot in terms of the policy rate in the

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Speaker 6: foreseeable future.

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Speaker 2: Which is strange when you think about it, given the

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Speaker 2: turbulence and uncertainty during the course of the year. The

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Speaker 2: other issue that rate setters are facing now though, is

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Speaker 2: a lack of data. The BLS is halting publications during

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Speaker 2: the shutdown. How big a problem is this for the Fed?

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Speaker 6: Well, the BLS has scaled back depending on the data

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Speaker 6: series or halted publication during a government shutdown before, including

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Speaker 6: numerous times when I was working in Washington, DC and

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Speaker 6: in charge of the economic news. You know, we've been

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Speaker 6: here before. It's not a tragedy. There will be catch

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Speaker 6: up publication afterwards. But what is interesting thing about this

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Speaker 6: is it comes at what some people are identifying as

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Speaker 6: a turning point in the economy, wherein the labor market

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Speaker 6: is softening, but actual other measures of economic activity are

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Speaker 6: holding up pretty well. The economy grew an annual rate

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Speaker 6: of more than three percent the last quarterly report we had,

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Speaker 6: but the labor market's also weakening, So there's something going

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Speaker 6: on here. We're in a sort of a gray zone

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Speaker 6: where grappling to figure out what's going on. The FED

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Speaker 6: does have a labor market mandate, and the labor market

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Speaker 6: is softening. I don't know, there's any question about it.

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Speaker 6: You can debate the extent of it and the causes

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Speaker 6: of it, but it does appear to be happening.

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Speaker 3: Daniel, thanks so much for joining us binber companding economists.

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Speaker 3: Daniel Math there and you can read the latest and

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Speaker 3: that Dana has been writing about the global central banks

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Speaker 3: at Bloomberg dot com forward slash opinion. Stay with us

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Speaker 3: more from Bloomberg Daybreak. Europe coming up after this next

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Speaker 3: to a major challenge facing global electricity supplies as artificial

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Speaker 3: intelligence increases demand orders for turbines to power natural gas plants,

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Speaker 3: a vastly outpacing supply, threatening the world's ability to keep pace.

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Speaker 3: Stephen Schaptinsky leads our team covering energy and Asia. He

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Speaker 3: joins us now for more. Stephen, First of all, what

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Speaker 3: effect is AI having on electricity demands?

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Speaker 5: So AI has effect on electricity demand depends on which

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Speaker 5: region you're talking about. Here in Asia it is affecting it,

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Speaker 5: but overall, emerging nations are growing for a number of reasons,

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Speaker 5: including air conditioning things like that. Now when you look

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Speaker 5: at the United States or Europe, it is having a

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Speaker 5: much bigger impact for developed nations where power demand had

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Speaker 5: largely been flat or growing somewhat steadling. The introduction of AI,

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Speaker 5: especially in the United States, has led to a real

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Speaker 5: big growth in data centers, and those data centers need power,

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Speaker 5: and more often than not, these companies are choosing or

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Speaker 5: utilities as well, are choosing to build gas fire power plants,

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Speaker 5: and those power plants need turbines. The turbines are the

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Speaker 5: heart of the power plant. It spins and it creates electricity,

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Speaker 5: and there are only three companies that make these turbines.

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Speaker 5: So it's creating a supply crunch because of suddenly a

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Speaker 5: spike in power demand in the US and in other

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Speaker 5: developed places.

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Speaker 2: Yeah, absolutely, the UK talking about this, the clash maybe

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Speaker 2: with its climate goals, but also the need to build

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Speaker 2: more infrastructure. It comes amide a broader shift also away

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Speaker 2: from coal into natural gas. How big is the shortfall

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Speaker 2: when it comes to the supply of turbines that are

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Speaker 2: needed for gas plants.

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Speaker 5: So that's really interesting and that was what we set

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Speaker 5: off to analyze this story. We heard that there was

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Speaker 5: a crunch in turbines, but when you actually look at

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Speaker 5: the numbers, it's much worse over the next four or

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Speaker 5: five years than we had expected. Right now globally to

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Speaker 5: build turbines, essentially, all the ones that are used for

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Speaker 5: power generation, all of the manufacturers have sixty gigawatts of capacity.

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Speaker 5: They can build sixty gigwats worth of turbines every year.

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Speaker 5: This year orders are going to be above sixty gigawatts

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Speaker 5: and they're going to hit close to ninety to one

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Speaker 5: hundred gigawatts every year basically through twenty twenty nine and

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Speaker 5: then maybe start to taper off. So there isn't enough

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Speaker 5: capacity to build these turbines for at least the end

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Speaker 5: of the decade. And that means that there are four

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Speaker 5: hundred billion dollars worth of power plans that are either

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Speaker 5: planned or proposed that might need to be canceled or

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Speaker 5: delayed if they don't get these pieces of equipment.

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Speaker 3: What does that mean in effect then for the power

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Speaker 3: supplies that we rely on globally, And I suppose is

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Speaker 3: it a problem that can be addressed?

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Speaker 5: So it depends again where you're looking in the United

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Speaker 5: States or countries that have more money companies that are richer,

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Speaker 5: if there isn't a gas turbine, they can quickly switch

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Speaker 5: to other solutions, which are renewables with batteries. That's a

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Speaker 5: solution that they can rapidly roll out. The grid has

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Speaker 5: the ability to degree to take that in now where

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Speaker 5: I sit in Southeast Asia, it's much more challenging. Places

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Speaker 5: like Vietnam that plans twenty at least twenty two gas

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Speaker 5: fire power plants through twenty thirty, they don't have the

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Speaker 5: option to switch to renewables as quickly, so that means

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Speaker 5: that they might have to rely on coal if they

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Speaker 5: don't get these turbines. We did a survey of these

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Speaker 5: twenty two power plants planned for Vietnam, and only one

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Speaker 5: of them has a binding contract for a gas fire turbine,

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Speaker 5: which means that many of these could be delayed or

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Speaker 5: not happen. In Vietnam. It's more than just Ai. Their

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Speaker 5: economy is growing rapidly, Their factory is being built the country.

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Speaker 5: The people are getting richer, and they want air conditioning.

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Speaker 5: All of this power demand requires more generation, and if

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Speaker 5: they can't fill it with gas or renewables, they're going

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Speaker 5: to do it with coal.

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Speaker 3: This is Bloomberg Daybreak Europe. You're morning brief on the

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