sale, george osborne says he will start returning rbs to private ownership. ahead of the open, dax futures up, we snap that losing streak on the stoxx 600. let's get the latest from our bloomberg team. caroline hyde is here in london. caroline: it looks like this not backfire we had yesterday might be short-lived. 1.8% is what we saw added to the stoxx 600 yesterday. we saw that surge higher. today, a little more tentative. similar moves in france and germany. where do we look? who do we believe when it comes to greece?

he will talk to his creditors. the european commission, the imf, and the ecb. could it be that angela merkel might be a little bit more lenient? the meeting -- germany might be looking to be a little more lenient. a german spokesperson has denied that. would they allow just one reform to get through? the ecb throws that lifeline. we open lower on the stoxx 600. an interesting bit of data from the u.s., the u.s. dollar trading higher. we will get retail sales, could be a jump of 1.2%. could that mean a rate rise?

dollar pushes higher. euros trade weaker. a little bit of nervousness around greece. bond sales from spain and italy. similar move for spain. 6 billion euros of bond sales. rbs, after the mansion house speech, the sale of shares up this morning. no mention of the bank levy. maybe that is what is concerning the shareholders. petra syngenta is trading flat. the deal could be getting

closer. monsanto wants to buy syngenta but syngenta not coming to the table. jonathan: we will be keeping a night on rbs throughout the morning -- an eye on rbs throughout the morning. the big story, the rate cuts for both new zealand and south korea for two very different reasons. >> let me get started with the currency. this is where we saw the big swings all morning. the new zealand dollar currently at the lowest level, not seen since august of 2010. let me tell you, this fell even further this morning breaking the $.70 level, falling to $.69 this morning. we are seeing the australian dollar rising, a completely

different story. because of the jobs data out of australia coming in much better than expected with the unemployment rate dropping to a one-year low in may. the australian dollar just jumping. it has come down from the gains. if you look at the aussie dollar compared to the kiwi dollar, that is where you are feeling the surge. currently, it is gaining 2.6%. i will not get into the korean won because we did not see much reaction despite the be ok cutting -- the bank of korea cutting rates. let's see how the major markets have wrapped up the day. australian stocks ending in positive territory up 1.4%. we saw this rebound in min

ers. new zealand up by 1%. the cost be ending the session up. the nikkei ended the day higher by 1.7%. asian stocks have been rising for a second consecutive day, but stocks in china have been lacking clear direction on morning. the shanghai composite, losses and gains all morning. we have positive data today showing the economy could be stabilizing. industrial output rising 6.1% last month, beating estimates. we are seeing concerns we could see a flood of ipos next week. funds from existing equities, that puts downward pressure on the shanghai composite. the hang seng rising because

chinese stocks trading in hong kong are rising from that two-month low we saw earlier. there are discounts, it reach the widest in six years. the hang seng index up .7%. jonathan: thank you for joining us this morning. the dax off by seven points. to break down the market moves i am pleased to say we are joined by a good friend of the show. he joins us on the phone from switzerland. great to have you with us this morning. the bank of korea cutting rates, the reserve bank of new zealand cutting rates for very different reasons. do still think the fed goes in september? mohamed: that is

the most probable and it speaks to divergence. this multi-speed global economy something the world bank has reiterated in its report this morning. it speaks to different exposure to exhaustion us factors -- exogenous factors. countries are using monetary policy as a currency policy. it is quite a fluid world. jonathan: president obama is the catalyst for the fed's decision, is it shifting towards the labor market? nmmohamed: i think we have seen a change in regime. for a while, the u.s. was

willing to sit on the sidelines and yet -- and let the dollar depreciate. u.s. companies started reporting difficulties on account of the foreign exchange appreciation. when that happened, we went from the currency market carrying the bulk of the adjustment to the interstate market having to react. the u.s. does not wish to be the only game in town when it comes to currency appreciation. you have signals that we are no longer in the paradigm where you get uncontrolled u.s. currency appreciation. jonathan: is the fed at risk of moving too soon or too late? >> if they move in september, they will be balancing the risk.

let me explain why. the economy is picking up. the weakness in the first quarter was temporarily reversible. the labor market continues to strengthen. there is no sign of inflation problem on the way down or way up. they are worried about excessive risk-taking. they are worried about the misallocation of resources. if you balance all of this, you get a first rate hike in september. however, however, i the time we get it, the fed -- by the time we get it, the fed would have done it's utmost to shift our focus. it will be a very gradual journey. it will be the loosest tightening in the modern history of central banking.

