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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 look ahead to April jobs numbers in the US. I'm Nathan Hager in Washington.
I'm Calaine Hebga in London, where we're looking ahead to an un usually important set of UK local elections.
I'm Doug Prisner 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 eleven three yeh New York, Bloomberg ninety nine to one, Washington, DC, Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias XM one twenty one, and around the world on Bloomberg Radio, dot 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. On Friday, we get non farm payrolls for the month of April at eight thirty am. Wall Street Time Here with us for more what to expect on jobs Friday and how that data could affect FED policy is Stuart paul Us, economist with Bloomberg Economics. Stuart, great to speak with you. I mean, it seems like we've been in this low
higher low fire environment for a while 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 higher low fire situation, a low higher low fire environment. Right now, the consensus expects about sixty thousand jobs were added during the month of April, and that's a notable slowdown from the hiring pace registered in March, when about
one hundred and seventy eight thousand workers were added to payrolls. Now, sixty thousand 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 thirty five thousand jobs added, So sixty k is a healthy print. It's even probably enough to push the unemployment rate down to four point two percent from four point
three percent in March. That said, Nathan, when we look at alternative data sources, we're actually a little bit more cautious. High 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 reports survey window, will definitely add a lot of
noise to the data. So when we zoom out, when we think about the labor market and 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, and 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 entering 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, and 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 cap X 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.
Do 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. Consumption can last that long that I don't think that firms are going to be retrenching in their
demand for labor, at least not immediately. And again, it looks like we're just in that low, higher, 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. 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. But we did get those descents from three policy makers who say they oppose the language that hinted at interstraight 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, 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 banker is 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 dubbish bias in the FMC statement, it's very understandable why they wanted to strike a more neutral tone. If 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 we're saying, where they should be striking a relatively more neutral tone at this moment.
Appreciate this, Stuart, as always, that's Stuart paul Us economist with Bloomberg Economics. Let's take a look now, add 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. Matthew, 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 Tomorrow, 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 who expect single digit growth in both adjusted earnings per share and revenue. So that's a dollar fifty one in EPs and nearly twenty five billion dollars in revenue. But if you think about the news for this company in recent months, a lot of it has again been
about what the company has to say. So on the financial side, you had to 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 Tomorrow'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 our investors to what they have to say.
I mean, what is the pressure on Tomorrow 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 as 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 in 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.
All right, So that could be the marquee event. This week, 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 hyper scaler technology companies such as Meta raise their expectations for capital expenditures this year.
If you look at the actual numbers that analysts are looking for, they're looking for just under nine point nine billion dollars 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 sixty two percent year to date, and it does feel like the entire semiconductor ecosystem is price to perfection. You 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 and dual 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, the 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.
All 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 day Break weekend, We're going to look ahead to an unusually important set of local elections in the UK. I'm Nathan Hagar and this is Bloomberg. This is Bloomberg day Break 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 will look to a monetary policy decision from the Reserve Bank of Australia. But first, voters across the UK go to the polls May seventh, in the biggest test for political parties at the ballot box. Since keer Starmers left leaning Labor Party won the UK's general election in July of last year. We get more from Bloomberg Daybreak europe banker Caroline Hepger 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. Usually 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 Labor Party won a landslide election with five thousand council seats up for grabs in England, here are the five main parties in England talking about their hopes.
More right, more security for renters, lifting half a million children out of poverty.
That'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 pedophiles, peerages for other friends of convicted pedophiles, broken promises on taxes, you turn after U turn after you turn.
Just a few years after we went through all this under Bryce Johnson and the Conservatives, in less than two years after 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, Unbritish, dissembling prime minister that the country's ever had.
I 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 the communities are disintegrating, that they're being afraid of the edges.
So that was Labor, the Conservatives, the Greens, Reform UK and Liberal Democrats talking about their hopes for the local elections. Well, joining me now is Irena Angel, our UK Economy reporter, and James Walcock, ore UK Politics reporter, just 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 Cure Starmer. But they are also very big in size. So on May seven, the same day that Scotland and Wales vote for new governments, we have over five thousand seats up for grabs in why one hundred and thirty six of England's almost two hundred local councils,
and that's predominantly in London and the Southeast. So compared to the last years, these elections are taking place on much more labor territory and 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, Labor and the Conservatives. So the two parties that have dominated the British politics, they've been losing support in all directions really in recent years, you know, amid the cost of living crisis, political scandals on popular fiscal measures and lots of other things. But at the national level we now have five parties, so Labor, the Conservatives Reformed, the Greens and the Liberal Democrats pulling in the double figures.
