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

and mers a threat to the economy? welcome to "the pulse." i'm francine lacqua. first the u.k. chancellor george osbourne said he will start returning r.b.s. to private ownership in the coming month even though it may cause a loss for the british taxpayers. he made his speech last night. >> in the coming months we will begin to see our stake in r.b.s. it is the right thing to do for british businesses and british taxpayers. yes, we may get a lower price than labor paid for it but we will get the best possible price. the longer we wait, the higher the price for the whole economy. francine: now just days after hsbc said it would decide whether to move its headquarters from london by the end of the year, mr. osborne spoke of his desire to keep the u.k. attractive to banks. >> i want britain to be the best place for european and global

bank headquarters. it is in our national interest to be so. and i think with a combination of a highly competitive economy, skilled people, new infrastructure, good quality of life and the rigorous application of the rule of law, we can achieve that. francine: meanwhile the bank of england governor mark carney ordered the finance industry to observe new rules on market conduct and a tougher regime if they fail to comply. >> for those who free ride on your reputation, the age of irresponsibility is over. francine: now let's digest all of this with bloomberg's richard jones. thanks for coming in. concerny's speech last night was in stark contrast to last year's where he ignored monetary policy this time. what did we hear from that? >> i think it was interesting that the focus was more bank's regulatory and supervisory role.

it is something that the bank takes very seriously and i think it is going to be a focus for them in the coming year. last year we heard a lot about monetary policy from mark carney and the markets reacted quite violently to what he had to say. we just had the inflation report last month. the idea is that they are going to pretty much have a steady issue -- i think the monetary policy will be lower for longer. they endorsed the market path and that hasn't changed that much since last month. francine: what do we hear about negotiations for this referendum, ahead of the referendum? >> i think what is going to be interesting for the bank of england in terms of the e.u. referendum is that if -- if the government embarks on its or continues on its austerity policy, you could get the referendum next year, being more

of a -- on the government itself rather than question that is being asked, should britain stay in the e.u.? as far as the bangor england is concerned, this will probably delay any rate rises because of the uncertainty. francine: we're joined by james ferguson. great to have you on the program. what do you make of all of this? it seems like we're trying to have a balance between banking bashing but not too much. >> i think they moved the banker bashing from the banks to the individuals. one of the things that possibly we're seeing here is a move towards more of the american end game which was due to look to claw back some of the money from the banking sector via legislature or judicial means. and one of the things that we can take from that at face value is that this is quite a positive

sign for the economy. because you don't start really looking at other ways of taking money back off the banks until you're pretty sure they have finished crystalizing bad loans on their books. the u.s. banking system, they are displaying all of it being fixed back to normal banking systems. an incredibly large amount of fines. $300 billion. we're starting to make the same noises in the u.k., potential big fines. francine: r.b.s.? >> it is always going to be a big thing to do politically. if you look at equity markets, we pulled back about half a percent on the highs. it is probably a reasonable time to start divesting the government's stake. now is probably as good a time as any to start. francine: james, what do you

make of r.b.s.? >> they bought the shares in the first place because that was the only vieable option for recapitalizing the bank at the time. therefore this was a rescue operation first and foremost. it was never an investment. the second part of that issue is what do we know about banks? one of the things we know about banks ironically enough is the way we -- the banking system because of of an excess in deregulation is second best way of blowing up the banking system. the best way is to -- state ownership, even if it is partial, passive of banks, just never turns out well. it is full of political risks. really from their point of view the quicker they can get r.b.s. back into proper private sector hands, run by private sector rules and regulations, they can take their backward step. as for the money, the money they

lose on r.b.s., because nobody is adjusting it for inflation so therefore it is not real anyway. the money they lose they make up for in the lloyds deal. this is not about losing money. it is about trying to return the system to normalcy. francine: if you're a banker and you were listening to that speech yesterday, would you be comfortable with staying in the u.k.? my personal interpretation is what hamstring shs doing is lobbying in order to -- what hsbc is doing is lobbying to back off the rules a little bit and we don't like the noises you're making about europe. in the end, you know it is not going to be apparently up to either the government or the banks as to whether we stay in europe. it is up to the voting public and everyone will deal with a new set of cards. they are just trying to get their view across. francine: richard, what do you

make overall? we have had so much news in the last week about banks in general and how they fit in within the u.k. were you confident about the speech yesterday? >> i think james is right. i think hsbc is probably in a negotiating stance now to try and improve the regulation from their standpoint. but realistically, i think the u.k. is a great place to do business and i think banks are still going to stay in london as a result of that. francine: hsbc, i was hoping to catch up with you earlier this week. are they just too big and complex? does that bank need to be broken up? >> i have heard this argument a lot. i think maybe r.b.s. is too big for fred wynn to understand. they don't really know -- francine: what do regulators need to understand? >> they have preset the rules and then they stand back and see

what happens. they are probably responsible for blowing up the banking system. that is why we have had no perp walks. the regulators are the first ones that defense attorneys would call. rule-based regulations very much the u.s. way of doing things and the principle based the way we do things. yes, some people break the rules and they should be paying the penalty. i think that is what mark carney was talking about. the problem with this move, this unstoppable march towards regulation is two-fold. one, it makes everybody do the same thing. the problem with that is if you have a problem it is a systemic problem. the second is it is impossible for regulators to predict in advance how people will work around the rules they put in place. in the long run, we'll probably learn a strange lesson from all

of this, which is that regulation, the more precise it gets the worse it is at doing its job. francine:ing the. thank you so much for joining us. now that brings us to today's twitter question. must banks do more to tackle misconduct? you can tweet me at flacqua. no deal was done with greece but angela merkel's government may be prepared to endorse a rescue payment that is according to two people familiar with germany's position. the bank of korea has cut its key interest rate and warns that mers is a risk to production.

