a second day of decline after four days of gains. let's check out what is happening caroline: we are set for a second day of declines. they will be sleep deprived again today. once again, an economy that accounts for less than 2% of the eurozone is dictating global sentiment. we are seeing them follow in unison in terms of correlation. it's the sort of situation -- separation we haven't seen since 2011. the most strong relationship since 2011. greek is back in the forefront of investors mind. clearly risk aversion is back. it is happening in the euro as well. the euro dipping lower this

morning. up by .1%. risk aversion is very prevalent in the bond market this morning. we are money moving into germany out of greece. 0.83% on the german 10 year. that can take in a slightly infiltrating when looking at spain and italy. meanwhile, greek at 10.84%. it is the short return where you really see the clear concern. they might be coming down on the two-year but still at 22% theoretically. really trying to action that bond market. we will look at stocks now because we have a little bit of eyes on data u.s. coming out later today.

we also have pmi showing expansion services. is the market ready for the u.s. rate rise? certainly gary collins saying it is not. we can see that for a real move back toward the dollar. let's have a little look in the markets. h&m down by 2%. dollar strength is not just turning u.s. companies but european companies as well. suddenly the purchasing power is eroding. the costs are rising. we are seeing the gross margin at the lowest since 2006. they say that this will be a real problem. looking at their purchasing costs rising. this is a company whining to

invest and expand getting into china and new markets like japan and peru. it erodes for h&m the retailer. still, the cfo sounding pretty up beat. he says the key profit target is within reach. market concern about global growth is playing into that this morning. it makes vacuum cleaners and refrigerators. it looks at the report and the chief executive could be stepping down. they rebuffed that this morning. enough to put a little bit of concern into investors minds. mark: let's turn to greece talks resuming between alexis tsipras and -- they woke up without a deal.

hans nichols and guy johnson join us. to brussels where we stand right now. >> they had eight hours of rest since those talks broke up around one. they are supposed to start a meeting right now in this hour. it is 6:00 a.m. and technical talks started. there was no progress in any of the meetings yesterday but for the most part everyone is coming out of it saying that not enough progress has been made to achieve a deal. think of these meetings like a waltz. i mean long, short short. we had a long meeting yesterday for seven hours and then we had the eurogroup finance meeting. then we had a separate meeting when all of the leaders reconvened. if today continues, i am not

sure how close we are to a deal. they need to get together and compromise on some core positions. although we have this morning is something from pierre moscovici he is saying where there is a will there is a way. uncertain if there is even a will. mark: tsipras is pushing for this deal in brussels, what are the politics looking like where you are? guy: he will see the music going here in athens. about the greek dance, in needs to make sure his party is in step and that is why he is fighting as hard as he is to make sure he can bring a deal back to athens. if he cannot get it past parliament then the political story here in greece is going to fragment a little bit.

we could be heading for an election. there is a lot that needs to be done so he has to find it deal that can be passed by the syriza led government. if you were to bring the deal currently on the table back from the creditors and back to athens right now you can probably pass it in the house but hast to be passed by syriza. i think he is very aware of that at the moment. mark: what is the latest on the banks? guy: it will be very interesting. we have not seen the el eight requests. we'll see if there is one made today because maybe we will start to see a pickup in the money flow as a result of the disappointing story coming out of brussels. on monday morning if we do not have a deal it is anybody's that. i think that conversation is

going come -- to come back to the forum over the next couple of days. mark: let's chat more about this. join the is carlson, thank you for joining me. guest: what -- good morning. mark: what is the mood like in germany after a day of confusion and diffusion? guest: i think it is really exhausting. people are getting exhausted and it is hard to distinguish between facts and fiction. no white smoke coming from brussels yet and i think people are getting tired. >> you think we will get a deal cast but the weekend or not? guest: honestly it is hard to tell.

i don't dare come up with the forecast. if you look at the facts, a deal should the possible. both the sides are not so far away from each other. under normal circumstances a deal should be possible. but if you look at the series and frequencies of inconclusive meetings. these are strong signs that there is at least -- that the political will is still there. people are getting more inpatient. if anything, the chances these negotiations will fail have increased. mark: you think that capital controls are going to be necessary monday morning if we do not get a deal i sunday? guest: i think -- it is very hard to tell. if we don't get a deal by sunday -- technically they could continue for weeks, but i think

with all parties involved, they are getting so tired and so impatient that the political will to continue -- if there is no deal, it will probably fade away and there won't be any political will. if there is no political will then will need not only controls but preparations towards a grexit. mark: does that mean that the payment to the imf of 1.6 billion euros will not be made? guest: i think it is possible. if you look at all of these things -- payments to the imf and even the bond held by the ecb -- there is no real 100% necessity to pay it back. technically speaking it is possible to postpone these payments. it would not automatically lead to default or grexit.

