Tech Stocks Rise as Micron’s Bullish AI Forecast Fuels Rally

>> LIVE FROM BRUSSELS, THIS IS BLOOMBERG DAYBREAK EUROPE GLOBAL BONDS POST THEIR WORST QUARTER IN MORE THAN TWO YEARS. THE U.S. 30 YEAR YIELD HOLDING THEIR ITS HIGHEST LEVEL IN 24 YEARS AFTER RESILIENT CONSUMER SPENDING DATA. PASSENGERS AND CREW AVERT CATASTROPHE AFTER THE PILOT OF A FLY DUBAI JET CARRYING MORE THAN 170 PEOPLE TO TEL AVIV STABBED HIS COPILOT AND ATTEMPTED TO CRASH THE PLANE. FIXING FRANCE'S FINANCES. THE GOVERNMENT SETS OUT PLANS AS IT COMES UNDER PRESSURE FROM INVESTORS AHEAD OF NEXT YEAR'S PRESIDENTIAL ELECTION. VERY GOOD MORNING TO YOU. LET'S CHECK IN ON WHERE MARKETS ARE MOVING THIS MORNING. NIKKEI 225 IS GAINING. JAPANESE CHIPMAKERS GETTING A BENEFIT FROM SOME OF THE UPBEAT FORECAST FROM MICRON EARNINGS. EUROPEAN STOCK FUTURES POINTING LOWER THIS MORNING AFTER WE SAW THE STOCKS HAVE ITS WORST MONTH SINCE MARCH. 2.5% IN SEPTEMBER. NASDAQ FUTURES GETTING A BOOST AFTER THE REACTION TO THE MICRON EARNINGS. ALSO THE LATEST ANNOUNCEMENTS FROM GOOGLE AND ITS AM COMING AI MODEL. WE HAVE OIL PRICES LOWER THIS MORNING BUYING ANOTHER 1.1%, BELOW $97 PER BARREL FOR BRENT CRUDE AS WE SEE HOPES FOR RENEWED FLOWS. THE DOLLAR STRENGTHENING AGAIN TODAY AFTER IT HAD ITS BEST MONTH SINCE MARCH. THE INFLATION STORY IS PART OF WHAT HAS BEEN LIFTING THAT AS WELL. THE HIGHEST CLOSE IN THE 30 YEAR YIELD SINCE 2002. HE RISK EVENTS TODAY. FRENCH GOVERNMENT UNVEILING ITS BUDGET PLANS TODAY. WE WILL HAVE THE U.S. JOBLESS CLAIMS DATA FOR YOU AHEAD OF TOMORROW'S PAYROLLS REPORT. PLENTY OF CENTRAL BANKS. THAT'S ALL TO COME. LET'S GET YOU SET FOR THE DAY AHEAD. TECH AND EASING OIL PRICES. LET'S SEE HOW MARKETS ARE FARING WITH AVRIL HONG IN SINGAPORE. GOOD MORNING. AVRIL: GOOD MORNING. THE GAUGE FOR THE REGION ERASING EARLIER LOSSES AND HELPING TO OFFSET CONCERNS SURROUNDING ELEVATED ENERGY PRICES. SURROUNDING OPTIMISM ON AI THANKS TO GOOGLE'S GEMINI. ALSO MICRON RAISING SIGNALS THAT OVERALL, AI RELATED DEMAND LOOKS TERRIBLE. THAT'S GOOD FOR THE REGION. MEMORY NAMES, THREE OF THEM. SAMSUNG COME SK HYNIX WELL IN THE GREEN DESPITE CAREER UNDERPERFORMING. THIS IS THANKS TO SOME DISAPPOINTED RELATED TO SHAREHOLDER RETURNS. JAPAN IS THE CLEAR OUTPERFORMER TODAY. GET OFF MY 3% IN TERMS OF GAINS. THIS IS DUE TO OPTIMISM SURROUNDING CHIP RELATED STOCKS. JEFFRIES PUTTING OUT A NOTE THAT SEMI QUICK CASH SEMICONDUCTOR PRODUCTION COULD SEE RECOVERY BECAUSE OF MORE VISIBILITY SURROUNDING MARKET GROWTH AND IMPROVEMENT RELATED TO THAT. FLIP THE BOARD. IT'S ALSO INTERESTING THAT JAPAN'S OPERA PERFORMANCE TODAY IS COMING AGAINST THE BANK -- BACKDROP SHOWING THAT LARGE FIRMS IN JAPAN STILL REMAIN CONFIDENT. AS SOME OF OUR STRATEGISTS HAVE HIGHLIGHTED, NOT IN TERMS OF A RED-HOT ECONOMY THAT WOULD SPUR THE BOJ TO AGGRESSIVE RATE HIKES. THIS IS COMING ON A DAY WHERE WE GOT THE BOJ FOR -- SUMMARY OF OPINIONS FOR THE SEPTEMBER MEETING THAT DIDN'T SEEM HAWKISH ENOUGH TO PROVIDE CLEAR SIGNALS OF A HIKE THIS MONTH AS WELL. DOLLAR-YEN CLIMBING ALONG WITH THOSE BACKEND YIELDS. STEPHEN: THANK. AVRIL HONG IN SINGAPORE. GLOBAL GOVERNMENT BONDS ENDED YESTERDAY, MARKING THEIR WORST QUARTER SINCE 2024. FOR MORE, LET'S BRING IN MARK CRANFIELD FOR MORE. YIELDS REMAINING UNDER PRESSURE DESPITE THE PCE NUMBER COMING IN LOWER THAN EXPECTED. HOW ARE INVESTORS READING THIS DATA? >> YEAH. THE PROBLEM IS NOT JUST UNITED STATES. ALSO THAT DATA IN ITSELF MAY HAVE MODIFIED SOME OF THE RISKS IN THE U.S. AT THAT TIME. SINCE THEN, IT'S GONE GLOBAL. FRENCH BONDS HAD A POOR FINISH IN EUROPE LAST NIGHT. COMING TO ASIA TODAY. JAPANESE YIELDS GOING UP. AUSTRALIAN BONDS SELLING OFF HARD. IT'S ALL FEEDING BACK INTO THE TREASURY MARKET. ONE OF THE ISSUES THAT INVESTORS ARE DEALING WITH IS THAT NEXT WEEK IS HUGE FOR SUPPLIERS. 