Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is the Bloomberg Day, bak you at podcast. Good morning,
Speaker 2: It's Tuesday, the tewond of September. I'm Caroline Hepkitt in
Speaker 2: London and.
Speaker 1: I'm Stephen Caroline Brussels.
Speaker 3: Coming up today.
Speaker 1: The price of gold surpasses three thousand, five hundred dollars
Speaker 1: an ounce to hit a new record high on US
Speaker 1: rate cut.
Speaker 2: Bets Nesley dismisses its CEO, saying he had an undisclosed
Speaker 2: romantic relationship with a direct subordinate.
Speaker 1: Plus when artificial pressure becomes a real problem, how cheaper
Speaker 1: lab made diamonds have helped to plunge Botswana into crisis.
Speaker 3: Let's start with a roundup of our top stories.
Speaker 1: Gold has had a record high, driven by expectations for
Speaker 1: federal reserve rate cuts and concerns over the Central banks independence.
Speaker 1: The price of the precious metal topped three thousand, five
Speaker 1: hundred dollars Announce as investors loaded up on.
Speaker 3: The safe haven asset.
Speaker 1: The latest run comes after Fed char Jerome Pell cautiously
Speaker 1: opened the door to a reduction due to a weakening
Speaker 1: jobs market. Here's the view of BNP Paribas chief economist
Speaker 1: Luigi Speranza, we think this down.
Speaker 4: There is no ma their life, and the FED will
Speaker 4: letpier with sort of insurance if you want to get
Speaker 4: a we I regarded the September kata, the liber macad
Speaker 4: has been weakening, probably more than we had expected on
Speaker 4: the base of original data. I think it's sillly so fatchier.
Speaker 1: Luigi Speranza speaking there as bond investors worry they could
Speaker 1: be in for a rough September. Over the past decades,
Speaker 1: debt maturing beyond ten years as typically last two percent
Speaker 1: in the month, and with government set to boost borrowing,
Speaker 1: long dated bonds are already trailing shorter maturities.
Speaker 2: Nesle has dismissed its CEO, Laur Fregs after only a year,
Speaker 2: due to an undisclosed workplace affair. The abrupt change removes
Speaker 2: the boss of the world's largest food company, who was
Speaker 2: seen as a safe pair of hands. Bloomberg's James Walcock has.
Speaker 5: More Nessler's board say an investigation found Freaks had an
Speaker 5: undisclosed romantic relationship with a direct subordinate. The CEO, who
Speaker 5: worked for the company for forty years, was only twelve
Speaker 5: months in his role at the top and will not
Speaker 5: receive an exit package. He's been contacted a comment by
Speaker 5: Meteor l Lids, but hasn't yet responded to the announcement.
Speaker 5: The food company has named Philip Navratil, who currently runs
Speaker 5: its Espresso coffee brand, as his replacement. In London James
Speaker 5: Walcock Blooder Radio Revolute has.
Speaker 1: Begun a secondary share sale at a seventy five billion
Speaker 1: dollar valuation. Bloomberg understands that staff at the London based
Speaker 1: digital bank will be able to sell as much of
Speaker 1: twenty percent of their stakes for just over one three
Speaker 1: hundred dollars a share. The deal with Samanda status as
Speaker 1: one of the most valuable FinTechs, with the latest valuation
Speaker 1: up from forty five billion dollars last year.
Speaker 2: A financial industry lobby group says that the European Union's
Speaker 2: failure to break down barriers between national banking markets has
Speaker 2: trapped hundreds of billions of euros of capital at big lenders.
Speaker 2: Boomberg's Mihail Kuberla has more now.
Speaker 6: The Association for Financial Markets in Europe says obstacles to
Speaker 6: cross border banking services have trapped two hundred and twenty
Speaker 6: five billion euros in low risk assets The Lobby group
Speaker 6: warns EU banks faced stuffer requirements than peers in the
Speaker 6: US or the UK, putting them at a competitive disadvantage.
