francine: the endgame looms for greece. prime minister tsipras says he won't back down on his pledges to end austerity. heading south, the biggest mining spinoff in a decade. a $9 billion valuation that missed analyst estimates. we will talk to the ceo. and ramadi taken in a major blow to u.s.-backed efforts. welcome to "the pulse" live from

bloomberg's european headquarters in london. i'm francine lacqua. the endgame is looming for greece. the prime minister is refusing to back down from campaign pledges to end austerity. a deal with european creditors for bailout funds also remains elusive. tom's neck rolls joins us now from berlin. what is now greece's biggest barrier? hans: there appears to be an emerging consensus that part of the problem is that syriza thinks they have a mandate to fight this austerity that they say is beginning imposed on them. you heard the maltese finance minister clarify and crystallized this point. here is a quote from him. "the mandate that the greek government has got, that is the stumbling block. that is why some are asking whether there should be a referendum." if you think it is the mandate

that is the problem, there is a solution. that is to have a referendum. you heard hints about that in germany last week, mr. schaeuble indicating that he could support that. you have sigmar gabriel, the vice chancellor in the merkel government, and he is saying that a greek exit would be a political problem, not an economic problem. that is very concerning if you are concerned about a greek exit. the more it becomes a consensus view in germany that an exit could be withstood economically, that means the germans have less incentive to keep this project going. they think of it as political matter. there may not be the will especially if there's going to be a third bailout. francine: how much breathing room do greek banks have now? hans: 80 billion is where they are at right now with emergency

liquidity assistance. if you look at what their potential collateral for new loans is, according to greek officials, they are up to 95 billion. however, if the european central bank changes the rules on collateral, imposes haircuts that could bring you down to 88 billion. that would be the ceiling. the ecb needs to have adequate collateral. if 88 billion is the number, you look at 1,000,000,000-2,000,000,000 in weekly increases. that only gives the greek banks sometime in june-july when they will no longer be able to finance themselves. that is another concern. we will be watching closely what the ecb has to say to this. francine: thank you so much, hans nichols. let's get more with j.p. morgan global asset strategist patrick. great to have you on the program. when you look at greece it

seems they are reaching slowly towards chaos. these are two sides that don't seem to be getting closer. >> i think we are going to run out of time. if you look at what analysts have been saying, we've passed so many deadlines. it does seem that over the summer, there are so many repayments. to the imf, the ecb governments in the eurozone. they are really going to run out of time. that is even before talking about the collateral issues that we heard about. francine: does it mean they are going to default? i'm not sure how to play this story. is it tough news until something happens? patrik: i think markets so far haven't reacted much. with the moves on bond yields it is hard to separate out how much of that might be attributed to greece. if you look at bond spreads

that is pretty much under control. i think that is sort of what syriza didn't count on. they didn't count on the ecb being the backbone of stabilizing bond markets. that neutralized any leverage the greek government had. francine: one of europe's biggest bankers said that he thinks qe ruins countries. do you feel the same? does it mean that investors can continue going along their way because it doesn't make a difference if greece defaults? patrik: that is a slippery slope. once you start talking about selective bond buying, you get the constitutional court on your case. in reality we know that qe does a number of things. one is to stimulate the economy. the other is to insulate you from problems. francine: how are you playing the market? let's say we face two months of uncertainty. you have bond markets adjusting

a little bit, certainly treasuries are, you have a lot of movement on fx. what do you buy into? patrik: it is always easy to say. we think that a lot of the extreme moves we have seen our extreme positioning being taken. there is a lazy consensus on the dollar, on ecb bond buying being taken out. you know what you've seen with bond yields is consistent with what you've seen in other qe rounds from other central banks. after thinking about it, bond yields suddenly rise. we haven't changed our strategy that much. we think a modest risk on stands is the one to take. francine: no meltdown if greece were to default? patrik: we don't think so. francine: interesting. thank you so much patrik schowitz. we will be hearing more from him shortly.

we now turn to one of our big corporate stories of the day. it was a slow start for bhp spinoff south 32. the company missed estimates, with investors valuing it at $1.1 billion. the company also missed estimates for its first day of trading in london. south32's ceo now joins us on the throne -- on the phone from perth. are you a little disappointed with how the market has been receiving your ipo? >> this has been something that has been in planning for a long time. if you look at the price today clearly there's other impacts. the australian market was down 1.3%. some key commodities prices are up. francine: do you think you have the right mix? a lot of analysts say, in terms

of commodities, they are a little bit muted. would you consider adding copper or zinc to the portfolio? graham: i think we start day one with a strong balance sheet high-quality assets that are being maintained. we have spoken quite clearly. our initial focus is on running these assets. we believe we can drive productivity and cost savings higher. that is our primary focus. our second focus is to look at the large resource space we have. with that large resource space, you already have people, infrastructure, equipment. if you convert that, that is something you can do. those are our primary focus is. francine: you've also said you want to focus on existing assets. are you concerned that you are missing out on sheet valuations? graham: we will focus on the

things that are within our control. we haven't said we won't look at m&a. the primary focus today is, we think we can generate more than by going out and buying something. francine: do you feel any pressure that you will be bought , that you will be a takeover target? graham: i think we start day one with a good set of assets. we will focus on the things we can control. there will always be speculation in the marketplace. we think we have a strong set of assets. we have great aluminum refineries. we think they will understand. francine: overall, this is day one. on day one, look at the market response. does it make you change your strategy? graham: again, there's a lot of

movement in the marketplace today. we saw some of our major peers in the industry off considerably with the drop in oil prices. the market always has noise. francine: graham kerr, south32 ceo. here's a look at what else is on our radar. i look -- the islamic state has taken over the capital of iraq's largest province. the new u.k. parliament will meet for the first time since the election this afternoon. over the weekend, the chancellor announced that he will deliver a second budget on july 8, setting out some details on the pledges made by his conservative party. that brings us to today's twitter question. what do you want to see from osborne's budget? still to come, we will be

looking in detail at that bhp billiton spinoff and examining why south32 missed estimates on its trading debut. at 10:00, we will be talking to parliament. at 10:40, as facebook comes under renewed scrutiny for its policies, i will be joined by a guest on protection of privacy. ♪

francine: welcome back to "the pulse." we are live on bloomberg tv and radio. the new u.k. parliament will meet for the first time since the election this afternoon. over the weekend, the chancellor announced that he will deliver a second budget on july 8, setting out some of the pledges made by his conservative party in the election campaign. meanwhile, the front runner in the race to become the next labor leader has called on david cameron to move forward with plans for an eu referendum. >> i've been watching how public opinion is changing. there is appetite for a referendum. i've said very clearly that we need to bring forward that referendum. the worst would be a prolonged period of uncertainty and argument. francine: let's discuss this with venue o'donnell.

