means we are down. equities are higher and i think it is a large reaction it friday out of the states. currently if i look at the fair value of the bloomberg for what the s&p will be like tomorrow morning it is down about a half of a percent. that is whether futures are telling us. still up .6 but this is the one it focus on. this is the dump contractor in europe and they are signaling concern that europe will run short of natural gas very soon. we could see a cutoff of russian supply next week or this week later and we have supply out of the united states. that is having an impact. we are seeing the first german trade deficit in 30 years. the question we are asking at bloomberg is what do i need to worry about. do i need to worry about inflation or in the second half about recession. this is what some guests have been telling us. >> high inflation is probably worse over the very long term. at this point inflation rules the game. that's why the fed is committed to really curtailing inflation. that is the bigger problem. >> this risk of entrenchment where inflation fears are in your led is elevated. >> the markets are ticking away from recession. markets are not sure so that is why it is going on but we are at the tipping point. >> i think recession is the bigger rick because we are aware of the high inflation and people are adjusting. but recession will turn the market over. >> i think people are talking themselves into the recession. >> the recession proof strategies like cash and high grade bonds and treasuries cannot be the strategies that you go full force when inflation is high. guy: over, as we -- joseph as we go into the second half which should we focus on, inflation or recession rick? >> i think the real worry is you could get both at the same time. we know inflation is a major issue at the moment with some statistical effects that can bring it down but it will stay high. at the same time we are seeing the activities weakening particularly in europe so i think my real worry is in the short term you could get both. ultimately weak demand and recession should bring the pressures down but that could take time while we have the supply shortages. guy: in terms of how easy it is to predict the second half particularly in europe on the economic fronts, we don't know yet whether the russians will turn the goes off. we don't know whether or not we will have the energy to go into next winter. how easy is it to build a model that gives you a fairly clear case for what will happen next? >> that's right, it is really differ and it is a matter of us watching policies closely. we know there are already efforts in europe to reduce reliance on energy and builds up gas stocks so we know that is a pinch on the economy and supply shortages at the same time are restricting german industry. so i think even without a reduction in russian gas supply we have a lot of head winds coming through here and if some of that goes ahead adds there are for the limits -- and there are further limits on supply it will hit germany hardest. guy: give us a sense of how big the risk could be in g.d.p. what impact could it have? because the leading union rep in germany is talking about entire industries being destroyed by there for good. >> i think that is probably a bit of an overstatement. it depends on what the policy is and how fargas supply is restricted. but there needs to be work suggesting a 10% could reduce g.d.p. in germany something like 1% so it is not one for one. there are things to do to improve the efficiency of goes use that with mean the hit from a reduction in supply is not passed through fully to the economy and it is likely any damage to consumers is going to be limited by government policies say subsidized energy. so again the impact will be felt hardest in heavy industry and some savings there that could mean it is not disastrous but adds to a whole host of head winds to the european economy that could tip it into recession. guy: it is said they will like 25 basis points in july. then saying the size of the e.c.b. september like will depend on the outlook. how difficult do you think that decision will be in september? >> it goes without saying it is going to be a difficult decision but i think the e.c.b. is paving the way for it to be a 75 basis point move in september. we know from past experience it likes to set out its intentions pretty clearly so i think something would need to change significantly on the inflation outlook for them to move back toward smaller rate hikes in september. i think more like we will up the pace. that would depend on inflation and wage rates. guy: how sticky do you think that will be? unions are calling for significant wage hikes. the difference between the eurozone and united states is that it is much more structured in the process of the wage rounds which it is more sticky. how big a challenge will that be? >> that is absolutely right. what we have seen for years is wage negotiations in europe have been relatively sticky. wage expectations persistently lower and you didn't get the shift and there was a concern europe was becoming japanese. once the shift happens the stickiness effect is in the other direction the once wage expectations do start running higher, once pay deals start to pick up it may be