manus: good morning from the qatar economic forum in delhi. this is "bloomberg daybreak: europe." crypto on the edge. bitcoin struggles to hang onto the $20,000 handle, continuing its recent freefall and continued volatility. the fed's christopher waller raises the possibility of another 75 basis point hike, saying the u.s. bank will do whatever it can to reestablish price stability. together no longer. emmanuel macron's -- has lost his political majority. it is day one of the qatar economic forum and we will have conversations with ceos and policymakers from around the world. a spectacular setting at the

ritz-carlton. what is at play? we are at the home, the nucleus of gas production for the world, as well as united states and will stroll you. they've done a $30 billion investment deal to get gas projects weaving in the last five years. russell hardy will join the platform tomorrow and we will talk about the risk of global economic recession. there is one man, the father of tesla, potential owner of twitter, elon musk. he joins the bloomberg team later on tomorrow. let me show you what is going on with risk at the moment. more bounce after a $2 trillion wipeout in u.s. equity markets last week, up a quarter of 1%. 18 weeks of outflows in the market. it seems as if powell is doubling down on an unconditional position in terms of price stability.

18 weeks of equity market outflows. commodity funds with six weeks of funds out as well. look at the biggest story of them all, bitcoin. absolutely slammed, down 60% friday. -- 16% friday. $40 billion changing hands in 24 hours in bitcoin. i suppose the world is chasing itself -- chastening itself about the chance of recession. the dollar index, the market is loading up with longs on the dollar position. you're looking at the hedge fund buying into the dollar position at the moment because the fed is unrelenting in its ambition to get to neutral early. can the futures trade this morning lower by a few seconds, yields rising as we look at the

most volatile bond market since 2008. let's get to the team around the world. join also gerbil get us more detail on -- joanna also gerbil get us more detail on bitcoin. we have the french parliamentary elections. and guy johnson is here in delhi. -- doha. bitcoin struggling. market volatility has been rampant over the weekend. down nearly 60% this year. that's get to joanna ossinger. do you think the specs have been washed out? good morning. joanna: there are a lot of things happening at the same time, we have the fed rate hikes and inflation in the background, but now we have this crisis of

confidence with a big lender pausing withdrawals and some others following in the wake of that. we have some decentralized finance protocol that are trying to keep their operations orderly and have been doing interesting things. one of them just decided to take over a crypto whale's account to keep things orderly but it got some blowback for it and are doing another proportional -- another proposal a lot of things are making people really hesitant. we've had a lot of liquidation in the past week or so, a lot of people who might've gotten taken out in recent days. manus: ok. there we go, sub 20,000 at the moment. it doesn't seem as if the shakedown is over yet. we will keep an eye on bitcoin through the morning. in terms of the crypto world, there is one man who might have

an opinion, elon musk. he is joining us tomorrow. he will speak with us at the bloomberg qatar economic forum. that could be an interesting back-and-forth. after last week's federal reserve jumbo 75 basis point hike, support for another such move appears to be growing. governor waller says he would back another big increase at the july meeting. >> the fed is all in on establishing price stability and part of that is understanding the forces that have boosted inflation and examining how policymakers responded. manus: let's get to dan and what he makes of the weekend's speakers. waller was just one. what we take away from his view on a recession risk?

markets are telling us a probability of 75%. others saying a recession at the end of the year. his waller misguided or on the money? -- is waller misguided or on the money? don: it's interesting to track -- daniel: it's interesting to track risks of a reflection -- a recession. he called it a little overblown. not a ringing endorsement. janet yellen says it is not at all inevitable. these same like equivocal comments. you can be all in on price stability, but when the recession does light, -- does bite, that other fed mandate, full employment, you might start here more about.

