Daybreak Weekend: US CPI, Europe Energy, RBA Decision

0:00Bloomberg Daybreak U.S. Edition is brought to you by OTC Markets Group. OTC Markets' overnight platform for exchange-listed securities, Moon ATS, provides access to global securities in U.S. dollars from 8 p.m. to 4 a.m. Eastern, Sunday through Thursday. Learn more at otcmarkets.com slash moon. Moon ATS is operated by OTC Link LLC, a FINRA-registered broker-dealer, and is available only through participating broker-dealers. Amazon Health AI presents Painful Thoughts I, um, I can't stop scratching my downtown Yeah, but I'm not itching to go downtown and tell a receptionist I'm here to talk about my downtown Some things you'd rather type than say out loud There's no question too embarrassing for Amazon Health AI Chat your symptoms and get virtual care 24-7 Healthcare just got less painful Ugh, hon, the ice cream has turned to soup.

1:00I think the fridge is finally dead. Hopping on grandappliance.com. Great idea. They were awesome with the Samsung Ranger microwave we bought last year. Oh, they have matching Samsung in stock and next day delivery. Let me see. Oh, yeah, that looks perfect. I hope we get the same delivery crew. Those guys were awesome. Agree. Total pros. Another crisis averted by the team at Grand Appliance. Appliance experts since 1930.

1:29Bloomberg Audio Studios. Podcasts. 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 some key inflation data in the U.S. and how they may affect Fed policy moving forward. I'm Nathan Hager in Washington. I'm Caroline Hepker in London, where we're examining the extent of Europe's energy crisis with earnings in focus. I'm Doug Krizner, looking ahead to next week's rate decision from the Reserve Bank of Australia. That's all straight ahead on Bloomberg Daybreak Weekend.

2:08On 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.

2:29Good day to you. I'm Nathan Hager. We begin today's program with some key inflation data in the U.S. The Consumer Price Index for July comes out Wednesday, followed by producer prices on Thursday, plus a read on how consumers may be dealing with higher prices when we get retail sales for the month of July on Friday. For more on what we can expect from all this data, we are joined by Bloomberg News senior strategist Edward Harrison, of course, the author of the Everything Risk newsletter. Great to see you on the weekend. Ed, thanks for coming in. So, What's the risk that price pressures pick up in July?

3:03That is a good question. I think the risk that they pick up is not what's currently discounted by the market. The market is thinking that we had inflation of 2.6%, and that inflation will fall to 2.5 % going forward. This is the core number that I'm talking about now. The broader number is going to be above 3%, but the Federal Reserve generally looks at the core number because that gives them a sense of where the overall trend is going. So where do we see price pressures continuing right now? And are we still on the disinflationary track, even if we don't see changes to Fed policy? I would say that we're not on the disinflationary track, and that is the problem for the Federal Reserve, that we've stopped disinflating.

3:55That is, inflation is not going down further, and potentially it's rising more. And part of the reason is because when you look at numbers like services, I think a lot of people look at something called super core services, both for the number that's used for personal income and expenditures. That's the PCE number. And then this number that we're going to see this week later on. Both of those numbers, those super core numbers are higher than the baseline number. What it says is that even if you look at core, you're not looking at a number that is reflective of some of the percolating inflationary symptoms that are in the economy.

4:40So what's keeping those services numbers higher? And is there anything that Fed policy can do to bring them back down? Are you saying that there is a risk that we could start to see the Fed think about invoking policy to get some of those prices back to where they want them? Yeah, we definitely could. I think we're seeing definitely financial services as part of that. Health care is another part of that. Generally speaking, what we're seeing is if super core services is well above 3%, 3.8 % actually using the PCE version, that says that at its core, numbers that geopolitical risk has nothing to do with are high.

5:20And therefore, the Fed might have to go against that. We saw last week, however, on Friday, that when the jobs numbers came out, they were relatively poor. That is, the non-farm payroll number was down. The unemployment number was lower, which is good. But it was just enough to make people think the Fed will not raise interest rates at its next meeting, nor is it completely priced in for the meeting after that either. As you mentioned, with those jobs numbers, it does seem as though the market is giving the Fed a little bit of breathing room. when it comes to policy. But if we see a pretty elevated inflation number, does that change the forecast?