jonathan: to bring it to the bond market, you and i sat here couple of months ago looking at german bond yields. we have had this huge reversal a selloff. what is the big catalyst for that? there is a big debate over what is happening in the bond market. willing to work through a big backup and yields. >> there has been a combination of triggers. secondly, the paradigm about inflation expectation has changed. thirdly, growth picked up. when you got these things combined, markets realized that the levels were wrong.

and then you hit the liquidity delusion. i cannot stress enough how important it is to understand there is insufficient liquidity when the market wants to reposition. that is why you have these sharp moves. what the ecb is worried about is the volatility in the fixed income market. the whole point of qe, unconventional policy is to repress volatility in order to repress risk factors to encourage people to go at the risk curve. if volatility continues, the ecb will we put a tough position. jonathan: do you think the ecb's blessing? -- do you think the ecb is bluffing? mohamed: the ecb will have to do more. the fed will be normalizing very

slowly. you will find the ecb and the bank of japan more likely to do more rather than less. jonathan: the backdrop to all of this is greece. a lot of people say the contagion is minimal. is that a false sense of security? mohamed: i do not think we are anywhere near where we were in 2010 and 2012. europe has taken steps to minimize the risk of contagion. you cannot eliminate it completely but you can reduce it. it is important because i am not a buyer of all it takes is putting to political leaders in a room overnight and you get a solution. this is a complicated case. policymakers are losing control

of the situation on the ground. there is still not a common view as to what has happened. even if you come up with another band-aid, this is on a problem that will be solved anytime soon. jonathan: as you look at the situation and the ecb's role in the greek crisis and the s&p moved to downgrade greece the bigger picture is reputational risk to the ecb going forward. are we at that point now? mohamed: going from triple c plus two triple c does not have any consequences. it does not change the liquidity situation but it does highlight the extent of financial and reputation risk the ecb has taken. not only does the ecb have a few payment -- a huge payment coming

up from greece in july, but the ecb has just increased the amount of lending to greece under the emergency lending assistance. that is not an instrument that should be used for propping up solvency's. the deeper greece goes into junk territory, the more it highlights the reputational risks the ecb is taking. jonathan: great to have you on the show. joining us on the phone from switzerland this morning. greece gets a downgrade. outlook negative for a deal anytime soon. is that the strategy for the government? more on george osborne's plan. vladimir putin is called on to commit to peace.

those stories and many more. ♪

jonathan: good morning and welcome back. 17 minutes into the trading day. the ftse 100 pretty much unchanged. the dax in positive territory for the second day running. the fx market, one euros would

buy me $1.12. let's get the latest on greece. negotiations between tsipras merkel, and francois hollande dragged on into the evening. s&p downgraded greece's credit rating. let's get to hans nichols in berlin. what are we hearing from merkel? it sounds like political noise. hans: she is saying talks will intensify, they want to keep greece and the euro. -- in the euro. no one wants greece to leave the euro. that is part and parcel of what we heard from merkel.

the german government may be prepared to accept a partial release meant of aid is greece shows a good faith effort to implement one, not all, the just one of the reforms. it was that report that injected a lot of optimism into the markets. the german government official denied the reports, saying germany will go along with the report if the ecb, imf are involved. angela merkel sometimes says the same things. where there is a will there is a way. the goal is to keep greece in the euro area. if there is anything i have detected in terms of a shift, it seems like most of the creditors are saying, the goal is to keep greece in the euro.

it is the emphasis that may be causing the optimism. jonathan: you sit there in brussels, another late-night meeting. what did we get out of the meeting last night? the other big question is how the creditors deal with this going forward. jones: they described last night's meeting, which one until early this morning, they both described it as constructive, but there was not any real progress made. the technical experts are still trying to work out the details of the programs. it is going back and forth between brussels and athens. there has been some acrimony about what is possible about bringing those proposals closer together. the european commission president met with tsipras last

week. those two leaders will sit down again this morning for another meeting. this comes after the late-night meeting last night with merkel and hollande. we will see if there is a better flavor coming out of that, a better atmosphere. it seems we are moving in that direction, but they still seem to be a part in terms of the technical details. jonathan: thank you very much for joining us this morning. let's bring in my guest. great to have you with us this morning. the facts are because they are looking for a nine-month taylor