how significant are his comments? >> they are significant on two points. it marks himself as different to ed miliband, different to the old labor leadership. there are a significant number of people within the labour party who would like to see a referendum on europe. it adds pressure to david cameron, who now has promised this referendum by 2017, and he's now got to deliver it sooner. francine: can cameron actually bring the referendum forward? svenja: he would like to bring it forward, because this is going to dominate his term until he delivers it. the problem is, he is campaigning for britain to stay in the eu. he's got to deliver the performance that would satisfy his backbenchers and get a yes vote. francine: what can we expect from george osborne's july budget? svenja: all the details of this

magnificent pledge that we heard in the run-up to the election. they want to make 12 billion pounds of cuts to welfare. we only know 2 billion of these cuts in detail. he's pledged a number of spending cuts to balance the books by 2018. there have been a number of measures promised. in typical pre-election fashion with very little detail there. i think everyone will be watching closely how these targets are going to be achieved. francine: thank you so much, svenja o'donnell. we are back with patrik schowitz. how do you play the u.k. right now? i guess the referendum is very likely. there's a chance that it may be brought forward. cameron also needs to give himself a chance to renegotiate with the eu. patrik: we've been underweight most u.k. assets for some time. in the wake of the unexpected

election results, they have gotten more positive on the u.k. a brexit referendum, everyone expected it to be negative for sterling. sterling has been surprisingly strong recently. we would still be negative on it. not as negative as perhaps we have been but the uncertainty that it will bring, bringing the referendum forward make sense at face value if they can do it. but as you say, they need time to do some negotiating. it is not exactly like the rest of europe is in a super accommodating mood. francine: that is a fair point. when you look at the bank of england, when can it raise rates? will it raise rates? how do you see it going? patrik: with the oil price having bounced 30%-40%, the

deflationary scares are probably behind us. but there's a big difference between saying the deflationary scares are behind us and suddenly being scared of strong inflation. but i think the conservative will actually brings up an interesting dynamic. there is a feeling that the tories manifesto is perhaps a little bit harsher on austerity than they would have liked. they thought they might have to give away something in negotiations. more austerity probably means a growth headwind and lower interest rates for a while. as we've seen from the bank of england, they may be comfortable with market expectations of no rate hike until the middle of next year, which most people thought was unrealistic. that brings me back to sterling. francine: our twitter question of the day is, what would you ask george osborne in his budget? austerity, but well-placed?

svenja: -- patrik: that is certainly a good starting point. i think it is a good ambition in the long run to balance the budget, but i don't think you need to be overly hasty. francine: all right, not overzealous. thank you, patrik schowitz, global asset strategist at j.p. morgan. next, we will get the latest from iraq as a islamic state militants take control of ramadi. we will discuss that, next. ♪

francine: welcome back to "the pulse" live on bloomberg tv and radio. islamic state has taken full control of ramadi, the capital of iraq's largest province. it came after a fierce battle against security and tribal forces. meanwhile u.s. commandos have killed an islamic state commander in syria as part of an evolving strategy to disrupt the group. let's get more on all of this with elliott gotkine. let's start with ramadi. how significant is this? elliott: it is a massive victory for islamic state, probably its biggest of the year. the greatest coup since taking over mosul almost a year ago.

it follows that it must be a big setback for the iraqi military. also, it shows the limitations of airstrikes, which have been going on. on top of that, i suppose what this also shows is it is evidence of the sectarian issues that are constantly being played out in iraq. ramadi is a sunni city -- excuse me is a sunni city, and there were concerns and there was no agreement for the iranian-backed shiite militias to push back islamic state as they has done in other places. it was only on sunday that the provincial authority gave the green light for these militias to go in the bolster iraqi security forces. by then, it was too late. islamic state now seems to be in total control of the biggest

city in iraq's biggest province. francine: we also understand that u.s. commandos have killed an islamic state commander in syria. what do we know about the person that was allegedly killed? elliott: anyone who watched it has echoed the kind of "zero dark 30" when they took out osama bin laden. we are talking about special forces on black hawk helicopters , on the ground for no more than 20 minutes, in gauging this building where they believed him to be hiding, and engaging with him, killing 12 militants including with anti-hand combat. himself being killed as well after he engaged with u.s. troops, his wife being captured along with a trove of what they will be hoping will be useful data. he was believed to be a very important player with collections to islamic state, in

charge of operations regarding oil, gas, and finances. the u.s. will be hoping that with a trade that took place inside syrian territory, they will get useful intelligence about the islamic state, recruitment, the kind of roots they use the crisscross the borders. some might see this as a complete change in strategy. it is more of an evolution in the strategy that the u.s. are carrying out. again, just like the loss of ramadi, the fact that the euros -- the u.s. but they had to send income and those does show the limitation of airstrikes. francine: elliott, thank you so much. elliott gotkine, our middle east editor on the latest from islamic state. this may help us unravel the financial communications and

personnel behind islamic state. as we head into break, let's have a look at the markets. we have a lot of volatility on bond prices area this is what european stocks are doing overall. carmakers are pushing the ftse 100 up. overall, it is porsche, volkswagen leading these automakers higher. this is also linked to the euro. overall, it is a story of foreign exchange markets feeding into the exports story in europe. next, why did the biggest mining spinoff of the decade disappointed investors? we spoke to the ceo of south32. he says it is just the first day. it is not the end of the world. we will be speaking to a specialist on the subject next. this is today's twitter question. what do you want to see from

george osborne's summer budget? that will be unveiled in july. we have plenty of stories coming your way. keep it right here on "the pulse ." ♪

francine: welcome back to "the pulse" live from bloomberg's european had orders in london. south africa's finance minister says the country is seeking some recovery in its energy capacity. the nation has been facing rolling blackouts as the power bridge fails to keep pace with the country's demand. the finance minister spoke to bloomberg in an exclusive interview. >> we are seeing a lot of recovery in our capacity.

