1 00:00:00,240 --> 00:00:07,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:10,400 --> 00:00:13,160 Speaker 2: This is Bloomberg Daybreak Weekend, our global look at the 3 00:00:13,160 --> 00:00:15,640 Speaker 2: top stories in the coming week from our Daybreak anchors 4 00:00:15,760 --> 00:00:18,360 Speaker 2: all around the world. Straight Ahead. On the program, we 5 00:00:18,400 --> 00:00:21,319 Speaker 2: look ahead to how commodities may fare in twenty twenty six, 6 00:00:21,360 --> 00:00:23,880 Speaker 2: along with an outlook for the housing sector. I'm Nathan 7 00:00:23,880 --> 00:00:25,000 Speaker 2: Hager in Washington. 8 00:00:25,120 --> 00:00:27,920 Speaker 3: I'm Stephen Carolin Brussels. So we're thinking about the culinary 9 00:00:27,960 --> 00:00:30,560 Speaker 3: and cultural trends in Europe to watch in the year. 10 00:00:30,600 --> 00:00:34,040 Speaker 4: Aheads, I'm Doug Christner looking at the possible timeline of 11 00:00:34,080 --> 00:00:36,480 Speaker 4: a rate hike from the Reserve Bank of Australia. 12 00:00:38,360 --> 00:00:42,360 Speaker 1: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 13 00:00:42,400 --> 00:00:46,120 Speaker 1: eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 14 00:00:46,600 --> 00:00:51,760 Speaker 1: Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias 15 00:00:51,920 --> 00:00:55,400 Speaker 1: XM one twenty one, and around the world on Bloomberg Radio, 16 00:00:55,480 --> 00:00:57,640 Speaker 1: dot Com and the Bloomberg Business App. 17 00:01:02,560 --> 00:01:03,360 Speaker 3: Good day to you. 18 00:01:03,480 --> 00:01:07,240 Speaker 2: I'm Nathan Hager, and we begin today's program with commodities, 19 00:01:07,360 --> 00:01:09,920 Speaker 2: a sector that presented a mixed but for the most 20 00:01:09,920 --> 00:01:13,480 Speaker 2: part strong performance in twenty twenty five. So for more 21 00:01:13,520 --> 00:01:16,600 Speaker 2: and what to expect in twenty twenty six, who better 22 00:01:16,640 --> 00:01:20,000 Speaker 2: to be joined by than Mike mcglowan, senior commodity strategist 23 00:01:20,400 --> 00:01:24,440 Speaker 2: for Bloomberg Intelligence. Happy New Year, Mike, and what a 24 00:01:24,520 --> 00:01:28,600 Speaker 2: year was for gold trading at records? Is twenty twenty 25 00:01:28,640 --> 00:01:30,720 Speaker 2: six going to be another year to be a goldbug? 26 00:01:31,400 --> 00:01:35,600 Speaker 5: Unfortunately? The lessons of history, Nathan say, the momentums upward, 27 00:01:35,959 --> 00:01:40,520 Speaker 5: but history suggests this is where overweight long new positions 28 00:01:40,560 --> 00:01:44,880 Speaker 5: typically underperformed, particularly for enduring pairents. To give you one example, 29 00:01:44,959 --> 00:01:49,200 Speaker 5: Gold's cousin silver, it's gone. You know, they both had 30 00:01:49,240 --> 00:01:52,560 Speaker 5: the best year since nineteen seventy nine. In nineteen seventy nine, 31 00:01:52,640 --> 00:01:56,280 Speaker 5: silver's high was thirty two. This year's low was twenty eight. 32 00:01:56,640 --> 00:01:58,880 Speaker 5: That's almost fifty years. So that's the kind of risk 33 00:01:58,960 --> 00:02:00,760 Speaker 5: you have with gold getting this level. So I think 34 00:02:00,800 --> 00:02:04,440 Speaker 5: momentum probably gets it towards five thousand, but a normal 35 00:02:04,560 --> 00:02:07,240 Speaker 5: back and fill of a high velocity where I like 36 00:02:07,280 --> 00:02:09,280 Speaker 5: this can actually get it to thirty five hundred. So 37 00:02:09,680 --> 00:02:12,120 Speaker 5: I put frightening in gold in the same sentence, because 38 00:02:12,120 --> 00:02:16,120 Speaker 5: I'm just absolutely frightening when gold grabs alpha like it 39 00:02:16,160 --> 00:02:20,240 Speaker 5: did this year beats everything, particularly beta the stock market. 40 00:02:20,440 --> 00:02:23,360 Speaker 5: I get worried, so to me, what commodities are telling 41 00:02:23,400 --> 00:02:25,000 Speaker 5: us this year? It's been based on a whole hum 42 00:02:25,080 --> 00:02:28,200 Speaker 5: broad commodity market. The Bloomberg Commodity Index is basically track 43 00:02:28,280 --> 00:02:31,080 Speaker 5: the S and P five hundred. It's the interworkings like 44 00:02:31,120 --> 00:02:34,280 Speaker 5: you mentioned. But gold going up with this velocity probably 45 00:02:34,280 --> 00:02:36,560 Speaker 5: you know, over sixty percent and crude oil going down 46 00:02:36,639 --> 00:02:40,520 Speaker 5: about twenty percent. That disparity is the widest ever and 47 00:02:40,639 --> 00:02:43,440 Speaker 5: so it's around eighty ninety percent in two thousand and 48 00:02:43,440 --> 00:02:46,440 Speaker 5: eight extreme. The previous extreme is sixty percent. So I 49 00:02:46,639 --> 00:02:49,320 Speaker 5: really concerned what this is tying us when the most 50 00:02:49,360 --> 00:02:52,560 Speaker 5: significant ancient store value grabs alpha and the world's most 51 00:02:52,560 --> 00:02:54,440 Speaker 5: significant industrial commodity goes down. 52 00:02:54,600 --> 00:02:57,160 Speaker 2: Yeah, let's talk a little bit more about that disparity, 53 00:02:57,200 --> 00:03:00,480 Speaker 2: because to your point, we did see oil prices pretty 54 00:03:00,480 --> 00:03:04,080 Speaker 2: subdued in twenty twenty five. What do you see driving 55 00:03:04,120 --> 00:03:05,800 Speaker 2: the oil market this year? 56 00:03:06,840 --> 00:03:09,280 Speaker 5: Well, the key thing Foil to think is to look 57 00:03:09,360 --> 00:03:12,040 Speaker 5: back from the future. Next to the peaks in twenty 58 00:03:12,120 --> 00:03:15,800 Speaker 5: twenty two shifted the world order, kicked in EVS, brought 59 00:03:15,840 --> 00:03:18,880 Speaker 5: on that all that rapidly advancing technology which brings on 60 00:03:18,960 --> 00:03:21,640 Speaker 5: more supply and reduces demand, and now we're in the 61 00:03:21,680 --> 00:03:25,080 Speaker 5: downward cycle from that, so typically takes a low price cure. 62 00:03:25,320 --> 00:03:28,200 Speaker 5: So WI crude oil has high for this year is 63 00:03:28,240 --> 00:03:30,600 Speaker 5: around eighty or so. It's got down around fifty five. 64 00:03:30,680 --> 00:03:34,640 Speaker 5: I think historically the loaves have been around forty dollars 65 00:03:34,720 --> 00:03:36,880 Speaker 5: a barrel, and I think that's going to happen in 66 00:03:36,920 --> 00:03:39,360 Speaker 5: the twenty twenty six year. But it can also easily 67 00:03:39,400 --> 00:03:42,760 Speaker 5: pop the seventy dollars barrel seventy Bear markets and notorious 68 00:03:42,760 --> 00:03:45,560 Speaker 5: are sharp shortcoming rally. So the one thing I really 69 00:03:45,560 --> 00:03:47,120 Speaker 5: think we're going to have next year is a decent 70 00:03:47,160 --> 00:03:50,280 Speaker 5: amount of voweltility in all markets, particularly the stock market. 71 00:03:50,320 --> 00:03:52,600 Speaker 5: I think crude oil is going to continue heading lower, 72 00:03:52,840 --> 00:03:55,200 Speaker 5: but it's not alone, Nathan. It has It's in the 73 00:03:55,240 --> 00:03:58,080 Speaker 5: same camp as corn, soybeans, and wheat and the grains, 74 00:03:58,280 --> 00:03:59,800 Speaker 5: and they're all on the back of going up too 75 00:03:59,840 --> 00:04:02,480 Speaker 5: much much to speak, in twenty twenty two and going 76 00:04:02,520 --> 00:04:05,120 Speaker 5: down now. And that's the key thing to remember. In commodities, 77 00:04:05,200 --> 00:04:08,280 Speaker 5: they go down because they went up too much. Typically 78 00:04:08,320 --> 00:04:11,120 Speaker 5: that's less so the case in things like gold, but 79 00:04:11,240 --> 00:04:14,200 Speaker 5: particularly most notably the lasting commodities. So here's what I'm 80 00:04:14,200 --> 00:04:17,720 Speaker 5: really worried about. If CRUILL continues lower likeness, which I expect, 81 00:04:17,760 --> 00:04:19,839 Speaker 5: and we just get a little backup in the stock market, 82 00:04:20,120 --> 00:04:25,160 Speaker 5: that's a pretty significant post inflation deflationary force, which is 83 00:04:25,279 --> 00:04:27,360 Speaker 5: a matter of time. And just one example of that, 84 00:04:27,360 --> 00:04:29,640 Speaker 5: that's what's happening in China. That ten you note neiled 85 00:04:29,680 --> 00:04:32,279 Speaker 5: in China is about one point eighty three percent versus 86 00:04:32,360 --> 00:04:34,040 Speaker 5: above four percent in the US. 87 00:04:34,400 --> 00:04:37,720 Speaker 2: What about the energy demand from artificial intelligence? Does that 88 00:04:37,800 --> 00:04:40,400 Speaker 2: play anything into the oil market right away? 89 00:04:40,440 --> 00:04:42,560 Speaker 5: Start with silver and copper. When you think of energy 90 00:04:42,600 --> 00:04:48,080 Speaker 5: demand electricity, transmission and conductivity, the two top commodities for 91 00:04:48,120 --> 00:04:50,320 Speaker 5: that in terms of metals are silver and copper. And 92 00:04:50,360 --> 00:04:52,520 Speaker 5: guess what, there's some of the best performing commodities this year, 93 00:04:52,600 --> 00:04:55,560 Speaker 5: but for different reasons. So not so much worried. And 94 00:04:55,640 --> 00:04:58,400 Speaker 5: if anything for electricity, man, you tilt over to natural gas. 95 00:04:58,600 --> 00:05:01,120 Speaker 5: Natural gas is back down below four in the year, 96 00:05:01,120 --> 00:05:03,800 Speaker 5: the highest five point five, and almost every time it 97 00:05:03,800 --> 00:05:06,640 Speaker 5: gets above five, it goes back back down below four. 98 00:05:06,839 --> 00:05:09,920 Speaker 5: Why woulds the elasticity is supplying us natural gas is 99 00:05:09,960 --> 00:05:13,640 Speaker 5: one of the most significant forces in all energy particular 100 00:05:13,680 --> 00:05:16,320 Speaker 5: in natural gases. So oil is the key thing, but 101 00:05:16,440 --> 00:05:19,719 Speaker 5: oil is being replaced by technology, and that part of 102 00:05:19,720 --> 00:05:24,080 Speaker 5: that technology is what's keeping bid things like copper and silver. 