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

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Speaker 2: This is the BlueBag daybak At podcast. Good morning, It's Wednesday,

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Speaker 2: the twenty eighth of January. I'm Caroline Hepkit in London.

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Speaker 3: And I'm Stephen Caroline Brussels. Coming up today. The US

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Speaker 3: dollar hovers close to four year lows as President Trump's

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Speaker 3: indifference fuels further weakness in the currency.

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Speaker 2: HSBC, Barclay's and Standard Charter joined the UK Prime Minister's

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Speaker 2: trip to wu Beijing.

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Speaker 3: Plus with gold at record highs, we report on the

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Speaker 3: Swiss bunker full of bullying that's turning a crypto firm

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Speaker 3: into a precious metals heavyweight.

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Speaker 4: Let's start with a roundup of our top stories.

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Speaker 3: The dollar is close to its weakest level in four years,

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Speaker 3: after suffering its deepest one day drop since last year's

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Speaker 3: US tarwerfrollout. The sudden decline came after President Trump said

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Speaker 3: he didn't think the currency had weakened excessively. The President

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Speaker 3: was asked by reporters if he was worried about the

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Speaker 3: currencies drop.

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Speaker 5: No, I think it's great.

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Speaker 6: I've been the value of the della.

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Speaker 5: Look at the business would now I'd want it to

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Speaker 5: be just secret sole level, which is the fair thing

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Speaker 5: to do.

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Speaker 1: You could have it, I could have it go.

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Speaker 3: Up or go down like eyo yo. After the US

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Speaker 3: President spoke, the Bloomberg Dollar spot Index extended lasses against

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Speaker 3: all of its major counterparts before steadying and Asian trading.

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Speaker 3: The latest moves come as the green back had its

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Speaker 3: worst year since twenty seventeen last year.

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Speaker 2: The dollars sell off has been found by Trump's unpredictable policymaking,

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Speaker 2: which has rattled overseas allies and investors. The latest slide

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Speaker 2: helped to push the Swiss frank to its highest level

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Speaker 2: since twenty fifteen, with both the pound and the Euro

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Speaker 2: also hitting multi year highs. European Central Bank Vice President

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Speaker 2: Luis the Gwyndos has previously suggested that the euro could

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Speaker 2: become an alternative to the dollar if the EU increases integration.

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Speaker 2: It's a message Former European Commission President jose Man Well

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Speaker 2: Barrosso is also keen to emphasize.

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Speaker 5: The reality is that the Euro remains by far the

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Speaker 5: second most important global currency, much ahead of all the

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Speaker 5: others accept the dollar. I think sometimes globally people underestimates

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Speaker 5: the resilience of the European Union and the resilience of

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Speaker 5: the Euro.

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Speaker 2: Jose Manuel Barrosso was speaking to Bloomberg with President Trump's

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Speaker 2: embrace of the week of dollar scene as a further

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Speaker 2: deterrent to overseas holders of US assets.

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Speaker 3: The dollar's recent drop comes despite a rise in government

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Speaker 3: bond yields and expectations that the FED is poised to

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Speaker 3: pause rate cuts at today's meeting. The President, meanwhile, has

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Speaker 3: long accused other countries of seeking weaker exchange rates to

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Speaker 3: boost exports, saying last year, I'm the person that likes

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Speaker 3: a strong dollar, but a week dollar makes you a

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Speaker 3: hell of a lot more money. Goldman Sachs, a vice

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Speaker 3: chair Robert Kaplan, says prolonged weakening brings with it a

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Speaker 3: numberumber of dangers for the US economy.

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Speaker 7: Yes, it is true a weaker dollars boosts exports. However,

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Speaker 7: we have in the United States has thirty nine trillion

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Speaker 7: of debt on its way to forty trillion plus. And

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Speaker 7: when you have that much debt, I think stability of

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Speaker 7: the currency probably trumps exports, and so I actually think

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Speaker 7: the US is going to want to see a stable dollar.

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Speaker 3: Robert Kaplan, speaking there as investors have increasingly shifted into

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Speaker 3: gold and what's becoming known as the debasement trade. The

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Speaker 3: price of bully in rows as much as one and

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Speaker 3: a half percent today, having jumped three point four percent

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Speaker 3: yesterday to hit a new record high above five th

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Speaker 3: two hundred dollars an ounce.

