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

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Speaker 2: This is the Bloomberg Day, bak you at podcast. Good morning,

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Speaker 2: It's Tuesday, the tewond of September. I'm Caroline Hepkitt in

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Speaker 2: London and.

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Speaker 1: I'm Stephen Caroline Brussels.

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Speaker 3: Coming up today.

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Speaker 1: The price of gold surpasses three thousand, five hundred dollars

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Speaker 1: an ounce to hit a new record high on US

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Speaker 1: rate cut.

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Speaker 2: Bets Nesley dismisses its CEO, saying he had an undisclosed

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Speaker 2: romantic relationship with a direct subordinate.

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Speaker 1: Plus when artificial pressure becomes a real problem, how cheaper

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Speaker 1: lab made diamonds have helped to plunge Botswana into crisis.

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Speaker 3: Let's start with a roundup of our top stories.

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Speaker 1: Gold has had a record high, driven by expectations for

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Speaker 1: federal reserve rate cuts and concerns over the Central banks independence.

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Speaker 1: The price of the precious metal topped three thousand, five

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Speaker 1: hundred dollars Announce as investors loaded up on.

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Speaker 3: The safe haven asset.

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Speaker 1: The latest run comes after Fed char Jerome Pell cautiously

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Speaker 1: opened the door to a reduction due to a weakening

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Speaker 1: jobs market. Here's the view of BNP Paribas chief economist

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Speaker 1: Luigi Speranza, we think this down.

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Speaker 4: There is no ma their life, and the FED will

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Speaker 4: letpier with sort of insurance if you want to get

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Speaker 4: a we I regarded the September kata, the liber macad

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Speaker 4: has been weakening, probably more than we had expected on

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Speaker 4: the base of original data. I think it's sillly so fatchier.

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Speaker 1: Luigi Speranza speaking there as bond investors worry they could

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Speaker 1: be in for a rough September. Over the past decades,

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Speaker 1: debt maturing beyond ten years as typically last two percent

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Speaker 1: in the month, and with government set to boost borrowing,

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Speaker 1: long dated bonds are already trailing shorter maturities.

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Speaker 2: Nesle has dismissed its CEO, Laur Fregs after only a year,

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Speaker 2: due to an undisclosed workplace affair. The abrupt change removes

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Speaker 2: the boss of the world's largest food company, who was

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Speaker 2: seen as a safe pair of hands. Bloomberg's James Walcock has.

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Speaker 5: More Nessler's board say an investigation found Freaks had an

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Speaker 5: undisclosed romantic relationship with a direct subordinate. The CEO, who

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Speaker 5: worked for the company for forty years, was only twelve

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Speaker 5: months in his role at the top and will not

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Speaker 5: receive an exit package. He's been contacted a comment by

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Speaker 5: Meteor l Lids, but hasn't yet responded to the announcement.

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Speaker 5: The food company has named Philip Navratil, who currently runs

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Speaker 5: its Espresso coffee brand, as his replacement. In London James

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Speaker 5: Walcock Blooder Radio Revolute has.

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Speaker 1: Begun a secondary share sale at a seventy five billion

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Speaker 1: dollar valuation. Bloomberg understands that staff at the London based

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Speaker 1: digital bank will be able to sell as much of

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Speaker 1: twenty percent of their stakes for just over one three

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Speaker 1: hundred dollars a share. The deal with Samanda status as

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Speaker 1: one of the most valuable FinTechs, with the latest valuation

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Speaker 1: up from forty five billion dollars last year.

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Speaker 2: A financial industry lobby group says that the European Union's

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Speaker 2: failure to break down barriers between national banking markets has

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Speaker 2: trapped hundreds of billions of euros of capital at big lenders.

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Speaker 2: Boomberg's Mihail Kuberla has more now.

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Speaker 6: The Association for Financial Markets in Europe says obstacles to

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Speaker 6: cross border banking services have trapped two hundred and twenty

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Speaker 6: five billion euros in low risk assets The Lobby group

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Speaker 6: warns EU banks faced stuffer requirements than peers in the

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Speaker 6: US or the UK, putting them at a competitive disadvantage.