b.m.w. top model will be capable of responding to hand gestures. b.m.w. is bowing to increasing pressure from mercedes-benz. >> the 7 series is the pinnacle of our brand. it is the car that brings the new technology. it is the car that brings the oin vegas. it is the car that is -- innovation. this is a proud moment for us. the sixth generation 7 series is unveiled. francine: let's take a look at what else is coming up on "the pulse" this morning. the french capital is getting back to normality after the terror attacks. we'll be talking china with london's economic professor and we get greek unemployment numbers. what might they reveal about the

crisis in the nation's economy? come up next, we'll be talking greece after the break. is angela merkel set to extent an olive branch to alexis tsipras? we'll discuss that next. ♪ 1

francine: welcome back to "the pulse" live on bloomberg tv streeping on bloomberg.com, your tablet and phone.

alexis tsipras and angela merkel and francois hollande's meeting ended early this morning. there are signs germany might be willing to agree to a debt deal. hans, let's start with you. walk us through what we're hearing from angela merkel's side this morning. hans: this is yesterday. i'll give you this morning first, francine. merkel heading into meet information brussels, she said they agreed to intensify talks and said that talks with tsipras were intensive. it seems like talks are continuing on that front. privately according to people familiar with the matter, merkel's government is considering this idea of releasing some of the bailout money, but in return only getting one pledge from the greek government instead of completely filling out and completely fulfilling that initial i.m.f. bailout program.

that is what is fueling some of the optimism in markets today. a government official has denied our report saying the merkel government will go forward with a plan agreed to by the i.m.f. , the e.u. and the e.c.b. the german bond president of the bond bank said they can only expect help if they accept conditions. we're back to the conditionality of it all. he also said that the risk of greece insolvency is rising by the day. we also heard going into the meetings in brussels. he said no one wants greece to leave the euro. that was his comment. we have a lot of -- everyone really, really promising to work harder but nothing firm. francine: let's ask. what exactly do we know happened in the meeting and how are creditors feeling about this? >> they -- both sides described

last night's talks as constructive. merkel when she was going back to the summit, said they were very intense. intense seems to be the word of the day for these things. because now they have agreed that they have to work with greater intensity, higher intensity in order to get this deal done. today, the greek prime minister tsipras is going to be meeting with european commission president juncker. they met last week and then tsipras went and spoke to the greek parliament. there was acrimony about how he described the talks. juncker wasn't quite satisfied. but they have agreed to meet again today on the sideline s of this summit. we're going to be looking at that. at the same time the technical talks will be getting underway. that is the real nitty-gritty details that need to be ironed out between the two positions. there were proposals back and

forth between brussels and athens and we still have to get them to come together. r- francine: hans, are we going to hear from the german side a little bit more? you talked us through with their thinking the sources we have spoken to, what they have been saying. is there anything coming up concretely over the next 24 hours? hans: it doesn't seem obvious that there is a chance for the germans and all of the creditors to get together. there is this tsipras-juncker meeting to see if mr. tsipras can bring juncker back into the fold. the last 72 hours things seemed to deteriorate between mr. juncker and mr. tsipras. we also haven't heard from the i.m.f. and we haven't heard from the euro group. a lot of this optimism now seems to be fueled by the fact that political leaders are engaged. we vice president heard anything concrete from the i.m.f. and the head over the euro group.

all of these european countries that would potentially need to put something through their parliaments to get any sort of aid relief whether that is partate aid or full aid, that is still a big step going forward. it seems like there are a lot more road blocks and we don't have that much concrete from the leaders negotiating in brussels. francine? francine: thanks. up next, the bank of korea cuts its key interest rate and warns of the threat of mers. we'll have that update after the break. ♪

francine: welcome back to "the pulse" live on bloomberg radio and tv streaming on your tablet and phone and bloomberg.com. now to the u.s. where former president bill clinton has been speaking to bloomberg. his clinton global foundation is meeting in colorado this weekend. we sat down with clinton at the event. here are the highlights. >> thank you. >> we know that you have something like 200,000-plus sponsors that have supported c.g.i. since 2001. some have begun to reassess their sponsorship. is this because of the funding controversy? >> well, i think they ought to be involved in politics. they don't think we were ever political.

there are people who just don't like bad press and you can't be involved in modern american politics without somebody attacking you. if you think all that matter is politics and everybody is running all the time -- you dope always know what they are going to do, then you should reengineer yourself from and imagine what is it going to be like on this day and we should walk around on tippy toes and not worry about the mission and i think that is an error. >> your wife is running for president. what happens if she does in fact win the election and enters the white house. what happens to the foundation's work? what happens to you at the foundation? [laughter] >> i don't know. i'll be -- you know, almost grown by then. [laughter] i'll give you my serious answer is this. i believe if you have been president -- and the current