Speaker 6: European politicians are taking steps to forge what they call
Speaker 6: a banking union, but progress has been slow. The AFME
Speaker 6: says a lack of trust between national supervisors is preventing
Speaker 6: changes to the rules and points in particular to the
Speaker 6: cumbersome process in approving cross border mergers. In Brussels, Michael
Speaker 6: Kubala Bloomberg.
Speaker 1: Radio Authority suspects Russian interfering was behind a GPS jamming
Speaker 1: incident that disrupted a plane carrying the President of the
Speaker 1: European Commissioner Slavanderline. A jet carrying the EU leader had
Speaker 1: to land in Bulgaria on Sunday using only paper maps
Speaker 1: after electronic navigation stopped working. The RIX Brussels Bureau chiefs
Speaker 1: Zan Lynch says it's part of a repeated pattern.
Speaker 7: A lot of the boat of countries have reported an
Speaker 7: increase in this kind of activity. GPS jamming impacting maritime
Speaker 7: and air travel across Europe by Russia so very much
Speaker 7: an indication of the tensions that are out there at
Speaker 7: the moment. In Europe as is war rages on in Ukraine.
Speaker 1: Lyn Chad's that Vonderline was touring the EU's eastern most
Speaker 1: states on a campaign to build up military infrastructure. The
Speaker 1: Kremlin didn't immediately respond to a request for comment.
Speaker 2: Now Here in the UK, Prime Minister Kis Starmer announced
Speaker 2: a series of personnel changes centered around his economic top team.
Speaker 2: Former Bank of England Deputy Governor Minu Chafique has been
Speaker 2: hired to be his chief economic advisor, and Treasury Minister
Speaker 2: Darren Jones was moved to run Starmer's office, But former
Speaker 2: head of the Institute for Fiscal Studies Paul Johnson criticized
Speaker 2: the attempts to hit the reset button after a stuttering
Speaker 2: first year.
Speaker 8: More than a year into this government, they're still they're
Speaker 8: only just working out what they might need some senior
Speaker 8: economic expertise within Number ten, both at a political level
Speaker 8: and at the advisor level. It's yet another example I
Speaker 8: think of how you staggeringly unprepared this government was for government,
Speaker 8: despite the fact that they essentially knew they were going
Speaker 8: to win the election some considerable time out.
Speaker 2: The economist Paul Johnson that are speaking two times Radio
Speaker 2: polls suggest that Labor have seen a significant fall in
Speaker 2: popularity in their first year in office, driven by issues
Speaker 2: including the economy and migration. Meanwhile, yesterday the Homes Secretary
Speaker 2: made a significant announcement on migration policy.
Speaker 3: As Parliament returned.
Speaker 2: The government will temporarily suspend the scheme that lets asylum
Speaker 2: seekers bring family members to the UK.
Speaker 1: Premier League clubs have spent more than ever before in
Speaker 1: a single transfer window this summer, surpassing three billion pounds.
Speaker 3: Headlining the total.
Speaker 1: As Alexander Esesak's record breaking move from Newcastle to Liverpool
Speaker 1: for one hundred and twenty five million pounds, making him
Speaker 1: the most expensive player in British history. Speaking to Bloomberg
Speaker 1: last month, trist From Leach, co head of European credit
Speaker 1: Apollo Global Management, told Bloomberg the sports presents interesting opportunities.
Speaker 9: Certainly, it's an area we're involved in, we think is interesting,
Speaker 9: we think represents compelling risk award and look it's part
Speaker 9: of our We look at that as part of our
Speaker 9: setback business, where you know, lending against receiverables from high
Speaker 9: quality counterparties is something we're happy to do and we
Speaker 9: think we can do in a competitive way. And look,
Speaker 9: the sports world seems to be attracting more and more
Speaker 9: money all the time.