103 00:05:24,800 --> 00:05:26,560 Speaker 5: But the key thing also remember a copper It was 104 00:05:26,560 --> 00:05:28,760 Speaker 5: a supply constrained year, and I think copper is the 105 00:05:28,880 --> 00:05:31,440 Speaker 5: number one wild card next year. And if it goes down, 106 00:05:31,480 --> 00:05:34,400 Speaker 5: which I'm afraid it will, like the stock market, that's 107 00:05:34,680 --> 00:05:37,719 Speaker 5: a sign of deflationary dominost of falling on the back 108 00:05:37,720 --> 00:05:40,599 Speaker 5: of crude oil and iron ore and China and bond 109 00:05:40,640 --> 00:05:42,200 Speaker 5: yields in China. So the bottom line is you have 110 00:05:42,200 --> 00:05:44,000 Speaker 5: to tilt over to China. Can they come out of this? 111 00:05:44,480 --> 00:05:48,640 Speaker 5: Meyle's paired with the significant demand pull economic recovery, facing 112 00:05:48,839 --> 00:05:51,160 Speaker 5: tariffs from the rest of the world, not the US, 113 00:05:51,200 --> 00:05:52,760 Speaker 5: I think that's unlikely next year. 114 00:05:53,080 --> 00:05:57,320 Speaker 2: So given all these dynamics, Mike, what do these moves 115 00:05:57,360 --> 00:06:00,480 Speaker 2: and commodities suggest to you about the economic outlook for 116 00:06:00,520 --> 00:06:01,479 Speaker 2: twenty twenty six. 117 00:06:01,920 --> 00:06:06,599 Speaker 5: It's the velocity to this rally in gold being the 118 00:06:06,680 --> 00:06:10,279 Speaker 5: highest in only almost fifty years, and certainly versus crudell 119 00:06:10,440 --> 00:06:14,760 Speaker 5: is a clear global recessionary trajectory. The key question is 120 00:06:14,800 --> 00:06:17,400 Speaker 5: what stops it next? Year. Now gold is clearly stretched 121 00:06:17,480 --> 00:06:20,600 Speaker 5: versus almost everything, with exception the US stock market, and 122 00:06:20,600 --> 00:06:22,799 Speaker 5: that you would expect when we have the paradigm shift 123 00:06:22,839 --> 00:06:26,880 Speaker 5: of the world's most demand pull significant importing country putting 124 00:06:26,960 --> 00:06:29,680 Speaker 5: a kabash on the rest of the world trying to 125 00:06:29,760 --> 00:06:32,120 Speaker 5: export to the US most only China. Now the rest 126 00:06:32,160 --> 00:06:34,479 Speaker 5: of the world's actually pushing back on China exports because 127 00:06:34,520 --> 00:06:39,039 Speaker 5: they're exporting deflation everywhere. So to me, the signals cirt commodities. 128 00:06:39,080 --> 00:06:43,520 Speaker 5: We're in a global deflationary trajectory and the entire pillar 129 00:06:43,600 --> 00:06:46,080 Speaker 5: of the whole world is resting on the US stock market. 130 00:06:46,160 --> 00:06:48,440 Speaker 5: It's a little bit less so, but still the highest 131 00:06:48,520 --> 00:06:51,440 Speaker 5: valuations versus most rest of the world. Notes look at 132 00:06:51,440 --> 00:06:55,760 Speaker 5: the MSCI World x US index and versus GDP in 133 00:06:56,000 --> 00:06:59,760 Speaker 5: almost a life and certainly almost one hundred years. So 134 00:07:00,120 --> 00:07:01,920 Speaker 5: that to me is the risk that we killed lower 135 00:07:02,200 --> 00:07:04,080 Speaker 5: and just a little pick up in volatility. So I'll 136 00:07:04,160 --> 00:07:06,839 Speaker 5: end with this, We've never had a rally in goal 137 00:07:06,960 --> 00:07:09,800 Speaker 5: with this velosophy. Like I mentioned, it's almost ninety percent 138 00:07:09,800 --> 00:07:13,000 Speaker 5: of its sixty month moving average with volatility and the 139 00:07:13,000 --> 00:07:15,120 Speaker 5: stock market this low, so one hundred and twenty day 140 00:07:15,160 --> 00:07:18,440 Speaker 5: volatilly in the stock market streets around eleven percent. The 141 00:07:18,480 --> 00:07:20,840 Speaker 5: average is usually seventeen percent. So I'll make a prediction 142 00:07:20,880 --> 00:07:23,440 Speaker 5: we're going to rally back up and get the normalizations 143 00:07:23,480 --> 00:07:25,960 Speaker 5: stock market volatilly next year, and that might be that 144 00:07:26,000 --> 00:07:28,600 Speaker 5: deflationary signals you're getting from commodities. But that's kind of 145 00:07:28,600 --> 00:07:30,720 Speaker 5: thing I'm really worried about in mis main Frighten, We've 146 00:07:30,720 --> 00:07:34,080 Speaker 5: never rallied this much in gold without stock market volatilly 147 00:07:34,120 --> 00:07:34,520 Speaker 5: going up. 148 00:07:34,720 --> 00:07:37,400 Speaker 2: All right, Well, we'll see how that prediction shakes out. 149 00:07:37,480 --> 00:07:40,440 Speaker 2: Thanks for this, Mike, and up happy new year once again. 150 00:07:40,520 --> 00:07:45,320 Speaker 2: That's Mike mcglow, senior commodity strategist for Bloomberg Intelligence. We 151 00:07:45,400 --> 00:07:48,760 Speaker 2: move next to the housing sector. In twenty twenty five, 152 00:07:48,880 --> 00:07:52,000 Speaker 2: it experienced a significant cool down with high mortgage rates 153 00:07:52,000 --> 00:07:55,120 Speaker 2: and home prices still lingering. So what can we expect 154 00:07:55,160 --> 00:07:58,520 Speaker 2: from real estate this year? Let's bring in Bloomberg Intelligence 155 00:07:58,600 --> 00:08:02,520 Speaker 2: US home building analyst. You're reading for some answers on that, Drew. 156 00:08:02,640 --> 00:08:05,200 Speaker 2: I think a lot of home buyers are hoping for 157 00:08:05,440 --> 00:08:08,280 Speaker 2: lower interest rates in twenty twenty six. Could could that 158 00:08:08,360 --> 00:08:10,440 Speaker 2: spark kind of a turnaround in the housing sector. 159 00:08:10,720 --> 00:08:12,680 Speaker 6: Yeah, you're right, there's there's been a lot of optimism 160 00:08:12,720 --> 00:08:15,560 Speaker 6: that the pullback in rates to that low six percent range, 161 00:08:16,200 --> 00:08:19,320 Speaker 6: you know, would help affordability and spur a lot more activity. 162 00:08:19,920 --> 00:08:22,240 Speaker 6: What's interesting, and what we've heard from some of the 163 00:08:22,280 --> 00:08:25,280 Speaker 6: builders is that there hasn't been a material increase in 164 00:08:25,360 --> 00:08:27,840 Speaker 6: demand since rates pulled back, and I think, you know, 165 00:08:27,880 --> 00:08:30,400 Speaker 6: one of the problems is that there's just a lot 166 00:08:30,480 --> 00:08:34,240 Speaker 6: more uncertainty out there in the market. There's concerns over 167 00:08:34,280 --> 00:08:37,640 Speaker 6: the general direction of the economy, more concerns about the 168 00:08:37,679 --> 00:08:41,400 Speaker 6: outlook for the labor market. So people are putting off 169 00:08:41,400 --> 00:08:43,520 Speaker 6: these big discretionary decisions. 170 00:08:44,480 --> 00:08:45,240 Speaker 7: You know, when we talk. 171 00:08:45,080 --> 00:08:47,240 Speaker 6: About the resale market, you know, we've kind of been 172 00:08:47,240 --> 00:08:50,680 Speaker 6: hovering in that four million annualized pace now. 173 00:08:50,600 --> 00:08:52,960 Speaker 7: For a couple of years. I mean, the market's really 174 00:08:53,000 --> 00:08:53,600 Speaker 7: been frozen. 175 00:08:53,960 --> 00:08:55,600 Speaker 6: But we do think that we'll start to get some 176 00:08:55,679 --> 00:08:59,480 Speaker 6: growth in twenty twenty six, albeit off of that low base. 177 00:09:00,120 --> 00:09:02,199 Speaker 6: You know, we'll have more inventory on the market. As 178 00:09:02,200 --> 00:09:04,400 Speaker 6: long as rates, you know, continue to play nice in 179 00:09:04,400 --> 00:09:07,600 Speaker 6: that low six percent range, we should be able to 180 00:09:07,600 --> 00:09:10,000 Speaker 6: see some growth with prices moderating as well. 181 00:09:10,320 --> 00:09:13,360 Speaker 2: So where do you see prices going specifically, and do 182 00:09:13,400 --> 00:09:16,319 Speaker 2: you think that we're going to see improvement across the 183 00:09:16,320 --> 00:09:19,080 Speaker 2: home building sector. Is it going to be in luxury 184 00:09:19,160 --> 00:09:21,120 Speaker 2: or can it be in sort of the load to 185 00:09:21,200 --> 00:09:22,120 Speaker 2: mid range as well. 186 00:09:22,720 --> 00:09:25,000 Speaker 6: So in terms of prices, I think in the existing 187 00:09:25,080 --> 00:09:27,320 Speaker 6: home market you're going to see a moderation maybe into 188 00:09:27,360 --> 00:09:30,679 Speaker 6: the low single digit range. In the new home market, 189 00:09:30,720 --> 00:09:33,120 Speaker 6: we actually think you're going to see prices net prices 190 00:09:33,160 --> 00:09:36,720 Speaker 6: continue to come down, you know, just because you know, 191 00:09:36,720 --> 00:09:39,360 Speaker 6: builders are shifting their product mixed, they're continuing to lean 192 00:09:39,400 --> 00:09:40,400 Speaker 6: on sales incentives. 193 00:09:41,080 --> 00:09:42,480 Speaker 7: Now, you know, in terms of how. 194 00:09:42,320 --> 00:09:45,280 Speaker 6: We're looking at the new home market next year, from 195 00:09:45,320 --> 00:09:48,000 Speaker 6: a broad industry perspective, we think that the single family 196 00:09:48,040 --> 00:09:50,120 Speaker 6: market is going to remain muted where I mean, we're 197 00:09:50,120 --> 00:09:53,280 Speaker 6: expecting housing starts to be lower in twenty twenty six, 198 00:09:53,880 --> 00:09:56,040 Speaker 6: and it's really a reflection of you know, the soft 199 00:09:56,040 --> 00:09:59,160 Speaker 6: demand environment we've seen as well as the fact that 200 00:09:59,240 --> 00:10:02,160 Speaker 6: inventory level in the new home market are the highest 201 00:10:02,160 --> 00:10:04,160 Speaker 6: they've been in a while. So there's not a lot 202 00:10:04,160 --> 00:10:07,560 Speaker 6: of incentives for the builders to put new product into 203 00:10:07,600 --> 00:10:11,120 Speaker 6: the ground until they work through that specumentory, and I 204 00:10:11,160 --> 00:10:12,240 Speaker 6: think it's going to take time. 205 00:10:12,280 --> 00:10:14,320 Speaker 7: Now, we do think that you could see a modest 206 00:10:14,320 --> 00:10:15,480 Speaker 7: improvement in sales. 