francine: greece in crisis. the stock exchange closed as capital controls are imposed. as greek banks teeter on the brink of a we will hear from angela merkel and jean-claude juncker. manus: the markets react. the euro falls and volatility surges. that as the risk of grexit moves further. francine: china enters the bear market as themanus rate cut fails to stop the rock. regulators are said to consider suspending ipo's.

welcome to "the pulse" live from bloomberg's european headquarters in london. manus: i'm manus cranny. francine: and i'm francine lacqua. manus: it is a big day. greece has shut the banks. this is an attempt to avoid a collapse of the financial system after a tumbled to as weekend. francine: the weekend saw talks with creditors break down and the european central bank freeze its lifetime to the country's banks. we are live in athens with guy johnson. elliott gotkine also is looking at the mood on the ground. hans nichols is in berlin. elliott, withdrawals are limited to 60 euros. that is the only amount that a greek person can withdraw from atms. elliott: that's right, francine. prime minister tsipras asked for

the patience of the greek people. it seems pretty patient right now. over here, we have one branch of national bank of greece in the center of athens. the problem is not so much that greeks can only take 60 euros per day. the problem is that you can't even get in because the banks are shut. they are going to stay that way for the week. there were people traveling to the airport specifically to take money out of atms. there were two there that had cash. one ran out while i was there. they were very patient. people going to the atm, putting in card after card to take as much money out as they possibly can. for some people, many would be very worried about taking money out. others, including one that i talked to, is not so worried about taking money out. he thinks it is time to make a stand. >> i'm a business consultant.

my salary is above average. it doesn't worry me. put your wallet where your mouth is. that's what i did, me and my family. i transferred a significant amount of money from london to greece. elliott: you move your money to greece? >> yes, because i want to make a firm stand. this is the way i express. elliott: and you will vote no in the referendum. >> definitely. elliott: there is a queue at the bureau. i did speak to a lady there. greeks can't use their cards there. they can only use it for foreign currency. that is closed off to them as well. manus: let's cross now to guy johnson. he is on the ground with us as well. what do the bank restrictions involve? the imf their payment is due tomorrow. we've got constrictions in

place. what can be expected for the rest of the week? guy: well elliott has gone over the restrictions. it is going to be there all week. the market is shot as well. in terms of the imf payment, this is where life gets really interesting. if that payment is missed, it will have a meaningful impact on the bank capital story here. the banks already have their solvency question. this is a critical part of the ela arrangement that greece has solvent banks. if the banks aren't solvent maybe there is a problem with ela being able to be maintained. they rely heavily on it. if the imf payment is made there's going to be questions about both of those two aspects of their capital base. it will also change the relationship between greece and the imf. it is going to make it very

difficult for the imf to be a program participant, a member of the troika. the number of big changes that will happen tomorrow if that payment is missed, and the expectation is that it will be missed. life is going to get interesting on that front. francine: guy johnson there in athens. let's cross to brussels. we've been to elliott in athens. we've been to guy johnson. let's cross to hans nichols in berlin. what are we hearing from finance ministers this morning? all right, we are struggling with the technicals. we are all in a kerfuffle. we are hearing from angela merkel in about an hour. then we are hearing from jean-claude juncker. we heard from some ecb ministers. mr. nowotny saying this is a difficult time for greece. let's check on the market. it has been dire. let's go to mark barton with the latest.

mark: what a day. this reminds me of -- manus knows this, the height of the last crisis three years ago. very reminiscent of those 2011 days. let's start with the stock market. every industry group is falling on the stoxx ex hundred. this is the euro stoxx 50. this encapsulates those blue-chip companies. biggest drop since 2011. bringing me back to that 2011 theme. every single stock today, falling on the stoxx 50. it is the biggest drop since 2011. it was 172 points lower. now it is just down 130 points. rwe is the best performer and it is down 1.7%. bnp paribas down 5.3%. every single bank on the stoxx 600 is falling today. the spanish banks, italian

