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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 some key jobs

data in the US. I'm Nathan Hager in

Washington.

>> I'm Caroline Hepka here in London where

we're looking ahead to the EU sending

fresh funds to Ukraine and what comes

next in this ongoing war.

>> I'm Doug Krer looking at whether

Australia's economy will show signs of

cooling in Q1. That's all straight ahead

on Bloomberg Daybreak Weekend on

Bloomberg 1130 New York, Bloomberg 991

Washington DC, Bloomberg 929 Boston, DAB

Digital Radio London, SiriusXM121,

and around the world on

Bloombergradio.com

and the Bloomberg Business App.

Good day to you. I'm Nathan Hager. We

begin today's program with some key

economic data in the US. The Labor

Department's allimportant non-farm

payrolls report for the month of May is

due out this Friday at 8:30 a.m. Wall

Street time. For more on the numbers and

their impact on Federal Reserve policy,

we are joined by Bloomberg international

economics and policy correspondent

Michael McKe. We've been looking at this

labor market talking about low hire, low

fire for so long. Mike, is this print

going to be low drama?

>> Uh, let's just say I hope you have a

high tolerance for boredom, at least

according to what the economists are

predicting.

>> Another low high or low fire. The

unemployment rate doesn't change. 4.3%

is the forecast. And that's basically

what the Fed is looking at. They're less

concerned with the number of jobs

created, and that will um basically

change as the the week goes on towards

the jobs number. um as we get additional

information, but it's it doesn't look

like we're going to have any kind of

major change in the number of jobs. Uh

remember last month was 115,000

and at this point because the labor

force has shrunk, you need far fewer

jobs to keep the unemployment rate

stable. So they won't worry if we come

in somewhere any anywhere say between

50,000 and 115,000 or if it gets a

little if it gets a little stronger that

and helps them make the case for rate

increases.

>> Yeah. Well, what's been keeping the

labor market at this this kind of simmer

that we've seen over the last few

months? Is it is it just about

uncertainty around the war? Is it

artificial intelligence? What what do

you see underneath the hood?

>> It's all of that. It's uh in part the

fact that the labor force has shrunk,

but uh companies just keep reporting

over and over again to Fed officials

that I talked to and what we've seen in

earnings reports that they're kind of

frozen at this point because they're

waiting. The new round of tariffs are

coming in July and there's uh still the

war going on and we don't know how long

that's going to last. All the analysts

say if we have a ceasefire, it's still

going to take a month to two months to

get enough stuff flowing through the

straight to uh to where it needs to go

to bring down prices significantly. And

we're not just talking about oil prices.

We're talking about things like

fertilizer, aluminum, uh other products

that haven't been able to get out of

there. So companies are reluctant to

make plans and staff up. And also

they're dealing as you said with the AI

situation of are we going to need these

employees or are we going to need add

add different employees somewhere else

or cut uh out a department because the

computer can do it. So there's a lot of

reasons for companies not to make any

big commitments at this point.

>> Yeah. I keep coming back to that comment

we heard recently from Standard

Chartered CEO Bill Winters about lower

value human capital and how artificial

intelligence could impact the financial

services business. Could we start to see

some of that reflected in the labor

department numbers that we're getting

this week? I don't think they're going

to lay off Jaime Diamond, but it's a

little early to to be able to say that

we are seeing that. There was less

hiring last month in financial services,

but uh AI is only beginning here and

there's there really aren't any

companies other than AI companies who

have a reasonable handle on the people

that they need and we have seen a lot of

AI companies announcing layoffs. So

that's the one area you could watch.

It's going to be a while till we see any

major change in any other area.

>> Yeah. Interesting to to hear you mention

the the AI companies talking about

layoffs because they're not the only

ones that have been uh putting out some

pretty high-profile layoff

announcements. How could that

potentially be reflected in this month's

print?