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Speaker 6: European politicians are taking steps to forge what they call

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Speaker 6: a banking union, but progress has been slow. The AFME

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Speaker 6: says a lack of trust between national supervisors is preventing

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Speaker 6: changes to the rules and points in particular to the

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Speaker 6: cumbersome process in approving cross border mergers. In Brussels, Michael

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Speaker 6: Kubala Bloomberg.

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Speaker 1: Radio Authority suspects Russian interfering was behind a GPS jamming

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Speaker 1: incident that disrupted a plane carrying the President of the

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Speaker 1: European Commissioner Slavanderline. A jet carrying the EU leader had

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Speaker 1: to land in Bulgaria on Sunday using only paper maps

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Speaker 1: after electronic navigation stopped working. The RIX Brussels Bureau chiefs

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Speaker 1: Zan Lynch says it's part of a repeated pattern.

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Speaker 7: A lot of the boat of countries have reported an

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Speaker 7: increase in this kind of activity. GPS jamming impacting maritime

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Speaker 7: and air travel across Europe by Russia so very much

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Speaker 7: an indication of the tensions that are out there at

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Speaker 7: the moment. In Europe as is war rages on in Ukraine.

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Speaker 1: Lyn Chad's that Vonderline was touring the EU's eastern most

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Speaker 1: states on a campaign to build up military infrastructure. The

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Speaker 1: Kremlin didn't immediately respond to a request for comment.

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Speaker 2: Now Here in the UK, Prime Minister Kis Starmer announced

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Speaker 2: a series of personnel changes centered around his economic top team.

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Speaker 2: Former Bank of England Deputy Governor Minu Chafique has been

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Speaker 2: hired to be his chief economic advisor, and Treasury Minister

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Speaker 2: Darren Jones was moved to run Starmer's office, But former

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Speaker 2: head of the Institute for Fiscal Studies Paul Johnson criticized

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Speaker 2: the attempts to hit the reset button after a stuttering

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Speaker 2: first year.

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Speaker 8: More than a year into this government, they're still they're

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Speaker 8: only just working out what they might need some senior

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Speaker 8: economic expertise within Number ten, both at a political level

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Speaker 8: and at the advisor level. It's yet another example I

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Speaker 8: think of how you staggeringly unprepared this government was for government,

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Speaker 8: despite the fact that they essentially knew they were going

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Speaker 8: to win the election some considerable time out.

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Speaker 2: The economist Paul Johnson that are speaking two times Radio

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Speaker 2: polls suggest that Labor have seen a significant fall in

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Speaker 2: popularity in their first year in office, driven by issues

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Speaker 2: including the economy and migration. Meanwhile, yesterday the Homes Secretary

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Speaker 2: made a significant announcement on migration policy.

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Speaker 3: As Parliament returned.

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Speaker 2: The government will temporarily suspend the scheme that lets asylum

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Speaker 2: seekers bring family members to the UK.

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Speaker 1: Premier League clubs have spent more than ever before in

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Speaker 1: a single transfer window this summer, surpassing three billion pounds.

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Speaker 3: Headlining the total.

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Speaker 1: As Alexander Esesak's record breaking move from Newcastle to Liverpool

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Speaker 1: for one hundred and twenty five million pounds, making him

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Speaker 1: the most expensive player in British history. Speaking to Bloomberg

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Speaker 1: last month, trist From Leach, co head of European credit

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Speaker 1: Apollo Global Management, told Bloomberg the sports presents interesting opportunities.

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Speaker 9: Certainly, it's an area we're involved in, we think is interesting,

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Speaker 9: we think represents compelling risk award and look it's part

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Speaker 9: of our We look at that as part of our

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Speaker 9: setback business, where you know, lending against receiverables from high

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Speaker 9: quality counterparties is something we're happy to do and we

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Speaker 9: think we can do in a competitive way. And look,

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Speaker 9: the sports world seems to be attracting more and more

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Speaker 9: money all the time.

