Daybreak Weekend: Housing Outlook, Europe Culinary Trends, Australian Eco

0:01Bloomberg Audio Studios Podcast Radio News this is bloomberg daybreak weekend our global look at the top stories in the coming week from our daybreak anchors all around the world straight ahead on the program we look ahead to how commodities may fare in 2026 along with an outlook for the housing sector i'm nathan hager in washington i'm stephen carroll in brussels we're thinking about the culinary and cultural trends in europe to watch in the year ahead i'm doug kristner looking at the possible timeline of a rate hike from the Reserve Bank of Australia. That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 1130 New York, Bloomberg 99.1 Washington, D.C., Bloomberg 92.9 Boston, DAB Digital Radio London, Sirius XM 121, and around the world on BloombergRadio.com and the Bloomberg Business App.

1:02Good day to you. I'm Nathan Hager. And we begin today's program with commodities, a sector that presented a mixed, but for the most part, strong performance in 2025. So for more on what to expect in 2026, who better to be joined by than Mike McGlone, Senior Commodities Strategist for Bloomberg Intelligence. Happy New Year, Mike. And what a year it was for gold trading at records. Is 2026 going to be another year to be a gold bug? Unfortunately, the lessons of history, Nathan, say the momentum's upward, but history suggests this is where overweight, long new positions typically underperform, particularly for enduring parents.

1:43To give you one example, gold's cousin, silver, it's gone. They both had the best year since 1979. In 1979, silver's high was 32. This year's low was 28. That's almost 50 years. So that's the kind of risk you have with gold getting this level. So I think momentum probably gets it towards 5 ,000, but a normal back and fill of a high velocity where I like this can actually get it to 3 ,500. So I put frightening and gold in the same sentence because I'm just absolutely frightening. When gold grabs alpha like it did this year, beats everything, particularly beta, the stock market, I get worried. So to me, what commodities are telling us this year, it's been basically a ho-hum broad commodity market.

2:26The Bloomberg Commodity Index has basically tracked the S &P 500. It's the interworkings, like you mentioned. But gold going up at this velocity, over 60%, and crude oil going down about 20%. That disparity is the widest ever. And so it's around 80%, 90%. In 2008, the previous extreme is 60%. So I'm really concerned what this is telling us, when the most significant ancient store value grabs alpha and the world's most significant industrial commodity goes down. Yeah, let's talk a little bit more about that disparity, because to your point, we did see oil prices pretty subdued in 2025. What do you see driving the oil market this year?

3:06Well, the key thing for oil to think is to look back from the future, the peaks in 2022, shifted the world order, kicked in EVs, brought on all that rapidly advancing technology, which brings on more supply and reduces demand. And now we're in the downward cycle from that. So it typically takes a low price cure. So WI crude oil, the high for this year is around 80 or so. It's got down around 55. I think historically, the lows have been around$40 a barrel. And I think that's going to happen in the 2026 year, but it can also easily pop to$70 a barrel. Bear markets are notorious for sharp shortcoming rallies.

3:44So the one thing I really think we're going to have next year is a decent amount of volatility in all markets, particularly the stock market. I think crude oil is going to continue heading lower. but it's not alone, Nathan. It's in the same camp as corn, soybeans, and wheat and the grains. And they're all in the back of going up too much, to speak, in 2022 and going down now. And that's the key thing to remember in commodities. They go down because they went up too much. Typically, that's less so the case in things like gold, but particularly, most notably, the elastic commodities. So here's what I'm really worried about.

4:14If crude oil continues lower like this, which I expect, and we just get a little backup in the stock market, That's a pretty significant post-inflation deflationary force, which is a matter of time. And just one example of that, that's what's happening in China. That 10, you know, yield in China is about 1.83 % versus above 4 % in the U.S. What about the energy demand from artificial intelligence? Does that play anything into the oil market? Right away, start with silver and copper. When you think of energy demand, electricity, transmission, and conductivity, The two top commodities for that in terms of metals are silver and copper.