10 AND 30 YEAR ISSUES IN JAPAN AND THE U.S. WHICH ARE THE TWO MARKETS THAT TEND TO SET THE SCENE FOR THE REST OF THE WORLD. IF WE DON'T GET SUCCESSFUL AUCTIONS THERE, IT WOULD SET PROBLEMS FOR THE REST OF THE MARKET. WE ARE SEEING PEOPLE WITH A LOT OF HEDGING GOING ON TODAY. PEOPLE TRYING TO PUT CONCESSIONS INTO THE MARKET TO MAKE SURE THAT NEXT WEEK'S AUCTION IS CHEAPER. THAT WILL APPLY TO THE TREASURY MARKET AS WELL. AS AVERILL WAS SINGING, THE BOJ REPORT WAS DISAPPOINTING FROM A FIXED INCOME POINT OF VIEW. PEOPLE WERE HOPING FOR SOMETHING MORE TO SAY THAT INFLATION WILL BE DAMPENED DOWN. A BIT OF STEEPENING IS GOING ON ON THE JAPANESE CURVE. TODAY, THE FRENCH BUDGET IS COMING. IT'S A BIT OF A VICIOUS CYCLE FOR GLOBAL BONDS. UNTIL SOMEONE BREAKS IT, IT'S NOT GOING TO BE GOOD FOR ANYBODY. STEPHEN: COULD IT BE THE U.S. JOBS ARE ALREADY TOMORROW THAT BREAKS THE CYCLE -- REPORT TOMORROW THAT BREAKS THE CYCLE? MARK: IT'S IMPORTANT. THERE ALWAYS IS. CLEARLY IT'S THE INFLATION NUMBERS WHICH ARE MUCH BIGGER. IN TWO WEEKS, WE GET THE CPI REPORT. THAT WILL FOCUS THE ATTENTION OF THE FED. WE HAVE SPEAKERS OVER THE NEXT WEEK. EVERYONE FROM THE FEDERAL RESERVE WILL BE UP GIVING THEIR OPINIONS ON WHETHER THERE SHOULD BE A RATE HIKE. FOR THE MOMENT, THE MARKET IS ASSUMING THEY WILL PUSH TO SEPTEMBER. WITH THE ELECTIONS COMING IN EARLY NOVEMBER, THE FEDERAL RESERVE WOULDN'T WANT TO BE SEEN CHANGING INTEREST RATES TO CLOSE TO THAT. SEPTEMBER STILL LOOKS LIKE THE MOST LIKELY OPTION. A HOT CPI REPORT WHICH CHANGE THINGS. JOBS REPORT AND CPI TOGETHER. THAT MAY INFLUENCE THE FED PEOPLE. THERE'S A LOT OF MOVING PARTS IN THE NEXT WEEKS. JOBS DATA IS IMPORTANT BUT CPI IS EVEN MORE IMPORTANT. STEPHEN: PLENTY TO KEEP US ON OUR TOES. MARK CRANFIELD, THANK YOU VERY MUCH. FRANS'S GOVERNMENT SET TO UNVEIL PLANS TO NARROW THE BUDGET DEFICIT SHARPLY, KICKING OFF A DEBATE THAT RISKS STOKING INVESTOR CONCERN OVER THE COUNTRY'S DEBTS. WE ARE IN PARIS THIS MORNING. WHAT ARE WE EXPECTING TO SEE THEN IN THESE PROPOSALS? >> A RECOVERY BUDGET WITH 54 BILLION EUROS OF EFFORT. THAT'S WHAT THE PRIME MINISTER IS TARGETING FOR NEXT YEAR. TO BRING THE DEFICIT BACK TO 5% TARGET. REMEMBER, THE DEFICIT HAS BEEN SLIDING OVER TO 5.4% FOR THIS YEAR. MUCH HIGHER THAN THE TARGET. SOME OF THE MEASURES WE ALREADY KNOW THAT ARE OUT THERE IN THE FRENCH PRESS. REMEMBER, ON THESE BIG MULTINATIONAL COMPANIES, THAT'S NOT EXCEPTIONAL ANYMORE. IT WAS ALREADY EXTENDED LAST YEAR. IT WILL PROBABLY BE EXTENDED AGAIN FOR NEXT YEAR. IT MIGHT BE SMALLER AND BRING ON 5 BILLION EUROS COMPARED TO 8 BILLION EUROS LAST YEAR. THEN PENSIONERS, THE OTHER CATEGORY OF THE POPULATION. THAT'S A RISKY BET. THEY ARE TARGETED IN THE NEXT BUDGET. WE HAVE TO PROPOSALS. ONE IS FREEZING THE HIGHEST PENSIONS BEFORE INFLATION. JUST KEEPING THE LOWEST PENSIONS WITH INFLATION. AS YOU REMEMBER, 3.4%. THAT'S THE LATEST READING. ANOTHER PROPOSAL IS TO REMOVE TAX BENEFITS FOR EXPENSES THAT SOME PENSIONERS ARE STILL BENEFITING FROM. SO A LOT OF CONTROVERSIAL OR -- MEASURES OUT THERE. SOCIAL SECURITY BUDGET TARGET. BASICALLY CUT THE DEFICIT IN HALF FOR NEXT YEAR. SOME NEW TAXES FOR EXAMPLE ON HIGHWAYS AND AIRPORTS. SO WE WILL SEE EXACTLY HOW THE OTHER PARTIES IN PARLIAMENT REACT. WE WILL HAVE THE BUDGET PRESENTED IN THE CABINET MEETING LATER THIS MORNING. OF COURSE, THE INTERNATIONAL CONTEXT HAS NOT HELPED. WE SAW THE FRENCH GOVERNMENT LOWERING THE GROWTH TARGET FOR THE YEAR TO JUST 0.5%. AS WE WERE MENTIONING, YOUR GUESTS EARLIER, THE SPREAD BETWEEN FRANCE AND GERMANY HAS REACHED A NEW RECORD YESTERDAY. WILL MORE THAN 1 -- MORE THAN 120 POINTS. THE PROBLEM IS THAT THEY HAVE A HARD TIME SEEING WHERE WE COULD ACTUALLY SEE SOMETHING TO BREAK THE CIRCUIT. STEPHEN: OF COURSE, IN RECENT YEARS WE'VE SEEN HOW DIFFICULT GETTING BUDGET PASSED BY THE PARLIAMENT CAN BE. TWO PRIME MINISTERS HAVE BEEN FILLED. THIS TIME AROUND, WE HAD AT THE ADDED COMPLEXITY OF A PRESIDENTIAL ELECTION NEXT YEAR. HOW DOES THE POLITICS FEET INTO THE DEBATE? >> LESS THAN SEVEN MONTHS AWAY FROM THE FRANCE PRESIDENTIAL ELECTIONS. BOTH OF THESE PRIME MINISTER'S GOVERNMENTS HAD TO COLLAPSE OVER THE BUDGET. THIS TIME, IT MIGHT BE SLIGHTLY DIFFERENT. THE NATIONAL RALLY IS STILL THE KEY MAKER IN FRENCH PARLIAMENT THAT IS FRAGMENTED INTO THREE BLOCKS. MARINE LE PEN HAS ACTUALLY SUGGESTED SHE MAY PERHAPS REFRAIN FROM TOPPLING THIS GOVERNMENT THIS TIME AROUND BECAUSE WHAT SHE THINKS IS THAT IF SHE IS ELECTED IN MAY NEXT YEAR, IT MIGHT BE EASIER FOR HER TO AMEND THE BUDGET TO CHANGE WHAT'S ALREADY OUT THERE RATHER THAN STARTING A NEW BUDGET FROM SCRATCH. OTHERWISE, IF THERE IS NO BUDGET BY THE END OF DECEMBER, FRANCE WILL HAVE TO RELY ON THE SO-CALLED SPECIAL LOW IN ORDER TO KEEP COLLECTING TAXES AND KEEP THE GOVERNMENT RUNNING. THIS CANNOT CONTINUE FOREVER. THE PAST TWO YEARS, IT WAS APPROXIMATELY UNTIL FEBRUARY. THE ELECTIONS ARE NOT UNTIL MAY OF NEXT YEAR. MARINE LE PEN IS SINGING THAT PERHAPS SHE WANTS THE BUDGET TO PASS EVEN IF IT'S NOT PERFECT. EVEN IF HE DOESN'T -- HE DOESN’'T LIKE IT SO THAT SHE CAN HAVE AN EASIER