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Speaker 1: Apolo's trust from Leach speaking there, Player fees are often

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Speaker 1: paid in installments over several years, creating future cash flows

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Speaker 1: that clubs can monetize. These so called transfer receivables can

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Speaker 1: enable a relatively low cost source of raising debt. The

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Speaker 1: Premier League's total transfer bill this year was more than

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Speaker 1: was spent by the Bundesliga, La Liga, Ligan and Seri

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Speaker 1: R clubs combined.

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

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Speaker 2: Looking at the markets, the all Con'try Weld index at

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Speaker 2: the moment in the red. The MSCIAS Pacific indexes also down.

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Speaker 2: Some modest gains elsewhere in Asia. For example, the Cosby

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Speaker 2: European defense stocks yesterday gained stop futures for Europe there

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Speaker 2: are in the red, so too are US stocks. We're back,

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Speaker 2: of course, after the Labor Day holiday yesterday. Yields on

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Speaker 2: treasuries also the cash trade reopening. In terms of ten

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Speaker 2: ure yields, we're up two basis points at four twenty five.

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Speaker 2: We've also got Euro Area inflation readings out today expect

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Speaker 2: just above two percent. Perhaps bloombig dollar spot indexes up

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Speaker 2: about a tenth of one percent. That's the markets right now.

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Speaker 1: In the moment, we'll bring you more on the rally

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Speaker 1: and gold prices, plus how Botswana has been hit by

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Speaker 1: the rise and lab grown diamonds. But another story that

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Speaker 1: we've been reading this morning on how American schools are

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Speaker 1: using AI as the new term start. So, as Fahimi

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Speaker 1: Varra has been writing for Bloomberg BusinessWeek, it is the

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Speaker 1: third school year since chat GBT first emerged. The initial

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Speaker 1: response from school authorities was to try to ban it,

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Speaker 1: although it does seem like attitudes are changing. She's spoken

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Speaker 1: to a whole range of educational experts, teachers, parents, pupils

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Speaker 1: for this piece as well, all with differing perspectives on

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Speaker 1: the use of AI, the potential applicability of it in

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Speaker 1: the classroom, whether it can be a good thing if

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Speaker 1: controlled properly, or whether it's universally a bad thing. There's

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Speaker 1: no conclusion essentially, as the research that one accelerator at

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Speaker 1: Stanford has been tracking as well, largely inconclusive as the

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Speaker 1: educational effects of it as well. But it is the

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Speaker 1: debate that's being had in schools and I'm sure in

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Speaker 1: households all over the world as well.

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Speaker 2: Yeah, I think it's interesting the way that you put

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Speaker 2: it that it's the third year in existence. I mean,

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Speaker 2: when you think about school pupils, it every year is

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Speaker 2: so important and kind of cumulative. Look, the UK's having

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Speaker 2: this debate as well, right The government released new guidance

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Speaker 2: for schools over the summer about this. The guidance, interestingly though,

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Speaker 2: was aimed at teachers stevas So teachers can use AI

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Speaker 2: to help them with lesson planning, with marking and with

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Speaker 2: administrative tasks, but they need to use their professional judgment,

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Speaker 2: was the view of the UK government. They sort of

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Speaker 2: frame it as an opportunity. But also there's been kind

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Speaker 2: of quite a lot of chatter over the summer about

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Speaker 2: how do teachers make it clear to parents and how

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Speaker 2: AI is being used as pretty much everyone knows that

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Speaker 2: pupils and students are doing it.

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Speaker 1: Yeah, exactly, And I suppose how do you, I mean,

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Speaker 1: look at the technologies evolving so quickly as well, how

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Speaker 1: do you try to make the most of it without

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Speaker 1: necessarily shortcutting some of the key skills that people need

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Speaker 1: later in life. So I think it's an ongoing debate

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Speaker 1: that we'll be hearing plenty more about, but Behini Varru's

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Speaker 1: piece are really well worth reading for an insight into

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Speaker 1: how this debate is playing out in the US over

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Speaker 1: the use of AI in skills.

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Speaker 2: Now, let's bring you more on our top market story

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Speaker 2: this morning. So the surge in the price of gold,

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Speaker 2: which has hit another record high, our economics were pulled a.

