guy: fading fast. optimism over a greek deal is in short supply as european finance ministers prepare to meet in luxembourg. angela merkel is accusing the greek government of dragging its feet on reforms. hike ahead? the u.s. says the economy is on track to raise interest rates this year. sanctions and low oil prices push russia towards recession.

good morning. welcome to "the pulse." we're live from bloomberg's european headquarters. we're in london. i'm guy johnson. within the last hour, angela merkel said an agreement with greece is still possible. her words come as european finance ministers prepare to meet in luxembourg for more talks. hans nichols is in luxembourg. you were listening to what angela merkel had to say in berlin. did she sound optimistic? hans: well, not when you listen to what she didn't have to say guy. many of the things she said, talking about where there is a will, there is a way, europe. that is common currency for merkel from peeg speaking about the situation there. what she didn't say is she was going to offer a new program. that she was somehow going to change any of her views. she focused quite a bit on the

fact that greece agreed no these reforms with the february 20 agreement. her frustration seemed to be almost with the tsipras government almost as much as with the arguments that they didn't agree to it. we heard from thomas offerman. he said that greek -- germany would not be blackmailed by greece. look no further to what the opposition just said. these are the people that could potentially be a little more sympathetic towards less austerity for greece. they are saying the german public won't -- to that blackmail. it would be very difficult for her to get more money and a new bailout package for greece. guy? guy: let's talk about what they are going to get in greece. my understanding is they will talk about greece. of course they have to talk about greece.

those conversations could be well, limited. hans: they will be limited. they will be short, guy, but they could be clarifying. the short rns is what everyone is expecting here adds to the pessimism that nothing serious is going to get done here. you may get pressure on varoufakis. he will be coming now. it is very clear to his prime minister they don't plan on offering any new proposals. we also have mr. varoufakis had a conversation. there was a conversation with mr. juncker last night. the important thing about today, though, is a status check. what will other finance ministers be saying and what will they be doing preparing for the day after? we heard that this morning. the french foreign minister talking about who they would go to very end and it would be a fight to the death to struggle

to keep greece in eurozone. the contagion might not be as bad as expected. maybe the fact that -- guy, if the more and more we hear tra from finance ministers starting to prive in luxembourg, the more likely it is that there will be a greek exit. these finance ministers trying to repair the market. no one hopes that it won't be that bad. guy? guy: hans, thank you very much indeed. plenty more coverage coming up from luxembourg from hans nichols. now we go to norway. we are now at 1%. there is talk that we could see further cuts in the autumn quotes. this is oil prices after having a significant grag drag on the norwegian economy and pushing it

towards inflation. we have seen quite a significant reduction in investment in the oil sector. investments down 5% to 10%. this is an economy that is pretty dependent on the oil story. as anticipated, i think it was 16 out of 17, the economists that we surveyed anticipated that we would see this cut. it has now happened. we'll bring you the market reaction in a few minutes' time. let's talk about the fed now. it has signaled that the pickup in the u.s. economy that we're beginning to see regaining traction may mean it raises interest rates later this year. the fed chair, janet yellen said increases may be more gradual than preeversly anticipated. you -- previously anticipated. let's get bloomberg's chief washington correspondent peter cook's take on this.

>> after its latest two-day policy meeting here in washington, the federal reserve moved another big step closer to its first interest rate increase since 2006. but the exact timing remains very much in play. yellen said progress has been made toward raising rates. inflation has moved back toward its 2% target. >> no decision has been made by the committee about the right time for an increase. it will depend on unfolding data in the months ahead. we could certainly see data that would justify that. >> the fed's latest economic projections reseal that 15-17 policy makers anticipate an increase this year. and two rate increases by the end of 2015. what matters, yellen said, is

that the fed plans to raise rates gradually and she responded on concerns at home and abroad. >> we can't promise that there will not be volatility when we make a decision to raise rates. what we can do is to do our very best to communicate clearly about our policy and our expectations to avoid any type of needless misunderstanding of our policy that could create volatility in the market. >> on other issues, yellen said a greek exit would have repercussions for the european economy and global markets and even though the united states has a limited exposure to greece, the spilloverfects would be felt in the united states. it is the domestic economy that remains the focus. as she as her colleagues move closer to liftoff. peter cook, bloomberg, washington. guy: peter cook talking about the fed.

there are two factors this morning purchasing one of what is happening with the fed and the other is what's happening with athens. to be honest, the greek story is dominating. let's take a look at the stoxx 600 and show you what is going on here. the 600 is down by around .50% this morning. the athens stock exchange is up but sharply down over the last few days. this is as you can see that is the athens market. over the last week, down by 17%. today just picking up a touch as you can see to the right hand side of that screen. in term turnovers norwegian decision, let me give you a quick heads up there. cutting rate business 25 basis points. that is the reaction. the norwegian kronor -- krona

dipping further. as you can see now, we're at 105. quite a significant depreciation in the norwegian economy leading to swiss, leading to the norwegians having to cut rates and the norwegian krona dipping further. we'll continue to monitor that story. it is very much related to what's happening with the oil price. let's see what else is on our radar this thursday morning. hong kong regulators have rejected the plan. the current system where the chief executive is chosen by a committee by the economic ltte rather than by the city's voters. business leaders are gathering in the russian city of st. petersburg for the annual economic forum there. the slump in the ole price has pushed the economy toward its first recession since 2009.

and the swiss national bank is getting deposit rates at a record low. is s.m.p. maintained its rate. it also reiterated a pledge to conduct currency interventions after it scrapped the -- five months ago that we all remember that. later today, mr. jonathan ferro will be sitting down with thomas jordan. looking forward to that conversation. stay with bloomberg for that interview up later. it is going to be fascinating to see what he has to say about greece. up next, as well, we're going to be talking about the greek side of things. we're going to go live to athens. we'll speak with a former greek finance and economy minister. nikos will be with us very, very

shortly. ♪

guy: good morning, everybody. welcome back. you're watching "the pulse." we're on live tv streaming on your phone, tablet. we're watching very much what's happening with greece. now the metal works on the

outskirts of athens is bracing for possible capital controls and an exit from the eurozone. we went to meet them. >> monday, we have the capital controls, it is going to be the most difficult situation that i have to face. i think that i have to -- that we have at the moment. which is a condition and to share it with my family. the family will be not only -- close people that we have but s there labor. i don't have one family. i'm the export manager. >> the banks at the moment try to help you to protect your money. for example, if you are going to buy some assets, financial assets for the e.c.b., we have -- we have