207 00:10:16,240 --> 00:10:18,240 Speaker 6: Of course, lower rates certainly help, but that's really a 208 00:10:18,280 --> 00:10:21,720 Speaker 6: reflection of the fact that builders are growing their community counts, 209 00:10:21,760 --> 00:10:25,320 Speaker 6: so it's not necessarily a pickup in sales pace, which 210 00:10:25,520 --> 00:10:28,960 Speaker 6: is similar to the concept that seems for sales. But 211 00:10:29,040 --> 00:10:30,680 Speaker 6: like I said, I think the group's going to continue 212 00:10:30,679 --> 00:10:33,840 Speaker 6: to lean on incentives to support their sales. So we 213 00:10:33,920 --> 00:10:35,680 Speaker 6: do think prices will moderate from here. 214 00:10:36,040 --> 00:10:36,120 Speaker 8: Now. 215 00:10:36,160 --> 00:10:37,840 Speaker 2: A lot of what I'm hearing from you makes it 216 00:10:37,920 --> 00:10:40,480 Speaker 2: sound like for a lot of these new home builders' 217 00:10:40,600 --> 00:10:43,559 Speaker 2: margins are going to continue to be sort of squeezed 218 00:10:43,559 --> 00:10:47,120 Speaker 2: into twenty twenty six. Is that what you're thinking, Yeah, 219 00:10:47,160 --> 00:10:47,520 Speaker 2: you hit. 220 00:10:47,400 --> 00:10:48,920 Speaker 6: The nail right on the head there. I mean, the 221 00:10:49,160 --> 00:10:52,840 Speaker 6: fundamental backdrop for the public builders we think remains challenging. 222 00:10:52,920 --> 00:10:53,880 Speaker 7: In twenty twenty six. 223 00:10:55,080 --> 00:10:57,920 Speaker 6: We're expecting to see further earnings de clients due to 224 00:10:58,640 --> 00:11:02,160 Speaker 6: soft top line growth and as you mentioned, further margin pressures. 225 00:11:02,600 --> 00:11:05,080 Speaker 6: And the reason for this is that many of the 226 00:11:05,080 --> 00:11:08,960 Speaker 6: home builders heading into twenty six will have backlogs that 227 00:11:09,000 --> 00:11:12,920 Speaker 6: are significantly lower, anywhere from ten to forty percent depending 228 00:11:12,960 --> 00:11:15,840 Speaker 6: on the builder. So that's going to put pressure on closings. 229 00:11:16,800 --> 00:11:18,319 Speaker 6: Like I said, there has been a fair amount of 230 00:11:18,360 --> 00:11:21,880 Speaker 6: optimism that the pullback and rates would help, but we 231 00:11:22,000 --> 00:11:26,520 Speaker 6: haven't seen that meaningful turn in demand. And because of that, 232 00:11:26,960 --> 00:11:28,920 Speaker 6: to your point, builders are going to have to continue 233 00:11:28,960 --> 00:11:32,920 Speaker 6: to lean heavily on incentives. We had a recent report 234 00:11:33,080 --> 00:11:36,800 Speaker 6: from the National Association of home Builders which showed that 235 00:11:36,840 --> 00:11:40,880 Speaker 6: the use of sales incentives is the most widespread that 236 00:11:40,920 --> 00:11:44,640 Speaker 6: it's been in the post COVID area. Now that's primarily 237 00:11:44,760 --> 00:11:48,600 Speaker 6: mortgage rate buydowns, which have really hurt builders' margins, but 238 00:11:48,600 --> 00:11:53,600 Speaker 6: we're also starting to see outright based price reductions. So 239 00:11:53,640 --> 00:11:55,360 Speaker 6: those things combined are going to are going to keep 240 00:11:55,360 --> 00:11:56,559 Speaker 6: profits muted it next. 241 00:11:56,440 --> 00:11:59,880 Speaker 2: Year and what could all this mean drew for homebuilders stock. 242 00:12:00,120 --> 00:12:03,080 Speaker 2: It sounds like it could be a pretty challenging environment 243 00:12:03,120 --> 00:12:05,719 Speaker 2: for their valuations in twenty twenty six. 244 00:12:05,960 --> 00:12:10,720 Speaker 7: From a pure valuation perspective. You know, it's not overly compelling. 245 00:12:10,720 --> 00:12:13,320 Speaker 6: There's an old rule of thumb in the industry that 246 00:12:13,360 --> 00:12:15,800 Speaker 6: says you buy the builders at one times book and 247 00:12:15,840 --> 00:12:17,200 Speaker 6: you sell them at two times book. 248 00:12:17,400 --> 00:12:20,040 Speaker 7: You know, that's not to say they've never breached those thresholds. 249 00:12:20,240 --> 00:12:22,319 Speaker 6: So I think you really need to you know, when 250 00:12:22,320 --> 00:12:24,839 Speaker 6: you talk about the stocks you know, kind of split 251 00:12:24,840 --> 00:12:27,080 Speaker 6: it out between the large cap builders and the smaller 252 00:12:27,120 --> 00:12:29,440 Speaker 6: cap builders who are trading at much more of a 253 00:12:29,480 --> 00:12:31,800 Speaker 6: discount than they have historically. 254 00:12:32,320 --> 00:12:32,520 Speaker 7: You know. 255 00:12:32,600 --> 00:12:35,079 Speaker 6: That being said, though, I think there's still a cloud 256 00:12:35,160 --> 00:12:38,800 Speaker 6: of uncertainty over the industry as to whether demand picks up, 257 00:12:38,800 --> 00:12:41,920 Speaker 6: whether housing policy has an impact next year. 258 00:12:41,960 --> 00:12:44,160 Speaker 7: So I do think that there are certainly some headwinds. 259 00:12:44,360 --> 00:12:47,560 Speaker 2: All right, Well, really appreciate this outlook on where the 260 00:12:47,600 --> 00:12:50,480 Speaker 2: housing sector could go in twenty twenty six. Drew, thanks 261 00:12:50,480 --> 00:12:53,559 Speaker 2: again for being with us. That's Drew reading us home 262 00:12:53,559 --> 00:12:57,600 Speaker 2: Building analyst for Bloomberg Intelligence. Coming up on Bloomberg day 263 00:12:57,600 --> 00:13:00,880 Speaker 2: Break weekend, we'll look at the culinary and cultural trends 264 00:13:00,960 --> 00:13:04,280 Speaker 2: in Europe to watch in the year ahead. I'm Nathan Hager, 265 00:13:04,400 --> 00:13:18,320 Speaker 2: and this is Bloomberg. This is Bloomberg Daybreak Weekend, our 266 00:13:18,360 --> 00:13:20,760 Speaker 2: global look ahead at the top stories for investors in 267 00:13:20,800 --> 00:13:23,600 Speaker 2: the coming week. I'm Nathan Hager in Washington. Up later 268 00:13:23,640 --> 00:13:25,319 Speaker 2: in the program, we'll look at what's in store for 269 00:13:25,440 --> 00:13:29,200 Speaker 2: monetary policy in Australia for the year ahead. But first, 270 00:13:29,280 --> 00:13:31,880 Speaker 2: it's been a roller coaster year for the global economy. 271 00:13:32,160 --> 00:13:34,680 Speaker 2: Even amid all that turmoil, though we did find time 272 00:13:34,720 --> 00:13:38,720 Speaker 2: to relax, explore and share a meal. The hospitality industries 273 00:13:38,760 --> 00:13:41,439 Speaker 2: had another challenging year in many places, but there are 274 00:13:41,480 --> 00:13:44,920 Speaker 2: still plenty of dining, travel and cultural highlights to reflect 275 00:13:44,920 --> 00:13:47,840 Speaker 2: on and look forward to. For more on that, let's 276 00:13:47,840 --> 00:13:50,319 Speaker 2: go to Brussels and check in with Bloomberg Daybreak Europe 277 00:13:50,320 --> 00:13:52,400 Speaker 2: anchor Stephen Carroll Nathan. 278 00:13:52,720 --> 00:13:55,160 Speaker 3: The worst of the inflation crisis is behind us in 279 00:13:55,640 --> 00:13:57,880 Speaker 3: the European Central Bank looks to have finished its rate 280 00:13:57,920 --> 00:14:00,400 Speaker 3: cutting cycle, and rates have come down significant leaf from 281 00:14:00,440 --> 00:14:03,240 Speaker 3: their peak in the UK too, but many consumers are 282 00:14:03,240 --> 00:14:05,920 Speaker 3: still feeling squeezed by the higher cost of living In 283 00:14:05,960 --> 00:14:08,800 Speaker 3: the UK. Surveys have shown Brits cutting back on dining 284 00:14:08,840 --> 00:14:11,800 Speaker 3: out in the past year. All of that being said, 285 00:14:11,800 --> 00:14:15,600 Speaker 3: many restauranteurs actually reported an upturn in bookings towards the 286 00:14:15,720 --> 00:14:18,840 Speaker 3: end of the year, showing a continued appetite for experiences 287 00:14:19,280 --> 00:14:21,560 Speaker 3: and a little indulgence as well. To help us unpack 288 00:14:21,600 --> 00:14:24,280 Speaker 3: the latest trends in eating, culture and travel, I'm joined 289 00:14:24,280 --> 00:14:26,880 Speaker 3: by the dream team from Bloomberg Pursuits, our food editor 290 00:14:26,920 --> 00:14:30,680 Speaker 3: Kate Crater and UK correspondent Sarah Rappaport. Great to have 291 00:14:30,760 --> 00:14:32,840 Speaker 3: you Kate, I'm going to start with you. I know 292 00:14:32,880 --> 00:14:35,320 Speaker 3: you've been keenly watching the big trends from food scenes 293 00:14:35,360 --> 00:14:38,200 Speaker 3: globally this year, but from a London point of view 294 00:14:38,200 --> 00:14:40,200 Speaker 3: and from sort of the big business point of view, 295 00:14:40,240 --> 00:14:42,400 Speaker 3: has it been a good year for restaurants in London? 