6:00I mean, is there a possibility that we could see those numbers come in a little bit hotter? Definitely, we could see that. And one of the things that's behind that is Kevin Walsh is the new Federal Reserve chairman, and he's been saying, we don't want you to look at what we're doing and what you think we're going to do. We want you to look at the numbers and come up with your own thinking about that. And what that ultimately means is every single time that we get a data print, the market will be more volatile in terms of reacting to that specific number than it was in the past because we're getting less information from the Federal Reserve about what they're going to do, less forward guidance from the Federal Reserve.

6:39So if that number comes in hot, as you say, Nathan, then I think that the markets will react negatively. Of course, we saw some reporting this past week that the chairman is keeping open the possibility of hiking interest rates if inflation prints do come in too hot after the relative lack of guidance that we got at the last Fed meeting. Is there a chance that we could see the Fed lean toward a hike just to get back some of that market credibility? Well, potentially. However, the jobs number that we saw last week took a lot of the impetus out of that move because now the market's not even pricing it.

7:17If the market's not pricing it, then the Fed may not do it as a result of that. It's hard to say because we're in a new regime now. But if the Fed does not raise interest rates in September, then suddenly you're in a situation where October, which is right before an election, is potentially the first time that you're going to raise interest rates. So legitimately, Unfortunately, September is probably a better time just from a purely practical stance, given that Donald Trump is a vocal Fed critic. But it's hard to say how the Fed is thinking about that. I really appreciate this. And again, thanks so much for coming on with us on the weekend.

7:56That is Edward Harrison, senior strategist for Bloomberg News and the author of the Everything Risk newsletter. Let's take a look now at some stocks making news in the week ahead. I'm Nathan Hager, joined by Bloomberg News reporter Judy LeGroux. And the earnings story continues right away on Monday when we hear from hims and hers after the closing bell. I mean, it feels like health care earnings have been going pretty good so far this season. Does that include telehealth, Judy? You know, telehealth is having a really interesting sort of season with this earnings season. But hims and hers, I think, is certainly a space to watch for a lot of investors.

8:33The company has beat EPS estimates sixth of the last 10 quarters. It's really seen a lot of growth recently. However, that growth is kind of slowing down right now. So reported subscriber growth was about 35 % for 16 straight quarters. But for the last two quarters, growth has been 9 % and about 13 % respectively. So I think what a lot of investors are really looking at is how HIMSS, ticker H-I-M-S, is responding to that slowing growth. So stock movement is also an interesting space to watch. The stock is down about 9 % this quarter alone. So definitely for investors looking to see HIMSS and HER's earnings results and then how that stock will respond to the growth report.

9:19You know, it's interesting, Judy, ahead of this earnings, we heard HIMSS announce a new app with a doctor-led AI native care experience. I think anytime anybody hears the letters AI, their ears start to perk up. That's right. That's right, Nathan. And I think for hims and hers, certainly trying to really push the envelope with respect to getting their consumers to stick with them, I think is certainly paramount for the company. One item as of note is that there was an FTC or is an FTC rather lawsuit against his and hers. The plaintiffs are FTC, Utah and Los Angeles County. And the lawsuit is alleging that hims and hers has misled customers into locking themselves into recurring subscriptions.

10:08and that the company has shared private information with Meta and Snap, despite saying that they were protective of customer privacy. So definitely, you know, I think investors will want to know what the company has to say about this. Certainly the company has come out to say that the FTC lawsuit disregards substantial evidence. So look for analyst questions on that. Look for stock moves based on what management says about this. I really think it's a space to watch. Yeah, nobody likes a legal overhang over any company. The earnings story continues on Tuesday. Another tech name reporting in CoreWeave after Tuesday's close, putting a focus back on AI infrastructure after all the concerns about hyperscale spending.

10:55That's correct. Earnings from CoreWeave, ticker CRWV, will show whether enormous AI demand can outweigh the heavy cost of data centers and debt. Right. So the company is expected to report its highest revenue since their IPO in 2025. It's sort of Wall Street is expecting two point five billion in revenue this quarter. So, you know, really looking at really how CoreWeave is managing that. And I think that Bloomberg intelligence analysts really hit the nail on the head that say when they wrote that CoreWeave second quarter earnings will signal to investors whether AI demand remains stronger than their share price.

