Daybreak Weekend: Jobs Preview, Paris Conference, BOJ Decision

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'll look to u.s non-farm payrolls for november and earnings from sneaker giant nike i'm nathan hager in washington i'm caroline hepker here in london where we discuss europe's business and political challenges in the face of u.s criticism i've got krishner looking at the likelihood of a rate increase from the Bank of Japan. 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. We begin today's program with U.S. jobs numbers. Non-farm payrolls for the month of November are due out Tuesday at 8.30 a.m. Wall Street time. For more on what to expect, we're joined by Michael McKee, international economics and policy correspondent for Bloomberg Radio and Television. First off, Mike, I don't really remember having a jobs Tuesday before. The government shutdowns really change things, hasn't it? It really has. Somebody said the other day, given the schedule for releasing all the data that we didn't get before, that it's soon going to be 2026, except at the Bureau of Labor Statistics.

1:39Seriously. It'll still be 2025 for quite some time. So what are we expecting with the numbers due out this coming Tuesday on a delayed schedule then? Well, to be totally honest, we're expecting a lot of confusion, because what they're doing is trying to put out as much of the October report in terms of the establishment survey where they count how many jobs as they can, but they don't have complete data. And then they're going to put out the November payrolls report with most of the data that they need, but we're going to have to parse two months there together, and some of it won't even – the data won't even be there.

2:23So we're going to have to take it with a bit of a grain of salt, but it will give us a better view of sort of where we are right now. The biggest issue is going to come on the other side, the household survey, which gives us the unemployment rate because there's no data for October. So they've got to jump right into November. And they didn't get started questioning people until the end of November, which creates some statistical anomalies that are probably too nerdy to talk about. But it's going to be a rough report to make a lot out of. Okay. So since we have those holes in the household survey, even with the November numbers coming out, does that raise some questions in the market about the reliability even of the November data?

3:10It should. And Jay Powell in his news conference this past week said the very same thing, that the Fed is going to have to really analyze this and not take it at face value because they understand the statistical issues that are involved. Now, the good thing is for the Fed, they don't meet again until January 28th. And so, therefore, they will have the December numbers, which will be a complete report, at least, to go on before they have to make another decision. But we will get more information than we have had. And in certain categories of jobs, we'll get good information because a lot of that stuff comes in electronically, wasn't affected by the government shutdown.

3:53But there will be gaps in the numbers for October, November. So in terms of the gaps that are meant to be filled here, what particularly are you looking for that is going to be filled in? And what's your expectation there? Big companies, manufacturing companies, people like that, and large retailers, they have computerized records that they send in to the Bureau of Labor Statistics. So those kinds of numbers will show up. It's going to be harder for them to count things that are at small businesses, which are surveyed but don't necessarily send in their stuff electronically, or construction workers because they're sort of itinerant and can be from job to job, and home health care workers.

4:40Now, that's going to be interesting because home health care has been the biggest job creator in the last few years. And so we might get a distorted number there that would kind of throw off the total. In terms of the data that we've gotten from the private sector so far, we've seen all sorts of ADP figures, the Challenger Grain Christmas layoff notices as well. What does that tell us about what we could see from the rest of the data that's coming from the BLS? I think all it will tell you is that they sort of confirm the idea that the hiring environment has slowed a lot. Neither one of them is a particularly good predictor of what the overall BLS numbers will be.

5:24It just kind of gives you some data that gives you a direction, but not necessarily a magnitude. So I don't think we go into it with a completely clear expectation for what the numbers are going to be. The consensus forecast at Bloomberg has asked economists is for 40 ,000 jobs. But again, that's combining two months. So there might be job losses in one month and job gains in another month. And it's really hard to know where we end up. You kind of just have to take it as it comes. And you mentioned that there's going to be kind of a hole in the unemployment rate with the household survey on hold due to the shutdown.