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Speaker 2: UK Prime Minister Kiss Starma arrives in Beijing today alongside

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Speaker 2: a business delegation that includes several banking executives. Standard Charter

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Speaker 2: at HSBC and Barclays will will be represented as the

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Speaker 2: Prime Minister tries to deepen trade ties with China. Bomberg's

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Speaker 2: James Walcock says there are a number of opportunities in

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Speaker 2: the region.

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Speaker 6: Fifty UK company CEOs are going according to China's Ministry

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Speaker 6: of Commerce, and it wants investment from China, it wants exports.

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Speaker 6: It's worth noting that China currently accounts for roughly zero

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Speaker 6: point two percent of foreign direct investment into the UK

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Speaker 6: versus America's thirty three percent.

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Speaker 2: That was our reporter James Walcock, speaking there ahead of

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Speaker 2: the visit, which comes just days after President Trump threatened

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Speaker 2: Canadian products with one hundred percent tariffs after Canadian Prime

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Speaker 2: Minister Mark Carney's Beijing trip earlier this month, Bloomberg understands

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Speaker 2: that Kirs Starmer is aiming to downplay the UK's Chinese

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Speaker 2: imports in a bid to avoid a similar flare up,

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Speaker 2: which could potentially endanger the US UK trade agreement.

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Speaker 3: To some breaking news this ere ASML has just reported

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Speaker 3: fourth quarter sales and bookings that beat estimates. The Dutch

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Speaker 3: ship equipment maker and it's booking of almost thirteen point

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Speaker 3: two billion euros for the quarter that's versus estimates of

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Speaker 3: almost six point nine billion. It also sees net sales

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Speaker 3: in the current quarter of up to eight point nine

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Speaker 3: billion euros. That's also above expectations, ASML and ensing a

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Speaker 3: new share buyback program of up to twelve billion euros

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Speaker 3: by the end of twenty twenty eight.

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Speaker 2: Sales at LVMH's key fashion unit slumped over the holiday

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Speaker 2: season due to week demand. The firm revealed yesterday that

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Speaker 2: organic sales in its fashion and Leather Goods division fell

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Speaker 2: three percent in the fourth quarter. That's more than analysts

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Speaker 2: had expected. The news comes as luxury companies struggled to

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Speaker 2: bounce back from a slowdown that followed the post pandemic boom,

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Speaker 2: as cost of living pressures and Geopolitical Uncertainty Way on Spending.

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Speaker 2: Lvmh CEO Berna Ahnor said the group faces a difficult

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Speaker 2: environment in twenty twenty six and that it will limit

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Speaker 2: spending this year. So those are our stories for you

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Speaker 2: this morning. Let's take you through the markets. The dollars

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Speaker 2: on an aggressive sell off on Tuesday. It rebounds on the

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Speaker 2: BlueBag Dollar Spot Index two tenths of one percent. The

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Speaker 2: Euro also reversing the games that we saw yesterday, so

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Speaker 2: it's down by four tenths of one percent one nineteen

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Speaker 2: ninety six. Same story for sterling. Risk reversals for the

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Speaker 2: dollar though also do seem to signal further weakness for

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Speaker 2: the dollar still to come. The worry about that, of course,

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Speaker 2: whether that imports inflation into the United States. Ten Your

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Speaker 2: Treasury yields easing a basis point to four twenty three.

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Speaker 2: Jerown Pal's first press conference today since the Fed was

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Speaker 2: served with those.

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Speaker 4: Grand jury subpoenuts.

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Speaker 2: So that is one definitely for markets to watch as

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Speaker 2: we see stock futures jumping. Your socks fifty futures are

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Speaker 2: up by half of one percent.

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Speaker 4: Stephen.

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Speaker 3: In a moment, we'll bring you more on the pressure

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Speaker 3: on the dollar plus how a cryptogiant has quietly become

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Speaker 3: one of the biggest players in the booming gold market.

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Speaker 3: But we've also been reading the US this morning from

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Speaker 3: our colleagues over at Bloomberg Opinion on artificial intelligence, Alison

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Speaker 3: Schreeger takes on Elon Musk's recent prediction that AI will

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Speaker 3: create such abundance that in a decade or two people

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Speaker 3: won't need to bother saving for retirement. Alison's take, don't

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Speaker 3: count in it. She out lines two probable scenarios for

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Speaker 3: AI's future. The first is that it is like other

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Speaker 3: big innovations, makes people more productive. We see a modest

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Speaker 3: increase in growth over time, not enough for you to

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Speaker 3: forego your pension just yet. But the second optimistic and

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Speaker 3: likely scenario, she says, is that AI is not like