quite soon, we will also have fuel capacity coming out of the plant about 800 megawatts. we have also seen the success of our alternative energy production has also helped capacity. francine: 100000 jobs could be lost in white hollows in the last five years -- in the next five years. that is according to "the financial times." the civil service is currently at its smallest size since world war ii. charles evans has repeated his call to hold interest rates near zero until early next year. he said inflation is too far below the goal. >> based on this forecast, i think the market committee

should refrain from raising the federal funds rate until there's much greater confidence that inflation one or two years i had -- one or two years ahead will be at our target. i see no reason to harry to tighten financial conditions until then. francine: let's return to the debut of bhp's mining spinoff south32. it started training today -- trading today. for more, let's bring in bloomberg's news reporter jesse, and mining analyst, john mayer. thank you for coming. jesse, let's kick it off with you. analysts seem to suggest this is a company that is going to struggle to grow. >> it is a fairly underwhelming response. i think bhp would be disappointed with the response. about a $2 billion shortfall between the markets now and

analyst estimates. commodity prices have been falling for some time. you've got slow economic growth in china. and they are exposed to some of the more obscure commodities like manganese, which is a big earnings driver for south32 and yet it is one of the worst-performing commodities on the back of steel market weakness. francine: is it now a takeover target? the ceo was very, like, this is my first day. are they now takeover targets? >> yes. there has been huge amounts of speculation about this. there is speculation about make davis. we reported last month that he made off last year with about $10 billion. that is something that would be very attractive to him. francine: john, will he be bought out?

john: it is a question of, will they be bought or are they going to go buying? if you look at why this has been done, great policy assets capacity assets, and they haven't just shoved this out with a load of debt. i think they have said, it is dressed acting -- it is distracting to go around buying other things here. let's go off and buy some more stuff. they've got plenty of firepower. maybe they will go after the other midsize companies and build up to a bigger scale. francine: how close are they going to start looking? john: i think there's a lot they can do with these. it is a bit of a rubbish heap time in the mining sector. the chinese are improving.

these sorts of metals should do very much better. it is not as if they've been given a load of junk. this is good quality stuff to play with. davis has given them the management template to go for. if i'm going to give them any advice, look at what he has done, replicate that. davis started with a far inferior set of assets. francine: would they be very disappointed with the valuation, or is this true it is just a market play? jesse: i think they would be somewhat disappointed. to john's point, on getting their house in order, the big question is, how much time do they have to do that? davis has been there for a year now. he has a handle on what these assets are. he has had time to come to the portfolio. we get the sense that they could move fairly quickly. francine: fairly quickly?

john: it is always possible. i think davis has a lot of options. this is the best market i have seen for making acquisitions in at least a decade. i'm not sure he will move straight away. i would wait to see what happens. he doesn't have to buy this, but if the market falls out of love with it, then i'm sure davis is there to pick up the business. francine: what would you be buying? you mentioned a couple names. john: quantum is probably the first to go for. put some copper back into this business. it would be difficult to buy and manganese. perhaps some cheap coal assets and maybe some on the aluminum side. if you look at ford motor company using a million tons a year clearly there's growth in that area. francine: you think valuations are going to stay at this level for the next six months for sure?

is there a danger as we start rising interest rate in the u.s. that the world economy is coming to play, that this asset class will go off? john: one has the feeling that commodities are a better place to store money right now. it is clearly a challenging environment. the market seems to respond better to the potential for more quantitative easing particularly if the chinese are going to put more into their own markets to stimulate economic growth and industrial production growth. europe should start to recover soon anyway. i think industrial production worldwide should are to recover. francine: are we going to see more consolidation in general? jesse: i think so. copper is the key space. maybe one of the other metals is zinc. unfortunately, there's not a great deal of producers out there.

there could be a constraint there. francine: do you have a favorite company in the mining world? john: on zinc, it is difficult to find one. it is a great recommendation but very few companies. i'm still very excited about some of the explorers. medusa mining on gold. the whole sector is looking massively undervalued. anglo asian on gold. there's plenty of opportunity. francine: jesse, going back to the story, are they overvalued? how much is the market create -- correcting? jesse: it wasn't really valued by the bank. the key question, i think, is what this means to bhp billiton. they've stripped out a huge chunk of assets.

now they are focusing on these four key pillars and a fifth pillar. copper is the only one showing any sign of momentum. iron ore is generating huge amounts of profit for them, but the longer-term story is fairly subdued pricing. francine: what is your take on bhp, john? john: they can now focus on the better quality assets they've got. francine: cover? john: cover is a great market to talk about. a lot of the surface production people were talking about this year which drove copper prices down seems to have fallen away. it looks like the year will finish in deficit again. for bhp tech carry on focusing on copper is good. they don't have that distraction of these other assets to hold them back. from a board perspective, spinning out is a good thing.

