WEBVTT - Gold Hits Record High, Nestlé CEO Affair Exit, Lab Diamond Pressure 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, podcasts, radio news. 0:00:09.680 --> 0:00:12.240 This is the Bloomberg Day, bak you at podcast. Good morning, 0:00:12.240 --> 0:00:15.200 It's Tuesday, the tewond of September. I'm Caroline Hepkitt in 0:00:15.240 --> 0:00:16.160 London and. 0:00:16.040 --> 0:00:17.520 I'm Stephen Caroline Brussels. 0:00:17.520 --> 0:00:18.320 Coming up today. 0:00:18.440 --> 0:00:22.080 The price of gold surpasses three thousand, five hundred dollars 0:00:22.079 --> 0:00:25.160 an ounce to hit a new record high on US 0:00:25.280 --> 0:00:25.759 rate cut. 0:00:25.880 --> 0:00:30.400 Bets Nesley dismisses its CEO, saying he had an undisclosed 0:00:30.480 --> 0:00:33.320 romantic relationship with a direct subordinate. 0:00:33.960 --> 0:00:38.159 Plus when artificial pressure becomes a real problem, how cheaper 0:00:38.320 --> 0:00:42.600 lab made diamonds have helped to plunge Botswana into crisis. 0:00:43.040 --> 0:00:45.240 Let's start with a roundup of our top stories. 0:00:46.080 --> 0:00:49.199 Gold has had a record high, driven by expectations for 0:00:49.320 --> 0:00:54.040 federal reserve rate cuts and concerns over the Central banks independence. 0:00:54.360 --> 0:00:56.800 The price of the precious metal topped three thousand, five 0:00:56.840 --> 0:00:59.400 hundred dollars Announce as investors loaded up on. 0:00:59.360 --> 0:01:00.480 The safe haven asset. 0:01:00.880 --> 0:01:04.160 The latest run comes after Fed char Jerome Pell cautiously 0:01:04.200 --> 0:01:07.080 opened the door to a reduction due to a weakening 0:01:07.160 --> 0:01:11.240 jobs market. Here's the view of BNP Paribas chief economist 0:01:11.319 --> 0:01:13.959 Luigi Speranza, we think this down. 0:01:14.040 --> 0:01:16.160 There is no ma their life, and the FED will 0:01:16.240 --> 0:01:19.759 letpier with sort of insurance if you want to get 0:01:19.880 --> 0:01:23.520 a we I regarded the September kata, the liber macad 0:01:23.720 --> 0:01:26.399 has been weakening, probably more than we had expected on 0:01:26.440 --> 0:01:31.039 the base of original data. I think it's sillly so fatchier. 0:01:31.080 --> 0:01:34.880 Luigi Speranza speaking there as bond investors worry they could 0:01:34.880 --> 0:01:38.280 be in for a rough September. Over the past decades, 0:01:38.400 --> 0:01:42.039 debt maturing beyond ten years as typically last two percent 0:01:42.080 --> 0:01:44.600 in the month, and with government set to boost borrowing, 0:01:44.640 --> 0:01:47.920 long dated bonds are already trailing shorter maturities. 0:01:49.240 --> 0:01:54.480 Nesle has dismissed its CEO, Laur Fregs after only a year, 0:01:54.680 --> 0:01:59.480 due to an undisclosed workplace affair. The abrupt change removes 0:01:59.520 --> 0:02:02.680 the boss of the world's largest food company, who was 0:02:02.760 --> 0:02:06.800 seen as a safe pair of hands. Bloomberg's James Walcock has. 0:02:06.640 --> 0:02:11.239 More Nessler's board say an investigation found Freaks had an 0:02:11.360 --> 0:02:16.080 undisclosed romantic relationship with a direct subordinate. The CEO, who 0:02:16.160 --> 0:02:19.120 worked for the company for forty years, was only twelve 0:02:19.160 --> 0:02:21.160 months in his role at the top and will not 0:02:21.280 --> 0:02:24.639 receive an exit package. He's been contacted a comment by 0:02:24.639 --> 0:02:27.480 Meteor l Lids, but hasn't yet responded to the announcement. 