states -- will they say no to sepp blatter ? he cannot monitor everyone. that is what he says. the new normal of american housing markets. we will speak with michelle meyer's -- bank of america merrill lynch. this is "bloomberg surveillance " live from our world headquarters in new york. i'm tom keene. joining me brendan "up all night fifa" greeley. brendan: the vote is later this afternoon. it looks good for sepp blatter. the only thing that will change anything today -- democracy within fifa will not do it. tom: if he wins, does he not speak to the u.s. and the caribbean and the europeans? brendan: it is already happening. what is interesting is what the europeans will do. i want to see what the european association is going to do. tom: let's go to top headlines.

here is vonnie quinn. vonnie: it is not that item though. item 17 on the agenda today. european leaders more broadly say greece is not doing well enough. they want greece to overhaul its economy. until they get that, they will not make any deal. they hope for a deal by sunday. it is clear that the process has to speed up here in >> -- the process has to speed up. >> time is running short. with all of our progress, there is still a way to go. there is still some more progress to be done and some substantial reforms that need to be delivered. it is absolutely necessary for a good agreement. vonnie: greece has not said how it will pay the imf $1.8 billion next month. the first payment is due next

friday. support may be waning for soccer's international kingpin hours before his reelection did. longtime supporters have backed away from fifa's president, sepp blatter. the u.s. and canada have said today they are in favor of a jordanian candidate instead. still, sepp blatter has support in africa and asia. he needs 2/3 of the vote to win in the first round. dennis has to has been charged in a -- dennis hastert has been charged in a hush money scheme. he allegedly agreed to pay an unnamed person $3.5 million for what he called prior misconduct. jpmorgan will cut thousands of jobs in the next year. tellers will be fired because more customers are using atm's.

one report says about 5000 will be fired. the u.s. economy probably contracted in the first quarter. we have the revised gdp figures at 8:30 eastern. the first estimate show the economy was barely growing. now the economy most likely shrank. all eyes will be on that report at 8:30 eastern. tom: very good vonnie. a lot of economic data starting at 8:30 this morning. let's do a data check. equities, bonds, currencies, commodities. the euro advances near 1.10. crude has been weaker over the past 10 days. not much going on there -- dollar yen under the 124 level. quickly to the mac monitor,

let's do the story on oil. $100 brent crude. this is the joy, a couple months ago. then we have worked nicely since. others looking at this measurement of marginal supply versus marginal demand, they make great note in the last number of days how we have rolled over on the support line. i do not usually use support lines, but this is pretty elegant mass, how -- pretty elegant math. it is friday. let's call it fifa friday. brendan greeley is counting votes. greece is decidedly losing in europe. we begin with the g-7 meetings with hans nichols. what do i need to know into the weekend about the soap opera the greek drama in dresden? hans: you need to know there is a difference between a

possibility and a potential. this was the big kerfuffle last night. madame was ours -- madame lingard -- there was a possibility, then they went back-and-forth. the problem with the translation, it turns out it is only a potential. that is the sense of how fraud and fragile -- how fraught and fragile the situation is. from those we talked to this morning, it is uniformly negative, saying the talks need to increase. brendan: the finance minister of journey said that this is a dance that he has been through before. greece saying we are close to a deal and everybody else saying they have no idea what they are talking about. is that what you're talking about? hans co. that is almost as reliable as the bells tolling behind me. the same thing played out at the top of the 11:00 hour. yanis varoufakis gave a talk in

athens saying how close they were to a deal. they said there is one red line on that, that the new agreement cannot be more austerity. budget discipline is being amended, being called for by the imf, the ecb, and the eu partners, the creditors to greece. in some ways, yanis varoufakis says the same thing, and in some ways we have the same redline. that is why privately we are seeing there is not a lot of optimism. brendan: the scramble is that it does not look like it is ever going to happen, and that overnight it has been last-minute. that does not seem like that is what is happening right now. do you get the sense from the people where you are in dresden that this is not going to happen by june 5? hans: i get the sense, but i do not want to fully acknowledge my cents on that because i have been wrong so many times. the first rule of a greek deadline is that there is no greek deadline. even the june 5 deadline we are

talking about -- it turns out there is an imf procedure from the 1970's that you can look your payments together and put them at the end of the month, so the june 5 deadline could be pushed act to the latter half of june. the only that has availed themselves of that is zambia in the 1980's. tom: hans nichols, thank you so much, in dresden, monitoring the drama. this morning we take a second reading of first quarter gdp. for the third or fourth time, we will wring our hands. in economist like michelle meyer, from bank of america, merrill lynch -- they suggest we should remain calm. i am. michelle, good morning. you see this -- oliver chen has a great quote this morning. i know you darkened the door of product recently.

people are not doing that. they are buying lipstick and not a handbag. is that we were doing, trading down consumption to a soggy level? michelle: clearly the consumer numbers at the start of the year were disappointing. you headed into the year with job growth in q4 exceeding 350,000 jobs a month. gasoline prices falling sharply. tom: we were going to spend money and we did not. michelle co. people are more cautious, they are picking and choosing what they spend on. tom: then spend -- then state the case of the optimist. mark zandi a at movies -- at movies is more optimistic. how do we shift from buying lipstick and a handbag out to a point in america where we are buying prada?

