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."

we are live from bloomberg's european headquarters in london. i'm guy johnson. we are going to be speaking to the atlas merchant ceo. he is coming to us live from the world economic forum on africa. that interview takes place with anna edwards in just over an hour. that's what is coming up. plenty coming up on greece. the first country to death are a payment to the international monetary fund in three decades. in a significant escalation of its game of brinksmanship with creditors telling the world not to worry about today's deadline. prime minister tsipras has informed the imf that greece will bundle its june payments into one lump sum later this month. this afternoon, he explains himself. angela merkel says talks resolving the situation are "far from reaching a conclusion." hans nichols is standing by in

berlin. elliott gotkine is in athens. elliott talk us through what this delay means. what are the greeks doing here? elliott: you have to wonder if zambia is feeling green to be lumped into the same basket as greece, in terms of being the first country to defer payments since the mid 1980's. it is easier to explain what this doesn't mean for greece. it doesn't mean that greece has default it. it is within the rules of borrowing from the international monetary fund to lump these payments into one sum to be paid later in the month. it also doesn't mean greece didn't have the money. it did have the money. it also has the money to make the next payment due on june 12 and to pay the first installment of salaries and pensions. i suppose what it does mean is one of three things. either greece was just buying time to do for these payments in

hopes a deal might come a long to make repayment more easily or it could be brinksmanship, just a negotiating ploy so that when backs are against the law later on when greece can't current bailout deal is due to and but it could also mean something else. it could mean greece is thinking the game is up. we are not going to reach a deal. better to default with some money in our accounts then to have repaid everything we've got. guy: hans, what do you think mrs. merkel takes of all this? hans: she is playing for the long game. she says negotiations have a far way to go. she had a phone call with mr. tsipras and mr. hollande tomorrow night. mr. tsipras told his counterparts that the creditors' proposal can't even be a basis for negotiations. this kind of codifies what we've

been hearing yesterday. that was the tsipras plan that he wanted to negotiate on. it seems like they are not even agreeing on which plan they should negotiate on. madame merkel has given a bunch of interviews. she said we are showing goodwill from our side, but goodwill alone isn't enough. this all gets us closer to this question of what would happen if there is going to be a default if there is going to be a grexit. among german economists they don't see overly concerned. whenever a central banker says that a grexit would be manageable, greek voters should be concerned. listen to what andreas dombret told bloomberg earlier. >> 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 of all german banks towards greece. in terms of a financial contagion, that's the only thing i'm looking at, i'm not worried very much. the word i would like to use with regards to this is that this situation should it come to a grexit, and i don't want to speculate about that, would be manageable. hans: 2.4 billion in exposure to greek banks. one issue here among germans, they have some 56 billion in debt to the various mechanisms that have underwritten the bailout. 2.4 is manageable, but the overall price tag could be closer to 60 billion euros. guy: hans, thanks very much indeed. elliott gotkine in athens.

we are back with both of those guys later on. let's carry on the conversation. antonio joins us now in the studio. i'm still unclear as to what mr. tsipras is trying to communicate . do you have any visibility for me? >> it is complex. it is an unusual move. this has been done for administrative ease. it seems this is behind greece's motivation. there could be more than that. mr. tsipras is addressing the parliament today. he's getting a lot of pushback. negotiations are complex. probably it will not be a matter of days. key topics fiscal consolidation, pensions, there are many in the party that say enough of austerity.

i think there is an aspect of liquidity management to it as well. at the end of the day, it is a possibility. guy: when we talk about liquidity, when we talk about the money that greece has, if i add up the months' payments, we may have today's payment, we may have tomorrow's payment but do we have the total payment? antonio: nobody knows, frankly. the only one that knows is the greek treasury. we think that probably they could have made this payment if they really wanted to. could they make the whole entire june of payments? perhaps. will they be able to make the july 20 payment, principality

interest of 4.3 billion? most likely not. i think really that the pressure is very high. guy: we have been interested in greece for years now. if you look at the market action over the last week, two weeks what is happening here? antonio: market action is difficult to pin down. certainly, greece has been a factor. it is creating uncertainty. but there have been many other issues to liquidity as well. the bund is telling us quite an interesting story. i think it is not only greece. i think there is a whole host of issues. guy: we will come back and talk about that further. opec is meeting in vienna. what happens is that we get an announcement, all the journalists pile into a room and

talk to the ministers. that's what ryan chilcote has done. he is standing by in the austrian capital. over to you. ryan bank this -- ryan: this, as you can see, the saudi oil minister, perhaps the most powerful man in the oil industry, is behind this huge crowd of people here. we are not even going to try to get close to him. actually, why not -- it is just brutally difficult to get close to him. everybody wants to know what he's going to do. let's see if we can find the iranian oil minister here. he's over here, behind this huge crowd. excuse me. mind if we pop in here? [indiscernible] guy: not getting anything here.

ryan: everybody wants to know what iran is going to do. i ran so the market is very oversupplied right now. however, unlikely they are going to call for a supply cut. >> [indiscernible] ryan: that doesn't seem like it is going to work. we are going to try to get a little closer. not getting any audio? then i'm going to pass it back to you. guy: ryan, thanks very much indeed. we will come back to ryan.

we will get his telecom figured out. opec obviously very interesting at the moment. let me bring you some of the confidence -- the comments we are getting. they are talking about iran not satisfied with the current price level. iran's oil minister saying the price is not right. the other saying he hopes the improving market will continue. the iraqi oil minister saying he's favoring an increase in opec membership. iran, saying the price is not good for many opec members. saudi arabia calling the shots at this point in time. let's look at what else is on our radar. u.s. jobs data is due today. economists are expecting about 226,000 jobs. job growth and steady gains in work they could keep the fed on track to raise interest rates later this year.

the imf yesterday urged the fed to delay any increase until 2016. >> higher u.s. policy rates could result in market volatility with financial stability consequences well beyond the u.s. borders. in weighing these risks, we think there is a case for waiting to raise rates until there are more tangible signs of wage or price inflation then our currency evidenced. in other words, we believe that a rate hike would be better off in early 2016. guy: oil is going to be a factor in what is happening here. ryan chilcote has got straight to the point, straight to the saudi's. let's go back to him now in vienna. ryan: secretary general, we are joining bloomberg television life.