Speaker 1: Apolo's trust from Leach speaking there, Player fees are often
Speaker 1: paid in installments over several years, creating future cash flows
Speaker 1: that clubs can monetize. These so called transfer receivables can
Speaker 1: enable a relatively low cost source of raising debt. The
Speaker 1: Premier League's total transfer bill this year was more than
Speaker 1: was spent by the Bundesliga, La Liga, Ligan and Seri
Speaker 1: R clubs combined.
Speaker 2: And those are our top stories for you this morning.
Speaker 2: Looking at the markets, the all Con'try Weld index at
Speaker 2: the moment in the red. The MSCIAS Pacific indexes also down.
Speaker 2: Some modest gains elsewhere in Asia. For example, the Cosby
Speaker 2: European defense stocks yesterday gained stop futures for Europe there
Speaker 2: are in the red, so too are US stocks. We're back,
Speaker 2: of course, after the Labor Day holiday yesterday. Yields on
Speaker 2: treasuries also the cash trade reopening. In terms of ten
Speaker 2: ure yields, we're up two basis points at four twenty five.
Speaker 2: We've also got Euro Area inflation readings out today expect
Speaker 2: just above two percent. Perhaps bloombig dollar spot indexes up
Speaker 2: about a tenth of one percent. That's the markets right now.
Speaker 1: In the moment, we'll bring you more on the rally
Speaker 1: and gold prices, plus how Botswana has been hit by
Speaker 1: the rise and lab grown diamonds. But another story that
Speaker 1: we've been reading this morning on how American schools are
Speaker 1: using AI as the new term start. So, as Fahimi
Speaker 1: Varra has been writing for Bloomberg BusinessWeek, it is the
Speaker 1: third school year since chat GBT first emerged. The initial
Speaker 1: response from school authorities was to try to ban it,
Speaker 1: although it does seem like attitudes are changing. She's spoken
Speaker 1: to a whole range of educational experts, teachers, parents, pupils
Speaker 1: for this piece as well, all with differing perspectives on
Speaker 1: the use of AI, the potential applicability of it in
Speaker 1: the classroom, whether it can be a good thing if
Speaker 1: controlled properly, or whether it's universally a bad thing. There's
Speaker 1: no conclusion essentially, as the research that one accelerator at
Speaker 1: Stanford has been tracking as well, largely inconclusive as the
Speaker 1: educational effects of it as well. But it is the
Speaker 1: debate that's being had in schools and I'm sure in
Speaker 1: households all over the world as well.
Speaker 2: Yeah, I think it's interesting the way that you put
Speaker 2: it that it's the third year in existence. I mean,
Speaker 2: when you think about school pupils, it every year is
Speaker 2: so important and kind of cumulative. Look, the UK's having
Speaker 2: this debate as well, right The government released new guidance
Speaker 2: for schools over the summer about this. The guidance, interestingly though,
Speaker 2: was aimed at teachers stevas So teachers can use AI
Speaker 2: to help them with lesson planning, with marking and with
Speaker 2: administrative tasks, but they need to use their professional judgment,
Speaker 2: was the view of the UK government. They sort of
Speaker 2: frame it as an opportunity. But also there's been kind
Speaker 2: of quite a lot of chatter over the summer about
Speaker 2: how do teachers make it clear to parents and how
Speaker 2: AI is being used as pretty much everyone knows that
Speaker 2: pupils and students are doing it.
Speaker 1: Yeah, exactly, And I suppose how do you, I mean,
Speaker 1: look at the technologies evolving so quickly as well, how
Speaker 1: do you try to make the most of it without
Speaker 1: necessarily shortcutting some of the key skills that people need
Speaker 1: later in life. So I think it's an ongoing debate
Speaker 1: that we'll be hearing plenty more about, but Behini Varru's
Speaker 1: piece are really well worth reading for an insight into
Speaker 1: how this debate is playing out in the US over
Speaker 1: the use of AI in skills.
Speaker 2: Now, let's bring you more on our top market story
Speaker 2: this morning. So the surge in the price of gold,
Speaker 2: which has hit another record high, our economics were pulled a.
Speaker 2: Katya Dmitrieva joins us for more on this. Good morning, Katya.