296 00:14:43,280 --> 00:14:45,880 Speaker 9: That's a really good question, and it definitely depends on 297 00:14:45,920 --> 00:14:48,720 Speaker 9: who you ask. I think that some of the big 298 00:14:48,760 --> 00:14:52,160 Speaker 9: recognizable names will tell you that it's been a really 299 00:14:52,200 --> 00:14:55,600 Speaker 9: good year and they haven't seen that much fallout, despite 300 00:14:55,640 --> 00:14:59,880 Speaker 9: as you said, you know, there's continual budget woe news 301 00:15:00,120 --> 00:15:02,360 Speaker 9: and it definitely seemed like it was going to be 302 00:15:02,360 --> 00:15:05,680 Speaker 9: a very unmarry Christmas. So it was it was actually 303 00:15:06,120 --> 00:15:09,040 Speaker 9: like some good news. I love an optimistic headline, and 304 00:15:09,360 --> 00:15:12,160 Speaker 9: it's amazing to know that a place like Hawksmore, the 305 00:15:12,240 --> 00:15:17,479 Speaker 9: fantastic UK British steakhouse chain, they saw like fifteen sixteen 306 00:15:17,520 --> 00:15:21,440 Speaker 9: percent increase in bookings from last year. Will Beckett told 307 00:15:21,440 --> 00:15:25,400 Speaker 9: our own Bloomberg TV team, But I live in South 308 00:15:25,440 --> 00:15:28,080 Speaker 9: London and there's this fantastic little restaurant across the street 309 00:15:28,120 --> 00:15:31,120 Speaker 9: from me called Lagare that I love. Shout out to Lagare, 310 00:15:31,640 --> 00:15:35,120 Speaker 9: and they're having a challenging year, like they were trying 311 00:15:35,120 --> 00:15:38,080 Speaker 9: to decide whether to open the week after Christmas just 312 00:15:38,120 --> 00:15:40,200 Speaker 9: to try and make some money back because they've lost 313 00:15:40,240 --> 00:15:43,120 Speaker 9: a lot of money on booze sales because people have 314 00:15:43,200 --> 00:15:46,600 Speaker 9: cut back on drinking so much. So it's definitely a 315 00:15:46,640 --> 00:15:49,120 Speaker 9: mixed year. But I want to be optimistic and say 316 00:15:49,400 --> 00:15:52,120 Speaker 9: yeah for all the places that have seen an increase 317 00:15:52,160 --> 00:15:52,680 Speaker 9: in sales. 318 00:15:52,920 --> 00:15:55,200 Speaker 3: And if you haven't already guessed, this is a conversation 319 00:15:55,280 --> 00:15:57,000 Speaker 3: with which you may want to be taking notes for 320 00:15:57,080 --> 00:15:59,600 Speaker 3: recommendations for what to do in the future as well. Sarah, 321 00:15:59,640 --> 00:16:01,360 Speaker 3: let's turn to you. In the past year, you've covered 322 00:16:01,400 --> 00:16:04,880 Speaker 3: everything from high end property to top notch travel destinations 323 00:16:04,880 --> 00:16:07,600 Speaker 3: and more as well. What's your reading on where the 324 00:16:07,680 --> 00:16:09,080 Speaker 3: travel industry is now. 325 00:16:09,240 --> 00:16:11,880 Speaker 10: I'd had a few years after the pandemic where everyone 326 00:16:12,240 --> 00:16:14,600 Speaker 10: was doing the whole revenge travel thing. People didn't care 327 00:16:14,640 --> 00:16:17,080 Speaker 10: how much money they were spending, borders are open, they 328 00:16:17,080 --> 00:16:19,080 Speaker 10: were just wanting to go out and you know, do 329 00:16:19,120 --> 00:16:21,040 Speaker 10: the Yolo vibes have a good time, right, So they 330 00:16:21,080 --> 00:16:23,880 Speaker 10: didn't have to try too hard to really differentiate themselves 331 00:16:24,000 --> 00:16:26,600 Speaker 10: in those first few years after the pandemic. But things 332 00:16:26,600 --> 00:16:29,240 Speaker 10: are changing now. Situation is getting a little bit harder, 333 00:16:29,440 --> 00:16:31,720 Speaker 10: and at the top end, at the ultra luxury end, 334 00:16:31,720 --> 00:16:33,680 Speaker 10: things are doing all right. The meddal is a little 335 00:16:33,720 --> 00:16:35,680 Speaker 10: bit more squeezed. So that's where we are now, and 336 00:16:35,720 --> 00:16:38,640 Speaker 10: that people are having to really decide more about their 337 00:16:38,640 --> 00:16:41,240 Speaker 10: budgets how much they wanted to spend on travel, Whereas 338 00:16:41,280 --> 00:16:43,600 Speaker 10: before twenty twenty one twenty two, like put it on 339 00:16:43,640 --> 00:16:46,000 Speaker 10: the credit card, we want to go somewhere. Now things 340 00:16:46,000 --> 00:16:47,440 Speaker 10: are a little bit different. 341 00:16:47,840 --> 00:16:50,120 Speaker 3: Okay, and that's I suppose making it everyone a little 342 00:16:50,160 --> 00:16:52,560 Speaker 3: bit more discerning too, and how they're putting forward their 343 00:16:52,600 --> 00:16:55,600 Speaker 3: offshings as well. Let's talk a bit about highlights of 344 00:16:55,640 --> 00:16:58,960 Speaker 3: the year then, Kate, what meals have really impressed you 345 00:16:59,280 --> 00:16:59,960 Speaker 3: in the past year. 346 00:17:01,080 --> 00:17:03,800 Speaker 9: It's been an interesting year. London was like a bit 347 00:17:04,000 --> 00:17:07,159 Speaker 9: on the quiet side in the restaurant scene, relatively speaking, 348 00:17:07,160 --> 00:17:07,680 Speaker 9: because when. 349 00:17:07,600 --> 00:17:09,080 Speaker 10: It's good, it's so great. 350 00:17:09,400 --> 00:17:12,000 Speaker 9: But if Sarah was saying about travel, I think that 351 00:17:12,080 --> 00:17:14,919 Speaker 9: echoes in the restaurant industry. One restaurant that opened that 352 00:17:15,000 --> 00:17:17,399 Speaker 9: I absolutely loved, maybe because I'm a New Yorker is 353 00:17:17,400 --> 00:17:21,880 Speaker 9: called One Club Row. It's in Shoreditch and it's actually 354 00:17:21,920 --> 00:17:23,640 Speaker 9: like a sort of two level It's one of those 355 00:17:23,640 --> 00:17:27,760 Speaker 9: places that occupies an old pub, and old pubs are 356 00:17:27,840 --> 00:17:31,399 Speaker 9: so beautiful and smart restaurants. Heurs know that on the 357 00:17:31,400 --> 00:17:33,720 Speaker 9: first floor level is a place called One Club Row 358 00:17:33,760 --> 00:17:36,080 Speaker 9: and it's got these New York vibes. It's a bit 359 00:17:36,080 --> 00:17:39,440 Speaker 9: of a steakhouse. They have a burger that's very good burger. 360 00:17:39,720 --> 00:17:44,000 Speaker 9: They have a jamming martini menu. Martini's like have been 361 00:17:44,040 --> 00:17:47,600 Speaker 9: a big trend this year. Everybody has martini menu. 362 00:17:47,760 --> 00:17:47,840 Speaker 10: Like. 363 00:17:47,840 --> 00:17:50,040 Speaker 9: If you hear the people aren't drinking, just look around 364 00:17:50,040 --> 00:17:53,760 Speaker 9: at all the martini menus and think again. So a 365 00:17:53,920 --> 00:17:57,399 Speaker 9: huge shout out to One Club Row. Borough markets just 366 00:17:57,480 --> 00:18:01,479 Speaker 9: also continue to be fantastic. And then West notting Hills 367 00:18:01,520 --> 00:18:04,240 Speaker 9: like having a very good year restaurant wise, and a 368 00:18:04,280 --> 00:18:07,160 Speaker 9: place called Dove from a very great chef, Jackson Boxer 369 00:18:07,240 --> 00:18:09,560 Speaker 9: opened and they too have a burger that I think 370 00:18:09,640 --> 00:18:12,439 Speaker 9: is one of the best burgers I can remember having, 371 00:18:12,680 --> 00:18:14,680 Speaker 9: and I've eaten a lot of burgers I see. 372 00:18:14,720 --> 00:18:16,800 Speaker 3: I like the idea of a staple doing well as well. 373 00:18:16,960 --> 00:18:18,399 Speaker 3: One of the pieces that I really enjoyed that you 374 00:18:18,440 --> 00:18:20,359 Speaker 3: wrote in the past year was about the question of 375 00:18:21,080 --> 00:18:24,159 Speaker 3: experience and it not perhaps just being the food that 376 00:18:24,240 --> 00:18:27,520 Speaker 3: makes a great meal, with your great experience and with 377 00:18:27,560 --> 00:18:30,680 Speaker 3: your expert hat on, Kate, what is the architecture of 378 00:18:30,720 --> 00:18:33,840 Speaker 3: a great meal? What impresses you when you're going out 379 00:18:33,880 --> 00:18:34,200 Speaker 3: to eat? 380 00:18:34,520 --> 00:18:36,919 Speaker 9: I love that question, Steven. Yeah, no, I got to 381 00:18:36,960 --> 00:18:39,200 Speaker 9: write about this was based on a New York meal. 382 00:18:39,320 --> 00:18:42,879 Speaker 9: But I'm wondering how much food matters anymore in this 383 00:18:42,920 --> 00:18:46,440 Speaker 9: world of experience. And Sarah knows that from travel too. 384 00:18:47,000 --> 00:18:48,879 Speaker 9: I think when you go somewhere, you can have a 385 00:18:48,920 --> 00:18:52,280 Speaker 9: great meal, but if the service isn't good, and or 386 00:18:52,320 --> 00:18:55,040 Speaker 9: if there's not something that captures your attention or makes 387 00:18:55,080 --> 00:18:58,359 Speaker 9: you feel like, wow, I'm really here, like this is something. 388 00:18:58,400 --> 00:19:00,600 Speaker 9: This is why I'm paying this money, because it's not 389 00:19:00,680 --> 00:19:02,439 Speaker 9: something I can do at home. It's not something I 390 00:19:02,480 --> 00:19:06,160 Speaker 9: can do anywhere else. It can be something as simple 391 00:19:06,440 --> 00:19:09,120 Speaker 9: as a good trolley. I mean, trolleys have rolled around 392 00:19:09,160 --> 00:19:11,680 Speaker 9: dining rooms for a really long time. But if someone 393 00:19:11,720 --> 00:19:15,280 Speaker 9: does a really good job of parking that trolley at 394 00:19:15,280 --> 00:19:18,359 Speaker 9: your table and then serving you some food in a 395 00:19:18,400 --> 00:19:21,000 Speaker 9: way that makes you feel special and makes you feel 396 00:19:21,040 --> 00:19:24,240 Speaker 9: like this is a singular experience, then it's going to 397 00:19:24,280 --> 00:19:26,280 Speaker 9: stick in your mind. It's going to play big on 398 00:19:26,320 --> 00:19:29,520 Speaker 9: your social media, like It's just such a winning trend 399 00:19:29,560 --> 00:19:31,720 Speaker 9: on so many ways. And someone who said that for 400 00:19:31,720 --> 00:19:34,480 Speaker 9: a very long time is Danny Meyer, who's the founder 401 00:19:34,520 --> 00:19:39,480 Speaker 9: of Union Square Hospitality in Shakeshack, and he's a hospitality genius, 402 00:19:39,560 --> 00:19:42,120 Speaker 9: and he's been saying for years that you can have 403 00:19:42,800 --> 00:19:45,880 Speaker 9: bad food and a good experience and you're more likely 404 00:19:45,960 --> 00:19:49,280 Speaker 9: to come back than if you have good food but 405 00:19:49,440 --> 00:19:53,280 Speaker 9: bad service and not a great experience. So everyone, remember that. 406 00:19:53,600 --> 00:19:55,520 Speaker 3: The trolley thing is so true. As soon as you 407 00:19:55,520 --> 00:19:57,760 Speaker 3: said it, I could picture two or three for some reason, 408 00:19:57,760 --> 00:20:00,560 Speaker 3: old cheese related. We'll come back to that later. Remember 409 00:20:00,640 --> 00:20:04,320 Speaker 3: is standing out for me as well? Sarah on the question, 410 00:20:04,400 --> 00:20:07,199 Speaker 3: let's start with travel, what's been the standout destination for 411 00:20:07,280 --> 00:20:08,520 Speaker 3: you and your recent reporting. 