-- we have a small amount in dollars. now we have a proposals for some assets from luxembourg, but they are very safe. >> we will put all the money on the table. we have to discuss how we want to spend it in order to survive a difficult situation. we are fighters. when we have a difficult situation, we fight very hard. guy: interesting story. how do you manage it? how do you make it work? we'll have more from greece over the next few days. coming up fitbit goes public on the new york stock exchange. we'll talk about this company when we come back. ♪

>> i am not a heavy believer in global warming. there could be some changes being made but i believe it is not so much man made. i think you get a little bit warmer and a little bit cooler. it is called weather. guy: it is called weather. that was u.s. presidential hopeful donald trump who clearly is not courting the green vote. we thought that was definitely worth bringing to you. let's talk about something else that is worth bringing to you.

fitbit started training on the new york stock exchange today. let's get more on the story. we're joined by ruth david. strong response. they raised the price. people like it now. >> yes. absolutely. they are very surprised. there is the size over the offering and there has definitely been a lot of interest for it. they are very much in demand at the moment. you have got people from president obama to ryan reynolds, the who's who wearing their device. it is a good time for them to go to the market. guy: it is not often you talk about president obama and brittany spears at the same time. >> yes. guy: when you do go public, you don't want those pesky shareholders making life difficult for you.

>> absolutely. none of them would want that. we have covered this a bit. one of the points that we are making is they are in a good position now but their competitors are pretty big and strong. apple for instance introduced the wapple watch which does pretty much what fitbit does. its highest range device is about $100 lower than apple's lowest range device. they still have the price ditch rble. if they don't stay ahead on r & d and oin vegas, they could have problems. guy: blackberry had everybody's attention for so long. it is worth looking at on the website. for the need to invest in r & d to make sure they stay ahead of the curve. >> they do. they already have lawsuits from rivals, right? jawbone is accusing them of everything. trade secrets.

stealing employees. all of that could blow up in their face. right now it is a good time. guy: investors like it right now. >> yes. the u.s. market has not been that act i ever compared to the rest of the world. europe has been very act think of year. guy: for i.p.o.s. >> combrefment in fact europe was three, maybe, at least double what was raised in the u.s. which is unusual. you don't usually see that. there is demand. they are riding that wave now. what we main to be seen is how long they are going to ride it. guy: if you look at where they are in market share at the moment. it is really impressive. that they have dominated the market to that degree. when you that much market share, you have to be thinking, it is hard to get more when you have 80% of the market. it is hard to take tarp to. it is godgeonl going to get tougher from here. >> exactly. and for those that are coming in

too. grabbing small chunks of that market, especially if you have big backers behind you. guy: continuing the tech theme. bought by google last year. it has brought updated prucks including a security camera and smoke alarm. >> after nest was acquired by google last year, people were wondering what to expect from the brand. today we got our answer. the nest cam has a zinc alloy body. shoots 10 a.b.h. h.d. video. you can use it from home security to keeping track of your dog.

it will start shipping next week for $199. for an additional $10 a month you can store your videos for 10 days or for $30 a month for 30 days. there is also a second generation smoke alarm that that has a better sensor that won't go off while you're cooking or taking a shower. it is still priced at $99 and it will start shipping next month. the thermostat is nest's original product. it is not getting any sexy hardware update, it is getting a software update that will improve safety. you'll get minimum and maximum temperatures and you'll get automatic fan and furnace shutoff in case you have a problem. the updates to the next app to go along with these programs. it shows you all of the devices

across your home. at and check your cams and drop cams right in the app. while we didn't get a new product category today, they did make everything besht and make together smarter. i'm excited to see where it goes from here. guy: cool stuff. ok. let's move you on and take you through the bloomberg top headlines. in the united states nine people confirmed dead after a shooting at an african-american church in charleston south carolina. the gunman who is still at large is believed to be a white male in his early 20's. charleston's police chief said the shooting is being treated as a hate crime and vowed to track down the perpetrator. >> it is senseless. it is unfathomable that somebody in today's society would walk into a church when people are having a prayer meeting and take their lives and i can assure you that we are going to do everything in our power to find

this individual, to lock him up and to make sure that he does not hurt anyone else. guy: buyer confidence returns following falling interest rates. new home prices declined in may compared to 47 cities back in april. jpmorgan morgan chase vice chairman lee has died unexpectedly. he was involved in some of the biggest deals. from general electric in 2009 and the united continental airline merger in 2010. heads survived by his wife and his three children. let's take a look at how the markets are dealing with today's news flow.

european equities by and large a little lower this morning. we continue to watch the situation evolve in greece and its negotiations with its creditors. we'll move to luxembourg today where finance ministers are set to meet from 2:00 p.m. onward. we understand there has been very little given by the e.u. side and it is likely to be short. the euro stoxx 600 down around .8% at the moment. let's show you to bond market. clearly the fed a factor in our thinking today. i thought it was a dovish statement coming from janet yellen and co. we may get two rate hikes by year end. the probability is probably more towards one. let's show you the story on euro/dollar. this is the picture there. we're up .6.