manus: let's see where the rhetoric is coming through. you got not just waller but others as well. i'm sure there will be a lot of fed speak this week. let's talk politics. french president man u omicron and his centrist alliance has -- emmanuel macron and his centrist alliance have lost control of parliament. for more, we are joined from paris. how much of a shock was this in terms of the numbers? take us through where he stands right now. >> there was a lot of -- last night in paris and it is a blow for emmanuel macron. some people calling it an earthquake that could paralyze the french president in making it difficult for him to govern

and implement reform. for the first time in 20 years, a president just elected two months ago does not have a majority at the national assembly behind me. the coalition of emmanuel macron but about 245 seats and he needed 289 seats to get a majority. the far left actually becomes the main opposition party. but arguably, the big surprise came from someone who has almost been forgotten, marine le pen in the far right party. they were expected to get only between 30 and 40 and they got nearly 90 seats. it is their best ever. even in 1996 when they had a strong group they only had about 35 mps.

usually this system makes it difficult for marine le pen but this time she will be able to have a group in parliament. she can influence the debates as well. stuck between the far left and the far right, emmanuel macron will have to make some very fragile alliances and fight on every single deal and reform. manus: thank you. getting various notes in terms of geography that marine le pen managed to take, places like northeast, around palais, and bordeaux. an interesting breakdown. fantastic shot, caroline. we will see you through the morning. a director general is bullish on the airline industry and sees a sustainable recovery for the sector.

>> pent up demand is being fulfilled at the moment but all of the research we are doing reaffirms that people want to get back flying again. there are headwinds but the outlook remains good. manus: let's bring in guy johnson. you have a busy day ahead of you. you've been speaking to the aviation industry leaders. terrorism is hot. will it indoor -- tourism is hot. will it endure? >> we know there is a demand for air travel and will it last until the autumn? you got to be positive to be in the airline industry, and they are at the moment, but he was saluting some of the headwinds that could be coming down the track. you mentioned what happened with the potential for recession and

potentially we are getting to the point where we will see demand destruction. airfares have rocketed as a result of fuel prices and staff shortages. we may be starting to see some destruction kicking in. last week, airfares in the u.s. started to nose off a little bit. maybe people are being put off. he expects airfares to continue to rise. the other factor everybody is aware of, the staff shortages experienced not only by airlines but airports as well. we have seen pictures of massive lines, people missing aircraft. many people are getting put off flying as well. we need to resolve these issues for this trajectory to continue. the expectation is things may slow into the autumn. how sustainable the rally is is critical for an industry desperately damaged by the pandemic, now seeing a recovery but not really ready for it. can it continue to take a vantage of the demand or will

high airfare, high fuel cost, etc. coming into the -- etc. eat into the demand? it is something we will watch very closely. manus: ok, we look forward to some of the big guns through the day. guy johnson on the ground in doha. we have the ceo and leaders of the airline industries. we will catch up with the qantas ceo, and the emirates president. coming up, markets on edge as investors price in aggressive monetary tightening and a possible economic slowdown he had we dive into the details of gas and oil with our guest. 6:30 london time. this is bloomberg. ♪

manus: it is "daybreak: europe" on the road in doha. a snapshot of risk as we start the trading week. equity markets trying to find a footing and asian markets lower. i want to focus on the bond market. australian rates, are you tempted at over 4%? that is the question. a drop of over seven basis points on the australian rates. iron ore down by 7.5%, $120 now. this is based on the toxic tail risk of recession, a crypto implosion. you are looking at sort of an underbelly of risk off. i like what was set over the weekend, we did not have a

volker style shock, it's about taking control. let's get to oliver kettlewell. a very good morning to you. the barbarians are literally at the gate in the bond market. the most volatile since 2008. is there much worse to come? let's set the stage, good morning p oliver: good morning. -- good morning. oliver: perhaps not much worse but some pain for the bond market. i've been coming on your show the last few weeks, talking about peak inflation but i have to admit, i have to introduce a new p-word, that is plateaued. inflation has not peaked but hopefully it has plateaued. if i take bpi numbers from last week, they are in line with forecasts and a little higher than prior.