And you know, the local level, together Label and the Conservatives only hold just over half of all council seats and that's the lowest since at least the nineteen seventies, after the last year's locals, so that proportion used to be around seventy eighty percent over the last fifty years. And the thing is it could go even lower. So pulling ahead of the May seven locals shows that a good night for Labor and the Tories would mean losing hundreds of seats each, but on a good night performing
the Greens could win over one thousand seats each. So 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 lots of different regions, aren't we. The Nations regiency as Scotland and Wales, but also the West Midlands and London, London's mini traditional stronghold of the Labor Party. You know they control twenty one out of thirty two boroughs in London. James, let me return to you. We have seen kistom in troll,
but a lot of trouble. Why though, you know, 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?
I think if there ever were a honeymoon for winning the Lands election twenty twenty four, it's it's not just ended, it's gone down in flames. Now with politics, it's all messy and interlinks 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 and one step down naturally. Simon Casey Lorn was sacked, Chris Wormold he's on his third. Antonio Romeo. He's lost his deputy Prime Minister Anderna 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, Labor's head in Scotland, Annas Starwak, disowned him and said he should leave Prime minister. All this sounds up to say there are clear rumblings now from sort of leadership rivals who can all, like me Karine's reader 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.
So Irena. Lots of anticipation then on what the results might actually show, because that's going to be key. You know, just how badly Labor does will be important. One of Britain's most well known polsters, 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 reforming the Greens. And you know, they do blame labor for the decline in public services, both with the national edit.
The local levels.
However, there is not.
One party that's seen as the replacement. You know, 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, you know, Gideon Skinner from IPSU said that we're in this sort of multi party system where no one convinces the majority. So if there was, 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.
Okay, 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, James, 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.
All the pens on if one of these leadership contenders in Labor 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 She's sunac saying sort of his confidence was up, and then like a sort of tide bursting a bank, so many more politicians joined in behind him.
On the other hand, increasingly now it's looking like there are multiple different factions inside Labor, some sort of in the sort of center right unite behind say where's streeting the health sefety some prefer and as the rain of the former deputy Prime Minister, like Andy Burnham, the current
mayor of Manchester. No one is yet seemed to sort of have a quorum, at least based on what we're seeing in public, and that might mean that with no everyone sort of struggling to get on top, no one says anything, and then we could be in the position for months that could still be in office by the end of this year. It could just gum up the system.
But currently, what you've got to understand about local elections is it is no MPs are lawmakers in Parliament are on the line here, but all their counselors 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 their people who go and campaign form 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 Okay, well that's pretty colorful, 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 MPs. There's lots of difficulties with that point. I mean, are some last pointers then for us? So as we think about these local and they are national elections to 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 signaling a strong appetite for change there after fifteen years of SMP dominance. So traditional parties are losing ground and insurgents are gaining tractions. You 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 SMP and Reform,
which is making its first breakthrough in Scotland. You know, despite widespread the mind for change, the SMP, which is anchored by its commitment to independence, still looks likely to remain in government. Then, moving to Wales, their posters project Labor to record its lowest share of seats since the early nineteen hundreds, and it might lose control of the Wales Legislature for the first time since since it was
format in ninety nine. And then the left wing pro independence plied are vying with Reform for first place.
In the end.
You know, Applied might be on track to to lead the minority government, potentially in coalition with Labor. But even there, you know, Reform really is on track to 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 Arena and Gel our UK Economy reporter, and to James Walcock, are UK politics reporter, 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 seventh of May. I'm Caroline hepget here in London. You can catch us every weekday morning here for Bloomberg Daybreak Europe, beginning at six am in London. That's one am on Wall Street.
Nathan, Thanks Caroline. Man Coming up on Bloomberg Daybreak weekend, we'll look to a cut decision on interest rates from the Reserve Bank of Australia. I'm Nathan Hager and this is Bloomberg. This is Bloomberg day Break Weekend, our global look ahead at the top stories for investors in the
coming week. I'm Nathan Hager in Washington. The Reserve Bank of Australia has an interst rate decision in the coming week, and for a preview, let's get to Doug Prisner, host of the Bloomberg Daybreak Asia podcast.