it takes quite a long time to bring them back down. i think it could be a big difference which would fog wage expectations down but you see the e.c.b. concern with inflation expectation rising this becomes a stand pickup in wage growth. guy: how high is the recession rick in the u.k.? >> in the u.k. i would say pretty significant. i don't think we have one fully embedded into our forecast at the moment but it must be close to 50's 50. we have seen data says it is more or less stagnating and increasing inflation pressures which are stronger than the eurozone of weighing on household purchasing power and will be a major factor in the second half of the year. guy: do you think that will be enough -- do you think we will see this being sever correcting i.e. we are starting to see it and get the numbers tomorrow and some others and we are seeing some behavior changing dramatically but some of it is out of the control of the central bank. do you think the bank of england will say this is an economy that will slow down and we don't need to hit the brake harmeder or in a stagflation environment the bank has to hike into significant weakness? >> i think that we have seen the bank of england responding more than other central banks to weak economic conditions and behaved differently to the fed with 25 basis point hike recently. it is conceding there is real economic weakness in the u.k. but it takes time for the weakness of demand it seep through with diminishing price prices and when you have energy prices, energy inflation still high, it is going to be very difficult to look through very high inflation prosecution and stop hiking rates while the indicators are pointing down so i think it will be quite some time and pay well take a u.k. recession before the bank of england can change its direction. guy: is the likely scenario on the fiscal front we will see support i.e. the government provide those most vulnerable with additional support but more broadly pry support for consumers at the same time the bank of i think land is trying to tamp demand by raising rates. they seem contradictory. >> yes but the benefit of fiscal policy it is can be hard on those who needs the support and hopefully not do so much to stoke inflation if you are supporting those people who really are struggling to make ends meet which can be the fiscal policy and that shouldn't have a strong inflationary implication. i think that is what is going to happen in the u.k. but the scope of fiscal policy to do a lot in the current juncture is were weaker because so much was done during the pandemic and that has occurred already. guy: another quick question, currency weakness is now a big driver of inflation as a result a lot of inflation is imported by the energy channel. at what point does it become the central banco needs to actively deal with? >> i think that direct intervention is probably unlikely from the bank from the e.c.b. but if they continue with the monetary tightening cycle it will be something in their minds. it does follow through with the intentions to revise rates and should help take some of the downward pressure off the currencies anyway. but i suspect probably the rest of the year will be an environment where the dollar continues to strengthen and that adds to the inflation narrow pressures. guy: jennifer, great to catch up. very much indeed. coming up, fresh off four consecutive satellite launches the president and c.e.o. will join us. this is bloomberg. legislature of the mission over the weekend. if you wonder whether straight up is, goes with paula abdul's families song. but the fourth quarter consecutive satellite launch for virgin and it carried seven satellites for the u.s. space force and parts of the rocket system launch program. let's talk more about this. we are joined by their president and c.e.o. dan hart. how did it go? sam: what a way to start the 4th of july weekend! we had a beautiful evening. it was a beautiful evening and we have done four in a row, 400% success, 33 satellites are now floating in space. and brilliant night. guy: take me through the difficulty of doing it at night. is there any real difference doing it overnight then during the day if a lot of things being made. how different is it launching at night? sam: it is not develop different but in any system you want to cover all the bases and understand the differences and mac sewer that there are not any unexpected items and we had none. the team did an incredible job flying, deploying and supporting. guy: now what? what is the next mission looking like? is this becoming seconds nature after you have ironed out the kinks? sam: we are now operational and it is an incredible system in that it is flexible. we can take any airport and overnight it can become a space port. next is the first launch in history from the u.k. over the next few weeks we will be finishing our next rocket, moving the system to cornwall where an airport will be setting up and preparing for the first launch from sovereign territory in the u.k. and a lot of collaboration. guy: i have been to that airport. i don't think it will know what hit it but after the g7 maybe they are up for it. in terms of the differences, the challenges, as you say any airport can do this because you are launching below a 