if inflation edges up a little higher over summer, where you have a counter of higher interest rates and slowing growth, that is not necessarily a bad thing for long yields, although short end yields will probably feel more pain. manus: ok, we will live in a world of plateau. if i look at what some have said over the weekend and i look -- and i put this question out over the weekend, what is the error here, to fold in the face of a 30% drop in stocks or to go foot to the board and all in on a volker style series of hikes? your call? oliver: the bigger mistake would be to fall to the market because you will lose your credibility and hurt the market more in the long term. the fed and even the ecb put our well off of that. i don't think it would come out to 30% despite the consequences

of a negative growth affect. the fed how was -- has a dual mandate but they are clearly focusing on inflation right now and the ecb are the same. more pain to come for particularly the stock market in the coming weeks i think. manus: ok. let's put some context around this. more pain to come. this is volatility across the assets on fx and equities and bonds i often ask myself when i see these spikes, is it too late to hedge? what is the hedge for further downside risk in the equity market in your view? oliver: the hedge i think, i think the only hedge would be cash, to be honest. a lot of people come on the show and say cash does nothing against inflation but i can tell you a fund manager, i look at my bloomberg screen and it has been

a sea of red when bonds and stocks have been falling. to have some cash which holds its own on some days is a pretty good hedge against those asset classes. i think that could continue through the summer. particularly when you have those interest rates coming up fast. cash suddenly becomes an investable asset class for the first time in a long time. cash is not trash, as i think some people on your show have mentioned to me a few times. manus: [laughs] let's talk about some moments in terms of risk. as we start the trading week, we need to reset the mind after the battering last week, the worst since the start of the pandemic. 1994, what was a grotesque year for bonds, those were big surprises. we did not know what was coming down the pike in 1994.

2008, every weekend you went home and somebody went bust. it doesn't seem like 2008. it doesn't seem like systemic risk, is there? oliver: it doesn't. this hiking cycle could be like 1994. there was about 12 months of big hikes including a 75 basis point hike, and if you think for the u.s., we started in march, so they might be finished by year end or the beginning of next year. i think the mid-1990's is the best historical context for investors to look at this rate hiking cycle in both the europe -- the u.s. and the u.k. in europe as well. credit spreads have widened enough finally to catch up with the stock market. i think they could have more to go. we take investment grade in europe, close to 200 basis points, the spread. historically, 120. i think it could go a little water in the coming weeks, especially over summer -- wider

in the coming weeks, especially over summer. manus: how wide could ig go to and what about junk? there has been an explosion in junk. oliver: in europe, high yield is 550 versus 400 historically and i think it could go to 600. investment grade it will not jump by 50 basis points. i think the pain is in high yield, the risk part of the bond /fixed income market. manus: oliver, cash is not trash. give me a good dollar account. that is oliver kettlewell. my guest this morning on the markets for more pain to come on the equity markets. to energy.

russia putting the squeeze on the flows to europe. the story from doha is next. this is bloomberg. ♪

manus: it is "daybreak: europe" on the road in doha. germany to step up efforts to bolster gas storage efforts as russia squeezes europe. there are also plans to fire up more coal plants to conserve natural gas, which is trading at the equivalent of $205 a barrel. my guest is with me to put some context around the latest squeeze russia is making on europe. we've not gone to zero but we have rolling attacks of supply

cuts. good morning. the latest for today? stephen: yes, flows down to germany by 50% over the key nord stream 2 pipelines, causing a lot of stress and anxiety, and quite frankly when you talk to traders in the market, the possibility of 0% flows could happen. if you talk to me about a month ago, the market was much more upbeat. despite the war, russia was sending to utilities. it seems they have ramped this up as a weapon. they are saying it is not due to that, that western sanctions are stopping them from getting vital equipment to send the gas to europe but the eu has said this is an attack on the country and they are weaponizing natural gas against the european bloc. manus: it's interesting, we were having this conversation last night here and would russia run

the probability to zero and the response was, well, the political weaponization, they will do rolling, almost terrorist style tax, austria for a period, germany for a period, rather than the nuclear option. that is the building consensus here in doha. what about rationing? you have to take preemptive action. what will rationing look like and will german industry adhere? stephen: the government has the authority to implement rationing. it is the last case scenario. as you mentioned at the beginning of the segment, this is not what germany wants to do. they want to look at other options, they want to restart coal-fired power plants, give more incentives to industries to refill inventories with other sources of gas. they want consumers to curb their consumption. but as an absolute last lever, they could ration gas to