Thanks Nathan. Central banks around the world are being challenged right now by a surge in oil prices following the war in Iran. It's more of a dilemma actually, since higher oil prices cut both ways. Obviously they produce higher inflation while at the same time threatening economic growth. So how will the RBA respond to the current situation. Let's bring in Bloomberg economist James McIntyre. James covers the economies of the Pacific and he joins from our studio in Sydney.
Thank you for being here. Before we get to the impact of the war and how it's affecting the Australian economy, take me back and help me understand what was happening before this conflict broke out in late February.
So before the conflict broke out, we'd had the RBA being a little bit concerned about inflation and raising interest rates two months in a row in February and early in March. Before things really became concerning, the RBA had been thinking that it's outlook for the economy, that there was a little bit more demand than they were expecting. And there's some reasons for that.
We do.
Prior to all everything that's gone on with the war, the global economy, Australian economy in particular, but the global economy was bracing for a positive demand shock from the
mega investments coming through from AI. Australia has got a very large pipeline of AI investment coming through and so the RBA was looking at that and everything else that was going on in the economy thinking that they needed to take a little bit of a heat out of demand, and they delivered two twenty five basis point hikes in a row to try and prevent inflation from getting away and try and make room in the economy for this positive demand shock coming through. So that's where we were.
Unemployment was low, inflation a little bit high, and a little bit of signs of early cooling in the core of the property market in Sydney and Melbourne. And so that's the lay of the land before we had the big energy shock coming through.
Okay, so that takes us to where we are.
Now.
What has the impact of the war been.
Yeah, we're dealing with a lot of high frequency indicators and sentiment indicators. The hard data is only starting to hit. But in those sentiment indicators, we've seen consumers in particular really pull their heads back. In the weekly readings of consumer confidence, we've seen some of the weakest readings on record, worse than twenty twenty two in response to the Ukraine Russia conflict and the impact on energy markets there, and we're still from the lockdowns from the pandemic era and
all of the previous recessions. Consumers have really been hit hard, and business confidence has taken a dive as well. In the property market, we've seen the combination of those rate hikes and the confidence hit really start to dial back and send Sydney and Melbourne property prices into reverse as well. So there's been a really big shock to consumers as they've been seeing the headlines and seeing those prices spike at the petrol at the gasoline bowser domestically.
So you mentioned the pipeline of investment as it relates to artificial intelligence, and I know that Australia was looking to benefit from the buildout of these AI Danta centers. So with an energy shock and higher electricity prices, for sure, what is the trajectory now? How might those aspirations of really becoming more a larger player, let's say in the AI space. How has that changed.
Well, surprisingly, it hasn't changed very much at all. So that is still part of the economic puzzle that's coming through. Just recently we've had Microsoft announce its plans for data center investment. That follows on the back of a few weeks ago Anthropic coming through and with the Prime Minister
and various ministers announcing their investment plans. So Australia is one of the world's top three energy exporters and we have a very substantial renewable investment renewable energy capacity that remains untapped. So this is perfect ground from an energy perspective to make these data center in investments, accessing you know, if it's via solar with battery backups for example, accessing some of the cheapest and most plentiful We've got a lot of sunshine and a lot of land renewable energy
investments to put these data centers in. And so that's still on the cards if we can get all of the components continue to come through, which from an Australian economists perspective, I mainly look at this from AFAR, but with some of these supply disruptions that are emerging as a result of the conflict. We're seeing some of those constraints potentially being a worry for data center roll out plans worldwide.
So what about other natural resources that Australia is involved in, And I'm thinking of coal for example, and whether or not in the absence of access to a lot of hydrocarbons visa v crude oil, that for a country like China, for example, that coal would be something that you maybe want to latch onto as a way of producing electricity.
That's right. This response from major energy Asian particularly major Asian energy users to the disruptions and the supply of energy coming from the Persian Gulf is driving them to seek alternative supplies or where that's not possible, alternative sources of energy. In Australia offers both. We are the third largest natural LNG exporter in the world, or probably the second largest now given the contailments from the damage to Qatar,
behind the United States. So those cargoes have been we've been seeing increased price for those LNG cargoes as well
as a very very substantial coal exporter. The coal sector is responding quite strongly to some of the signs that of increased demand is as that energy switching is going on within Northeast Asia in response to the disruptions to that gas supply, so that that is where Australia is getting a bit of an income windfall as the price of those commodities and the demand for them is rising in some of these well, I think we should still consider to be early response to the conflict and the
disruption that's going on from the Middle East.