6:04But what's the trend when it comes to the unemployment rate? Are we seeing more people getting into the job market? Well, we're seeing the last data we have is from September, and more people did go into the labor market. And that's one reason that the unemployment rate went up a bit in September. We don't know what has happened since. And one of the issues is, of course, that the administration is deporting as many people as they can deport as fast as they can. And that's cutting down on the size of the labor force. But we don't have exact figures. So that will also be an interesting aspect of these reports to see whether or not we're losing workers or losing potential workers because they have been kicked out of the country.

6:49That would probably raise the unemployment rate. So there are some other concerns. One thing I didn't mention is that a lot of the people who were fired by Doge or took early retirement because they thought they were going to get fired, they were on the payrolls till the end of the fiscal year, which was September 30th. So we could see a big drop in government payrolls in the month of October, and that would have the effect of depressing the whole thing. And it might increase unemployment numbers some, but it looks like at this point not a whole lot. But it does complicate even more the whole task of sorting all this out.

7:36Yeah, lots to sort out ahead of Jobs Tuesday. Thanks, Mike. Appreciate this. That's Michael McKee, Bloomberg International Economics and Policy Correspondent. We move next to corporate earnings from Nike. The sneaker giant reports second quarter results on Thursday. For more on what to expect, it's got to be Poonam Goyal, senior U.S. e-commerce and retail analyst at Bloomberg Intelligence. Poonam, thanks for being here. I mean, the swoosh has kind of been crushed lately by the competition, hasn't it? So what are we expecting this time around from Nike? Yeah, I think right now we're just holding tight, kind of waiting for the turnaround to take shape.

8:12We think Nike is making all the right moves to get itself back on track. That said, earnings will be a little light. And that's as expected. We do expect sales to fall, turn negative again in fiscal 2Q, slipping by low single digits. And that's after it posted a slight gain in the last quarter. I'm not so worried about that. My main concern is, is Nike moving forward on clearing inventories? Is Nike innovating to draw full price sales of the new stuff that it's introducing? And it is. So you say that Nike is doing the right things to do that turnaround. Talk a little bit more about what you're seeing, why you think Nike might be getting back on the front foot to keep using puns.

8:57Yeah, I guess, you know, the biggest move for me that they are making to right size the brand is right sizing inventories. Inventories have been very elevated for Nike for a few years now. And just bringing them down and really getting them to realign with sales is the number one factor that I'm looking for to have them kind of take out everything that's old that they made too much of, and that wasn't working to really bring in the new stuff more mainstream. The other thing is innovation. So when you think about what Nike was doing just, you know, three to five years ago, it was just introducing the same thing with a different color wave.

9:38That's simply, I mean, they were doing a lot of other things, but there just wasn't as much innovation as the customer demanded. I think that's changing. I think they are adding more performance, more innovation to their product lineup. I also think that they're going back on the playing field. So, you know, one question that I get asked often is, how did Nike let Hoka and the Ons take share from it? And the best answer I could give is, it's because they weren't on the field. They weren't where the runners were. They kind of took a backseat in the sport, and they focused on digital too aggressively.

10:15That's all changed. They're back on the field. They're at the runs. They have shoes that the runners are wearing. They're showing off. And quite honestly, they are competitive and they are just as good, if not better, than some of what's out there in the competition. Well, that's been the thing, right? Because there has been so much attention on these upstart sneaker makers. You mentioned Hoka and On coming out with these more, I guess, innovative products compared to what Nike's product line has been over the last few years. What is it that Nike's doing? What kind of changes is it making to sort of meet up with that competition?

10:50It's being where the runners are. It's very simple. It's back to 101. It's we need to be on the running grounds. We need to be at the races. We need to have the runners wear our shoes and believe that they are the best shoes for that sport. They're doing all of that now. It's just a matter of time. I think we'll start to see it in the results. The other thing I would say is, you know, we talk about these emerging brands or I guess these newer brands taking share. But when you think of the market share that Nike holds, given its size, it's still the number one footwear brand in the world. And we ran a survey at BI just last month asking consumers, when you shop for sneakers, especially athletic sneakers, who do you wear?