brendan: weight -- who is weak chemo kemosabe? michelle: even with an unemployment rate down 5%, there are still underutilized and discourage workers. you have seen a significant tightening in the labor market. that by itself should generate stronger and more broad-based economic growth. brendan: we will get gdp numbers today. how do you account for first-quarter growth? usually you have to put a dampening function on it. michelle: we are looking for minus 1.2% after last month. there has been a lot of talk and a lot of press. a lot of colleagues have said this as well. the residual seasonality for the

first quarter, there are issues and how it is calculated. brendan: i want to understand this correctly. is there regularity to that, or has it been worse in the first quarter in recent years? michelle: the past five years it has been worse. it is not the case that the economy -- tom: you nailed this with the trend here, brendan. yesterday the call was -0.8. the bloomberg terminal now is -0.9, and they are coming toward you. brendan: i am using your words -- it is a lipstick mood, not a handbag mood. tom: great notes on the spirit of retail. we have a lot to talk about. we will talk to michelle meyer about housing coming up. brendan: coming up, fifa meets

to elect its president. that is happening in zurich today. sepp blatter has been there for 17 years. will he stay? this is "bloomberg surveillance " and soccer report, live on bloomberg television. good morning. ♪

tom: good morning, everyone. "bloomberg surveillance." a lot of economic data as well. let's get to top headlines with vonnie quinn. vonnie: the senate will be back in session sunday, facing a deadline. opponents want to stop collection of american phone records. the death toll in india with a ring way it is now more than

1800 and temperatures in the last month have reached 116 degrees. water shortages are widespread. one third of the population does not have electricity. uber has come out with a new policy for customers. it is shorter, easier to read and is a lot more expansive. uber tells customers it can track everything they do while using the uber app. the app is called "god view." nice to have that sometimes, but also not so nice. tom: i cannot imagine if they take uber away. you wonder what new york city would be like if they took it away. brendan: you would pretty much all the time be on the long island railroad. that is where god view puts me. tom: coming up this morning, a lot to talk about, more than a normal friday.

we're thrilled to bring you michelle meyer, egg of america, merrill lynch. -- bank of america, merrill lynch. we are going to feature this all of next week as well. then we look at the debt of this nation, a very interesting research piece out of m.i.t. the skies -- the size and scale. brendan: back to the only thing we care about, u.s. investigations into fifa made public this week. that was not an accident. the entire organization is in zurich for a vote today for president. mark barton joins us from zurich. he is not on the ballot. what is the whip count right now where you stand? mark: it is all happening behind me right now. 209 national delegates are meeting. on the agenda, the main event.

it is david, goliath. david, the brother of the king of jordan. and goliath, sepp blatter, going for a fifth consecutive term. he said he would not even run for a fifth term, and the biggest scandal in football history has overshadowed this event. but it is overshadowing mr. blatter himself. brendan: walk me through what we know, association by association. the europeans, are they going to vote in a block, no? mark: the european said they might even boycott the vote. they said they should suspended for six months. then later they decided to turn up. they will vote because changes are from the inside. it is thought the majority of the 54 delegates will vote for

prince ali. but you need a 2/3 majority to win the first round, and blatter has the africans, the asians, the south americans, and he probably has the caribbean's. -- the caribbeans. brendan: let's hang out with that word "probably." the caribbeans has been his staunchest allies. mark: it is incredible when you remember what has been happening in the last few days considering this is the biggest scandal, considering we have had this indictment of 14 officials by the department of justice considering they talked about this corruption, this rampant corruption within fifa over the last 20 years. considering that, the allies of sepp blatter still stand behind

him. why do they stand behind him? it is simple. at sepp blatter's disposal is money, a lot of money -- $5 billion grossed in the last four years between the last world cup and 2014. $1 billion is given to federations for stadiums. most of the money goes to the smaller associations. every vote today is equal. montserrat, the caribbean island with just a population of 5200 has an equal vote to brazil. brazil has 200 million inhabitants, plus he does not need to worry about brazil. he goes to the cayman islands. the cayman islands have received $2 million of funding from fifa since 2002. that explains the smaller countries, why blatter is pretty

much guaranteed to win. brendan: mark barton insurrection am a calling the fifa -- mark barton, in zurich. calling the fifa situation like a boxing match. the only people who have leverage once blatter wins the vote are the sponsors. tom: we do not know what nike, coca-cola, and visa will do. in the next hour michelle, and that is good. david rosenberg on your future inflation. look for that in the second :00 -- in the 7:00 hour. good morning. ♪

tom: it is a hallmark day for new york city -- no, not game seven, new york rangers/tampa bay lightning. the opening of one world observatory. this is, should we say, coming up on 15 years of moving forward. it is a great day for new york. brendan: we are taking a look at a morning must read. this comes from gavyn davies of "the financial times." he writes -- brendan: michelle meyer we do

not know what is happening in the real economy, so what i found fascinating from macroeconomics is we have stopped assessing the numbers and we have started discussing how the numbers are put together. the argument here is that real gdp growth is greater than we thought it was because inflation is lower than we thought it was because technology is much better for the same price. we are getting more utility out of what we are paying. michelle: it comes with his argument of productivity. if you have seen technological advancements, it is inflationary but we are also seeing greater real consumption and real quantity. that is a challenge that is hard to measure productivity real-time. it is hard to measure technological advancements and how products are changing how we are living. we feel like a lot has changed. we are not sure if it is actually being measured. tom: what do you mean about two america's? there is a will doubt hear coming out of the negative first quarter.

what does it say about two americas those that are playing with toys and those that are playing without toys? michelle: one of the clear ramifications of this crisis is that it has been an uneven recovery in terms of wealth creation, in terms of access to credit. that is one of the challenges. even in terms of accessing consumer products. tom: what is gdp right now? if we are underestimating? michelle: q1 i do not think was actually negative, but we are probably in the environment of mid-percent gdp growth. brendan: michelle meyer is wearing an apple watch. michelle: it is very cool. brendan: where do you stand on growth in the future? are we done innovating? michelle: no. i think there is still so much

investment in terms of technology, in terms of research and development, and that can really be -- when people try to look forward into how much growth there is left in the economy, we do not know now. we are going to find out. tom: michelle meyer with us on this estimating gdp. -- on mis-estimating gdp. thank you for you or responses. love what we're seeing. it goes to michelle meyer and david rosenberg's work. when will inflation return? it is that simple. it is like a haiku on friday. ♪