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Speaker 2: Katya Dmitrieva joins us for more on this. Good morning, Katya.

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Speaker 2: What is driving this latest rally in gold so huge reality?

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Speaker 10: I mean, it's really three things if you think about it.

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Speaker 10: The first being first and foremost is growing expectation by markets,

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Speaker 10: by economists that the FED is going to have to

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Speaker 10: cut interest rates this month. We're now in September, I

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Speaker 10: believe it or not. And also because you know, economic

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Speaker 10: activity is slowing and you have these potential changes at

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Speaker 10: the FED. And that's sort of the second reason. So

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Speaker 10: there's been a lot of risk, growing volatility because of

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Speaker 10: Trump's attacks on the FED, most recently of course going

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Speaker 10: after Governor Lisa Cook. She's taken him to court and

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Speaker 10: still in her position and it's sort of remaining there.

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Speaker 10: But this, you know, creates a lot of volatility. Gold

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Speaker 10: being a safe asset we've seen buying based on that. Finally,

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Speaker 10: and this is kind of a longer term trend, but

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Speaker 10: this idea of selling the US dollar, selling America, or

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Speaker 10: at least pivoting to other assets, you know, particularly safer assets,

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Speaker 10: and many countries, particularly emerging nations, have been buying gold

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Speaker 10: instead of US dollars, so that's really been keeping demand high.

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Speaker 1: And of course this comes after a huge run for

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Speaker 1: gold so far this year, up over thirty percent. Questions

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Speaker 1: over tariff, so what the fact that was going to

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Speaker 1: have as well? How much further could this go?

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Speaker 10: Well, we're now talking about four thousand dollars an ounce,

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Speaker 10: so we're about thirty five hundred right now, and you know,

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Speaker 10: we're seeing some analyst notes that are saying, well, four

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Speaker 10: thousand isn't actually out of the ordinary, and even through

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Speaker 10: year end, and that's kind of because of the recent

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Speaker 10: run up, because of the year to date run up,

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Speaker 10: and because a lot of these geoeconomic tensions and volatility

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Speaker 10: are not going away. I mean, even just this week

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Speaker 10: we saw this meeting between puts In and she and Mody,

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Speaker 10: and it really underscores just how much the global South

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Speaker 10: is going to continue to diversify away from the US

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Speaker 10: really come together, boosting trade agreements with one another, potentially

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Speaker 10: purchasing more gold, which is going to increase that pressure

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Speaker 10: on prices, So it doesn't look like it's going away

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Speaker 10: anytime soon.

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Speaker 2: Meanwhile, of course five days job support is the next

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Speaker 2: key data point to watch in terms of those rate

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Speaker 2: cut expectations, and we also have some other data points

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Speaker 2: to look forward to before then. So what could be

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Speaker 2: the next catalyst for markets.

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Speaker 10: Well, it's really going to be the Friday job numbers.

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Speaker 10: I mean they're expecting economists are expecting right now about

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Speaker 10: seventy five thousand gain in August, which is about the

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Speaker 10: same as the prior month. So anything too far above

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Speaker 10: that would raise some questions potentially about cutting rates, but

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Speaker 10: anything below that would pretty much solidify rate cuts in

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Speaker 10: markets minds and investors' minds. But before then, we also

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Speaker 10: have some hints of that. Of course, we have the

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Speaker 10: ADP private payrolls numbers. We have weekly jobless claims. Those

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Speaker 10: are expected to come in about the same as the

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Speaker 10: prior week. Factory orders, which kind of gives you an

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Speaker 10: idea of the industrial side of things that's probably going

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Speaker 10: to be contracting again, but less than June and Jolts

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Speaker 10: lay off data, which is going to be lower in

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Speaker 10: July than the prior year over year. But really, you

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Speaker 10: know Friday Job's numbers, you really can't can't get more

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Speaker 10: important than that.

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Speaker 1: Great to talk to you, Thanks very much for your analysis.

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Speaker 1: That's our economics reporter Katie demin Trieva.