11:35Nike was still number one. And yes, Hoka and An are definitely gaining traction, but Nike leads still by a wide margin. Is Nike putting out the kind of product that sneakerheads are still willing to pay top dollar for? I know some of these models can really drive into pretty high price points. Is that something that Nike is able to meet? Yeah, I think so. And if you think about the price points that Nike is launching these new products at, they're pretty competitive with what's out there in the competition. So the nice thing about Nike is that they have a range of price points, right? So if you want to buy sneakers starting at$70,$80, you can at that$100 price point.

12:18But you can go as high as up to$240,$252 for the most premium sneaker that they offer. And when you think about the competition, I think they do, too, offer sneakers in the$140,$160, north of$200 range, depending on the style that you're looking at. Really appreciate this, Poonam. Thanks again for being with us. That's Poonam Goyal, Senior U.S. E-Commerce and Retail Analyst at Bloomberg Intelligence. And coming up on Bloomberg Daybreak Weekend, we'll look at Europe's business and political challenges in the face of U.S. criticism. I'm Nathan Hager, and this is Bloomberg.

13:01As 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 whether the Bank of Japan will raise interest rates. But first, in the coming days, global leaders convene in France at the Conference of Paris. It is an annual gathering in the City of Light, which encourages knowledge sharing on economic, social and environmental issues in the hope of collaboration to overcome the world's challenges.

13:45Meanwhile, political leaders are gearing up for the European Council meetings where priorities will be on Ukraine and its security. For more, let's go to London and bring in Bloomberg Daybreak Europe anchor Caroline Hepker. Nathan, Europe is facing complicated times A weak economy, the war in Ukraine And a strained relationship with the Trump White House Three persistent and intertwined challenges The continent has grappled with throughout 2025 The region's leaders are deeply concerned by US efforts To end the nearly four years long conflict in Ukraine By cutting a deal with the aggressor, Russia But what action can European leaders take?

14:25From J.D. Vance's speech at the Munich Security Conference in February through to the 33-page national security strategy signed by President Trump that claims Europe risks civilizational erasure. The issue for Europe, according to J.P. Morgan CEO Jamie Dimon, is anti-business bureaucracy, internal fragmentation and a lack of innovation. He told Bloomberg's Caroline Hyde that Europe needs to make serious changes to survive. I think Europe has a real problem. It's very hard to look at the world. We have moving tectonic plates. You've heard us spoken about AI. The enemy's in the satellite up above and in your computer systems right now.

15:10And the world changed. The other tectonic plate is the rise of China, huge global deficits, social network programs that probably can't be maintained over a long period of time. So Europe has a problem. I think they accomplished an unbelievable thing when the Euro got together, the EC, and they said, you know, let's live in peace and not war. You know, they had World War I and World War II, but they had the Franco-Prussian Wars and Napoleonic Wars, the Hundred Years' War, the War of the Roses. You know, and so living in peace is a good thing, but it got bogged down. They never finished the common market.

15:45it takes 27 nations to make a decision. They let their military drop dramatically. It's very bureaucratic. There's why part of the reason that they lost Britain to the EU, which I think makes it bad for both of them, by the way. And so you got to be honest about this. So in those tectonic plates may move over 20 years. But if we ever write a book about how the West was lost, it will be because of the following. It will be because of we didn't get our act together here and we go through all the policies here, that we didn't have the strongest military in the world, and that we allowed Europe to fall apart.

16:20That was JP Morgan CEO Jamie Diamond speaking there to Bloomberg's Caroline Hyde at the Reagan National Defence Forum. Questions of European security and collaboration with the US will be major points of discussion at the Conference of Paris in the next few days. Speakers include Bruno Le Maire, the former French economy and finance minister and Ken Griffin, CEO and founder of Citadel. It's also an issue that will be on the minds of leaders at the upcoming EU Leaders Summit in Brussels. Well, joining me now for more is Ben Sills, Bloomberg's managing editor for European government and economy.