[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! ♪ tom: good morning everyone. "bloomberg surveillance." futures are at negative two, improving a little bit in recent moments. let's get to top headlines with vonnie quinn. vonnie: if you days ago, the

president of soccer's governing body was the overwhelming favorite to be reelected. now in the wake of the bribery scandal, a report says that sepp blatter is waning in the last few hours. much of europe will vote for a jordanian prince instead. blatter appealed for unity before the vote. sepp blatter: it may not always be easy, but it is for this reason we are gathered here today, to tackle the problems that have been created and to try to solve them. vonnie: he has strong support in asia and africa, but he may not get the 2/3 of votes he needs to win the first round. the government comes out with the revised first-quarter gdp figures in the u.s., likely to show that the economy contracted slightly. economists say it probably shrank at an rate -- at a rate

of almost 1%. >> we have to view the first-quarter numbers as a little bit suspect. last year we looked through the numbers and we did get very strong growth in the second and third quarters. we will see of something similar happens. vonnie: jim bullard speaking on bloomberg tv and radio yesterday. once again, a time is running out for greece. the country has not said how it will pay 1.8 ilion dollars to the -- $1.8 billion to the imf next week. international creditors say greece -- president obama' bill appears to have the votes in the house of representatives. two house aides -- the senate has already passed the bill. it will let the president submit trade deals to congress for an up or down vote without amendments.

in japan, a volcano has er upted. crowds -- clouds of rock -- have exploded. no one was hurt. it is the consent -- it is the second time the volcano has erupted in 10 months. the tiny island has 150 people living on it. brendan: tom, did you see the headphones and the microphone on jim bullard, like he was a sportscaster calling the economy? "had a pretty good season, looks like it is going to tighten -- no, and she pauses! tom: he is that odd exception where he is never dry as dust. he is a plainspoken, straight talking economist, as is michelle meyer, bank of america, merrill lynch. see how i got into that?

that was a nice segue. housing is still culturally a big deal. a better housing market signals all is well in employment, the expectation of wage growth and a stable american society. michelle myers, deputy head of u.s. economics, bank of america and merrill lynch. on how the housing recovery is. this is not normal. michelle: there is nothing normal about this. the only thing normal about the past decade -- it has not been normal for about the past decade. you had an unprecedented housing bubble, a homeownership rate climbing higher well into the middle of the 2000's, and that has reversed. tom: i want to look at existing home prices adjusted for inflation. the headline is we are back to trend. we are really right on normal. is this all there is?

do we go flat on trend, where housing is normal, or is there a boom feel to where we could go? michelle: i think there has been a difference in terms of what we have seen from the activity side, in terms of building versus what we have seen from home prices. the recovery in home prices has been pretty impressive. we have double-digit home price depreciation in 2000 on a nominal basis, and in an economy disposal income was sub 2% on a per capita basis. last year we had about 5% appreciation. we have actually seen an impressive gain back to trend but for activity, for housing starts, housing sales, there has been much more lackluster -- tom: some of the series show the recovery, and others do not. brendan: this is a distinction we are learning to draw between existing home sales and new housing starts. take us through the holland tunnel out through the rest of america. what do things look like region

by region? michelle: housing is regional, so there is going to be very different dynamics depending on where you are. if you look at the coast, there you are seeing faster depreciation. california has seen impressive growth in terms of building. the economy is doing better there as well. if you think about what is happening down south in florida, you have a lot of building in prime areas in miami. you go inland more, and you have some closure inventory to work through that has not been processed. brendan: is that the case in arizona, and nevada as well? michelle: the foreclosure process there has gone a lot faster and the market has rebounded quickly. florida it just takes a long time.

same with new york, pennsylvania, and new jersey. tom: as we go into the summer what is the rent-to-be youuy calculus right now? michelle: nationally the overall trend in home prices taking into account a 30-year fixed conforming mortgage, your monthly payments to frida's report michelle:: the critical for housing is -- it is not just wages, it is expectations. tom: you are so good at measuring the confidence to commit to a three or five or 10 or longer. are people doing that? michelle: it is slowly coming

back but it is fragile because you do not have the same availability of credit. you have to put up a larger down payment. there is expectations that home prices potentially could fall. we have learned a lesson that home prices do not just -- tom: housing could be flat or go down. michelle: it is possible. we could see another downturn in prices. tom: could i put that out on twitter? michelle: if you must. brendan: coming up, she is america's analyst. one key finding -- india is ready for us to go in and find its unicorn. that is today's single best chart. this is "bloomberg surveillance ." good morning. ♪

tom: good morning everyone. "bloomberg surveillance." brendan has the single best chart. brendan: the internet trends report is out. here is what we are looking at. we should be hunting for unicorns in india. that is the subject of today's single best chart.

what we are looking at is three trendlines. that is an actual measurement line. looking at internet penetration. at the point where india is now, in the u.s., amazon was founded. in china alibaba was founded. now here is where we are looking in india. we do not know, but now is the time to do it basically where we are in terms of internet penetration. one qualification i would add is that the trend is different. growth is going to be all in mobile. what access there is, they are going on very cheap chinese handsets. tom: 1990's with the big ugly cell phones. brendan: it is very much a fixed business. you have the fixed internet connection. you sit at home and order stuff.

that is what amazon was designed to do. you do not know what the amazon is going to be for india because of the penetration there. she is talking about an indigenous indian company. alibaba was invented in china to serve chinese needs. what is happening in india -- michelle meyer, when you look at the curve do you see the same result where at a certain point of internet usage that is where all the companies that will define the future of the internet start to happen? michelle: part of what you are happening is how the economy is developing. how much income creation do you see? how much job growth do you see? how advanced is the economy? when you get to a certain level of economic performance, you can see the broad-based technological advances. tom: what does bank of america and merrill lynch say about india's ability to proxy a 7% china-like growth?