4:50And guess what? They're some of the best performing commodities this year, but for different reasons. So not so much worried. And if anything, for electricity, man, you tilt over to natural gas. Natural gas is back down below four in the year. The high is 5.5. And almost every time it gets above five, it goes back down below four. Why? It's that elasticity of supply in U.S. natural gas is one of the most significant forces in all energy, particularly in natural gas. So oil is the key thing, but oil is being replaced by technology. And that part of that technology is what's keeping big things like copper and silver.

5:24But the key thing, I also remember, copper, it was a supply constrained year. And I think copper is the number one wildcard next year. And if it goes down, which I'm afraid it will, like the stock market, that's a sign of deflationary dominoes falling on the back of crude oil and iron ore in China and bond yields in China. So the bottom line is you have to tilt over to China. Can they come out of this malaise paired with a significant demand pool economic recovery facing tariffs from the rest of the world, not the U.S.? I think that's unlikely next year. So given all these dynamics, Mike, what do these moves in commodities suggest to you about the economic outlook for 2026?

6:02It's the velocity of this rally in gold being the highest in almost 50 years and certainly versus crude oil is a clear global recessionary trajectory. The key question is what stops it next year. Now, gold is clearly stretched versus almost everything, with the exception of the U.S. stock market. And that you would expect when we have the paradigm shift of the world's most demand pull, significant importing country, putting a kibosh on the rest of the world trying to export to the U.S. Most notably China. Now the rest of the world is actually pushing back on China exports because they're exporting deflation everywhere.

6:36So to me, the signals for commodities, we're in a global deflationary trajectory. And the entire pillar of the whole world is resting on the U.S. stock market. It's a little bit less so, but still the highest valuations versus most rest of the world. Let's look at the MSCI World X-US Index and versus GDP in almost a life and certainly almost 100 years. So that to me is the risk that we tilt lower and just a little pickup in volatility. So I'll end with this. We've never had a rally in gold with this velocity. Like I mentioned, it's almost 90 % above its 60-month moving average with volatility in the stock market this low.

7:14So 120-day volatility in the stock market has reached around 11%. The average is usually 17%. So I'll make a prediction. We're going to rally back up and get to normalization in the stock market volatility next year. And that might be that deflationary signal that you're getting from commodities. But that's the kind of thing I'm really worried about. And I'm frightened. We've never rallied this much in gold without stock market volatility going up. All right. Well, we'll see how that prediction shakes out. Thanks for this, Mike. And Happy New Year once again. That's Mike McGlone, Senior Commodity Strategist for Bloomberg Intelligence.

7:44We move next to the housing sector. In 2025, it experienced a significant cool down with high mortgage rates and home prices still lingering. So what can we expect from real estate this year? Let's bring in Bloomberg Intelligence U.S. home building analyst Drew Redding for some answers on that. Drew, I think a lot of homebuyers are hoping for lower interest rates in 2026. Could that spark kind of a turnaround in the housing sector? Yeah, you're right. There's been a lot of optimism that the pullback in rates to that low 6 % range would help affordability and spur a lot more activity. What's interesting and what we've heard from some of the builders is that there hasn't been a material increase in demand since rates pulled back.

8:27And I think, you know, one of the problems is that there's just a lot more uncertainty out there in the market. There's concerns over the general direction of the economy, more concerns about the outlook for the labor market. So people are putting off these big discretionary decisions. You know, when we talk about the resale market, you know, we've kind of been hovering in that 4 million annualized pace now for a couple of years. I mean, the market's really been frozen, but we do think that we'll start to get some growth in 2026, albeit off of that low base. You know, we'll have more inventory on the market.

9:01As long as rates, you know, continue to play nice, that low 6 % range, we should be able to see some growth with prices moderating as well. So where do you see prices going specifically? And do you think that we're going to see improvement across the home building sector? Is it going to be in luxury or can it be in sort of the low to mid range as well? So in terms of prices, I think in the existing home market, you're going to see a moderation maybe into the low single digit range. In the new home market, we actually think you're going to see prices, net prices continue to come down, you know, just because, you know, builders are shifting their product mix.

9:38They're continuing to lean on sales incentives. Now, you know, in terms of how we're looking at the new home market next year, from a broad industry perspective, we think that the single family market is going to remain muted. I mean, we're expecting housing starts to be lower in 2026. And it's really a reflection of, you know, the soft demand environment we've seen, as well as the fact that inventory levels in the new home market are the highest they've been in a while. So there's not a lot of incentive for the builders to put new product into the ground until they work through that spec inventory.