president of either party asks you to do anything if in good conscious, you can do it you should do it. that is the truth. quite apart from our being husband and wife. that will be not an easy decision should she be elected president. i mean, she will have to decide what is my best use? i think the foundation will be just fine. but i am determined to stay at it for as long as i can to make sure we're in the best possible shape. >> our bloomberg politics poll just a few weeks ago found that if hillary clinton were to be elected to the white house, that 83% of those voters polled said it was mostly good for her to turn to you as a chief advisor. >> well, that is nice. [laughter] i appreciate that. >> where could you be most valuable to her as president of

the united states? >> if there is one thing she knows more about than anybody on earth, it is on what subjects i should be listened to. [laughter] and what subjects i shouldn't. [applause] francine: bill clinton. the bank of korea has cut its interest rate and warned that the spread of mers is a threat to consumption. the virus has killed 14 people and closed more than 2,000 schools across south korea. let's get more from mark barton. why did they cut interest rates today? mark: the central bank governor said that the rate cut was a preemptive move designed to reduce the economic fallout of mers. the central bank cut its key

interest rate, the seven-day repurchase rate to a record low of 1.4%. the fourth rate cut since august of last year. they warned the spread of mers poses an imminent threat to consumption which was showing some signs of recovery. the mers outbreak so far has killed nine south koreans and put more than 9,000 in quarantine. this is an economy, francine that is also under pressure from exports. don't forget it is the second straight year that policy make verse had to confront a blow to confidence and spending as well from an unexpected quarter after that ferry sinking disaster in 2014. mers, the central bank says is the biggest variable to korea's economic outlook. i looked at the impact on the currency market. we have about nine 10

currencies rising against the south korean won. all the others are actually falling. that is the reaction. francine: thank you. up next we hear from the mayor of paris about how the french capital is returning to normalcy after the attacks. ♪

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now it's easier than ever to manage your account. get started at xfinity.com/myaccount francine: welcome back. i am francine lacqua. these are the top headlines. bank of england governor mark carney ordered the finance and the -- finance industry to enforce rules on the market. that came during his speech in london last night. the same event the u.k. chancellor will start returning rpms to private ownership even if it is a loss to british

taxpayers. a meeting between the leaders of greece, germany, and france. no deal was done. angela merkel's government may endorse a rescue payment in return for one reform. that is according to two people familiar with germany's position. the spread of mers risks derailing an economic recovery. it has killed 14 people in the country and closed 2000 schools. mark, looking forward to u.s. retail sales figures. mark: we are. last month showed a flat number. expect improvement of 1.2%. that causes concern. it shows the low in spending continued into the second quarter.

if we get this increase, it will be the biggest increase in more than a year. that figure will be dominated by auto sales. it is best to look at retail sales excluding autos which will show an increase of .8%. that will give greater clarity towards overall spending. consumers have been using this windfall from the decline in oil prices to boost savings. wages have been slow to pick up. that is evidenced by the latest nonfarm payroll report. borrowing costs should underpin household spending. accounts are about 70% of the economy. a strong figure should confirm expectations of the economy awaking from its first slumber. it should add to expectations that the fed will start the

process of normalizing monetary policy. expectations are set to raise rates twice this year. that is according to an economist we have surveyed here. if the said does raise rates this year it will go against the advice of the imf and the world bank. yesterday, the world bank joined the imf in urging the fed not to raise rates until next year, fighting uneven recovery. it does seem as if the fed will continue on its past to normalize policy. today's retail sales number should confirm that trend. francine: thank you. the mayor of paris says the capital is returning to normality following the terror

attacks in january. >> after the attacks, there was a significant decrease in tourist attendance. many people were afraid of traveling. i think it is over. hotels are fully booked. we have many great events going on now. activity is back. we needed to be cautious. among others, the negative image that these terrorists attacks gave of paris abroad. i went to washington after the attacks, being invited and i had interviews with the american media. they asked if one could come safely to paris. is the paris-jewish community protected? i wanted to explain real life in paris.

yes, there were attacks. there is a terrorist threat. this thread is everywhere. not only in paris. it hit other cities. i am thinking of copenhagen or tunis. paris is a safe city for visitors and the jewish community is protected. the french president chose to use significant means for this protection sense the army came to paris to protect a certain number of places. i was afraid of the image this military presence would give of a city that should live without it. then again, parisians were creative because they accepted this presence, but they also supported it.

it allowed everyone to go back faster to normal life. to have a normal city, a normal economic activity again. today, activity is in full swing. we are getting ready to host a conference on climate change at the end of the year. many heads of state, business leaders, and mayors will be present. this shows the dynamics of our city. activity is fully back to normal. francine: that is the mayor of paris. vladimir putin met with pope francis yesterday after putin kept him waiting for over an hour. once the meeting began, a got off to a chilly start.

we were anticipating it to go smoothly. what did the pope tell putin about ukraine? hans: it is common for people in the kremlin to wait to see the president. it is uncommon for the pope to have to wait to see his guest. the russian president sees himself as a guardian of conservative values. he wanted to talk about christians in the middle east the threat of islamic state, and ukraine. that is what the pope wanted to talk about. the pope told him that he must demonstrate a sincere desire to have peace in ukraine. a bit of a dig at him. as he was leaving, he gave him a medallion that represents the

angel of peace, which defeats all wars. a message he thinks that the russian president is erring on what is going on in ukraine. it was his second meeting with the pope. maybe not the best er stunt. francine: maybe something will come out of it. hans: if you want to change the situation in ukraine, there are only a couple of individuals that can do that. we do not know other than what we got from the statement from the pope's spokesman, what was said in the room. apparently putin finds him to be a profound man and it was a deep meeting. francine: we have had a lot of fluctuation on bonds. hans: even as the conflict

continues to simmer, the bigger story now is the threat of an economic meltdown in ukraine. we saw that with bond prices yesterday. ukraine has about 500 million dollars worth of bonds due in september. it fell about three cents the first of about $19 billion cell, to. the imf said it is effectively not necessary for ukraine to come to a deal with its creditors before the imf disperses its next tranche. that was a signal to the creditors and everyone that may be ukraine will make good on its threat of imposing a moratorium on coupon payments. this is something that they have held out on.