michelle: pretty positive and constructive on the economy in india. overall they will think it is an engine of growth and pretty upbeat. brendan: it is not the first time i have heard this in the last two or three weeks. the silicon valley of india looking at the possibility of finding a unicorn. tom: to your credit, this heat wave the drought of india, is the real deal. brendan: absolutely, and the numbers are stunning. we are now at 1800. that is huge. it is hard to imagine. that is the top photo today. number three photo in india, the roads are melting. it is too hard to believe. temperatures rose to 116 degrees fahrenheit 45 degrees celsius. tom: the percentage of indians

without electricity is a problem -- no electricity, no air-conditioning, fans, nothing. brendan: the monsoon is later this year. that is the problem they are having. tom: so this is linked to the lack of a monsoon. brendan: yes and may is always the hottest month. it has been worse for longer because they are waiting for the reins to come. number two, in san francisco, uber releases a sketch of its new headquarters. everybody should run for the door. tom: the third floor i have paid for entirely. brendan: nobody is more bullish on uber than tom. tom: it is not just bullish, we use it and it works. michelle: the ability to pull up on your mobile device a car, and you track it and it comes within minutes.

tom: but to your point, we have a uber headquarters, and isn't apple building some monstrosity? brendan: exactly. apple is building the mothership. do you i bank into the -- do you buy that the second the company -- tom: be careful. brendan: we are going to get everybody out of trouble right now and go to maryland. two spellers celebrate after winning the scripts spelling bee. they are co-champs. there were not enough words left for them to keep facing off. she spelled the word -- he spelled nunatkaak.

i do not even know what that is. they took home a trophy. tom: where the mountains are lofty and the sides of the fjord sink. brendan: how overextended is our balance sheet? the united states is the world's largest -- this is "bloomberg surveillance ," streaming on your tablet your phone, and bloomberg.com. ♪

tom: good morning, everyone. "bloomberg surveillance." let's get to top headlines of vonnie quinn. vonnie: less than two hours from now, we will get our first quarter revised gdp figure, likely to show the economy contracted. we will get that report at 8:30 eastern time. here in new york, the founder of an online drug peddling site will likely be sentenced to 20 years in prison. prosecutors want him behind bars for longer than that. they say he connected $18

million in bitcoin to the website. the new observation deck at one world trade center is now open to the public. visitors say you can see 50 miles on clear days. sometimes looking down at clouds . a beautiful day, bittersweet i am sure for some. tom: greece, the story continues to move forward in dresden. mr. short-- i have never seen him mr. schaeuble, anything but cranky. brendan: we saw one smile. tom: he is wearing a tie this morning. brendan: he is definitely the --

tom: on the united states budget with an important guest right now. brendan: if you are an american citizen, you have equity in what you might think of as the world's largest bank. this is a question for accounting, professor lucas. i understand that we have loan guarantees that we do not account for in our budget. we do not see the market risk. >> that is exactly right. we account for them but very differently than any private company would. take student loans, which we all know that are very risky, high default rates. as current government accounting works, the government treats those as profitable business. the reason is simple. they use the treasury rate as their cost for capital.

they take into account the expected default losses, but there is no chart for the market risk. the best way to say this is that the accounting for the government is a money machine for the government. if the government were to issue debt and buy stock, they could solve the entire budget deficit. brendan: what is the swing here? how do our budget numbers shift for the last year? debra: -- deborah: it is a big shift. it does not change the whole picture, but what it changes is the picture for how the government looks in its risky loan program. tom: the real worry is 10 years 20 years out, reinhardt rogoff in his acclaimed work have spoken of the same work.

what is the distinction of the m.i.t. sloan research? deborah: the imbalance in social security, the fact that we have made promises that we have not funded. i am worried about something that way fewer people are worried about, that the government is central to our mortgage and student loan market's -- and student loan markets. it looks like the government is actually making money on them when in fact -- brendan: it is also about credit guarantees. you have been arguing about this for years, and you are getting somewhere now, particularly with republicans are what has changed? deborah: i think there is greater awareness of problems with government accounting. the government really needs good accounting to understand the commitments it is making.

congress has been moving toward using value accounting, which is a way of recognizing that risk. this year they have included in the budget resolution that they would have access to these accounting numbers. tom: if i am having coffee with you and doug ellen dorf, he will tell you that the deficit to gdp is 3%. what is it with the deborah lucas account? deborah: the real import of all this is in the microcosm. the government to privatize fannie mae and freddie mac but they will show that it costs money to you that if they use their current accounting system. tom: you are telling me the deficit to gdp, under your recalculation -- brendan: i think i can explain. so we are not talking about the money we actually -- we are not talking about balance sheet. we are talking about the credit guarantees we have for student loans for fha, for fannie and

freddie that actually have a market risk. if things go well, that is making money for us. but we are not accounting for the possibility that we might lose money on it. we are a bank and we are not accounting for the credit that we are guaranteed. michelle: i think what worries me the most is fannie and freddie. we know policy are working on reforming the mortgage markets. what do we do in the next few years if they do get rid of fannie and freddie? how do they account for that? deborah: say they liquidate their portfolio at market prices. that should be neutral for the government. but under the current of government -- under the current government accounting rules, it looks like it cost the government money when in fact it does not. we need to have, just like businesses the government needs the right numbers to make the right decisions.

this is about decision-making, it is not the macro of the deficit. but it is so important. we are talking about trillions of dollars of financial decisions. brendan: these are things that have moved from not existing at all in the cbo's estimates to footnotes to possibly in the future something that is really sitting on our balance sheet that we can see it has to do with. deborah: that is the hope. brendan: truth in accounting, tom. tom: i am lost. i do not agree with anything i just heard. brendan: we will walk you through it. tom: thank you very much. brendan: thank you very much. tom: it has been quite a week for the japanese yen. 123 .85, a little bit of a reversal right now for the u.s. dollar to the japanese yen. michelle myers, as always, -- michelle meyer, thank you so

much as always. in the next hour, david rosenberg will join us. we will speak to david rosenberg about canada and that linkage to oil. stay with us. another hour of "bloomberg surveillance." ♪

tom: citrus takes -- tsipras

takes a call on the speaking in dresden on greece and the future of europe. europe and the u.s. -- sepp blatter monitors the fifa vote. david rosenberg on price change. inflation is coming. good morning, everyone. this is "bloomberg surveillance ," live from our world headquarters in new york. i am tom keene. joining me, rendon greeley -- brendan greeley. who is this person speaking to? brendan: such an amazing dry but cutting wit. schaueble's talk only took a few minutes. griese said please, and he said no. -- greece said please, and he