TIME TO CHANGE IT IF SHE SELECTED. THAT'S THE POINT FROM THE PRIME MINISTER. SAYING IT'S BETTER TO HAVE BUDGET THAT'S IMPERFECT RATHER THAN NO BUDGET AT ALL. HIS POPULARITY HAS BEEN GOING DOWN. 24% IN HIS LATEST POLLS THIS WEEK BEFORE THE STRIKES THAT WE SAW ON TUESDAY. MIKE ROUNDS POPULARITY IS AT THE LOWEST EVER. JUST 18%. AT THE SAME TIME, THE DOUBLE TICKET FOR THE PRESIDENTIAL ELECTIONS IS STILL FAR AHEAD IN THE POLLS WITH 35% OF SUPPORT AMONG THE FRENCH. STEPHEN: ABSOLUTELY FASCINATING POLITICAL CONTEXT TO THIS PARTICULAR BUDGET. THANK YOU. WE WILL FOCUS ON THE U.K. AND HOW THE PRIME MINISTER'S BOLD POLICY PLANS ARE BEING RECEIVED BY INVESTORS. FIRST, MICRON SAYS IT EXPECTS THE AI SALES BOOM TO CONTINUE. WE DIG INTO THE AMERICAN -- NUMBERS FROM THE AMERICAN SHIP GIANT, NEXT. STEPHEN: WELCOME BACK TO BLOOMBERG DAYBREAK: EUROPE. MICRON POSTED AN UPBEAT OUTLOOK AS THE AI BOOM CONTINUES TO DRIVE DEMAND FOR MEMORY CHIPS. THE COMPANY FORECASTING FIRST QUARTER REVENUE WELL ABOVE ESTIMATES AFTER A RECORD 2026. HIRE EMPLOYEE COMPENSATION WILL PUT SOME PRESSURE ON MARGINS. LET'S BRING IN -- WITH MORE ON THE STORY. MICRON HAS BEEN A BIG WINNER THIS YEAR, UP 270%. DID THESE RESULTS CHANGE THAT PICTURE? >> GOOD MORNING STEPHEN. YES. IT WAS A VERY STRONG SET OF RESULTS FOR MICRON AS YOU MENTIONED. A LOT OF EXPECTATIONS GOING INTO THE PRINT. IT'S BEEN ON AN INCREDIBLE RUN THIS YEAR. UP MORE THAN 50% FROM THE JULY LOW. THE BIG QUESTION FROM THESE MEMORY CHIP PLAYERS MORE PROBABLY IS HOW STRONG AND HOW DURABLE THIS CURRENT MEMORY CYCLE IS. WE KNOW THAT MEN ARE -- MEMORY SUPPLY HAS BEEN TIGHT OVER THE LAST 18 MONTHS AND THAT TRANSLATES INTO FAVORABLE INDUSTRY ECONOMICS WHICH PLAYS INTO THE EARNINGS THAT WE'VE SEEN FROM MICRON AND THE OTHER PLAYERS. GROSS MARGIN CONTINUES TO BE STRONG. HANDSOME ON THE TOP AND BOTTOM LINE. THEY CONTINUE TO GUIDE QUITE STRONGLY AS WELL. THE QUESTION FOR INVESTORS IS, IS MICRON A CYCLICAL STOCK? IS IT A CYCLICAL INDUSTRY? HAS AI DEMAND CHANGE THE INDUSTRY ECONOMICS MORE SIGNIFICANTLY INTO SOMETHING THAT IS MORE DURABLE? IT HAS VERY POSITIVE IMPLICATIONS FOR THE STOCK. STEPHEN: THAT'S ONE THAT WE ARE WATCHING CLOSELY AS A SECTOR IN SEEING SHARE PRICE REACTION IN JAPAN WITH CHIP EQUIPMENT MAKER'S GETTING A BOOST. WE'VE HAD GOOGLE START TO ROLL OUT ITS GEMINI FOR AI MODEL. WE ARE REPORTING ON THE SKEPTICISM ON THE PERFORMANCE FROM ITS EMPLOYEES. HOW IMPORTANT IS THE RELEASED ALPHABET? >> I THINK THE UPDATE IS QUITE POSITIVE. THERE HAS BEEN CONCERN FROM INVESTORS WITH ALPHABET, PARTICULARLY AROUND THE DEVELOPMENT OF ITS OWN AI MODELS. WE'VE SEEN MODEL RELEASES BE DELAYED. WE'VE SEEN SOME KEY STAFF AS WELL. I THINK THIS UPDATE -- IT HASN'T BEEN ROLLED OUT FULLY YET. IT'S BEEN ROLLED OUT TO A SELECT GROUP OF CYBERSECURITY FIRMS AND THE U.S. GOVERNMENT. I THINK IT'S A POSITIVE. I THINK THE KEY THING FROM THE RELEASE THAT CAUGHT MY EYE WAS THAT IT'S A LOT CHEAPER THAN THE OPENAI AND ANTHROPIC EQUIVALENTS . I THINK THAT COULD BE A POTENTIAL POSITIVE IF THE PERFORMANCES IS GOOD. WE KNOW THAT THE COST OF SOME OF THESE AI MODELS HAS BEEN A HUGE CONCERN FOR INVESTORS RECENTLY. IT WILL CONTINUE TO BE GOING FORWARD. STEPHEN: BLOOMBERG'S EQUITY STRATEGIST, THANK YOU VERY MUCH FOR JOINING US AS WE LOOK AHEAD TO HOW THAT WILL PLAY OUT IN THE U.S. SESSION LATER. COMING UP, CATASTROPHE AVERTED. STOPPING A PILOT CRASHING A PLANE TRAVELING TO TEL AVIV. THE DETAILS, NEXT. THIS IS BLOOMBERG. STEPHEN: WELCOME BACK TO BLOOMBERG DAYBREAK EUROPE. THE PILOT OF A FLY DUBAI FLIGHT CARRYING 170 PASSENGERS TO TEL AVIV ATTEMPTED TO CRASH THE PLANE. THE CATASTROPHE AVERTED AFTER PASSENGERS AND CREW MEMBERS STORMED THE COCKPIT AND MANAGED TO STABILIZE THE JET. ISRAEL'S PRIME MINISTER DESCRIBE THE EVENT AS A SERIOUS SECURITY INCIDENT. FOR MORE, LET'S BRING IN OUR GLOBAL COVERAGE OF AVIATION. WHAT MORE DO WE KNOW ABOUT WHAT HAPPENED ON BOARD THIS PLANE? >> GOOD MORNING. A COUPLE DETAILS EMERGED OVERNIGHT. WE HEARD FROM BENJAMIN NETANYAHU WHO SPOKE TO FOX NEWS LAST NIGHT AND HE DESCRIBED THE DETAILS OF THE DRAMATIC MOMENTS THAT YOU JUST DESCRIBED. IT SEEMS THAT POSSIBLY THE ATTACKING COPILOT USED IN ACTS -- AND ASK TO HURT HIS COLLEAGUE. THEY HAVE ACCESS TO SAFETY MEASURES IN THE COCKPIT. THERE WERE QUESTIONS AROUND WHAT EXACTLY HE HAD USED. THERE ARE SOME DETAILS, IMPORTANT DETAILS EMERGING ON HOW THIS UNFOLDED. ALSO IMPORTANT, THE PILOT DID MANAGE TO OPEN THE COCKPIT