10:10And I think it's going to take time. Now, we do think that you could see a modest improvement in sales. Of course, lower rates certainly help, but that's really a reflection of the fact that builders are growing their community accounts. So it's not necessarily a pickup in sales pace, which is similar to the concept of same-store sales. But like I said, I think the group's going to continue to lean on incentives to support their sales. So we do think prices will moderate from here. A lot of what I'm hearing from you makes it sound like for a lot of these new home builders, margins are going to continue to be sort of squeezed into 2026.

10:44Is that what you're thinking? Yeah, you hit the nail right on the head there. The fundamental backdrop for the public builders, we think, remains challenging in 2026. We're expecting to see further earnings declines due to soft top line growth and, as you mentioned, further margin pressures. And the reason for this is that many of the home builders heading into 26 will have backlogs that are significantly lower, anywhere from 10 to 40 percent, depending on the builder. So that's going to put pressure on closings. Like I said, there has been a fair amount of optimism that the pullback in rates would help.

11:21but we haven't seen that meaningful turn in demand. And because of that, to your point, builders are going to have to continue to lean heavily on incentives. We had a recent report from the National Association of Home Builders, which showed that the use of sales incentives is the most widespread that it's been in the post-COVID area. Now, that's primarily mortgage rate buy-downs, which have really hurt builders' margins, But we're also starting to see outright base price reductions. So those things combined are going to keep profits muted next year. And what could all this mean, Drew, for homebuilder stocks?

12:00It sounds like it could be a pretty challenging environment for their valuations in 2026. From a pure valuation perspective, you know, it's not overly compelling. There's an old rule of thumb in the industry that says you buy the builders at one times book and you sell them at two times book. You know, that's not to say they've never breached those thresholds. I think you really need to, you know, when you talk about the stocks, you know, kind of split it out between the large cap builders and the smaller cap builders who are trading at much more of a discount than they have historically. You know, that being said, though, I think there's still a cloud of uncertainty over the industry as to whether demand picks up, whether housing policy has an impact next year.

12:42So I do think that there are certainly some headwinds. All right. Well, I really appreciate this outlook on where the housing sector could go in 2026. Drew, thanks again for being with us. That's Drew Redding, U.S. Homebuilding Analyst for Bloomberg Intelligence. Coming up on Bloomberg Daybreak Weekend, we'll look at the culinary and cultural trends in Europe to watch in the year ahead. I'm Nathan Hager, and this is Bloomberg.

13:14As markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis, and powerful tools that help you connect the dots. Visit Bloomberg.com slash podcast offer to learn more. This is Bloomberg Daybreak Weekend. Our global look ahead at the top stories for investors in the coming week. I'm Nathan Hager in Washington. Up later in the program, we'll look at what's in store for monetary policy in Australia for the year ahead. But first, it's been a rollercoaster year for the global economy. Even amid all that turmoil, though, we did find time to relax, explore, and share a meal.

13:54The hospitality industry has had another challenging year in many places, but there are still plenty of dining, travel, and cultural highlights to reflect on and look forward to. For more on that, let's go to Brussels and check in with Bloomberg Daybreak Europe anchor Stephen Carroll. Nathan, the worst of the inflation crisis is behind us in Europe. The European Central Bank looks to have finished its rate-cutting cycle and rates have come down significantly from their peak in the UK too. But many consumers are still feeling squeezed by the higher cost of living in the UK. Surveys have shown Brits cutting back on dining out in the past year.

14:27All of that being said, many restauranteurs actually reported an upturn in bookings towards the end of the year, showing a continued appetite for experiences and a little indulgence as well. To help us unpack the latest trends in eating, culture and travel, I'm joined by the Dream Team from Bloomberg Pursuits, our food editor, Kate Crader, and UK correspondent, Sarah Rappaport. Great to have you. Kate, I'm going to start with you. I know you've been keenly watching the big trends from food scenes globally this year, but from a London point of view and from sort of the big business point of view, has it been a good year for restaurants in London?

