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.

nikos: -- manus: and i'm manus cranny. francine: talks have this morning resumed between the greek prime minister tsipras and the country's creditors. it comes after a long night of talks in brussels failed to produce a deal in the standoff over bailout aid. >> discussions yielded little progress. joining us for more is hans nichols in brussels guy johnson in athens. more talks started early this morning. 6:00 a.m. when they started the technical talks. now leaders in discussion. where are they? hans: well, they are still in the meeting. this is a meeting between lagarde and draghi. that meeting started about an hour ago. they had about eight hours pause in there when the meetings broke

up at 1:00 a.m. last night. what could have changed in those eight hours? maybe everyone got a little rest or went back to their negotiating teams and thought of new strategies. the euro group of finance ministers are supposed to meet at 1:00 here. their meeting last night was basically cut short, over before it began. the old plan was to have the finance ministers bless whatever deal you come from the core creditors and then have it go to leaders summit. there is still plenty of time. as long as the leaders will be here there is an opportunity for a deal to get everyone on the same page and then to get it to parliament and have them vote on it monday or tuesday. still, it looks like the sides are hardening. comingout yesterday, very little reason to be optimistic if, you're looking for one reason to

be optimistic, it is that's the greeks have not packed their bags and flown lack to athens. there is still a prospect for a deal. francine: i guess tsipras has to make a choice whether he backs his own party or greece at this point. talk to us about the funds available, hans? hans: the old thinking was and this is what they were saying in luxembourg. you needed to unlock that 7.2 billion in leftover bailout funds to pay the miver. now it looks like they will be able to dip into a separate pot of money the s.n.p. that is about 3.3 billion from early july. this is from old loans. only thing you need to get clearance is the euro group finance ministers to agree. importantly and crucially you would need to go back to state and national parliaments to get that money through. that gives you a little bit of

breathing room and an escape out but you still need a deal by june 30. manus: guy let's turn to you. you are in athens and have been there all weekend. sip vas standing firm in brussels. i presume this is about posturing on the domestic front as well in terms of his party? guy: i think posturing probably is not right word. crucially he needs to keep his party behind him in order to make his government continue to function. i think you probably could pass what the institutions are suggesting in the parliament behind me. if he brought that deal home it would pass the house, but it would not pass the house with a majority and that is critical for tsipras. he understands if his government is to continue, we're going to have to have a majority of those backing him.

that is by no means certain. he is finding himself in a very very difficult situation when it comes to pension reform and cuts and taxation increases on not just the wealthy but everybody. changes in discussion at this stage surrounding the issue of restructuring. there is so much he has to deal with to keep his party onboard. i think he is going to find it very, very difficult at this stage. as hans said, we're likely to get a vote over the weekend. we think he is back probably friday night or early saturday morning. you could have a vote late saturday night. you could have very late night procedures taking place. saturday or sunday we could get a vote and then as hans said maybe a vote on monday. if we don't get the right substance, you could see early elections here in athens and greece once again. guys? francine: guy, what is the latest on the banks? what do we know? guy: we haven't heard much about

it since the beginning of the week. it will be interesting to see whether orders for outflows increase today into tomorrow. i suspect if we don't have a deal passed by both the fleersd brussels and then parliament here on saturday/sunday, then i think the conversation surrounding currency controls will come back to the forein discussion and we'll start talking about it again. it is not there now but it is not far away at the moment. the banks remain absolutely pivotal at this stage, fran. back to you. francine: guy johnson in athens hans nick nols brussels. manus: this is on the swiss national bank. still talking took into account swiss franc being overvalued. you don't see growth coming through in the second half of the year.

this would be a -- you take banking out of the swiss economy, what are you left with? not a lot. a bit of tourism. here is the euro swiss moving this morning up .2%. francine: seeing a lot of volatility in those talks that are not going to plan. it seems that what the president of the swiss national bank is saying, the frank is still markedly overvalued. let's get more with alex and jamie. alex, let's kick it off with you. the markets were so sure that we would get a deal on greece. we had quite a big rally. it seems that every thinks we will get a deal. what if we don't? >> that is a very difficult thing for markets. it is a binary outcome really.

it is quite difficult to place your bets on something like that. i think they want it to be a deal. the fact that everybody is still talking looks like there will be a deal. there is a big risk that won't get one. manus: jamie, how much -- the tiny proportions for g.d.p. in the eurozone, it is inconsequential. it is not going to make any difference. what is your view? >> well, it is small. there is no getting around that. we did some calculations looking ahead of the current bailout and negotiations and about how much money greece would need to tide them over until 2016. it is small. francine: the problem of course is that it is not the amount of money. it is the political will and the

fact that if you're going to lend money then the creditors want something in return. for me, in my mind, the prime minister of greece has to make a chance of whether he continues having the full back overing his party or actually makes sure that greece stays in the euro. do we know about his thinking here? >> i think the markets are -- appear to have gone through some of those lines. it is questionable from here whether he has the backing of his parties. will he go far enough to actually get a deal made? manus: the e.c.b. is having to lean on the politicians at this time. the e.c.b. has this -- well, it is almost perceived as benevolent. >> the e.c.b. are not political as they keep saying. they are just sticking to rules of the e.l.e.

they will keep doing that. the problem is the current program runs out on tuesday. francine: will we have an agreement? [laughter] as an economist, i understand that you're not a political gambler. which is almost what this is. what happens -- i'm still unclear, if we don't have a deal is it euro positive or euro negative? >> it is probably negative. it will be kept open even if there is a whiff of a deal. it would be very difficult to close it down straight away. manus: the reality of greece in the near term, get bailout number two done and then hopefully deal with the reality. greece cannot continue with this amount of debt. >> i think everybody is agreed about that. it is just a question of what you get in return for giving that debt relieve leaf.