11:36implies. And they cited that they feel like the share price is underperforming. So they'll be looking at revenue specifically for their earnings. And Bloomberg Intelligence really believes that the revenue for Corweave for the quarter could exceed guidance. That would be a pretty big turnaround at a time when, as you know, Corweave's kind of missed more often than not when it comes to earnings. Is the bar pretty high then for Corweave to outperform this time around? I mean, you're right about that, Nathan. The company has missed EPS estimates four times out of the last five quarters. So yes, definitely looking at that, looking at revenue, looking at EPS, and really understanding from management.

12:17And again, the earnings call and comments are really going to be big here, where they see the company going. Analysts, on the other hand, are quite bullish. 29 buys, 11 holds, 3 sells. So again, we'll be listening to that earnings call quite closely. Yes, absolutely. We're also going to be listening, I think, to earnings from Cava. They report on Tuesday as well. Is this one affected, do you think, by the produce scare that we've seen in fast food as opposed to fast casual? I mean, certainly anybody who touches lettuce is having a rough summer. I will say that. So yes, we're focusing on ticker C-A-V-A.

12:56That's right. And so for analysts, the earnings for Kava Group really need to show that customer traffic, restaurant profits, and new store growth is remaining strong despite these headwinds we're seeing, right? With the cyclospara parasite and really understanding exactly what kind of slowdown the company is seeing as a result of all of the headlines about food safety in general. The stock is up around 13 % this year, but down about 11 % this month. And when we put that in comparison to names like Shake Shack, which is up about 30 % this month, Domino's, which is up about 17 % this month, really, Cava, I think, it could represent, in many respects, close to the epicenter of this issue with cyclospora as it pertains to lettuce and produce as it gets served in fast, casual settings.

13:53Yeah. So we'll be watching for those hungry for the earnings. Thank you, Judy. Judy LeGroux of Bloomberg News with Stocks to Watch. Judy, thank you for this. Coming up on Bloomberg Daybreak Weekend, we'll examine the extent of Europe's latest energy crisis. I'm Nathan Hager, and this is Bloomberg.

14:20Bloomberg Daybreak U.S. Edition is brought to you by OTC Markets Group. Thinking about joining the exploding overnight market space, but unsure where to start? Designed to meet the needs of a growing international investor base, OTC Markets Overnight Platform for Exchange-Listed Securities, Moon ATS, provides access to global securities in U.S. dollars from 8 p.m. to 4 a.m. Eastern, Sunday through Thursday. Extend your trading day and trade global securities in U.S. dollars through a FINRA-licensed broker-dealer. In the first half of 2026, over$28.1 billion U.S. dollars traded on Moon ATS. Learn more about Moon ATS.

14:57Visit otcmarkets.com slash moon. Moon ATS is operated by OTC Link LLC, a FINRA-registered broker-dealer. Bite into a stacked sandwich made with Hero Bread or a fully loaded bagel. And the only thing you'll think is delicious. You won't think it's up to 19 grams of protein, but it is. You wouldn't believe it has 11 to 32 grams of fiber, but it does. Hero Bread makes loaves, buns, tortillas, bagels, and noodles hacked with taste, but without all the net carbs. We're talking 0 to 5 grams net carbs per serving. With Hero Bread, there are no compromises, just flavor. There's none of the stiff baked goods you'd expect from better for you brands.

15:41There's just the soft, fluffy bread you crave. Plus, small batch drops of indulgent favorites, like the popular 2-gram net carb Hero Croissant and 3-gram net carb Hero Pen au Chocolat. And right now, Hero Bread is offering 10 % off your order. Go to Hero.co and use code IHEART at checkout. That's code IHEART at H-E-R-O dot C-O. All figures per serving of Hero Bread. See Nutrition Facts on Hero.co. Ugh, hon, the ice cream has turned to soup. I think the fridge is finally dead. Hopping on grandappliance.com. Great idea. They were awesome with the Samsung Ranger microwave we bought last year. Oh, they have matching Samsung in stock and next day delivery.

16:22Let me see. Oh, yeah, that looks perfect. I hope we get the same delivery crew. Those guys were awesome. Agree. Total pros. Another crisis averted by the team at Grand Appliance. Appliance experts since 1930. 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 to a monetary policy decision from the reserve bank of australia but first in the coming days we hear from some of europe's biggest energy companies about their recent performance as reserves drop to new lows and geopolitical unrest drives up prices how are the major players responding let's head to london and bring in Bloomberg Daybreak Europe anchor Caroline Hepker.