0:02:28.120 --> 0:02:30.760 The food company has named Philip Navratil, who currently runs 0:02:30.800 --> 0:02:34.760 its Espresso coffee brand, as his replacement. In London James 0:02:34.760 --> 0:02:37.920 Walcock Blooder Radio Revolute has. 0:02:37.800 --> 0:02:41.200 Begun a secondary share sale at a seventy five billion 0:02:41.280 --> 0:02:44.840 dollar valuation. Bloomberg understands that staff at the London based 0:02:44.880 --> 0:02:46.720 digital bank will be able to sell as much of 0:02:46.760 --> 0:02:50.560 twenty percent of their stakes for just over one three 0:02:50.720 --> 0:02:54.480 hundred dollars a share. The deal with Samanda status as 0:02:54.560 --> 0:02:57.720 one of the most valuable FinTechs, with the latest valuation 0:02:57.960 --> 0:03:00.560 up from forty five billion dollars last year. 0:03:01.960 --> 0:03:05.440 A financial industry lobby group says that the European Union's 0:03:05.600 --> 0:03:10.000 failure to break down barriers between national banking markets has 0:03:10.000 --> 0:03:14.079 trapped hundreds of billions of euros of capital at big lenders. 0:03:14.240 --> 0:03:16.519 Boomberg's Mihail Kuberla has more now. 0:03:17.720 --> 0:03:21.799 The Association for Financial Markets in Europe says obstacles to 0:03:21.880 --> 0:03:25.400 cross border banking services have trapped two hundred and twenty 0:03:25.400 --> 0:03:29.359 five billion euros in low risk assets The Lobby group 0:03:29.440 --> 0:03:32.400 warns EU banks faced stuffer requirements than peers in the 0:03:32.520 --> 0:03:36.320 US or the UK, putting them at a competitive disadvantage. 0:03:36.520 --> 0:03:39.560 European politicians are taking steps to forge what they call 0:03:39.600 --> 0:03:43.640 a banking union, but progress has been slow. The AFME 0:03:44.040 --> 0:03:47.600 says a lack of trust between national supervisors is preventing 0:03:47.720 --> 0:03:50.760 changes to the rules and points in particular to the 0:03:50.800 --> 0:03:55.760 cumbersome process in approving cross border mergers. In Brussels, Michael 0:03:55.840 --> 0:03:57.520 Kubala Bloomberg. 0:03:57.120 --> 0:04:01.760 Radio Authority suspects Russian interfering was behind a GPS jamming 0:04:01.800 --> 0:04:04.400 incident that disrupted a plane carrying the President of the 0:04:04.440 --> 0:04:08.520 European Commissioner Slavanderline. A jet carrying the EU leader had 0:04:08.560 --> 0:04:11.840 to land in Bulgaria on Sunday using only paper maps 0:04:11.880 --> 0:04:16.000 after electronic navigation stopped working. The RIX Brussels Bureau chiefs 0:04:16.120 --> 0:04:18.560 Zan Lynch says it's part of a repeated pattern. 0:04:19.680 --> 0:04:21.920 A lot of the boat of countries have reported an 0:04:21.960 --> 0:04:27.240 increase in this kind of activity. GPS jamming impacting maritime 0:04:27.279 --> 0:04:31.040 and air travel across Europe by Russia so very much 0:04:31.480 --> 0:04:35.120 an indication of the tensions that are out there at 0:04:35.120 --> 0:04:40.040 the moment. In Europe as is war rages on in Ukraine. 0:04:40.240 --> 0:04:44.560 Lyn Chad's that Vonderline was touring the EU's eastern most 0:04:44.600 --> 0:04:48.840 states on a campaign to build up military infrastructure. The 0:04:48.920 --> 0:04:51.960 Kremlin didn't immediately respond to a request for comment. 0:04:52.760 --> 0:04:55.520 Now Here in the UK, Prime Minister Kis Starmer announced 0:04:55.560 --> 0:04:59.760 a series of personnel changes centered around his economic top team. 0:05:00.160 --> 0:05:03.720 Former Bank of England Deputy Governor Minu Chafique has been 0:05:03.800 --> 0:05:07.320 hired to be his chief economic advisor, and Treasury Minister 0:05:07.400 --> 0:05:11.640 Darren Jones was moved to run Starmer's office, But former 0:05:11.680 --> 0:05:15.520 head of the Institute for Fiscal Studies Paul Johnson criticized 0:05:15.560 --> 0:05:19.000 the attempts to hit the reset button after a stuttering 0:05:19.120 --> 0:05:19.800 first year. 0:05:20.440 --> 0:05:23.240 More than a year into this government, they're still they're 0:05:23.320 --> 0:05:26.320 only just working out what they might need some senior 0:05:26.320 --> 0:05:30.400 