412 00:20:08,840 --> 00:20:11,040 Speaker 10: Well, it's not so much a destination as a way 413 00:20:11,080 --> 00:20:14,320 Speaker 10: to get there. This year I got really into luxury trains, Stephen. 414 00:20:14,760 --> 00:20:17,080 Speaker 10: I took two luxury trains. I went on the Royal 415 00:20:17,119 --> 00:20:20,880 Speaker 10: scotsmand which operated by Belmond, which was just absolutely incredible 416 00:20:20,920 --> 00:20:22,639 Speaker 10: and took me through Scotland, which I've been to a 417 00:20:22,640 --> 00:20:25,760 Speaker 10: few times before, but never through my own train carriage. 418 00:20:25,800 --> 00:20:28,240 Speaker 10: Like sleeping on it, can you know the other passengers 419 00:20:28,480 --> 00:20:30,920 Speaker 10: not having any cell service. It was a real throwback 420 00:20:30,960 --> 00:20:33,760 Speaker 10: to like an older way of traveling, something really glamorous 421 00:20:33,800 --> 00:20:36,040 Speaker 10: and really fun. And I also took the new orient 422 00:20:36,080 --> 00:20:38,800 Speaker 10: Express train through Italy with just launched last year, and 423 00:20:38,800 --> 00:20:41,680 Speaker 10: these are very expensive. But there are also experiences that 424 00:20:42,000 --> 00:20:45,520 Speaker 10: photograph really well, so bucket list things that just make 425 00:20:45,600 --> 00:20:49,040 Speaker 10: you see destinations that you know differently through the windows 426 00:20:49,200 --> 00:20:50,200 Speaker 10: of a train carriage. 427 00:20:50,440 --> 00:20:52,600 Speaker 3: Sarah, if I can also mention you did get married 428 00:20:52,720 --> 00:20:55,119 Speaker 3: this year, I did, but I did see you also 429 00:20:55,200 --> 00:20:58,879 Speaker 3: reporting on the wedding industry, So first of all, congratulations 430 00:20:58,920 --> 00:21:01,360 Speaker 3: and secondly, watched you learned about the wedding industry. 431 00:21:01,560 --> 00:21:02,960 Speaker 10: They say, right about what you know? 432 00:21:03,080 --> 00:21:03,280 Speaker 6: Right? 433 00:21:03,400 --> 00:21:06,240 Speaker 10: I got married in September in Athens in the Riviera 434 00:21:06,320 --> 00:21:10,520 Speaker 10: in Greece on the seafront. Is a beautiful day I learned. 435 00:21:11,040 --> 00:21:13,000 Speaker 10: Top tip, things are gonna cost more than you think 436 00:21:13,000 --> 00:21:16,880 Speaker 10: they will. Maybe people know this, weddings are expensive, but yeah, 437 00:21:17,040 --> 00:21:19,239 Speaker 10: just have the day you want is what what I'd 438 00:21:19,280 --> 00:21:21,080 Speaker 10: say is important and figure out what matters to you. 439 00:21:21,520 --> 00:21:23,280 Speaker 10: For me, I wanted to have a party that went 440 00:21:23,320 --> 00:21:24,720 Speaker 10: on till four in the morning, which meant that I 441 00:21:24,720 --> 00:21:26,639 Speaker 10: couldn't do that in the UK really, given all the 442 00:21:26,720 --> 00:21:29,960 Speaker 10: rules and regulations, and I wanted really great food. So, 443 00:21:30,200 --> 00:21:32,240 Speaker 10: like Kate, I love food. It's important to me to 444 00:21:32,240 --> 00:21:34,359 Speaker 10: feed my friends and family. Well, so we had it 445 00:21:34,359 --> 00:21:34,800 Speaker 10: in Greece. 446 00:21:35,359 --> 00:21:38,120 Speaker 3: Okay, well I love those as top tips. Let's turn 447 00:21:38,160 --> 00:21:41,280 Speaker 3: to some recommendations then for the year ahead, Kate, what 448 00:21:41,359 --> 00:21:44,480 Speaker 3: are you looking forward to in twenty twenty six? Any 449 00:21:44,640 --> 00:21:46,200 Speaker 3: exciting openings or trends. 450 00:21:46,520 --> 00:21:49,000 Speaker 9: It's hard to see because I feel like the sands 451 00:21:49,080 --> 00:21:52,200 Speaker 9: keep shifting, but because I'm here to say some things 452 00:21:52,200 --> 00:21:55,040 Speaker 9: that I'm excited about. As we were just talking about, 453 00:21:55,160 --> 00:21:57,639 Speaker 9: like pubs which have been under pressure in a lot 454 00:21:57,680 --> 00:22:00,639 Speaker 9: of places. Some of them were beautiful and smart operators 455 00:22:00,880 --> 00:22:04,119 Speaker 9: are taking them over. The public House group is famously 456 00:22:04,160 --> 00:22:07,760 Speaker 9: doing it, and notting Hill at the Fat Badger, et cetera, 457 00:22:07,920 --> 00:22:12,680 Speaker 9: the Pelican, and so this year Simpson's Tavern is being 458 00:22:12,720 --> 00:22:16,240 Speaker 9: taken over by the group behind Cloth Restaurant. If you 459 00:22:16,320 --> 00:22:19,720 Speaker 9: haven't been, it's in the city. It's a fantastic little 460 00:22:19,760 --> 00:22:24,040 Speaker 9: restaurant and it's sort of British food with great wines. 461 00:22:24,359 --> 00:22:26,800 Speaker 9: And now they're taking over one of the storied properties 462 00:22:26,800 --> 00:22:30,919 Speaker 9: that's also in the city, conveniently close to Bloomberg Offices. 463 00:22:31,359 --> 00:22:34,120 Speaker 9: That's going to be really exciting. I think that's a huge, 464 00:22:34,160 --> 00:22:37,600 Speaker 9: big opening. Also, Jeremy King, who's one of the legendary 465 00:22:37,640 --> 00:22:40,760 Speaker 9: restaurants and Our Time, is finally going to reopen Simpsons 466 00:22:40,760 --> 00:22:44,600 Speaker 9: on the Strand, speaking of throwbacks and trolleys and stuff 467 00:22:44,640 --> 00:22:47,720 Speaker 9: like that, and so that's those are places where I 468 00:22:47,800 --> 00:22:51,000 Speaker 9: plan on spending a lot of time. There's also, as 469 00:22:51,000 --> 00:22:54,679 Speaker 9: I'm saying right now, of really fun Vietnamese food trend 470 00:22:54,680 --> 00:22:56,040 Speaker 9: coming and that food. 471 00:22:55,840 --> 00:22:56,639 Speaker 10: Is just delicious. 472 00:22:56,680 --> 00:22:58,800 Speaker 9: It's fresh, it's the kind of thing that relies on 473 00:22:58,840 --> 00:23:03,240 Speaker 9: a lot of herbs, restorative. This awesome restaurant just opened 474 00:23:03,280 --> 00:23:07,640 Speaker 9: on Paradise Row often bethnal Green, called Tempo. The chef 475 00:23:07,680 --> 00:23:09,880 Speaker 9: has been doing pop ups. He used to be in finance, 476 00:23:09,920 --> 00:23:12,679 Speaker 9: but now his time is much better spent cooking in 477 00:23:12,720 --> 00:23:15,840 Speaker 9: the kitchen and he makes just this shrimp toast that's 478 00:23:15,880 --> 00:23:17,960 Speaker 9: extraordinary And it just opens. 479 00:23:17,960 --> 00:23:20,560 Speaker 3: So when you go there, Sarah, when people ask you 480 00:23:20,600 --> 00:23:22,800 Speaker 3: what they need to see in the next year, over 481 00:23:23,160 --> 00:23:26,520 Speaker 3: the festive period, what will you be recommending, what highlights 482 00:23:26,520 --> 00:23:27,439 Speaker 3: are you looking forward to. 483 00:23:28,080 --> 00:23:31,040 Speaker 10: Well, I'm really excited about Cynthia Arriva, who we all 484 00:23:31,040 --> 00:23:33,040 Speaker 10: know from Wicked, but she's also British and was the 485 00:23:33,359 --> 00:23:35,919 Speaker 10: first came to people know her as a stage actress. 486 00:23:36,040 --> 00:23:38,840 Speaker 10: Is back on stage in Dracula. So it's one woman 487 00:23:38,960 --> 00:23:41,359 Speaker 10: show by Kip Williams, who did the Dorian Gray with 488 00:23:41,440 --> 00:23:44,239 Speaker 10: Sarah Snook which won all these Tony's and Olivier's and 489 00:23:44,280 --> 00:23:46,920 Speaker 10: that starts in February, and I'm really excited about about 490 00:23:46,920 --> 00:23:49,719 Speaker 10: seeing that because she's just a sensational talent on stage. 491 00:23:49,760 --> 00:23:52,960 Speaker 10: She's yeah, she's amazing. There's a new Tracey Emmon show. 492 00:23:53,000 --> 00:23:55,840 Speaker 10: It's a full retrospective of her career. It has a 493 00:23:55,840 --> 00:23:58,960 Speaker 10: famous bad there's ninety other pieces at the Tate Modern 494 00:23:59,000 --> 00:24:00,920 Speaker 10: from the end of February as well, so it'll be 495 00:24:00,960 --> 00:24:02,719 Speaker 10: a good one to take people to who're visiting. 496 00:24:03,000 --> 00:24:04,800 Speaker 3: And just on the question of travel for you both, 497 00:24:04,800 --> 00:24:06,560 Speaker 3: if we're thinking a little bit further ahead into the 498 00:24:06,600 --> 00:24:09,440 Speaker 3: year and destinations of where we want to go, where 499 00:24:09,480 --> 00:24:12,920 Speaker 3: will you be recommending Sarah in terms of a travel destination. 500 00:24:12,920 --> 00:24:15,320 Speaker 10: Start jinning us having a moment, a lot of luxury 501 00:24:15,320 --> 00:24:18,560 Speaker 10: new hotels opening, there's a new Beltmone, a new Mandan Oriental. 