DOOR. THERE HAVE BEEN QUESTIONS AROUND, HOW DID THE PASSENGERS WHO CHARGED TOWARDS THE SCENE OF THE CARNAGE, HOW ARE THEY ABLE TO GET INTO THE COCKPIT? NORMALLY THESE DOORS ARE CLOSED. IT SEEMS LIKE INACTIVE HEROES THEM -- HEROISM. THE PILOT WAS ABLE TO STABILIZE THE PLANE. STEPHEN: THE STORIES FROM SOME OF THOSE PASSENGERS WHO HAVE BEEN SPEAKING TO OUR COLLEAGUES AT BLOOMBERG, PARTICULARLY CHILLINGLY -- READING. WHAT DOES THIS MEAN FOR THE AVIATION SECTOR MORE BROADLY? WHAT ARE THE IMPLICATIONS OF THIS INCIDENT? >> THE IMMEDIATE IMPLICATIONS ARE THAT THEY HAVE SUSPENDED THEIR FLIGHTS TO TEL AVIV FOR THE TIME BEING. THEY SAID THEY WERE DOING THIS SO THAT THE INVESTIGATION CAN UNFOLD. THERE ARE A LOT OF QUESTIONS CELEBRATE -- SWIRLING AROUND. THE COPILOT, WAS HE ACTING ON HIS OWN? WAS THERE SOMEONE BEHIND HIM PLANNING THIS? WHAT WERE ULTIMATELY THE MOTIVES? WAS IT A SUICIDE ATTACK? WAS IT A TERROR PLOT? WE HAVE IMAGES IN OUR MIND OF 9/11 25 YEARS AGO. WAS THIS AN ATTEMPT OF A 9/11 TYPE ATTACK USING THE AIRCRAFT TO FLY AT -- IT INTO SOMEPLACE? WE DON'T KNOW. MORE BROADLY, WHAT DOES IT MEAN FOR FLYING THROUGH THE REGION OVER THE PAST SIX MONTHS? THERE IS A LOT OF CONCERN. IS IT SAFE TO FLY IN THE MIDDLE EAST? WE KNOW THE EMIRATES, QATAR, THEY WERE FORCED TO SUSPEND SOME OF THEIR ROUTES IN THE WAKE OF THE WAR. THEY HAD COME BACK PRETTY MUCH TO NORMAL NOW. BUT WITH -- WILL THIS LEAD TO A HESITANCY AMONG PASSENGERS TO TAKE THESE TYPES OF ROUTES? PEOPLE TRY TO CIRCUMNAVIGATE THE MIDDLE EAST? WILL IT ROLL BACK SOME OF THE ADVANCES THAT THESE ALLIES HAVE MADE IN THE REGION? A LOT OF QUESTIONS AROUND THAT. THERE'S A POLITICAL DIMENSION. THERE'S A CORPORATE DIMENSION. THERE'S A HUMAN FACTOR. WHAT WILL HAPPEN TO THE COPILOT? WHAT WILL THE INVESTIGATION BRING? STEPHEN: IN TERMS OF THAT INVESTIGATION, IT DOES RAISE ISSUES ABOUT PILOT SAFETY. THIS IS SOMETHING THAT CAME UP IN THE WAKE OF THE GERMAN WINGS CRASH AS WELL. HOW IS THAT DEEPLY -- DEBATE PLAYING OUT IN THE INDUSTRY? WHAT ARE THE KEY QUESTIONS WHEN IT COMES TO THE ASPECT OF THE INVESTIGATION? BENEDIKT: IT REMAINS ONE OF THE BIG UNRESOLVED ISSUES OF AVIATION, CIVIL AVIATION. HOW DO YOU MAKE SURE THAT THE PEOPLE IN THE FRONT OF THE PLANE ARE TRUSTWORTHY? IT SEEMS AN OBVIOUS THING THAT THEY ARE. BUT WE HAVE HAD SOME NOTABLE CASES OF PILOT SUICIDE OVER THE PAST COUPLE OF DECADES. YOU MENTIONED THE GERMAN WINGS INCIDENT IN 2015. THERE HAVE BEEN OTHERS MORE RECENT AS THE MH 370 MALAYSIAN PLANE THAT DISAPPEARED OFF THE FACE OF THE EARTH AND IT SUSPECTED A PILOT SUICIDE. THERE WAS THE ACCIDENT LAST YEAR INCLUDE -- INVOLVING THE AIR INDIA AIRCRAFT. THAT IS STILL PENDING. ALL THINGS POINT TWO POTENTIAL DELIVERED ACT BY THE PILOT. THESE TEND TO BE ROGUE ACTORS TO GET THE QUESTION IS, HOW DO YOU MAKE SURE THAT THIS DOESN'T HAPPEN? PILOTS WITH MENTAL ISSUES WILL HAVE A LOT OF HESITANCY TO COME FORWARD. IT'S ESSENTIALLY A DEATH WARRANT FOR THEIR CAREER. THEY MIGHT HIDE ANY ISSUES THAT THEY HAVE. THERE'S A LOT OF DEBATE IN THE INDUSTRY ABOUT, HOW DO YOU DETECT THESE BEHAVIORS EARLY ON? HOW DO YOU SUPPORT PILOTS THAT HAVE ISSUES? WHETHER THAT WAS THE CASE HERE OR WHETHER THERE WAS A POLITICAL MOTIVE BEHIND IT, WE DON'T KNOW. THAT'S AN AVENUE THAT WE WILL BE INVESTIGATING. STEPHEN: THANK YOU FOR BRINGING US THE LATEST ON THAT STORY. NOW TO SOME OTHER TOP STORIES WE ARE FOLLOWING THIS MORNING. PRESIDENT TRUMP SAYS JEROME POWELL SHOULD RESIGN FROM THE CENTRAL BANK'S BOARD OF GOVERNORS OVER THE MISMANAGED RENOVATION OF ITS HEADQUARTERS. THE REPORT FROM THE FED INTERNAL WATCHDOG OUTLINED A SERIES OF MISSTEPS. INITIAL ESTIMATES OF $1.3 BILLION TO 2.4 BILLION. BUT IT FOUND NO EVIDENCE OF CRIMINAL WRONGDOING. >> IT'S HORRIBLE WHAT THEY'VE DONE. HE'S INCOMPETENT. SHOULD NOT BE FITTING -- SITTING ON THE FEDERAL RESERVE BOARD. I'M SURE THAT TODD AND EVERYBODY WILL BE LOOKING. THE REPORT WAS A BAD REPORT. THE REPORT SAID THAT THEY DID A BAD JOB. THEY DIDN'T KNOW WHAT THEY WERE DOING. STEPHEN: KRISTI LAGARDE SAID SHE MAY LEAVE HER ROLE AS EUROPEAN CENTRAL BANK PRESIDENT A FEW MONTHS BEFORE HER TERM ENDS IN OCTOBER. BUT SHE SAYS SHE WILL STILL BE IN THE JOB DURING 2027 AND HAS NOT ANNOUNCED ANY SPECIFIC PLANS TO LEAVE EARLY. THE ECB SAYS THE NEXT FEW MONTHS WILL BE KEY IN DECIDING HOW HIGH DID TAKE INTEREST RATES. THE GERMAN OFFICIALS AS POLICYMAKERS SHOULD GET A CLEARER PICTURE OF HOW THE ENERGY SHOCK FROM THE AROUND MORE IS FEEDING