in may. the imf says rates to go nowhere until next year. ahead of the open, i am looking at futures market, dax up. it did 100 futures down by 27. european markets just opening up. let's get more from our bloomberg team. manus cranny, over to you. manus: it is lower opening for the equity markets. it is all about the bonds. that is what it is all about. we are touching back to the higher quarter, almost at .90%. stephen major from hsbc will go through the master nation. -- masturbation -- game theory. greek government bonds again

back to serious levels. the bond route is something that is frightening. frightening bill gross he is scared. then again, as someone said what is everyone clapping about? treasury yields are met -- here for most of the back half of 2014. there is a nice in these bond markets, that will be the consensus in terms of people seeing this as an opportunity. look at insurance companies which are rising. let's look into london and see what is driving training. -- trading. will they or won't say dance with john malone, if they do, who will be the winner westmark -- winner?

vodafone up 2%. go back to bloomberg.com and there is an interview with mike greg. there have in a mishandled number of ppi claims. they cooperated and went early with the sca. the news is the bonus has been cut by 30 million pounds at lloyds.bell way down. the election had no affect on the housing market. pricing is strong. london is outperforming. the order book is up 22%. they say housing completion will

exceed last year it will go down to nonfarm payrolls. jonathan: fantastic work this friday morning. the dax up. let's go to asia, what a week it has been for asian markets. particularly the volatility on the shanghai. david, over to you. david going -- david: this week has been quiet across, everywhere else with the exception of the shanghai. we are looking at a 5th street -- straight day of declines. we are back to levels of last april. nothing special. you look at the shanghai composite, that is the market story of the day. i am at a loss of words and really finding the right

narrative to describe this market. trust me when i say it changed your actions -- directions more than 40 times. we are now up again, one .5% as we close out the day in hong kong. a few things, what is the outlook? it is very hard when we talk to our guests there is the outside view and there is the inside view in side china. this is dominated by domestic retail investors it a lot of those investors are very new to the game. the reason why when people asked, where do we go from here? to hope is the rally continues. when we see the chart correction coming, it will be painful. we talk about as high savings

rate in china, it will be a pity if that hard earned money goes into meetings margin performance. we are close to 150% in the last year in gains. where are we? we are at 21 times forward earnings. at these levels, you take a look at the rsi overbought earlier not so much now. the most important thing to note is there is still liquidity in the market to keep it going. the answer is yes. let me and on this chart, as is the intra-bank chart. biggest drop today since january. we are down 60% on this rate. 2% gives you an idea of where this market can still go over

the next few days. jonathan: thank you very much. vodafone any news of the last couple of weeks. breaking news now, vodafone and liberty global an early as it talks are it not merger talks. vodafone says there is no certainty that any transaction will be agreed on. you are not in talks with liberty global concerning a combination. let's look at a stock -- stock reaction. there has been confusion behind vodafone. this morning vodafone was higher. we have come back since then. we're -- we were up 4% in the morning and we are up .4% on vodafone. they are in early asset swap talks. we talk about this throughout

the morning. for now, big week, big day for greek prime minister alexis tsipras. he told the world's not to worry about a payment because greece has become the first country to defer a payment since the 1980's. the nation takes advantage of a policy that allows them to bundle their payments. breakdown what has happened here and the significance. is it a surprise? >> it does not constitute a breach of the imf rulebook. it is not constitute a default. it is a deviation from standard practice. it is a sign that greece may be waiting for a breakdown from creditors. if you explode -- expect that

both would end in spain, why would you use your last reserves to pay the imf. nikos: it is only and i am a statement that greece submitted this request to bundle payments. we expect the prime minister to explain the rationale behind this this evening once he speaks to lawmakers in athens. most importantly, we expect him to tell us about progress with bailout talks and what is next. the government decided to reject a proposal by creditors to adopt more austerity measures in exchange for the disbursement of bailout funds necessary to avert the default. jonathan: nikos, stay with us.