maybe rio tinto will look at something similar. francine: thank you for joining us. john mayer and jesse riseborough. we will talk ethical investing. some are ditching companies that contribute to climate change. we will bring you the details after the break. ♪

francine: welcome back to "the pulse." here are bloomberg's top headlines. alibaba is being sued by the

luxury group kering. they have accused the chinese e-commerce company of allowing the sale of fake goods on its platforms. asking prices for london homes fell the most in nine months in may over concerns that labor government would have imposed the so-called mansion tax. prices dropped according to a property website. russian president vladimir putin has been showing off his ice hockey skills. putin played in an exhibition match as part of a celebration marking the 70th anniversary of the end of world war ii. he launched eight goals. a man of many skills. german chancellor angela merkel is seeking an emission system to curb climate change. the move comes ahead of the climate summit this week. investors including some in

norway are taking a second look at certain companies due to climate change concerns. here with more is bloomberg intelligence analyst gregory elders. what is happening? certain companies are looking into the climate change approval. gregory: what we have seen is a number of nordic investors saying they are going to sell out of companies that are at risk for climate change. francine: this would be how wide? if we look at the norwegian wealth funds how much investment do they have at the moment? have they given themselves a commitment to invest in more pro-climate change companies? gregory: they have done that as well. they would say they are boosting their global energy and they said they would divest in a number of companies. we have seen their filings, that

they no longer hold certain energy companies. francine: which companies are being targeted? gregory: it is primarily coal miners. they are the ones most at risk. as we have seen a drop in coal prices, 50% in the last three years it has become economically challenging for them. investors are saying potentially, their business model may be at risk for the climate change regulations. francine: why are energy and utility companies facing so many shareholder resolutions? gregory: you have a number of shareholders in the u.s. not willing to divest. what they want to do is work with management to make sure they understand these issues. they are asking management, what are you doing? francine: is there a correlation? if i'm more climate change-friendly, does my profit go down? gregory: there's been no real link as to if it costs you money. a lot of investors say, if it is

not going to cost you anything you might as well be prepared if there are more stringent regulations going forward. francine: are we going to see more companies in these kinds of initiatives as we gear up to the big talks in november? angela merkel has put it at the top of her priority list. gregory: you see europe putting a focus on it. china and the u.s. said they would seek to cut carbon emissions. you have this increasing noise around the issue leading up to december in paris. francine: increasing noise, but no game changer. gregory: no game changer. francine: until it is something that is mandatory. gregory: that is why a number of these nordic investors with $1.3 trillion in assets are getting ahead of it. francine: in terms of what you are saying, it seems that these countries are coming down the

harshest in terms of investments. what is the next group that care about it more than others in terms of climate change? gregory: i think you see a number of pension funds around the world particularly in europe, but in the u.s. as well. they are not thinking one-to-three years out. they are thinking of when you will see more action happen on this. francine: interesting. gregory elders, bloomberg intelligence analyst. mass surveillance has a chilling effect. that is what jimmy wales told bloomberg this morning. here is what he said. >> our view is that mass surveillance of everyone has a chilling effect on free speech. we want people to feel comfortable with wikipedia without worrying that governments are going to be spying on them and possibly

sharing intelligence in ways that are inappropriate. we need to have a big public debate about what the parameters of surveillance are. i feel like a lot of this has happened without that public debate. francine: we will be continuing that conversation later in the show as we put facebook's privacy policies under the microscope. we will also talk to one of the richest women on how she made her fortune. ♪

guy: what -- francine: welcome back to "the pulse." now, for the latest in bloomberg's series of hidden billionaire profiles. we are taking a look at one of saudi arabia's biggest conglomerates who stands out because she is a woman. devon pendleton joins us with the very latest. how did she rise to the top? devon: she is very experienced. she started as an analyst for jpmorgan in new york. she came back after getting her degree in the u.s. she was championed by her father, who started one of saudi arabia's biggest conglomerates. oilfield services, consumer goods distribution fast food,

pretty much everything you can think of. he saw a lot in her. he mentored her in the business. francine: is she part of the royal family? devon: she is not. there is no collection -- connection at all, which is striking. her father made his way to the top as a young man. francine: tell us more about the company. devon: they are a very big company in saudi arabia. they've got brands from the u.s. and from england and they brought them over to saudi arabia. brands like burger king brands like nabisco oreos coca-cola a lot of those big consumer goods. they are in saudi arabia because of olayan group. francine: how much do we know about her? we don't hear about her often. devon: she is not very big into

self-promotion. but she is remarkable as a woman and a leader of such a big company in saudi arabia, she is very sought after. she hosted dabbles -- davos a few years ago. she has done lots of speaking advocating for women and change in saudi arabia on all sorts of issues. francine: it is rare, being a woman and a ceo not part of the royal family. do we know any others in saudi arabia? devon: nobody with as high a profile. she is unique. she actually is the first woman to join the board of a publicly traded saudi company. francine: amazing story. devon pendleton from the billionaires news team. let's have a check on the foreign exchange markets. this is a picture for euro-dollar and pound-dollar. investors are spending a lot of good data from the u.s.

the dollar climbs from a four-month low versus its major peers. it broke a four-day run of losses against the euro on speculation that this week will have more data in the u.s. pointing to a case for a federal reserve interest rate increase. we will have manufacturing. we will have a little bit of these housing numbers early on. it is a policy divergence the foreign exchange traders are now focusing on. this policy divergence was underlined by officials through the weekend, including some australian officials, saying that the south pacific nation is having to cut borrowing costs. here are bloomberg's other top headlines. south africa's finance ministers says the country is seeing some recovery in its energy capacity. the country has been facing rolling blackouts.

the finance minister spoke to bloomberg in an exclusive interview about the energy crisis. >> we are seeing a lot of recovery in our capacity. we will also have new capacity coming out of the nuclear plant. we've also seen the success of our alternative energy production. francine: 100,000 jobs could be lost in whitehall over the next five years as george osborne seeks to balance the books. osborne is targeting 10 billion pounds in cuts from the civil service, which is currently at its smallest size since world war ii. fed president charles evans has

spoken in stockholm. he said inflation is too far below the fed goals. >> based on this forecast for the rest of the outlook i think the federal open market committee should refrain from raising our traditional short-term interest rate until there is much greater confidence that inflation will be at our 2% target. i see no compelling reason for us to be in a hurry to tighten financial conditions until then. francine: just a reminder, you can follow us on twitter. guy johnson is out today, but he's also on twitter. coming up, we have plenty to talk about, facebook, and privacy laws. we have a great panel. we will also be talking about bhp billiton. we spoke to the ceo of south32 the entity that it spun off.

the ceo was confident that they will focus on growth and they may become an acquisition target or by some things as well. we are back in a couple minutes. ♪

francine: the endgame looms for greece. prime minister tsipras says he won't back down on his pledges to end austerity. heading south, the biggest mining spin off in a decade disappoints investors as south32 debuted with a valuation that missed estimates. we will look at what george osborne could have in store for us in july. good morning to our viewers in europe. good evening to those in asia.