17:06Nathan, European gas storage levels have fallen to their lowest for this time of year in almost two decades after the war in the Middle East drove up prices and stalled winter stockpiling. The situation has left governments with a growing dilemma as colder weather approaches. At the start of this month, European Union inventories were only just about 57 % full. Meanwhile, prices are still about 80 % above pre-war levels and remain higher than winter contracts, leaving little incentive for hoarding the fuel. And extreme temperatures are also a factor. A series of blistering heat waves in the region has weakened some of the most historically reliable sources of electricity, forcing more dependence on imported fossil fuels and variable renewable energy.

17:55France's river-cooled nuclear power plants have suffered a record amount of heat-related outages. Emily Ashford is head of energy strategy at Standard Chartered Bank and says that the sector is facing a particularly pertinent combination of challenges now. Weather has always mattered to the energy complex. It influences fuel demand, but increasingly extreme heat and drought affect refiners' ability to produce fuels efficiently. So we have simultaneous raising of demand and constraint in supply. Each individual effect is relatively small, but when you combine them, that amplifies pressure. And we've particularly seen that on middle distillate cracks and boosting of refinery margins over the summer months.

18:42The ice gas oil Brent crack that reflects European diesel pushed over$75 at the end of July, a near 20-year high. And there is still further upside possible there if conditions worsen. And Europe is a particularly interesting case for this because most European refineries were designed decades ago for significantly cooler climates. And the limiting factor isn't the distillate column itself, but it's the cooling systems. As we see ambient temperatures increasing, air coolers become less effective. Cooling water sources, like you mentioned, such as the rivers, they warm, so they remove less heat.

19:20and there's an increasing risk of refiners breaching water discharge temperature limits. And we have operational safety limits, which can reduce runs, taking processing units offline. That was Emily Ashford from Standard Chartered there, speaking to Bloomberg's Lizzie Burden and Anna Edwards. So this is the backdrop for earnings from utilities E.ON and RWE and the wind turbine manufacturer Vestas that we'll get in the next few days. To me now for more is Bloomberg's Brussels Bureau Chief Suzanne Lynch and our energy reporter Eamon Farhat. Suzanne, the energy crisis is affecting much of the European continent.

19:59What has the response been like in Brussels? Well, I think since the outset of the war in Iran, European officials have been keen to stress that this is not the same as a crisis that engulfed the European Union back in 2022. following the full-scale invasion by Russia of Ukraine. Then we saw that big energy spike. Things have not gone as high as we had then. One reason the EU officials are keen to stress is that Europe has diversified its supply now. It's not directly dependent on the Middle East for energy imports, for example. It is more dependent on places like the US, Norway, although, of course, it is indirectly impacted by what's happening in the Strait of Ormos and around that region.

20:50Yeah, as you say, perhaps not comparable to 2022 when Russia first invaded Ukraine. That was towards the end of the COVID-19 pandemic, wasn't it? But then layer that with the war in Iran. And there are some issues, aren't there, for the EU to deal with. I mean, how do you think this plays into diplomacy between the EU and the US, given this pressure? Well, as part of the EU-US trade deal that was signed around a year ago between Ursula von der Leyen, the head of the European Commission, and Donald Trump at his golf course in Scotland, a big part of that was a commitment by Europe to buy around 750 billion worth of US energy.

21:32Now, we do know that the Europeans have been buying a lot of LNG from the US. Now, whether it's going to hit those figures, how you measure that, that's a whole other question. But that is certainly the case. And even in some quarters, there's been talk about is the European Union building up dependency? It's just got rid of one dependency for Russia. And here it is kind of opening up potentially new dependency with the US at a time when, of course, relations between the US and Europe are at a low, it has to be seen. But look, I'm not downplaying the issue here for the European Union. The reality is that, you know, the EU storage facilities that come to LNG, to gas, are very, very low.

22:12It's around 57 % full. That's been the lowest in records going back to around 2009. And we have seen these LNG imports have been dropping since April because of the disruption in supply. Now, again, the European Union is saying, you know, not time to panic yet. It believes that fresh imports will offset those lower levels of storage. But undoubtedly, it is an issue now as we get into the winter months. yeah it's already started to turn even though it's august you can feel that the daylight hours are becoming shorter in the uk at least really interesting suzanne thank you so much yeah for those thoughts then about europe how europe can try to ameliorate the energy situation after well a series of crises really an overlaying crises thank you eamon let me turn to you then in terms of this, well, what I'll call a multi-layered problem, a recurring problem of energy for Europe, what do you think there is about this particular moment that is so very difficult for the European energy market?