we're going to take a break. when we come back, we'll speak to the president of russian railways. that coming to you from the st. petersburg international forum. we'll see you in a moment. ♪

guy: good morning. welcome back. you are watching "the pulse." i'm guy johnson and here are the bloomberg top headlines. the german chancellor has accused the greek government of dragging its heels. the comments came ahead of a meeting in luxembourg later today. it is being billed as the last chance to seal an agreement for 7.2 billion euros in bailout aid. the federal reserve has signaled that a pickup in the u.s. economy is keeping it on track

to raise interest rates later this year. fed chair janet yellen says the increases may be more gradual than anticipated. swiss leaders are gathering in st. petersburg for the annual economic forum. we just had u.k. retail sales coming through. let me see if i can bring you a headline on that. 0.2% forecast for 0.1%. gold very much on the move over the last few minutes. st. petersburg definitely the focus. let's take you back to ryan chilcote at the st. petersburg international forum. he's got another guest. ryan: i'm joined by the chief executive of russian railways.

russian railways is many things. it is the employer of 1.2 million people in this country. the chief executive has been kind enough to enjoy us. thank you for your time. i personality, was struck by the fact that we saw an extension of the sanctions against russia by the european union yesterday. not a great way to kick off the party in st. petersburg when the 28 countries of the eu say guess what, you're still basically a pariah as far as we are concerned. russia then came back tit for tat, said, we are going to extend our ban on food imports. >> it is not who started all this deal, but actually speaking, i suppose the

political hat of europe and economical body of europe, which consists of the economy and all these people who want to develop relations with russian railways or russian economical borders, they are feeling differently. that is not normal. you say is the euro shocked? we also considered the so-called sanctions, because it is not a legal term, should be stopped by the wish of the european people and european government. it is not the case. so we are living in this. i hope sooner or later the political head and economical body of europe get together. ryan: you yourself are on the u.s. sanctions list. it has been a year. has that affected your ability

to run russian railways? how has that changed your life as chief executive? >> i got more interest to my figure, to tell the truth. because those limits imposed on me by a america and australia they did not actually influence my professional activity. i'm not limited in communication in europe. i'm doing business as usual. of course, when i'm meeting american partners, they should be curtain -- be concerned with doing business, not me. ryan: it seems there's two schools of thought in this country, one, that russia needs to find some way to reengage with the west.

there's a second school of thought in russia that says russia can go it alone. the soupy at union when it alone -- the soviet union went alone. do you subscribe to that idea, we will just do it on our own? >> i suppose both estimations -- [indiscernible] firstly, my position is, i'm against fragmentation of the family of international people and unity. many countries should be the part of this international development. i'm against the fact that one country somehow acquired by itself the role of judge. that is not correct. secondly, of course we need to

you know transform our economical model. we need to know where we are headed. it is correct or both international community or global community, or the local russian community. ryan: one of the big themes in russia is import substitutions. it is producing things in the country. does that mean russian railways is going to import less? >> not only because of so-called sanctions, but that was our comprehensive policy, that we demanded. we demanded localization for the products we are buying. for example consumers plan to localize production. that actually is substitution of

the people. ryan: russian railways was the country's biggest borrower on international markets. when are you going to return to international markets? >> when we are welcome to return. now, we are limited because of the policy of the financial regulator in the united states of america imposed those limitations. ryan: so when the sanctions are lifted, you will come back to the international market? there's no grudge? >> no. ryan: what are you seeing? you are a good barometer of the russian economy in terms of the cargo you see on your trains. give me a snapshot of the picture right now. >> we are following the trends of the economy as a total economy. the trend is decline of 1.5%. at the moment the economy will

start to rise this moment, our cargo operations will also rise. ryan: quick question on the high-speed railway you want to build. exciting project. how much would it cost, and who is going to pay for it? >> [indiscernible] ryan: $20 billion. who is going to pay for that? >> i invite you to be the first passenger. ryan: thank you very much, vladimir yakunin. back to you, guy. guy: ryan chilcote, thank you very much indeed. a reminder, tomorrow, you can watch charlie rose's conversation with the russian president, vladimir putin. that will be right here on bloomberg television. we will bring you live coverage of the event from noon u.k.

time. that interview with president putin sure to feature in our new show, "bloomberg best." it is a wrapup of all our best interview coverage of the week. dubai, we were there for the saudi market open. and top interviews from spief. that is on bloomberg television and bloomberg.com this weekend. talking of russians bombay has been home to millionaires for quite some time. with the clash of the ruble, many consider whether they can afford the luxury us lifestyle they've enjoyed. maria took a trip to the coast and also to find out. >> it is no secret that marbella is a place of sunshine luxury

and russian millionaires. tough times back home mean some are wondering whether staying here is worth it. hi natasha. nice to see you. natasha romanov describes herself as one of russia's best ambassadors to marbella. >> hi, america. >> she's been here since the beginning and has a lot to say about how life has changed since the ruble collapse. >> i expect most of the people, even these people who have a lot of money -- looking at what they were doing before, spending their money, buying these properties, we don't see it anymore. >> natasha isn't the only one. she arrived in marbella from siberia and has sold houses to everyone, from russian politicians, to celebrities.

i take it this is a house designed for russians. tell me about the ruble. how has that affected your business? >> the euro rose a lot, to 108. that was a shock. we didn't know what was going to happen, whether we would go to war what was happening in the country. we didn't know whether we would be able to take money out of russia. we had a real problem and lost sales. >> this is a russian lawyer who has been in marbella for more than 20 years. if you are russian and you need legal help, he is the guy you want to see. >> everything has gone up for russians who have their businesses in rubles and make their money in rubles. after the sanctions, i wouldn't say it has the same impact. sanctions affect politicians mostly. with the exchange rate, for

every day russians, it has an impact. >> while russians in marbella don't like to talk about sanctions, the market has one benefit. it separates the rich from the pretenders. guy: fun package. up next we are speaking to a company that has been dubbed the amazon of russia. that is live from the st. petersburg international economic forum after this break. ♪

guy: good morning. welcome back. you are watching "the pulse." let's talk more now about what is happening in russia. i want to take you back to st. petersburg and ryan chilcote. ryan: we are joined by dimitri. he is the chairman of ulmart russia's largest internet retailer. thank you very much for joining us. i'm just amazed that online sales in russia continue to grow despite the economic backdrop. the economy set to contract by 4% this quarter. more of the same later in the year. how the you explain that? >> russia feels somewhat behind ratio-wise, like gdp to e-commerce sales. we have the lead in internet