out extension. -- bailout extension. >> there is that effort being put in place. the bigger picture, will it address the underlying issue of solvency? i'm afraid the answer is still no. buying more time for the greeks means more pressure on them to actually deliver. it means they have to cross them . i guess i see an indication we may be moving, but no lasting resolution in sight. jonathan: i remember the debt ceiling in the u.s. treasuries did not move in the way he anticipated. the whole point of that was the pressure point. is the pressure point in the

financial sector? >> one has to take of you as to how is this going to play out. the market is pricing in a happy ending. that is the best case scenario. we are experiencing the best case scenario. what does one do as an asset allocator? you could avoid what might be a high risk area, european banks. with volatility this cheap portfolio insurance -- it will not damage anyone's portfolio. there is an action plan one can take that prevents you from worrying about greece. we are not very worried about the outcome. jonathan: the volatility has picked up. >> the assets -- in terms of

policy outlook, economic outlook, or sovereign debt risk. there may be some supports for the euro. in the bigger picture, it is still the case the economic outlook for the u.s. versus eurozone, it is still very much in place. any respite for the euro could be contained. we are still facing the prospect of a fed rate hike down the road. fx volatility may remain quite supported. it will continue to outperform. any historic analysis will show you fx volatility is quite

supported. jonathan: try to strip through some of the noise. a group of creditors that need to get paid. how do they get paid? isn't that the bottom line? johnny: what i am interested in i am not interested in the default. what i am interested in is the constitutional integrity. that affects whether the eurozone can stay together in the medium and long term. that becomes a euros strength issue. jonathan: i wake up at the end of the month. they owe the imf, what does the

world look like? >> that is a debate we are having with quite a few clients, how they go forward. chances ar on the reforms in greece. they want to stay in the eurozone. market volatility likely to remain. there might be a sense of complacency especially in the absence of market pressure. eurozone officials have shown they do need some outside pressure to deliver. jonathan: if they want a referendum, they are running out of time. up next, the age of the

responsibility is over. is the era of banker bashing finished? we're back after this short break. ♪

jon: good morning and welcome back. i'm jonathan ferro. this is how things are shaping up in the equity market. the ftse 100 is higher by about three points. the dax is higher as well you 62 points traveling north areas for the record highs of april and down coming back a little bit. check out the fx market big moves there the euro-dollar, one euro buying the 11286 with dollars down about one third of 1%. kiwi getting battered down by 2.5% after the first rate cut from the reserve bank of new

zealand in four years. we will break down these fx moves in just a minute. for now let's get to the mansion house tonight. last year it was all about monetary alice's in this year is squarely on banking. >> for those who free ride, the age of irresponsibility is over. >> does the era of banker bashing continue, george osborne stressed the important of the financial instructor. >> the financial services industry has been seen as part of the problem and now it must be part of the solution. i want britain to be the best place for european bank and global headquarters and it is in our national interest to be so.

>> the bank that took the spotlight is rbs. >> in the coming months, we will begin to sell our stake in rbs. it is the right thing to do. you may get a lower price than labor paid but we will get the best possible price so the longer we wait the higher the price for the whole economy. >> we are joined by the bloomberg news reporter richard party. a lower price than labor hate and that is the key. a lower price than labor paid for it. >> the reason chancellor is selling at a loss is that he says he can get a better price later. he will only sell a small amount of rbs stock. the hope is that will make more

trading liquidity for that stock and in the future that may make the stock more attractive to new investors. we have already seen the stock rise 1.8% this morning however it is still hovering which is still below what osborne had previously said was a decent return. back in the bailout in 2008 there was a 45 billion pound ejection. at the moment we are standing on a 7 billion pound loss. in totality with the returns of lloyd's banking group, the government is making a profit areas even as it stands today the government with all of its bank investments is sitting on about $14 billion in profit. that is an important argument that osborne is trying to make.