really the institutions that they now owe the money to is not going to bring down the banking systems in europe now. it is not about that anymore now it is a case of the package extended. francine: do you think thlt be extended and that we will have a positive outcome? >> i think the balance of probability is yes because as i say i think tsipras has stepped over that line and the package will pass because of the other parties and then the government falls and we probably have elections. but it is going to go to wire. manus: alix stewart and jamie murray. thanks. you're going to stay with us. francine: here is a look at what else is on our radar this thursday morning. south korea says it will introduce a stimulus package of

more than $13 million to cut the political impact of mers. the disease has infected 18 people in south korea and killed 29 and more than 120,000 tourists have canceled trips to the country since the outbreak began last month. manus: david cameron is in brussels today. he arrives at the june meeting of the european council fresh from talks in berlin. he will continue to outline his proposals to other european leaders over a working dinner. francine: the alfa romeo model will go on sale at the end of the year. manus: years of discussing when

and how the federal reserve will raise interest rates, probably isn't going to prevent the market participants from being caught offguard so says goldman sachs president. that was in a podcast on the company website. he said we're probably less ready than people think. economists at the u.s. central bank will begin raising the benchmark target in september after more than six years of near zero rates. francine: that brings us to today's twitter question. are the markets ready for a fed rate hike? this has happened in the past. the fed has been giving all the signals. it has been telling the markets but have the markets already priced it in? you can tweet us at flacqua and manus cranny. manus: 9:30 we'll be asking the e.u. ambassador to russia about

sanctions against moscow. bini smaghi joins us from frankfurt. francine: at 9: 50rks we'll be looking at some -mail blunders. that is coming up on "the pulse." we're just getting started. ♪

manus: welcome back to "the pulse" live on bloomberg tv, radio, streaming on bloomberg.com. francine: david cameron is in brussels today. the prime minister arrived fresh from talks in berlin after talks with angela merkel woverbing a working dinner. manus: sir richard branson has warned that britain must be in the room fight r for reform. let's get more from svenia. today ooze about bruzz brussels and detail. >> this is really the next step in renegotiations. he has gone around the european capitals. he has established where his friends are pretty much.

what he can achieve easily what happened the sticking points are. so this is the first formal occasion official e.u. summit where he can really set it. the problem is it is still all about greece but it is a chance for him to set out his agenda. francine: does david cameron have enough friends in europe to push through the reforms he needs to then come back home and convince vote hears the he has done enough? >> of course we don't have a set official list of reforms which strengthens his hand. because other leaders don't really know what position he is going to come from. now there are certain elements improving the markets, cutting red tape, there is broad con sess us on it. eastern european countries are massively -- germany has indicated it is the red line. that to them -- the freedom of

movement. we really have to see where we go from here on this issue which we're likely to be hearing a lot more about. manus: we're hearing from a lot of businesses regarding the e.u. talks. there is this letter signed by as we know a typically pro position group, the likes of branson, etc. how important is this? >> it is pretty important. what is key here is they are saying it is better to negotiate from within rather than making threats. cameron has two audiences here. the tory party. the euro skeptics who are agitating who want him to talk tough. he also has the audience back home. at the end of the day, they are the people who'll be voting in this referendum. if he has branson and soros saying it is best for britain to stay in the e.u. it is likely to have the most sway with voters.

manus: thanks for putting all of that in context for us. francine: new to get more with alix stewart and jamie murray. thank you very much for sticking around. alix if, you look at fixed income, we haven't been doing bad at all in terms of gilts. how concerned are you that people start getting spooked by the referendum? >> it is something that has been out there for a while and we know it is come coming. to get spooked from here, there has to be the belief that a brexit is a possibility. it has been a source of on one hand it is a source of uncertainty. so therefore you might expect the economic growth might be a little bit slower but obviously the rating agencies said obviously a brexit risk could impact the rating. manus: one of the things a came

out from a conference i attended yesterday, the job rate -- the job explosion or employment explosion will tailor off. income is going to ramp higher. do you share that level of optimism, jamie? >> no, not really. forecasting productivity to rise and it never having done so does -- your confidence somewhat. we're hopeful for a very gradual pickup. we don't think it will get to the trend rate, the 2% historical average for many years. francine: what's happening with productivity? we talk about the productivity puzzle. the u.k. is still dependent on financial services, product i everity goes down because of regulation. >> there has been so many -- about what's happening with

productivity. it is a puzzle. nobody is sure. it may well be that businesses have been a little bit uncertain given the depth of the recessions and the likes of it. rehiring labor. if that is the case, then we'll see wages not rise as fast as they have been rising and productivity picking up. manus: we mentioned it earlier during the twitter question. the fed, goldman sachs' president said the market probably is not fully prepared for a rate rise. he said we're probably less ready than people think. it bopet surprising to me if there are some interesting reactions on the official change in the rate policy by the fed. if we look at the statement, this is a huge institution making a call on the preparedness for the markets. what cohn said, it is not the

first move, it is the second the third, the fourd. do you agree? >> i think it is the trajectory that is important it is if you look at what is priced into market, it is not that much in term turnovers speed of it. it depends on whether they are late or early in raising rates as to how fast they will have to do it from there. francine: will it make the e.c.b.'s job much more difficult or buzz it will be such a small rise, we talk about outflows for emerging markets. the fallout globally if we are expecting that, it will be fairly limited. >> we're more worried about the fallout. i think actually it may be slightly easier. francine: why? >> just because over the diverging policy. manus: alix stewart and bloomberg chief economist jamie

murray. thank you both for being with us this morning. francine: south korea said it will introduce a stimulus package of more than $13 billion in response to the mers outbreak. it cut its g.d.p. outlook for this year also. tell us more about the details and basically the reaction to them? >> well, i think from a market standpoint we had a rather muted reaction. i think there is a few reasons for that. one is that there have been so many comments from investors and politicians and the government over the last couple of weeks that they really needed to be some -- there needed to be some kind of stimulus. i think the other side of this is that the market is still waiting. the government still hasn't told us how much is -- of this stimulus package they have announced, $13.5 billion is going to be new money versus how much is going to be redirected interest other programs or other budgets. so i think for now we're not

entirely sure how much of an impact this is going to have on dealing with the mers -- the economic impact of the mers outbreak. manus: put this stimulus in some kind of context for us. we're dealing with -- we have record low interest rates already in the country. so just give me some kind of context in terms of size and a potential impact. >> yes, i think part of context of this goes back to last year when we had the ferry sinking and what happened after that was a very big fall in consumer spending. the economy really hasn't recovered from that time. and then what happened with the mers outbreak is we have perhaps seen an even bigger fall in consumer spending. it was at the lowest since 2012. we have seen department store sales down 30%. more than it was down after the

ferry sank. the context of this is still a recovery from after the ferry that has been hurt by the mers outbreak. that lowered rates to a record low. this was the government's response. a two-pronged attack on trying to deal with this fallout. francine: thank you so much. the very latest on south korea. coming up, the european union and russia extend sanctions to each other. manus: join us both on twitter. fran starts earlier than i do. these new hours are killing me. 6:00 a.m. i'm at manus cranny. francine is at flacqua 3. -- flacqua. the question is are the markets ready for a fed hike?