to what extent do you think the resilience of the american shale producers is going to be a topic at this meeting? >> we don't talk about resilient or no resilience. we talk about supply as a whole. there is a lot of countries that will reduce. the most important thing is how much of the supply will provide to the markets in the third quarter and fourth quarter of this year. ryan: what do you see? the idea of the strategy was to hold onto market share at the last meeting and shake some of these high-cost producers out of the market. >> what we see now, we see a lot of -- [indiscernible]

we see a lot of rigs laid down now. ryan: one of the things opec is going to have to deal with in the future is a lot more oil from iran if the sanctions are removed. the iranians sent a letter to the delegates saying the opec countries need to make room for iran now that there is the prospect of returning to the market. >> iran is a founder, is a member under sanctions for so many years. [indiscernible] ryan: and how should opec do that, by erasing the production ceiling? >> i can't tell you what opec will do, but they will discuss it. ryan: do you think that's a conversation for this meeting or the next meeting?

in a rig it just because the sanctions are still in place? >> yes. i can't tell you what will happen. they will discuss it. the country is under sanctions. ryan: and the iraqis meanwhile they are producing oil like there's no tomorrow. do you think some guys are going to say, time for you to have a quota? >> i don't know. we have to wait and see. ryan: thank you for your time, secretary general. >> we will -- ryan: qatar is part of the gulf countries. what would you like to see happen at this meeting? >> we will have the opportunity to review -- [indiscernible]

over the last few months. there were a lot of developments. supply and demand, the current situation, until you have positive results, healthy supply and demand, gdp has taken a positive direction. ryan: so you think the strategy of holding onto market share at the expense of prices is working. to what extent are you concerned about the shale producers? they are still kicking around. the idea was to kick them out of the market. even in the $60 range for brent they are going full cylinder. >> opec policy is not directed

toward a particular type of production or a region. it is the economic forces which will if you like determine the resilience of the production resilience of supply, and the economic situation of the world will indicate the supply. but it is natural that those who will have the opportunity to produce at a cheaper, lower price, more efficient, will be even more resilient than those who produce at a higher price. ryan: the iranians sent -- we are going to leave it there. i think we've lost the oil

minister there for a moment. as you can see, it remains a madhouse. we know what it is going to happen here. they are going to keep the production ceiling where it is. they are producing more than that right now. what is going to the discussion that happens. guy: ryan, great work. thank you very much indeed. interesting interviews coming out of the media scrum in vienna. talking to the journalists you for they talk to each other about what they are going to deliver out of this meeting. let's talk about what is being talked about in athens. let's go back to the greek story. we have a professor joining us from athens. what do you think the news of the last 24 hours tells us about the state of negotiations between greece and its creditors? the decision to defer payment to the imf.

>> i think we are learning that the greek government has landed back to the land of reality and has to face a reality that they were trying to avoid all this time. they are facing a difficult choice, especially tsipras. he has to find a way to get the best possible deal and the best possible deal is not going to be nearly close to what he was hoping. there is an internal party revolt brewing. guy: how does he deal with that? how do we square the circle here? we are in a situation where there is economic imperative and political imperative. how does he manage to compromise on both counts? can he compromise on both issues? stathis: i think he can, but for him to do so, he will have to show a quality that we do not

know he has, which is leadership . what he needs to realize is that he is very unpopular right now with the greek public, and he has to run with the public against a very big part of his own party. he will have to change his attitude and perhaps even change his sense of self identity. he will have to become a different type of leader from the type he was up to now. it is possible if he has what it takes. guy: do you think in order to convince the party that he has that kind of mandate that he should have elections or a referendum? is that the most obvious way of translating that popularity into political capital? stathis: perhaps, but not immediately. the situation is very critical right now. i don't think there is much time for elections.

elections that take place under emergency will not be a great deal for him. he needs to get his party in line, which he can do. the threat of future elections is such that he can gain a lot of advantage and at the same time, try to gain some in september and try that strategy then. guy: i look at the polling numbers of varoufakis and he is very popular now. he is almost being removed from the negotiating story. i find it hard to reconcile the desire by the greek people to stay inside the euro at the same time as their politicians who are taking it to their creditors as saying, we will not do the deal you want us to do. how do those things fit together? stathis: i think there is a way to understand this paradox if you take into account the emotional dimension. a lot of greeks are satisfied

with the fact that there was a sort of negotiation. they do not feel as humiliated and they do not feel their pride as wounded as in the past. at the same time, they are aware of the consequences of bad decisions. that explains why they wanted negotiations to end. they wanted a end to uncertainty. at the same time, they recognized the emotional dimension of what has happened. that is the way to understand this contradiction. guy: thanks for your time and thoughts. stathis kalyvas. quick twitter question -- do so you -- just to show you what we are thinking about. greece is going to bundle up at the end of the month. what is the next move by the greek government? ♪

guy: welcome back. you are watching "the pulse." vodafone and liberty global are in talks about possible asset swaps. vodafone says there are no plans for a merger. this comes in a flurry of consolidation in the telecom industry. nejra cehic joins us now. very confusing this morning. asset swaps and mergers. i expect there is a blurry line between those two things.