16:58Ben, good to speak to you. Firstly, I'd just like your reaction to what Jamie Dimon had to say. Really, his comments have dominated news in Europe over the past few days, saying that Europe has a big problem. What do you think the response and the thinking is in Brussels and across Europe? Well, I think he's right, for starters. I think most people, most European officials will recognise that he's right. He's not the first person to say this, but when somebody as influential as Jamie Damman makes that sort of comment so publicly it has to sting um I think that um will it will it lead to a bit more soul searching I'm not really sure to be honest I think like the Draghi report last year um was arguably a more substantial a more kind of conspicuous call to arms for um European officials and the progress on the back of that has been limited and the progress on so many of the critical files for the European Union has continued to be kind of plagued by the same old problems of the need for consensus, the divisions over the sort of kind of vision of the sort of European economy that people want to build.

18:25And that just kind of constantly holds the European Union back. Do you think that it is something that European leaders are going to think about at this EU Council meeting or at the Conference of Paris, where we're going to see, again, a number of leading US CEOs speaking to Bloomberg, speaking to the investor community? And we know that the Draghi report has not perhaps had the galvanizing impact that maybe the former ECB president might have wanted to see. I would imagine it's likely to be a topic for discussion on the sidelines. I would imagine that Emmanuel Macron, who is always one for articulating his grand vision, might be talking about those sorts of issues.

19:13But what we've seen summit after summit is that Macron's rhetoric is not successful in persuading the rest of the European leadership to kind of come along and to take decisions. and we've got the very kind of concrete, tangible decision on the table of what they're going to do about Ukraine, what are they going to do about the frozen Russian assets and that's the real test. If the Europeans want to prove at this moment when the White House is really stepping up its push for a settlement of the war in Ukraine, the single most important thing the Europeans can do is find a way to supply substantial amounts of additional financing to Kiev with this mechanism based on the frozen Russian assets.

20:01And they've been going round and round in circles on that for months. So now it's really time for them to deliver on that one. And that again is the issue that President Trump raised also just in the past few days, criticising the talk, the lack of action as he sees it. Also, again, using this very strong, very critical language about Europe. It really does seem that the Trump White House has the EU in its sights and he's talking about European nations decaying. This also must have an impact on leaders in Europe too. I mean, I just note that the former EU diplomat Joseph Burrell saying European leaders must stop pretending that Trump is not our adversary.

20:50Are we at that point yet? The Trump administration, I mean, their rhetoric flips back and forth a little bit. But we heard, I was at the Munich Security Conference in February where J.D. Vance delivered that really shocking speech attacking the European Union, attacking the kind of the democratic norms on which European societies are based. and it was pretty clear then that any support, any kind of legacy support that the Europeans were going to be getting from the US was going to be kind of limited, qualified and certainly not something that you could count on and we've seen that come back with a vengeance with the US national security strategy which came out last week with that really quite shocking language about civilizational erasure.

21:56And, you know, following up with Trump's comments in his interview this week about the weakness of European leaders. I have to say, I've lived in Europe for more than 20 years, and I don't see much sign of civilizational erasure. but I do think he's right when he says that the European leaders are weak and I think that they've been demonstrating that with their failure to muster proper support for Ukraine despite all of their all of their talk. Yes I suppose you know to that that raises issues around migration anti-immigration within Europe but also as you say the litmus test is Ukraine. In the next few days what do you think is going to change?

22:40Who is maybe best to engage with President Trump on the European side? The Europeans have been trying to get into that negotiation, that process of the US wanting to get to a deal with Moscow. But it's about speed and who engages. Yeah, I think that it's pretty clear by this stage in the process that if the Europeans want to have a seat at the table they need to earn that by putting down some either some serious support whether that's money whether that's weapons whether that's political commitment whether that's boots on the ground in ukraine they need to be making a real kind of concrete commitment to Ukraine, which will demonstrate to the US, to Russia, to the Ukrainians that the Europeans are serious and serious about taking unilateral measures outside of the kind of US umbrella to defend and promote their own interests.

