Gold Soars as US Shutdown Enters Day 8; French Premier Optimistic on Resolving Political Crisis

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1:09Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, we begin on day eight of the federal government shutdown, and the White House is ramping up the pressure on Democrats. President Trump is floating the idea of blocking back pay for some federal workers when the government reopens. For the most part, we're going to take care of our people. There are some people that really don't deserve to be taken care of, and we'll take care of them in a different way. The president spoke from the Oval Office after the White House Budget Office drafted a memo saying workers are not guaranteed compensation during a shutdown.

1:50we get more from Bloomberg's Derek Wahlbank. There is a substantial amount of question about whether or not that's something he can actually do. But that is the threat that's there. And hanging over all of this is a threat from Russ Vogt, the OMB director, to maybe rather than furlough federal workers, which they are currently furloughed, to actually go through with permanent job cuts trying to put pressure on Democrats. That's Bloomberg's Derek Wahlbank. In the meantime, the shutdown's starting to have a real-world impact outside the Beltway. Flights at Chicago, O 'Hare, and Dallas-Fort Worth airports were delayed by at least a half hour last night due to staffing shortages.

2:31Air traffic controllers and other essential staff are still working at the nation's airports, just without pay. In France, Nathan, the countdown underway to salvage the French government. Outgoing Prime Minister Sébastien Le Corneau expressed optimism that an agreement can be reached to allow the formation of a new government without fully endorsing a new proposal to rethink a controversial pension law as demanded by the Socialists. Bloomberg Daybreak anchor Stephen Carroll is in Paris and has the very latest developments. The centrist and centre-right parties that he spoke to yesterday have a willingness to agree on a budget by the 31st of December.

3:09He says the conversation was steering further away from a dissolution of the Parliament. They've agreed that the budget must allow France to advance and to reduce the deficit to below 5 % next year. That's interesting because the previous budget target was 4.7 % next year, so perhaps an indication of some of the willingness and what's being discussed in terms of changes to spending plans. Now, he's going into discussions with the left-wing parties today. Sébastien Lecornu says he'll be asking them what concessions they're willing to make to try and support a budget plan as well. And he talked more broadly about the risks of what this crisis means to the image of France, to the place on the international stage that France holds as well.

3:49But the message from the first day of talks is that they are working towards a budget agreement. They're working away from the idea of calling fresh National Assembly elections. Emmanuel Macron has given Sébastien Le Corneau until this evening to try and come up with a plan. I will be waiting to see what the next update brings. And Bloomberg's Stephen Carroll notes that French bonds extended in advance as Le Corneau spoke. They yield on 10-year bonds, fell five basis points to 3.52 percent, the lowest since Friday. Now, Karen, let's get to the latest on efforts for peace in the Middle East. Teams from the U.S., Qatar, and Israel are gathering in Egypt for final negotiations to end the war in Gaza.

4:26Israeli opposition leader Yair Lapid says he is hoping for an end to the conflict. A war that is going nowhere, hostages that are slowly dying, and of course the suffering Gaza that everybody in his right mind cares about. Children should not die in drop-ups wars. So for everybody's sake, we pray for this to you. Israeli opposition leader Yair Lapid made those comments to Sky News. A Hamas spokesperson says a permanent ceasefire and withdrawal of Israeli troops from Gaza must be central to a deal. We turn now to the markets, Nathan, where gold is continuing its record run. It's smashed through$4 ,000 an ounce for the first time.

5:06concerns over the U.S. economy and a government shutdown are adding fresh momentum to the rally. Bloomberg Markets executive editor Paul Dobson has more in the historical run. 50 % just this year alone is a pretty impressive statistic that's against the U.S. dollar. And when you sort of look at how that compares with history, it's the best annual gain since the 1970s. And it's not just that that's kind of noteworthy here. It's also the sort of pace which we're gaining in sort of longer term history. If you think about it, we only breached$1 ,000 an ounce after the financial crisis, $2 ,000 during the COVID pandemic.

5:46But we've gone from$3 ,000 to$4 ,000 just since March to this month. So, you know, we're really stepping up in terms of that sort of big number rate of change. And that's Bloomberg Markets executive editor Paul Dobson taking a look at Comex Gold right now. Now it's up one and a third percent, up more than$55 at$4 ,059 an ounce. Karen, we have new developments this morning involving Elon Musk's push into artificial intelligence. The billionaire startup XAI is raising more than initially planned. Let's get the details from Bloomberg's Gina Cervetti. Bloomberg News has learned Musk is tapping backers, including NVIDIA, to lift the ongoing funding round to$20 billion.