hans, they say a deal is close now they say a deal is not hans: she is saying she is willing to play the long game. she is trying to get tougher negotiations. she gave a series of interviews ahead of the g-7 summit which will be overtaken by this greek crisis situation. here is her latest saying that we are showing goodwill from our side, but goodwill alone is not enough. at the end, the numbers have to add up. that is from merkel. very clearly she wants a deal. she needs a deal that is acceptable to her people. that is the challenge because there is a faction within her party, within the core of the german populace that does not want to have a third bailout package for greece more money

with no assurances that they are going to be paid back. jonathan: the proposal so far what will he say to parliament today question mark -- today? nikos: he will last lawmakers and the opposition for the negotiation stance. don't forget that the standoff has been going on for months. the bailout expires in three weeks. if talks fail, then greece will default the summer. the country has lost market access. mr. tsipras will asked lawmakers for what he needs to do. we don't expect his own lawmakers to back him if he opts

to strike a deal with creditors, including house austerity measures. he would be stuck between a heart -- rock and a hard place. jonathan:hans, again and again we have been told this is not 2012, we are in in a different place, what is the story? hans: he spoke to bloomberg earlier, he put the number at 2.4 billion for german bank exposure, he said it was manageable. >> i am looking at the exposure of the banking system towards greece. if i look at the exposure of german banks, we have an exposure of 2.4 billion euros left. in terms of a financial contagion that is the only thing i am looking at the word

i would like to use regarding this is the situation should it come to a grexit would be manageable. hans: it is that kind of confidence that this is manageable that is driving merkel's negotiating position. the overall german taxpayer exposure to the 250 billion bailout around 56 million euros. yes, the bank exposure is not all that high, but when you look at what to german taxpayers could be potentially on the hook for that is quite significant. johnathan loyd -- jonathan: thank you very much for joining us this morning. let's get insight from steve major. great to have you. they say it is manageable. the conversation this week is

about policy response. how big will it be for the contagion not to rip through the bond market? steve: there are lots of numbers. the two .4 and 56, not just about numbers, it is about principle. it is about response from the ecb and others. i think we have already had flexibility being demonstrated by the imf. in this complex negotiation, all parties would have to be flexible in some way. a compromise of the reach to then. i find the numbers confusing it is a little bit dangerous to say that there is not a contagion risk. we are not just talking about numbers, we're talking about principle. if it went to the extreme, no one knows what would happen. the euro is supposed to be reversible. there should not be questioned

about a country leaving. the fact that they are talking about it is worrisome in itself. jonathan: from a political standpoint, this offer was always on the table, that is not a big shock. was this the right move for greece? steve: it buys the more time. it has been many months, another month might make the difference. it is about negotiating and principle. i don't think it is about numbers, i can play with numbers as well. been amount of money that greece needs is probably just over one days qe. the money is there, it is not about money. jonathan: the bond market has not been about race. mario draghi said on wednesday volatility is there and get used to it. that is not the same as saying tolerate yields going up, do we need to extrapolate both things?

steve: absolutely. i answer the question did you really think that five basis points for 10 years would get you there? we got there because of the previous miss calibration of the qe purchases. it was technical, not fundamental. that whole move below 1% started from september .14, that whole move was driven by the ecb. inflation expectations have been going up. the economic data has been better than expected. this was not driven by the economy. jonathan: the bond market had three things that drive yield inflation, expectation, and term premium. do you think that is the biggest driver, term premium? steve: if you are trying to

predict where bond yields would go just looking at the real gdp and inflation, you're going to miss the biggest piece. the premium is riven by what the fed will do with its balance sheet, what the ecb is up to they are dragging yields down everywhere, and the greek story because that is a safe haven for term premium so that is dominating markets. the economic data has been getting better in europe. bond yields are going down. there is a complete disconnect. jonathan: for the european market, you get a backup in yields, a backup in stronger euro the ecb has to step in and put a lid on yields? steve: if you compare the bond

yields to the u.s. and look at the moves since 2014, we have made some calculations and we think the curve has adjusted to a reasonable level compared to the u.s.. five basis points is ridiculous. somewhere around current levels is sustainable. maybe that is what everyone needed, a shakeout. jonathan: coming up, jobs in the united states. bill gross says he is scared as hell. oil heading for its first week in losses in three months. we are live at the opec meeting. later on vodafone confirms they are in talks with liberty mobile, not for a merger though. those stories and more coming up through the hour. ♪

jonathan: good morning and welcome back. let's bring you up to speed with some of bloomberg's top stories. vodafone has confirmed they are in talks with liberty global. vodafone says they talking about asset swaps, not a merger. the s&p 500 and the dow jones dropped nearly 1%. the news comes today with the