Speaker 2: What is driving this latest rally in gold so huge reality?
Speaker 10: I mean, it's really three things if you think about it.
Speaker 10: The first being first and foremost is growing expectation by markets,
Speaker 10: by economists that the FED is going to have to
Speaker 10: cut interest rates this month. We're now in September, I
Speaker 10: believe it or not. And also because you know, economic
Speaker 10: activity is slowing and you have these potential changes at
Speaker 10: the FED. And that's sort of the second reason. So
Speaker 10: there's been a lot of risk, growing volatility because of
Speaker 10: Trump's attacks on the FED, most recently of course going
Speaker 10: after Governor Lisa Cook. She's taken him to court and
Speaker 10: still in her position and it's sort of remaining there.
Speaker 10: But this, you know, creates a lot of volatility. Gold
Speaker 10: being a safe asset we've seen buying based on that. Finally,
Speaker 10: and this is kind of a longer term trend, but
Speaker 10: this idea of selling the US dollar, selling America, or
Speaker 10: at least pivoting to other assets, you know, particularly safer assets,
Speaker 10: and many countries, particularly emerging nations, have been buying gold
Speaker 10: instead of US dollars, so that's really been keeping demand high.
Speaker 1: And of course this comes after a huge run for
Speaker 1: gold so far this year, up over thirty percent. Questions
Speaker 1: over tariff, so what the fact that was going to
Speaker 1: have as well? How much further could this go?
Speaker 10: Well, we're now talking about four thousand dollars an ounce,
Speaker 10: so we're about thirty five hundred right now, and you know,
Speaker 10: we're seeing some analyst notes that are saying, well, four
Speaker 10: thousand isn't actually out of the ordinary, and even through
Speaker 10: year end, and that's kind of because of the recent
Speaker 10: run up, because of the year to date run up,
Speaker 10: and because a lot of these geoeconomic tensions and volatility
Speaker 10: are not going away. I mean, even just this week
Speaker 10: we saw this meeting between puts In and she and Mody,
Speaker 10: and it really underscores just how much the global South
Speaker 10: is going to continue to diversify away from the US
Speaker 10: really come together, boosting trade agreements with one another, potentially
Speaker 10: purchasing more gold, which is going to increase that pressure
Speaker 10: on prices, So it doesn't look like it's going away
Speaker 10: anytime soon.
Speaker 2: Meanwhile, of course five days job support is the next
Speaker 2: key data point to watch in terms of those rate
Speaker 2: cut expectations, and we also have some other data points
Speaker 2: to look forward to before then. So what could be
Speaker 2: the next catalyst for markets.
Speaker 10: Well, it's really going to be the Friday job numbers.
Speaker 10: I mean they're expecting economists are expecting right now about
Speaker 10: seventy five thousand gain in August, which is about the
Speaker 10: same as the prior month. So anything too far above
Speaker 10: that would raise some questions potentially about cutting rates, but
Speaker 10: anything below that would pretty much solidify rate cuts in
Speaker 10: markets minds and investors' minds. But before then, we also
Speaker 10: have some hints of that. Of course, we have the
Speaker 10: ADP private payrolls numbers. We have weekly jobless claims. Those
Speaker 10: are expected to come in about the same as the
Speaker 10: prior week. Factory orders, which kind of gives you an
Speaker 10: idea of the industrial side of things that's probably going
Speaker 10: to be contracting again, but less than June and Jolts
Speaker 10: lay off data, which is going to be lower in
Speaker 10: July than the prior year over year. But really, you
Speaker 10: know Friday Job's numbers, you really can't can't get more
Speaker 10: important than that.
Speaker 1: Great to talk to you, Thanks very much for your analysis.
Speaker 1: That's our economics reporter Katie demin Trieva.
Speaker 3: Stay with us.
Speaker 1: More from Bloomberg Daybreak Europe coming up after this.