747. is there any real difference in terms of operating out of campbeller -- campbell or corn well -- california or cornwall. sam: there really isn't. the process will to be tail blazed and whole understanding the process and working with the airport and all the lodge just particulars details. we have gotten tremendous support from the u.k. space agency and r.a.f., really goods engagement with the c.a.a. which is the f.a.a. in the u.k. so a lot of work but we are excited and we have gotten a very welcomed presence there. guy: in terms of the paplgs you are launching are you going to continue at the moment with space force? what is the commercial two-on-one here? sam: we have already launched commercially and with nasa and put out a number of their satellites and with the space force. we are covering every part of the market. it is growing space economy. it is currently a bit over $400 billion globally, forecasted to go well beyond a trillion dollars the next 15 to 20 years and for national security you see what is going on in ukraine and how each night we are looking at satellite imagery in our living rooms to understand how important satellites are today to understand our worlds. guy: in terms of the economics, as you start to get the system fully operational understand kinds of how it works and make sure that you can do it consistently and repeatably how do the economics change the next few years? sam: internally when you start a system and you're launching once in a year or a couple times a year the fixed costs are spreads across a couple launches. as you ramp up and we are in the middle of ramping up launches commercial lunch number four, your pweubgs r fixed costs spread and you achieve a learning curve. in aerospace the paperwork and processes are well known and efficiency goes up. so internally the costs will go down. we are seeing is amount that is reliable and launches on time which is also a cost benefit. then as the market really takes us in and we are seeing tremendous excitement that a new system is available we are seeing a great competitive advantage for a simple rocket being carried up by a 747. guy: in terms of the turnarounds time, you have a 747. it flies back down and lands. how quickly is that aircraft operational again? sam: that aircraft can launch another rocket now. it is all about the factory and producing. so, we are in that low rate production initial phase where we are getting all of our processes completely in place and we will be ramping up. guy: the final quick question, a lot of people are trying to launch a lot of things into space right now. is that going to become a problem? sam: well, there's also a lot of discussion about regulatory, about situational awareness in space and that is the healthy part. we could have issues if we don't manage it properly. so, regulations on how long satellites can be in space, what they do at the ends of their life. there are companies coming up with technologies to get debris out of space. all of that i think is healthy. it is manageable but we have to manage it. guy: dan, we will see you in cornwall. looking forward to it. virgin orbit president. a few headlines relates to the energy narrative. the norway union energy union is the focus of the gas market planning to escalate off shore strike further pushing outs to july. boris johnson is speaking in the house of commons now taking about the energy issue and we are going to needs a lot more opec plus oil with the plus there is russia but opec now increasingly concerned and french voiced this to president biden that maybe actually opec doesn't have a great deal of spare capacity left and that could be a something challenge going forward from here. we will watch it see whether or not it gets delivered upon and we have an upcoming trip by the president of the united states to saudi arabia. this is bloomberg. >> keeping you up to date with news here is the first word. in turkey the inflation rate in june was 79%. that was slightly less than expected. global so long as in food and energy added to pressure. inflation in turkey has been in double digits almost continuously since 2017. the european central bank is making the most significant shift to take vanderbiltal considerations into monetary policy. it will tilt the corporate bond holdings toward issuers to demonstrate a better climate performance. officials plan to dhi qar bonnize bond holding with investments over the coming years. in the northern italian alps at least seven were killed and 14 missing after a glacial ice shelf collapsed. a chunk broke loose on it the highest peak in the range. the disaster struck one day after a record high temperature of 10 depress celsius was recorded. global news 24 hours a day on air and bloomberg quick take powered by more than 2700 journalists and analysts. guy: we are counting down the last few minutes before the european close. this is the picture with asset prices right now. u.s. volume is light so take this with pinch of salt. shell and b.p. trading strongly and dax is ends performing and data out of germany is worse they suffered from high inflation. the close is next. this is bloomberg. psst. girl. you can do better. ok. wow. i'm right here. and you can do better, too. at least with your big name wireless