15:00That's a really good question, and it definitely depends on who you ask. I think that some of the big recognizable names will tell you that it's been a really good year and they haven't seen that much fallout, despite, as you said, the, you know, there's continual budget woe news. And it definitely seemed like it was going to be a very un-Merry Christmas. So it was actually like some good news. I love an optimistic headline. And it's amazing to know that a place like Hawksmoor, the fantastic UK British steakhouse chain, they saw like 15, 16 % increase in bookings from last year. Will Beckett told our own Bloomberg TV team.

15:40But I live in South London, and there's this fantastic little restaurant across the street from me called Legare that I love. Shout out to Legare. And they're having a challenging year. like they were trying to decide whether to open the week after Christmas just to try and make some money back because they've lost a lot of money on booze sales because people have cut back on drinking so much. So it's definitely a mixed year. But I want to be optimistic and say yay for all the places that have seen an increase in sales. And if you haven't already guessed, this is a conversation for which you may want to be taking notes for recommendations for what to do in the future as well.

16:16Sarah, let's turn to you. In the past year, you've covered everything from high-end property to top-notch travel destinations and more as well. What's your reading on where the travel industry is now? It had a few years after the pandemic where everyone was doing the whole revenge travel thing. People didn't care how much money they were spending. Borders were open. They were just wanting to go out and, you know, do the YOLO vibes, have a good time, right? So they didn't have to try too hard to really differentiate themselves in those first few years after the pandemic. But things are changing now.

16:44The situation is getting a little bit harder. and at the top end, at the ultra luxury end, things are doing all right, but the middle's a little bit more squeezed. So that's where we are now and that people are having to really decide more about their budgets, how much they want to spend on travel. Whereas before 2021, 22, like put it on the credit card, we want to go somewhere. Now things are a little bit different. Okay, and that's, I suppose, making everyone a little bit more discerning too and how they're putting forward their offerings as well. Let's talk a bit about highlights of the year then.

17:13Kate, what meals have really impressed you? in the past year? It's been an interesting year. London was like a bit on the quiet side in the restaurant scene, relatively speaking, because when it's good, it's so great. But as Sarah was saying, about travel, I think that echoes in the restaurant industry. One restaurant that opened that I absolutely loved, maybe because I'm a New Yorker is called One Club Row. It's in Shoreditch. And it's actually like a sort of two level. It's one of those places that occupies an old pub and old pubs are so beautiful and smart restaurateurs know that. On the first floor level is a place called One Club Row and it's got these New York vibes.

17:52It's a bit of a steakhouse. They have a burger that's a very good burger. They have a jamming martini menu. Martinis have been a big trend this year. Everybody has a martini menu. If you hear that people aren't drinking, just look around at all the martini menus and think again. So a huge shout out to One Club Row. Borough Markets just also continue to be fantastic. And then West, Notting Hill's like having a very good year restaurant wise and a place called Dove from a very great chef Jackson Boxer opened. And they too have a burger that I think is one of the best burgers I can remember having.

18:29And I've eaten a lot of burgers. I see. I like the idea of a staple doing well as well. One of the pieces that I really enjoyed that you wrote in the past year was about the question of experience and it not perhaps just being the food that makes a great meal. With your great experience and with your expert hat on, Kate, what is the architecture of a great meal? What impresses you when you're going out to eat? I love that question, Stephen. Yeah, no, I got to write about this was based on a New York meal, but I'm wondering how much food matters anymore in this world of experience. And Sarah knows that from travel, too.

19:04I think when you go somewhere, you can have a great meal. But if the service isn't good, and or if there's not something that captures your attention or makes you feel like, wow, I'm really here. Like, this is something, this is why I'm paying this money, because it's not something I can do at home. It's not something I can do anywhere else. It can be something as simple as a good trolley. I mean, trolleys have rolled around dining rooms for a really long time. But if someone does a really good job of parking that trolley at your table, and then serving you some food in a way that makes you feel special and makes you feel like this is a singular experience, then it's going to stick in your mind, it's going to play big on your social media, like it just is such a winning trend on so many ways.