what would lead to a grexit is if the political will to compromise and continue with negotiations is over. everything is in the hands of the politicians. >> on that question the political will, what is it like in germany. it is been said that the greek parliament will have to pass -- pass legislation before the german lower house votes on it, is that the change that is going to take place? guest: it is possible. i think the german parliament would like to see incredible commitment. they don't want to see plans on paper but they want to see the legislative and is at least a parliamentary agreement in greece. there is the hope that at some

point in time it will be passed on and implemented. i am not so worried about german rectification right now. but if mrs. merkel is in favor of further support to greece her party will follow because even if some are getting stomach pain on these things, there is no political alternative to merkel in germany. which means if push comes to shove the party will support her even in the greek issue. mark: what is your base case scenario? does the deal get made, does greece stay in the eurozone? guest: the base case is on very weak footing these days it is still that we will get a deal with a typically european compromise which will lead to short-term release but then in the coming months greece will

have to decide if it is willing and able to come up with a credible commitment to implement these reforms and that we do not get a repetition of the current case. the high risk that the entire situation can still escalate later on. mark: good to chat to you. should we checked the markets? the carmaker unveils a new alfa romeo model. is it too little, too late? korean prices see a stimulus package to soften a double blow of the deadly mers virus. we break it down. this is what is happening in the market today.

after four days of gains, two days of declines. stocks have opened lower as tsipras heads into that meeting with the big figures from the creditor nation. way in on what is happening today. you will always find me on twitter. will there be a deal in the next 24 hours? we are approaching midnight. what are you thinking? are you feeling confidence? will there be a bunch? -- budge? ♪

mark: let's bring you up to speed with the top stories today. alexis tsipras will meet creditors again today. yesterday's talks ended without a deal and the eu officials said a deal had little progress and no breakthrough insight. comes ahead of next week's euro bailout expiry and the imf repayment deadline. the greek prime minister will travel to brussels today as he seeks the renegotiation of britain's membership of the eu. david cameron will outline his proposals including plans to protect the u.k. sovereignty. britain is expected to hold a referendum over its membership

in the second half of next year. south korea plans a stimulus package more than $13.5 billion and a doubt. let's bring in bloomberg's stewart banks -- what has been the reaction to this announcement? give us the details? >> i think from the market side it was a somewhat subdued reaction. there are probably a number of reasons for that. one is that the market may have already factored in its talks that the government would step in to deal with this situation. the other factor is that within that 13.5 billion, the government hasn't yet sad how much of that is new money at how much of that is repurposed from other objects. until we know the exact details of what is being proposed, it is hard to know how much this will

deal with the economic impact of mers. mark: let's get more on what is moving in the market and i am joined by john bolton, the head of the global strategy team, hello john. >> there has been a change of tone since the weekend and tsipras is behaving in a much more statesmanlike manner. some of the rhetoric has subsided but we still see it as the eurogroup has acknowledged. i think there is political will but the technicalities are still pretty challenging. this is europe so it is very much the likely outcome but this is probably the closest we are coming to running out of road that we have seen at any point in this crisis so far. mark: explain what we have seen

come especially since monday when we got an interesting excavation for the big moves? guest: it is worth bearing in mind that friday was the quarterly option expiry. when those options expire and role off of a dealer's books the market can move around more freely. one of the theories that we have for the 4% move at the beginning of the week is that we were beginning to see something of a reposition. we got a boost of good news but also had a market -- market much more able to move higher. mark: how do you position yourself in a market where daylight date we are getting conflicting signals? >> you have to go back to long-term fundamentals. when we look at europe we have the support of the ecb and the beginnings of an earnings cycle which is in upgrade the first

time in five years and generally we are seeing underlining -- underlying improvements. because of the greek situation we have to be mindful of the risks and so it means that we have to be a little bit less aggressive than we might otherwise be. it would extend this for some months to take advantage or perhaps a clearing of some of the headwinds. mark: it does bring this back to the table. >> it allows the other economies looking a lot better to gain precedence in the headlines. right now we are focusing on an issue which involves a company

representing 2% of european gdp without focusing on the big improvements. also, the support that the ecb are giving. mark: do you think that support might come to an end? the president has continually stated we will continue to buy ons through next september. if the economy warrants it could they stop for? >> think it is extraordinarily unlikely. draghi's growth forecast are assuming a full completion of the ecb qe program. they would need to recast those forecast which would gradually take them lower. if anything, there may be risk of further easing measures.