there is no deal and there are:28 coupon payments due. francine: we are getting breaking news's saying russia is not trying to rebuild the soviet union. this is a lot of what the foreign commentators or telling about putin. are they trying to reform a massive empire and is that which -- is that what we should be worried about? ryan: that is the common president obama made about president putin, he was trying to re-create the soviet empire. until he gave that up, there would not be peace in ukraine. now you hear the russian prime minister saying that is not what we are trying to do. francine: we will take a look

inside bmw's new seven -- new seven series sedan. ♪

francine: welcome back. let's talk china. the output gained momentum last month from what seems to be stabilization from the second-largest economy.

our guest has so much news on china. we had the overshooting of lots of the stock market and we have this output. is china on the right path? >> financial reform is they keep policy agenda for the government. this move towards msci can act as an external commitment device, which can push and accelerate capital markets. china joining the wto, the world bank, all act as an external requirement to push through certain criteria.

the move is positive for the chinese government. francine: we have known this is a huge adjustment period for china. you think this will come quicker? >> for the chinese, it has been delayed. it is the western view that a lot of resistance to reforms is going to accelerate, but it is on track. it could happen faster than what the western market expects. francine: we have hints of this maybe some of the companies going bankrupt. we have thought that may be a way of the government letting off steam and warning some of their companies. >> these go hand in hand.

globalization has to go simultaneously with liberalization. there is not one reform that precedes the other. they are taking baby steps. including getting to the msci's. it requires more openness. it is a baby step. the most unexpected will be the exchange rate liberalization that will happen within a year to two years. francine: what does that mean for our view of china? keyu: the government is better able to handle volatility. in the past, they tried to suppress business cycles. you see the smoothed out version of a market oriented economy. they are less concerned about that. they are concerned with the banking system being able to handle the volatility. the potential for volatile

capital flows with exchange rates. we are seeing a government more confident and tolerant for business cycles. francine: it is difficult to say china is not in a bubble. should we be concerned the bubble is about to burst? keyu: one thing is clear. and it's not going to be the government that will interfere with the stock market to suppress a rising bubble or two tried to -- a market. investment opportunities are very limited in china. there is this speculative motive

behind us. there is a new generation of investors, my generation, just coming into this market. they are not wealthy enough to invest in housing or property. they put their savings into the stock market. there is a new demand for assets. they are wildly optimistic. you do not invest in the stock market, you play the stock market. there is a reason to be concerned. there is room for optimism for housing and equity markets. francine: do we need a correction sooner rather than later? this is one of the only things that people of a certain generation with income but not super rich there is a danger this will go on and on until it

is no longer tenable. keyu: that is the main sentiment for the chinese government. they are not going to activate into fear, which is different than the past. francine: other things we have heard, the prime minister was in. most saying we are going to -- was in. davos. keyu: transition towards more consumption and expanding services. this is where the jobs are being created. 80% of employment is created by the services. it is only 35% in china. the transition will unleash efficiency gains in the long run, including employment opportunities boost consumption

capability. it is a short-term effect we have to reckons while. it does not mean there is no room for growth. we have misallocation of resources, especially in the capital markets. financial reform, if that goes through, that will unleash a wave of growth potential. francine: coming up, bmw unveils its seven series sedan. will he give it an adage in the luxury car market? -- will it give an edge in the luxury car market? ♪

francine: welcome back. here are the top headlines. the reserve bank of new zealand has lowered interest rate for the first time in four rate -- in four years. growth slows. the industrial production gained momentum in may. output rose. retail sales in line with the previous month. data suggests stabilization in the second-largest economy. u.k. house prices growth accelerated.

prices were driven by the continuing pressure on supply that many state agents predicted might be alleviated after david cameron's conservatives won in the right victory. bmw stepping up its game. they debuted its new seven series yesterday. the sedan comes equipped with top of the line technology. speaking to bloomberg earlier this morning, bmw's head of sales was a lot of praise. >> -- was full of praise. >> it is the car that is driven by opinion leaders and the movers and shakers. this is a proud moment for us. francine: chris joins us from glenwood the latest. what do we know about the seven

series? chris: it is where they packed their new technology and gizmos. one of the coolest things in the car is hand gesture recognition. you can control certain functions within the car by waving your hand over the center console. you do not have to look for a button or press the touchscreen. it has remote controlled parking. you can get out of the car and control the car and park it via a touchpad key. it is an effort by bmw to establish itself or reestablish itself as a technology leader within the auto industry. they have been put under pressure by mercedes and audi. francine: how innovative is

this? what does it mean for bmw? i think we may have lost chris from berlin. we will have more on that. it has pretty cool features. if you do not want to take a phone call you do something like this. if you are italian, that is going to cause a problem because you are constantly talking with your hands. at 10:00, we will be talking greece. we have unemployment figures. they had been bad for a long time. we will see what it means for creditors. we understand angela merkel is ready to concessions as long as they have one reform. we will talk about demand ahead

of summer, the euro, and what it means for travel demand. you can follow me on twitter space@flacqua --@flacqua. ♪

francine: mark carney warns city bankers will be held accountable. >> for those who free ride on your reputation, the age of your responsibility is over. talks between greece, germany and of france failed to reduce a deal. south korea cuts interest rates to a record low. mers poses a threat to the economy.