what do we know? nejra: the key thing is that they are not in merger discussions. this is one of the things people were saying before the statement from vodafone. we also heard there might be swaps of european assets. they haven't actually specified what those assets would be. simply that there could be asset swaps of some kind. guy: those could be very big assets. nejra: it won't. if this merger had gone ahead, it would be the biggest deal ever. guy: even the european assets if you merged them, massive. nejra: precisely. they are different sizes in terms of market value. vodafone is more than twice the market value of liberty. this is the latest we've had today, not in merger discussions. guy: how have credit markets

been reacting? nejra: credit default swaps have been coming down in the past few days because bondholders seem less concerned about the risks of vodafone taking on all this debt for a merger or possible takeover. guy: thanks very much indeed. ♪

guy: welcome back. you are watching "the pulse." these are the bloomberg top headlines. vodafone has confirmed that it is an early stages of asset swap talks with liberty global. it comes amid a flurry of mergers in the telecommunications industry. vodafone says there is no indication the transaction will be agreed. members of opec are meeting today in vienna. oil is heading for its biggest weekly drop since march amid speculation that the market will

be oversupplied. bloomberg, more specifically, ryan chilcote, spoke to iraq's oil minister in an exclusive interview. >> we didn't have the experience last month. i think we are entering this week with more optimism. we are going to tell public members that we have to keep unity. the unity of opec is very important to all of us. guy: greece has become the first country to defer a payment to the international monetary fund in three decades. prime minister tsipras has told the imf that greece will bundle its june payments into one lump sum. angela merkel says talks on resolving the situation are far from reaching a conclusion. let's talk to a man who has some experience negotiating with greece. charles dallara from the

institute of international finance. he joins us now on the phone from switzerland. good morning to you charles. what do you make of the latest developments? charles: good morning, guy. i think this is a highly unusual step that the greek government has taken. it does not constitute a technical default. i think we should not overly dramatize it. it is more of a symptom than a problem itself. but it does reflect the narrow space between what can be handled by the greek government in terms of a reform vote and what is acceptable to the european and imf creditors. there is a very narrow space there and it is important that both sides find that space. guy: who do you think he's trying to communicate with?

the greek people, his party syriza, or the creditors? he's got to address parliament later this afternoon. he's trying to keep his party on board. they are pushing back fairly aggressively. which do you think you've got the bigger problem with? charles: i think he's got a problem with both. i think this reflects the tensions coming from both directions. in athens, there is resistance building. i think it has come to a point where he will have to kind of quell the anxieties there. on the other hand, he's not quite yet in a position with the creditors want him to be. i believe this actually is seen more as a signal to his greek constituency that he is not giving into every demand of europe and the imf. i think its very important for both sides to be pragmatic.

this is a deal that can be done. i've seen this many times in the past. there's no reason why compromise can't be found. it seems to me they have broad consensus for an except double budget deficit. the greek government accepts the fundamental need for reform. creditors may need to be flexible on certain items at this stage. the bulk of the debt payments that greece owes are back to the european creditors and the imf. a good dose of pragmatism on both sides is needed. the last thing europe needs at this point is further tun mult. guy: charles, do you think the debt restructuring needs to be part of this? you've had some experience dealing with this. do you think we need to be dealing with government to

government debt restructuring? if that's not part of the discourse, do you think these talks really mean anything? charles: when we wiped out over 100 billion in private sector claims on greece in 2012, i think all parties including the european commission and the imf knew that future debt strains would be imposed not just on the private creditors. they are a small piece of the total problem. i think that while the immediate deal does not seem to include debt relief by the official creditors, that it is unavoidable that this be put back on the table over the course of the summer in order to find a more sustainable long-term solution. if you look at the debt numbers, you realize that the overwhelming bulk of obligations to european creditors, to the ecb, to the imf, are such that

it is highly unlikely that greece will make those payments on schedule. a substantial further reduction in the interest rates will make some difference here. ultimately, i believe european creditors need to face squarely the need for fundamental debt restructuring while greeks need to accept the reality that there is no choice particularly on the structural side. i believe greece has done a huge amount on the fiscal adjustment side. i would really not recommend further rounds of tax increases. i do think that both sides will need to stare down reality and that will mean some form of debt restructuring for europe and some intensification of social reforms for greece. guy: wendy you think we get to that any dropping? at the moment, we face some very

short-term payment issues that need to be resolved if we are not going to have a major problem. angela merkel is talking about, they are far from a deal. we seem to have a mismatch here. charles: i think that the current deal can be done without a huge amount of movement on both sides. i'm not inside the details of the current negotiations. my sense is pretty clear that the gap that remains at this point is not on bridge-able. i think this will need to lead to the disbursement of the funds which are now hung up in the system. give greece and europe a little breathing space here. then the real discussions will need to take place over the course of the summer in the context of a new program. that's where i think the rubber really hits the road in terms of debt restructuring and

structural adjustment reforms. guy: charles, always a pleasure. thank you very much indeed, charles dallara joining us from switzerland. coming up, turkey in focus. we will look at the country's growth prospects. stay with us for that story here on "the pulse." ♪

guy: good morning.

welcome back. turkey goes to the polls in an election. the ruling party hopes to win two thirds of the parliamentary seats available so it can change the constitution and give president heard again -- president erdogan more power. elliott gotkine sends this report from southeastern turkey. elliott: knickers underpants, and vests. at the factory in turkey, they make more than 2.5 million of them every year. 1/5 are sold overseas. the largest clothing manufacturer has been hit by high interest rates and high inflation. you would think that the country's main concern would be the economy.

you would be wrong. this man set up this factory 15 years ago. his main concern is that the pro-kurdish party wins at least 18% of the vote and gets into parliament to reduce the prospects of peace. >> once the guns go silent, people will be able to look at the future. even if there's a coalition, we can have a reconciliation. if we can't see what will happen, we can't invest in the long term. for people in this region, peace is more important. elliott: the cochairman has already warned of civil disobedience if his party fails to win seats. >> there's a fear that there will be growing instability in the southeast. that will happen also on the country's economic profile. if the kurdish party is able to overcome 10%, we will see a more

representative parliament potentially a better framework for the settlement of the kurdish issues and therefore, the political climate will be more conducive to economic reform. elliott: polls suggest the outcome of this election campaign is too close to call. if they are right, they should squeak into parliament by the slimmest of margins. guy: turkish voters are going to the polls on sunday. let's talk about the investment story. our next guest says we shouldn't be banking on a strong post-election recovery. he is joining us now from bank of america merrill lynch. good morning. nice to see you. i'm hearing all kinds of reports about how this election is going to go. i guess the uncertainty is the main take away story right now. >> yes, it is.