Speaker 2: Now to Botswana next, where the rise of lab grown
Speaker 2: diamonds is robbing the country of revenue from an industry
Speaker 2: that's made it one of the richest countries in Sub
Speaker 2: Saharan Africa. Our reporter Matthew Hill has been writing about
Speaker 2: this and joins us now, Matthew, how has diamond mining
Speaker 2: transformed Botswana.
Speaker 11: Someth independence from the UK in nineteen sixty six. What
Speaker 11: Swan has really used diamonds to develop its country and
Speaker 11: it's been hold up as a real success story of
Speaker 11: an African nation that has used its natural resource wealth
Speaker 11: to develop its country, educate its people, bull infrastructure.
Speaker 1: So what's changed then as we've seen a greater youth
Speaker 1: or or kind of interest in lab grown diamond womans
Speaker 1: from consumers as well. This transformation how was that played
Speaker 1: out in Botswana.
Speaker 11: So for decades the country's benefited from having this massive
Speaker 11: endowment of diamonds. It's been the world's biggest producer of
Speaker 11: the stones by value. And then after COVID, we saw
Speaker 11: a spiking price of twenty twenty one and demand where
Speaker 11: everyone was basically buying everything, including diamonds. But after that
Speaker 11: there was a slowdown. There was a slump in demand
Speaker 11: from countries like China, which caused vices to fall, and
Speaker 11: some cutbacks from producers like Botswana. And then the real
Speaker 11: challenge came along, which was, as you say, lab grown
Speaker 11: diamonds where there were there was a big ramp up
Speaker 11: in production of these zones. They started coming to the
Speaker 11: market at increasingly cheap prices. One diamond minding company said
Speaker 11: this year that they've basically been in free fall. So
Speaker 11: you've seen less phenomenon in the US and China where
Speaker 11: young buy especially gen Z buyers, are turning to lab
Speaker 11: grown diamonds for engagement rings, which can cost one of
Speaker 11: the price of a natural diamond. And I mean, you're
Speaker 11: just talking about the record gold price. If you're a
Speaker 11: young person buying an engagement ring and you are facing
Speaker 11: significantly higher price for the gold that diamond is set in.
Speaker 11: That's perhaps even more of an incentive to go for
Speaker 11: something that costs far cheaper.
Speaker 2: Yeah, yes, absolutely, that seems to be you know, the
Speaker 2: rationale of some bars at least.
Speaker 3: But then what does it mean overall?
Speaker 2: For Botswana the population of just about two and a
Speaker 2: half million people, This, as you've reported, means huge issues
Speaker 2: for government finances for companies there.
Speaker 3: How is the government responding exactly?
Speaker 11: It is a really really difficult situation that they find
Speaker 11: themselves in. For a bit of context, diamonds account for
Speaker 11: about eighty percent of What'swana's exports, about one third of
Speaker 11: government revenues, and in terms of the economy, that make
Speaker 11: up for about twenty five percent of the total economy.
Speaker 11: When you take a big chunk of that revenue away,
Speaker 11: that introduces a crisis. The government is forecast to run
Speaker 11: up a budget deficit of about eleven percent this year.
Speaker 11: That's the highest in Africa. And if you take in
Speaker 11: the context of what's one of being a shining example
Speaker 11: generally speaking of how to manage resource wealth, well that's
Speaker 11: quite a shocking statistic. The government's debt has nearly doubled
Speaker 11: in the past three years to buy MFC's reaching forty
Speaker 11: three percent of GDP this year, which is actually beyond
Speaker 11: what the fiscal limits allow. So that also just shows
Speaker 11: how stark the crisis is. Government's forced to cut spending,
Speaker 11: they base medical socks running low, and the construction champanies
Speaker 11: that rely on government tenders are laying off a lot
Speaker 11: of their workers too.
Speaker 1: This is Bloomberg Daybreak Europe, your morning brief on the
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Speaker 3: I'm Caroline Hepka.
Speaker 1: And I'm Stephen Carroll. Join us again tomorrow morning for
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Speaker 1: here on Bloomberg Daybreak Europe.