6:28Sources say the financing includes equity and debt in a special-purpose vehicle that will buy NVIDIA processors and rent them to XAI for use in its Colossus 2 project. NVIDIA is investing as much as$2 billion in the equity portion of the transaction, a strategy that helps accelerate its customers' AI investments. The massive financing is just the latest for the AI industry. Earlier this week, OpenAI announced a deal to use advanced micro-devices chips over multiple years. Meta Platforms has inked several multi-billion dollar deals in the past few months, including a$29 billion financing package for data centers.

7:04And Oracle also raised a$38 billion debt package for its infrastructure. Gina Cervetti, Bloomberg Radio. All right, Gina, thank you. While Jamie Dimon is weighing in on the AI boom, he says JPMorgan Chase spent$2 billion a year on developing artificial intelligence technology and saves about the same amount annually from the investment. Diamond tells Bloomberg's Tom McKenzie that he celebrates the opportunities offered by AI, even if it eliminates some jobs. We have 2 ,000 people doing it. Spend$2 billion a year on it. It affects everything. Risk, fraud, marketing, idea generation, customer service.

7:43And it's kind of the tip of the iceberg. And so we're deploying it. Every time we meet as a business, we ask, what are you doing in AI? What are you doing to serve your people? Why can you do better? What is somebody else doing? So we're freely deploying it and safely. In a letter to shareholders last year, Diamond likened AI technology to the printing press, the steam engine, electricity, computing, and the internet. Get the full conversation with JPMorgan Chase CEO Jamie Diamond on the Bloomberg Podcast channel on YouTube. And finally, Karen, Cristiano Ronaldo is soccer's first billionaire. His net worth now stands at$1.4 billion on the Bloomberg Billionaires Index.

8:20The Portuguese player reached the milestone after a lucrative contract extension with Saudi Arabian team Al Nasser reportedly worth$400 million. But Bloomberg Portugal bureau chief Sofia Horta Acosta says Ronaldo's move to the Middle East was controversial. At the time, a lot of people were criticizing that decision because, you know, he was going from Manchester United and playing at really top level football to a very unknown league. even in Saudi Arabia wasn't the most successful team. And despite endorsement deals with brands including Nike and Armani, Bloomberg's Sofia Horta Acosta says Ronaldo's wealth primarily comes from his playing career.

9:00Time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Attorney General Pam Bondi clashed with the Democratic senators during a contentious hearing on a wide range of issues. In an exchange with Senator Dick Durbin of Illinois, Bondi was asked about any conversations that she may have had with the White House about deploying the National Guard to Democratic-run cities. I wish you loved Chicago as much as you hate President Trump. We're there to help make America safe and Illinois safe, whether or not you want to.

9:37A.G. Bondi was also questioned about the Jeffrey Epstein files, basically saying that there is no evidence that would implicate potential co-conspirators. Matt Van Epps, a former commissioner in Tennessee, Governor Bill Lee's administration has won a crowded Republican primary in the special election to replace former GOP Congressman Mark Green, who left office this summer. Van Epps clinched Tuesday's victory with 51.6 % after an endorsement from President Trump. In the Democratic primary, State Representative Afton Bend won a four-way contest with almost 28 percent and will face Van Epps in the general election December 2nd.

10:18A truck driver has filed a lawsuit against former New York Jets quarterback Mark Sanchez and Fox Corporation following a bloody fight police say was started by Sanchez outside an Indianapolis hotel. The altercation left 69-year-old Perry Toll with several injuries. Toll also stabbed Sanchez during the fight. Lead prosecutor Ryan Mears. Certainly the description from the victim would have been key that he was of the belief that the person that he had the confrontation with was very much intoxicated. Prosecutor Ryan Mears also said Tuesday Sanchez faces a felony battery charge and several misdemeanors.