we will be in a better position today. >> i had investors sitting next to me that even if they inherited the funds your job is still to make money so this won't sit well with a lot of people in the city. you do wonder how they are going to balance the books and i will have that discussion just a moment. going forward for rbs specifically, the challenges this bank has faced in the last six or seven years one word that would describe it is ugly. how ugly will it be. >> it will still be very ugly. they are not out of the woods yet. have a fine that will be coming over the next year. they have not given a set deadline for that in the united states for their handling -- handling of u.s. mortgage-backed securities. the department of justice has suggested that could come in the latter part of this year or early in 2016. that however is not something

that should affect the sale of shares in the coming months according to and -- to an independent report from rothschild and the reason there is that investors are already pressing in the impact. it could be as high as $4.5 billion according to bloomberg. jon: thank you for joining us. let's bring in my guest. still very much with us. >> if you are managing a fund and you took over as the fund manager and the other guys left your job is to make money? >> unless you are an mp or part of the government. it is not their problem. it is there's been. they have -- it is there spin -- their spin. they will have to implement some moderately unpopular things in

the future. this is all popular rhetoric and commentary and there is a good reason behind it all. it allows you to recoup some money and redeployed. whether it is good investment management is a different question. >> this isn't a government with a cash flow problem. how tight doesn't have to be the balance the books? >> rbs is a specific case in itself. we have been already ahead of the election. the u.k. is becoming less attractive so we have that debate about hsbc moving out. so bankers are potentially boosting the popularity of the politicians and it may backfire overtime. needless to say losses could apply overtime and you would have to implement even more

fiscal austerity. it seems for the conservatives now there is opposition to doing more rather than less. the real question is, what impact that will have. the banks are earners in terms of tax revenue and at the same time we have the fiscal side of that. to be honest i was hoping that mark carney would have to elaborate a bit on the setup of tougher regulations and banker bashing and more fiscal austerity on the economy. i guess those questions remain unanswered, but these are more things for the boe to worry about. from that point, folks will do what they have to in the upcoming statements and minutes. chances are there is a more subdued growth outlook.

jon: as an investor is rbs more attractive if the government gets out? >> yes. it gives it flux ability to act like a bank -- flexibility to act like a bank. at the moment it is hamstrung. i would frame that in the context that i am not very optimistic about the banking model generally and him relatively averse to european banks in general. jon: we cannot let this go without talking about june last year. if i had asked you last year, what currency would you be buying, there would be a decision to make. that decision has shifted incredibly to the other side. >> it is significantly to the downside on the back of political uncertainty.

obviously the boe has turned more dovish. if anything things are not really changing much. i don't expect the outlook to be shifting significantly. if anything we expect the dollar to keep performing across the board. clearly, the biggest risk is what the boe will make of the slowing economy. indeed the prospect for more fiscal austerity and potentially the underperforming banking sector. some portions -- jon: thank you for joining us. merrin off will break down the fx market later in the show. still to come, bmw unveiled its new seven series. will it help the carmaker pull ahead? ♪

jon: welcome back to "on the move." let's check on the equity market. image -- pretty much dead flat. the dax traveled north by 70 points. some big moves in the fx market that we need to talk about. the euro where are we?

$1.12 last time i checked. big move on kiwi. new zealand dollar headed for its biggest day of losses against the dollar. where are we against 2011 september? i will break it down in about 10 minutes time. let's get the stock movers with caroline hyde. caroline: we've been talking about the government offloading its stake in rbs. this is one of the biggest movers today. it has been cashing in and the u.k. government sending $.15 up half of its over all stake. it is all about reducing its exposure to this and sending 150 million shares. the price with a little bit of weakness. interesting from the mansion

house speech. coming to the market with royal bank in scotland shares. george osborne did not mention that the bank levy is weighing on some others this morning. of course it will not be that all of branch extended to the banking industry. they will not the railing back on some of those bank levies pushing it down. that came as a little bit of a disappointment to the shareholders. it looks like levies will not be reducing their banking in the u.k. anytime soon. a sudden pop in spot -- stocks. alpha bank is up. the national bank of greece rising. all in double-digit figures. this is only four cents in terms of the national share price but we are turning to see a bit of the move higher in the optimism

seems to be right out there to do with grace areas as i speak angela merkel has been speaking and greece has agreed to step up efforts with creditors and everyday counts. look how those greek stocks are leading the charge. jon: the athens stock exchange up 5.6%. not sure if the words greece and optimism go together. let's talk cars. bmw debuting its new series model. trying to take back market share. >> the seven series is the pinnacle of our brand. it is the car that brings the new technology and the innovation and it is a car driven by the opinion leaders and the movers and shakers around the world. it is a very proud moment for us as the sixth generation seven