mark: how are you feeling about the fed right now you go if we get -- you? if we get a strong jobs report does that nail on a september rate hike? >> if we get continued improvement, then that becomes at the margin much more likely. they ran about a 30% to 40% chance for sick timber hikes. we would still favor september. we still think that the fed language is indicating an earlier start but a flat approach to raising rates. mark: there are other considerations. when you way up those, what is the risk of a september rate hike not taking place?

>> the probability of september is perhaps -- there is a margin of error around that. it is on a path toward the 2% level over the medium term and that is what janet yellen stated. she certainly big knowledge to the international challenges but it is fair to say that unless those become first order and not second order, it is unlikely that they would be the deciding factor in whether or not to raise rates in september. market you cannot raise rates amid greece default. >> it depends how the market treats it. at the moment we are in the eye of the storm and european banks have held their gains relative to the index.

credit formation is continuing to improve and the signals from the market are that while this is problematic it should not derail the broader recovery. central bankers need to and it do look into the intermediate and longer term. mark: do get the sense that this is a couple more courses more advanced than even the market would be to let greece go? >> let's play through a potential scenario. you get a five this time and see that we go through the wire but eventually we do get a deal. bear in mind, tsipras is going to have to go back to athens and somehow sell it to the left wing of his party. that would make it harder if all of it were to be needed. if the european recovery were a few quarters down the line would it lead european leaders to be a little bit more hardline in how they deal with greece

possibly because the broader economy were able to expand a greek exit. mark: one minute it is up in one minute it is down. it is down 3.4% today having riven 2% yesterday. this market -- how do you make sense of it? >> we saw the a shares market rise getting on and it almost doubled over the first part of the year. i gave up around a third of the year's gains and we have so much else going on with the fed focus and the focus on greece. the liberalization of retail brokerage access to the market has certainly been a consideration there.

in terms of the outlook, china have a number of levers they can pull. so we are perhaps not so concerned about things like a hard landing but looking at the valuations and the ownership and the margin debt, it is very difficult to feel that it is in anything other than speculative mark: that is a potential -- potential boost to credit growth. that is a positive in the terms of opening up the banking industry. >> two things that it has aimed to achieve. it brought the banks back to the regulatory reform agenda. that is something to make progress with terry of the second thing is it helps the transmission mechanism. at the margaret the loan deposit

ratio is around 66%. the 70% cap is not necessarily in the short run.

mark: welcome back to "on the move." we are 30 minutes into the trading day. here is a picture of the market. mostly declining. two days of drops and four days of gains. let's get the stories behind the market decline there did caroline him up -- decline. caroline, what are you watching? caroline: h&m up by almost 2% this morning. these are its second-quarter figures. we knew the sales were looking good, but then you strip away the fx and then you havelf that

and the prices are rising and they say it will get even more negative in the third quarter and fourth quarter. it is not just u.s. companies that are feeling the impact on profits. h&m are really feeling the effect up by 2% as growth margin is the weakest since 2006. meanwhile, oz ram -- osram also down 2.8%. it came out yesterday saying that it's led products are being restructured because of erosion in the price point. they are saying they are also under utilizing factory and taking an $85 million charge.

-- taking a $285 million charge. meanwhile, let's look at the sexiness of the packaging we are talking about. it is sexy because the companies are saying it is excited about the prospect for the business. raises its medium-term target. mark: thank you. let's check in what is going on elsewhere because the athens stock exchange is opening as we speak. we have had to throw days of the kleins after four days of gains. it rose by roughly 16% so the

declines of 2.5% in the last two days including today do not amount to much. when you consider what preceded them. the sentiment is certainly muted today across all asset classes. tsipras heads to his second day of meetings with creditors and eu leaders. as the clock ticks ahead of the june 30 deadline for the second greek bailout and the payment to the imf, a 1.6 billion euro payment. let's get to athens. guy johnson is standing by. guy: the market is just opening. the group managing director at the investment bank which specializes in a peripheral of europe. greece, cyprus and portugal.