how prepared are you? join us. we're both there. ♪

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call 800-501-6000 to switch today. perks are nice. but the best thing you can give your business is comcast business. comcast business. built for business. francine: welcome back to "the pulse." i'm francine lacqua. manus: and i'm manus cranny. here are some of the bloomberg top stories. talks have resumed the between greek prime minister tsipras and his creditors. it comes after a long night of talks in brussels failed to produce a deal to end the standoff over bailout aid. eu officials say discussions yielded little progress and no breakthrough is in sight. francine: david cameron is in

brussels today. the prime minister arrived at the june meeting of the european council fresh from talks in berlin with the german chancellor and will outline his proposal to other european leaders over a dinner. manus: south korea says it will introduce a stimulus package of more than $13 billion to cushion the economic impact of mers. it also cut its gdp forecast this year from 3.8% to 3.1%. the disease has affected 180 people in south korea and killed 29. more than 120,000 tourists have canceled trips to the country since the outbreak began. francine: earlier this week, the eu extended sanctions against russia. president putin responded by lengthening his own counter sanctions. is there any end insight to the standoff between russia and the west? manus: for more, we are joined from moscow by the eu ambassador

to russia. the gout is osaka's -- vygaudas usackaas, great to have you with us this morning. more sanctions imposed on russia. how much is this going to put more pressure on russia. they are already under refresh and -- repression. >> they are going through tough times. it is a deep recession. we witnessed a huge capital flow last year. there is a huge uncertainty among investors, and sanctions are aimed at influencing the decisions of russia to behave in a constructive way through the separatists in donetsk and luhansk, so as to make sure we read these, stability and implement the minsk agreement. francine: how dangerous is the

situation at the moment? how concerned are you that this will escalate? >> it is kind of half-full-half-empty glass. on one hand the february agreement and mask -- in minsk has provided a framework which was so necessary. unfortunately, we have not seen fully russia engaged in terms of honoring the commitment of minsk, ensuring that the cease-fire is in place, that heavy weaponry is withdrawn, and that tranquility and stability is returned back to the neighborhoods of luhansk and donetsk. manus: there are many ways to assess whether the sanctions are having a material impact. we look at putin's personal ratings in the country. they are at a record high. 89% of those polled show

approval for putin. sanctions are not working internally in terms of meyer ring his position in the country, are they? vygaudas usackas : with all due respect, we sometimes joke that we would not be surprised to see 101% approval rate. bearing in mind the closed society, control of the media, and lack of choice. people i speak with our afraid and intimidated to express their real opinion. second, the sanctions are imposed as an instrument to influence the behavior of russian leadership. we've seen some movement when it comes to the signing of the minsk a court and will continue to do so until the minsk agreements are fully implemented as was stated when we adopted the sanctions. francine: i'm trying to

understand how worried you are that this is going to escalate. in six months, will we have more sanctions? putin is talking about possibly using heavy weapons. he mentioned nuclear arms. is this just talking, or should we be more worried than we currently are? >> i think we have to be realistic. we are facing a severe risk in our relations, what i call the clash of the worldviews between the west and russia. we see -- [indiscernible] the way russia is not respecting international provisions when it comes to wto rules or the way it is behaving in ukraine. we have that in front which we

have to confront, while at the same time using the leverage we have and the european union has when it comes to our trade relations, bearing in mind the income russia gets on the budget to try to get russia to act in a more responsible way, honoring the agreements which will lead to peace in ukraine. manus: it begs the question, why did you not raise the level of sanctions further? if you want to extract more pressure and you are saying you have had little progress from putin, why not go for harder sanctions? >> all options remain open. that has been the policy from the beginning. at this particular stage, what is most apartment is that we do not allow further escalation in ukraine. so as to see that minsk

agreement about the cease-fire about the role of heavy weaponry, are implemented and the political process is intact. francine: ambassador, thank you. vygaudas usackas in a bloomberg exclusive. manus: now, it is not just u.s. companies that are hit by the strength of the strong dollar. european companies are impacted as well. that was demonstrated in results from a retailer. with more on the story it is caroline hyde. talk us through the story. caroline: pretty interesting stuff. we got the sales from h&m. many of their brands looking pretty good. up more than 20%. why then is profit instability up 11%? we are seeing margins, the

measure of profitability, being squeezed. gross margins, 59.4%. worse than analysts expected and more than a 1% fall from the previous year. this is the lowest growth margin for the second quarter we have seen in six years for h&m. sales for june are looking relatively strong. we are seeing them up about 14%. all attention is on the gross margin today. that is why you are seeing the share price fall. if we look at the reasoning, it is the dollar. the u.s. dollar is making the cost of doing business more expensive. we can look at the dollar over the last 12 against the swedish krona. overall up 22%. it is driving up the price of doing business purchasing cost in particular. when they have to source the goods they sell, the costs are

being brought up. they are battling this dollar strength. third quarter, fourth quarter, they say this whole environment of the strong dollar is going to have a very negative effect on the business. this is a business that is trying to splash the cash, to invest. they've opened up eight new online areas, poland, portugal, romania. they are also investing in the high street. they are looking at china macau. they are ramping up the cost of doing business. meanwhile, sales are doing well but not well enough. francine: caroline, thank you. up next, we will be joined by the societe generale chairman joining us from the international institute of finance. ♪

francine: welcome back to "the pulse." manus: now, with hurdles in greece's negotiations remaining, we are joined by the chairman of socgen the former member of the ecb executive board, lorenzo bini smaghi. he joins us from the institute of international finance summit in frankfurt. great to have you with us, lorenzo. the language that we've heard so

far, confusion, diffusion, political will being squandered at the moment on these negotiations. what is your take on this, on the negotiations thus far? we've got leaders in negotiations area it really is 11th hour negotiations again. >> yes, again. it is not new in europe, i guess. i think we have gone past the point of no return. it could be very difficult for greece, for tsipras to go back and say, i couldn't get a deal. it is so difficult for mrs. merkel and the other heads of state to say to greece, we will let you go on your own. they have to just muscle the last details and be sure that the deal somehow is agreed. this doesn't mean it is a good deal, but at this point, we just need a deal. francine: we understand,

everyone apart from maybe a few people in power in greece understand the importance of a deal. you laid out why we need a deal. do you think we will get a deal? do you think we will get this half-baked deal that you were alluding to? >> the point is that, again, it is a lot of austerity measures increasing taxation on business rather than spending cuts rather than real reforms to make the economy more competitive. to all those who criticize maybe the key issue is austerity. when you negotiate against the law, that is the only thing you discuss about. a few more points about taxes. it is not very efficient. in the end, it is not good for

the economy, for the prospects of recovery. manus: but the creditors seem intent on haggling over those my new show that you referred -- over those minutiae that you referred to. they will go down to the wire on percentages. are the creditors treating greece anymore fairly or unfairly than they did with ireland or cyprus or -- are they being any more unfairly ♪ ♪ -- any more unfair than with other bailout countries? >> know, certainly for the imf, the imf has the key issue of equality of treatment. it is very broad. it is all european governments. they want greece to be treated