>> Well, the AI people will show up in

computers and software, software design

in terms of jobs. Uh in terms of other

jobs, it it's really going to depend on

uh whether or not you can tease out an

AI effect. Don't forget that every

company that doesn't do quite as well as

expected tends to announce layoffs after

their earnings because they're going to

rightsize their business or something

like that to try to bring down costs and

keep the stock price up. So that's not

unusual. And the the other thing that

happens is this is a very dynamic labor

force and there are millions of jobs

lost and millions of jobs gained uh each

month and what we talk about is the net

change. So

you'll have all this stuff going on in

the background and we won't really have

a good handle on what's happening for a

while yet. The non-farm payrolls report

for May due out this Friday 8:30 a.m.

Wall Street time. Thank you for this

Mike as always. That's Michael McKe,

Bloomberg international economics and

policy correspondent. Let's take a look

now at some stocks making news in the

week ahead. I'm Nathan Hager with

Bloomberg equities reporter Natalyia

Kenvich. And it looks like this

Wednesday is going to be the day we see

a lot of news with a bunch of companies

reporting including Broadcom. More of

the software story to be told. A

Natalya,

>> that's right. So yes, uh Broadcom uh

reports earnings on June 3rd. The ticker

is AVGO.

you know, uh lots of expectations of

course for this earnings report because

we've heard from CEO who said that uh

the company expects uh to see sales uh

above $100 billion next year. They also

said that AI chip revenue will be at

around $10.7 billion. And then if we

look back um at the latest uh earnings

report, we saw that the company posted

better than expected quarterly outlook.

They also announced a pretty solid stock

stock buyback uh program of as much as

$10 billion. We know that companies have

have been buying back their own stocks

pretty aggressively uh this year. Um

analysts are of course really excited uh

by the company's AI related revenue. We

know that Broadcom expanded agreements

with companies uh like Google and

Anthropic and it's also you know um a

good addition to multi-year visibility

and contracts and we also saw you know

some optimism across uh Wall Street

analysts because on Thursday uh Sesuana

analysts also erased uh the price target

on Broadcom to $490

from $450 and the stock is doing really

well this year on on a year-to-day uh

basis. As of Thursday, the stock was up

by uh 23%. So, it's a pretty solid run.

>> Yeah, nice little run there for that

stock. So, we'll be definitely keeping

an eye on that one along with another

pretty big tech name that's had an even

better run. This is uh Crowd Strike also

reporting Wednesday.

>> That's right. Yes. So, Crowd Strike uh

valuation of course have surged uh this

year helped by deals to make custom

chips for companies like Open AI and

Anthropic. And again, I'm going to site

the latest earnings report because Crowd

Strike uh shares um kind of fluctuated a

little bit, but the software company

reported results that were in line with

expectations. Uh and we know that this

stock among other software uh peers were

really volatile this year because

investors were debating potential

disruptions coming from AI. Cyber

security stocks in particular were

really volatile because anthropic

announced uh new you know features in

its cloud AI model that can scan

different codes for vulnerabilities. So

lots of debates about the sustainability

of the software uh sector uh here in the

United States. Uh nevertheless, we also

see some optimism on Wall Street. On May

27th, Wedbush analyst Dan Ies raised uh

the price target to crowd strike

holdings to $700

from $550. He maintained outperform

rating and as of Thursday, as you

mentioned, the stock has been doing

really well this year. The stock was up

by about 43%. So definitely

outperforming broader markets.

>> Yeah. Well, we know how bullish Dan Ives

of Wedbush is across the AI story. So

his perspective definitely one to uh pay

attention to. Now uh before these uh

tech and software companies report,

we're going to hear from a a big name in

retail before the bell on Wednesday in

Macy's. How are things at Herald Square

these days, Natalyia?

>> Yes. Uh, so you know, I I actually also

go to Maces pretty regularly. When you

go to the department store, it's very

crowded. No signs of, you know, any

consumer concerns or recession. Uh, but

the stock is flat year to date. Um, we

of course keep an eye on Macy's because

it's also a bell weather because it's

such a huge presence across the United

States. So uh Bloomberg intelligence

analysts expect that sales may meet

consensus based on transaction data. Uh

comparable sales could be somewhere at

around 1.3% EPS could top expectations.