industries the worst case scenario is ration gas to households in the winter when it gets cold. they want to make sure they are not in that situation so they will pull every lever before that. with pipelines closed, they will be short this winter. there is a stress right now in european economies. manus: stephen, thank you very much. the constriction is palpable on those reserves. the very latest on europe's energy crisis. coming up, more on the energy markets. we have a take on the latest on we have a take on the latest on the genough with) the calorie counting, carb cutting, diet fatigue, and stress. just taking one golo release capsule with three balanced meals a day has been clinically proven to repair metabolism, optimize insulin levels, and balance the hormones that make weight loss easy. release works with your body, not against it, so you can put dieting behind you

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manus: a very good morning from

the qatar economic forum here in doha. i am manus cranny and it is "daybreak: europe" on the road. crypto on the edge. bitcoin struggles to hang onto the $20,000 handle, continuing its recent freefall amid current volatility. all in. the fed's christopher waller raises the prospect of another 75 basis point hike, saying u.s. central bank will do what it can to reestablish price stability. together no longer. emmanuel macron's coalition has lost its parliamentary majority, potentially stalling the french president's economic plans. welcome to doha, the home of gas, and over the next three days, it will host some of the biggest newsmakers from russell hardy on the oil industry,

others on supply chain constraints. one name in the top left-hand corner -- elon. he knows a thing or two about volatility. the ceo of tesla, elon musk, will join us from doha. you need to watch that conversation with our editor-in-chief as he continues his bid for twitter, and we know he has spoken to a number of sovereign wealth funds. let's see what the conversation holds tomorrow. for bitcoin, tesla, and twitter. let me show you what is going on with risk. it is monday morning. we are desperately trying to grab onto the upside with equities, a two trillion dollar wipeout in the u.s. last week, energy stocks crumbling by 17%. an unconditional val from -- val from pal on priced ability. nasdaq tries to bounce and

anemic to say the least. bitcoin struggling in terms of whether the worst has passed. let me show you the bitcoin market, $500 billion. down 16 percent. nymex back in the green. we've seen the oil markets take a little bit of a beating in the past couple of hours as we hear of more supply from the secretary-general, 9.7 billion barrels back on the market by august. u.s. secretary granholm says there is demand on gas continuing. bonds are flat as you look at the most volatile bond market since 2008. the question is to what extent futures will see a little bit of hedging come in. let's double down on the energy market story and talk about

germany. they are preparing to fire up the coal plants, use of gas at a minimum. russia's vladimir putin squeezes the energy supplies to europe. you have the oil market studying. escalating worries about the pace of the fed raising rates, rattling financial markets. my guest is here, thank you for taking the time. russia expects the aiding europe in shotgun --as fixie a europe in shotgun fashion. what are the risks? >> the risk here is russia is

playing this game of cutting it off and the europeans and in particular the germans would be like the frog in the water that is being heated. the risk in europe is letting this happen. from what we are seeing so far, the risk is getting smaller. it seems the germans, the greens no less, have decided to fire up coal power plants. but only about 1/5 replaces natural gas. about 30% for industry. those will be harder to replace. they will have to start looking into that. they may do the unthinkable, which they denied today, continue losing -- continue using nuclear power. it is scheduled to be phased out

by the end of the year and germany insists they will do it on time. manus: for those people who are tuning in this morning, we will see futures in europe began to trade again a little later on. we are showing the equivalent on european gas futures. in this rolling a series of supply risks am i am very surprised that gas futures in europe are not back where they were at their peak at the start of the war. up 50% last week. how much tighter and higher do you expect prices to go? let's start there. christof: europe as a whole used to be 40% of gas from russia and that is down to 20%. there is an interesting distinction when you look at the way sanctions work and you compare oil and gas markets from a european union perspective. with oil, they have insisted on

-- energy and an oil embargo that reflects the lowest common denominator. some have decided to cut off the shipping trade, this is the oil that is most easily redirected, and leave the pipeline, which cannot be redirected. they have allowed those who can afford it to -- gas is completely different. we still have what used to be the characteristic -- these sanctions for ukraine, centralized country to country, country volunteer to cut what they think they can afford. they have not been enforced by secondary sanctions like we've seen in the past. all of these sanctions are voluntary. just four countries going off.