welcome back. this is "the pulse." breaking news out of nestle. this is related to an ongoing saga with a noodle company. nestle is saying the noodles are only told by third parties. the u.s. fda has taken samples of maggi noodles to test. nestle is saying it does not import or market maggi noodles in the united states but they are under investigation because a third party sells them in the united aids. they were taken out of the market in india because they found something that should not have been in it and that was bad

for us to consume. one of our top stories, george osborne will start returning the royal bank of scotland to private ownership even though it may cause a lost to british taxpayers. he made his speech last night. >> we will begin to sell our state and rbs. it is the right thing to do. we will get the best possible price. the longer we wait, the higher the price for the whole economy. francine: before hsbc said it would decide to remove it headquarters from london, he spoke about his sire to keep u.k. banks attractive. >> i wanted to be the best place for global bank headquarters using our national interest to be so.

with the combination of a highly competitive economy, new infrastructure, a good quality of life, and the application of the rule of law we can achieve that. francine: mark carney ordered friday and to industry to observe new rules of market conduct and threatened tougher regime if traders and bankers failed to comply. >> for those who free ride on your reputation, the age of your response ability is over. francine: let's digest that with richard jones and neil mackinnon. carney's's beach was not what we had last year. this was focused on banks and the financial system. what did we learn? richard: it is a sign that the bank will be focused on its regulatory role.

a lot of people in the analyst community were thinking we would get a message on interest rates from mr. carney last night. he did not mention them at all. it is a sign the bank of england is still comfortable as it was last month when it released the quarterly inflation of work that the interest rates will allow them to meet their inflation targets. francine: we also heard about the referendum. if you look at what you are most concerned about, they have to find this system of dealing with the financials they have to be sure they are attractive and they have this huge referendum problem. neil: that is a good question. there is an argument that the referendum could create some uncertainty for international

companies. we have seen elements of uncertainty with the scottish referendum and in the recent selection. that can have an aversion on the real economy. in regards to the banks, it is interesting. it was not so much anything to do with the eu or any you referendum. it had to do with a bank levy and the relative attractiveness of being located in london where they would face higher taxes, or in hong kong because of the nature of the balance sheet lower taxes. i think that is what it boils down to. the chancellor is correct and trying to make the city attractive for financial institutions. a lot of people in the industry would say the level of regulation and compliance has reached such a degree it is becoming an adverse factor for

the industry. it is achieving the right balance. i think he is right to set minimum standards. the city has been badly tarnished by a number of scandals. thanks face tremendous litigation and fines for all kinds of that behavior. clearly that is a factor. i think he is right to highlight that in his speech and hopefully will be enforced as well. for long-term points of view, a lot of these scandals we see has tarnished the banking industry. francine: is that right? are we overregulated? is that what came out last night? the government saying there is -- we can still afford to have some risk. how are bankers taking it? richard: there is a fine line

between trying to curve the excesses and breaches we have seen in the past while keeping london as a reasonable place to do business. they're are trying to find the balance. it will be a process that unwinds over the coming weeks and months. it is a challenge for the government. francine: would it be disastrous for london is hsbc left? >> i do not think it will be disastrous. many might see it as a potential warning shot because of the cost of bank levies of regulations. that is probably something for hsbc to decide what is in their best interest. for the city, it is important to keep competitiveness. the city has been an international center of financial is this rather than the year and. i think the way the global

economy is developing in terms of trade and investment, we should not be focused just on the eu. growth is happening on the outside of the eu. my own personal point of view the referendum should be held earlier rather than later as a way of resolving any long-lasting uncertainties, not a bad idea. a referendum is important for the british electorate. i am the camp that believes being part of the eu is not necessarily in the political any comic interest. many hold that point of view. it is controversial and contentious. the cost and benefits can be put one way or the other. looking forward to the

referendum issue, and is going to be a key factor and how that plays out. if they stick with the status quo, we will have to wait and see. francine: thank you. we will talk about that next. that brings us to today's twitter question. you can tweet me. @flacqua. respiratory syndrome poses a threat to consumption. mers has closed more than 2000 schools. let's get more with mark. mark says the south korean central bank tried to preempt falling consumption linked to mers. >> it was said to lessen the impact of mars. they created a cutting rate to a

record low of 1.5%. the rate cut was a preemptive move. it weren't -- it warned the spread of murders -- of mers -- it has put more than 9000 in quarantine. this is an economy under pressure from a slump in exports. it is the second straight year policy makers have had to deal with some sort of low to confidence from an unexpected source. you will remember the ferry sinking disaster in 2014. morgan stanley economists have come up with a survey saying it comes at a bad time. confidence is not strong enough

to sustain an economic recovery. negative media coverage can take a toll on consumer sentiment. mers is the biggest variable to the economic outlook according to the governor today. other risks cited by the bank and politicians include the timing of a rate hike and exports form, and the harm caused by the strength of the currency. little move in the markets today. the stock index finished up by about a quarter of 1%. the dollar rose against the

south korean. the currencies i was talking about, which the governor wants to rise against hasn't falling today against the euro and the japanese yen. -- has been falling again today against the euro and the japanese yen. it is a preemptive move ahead of this mers outbreak. francine: up next, we will get more on greece. we will discuss the next. ♪

francine: welcome to "the pulse." a late night of talks between tsipras merkel, and hollande ended this morning. there are signs the germans might the willing to accept concessions to reach a deal. hans, let's kick it off with you. hans: angela merkel told mr. tsipras she wants to see his good intentions backed up by policy actions. they want to see concrete results.