this can be an election to remember. we can have either a break from the past politics and policies and all is boiling down to whether the party is going to exceed the 10% thresholds, and the calls are putting them at just below. it could go either way. the direction turkish politics will take depending on the outcomes are widely different. in a sense we cannot have a best case scenario. we kind of do not bank on this quick normalization after the elections like we had in march 2014. this times around, it seems like we will have this political noise for longer. guy: if you think about how

symmetrical the outcomes are, if we were to get the party getting to the point at which we can have this kind of constitutional change, would that generate a bigger market reaction then the hdp getting over that 10% line? i'm trying to understand the symmetry. >> i think such a scenario is a risk. just looking at the opinion polls, it seems like maybe 60% of the parliamentary seat is more likely. the supermajority is a little bit like a long shot. they initially announced they are going to call for a referendum. i think that is pretty much the same outcome. we have to think this way. the markets do not want to see two outcomes. they want this election cycle to be over by this june 7 election.

we have to focus on which outcome is going to give us the scenarios and i see none. guy: ok. at least you kind of know. i was reading your notes this morning. if we strip out the politics, you still believe that below the political story, there is a secular slowdown taking place in turkey. we had a long period where we were generating 5% growth. what is it going to take to get back to that? >> if we just see the last couple of years, growth has been coming down. the government party they will go back to structural reforms. there is a good element of social confidence. politics have been on the driving seat for so long. the key reason behind the slowdown in turkish gdp growth

is a lack of good structural policies. at the same time, inflation has been running quite high. the government has assessed its priorities. they have to focus on bringing that inflation through some structural reforms. rather than real estate and construction trying to extend slow burning growth performance. guy: how independent do you think the independent central bank will be after this? >> the independence of central bank is a trippy topic -- is a tricky topic. the government has said they keep this operational independence. the key is to change the mandate of the central bank or not. if you had a deal mandate the

central banks and inflation at the same time, it means that the central bank has to deliver on that which means loose monetary policy. it is kind of a political question. it will be probably shaped with the election outcomes. the prime minister and his economic team they have a better understanding of central banking independence. from a market point of view i think it is a clear negative. we have been criticizing central banks quite a lot. i personally believe that the monetary policy framework is outdated and needs to change. the global backdrop is changing. guy: nice to see you. thanks for your analysis.

we are going to take a break. when we come back, more on greece. ♪

guy: welcome back. you are watching "the pulse." let's get more on the greek

story. elliott gotkine is in athens. let me hand you over to him. elliott: thanks, guy. welcome to a somewhat stormy athens. i hope this doesn't bode ill for prime minister tsipras. i am joined by a member of parliament for the main opposition party. great to have you with us. thank you for braving the storm. first of all, the imf are lumping together -- they are lumping together the next payment to the imf. what do you make of that? >> not a positive development in my book. apparently it is a negotiating tactic. i have two problems with that. i'm concerned about our international credibility. until yesterday afternoon, there were assurances the payment would be made. elliott: we actually learned about it through sources at the bank of greece.

anna: there is never any information to the opposition. today, we are hoping to hear some official information from mr. tsipras about what is going on. from where we stand, this negotiating strategy is not working out. this is either due to inexperience and incompetence, or perhaps tsipras all intended to leave greece out of the eurozone. elliott: he has always said that is not the plan. maybe this is just a negotiating ploy to hopefully get a better deal palatable to mr. tsipras and his party, further down the line. anna: i think he is speaking to his party over what to do about it. but we are not necessarily closer to a deal. we would like to know what the proposed deal is. the important thing is the result, not the strategy. what he promised the people was

a better deal and to keep us in the eurozone. that's his mandate. the greek people do not want to leave the eurozone. elliott: he has been adamant that he will not let these redlines be crossed in terms of proposals. would you have signed the deal on offer right now? anna: his deal includes essentially covering the fiscal gap with taxes. there's two ways to deal with a fiscal gap. there was a much better deal on the creditors five months ago. we have to be realistic. the fiscal gap is larger. we want to cover it through spending cuts and cuts to the public sector. he hired 5000 people in the public sector. that is not in the right direction. the greek people are going to pay the bill for his mistakes, his incompetence, his lies. he ought to own up to his

lies. elliott: when he addresses parliament, what do you expect him to do? come out fighting? anna: i would like to hear the truth. i would like him to own up to what he's done. i would like him to accept our call for national unity. we can get a better deal for the people and that is what we should be doing. unfortunately, i think he'll do what he always does, high-level rhetoric against the lenders speaking to the interior of the party blaming everybody else and not owning up to his incompetence. elliott: are we one step closer to a deal or a greek exit? anna: i would like to think even though the signs are not so great at the moment, i'd like to think we are closer to a deal. clearly, a deal is necessary. elliott: anna, thank you so much, member of parliament. we will be waiting to hear what

prime minister tsipras says when he addresses lawmakers. some say he may come out fighting. we will be waiting to see what happens there. from a very stormy and rainy athens, back to you in london. guy: i'm just waiting for the lightning bolts. thank you very much indeed. elliott gotkine joining us from athens. doesn't usually look like that. we will be back. 20 more still to come in athens. for our viewers, it is a second hour of "the pulse" that we have for you. my colleague, anna edwards, is going to be talking to the former barclays boss, bob diamond. he is now running at this merchant capital. what he's going to be talking about is africa. we will also talk about opec as well. we will take you back to that meeting.

we will take you back to what we are going to find out about oil output. and we are talking about greece. what is greece's next move? we will take a break. see you in just a moment. ♪

guy: greece becomes the first country to defer a payment to the imf. vodafone confirms it is in talks with liberty group. good morning to our viewers in europe. good evening to those in asia. and a very warm welcome to those

just waking up in the united states. we are live from european bloomberg headquarters. we are going to talk a lot about greece and a lot about it because well. bob diamond now running alice motion capital. a big focus in africa for him. in those couple of minutes, we are going to talk about greece. the first country to defer repayment since the -- to the international monetary fund in three decades. prime minister see press has now informed the imf that greece will bundle all of its june payments into one lump that will be paid for at the end of the month. he faces the greek parliament later. angela merkel says that talks are far from reaching a conclusion.