jobs report in the u.s.. they say that more than 26,000 jobs were added to the u.s. economy. it has been a volatile couple of weeks of the bond market. one man that is concerned, bill gross. bill: i realize the liquidity problems on a daily races. i don't think we are in for a bear bond market just yet. jonathan: steve majors is still with us. steve major you listen to bill gross not the start of a bear market, is that something you agree with? steve: it is a normalization, that means the curve goes deeper, not flatter. this is quite controversial because the consensus is in line with the forwards. they say that the curve will

flatten. i think digging into history and looking at what happens when the fed with rates up, it will flatten. they are missing something simple. it is too low. we are starting with a low yield level and it is difficult to see how this will be possible to flatten. jonathan: we will move to a position to something you have been talking about for a while the federal reserve's talking about using the balance sheet. steve: your comments this week -- there were comments this week about that. they are conscious of the role of the balance sheet. buying all of those bonds flattens the curve. it stimulated the economy. reverse this unconventional elements, everyone thinks will

be conventional but it does not make sense. jonathan: how you manage that? do you think about selling? steve: there is no selling. the first redemption for treasury is not until february next year. in the meantime, mortgages are coming in between 20 billion and $30 billion a month. we're talking about $400 billion to $500 billion over the next few years. someone has to by those bonds if the fed does not. i say that stevens the curve. i think it is likely that the fed will give some guidance on the balance sheet, not just on the rate. at the moment, the market is pricing the first liftoff for next year. it is not this year. the imf and others are guiding the fed to do what the market already telling them. jonathan: let's talk about the u.s. curve. typically you write -- rise of

short-term rates and that front end flattens. you are saying that curve will stephen, that is the bottom line. steve: if you compare cycles in the last 30 years, you don't get much precedent, when has there ever been a $4.5 trillion balance sheet? never. i get the idea that if you lift the short break, normally the curve will flatten, that is normal. these fed would be remiss if it was not using the balance sheet. jonathan: that is the policy prescription. the bits that comes before that are the prescriptions that would allow you to execute that policy. 200 point 6000 jobs, is the job market in a position where we can talk about what you are talking about? steve: it is been steady -- it has been studied. everything would traditionally

point to higher wages and therefore inflation. the simple point being missed is the economy is being impacted by global factors. the price of labor is not just fixed by the u.s. labor market. it is impacted by international factors. this is confusing people based on the past, you would expect a rate hike just on the jobs number. meanwhile, inflation is going down to to say that was boxed in based on the feds own data, they cannot actually hike. they have to keep pushing out the date of the first hike. jonathan: internationally, do you think it is politically more palatable to use the balance sheet than it is to hike rates? steve: we are not talking about selling bonds and going cold turkey and not reinvesting, we are talking about tapering this and testing the idea. it is a soft shift. that is why it is inappropriate to talk about big moves in yields and bear market, it is

too early. we are seeing an adjustment that i think is logical given the unconventional policies. jonathan: if i said steve major, i am giving you a german 10 year and a u.s., which ones you take? steve: given this week and the views of the views of a next week, probably german. going year end, i would prefer the treasury. jonathan: steve major, of hsbc. when steve major is wrong, i will let him know. coming up, billionaire mining mogul patrice motsepe will join us. plus he is one of the most thought out delegates, iraq's oil minister will join us. ♪

jonathan: good morning and welcome back. happy friday to you, 30 minutes into the trading session. this is the shape of the equity market right now. the dax now up by .5%. things have been good. reality check for european equity. check out fx euro-dollar heading for a week of gains. a weaker pound this morning down by .30%.

the german 10 year, a yield of .03. i am looking at the bti up by .8 percent. lift the lead -- lid on the xpm dekes is. -- indexes. >> vodafone was up by 3%, but look, actually heading down now. in the past half hour it is confirmed it is an early stages of discussions with liberty global regarding possible asset swaps. they did say they were not discussing a merger. that comes after we fed the two companies were discussing a range of pope -- potential actions. nestle, the indian unit has had to pull them off of the shelves

because of concerns over of the lead. nestle says the products are safe, but the are keeping them off the shelves until he can clarify. hsbc down today poised to announce deeper cuts of the investment bank. that comes after reports earlier this week about thousands of cuts at the bank. we will find out more about that tonight. that is a strategy update. the person with knowledge also said we would get detailed plans about selling assets in turkey brazil, and of course these -- hsbc's potential of moving headquarters. jonathan: the shanghai composite touched a 2000 and eight high today. it climbs for the first time since 2008. the index is up more than 140% in the last year. tesco is said to be discussing a

sale of its korean business area according to people with knowledge of the matter, the uk's biggest brochure is discussing sales of ipo. goldman sachs has said to be in talks to settle a probe into sales of mortgage bonds leading to the financial crisis. the firm may pay between $2 billion and $3 million print the investment bank could reach a deal with the u.s. justice department in a week. the 5100 up by .4%. the athens stock exchange up. the f -- afc down. greek bonds yields surging, down a bit this morning. let me bring up the script. greek bond yields, the two-year note up by 22.9%.