502 00:24:18,880 --> 00:24:20,600 Speaker 10: But it's also a great part of Italy that just 503 00:24:20,640 --> 00:24:24,600 Speaker 10: doesn't get enough attention, beautiful beaches, amazing food. It's also 504 00:24:24,640 --> 00:24:27,000 Speaker 10: known as a blue zone. People live longer because of 505 00:24:27,040 --> 00:24:29,760 Speaker 10: the Mediterranean diet, so you know you can live longer 506 00:24:29,800 --> 00:24:32,160 Speaker 10: on your next holiday and enjoy great Italian food, some 507 00:24:32,320 --> 00:24:33,680 Speaker 10: nice red wine on the beach. 508 00:24:34,160 --> 00:24:37,200 Speaker 3: Any dining destinations Kate that you'll be very keen to 509 00:24:37,280 --> 00:24:38,640 Speaker 3: check out in twenty twenty six. 510 00:24:39,000 --> 00:24:41,159 Speaker 9: I mean I want to go everywhere, of course, because 511 00:24:41,160 --> 00:24:43,800 Speaker 9: this is a kind of time when food like you 512 00:24:43,800 --> 00:24:47,159 Speaker 9: can find something fun almost everywhere everywhere you go, not 513 00:24:47,280 --> 00:24:50,600 Speaker 9: almost everywhere you go. I got to go there last year, 514 00:24:50,640 --> 00:24:53,359 Speaker 9: and I actually cannot wait to go back. Taiwan, and 515 00:24:53,400 --> 00:24:58,880 Speaker 9: specifically Taipei is just booming. It's the place that bubble 516 00:24:58,920 --> 00:25:02,240 Speaker 9: Tea was create, so everybody knows it for it's very 517 00:25:02,280 --> 00:25:06,320 Speaker 9: fun drink. It's also the soup dumpling Kings didn't ty 518 00:25:06,440 --> 00:25:09,040 Speaker 9: fun come from there, so they know their way around 519 00:25:09,119 --> 00:25:12,920 Speaker 9: some really good dishes. But they have some cool hotels 520 00:25:12,920 --> 00:25:16,159 Speaker 9: have been opening. The Capella open this beautiful hotel, and 521 00:25:16,200 --> 00:25:18,359 Speaker 9: now it's a really good time to explore their food 522 00:25:18,440 --> 00:25:21,880 Speaker 9: because they mix up this sort of sultry old school 523 00:25:22,160 --> 00:25:26,680 Speaker 9: kind of cooking and food stalls with some really modern smart, 524 00:25:26,720 --> 00:25:31,639 Speaker 9: innovative restaurants, and as happens in some of these places, 525 00:25:31,720 --> 00:25:33,960 Speaker 9: it's if you go to a two star, three star restaurant, 526 00:25:34,280 --> 00:25:36,720 Speaker 9: it's cheaper than if you try to do it in 527 00:25:36,960 --> 00:25:39,800 Speaker 9: a place like Europe, you know, or certainly the US, 528 00:25:40,320 --> 00:25:43,800 Speaker 9: it's definitely a couple hundred dollars cheaper. So it's great 529 00:25:43,840 --> 00:25:46,400 Speaker 9: to go to a city like that and experience cuisine 530 00:25:46,440 --> 00:25:47,240 Speaker 9: from high to low. 531 00:25:47,800 --> 00:25:50,119 Speaker 3: Plenty two inspiers for the year ahead. Thank you to 532 00:25:50,160 --> 00:25:53,520 Speaker 3: you both our Bloomberg Pursuits UK correspondent Sarah Rappaport and 533 00:25:53,600 --> 00:25:57,000 Speaker 3: food editor Cake Crater. I'm Stephen Carolyn Brussels. You can 534 00:25:57,040 --> 00:26:00,359 Speaker 3: catch us every weekday morning for Bloomberg Daybreak Europe, starting 535 00:26:00,400 --> 00:26:02,840 Speaker 3: at six am in London, seven am in Brussels and 536 00:26:02,920 --> 00:26:04,400 Speaker 3: one am on Wall Streets. 537 00:26:04,520 --> 00:26:08,359 Speaker 2: Nathan, Thanks Steven. And coming up on Bloomberg day Break Weekend, 538 00:26:08,440 --> 00:26:11,160 Speaker 2: we look ahead to how interest rates in Australia could 539 00:26:11,160 --> 00:26:14,400 Speaker 2: be impacted in twenty twenty six. I'm Nathan Hager, and 540 00:26:14,480 --> 00:26:29,520 Speaker 2: this is Bloomberg. This is Bloomberg Daybreak Weekend, our global 541 00:26:29,520 --> 00:26:31,679 Speaker 2: look ahead of the top stories for investors in the 542 00:26:31,680 --> 00:26:35,240 Speaker 2: coming week. I'm Nathan Hager in Washington, The Reserve Bank 543 00:26:35,240 --> 00:26:38,720 Speaker 2: of Australia looks set to pivot to interest rate increases 544 00:26:38,880 --> 00:26:40,840 Speaker 2: in the new year. For more on that, let's get 545 00:26:40,840 --> 00:26:45,040 Speaker 2: to Bloomberg's Doug Chrisner, host of the Daybreak Asia podcast. 546 00:26:44,960 --> 00:26:49,159 Speaker 4: Nathan Inflation in Australia has accelerated in the past few months, 547 00:26:49,160 --> 00:26:52,520 Speaker 4: and right now the market suspect there is a chance 548 00:26:52,640 --> 00:26:55,960 Speaker 4: that RBA Governor Michelle Bullock may raise interest rates in 549 00:26:56,000 --> 00:26:59,320 Speaker 4: February of next year. The swaps market right now is 550 00:26:59,400 --> 00:27:02,960 Speaker 4: indicating a one in three probability of a rate hike 551 00:27:03,040 --> 00:27:05,399 Speaker 4: at that time. For a closer look, I'm joined by 552 00:27:05,400 --> 00:27:09,280 Speaker 4: Bloomberg economist James McIntyre, who joins us from our studios 553 00:27:09,400 --> 00:27:13,280 Speaker 4: in Sydney. James, thank you for being here. So at 554 00:27:13,320 --> 00:27:15,960 Speaker 4: the RBA's December meeting, the cash rate, as we know 555 00:27:16,119 --> 00:27:18,840 Speaker 4: was held steady at three point six percent, and some 556 00:27:19,080 --> 00:27:22,119 Speaker 4: in the market may have been somewhat surprised by that. 557 00:27:22,920 --> 00:27:25,320 Speaker 4: We now have the benefit of the minutes from that meeting. 558 00:27:25,400 --> 00:27:27,080 Speaker 4: How would you summarize them? 559 00:27:27,640 --> 00:27:30,919 Speaker 11: It shows that the Central Bank is grappling with a 560 00:27:30,960 --> 00:27:33,680 Speaker 11: bit of an inflation surprise from some of the latest data. 561 00:27:33,760 --> 00:27:37,040 Speaker 11: So we got third quarter CPI data, and Australia now 562 00:27:37,080 --> 00:27:40,600 Speaker 11: has a new monthly CPI that's begun to be released, 563 00:27:40,600 --> 00:27:43,399 Speaker 11: and both of those were a little bit hotter, and 564 00:27:43,440 --> 00:27:45,960 Speaker 11: it did suggest on the monthly one that it's going 565 00:27:46,040 --> 00:27:47,639 Speaker 11: to take the RBS some time to get used to 566 00:27:47,640 --> 00:27:50,240 Speaker 11: this data. But their initial read was that it could 567 00:27:50,240 --> 00:27:53,280 Speaker 11: be showing some upside risk in December, and so's that's 568 00:27:53,320 --> 00:27:55,639 Speaker 11: really allowed them, with a still hot labor market, to 569 00:27:55,720 --> 00:27:57,480 Speaker 11: kind of take this little bit of a step back 570 00:27:57,480 --> 00:28:00,920 Speaker 11: and go well with East seventy five this point so far. 571 00:28:01,400 --> 00:28:04,680 Speaker 11: But it's showing that the discussion at this meeting was okay, well, 572 00:28:04,680 --> 00:28:06,879 Speaker 11: maybe we might have a bit more inflation being a 573 00:28:06,880 --> 00:28:10,280 Speaker 11: bit more persistent and stickier than we like. What would 574 00:28:10,280 --> 00:28:12,440 Speaker 11: we need to see if we were going to think 575 00:28:12,480 --> 00:28:13,640 Speaker 11: about hiking next year. 576 00:28:13,880 --> 00:28:15,720 Speaker 4: So I'd like to look at the chance of a 577 00:28:15,800 --> 00:28:18,359 Speaker 4: rate hike in February from the point of view of 578 00:28:18,400 --> 00:28:22,080 Speaker 4: the market. We recently spoke with Amy Shea Patrick. She 579 00:28:22,119 --> 00:28:25,120 Speaker 4: has head of Income Strategies at Pandel Group in Sydney. 580 00:28:25,680 --> 00:28:28,760 Speaker 4: Let's listen to Amy react to the idea of a 581 00:28:28,880 --> 00:28:30,119 Speaker 4: rate hike in February. 582 00:28:30,400 --> 00:28:32,840 Speaker 8: I don't feel strong enough to put a trade on 583 00:28:33,080 --> 00:28:36,040 Speaker 8: for February at this stage, but I would argue that 584 00:28:36,200 --> 00:28:40,000 Speaker 8: you know, the IBA is definitely waiting for the trimmean data. 585 00:28:40,560 --> 00:28:43,560 Speaker 8: I would argue that there's even further room to look 586 00:28:44,240 --> 00:28:46,320 Speaker 8: to wait a little bit longer because some of the 587 00:28:46,360 --> 00:28:49,400 Speaker 8: blips that we've been seeing coming through our inflation data. 588 00:28:49,840 --> 00:28:51,440 Speaker 8: When I think about it, it's to do with the 589 00:28:51,440 --> 00:28:54,400 Speaker 8: timing of subsidies being coming off. But when I think 590 00:28:54,440 --> 00:28:57,720 Speaker 8: about the trends in wages that you see in Australia, 591 00:28:57,720 --> 00:29:00,000 Speaker 8: and you know, the reason as essential banker you'd really 592 00:29:00,120 --> 00:29:03,040 Speaker 8: worry about inflation getting out of control again in your 593 00:29:03,080 --> 00:29:05,880 Speaker 8: country is if you see signs of any spiral happening 594 00:29:05,920 --> 00:29:09,600 Speaker 8: right whether it's expectations into actual inflation, whether it's wage 595 00:29:09,600 --> 00:29:13,520 Speaker 8: pressures into actual inflation. None of these things are happening 596 00:29:13,600 --> 00:29:16,640 Speaker 8: in Australia. So if you even you do get a 597 00:29:16,720 --> 00:29:20,680 Speaker 8: let's say one percent from mean course on quarter, there 598 00:29:20,760 --> 00:29:23,320 Speaker 8: might still be room to wait beyond that. If I 599 00:29:23,360 --> 00:29:26,120 Speaker 8: had to put a trade on, I would probably still 600 00:29:26,200 --> 00:29:30,160 Speaker 8: lean against not February the first hike, if indeed any 601 00:29:30,200 --> 00:29:30,960 Speaker 8: hikes next year. 602 00:29:31,000 --> 00:29:33,880 Speaker 4: Amy Shea Patrick from Pendel Group in Sydney back with 603 00:29:33,920 --> 00:29:38,400 Speaker 4: Bloomberg economist James McIntyre. James, does Amy have a point 604 00:29:38,440 --> 00:29:40,640 Speaker 4: that maybe the best option right now is to wait 