19:47And someone who said that for a very long time is Danny Meyer, who's the founder of Union Square Hospitality and Shake Shack. And he's a hospitality genius. And he's been saying for years that you can have bad food and a good experience and you're more likely to come back than if you have good food, but bad service and not a great experience. So everyone remember that. The trolley thing is so true. As soon as you said it, I could picture two or three, for some reason, all cheese related. We'll come back to that later. that I can remember as standing out for me as well. Sarah, on the question, let's start with travel.

20:22What's been the standout destination for you in your recent reporting? Well, it's not so much a destination as a way to get there. This year, I got really into luxury trains, Stephen. I took two luxury trains. I went on the Royal Scotsman, which operated by Belmond, which was just absolutely incredible, and took me through Scotland, which I've been to a few times before, but never through my own train carriage, like sleeping on it, getting to know the other passengers, not having any cell service. It was a real throwback to like an older way of traveling, something really glamorous and really fun.

20:51And I also took the new Orient Express train through Italy, which just launched last year. And these are very expensive, but they're also experiences that photograph really well. So bucket list things that just make you see destinations that you know differently through the windows of a train carriage. Sarah, if I can also mention, you did get married this year. I did. But I did see you also reporting on the wedding industry. So first of all, congratulations. And secondly, what did you learn about the wedding industry? They say right about what you know, right? I got married in September in Athens, in the Riviera in Greece.

21:24On the seafront is a beautiful day. I learned top tip, things are going to cost more than you think they will. Maybe people know this wedding. Weddings are expensive. But yeah, just have the day you want is what I'd say is important. And figure out what matters to you. For me, I wanted to have a party that went on until four in the morning, which meant that I couldn't do that in the UK, really, given all the rules and regulations. And I wanted really great food. So like Kate, I love food. It's important to me to feed my friends and family well. So we had it in Greece. OK, well, I love those as top tips.

21:54Let's turn to some recommendations then for the year ahead. Kate, what are you looking forward to in 2026? Any exciting openings or trends? It's hard to see because I feel like the sands keep shifting. But because I'm here to say some things that I'm excited about, As we were just talking about, like pubs which have been under pressure in a lot of places. Some of them are beautiful and smart. Operators are taking them over. The public house group is famously doing it. And Notting Hill at the Fat Badger, etc. The Pelican. And so this year, Simpsons Tavern is being taken over by the group behind Cloth Restaurant.

22:32If you haven't been, it's in the city. It's a fantastic little restaurant. and it's sort of British food with great wines. And now they're taking over one of the storied properties that's also in the city, conveniently close to Bloomberg offices. That's going to be really exciting. I think that's a huge, big opening. Also Jeremy King, who's one of the legendary restaurateurs in our time is finally going to reopen Simpsons on the Strand, speaking of throwbacks and trolleys and stuff like that. And so those are places where I plan on spending a lot of time. There's also, as I'm seeing right now, a really fun Vietnamese food trend coming.

23:12And that food is just delicious. It's fresh. It's the kind of thing that relies on a lot of herbs. It's restorative. This awesome restaurant just opened on Paradise Row off in Bethnal Green called Tempo. The chef has been doing pop-ups. He used to be in finance, but now his time is much better spent cooking in the kitchen. And he makes just this shrimp toast that's extraordinary. And it just opened, so everyone should go there. Sarah when people ask you what they need to see in the next year over the festive period what will you be recommending what highlights are you looking forward to well I'm really excited about Cynthia Arrivo who we all know from Wicked but she's also British and was a first came to people know her as a stage actress is back on stage in Dracula so it's a one woman show by Kip Williams who did the Dorian Gray with Sarah Snook which won all these Tonys and Oliviers and that starts in February and And I'm really excited about seeing that because she's just a sensational talent on stage.

24:06She's, yeah, she's amazing. There's a new Tracey Emmons show. It's a full retrospective of her career. It has the famous spad. There's 90 other pieces at the Tate Modern from end of February as well. So it'll be a good one to take people to who are visiting. And just on the question of travel for you both, if we're thinking a little bit further ahead into the year and destinations of where we want to go, where will you be recommending, Sarah, in terms of a travel destination? Sardinia is having a moment. A lot of luxury new hotels opening there. There's a new Belmont, a new Mandan Oriental. But it's also a great part of Italy that just doesn't get enough attention.