10:57Sanchez was in Indianapolis for Fox's coverage of a football game. Global news 24 hours a day, and whenever you want it with Bloomberg News Now, I'm Michael Barr, and this is Bloomberg. Karen. Thanks, Michael. Time now for our Bloomberg Sports Update, and for that, we bring in John Stashauer. Thanks, Karen. The Yankees were in big trouble trailing Toronto two games to none, and the Blue Jays led game three, six to one, but the Yanks rallied. Aaron Judge had a game-tying three-run homer. Jazz Chisholm a go-ahead solo shot. Yanks won 9-6. The Blue Jays still lead the series 2-1. Seattle won 8-4 at Detroit for a 2-1 series lead.

11:3340-year-old Joe Flacco traded from one AFC Central team in Ohio to another. Goes from Cleveland to Cincinnati. The Bengals lost quarterback Joe Burrow to injury. That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going.

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12:54Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg.com and the Bloomberg Business app. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager. As the French political crisis continues, France's caretaker prime minister now has just hours to find a solution to his country's budget and government woes. And as he edges closer to President Emmanuel Macron's deadline, Sébastien Le Corneau is sounding optimistic. There is a will to have for France a budget before the 31st of December this year. And this will creates a movement that steers us further away from the dissolution of Parliament.

13:35That was Prime Minister Le Corneau speaking through an interpreter this morning. And for the very latest, we are joined in Paris once again by Bloomberg Daybreak Europe anchor Stephen Carroll. So Stephen, there is a will to get a budget by the end of the year, but isn't the deadline this month? Good morning. Good morning, Nathan. Yeah, I mean, we're into the latest twist of this, but a note of optimism coming from Sébastien Le Cornu. He was speaking before what is perhaps the most crucial part of his negotiations. He was going in to talk to the centre-left Socialist Party. They're seen as being the key to the way out of this crisis for Le Cornu to build a broader consensus, potentially around a budget plan.

14:13and that optimism that he talked about of having the centrist and centre-right parties on board to try and pass a budget and move away from the idea of fresh National Assembly elections would be something that has given markets a bit of a boost. We've seen a reaction on the CAC 40 in Paris getting a bit of a spike and the advance in government bond yields also continuing. We're seeing the drop down about four basis points on the tenure and the spread with Germany narrowing as well. So a sense from Sébastien Le Corneau that things went well with his discussions yesterday, But I would point out those are his existing partners.

14:45What he has to get the socialists to agree to, he said he'd be looking for concessions. He's meeting a whole range of left-wing parties today is what exactly they're willing to agree to. And a lot of the focus now in the conversation has been around the question of retirement reforms and whether the controversial pension reforms passed in France might actually get suspended as part of some sort of deal with the Socialist Party. And that raises the question about whether those kinds of reforms would be agreed to by some of the parties on the right wing. Exactly. And this is where things get extremely complicated.

15:17And we look at the potential for a split in the existing coalition as well. So Sébastien Lecornu is caught in a sort of a game of three-dimensional chess where he's trying to bring new allies on side without losing his existing ones. But it is interesting to point out that the idea of suspending the pension reforms came from the person who was responsible for bringing them through Parliament, the former Prime Minister, Elisabeth Bonn. Again, another indication of how even in Macron's own party, we're seeing a sort of distancing from some of the president's key reforms as well. Sébastien Lecornu is going to speak in an interview on French television this evening.

15:52That's around the time we're expecting him to be able to have told the president whether or not there is a way out of this crisis. The hours are ticking down, the meetings are continuing, and the pressure is on for Sébastien Le Corneau. At the same time, as you mentioned, we are seeing some relief in the markets. But with some of President Macron's traditional allies sort of distancing themselves from him in ways that we've been talking about since yesterday, does that keep some of the political pressure on him? He's been facing calls from some of his past allies to resign. Yeah, that's right.

16:21And some of those calls are ones that they've been making for quite some time. But the issue now is that Emmanuel Macron looks very unlikely to try and resign and much more likely that there would be National Assembly elections, if any at all. And I suppose the message from Sébastien Lecornu seems to indicate that elections are looking like a more distant prospect this morning. On the market reaction, though, I would point out that if they were to suspend the pension reforms, that could be a real impact on markets. conversations we've been having with the likes of Christopher Dembeck from Pictet this morning, talking about it being the biggest risk to France's fiscal outlook, which, as we know, is the origin of this whole crisis to begin with, is the fact that they couldn't agree on a budget to reduce the deficit.

17:02And if you add to the fact that you're going to add billions of euros of costs of pensions, if you do suspend those pension reforms, that's going to make the situation even more complicated. This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121.

17:41Plus, listen coast to coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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