Now uh Bloomingdale sales uh which is

around the corner from Bloomberg office.

>> That's right. Yes.

>> Yes. So they expected that sales have

been have risen to low to mid single

digits on the earnings call. Of course,

people will be watching whatever Macy's

says about the progress because they uh

including 200 revitalized stores, all

things on consumer trends, luxury

spending, tariff funds, and of course

the outlook. Uh you know, it's

interesting because Macy's management

also introduced a new letter for the

shape of US economic growth. They expect

E-shaped economic recovery. Oh. where

you know wealthy consumers are doing

well, middle inome consumers hanging in

and lower income consumers are

struggling. So anyway, latest earnings

report by the way was really good. The

company reported better than expected

results. Uh but it did not help the

stock price. Maybe there are lots of

concerns about consumer trends uh going

forward. Maybe something that we have

not seen yet. Yeah, we'll have to think

about uh new alphabet uh letters to uh

talk about the economy, not just M the

ticker K, but E. Uh very interesting.

Thank you for this, Natalyia. That is uh

Bloomberg Equities reporter Natalyia

Kijvich. And coming up on Bloomberg

Daybreak weekend, the EU is sending

fresh funds to Ukraine. We'll discuss

what comes next in the ongoing war with

Russia. I'm Nathan Hager and this is

Bloomberg.

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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 some key economic

data in Australia. But first, Ukraine is

now in the fifth year of its war against

Russian invasion. European allies and

Canada have largely taken over

responsibility for financing Kiev's

military aid. The country is set to

receive the first payout from an EU

support package in June, followed by two

further payments later this year.

Bloomberg Daybreak Europe anchor

Caroline Heepker has more. Nathan, the

conflict in the Middle East has pushed

Ukraine down the agenda, but in June the

country is expected to start receiving

90 billion euros from the EU. The

conflict in the Middle East has pushed

Ukraine down the agenda, but in June,

the country is expected to start

receiving 90 billion euros from the EU,

its vitally needed funding. But it will

finance a Ukrainian war machine, which

has surprised its allies with its

ability to innovate. Increasingly,

Ukraine's drone technology is in demand

as a cost-effective alternative for both

the United States and NATO. Meanwhile,

Russia is having to fend off attacks on

its capital, Moscow, and its refineries.

Tony Halpin leads Bloomberg's coverage

of Russia's government and economy, and

joins me now. Tony, good to speak to

you. A year ago, who can forget

President Trump telling President

Zalinski that Russia holds all the cards

in what's become a historic dressing

down in the Oval Office. If Russia does

hold all the cards, why is this war

still going on?

>> It's a good question. I think u you know

the past year has demonstrated quite a

lot for both Russia and Ukraine about

how this war is evolving. A year ago

when Trump said those things, it was

certainly the case that Ukraine was up

against it. There they were just

emerging from a difficult winter. there

were question marks over continued US

military supplies and uh Russia appeared

to be on the front foot and advancing

slowly if surely um in the east and

south of Ukraine. But since then quite a

lot has changed. I was just recently in

Kiev and and I was really struck by the

degree to which people felt a lot more

confident now about their positions on

the battlefield, about their ability to

push back Russia. And part of that is to

do with drone warfare. Their innovations

in drone warfare are equalizing things

on the battlefield. They're helping to

make up for a shortage of manpower in

comparison to Russia that Ukraine has

always had. And I think they've also

realized they've come through what was a

really brutal winter just this last

winter, by far the harshest of the war.