economic expertise within Number ten, both at a political level 0:05:30.440 --> 0:05:34.839 and at the advisor level. It's yet another example I 0:05:34.880 --> 0:05:39.960 think of how you staggeringly unprepared this government was for government, 0:05:40.000 --> 0:05:42.280 despite the fact that they essentially knew they were going 0:05:42.320 --> 0:05:45.400 to win the election some considerable time out. 0:05:45.600 --> 0:05:48.360 The economist Paul Johnson that are speaking two times Radio 0:05:48.560 --> 0:05:52.640 polls suggest that Labor have seen a significant fall in 0:05:52.680 --> 0:05:55.760 popularity in their first year in office, driven by issues 0:05:55.800 --> 0:06:00.520 including the economy and migration. Meanwhile, yesterday the Homes Secretary 0:06:00.560 --> 0:06:03.120 made a significant announcement on migration policy. 0:06:03.160 --> 0:06:04.320 As Parliament returned. 0:06:04.560 --> 0:06:08.200 The government will temporarily suspend the scheme that lets asylum 0:06:08.240 --> 0:06:10.640 seekers bring family members to the UK. 0:06:11.640 --> 0:06:14.080 Premier League clubs have spent more than ever before in 0:06:14.120 --> 0:06:18.239 a single transfer window this summer, surpassing three billion pounds. 0:06:18.560 --> 0:06:19.839 Headlining the total. 0:06:19.520 --> 0:06:23.440 As Alexander Esesak's record breaking move from Newcastle to Liverpool 0:06:23.480 --> 0:06:26.560 for one hundred and twenty five million pounds, making him 0:06:26.600 --> 0:06:30.280 the most expensive player in British history. Speaking to Bloomberg 0:06:30.360 --> 0:06:32.640 last month, trist From Leach, co head of European credit 0:06:32.720 --> 0:06:37.760 Apollo Global Management, told Bloomberg the sports presents interesting opportunities. 0:06:38.839 --> 0:06:41.280 Certainly, it's an area we're involved in, we think is interesting, 0:06:41.320 --> 0:06:44.800 we think represents compelling risk award and look it's part 0:06:44.839 --> 0:06:46.200 of our We look at that as part of our 0:06:46.480 --> 0:06:51.520 setback business, where you know, lending against receiverables from high 0:06:51.560 --> 0:06:53.760 quality counterparties is something we're happy to do and we 0:06:53.800 --> 0:06:58.039 think we can do in a competitive way. And look, 0:06:58.400 --> 0:07:00.560 the sports world seems to be attracting more and more 0:07:00.560 --> 0:07:01.400 money all the time. 0:07:02.160 --> 0:07:05.080 Apolo's trust from Leach speaking there, Player fees are often 0:07:05.080 --> 0:07:08.559 paid in installments over several years, creating future cash flows 0:07:08.600 --> 0:07:12.920 that clubs can monetize. These so called transfer receivables can 0:07:13.040 --> 0:07:16.800 enable a relatively low cost source of raising debt. The 0:07:16.840 --> 0:07:20.040 Premier League's total transfer bill this year was more than 0:07:20.160 --> 0:07:23.400 was spent by the Bundesliga, La Liga, Ligan and Seri 0:07:23.600 --> 0:07:24.800 R clubs combined. 0:07:26.040 --> 0:07:28.200 And those are our top stories for you this morning. 0:07:28.720 --> 0:07:31.120 Looking at the markets, the all Con'try Weld index at 0:07:31.120 --> 0:07:34.880 the moment in the red. The MSCIAS Pacific indexes also down. 0:07:34.960 --> 0:07:38.080 Some modest gains elsewhere in Asia. For example, the Cosby 0:07:38.400 --> 0:07:42.080 European defense stocks yesterday gained stop futures for Europe there 0:07:42.160 --> 0:07:44.480 are in the red, so too are US stocks. We're back, 0:07:44.480 --> 0:07:48.360 of course, after the Labor Day holiday yesterday. Yields on 0:07:48.920 --> 0:07:52.960 treasuries also the cash trade reopening. In terms of ten 0:07:53.040 --> 0:07:55.880 ure yields, we're up two basis points at four twenty five. 0:07:56.280 --> 0:07:59.880 We've also got Euro Area inflation