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