And maybe there's some optimism related

to the arrival of spring. But they saw,

I think, that, you know, Russia tried to

freeze them into submission. there was a

sustained campaign of uh strikes against

Ukrainian energy infrastructure all

through last winter and it didn't really

work. It didn't extract any concessions

from Ukraine and at the same time

Ukraine has been busy um developing its

own uh weapons industry, developing its

own drone uh output and it feels now

that it doesn't necessarily depend as it

did before a year ago or so on the uh to

the same degree at least on on the US

for weapons that it's secured the

European funding. So some of the

pressure has been relieved there as

you'll remember late last year there was

a big question mark over that and and

Russia seems to be running out of

answers. So they are feeling a bit more

confident I think that they can stand

their ground and perhaps um even force

uh Putin eventually to the negotiating

table.

>> That's interesting that you report on

that change in mood from having visited

the country uh and as you say yes more

independence in terms of weapons

manufacturing. I thought it was an

extraordinary number that Ukraine saying

that it could make as many as 4 million

drones a year. And on the Russian side,

that victory parade that is an annual

event very much paired back this year.

How has Ukraine managed to hold on

against, you know, as you say, a much

larger and more powerful country?

>> If you just look at um the two

presidents, Zilinsky and Putin, for

example, I mean, Zalinsky has been

traveling quite extensively in recent

months. He's been in the Middle East

offering, as you've noted, Ukrainian

drone technology um to countries there

which are suffering from Iranian uh

missile and drone strikes. He's been

traveling extensively in Europe. Putin,

it seems, couldn't even go out onto Red

Square safely without worrying that

there might be Ukrainian drone attacks.

So, there's a there's a clear sense

that, you know, Russia's actions have

been far more restricted now than they

were even a year ago. Um, Ukraine is

holding on because I think essentially

for them, you know, this is an

existential fight, right? If they win

this war or if they prevent at least

Russia from winning this war, then they

get to survive as a nation. If Russia

wins this war, the intention clearly is

for Ukraine to disappear as a country.

Now, that's far more motivating to you

as a soldier if you're defending your

home and your family and your country

and your beliefs against people who

might be there just because uh they're

able to earn a lot more money than they

were earning at home. And Russia has

relied very heavily on very large uh

recruitment bonuses and salary payments

to persuade people to sign contracts to

join the military. So, they are more

motivated. They are innovating much more

quickly because they've been obliged to

innovate much more quickly. that that's

the only way they can really match up

against a country which has far more

resources and far more people. Russia,

you know, in any measure can produce a

lot more than the Ukrainian economy can

in terms of its war economy, in terms of

defense materials, in terms of soldiers.

But the way to answer that clearly has

been to innovate. And we've seen the way

Ukraine has uh developed its its whole

drone industry, which is something now

the rest of the world is looking on with

a degree of envy and and eager to copy.

And we've also seen that they've been

much more innovative in the way that

they've deployed their military than

Russia. Russia has relied in many

respects on a kind of Soviet era

playbook where you just keep throwing

large numbers of people into the fight,

pushing forward in the hope that

eventually your opponent will break.

Ukrainians have been much more nimble on

the battlefield than that.

>> Motivation and innovation really

interesting in terms of the finances.

The EU uh has decided now that Hungary

has lifted its veto to hand over this 90

billion euros in this loan package. How

easy will it be for Ukraine to get all

of that money? You know, what are they

going to use it for in terms of

supporting their wartime economy?

>> Yes, I mean this has been an absolutely

crucial decision. Um, there was every

prospect that Ukraine was going to run

out of money by about June if this money

hadn't appeared. And that would have

been very difficult for them to pay

their soldiers. It would have been very

difficult for them to keep the economy

running as smoothly as it currently

does. So, there's big relief all around

in Brussels and in Kiev that the uh

blockage of this funding has been lifted

and it should flow reasonably steadily.