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Speaker 3: Stay with us.

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Speaker 1: More from Bloomberg Daybreak Europe coming up after this.

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Speaker 2: Now to Botswana next, where the rise of lab grown

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Speaker 2: diamonds is robbing the country of revenue from an industry

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Speaker 2: that's made it one of the richest countries in Sub

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Speaker 2: Saharan Africa. Our reporter Matthew Hill has been writing about

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Speaker 2: this and joins us now, Matthew, how has diamond mining

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Speaker 2: transformed Botswana.

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Speaker 11: Someth independence from the UK in nineteen sixty six. What

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Speaker 11: Swan has really used diamonds to develop its country and

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Speaker 11: it's been hold up as a real success story of

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Speaker 11: an African nation that has used its natural resource wealth

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Speaker 11: to develop its country, educate its people, bull infrastructure.

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Speaker 1: So what's changed then as we've seen a greater youth

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Speaker 1: or or kind of interest in lab grown diamond womans

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Speaker 1: from consumers as well. This transformation how was that played

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Speaker 1: out in Botswana.

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Speaker 11: So for decades the country's benefited from having this massive

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Speaker 11: endowment of diamonds. It's been the world's biggest producer of

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Speaker 11: the stones by value. And then after COVID, we saw

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Speaker 11: a spiking price of twenty twenty one and demand where

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Speaker 11: everyone was basically buying everything, including diamonds. But after that

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Speaker 11: there was a slowdown. There was a slump in demand

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Speaker 11: from countries like China, which caused vices to fall, and

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Speaker 11: some cutbacks from producers like Botswana. And then the real

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Speaker 11: challenge came along, which was, as you say, lab grown

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Speaker 11: diamonds where there were there was a big ramp up

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Speaker 11: in production of these zones. They started coming to the

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Speaker 11: market at increasingly cheap prices. One diamond minding company said

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Speaker 11: this year that they've basically been in free fall. So

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Speaker 11: you've seen less phenomenon in the US and China where

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Speaker 11: young buy especially gen Z buyers, are turning to lab

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Speaker 11: grown diamonds for engagement rings, which can cost one of

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Speaker 11: the price of a natural diamond. And I mean, you're

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Speaker 11: just talking about the record gold price. If you're a

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Speaker 11: young person buying an engagement ring and you are facing

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Speaker 11: significantly higher price for the gold that diamond is set in.

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Speaker 11: That's perhaps even more of an incentive to go for

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Speaker 11: something that costs far cheaper.

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Speaker 2: Yeah, yes, absolutely, that seems to be you know, the

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Speaker 2: rationale of some bars at least.

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Speaker 3: But then what does it mean overall?

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Speaker 2: For Botswana the population of just about two and a

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Speaker 2: half million people, This, as you've reported, means huge issues

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Speaker 2: for government finances for companies there.

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Speaker 3: How is the government responding exactly?

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Speaker 11: It is a really really difficult situation that they find

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Speaker 11: themselves in. For a bit of context, diamonds account for

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Speaker 11: about eighty percent of What'swana's exports, about one third of

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Speaker 11: government revenues, and in terms of the economy, that make

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Speaker 11: up for about twenty five percent of the total economy.

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Speaker 11: When you take a big chunk of that revenue away,

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Speaker 11: that introduces a crisis. The government is forecast to run

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Speaker 11: up a budget deficit of about eleven percent this year.

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Speaker 11: That's the highest in Africa. And if you take in

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Speaker 11: the context of what's one of being a shining example

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Speaker 11: generally speaking of how to manage resource wealth, well that's

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Speaker 11: quite a shocking statistic. The government's debt has nearly doubled

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Speaker 11: in the past three years to buy MFC's reaching forty

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Speaker 11: three percent of GDP this year, which is actually beyond

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Speaker 11: what the fiscal limits allow. So that also just shows

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Speaker 11: how stark the crisis is. Government's forced to cut spending,

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Speaker 11: they base medical socks running low, and the construction champanies

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Speaker 11: that rely on government tenders are laying off a lot

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Speaker 11: of their workers too.

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