welcome to those just waking up in the states. i'm francine lacqua. the endgame is looming for greece. the prime minister is refusing to back down from campaign pledges to end austerity as the nation's banks run short on the collateral needed to stay afloat. and to deal with european creditors to unlock bailout funds seems elusive. ponzi nichols joins us from berlin. what seems to be greece's biggest barrier? hans: it is the idea that syriza believes it has a mandate to say no to these austerity measures. that is according to the maltese finance minister. there is an emerging consensus that one way around this mandate question is to have a referendum. he said the mandate that the greek government has got that is a stumbling block. that is why some are asking whether there should be a referendum. last week, you heard mr.

schaeuble in berlin, indicating that he could support a referendum. if you had a referendum, you could get a clear vote and take away this idea that syriza has a mandate to say no to everything. one other quick note on what is happening in germany yesterday, mr. sigmar gabriel, vice chairman of the coalition, he said he thinks that greek exit would be a political problem not an economic one. it gets to this view in germany that the eurozone economically can withstand a greek exit, but politically, there would be problems, but economically they think the contagion could be limited. francine: just how much breathing room to the greek banks have, if any? hans: emergency liquidity is 80 billion euros right now. they have been raising that one billion to 2 billion every week.

when you look at the collateral that greek banks need to post they have about 95 billion in collateral. that gives you about 8-10 weeks from now. if the ecb imposes haircuts on the collateral, you could get down to 88 billion in were the collateral. that's another 8 billion to go and that could mean capital controls at some point down the line if the ecb titans the screws. francine: hans nichols nichols there, our international correspondent. the new u.k. parliament meets for the first time since the election this afternoon. chancellor george osborne announced that he will deliver a budget on july 8, setting out in detail the pledges made by his party. meanwhile, the front runner in the race to become the next labor party leader has called on david cameron to bring forward his plans for a referendum. for more, let's bring in svenja

o'donnell. we are also joined by russ walker. sven you -- svenja let's start with the referendum. how likely is it that david cameron will have no choice but to call the referendum earlier than planned? svenja: he would like to bring it forward, because this is going to dominate his term. the problem is, he is campaigning for britain to stay in the eu. he needs to deliver some pleasing reforms to his backbenchers and the public to ensure he gets the yes vote. that's where it gets complicated. francine: because he needs to help them, i've tried to negotiate, and this is what i've got. we found out quite a lot over the weekend. they've focused on the devolution of parliament and now we have this new budget resented by george osborne in july. svenja: the tories made all

sorts of promises in the run-up to the election. we know there are going to be 12 billion pounds in welfare cuts. so far, we've only had about 2 billion of them. there will also be cuts to social service and at some point, they have to deliver. this is george osborne's chance the first time he's got a full tory majority, to deliver a budget that sets out exactly how to achieve that. they also promised and david cameron reiterated that, a big increase in spending for the nhs. people would like to know where the money is going to come from. francine: if you look at the conservatives' position, they probably had to be tough on austerity. what are we going to see on july 8? >> i'm not sure we are going to see a great deal. you had a budget back in march. in terms of the headline growth

forecast, i don't think that's going to change in any material way. there ought to be a comprehensive spending review during the summer and the autumn , where they will divvy up the money between different government departments. that is quite complicated. i'm not sure by july 8, we are going to have a lot more detail. it is not obvious to me that we need this budget on the eighth. francine: our twitter question of the day is, what do you want from osborne's budget? would you say not much, or more austerity? ross: i think the headline fiscal plans that were set out back in march look well-judged. the key is, we need more detail on how to deliver those spending cuts. francine: scenjvenja, if you look at the last two weeks, is there a feeling that because labor and you cap are without a leader --

and ukip are without a leader the conservatives are trying to push through things and muster support? svenja: i think that's true. this is also the first time they've had a majority in quite a few years. bear in mind that david cameron's problem isn't the labor opposition. it is his own backbenchers. with the slim majority, that's what he has to worry about now. francine: are you worried about the slim majority in terms of where they can steer the economy? ross: eventually, i think it becomes a problem. the working majority is quite tight. i think, for the first year or two, it is going to be relatively plain sailing. the big risk was always the

rebellion on europe. i think mr. cameron's backbenchers will be relatively well-behaved. francine: when do we start worrying about the referendum? with the scottish referendum markets started worrying about two weeks before. do you worry about a referendum? is it too dangerous to call it too soon? ross: in a way, the sooner, the better. remove the uncertainty. the problem is that the political cycles are out of sync. there won't be a new treaty until 2020 perhaps. with an early referendum, we still have to have another referendum on a new treaty or another in-out referendum once we know the future in direction of the eu. in a way, this is going to go for a lot longer. francine: how tough does george osborne need to be?

does he just need to come back and say, we've renegotiated this? or does he really have to try to get some of the red lines that angela has been talking about? svenja: it is all about how you package them, really. david cameron had a period in which he alienated other european leaders because he was trying to please the home crowd. george osborne, very different figure. he's a lot more measured. he can afford to be, being the chancellor. i think there's been some positive response already from the eu. ideally, they would like to see britain stay in. they are -- some people just won't budge. the important issue here is which will be palatable to both germany and france and to the more eurosceptic tory crowd at home. francine: what are your biggest

concerns for the country? ross: i think the pound should be manageable. we haven't had any sort of export-led recovery. you would not want to see further appreciation. i think we can probably live with mid-150's against the dollar. i think the risk is the eu referendum that we are pulling up the drawbridge, we are not as open for business as we have been in the past. you can make a respectable case for the u.k. prospering outside the eu but i think there are big problems around perception. francine: you can make a case. that's why it is so dangerous. give us a sense of what you think we will do. i guess it is much more of a danger to raise interest rates quicker than have to reverse it. are we going to wait until next year? ross: my forecast is february