elliott, talk to us about this referral. elliott: what it doesn't mean is that this is a default. . it is within the rules of the imf it is little known. it is a deviation from, practice. but that's from common practice -- it is a deviation from common practice. it also doesn't mean that greece did not have the money. it has the money to make the next they meant on june 12 and to make the payments for pensions and salaries for silver su -- or so -- for civil servants on june 20. this is buying time for greece and its negotiations. brinkmanship, just part of this

ongoing negotiations designed to enable grease to -- enable greece to try to get a better deal. there is one other possibility is that greece thinks the game is up, it is better to have some. guy:guy: money let's turn our attention to what is happening in berlin. we've got an interesting story. a little piece that -- a little too that he did not invited to the meeting on monday. hans: he didn't even know about this meeting between angela merkel, lagarde, draghi and hollande. it is important because, to bring her party along, angela merkel is likely going to need

the support of her finance minister. if there is any distance, that will make merkel's challenge to sell any sort of potential deal back to her public, it will make it that much more difficult. for her part, merkel is pleading for time and part because the sites seem so far apart. mr. sippers spoke with meta-merkel and mr. hollande and he rejected the very basis of the proposal, the proposal #on the late-night meeting on monday night. she said we are showing goodwill from our side, but goodwill alone is not enough. in the end, the numbers have to add up. andreas don brett is the number two at the bundesbank. he said that am, too -- that an exit would be manageable.

>> i am looking at the exposure of the banking system towards greece. for example, if i look at the exposure of german banks, we have an exposure of 2.4 billion euros left of all german banks. so in terms of a financial contagion, that is the only thing i am looking at. i am not worried very much. the word i would like to use with regards to this is that this situation, should it come to a greek exit -- and i don't want to cut -- too speculative out that, would be manageable. hans: they think their banks can sustain it. that gives you an indication that there is a large segment of the population here in germany that is simply fed up with the situation in greece and are prepared to move on. if there is any tension that is

going to make it all the more challenging to do. we will try to follow up on this bill and try to confirm it for ourselves. but it is an interesting story and adds another wrinkle the messily to potential negotiations. guy: so sunny in berlin today and teaming with raina nath and's. maybe there is something -- with rain in athens. maybe there's something in that. vodafone has confirmed that it is in early talks with liberty group. vodafone says there is no certainty to the transaction. the 12 nations a makeup opec are meeting in vienna today.

>> what we see now is a lot of work being declared from all companies. we see a lot of [indiscernible] laid down no. and we see production is coming down. guy: the first friday of the month. jobs day. economists are expecting employers to send as much as 26,000 workers to payroll. the imf yesterday urged the fed to delay any increase until 25th -- 2016. >> higher u.s. policy rates could still result in significant market volatility with financial stability consequences that go well beyond the u.s. borders. in weighing these risks, we think there is a case for

waiting to raise rates until there are more tangible signs of wage or price inflation than are currently evident. in other words, we believe that a rate hike would be better off in early 2016. guy: senior economist at west bank agreed with madame lagarde. payrolls today, a key factor in the fed's thinking. >> the accumulation of jobs, it may be a disappointing one. we think it is realistic to think about 150,000 to 160,000.

we saw very rarely two consecutive quarters of declining productivity. they are effectively hiring people not to produce much more. and that is not sustainable. where the existing workforce -- that will be the mentality with jobs this year. guy: where will today's number leave the fomc? what will they be looking at in today's number? >> what madame lagarde said was inflation is important. the inflation started -- the inflation story does not promote the fed tightening. when it does titan, it will be on the forecast that inflation gets back towards 2%. there is certainly very little pressure on inflation side other than perhaps rents and some other minor parts of the economy. but there are still pressures

their bank and will give them the scope to be able to nurture the labor market for longer. a lot of the noises coming out of fed officials this week. it's been along the lines that maybe we will have to do it later the rather than sooner. guy: what is happening in the bond markets? >> last year, we had jackson hall -- jackson hole. draghi is not going to be easing any further. his policy has been announced. if anything, the fed may not be tightening as previously thought. euro appreciation in that sort of environment produced disappointments about fed tightening. guy: if you look at the rate trajectory that we are ultimately going to get to come

up where rates and up, the longer we push it out, we end up with a shorter cycle. >> the longer we push it out the more likely it is no one working in banks dealing rooms -- if it is 2016, it will be 10 years since the fed hike. i have been an economist for a third of a century and i have been through a few of the cycles. there are only seven out of a large number that remember the last rate hike in america. guy: thank you very much. senior economist at westpac. i want to take you to care down to the world economic forum. anna: welcome to cape town. we are joined by bob diamond. thank you so much for joining us today. you are talking about the global environment in the studio how

few have seen a rate cycle -- a rate hiking cycle in the u.s. perhaps you can give us the benefit of your expense on bond markets and what we are seeing in the global markets. let's start with the greece story. does this feel like something you would need to protect yourself from? bob: this week, it has been all about africa. with what is happening further this week are we at the 11th hour again i think the truth is that the possibility of a greek exit has been discounted and is being prepared for in a way that is very different than if this had occurred three or four or five years ago. anna: do you think that we just need to get back to a stage where u.s. interest rates are higher? it's been too low for too long and that is causing some strange things to happen in the bond

market? bob: it is tough to make that judgment. we think they will continue to stay lower longer. we think the commitment of the fed under chairman bernanke and continuing now is serious. i think it would be a different environment particularly for financials, the big global financials and the big u.s. financials, who would all benefit from higher at your straits. we do think -- from higher interest rates. but we do think it would be in the interest of the economy, in terms of the financial services. anna: does it look scary to you? do you have a handle on what is driving the bond markets at this moment come especially in europe where there has been incredible volatility the last few days? bob: quantitative easing in the u.s. and now in europe is driving the front end of the curve and the expectations there. and i think the situation in the euro is driving the other end of

the curve. anna: does it impact on your business on a day-to-day now? it must, even operating here in africa. bob: they always have some impact. we are looking at acquiring banks, requiring financial services businesses here in africa. we have done five acquisitions in our first year. we are now in seven countries. the overall environment certainly has an impact and the ability to do these types of acquisitions. but not a big impact. on a: is this -- onanna: is this a bond drought? bob: if bill gross says it is a bond dread, you should be listening to that. onanna: we talk about what africa needs to be doing to be more integrated into the financial markets.