THROUGH THE ECONOMY AND INFLATION EXPECTATIONS. COMING UP, FRANCE BUDGET PROPOSALS ARE DUE TODAY. WE DISCUSS THAT AND THE OTHER RISK EVENTS FOR INVESTORS. STAY WITH US FOR MORE ON THAT STORY AND THE OUTCOME OF THE LABOUR PARTY CONFERENCE IN THE U.K.. THAT'S NEXT. THIS IS BLOOMBERG. ♪ STEPHEN: LIVE FROM BRUSSELS, THIS IS BLOOMBERG DAYBREAK ERA. I'M STEPHEN CARROLL WITH YOUR TOP STORIES. GLOBAL BONDS POST THEIR WORST QUARTER IN MORE THAN TWO YEARS. U.S. 30 YEAR YIELD HOLDING NEAR ITS HIGHEST LEVEL AFTER RESILIENT CONSUMER SPENDING DATA . PASSENGERS AND CREW EVER CATASTROPHE AFTER THE PILOT OF A FLY DUBAI JET CARRYING MORE THAN 170 PEOPLE TO TEL AVIV STABBED HIS COPILOT AND ATTEMPTED TO CRASH THE PLANE. FIXING FRANCE FINANCES. THE GOVERNMENT SET OUT PLANS TO CUT THE COUNTRY'S DEFICIT AS IT COMES UNDER PRESSURE FROM INVESTORS AND AHEAD OF NEXT YEAR'S PRESIDENTIAL ELECTION. THE TECH STORY BACK IN THE DRIVING SEAT. THE CHINESE AND HONG KONG MARKETS CLOSE. THE NIKKEI AND TOKYO UP OVER 3% NOW. MICRON EARNINGS, LIFTING NASDAQ FUTURES IN THE U.S. OVER 1% AS WE LOOK TOWARDS THE REACTION TO THAT SESSION. GOOGLE GEMINI ANNOUNCEMENT WHICH IS FUELING THE AI TRADE. LESS POSITIVE AS USUAL. EUROPEAN STOCK FUTURES POINTING LOWER STILL. OTHER ASSETS. OIL PRICES STILL A FOCUS. A LITTLE LOWER TODAY. UNDER $97 PER BARREL NOW. BLOOMBERG DOLLAR SPOT INDEX STRENGTHENING FURTHER. 30 YEAR YIELD IN THE U.S. HOLDING ONTO MUCH OF YESTERDAY'S JUMP AFTER IT CLOSED AT THE HIGHEST LEVEL SINCE 2002. ANDY BURNHAM SAYS HE WOULDN'T NEED TO INCREASE TAXES TO PAY FOR HIS PLAN TO CREATE A NEW BRITISH SOCIAL CARE SERVICE. DAYS AFTER INDICATING THAT FURTHER LEVIES WOULD BE REQUIRED. LET'S GET THE THOUGHTS OF ANNA MCDONALD AT HARGREAVES LANSDOWN. GOOD MORNING. GREAT TO HAVE YOU WITH US. HOW CLEAR ARE YOU ABOUT THE TAX OUTLOOK IN THE U.K. AFTER EVERYTHING WE'VE HEARD FROM ANDY BURNHAM THIS WEEK AND THE REMAINING QUESTIONS ABOUT HOW TO FUND THESE BIG POLICY PROMISES? ANNA: MY IMPRESSION FROM THE CONFERENCE WAS THE CHANCELLOR AND PRIME MINISTER ARE CLEAR THAT THERE ARE CONSIDERABLE PHYSICAL CONSTRAINTS FACING THE GOVERNMENT. JOHN HEANEY WAS CLEAR THAT IT'S NOT THE SAME AS IT WAS A 1997. HE WAS TELLING THE DELEGATES THAT. SO THERE ARE SIGNIFICANT CONSTRAINTS. THE MARKET AND INVESTORS ARE REALLY NOW LOOKING FORWARD TO THE BUDGET AND HOW THE CHANCELLOR WILL BALANCE THE BOOKS. STEPHEN: BUT THE QUESTION OF TAX RISES IS ALMOST UNAVOIDABLE WHEN YOU LOOK AT THE NUMBERS. THE DECLINING HEADROOM IN PARTICULAR. WHERE WOULD YOU SEE AS BEING MOST VULNERABLE IN THE MARKET IF THERE ARE GOING TO BE TAX RISES? ANNA: I ACTUALLY THINK THAT THE NARRATIVE THAT WE'VE SEEN RECENTLY IS THAT THEY MAY BE TOLERANT OF LOWER HEADROOM. I THINK THAT'S BECAUSE PRIME MINISTER BURNHAM AND THE CHANCELLOR ARE TRYING TO MAKE SOME LONGER-TERM PLANS. FOR EXAMPLE, THE DISCUSSION AROUND THE TRIPLE LOCK, DOUBLE LOCK THAT ANDY BURNHAM HAS BEEN TALKING ABOUT IN RELATION TO THE NATIONAL CARE SERVICE. THOSE ARE TALKING ABOUT LONGER-TERM PLANS. AGAIN, WE'VE GOT A FURTHER PENSIONS COMMISSION REPORT AND A REPORT INTO INDEPENDENCE PAYMENTS BEING PUSHED TO NEXT YEAR. I THINK THAT MAY GIVE SOME AIR COVER IN TERMS OF THINKING ABOUT LONGER-TERM SPENDING COMMITMENTS AND THE SPENDING REVIEW. WHAT THAT MIGHT DO IS ENABLE THE PART -- MARKET TO PRICE LONGER-TERM DEBT MORE ATTRACTIVELY IF THEY THINK SOME OF THE THORNIEST ISSUES ARE FACING ALL GOVERNMENTS THROUGHOUT THE WORLD IN TERMS OF SPENDING COMMITMENT AND IN TERMS OF BORROWING COSTS. PERHAPS IF THOSE COMMITMENTS CAN BE SEEN TO BE APPROACHED IN A VERY LONG-TERM AND MORE APPROPRIATE WAY, THAT THAT -- THEN THAT CAN REDUCE BORROWING COSTS AND EASE FISCAL PRESSURES FOR THE CHANCELLOR. STEPHEN: WHAT LEVEL OF HEADROOM CAN THE CHANCELLOR AFFORD TO GO TO WITHOUT PUTTING FURTHER PRESSURE ON THE GILT MARKET? WHICH HAS ALREADY BEEN CAUGHT UP WITH RISING YIELDS THAT ARE HAPPENING CLOSE -- GLOBALLY. ANNA: I THINK THAT LEVELS OF HEADROOM THAT HAVE BEEN EXPERIENCED BEFORE BY THE PREVIOUS CHANCELLOR, THEY ARE PROBABLY WHERE THEY ARE TARGETING. BUT I THINK THAT BASICALLY FROM OUR POINT OF VIEW, FROM WHAT WE'RE THINKING ABOUT FOR OUR INVESTORS, WE DO UNDERSTAND. INVESTORS UNDERSTAND THAT THERE ARE FISCAL PRESSURES FACING GOVERNMENT. WHAT WE ARE REALLY HOPING IS THAT THERE ISN'T TOO MUCH SPECULATION AHEAD OF THE BUDGET. THAT MAKES LONG-TERM PLANNING MORE DIFFICULT FOR OUR CLIENTS. IT MAKES LONG-TERM PLANNING MORE DIFFICULT