retailer in russia. we should be on par with the gdp to e-commerce sales. ryan: your first quarter growth what does that look like? >> this year is quite unusual. there was the ruble weakening and the ruble strengthening like in the first quarter and second quarter. all this, we have to discuss it in detail. ryan: in the electronics space what are you seeking? given the economy, are people going down market, trading down and going after cheaper devices? that's what going on? one thing that is different about your model from amazon is the way you get your products to the customer. you have physical points where

people can pick them up. >> i would slightly rephrase that. ryan: you have your own infrastructure. >> our fulfillment centers that is the difference. we believe that fulfillment centers should be moved closer to customers and made accessible. then, you would have a choice whether you want to pick it up directly from the fulfillment center, or you wanted to be shipped to your household. ryan: and you think that gives you an incredible advantage over the amazons of the world in terms of how your business operates. >> it is way better economically. ryan: i live in the u.k., and on amazon you can order up to 10:00 p.m. in the evening and get it the same day. that is very short turnaround time. >> we see that developing, but

ulmart products is anything you order until 11:00 p.m. is available either at the fulfillment center, or the next -- ryan: it makes sense to include in your business model. >> that would be extra time. ryan: last year, you were the first internet company to post more than $1 billion in sales. next year, you are planning an ipo for london. do you have a target lined up for how much you intend to raise? the idea is to raise one billion, but some say that is ambitious. >> we have ubs and jpmorgan as to banks who are on the process. we focus on the london stock exchange as the public space.

we see a positive response so far. it is a retailer with a really good product. we are approachable. we are close to becoming bigger. ryan: people talk about the so-called russian discount, the sort of discount that investors demand because they are buying into a russian company. do you see that growing right now? in general or getting smaller? the news flow, as you know, is very negative out of russia. >> there is clearly a discount but it is somewhat stabilized. ryan: a little improvement. >> but still, i would say probably 50% discount. ryan: one question i've asked

all executives today is how the sanctions affect their business. for ulmart, what do the sanctions mean? >> we see great opportunities for acquisition. ryan: because others are hurting? do you have access to the capital you need for the ipo now? >> we see that potential targets are now much more flexible and willing to negotiate. ryan: planning some acquisitions in the future? >> absolutely. ryan: good luck and good luck with your idea. the chairman of ulmart russia's largest internet retailer, coming to london. guy: great stuff. thank you very much indeed, ryan chilcote at the petersburg economic forum. up next, my workplace workouts are becoming a thing. you want to watch this, believe you me. could be coming to an office near you. ♪

guy: good morning. welcome back. you are watching "the pulse." we are live on bloomberg tv. i want to show you what has been happening with gold. over the last 48 hours, you can see some fairly big moves to the upside. today's move takes us back to levels we haven't seen since the back end of may. gold certainly on the front

foot. the fed maybe gets on the back foot. it is talking about raising rates, but i sense that statement is more dovish than some had anticipated. i'm told the dollar index is a little negative as well. that should be positive for gold as well. we are up by around 10% -- sorry, around 1.2% so far over the last two days. now, something else, a fitter workforce. that is something that many companies are beginning to catch on to. more and more firms are encouraging employees to work out at work. as bloomberg's rebecca greenfield reports, she is not a fan. let her explain why. >> i've got my sneakers. i'm ready to go. >> there's something going on at

workplaces that i'm not sure i approve of. people are working out at work with their coworkers. i'm going to give it a shot. i'm headed downtown to a workplace boot camp at an advertising company. seems a little fancy for a workout. these are their offices where they've cleared out the chairs and tables to make a makeshift workout space and hired dmo -- guillermo to run the boot camp. >> move those arms. 1, 2, 3, 4. >> generally, it works like this. healthier employees are cheaper to ensure. hr departments have started to incentivize exercise at the office. people who participate pay lower premiums and in the long run save money. >> 3, 2, 1. >> i don't love this idea.

i'm not sure i want to sweat and wear spandex in front of my boss and colleagues for obvious reasons. >> very good. >> i think the biggest benefit is, we can bond with each other outside of just drinking a beer. instead, we are working out. >> but drinking makes hanging out with your coworkers so much more bearable, and working out doesn't. i had more fun than i expected but i was glad the boot camp wasn't with my coworkers. i think i'm too self-conscious to squat with my boss. i can't imagine the general counsel at bloomberg holding on to my ankles while i push his feet to the ground. working out at work works for some people. >> are you one of those people? >> no. guy: i have to say, i'm with her on that one. for those listening on bloomberg radio, the first word is up next area for our viewers, it is a second hour of "the pulse."

the russian economy minister is going to be joining us. he's going to be joining ryan chilcote in st. petersburg. looking forward to that. see you in a moment. ♪

guy: optimism over a greek deal in short supply as european finance ministers meet in luxembourg. angela merkel accuses the greek government of "dragging its feet." the u.s. economies keeping on track to raise rates this year as business leaders gather in st. petersburg. low oil prices push russia towards recession. good morning. good evening to our viewers in

asia. i'm guy johnson. this is "the pulse." live here in london. let's talk about the greek story. angela merkel has told the german parliament an agreement with greece is still possible. merkel: i'm still convinced where there is a will, there is a way. if they show this will, in agreement with the three institutions is still possible. guy: angela merkel is an berlin. her finance minister heading to luxembourg. they will meet this afternoon for talks. hans nichols is there. hans as significant as what angela merkel says about greece she did not say quite a lot of things. hans: she didn't make a new offer. what you heard from mr. tsipras was that he was waiting to see

what the germans, the creditors would offer. he said his proposals are with the european union. he is not going to go further. what we heard from angela merkel's aid, praise for countries that implemented programs. you heard her say, yes the euro is more than about just currency but she did not add the normal follow-on, which is without the euro the european project could potentially fail. in a lot of ways i was listening for angela merkel -- yes, she was optimistic there is time for a deal. but she do not say anything that fundamentally alters the dynamic. and dynamic right now is the finance ministers -- it's stalemate. this is not seem like either side is willing to budge. guy: any hint we are going to see progress this afternoon? hans: i wish i could report and