banks, these banks hold a lot of their national sovereign debt. we see yields in those countries rise. we see banks in those countries decline. i want to show the euro against the dollar. this is a major of the -- measure of the expected future volatility of the euro-dollar until the maturity date. the maturity date here is one week. look at the spike today. earlier, it rose as much as 46% to 21.52. that was the highest ins may 2010. the concern at least an hour or two ago, that in a week, no one knew what sort of volatility we would have within the euro-dollar exchange rate. that was reflected in implied volatility. let's get to the bond market. look at the yield on the french the german, and the 10-year bonds. all down by almost 10 basis

points. the money is flowing out of the periphery. 377 basis points advance for the greek 10-year. almost more interesting are these prices. the italian 10-year yield is up by 60 basis points. both, earlier, were up around 50, 55 basis points. it is not all about europe today. i want to show you about china. china is in a bear market. it has fallen by 21% from the highs earlier this month. the point swing today, 422 basis points was the most since 1992. that rate cut did nothing. manus: mark, thank you very much. the move in those markets is quite staggering. pierre moscovici says that greece can restart the

negotiations at any time. the door is still open as far as the french are concerned. then you got the european commissioner for financial services saying that capital controls should remain in place for the shortest possible time. francine: commissioner moscovici says the door is open. the door is actually closing because the deadline is tomorrow night. it has to be today or tomorrow. that brings us to today's twitter question. has tsipras blown it? you can tweet us. let's get more from h donald. thank you so much for joining us. do you think tsipras has blown it? >> i think he has. it is very sad for the greek people. equity markets, fixed income markets, are going to have a difficult time going forward. there's a lot of emotion anxiety, in the market lace. the big question right now is really looking at what the short

term are and the medium-term implications. i think they are very different. medium-term, i don't think it is going to impact the capital market that much. we have seen a selloff. it could create a buying opportunity for people. 5-6 months from now, it is not going to be that big a deal. manus: those buying opportunities, we've seen a very immediate reaction in the euro in that medium-term. where should we be focused? >> first of all, when you look at european equities versus u.s. , they are trading at a discount. you have an economic stimulus. the economy is growing. the euro is down, which gives it a competitive advantage. these markets are selling off. they are already at a discount to the u.s. marketplace. i think investing in europe if we see further decline is where

you are going to see the most value. greece doesn't matter as much today as it did in 2010. it is a small percentage of the gdp. the investors in the debt are not individuals. it is institutions. spain, italy portugal economies are doing much better. up until recently, spain and italy had yields lower than the u.s.. i think europe can manage this situation. francine: your base scenario is what, greek default followed by a grexit? what worries me is capital controls. once you get into that black hole of capital controls for such a long time, it is difficult to see them lifting it. >> i think it is going to be terrible for greece. i'm talking about european union, euro i think right now the markets are very emotional. when markets are emotional, volatility spikes. i think they are going to go

down more than they should and it could create a buying opportunity. manus: should the ecb come out with any additional terms? we've heard these words used over the weekend, that the leaders will embark on doing whatever it takes to protect the eurozone. do you think the ecb might say something in terms of what they are going to do to protect the markets? increase qe? >> they should. i don't know exactly what they should do. it is important for all the countries that participate in it. i think this problem can be managed. i don't think it is going to go away. if the greek voters vote for an agreement, i'm not sure we are back in the situation three months from now or a year from now. i think at some point, greece is going to default. we have to prepare for that. francine: we talk about the political implications. use it in the states. the u.s. perception is i guess a

little more sanguine. it is small, why not just deal with it? is there concern about setting a precedent? >> i think you need to. if you forgive greece, there's going to be a lot of other countries that want to be forgiven as well. you have to take a fairly hard line. francine: donald steinbrugge founder and managing partner at agecroft partners. here's a look at what else is on our radar. manus: china has entered a bear market as interest rate cuts over the weekend failed to stem the nation's biggest rout since 1996. shanghai composite index, 3.3% down. sources say that chinese regulators are considering suspending initial public offerings to stabilize the tumbling stock markets. francine: there was a nationwide hunt for suspects who may have