2016 for the next rise. we have seen the bank of england pushing back against markets when the first hike is priced into the second half of next year. that may materialize. today, the bank feels uncomfortable with that. inflation is going to remain close to zero. there nothing forcing them into an early hike. i think the chances this year are still quite slim. once we get into 2016, they will want to begin normalizing rates. francine: do they have to wait for the fed? ross: i don't think they have to wait for the fed, but the u.s. economy looks like it has more momentum at the moment. i think if the bank of england is too far ahead, you will see table jump rings. at those sort of levels, you start to create problems for u.k. exports. francine: thanks so much. that brings us to today's twitter question.

what do you want to see from osborne's budget? tweet us. here's a look at what else is on our radar this monday morning. islamic state has taken control of ramadi. the militants forced their way into the city after detonating x car bombs burning down a police station, and raising the black flag over the government complex. south32 has missed analyst estimates in its trading debut. investors valued it at about $9.1 billion below estimates of just over $11 billion. south32 is the world's biggest manganese producer and the operator of the largest solar mine. still ahead, he says facebook users' private lives are being treated without respect. we will speak to belgium's privacy regulator. ♪

francine: welcome to "the pulse ." let's turn to mining now. it was a slow start for bhp spin off south32. the company missed analyst estimates on its trading debut with analysts valuing it at $9.1 billion. let's bring in bloomberg news reporter, jesse riseborough. why did they miss estimates? jesse: you have to look at it

against this backdrop of weaker commodities. coal, silver, lead, and manganese has been one of the worst performing mining commodities this year. there were some bearish analyst commentaries that referred to this as a ragtag mix of unloved commodities. investors never bought bhp for these assets in the first place. why should they continue to hold them? francine: so bhp basically spun off this entity with the more unloved commodities and they are keeping the best? jesse: that's right. they've got this strategy of a four-pillar approach to their portfolio. copper, coal, iron ore, and petroleum. they have spun off all the aluminum, manganese, led, the more unloved assets. it is a complex array of assets. it was taken at management time,

and everyone wants to streamline. francine: does it mean that both entities are targets or they will try to buy other companies to grow? jesse: with self32 -- sou th32, there is this feeling of acquire or be acquired. it seems like they are going to focus on what they have, get their own house in order. there is definitely a risk that they will be a target. there is a huge amount of cash sitting there. they will probably have pressure from investors to deploy that capital. they've had a lot of time to get comfortable with these assets. there is a strong view in the market that it could move quite quickly. francine: because they are cheap or because they are desirable? jesse: certainly, there is a growing consensus that there has

to be a near bottom in commodity prices. it is a bit of a risk from that point of view. in terms of the valuation perspective, we've heard it reported that they made an offer of 10 billion. given where the market is, 9 billion, you could make the case that he could fund that transaction. francine: when we spoke to the ceo of south32, he kept his game close to his chest. do you think they have a plan to acquire? jesse: really good question. he was very coy, didn't give much away. clearly, every investor he would have met with would have asked him, what is your growth strategy and given those assets, some of them not very long life, you would think they would have to look at deals fairly quickly. they've got a really strong balance sheet.

they definitely have scope to do something. francine: jesse riseborough there. still to come in the program, we get the latest from the middle east as reports emerged that islamic state has taken the key iraqi city of ramadi. stay tuned. ♪

francine: welcome back to "the pulse" live on bloomberg tv and streaming on the ipad and bloomberg.com.

islamic state has taken control of ramadi, the capital of iraq's largest province. it is a major loss despite intensified u.s.-led airstrikes. we are joined now from baghdad by bloomberg's asiz. tell us the latest. [no audio] francine: i don't know if you can hear me. give us a sense of what you hear in baghdad at the moment. if you can hear me, give us a sense of what happened over the last couple days. >> [inaudible]

francine: all right, thank you so much. aziz alwan from bloomberg news in baghdad. u.s. commandos have killed an islamic state commander in syria. let's get more on that with our middle east editor, elliott gotkine. we were hearing from our reporter in baghdad. the line was quite bad. it is very significant that on the same weekend islamic state took ramadi, an airstrike also took out one of the biggest

commanders in syria. elliott: the ramadi victory for islamic state, not just a huge coup militarily, but in terms of their propaganda. there were suggestions that islamic state was on the back foot. they are still very much a force to be reckoned with. it also underlines the deficiencies, the weakness of the iraqi security forces, and how airstrikes alone are not enough. the fact that airstrikes are night -- are not enough are evidence of the fact that you have u.s. special forces flying in on black hawk helicopters taking off from iraq, going into syrian territory. they were on the ground for 20 minutes. 12 militants were killed, including abu sayyaf the commander they were hoping to capture. they engaged them in hand to at some point. sounds like a scene in a movie.

they managed to capture his wife, as well as a trove of potentially useful computers and phones, on which the u.s. hopes to find useful intelligence regarding the operations that abu sayyaf was in charge of mainly regarding to oil and gas, and finances. they could have information on the way islamic state crosses borders and the like. they are hoping that the wife of abu sayyaf will perhaps, her usefulness will compare with the intelligence they hope to glean from the computers and phones that they snatched in that raid. francine: how much do we know about abu sayyaf? this wasn't his real name. elliott: we know that he was, according to u.s. spokespeople someone that was really directing, almost like a finance

minister of what islamic state likes to call its caliphate. we know that the islamic state very much relies on things like oil sales and ransoms to help operate the territories where it now holds sway. they are very much hoping that the killing of abu sayyaf will in some way disrupt islamic state in order to give them a window into how it operates and make them better able to disrupt the advances that it has been making the most notable among them, the taking of the biggest city in iraq's biggest province over the weekend. francine: thank you so much, elliott gotkine. still to come, we talked ethical investing. some funds are ditching companies that contribute to climate change. we will bring you the details after the break. just a reminder, you can follow us on twitter. guy johnson is off today but he

is on twitter. the question of the day focuses on the u.k. we found out that george osborne is preparing for a july budget. what do you want to see in it? ♪