23:18I mean, I think this, as we always say, this a lot of it is about weather. I mean, we've had now this extreme heat this summer. Definitely some of it's predictable. You know, it's always hotter than summer, but it has been quite prolonged. And just now all these companies and all these different markets will be thinking about getting ready for winter. And when you have that kind of that winter looming with what's happened this summer with lots of energy supplies being used up because of cooling demand but also lots of issues with cooling nuclear reactors meaning we have to use more coal and gas supply you know it puts everyone in a bit of a difficult position going into the coming months as we prepare for those colder months ahead yeah suzanne was just mentioning though it's not really a crisis that you can compare to the invasion of ukraine when that's sent such a shock across europe in terms of the scale of this problem.

24:03Give us an idea of how you're thinking about it. Yeah, I mean, you're right. I think very quickly we start trying to draw those parallels and we're not in the same position as we were back then. That being said, we are starting to see some, I'd say, warning signs. For example, when we look at some of the energy futures, energy prices, they are going up to levels that we haven't seen since winter 2022. I think I wrote a story about Italy actually this week, which is very gas dependent, which just saw one of their prices go up to the highest since December 2022, which is quite shocking. But we always say when it comes to again to winter which is really where these effects are felt it only takes you know a very cold snap a difficult month to very quickly be in i'm not going to say the same position but in a very similar position as we were back then so although you're right we're not there yet everyone is very aware that that could change very quickly depending on the months ahead so how are energy providers dealing with that situation and as you say are they therefore passing those price pressures on to consumers yeah i mean when it comes to wholesale markets As I said, the prices have been elevated because of the Iran war.

25:01They are elevated because of the extreme heat this summer and also because of gas storage issues. Those prices do get passed on to consumers through their bills in different mechanisms in different countries. It has to be said that Europe has learned, obviously, since the last time. We've built a lot more resilience, whether that be expanding renewable energy, that be just kind of getting smarter about how we run our grid at different times. That's something that everyone is thinking about. But, you know, again, with renewable energy, there are lots of things that can affect that, whether there's less wind for a period of time.

25:29So it still creates vulnerabilities and there's no kind of golden bullet. But it's just about trying to mitigate every eventuality that could lead to those difficult times. OK. In the next few days, we've got earnings from some major companies, utilities, businesses in Europe, from Eon, RWE, also Vestas. What are we expecting in terms of Eon and RWE earnings? and will some of these themes be evident in their reports? Yeah, I mean, I think these companies operate across different parts of the energy landscape. I mean, E.ON, they do lots in the grid space and grids have been really important this summer as far as resilience goes, making sure that energy can be kind of brought from different parts of the country.

26:08So it's very much going to be kind of an investment picture there about, you know, the whole story we've been having about upgrading grids, being able to carry that wind energy from the north to the south in Germany, etc. I think RWE are similar. They're obviously a bit more impacted in the kind of renewable spaces. They're also building their own projects in different jurisdictions, you know, bidding for products in the UK and elsewhere. So for them, it'll also be about that investment picture. We have had a difficult few years for offshore wind, something that we keep talking about, and those cost pressures are still there.

26:40But at the same time, you know, when energy prices go up elsewhere because of geopolitical things, wind does start becoming be more interesting as well. So there's kind of an investment case there to think about and see how these companies react to that. What about Vestas again with the exposure to the US? So that's been in focus in the past. Yeah, I mean, the US has been a difficult market for offshore wind recently, because the actions of Trump there. That being said, Vestas has already kind of done a lot of what they have to do there as far as kind of pulling back. They'll be focusing on other projects.

27:09And again, it's again, that investment picture about where they start putting their capital next. They know they've also been looking at the different kinds of M &A and stuff like that. But I think it's important also to note that although when we talk about the US and kind of renewables more generally, sometimes we talk about being kind of a difficult environment, there are still opportunities there. And all these companies, when I talk to them about the US market, they're still very interested. They're still looking at projects there. So there are still opportunities there for these firms. Okay.