Daybreak Weekend: US Jobs, UK Elections, RBA Decision

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1:27Bloomberg 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 April jobs numbers in the U.S. I'm Nathan Hager in Washington. I'm Caroline Hepger in London, where we're looking ahead to an unusually important set of U.K. local elections. I'm Doug Krisner looking at how higher oil prices will affect the thinking at 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.

2:26Good day to you. I'm Nathan Hager. We begin today's program with some key economic data in the U.S. On Friday, we get non-farm payrolls for the month of April at 8.30 a.m. Wall Street time. Here with us for more on what to expect on Jobs Friday and how that data could affect Fed policy is Stuart Paul, U.S. economist with Bloomberg Economics. Stuart, great to speak with you. I mean, it seems like we've been in this low-hire, low-fire environment for a while now. Now, are the April numbers going to change that? You know, I don't think that the April numbers are going to change the thematic view that this is a low-hire, low-fire situation, a low-hire, low-fire environment.

3:06Right now, the consensus expects about 60 ,000 jobs were added during the month of April. And that's a notable slowdown from the hiring pace registered in March when about 178 ,000 workers were added to payrolls. Now, 60 ,000 would still be a relatively strong reading. The break-even hiring pace, that hiring pace that's needed to hold the unemployment rate steady, is likely closer to about 35 ,000 jobs added. So 60K is a healthy print. It's even probably enough to push the unemployment rate down to 4.2 % from 4.3 % in March. That said, Nathan, when we look at alternative data sources, we're actually a little bit more cautious.

3:45High-frequency and private sector data suggests that the hiring pace was a bit slower than the consensus expects for April. But the timing of Easter, which was celebrated during the payroll report survey window, will definitely add a lot of noise to the data. So when we zoom out, when we think about the labor market in its totality, when we filter out the noise and account for the month to month volatility that we've seen throughout the start of this year, what we're basically seeing is a hiring pace that's just a little bit faster than we saw throughout last year. That's despite policy uncertainty, despite the war in Iran.

4:19And it's a healthy enough hiring pace to weigh on the unemployment rate. Like you say, it's relatively low hiring, but we also have a low enough degree of firing that the unemployment rate could be inching down. How do you account for the relative resiliency that we are seeing in this labor market, despite all the uncertainties and all the pressures that you were just talking about? There's a lot of investment going on. We saw in the first quarter that investment plans and an actual investment that was laid out during the quarter was really strong. And when you have a lot of investment, you're also going to have some demand for workers to work those machines.

5:04And I think that that's part of what's sustaining the labor market right now. Beyond that, we're also getting a little bit of fiscal thrust. We had the distribution of relatively high, relatively large tax refunds throughout the first quarter and also obviously through April. And when that's the case, you have strong enough demand. You have enough going on in terms of total economic activity that workers are going to find places to land. They're going to find jobs to serve that demand. And so right now we have a little bit of fiscal thrust. We have a lot of CapEx coming online and we have enough labor demand to serve both of those needs to sustain the labor market where it is and to prevent any sort of fallout and ramp up in hiring, so to speak.

5:54Do you expect that to be able to continue to be sustained if we continue to see a conflict in the Middle East continuing? I expect so at least for some time. It doesn't look to me like the stimulus and the stimulative effect from the One Big Beautiful Bill Act and the tax refunds that people are seeing, it doesn't look like that's going to be depleted by high energy prices, at least through the summer. It looks like consumers at least have that long of a runway. And if consumption can last that long, then I don't think that firms are going to be retrenching in their demand for labor, at least not immediately.

6:31And again, it looks like we're just in that low-hire, low-fire, relatively undynamic labor market right now where enough workers are landing on their feet and finding jobs to keep the unemployment rate relatively low. So it's not screaming labor market dynamism. But again, it's enough to create smooth enough sailing in the near term, despite the kinetic conflict in the Middle East, that, for example, the Fed can stay on hold. It has enough time to wait it out and make a more deliberate decision in the second half of this year. Yeah, we just came out of a Fed decision just last week where they did decide to stay on hold.

7:14We did get those dissents from three policymakers who say they oppose the language that hinted at interest rate cuts down the road. Do you expect this jobs report to shift that bias in any way? It's interesting. When we look at the labor market and we look at which direction the risk cuts for the unemployment rate, odds favor the unemployment rate coming down. And I expect that the central bankers in the room last week understood that same reality, that the risk is skewed towards the unemployment rate coming down. And when that's the case, to the three relatively hawkish members who did not want to include a dovish bias in the FOMC statement, it's very understandable why they wanted to strike a more neutral tone.