as any emerging market. they are asking the managing director who is in brussels to ask greece to do the same kind of commitments, prior commitments and implementation before the deal is done. which may be interpreted as a lot of arithmetic. that is the way we need to measure the sustainability of the debt in greece. to avoid greece coming back in six months or one year saying i need more money. that is the big risk. francine: do you think at the moment the creditors are being too lax or too tough? this is a headline that just crossed bloomberg. mr. tsipras have been given a deadline of 11:00 a.m. that is local time. that is in 15 minutes. he has to come up with a counter

proposal. deadline to me seems that if he doesn't come up with that, they don't have a deal. is that too harsh? >> the 24th hour is the 24th hour. markets have to have answers. the key issue what would have been desirable is some reforms in the economy. but then if the greek government is not willing or able to implement these reforms because of the opposition of some vested interest unions and so forth, the only discussion is about percentages of taxation. it is very unfortunate. i don't think it is an ideal way to think about restructuring a country and making the country being able to sustain itself in the monetary union, but that is where we are. it is not necessary a good deal,

but it is the only one on the table. if the greek government doesn't like the proposals, they have to come back with alternatives which make the circle square in the end. manus: making the circle square as you say may well involve greece remaining within the eurozone and the currency. does the euro currency, out of this political debacle any stronger, or is it weakened by greece remaining if that is the outcome? >> over the long-term unless greece makes fundamental reforms, which is not by raising taxes, we will come back with greece one year from now, two years from now it is going to take a long time. from a political point of view being able to manage this crisis , i think will strengthen europe

over the medium term. i think the citizens in other countries have understood the risk of voting a party which goes to the elections promising the moon but then when it comes down to earth, the moon is not consistent with being part of a monetary union certainly not part of a balanced budget which you need to have. i think it is a lesson also for populous around europe about the risks of following easy promises rather than trying to work with the rest of the union, with the institutions with the other countries, to improve prospects of growth in the economy. francine: you were a member of the executive board of the ecb. are you concerned that the ecb is playing too much of a role in this through the ela given to

the greek banks? >> the ecb is in a difficult position. if it doesn't grant emergency lending assistance to the banks, the banks have to close down and it is a panic in the country. you don't want to pull the trigger. on the other hand, you have to follow the rules. if the country doesn't want to be in the euro or doesn't want to sign a program, then if you continue lending and the country exits from the euro then you have a huge loss which is paid by your shareholders, that is your taxpayers. it is a difficult balancing act. the ecb has to explain to the country what are its tools. i think that we wouldn't have had the greek document on monday and the start of the negotiation unless the ecb had made it clear that beyond monday, it would not be able to grant any additional

liquidity to the banks. i think it is a difficult act but it is played by an institutional role. francine: all right, lorenzo bini smaghi thank you for joining us. manus: now, here are some of the bloomberg top headlines. tesco the u.k.'s biggest supermarket chain has received offers from private equity firms including car kyle -- carlyle group and kkr. they say the unit could fetch more than $5 billion. francine: billionaire investor carl icahn has sold his shares of netflix, reading a profit of at least $1.6 billion in three years. netflix is a top performing stock in the standard & poor's 500 index this year. manus: h&m has reported second-quarter profit that missed analyst estimates.

as it battled with the strength of the u.s. dollar, income rose. francine: up next, gmail introduces an undo send feature. we will look at some classic e-mail blunders that might have been avoided with such a function. ♪

francine: welcome back to "the pulse." we've had some breaking news on greece. we understand, this is that greece and mr. tsipras have been given a deadline. he only has six minutes from now to submit a proposal. it is unclear whether this is something technical, so if they don't have it before 11:00 local time, they can't actually meet when the leaders are scheduled or whether this is to put pressure on greece to come up with the goods. manus: we don't exactly know what the details are, but let's cross over to hans nichols. hans give us a sense of what we understand here. hans: my understanding is that at 11:00 p.m. local time, in about five minutes, greece has to put forward a formal proposal. our understanding is that this is a mere technicality.

to get something in by the 1:00 finance ministers meeting, you would need to have something on paper in the next five minutes. if you don't have a submission from the greeks in the next 5-10 minutes, you could still go to the eurogroup and have this take it or leave it option. this is one possibility. the eurogroup could then go forward with the proposal and handed over to the greeks. at that point, we would have a take it or leave it moment. we still don't know if there's been any progress in this morning's meetings. they went in about two hours ago. that's what we are trying to figure out here. as soon as someone comes out of that meeting, we will try to get you a readout. francine: hans, thank you so much. it is difficult to keep up with these proposals. we hear about things. certain finance ministers tweed. manus: six minutes to run and

you have to hand in your homework. francine: the prime minister of greece has been holding these nonstop talks. we will see a something comes out of it. for our viewers, it is a second hour of "the pulse" and we will focus on greece and the u.k. ♪

francine: dicing with default. greece teerts on the edge as tensions rise between brussels and athens. >> cameron is ready for the next stage in his e.u. negotiations. british businesses urge him to keep the u.k. in the union. francine: h & m misss estimates. it is a dollar strength hits garment costs. manus: good morning to our viewers in europe. good evening to those of you in

asia and good morning to those of you waking up in the united states. i'm manus cranny. francine: i'm francine lacqua. this is "the pulse" from european headquarters in london. manus: we start with breaking news in brussels. some say the deadline for greece to agree on a debt deal has within the last few secondses just passed. it comes after a long night of talks failed to produce an agreement to end the standoff over the bailout. joining us is hans nichols in brussels and guy johnson in athens. hans, let's go straight to you. talks are underway this morning. we understand there was this ultimatum to make or break in the last few minutes. what was that about? hans:, well, our understanding of this is that there was a deadline given of 11:00 p.m.

local to have a staff level of agreement. technical talks start at 6:00 a.m. here and then the leaders talking, tsipras, lagarde from the i.m.f. and draghi and juncker is in there as well. now we still don't have a readout of what's happening in that meeting right now. the one that is still going on. the one that started about two hours ago. it follows a two-hour meeting last night. it took a two-hour break before they reconvened in brussels. no progress in the first two meetings. we're still waiting to find out if anything has happened. there is a question as to what happens with the banks. if this day continues and there is not much progress. guys? francine: what do we know about the e.l.a. and the state of the

banks today? guy: we think there was a call at 9:45 this morning. we don't know exactly what application was made by the bank of greece. there is a lot of confusion surrounding the banking sector. we don't have any additional information. we know the call. we think it has taken place. we don't know exactly what the outcome is. i would suspect if i was running the shop that i would wait and see exactly what the outcome of this meeting is if i was sitting on the other side of the table from the greek banks. we don't know is the honest answer. we're waiting to see how the situation unfolds in brussels. this feels largely procedural. what we're also getting is this could carry on. we're not there yet. there has been so much talk of deadlines and this is just another one of them that we could carry on talking for still quite sometime. that we could end up talking

well into friday night and saturday morning and whether or not that would produce a deal that could be brought back here to parliament. i don't know. yes, we have a deadline. it feels largely procedural at this point. the f.t.'s report i'm told is pretty solid. francine: do we have reason for optimism? as long as the greeks are in brussels, it means they are talking and we should have hopes? hans: yes. still, you see alexis tsipras' motorcade heading toward the airport. they need to bless it procedurely with enough finance ministers and then the leaders. the most important thing is getting it passed in the athens parliament so they can vote on monday and tuesday. i don't want to diminish this deadline at 11:00 or dispute the fact that we are five minute or one minute towards midnight. but there is still time.