helped the man who massacred holidaymakers on friday. 38 people died in tunisia's worst ever such attack. the killer was shot dead by security forces. the interior ministry says he acted alone, but had a compasses who supported him. manus: elon musk aims to transport astronauts. he was dealt a serious blow when one of the unmanned cargo rockets exploded shortly after takeoff. the spacex vulcan 9 blew up on its mission to resupply the international space station. officials are now investigating what went wrong. francine: let's take a look at what is coming up later. at 10:00, the german chancellor undresses her party in berlin. we will keep an eye on what she says. manus: at 11:45 london time, jean-claude juncker speaks in brussels. make sure you stay tuned to

bloomberg for all the latest developments. ♪

manus: welcome back to "the pulse." we are live on bloomberg tv, radio streaming on bloomberg.com, on your tablet and on your phone. francine: let's cross live to michael houston. we are bracing ourselves for a shop all in equity markets. what is the mood like? >> the mood is fairly upbeat.

we are significantly off the lows of the day. i think clients are taking a fairly sanguine attitude to what has happened. we are seeing a significant amount of buying interest. we've seen a significant fall over the weekend, but we are still above the lowest levels this year. i think our clients are taking this as a buying opportunity. manus: we saw the euro quite significantly against the yen against the dollar. it seems they've had a little bit of a reprieve. the same scenario in the fx markets. you have this initial rush to clean out the market and you are getting a little settlement now. >> i certainly think that is the case. we opened in asia about 109.60. now we are well off that. i think what we need to see is a

move above 120. i think the emphasis has changed somewhat. we've got u.s. nonfarm payrolls later this week. i think a lot will depend on that number as well. with respect to this greek story, i think it has quite a bit of legs in it. the greeks could vote yes in the referendum. then what happens? francine: why are the markets sanguine? is it because people believe we will find a solution? is it because talks can still resume? is it because we think the referendum will be a positive, or because the ecb is ready to act? >> i think you've hit the nail on the head. while the ecb is still in the frame with respect to keeping the greek banks and the ela open, let's not forget, they didn't shut it off. they've just frozen it. i think we have to take this on

a day by day basis. mr. nowotny has said that missing the june 30 deadline does not necessarily mean a default. it is in no one's interest whatsoever for greece to spiral out of control. i think at some point, good sense will prevail. the u.s. has been on the phone to germany, i believe. they have a vested interest in keeping greece on an even keel. i'm sure pressure will be brought to bear by the u.s. on angela merkel to cut some sort of deal. francine: michael, thank you so much. michael hewson from cnc markets. manus: back with us is donald steinbrugge. great to have you still with us. you've got the american perspective. jack lew is calling for everybody to do what is necessary. this is a real fly in the ointment for the fed, or will it pass over this? >> i don't think it is going to impact the fed.

i think the fed is going to increase rates. what happens to greece, unless it spirals out of control throughout europe, i don't think the fed is going to do anything at least in the short term as far as implication for interest rates. francine: this is why, because of the discount on greece or because they are worried about emerging markets? >> i think they just don't think that greece on its own is that big of an issue for the world economy. i think they are going to stick to their current policy. i think you are going to see a rate rise later this year and it is going to be the first of a couple more in 2016. manus: are you a perpetual dollar bull? the fed goes with a hike, does it go with the dollar? do you buy financials? how do you play that trade? >> the dollar is going to strengthen versus the euro.

the situation is going to cause the euro to weaken short-term. you need to start hedging fixed income. i think interest rate are going to start going up. i think spreads may widen. year-to-date, they've tightened but i think that is going to reverse. you had a lot of money going to mutual funds and etf's. it causes prices to go up and spreads to tighten. the problem is, that is not liquid security. you could see spreads widen out, and high-yield securities get hammered in the marketplace. you've got to be careful with fixed income. francine: donald steinbrugge there, founder and managering partner at agecroft. manus: stay right here with "the pulse." ♪

francine: welcome back to "the pulse" live on bloomberg tv and radio. manus: the greek prime minister, alexis tsipras, his decision to call a referendum may have shocked his country's creditors, but his surprise move is being celebrated by many on the left of his party. francine: they are pushing for an exit from the euro and the