here is steve we touched on bonds when someone says to you i am looking at yields of 100 basis points on the greek two-year, do you pay attention to that bond market? steve: no. it is not about the fact that you might get 24%, it is the fact that you might not get your money back. that changes the game. the yield misleading. investors start to train on price rather than yield. it is about restructuring in default risks. from what i can see, people are sidelining greece, they are not investing in it. they have been burned before. jonathan: the big question is what is the proxy? how i gauge the tension with greece? where do i go?

steve: people are looking at measures of volatility to gauge what is going on. before we spoke about's term premium and bond markets, it is all of these relatively new concept for it yields are very low, and so if you look at it on a longer-term horizon, these markets need to adjust. that is what is happening at the moment. greece is a slideshow as far as i'm concerned. jonathan: you look at italy and spain and the german 10 year, is the pinnie 10 year 2.2%? steve: that is more interesting. if you asked me a week ago, i would've said the same thing. the increase in yields, i have seen italy better than germany. about 2%, you say there is good long-term value in italy. remember italy has a big domestic base for its bond market, a high savings rate.

as long as the euro continues like this and all of the problems are solved and there is no contagion, you would buy italy. if there is a contagion risk, all of the markets will be vulnerable. on the basis that we get through this, italy would be a good value. jonathan: with a spanish election on the horizon, should i be buying spanish bank? steve: i would prefer italy. the political risk is higher. the domestic basis of the investment is much less. there is less support in spain compared to italy. what happens in greece, the principles come out from this negotiation is clearly affecting politics in spain, more than italy. to answer a question, yes. italy. jonathan: in terms of yield in spain, you have seen the

reaction in greece, that is about her ability to service debt, not hold -- politics. in spain, are things not different in terms of politics at the end of the year? steve: you could argue that some of the developments are constructive. some issues have suddenly been pushed to the side. last year we were worried about referendum, breakup, all of this , but now there is a new party emerging. it is a distraction. the emergence of this party has diluted some of the risks in spain before. i am sorry to overcomplicated. -- i am sorry to overcomplicate it. i'm not saying there's a problem in spain, i am just saying it is relative. jonathan: steve major, thank you very much for joining us this morning.

we had to the break, 37 minutes into the session, let's get you up to see. the 5100 off by .4%. elsewhere in the fx market, the euro has been a big week of gains. the big moves in bonds, up three basis points the yield on a 10 year, going into the opec decision time, wci is $57 a barrel. we will talk about that after the break. he is one of the most thought out delegates iraq's oil minister joins us for an interview. that is after the break. ♪

jonathan: good morning and welcome back. it is decision day and opec. ryan is there for an exclusive interview. ryan: good morning. we are talking to the oil administer of iraq thank you very much for joining us. we seemed to have until traded inner chambers of opec to eat with you. guess: thank you very much.

ryan: the meeting is coming soon, everyone is expecting the production target will stay where it is at 30 million barrels a day. what will you tell the other delegates? guest: last time we did not have the experience of the six last month. we are entering this meeting with more knowledge. we will tell numbers -- members that the unity of opec is important to all of us. ryan: the unity. guest: we will take into consideration, the rights of each of the members. ryan: do you believe the strategy enacted at the last

meeting has proven to be good? guest: i think it was. that is why you see prices rising up. there are differences between members. you are seeing some members trying to leave opec. ryan: indonesia? guest: opec is defending its right area this is a historic situation that is regaining ground.