it is thursday mid-morning in brussels and if this program doesn't really end until midnight on tuesday. here is the question for you guys. is it midnight tuesday in athens or midnight tuesday in washington, d.c. which would be 6:00 a.m. in brussels 7:00 a.m. in athens. that's how much time we have. francine: it is the european union. we know the i.m.f. is flexible. we could say crunch time is, i don't know, give us 10 extra days? that is how we roll. thank you very much. guy johnson. huh? guy: yeah. hans: the i.m.f. doesn't have that much. if the program lasts until june 2030, then the european central bank is going to have a very difficult time continuing to extend emergency liquidity. that june 30 deadline is real, maybe not for the i.m.f. but it is for the e.c.b.

francine: right. we're just getting news of everything the e.c.b. has asked for. they got the e.l.a. funds it has asked for according to a greek official. manus: that is on a daily basis. how political is the e.c.b. becoming in its own negotiation which is something we'll talk to our guests about. thank you, guys, hans and guy down on the ground there. let's talk about the whole subject now the global head of credit fixed income joins us along with jamie murray. this sounds like a high wire act, steven, great to have you with us this morning. very welcome to the program. the e.c.b. stands ready to review the e.l.a. in the next 24 hours. continuing to fund the greek banks. are you optimistic?

>> i'm optimistic that an agreement will be reached. not a permanent agreement but perhaps a kick the can down the road type of agreement. there is incentives on all sides to reach an agreement. is there political will and a face-saving manner in which to agree to terms that does not upset their political base back home? francine: jamie, what do you make of the deadline? in the past, i know they have bundled with the -- to the i.m.f. is it likely that they will come up with another solution if we're close in agreement have not quite reached it? >> they are an inventive bunch. we know it is the money -- there is some interest on the s.n.p. program. the money could come that way to pay off the i.m.f. that would happen only if a deem is agreed between finance ministers. manus: the greeks have taken

money from that program before in 2014. there is some progress there. let's bring this to a market context. there hasn't really been an automatic selloff in the europian bond markets. you're a bond man. a deal will come. quantitative easing will continue and therefore you would want to see the opportunity to buy bonds. >> i think one could ark there is complacency in the marketplace. i think the market positioning and expectation is for a last-minute agreement and i think the market right now is not appropriately pricing in the tail risk downside scenario which could occur. we're also in a very unusual market environment are tail risks are elevated on both ends offer the bond market spectrum depending on the outcome. if there is a resolution, then bond marks could suffer because the fed comes back in play with rising interest rates. francine: what happens if we

don't get a decision? is q.e. big enough to -- or are we going to hear or see a huge swing in yields? >> we would certainly see a selloff in the markets if there is no resolution and we head towards a grexit scenario or capital controls come into place. i don't think you'll see a panic in the beginning. you'll see a widening of really a spreads and risk assets and a rally on expectations of bonsd and u.s. treasuries. >> i think the situation in the periphery outside of greece is very different than within greece. the very large political differences. my feeling is i don't think you have an enormous selloff. manus: steven, just one last question. our twitter question of the day is are markets ready for the fed to hike?

goldman sachs said it will be the second one, the third one. are you ready? how are you positioned? >> i think the market and everyone is focused too much on when the fed will hike opposed to what will be the pace of hikes. the hike does not necessarily represent an ongoing course of the increasing rates however after the hike they will likely pause and reassess the data and temper expectations to make sure that the market does not become overly reactive to expectations. francine: hold that thought. we'll be talking much more about the fed next msm here is a look at what else is in our radar. south korea says it will introduce a stimulus package of more than $13 million to cut the political impact of mers. the disease has infected 18 people in south korea and killed 29 and more than 120,000

tourists have canceled trips to the country since the outbreak began last month. manus: david cameron is in brussels today. hoping to advance his renegotiations of britain's membership in the european union. the prime minister arrives at the june meeting of the european council fresh from talks in berlin yesterday with talks with angela merkel. he will continue to outline his proposals to other european leaders over a working dinner. francine: c.f. has revealed its new alfa romeo model that will go on sale at the end of the year. taking on models like b.m.w.'s 3 series. manus: years of discussing when and how the federal reserve will raise interest rates, probably isn't going to prevent the market participants from being caught offguard so says goldman sachs president. gary cohen. he said we're probably less

ready than people think. economists at the u.s. central bank will begin raising the benchmark target in september after more than six years of near zero rates. francine: that brings us to today's twitter question. are the markets ready for a fed rate hike? tweet us at flacqua, at manus cranny. we'll be talking about in a lot more after the break. ♪

manus: welcome back to "the pulse" live from bloomberg's european headquarters in london. francine: europe is discussing how the federal reserve will raise interest rates, probably won't prevent market participants from being caught off guard according to goldman sachs' larry cohen. manus: he said it won't be surprising to me if there are some interesting market reactions based on official change in rate policy by the fed. francine: steven ho is still with us and also bloomberg's jamie murray. thank you for sticking around. we were mentioning the fed before the break. you were saying it is not first rate that is the issue. it is what comes afterwards. is it a communication problem from the fed or do the markets

still have blinkers on and they are not quite ready to deal with the fact that interest rate also go up? >> i think the market is aware of the expectations and if you look at the market forecast, it is slightly different than what economists are forecasting. interest rate futures indicate there is about a 30% possibility of a rate hike in september. if the fed does hike it it would create some short-term volatility. i think the key issue going to relate to the messaging around the first rate hike if and when it occurs. one of the key factors now is interestingly enough if, the greece situation deteriorates, it is difficult to see a scenario where the fed will be in a position to hike rates. >> and this goes somewhat to janet yellen's comments last week. she said too much attention is being placed on the timing of that first hike. what should mattered is the market participants on the