bob: we had a great panel that you chaired yesterday on trade. intra-africa trade is 10% to 12% of all trade in africa. in the u.s. intra-north america trade, 40%. in europe, intraregional trade is 60%. there is a lot that needs to be done. one of the things that we are doing is trying to break the simple -- these with which taking deposits and buying treasury bills gives good spreads, but doesn't help the economy it doesn't give lending to the small businesses. the tray finance groups are looking at the same thing. the more we can get lending to small businesses, lending to entrepreneurs, lending to the midsized corporis, lending into the agricultural sector, the more we are going to do here to create jobs and economic growth. anna: how do you break that?

if government debt look so attractive to the local banking sector, why go through the hard work to assess whether to lend money to medium-size business? bob: in our case, we are very clear that it takes strong moves from the public sector. so the central bank in nigeria come as an example, has been increasing capital charges on domestic treasury bills to encourage banks to lend rather than to hold treasury bills on the balance sheet. on the other hand, what my partner and i are doing through our ceo is we are trying to take the best of international. so some of the techniques for creating a specialize lending units in agriculture, for example, define relationships. i think it takes a, nation of international and local in terms of how we are driving the lending sector in the banks. but it also takes strong public policy to encourage banks to

lend rather than to hold the bills on the balance sheet. anna: is this a difficult place to do business? you didn't come into this with your eyes closed. you have a lot of experience in africa. bob: everyone talks about the constraints and the challenges, but in our case, we did five acquisitions last year. today, four of them are closed. one of those acquisitions was in five countries. it took the support of five country regulators in addition to the regulators in germany where a lot of the shares were held. we were able to close that should section -- that transaction in five months. africa is clearly open for business. that doesn't mean there aren't challenges and there aren't some constraints, but africa is clearly open for business. anna: is it going to make money? bob: it was about 15 months ago that we did our first equity raise. we raised 300 when he $5 million

on the london stock exchange. our investors were very enthusiastic. 90% of the investors in our first ipo were investing in africa for the first time. i think that was fantastic. anna: to what extent is africa still a hub for investment for the rest of africa? do you think investors are confident enough to go direct to those attractive destinations? bob: i think you are absolutely right. i think there is a lot more direct investment throughout sub-saharan africa, not just south africa. although we have both been here all week. obviously, this is a very important economy. what we are really seeing is a quarter develop. we see a lot of investments to write two different african countries -- investments direct to different african countries. what we might call the is johann

a hannah spur, but they are avoiding the high of of london and new york. anna: bob diamond, founder and ceo of alice merchant capital -- of atlas merging capital. guy: still to come, we are going to talk of telecom acquired. vodafone is not discussing a merger. we will bring you the details of that story when we come back. ♪

guy: welcome back. vodafone and liberty global are in talks about a possible assets swap. vodafone says there is no chance of a move -- a merger between these two companies. the language here is interesting. we are not talking about a merger. that leaves a lot of ground to be covered. >> it does. what is interesting is that vodafone said in a statement this morning it did not specify the assets. it just said an asset swap. but i have been talking with analysts. they said basically what we could be looking at is

sensitive, nation of assets in u.k., germany, and the netherlands. if that happens, we're talking about tens of billions of dollars. so it look so much like a merger. even though that is not what it's being called, it could be totally transformative. that is what we are hearing. but a phone has not said that. it has just referred to asset swaps. by: in terms of acid opportunities reacting to this it is an interesting story when you look at the definitions. you look at the underlying credit story and that is just as interesting. you look at the credit positions of these two companies. you look at the difference in outcomes and they could be very different. what are the asset classes telling us? nejra: since john malone as the chairman of liberty said a couple of weeks ago that some sort of deal would be a great it, we saw vodafone shares, for example, reach 14-year high on that even though they have come off of that now. stock investors seem to like

that talks about a deal. but if you look up on holders, they have been a little more concerned because any sort of deal, whether that would have been a merger or a takeover would have been debt-fueled. so they were concerned about that. what we have seen today in particular, but actually in the past three days, is the price is a vodafone's profit default swaps coming down, less concern about a risk of default. guy: yeah. and they are pricing them back into the bonds. and maybe the asset swap story is more credit from a. what you are doing is putting assets together. it could be a much more credit from the story. what are we expecting now? do we know what stage these talks are at? do we know what happens next and when they will talk next? nejra: we were told by vodafone that talks were in early stages? of course, they gave the usual warning that they could still fall through.

we haven't yet had a statement from liberty. i guess we will be waiting for something from that. and also for more on the record statements from analysts. guy: when you talk to the analysts, do you have a sense they are expecting a transaction to happen? there are so much talk about this kind of a deal taking place. what is the bottom line for them? nejra: one analyst i spoke to talked about the fact that is what is likely to have happened is they talked about various sort of types of deals, whether that be a merger, whether that be one taking over the other. and they probably came to a conclusion that actually they did not want to pay a premium where they did not have synergy in certain regions. guy: thanks very much. the vodafone story, fascinating. plenty more to come. it is payroll day. plenty more still to come. we need to talk about what is happening in the markets.

226 seems to be the expectations. the risk does seem to be to the downside at the moment on that number. let's talk about how the european markets are faring into that figure later on. let me show you the stoxx 600 to give you an idea where it is at the session. it is down .0% -- .9%. let's show you what is happening with a bond markets around europe. this is clearly the focus over the last few weeks. that is the forces around europe. pretty slightly out performing. a quick look at the bonds. it has been a horrible, horrible week for european bonds. again, as you can see, yields are praising -- are rising prices are falling. we've got the german 10 year around 1.86 in terms of the yield. we started the week at very low

levels. a quick look at the euro, the euro has had a very bumpy ride. it is half past the hour. we will update you on the latest headlines. we will see you in three minutes. ♪

guy: welcome back. we are live from bloomberg's european headquarters. vodafone has confirmed that it is in early stages of talks with liberty group. vodafone says there is no certainty that any transaction will be agreed. the 12 nations that make up opec are meeting in vienna today. oil is heading for the biggest weekly drop since march. there's speculation that opec will maintain its outlook market -- it's market outlook.