Now it's a commitment for two years and

it'll be doled out in in tranches

through this year and next year and that

will help uh Ukraine support itself as a

government and an economy and a and a

war effort that previously that they had

some doubts about. There are still

obviously some other issues. is they're

in talks with the IMF about support

packages there. And some of that money

is dependent on Ukraine making reforms,

which many in parliament are opposed to

doing because it's just difficult to do

in a wartime setting if you're trying to

impose extra costs or or or a burden of

taxes on people. But I think there's a

general understanding really that

Ukraine needs this money. It needs to

keep functioning because that's part of

a general European defense position,

right? If if Ukraine loses this war for

lack of funding, it just requires

everyone else in Europe to to spend even

more than they do now uh ramping up

their defense spending and their defense

industries. So, in some ways, this is

viewed as an investment really against

future spending.

>> In terms of the conflict, what might

happen next? It's a horrible phrase,

fighting season, but the seasons, as

you've indicated, play a very big role

in the kind of cadence of fighting. What

do you think might come next?

>> Yes. I mean, it's inevitable because,

you know, the winter is so harsh there.

It's very difficult to move around.

There's a lot of snow. It's very cold.

So, of course, then you get spring and

and everything melts and becomes rather

muddy and it's still quite difficult to

move. But by summer, you've got hard

ground and people are looking to make

some progress when that happens, at

least to improve their positions before

the the winter weather arrives again.

One of the interesting things this year

has been that there was an expectation,

I think, that, you know, Russia was

going to come out of this winter having

bombed Ukraine extensively throughout to

try and weaken morale and undermine the

economy. that they were going to come

out of this winter with some kind of uh

new offensive in spring and summer

intending to put pressure on the front

line and and and try to break Ukraine in

various positions. Ukraine has resisted

that. Russia has not managed in any

point on the front line to make

significant progress. There are still

points where it is grinding forward. And

there are points, it seems, where

Ukraine is managing to push them back,

but any kind of largecale offensive

hasn't occurred, which suggests that

effectively the whole thing is at a

stalemate now on the battlefield. And

that somewhat explains Russia's decision

to revert to to more intense bombing of

Kiev, that they want to try and exert

pressure on the civilian population

because they're not really making much

progress against the military. The risk

there is is is precisely that that the

war just grinds on with you know no one

able to resolve it and no one able to

resolve it militarily uh and that the

diplomacy then just sort of fails uh to

find some kind of form of words that

both sides can sign up to. I think that

is the biggest risk at the moment

because as the US has indicated there

are no active talks going on. The US

isn't really trying to bring the two

sides together at this point because its

bandwidth is consumed by what's going on

in Iran and the Middle East. and and so

it's being left to to the troops on

either side to sort of continue their

actions and and neither side can really

demonstrate that they are able to make a

decisive breakthrough that at at least

at present will will change the course

of the war

>> as you say distracted by Iran. How has

the US's role changed in the war under

President Trump in terms of diplomatic

attempts? Is there anything in the

offing? We started by talking about

President Trump's meeting with President

Zalinski. Maybe we should end thinking

about uh the US attitude in all of this.

>> Yes. I mean, I think Secretary of State

Marco Rubio's words the other day that,

you know, they seem to be the only

people who can who can get this done,

but others are welcome to try if they

want to, was kind of a slightly sideways

dig at Europe's inability to get to the

table. And and one of the things we're

currently watching for is whether Europe

can get its act together and find a

representative who would then engage

with President Putin to try and move the

diplomacy forward. There's been a lot of

talk in Europe about re-engaging in some

form with Russia because that's the only

way that they can really get involved in

the diplomacy that ends the war.

Clearly, they're supporting Ukraine and

President Zinski, but they don't have

engagement with Russia. If that does

happen and if they manage to engage in

that way then the question for Trump

will be whether you know whether the US

steps back or whether it tries to step

and they haven't managed to do it. So

it's an outstanding item in his entry.

We'll have to see if if Europe does find

someone. We'll have to see whether

Russia is willing to engage with that

person. And even if it is the the the

outstanding question remains Russia's

territorial demands and and how willing

or otherwise Ukraine and not only

Ukraine its allies are to uh accepting

Russian demands. If Russia doesn't feel

that it can get a deal on the on the

table, then Putin has indicated that

he's ready to keep fighting even if

there are increasing difficulties as

there clearly are in Russia's economy.