entire trajectory. i suppose this is the whole point which is going to be the slowest rate hiking cycle in the history of hiking. that is the essence of what they need to communicate to the market or want to communicate, isn't it? >> yeah, and with good reason really. we just don't know how the economy are going to respond to the increase in interest rates. we have a bit of overhang of leverage. it is not clear how much they can sustain. this is an obvious case of being extremely carbgsr cautious about it. i think -- cautious about it. i think that is reflected. >> there is not a lot of fixed assets in fixed income. if you a little bit long-term time horizon where we see value in terms of spread risk is u.s. investment, corporate credit, we think has value. we believe that segment s of the bank market continues to have

value while offering interest rate protection as well. long-term we are favorable on come postseasons of the emerging market. it is a matter of time horizons. francine: everything. manus: look at what's happening with the leaders in greece. there was also another bloomberg article at the start of the week. we have seen some of this come to fruition a couple of times in the u.s. bond market. liquidity, liquidity, liquidity. there is a real concern. perhaps in other bond markets on liquidity. does that concern you? >> liquidity is a big concern. it create an environment for much greater volatility going forward. one of the negative impacts has been the sweezing of liquidity in the -- squeezing of liquidity in the market places. we're finding it is very difficult to transact anything of meaningful size. even in the treasury markets

which should be the most liquid markets. >> volatility is obviously important. there is macro economic impact. a lot of pricing happens at the longer end of the curve. interest rate movements don't necessarily translate one to one in the broader economy. francine: what is the impact on emerging markets from a fed rate hike? >> when the fed hikes rates, expectations that we'll see, outflows in emerging markets. that has been the trend in the past. i believe some investors believe this time it is different in terms of the fundamental outlook in terms of emerging markets. i think there will be some demand at some level of outflows. >> bank of america wrote a report. the great rotation.

nearly 11 billion dollars came out of bond funds and 11 billion went into equity funds. do you think the great rotation -- be the first to call it properly. >> i think the discussions about great rotation is probably a bit overblown. in fact, even though we may see periods of bond outflows into equities i think in many ways you're seeing the reverse as equities perform quite well some segments of the market particularly pensions will want to insulate further and you're almost seeing the opposite take place. one of thes in the capital market is you're seeing an ongoing correlation between equities and bonds which are supposed to offset each other but they are moving more in tandem because of the impact of market policy. francine: thank you very much. steven oh and jamie murray.

manus: coming up, the latest on syria's war machine.

manus: welcome back to "the pulse." there is a deadline. another deadline. this time it is around the deal on iran's nuclear program.

it is barely days away. there are some items that won't even be up for discussion such as how the country uses oil to prop up the regime of syria. president bash ar al assad. elliott, it is not a secret that the iranians support assad, but now we have got some numbers. >> that's right manus. the estimates do vary. the u.n.'s special envoy to syria puts it around $6 billion a year. if you throw in money spent on fighters from hezbollah, the militia that is helping to prop up the regime on the battlefield, that figure rises to $20 billion it is reckoned. one of the most important things that helps the war machine is oil. syria actually used to produce enough oil to satisfy its own

domestic needs and even exported a little. that is now down to just 20,000 barrels a day. 5% of what it wasful plugging that gap is iran. according to analysis of shipments from iran, that go around arabia into syria. some 10 million barrels have flown from iran to syria this year. the oil prices around $50 a barrel worth about $600 million. syria probably hasn't been paying for that because it hasn't got the money and under the regime on iran's oil industry it can't export to syria. it can't sell the stuff to syria at least, but perhaps it has found a way around that by giving the stuff away. that is one way of skirting their sanctions. francine: talk about the nuclear deal with iran. one big oil company, shell, is preparing to return to iran to

be ready if sanctions are lifted. >> yeah, oil companies in general are queuing up to get back into iran. shell is the second company to acknowledge that it has executives in tehran. they were there to discuss the $2 billion shell owes the iranians and the other, sizing up opportunities once the sanctions are lifted if and when they are lift. that is not really a secret. the c.e.o. of shell said earlier this month the minute sanctions have changed we will look at opportunities in iran. which of course is the place which has the fourth largest oil reserves in the world. now oil companies are queuing up to get in. but the iranians need these oil companies because their capacity has seriously been degraded

during the sanctions regime and two because it needs western technology. they will probably offer better terms to these western companies than the last time it was opening up. francine: elliott, thank you. elliott gotkine there in tel aviv. we're back in just a couple of minutes and we'll be talking about greece and a lot of market movement. we'll also hear from the e.c.b. ♪

francine: welcome back to "the pulse" live froo bloomberg's european headquarters in london i'm francine lacqua. manus: i'm manus cranny. francine: we're getting some breaking news out of the e.c.b. we understand from sources from the e.c.b. the e.c.b. is set to leave the meeting unchanged. we knew earlier on that actually they had given everything to the greek banks that the bank of greece asked for. i don't know if we see anything on euro/dollar because 15 minutes ago we knew they had

received all they wanted, it has probably a limited impact on markets now. e.l.a.'s ceiling unchanged. manus: this is on a daily basis. they are conning to review this and what they need on a daily basis. it gives us space to those negotiation s that areongoing. ok. that is the breaking news. let's gets a little bit more now because earlier bloomberg spoke with commerzbank's chairman. here is what he had to say about his bank and handling the situation in greece. >> most banks including us have probably very limited positions on greece. so the direct effect on a haircut in greece would be limited. but of course the question is what kind of effect it would have on other countries. they are much more optimistic today than i was three years ago. i think that the e.c.b. is the

backstop, this is a manageable situation. the greek government is in a very difficult position. the best would of course be if the greek government and the institutions could agree on a credible -- to a good future for greece. i think that will be very difficult. if there is no agreement, then we will be facing a couple of tough weeks. if greece were to default or would leave the eurozone i think that will not be a end of the eurozone but it would be a tough situation to face. francine: let's check in on the markets. mark barton has the latest. mark? mark: these emergency marathon talks taking place in brussels between tsipras and his creditors ahead of this gathering of the finance ministers and ahead of the e.u. meeting later. the color on the map tells the whole story. if you needed evidence that

greece matters to europe francine, the euro stoxx 50, the gauge of euro area blue chips that matters and the a.f.c., this index here they are moving in unison by the most since 2011. better economic data in the eurozone. better earnings growth as well. investors are dealing with this most volatile stock market on a record relative to the united states. it matters despite the fact that greek companies only make up .1% of the stoxx 600 and greece accounts for only 2% of the euro area economy. but we're focused purely on these emergency meetings taking place within brussels today and the bond market is reflecting that as well. because yields in greece and italy and spain and even in germany are rising today. the greek 10-year up by 16 basis points. the only hane market today seems