said no. yanez verify and said we have made some progress. -- yanis varoufakis said we have made some progress. tom: right now we need to speak to vonnie quinn. vonnie: the fifa chief is rapidly losing support. officials from around the world are meeting right now in zurich the capital of switzerland. they must decide whether to give president sepp blatter a fifth term. prosecutors are investigating corruption inside fifa. blatter is ignoring calls to quit. instead, he is calling for unity. sepp blatter: it may not always be easy, but we are gathered today to tackle the problems that have been created and to try to solve them. vonnie: his chief rival is a jordanian prince ali. canada says they will vote for

ali. but sepp blatter has strong support in africa and asia. european lenders are saying greece must do more to fix its economy, and they say there will be no more bailout money until that happens. within the hour, germany's finance minister says the talks by greek officials will accurately reflect. greece has been saying it hopes for a deal by sunday. >> it is running short. we need to speed up in order to get to the agreement that we all want. the second thing is that although there is progress there is still a way to go. there is still more progress to be done, and some substantial reforms, a comprehensive set of reforms that is absolutely necessary for a good agreement. vonnie: greece has not said how it will repay a 1.8 oh in dollar imf loan.

the first payment is due a week from today -- a 1.8 billion dollar imf loan. former house speaker dennis has to do is accused of breaking banking laws in a push money scheme. prosecutors say he was paying someone to cover up what they call prior misconduct. sweeping job cuts underway at jpmorgan. bloomberg news is learning that workers are being cut because of a home loan slump. tellers are being laid off as customers are turning to atm's. the bank has more than 240,000 employees. those are the top headlines this morning. tom: it has a lot to do with retail banking. it will be amazing to see where the big tank's are one year from now -- where the big banks are one year from now. the empty stores i see it every corner. let me do a quick data check. i want to get to the news with mr. rosenberg.

futures were at negative seven, negative two. i am looking at this. i do not want to overstate this. this is good news for greece. we have given it back here in the past 10 or 15 years with sch aueble comments. the question here is, is greece folding into all of the american economics experiment? i have been taken by the comments of alan ruskin, and now we speak with david rosenberg. tell our american viewers why greece matters, not so much referral or contagion, but the unknowns that are out there right now. david: it does not matter for the u.s. economy one iota. what a matters is for the markets, because it -- what it matters is for the markets because they do not want uncertainty.

it is basically an annoyance from my perspective. i am not overly worried about it because the really big deal would have been financial contagion. the reality is banks do not oh big debt. they was the case -- that was the case three years ago. right now you have some angst and uncertainty, but it is not a financial catastrophe. tom: i have a problem with you. i cannot tell you what you are saying in dinner. you were at dinner in new york the other night, and five will said to me, "rosenberg said." the same thing -- the thing is you are being an optimist. no one believes you. there is a rosenberg shift from caution to optimism. on economic growth, what caused that shift? david: it took place three years ago, so it is not new news. i laid out the marker here. everybody is concerned about the first rate hike of the fed. we have the mother of all fiscal

tightening back in 2013. broad-based tax hikes, across dividends, capital gains. tom: and that is gone. david: it is actually the gift that keeps on giving for uncle sam because of 14% revenue growth for the government. what the revenue yields accomplished -- people are concerned about the fed a 19 seven -- a 1937, 1938 repeat. we had a fiscal shock in 2013 that has only happened three times in post-world war ii experience in the u.s. it did not happen this time which told me that there was some firm underbelly to the economy. it is not going fast, but we are going nonetheless. tom: -- david: firstly, second-quarter

quarter gdp looks like it is going to be in the high twos. we have just had the durable goods numbers. the was solid and the -- the cap ex was solid. last year we came off the negative first quarter. we are not getting a four handle on the second quarter of this time. i think he will be in the high twos. the pattern over the past several months not just the headline but also the diffusion index it is behaving in a way that i think we will see at least 3% maybe a four handle in q3 or q4. brendan: we would not have thought that no progress is good progress in d.c. i was in d.c. at the time. if what you are saying is true, the fact that nothing has

happened since then in the last three years is a good thing. david: i am actually not saying it is a good thing because people are wondering, with all the monetary stimulus, 0% rates and a bloated fed balance sheet fiscal policy in the united states is inordinately tight. if you are wondering what is holding back the u.s. economy, it is not housing or consumer spending. everybody was wondering what the gasoline proceeds -- where the gasoline proceeds are being spent. exports are pretty soft right now. i do actually agree -- here is what i will say. you are wondering where the big restraint is on the u.s. economy. you have a situation where uncle sam is drawing in 14% revenue growth, tax proceeds from the private sector, and they are putting back barely more than 2% spending into the economy. tom: do you agree with professor

krugman that we have to give more umph to the economy in washington? david: they should rollback or partially rolled back those taxes in washington. people thought back then that the u.s. dollar is going to zero, we are getting downgraded by standard & poor's. tom: have you spoken to any republican candidates on this? david: no, i haven't. tom: there are 42 to choose from. david: we have gone from a 10% deficit gdp ratio down to 2.5%. brendan: it is a tax hikes and not the lack of spending that for you is a bigger driver. david: i would say the tax hike is significant, and it is the gift that keeps on giving. if uncle sam was a stock, you would want to buy it. 14% revenue growth out of 4%

nominal gdp is incredible. brendan: but also when we talk about spending, we have to look at the state level as well. the states have cut act, and they have not come anywhere close to they were -- to where they were pre-2007. david: i was in the double-dip camp. but you have to be re-disciplined and you have to be challenging of your macro view. you look for evidence that is challenging to your view come and mentally i was cautious. but when you take a look at the shock that i have had ever's -- that we have had ever since crisis, the fact that we have an economy that is even growing -- tom: we will talk about inflation and the toronto maple leafs. our twitter question is simple. ♪

tom: good morning everyone. "bloomberg surveillance" in new york city. our twitter question -- when will inflation return? we look forward to hearing from you on when inflation will return. the good efforts of peter orszag with citigroup earlier this week -- here is peter orszag signaling an important research paper.