series is unveiled. jon: let's get to our bloomberg reporter in berlin. what do we need to know about the seven series? reporter: it is packed with all kinds of technological bells and whistles. it will be the first car available were you can control certain functions just by moving your hand. in robinson demonstrated that earlier. that is a sign that bmw is pushing everything that it can into the car to regain its edge. jon: what does bmw need to do and what do they need to get out of this car? how important is the seven series to the company? reporter: it comes at a critical juncture. mercedes has been growing in

double digits for a while now. they have a new ceo at bmw harold kruger who just took over last month. this is their biggest launch this year and they need this car to hit well. they need to gain their momentum back. as you recall the eye three and i ate electric -- i3 and i8 electric cars. electric cars are lossmaking and the seven series is something you will see on the street. if it is coming up against the s class which was refreshed only a couple years ago, it will be tough for bmw to come up against that in many to show something. they need to get their momentum back. their mojo.

jon: thank you for joining us and breaking it down. i don't know if the guy next meet once to buy one but i will ask them very let's wrap up a big day for the foreign exchange market today especially in the southern hemisphere. check out kiwi against the dollar. the biggest drop for the new zealand currency since september 2011. is it the start of more to come? we will talk about that after the break. ♪

jon: we are about 51 minutes into the trading session. the stoxx here heading for a second straight day of gains. chinese industrial gained in may. retail sales were in line with the previous month. the data suggests stabilization in the second largest economy. australia reported a drop in unemployment. the number rose by 42,000. the australian dollar rose on the news. the bank of korea loaded key interest rates to a record low. the central bank cut the seven-day repurchase rate to 1.5%. the highest since august of last year. the reserve bank of new zealand lowered its interest rates for

the first time in four years. it was cut by 3.25%. the central bank signaled another rate cut might be appropriate. more on that story and to wrap up the trading day. let's bring in the head of g 10. we will get to u.s. retail sales in a moment. we are coming into this. not everyone expecting a rate cut. the idea now is the first in four years. a new cycle. that is why you see the big move. is that justified? guest: obviously the timing was unexpected. ahead of the meeting, they were pricing at about an 18% chance. if you look at the rates markets after the meeting, they are expecting another cut. if anything the surprise came

from the timing, but not the message. from that point, you would think that they would have to step up the dovish to see qe selling off on its own. think of the kiwi-dollar angle. we could see the dollar doing rather well, but also going and the fed to lift off. four kiwi-dollar, risks could be balanced. we had the lows that we made earlier today. on the relative currency basis -- jon: the parity of the kiwi-dollar, everyone else is waiting for the kiwi to hit parity. guest: in the big scheme of things, i doubt that will be that will be coming at the

expense of massive monetary stimulus. the chinese are pumping money into the economy. the banks are also reluctant to lend. the risk for the chinese economy may still be on the downside. that could continue to weigh on the aussie longer-term. domestic resilience could be far better than the australian economy. if global growth slowdown is here to stay domestic demand will remain the key driver of the economy. from that point of view, you would think that before long they will be topping out. jon: how does -- head of g 10 strategy, you are a day trader. sitting at your desk, how does valentine position himself? guest: i think the dollar could do well. consensus is for a rebound.

it has to be a big disappointment to come off. what is happening at the moment is the market is starting to price it earlier. jon: how will it balance -- how well in advance? guest: markets are still undecided between december or october. a stronger print will help offload those expectations. the chances are, week print dents dollar sentiment. the fed may have reasons to because her sleep confident -- to be cautiously confident. a stronger rebound in the first quarter. we are having core inflation. inflation and expectation gauges picking up. the labor market resilience is still very much here. to the extent it is translating

into strong wage growth should make the fed confident. we expect a fairly constructive message next week. i think the dollar could extend its gains. jon: that is a wrap of the fx market. fx researcher. june 17. data. a lot of it later. greek unemployment down. u.s. retail sales. that is your big data point. the survey for may, 1.2%. the previous month was an ugly number. 0% flat. what is the story going to be? sit tight, i will bring you that. "the pulse" is coming up next. key developments from the mansion house and south korea's rate cuts. we will be talking to the president of marriott international.

you want to talk about these markets, i am on twitter. good luck with the rest of your day. ♪ . .

francine: toughening up. mark carney warnings city bankers they will be held for misconduct and harsh punishment for those with fail to comply. >> for those who free ride, the age of irresponsibility is over. francine: late night talks between leaders of greece, germany and france failed to produce a deal but is angela merkel ready to extend and olive branch? south korea cuts interest rates