say there has been. if anything that we have is the finance ministries are preparing for the day after. they are making contingency plans. . what you do the next day. even the finance minister in france hinted at the possibility that may be contagion would not be a disaster. now, he also said they will do whatever it takes to keep greece in the euro zone. one of the more important things for merkel as she is agreeing to abide by the february 20 agreement agreed to by the tsipras government. they have not implemented the reforms they said they are going to do. what merkel wants to see is not a backslide into a new agreement but following through on the current agreement. no give from her that she is willing to compromise on what appeared to be core values. guy: if you do not get a deal

here, where are you going next? hans: i think we go to brussels. the story that becomes a, capital controls which could be a greek story. there is a june 25 meeting that will take place in brussels. the leaders will be there. there has been a back and forth. the leaders are supposed provide the political will in the finance ministry are supposed to have the technical talks to figure out how the math works. how to make sure you have an account surplus. now we have neither. no agreement on top and no sense that there is enough technical common denominator is for them to move forward. so may be brussels but a lot has to happen. one side has to give. there is going to be a banking side to the story. and i mean banking lines in athens in greece. gy? guy: hans nichols in luxembourg ahead of the euro area finance

minister starting around 2:00. i'll expect there will be commentary. you will start to see headlines. to be honest we have a strong sense of how that meeting is going to go. we are joined by a chief economist and ed robinson, the author on a piece detailing the relationship between greek finance minister and his german counterpart. not exactly the greatest of relationships. these two have butted heads. you've hung out with varoufakis. you get a sense they are not going to change that. ed: they each represent polar opposites in the way they look at the economics, the fiscal policies of the euro area. and neither side will bunch. with scheaeuble it is all about the rules.

this was an agreement that the prior government signed on to. you need to stick to those rules, and they are working in other countries. spain, ireland, they worked in germany after reunification. they implemented structural reforms. you can see his frustration over . from varoufakis' side -- he's like, look this is not working. the bailout has not worked. the austerity programs have not worked. we need to do something different. we are reluctant to do so. each man sees that they have a moral position as well as a fiscal position. guy: black and white. one side of the austerity fence of the other. is there little ground? holger: it is pretty clear the greek side has to basically stick to the rules. period. the rules are flexible.

once we have that settled, there are rules. this is not going to found on 1 billion euros. if the greek side continues to hurls insults at its bankers then simply its lender's will not provide new loans. if the greek side says, yes, we do accept our pension system -- let's talk about how we get change. for instance, if we cannot cut pensions, then let's increase the retirement age more rapidly. if the gree sk side or to make her puzzles, it is not europe insisting on you have to cut this. it is europe basically saying there is a framework. you can fill the framework but you cannot say all of a sudden the framework is longer's because then the - is bonkers, because then the bankers say

the conditions under which we gave you the money is over. guy: you owe the bank $1 million, it is their problem. there is a debt restructuring story. they have not gained as much traction with bad as some people thought he would. many economists argued that greece needs debt+++ ed: remember he promised that people they would see debt restructuring when they ran for office. that is a promise they could not

keep. right away, they backed off of that in negotiations with creditors. but it is always there. you get a sense that right now in this ointment ship, that is where they want to get to. let's not forget that varoufakis has characterized greece as a bankrupt nation. that drives the ministers crazy. what he's saying is whenever you have a bankrupt entity, you need debt forgiveness. somebody has to take the haircut. guy: for a country. to think that is what we end up with? holger's shaking his head. ed: the imf has embrace the idea of some sort of restructuring. holger: greece has had massive debt relief. there is no debt which greece has to repay for europe for 10 years. this is massive. this is simply a red herring. europe will extend maturities further if need be. the debt restructuring, the sense that you need agreement to cut the nominal face value is nonsense. this is not about any debt which greece has to pay to your. this is about greece doing the reforms. if greece does the reforms, then

your pull take care of the debt. but if greece does not do the reforms, then eventually, it is over. debt restructuring is not the issue. it is time for the academics and the greek government understood that. it is about the pension system the labor system a system for the vat. it is about being nasty to some of the people who are the constituency of tsipras. some public sector workers. it is about the painful structural reforms. it is about achieving what spain has achieved, laying the basis for solid growth. guy: do you get any sense when you sit down with varoufaskis that he is anywhere close to what holger described? ed: no, no. he sees, this is a moral question for him. to say that the problems of greece could be fixed by

slashing pensions, he dismisses that on its face. he thinks that idea is foolishness. he sees architectural. he likes to talk about changing the architecture of the euro area. greece is the canary in the coal mine. europe should see the opportunity to refashion the architecture of the euro area write large. the ministers are missing an opportunity but not using greece . of course his creditors are about this is about you fixing your problems. guy: thank you very much. ed robinson joining us. holger will stay with us. let me give you a heads up. this is what is on our radar this thursday. hong kong lawmakers have rejected the china bank election plan. the current system where the chief executive is chosen by

committee of hong kong m ostly beijing friendly. business leaders are gathering in st. petersburg for its annual international economic forum. the slump in the oil price push the nation towards recession. this swiss national bank warned it is taking further actions to reduce the impact of an overvalued franc. the smb maintained its deposits. that was forecast by most of the economist at bloomberg. it also reiterated its pledge to conduct currency interventions. later today, jonathan ferro will sit down with ahead of the smb, thomas jordan. that interview coming up later. up next, as well hikes ahead. yellen signals a rate rise

will come this year. we go to washington for analysis next on "the pulse." ♪

guy: good morning. welcome back. you are watching "the pulse" here in london. now the federal reserve has signaled that a pickup in the u.s. economy is keeping it on track to raise interest rates later this year, but janet yellen said subsequent increases