nationalization of key industries. bloomberg caught up with one key politician regarding the referendum. >> even if it means exiting the euro, why not? everybody sees now, in greece, but also in europe, that much wake up, they are -- the troika they are trying to demolish the left government. it is not possible to have a good or bad agreement with them. the only road now is to stand up to people and say, enough. stop austerity now. i don't know what is going to happen. i want to remind you that banks in greece along to the nation. it is only the new liberal

direction of europe that they don't let us take them. there are ways. nationalize the banks? why not? we must go to the side with no fear. some important sectors of energy and some important sectors of industry -- this is for sure. it is a bigger problem for the construction of the european union than for the greeks. greece has now, after the crashes -- [indiscernible] we have a floor to stand and fight if we remain outside of the european union.

francine: it is a really tough situation for the people on the ground. we've had a lot of market volatility. german bonds climbing the most since 2011. the weekend was turmoil. we saw mr. tsipras announcing a referendum on the nation's bailout. that is raising the risk of a euro exit. the yield on the greek 10-year we don't have it there but we will in just a second. that jumped the most on record as the nation's banks impose capital controls. those capital controls will last for six days. although we have commissioners saying that the talks can still restart, it seems very difficult that they do in the next 48 hours. manus: let's have a look at the currency. a lot of the flow was in euro-yen. what you see here is the euro

retracing some of its biggest losses. volatility back at levels you haven't seen since 2011. one week volatility jumped by nearly 25%. that is the biggest one-day jump in volatility since the birth of the euro. the euro-dollar bouncing by nearly 50% of its original losses. the yen is where money is going generally. the euro declining and the yen rising. we also heard comments from the smb saying they have intervened. euro-swiss franc, down about 0.25%. the s&p confirmed that they have got involved in the market to defend their currency position. francine: just getting breaking news on the bloomberg terminal. macedonia has ordered to pull deposits and loans from greece. macedonia has moved to curb capital flow from greece.

we are getting some headlines from the french president. after we had the position of capital controls, now they are all coming, eu leaders coming one by one to give us their thoughts. mr.: saying that resuming talks will depend on referendum results. there is a timeline. the referendum is on sunday. we are not sure what they are voting on. the offer put on the table by creditors expires tomorrow. manus: the legitimacy of that referendum is in question. it is a moving issue. madame lagarde referred to, what the greeks have been asked to vote on hasn't even been ratified. francine: i'm confused by what mr. hollande has said. he said that talks can resume after the referendum. whether that means they want to stay in the euro, so the scenario would be to restart negotiations from scratch, that

is what i think we can infer. manus: as we get more breaking headlines, we will bring them to you. here's the top headlines on bloomberg. china's benchmark share index has entered a bear market. interest rates were cut over the weekend. that is to stem the nation's biggest rout since 1996. shanghai composite index fell 3.3%. sources say the chinese regulators are considering suspending initial public offerings to stabilize the country's stock markets. francine: greece has imposed capital controls. the move comes after prime minister alexis tsipras announced a july 5 referendum on austerity measures. the banks will be closed at least until july 6, and cash withdrawals are limited to 60 euros. manus: the former pimco ceo mohamed el-erian says that greece is likely to be forced out of the eurozone.

he spoke to bloomberg this morning. francine: we are just getting some live pictures. you can see mr. aland. those are live pictures from the elysees palace. that is where a lot of the presidents give their comments. just to recap what he's been saying, first of all, he regretted greece's decision. manus: saying he wants greece to stay in the euro. francine: i guess they all say that. it is difficult for a leader to say they should get kicked out. manus: they went to this point of brinksmanship where tsipras pulled the plug on them. his own negotiators found out by twitter. the question is, has he overplayed his hand? francine: there is concern about the markets. there is also concern on the ground. let's get back to guy johnson in athens. what is the latest on the ground? guy: people here i think are adjusting to the new reality,

that they are restricted from accessing their bank accounts. they are restricted from taking money out of the country. this applies not only to individuals, but businesses as well. the bulk of the economy is made up by small and medium-sized companies. they can't make the preparations needed to circumnavigate these roles. they find themselves in a difficult situation. the economy is in a deep freeze. people have been trying to get money out for a couple days. before that you put your order in and took your money out. after the capital controls became a possibility, the atms became the main focus of attention. bloomberg joined the queue. >> we didn't find money anywhere. we tried many banks, many atms, but we didn't find money. >> i want to get my money before i lose it.