manus: i want to talk about the oil market, let's give it across oil, we saw a drop by 7%. becoming much more prevalent in our conversations, a slow recession as one person said to me this morning. you are a veteran of this region. mbs going on a tour and biden we understand going to saudi arabia. when the handshake takes place, how material and impact would biden meeting mbs be to the stage setting or a more pronounced saudi oil supply? is that what you would expect? if so, what impact would it have? christof: you may remember for the people that always thought the crude market are the least dramatic at the moment. i think we will see crude oil steadying out.

we are already putting one million barrels per day from the petroleum reserve in the market. there is unused capacity specifically held for emergencies and saudi arabia and uae. of course there will be some sort of agreement that saudi arabia and uae can continue business with russia. there are countries under sanctions and others with civil strife. then there is the home front, really emphasizing natural gas. i would not expect the price hikes forever.

product markets are more difficult, but we know that the global refining system is actually quite flexible. it will adjust in the product market will come down. -- adjust and the product market will come down. manus: let's see what that handshake or whatever form it takes in terms of meeting, delivers for the market. great to get your take on the markets this morning. liz get the first word news -- let's get the first word news from juliette saly. juliette: president emmanuel macron's alliance has lost its outright majority in french parliament. the group won 245 seats, short of the 289 needed for an absolute majority. the far right group is in third.

this could put his economic agenda and peril. president zelenskyy says ukraine is facing a historic week. meanwhile, the war-torn nation has less than 40% output this year because of the war. efforts to avert a planned rail strike failed in the u.k. and trains will be disrupted in three days of walkout starting tomorrow as 30,000 staff hold the biggest train strike in more than 40 years. londoners will also be hit by a walkout in the underground network in a different dispute. india is looking at as much as 30 jets.

it could be from airbus or boeing or mix of the two. the state run airline is looking to overhaul its fleet. global news 24 hours a day on air and on bloomberg quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. manus: thank you very much, juliette saly in singapore. coming up, we will speak to the qantas ceo about the airline industry as a struggles to cope with the resurgence of demand for travel. revenge travel is live, it is back, but can it endure? we discuss on bloomberg. ♪

manus: it is "daybreak: europe."

let's get straight out to guy johnson on the ground in doha and has a special guest. guy: a lot of guests lined up, we have a fantastic guest to talk about the aviation industry and the recovery. alan joyce is the ceo of qantas. good morning. fantastic to be here. looks like the aviation industry is getting back on its feet. almost too quickly, some would argue. huge pickup in demand. is it sustainable? alan: i think it is not there is pent-up demand for people who could not travel for two years. in australia, we are seeing two

times demand precode levels. some of that is pent up. we can see the growth rates really strong and there is still a lack of capacity compared to demand, particularly internationally. we are only at 50% precode levels and demand is a lot more than that. by march of next year we will be at 100% but there is a lot of demand. i would like to get more aircraft into the air. guy: let's figure out what is happening here. you are having to raise fares. aviation is expensive right now. how far away from the point where we see demand destruction to the high fares? alan: we are a long way away from noticing demand destruction.

average air fare is covering -- and there is no capacity. even as we put more capacity back on, we think that could be the case for some time. we could be in the situation for a year or two where we have less capacity than demand. we are seeing -- we have the bells ringing in the background. they are trying to get airfares up. there's been a 12% increase in -- and that can be done at about 10% capacity in australia and america. guy: you are struggling to bring aircraft back on but also struggling to bring people to man the aircraft, to load the bags. there is a staff shortage across the industry.