[beeping] ooo come on everybody, i think this is my grandson. [lip syncing] ♪little girl you look so lonesome oh my goodness. ♪i see you are feeling blue ♪come on over to my place ♪hey girl ♪we're having a party happy birthday, grandma! ♪we'll be swinging ♪dancing and singing ♪baby come on over tonight [baseball crowd noise] ♪ ♪ [x1 chime] ♪ ♪ [crowd cheers]

oh! i can't believe it! [cheering] hi, grandma! ♪ francine: welcome back live to "the pulse." the nation has been facing rolling blackouts after power grid failed to keep pace with the country's demand. finance ministers spoke to bloomberg with a discussion on the crisis. >> we are seeing a lot of recovery in our capacity. we are at this stage where we

will have new capacity coming out of the plant about 800 megawatts. we are also seeing that, this time around, the success of our alternative energy production. it has also helped capacity. francine: 100,000 jobs to be lost in whitehall as george osborne seeks to balance the books according to "the financial times." he's targeting 10,000 cuts from the civil service. the chicago fed president charles evans as your pete at his calls to hold interest rates near zero until early next year. speaking in stockholm, he said inflation is too far below the fed's goal. >> based on this forecast and the rest of the outlook, i think the fomc should refrain from

raising the rate until there is much greater confidence that inflation one or two years ahead will be at the 2% inflation target. i see no compelling reason for us to be at a hurry to tighten financial conditions until then. francine: let's check on the markets. jonathan ferro has more. jonathan: losses on the periphery. on the dax in germany pushing 0.8 percent higher. in the ftse 100 up by 0.4% in london this monday morning. i bring you over to the touch green because i want to lift the lid and show you one of the biggest losers. it does not show you the full story. down by almost 4% a disappointing evaluation of over $9 billion with analysts looking for something lists and 11 in

front. $2 billion less than forecast. another thing taking a hit is the euro. last week, the story was strong euro. the docs sounding off this morning with the opposite. 0.6% lower -- the dax sounding off. coming off of its longest weekly losing streak since 2013. retail sales in u.s. disappointing. consumer sentiment dropping the most in two years. this morning, a strong dollar at least for now ahead of a key week for data. in the european bond market generating headlines once again. italian bonds down for the first day in a three yields to one point 86%. the core is not immune yields up a take on the german 10-year. if you want to see a real move in a bond market, get up to

two-years. look at this move on the greek two-year up 225 basis points to 23 point 16%. when you talk about a bond route, that it is. francine: 25 minutes from now "surveillance" with tom keene. what are you most excited about today? tom: greece's front and center. francine, there's a lot of the greek fatigue on bloomberg "surveillance." maybe this is the week for greece. i tell you -- it's front and center. francine: i know there's greek fatigue. thus the dangerous point. you think you have it sorted. the minute it defaults or the minute there is a negative event, it might have a huge impact on the market. you don't have data this week. tom: the idea that imf is

involved if they are the adult in the room, it's not just about the developed part of europe say germany versus offense, but it's much more than that with the imf involved and you wonder what they will do in the first week of june if they miss that first payment. we are here on may 18. francine: what happens to the data? i was looking at dollar charts. the dollar is quite up significantly. tom: it's a rebound. as jonathan mentioned, the data was moldy. we will focus on retail. all of his tentacles out into the retail world, it was a very soggy retailer week and we are beginning to see the sales in new york command. the data was there. the charles evans clip you played, the federal reserve resident from chicago, it really underscores what a tepid week it was as we begin this monday. francine: tom, i look forward to

"surveillance" starting in 25 minutes. angela merkel is seeking an emissions system coming out of the climate summit in paris later this week. a number of institutional investors say they are taking a second look at certain companies due to climate change concerns. here with us is gregory elders. >> nordic institutional investors are selling out of companies at risk for climate change, coal oilsands. they believe the growth scare is -- the risk is too great. francine: one of the companies that will be targeting? greg: in the u.s., peabody consol energy, oilsands, frack are's like eog resources.

the swedish national pension fund says the risks are two great going forward. francine: this is a big year for climate change. the essential talks in paris are talking at the end of this year. more shareholders more it's a too shall investors are saying hold on. i'm not going to buy that coal miner if it doesn't look at carbon emissions. greg: what we have seen a shareholder resolutions are up. in the u.s. a record number of resolutions file that energy companies. they are not really necessarily willing to divest but they want to make sure management is disclosing on the risk. francine: how much time are they given to comply? greg: tomorrow at shell, they have a resolution at their annual meeting asking to disclose with the risks are

going forward to next 20 years. bp shareholders voted on a similar resolution last month. francine: angela merkel put climate change as one of her top priorities to focus on this year. if we have an agreement in paris, does it directly translate to more burden companies? greg: directly, no. there will be more legislation coming down the road. the u.s. and china agreed to start limiting climate. they will put rules in place for power plants. very much you can see that flowing out if there is a strong agreement. francine: gregory elders bloomberg intelligence analyst. facebook privacy policy under the microscope. we speak to the president of the eu privacy watchdog who recently attacked the company's recent changes. ♪

francine: welcome back to "the pulse" live from london on bloomberg tv. jimmy wales is in israel to receive a prize for innovation. here's what he said. >> google is being forced by law and it's a very dangerous precedent for google to be making this decision. they will be censoring

newspapers and we definitely need a judge involved. that's my point. >> as the founder of wikipedia you sued the nsa on behalf of wikipedia users. what was your view on that? >> mass surveillance has a chilling effect on free speech. we want people to feel comfortable participating on wikipedia without worrying that various governments will be spying on them or the u.s. government will be possibly sharing that intelligence. we need to have a debate about the parameters of surveillance and i feel like a lot of it has happened without the public debate and is time to have it now. >> will suing the nsa make a difference? they are doing this without judges anyway. >> currently we believe their

actions are violating not only statutory bob davie exceeded even what was given them -- but they have exceeded what was given them outside of the scope of the constitution. if the supreme court rules correctly, they will be forced to stop what they are doing. we are not that far gone yet. >> they can look after information on facebook, twitter, instagram, what have you. >> it's a common thing to say that young people don't think about privacy in the same way. they are also using snapchat and different apps because they are concerned about their privacy. they understand not everything should be made public. francine: let's keep it on the privacy debate. facebook is writing over eu data protection laws. he says facebook labor -- facebook uses private lives are being treated without respect.