all sides agreed. they were constructive. everyone has agreed to intensify their talks. the german government position may be to offer some step incentive to the greek side. that is a relief of some bailout money. if greece makes one step towards implementing one of the reforms. the german government has denied this report. they say germany will only support a proposal backed by the ecb, imf, and european union. it did give confidence to the markets. there is a little negativity. pyramid skivvies he says -- pierre is talking about how greece needs to complete

their program and then they can get new funds. it seems like the leaders are working towards something. they're working towards an agreement, even though everyone acknowledges more technical work needs to be done. francine: what exactly happened at the meeting? how much do we know? >> both sides said it was constructive. not a lot was accomplished. there was not a lot of progress. there were good feelings on both sides. the leaders of greece, germany and france getting together at the highest level to push negotiations forward. we have the details that need to be worked out, but they are trying to make sure at the leader level, the discussion is one of camaraderie, that they are together in this.

president yunker will meet with prime minister tsipras. they are meeting again this morning. that will push things further ahead. it is up to the negotiators to make sure the details are worked out. francine: thank you. we are back with global macro strategist at pk capital. neil, we want to talk about greece. are the two linked? do people in this country look at europe and say the whole thing is such a mess that there is a bigger chance of the referendum being voted towards getting out of the eu? neil: that is a fair point. there is no doubt the greek

situation is something that is on everyone's radar screen. whether we get an extended deal that delays the day of reckoning for the greeks looks likely. the markets are hopeful there can be a last-minute deal. most people agree that greece cannot repay its debts. they face a cash crunch that could result in a debt default. there has to be a restructuring of the debt. 180% of gdp is not sustainable. what that would mean for the u referendum arguments undoubtedly, if there is a greek default, people would look beyond that and say it is not a local issue. we knew the greeks cannot pay. as has nothing to do with us. i think if greece left the

monetary union, it puts a question mark over the longer-term viability of monetary union and whether it is nothing more than a fixed exchange rate system that can break down. inevitably who is next? could it be portugal, italy spain, france? with the u.k. referendum on the timeline inevitably people will talk about -- francine: you say you are not for negotiating. you save his country would be better off outside the european union. why? neil: you would have to give me one good reason why anyone would

want to sign up to a system which has generated double-digit unemployment an absence of economic growth -- richard:francine: germany do it -- germany is doing well. neil: they have been a beneficiary of monetary union. other countries have paid the price. you have to give me a good reason why anyone in their right mind would sign up for a system that has generated unemployment no economic growth. francine: it is not the system that generates unemployment. neil: i disagree. i believe it is the design system of monetary union. francine: you are not in the

monetary union. neil: thankfully. that has allowed the u.k. to be the fastest growing economy in the g7. francine: would you not feel uncomfortable -- neil: no. francine: you do not know my question. would you be uncomfortable outside the decision-making process? neil: no. the other issue is fundamentally undemocratic. people in brussels and frankfurt do not stand for elections. they are unaccountable. if you believe in democracy, that is an not acceptable arrangement. francine: that is a fair point. a lot of people in brussels feel the same. i have to get you back on to continue the conversation. up next, testing the patience of the pope.

how vladimir putin did not get out to a good start with the leader. ♪

francine: vladimir putin met with pope francis yesterday only after putin kept the pontiff waiting for over an hour. the meeting got off to a chilly start. ryan, this was -- the pope was

tough on vladimir putin. ryan: it is common for people to wait for a meeting with vladimir putin. it is not common for the pope to wait. it is a rarity in the vatican. the russian president wanted to talk about the plight of christians in the middle east. this is an issue with the advance of the you -- of the islamic state. he also wanted to talk about ukraine. the pope saying he hopes the russian president will make a sincere effort at peace. he gave him a medallion that represents the angel of peace. francine: thank you. breaking news out of russia. russia saying the u.s. -- threatens the treaty.

we will get more from ryan shortly. up next, we hear how the french capital is returning to normality. ♪

♪ francine: welcome back to the pulse. we have live pictures coming in from turkey with the president. this is the first time we have seen him a 92 hours. this is his first major speech. we understand the president will say he wants a government formed as soon as possible. we have not seen the cover -- the president since those elections in turkey over the weekend and we are expecting him to talk about how is going to

trying to form a government, and we will see if the parties agree amongst themselves how and what kind of coalition they won't. we understand the president also see he will not be an obstacle. it is the first time we have seen the turkish president since that election over the weekend and we will keep you updated. here are bloomberg's other top headlines. the bank of england has ordered them to -- and has threatened a tougher regime. that came during his house speech in the city of london last night. the u.k. chancellor george osborne says he will start returning obs even if it is at a loss to british taxpayers. a meeting between leaders of greece, germany, and france went into the early hours of the morning. angela merkel's government may