So when you look at the domestic economy, I think that you and I can agree that for any central banker there is a risk here in the current environment of and unanchoring in inflation expectations. To get back to the RBA and the meeting in the week ahead, do you think that's going to be a major concern.
I think that is the concern. So we have a situation where there is where central banks around the world are going to be looking at the same thing. They're going to be facing an inflationary shock. This energy price shock is going to be hitting the economy and there's nothing they can do about that. No amount of rate hikes from the RBA or the Federal Reserve is going
to reopen the strait of holl moves. It's going to be you know, and we know that monetary policy works with a lag, so it's going to be about what do those central banks see in terms of how businesses and consumers are responding to the rate to the energy price shock. And so that's that the anchoring or how anchored our inflation expectations, So that confidence shock within the Australian circumstance from consumers is a key part of the puzzle.
We've seen consumer inflation expectations rise, but if we are getting a major hit to confidence, that is going to see consumers close their wallets to the extent that those wallets have much left in them after having met the higher price at the bowser. That's going to be a very key factor in the reserve banks thinking about is there much capacity for businesses to pass on these energy costs.
So I know that recently Australia's Treasurer Jim Chalmers was warning a very serious consequences for Australians. I mean, we're talking here about the impact of the war and I'm wondering about the role away from monetary policy that the government may have or may play in trying to maybe reduce some of the pain that's being inflicted on consumers.
There's already been some steps that have been taken by the government to try and cushion some of the shock, but they are not going to be able to cushion the entirety of the shock. So if we have, for example, about a seventy cent per liter increase in the price of a leader of gasoline or petrol as we would call it at the pump, the government has, through a reduction in rebates and through the return of some taxes,
taken around about thirty cents of that off. So there's still a large degree of the shocks that's come through. The government's also having to do something else here. Even though Australia is one of the largest energy exporters in the world, those energy exports come in the form of LNG in coal, in uranium, and we export some crude oil. However, Australia is a very significant net importer of petroleum products, so our refining complex here it's about twenty percent of
domestic demand. Eighty percent of the fuels that we use on a day to day basis to run the economy are imported. They're imported from Asian refiners, and so what we're seeing the government having to do is try and negotiate with some of those foreign governments that have instituted export bands for US to supply them with gas and in return they open those export gates to send through the fuels that we need jet fuel, diesel and gasoline
to keep the economy running and ticking over. So that's been a very significant piece of activity that the government's had to do, not just to try and cushion the price shock to consumers, but to prevent the economy from experience a significant supply restriction or constriction in supply. So we're doing okay for now, but it remains a week by week and a month by month situation for the economy.
So we're not out of the woods yet in terms of a disruption to the quantity of petroleum fuel supplies coming through to run the economy resulting in US having to go to rationing and restrictions.
It seems to me, when what the shock has exposed in terms of the vulnerability of the oil refining infrastructure, this might be a time for energy producers in Australia to kind of fortify that infrastructure in some way to add capacity for refining crude oil. Is anyone having that conversation.
The conversation has started, but it will take a long time. If you want to start a refinery from scratch, or make or undertake a major expansion of a refinery that exists, you're looking at many, many years to bring these facilities online and set them up so that won't be happening overnight. Australia has relied on the open market, the free flowing global commodity markets, and when we've seen that, I guess
bedrock or foundation of the global economy shift. With the closure of the Straight of Hall moves and the restrictions that are flowing from the conflict, those foundations, that reliance that the economy is based upon, those foundations are being shaken and it's resulting in conversations domestically shifting to look at what sovereign capacity do we need to bolster and reinforce given that those assumptions are not holding in a time of conflict.
James will leave it there. Thank you so very much for helping us understand what's happening in the Australian economy as we look ahead to the meeting of the Reserve Bank of Australia. In the coming week, James McIntyre covers the economies of the Asia Pacific. Joining from Sydney, I'm Doug Krisner. You can join us weekdays for the Daybreak Asia podcast. It's available wherever you can at your podcast Nathan.
Thanks Doug. And that does it for this edition of Bloomberg Daybreak Weekend. Join us again Monday morning at five am Wall Street Time for the latest don markets, overseas and the news you need is start your day. I'm Nathan Hager. Stay with us top stories in global business. Headlines are coming up right now.