those are the places our next guest spends time looking. when you talk to investors, when they give you their views on what is happening, what are they telling you. >> don't know if there is any place in the world when they had to figure that politics have so as you hear. local -- beyond the local politics you have to elevate the decision-making process. for many this is too much to handle. guy: are they out or waiting for the opportunity to get back in? >> a lot are out and would not be motivated to come in unless they see stability or some kind of environment which makes their investment outcome predictable.

on the other hand, due to the liquidity, greece offers a unique opportunity. the government wants binary trade. you are in or out. if greek manages to stay in the eurozone the returns could be very strong compared to what we saw back in 2012. with everything else whether investing in banks or corporate, the dynamics are very different. it is not simply measuring the fundamentals of the business. you need political stability and an environment that provides predictable outcome. guy: you want to get your money in and out. >> you need to understand whether you are investing in a eurozone country or in something completely different. whatever the outcome, this investment that would come in

the country even if it blows up, there are a lot more investors that would come to the country if the country goes back into a more stable and protectable direction. cyprus is a very different case. if there is a lesson to be learned from cyprus it is how the europeans framework works. you have to take the possibility that you could have capital controls or an outcome that is not part of the menu of things you participate. guy: when they look at businesses they can invest in, what do they see? when they talk to guys running companies -- they are finding things difficult. things seem to be changing very quickly and the balance seems to be on companies paying taxes rather than cutting taxes.

>> it is an impossible environment to run a business so the investors would look at only distressed situations. meaning if you have a low entry point, you might be tempted to consider something especially with good management and a globally competitive interest plan, otherwise it simply is impossible to make any estimates or analysis since the environment is very hostile. i think that unless the trust comes back into both government and economic environment and stability it would really be impossible or greece to come to a growth pattern that is sustainable. at this point, we need to depend on private capital and foreign investments in order to growth to come back to the country.

guy: how difficult is it to employ smart people here in this environment? >> increasingly difficult to we imported people for some of the key positions in my firm. i would say in today's environment it would be impossible. now that they are here we are redistribute in thing space on the workload. it is extremely challenging to convince summary to come to an environment like this and they would only come if you offer them something comparable with what they have in other countries. the instability that has been created really caused a lot of talented and smart people to leave the country and unfortunately, this is a trend that is difficult to reverse. guy: thank you for your time.

his investment bank specializes across the euro, good visibility of what is happening here. back to you. mark: we will see you later. guy in athens. still to come, alfa romeo unveiling its new sporty sedan. will it be a challenger to bmw? in the meantime, way in on today's story on twitter. are you and alfa romeo fan? is this a brand that can be brought back to prominence?

mark: this is "on the move your co left -- "on the move." shares in netflix retained profits in three years. the world's largest online subscription service is a top performing stock. the greece prime minister meets creditors today. to pitch a new aid package to his country. eu officials said the talks yielded little progress and no

breakthrough is insight. this latest round of negotiations comes in the euro area bailout expiry and repayment deadline. the u.k. prime minister will travel to brussels as he seeks to advance his renegotiation of britain's membership in the eu. the u.k. sovereignty has imposed controls. his concerns are that government could pledge to hold a referendum over there membership of the eu by 2017. in the rest of europe politicians and business leaders are weighing up the cost of a grexit. >> the greek government is in a difficult position and the best would be if the greek government

and the institutions could agree on a credible have to a good future with grace. i think that would be very difficult. if there is no agreement that we will facing a couple of tough weeks. if greece were to default or lead -- leave the eurozone, i don't think that would be the end but it would be a tough situation to face. mark: he outlines the possible preparations his bank is making for a cut on greek debt. >> the best situation would be if the greek government and institutions could agree on a credible path to a good future for greece. i think that would be very difficult. if there is no agreement, we will be facing a couple of tough weeks. if greece would default or leave the eurozone, it would not be

the end that it would be a tough situation to face. mark: unveiling the new alfa romeo sedan yesterday. how does it stack up against its rivals? lets to the latest from our team leader in berlin. what is so special about this car? >> it is a huge car for alfa romeo. they expect it to kickstart and relaunch the brand. as you know it is basically just two -- too compact right now and they expect it to be the beginning of an eight car launch. we will see if they really carry that out. we only know of an suv coming next year. it will have up to 500 horsepower. it will be very sporty with alfa romeo performance oriented so it

is a big car for alfa romeo. mark: why does mark care so much about alfa romeo? >> it is at the center of the strategy for european operations. he wants alfa romeo to fill underutilized plants in italy and export these models around the world. alfa romeo is the key anchor of this strategy. it has eight models land by 2018. and he has 5 billion euros and investment budgets for the brand. it is critical. if alfa romeo goes well it looks like the rest of the strategy does well. that is what it is so court to what is going on for the next couple of years. mark: what is next for the brand?