to be the u.k. bond market. the yield on the 10-year here down by a couple of basis points by 2.1%. you mention that news from the e.c.b. the e.l.a. ceiling hasn't been raised. was there any impact? the euro remarkably resilient in the face of no news essentially out of brussels today. it was rising earlier and it is down by .4% now. according to one of our guests earlier, a strategist at westpipe banking in sydney said the euro is set to slide to 106 in the coming weeks as the focus shifts on the e.c.b. and q.e. 106 from 1.11. that is a big call. he said it will happen in a couple of weeks. bets on a weaker euro by hedge funds and other large speculators fell in the week ending june 16 to the least since july 2014. data today from the u.s. will have a big bearing on how the

euro performs because we have personal income and spending data at 1:30 u.k. time. initial jobless claims and the feesd preferred inflation gauge. the personal expenditures. that is at 1:30 u.k. time. i'll leave you with this. gripped with what's happening in athens. francine: we are gripped. guy johnson has more on the breaking news about e.l.a. guy, we found out half an hour ago the bank of greece got everything it asked for and we understand the ceiling is the same? guy: yeah. that sounds slightly counterintuitive. they asked for nothing, right? am i confusing the situation here? i think tomorrow the e.l.a. call will be the interesting one. if we don't get any progress over the next 24 hours, the call tomorrow effectively will be about making sure that the greek

banks can open on monday morning. i think that is where people are going to start focusing on over the next few hours. whether there is enough liquidity to make sure that the greek banks can deal with whatever come over the weekend and come monday morning. if that is not the case, then i think life gets very, very interesting. i think the conversation comes back to currency controls. the situation at the moment seems to be fairly stable with the greek banks. whether that changes, we'll wait and see. fran manus? manus: i know this has come up. taking money out of banks is no longer a process of standing on the streets. you can't have bank run or bank liquidity drained. is it part of the conversation that you're having on the ground there over the past two or three days, is that what businessmen are doing? is that what people are concerned about? the banks rather than politics?

guy: no. there is no way, manus that the e.c.b. pulls the plug on this situation. if the e.c.b. pulls the plug on the situation, it has made the decision for greece. now mario draghi represents the rules-based organization that is meant to be apolitical. we're in a situation that the greek banks are solvent and you have a discussion about that and greece is still a member of the eurozone, you're not going to see the e.c.b. pulling the plug. it is going to manage the situation very closely. if its decides it is going to withdraw liquidity then that is game over. that is a very different situation. so yeah, people are managing their liquidity for their companies and buying assets elsewhere trying to make sure they are hedged. individuals are taking money out stuffing it behind the radiator. the e.c.b., it has a responsibility and it is managing the situation. it doesn't want to put itself

draghi does not want to put himself in the middle of this and find he is the one responsible for greece withdrawing from the eurozone. francine: he certainly doesn't want it to be his legacy. guy, thank you so much. great work on the ground there in athens. manus: david cam ran is hoping to renegotiate the membership in the european union. he arrived fresh from his talks yesterday. german chancellor angela merkel. meanwhile group of high profile business leaders including virgin's founder sir richard branson warned that britains must be in the room for fighting for reform. not knocking on the door from the outside. what can cameron say to the press core? >> unfortunately british negotiations right now feels

like a bit of a side show with everyone everything that is happening with greece. it will be on the agenda at the summit but this is one step in what is going to be a very long renegotiation. he wants to move things on the technical stage. he has established through meetings with all the other e.u. leaders. he has been on a bit of a tour the last few weeks, what the issues are. what the sticking points are likely to be. what he wants to do is coming home and say we have had tough talks. we got this far. we're well on our way. in terms of concrete proposals sh we're not there yet. francine: how many friends, allies does david cameron have in europe to push through the reforms that he needs to come back home and say he has renegotiated with the e. numbings a credible manner? >> it depends on the issues you're looking at. some of the negotiations he is pushing for involve a smoother

functioning common market. cutting red tape. there is pretty broad consensus for that. they have voiced a lots of support for what david cameron is trying to do. the main point of contention is benefit which is eastern europe has shown opposition to. they said this is discrimination against their workers who may be coming to britain for a couple of years and they say what david cameron is proposing is paying them less than their british counterparts. manus: there is never a dull day in the british praste press. again, today, we're hearing a lot more from business leaders regarding e.u. talks. how important is it that he garners this support from business? >> we do like writing letters in this country. at the end of the day, the big audience to convince is the

british public. if you hear them telling you we need to stay in the e.u., that is pretty important and is a good way of getting that message across. manus: thank you. francine: letters of the day. i like that. manus: i'm going to write a letter. francine: it is not just the u.s. companies hit by the strength over the strong dollar this year. european companies are hit as well. h mnch. walk us through numbers. caroline: it is being hit by currency. you heard it ringing in our ears in the u.s. in first quarter earnings. second quarter earnings, when we look at their second quarter seals, they came out earlier in the month stellar about 20%. 22.1%. but then if you look at what the currencies did, we saw profit up only 11%. why are sales up so much and

profit up half of the percentage rise? profit up to 6.45 billion swedish krona. it is down more than a percent compared to last year. worsening. also it is the worst we have seen for the second quarter in six years. so clearly profits are under pressure when we're looking at the numbers. in terms of a silver lining, sales were climbing, up about 14%. sales still doing well, but prafts are where analysts and workers are looking this morning. that is where the share price is falling. the swedish krona versus the dollar, you'll see the dollar has been gaining strength. we're clearly start to go see that. sales are better in the u.s. when you turn them into swedish krona. what about the cost. this is where the problem is

coming for h & m. they are battling the strength of the dollar at the moment. it is pushing up their purchasing costs. they are buy an awful lot of their good. clearly this is going to be eroding their profitability. it may therefore remind us it is not going to get any better any time soon. the strength of the dollar is here to stay. third quarter, fourth quarter, they say is going to be very negative indeed. this is really hurting h & m. they are also trying to expand at the same time. not only are they battling these high costs but they are also investing in new retail outlets. they just opened in peru and china. they are losing money in that respects. also they are rolling out new beauty products. they even have sportswear. while they are investing, they are also underperforming. for the long-term they are trying to convince the investor base, you should buy in us. when growth is down, look how

the retail index, the stoxx 600 retailers have performed. many analysts are saying we're recommending a sell on the h & m stock. it is all about the the problems with that darn strength in the u.s. dollar. back to you. francine: thank you so much. caroline hyde there. we are just getting some breaking news. manus: this is from mr. shelling. he is saying that they have got a greek paper just a few minutes ago. the summit has given finance ministers until 4:00 p.m. a deadline of 4:00 p.m. to study the greek proposals. of course we have this high wire 11:00 a.m. headline that we had that the greeks had to submit a paper by 11:00 a.m. it looks as if i think so we discussed this with guy and hans in that it was in some ways a technicality first of all to jump over before the negotiation consist continue. francine: it is very difficult