605 00:29:40,680 --> 00:29:41,120 Speaker 4: and see. 606 00:29:41,320 --> 00:29:43,680 Speaker 11: I think she does. I think Amy is nailed. In 607 00:29:43,960 --> 00:29:46,640 Speaker 11: my view, it's too aggressive to think that the RBA 608 00:29:46,760 --> 00:29:50,440 Speaker 11: is going to do something in February. They still there's 609 00:29:50,480 --> 00:29:52,920 Speaker 11: going to need to be a lot more information for 610 00:29:53,000 --> 00:29:56,080 Speaker 11: them to be able to assess whether inflation is going 611 00:29:56,120 --> 00:30:00,320 Speaker 11: to durably exceed their target band. So the expectation RBA 612 00:30:00,440 --> 00:30:02,479 Speaker 11: has is that inflation is going to have a bit 613 00:30:02,480 --> 00:30:04,440 Speaker 11: of a blip up, and some of it is because 614 00:30:04,480 --> 00:30:07,240 Speaker 11: of these subsidies that have been removed and the timing 615 00:30:07,280 --> 00:30:09,280 Speaker 11: of the delivery of them, and that's going to be 616 00:30:09,280 --> 00:30:11,360 Speaker 11: something that is going to be a part of Australia's 617 00:30:11,360 --> 00:30:14,360 Speaker 11: inflation story for the next nine or twelve months or so. 618 00:30:14,680 --> 00:30:16,680 Speaker 11: Getting used to that for the RBA is going to 619 00:30:16,680 --> 00:30:19,360 Speaker 11: be extremely difficult, and so I think it urgs that 620 00:30:19,520 --> 00:30:22,160 Speaker 11: leads you to err on the side of caution. February 621 00:30:22,200 --> 00:30:24,280 Speaker 11: is too soon. It really does put us in this 622 00:30:24,360 --> 00:30:27,880 Speaker 11: situation for May. Those other factors that Amy raised about 623 00:30:27,960 --> 00:30:31,840 Speaker 11: the labor market, wages and kind of wage driven cost 624 00:30:31,880 --> 00:30:37,440 Speaker 11: pressures and expectations by consumers of wages running away. She's right, 625 00:30:37,640 --> 00:30:39,880 Speaker 11: I don't see that, and not only do I not 626 00:30:39,960 --> 00:30:42,000 Speaker 11: see that now, but my view is that where I 627 00:30:42,040 --> 00:30:44,560 Speaker 11: see that going is that they see a softening in 628 00:30:44,560 --> 00:30:48,280 Speaker 11: the labor market gradually drag in the RBA, not from hikes, 629 00:30:48,320 --> 00:30:51,640 Speaker 11: but actually dragging them back towards easing, and this being 630 00:30:51,680 --> 00:30:54,080 Speaker 11: more of a we'll see you around the middle of 631 00:30:54,120 --> 00:30:56,560 Speaker 11: the year that this was more of a in my view, 632 00:30:56,800 --> 00:30:59,000 Speaker 11: a bit of a mid cycle pause from the RBA 633 00:30:59,400 --> 00:31:03,080 Speaker 11: with them returning to easing monetary policy again. 634 00:31:03,240 --> 00:31:06,920 Speaker 4: So how would you describe, James the overall economic growth 635 00:31:07,000 --> 00:31:08,800 Speaker 4: story in Australia right now? 636 00:31:09,040 --> 00:31:11,480 Speaker 11: It's how I've described it for a long time. It 637 00:31:11,520 --> 00:31:13,680 Speaker 11: looks good on the surface, but once you peer under 638 00:31:13,680 --> 00:31:16,840 Speaker 11: the hood, there's a few things going on that suggests 639 00:31:16,840 --> 00:31:19,800 Speaker 11: that the engine could be running a little bit better. 640 00:31:20,000 --> 00:31:24,200 Speaker 11: We've had surprise upside for migration that's boosted demand. When 641 00:31:24,200 --> 00:31:26,200 Speaker 11: we look at some of the latest GDP data that 642 00:31:26,200 --> 00:31:29,280 Speaker 11: we've got, looks like business investments strong and businesses are 643 00:31:29,280 --> 00:31:31,240 Speaker 11: telling us that they're going to ramp up. But when 644 00:31:31,280 --> 00:31:33,360 Speaker 11: we look at what type of investment they're going to 645 00:31:33,480 --> 00:31:37,080 Speaker 11: ramp up, it's that same AI investment story that is 646 00:31:37,240 --> 00:31:40,160 Speaker 11: echoing all around the world right now. Now, Not only 647 00:31:40,240 --> 00:31:42,960 Speaker 11: is that AI growth going to be in business investment, 648 00:31:43,000 --> 00:31:45,760 Speaker 11: that's not going to give us many enduring long term jobs. 649 00:31:45,840 --> 00:31:48,920 Speaker 11: I don't see many people working in those closed down 650 00:31:49,000 --> 00:31:52,280 Speaker 11: data centers with no lights. But the AI and the 651 00:31:52,320 --> 00:31:55,040 Speaker 11: tech and the data center thing is going to help 652 00:31:55,080 --> 00:31:57,960 Speaker 11: improve productivity and sort of could soften jobs growth for 653 00:31:58,120 --> 00:32:00,200 Speaker 11: a whole range of services sectors. So that's I mean, 654 00:32:00,240 --> 00:32:02,200 Speaker 11: the RBA is going to have to deal with not 655 00:32:02,240 --> 00:32:03,720 Speaker 11: any of the course of this year, but over the 656 00:32:03,800 --> 00:32:05,680 Speaker 11: years ahead and when they're looking on a two to 657 00:32:05,680 --> 00:32:08,760 Speaker 11: three year basis as to when whether they need to 658 00:32:08,800 --> 00:32:11,600 Speaker 11: pull the trigger on any monetary policy. I think as 659 00:32:11,600 --> 00:32:14,160 Speaker 11: we roll through the course of twenty twenty six, we'll 660 00:32:14,200 --> 00:32:16,760 Speaker 11: see more of that softening in the labor market being 661 00:32:16,760 --> 00:32:20,560 Speaker 11: the factor relative to say price pressures, which I don't 662 00:32:20,560 --> 00:32:23,560 Speaker 11: think will be persistent, that labor market data pulling them 663 00:32:23,600 --> 00:32:25,800 Speaker 11: the same way we see it pulling the FED into 664 00:32:25,840 --> 00:32:27,680 Speaker 11: easing again in twenty twenty six. 665 00:32:27,960 --> 00:32:31,080 Speaker 4: When I think of Australia's economy, I think of those 666 00:32:31,280 --> 00:32:35,680 Speaker 4: commodity type industries, mining industries, I think of iron ore 667 00:32:35,760 --> 00:32:39,360 Speaker 4: in particular. How are those industries holding up right now. 668 00:32:39,320 --> 00:32:40,120 Speaker 11: Better than expected. 669 00:32:40,160 --> 00:32:40,360 Speaker 8: Douck. 670 00:32:40,920 --> 00:32:43,520 Speaker 11: You tend to think of iron ore and coal, and 671 00:32:43,560 --> 00:32:46,680 Speaker 11: those have been the two big stories for Australian commodities 672 00:32:46,760 --> 00:32:48,560 Speaker 11: for the better part of the last fifteen years. We 673 00:32:48,640 --> 00:32:52,440 Speaker 11: had a very big LNG investment boom and that's been very. 674 00:32:52,360 --> 00:32:52,880 Speaker 1: Big for us. 675 00:32:52,880 --> 00:32:55,640 Speaker 11: But over the last two to three years it's been 676 00:32:55,760 --> 00:32:59,840 Speaker 11: very very interesting. We've seen lithium surge with that price 677 00:33:00,120 --> 00:33:02,280 Speaker 11: I can now with the price spike in gold, we're 678 00:33:02,320 --> 00:33:06,240 Speaker 11: seeing gold exports. Australia is also the third largest exporter 679 00:33:06,360 --> 00:33:08,520 Speaker 11: of gold in the world, and so this is delivering 680 00:33:08,520 --> 00:33:11,880 Speaker 11: a new river of gold actually in terms of export 681 00:33:11,920 --> 00:33:15,160 Speaker 11: earnings for Australia's economy. And so we've seen the latest 682 00:33:15,280 --> 00:33:17,920 Speaker 11: update from the Office of the Chief Economist in the 683 00:33:17,920 --> 00:33:21,400 Speaker 11: Department of Industry who does our projections for commodities exports, 684 00:33:21,440 --> 00:33:23,920 Speaker 11: and we've seen an upgrade to those again. So it's 685 00:33:23,920 --> 00:33:27,320 Speaker 11: actually a continued export windfall on the commodity side for 686 00:33:27,360 --> 00:33:30,680 Speaker 11: the economy and that's really really good news for the 687 00:33:30,720 --> 00:33:34,280 Speaker 11: government who will be benefiting from some higher tax revenues 688 00:33:34,320 --> 00:33:38,080 Speaker 11: from those and could see smaller budget deficits and helping 689 00:33:38,280 --> 00:33:41,320 Speaker 11: improve the fiscal situation next year as well. 690 00:33:41,640 --> 00:33:44,680 Speaker 4: So if you're upgrading an outlook like that, does that 691 00:33:44,760 --> 00:33:47,560 Speaker 4: necessarily mean that you're betting on a recovery in the 692 00:33:47,640 --> 00:33:50,520 Speaker 4: Chinese economy, given the fact that Australia is such a 693 00:33:50,880 --> 00:33:52,640 Speaker 4: strong trading partner with China. 694 00:33:52,880 --> 00:33:55,000 Speaker 11: So what's interesting is that the iron ore story is 695 00:33:55,600 --> 00:33:58,320 Speaker 11: one of we'd expected iron ore prices to fall because 696 00:33:58,320 --> 00:34:01,240 Speaker 11: we weren't thinking, you know, looking at the Chinese economic 697 00:34:01,280 --> 00:34:05,200 Speaker 11: outlook and the uncertainties there that there was some perhaps 698 00:34:05,440 --> 00:34:08,640 Speaker 11: we're now seemed to be overly conservative bias when it 699 00:34:08,680 --> 00:34:12,120 Speaker 11: comes to what was previously factored into that export outlook. 700 00:34:12,400 --> 00:34:14,760 Speaker 11: And so now even with a sort of a steadying 701 00:34:14,800 --> 00:34:18,600 Speaker 11: as she goes and perhaps some more supportive Chinese policy 702 00:34:18,640 --> 00:34:21,479 Speaker 11: next year, it does look like that is a little 703 00:34:21,480 --> 00:34:23,879 Speaker 11: bit better on the iron ore side coming through there. 