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Speaker 3: past innovations. It'll transform lives like nothing before. And that

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Speaker 3: could be different because it has the potential to change

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Speaker 3: the speed of innovation because the technology can actually innovate

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Speaker 3: by itself. Right now, all of this put together would

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Speaker 3: mean that you know, innovation is great, but for example,

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Speaker 3: if it makes us live longer, we're still going to

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Speaker 3: need people to look after us when o're old, When

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Speaker 3: we're older, because we know that socialization is such an

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Speaker 3: important part to living a good life. AI can't provide that,

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Speaker 3: so we're going to need to pay for it. It's

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Speaker 3: probably going to cost more, and thus you're going to

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Speaker 3: need your pension. Now, these are the optimistic scenarios. Other

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Speaker 3: scenarios included. I mean, it could just kill us all

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Speaker 3: on which takes then you don't need a pension.

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Speaker 2: H Yeah, I'm not Is that what Elon Musk meant?

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Speaker 2: I mean, yes, I think that's very interesting. Look, Elon

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Speaker 2: Musk is just absolutely fascinating, isn't he? And I like

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Speaker 2: the fact that it's optimistic. But no, I don't think

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Speaker 2: that I'm going to stop savey for a tirement under

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Speaker 2: this sort of under the current conditions anyway. And also

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Speaker 2: I note that you know what if AI comes along

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Speaker 2: and actually there are far fewer jobs and we all

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Speaker 2: need something to live on universal minimum wage?

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Speaker 4: I mean, does it bring that argument back? I don't know.

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Speaker 4: Interesting story though.

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Speaker 3: Yeah, plenty more to read Bloomberg dot Com Forward Slash Opinion.

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Speaker 3: Well let's bring you more now on the pressure on

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Speaker 3: the US dollar, part of the debasement trade playing out

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Speaker 3: on markets that's seen investors offload major sovereign debt and

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Speaker 3: currencies for fear that they're being devalued. Bloomberg opinion columnist

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Speaker 3: Chili Rehn has been writing about this, and she joins

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Speaker 3: US now for more. Really great to talk to you.

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Speaker 3: Donald Trump says he's not worried about a week or dollar.

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Speaker 3: Should he be?

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Speaker 8: I think Trump needs to be a little bit more

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Speaker 8: careful with what he's saying. I mean, he always wants

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Speaker 8: a week dollar because US goods is very expressive and

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Speaker 8: the US is very expensive for a wealthy tourists from

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Speaker 8: Europe or Japan. But the problem is when we start

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Speaker 8: to see such a clear trend of a dollar weakening,

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Speaker 8: international investors will have even more incentive to sell US

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Speaker 8: based assets. Talking about Euro, right, for investors that are

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Speaker 8: based in the European Union, if they bought into the

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Speaker 8: S and P five hundred in the last year the

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Speaker 8: Euro based the returns is actually none because the euro

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Speaker 8: has just strengthened so much against the greenback. So going

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Speaker 8: forward in twenty twenty six, say the dollar is going

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Speaker 8: to weaken, I don't know, five six seven percent against

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Speaker 8: the Chinese un or the Japanese yen. That is going

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Speaker 8: to be a big the Asian investors will also want

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Speaker 8: to start to sell America.

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Speaker 2: Okay, you've also been writing about why this whole idea,

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Speaker 2: the debasement trade, should be a bigger worry for the

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Speaker 2: US treasury sector. It'scott basn't what does this mean for

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Speaker 2: US government borrowing?

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Speaker 4: If you have a week a dollar.

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Speaker 8: Well, the US government has a lot of deficit to

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Speaker 8: finance every year. This year we're looking at somewhere around

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Speaker 8: two trillion dollars. But the debasement tree that the central

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Speaker 8: thesis of debasement trade is basically saying that the you know,

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Speaker 8: global investors should offload some of their holdings in sovereign

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Speaker 8: months and instead maybe they should look into precious metals

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Speaker 8: like gold, silver, or some even looking at crypto. Right, so,

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Speaker 8: like when the global demand for US treasuries, say weekends,

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Speaker 8: even domestically, like maybe it's possible American households want to

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Speaker 8: hold a less bounds and the more gold. Then it's

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Speaker 8: a big problem for Scott Beson because he's going to

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Speaker 8: rely more on short term TA bills and he has

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Speaker 8: to worry about rising borrowing costs.

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Speaker 3: How much further could this trade go? Then, Julie is

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Speaker 3: it putting the reserve status of the dollar in question.