FOR BUSINESSES AND HOUSEHOLDS IN GENERAL. I THINK IT IS HELPFUL THAT THE CHANCELLOR IS KEEPING HIS CARDS CLOSE TO HIS CHEST AND MINIMIZING SPECULATION. WHETHER THAT'S ON THE LEVEL OF HEADROOM OR POTENTIAL CHANGES. THAT IS MORE HELPFUL WHEN PEOPLE ARE MAKING LONG-TERM FINANCIAL DECISIONS. STEPHEN: HOW ARE YOU THINKING ABOUT BONDS IN THE PORTFOLIO AT THIS STAGE? THE LEVEL OF YIELDS NOW DOES SORT OF UP AND A LOT OF THE ASSUMPTIONS FOR YOU TO PLACE THEM TRADITIONALLY TO BALANCE OUT EQUITIES. STEPHEN: ABSOLUTE -- ANNA: ABSOLUTELY. AT THE MOMENT, GILTS ARE THE MOST POPULAR ASSETS BEING TRADED ON THE PLATFORM. WE HAVE A SUBSTANTIAL NUMBER OF INVESTORS WHO ARE LOOKING AT SIGNIFICANT BONDS MATURING THIS MONTH AND REINVESTING FURTHER INTO THE MOST POPULAR ONE AT THE MOMENT, THE JANUARY 2028 GUILD. ALTHOUGH THEY ARE ACTUALLY BY THING -- BUYING FURTHER OUT AS WELL. INVESTORS ARE SEEING THESE YIELDS AS ATTRACTIVE RELATIVE TO INFLATION. THEY ARE QUITE HIGH YIELDS AS WE KNOW. THEY CAN BE VERY ATTRACTIVE FOR RETAIL INVESTORS. PARTICULARLY BECAUSE THERE'S NO CAPITAL GAINS TAX TO BE PAID BY YOUR RETAIL INVESTOR. WHAT WE DO KNOW IS THAT THE STARTING YIELD IS A PREDICTOR OF LONG-TERM RETURNS. ESPECIALLY FOR OUR CLIENTS, THEY ARE SEEING THOSE NOW AS PRETTY ATTRACTIVE. STEPHEN: LOOKING AHEAD TO THE NEXT STEPS OF EARNINGS REPORTS WE WILL BE GETTING. WE CAME OFF OF A STRONG Q2. HOW WERE YOU EXPECTING COMPANIES TO TALK ABOUT ENERGY PRICES MORE GENERALLY IN THIS QUARTER, GIVEN THAT IT DIDN'T GET A LOOK IN THE LAST TIME AROUND? ANNA: WE'VE GOT THE BIG U.S. TECH COMPANIES ARE A BIG INFLUENCE TOWARDS THE END OF THE MONTH. AND HOW THE AI TRADE CONTINUES TO UNFOLD WILL BE SUPER IMPORTANT. ENERGY PRICES, THAT'S A COMMON THREAD RUNNING THROUGH -- THERE ARE SO MANY MARKET STORIES. IT MAKES THE INFLATION OUTLOOK MORE CHALLENGING. IT MAKES HOUSEHOLD FINANCES MORE CHALLENGING. SO I EXPECT THAT BOTH OF THESE IMPACTS, ENERGY PRICES AND HOW THE BIG GUY TRADES WILL BE REALLY AFFECTING HOW OUR CLIENTS BEHAVE ON THE PLATFORM IN TERMS OF WHAT THEY ARE LOOKING TO BUY AND SELL. ENERGY, THIS IS FACING ALL OF US. GOVERNMENTS, COMPANIES, HOUSEHOLDS IN TERMS OF REALLY ADDING THAT SQUEEZE. STEPHEN: ON THE QUESTION OF AI TRADE AS WELL. WE'VE COME THROUGH A COUPLE WEEKS WHERE THE CONVERSATION WAS FOCUSED AROUND A GUY, PROVIDING MORE FOOD FOR THOUGHT AS TO WHERE THIS TECHNOLOGY IS GOING. DO YOU THINK THOSE FEARS HAVE BEEN DISPELLED AT THIS POINT, GIVEN THAT WE ARE LOOKING AT STRONG EARNINGS FROM MICRON FOR EXAMPLE LAST NIGHT AS WELL? IS THE BULLISHNESS RETURNING FROM A MOMENT OF DOUBT? ANNA: WELL, I THINK THAT THERE ARE JUST SO MANY ASPECTS TO THE AI STORY. WE SEE GOOGLE'S RELEASE OF OREGON. THEY REALLY DID TRY TO EMPHASIZE THAT THERE WERE SO MANY GUARDRAILS IN PLACE AND THAT SAFETY IS OF EMINENT IMPORTANCE TO THEM. WE'VE SEEN MEETINGS OF THE MAIN AI LEADERS TOGETHER WITH TRUMP JUST RECENTLY. TOGETHER WITH ANTHROPIC'S PROSPECTUS WHICH TALKS ABOUT HUGE OPPORTUNITY AND POTENTIALLY HUGE RISK. I THINK THAT FOR CLIENTS, THEY ARE LOOKING AT THIS AS A REALLY INTERESTING INFLECTION POINT IN TERMS OF WHERE WE WILL SEE THOSE WINNERS EVENTUALLY EVOLVE. IT'S DIFFICULT TO PICK WINNERS. FOR EXAMPLE, POTENTIALLY WISE ON MICRON OR ANOTHER MAKER OF PICKS AND SHOVELS TRADES, AS IT IS OFTEN REFERRED TO, THOSE KINDS OF SHARES CAN BE VERY POSITIVE. I THINK THERE ARE GOING TO ALWAYS BE SKEPTICS AROUND THE AI TRADE, ABOUT WHO THE EVENTUAL WINNERS ARE. THERE IS STILL HUGE INTEREST IN THIS PLATFORM. STEPHEN: OK. DIRECTOR OF INVESTMENT STRATEGY, THANK YOU VERY MUCH FOR JOINING US. COMING UP, A RALLY OF 250,000% SINCE THE LISTING IN 2002. WE SPEAK TO THE CEO OF A SOUTH AFRICAN PRANK -- BANK WITH RECORD RESULTS. STAY WITH US. THIS IS BLOOMBERG. ♪ STEPHEN: WELCOME BACK TO BLOOMBERG DAYBREAK EUROPE. SOUTH AFRICA. BRACING FOR TOUGHER OPERATING ENVIRONMENT AS THE IRAN MORE STOKES INFLATIONARY PRESSURES AND WEIGHS ON CONSUMER CONFIDENCE AFTER THE BANK COME THE LARGEST INSIDE AFRICA BY CUSTOMER NUMBERS, RECORDED RECORD FIRST QUARTER PROFITS. WE ARE JOINED BY THE CEO. GREAT TO HAVE YOU WITH US ON THE PROGRAM. YOU FLANKED THE IRAN MORE AS A HEADWIND FOR THE COMING MONTHS, WEIGHING ON CONFIDENCE AND INFLATION AS I MENTIONED. HOW DO YOU SEE IT INVOLVING YOUR BUSINESS OVER THE NEXT 12 MONTHS? >> GOOD MORNING. YES. RECENTLY FUEL INFLATION AND TRANSPORT INFLATION DRIVEN BY THAT HAS COME AS HIGH AS 20%. IN SOUTH AFRICA, THAT'S A LEADING