the president of the commission for privacy protection joins us now from brussels. they give her joining us. several european regulators have looked into this. why are you starting this probe now? >> we are confronted by new terms and conditions from the first of january, the third of january. we are going into an in-depth academic research and assessment. we have seen a lot of violations of problems according to privacy. francine: what exactly are your main concerns? what are you hoping or expecting to force facebook to do? willem: we see there is a lot of tracing from people not only from members of the facebook group but also nonmembers people consulting webpages where you can see things from facebook

in these people are tracked and traced without their knowledge, without their consent, without any report. francine: the dutch regulator are saying the photos can be used for commercial use. facebook already responded saying it was the case in previous policies as well. what's your take on this? willem: it's a very strange thing. policies are changing practically every year. we see there is an evolution of. it is only in one direction -- more and more power to reuse use the data from their members and nonmembers. we want a debate. we want to come to a settlement, an agreement on the way that they are treating this data from the european and belgian citizens. francine: is facebook cooperating?

willem: well there's a great difference between, for example, google who is now in speaking terms with us in facebook who says they are defending privacy but who don't want to speak don't want to recognize our jurisdiction the obligation of belgian or dutch law. francine: facebook is still saying the only people who are allowed to investigate are the irish. is that correct? willem: that's not correct. if you are saying to them you are in violation of the still existing european legislation, of course ireland is a very important partner. irish law is applicable, but not only irish law. francine: the endgame would be what? to get facebook to change the privacy laws or would you be able to fine them because of

this violation? willem: we cannot fine them but the prosecutor can take action. we are working together with not only belgian but the netherlands, germany, and now also france and spain has joined this group. together, i think we shall be stronger to have real engagement from facebook. francine: the possible signs and investigations, do you think this will be enough to deter companies, such as facebook, but there may be others because related in an increasingly internet world to use own privacy settings for their own good? willem: we think it's a very important case. it's not only facebook of course. a lot of other companies are involved in the euro, in the united states.

for example, in india and china for example. i think it is a test case. three years ago, we had a lot of discussions with google. first year, google refused the application but after the sentence of google spain, the accepted. we are now on speaking terms. i have great confidence that they will change their policies. francine: thank you so much sir. willem debeuckelaere president of the belgian commission for reduction of privacy. how should tech giants react to eu laws on privacy policy? we are joined by the ceo of good technology, christian. thank you for being on the program again. what do you make of what he

said? he said this should be a deterrent. >> at the end of the day, we are all breaking uncharted ground. we're in these epic series of conversations whether it is commercial entities government entities. there is a massive dialogue about data, who owns it, how do you opt in or out? the concern is, yes, what are they doing with the data, but the bigger conversation is to the users now? have they given their consent? francine: facebook says one thing and the eu says another. is this an eu versus tech company story? christy: it is not localized just to facebook. there are a lot of entities grappling with this from the tech companies perspective. you have a very fast, rapidly changing landscape of regulations. i think they are crap thing with

how -- they are grappolingpling with geographic boundaries. have you done everything responsibly you can to tell the user what you are doing, when it changes? if they say they are not ok with that, what are their options? francine: do we need a regulator? are not sure of the privacy on my accounts. christy: if you are to ask if it's the application to her downloading on the application device or privacy on facebook most users don't know. by the way, they are changing all the time. you may have read than the first time and they change again. there's an opportunity to have a broader conversation about educating users. i would argue that end users are becoming much, much more aware about the debates in this space. francine: who needs to drive this conversation? does it need to come from the tech companies in general?

or does it have to come from governments trying to protect their citizens? christy: it needs to be a collaborative conversation and i would argue that it needs to be global. if you look at what's happened in other technology areas -- think about financial services. it hurts the ability to deliver a consistent experience of the only way to get around that is you have to have the user and government entities come together with the industry to sit down and come together to talk about what the best ways are to communicate. how do we let users know what they are doing? francine: christie wyatt, ceo of good technology. here are the other top headlines. alibaba is being sued by a luxury group behind gucci, alexander mcqueen, and stella mccartney. they are accused of allowing the sale of fake goods on its platforms. buying the most in nine-month over concerns that the labour

government would have opposed the so-called mansion tax. russian president vladimir putin has been showing off his ice hockey skills. he played in a neck submission match as part of the celebration marred in the 70th anniversary of the end of world war ii. he notched an impressive eight goals in his teens 18-6 victory. coming up, we are watching grease. stay with us. we have plenty more coming your way. ♪

francine: welcome back to "the pulse" live on bloomberg tv, streaming on your ipad and on bloomberg.com. for what we are watching the rest of the day, we are joined by hans nichols. they are speaking about the red lines that they are not to root pete the mistakes of -- they're not to repeat the mistakes of the past. we also have a live tv interview later today. hans: he's speaking at 11:30 a.m. greek time and that could give us a better idea of where we are in negotiations. but we just had does not amount to a whole lot. the greek red line is to not repeat the mistakes. francine, i'm not sure what that means. it say circular statement. are they willing to make a

foreign's on pensions, on labor costs? that's what they agreed to in -- are they willing to make changes? what's with a agreed to. if he sticks to the line, it's difficult to see how either he or mr. separates can figure out the way to come to an agreement. francine: what's the likelihood of a negative event? hans: is a 40% probability. these are almost entirely made up. no one can give you a firm number on the probability. we can only give firm and hard numbers on when you will get your drivers license and start driving in greece, francine. francine: ponds, thank you so much for pointing them out. hans neck goals -- hans nichols. that's it for "the pulse."

stay tuned for "the surveillance" up next live from new york. follow me on twitter @flacqua. we will see you tomorrow at the same time. ♪

tom: injuries tries to get through friday. no sign of compromise. money runs out. the islamic state takes ramadi.

retail sales slide. everything must go on sale. this is "bloomberg surveillance." we are live from new york. i am tom keene. joining me, brendan greeley. our guest is on spanks and body enhancing. brendan: it will be all dad bod all the time. i am going to put a dollar in the jar for bringing up my children. tom: we regress into further dad bod and into the top headlines. >> the prime minister