may be more gradual than anticipated. peter cook has details. peter: after its latest meeting in washington, the federal reserve moved a step closer to its first interest rate increase since 2006, but the timing remains in play. janet yellen says progress has and made in meeting the fed's test for raising rates. further improvements in the labor market and more confident inflation is moving back to its target. but not enough progress. janet yellen: no decision has been made by the committee about what the right timing is of an increase. it will depend on unfolding data in the months ahead, but certainly an increase this year is possible with -- we can certainly see data that would justify that. peter: 15 of 17 policy makers an increase this year and their

forecast implies two rate increases by the end of 2015. yellen stresses the focus on the first move is misplaced. what matters is the fed lands to raise rates gradually she responded to concerns that tightening will threaten financial stability. yellen: we cannot promise there will not be volatility when we make a decision to raise rates. what we can do is to do our very best to communicate clearly about our policy and our expectations to avoid any type of needless misunderstanding of our policy that could create volatility in the markets. peter: a greek exit from the eurozone would have repercussions for the european economy. even though the u.s. has only a limited exposure to greece the spillover effects will be felt in the united states. that it is the domestic economy that remains the focus. as she and her colleagues move

closer to lift off. guy: let's get a view from london. holger stil lwithl with us. there are those on the fomc that say we may see two rate hikes but seemed to be go with a view there is one. when does it happen? holger: we have been of that view for a while. there will be one rate hike in september. the fed was to get over with the first one. to have that issue out of the way and then guide markets towards anticipating a gradual increase in rates, as with the taper tantrum. it was worse before the first tapering happened. once we had that out of the way we could have a much more normal conversation about the gradual pace of the next cut. that is where the fed once to

get to if the data for the second quarter are good enough to justify a ste p in september, they will go. guy: right. they are data independent or dependent? holger: the data need to be good enough. unless the data were to show that a rate hike was -- is not advisable, unless that is the case, they will go in september. the burden of proof has shifted. guy: after that we become increasingly data dependent. holger: we will take it step by step and gradually initially. guy: yellen talked about the dollar and the factors that influence decision-making. do you think they are more dollar dependent and data dependent? she talked about export markets. the u.s. economy is not export orientated, but she talked about it. holger: it is a significant factor. the mixture of what happens in demand an external market such

as does greece have a significant impact on europe or not? and the dollar. in the worst case, if there is economic weakness in major trading partners and a strong dollar, that is significant for markets in the u.s. and the u.s. economy. and that would be something that fed would react to. again, to delay the september spike it would have to be seriously bad news and not just mediocre news. guy: that would be the mechanism for the story -- the greece story. it would be that way the dollar reacts. making the transition from greece to the u.s. economy which seems tangential. holger: yes. if there is any transmission it would be largely through financial markets of which the dollar is part. where equity markets play a bigger role. guy: let's talk about greece. stay with us. let's return to the subject of what is happening in athen s and luxembourg. wage cuts and hard won foreign

deals. for one small family run business. now this metal works on the outskirts of a athens of bracing for possible capital controls, and maybe for a greek exit from the eurozone. we meet them. >> monday, we have capital controls. will be the most difficult situation i have to face. i think i have check the liquidity we have at the moment. and sit with my family. the family will be not only the close people that we have but also the labor. i do not have one family. i have 40 families to support. i'm the export manager. the banks at the moment try to help you to protect your money.

for example, if you're going buy some assets, financial assets of ecb, a smallpercentage but we have -- we have a small amount in dollars. now we have proposals for -- from luxembourg that they are very safe. we will put all the money on the table, and we have to discuss how we have to spend it in order to survive in difficult situations. we fight hard. guy: capital controls and metal bashing. the two having a big impact on each other. let's get your take on this. currency controls this weekend? holger greece will have to impose them themselves, and i do not think they will do it. the greek government would not

like to be blamed by its own population for capital controls. probably the thregreek side would not resort to that, to spend the out -- to stem the outlow of money out of greece. guy: harsh criticism of the way the government and athens is handling the situation. warning of dire outcomes. this comes on the same day that the ecb raised the ela. the ela is providing liquidity. is that a message from the ecb saying our patience is running out? there are some dire outcomes. you guys have got to get on it. holger: the greek central bank is part of the european central bank. it's in line with the thinking in frankfurt. yes, the greek government needs

to see to it soon because the situation in the banking system and the economy could become untenable. the question for the ecb is whether the ecb should openly be the one that pulls the plug. ion that one, the ecb will remain reluctant. guy: the ecb's exposure. erased again and again the ela. when does that stop? you hear noises coming out of frankford that they are nervous with the levels. holger: they are nervous about it, but at this delicate stage of the process to be the one institution that really puts an end to greece being solvent or greek banks being solvent, that is a huge step to take heard i think the ecb would only do that once it has the political green light from the powers in europe. guy: for the moment, it has political cover to carry on providing money to the greek banking system.

holger: as long as there is some hope left that negotiations could lead to a deal probably the ecb will go along with that. but sometime over the course of july, this could turn. on the 20 of july, greece has to pay the ecb. if greece misses that payment or for becomes likely that greece will miss that payment, then the story at the esp would be even much -- the ecb would be much bigger and contentious than it is now. guy: angela merkel repeated over the last few days where there is a will there is a way. on the other hand, she accused greece of dragging its feet. what is the primary message she is trying to deliver? holger: you, in athens you the government, need to have the will. if you have the will, there is a way. if you do not really want a deal with europe roughly in line to

the european rule book, then we cannot help you. guy: is that a harder line the we have heard from her previously? holger: no but it does have an undertone of frustration with that greece has not responded positively to the offer europe they last week. europe basically gave greece the parameters of the deal asking greece or giving greece leeway to shift a few things around. instead, greece rejected this whole sale in public. that is frustrating to creditors. guy: very nice to see you as ever. thank you for your analysis. the austrian finance minister saying he is not expecting a proposal from greece. coming up we will hear from russia's economy minister about greek bonds. that interview is coming up on "the pulse." we will be taking you back to the st. petersburg international

