Daybreak Weekend: US CPI, Cannes Festival, Bessent Visits Japan
Bloomberg Daybreak Weekend covers three major stories: upcoming U.S. economic data including CPI, PPI, and retail sales; the Cannes Film Festival and the state of the cinema industry; and U.S. Treasury Secretary Scott Bessent's visit to Japan amid yen weakness and energy price pressures from the Iran war.
Summary
The program opens with a discussion of key U.S. economic data expected in the coming week. Senior Bloomberg editor Edward Harrison explains that April CPI is expected to jump from 3.3% to 3.7% year-over-year, largely driven by energy prices related to the Iran war. Core CPI is expected to rise modestly from 2.6% to 2.7%. Harrison also flags that PPI is expected to surge to nearly 4.8% including food and energy, and that producers will likely pass these costs on to consumers. April retail sales, particularly the 'control group' metric, are expected to soften, suggesting a middling economic environment.
The stock market segment features Bloomberg Markets Live Managing Editor Christine Aquino discussing several earnings reports. Hims & Hers Health is expected to benefit from a new partnership with Novo Nordisk to sell Wegovy on its platform, with options pricing in a potential 13% move. Applied Materials is expected to report strong results driven by AI infrastructure demand, with analysts setting price targets as high as $500. Cisco Systems is highlighted as a beneficiary of AI networking demand, with analysts projecting a potential increase in its AI order outlook to $5 billion.
Bloomberg Daybreak Europe anchor Caroline Hepker leads a segment on the Cannes Film Festival, featuring an interview with Bloomberg's Benoit Berthelot. The festival is described as having both a glamorous public-facing competition for the Palme d'Or and a less-known underground film market where distributors from around the world buy rights to films. Key films to watch include a James Gray film starring Scarlett Johansson and Adam Driver. AI is noted as a growing topic at the festival, with one animation film called 'Creators' using OpenAI technology being shown to buyers. The broader cinema industry is described as still recovering from pandemic-era declines in theater attendance.
Daybreak Asia host Doug Krisner previews Treasury Secretary Bessent's three-day visit to Japan. Bloomberg's Molly Smith, on temporary assignment in Tokyo, explains that yen weakness is a central concern, with 160 yen per dollar being an unofficial threshold authorities want to avoid breaching. The Bank of Japan is widely expected to raise interest rates at its June meeting, supported by three consecutive months of real wage growth and a dissenting minority at the most recent BOJ meeting favoring a hike. The Iran war is cited as compounding yen weakness due to Japan's heavy dependence on Middle Eastern oil imports.
The program concludes with a segment featuring Kent Zhu, CEO of Accor Greater China, who reports strong hotel performance during the recent Labor Day holiday. Inbound travel to China grew 36% in 2025 and 25% in the first quarter of 2026, driven by China's visa-free policy. Luxury and premium hotel segments outperformed, with RevPAR growing 5-8% year-on-year, while mid-scale and economy hotels lagged.
Key Insights
- Edward Harrison argues that April CPI is expected to jump to 3.7% year-over-year from 3.3%, largely baked into market expectations due to Iran war-driven energy prices, meaning the key question is whether the actual number comes in above or below consensus.
- Harrison points out that the PCE index, which the Fed actually targets, was already at 3.2% year-over-year, characterizing this as 'really high' and suggesting any further energy-driven increase would create a very difficult path for the Federal Reserve on interest rates.
- Harrison argues that unlike tariff-related price pressures whose legality was uncertain, Iran war-driven energy cost increases are unambiguous and real, meaning companies will be more willing and able to pass them through to consumers.
- Bloomberg's Benoit Berthelot notes that for the first time in recent years, no major Hollywood blockbuster will premiere at Cannes 2025, which he describes as a sign of the broader business difficulties facing the studio system and a 'snub' for big U.S. studios.
- Berthelot identifies an animation film called 'Creators,' which uses OpenAI technology, as a notable example being shown to buyers at Cannes's film market, signaling that AI-generated feature films are moving from concept to commercial reality.
- Bloomberg's Molly Smith argues that yen weakness is driven by two compounding factors: the long-standing interest rate differential between U.S. Treasuries and Japanese government bonds, and new pressure from Japan's heavy crude oil imports from the Middle East since the Iran war began.
- Smith notes that three BOJ policymakers dissented in favor of raising interest rates at the most recent meeting, and that the BOJ meaningfully increased its inflation projections, which she reads as a signal pointing toward a likely June rate hike.
- Accor Greater China CEO Kent Zhu reports that inbound travel to China grew 36% in 2025 and an additional 25% in Q1 2026, attributing the surge primarily to China's visa-free policy, while noting the luxury hotel segment specifically recorded over 8% RevPAR growth year-on-year.
Topics
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