>> Indeed. Yeah. All of this as Europe

prepares to disperse those funds over to

Ukraine in support of their wartime

economy, but what of the diplomatic

efforts? Tony, a pleasure to speak to

you as always. Thank you so much. Tony

Halpin, who leads Bloomberg's coverage

of Russia's government and the economy

talking us through the latest when it

comes to Ukraine. I'm Caroline Hepker

here in London and you can catch us

every weekday morning here for Bloomberg

Daybreak Europe. That's beginning at

6:00 a.m. in London, 1:00 a.m. on Wall

Street. Nathan,

>> thanks, Caroline. And coming up on

Bloomberg Daybreak Weekend, we'll look

ahead to Australia's first quarter GDP.

I'm Nathan Hager and this is Bloomberg.

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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. This week, we get

the reading on Australia's first quarter

GDP. With a closer look, let's get to

Doug Krner, host of the Bloomberg

Daybreak Asia podcast. Thanks, Nathan.

Australia's economy has been in an

upswing for a while, so it seems. The

question now is whether the momentum has

shifted. For a closer look, let's bring

in Bloomberg economist James McIntyre,

who covers the Asia-Pacific for us, from

our bureau in Sydney, and he joins us

from our studios there. James, thank you

so very much. What are we expecting to

learn from this GDP data? Yeah, what

we're expecting to see from uh the late

the March quarter uh reading for

Australia is um is how the economy was

fairing in the initial parts and then

the some of the beginnings of the hit

from the energy price shock. So it is a

bit interesting when it comes to how the

economy is going to get buffeted by the

closure of the straight of horm very

large energy exporter especially when it

comes to natural gas. It delivers an

export boom at the spike in oil prices

and the gas market shortages uh with

Qatar being taken offline. Uh but has uh

while we export gas, we import all of

the petroleum products from Asia and

those Asian refinery disruptions are

costing consumers. So we should see some

of the beginnings of that within the uh

the GDP data. But overall uh we're

likely to see the quarterly pace of

growth ease back a bit. We had a very

very strong 0.8% 8% uh quarteron quarter

growth in in the last the final stanza

of 2025 that's likely to slow down to

0.5 or below for this first quarter of

the year. the real question when it

comes to the RBA um and what it might

mean for monetary policy and what

they're going to be thinking about is

where is the second quarter for the

economy because after this March quarter

data we've seen consumer confidence at

record low levels uh as a result of all

of the uncertainty stemming from the war

with Iran.

>> So what about the tension between

overall economic growth and the poll of

inflation? I mean what is happening on

the inflation front? We've had a spike

uh up in inflation, but we've also had a

real fullcourt press going on from the

Australian government when it comes to

to dealing with the fuel crisis. So, the

direct impact of has been petrol prices

spiking. But the government has given

it's halved its tax uh and handed back

another chunk of tax which has meant

that overall petrol prices or gasoline

uh has is about level pegging with where

it was last year in pre-war. There's a

diesel price shock that's hitting the

economy. That's when it comes to the

inflation side of things. The spike up

and the spike down at the headline level

is is likely to to give us a bit of

volatility. But we have seen a big

cushion there from government action.

Second round effects are going to be

really what's interesting over the next

little while as we see or the next 6, 12

and 18 months as we see the diesel hit

to the economy affecting all of the

transport uh around and Australia is a

small population, big land, rail doesn't

get a lot of love. It's a lot of trucks

driving a lot of things around. That's a

diesel economy and also mining and

agriculture as well. And so when we see

diesel you uh fertilizer, those

disruptions, that's going to push up

food prices down the track. So we've

cushioned the initial impact of

inflation, but there's still a few uh

inflation bogeies uh lying in wait for

us down as we uh move through the rest

of the year.