tom: thank you to peter orszag for this original research from nber using social security data. this shows technological progress, that there are companies with a lot of technology, and what a shock they are paying more than burger flippers. david: wage rates ultimately affect skills and productivity. that is economics 101. tom: with renewed good inflation, does that mean better productivity? david: the list of productivity is capital -- where is the

investment? that is the question. right now california is very strong. traditionally in a state that is a leading indicator for the national economy in both directions. silicon valley is in whom mode -- is in boom mode right now. there are significant increases in capital spending. it is not wrongly based, though. if you believe the -- it is not broadly based, though. over the past couple of quarters, what is amazing is that the path this is the weakest growth rate, and the private sector -- in the private sector capital stock in the world war ii era. it is something difficult to measure, and there will be a lot of bad provisions, and most important is multifactor productivity and how labor and capital mingle. for whatever reason, and there

are probably a lot of reasons that we can debate, but we know that the cost of capital is low. capital formation has been low. whatever reason, for ceo's, the greater return on capital -- brendan: we have to jump in here. we have to go to zurich and talk about soccer. that is coming up next. the vote is today. this is "bloomberg surveillance ." ♪

tom: so much for a quiet friday. at least i thought it would be. we are going to zurich in a moment. right now, top headlines with vonnie quinn. vonnie: the senate will be back in session sunday, facing a deadline in the patriot act controversy. it will expire in the next day if congress does not renew it. the national security agency bases the program on -- we are

learning this morning that the number two executive at goldman sachs was considered for the ceo job at pimco. goldman president gary cohn was on the shortlist to succeed mohamed el-erian. he is not commenting. uber is out with a new privacy policy. the car booking company is telling customers everything they do while using the uber app can be tracked. some customers complain about a tool that tracks where cars are at all times. tom: it is scary what they know about me as uber takes over new york city. let's go to what you see on "surveillance" with david rosenberg this morning. we will speak with his canada and oil. we was slice and dice the new

inflation, making a comeback. and we will digress. we will talk about seismic shifts in toronto, canada. we will do that on ice hockey. this is with two game sevens in hockey, the first i'm -- the first time in 15 years. brendan: staying with sports the story with fifa has moved from brooklyn back to zurich. there is a vote for president, add now police have concern -- have confirmed that there is a bomb threat where there is the vote for president. mark barton joins us. mark: you would not know that there is a bomb threat here. complete calm. the protesters are quiet. we do not know anything about a

bomb threat. there is a lot of increased police presence. it is all happening inside. behind me you can see it is obviously lunchtime at the 65th fifa congress. the main course of the day is the fifa presidential election later, probably around 4:00 p.m. local time. we know who the favorite is. brendan: we are looking at headlines right now, mark, and i see that the argentine soccer association and the new zealand soccer association have announced that they will not vote for set latter -- for sepp blatter. is that a real movement? mark: you know what, brendan, we might have something here. i was just speaking to one of my bloomberg print colleagues. it seems as if a few of his traditional supporters like new zealand are just turning, going for prince ali.

we had the u.s., canada go out in support of prince ali as well. we know europe is a big supporter of prince ali. it might be in the air, just a touch of the possibility of the second vote. the first vote needs a majority of 2/3 of the 109 delegates. by the way, to win the second vote, the winner just needs a simple majority. we are hearing that some of the associations like the caribbeans, are rethinking the support for mr. blatter. the caribbean has had a history of being a starch -- a staunch supporter of the incumbent. tom: i want to get to the sponsors here.

how can nike be involved in this? brendan: nike is not involved in this. nike has never been a sponsor. i am going to throw you to something that we read this morning. tom: when does coca-cola say enough? are we there? brendan: why would they have any reason to say enough? we have had this discussion every time the question of corruption in fifa comes up. they have always put out a press release. they say they are deeply disappointed, but they do not change anything. i have zero confidence they will bring any pressure. tom: i am in the cap, when they

fall down, they fake they are hurt. david rosenberg knows a montreal canadiens fan like me -- you are in the penalty box somebody falls down, you are two minutes in the box. we are of that mindset. looking at this juvenile drama in zurich -- do we have to wait another four years? brendan: it is deadly serious for a lot of people and hard to which link culturally. we have always known that this is how fifa is run. tom: how can coca-cola do this? brendan: how can they walk away from the biggest event in the world? i am not saying it is morally defensible. tom: it is a great debate, a great conversation away from the garbage we are seeing in zurich. he is going to win right? brendan: we are going to take a deep live to the great white

north. economy, the price of oil is a big deal right now. this is "bloomberg surveillance" and fifa report on bloomberg television and radio. good morning to you. ♪

tom: never a dull moment. the chancellor of germany speaking right now. of course, a busy week with prime minister cameron and also what is going on in dresden. are they on the same page? brendan: they say very different

things publicly. he is more aggressive publicly than she is. but given what has happened, i do not think they are that far off from each other. they are both saying this is not going to work and we need to go back to the original agreement. tom: we will have continuing coverage through the morning from dresden germany, and from zurich, switzerland. jpmorgan with the announcement yesterday, widely expected -- i believe i have been out front on this on retail matters -- that there will be job cuts. 7.7% decline at jpmorgan since 2002. emily glaeser highlighted that in "the wall street journal" this morning. the next step in our new financial system. brendan: i look at that number, and it is very specific jobs that are going -- tellers and mortgage underwriters. what is a bank? it is really definitional --

what is a bank? one thing that is happening with deutsche bank as well, they are shedding their retail operation. they do not make money. tom: david rosenberg is with us with the bank -- with big bank experience. is the merrill lynch that you knew the same merrill david: it is not merrill lynch anymore. it is bank of america merrill lynch. tom: you are talking to a 24-year-old who just graduated. would you tell him to work at a bank? david: i am making a transition to the buy side. for me it is a lot more fun. different pressure. tom: there is your exclusive there rosenberg and and rested on the buy side. bonnie: officials of sports

around the world are meeting insert and much -- must decide -- u.s. prosecutors are examining -- >> the important point is how our football and fifa are placed in the world. it is the fight against corruption, match fixing, races, and discrimination, which are always present in the game. vonnie: prince ali, both u.s. and canada say they vote for him. blatter has strong support in africa and he needs to third's of the vote to get past the first round. they are likely to show the u.s.