to cut through the noise to understand what the real issue is here. the proposals come and go. we don't know what they contain. the counterproposals. in terms of the timing, the timing, the summit was meant to start at 1:00 p.m. brussels time. that may also be postponed. i would say bear with us for the moment. hans sate they are still in brussels. they are still negotiating. there is a chance of a deal and we understand they got this greek paper and they are reviewing the best possible outcome and whether the two side consist come together with an agreement 378 -- agreement. manus: the language is going to be one of caution among the finance ministers. they have been to the wire so many times. in time around it has to be a conclusive view. there really is so much at risk. the e.l.a., the liquidity, they have not asked for anymore. tomorrow is a completely

different day. where should we go? francine: alfa romeo fans, they have unveiled their new model. they hope it can challenge b.m.w. and audi. >> guests gathered in milan for the big reveal as alfa romeo sang its own praises. it is the first in a series of new cars promised by the italian manufacturer. its 510 horsepower engine was designed with help from ferrari and will go on sale at the end of the year in europe and next year in the u.s. the car is a new design from the ground up. built in the north of itly. -- itsly.

its parent company fiat chrysler, the julia has been a labor of love. >> the ability to give life back to the brand and give it its rightful place in market is something which industrially from a car standpoint was one of the biggest things we could do. >> this car is personal. he stated his reputation and alfa romeo's success on it and the models to come. alpha has invested as much as $5.6 billion in its strategy to produce eight new models including an suffer. >> -- an s.u.v. >> it is a unique car and i think it needs -- it is threatening people with success let the press drive the car. they will see how good it is. i think it is an exceptional car.

>> he wants to see alma romeo go head-to-head with the likes of b.m.w. and audi. he wants to sell 400,000 a year. with billions invested in this project and fiat chrysler carrying $12.7 billion in debt, there is not much room for error. manus: for more on the car to compete with the likes of b.m.w. and audi we are joined by our guest. will the alpha be a winner? >> i think that is the question that everyone is asking. it will be interesting to see what is going to happen over the next three years. that is what marchionne said in terms of his deadline to meet the 400,000 units to be sold in 2018. there is a lot to be seen in next couple of years. especially with eight other models coming soon.

francine: what do you make of this model? >> to be honest he had to obviously change a little bit. in the past alpha was aggressive sportsy. what they realize now is that it at the moment, they don't have any commerce. they lost all of their customers to b.m.w. and audi. they need to revamp. they also need to address younger commerce as well. that focus on the younger commerce who don't remember much of the tradition, of the history of the alpha but want to drive a car that has a sexy design, a powerful engine. francine: this is a sexy design? >> yeah. francine: i'm obviously italian. we have only ever had alfa romeos. this is not the one i would have designed. it depends on whether it else is or not. manus: i suppose.

individually we would like something rather sexy. of course the timing is really off. not only has he spent $5.6 billion doing this. you have audi coming out with a new car. b.m.w. coming out with gnaw car. his core competitors, the possiblies are they could trump him on the timing of this. >> you're absolutely right. i think the timing would have been right or wrong. last chance to have a go at it. he is trying to sell the car not as a car. he is trying to sell it that you'll fall in lover with this car. francine: maybe he will sell it to the americans. >> you're actually right. he probably would have a lot more chance in the states. in america, european cars are sexy. everybody goes for them. er in not as way ware of what the reputation is back in europe. i think in the states it could have been a lot better, especially as well, because you

only have alpha there. francine: you think this will work in the states? there is a clear push he needs to get that market share in the states. first of all, is there a chance he finally gets g.m.. if he doesn't, does he have the right team behind him to design product s that aredesirable? >> i think the g.m. as well is something where obviously he is trying to -- there is a lot of media happening now in terms of what's going to happen. we have to consolidate the platforms together. to do morer cars. the same is like with other carmakers as well. interesting, yeah. and a lot depends on the alfa at the moment. francine: do we give its six months? houpping do we gift to see whether it works or not. six months? a year? >> 18 months. manus: that is generous. great to have you with us this morning.

francine: we are just getting some breaking news. we have lake-effect more i guess beef on the burner. we had of course we are all over the greek story. we understand that the e.c.b. is set to leave the greek bank ceiling unchange pd guy johnson was talking about this in athens. it means for moment everything seems steady. they are negotiating. they ever negotiated a lot in brussels. will we get an agreement? we're going to take a short break and after that, we're going to athens. ♪ 6

francine: welcome back to "the pulse" live from bloomberg tv and radio. streaming on the ipad and on bloomberg.com. manus: a little bit of news for us. we know on the greek situation draghi and tsipras have left meeting in brussels. that is what we understand. talks are still ongoing. we know the cutoff time seems to be at the moment for today at 4:00 p.m. brussels time. they have received the paper from the greeks. they are still in the review process. francine: let's get more from athens. guy johnson is there. so, guy, what is the talk on the ground? guy: people are saying, you know what? tsipras is still there. he is still talking. what is what we expected. we don't expect this situation to end any time soon. deadlines are going to come. deadlines are going to go. you're going to have a lot of them over the next few days.

talking about sunday as being the real cutoff point, you need to get a vote at some point in parliament behind me. you need to get them passing that if the greek government is to hold together. maybe that is not objective. maybe we're looking at a unity government being formed over the next few days. there are so many options on the table these days it is difficult to get your arms around what's happening what is goings to happen next. tax rises is something the institutions are not comfortable with. we'll see whether there is a middle ground. honestly, the situation here everybody is just line by line watching what is coming out of athens. the political story here is gathering momentum as well. will they back their leader, tsipras or are we going to be looking at change in the political landscape? so much is going to happen. monday morning is going to be a really big morning for greece and its banks.

back to you. francine: thank you so much. guy johnson there in athens. manus: the equity markets are in a fluster at the moment. let's pick it all up again tomorrow. ♪

tom: markets reversed feds widen, headlines coming out as we speak. a haircut needed for greece. it is not a new mediocre in

america, the u.s. gives economic growth. throughout surveillance conversations with larry summers, greece and europe will restructure their debt. good morning, this is bloomberg "surveillance." it is thursday, june 45. the headline, moments ago, a true restructuring, somebody asking for the needed. brendan: coming from the managing director of pimco germany. conventional wisdom, we accept as truth 180% of debt to gdp. hard to imagine anything but a restructuring for greece. tom: this ecb jargon came up again, what did they just decide? brendan: they have no choice but to get political. they should not continue extending this to the greek banks. it the liquidity assistance