readings out today expect 0:08:00.360 --> 0:08:03.800 just above two percent. Perhaps bloombig dollar spot indexes up 0:08:03.840 --> 0:08:06.080 about a tenth of one percent. That's the markets right now. 0:08:06.240 --> 0:08:07.840 In the moment, we'll bring you more on the rally 0:08:07.840 --> 0:08:10.480 and gold prices, plus how Botswana has been hit by 0:08:10.520 --> 0:08:13.840 the rise and lab grown diamonds. But another story that 0:08:13.880 --> 0:08:17.160 we've been reading this morning on how American schools are 0:08:17.240 --> 0:08:20.840 using AI as the new term start. So, as Fahimi 0:08:20.960 --> 0:08:23.720 Varra has been writing for Bloomberg BusinessWeek, it is the 0:08:23.800 --> 0:08:27.040 third school year since chat GBT first emerged. The initial 0:08:27.080 --> 0:08:29.680 response from school authorities was to try to ban it, 0:08:29.760 --> 0:08:32.600 although it does seem like attitudes are changing. She's spoken 0:08:32.600 --> 0:08:37.040 to a whole range of educational experts, teachers, parents, pupils 0:08:37.200 --> 0:08:40.400 for this piece as well, all with differing perspectives on 0:08:40.640 --> 0:08:43.520 the use of AI, the potential applicability of it in 0:08:43.559 --> 0:08:46.120 the classroom, whether it can be a good thing if 0:08:46.160 --> 0:08:50.079 controlled properly, or whether it's universally a bad thing. There's 0:08:50.120 --> 0:08:54.800 no conclusion essentially, as the research that one accelerator at 0:08:54.800 --> 0:08:57.800 Stanford has been tracking as well, largely inconclusive as the 0:08:57.920 --> 0:09:00.120 educational effects of it as well. But it is the 0:09:00.160 --> 0:09:02.960 debate that's being had in schools and I'm sure in 0:09:03.000 --> 0:09:04.959 households all over the world as well. 0:09:05.400 --> 0:09:07.800 Yeah, I think it's interesting the way that you put 0:09:07.840 --> 0:09:09.960 it that it's the third year in existence. I mean, 0:09:10.000 --> 0:09:12.120 when you think about school pupils, it every year is 0:09:12.160 --> 0:09:15.320 so important and kind of cumulative. Look, the UK's having 0:09:15.320 --> 0:09:18.280 this debate as well, right The government released new guidance 0:09:18.320 --> 0:09:21.920 for schools over the summer about this. The guidance, interestingly though, 0:09:22.000 --> 0:09:25.880 was aimed at teachers stevas So teachers can use AI 0:09:26.000 --> 0:09:29.600 to help them with lesson planning, with marking and with 0:09:29.800 --> 0:09:33.040 administrative tasks, but they need to use their professional judgment, 0:09:33.200 --> 0:09:36.000 was the view of the UK government. They sort of 0:09:36.559 --> 0:09:40.199 frame it as an opportunity. But also there's been kind 0:09:40.200 --> 0:09:42.880 of quite a lot of chatter over the summer about 0:09:42.920 --> 0:09:46.280 how do teachers make it clear to parents and how 0:09:46.400 --> 0:09:49.480 AI is being used as pretty much everyone knows that 0:09:49.520 --> 0:09:50.960 pupils and students are doing it. 0:09:51.600 --> 0:09:53.440 Yeah, exactly, And I suppose how do you, I mean, 0:09:53.440 --> 0:09:55.719 look at the technologies evolving so quickly as well, how 0:09:55.720 --> 0:09:58.160 do you try to make the most of it without 0:09:58.280 --> 0:10:02.280 necessarily shortcutting some of the key skills that people need 0:10:02.400 --> 0:10:04.439 later in life. So I think it's an ongoing debate 0:10:04.440 --> 0:10:07.840 that we'll be hearing plenty more about, but Behini Varru's 0:10:07.880 --> 0:10:10.160 piece are really well worth reading for an insight into 0:10:10.200 --> 0:10:12.480 how this debate is playing out in the US over 0:10:12.520 --> 0:10:14.200 the use of AI in skills. 