>> next up is an suv next year. it is a platform developed where maserati is based. that would be the second of eight cars coming and it remains to be seen what happens after that. we don't have clear guidance of the model strategy after that. but if they can get there, maybe they can challenge bmw and audi a little bit here it the target right now is 400,000. it will be a bit of a stretch because they sold 68,000 cars last year and they are expecting massive growth. mark: a greek deal may be too late to pay it down, does it matter?

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mark: welcome back to "on the move." let's get back to our top story. with greece little progress as leaders are burning the midnight oil. no solution. the deadline gets closer and a deal could come too late.

jamie from bloomberg intelligence joins us now, you think greece will get a --

once we have an agreement it has to go through the greek parliament and that is the bit that will take time -- it will probably come too late field pay them on june 30. there is a good chance the payment will be missed. >> is that a default or not? >> greece will immediately be in arrears. the next step would be an angry letter from imf. there is nothing of any great consequent's for some time after. mark: now from grexit, to a possible brexit, david cameron is in brussels hoping to advance his renegotiation of britain's membership. the prime minister arrived fresh from talks yesterday with angela merkel and will outline his proposal to other leaders. meanwhile, a group of high-profile is this leaders including sir richard branson has warned that britain must be in the room fighting for reform, not knocking on the door from the outside. let's get more with svenja o'donnell what is cameron

trying to achieve? >> this is the next step in negotiations. he is trying to get things to a technical level. he is again a fight it by now and has had a chance to talk to other leaders. we know what the sticking points are likely to be. greece is still going to be the main story. it is a chance for him to get the ball rolling. he needs to show that he is talking tough and doing his best to get a good deal for britain. mark: how do these working dinners work? >> it tells you all that you need to know about how things have been going. it doesn't matter that we have no formal list of requirements.

that is a good thing. it strengthens his hand. but it means they don't really know what is coming, but also he is not going to come back. mark: does he have enough friends in europe to push through reform? what is the noise? >> he has some friends. denmark. northern europe. germany to a certain extent. as ever, eastern europe is against this. it is hard to sell this as a move that will not involve discrimination. mark: business here in the u k continues to voice it. what are they saying? >> they are saying that britain needs to stay in. what is important is that they seem to be backing this process.

david cameron has two audiences. the tory party and the people back home. ec -- you see people in britain saying we need to keep them in, that will push a pro yes vote. mark: what do you think he will come back with? it is easier to sell back home. do you think he will come back with -- we got something out of the summit or not? >> i think that he needs to come back saying, we had a tough discussion, it wasn't easy but we made some headway. we will not get anything concrete. we are talking at the earliest about months of negotiations but he needs to be seen to be trying. mark: the public wants to see him negotiating and fighting. >> it is all about how he sells it. the key issue is that it is

better to take the stand from within rather than making distress about leaving. mark: sanyo o'donnell. -- sven you all donald -- svenja o'donnell. the gains have come to a close. small gains in italy, declined here in the u k him of france and germany as -- in the u.k. france and germany. that is it for "on the move." "the pulse" is next. later they are talking to lorenzo bini smaghi. stay with bloomberg. follow me on twitter. weigh in on all of today's stories. are we going to get something concrete out of this eu leader summit taking place in brussels? concrete not only on greece but

what david cameron wants. british proposals he hopes will lead to a positive referendum. i will see you nice and early tomorrow. ♪ . .

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francine: dicing with default. talks once again failed to produce a deal. >> cameron is ready for the next stage in his e.u. negotiations. finnish businesses urge him to keep the u.k. in the union. francine: cutting their costs. h & m misss estimates. it is a dollar strength hits garment costs. welcome to "the pulse" live from bloomberg's european headquarters in london. i'm francine lacqua.