>> So you alluded a moment ago to the fact

that the consumer seems to be

struggling. Obviously, energy price is a

big component in that, but I'm wondering

about the labor market and how well that

is holding up.

Yeah. So, the labor market has been it's

been a real despite GDP per capita and

uh being negative for quite some time

and having a GDP per capita recession

and so more more consumers in the

economy uh has kept the economy ticking

along. We've actually found jobs for all

of those migrants as well and that's

been a really strong point of the

economy for 2024 and 2025, but we've

begun to see some of that momentum slow.

We've just had uh recently we've had the

April uh labor market data and that's

that's shown some cracks emerging and

the unemployment rate ticking up uh to

its highest level in in a couple of

years. Uh our view is that's likely to

to push further. There's been some cuts

uh in the recent uh budget to some very

employeeheavy parts of the economy that

the government was providing a lot of

injecting a lot of money into especially

around health age care and disability

services. big cuts in those areas means

that those employment intensive bits of

economic growth are actually going to

pull backwards. And meanwhile, we've got

resources side of the economy benefiting

from higher energy prices and some

higher commodity prices. There's, you

know, there's not a lot of jobs when it

comes to to mining uh to digging the

things out of the ground. And so this

swing in the economy means that the

labor market outlook isn't quite as

favorable going forward uh as it's been.

And so we should see the unemployment

rate ticking higher uh over the course

of this year.

>> I'm wondering about the real estate

market. I mean, Australia's homes are

among the most expensive in the

developed world. How have home prices

been holding up? And is there anything

that has been done to address the

shortage of housing supply?

>> Well, the government's been trying uh to

to get a lot at the federal level.

government's been trying to get a lot of

um traction on improving the supply of

housing. Uh some of that responsibility

rests with the state governments and and

uh in that recent budget where uh we

were just discussing before there was a

program uh by the government to inject a

lot of money into to rolling out the

infrastructure so that we can get some

of the green fields developments on the

edge of the cities, new homes uh out the

back in new suburbs. Uh the the

infrastructure for those uh laid out um

and laid out faster so that we can get

moving. But there's a lot of pressure

from the government on states to open up

planning and and the restrictions that

are holding back uh the the

intensification in our in the inner and

middle parts of our cities. That's

what's really needed to get that housing

where the jobs are. But when it comes to

the price side of the economy, you've

really had a bifocation, a two-speed on

two different fronts uh when it comes to

the economy. Sydney and Melbourne, the

big population centers, they have seen

how their housing markets slow over the

course of the of the last year or so.

Whereas the other smaller capitals,

Brisbane, Adelaide, Perth, they've seen

uh very very strong house price growth.

They've been more affordable. They've

got the resources side uh of the uh the

equation when it comes to the uh the the

upside in the economy. And so those

housing markets are roaring ahead. But

even when we look at Sydney and

Melbourne, a government policy to

support first home buyers and help them

uh overcome the deposit gap by the

government underwriting um uh 5%

deposits for them as has actually really

pushed up uh all of the the prices that

first home buyers can reach at the lower

and up to the middle end of the market.

Uh so that's been uh really a strong

point for Sydney and Melbourne. Whereas

ever since November last year when it

became clear that inflation might be

stirring a little and the RBA might be

beginning to take back its rate cuts

that are delivered in 2025. It's

delivered three so far in 2026. But that

top end of the housing market very

interest rate sensitive that has seen a

big slide down uh and that's likely to

be continuing as we see um the

announcement from the government around

taxation changes to housing. It might

actually broaden out some of that

reticence uh and some of that uh hit to

confidence and see that price softening

uh become a little bit more pervasive

across the rest of the housing market,

not just the top end of Sydney and

Melbourne. As long as we're talking

about home prices, maybe another

antipodian jurisdiction. Let's go to New

Zealand. Once home of the world's

biggest housing boom, it now appears as

though that home prices in New Zealand

are in a prolonged downturn.