carrier. with xfinity mobile, you can get unlimited for $30 per month on the nation's most reliable 5g network. they can even save you hundreds a year on your wireless bill, over t-mobile, at&t and verizon. wow. i can do better. yes, you can. i can do better, too. break free from the big three and switch to xfinity mobile. guy: we are close to ending the day. with respect europe pretty mixed. the german market is the one i would focus on. energy is up in london but the problem for the dax. they have been under pressure and it is front and center right now. we don't know what will happen with some of these big utilities but they are looking like they could need significant help from the german government. we will see what the stoxx 600 is like and we want to caveat wither seeing super light volume because the u.s. is out for the fourth. that is the picture in europe. the 409 a little move first thing. we are pricing in friday's move in the states. u.s. futures rolling over a little bit this afternoon the s&p futures looking like they are down half of a percent. that is kind of what europe is pricing in but it is waiting to see what happens when the u.s. comes back tomorrow. it is big with minutes from the fed and e.c.b. and payroll friday. in terms of what the story looks like from an individual point of view and from a stock point of view i mentioned energy story is strong today and energy is up 4.1% and bake resources up. that is why london is outperforming. technology parts all trading pretty softly today and that is the reason you are seeing that pressure coming into the german market. in terms of individual stocks we will talk about what is happening here. we are watching. easy jet down lost the chief operating officer and we have seen chaos in or piano travel and easy jet many ways the center of that. swiss is up and the reason is we are thinking some cost cutting out of israel -- asia and we are seeing the strength in energy stocks into some names. shell up by 4.3. but the stock i want to finish on is this. this is the german utility down by 72% year to date and today rolling over quite sharply and the reason is that it used to rely on russian gas which it had at a low fixed price. it doesn't have it to the same extent and having to buy gas on the spot market. the price is different quite significant and they are leaving millions of euros every day as a result of that spread. it is a huge problem the german economy is ultimately having to deal with. there is feeding through into the concern about inflation the german changes lore was talking in. we are seeing gas rally to the highest level we have ever seen in four months. you have this added factor today with the norwegians are thinking about further stepping the strike offshore and that is a problem. you have norwegian and russian supply donation potentially coming in and being a problem. today we have the executive vice president over the european commission to talk about this issue earlier. >> we are watching right now to diversify the gas supply and talking with other suppliers both pipelines and with another way or u.s. has agreed to supply substantial additional amounts also with many other countries because clearly the risk is everywhere with russia cutting supplies to a number of countries so something we need to take seriously. guy: the vice president of gas and l and g joins us and hopefully he won't class ties me too much for pronouncing his name. >> it was close but in the ball park. guy: we have a big problem. how short do you think we will be if we take out not only russian gas but a chunk of norwegian gas? prices continue to spike sharply. what is your read of the current situation? >> it is very difficult. we know that russian gas is adjusted 40% by capacity. the reduction of another wgcen flows is not enormous. we are talking about 10% to10% of export but it is at a time when flexible capacity in the market is extremely low and every molecule of gas is not put storage and this creates a big question mark and exacerbates the issue of this winter on how much gas europe has to get through the winter in storage. guy: what do you think will happen with them being down 40%. any understanding it will be turned off for maintenance. how long do you think that maintenance may last? >> gas prom has been saying it will be until the 21st of july and that has been very clever if you want it playing with russian gas. so it has been slowly reducing russian gas it europe and at the same time prices have increased more than the russian gas has been declining. so, overall revenues for gas prom on the face value remains relatively high despite the reduction in flow because prices have continued to go up. there's a limit because if no russian gas is sold there's no price and even the price goes high they won't gets revenue. so there's a school of that the that suggests perhaps there might be further reduction but if it stops flow all together that is the point where revenues will dry,completely. it would be a dire situation for europe but this gives you a level of high the buyers on one side and russia is playing out. and the scenario that oil flow could stop any time soon is far from remote. guy: there's another theory that i heard out of brussels last week is what they will