be prepared to endorse a rescue payment in return for just one reform. that is according to two people familiar with germany's position. the bank of korea has cut its key interest rate. the outbreak has killed 14 people in the country and closed 2000 schools. it is 10:30 u.k. time. let's check in on the markets. jonathan: coming off a six-day losing streak, stocks gain yesterday and were pushing higher today. right here on the ftse 100 in monday, we are up about one third of 1%. typically in the last -- it was at its highest it's one and half years ago. the bond market, as the xp market turned around the bond market has not. every single day german bonds

have been rising. those securities in italy and spain have declined. we spent a lot of time talking about funds -- bunds and its basis point rebound. it looks like we are staying there for the time being. no sign of a rebound in the bond market here it in the fx market, you have to take it right from europe go really far down south to the southern hemisphere in new zealand. the reserve bank in new zealand ripping the floor away. they dropped over 2% in today's session against the dollar, one of the biggest losses this year. for a loss that big, you have to go back to 2011. the reserve bank in new zealand cutting its rates in the first time in three years. really taking some pain in the

fx market. francine: jonathan, thank you so much. in about 25 minutes from now, "surveillance" with tom keene. tom: retail sales is arguably the key economic indicator. michael mckee suggests retail sales will be a good litmus paper for a better american gdp. bft on the front page showed developed economies doing better and some of the emerging market economy starting to struggle. i agree with jon ferro that the royal bank of new zealand announcement is shocking profound, it will have ramifications all the way to the fed in washington. francine: tom, thank you so much. it will every percussions around the world and i know that is one of your focus is on the show. the mayor of paris says the

french capital is finally returning to normality following day terror attacks in january. he spoke to our matt winkler. right after the attacks, there was quite a significant decrease in taurus attendance because true, many people were a trail -- afraid of traveling but at the same time i think it is over. hotels are fully booked. many great events going on right now. activities back. but we needed to be cautious among others, on the negative image that these terrorist attacks gave of paris abroad. i went to washington right after the attacks, being invited by the white house and i had interviewed with the american media, and they asked whether one could come safely to paris should we be afraid, is the paris jewish immunity protected? i wanted to explain what real

life in paris was. yes, there was a tax and yes, there is a terrorist threat, but this threat is everywhere, not only in paris. it hit other cities. i am thinking of copenhagen or tunis but yes, paris is a safe city for visitors and the jewish community is protected. the french president chose to use significant gains for this protection -- means for this protection since the first time the army came to paris to protect a certain number of kate -- places. i was also afraid of the image the military presence would give for a city that should live without it but then again parisians were extremely created because they accepted this military presence but they also supported it.

i think it allowed everyone to go back much faster to normal life, to have a normal city and normal economic activity again. today, activity is in full swing and we are getting ready to host the conference on climate change at the end of the year. many heads of state, business leaders, and mayors will be present, and i think this all shows the dynamics of our city where activity is fully back to normal. we can see more of that interview on bloomberg.com/europe. coming up, we talked to the marriott hotel chain's european president about its plans to

triple its presence in europe. ♪

♪ francine: welcome back to the pulse live from london on bloomberg tv. the hotel chain marriott is planning to triple its presence in europe by 2020.

we are joined by marriott international's president in a bloomberg exclusive. amy: thank you. francine: we do not have much good news. there is more upswing in terms of shy growth. amy: we have had the best start to the year that we have had 2008. a fantastic start to the year and it is the great thing about europe when some markets are still distressed like your like russia. francine: domestic bookings, -- amy: europeans as well as americans coming over for the summer. francine: you think it is a foreign exchange story? amy: it definitely helps. if you are getting a much less

expensive trip to barcelona of course you will take advantage of it. the currency exchange clearly helps. francine: you want to go big in europe, improve the number of offerings. amy: yes. francine: is it on the beach side, metropolises, how do we travel nowadays? amy: people want to blend work and play particularly millenial travelers so they want to get the local experiences and they do not want to come in, doing meeting, and get out, so they are traveling for all different purposes. we provide products and brands. for the gen x traveler, you have affordable style and much more localized food and beverage operating and cool buzz in the op -- in the lobby. francine: the amount you are going to offer is quite spectacular.

amy: friday was the 40th anniversary of our forced hotel in your -- our first hotel in europe. we had 40,000 rooms in europe and seven brands. it was met with skepticism and over the last five years we have tried to open another 35,000 rooms so we did what we did in 40 years, in five years. when we announced recently that we are going to grow to 150,000 open rooms by 2020, people felt more confident about it because we have launched five new brands in five years that are great platforms for growth. francine: how much market growth do want in six years? amy: we think we could get up to mid single digits and i think with the growth that we have now, 40% of our pipeline is in east so the russian cas countries will continue to play a strong role but our new brands

will as well. the ac hotels in spain, a great geographic place for us because we were nowhere in spain. francine: so the more kind of boutique fashionable hotels? amy: four out of five that we have launched our in a lifestyles days. -- a lifestyle space. we think that relates to the european traveler so if you look at brands that we have launched like addition, like the autograph collection were you take these iconic teco tells, plug them into our marriott rewards system, it is a great play for people and it is a completely different product offering them what a typical marriott brand's customer is used to. francine: how concerned are you about airbnb question mark --