704 00:34:23,920 --> 00:34:27,000 Speaker 11: So the surprising resilience, i think is more the story 705 00:34:27,280 --> 00:34:29,839 Speaker 11: when it comes to those iron ore prices, and then 706 00:34:29,920 --> 00:34:32,920 Speaker 11: surprising upside when it comes to those other factors like gold. 707 00:34:33,160 --> 00:34:35,120 Speaker 4: You mentioned the labor market a moment ago, and I'm 708 00:34:35,160 --> 00:34:39,640 Speaker 4: curious about the migration story in Australia, what that may 709 00:34:39,680 --> 00:34:42,440 Speaker 4: look like now and how you might expect things to 710 00:34:42,560 --> 00:34:43,480 Speaker 4: change in the future. 711 00:34:43,840 --> 00:34:46,400 Speaker 11: So the story for twenty twenty five for migration was 712 00:34:46,400 --> 00:34:48,520 Speaker 11: that a set of policy measures were put in place 713 00:34:48,560 --> 00:34:51,320 Speaker 11: by the government to try and deal with a massive 714 00:34:51,360 --> 00:34:55,439 Speaker 11: surge in migration as students and temporary workers all came 715 00:34:55,520 --> 00:34:59,319 Speaker 11: rushing back post the pandemic, and so the expectation was 716 00:34:59,400 --> 00:35:01,640 Speaker 11: migration was going to fall this year, but when we 717 00:35:01,680 --> 00:35:03,319 Speaker 11: got to the middle of the year, it didn't. And 718 00:35:03,719 --> 00:35:06,800 Speaker 11: we've forgot a factor. We forgot the back door. Australia 719 00:35:06,880 --> 00:35:10,520 Speaker 11: has an open labor market when it comes to New Zealand, 720 00:35:10,800 --> 00:35:13,600 Speaker 11: and New Zealand's economy has been struggling and dipped back 721 00:35:13,640 --> 00:35:16,000 Speaker 11: into recession in the middle of this year. And if 722 00:35:16,040 --> 00:35:18,640 Speaker 11: there's jobs going in Australia in a tight labor market 723 00:35:18,880 --> 00:35:21,000 Speaker 11: and it's looking pretty bad at home, and you're a 724 00:35:21,080 --> 00:35:24,080 Speaker 11: Kiwi and the weather is better as well, well, they've 725 00:35:24,120 --> 00:35:26,359 Speaker 11: voted with their feet. It's a flightless bird, but they've 726 00:35:26,360 --> 00:35:29,200 Speaker 11: gotten The Kiwis have gotten on the plane and have 727 00:35:29,320 --> 00:35:32,359 Speaker 11: moved quite a bit to Australia and that's really moved 728 00:35:32,360 --> 00:35:35,239 Speaker 11: the dial on migration. So seeing that normalized next year 729 00:35:35,800 --> 00:35:38,040 Speaker 11: is something that from twenty twenty six, we think that 730 00:35:38,040 --> 00:35:40,839 Speaker 11: that migration story will step back, but right now it's 731 00:35:40,880 --> 00:35:42,920 Speaker 11: been one that's added a little bit of a surprise 732 00:35:43,000 --> 00:35:46,440 Speaker 11: boost to demand within the economy. So that's been a 733 00:35:46,520 --> 00:35:49,479 Speaker 11: one more factor that helps the RBA being a little 734 00:35:49,480 --> 00:35:52,520 Speaker 11: bit reticent around do we have too much activity in 735 00:35:52,560 --> 00:35:55,440 Speaker 11: the economy? Could this inflation be a bit more persistent 736 00:35:55,760 --> 00:35:58,680 Speaker 11: because we haven't had for sort of firms that are 737 00:35:58,680 --> 00:36:01,440 Speaker 11: in the consumer side of the yon. If migration was 738 00:36:01,520 --> 00:36:04,040 Speaker 11: going to fall away and population growth wasn't going to 739 00:36:04,040 --> 00:36:06,399 Speaker 11: be as strong, you know, those firms might have been 740 00:36:06,440 --> 00:36:09,239 Speaker 11: a little bit more cautious in their demand outlook and 741 00:36:09,239 --> 00:36:13,040 Speaker 11: their sales outlook. And if we've had the situation of 742 00:36:13,120 --> 00:36:16,200 Speaker 11: strength in that consumer demand, if there is any opportunity 743 00:36:16,239 --> 00:36:18,360 Speaker 11: for them to raise prices, that's a little bit of 744 00:36:18,400 --> 00:36:21,040 Speaker 11: a different environment and an environment that the RBA is 745 00:36:21,600 --> 00:36:24,560 Speaker 11: flagging those concerns about. It's an environment we think will 746 00:36:24,560 --> 00:36:27,480 Speaker 11: give way to a bit of an easier inflation outlook 747 00:36:27,520 --> 00:36:30,440 Speaker 11: next year, leading to those cuts. As flagged in the 748 00:36:30,440 --> 00:36:31,240 Speaker 11: discussion earlier. 749 00:36:31,680 --> 00:36:34,360 Speaker 4: One of the hot button political issues here in the 750 00:36:34,400 --> 00:36:37,320 Speaker 4: States as it relates to the economy is this issue 751 00:36:37,320 --> 00:36:40,680 Speaker 4: of affordability. And I'm wondering whether that's playing out in 752 00:36:40,680 --> 00:36:44,040 Speaker 4: a way that is very similar in Australia right now. 753 00:36:44,239 --> 00:36:46,480 Speaker 11: It's called affordability in the US. We've called it a 754 00:36:46,480 --> 00:36:50,799 Speaker 11: cost of living crisis here in Australia and that's been 755 00:36:50,920 --> 00:36:53,640 Speaker 11: a hot button issue for the government for the past 756 00:36:53,640 --> 00:36:56,520 Speaker 11: two to three years and we've done everything. We've had 757 00:36:57,680 --> 00:37:01,959 Speaker 11: a very big, wide ranging government and quiet into the supermarkets, 758 00:37:02,000 --> 00:37:04,759 Speaker 11: we call it a Royal Commission, and that really put 759 00:37:04,760 --> 00:37:08,040 Speaker 11: the heat on whether that duopoly that we have in 760 00:37:08,080 --> 00:37:11,400 Speaker 11: our supermarket system here was responsible for some of that 761 00:37:11,440 --> 00:37:14,840 Speaker 11: inflation in the housing market. It's been a perennial concern. 762 00:37:15,280 --> 00:37:17,960 Speaker 11: But what the government has done is they provided additional 763 00:37:17,960 --> 00:37:21,480 Speaker 11: supports to first home buyers, those at the most difficulty 764 00:37:21,520 --> 00:37:24,959 Speaker 11: of entering the housing market that will actually ironically push 765 00:37:25,040 --> 00:37:29,000 Speaker 11: up prices even further, will help support house price rises 766 00:37:29,160 --> 00:37:31,120 Speaker 11: in the parts of the market the first time buyers 767 00:37:31,160 --> 00:37:33,279 Speaker 11: would be in. But we have been dealing with that 768 00:37:33,360 --> 00:37:36,160 Speaker 11: here in Australia in different ways, be it ether housing, 769 00:37:36,640 --> 00:37:40,000 Speaker 11: food supply, or when it comes to and going back 770 00:37:40,040 --> 00:37:44,240 Speaker 11: to what Amy was saying and what I was also discussing, 771 00:37:44,239 --> 00:37:47,920 Speaker 11: when it comes to the inflation story around subsidies, electricity 772 00:37:47,960 --> 00:37:49,920 Speaker 11: price subsidies will put in place as well to try 773 00:37:49,920 --> 00:37:52,480 Speaker 11: and deal with this. So we've been going through this 774 00:37:52,760 --> 00:37:56,560 Speaker 11: affordability issue on the Australian context in many many ways, 775 00:37:56,960 --> 00:37:59,560 Speaker 11: and it does look like, or at least the expectation 776 00:37:59,719 --> 00:38:03,960 Speaker 11: is that inflation should be continuing to ease back over 777 00:38:04,000 --> 00:38:07,160 Speaker 11: the course of twenty twenty six after a bit of 778 00:38:07,160 --> 00:38:09,279 Speaker 11: a bump up through the middle of the year. We 779 00:38:09,320 --> 00:38:11,880 Speaker 11: could see the RBA beginning to be a little bit 780 00:38:11,880 --> 00:38:13,480 Speaker 11: more comfortable by the end of the year. 781 00:38:13,600 --> 00:38:15,880 Speaker 4: Nonetheless, as you were just pointing out, it seems to 782 00:38:16,000 --> 00:38:18,680 Speaker 4: underscore the dilemma facing the RBA. 783 00:38:18,760 --> 00:38:21,680 Speaker 11: Look, it certainly does, and when it is especially when 784 00:38:21,800 --> 00:38:25,320 Speaker 11: you have price pressures in high frequency purchase items. You know, 785 00:38:25,520 --> 00:38:28,400 Speaker 11: if there's things that consumers buy once a year or 786 00:38:28,440 --> 00:38:31,120 Speaker 11: once in a blue moon, like a new television courtesy 787 00:38:31,160 --> 00:38:34,160 Speaker 11: of say some trade restrictions or tariffs. If that were 788 00:38:34,200 --> 00:38:37,400 Speaker 11: the case, that's very very different inflation to inflation you 789 00:38:37,440 --> 00:38:40,520 Speaker 11: see at the petrol pump, at the fuel pump or 790 00:38:40,600 --> 00:38:43,799 Speaker 11: at the supermarket every single week when you're buying food 791 00:38:43,840 --> 00:38:47,239 Speaker 11: for your family, and consumers respond very very differently to 792 00:38:47,280 --> 00:38:50,400 Speaker 11: those and so it's something that the RBA has been watching, 793 00:38:50,680 --> 00:38:54,040 Speaker 11: and no doubt other central banks will be watching as 794 00:38:54,080 --> 00:38:56,360 Speaker 11: well through the course of the year ahead. 795 00:38:56,800 --> 00:38:58,719 Speaker 4: James will leave it there. Thank you so very much, 796 00:38:58,719 --> 00:39:02,680 Speaker 4: Bloomberg Economists. James McIntyre and I'm Doug Prisner. You can 797 00:39:02,719 --> 00:39:05,919 Speaker 4: catch us weekdays for the Daybreak as your podcast. It's 798 00:39:05,960 --> 00:39:08,919 Speaker 4: available wherever you get your podcast, Nathan. 799 00:39:09,040 --> 00:39:11,560 Speaker 2: Thanks Doug, and that does it for this edition of 800 00:39:11,560 --> 00:39:15,200 Speaker 2: Bloomberg Daybreak Weekend. Join us again Monday morning at five 801 00:39:15,239 --> 00:39:17,920 Speaker 2: am Wall Street Time for the latest don markets, overseas 802 00:39:17,960 --> 00:39:20,560 Speaker 2: and the news you need to start your day. I'm 803 00:39:20,600 --> 00:39:23,640 Speaker 2: Nathan Hager. Stay with us. Top stories and global business 804 00:39:23,640 --> 00:39:25,560 Speaker 2: headlines are coming up right now.