economy contracted slightly. the first estimate said the economy barely moved in the first three months of the year. it has probably shrank, in fact. >> we have got to view the first-quarter numbers as a little bit suspect. last year we looked through the numbers and we did get very strong growth in the second and third quarter so we will see if something similar happens. vonnie: we will have that gdp to report to you as soon as it is released. the germany finance minister is speaking out about that germ -- the greek debt crisis. he says comments from the greek officials do not reflect the status of the talks. he says they are not close to a deal. one week from the day -- from today greece must repay the imf. the eruption of a volcano forces

people to flee a small japanese island. ash billowed almost 30,000 feet high. our than 100 people were evacuated. no one thankfully was hurt. this is the second highest volcano to a rapt in -- to be wrapped in two months. tom: into the data check with miracle speaking on cameron and shoretel speaking on citrus, it is like two zeitgeist's. the euro strengthening fractionally. futures negative three. oil has been light over the last couple of days. close watching into june. 13.31 showing us elevated equity prices. to consider equities have been so resilient. the big story this week ¥124.

something nobody is talking about, a lower german yield. positive 0.50%. brendan: this is bloomberg surveillance. tom: going north to canada. our guest host, david rosenberg, is from toronto. he is shocked at the disinterest americans pay two things economic north of the border. oil is the heart of the future for canada and here i say, for america as well. david is joined by norman levine. norm, what oil price does canada need to be a successful canada? norm: probably in the 70's $80

area minimum. tom: we see worries about supply, worries about demand. do you see a great adjustment in alberta that affects all of canada? norman: the adjustment is already underway. you are having employees starting to be laid off and people are looking at the statistics, saying it should be worse. my opinion is it is still early on that these things take time and it has to take time to work its way through the system. brendan: the bank of canada in its monetary policy reports say the bad news was largely due to transitory effects of sharply lower energy prices. that word "transitory" it sounds a little more hopeful than is justified. norman: my opinion on this is that commodities cycles go for a

decade or longer at a time of positive and negative. we are in the fourth or fifth year here so it does not seem to me to be transitory. i think oil and other commodities be depressed or quite a while. tom: let's bring in dave rosenberg. this goes back 30, 40 years, through p year today oh. the great weakening of the canadian dollar and the move for a stronger canada. tell us, david rosenberg, about the dynamics of the canadian dollar with the u.s. dollar. david: it is really a three chapter story. the first one going above par. basically dilapidated the manufacturing center. you could not lift up a newspaper two or three years ago

and not see about a major canadian any fracturing plant closing down. tom: so that is from the oil. david: the next is the trap door opening up on the old oil price. oil fell bad, the canadian dollar went down $.83 to $.85. the bank of canada cut interest rates in january. they will never tell us this. all of a sudden, when we got down toward $.78. i think right now we're just bobbing in a range. tom: this is textbook canada brendan. if you are confused at home, trust me, i'm confused on the desk as i talk looney and rosenberg talks tourist dollars. brendan: we are sitting here in new york talking about canada as if it is an island that if you

look south across the great lakes you see the united states. how closely is that economy tied to the u.s. economy? david: it is totally tied. we are totally independent. you are by follower -- by far our biggest trade partner. we are working on a free trade agreement with europe. hopefully we will be part of the transpacific but basically, you have the biggest part of our exports and imports. when you get a cold we get the flu. brendan: 20% of canadian gdp is just south of the border. the one thing i would add on the energy side is this, what price of oil are we talking about? if you go to the western canadian oil price, the canadian dollar prices of oil for the producers in alberta have actually gone up 70%. tom: i'm going to look at that.

we are going to do oil from canada some point in the next days. how about our twitter question. when will it inflation return? wasn't it a song in the 70's? ♪

♪ tom: so much for adult friday.

the prime minister of the united kingdom has said he must go. brendan: this is pebbled against a tank. tom: the prime minister of the united kingdom. brendan: he has no power over set latter and it is known that the entire united kingdom -- you know what we are moving on to? we are moving on to hockey is erik schatzker is onset. i have nothing to say about hockey. let's check the hockey headlines. tom: excitement across all of north america. no canadian teams are involved and the toronto maple leafs have decided to fix that. they have spent $50 million on one human being to come in and save arguably the richest sport

in the world. let's have fun. will mike babcock save your toronto maple leafs erik:? it does not matter. i would go so far as to say i wonder why they are wasting $50 million on mike babcock and it has nothing to do with his ability as a coach. tom: why does it not matter? you have not won since forever. erik: let me illustrate. winning does not matter. in 2000, the top five teams in the nhl or valued at approximately a billion dollars. in 2014, you can see what happened. the maple leafs or the fifth most valuable team in 2000. they are now the most valuable team. in that. of time, they have been to the playoffs five times and mostly disgrace themselves.

look at the winds. tom: david, jump in here. why did toronto spend and ontario kings ransom? david: the first strategy was to get rid of a lot of the players they thought were dead wood. the second stage is basically to get management in. if you look at any successful franchise, it starts with management. they have a phenomenal general manager and a great coach. the problem with last year is it was left to the individual players and the system. they are one of the worst teams in the world for puck control. tom: what we are talking about here is the world cup in brazil. so you guys from toronto, this is a huge deal. erik: the world cup in brazil? tom: look who is back.