say is we have a bit of a problem with nord stream one maintenance will take longer but we have this other fully pressure aoeuszed we call it nord stream two and it is ready. any chance europe would take the battle or do you think nord stream two is off the taliban? >> i think politically it is off the table. it will be a big turn for them to accept that gas from nord stream. to be fair there are other options that russia would have to supply gas it europe when nord stream is -- that is to ukraine and even to poland despite current sanctions from russia permitting the use of the pipe. so i think that politically it would be very difficult for the e.u. to justify use of that gas in nord stream two. we will see. guy: does that -- this leaves coal. how much coal will we have to burn in europe to compensate for the lack of gas? >> the estimates is there could be as much as 15 gig watts of goal throuts europe mostly in germany but austria, italy, u.k. that could come back and alleviate the situation so each gig watts of coal that comes back assuming an average of 60% could save the equivalent of about one. so 15 gigs come back on the yearly basis they would say 1% of gas but that is guess. so the next six months that could equate to six or seven so probably won't be enough to compensate for a full shutdown of russian gas. and having said that, if this measure isn't prevented and given how high gas prices are at the moment and how gas is affecting particularly been down up to now and likely will continue to be down we think that if russian flows do continue as they are at the moment storage levels in europe could get up to a range of about 75% to 80% full so they will be in the range of about 55% at the moment so below the 90% the government,ed a few weeks ago and zoomed to be -- seemed to be in line to get there but could ensure europe with those through the winter could get through the winter in a tight balance but in this condition and even under differ weather could get through the winter without having to curtail demand. very tight condition, it is predicated on the situation where gas demand continues to be in the 10% to 15% lower than the last five-year average. nevertheless the situation could be managed. the real rick is if -- the real risk is if additional caps are implemented and severe scenario also they are curtailed from russia we could see substantial curtailing of gas. guy: it depends on the weather as it always seems to. thank you very much indeed. we have wrapped,in europe and a particular lower during the auction process. the final numbers positive for the ft-si 100 up by .9%. germany under a little bit of pressure. we will go back to the u.k. and -- ukraine -- recovery conference in switzerland. we have the oecd secretary general. guy: while the war in ukraine continues the ukrainian government and global policy makers are looking to the future. chronologyian and european officials basically looking at the idea of how to rebuild the country. the heads of international organizations are gathering now in switzerland to figure out what comes next. we have this report from there. maria. >> we are joined by the head of the oecd. you said you have meetings back-to-back and i wonder as i was paying attention some of the numbers floated around this morning are huge from 100 million euros to rebuilds to up to one trillion. when you look everything you have heard how many damage and help does ukraine need? >> the impact of the war is devastating and the destruction of lives, homes, infrastructure and the cost is going to be enormous. it will be hard to put a precise number on it right now because we don't know who were longer it will last and how much worse it will get but the need will be enormous but there's a lot of international good will. we will need a lot of international public and private investment to optimize the strength of the recovery. >> you said leads to the next question. a lot of perhaps maybe not critics but some that were skeptical about the need of a conference like this when the war is ongoing and russia is making in ways and they say there's no point. why is it important here? >> it is incredibly important to support ukraine and show solidarity with the people in the democratically electriced governor of ukraine and support their plans for the reconstruction and recovery. from the oecd we have been working to support there reform agenda and we are looking forward to get under way rebuilding. it is about planning to make sure we can hit the ground running even as the opportunities present themselves but there are things we are and can do now. we are providing for example support to ukrainian refugees outside of ukraine but also people that are displaced in ukraine in terms of maintaining educational activities and being able to pass exams and things of that nature. there are things we can do now and planning that should get under way now. really just to make sure we can hit the ground running. what is impressive to see the ukraine government has maintained service delivery at a my level given there's a war and there is a lot of policy work under way it rebuild the country. >> i remember off camera you said there's a lot of good will. you have the impression trts conversation but you said it is