8:01If you expect the labor market to be improving modestly and you expect the unemployment rate to inch down, why suggest that the next move is going to be an interest rate cut? So I totally understand that. And I expect that this April jobs report is going to affirm exactly what those relative hawks on the committee were saying, where they should be striking a relatively more neutral tone at this moment. Appreciate this, Stuart. As always, that's Stuart Paul, U.S. economist with Bloomberg Economics. Let's take a look now at some stocks making news in the week ahead. I'm Nathan Hager, joined by Bloomberg Equities reporter Matthew Griffin with more earnings to stay on top of this week.

8:41Matthew, maybe the biggest name that we're looking at is the biggest name in entertainment. Walt Disney reporting earnings on Wednesday, the first one under the new CEO, Josh DeMauro, if I'm not mistaken. Is that right? Yes. And Nathan, I think that's going to put a lot of focus on what the company says here, on the questions that they take from analysts, and on what the new CEO has to say. You do have relative optimism among analysts to expect single-digit growth in both adjusted earnings per share and revenue. So, that's$1.51 in EPS and nearly$25 billion in revenue. But if you think about the news for this company in recent months.

9:23A lot of it has, again, been about what the company has to say. So on the financial side, you had the share sell off after the last earnings. Disney said they expected only modest growth in the March quarter as they, for example, had trouble getting international visitors to come to their parks. It's getting more expensive to air live sports. Now, under Josh DeMauro's tenure, you have this dust up with the Trump administration yet again over Jimmy Kimmel. I think analysts are really going to pepper this company with questions and are going to be listening closely as are investors to what they have to say.

9:57I mean, what is the pressure on DeMarro to outperform given the stock performance so far this year? Yes. You know, it's interesting. I do think investors had some level of patience with Bob Iger, even though the company wasn't necessarily seen as innovating or is growing to the extent that people wanted. So he may have a bit of runway and he's making some moves. The company does have plans to cut jobs in an attempt to cut costs. But I do think there's going to be an expectation eventually of better results and better stock performance than Eiger delivered in his second tenure at the company. The stock was up during his time as CEO, but badly trailed the broader market.

10:39All right. So that could be the marquee event this week when we hear from Disney on Wednesday. But before that, after all the tech earnings we saw last week, we hear from one more name in the chip space on Tuesday. What are we looking for from advanced micro devices? Well, Nathan, I think investors are going to be expecting a lot from the chip maker. You have the shares trading at all-time highs. And if you think about what we've seen in recent weeks, you had blockbuster outlooks from Intel, from Texas Instruments, share reactions to match. Now you've had the sort of hyperscaler technology companies such as Meta raise their expectations for capital expenditures this year.

11:17If you look at the actual numbers that analysts are looking for. They're looking for just under$9.9 billion in revenue. That's in the range that AMD gave when they last reported earnings. That being said, that was seen as disappointing at the time. You had the stock's steepest drop in years after that. And if you look at the stock rally now, investors may be looking for some upside there. Yeah, I mean, there's a lot of upside already with this stock. It's been surging since the start of the year. Is this almost a price to perfection moment for AMD? So yes, this stock up 62 % year to date, and it does feel like the entire semiconductor ecosystem is priced to perfection.

12:02You had the Philadelphia Semiconductor Index just went on a record-long winning streak. You just look, basically there's green across the board. And yet at the same time, There are questions about the profitability of investments in artificial intelligence. Investors just constantly have their eyes on that. And I do think each individual company is going to be expected to deliver something concrete for investors to chew on. Also on Wednesday, we hear from Marriott International. Always curious to see how travel names are doing, given all that's going on in geopolitics. Yes. And the really interesting thing here with Marriott International is that this also looks like a stock that may be priced for perfection, even during the war in Iran.

12:50The stock is trading close to all-time highs. Again, even though hotels in the Middle East, many of them are near empty, even though consumers are facing pricier airfares, are facing higher fuel costs that are eating into their budgets, Right now, investors are positioned in hotel names as if that's not going to matter, as if there's going to be enough upside, especially from, for example, higher income consumers to wash all of that away. But we've started to see some weakness showing up, for example, in outlooks from Hilton and elsewhere in travel from Booking Holdings. I think investors and analysts want to know whether Marriott's under some of that same pressure.

13:33All right. Well, we'll be watching for it all with earnings coming up later this week. That is Matthew Griffin, equities reporter for Bloomberg News. Coming up on Bloomberg Daybreak Weekend, we're going to look ahead to an unusually important set of local elections in the U.K. I'm Nathan Hager, and this is Bloomberg.

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14:38Want to lend a hand? Explore Garnier's partnership with the National Park Foundation and learn how you can help support our national parks at garnierusa.com slash NPF. The Bloomberg Sustainable Business Summit returns to Singapore on July 22nd, Our fifth annual Asia Pacific Summit will explore how business and finance leaders are shaping the next phase of globalization by strengthening resilience, advancing climate adaptation and driving a multi-speed energy transition across Asia's diverse markets. Join us for solutions driven discussions, interactive workshops and networking opportunities. Learn more at Bloomberg Live dot com slash SBS dash Singapore.