when will you have enough staff to match what you want to do? alan: in australia, the issue has not been as bad as it europe and north america. levels have gone up a little bit. guy: we are hoping this bellringing is going to go away. alan: we haven't seen the problems of other areas and we advertise mainly for cabin crew and we have 25,000 applicants. one thing i will say, for an industry that has been in hibernation two years, an industry that saw a lot of people leaving, i think there was always going to be some problems to getting there. in some cases the problems are a lot worse than we expected but the industry is robust and it will get all of those moving parts working efficiently together again. it is usually complicated, the aviation industry, and it needs

all parts of the industry functioning. airports, manufacturers and airlines. i think we will get there, and in our case, we think we will get back to precode levels within the next -- pre-covid levels in the next few weeks. guy: the rba is raising rates aggressively, the fed raising rates aggressively. inflation is a massive problem at the moment. what do you see the economic cycle looking like? does demand continue if we get a recession? alan: what we have seen in a recessionary environment, there is a hit on demand, but you have a couple of unique things taking place from where we are starting. unemployment at unbelievably low levels. savings during covid went through the roof. $250 billion in savings in the australian economy. and you have people willing to spend the money even with the outlook with tightening monetary

policy. we haven't seen any pullback of people traveling. you've got unique situation at the moment. certainly a recession would put pressure on air travel, it has always done in the past, but that pressure coming managed with supply and demand. at the moment, we have less supply than demand, so i think we can -- guy: in terms of fuel prices, what do you expect to happen there? and do you think you are at the point where you can continue to raise fares? have you thought about fuel surcharges? alan: if you take all of our hedging and apply it to domestic, we are 95% hedged to december so we have some time to adjust to the environment. i don't like fuel search as is. we can't do them in australia

because the regulator only wants you to advertise all-inclusive airfares so it doesn't make a difference. you are better off trying to include it in the airfare and overtime time, airfares go up and down. it is a competitive market. that's the way we will be coping with it. guy: let's talk about fuel in more detail. i spoke to someone yesterday, they are going to invest with you to kickstart the production of sustainable aviation in australia. a new leg of government leading into that sustainability story in a big way. have you spoken to the government and what impact do you think will have? alan: really positive. this was a landmark announcement with airbus and qantas to get the sustainable aviation industry started. there are a number of advantages to it which of labor government are keen on. one gives you aviation energy

security, which i think is a big thing in the current world. secondly is it creates a lot of jobs, one estimate is over 15,000 jobs locally in australia for just the sustainable aviation fuel industry. we need a framework in place like the u.k., the u.s. and europe, and the government under the new energy minister is very engaged on putting the framework in place to allow this industry in place. we are more off the mystic that we've been in a long time here -- more optimistic than we've been a long time. i've spoken to the prime minister a couple of times in the transport minister a couple of times and we've raised this as a key area. guy: what feedback are they giving in terms of the industry? alan: they can see the logic and ordinance of it. they have a lot of priorities at the moment. there are other energy issues in australia the last couple of

weeks. but we have no doubt this will start appearing on the priority list. guy: great stuff, thank you for bearing with us with the bellringing. [laughter] alan: ringing in your ears. guy: alan joyce, the ceo of qantas. manus: thank you very much. get ready for ramping up that capacity. guy johnson on the ground today with the qantas airline ceo and many more to come. coming up, emmanuel macron's reform agenda at risk because of an unexpected surge from the far right in the legislative election. we are live in paris for analysis right here on bloomberg. ♪

manus: it is "daybreak: europe"

with manus cranny in doha. setting up your risk perspective for the week. the equity perspective, further losses to come according to some, a plateauing in inflation is another narrative. equities poised for a small gain at the moment. liquidity may change as the u.s. is technically on a vacation today. asian stocks down for the eighth day in a row, the longest losing streak since the start of the pandemic in march 2020. asian stocks under pressure. i love what bank of america said this morning, profit and positioning policy in a dire situation. you want to nibble on the s&p. if you want a lehman moment, i give you the bond market. the most volatile 2008 -- since

2008. more pain to come is the assumption. waller wanting to get the job done. fed speak is tough, it is hawkish. let me show you the closing view of what is going on across the global market map this morning. this is the concern about recession, slowdown, the new york fed says there is an 80% probability of a hard landing. iron ore down, bond markets, and aussie rates over 4% for return. that's what the market board says this morning and i will hand over to europe now. this is bloomberg. ♪

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>> good morn