important we work together. do you get a feeling there's international consensus on this because they won't hit everyone the same way. >> the priorities in terms of reconstruction and recovery plan have to be set by the government of ukraine and it is important all international partners work together closely in a coordinated fashion based on their core strengths and that is what we are focused on. >> in terms of your consideration was -- conversations with them we hear there's a huge army and buy time to reprep the arm and go back on correspondent offense. >> there are different levels. there's an ongoing military need and certainly ongoing made for military support. there's a significant need for financial support even just in terms of keeping the general operations going and it has been a master feat on the ukraine economy from this. but there's the need ongoing in terms of financing and managing the reconstruction and recovery effort from the oecd. our expectation is to provide policy support and provide advice on policy best practices and to rebuild better and strengthen the institutions and happen strengthen capability. >> today it was addressed the conference saying this is about the reconstruction and building a better ukraine. you know from your experience in are serious issues. corruption, a lot of oligarch powers that perhaps pollute some institutions. will we see a country that can fight a war and do reforms? >> i'm inspired by president zelensky and the ukraine leadership in the face of this enormous challenge the strength and courage and resilience they have shown and ukraine does have an historic opportunity to rebuild better and consistent with the aspirations to be their best several and i have optimism they can achieve t. >> they say a lot of this is what is left of the ussr and back to the soviet union which is they don't want want but in the future this is what it comes down to we don't know when the war is ending, the cost will be enormous and you say there needs to be global organization but somebody has to pay the bill. do you get it is the united states and european union feel responsibility? >> a key responsibility of course would have to rest on the shoulders of the aggressor. those -- russia is going to pay -- >> i do believe those who cause harm -- >> russia should pay. >> there should absolutely contribute and people in russia should contribute to repairing the damage. >> that is interesting because a lot of people say putin will never pay a cent toward this country but you believe there should and there needs to be a way to do it? >> absolutely. i don't think it is contested. i think there's brought consensus this given the circumstances of this war of aggression and what it has caused of course there ought to be part of the financing effort but they ought to be reparation from russia. >> the ukrainians i'm sure other governments in europe would agree with that. thank you so much. always good to see you. head of the oecd. guy: thank you very much. fascinating conversation. still ahead what to watch the next 24 hours. big day on inflation out of the european zone and china. u.s. will return as well. this is bloomberg. guy: as we wrap,in europe in the united states we are kicking off a day of celebration. we will go to boston ahead of the boston pops 4th of july spectacular. kay, are the crowds arriving? when does it kick off? >> it kicks off just eight hours from now at 8:00 p.m. eastern but the doors are about to open in boston on the charles river so we expect a flood of people to start running toward the front of the stage to snag a seat. we expect 400,000 to be here to hear the music from the pops from the headliners. and we will have 20 minutes of uninterrupted fireworks. it will be a fun evening of celebration. guy: what do you most like forward to? >> no one at all of the 400,000 is here to hear me sing but i love singing so i look forward to being back stake when we have the patriotic song sing along but on that the music, energy and people back for the first time since 2019 is going to be an exciting night and the weather is supposed to be great. i'm counting my blessings on that. guy: yes, that definitely will be a big factor. can't have fireworks in the rain. we have been tacking to the secretary general of the o guest: cd about the rebuilding of ukraine. will that play a part in this evening's events? >> absolute. we recognize while we are celebrating freedom there are so many men and women fighting for it elsewhere in the world including ukraine which is was attacked 130 days ago today so we will recognize that and they will sing state anthem of ukraine so we are bag tribute to those fighting for their freedom there. guy: sounds like quite an evening. i will be certainly watching it later on. quite late here in the u.k. but i will be in. 8:00 p.m. eastern. you can catch kaley and rest of the 400,000 singing along. bloomberg television fantastic coverage the boston pops. do not miss it. what else will we watch the next 24 hours? other than the fireworks? you have p.i. data from europe, icon, india, r basic of australia. expecting a rate hike there third month in a row. it will be a busy day and u.s. markets will be back. enjoy the fourth and enjoy the fireworks and this is bloomberg.