15:19This 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 our program, we'll look to a monetary policy decision from the Reserve Bank of Australia. But first, voters across the UK go to the polls May 7th in the biggest test for political parties at the ballot box since Keir Starmer's left-leaning Labour Party won the UK's general election in July of last year. We get more from Bloomberg Daybreak Europe anchor Caroline Hepker in London. Nathan, local councils are in charge of providing care for the elderly and disabled, fixing roads, collecting rubbish and dealing with planning applications.

15:59Usually local elections are, well, local. But this set of elections is going to be much more significant, with voters in Scotland and Wales also electing representatives to their national parliaments. Not only are local council taxes going up, but this could also be a hugely significant moment when UK politics shifts decisively from the dominance of a few parties to fracturing into possibly as many as seven. Barely two years since the Labour Party won a landslide election. With 5 ,000 council seats up for grabs in England, here are the five main parties in England talking about their hopes. More rights at work, more security for renters, lifting half a million children out of poverty.

16:48That's our mandate, that's our mission and nothing's going to hold us back. It's been one disaster after another. Cronyism. Jobs for friends of convicted paedophiles. Peerages for other friends of convicted paedophiles. Broken promises on taxes. U-turn after U-turn after U-turn. Just a few years after we went through all this under Bryce Johnson and the Conservatives and less than two years after the British people voted them out of office for indulging in this sort of chaos and distraction, here we are again. I genuinely believe that reform are going to do so well in the Midlands, the North, South Wales, that it will be the end of the Prime Minister and frankly you know I'm of the view that this is the most unpatriotic un-British dissembling prime minister that the country's ever had.

17:38I think one of the reasons we're seeing the rise of the far right in our communities or some of our communities is because people feel in fact they don't just feel they know that politics is being done to them rather than with them people feel like they're not involved in decisions money is being spent and they feel like their communities are disintegrating that they're being frayed at the edges. So that was Labour, the Conservatives, the Greens, Reform UK and Liberal Democrats talking about their hopes for the local elections. Well, joining me now is Irina Angel, our UK economy reporter and James Woolcock, our UK politics reporter.

18:14Just lay out how big these elections actually are. I mean, as I say, local elections are usually about potholes, but perhaps not this time. That's right. So this round of elections is big in scope. So they will determine, they might determine the fate of Prime Minister Keir Starmer, but they're also very big in size. So on May 7, the same day that Scotland and Wales vote for new governments, we have over 5 ,000 seats up for grabs in 136 of England's almost 200 local councils. And that's predominantly in London and the Southeast. So compared to last year's, these elections are taking place on much more Labour territory.

18:51And that's what makes them essentially a referendum on Starmer's leadership. Yes, that's interesting. You've been looking at the data. These elections are then showing also quite a fracturing. It's not actually about just the traditional opposition party, the Conservatives. It might be about many more parties this time around. That's right. Labour and the Conservatives, so the two parties that have dominated British politics, they've been losing support in all directions, really, in recent years, you know, amid the cost of living crisis, political scandals, unpopular fiscal measures and lots of other things.

19:28But at the national level, we now have five parties. So Labour, the Conservatives, Reform, the Greens and the Liberal Democrats pulling in the double figures. and you know at the local level together Labour and the Conservatives only hold just over half of all council seats and that's the lowest since at least the 1970s after last year's locals so that proportion used to be around 70-80 % over the last 50 years and the thing is it could go even lower so pulling ahead of the May 7 locals shows that a good night for Labour and the Tories would mean losing hundreds of seats each but on a good night performance the Greens could win over a thousand seats each.

20:09So the two-party system has been fracturing for a while now but this round of local elections might deliver the final blow. Yeah, absolutely. And we're going to be watching in lots of different regions, aren't we? The nations and regions, yes, Scotland and Wales but also the West Midlands and London. London's been a traditional stronghold of the Labour Party. They control 21 out of 32 boroughs in London. James, let me turn to you. We have seen Keir Starmer in trouble, a lot of trouble. Why, though? As we think about this set of local elections as being a major test for Keir Starmer and his government, why has it come to this?

20:50I think if there ever were a honeymoon for winning the Lancelot election in 2024, it's not just ended, it's gone down in flames. Now, with politics, it's all messy and interlinked with each other. But if you're trying to condense this into three reasons, Starmer is the most unpopular prime minister in modern politics, not just in the extent of popularity, but in the speed of which he has become unpopular. He is scandal prone. And I say this because he has lost two of his chiefs of staff, the most recent one just this January. He has lost two heads of the civil servants. One stepped down, naturally Simon Casey, the other one was sacked, Chris Wormald.