23:51And so far, we haven't seen that. I think, I don't know for sure, but I think it would have flown a little more under the radar again in recent days. The address that the Chancellor of Germany, Friedrich Mertz, made on TV to German voters in the last few days, where actually he was, you know, kind of countering what was happening in the US and was a little bit critical, I'd say even fairly critical of the United States. And I think, again, there are moves in Europe to spend a lot more on defence. And just in the last few days, that has been, you know, commitment by Germany to build out its conventional armed forces.

24:39So there is a response that is happening, isn't there, in Europe? yeah that's right actually and i think german defense spending if you're looking for arguments to support the idea that the europeans are getting serious then german defense spending is that should be top of the list um the increase in german defense spending is significant it's real it's happening um and it's going to have a meaningful impact on uh european security in the next decade. And that's, you know, without doubt, Matt's biggest achievement, I would say, in a difficult first year in office. Ben, thank you so much for being with us.

25:28There'll be plenty then for both Europe's political and business and finance leaders to think about in the next few days with a couple of big events in Europe. Ben Sills is Bloomberg's Managing Editor for European Politics and Economy. Thank you. We will have full coverage in the next few days of the Conference of Paris with our own Francine Lacroix and Danny Berger and the EU Leaders Summit right here on Bloomberg Radio. I'm Caroline Hepger in London. You can catch us every weekday morning for Bloomberg Daybreak Europe beginning at 6am in London. That's 1am on Wall Street. Nathan. Thanks, Caroline.

26:05And coming up on Bloomberg Daybreak weekend, we look ahead to a monetary policy decision from the Bank of Japan. I'm Nathan Hager, and this is Bloomberg.

26:25This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Nathan Hager in Washington. In the coming days, the Bank of Japan is expected to raise its policy interest rate. For a closer look, let's bring in the host of the Daybreak Asia podcast, Doug Krizner. Nathan, over the last month, we have seen more bets placed on a BOJ rate hike in the coming week. Right now, the swaps market has assigned a 91 % probability of a 25 basis point increase. Now, if that comes to pass, it would take the BOJ's policy rate to 75 basis points, and that would be a 30-year high.

27:03Just a month ago, the probability of a rate hike was less than 50%. Let's take a closer look now at the dynamics surrounding the BOJ's decision with Bloomberg's Paul Jackson. Paul covers the economies of Japan and South Korea, and he joins us from our studios in Tokyo. Thank you for making time. Can you help me understand how we got to a 91 % probability when a short while ago the probability was less than 50 percent? Well, it all relates really to a speech at the beginning of December by Bank of Japan, Governor Kazuo Ueda, in which he said the central bank would consider the pros and cons of raising interest rates at its next meeting.

27:45Now, that is seen as key language hinting at a rate hike. Subsequently, Bloomberg reported that key government officials would not try to block a rate hike. And also, separately, we reported that officials at the bank were ready to raise the rate. And so that has had a dramatic effect on expectations for a rate hike at the upcoming meeting. Is there any conversation around the possibility that the BOJ may have fallen a bit behind the curve? Absolutely. Obviously, we've seen comments from American officials, including Scott Besant, about the risk of falling behind and whether the BOJ is acting fast enough.

28:33We have inflation at 3%. I don't know about you, Doug, but to me, that seems to be higher than the Bank of Japan's 2 % target. And you know what? It's been there for more than three and a half years. So in terms of conventional policymaking, you would want to raise rates to cool inflation. And, you know, just another perspective on this is that with inflation at 3%, if your inflation, if your central bank rate, even if you raise it to 0.75%, you're still way below the inflation rate. That means real interest rates are deeply zero. And to extend that model a bit further, if you think in terms of where inflation was in April 2021, it was actually falling.

29:29Prices were falling by 0.9%. So at that time, a negative interest rate at the Bank of Japan of minus 0.1 was actually positive, 0.8 % positive at that time, whereas whereas now we're deeply, deeply negative. So, I mean, to all intents and purposes, it seems crazy that we're still so low. So, Paul, when we consider the rates environment in Japan and we look at the Japanese bond market, what becomes apparent? Well, I think in the bond market among investors, there are concerns on the one hand about how much spending Sanaitakeichi's government is going to conduct. We've seen this hefty economic package unveiled last month.