>> i think we are entering this meeting with more optimism. but we will tell opec members that we need to keep -- whatever we agree on, whatever differences we have. the unity of opec is important to all of us. guy: greece has become the first country to do for -- to defer and imf payment in three decades. ministertsipras tsipras says that it will lump its payment later this month. markets are watching that story pretty carefully. plenty of things for the markets to watch today. jonathan: greece riches for the

zambia playbook. i don't think it was a surprise to many people. equities pulling back a little bit,. the stoxx 600 now poised for two straight weeks of losses for the first time since january. aapa's you a lot about the one-way traffic we have seen -- that tells you a lot about the one-way traffic we have seen. look no further than the bond market and look no further than bunds. the yield almost double toe 1% yesterday. bunds, the german bond market, heading for the worst week since the late 1990's. it has been brutal. even bill gross said it was scary. a stronger euro this morning.

as yields surge, the euro has moved on the back of that. the big story on the other side of the trade, of course, u.s. job numbers coming in at 226,000. that is the estimate this morning. unemployment expected to stay at 5.4%. what does it mean for the federal reserve? if the imf has anything to do with it, absolutely nothing. they don't want them to move until 2016. the other certain he is crude. down another .5% this morning, $57 a barrel. we expect south of $50. not many people ask that -- people expect much from the opec meeting. guy: yellen and lagarde are supposed to be quite good friends. what is going on here? i know tom keene wants to talk about it. tom, what do you make of that?

tom: i can imagine -- i can't imagine christine lagarde calling up carney and saying i would like to wait you -- would like you to wait until 2016. madame lagarde lectured janet yellen on what to do. the implications are large. dr. larry and talked about the stunning specifically -- dr. el-erian talked about the stunning specificity. we will have richard clarida from pimco. we will advance this conversation forward. the jobs day dovetailed with what madame lagarde said yesterday. makes for a very interesting friday. guy: you bring up the u.k. is an example. the imf did criticize the u.k. may be the fiscal side, not the monetary side. and it turned out to be spectacularly wrong.

tom: the thing that is in my ahead here is the precedence setting that we saw yesterday at the imf. did she lecture kuroda? did she lecture draghi? what i will say is that jon ferro nailed on the market coverage a little bit of attention this morning three hours away from the jobs report. guy: we are looking forward to that number. "surveillance" very shortly. let's stay on that side of the atlantic. the payroll number coming out a little bit later. in terms of the number we've got, we surveyed 100 economists as we always do. we try to figure out exactly what the economic consensus is. we think it is around two to six or they think it is around two to six. here is -- 226. here is peter cook.

kind of breakdown that number in a little more detail for us. peter: they are looking for a repeat of what we saw last month, 223,000, the report we got a month ago. that would again be consistent with an economy that is still expanding. maybe the economy doing better than what we heard from the imf. and from christine lagarde yesterday. this has become a much more important report than it was just a few days ago if you will but because there have been so many questions about the u.s. economy. 226,000 jobs would suggest again strengthening u.s. economy, not booming, but better than what we saw in the first quarter. guy: peter, people are buzzing in new york about that sort of disagreement. it's not a disagreement, but the conversation that exists with the imf and the fed. what are people in washington saying? peter: that perhaps the imf crossed the line.

it is not the first time that the imf has had advance -- advice or guidance for the u.s. or other countries. but the fact that christine lagarde was so specific, that she said it's probably -- so publicly when the fed is trying to shed its calendar guidance he was very close. we had footage a few weeks ago. you can see the relationship they had together. did she give a heads up? did the fed know this was coming? did the fed say this is a mistake, you're going to try to boxes and here? it does put the pressure on the fed. guy: thanks very much. let's look at what is happening back here in europe. turks go back to the poll on sunday.

the ruling ak party hopes to win a two thirds majority in parliament, and effectively could change the constitution and give president erdogan the advantage. reporter: knickers, underpants and invests. they make more than 2.5 million of them every year. 1/5 are sold overseas. business may seem brisk here but the clothing manufacturer has been hit by high interest rates s. his main concern is that the pro-kurdish htp would win 10% of the court and boost the stakes

for peace. x once there is peace in the region and guns are silent, people can look to the future. even if there is a coalition there is still a future in economy. if we cannot see what is ahead in the next five month, we cannot invest with a long-term. for people in the region, peace is more important than the economy. >> there is a fear that there will be growing instability in the southeast. that is going to have an impact also on the's country economic profile -- the country >> economic profile. if they are able to overcome the 10% threshold, then we will see more representative parliament potentially a better framework for the sentiment of the kurdish issue and therefore the political climate will certainly be more conducive also to economic reform.

reporter: polls suggested the outcome of this noisy election campaign is too close to call. if they are right, the htp should squeak into parliament by the slimmest of margins. guy: let's go to istanbul. it is clear the kurdish vote will be an important factor in these elections. >> excitement is building in turkey. the kind -- the most critical elections that the country has seen in years. it could determine president ergodogan's future. previously, kurdish opposition candidates promised independence. because of this, a lot of tactical voting is expected.

people who would not usually support the kurdish party may do so this time around in order for the up party to potentially lose seats in parliament. the up party hopes to change the constitution. not everyone is in favor of this. the party has been in power since 2002 with aslan until 2014. when he was elected president he was succeeded by bach med. he is at the center of the campaign as a result. the results are far from clear. guy: walk us through the economic backdrop. reporter: the health of the economy is very important for voters. turkey is facing a slowdown.