airbnb? is this going to be a big disruption? it increases the number of travelers. amy: we think there is room in the space. we have historical highs in occupancy as i said. we have had the strongest start to the year since 2008. it is a big offering. we are a large chain, governed by safety regulations and local regulations so it is a different offering. francine: what is your biggest challenge? is it finding the best spot or not overpaying for retail #do you have to buy property? amy: both moxie and autograph are 100% franchised. so growth in those brands will go a little more towards franchising but the geopolitical challenges and economic challenges in europe continued to be out there, and we are always watching those. francine: you have exposure to

russia? amy: yes. francine: how do you do it now? wait until the situation gets better, until sanctions are lifted, or du actually pull out slowly? amy: we are doing a lot better in russia this year than we expected. outbound travel has clearly been affected into other european destinations as well as around the world. russians are staying at home so hour shift to domestic business is 60%. in markets like moscow and st. petersburg that are more international, that more u.s. demand is down into those markets but markets outside of that are 80% to 90% russian travelers. francine: does it actually make up for it? amy: it does not completely make up for it here it we are down in russia but it is half of what we expected it to be down this year.

francine: doesn't make a difference if the sanctions continue like we are expecting them to question mark amy: sure. we hired through cycles all the time. we have been through oil cycles. we understand that and we watch it very closely. we look at patterns of past cycles and predict, what is demand likely to be and how long will it be before it comes back? we want to be really quick on getting the right demand and driving the right business so we will watch it. francine: thank you so much for coming on. amy mcpherson president and managing director of marriott in europe. the reserve bank of new zealand has lowered rates for the first time in four years. it was cut to 2.25%. one more raid cut -- when a rate cut by 2020.

output rose 6.1% compared to your earlier. retail sales were in line with the previous month. the u.k. house price growth accelerated for a fourth month in may, and the shortage of properties for sale reached its worst level in approximately four decades. prices were driven by the continued pressure on supply that many state efforts believe might have been -- now to the u.s. where former president bill clinton has been speaking to bloomberg. he is meeting in colorado this week but we sat down with clinton at the event for a wide-ranging interview. here are the highlights. >> thank you. francine: we know that you have something like 200,000 plus

sponsors. a few of them have begun to reassess their sponsorship of the clinton global initiative. is this because of the funding controversy? >> there are people who just do not like that press and you cannot be involved in modern american politics without somebody attacking you. if you think all that matters is politics and everyone is running all the time but always know what they will do, you should reengineer yourself and imagine what you will be like on this day. we should walk around on to be toes from now until then and not worry about the mission, and i think that is an error. betty: your wife is running for president. what happens if she enters the white house question mark what happens to the foundation's

work? >> i will be almost grown by then. i will give you my serious answer, is this. i believe if she had been president and the current president of either party asks you to do anything, if in good conscious you can do it you should do it. that is the truth, quite apart from our being husband and wife. that will be not an easy decision, should she be elected for president. she will have to decide what is the best use so i think the foundation will be just fine but i am determined to stay at it for as long as i can to make sure we are in the best possible shape. betty: our bloomberg politics poll just a few weeks ago found that if hillary clinton were to

be elected to the white house, that 83% of the voters polled said it was mostly good for her to turn to you as the chief advisor. >> that is nice. i appreciate that. betty: where could you be most valuable to her as president of the united states? >> if there is one thing she knows more about that anybody on earth on what subject i should be listening to and what subject i should not. francine: bill clinton. coming up we will take a look at what we are watching for the rest of the day, and the retail sales from a that are on our radar. ♪

♪ francine: welcome back to the pulse. streaming on the ipad and bloomberg.com. within the last few minutes we have been getting headlines from the greek finance minister. hans nichols joins us from berlin. we going to get a deal or not? hans: he is saying that the greek people want a deal, they want to stay in the eurozone. but he is also saying the greece has not agreed to a 1% primary

budget surplus so that compares to be a problem. he seems to say that these primary surplus or deficit account numbers is the crucial part of the investigations. if they can agree to an agreement on that number and everything else on the technical side can potentially fall into place all the numbers add up so there will be a great deal of emphasis and focus in conversation on just what this number is. the old bailout package for 2015 had him at 3% at 3% of a primary budget surplus this quarter. i believe one of the initial packages or initial proposals that in february was 1.2%. even now it seems like varoufakis is climbing down. that said, the economy is deteriorating and it is harder to reach those numbers we do not have the revenue streaming in. francine: we are watching grease

for the rest of the day. when other thing we are watching his retail sales out of the u.s.. mark barton will be all over those. mark: that matters because april's figure was zero, which meant that the slump we saw in third-quarter gdp had ended for the second quarter. the spending habits had not hit up in the second quarter so an expected increase of 1.2%. if you strip out autos, we should get an increase of .8%. it suggested that americans remain reluctant to splurge at the start of the second quarter. they are saving the money from the reduction in gasoline prices rather than spending it but it is important. consumer spending accounts for -- we should see a bit of a pickup today. francine: stay tuned for "the

surveillance" team. i am on twitter. we can talk banks on twitter, a little bit of greece, and turkey. ♪

tom: the respected royal bank of new zealand.

they stunned. they cut rates for the first time in four years. the future of american banking. thousands of jobs will be shed. vladimir putin keeps pope francis waiting. good morning. this is "bloomberg surveillance." brendan, i love how you bring up iceland is the opposite of greece. brendan: iceland exited capital controls. they did everything you are not supposed to do after the crash. put people in jail, impose capital control, told its creditors to jump in a lake. it has been able to exit crisis mode sooner than greece. tom: they restructured. how shocking.