0:10:14.800 --> 0:10:17.760 Now, let's bring you more on our top market story 0:10:17.760 --> 0:10:20.280 this morning. So the surge in the price of gold, 0:10:20.320 --> 0:10:23.120 which has hit another record high, our economics were pulled a. 0:10:23.160 --> 0:10:27.040 Katya Dmitrieva joins us for more on this. Good morning, Katya. 0:10:27.080 --> 0:10:31.240 What is driving this latest rally in gold so huge reality? 0:10:31.320 --> 0:10:34.040 I mean, it's really three things if you think about it. 0:10:34.320 --> 0:10:39.200 The first being first and foremost is growing expectation by markets, 0:10:39.240 --> 0:10:41.520 by economists that the FED is going to have to 0:10:41.600 --> 0:10:45.120 cut interest rates this month. We're now in September, I 0:10:45.160 --> 0:10:48.600 believe it or not. And also because you know, economic 0:10:48.600 --> 0:10:52.240 activity is slowing and you have these potential changes at 0:10:52.240 --> 0:10:54.880 the FED. And that's sort of the second reason. So 0:10:54.960 --> 0:10:58.760 there's been a lot of risk, growing volatility because of 0:10:58.800 --> 0:11:02.360 Trump's attacks on the FED, most recently of course going 0:11:02.360 --> 0:11:06.240 after Governor Lisa Cook. She's taken him to court and 0:11:06.320 --> 0:11:10.160 still in her position and it's sort of remaining there. 0:11:10.200 --> 0:11:13.880 But this, you know, creates a lot of volatility. Gold 0:11:13.920 --> 0:11:18.080 being a safe asset we've seen buying based on that. Finally, 0:11:18.720 --> 0:11:20.800 and this is kind of a longer term trend, but 0:11:20.880 --> 0:11:25.040 this idea of selling the US dollar, selling America, or 0:11:25.240 --> 0:11:30.600 at least pivoting to other assets, you know, particularly safer assets, 0:11:30.760 --> 0:11:35.440 and many countries, particularly emerging nations, have been buying gold 0:11:35.640 --> 0:11:40.199 instead of US dollars, so that's really been keeping demand high. 0:11:40.240 --> 0:11:42.480 And of course this comes after a huge run for 0:11:42.600 --> 0:11:46.040 gold so far this year, up over thirty percent. Questions 0:11:46.040 --> 0:11:47.720 over tariff, so what the fact that was going to 0:11:47.760 --> 0:11:49.600 have as well? How much further could this go? 0:11:50.679 --> 0:11:54.400 Well, we're now talking about four thousand dollars an ounce, 0:11:54.400 --> 0:11:56.720 so we're about thirty five hundred right now, and you know, 0:11:56.760 --> 0:11:58.719 we're seeing some analyst notes that are saying, well, four 0:11:58.760 --> 0:12:03.040 thousand isn't actually out of the ordinary, and even through 0:12:03.240 --> 0:12:06.559 year end, and that's kind of because of the recent 0:12:06.880 --> 0:12:09.520 run up, because of the year to date run up, 0:12:09.920 --> 0:12:15.040 and because a lot of these geoeconomic tensions and volatility 0:12:15.200 --> 0:12:18.240 are not going away. I mean, even just this week 0:12:18.280 --> 0:12:21.560 we saw this meeting between puts In and she and Mody, 0:12:22.040 --> 0:12:25.600 and it really underscores just how much the global South 0:12:25.720 --> 0:12:29.520 is going to continue to diversify away from the US 0:12:29.640 --> 0:12:32.800 really come together, boosting trade agreements with one another, potentially 0:12:32.840 --> 0:12:36.480 purchasing more gold, which is going to increase that pressure 0:12:36.520 --> 0:12:38.640 on prices, So it doesn't look like it's going away 0:12:38.679 --> 0:12:39.320 anytime soon. 0:12:40.640 --> 0:12:43.000 Meanwhile, of course five days job support is the next 0:12:43.080 --> 0:12:45.960 key data point to watch in terms of those rate 0:12:46.040 --> 0:12:50.320 cut expectations, and we also have some other data points 0:12:50.360 --> 0:12:53.960 to look forward to before then. So what could be 0:12:54.040 --> 0:12:56.840 the next catalyst for markets. 0:12:56.920 --> 0:13:00.640 Well, it's really going to be the Friday job numbers. 