brendan: i just had a nice cup of coffee. if you own the franchise, at the end of the day, winning is fine but if i make money that is what it is about. it is a capital market. tom: we got through this entire thing without talking about the montreal canadiens. that was a great hockey conversation. ♪

♪ tom: good morning, everyone. we are flying around the world. cameron and merkel are speaking and brendan greeley, this is important. this is about the future of a combined euro out of world war ii. brendan: they have been talking and camera needs merkel's approval. he was a treaty change. tom: change, not ended. brendan: he wants a new treaty. he needs her approval to do it and it is hard to see how that is going to happen. she has been open to finding a way to compromise on his demand. i think she is the most powerful person in the world. tom: let's go to our other top

headlines this friday. vonnie: she may have a lot of power generally but she does not in football. she agreed that international soccer must be cleaned up. cameron has said flatly that fifa bladder should quit. fifa is being investigated by both u.s. and swiss prosecutors. less than an hour from now we will get the latest reading on america's economy. bloomberg analysts say the economy has probably contracted and we will have that for you as soon as it is released. the founder of a drug peddling website will hear his fate. he faces a minimum prison sentence of 20 years. prosecutors say he collected

more than $18 million in bitcoins through the silk road site. the deck at world trade center is open. visitors say you can see 50 miles on a clear day, sometimes looking down at clouds. bittersweet for some. tom: a real symbol for new york city. the 14th anniversary for september 11. brendan: i have not gone and i am not sure i'm ready to. tom: i have been told it is a spectacular museum. maybe if i have this wonderful observatory. let's talk with david about inflation. there will be a new inflation. is it walter heller's inflation from the 1960's? david: i think there will be flechette.

when you asked the question, when is inflation going to come back, my answer is now, it has already started. it is not that apparent in the commodities complex. i think so far year to date core inflation is rising at a two and a half percent annual rate. i am not talking about going back to the 1970's. tom: we are not going back to walter heller. david: the 1970's inflation is out of the question but are we going to end up having moderate inflation? tom: to continue this conversation, brendan, is a split between service inflation and goods producing inflation. brendan: what is your target inflation? vonnie:? david: the new york times ran an

article talking about how there was a move for it in the fed to raise the target inflation from two and a half percent to 3%. inflation is still too low, and she gave the reason why the fed wants inflation to go up moderately, is to help diffuse the problems in the economy in terms of large indebtedness. tom: let's bring ourselves back to dresden, germany. they are talking about hard decisions. why are we seeing all of this? what is it about this friday in the urgency and immediacy? what is the catalyst this friday morning? brendan: it is about getting to june 5 and listening to our hans nichols speak from dresden, i was struck by how to route the euro crisis everybody got used to the idea that there would not be a deal. the deal emerges.

i think there is a dawning realization that there may not be a deal this time. tom: there is a new urgency on it. with david rosenberg on inflation. the inflation that we are going to see, will it raise the nominal rate so that there is less financial repression or will we see inflation that will give us further financial repression because the nominal rate is not going to go up? that is a key question. david: the key is really going to be, will wages rise faster than prices. my sense is that the labor market will continue to tighten. the labor market is a lagging indicator. go back to the great cycle of the 1980's, wage growth did not start to pick up until 1986. tom: can you reaffirm your cost push inflation call? david: it is not so much a cost

push. i do not believe wages will create inflation. it is important for the economy to get some significant wage growth. i think we are starting to see that. when you take a look at probably the most reliable measure of wages in the employment cost index, it is running 2.6%. the labor market is not like the market for commodities or stocks or bonds. the information goes into the labor market with long lag. tom: let's jump into our twitter questions. vonnie: we put up the question on twitter earlier on this morning. when will inflation return? >> inflation will return when the mainstream media starts asking when it will return. vonnie: i do not know about

that. tom: i think this is a complex answer. vonnie: i am not sure that was 140 characters. brendan: we are not talking about football, we are talking about politics. the sheer audacity of chefs -- seth bladder is magnificent. vonnie: inflation is -- will start -- tom: where is the natural rate of unemployment, david rosenberg? david: i would say it is probably close to 5%. tom: others are much lower. david: the proof is in the pudding. wage growth properly measured is trending higher. i'm not sure -- i'm not saying it is strong. the rate of change in wages properly measured is starting to accelerate and that will continue. vonnie: then there is our third

answer, the government has lied about our unemployment rate. let's not even go there. tom: this is a debate about the atrocious statistics. david: they are doing the best job they possibly can but the data themselves are just samples. we get the data very quickly, then they get revised. now we are learning that we have to seize things up for the first quarter data. tom: let's get to our agenda. vonnie: i am going to be looking at the data. we will be looking at them to see if we have a repeat of 2014. tom: michelle meyer was more negative. vonnie: yes. tom: i just know what your agenda is. brendan: my agenda is fifa. i think it is a fascinating story just for the sake of the story.

i will say something odd on soccer right now, i agree with tom. we are not waiting on today's vote. tom: mine is going to be on hockey. thank you to erik schatzker for smart comments on the toronto maple leafs. for the first time in 15 years new york or tampa bay, who wins? david: i have got to go for new york. and i will go for chicago as well for the same reason. they have never faced each other in the finals. tom: the original six teams going back to our childhood, will the rangers play the blackhawks? congratulations to gary bettman for a great season of nhl. david, come back when the canadians actually win. fifa, are we going to talk fifa on monday question mark? brendan: i do not know.

tom: stay with us on bloomberg radio and bloomberg television as the g7 speaks at of dresden germany. ""market makers is quote next. ♪

kers." stephanie: happy friday.

this is "market makers" on our new time slot. erik: the gdp ridge's vision and a fee for vote is coming. let's get to our top stories. less than 30 minutes from now, we will get the first revisions on it gdp data. they will show that the u.s. economy shrank. the initial showed it grow 0.2%. now it has probably contracted 0.9%. the present of the st. louis fed does not appear concerned there and --. >> they are a little bit suspect. last week we looked through the number and we did get strong growth. we will see if something similar happens. erik: he spoke to our mike mckee and he will be with us when that number breaks.