INDICATOR FOR OTHER INFLATION TO COME. SO MUCH OF THE LOGISTICS IN SOUTH AFRICA IS ROAD BASED SO WE DEFINITELY HAVE STARTED WEIGHING ARE DOWN AND NEGATIVE SCENARIOS A LITTLE BIT MORE HEAVILY IN OUR PLANNING. WHAT WE KNOW FOR SURE, THE ONLY FUNCTIONAL VALUE OF ECONOMIC FORECASTING IS TO MAKE ASTROLOGY LOOK RESPECTABLE. WE MAKE SURE THAT WE HAVE A FULL VIEW OF THE DIFFERENT SCENARIOS AND POSSIBILITIES AHEAD OF US. WHILST WE ARE WAITING THE DOWNSIDES MORE HEAVILY, THAT'S NOT TO SAY THAT WE ARE NEGATIVE OF THE OPPORTUNITIES. WHAT WE KNOW IN SOUTH AFRICA IS THAT OUR CLIENTS ARE RESILIENT. WE PLAN SENSIBLY FOR THE FUTURE RATHER THAN WORRYING ABOUT THE FUTURE. STEPHEN: YOU ARE RAISING PROVISIONS TO $1.8 BILLION. I WONDER WHERE THAT FITS WITHIN YOUR SCENARIO. HOW MUCH WORSE COULD IT GET DOWN THE LINE? WHAT IS YOUR WORST-CASE SCENARIO IN TERMS OF LOSSES GOING FORWARD? >> WE ARE ALREADY APPROPRIATELY PROVEN. I THINK THAT'S A SENSIBLE NUMBER AND WE DON'T SEE IT GETTING WORSE THAN THAT. IT'S VERY MUCH DRIVEN AS WELL AS THE FORWARD-LOOKING PROFICIENT BY THE FACT THAT WE HAVE GROWN OUR LONG SO MUCH. WE'VE GROWN SALES SIGNIFICANTLY. THE WAY THAT HITS THE ACCOUNTS IS THAT YOU CREATE AN UPFRONT PERVERSION. -- PROVISION. THAT GROWTH MEANS THAT WE HAVE A BIG UPFRONT PROVISION NOW. THAT'S THE BIGGEST FACTOR IN RAISING THOSE PROVISIONS. STEPHEN: IS THAT TO SAY THAT YOU ARE NOT EXPECTING TO MAKE FURTHER PROVISIONS ON THIS ISSUE? GRAHAM: WE THINK THAT WE HAVE PROVIDED SUFFICIENTLY, YES. STEPHEN: IN TERMS OF YOUR LOAN BOOK, HOW EXPOSED IS IT TO FOOL -- FUEL PRICE SENSITIVE SECTORS? GRAHAM: IN TERMS OF OUR EXISTING LOAN BOOK, IT'S NOT EXPOSED AT ALL. IT'S WEIGHING MORE HEAVILY ON WHAT OUR FUTURE SALES WOULD'VE BEEN. SO WE PLAN TO GROW AGGRESSIVELY. WE ARE STILL OPTIMISTIC AND WE WILL STILL GROW OUR BOOK QUITE SIGNIFICANTLY. JUST LEFT SO THEN WE WOULD HAVE. STEPHEN: CAN YOU GIVE US MORE DETAIL ON THAT? TALKING ABOUT SLOWING GROWTH IN THE LOAN BOOK. WHERE WAS YOUR ORIGINAL ESTIMATION? HOW FAR ARE YOU OFF THAT NOW? GRAHAM: SO WE'VE GROWN SO FAR THIS YEAR BY A LITTLE OVER 20%. WE WERE EXPECTING TO GROW AROUND 23 TO 24%. STEPHEN: I WANT TO ASK YOU ABOUT YOUR HOLDING IN THE FINTECH AVA FINN AS WELL. CONTRIBUTING LESTER EARNINGS TO THE END OF AUGUST. WHAT'S YOUR GOAL IN TERMS OF THE CONTRIBUTION TO EARNINGS GOING FORWARD? WHAT ARE THE PARTICULAR MILESTONES YOU ARE LOOKING OUT FOR? GRAHAM: IT'S AN EXCITING BUSINESS. IT OPERATES IN EASTERN EUROPE, LATVIA, POLAND. WESTERN EUROPE, SPAIN, MEXICO. IT PROVIDES AVAILABLE FINANCE TO ORDINARY PEOPLE AND ENTREPRENEURS. WE SEE A LOT OF RUNWAY FOR GROWTH IN THE FUTURE. THE REASON WHY THERE'S BEEN A SMALL SETBACK IN PROF -- IS THAT THEY ARE MOVING TO LONGER-TERM, LOWER INTEREST, LOWER RISK LOANS. BECAUSE OF THAT, WE HAVE EARNED INTERESTING. THE PROOF POINT IS THAT IT HAS COME DOWN BY A THIRD. IT IS SOUTH AFRICA'S BORDERS. STEPHEN: THAT IS SOMETHING YOU HAVE FURTHER AMBITIONS TO MAKE. I WONDER, IS YOUR INTERNATIONAL EXPANSION PLAN BEING SLOWED BY THE CURRENT MACROENVIRONMENT? STEPHEN: NOT PARTICULAR -- GRAHAM: NOT PARTICULARLY. WE WERE TAKING IT SLOW. THIS IS A 10 YEAR STRATEGY, NOT A NEXT YEAR STRATEGY. STEPHEN: WHERE ARE THE NEXT MARKETS YOU ARE LOOKING AT? WHERE WOULD YOU EXPECT TO SEE YOURSELF EXPANDING? GRAHAM: WE ARE GOING TO FOCUS ON THOSE MARKETS AND MAKE A SUCCESS OF THEM FIRST BEFORE WE CONSIDER ANYWHERE ELSE. GRAHAM: MORE BROADLY, -- STEPHEN: MORE BROADLY, HOW ARE YOU SEEKING THE HIGHER GUILT ENVIRONMENT FITTING INTO YOUR BUSINESS? WE HAVE HAD SUCH A GLOBAL MOVE IN YIELDS. THE SUPERLATIVE'S WE'VE BEEN TALKING ABOUT THIS MARKING -- MORNING, THE HIGHEST IN 24 YEARS. GRAHAM: IN SOUTH AFRICA, THAT PUTS MORE PRESSURE ON CONSUMERS. I THINK WE WILL MODERATE GROWTH SLIGHTLY. IT IS SOMETHING THAT WE WERE EXPECTING. SO IT HASN'T COME AS A GREAT SURPRISE. BUT WITHOUT DOUBT, IT WILL BE A DRAG ON OUR ECONOMY. STEPHEN: TO WHAT EXTENT WILL THAT LAYER INTO THE OTHER PRESSURES COMING FROM HIGHER ENERGY PRICES? GRAHAM: YEAH. WE HAVE A SENSE THAT THE CONSUMER IS GOING TO CONTINUE TO BE UNDER PRESSURE FOR PROBABLY THE NEXT 12 TO 18 MONTHS. BUT IT'S NOT THE BIGGEST FACTOR IN THE LIVES OF MOST SOUTH AFRICANS. WHILST IT IS A HEADWIND, IT'S NOT AN OVERWHELMING ONE. WE SHOULD BE ABLE TO CONTINUE TO GROW OUR BUSINESS SUCCESSFULLY DESPITE THIS. STEPHEN: OK. GREAT TO TALK TO YOU THIS MORNING. THANK YOU FOR BRINGING US THE INSIGHTS INTO YOUR RESULT AS WELL. NOW ONTO