>> i went to the other bank and there was no money. that's my pension. i pay rent. i have to pay my rent. >> we are worried about our jobs. our future. >> did you take money out today? >> know, because i have trust in the greek government. >> it is the most serious situation either. in my life. >> it will be difficult for the greek people. we are waiting for the better. we are hopeful.

guy: incredibly difficult situation. how long could you last on 60 euros a day? how do you pay the bills? it was decided that foreign terrorists with credit cards would still -- foreign toursitsists would still be able to access their money. if you hadn't done that, you would have crashed the tour ist sector as well, which is pivotal to the economy. so many questions still need to be answered. what are the implications of a default tomorrow? what are the implications for the banking sector? people are trying to figure out who is going to say, i'm the leader of the yes campaign. there doesn't seem to be anybody yet taking that position. maybe mr. samaras could decide to do that.

could be toxic to his political career. we don't have somebody stepping up at this stage. it will be interesting to see if the business community decides that it needs to make its voice heard and say there are jobs on the line, but at the moment we are simply not getting that. it is very much dominated by syriza, by the coalition. we will see whether that changes. back to you. francine: thank you so much, guy johnson bringing us the latest from athens. now to china. manus: the benchmark index entered a bear market. the shanghai composite felt by 3.3%. it is now down 22% since june 12, despite attempts to restore confidence. regulators are now said to be considering suspending ipo's to stabilize volatile stock markets. the managing director joins us from shanghai. right to have you with us, sir.

let's talk about this rate cut that we've had. the question is, is this trying to protect the chinese stock market or is it tied in any way to what is going on with greece? is it enough to stymie the drop in chinese stocks? >> obviously it is not enough to stop the market from plunging. today is another epic move in the market. we had a 10% from high to low even though we closed down just under 4%. the timing of the interest rate cuts is peculiar. we didn't need the interest rate cuts right now. the timing of the announcement coincides with an epic move late last friday trying to stem the market from falling. even if you cut interest rates now the problem is that the

market has been anticipating a rate cut a long time ago. the cut set of a fall in for expositions. for the economy, it does no good. that is why there is a very strong opening up at the open but then plunging down almost 8% at the lowest point today. francine: i'm following what you are saying but should we not be more concerned? china is thinking about stopping ipo's because of what volatility we see. for me, that seems like very drastic measures and spells mayhem to come. >> it is concerning. we had a very volatile two weeks and the index was down more than 20% in less than two weeks.

the regulators are trying to stabilize the markets. the problem is that we had too much leverage in the system. we had well over 2 trillion yuan worth of spending in the market. at one point, total volume traded was about 20%. it was unseen before anywhere in the world. we have very high leverage in some parts of the market. we have very high valuation. and then, we had all these gigantic ipo's, and that is what really brought down the market. going forward, i can see what they are trying to do. they are trying to stop ipo's so that ipo's don't suck away liquidity. there is a mechanism in the ipo process that people need to pay attention to. in order to be eligible for the ipo, you need to have a certain amount of stock in your account. the more stock, the more market

value of your stock in your account, the more chance you can get to win the ipo lottery. manus: i just want to get something from you in terms of the amount of margin in the system. this is the debate. you've got the small retail accounts which have leverage. you say that you are more concerned about the amount of non-brokerage margin account trading out there. you are more concerned that there is much more leverage than we understand in the system. >> i think on the book, we can only see 2 trillion yuan marginalize spending but the umbrella trust channel has been following much of the margin trading as well. our expectation is that the non-brokerage channel is