forum. we've had great conversations. we carry on after the break. ♪

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guy: welcome back. you are watching "the pulse" live in london. i'm guy johnson. these are the top headlines. angela merkel has accused the greek government of "dragging its heels." her coomments ahead of a finance ministers meeting in luxembourg today. optimism in short supply. the federal reserve has signaled that a pickup in the u.s. economy is keeping it on track to raise interest rates later this year. but janet yellen said the

subsequent increases may be more gradual than previously anticipated. and business leaders are gathering in the russian city of st. petersburg for general economic forum. the meeting comes as sanctions imposed on russia after it annexed crimea. the oil price push the nation's economy towards recession since 2009. let's get more on that story. ryan chilcote caught up with russia's economy minister to talk you sanctions, the ruvell and greece. -- the ruble and greece and e.u. sections. >> of course, there could be some deals. this pipeline, if they decide to construct it, we can guarantee some credit. . we are not ready to buy bonds, sovereign debt or something like that. ryan: what is the fail value for the ruble now? >> i mean, it is something

around the current figures. today it's 53 rubles per dollar in accordance with the performance -- both capital accounts. keep in mind this 60-plus rubles per dollar, this 53, 54 55 could be reasonable. ryan: there is an expectation the ruble is going to depreciate in the fall. where are we going to be? >> that is very possible because of the -- september and december. quite possible but not dramatically. ryan: give the traders a target of two-three rubles. we got the statement from the fed yesterday.

it imply that are going to hike rates by 25 basis points twice each time. what does that mean for russia? ulyukayev: it will influen ce oil markets. so, probably we can see other volatility of oil prices right? this is the first one. the second one probably all the emerging markets, including russia, will feel some other capital outflow or movement. but generally markets are very well informed about that -- the development. i believe that the majority of the participants are already including the expectation in their estimations. ryan: in terms of inflation, you said the central bank could have cut rates further to 10% for the

key rate because the inflation forecast allows that. how low could inflation go? ulyukayev: we believe by the end of this year, it will be lower than 11. somewhere between 10 and 11 in cpi measurement. in the beginning of next her, we -- next year, we will see more dramatic going down tendency, by the end of the first quarter of the year, our focus is 7%. cpi. and as oonsoon as normal monetary policy and inflation performance gets six to nine months, so the -- where it is normally has the target the inflation of

these periods, six to nine months. so it means, the minister of economic development in russia believes that we will see soon 7%. it means quite normal to be the key policy rate of the bank of russia lower than 10. ryan: last year, you told me that economic sanctions would not be imposed against russia because they were -- they're a great deterrent. but the european union and the united states would not use them because that would be devastating. have you been surprised? >> i was wrong. i was very surprise. i overestimated the reasonability of policymakers. ryan: you are a poet. if you're going to write a poem about the russian economy, what

would it sound like? >> i don't know. a very difficult question for me. normally, the most -- the firs t letters solve the problems and then we moved to the poetry. guy: that was russia's economic minister talking to ryan chilcote in the st. petersburg international economic forum. i want to bring you some breaking news from the ecb. it's a technical process but it is worth paying attention to. this is the teltro, the targeted longer-term refi operation that the ecb index every quarter. the idea is that this money is taken by the banks fro mtm the central bank and farmed out to the euro renminbizone which is much

more bank dependent than the u.s. economy. banks have been maybe not providing that much to the real economy and maybe buying debt i nstead. after the volatility we have seen and debt markets over the last for years, you can see how this number is being taken up. i think the number is a little lower. we have seen banks according to the ecb, taking 73.8 billion euros. the estimated range from somewhere from 20 to 120. my view was that most people were anticipating that number to be north of 100. i want to bring that to you. check the website. it's an interesting point. it is very detailed, but it tells you a lot about what is happening underneath the skirts of the braking system in europe and what is happening in the wider euro zone.

maybe a little bit lower. let's move on to. marbella has been the home for russia's millionaires for quite some time. maria took a trip to the costa d el sol to find out what is going on. maria: it is no secret that marbella is a place for sunshine and luxury and until recently russian millionaires. soeme are wondering whether staying here is worth it. hi, natasha. how are you? nice to see her too. natasha romanoff describes herself as one of russia's best ambassadors to marbella. natasha: hi america. maria: she has a lot to say how life is change since the ruble collapsed. natasha: i expect most of the

people, even people who up a lot of money, looking at what they were making before and buying the top properties, we do not see it anymore. mari:a: she is not the only one. we meet mila. she arrived in 1995 from siberia and has sold houses to everyone from politicians to celebrities. i take it this is a house designed for russians. tell me about the ruble. >> the euro rose a lot to 108. it left us in a state of shock because we did not know whether we would go to war what was going to happen in the country. we did not know whether we would be able to take money out of russia. we had a real problem and lost sales. maria: we are going to see a lawyer who has been in marbella

for 20 years. if your russian and you need legal help, he is the guy you want to see. >> everything has gone up for russians and have their businesses in rubles. after the sanctions, i would not say it had the same impact because sanctions affect politicians mostly, but the exchange rate for every day russians had an impact. maira;ria: while russians to not like to talk about sanctions, the market has -- separated the rich from the pretenders. guy: still looks pretty nice. fitbit goes public today. will it be a healthy debut? we find out when we come back. ♪

guy: 43 minutes past the hour. you're watching "the pulse." fitbit starts trading in new york later on. the new york stock exchange operating $732 million. for more we are joined by ruth david. strong response, very strong. ruth: absolutely. it is likely to see a bit of pop in the debut. they did increase the price range but things like that plenty of cement. guy: why is there demand for

this? you wrote a great piece talking about the fact this could be the next blackberry. ruth: right now investors are saying look at how -- it has tripled over the last quarter. they own 85% of the market. guy: i was stunned when i read that. ruth: that is a pretty interesting factoid. they are betting on the fact that this'll be a big story. especially the u.s. is a market where investors love these types of high growth stories. so there is plenty of euphoria. as we pointed out, the things they need to keep in mind is that they have some really stiff competitors. apple introduced the apple watch, which is a similar thing. while they are now saying that we are $100 cheaper, our highest price offering is 4100 cheaper one thing otto keep in mind when