SOME CORPORATE NEWS. NEW BANK SHARES REBOUNDED IN EXTENDED TRADING AFTER SINGING IT WON'T PURSUE A DEAL WITH THE U.K. FINTECH COMPANY FOLLOWING REPORTS OF A POTENTIAL TRANSACTION. THE COMPANY SAYS IT REMAINS FOCUS ON EXPANDING ITS EXISTING BUSINESSES INCLUDING BUILDING ITS PRESENCE IN THE UNITED STATES. BLOOMBERG HAS LEARNED THAT PRIVATE EQUITY FIRM SYCAMORE IS NEARING A DEAL TO SELL THE U.K. HEALTH AND BEAUTY RETAILER BOOTS TO THE CANADIAN BRANDS OF THE BILLIONAIRE WESTON FAMILY. AN AGREEMENT COULD BE REACHED IN THE NEXT FEW WEEKS. TALKS ARE ONGOING AND COULD STILL FALL APART. OPENAI HAS ACCUSED ITS CHINESE RIVAL MOONSHOT OF CONDUCTING A WIDESCALE EFFORT TO EXTRACT DATA FROM ITS GPT MODELS. THE COMPANY SAYS IT OBSERVED THOUSANDS OF ATTEMPTS BY USERS ASSOCIATED WITH MOONSHOT TO DECIPHER HAVE INFORMATION ABOUT HOW IT'S MODELS REASON THROUGH PROBLEMS. THE ACCUSATION ADDS TO GROWING CONCERNS AMONG U.S. FIRMS THAT CHINESE AI DEVELOPERS ARE IMPROPERLY PIGGYBACKING ON THEIR MODELS USING A TECHNIQUE KNOWN AS DISTILLATION. PARAMOUNT SKYDANCE SAYS FORMER MATTEL CHIEF WILL BECOME CO-CEO ALONGSIDE DAVID ELLISON AFTER IT COMPLETES ITS ACQUISITION OF WARNER BROTHERS. THE FIRMS NOW SAY THEY EXPECT THE MERGER TO CLOSE ON OCTOBER 6 AFTER APPROVAL BY A CALIFORNIA FEDERAL JUDGE. A SOURCE ALSO SAYS PARAMOUNT SOLD $30 BILLION OF U.S. DOLLAR INVESTMENT GRADE BONDS, SECURING THE BIGGEST PART OF ITS FINANCING FOR THE BUYOUT. PLENTY MORE COMING UP NEXT INCLUDING MORE ON THE MARKET MOVES IN THE PRESSURE ON LONG AND YIELDS IN THE U.S.. STAY WITH US. THIS IS BLOOMBERG. ♪ >> I FEEL LIKE YOU DON'T NEED, AT LEAST FOR THE ANTHROPIC'S OF THE WORLD, YOU DON'T NEED LEGISLATION OR THE GOVERNMENT TO PROTECT THEM FROM DOING SOMETHING STUPID. YOU WOULD HOPE YOU WOULDN'T BECAUSE IT'S A BIT LIKE A PHARMA COMPANY. YOU DON'T RELEASE A DRUG TO THE WORLD. IN THE CASE OF A DRUG, YOU HAVE GOVERNMENT OVERSIGHT. THE INCENTIVE TO PUT OUT A PRODUCT THAT'S GOING TO DESTROY THE WORLD. STEPHEN: BILLIONAIRE INVESTOR BILL NACHMAN WEIGHING IN ON THE AI REGULATION DEBATE. THE MOVEMENTS IN THE AI STORY HAVE BEEN A KEY PART OF WHAT BEEN HAPPENING ON MARKETS IN THE U.S.. CENTRAL TO STOCK MARKET PERFORMANCE IN SEPTEMBER. IF WE TAKE A LOOK AT THE CHART WHICH STRIPS OUT THE MARKET CAP AS WELL, IT TELLS US THE STORY OF HOW THE RECORD RALLY HAS BEEN CONCENTRATED IN THE TECH RELATED NAMES. THE EQUAL WEIGHT INDEX HEADING FOR ITS LONGEST WEEKLY SINCE 2022. ONLY THE SECOND TIME THAT WE'VE HAD A LOSS OF THIS LENGTH ON THAT PARTICULAR INDEX IN HISTORY. THE QUESTION OF CONCENTRATION IN THE MARKET IS IN FOCUS AS WE GET INTO Q4. LOOKING AT HOW THINGS PLAYED OUT THROUGH THE CLOSE OF THE LAST SESSION, OF COURSE WE HAD THE REACTION OF THE PCE DATA WHICH WAS CHOPPY. BUT ALSO, THE QUESTION OF REBALANCING. GOLDMAN SACHS ESTIMATING THERE WAS $33 BILLION WORTH OF REBALANCING THAT HAD TO BE DONE BY PENSION FUNDS AS WELL. WE COULD SEE THAT DROP INTO THE END OF THE TRADING DAY FOR SEPTEMBER FOR THE S&P 500 AS WELL. FINISHING THE QUARTER ON A WEAK NOTE. LOOKING AHEAD TO THE FRENCH BUDGET ANNOUNCEMENT LATER TODAY. WORTH REMINDING US OF WHERE THINGS ARE IN THE SPREAD OF GERMAN TO FRENCH DEBT. 127 BASIS POINTS YESTERDAY. THIS IS ONLY THE START OF THE DEBATE OF HOW FRANCE WILL TRY TO CUT ITS BUDGET. WE KNOW THIS HAS BEEN A POLITICALLY FRACTIOUS ISSUE. WILL THERE BE MORE POLITICAL TURMOIL OVER THE ANNOUNCEMENT OF THE FRENCH BUDGET AS THEY TRY TO MAKE CHANGES TO CONTROVERSIAL ISSUES? QUESTIONS ABOUT INDEX PARTS OF PENSIONS AND MAKING CHANGES TO SOME OF THOSE ELEMENTS THAT ARE VERY CORE TO THE FRENCH SOCIAL SYSTEM. PART OF THE IMPORTANT DEBATE THAT WE WILL BE WATCHING. BOND MARKETS WATCHING AS WELL WITHIN I ON NEXT YEAR'S PRESIDENTIAL ELECTION AS WELL. GERMAN YIELDS VERY MUCH A FOCUS FOR MARKETS TODAY AS WELL. TO SEARCH AND SAVE ALL OF THE BLOOMBERG TERMINAL CHARTS USED ACROSS THE SHOW AND AROUND BLOOMBERG TV, SUBSCRIBERS CAN USE THE FUNCTION SEE RTV TV <GO> HEARING OF THE KEY RISK EVENT LATER TODAY. THE FRENCH BUDGET. CABINET MEETING HAPPENING THIS MORNING. 1:30 U.K. TIME. U.S. INITIAL JOBLESS CLAIMS AHEAD OF TOMORROW'S JOBS REPORT. WE HAVE A HOST OF CENTRAL-BANK SPEAKERS TO LOOK FORWARD TO AS WELL. CHRISTINE LAGARDE, ANDREW BAILEY AS WELL AS SEVERAL FED SPEAKERS AS WELL. THE CEO OF THE LEGAL AI STARTUP JOINS THE OPENING TRADE TO DISCUSS ITS LATEST FUNDRAISER AT 8:30 A.M. LONDON TIME. THE OPENING TRADE IS UP FOR YOU NEXT. THIS IS BLOOMBERG. ♪