Give me a sense of what's happening

here.

Yeah. So, uh, the team, uh, led by the,

uh, the New Zealand Bureau has put out a

big take on New Zealand's housing

market. And, and what that piece was

looking at was the big big, um, you

know, I hate to use the bust the B-

word, bust, but the the big prolonged

decline in New Zealand house prices. So,

New Zealand does have ups and downs in

its housing market like every economy.

Uh, but this has been one of the longer

ones and we've seen over about 4 and 1/2

years now. Uh, since late 2021, uh,

house prices has peaked then and they

have not recovered and they've continued

to track sideways. Um, what's happened

there is we've had a 16% fall from the

peak to where we are now and things

still don't look all that great. Um when

we think about the inflation that's

happened over the time uh since that

time since 2021 uh especially that

inflation shock post Russia's invasion

of Ukraine um that real house price

decline very significant so many

consequences of this uh for the economy

but what's driven it well classic and

sorry to be an economist here but u

supply and demand so what's happened is

that um New Zealand's economy it's been

uh in and out of recession for the last

couple of years the labor market. We've

seen the unemployment, it's been very

weak. We've seen elevated unemployment

there and net overseas migration, which

is usually a big positive for New

Zealand's economy. Because Australia has

been doing well in New Zealand's been

weak. As a New Zealander or as an

Australian, you can choose to live and

work in either in either country. That's

a uh a deal that we have uh between both

economies. Uh we have a common economic

market. And so what's happened is with

the weakness in New Zealand, we've seen

New Zealanders move over to Australia.

And when they do that, the demand for

housing uh whether it's the rental

market or to purchase is weak there.

Then New Zealand managed to do what so

many countries in the Anglosphere have

struggled with over the recent decades.

they managed to get their h unlock their

housing supply, get those regulations

that are holding the supply of housing

back removed in some instances or really

freed up so the market could deliver a

lot of housing and it did. And so what

we've had is we've got this combination

of a recession, a high unemployment

rate, weak migration, and a strong

supply of dwellings. Guess what?

Nobody's uh you know, the price is is

the the thing that's correcting there,

and it's been there for quite some time.

I'm I'm curious though, James, about

non-Kiwi home buyers, whether there has

been or was an influx of foreign buying

and maybe that trend shifted a bit. Is

is that something that we need to

consider? that was there uh that was

there and it was it was very much at the

higher end and you had some big names uh

there was a trend for quite some time uh

for for uh some you know some notable

figures uh Silicon Valley Peter Teal for

example buying the New Zealand bugout um

uh joint. So if everything goes wrong

you hop on a plane and you fly across

the Pacific and um and you'll be safe

and sound uh in in New Zealand, the land

of milk and honey uh while whilst the

world tears itself apart. um there you

know so that was a trend very much uh uh

something that uh really pushed up some

of the higherend prices um the New

Zealand government uh different

governments cut uh cut back on that put

in place residency restrictions so we

didn't have that you know kind of um

foreigners just buying up and holding

these places as a um as a you know a

kind of a doomsday card instead you had

to be a resident uh and and so there was

there was that program The new

government introduced a golden visa. You

could, if you brought $5 million worth

of um funds, you could either purchase a

home or purchase a business and that

would guarantee New Zealand citizenship.

That didn't really get taken up as well.

>> James, we'll leave it there. It is

always a pleasure. Thank you so very

much. Bloomberg economist James

McIntyre. He covers the economies of the

Asia-Pacific, notably Australia and New

Zealand. I'm Doug Krishnner. You can

catch us for the Daybreak Asia podcast

weekdays. It's available wherever you

get your podcast. Nathan,

>> thanks, Doug. And that does it for this

edition of Bloomberg Daybreak Weekend.

Join us again Monday morning at 5 a.m.

Wall Street Time for the latest on

Markets Overseas and the news you need

to start your day. I'm Nathan Hager.

Stay with us. Top stories and global

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