apple entered the marketin in 2007 blackberry was in the same position. customers went to them because they like the functionality on the style. the one thing you can -- can't bet on is how long your customers are going to be loyal to. guy: people where these things for a few months and get new ones. what have they said about how they are using the money? ruth: they said they will use some of it for r&d. we have been speaking to analyst and a lot of them are saying they should use more money for innovation so they stay ahead of the curve. there are some unknown in the sense that they have losses from one of their -- fro mjm jawbone alleging patent infringement

and trade secrets. we do not know how that might pan out. blackberry had something similar. customers were worried as the whole thing to write on. there is a risk of thatt, too. guy: i would love to see what the heart rate monitor on the greece fitbit's executive has said for the last two days. thank you for joining us. talking of heart rates. apparently, if your workforce is fitter, it is a cheaper workforce. companies are beginning to cotton on to this. more firms are encouraging employee's workout at work but rebecca greenfield not exactly a fan. she is going to explain why now. rebecca: i've got my sneakers. my ratty t-shirt. there is something going on at work faces that i'm not sure i approve of. people are working out with

their coworkers. i'm going to give it a shot. i am headed downtown to a workplace bootcamp at fluent. seems fancy. hi. these are their offices where they took out the chairs and table to make a workout pacspace. guillermo: let's get ready guys. move those arms, 1, 2, 3, 4. rebecca: it works like this -- healthier employees are cheaper to insura. hr departments are starting to incentivize exercise at the office. people play lower -- pay lower premiums and company save money. guillermo: 3 2, 1. rebecca: i do not love this

idea. i do not want to wear spandex in front of my boss for obvious reasons. >> the biggest benefit is we can bond with each other outside of drinking a beer, which is where i would be at 7:00 tonight. instead, we are working out. rebecca: drinking makes hanging out with her coworkers bearable and working out does not. i had more fun that i expected working out with fluent but i was glad the boot camp was not with my coworkers. i'm too self-conscious to squat with my boss. i can't imagine the general counsel bloomberg holding onto my ankles. i think working out at work works for some people. >> are you one of those people? rebecca: no. guy: i am with her on that front. we will take a break. we will tidy what is coming up. we're building up to this euro group meeting in luxembourg. how are marcus position for that?

-- how are markets position for that? ♪

guy: welcome back. you are watching "the pulse." athe top stories and bloomberg. int he the u.s. 9 people are confirmed dead after a shooting at an african-american church. a whilte tel male -- the

shooting is being treated as a hate crime and vowed to crackdown -- track down the perpetrator. >> it is senseless and on federal -- unfathomable that somebody would walk into a church with people having a prayer meeting and take their lives. i can assure you we are going to do everything in our power to find this individual, to lock him up and make sure he does not hurt anyone else. guy: j.p. morgan chase vice-chairman lee decides unexpectedly at the age of 62. mr. lee was involved in some of the biggest deals in corporate america, including comcast and nbc in 2009. and the united continental airline merger in 2010. he is survived by his wife and three children. speaking from bloomberg in st.

petersburg, the ceo of russia's second-largest retailer talked about the challenges he faces with declining inflation and the impact it is having on business. >> with inflation declining, you'd think that is good news for customers, but as you pointed out, real incomes have been hit very hard. wages have not kept pace with inflation. the behavior of customers is such that they are looking for value. guy: quick market update. stoxx 600 we see the gap lower. we saw that ggapap down. the stoxx 600 down by 1.6%. a decent move in bunds. you are getting some moves around the market.

people are worried about what is happening with greece. their also thinking about what is happening with the fed. gold is interesting. you saw move up o mn the back of the fed. the dollar set up fairly negative at the moment. another leg higher this morning. up 1.4% in gold. the magnitude of that move is significant. we have not seen this move since may. so, we are seeing certain asset classes movement around. a move following a norwegian central bank rate cut. the siwswiss have left rates where they are. what we can expect for the rest of the day. the meeting in luxembourg whick kicks off at 2:00. what should we watch for? hans: we should be watching for the length of the meeting.

if it is a short meeting, it is as disastrous as everyone has been predicting. we will be watching for the length of it. heading into it, the eu commissioner for the economy has been the most optimistic. my favorite quote the italian five -- foreign minister said "i am not concerned "." it does seem that there is a great deal of concern. angela merkel do not offer new concessions. she is holding the line. we have not heard directly from mr. tsipras. we have overnight interviews mostly in german-speaking papers. he is saying it is up to the e.u. to offer a new deal. basically we are at a stalemate. guy: thank you very looking forward to continuing coverage. mr. ferro has more coming up from switzerland. he's talking to the swiss national bank's boss thomas jordan.

we will head inside to what is happening in switzerland as well as what is happening in the wider economy and greece, etc. that basically wraps things up for "the pulse." there are so much more still coming up on bloomberg television. "surveillance" will pick talk about the fed and analyze what yellen had to say. fed says, yes, we will get a rate hike by the end of the year. from there, it looks increasingly flat. i.e., we are not going to see big, aggressive moves. it looks like there will be one before year end. that is what the dots indicated the moment. we will take a check on that and see what impact it has on the dollars and equities. "surveillance" will analyze that. plenty more to come. mr. ferro will talk to the swiss national bank later.

plenty more here on bloomberg television. "surveillance" is up next. we'll take a break. ♪

brendan: tighten we will, says janet yellen. jimmie lee. wall street will listen. he changed america. forget one laptop per child.

let's all try one teacher per child. good morning. this is bloomberg "surveillance" in new york. this is thursday, june 18. tom keene is out to me. out today. vonnie: he is out to you. brendan: joining me are vonnie quinn and mike mckee. the news out of trust and is stunning. it is hard to fathom. there are nine dead outside of the emmanuel ame church. the police chief has called it a hate crime. vonnie: he's holding a press conference now. we will bring you the latest headlines on what is going on in trusted. it is not the first time charleston has seen a tragedy this year. mike: the scott shooting. this comes after that. that is spent trade in racial terms. brendan: it is one of those things that is normally