growth which faced an average of 5% will slow to 3% this year. the turkish there a has slipped around 14% in value against the dollar. and it is the second worst-performing major currency. in order to stimulate the economy, erdogan has argued publicly. if the u.s. federal reserve raises interest rates, market investors could drop turkish bonds for american treasuries weakening the lira further. the lira is expected to remain under pressure for time -- for some time to come. we could expect results around 8:30 p.m. london time. guy: thanks very much. we are going to take a break. we are going to talk about the opec decision.

we will also talk about what is happening with greece as well. we will take a break. see you in a moment. ♪

guy: welcome back. we are live from london on bloomberg television. as crude falls to a seven-week low, we find out what is going on.

ryan is standing by with everything we need to know. ryan: the 12 delegates that make up opec are meeting in the building behind me. we should have a decision in a couple hours time to discuss what they are going to decide. i am joined by jason shanker from prestige economics. jason is one of the best rated analysts out there. jason: number five in the world for a brand, number two for -- ryan: he also talks a good book. check this out. he is from texas. i was going to show you his cowboy boots. they are in there right now. we know they are going to keep the production target exactly where it is. what is going to happen to the price of oil? jason: there is a couple of

things. right now, they are likely to leave the production target at the 30 million barrels a day. they are likely to make statements that reaffirm the fact that they are going to respond to the markets demands and supply. that may be a little bit embarrassed because there are some analysts expecting something could happen. but i think there are other things going on right now. ryan: what kind of outsized factors are out there that could influence oil today? jason: we have the jobs number from the united states. that could be a big deal because you have a fed meeting in less than two weeks. if it is a solid number, that could send the dollar higher which could also weigh on the price of crude. ryan: it would be bears for the price of crude. making what is a pretty bad week

for crude even worse. jason: the number to watch right now is the hundred-day moving average. but yesterday, we had a close below the $63 level. they hundred-day moving averages the want to look far. ryan: we have talked about how central banks are pumping money into the system. people go out and buy commodities when there is money in the system. we had christine lagarde saying that the fed should perhaps hold off until next year the beginning of next year, before it raises rates. does that matter for oil? does anybody listen to lagarde in the fed -- and the fed? jason: i think the fed will do what the fed will do and i think that fed will raise rates later in the year. that is much more dovish. i was at the event at the end of march. very few were talking september are december.

we actually think it does not come until much later in the year because some of the economic data out of the u.s.. lagarde's comments come i think her opinion will do with the data will tell it to. and opec will do with the data tells it. ryan: where is god -- what is -- where is oil going for the rest of the year? jason: there is an outside risky for the next fed meeting. but the price could go back up. you look later in the year you see all the monetary policies that have been accommodative globally right now, you've got most central banks in the world either in some way adding a further accommodation or they are not removing the accommodation a policy. that gives you growth. it is not a unique recipe. that means more oil demand growth. ryan: we are seeing that demand. you talk about this idea that low-cost treat low cost when it comes to oil, is that something

that will play into the price of oil later this year? jason: it is something we have already seen. we have seen increases in the u.s., for example. you have seen increased miles driven. few are likely to see this and other countries were we don't have the data right now. these lower prices are incentivizing additional demand. if you look at the. purchasing manager indices the most recent came out for me this week. china is still below 50. even that went up a little bit. the u.s. and the eurozone arm proving -- are improving modestly. ryan: so supply doesn't matter. these guys are pumping like there's no tomorrow. they are probably going to produce more even if the price goes up a little. jason: i think demand is a more important factor that opec is looking for, for price. when we asked what caused those prices last fall the

september pmi's were all week and the imf improvise all their growth numbers lower. and with the driving season they had -- the prices had no support. now you have something that is the op assayed of that. we are going into the u.s. summer driving season. you have central banks that were not doing anything. the year is -- the european central bank is now pushing on a stimulaus. ryan: a lot of charge to look at after that conversation here in we expect you to look at them all. guy: all i can think about his cowboy boots but we will leave that alone. going to take you to kiev right now. it is one year since petro poroshenko assumed office. he is talking as we speak.

live pictures coming to us from kiev. clearly, there is a great deal of tension in the donetsk region. he is also indicating he will be speaking with president obama a little bit later on today. he is going to talk to the u.s. president by found. he answers questions at this press conference. we are going to take a break. alexis across -- alexis tsipras will have to pay the imf at the end of the month. we will talk about what is happening in berlin as well when we come back. ♪

guy: welcome back. we are live on bloomberg tv. we've got a busy day on both sides of the atlantic. payrolls later in the states. a lot of meetings. hans: we have a phone conversation taking place between alexis tsipras and vladimir putin. mr. tsipras visited mr. putin in april. merkel is insisting come a her press person is insisting that there is no daylight between her and her finance minister. there was a report earlier that he may have been a little fussed

but had not been informed by the monday night meeting. on june 9, there may be a meeting between mr. verify this and mr. short black here in berlin. that will be next week after the g7 concludes. of course, we have to brace ourselves for nonfarm payrolls coming out in the states later today, 8:30 eastern time. it will be a good sense of whether or not they will go ahead with the rate increase this year or if they will take matter lagarde's advice and wait a little bit. guy: peter cook later on was saying essentially washington says lagarde overstepped the mark with that. hans: the fed prices independent. any u.s. president is careful about not influenceing the fed. guy: thank you very much.

"surveillance" will pick up the bat. that is it from me on "the pulse." i will be back bright and early on monday morning. ♪

announcer: this is "bloomberg surveillance." tom: european leaders will be "preoccupied" this weekend with greece. alexis tsipras and vladimir

putin have announced they will host a call within the next two hours. it is jobs day, and christine lagarde tells yellin -- and it gets worse, chinese hackers have 4 million americans' personal information. this is "bloomberg surveillance ," live from new york. it is friday, jobs day, june 5. i'm tom keene, with brendan greeley and vonnie quinn. white is supposed want to talk to prudent? brendan: is he showing europe, look, i can talk to him, he has money, i have other options. this has been the game theory for the past four months, that alexis tsipras once europe to know i have auctions -- i have options. tom: you and i heard this eight weeks ago come and here it is today. brendan: because they are