21:25He's on his third, Antonio Romeo. He's lost his deputy prime minister, Angela Rayner, and had to replace her as well. There has been multiple chopping and changing this government. And that has led to him, amongst other reasons, being seen as weak. In January, Labour's head in Scotland, Anna Sarlot, disowned him and said he should leave prime minister. All this adds up to say there are clear rumblings now from sort of leadership rivals who can all, like me, Caroline, read a calendar, see sort of the writing on the wall for the next week and are starting to sort of wonder if this might be the moment they step into the limelight and say they could do a better job.

22:06So, Irina, lots of anticipation then on what the results might actually show because that's going to be key. You know, just how badly Labour does will be important. one of Britain's most well-known pollsters, John Curtis, talking about the elections posing a potentially remarkable calamity for the government and also for the Conservatives. So what are we thinking about and expecting in terms of results? Any clear winners and losers? Well, so if you ask voters themselves, they expect a power shift towards the insurgents, towards reform and the Greens. and they do blame Labour for the decline in public services, both at the national and at the local levels.

22:50However, there is not one party that's seen as the replacement. When asked who would be the best at running the local council, a quarter of voters say they just don't know, while the rest are split between the five parties. So Gideon Skinner from IPSA said that we're in this sort of multi-party system where no one convinces the majority. So if there is a winner, a clear winner from these local elections, it might not be an actual party. It might just be the new multi-party system. OK, yeah, which I suppose is quite European in some ways, isn't it? I mean, if you compare the number of parties in many European countries.

23:27James, how quickly do you think that this could unravel? The local elections are on a Thursday. Take some time to get the results. What could be the fallout? It all depends on if one of these leadership contenders in Labour chooses to say this has gone terribly, we need a change of leadership. If that sort of boulder starts going down the hill, it can happen very quickly indeed. I mean, I look back to Boris Johnson when he left office, the Conservative Prime Minister. All it took was the then Chancellor Rishi Sunak saying his confidence was up. And then like a sort of tide bursting a bank, so many more politicians joined in behind him.

24:11On the other hand, increasingly now, it's looking like there are multiple different factions inside Labour. Some sort of in the sort of centre-right unite behind, say, where's Street in the health sector? some prefer Angela Rayner, the former deputy prime minister, like Andy Burnham, the current mayor of Manchester. No one has yet seemed to have a quorum, at least based on what we're seeing in public. And that might mean that with everyone struggling to get on top, no one says anything. And then we could be in a position for months that Keir Starmer could still be in office by the end of this year.

24:41It could just gum up the system. But Caroline, what you've got to understand about local elections is it is no MPs are voting, no sort of lawmakers in parliament are on the line here but all their councillors are all the people who've backed them for their seats are all the people who campaign for them are there and it is a real psychological loss for a lot of these mps if they lose all of the people who go and campaign for them and those people are ringing them up on the mobile saying it was your national government that lost me my job. And it is often a really psychological punch to the face that many governments, in the UK at least, can be unwound by.

25:23OK, well, that's pretty colourful. Yes, Andy Burnham. I mean, I'll add that that's a difficult issue, isn't it? Because, of course, he may be the mayor in Manchester, but he isn't a sitting MP. There's lots of difficulties with that point. Irina, some last pointers then for us as we think about these local and they are national elections too in Scotland, in Wales. What should we be thinking about? So if you look at Scotland, Scottish politics has also become increasingly fragmented and voters are signalling a strong appetite for change there after 15 years of SNP dominance. So traditional parties are losing ground and insurgents are gaining tractions.

26:04You know, in voters, we see them transferring across the traditional sort of independence divide. And the election there is being cast as this contest between the incumbent SNP and reform, which is making its first breakthrough in Scotland. Despite widespread demand for change, the SNP, which is anchored by its commitment to independence, still looks likely to remain in government. Then moving to Wales, their pollsters project Labour to record its lowest share of seats since the early 1900s. And it might lose control of the Wales legislature for the first time since it was formated in 1999. And then the left wing pro-independence Plaid are vying with reform for first place.

26:50In the end, you know, Plaid might be on track to lead a minority government potentially in coalition with Labour. But even there, you know, reform really is on track to form the official position. So very much the same fragmentation conversation going on across the UK. Yeah, absolutely. It's going to be a very interesting time. My thanks to Irina Angel, our UK economy reporter, and to James Wilcock, our UK politics reporter, for laying it all out for us, the local elections in the UK, in England, and, of course, the votes for the Senate and the Scottish Parliament on the 7th of May. I'm Caroline Hepker here in London.