financing just as much as margin trading. that is why we are seeing such dramatic, volatile moves in the market. we have too much leverage in the system. the market has gone vertical in may and early june, to well over 5000 points. and then taking the same acceleration down. also, in the recent days, the volatile move suggests that some of the margin calls because the plunge in the market has not been met by traders. that is why -- that is causing volatility. francine: thank you so much, hao hong. manus: up next, as greece imposes capital controls, what lessons can be learned from cyprus? we will ask the former deputy governor of the central bank of cyprus. ♪

francine: welcome back to "the pulse." manus: as greece takes extreme measures to over the collapse of its financial system ahead of this week's referendum on austerity, the cypriot finance minister has said that the island is in favor of restructuring greek debt.

here is the former deputy governor of the central bank of cyprus. he joins us now on the phone. great to have you with us this morning. capital controls have been imposed by the greeks. what impact on cyprus do you think this will have? >> i don't think there will be a major impact. as you know, back in 2013, the free cypriot banks in greece were sold. therefore, there is no direct connection as far as the banks are concerned. francine: sir, do you think it was the right decision to impose capital controls? they've done so before there's been an agreement, or even the possibility of an agreement with creditors. it is unclear when they will be able to lift it. >> you are right. there is no clear decision by the eurogroup. capital controls were imposed.

i suppose it was unavoidable to impose these controls. there was panic among the depositors in greece. they had to do something. the big difference between greece and cyprus was that in the case of cyprus, there was a specific eurogroup decision to impose a special tax levy on our deposits. deposits had to be frozen and banks had to be closed down. later, there was another decision to put the systemic banks under resolution. again, the banks had to remain closed until the resolution process was completed. in the case of greece, there is a lot of uncertainty, which creates a lot of panic. because there is no decision of the eurogroup in the background i think this makes the whole

situation very difficult. manus: solvency is the word that everybody's using in regards to the single biggest issue facing the greek banks. the ecb has been lending via the ela to the greek banks. how quickly do you see the solvency of greek banks coming into question if the ela remains not raised by the ecb? >> under the rules of the ecb they can only extend ela to solvent banks. or to banks which have the prospect of becoming solvent. i suppose the fact that until a few days ago, ecb was expanding ela to the greek banks, we must assume that they consider the greek banks to be solvent. otherwise, it would have been against the rules of the euro system.

francine: do you think that greek banks will need recapitalization? >> this depends on the stress test which they have to carry out. it is an internal process and there is a process which is going to be carried out by the european central bank on a european level. for the time being, one can only rely on what the ecb has said that it has expanded ela to greek banks and we must assume that greek banks are solvent. otherwise, ela would not have been extended. manus: the greeks go to the polls next weekend to make a decision. many would say whether they stay in the euro or not. it is still very early to get an indication of how the greek public will actually vote. but there is support to stay

within the euro. what is your feeling about this referendum? >> these are politics. i wouldn't like to comment on political decisions. but again, it is a very difficult information which creates a lot of uncertainty. whatever the outcome of the referendum, one is not certain what the next step is going to be. again, there is no specific decision by the eurogroup. this uncertainty continues. this is very bad for the greek economy and the banking sector. francine: you are one of the very few that had to live through this when it happened in cyprus, the capital controls. do you think they will work in the long run, and what advice would you give to greek authorities right now? >> it is very easy to impose

capital controls, but it is very difficult to exit capital controls. this is -- this was the situation in cyprus. in the case of greece they keep saying there is no definite decision or clear plan as to what the next step is going to be. imposing capital controls, it was unavoidable because of the panic which has been created among depositors. but once imposed capital controls, immediately you send the message that there is something wrong with the banking sector as a whole. imposition of controls creates more anxiety among depositors and consumers. then, it is extremely difficult to phase down these controls. and the timing of lifting completely these controls. greece has entered into a period

of uncertainty, i'm afraid to say so. francine: thank you so much for all your insight. mr. spyros stavrinakis the former deputy governor of the bank of cyprus. in just over half an hour, we will speak to the cypriot finance minister. we are also getting some breaking news about mr. nowotny. manus: nobody is on the tapes. francine: ela. he's basically saying that for the moment, the greek ela level is valid until wednesday. it was interesting hearing the former deputy governor of the central bank of cyprus saying, they still think the banks are solvent. manus: that is the most important thing. conditions weren't there for the ela to increase. you are right. i think that is the issue. francine: we are going to take a break. ♪

francine: welcome back to "the pulse" live on bloomberg tv and radio. manus: entre burner elon musk wants to transport astronauts. his rocket exploded yesterday. the spacex mocon 9 blew up after its takeoff. >> the rules are simple.