0:13:00.720 --> 0:13:04.040 I mean they're expecting economists are expecting right now about 0:13:04.040 --> 0:13:08.200 seventy five thousand gain in August, which is about the 0:13:08.240 --> 0:13:12.800 same as the prior month. So anything too far above 0:13:13.000 --> 0:13:20.200 that would raise some questions potentially about cutting rates, but 0:13:20.280 --> 0:13:24.480 anything below that would pretty much solidify rate cuts in 0:13:24.800 --> 0:13:28.160 markets minds and investors' minds. But before then, we also 0:13:28.200 --> 0:13:29.760 have some hints of that. Of course, we have the 0:13:29.800 --> 0:13:34.360 ADP private payrolls numbers. We have weekly jobless claims. Those 0:13:34.400 --> 0:13:36.560 are expected to come in about the same as the 0:13:36.600 --> 0:13:40.160 prior week. Factory orders, which kind of gives you an 0:13:40.200 --> 0:13:43.360 idea of the industrial side of things that's probably going 0:13:43.440 --> 0:13:48.080 to be contracting again, but less than June and Jolts 0:13:48.160 --> 0:13:50.520 lay off data, which is going to be lower in 0:13:50.600 --> 0:13:54.320 July than the prior year over year. But really, you 0:13:54.320 --> 0:13:57.560 know Friday Job's numbers, you really can't can't get more 0:13:57.559 --> 0:13:58.240 important than that. 0:14:00.400 --> 0:14:02.480 Great to talk to you, Thanks very much for your analysis. 0:14:02.520 --> 0:14:04.520 That's our economics reporter Katie demin Trieva. 0:14:06.280 --> 0:14:07.000 Stay with us. 0:14:07.040 --> 0:14:09.920 More from Bloomberg Daybreak Europe coming up after this. 0:14:11.880 --> 0:14:15.559 Now to Botswana next, where the rise of lab grown 0:14:15.640 --> 0:14:18.960 diamonds is robbing the country of revenue from an industry 0:14:19.000 --> 0:14:21.480 that's made it one of the richest countries in Sub 0:14:21.520 --> 0:14:24.800 Saharan Africa. Our reporter Matthew Hill has been writing about 0:14:24.800 --> 0:14:28.600 this and joins us now, Matthew, how has diamond mining 0:14:28.800 --> 0:14:30.880 transformed Botswana. 0:14:30.640 --> 0:14:35.480 Someth independence from the UK in nineteen sixty six. What 0:14:35.720 --> 0:14:40.560 Swan has really used diamonds to develop its country and 0:14:40.600 --> 0:14:44.160 it's been hold up as a real success story of 0:14:44.240 --> 0:14:48.560 an African nation that has used its natural resource wealth 0:14:48.720 --> 0:14:52.880 to develop its country, educate its people, bull infrastructure. 0:14:53.360 --> 0:14:57.560 So what's changed then as we've seen a greater youth 0:14:57.720 --> 0:15:00.360 or or kind of interest in lab grown diamond womans 0:15:00.560 --> 0:15:05.040 from consumers as well. This transformation how was that played 0:15:05.080 --> 0:15:06.320 out in Botswana. 0:15:06.480 --> 0:15:10.720 So for decades the country's benefited from having this massive 0:15:11.000 --> 0:15:16.120 endowment of diamonds. It's been the world's biggest producer of 0:15:16.240 --> 0:15:21.120 the stones by value. And then after COVID, we saw 0:15:21.720 --> 0:15:24.840 a spiking price of twenty twenty one and demand where 0:15:24.920 --> 0:15:30.000 everyone was basically buying everything, including diamonds. But after that 0:15:30.040 --> 0:15:33.400 there was a slowdown. There was a slump in demand 0:15:33.520 --> 0:15:38.520 from countries like China, which caused vices to fall, and 0:15:38.920 --> 0:15:45.920 some cutbacks from producers like Botswana. And then the real 0:15:46.040 --> 0:15:49.000 challenge came along, which was, as you say, lab grown 0:15:49.080 --> 0:15:52.360 diamonds where there were there was a big ramp up 0:15:52.440 --> 0:15:56.520 in production of these zones. They started coming to the 0:15:56.600 --> 0:16:01.560 market at increasingly cheap prices. One diamond minding company said 0:16:01.560 --> 