ryan: $62 a barrel can't make you too happy. guest: we talking about the framework of opportunity, then the cap is acceptable. ryan: how much oil is iraq producing right now? how much do you think you could ratchet it up? guest: iraq is approaching 4 million barrels. we have schedules. iraq is respecting this. ryan: the break even price is

being met, but you are not meeting it in the first few months, do you need a better price? guest: of course. the budget was on $56 a barrel and an exportation of 3.3 million barrels. the first six months was lower now we are catching up. ryan: your iranian colleague is standing behind you, he just sent a letter to the other delegates saying when the sanctions were removed and iran returns to the market, they need to make room. is iraq prepared? guest: we already said lifting sanctions on iran is a good thing, not only on oil, but as a whole. this will make more peace in the

region. the value is positive, not negative. ryan: we keep seeing horrifying images of the advanced through the islamic state to the middle east and your country does not seem to be concerned. guest: they advanced in june last year but they gained more than 40% of the ground, and the oilfield was in a south. they are far away. ryan: as you can see, the shale producers are still pumping out oil. are they a threats to opec? guest: i don't think so. marginally energy should do better and technology should

reduce, but i think we have a low cost of production of energy. gradually, all kinds of energy will be balanced. ryan: a lot of people say that what saudi arabia once at opec is what they get. is that true? guest: partially. we all accommodate our policies together. ryan: thank you very much for joining us. the iraqi oil minister saying the most important thing is unity amongst opec members. of course we know that many of them, in particular, saudi arabia once to keep the production target right where it is. it sounds like my colleague here is prepared to a comedy that. -- accommodate that. jonathan: up next, we'll wrap up the hour. we'll wrap up the three charts

that wrap up the week. equities selling off just a little bit. the german 10 year, 0.87%. german bonds heading for the worst week since the euro crisis. join us in 2. ♪

jonathan: good morning. welcome back. that is almost it for us. it has been a big week for markets. let's take a look at our three charts. we have a german 10 year with a yield around 0.87%. at one point this week it was that 0.5%. in the words of will gross, it has been scary as hell. check out commodities crude, deb uti is on track for its first week of losses in three months. opec will maintain its output target. the shanghai, does not make it. it fell off a cliff midweek. another index the qatar stock exchange.

their bid for the world cup could now be in jeopardy. a look at what we're watching for the rest of the day, we are joined by guy johnson. guy: the stocks have been howling over. we are going to talk about greece. we will get the take on where they stand now. we will get charles and his take on that. we will talk about what is happening in africa. we will get bob diamond. we will see what he has to say about africa. we talk about vodafone.

we will talk about assets and mergers. i talked to matt campbell, he said you could put all of the liberty assets and vodafone assets into a company. that sounds like a merger. that would be a heavyweight. jonathan: elliott is joining us from athens. what is on the schedule for prime minister alexis tsipras? is this a classic european can taking -- kicking? elliott: it depends on your take. the main item is that the primacy of greece is due to address lawmakers and parliament to explain what he is thinking, doing, in terms of the negotiations with greece's

creditors. why they have made the delay in payment and bundling the payment for the rest of the month and one lump sum that is something within the rules. he will explain that. he will explain his negotiating strategy to ensure that it does not cause any red lines with regards to cutting pensions are lower income people. jonathan: great work. guy is still sitting next to me. the market story is something else, greece has not shaped up. guy: it is kind of, here is the base load, we are worried about greece and we will pile on the other stuff. i think the bond move has been

about a number of things. i think greece as part of that. there is an issue of liquidity in the market, volatility, we heard what mario draghi had a earlier this week. i think at the end of this week, as i look back, this is part of a normalization. ill gross is scared -- bill gross is scared. that tells you a lot. i think there was always going to be a normalization. we would never keep bonds trading were there were. jonathan: i think the stock 600 is heading for its first two weeks of losses since january. that tells you about the road. avoid the road has been extorting very. you look at where stocks and profits are, the road is amazing. you factor in shanghai, which is weird.

you look at where stocks are mrs. -- this is a normalization, people are looking at books and about to go on holiday. jonathan: guy johnson will not be on a monday, he will be starting a new show at 6:00 a.m.. the lion is over. that is it. thank you very much. all eyes later on the u.s. today . according to the survey, they will add to one or 26,000 jobs in the last month. what a week it has been for markets. the 51 -- 5100 up by .5%. that is it for me. good luck for the rest of your day. have an awesome weekend. ♪

guy: payments postponed. greece becomes the first country in three decades 2-d four a payment to the imf. iraq's oil minister tells bloomberg he is entering today's opec meeting with optimism. and, vodafone confirms it is in talks with liberty, but the discussions are about asset swaps rather than a full-blown merger. welcome to "the pulse