Episode summary
Daybreak Weekend: US PCE, London Climate | Bloomberg Daybreak: US Edition
Bloomberg Daybreak: US Edition
· · 38 min · Hosts: Nathan Hager · Guests: Stuart Paul, Avalon Pernell, Joe Wertz, Olivia Rudgard, James McIntyre
Summary
US inflation remains the centerpiece of the week ahead, with the host and a guest arguing that Thursday’s PCE report should confirm sticky price pressure even as some of the June outlook looks softer. The guest expects monthly headline PCE inflation of about 0.5%, lifting the annual rate to 4.1%, with core PCE around 0.4% on the month and 3.4% year on year. He said the Fed’s recent tone, including its emphasis on price stability, looks hawkish, but also argued that some of the economy’s strength is structural rather than cyclical, which could still leave room for a rate cut next year if labor data weakens.
Key takeaways
- The guest expects Thursday’s PCE report to show 4.1% headline inflation and 3.4% core inflation, still well above the Fed’s 2% goal.
- The guest said falling energy prices and fading tariff pass-through could create disinflation starting in June and continuing through the second half of the year.
- Avalon Pernell said Carnival could move about 6% after earnings, with investors focused on the Strait of Hormuz, fuel costs and bookings since March.
- Avalon Pernell said FedEx options imply a nearly 7% move as investors assess the freight spin-off, new leadership and margin targets.
- Avalon Pernell said Darden options imply about a 4% move, with analysts watching whether consumer demand and restaurant mix stay resilient.
- Joe Wertz and Olivia Rudgard said Europe’s heatwaves are already affecting nuclear power, flood risk, insurance costs and consumer spending on air conditioning.
Notable quotes
“The PCE will be top of mind. What's good though is that CPI and PPI are used as the primary inputs for PCE inflation”
“we're expecting to see about 0.5% monthly headline PCE inflation. That's going to boost the annual PCE inflation rate to about 4.1%”
“I'm expecting to see some disinflation coming in June and thereafter and as you mentioned, you know, the memorandum of understanding, the reopening of the Strait of Hormuz both help”
“option data that we are seeing at the moment is currently implying about a 6% move after those results”
“we've seen the economic surprise index for Australia that City Bank economic surprise index really fallen to deeply negative territory”
How the episode opens
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 to the Fed's preferred gauge of inflation and how it could affect policy going forward. I'm Nathan Hager in Washington.
I'm Caroline Hepker here in London, where we're looking ahead to London Climate Action Week. — I'm Doug Krizner looking ahead to the latest reading on consumer inflation for 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.
Good day to you. I'm Nathan Hager. We begin today's program with some key economic data in the US and we are getting a lot of it this week.
The Federal Reserve's preferred gauge of inflation comes out this Thursday along with an updated reading on economic growth at the start of the year along with a slew of other readings to help us get set for the flood of data. We're joined by Stewart Paul, US economist for Bloomberg Economics. And I'd have to think, Stewart, after what we heard from the new Fed Chair Kevin Warsh last week about the commitment to price stability, the PCE has got to be really top of mind.
Is that how you see things right now?
The PCE will be top of mind. What's good though is that CPI and PPI are used as the primary inputs for PCE inflation. So, even going into last week's FOMC meeting, central bankers had a pretty good feel for what we're likely to see in this upcoming personal income and outlays and PCE inflation report.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- us pce
- us gdp
- stocks week ahead
- london climate action week
- australia cpi
Companies and tickers mentioned
- Bloomberg
Watch the episode
Watch “Daybreak Weekend: US PCE, London Climate | Bloomberg Daybreak: US Edition” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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