0:16:04.800 this year that they've basically been in free fall. So 0:16:04.840 --> 0:16:07.760 you've seen less phenomenon in the US and China where 0:16:07.800 --> 0:16:13.440 young buy especially gen Z buyers, are turning to lab 0:16:13.520 --> 0:16:18.760 grown diamonds for engagement rings, which can cost one of 0:16:18.800 --> 0:16:21.640 the price of a natural diamond. And I mean, you're 0:16:21.680 --> 0:16:24.160 just talking about the record gold price. If you're a 0:16:24.200 --> 0:16:27.760 young person buying an engagement ring and you are facing 0:16:28.280 --> 0:16:32.120 significantly higher price for the gold that diamond is set in. 0:16:32.400 --> 0:16:35.000 That's perhaps even more of an incentive to go for 0:16:35.280 --> 0:16:37.920 something that costs far cheaper. 0:16:38.200 --> 0:16:41.320 Yeah, yes, absolutely, that seems to be you know, the 0:16:41.440 --> 0:16:43.280 rationale of some bars at least. 0:16:44.080 --> 0:16:45.680 But then what does it mean overall? 0:16:45.720 --> 0:16:48.200 For Botswana the population of just about two and a 0:16:48.240 --> 0:16:53.520 half million people, This, as you've reported, means huge issues 0:16:53.560 --> 0:16:56.000 for government finances for companies there. 0:16:56.080 --> 0:16:58.880 How is the government responding exactly? 0:16:59.080 --> 0:17:03.760 It is a really really difficult situation that they find 0:17:03.800 --> 0:17:06.600 themselves in. For a bit of context, diamonds account for 0:17:07.000 --> 0:17:11.840 about eighty percent of What'swana's exports, about one third of 0:17:12.520 --> 0:17:16.239 government revenues, and in terms of the economy, that make 0:17:16.320 --> 0:17:19.040 up for about twenty five percent of the total economy. 0:17:19.080 --> 0:17:21.439 When you take a big chunk of that revenue away, 0:17:21.960 --> 0:17:26.440 that introduces a crisis. The government is forecast to run 0:17:26.520 --> 0:17:30.760 up a budget deficit of about eleven percent this year. 0:17:30.960 --> 0:17:34.320 That's the highest in Africa. And if you take in 0:17:34.359 --> 0:17:37.400 the context of what's one of being a shining example 0:17:37.480 --> 0:17:42.600 generally speaking of how to manage resource wealth, well that's 0:17:42.680 --> 0:17:46.480 quite a shocking statistic. The government's debt has nearly doubled 0:17:46.800 --> 0:17:50.119 in the past three years to buy MFC's reaching forty 0:17:50.160 --> 0:17:53.880 three percent of GDP this year, which is actually beyond 0:17:54.040 --> 0:17:57.439 what the fiscal limits allow. So that also just shows 0:17:57.480 --> 0:18:01.119 how stark the crisis is. Government's forced to cut spending, 0:18:01.200 --> 0:18:06.840 they base medical socks running low, and the construction champanies 0:18:07.240 --> 0:18:10.200 that rely on government tenders are laying off a lot 0:18:10.240 --> 0:18:11.120 of their workers too. 0:18:13.440 --> 0:18:16.159 This is Bloomberg Daybreak Europe, your morning brief on the 0:18:16.240 --> 0:18:19.280 stories making news from London to Wall Street and beyond. 0:18:19.640 --> 0:18:23.600 Look for us on your podcast feed every morning, on Apple, Spotify, 0:18:23.720 --> 0:18:25.760 and anywhere else you get your podcasts. 0:18:25.800 --> 0:18:28.840 You can also listen live each morning on London DAB Radio, 0:18:28.880 --> 0:18:31.560 the Bloomberg Business app, and Bloomberg dot Com. 0:18:31.640 --> 0:18:34.400 Our flagship New York station is also available on your 0:18:34.400 --> 0:18:39.119 Amazon Alexa devices. Just say Alexa play Bloomberg eleven thirty. 0:18:39.359 --> 0:18:40.760 I'm Caroline Hepka. 0:18:40.520 --> 0:18:42.960 And I'm Stephen Carroll. Join us again tomorrow morning for 0:18:43.080 --> 0:18:45.480 all the news you need to start your day right 0:18:45.520 --> 0:18:50.960 here on Bloomberg Daybreak Europe.