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Speaker 8: To be honest, at the current goal price, global central

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Speaker 8: bank's goal reserves are already more. They already have bigger

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Speaker 8: gold reserves than treasury reserves. So in fact, the facto

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Speaker 8: we have already moved to a gold standard. And unfortunately

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Speaker 8: the issue with the boring reserves is that if a

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Speaker 8: central bank feels like, Okay, I'm investing in the euro

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Speaker 8: or gold and they're serving me very well, I'm going

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Speaker 8: to keep on investing in them and sell my treasury reserves.

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Speaker 8: So I think the US government does need to be

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Speaker 8: very careful because there is already a sense that the

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Speaker 8: dollar is no longer the reserve currency.

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Speaker 4: Wow.

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Speaker 2: Interesting, Shuley, Thank you so much for being with us.

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Speaker 2: Our Bloomberg opinion column is Shuley Wren. Stay with us.

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Speaker 2: More from Bloomberg daybake you coming up after this.

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Speaker 3: The crypto giant Teather Holdings has quietly become the world's

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Speaker 3: largest known order of gold bullion outside of banks and

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Speaker 3: nation states, and it's shaking up the gold market. Joining

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Speaker 3: us now for more on this story, our Precious Metals

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Speaker 3: and Mining reporter Jack Ryan Jack. Good to have you

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Speaker 3: on then remind us who are Teather and what are

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Speaker 3: they up to in the gold market.

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Speaker 1: Heather one of the most interesting companies in the crypto world.

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Speaker 1: They basically issue this dollar stable coin and in return

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Speaker 1: for that, investors give them real dollars which they can

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Speaker 1: then invest in things like gold and bigcoin and treasuries,

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Speaker 1: and thus made them immensely profitable, and a lot of

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Speaker 1: that money they've been pouring into gold bullion. So they've

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Speaker 1: been buying one to two tons of gold a week,

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Speaker 1: which makes them really one of the one of the

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Speaker 1: biggest buyers of gold in the market. The second biggest

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Speaker 1: buyer of any for example, central bank that we know

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Speaker 1: would be Teather. And so this is there's very actually

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Speaker 1: little known about why they're buying gold or how much

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Speaker 1: they'd band to continue buying, and so in our story

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Speaker 1: we kind of lay out some of those things.

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Speaker 2: Has it had an impact then on the rally that

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Speaker 2: we've seen in gold, given you know, just the heft

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Speaker 2: of this company.

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Speaker 1: Now, yes, I mean so they bought more than seventy

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Speaker 1: tons last year, which definitely would have been enough to

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Speaker 1: have an impact on the price, not maybe you know,

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Speaker 1: the line's share of gold sixty five percent rally last year,

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Speaker 1: but I think from talking to a few experts in

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Speaker 1: the market, they estimated that definitely a few percentage points

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Speaker 1: of that you could attribute to a buyer of that size.

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Speaker 1: So they definitely had an impact, but only one of many,

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Speaker 1: many reasons why gold has been surging over the last year.

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Speaker 3: One of the most fascinating parts of this story is

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Speaker 3: how Tether is storing the goals. Tell us more about

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Speaker 3: it and what do they want to do with it.

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Speaker 1: Yes, it's a converted old nuclear bunker in Switzerland. Theyther

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Speaker 1: have a massive emphasis on keeping a hold of their

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Speaker 1: gold themselves. I mean, like a lot of people I

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Speaker 1: think in the crypto world, they you know, are maybe

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Speaker 1: skeptical about government debt. They have a great emphasis on

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Speaker 1: kind of keeping physical possession of their own assets. So

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Speaker 1: gold is a kind of natural is a naturally appealing

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Speaker 1: asset for people in that world. So because of that,

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Speaker 1: you know, often central banks would store their goals with

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Speaker 1: the Bank of England or something like that. Investors would

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Speaker 1: maybe store it with commercial banks in London. Teather has

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Speaker 1: been buying physical gold from refiners big bangs and essentially

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Speaker 1: shipping it to its own massive massive vault in Switzerland

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Speaker 1: and actually now is looking at maybe trading some of

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Speaker 1: that gold to kind of make active use of it

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Speaker 1: and take advantage of arbitrages spreads, and to that end

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Speaker 1: they've actually hired two of the most senior two of

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Speaker 1: the most senior bullian traders from HSBC, which is one

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Speaker 1: of the biggest bullion bags in the industry.

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