that's what it takes to compete in the google lunar challenge. there's history to be made and cash to the won. $20 million for the first privately funded team to land a rover on the moon, drive a short distance, and transmit pictures back to earth. one of the teams taking part hoping this rover will take top honors. the robot weighs only four kilograms, has a 360 degree camera. the team has been testing the rover both inside and outside the gauge its mobility and range. the team leader says such compact machines offer plenty of new possibilities for space exploration. >> they could be used for

delivery services to the moon. there's already a demand for that. there's also interest in collecting more data from the moon. there are american companies that have signed contract with nasa. >> spacex is one such company taking part in the competition. >> we want to split the cost with some of the teams and ultimately split the prize. that way, when we land on the moon, we will deploy multiple rovers on the surface. they will all drive out together. it will be like a formula one style race on the surface of the moon. we want to make -- we see the moon turning into the new continent of the world. it will be a place for economic development. >> that journey starts here with private enterprise. francine: from lunar rovers to

greece. for those listening on bloomberg radio, "the first word" is next. for our viewers, a second hour of "the pulse" and we will be focused on greece. ♪

manus: greece in crisis. banks and the stock exchange close and capital controls are imposed as the country tries to avert the collapse of its financial system. as greek banks teeter on the brink, we're going to hear from angela merkel over the next few hours. francine: the markets react. european indices drop and volatility surges as the risk moves closer. manus: and china enters a bear market as the country's fourth rate cut since november fails to stop the run. the shanghai composite slides again, and regulators are said

to consider suspending i.p.o.'s. manus: good morning to our viewers in europe, good evening to those of new asia, and welcome to those waking up in the united states. i'm manny cranny. francine: and i'm francine lacqua. we're live in london. manus: greece has shut its banks, imposed capital controls in an attempt to avoid the collapse of its financial system. it comes after the weekend which saw talks with creditors break down and the european central bank freeze its lifeline to the country's banks. francine: as greece teeters on the edge we're live with guy johnson. hans nichols is in berlin. let's kick it off with guy in athens. guy, what are the latest developments, and what can we

expect the rest of the week? guy: the rest of the week looks extremely interesting. today greece is really trying to deal with the reality of a financial system that is now effectively frozen. the banks are closed. people are restricted from taking money out both of the banks and the country. 60 euros a day, how long can you live on that? they're trying to figure out how to make the pensioners be able to get their money out. there are lots of pensioners here, and they vote, and that is a big factor that is coming into the mix tear as we work our way toward the referendum. what is the mood music coming out about this referendum? who is being blamed? who is responsible for the financial situation we find ourselves in here in greece? it was interesting to listen last night. he knows who he's pointing the finger at. >> this decision today led the european central bank to not

increase the liquidity to greek banks and force the bank of greece to recommend measures for a bank holiday and limit on bank withdrawals. it is more than clear that this decision had no other goal but to blackmail the will of the greek people and obstruct the smooth democratic process of the referendum. but they will not succeed. these moves will bring precisely the opposite result. the greek people will be mohr resolute and its choice of rejecting the unacceptable bailout proposals and the ultimatum of lenders. guy he's making his views very, very clear there. it's going to be interesting to see who stands up and backs the yes campaign. mr. junger could be pushing that line a little later when we get to his news conference. it's going to be fascinating to hear from angela merkel as well. one point that's worth making, if you've got relatives over here and they're on holiday, they will be able to access their money. anybody with a foreign credit

card, these restrictions, they don't apply. so the tourist sector, so critical to the greek economy, largely exempt. manus, francine? manus: let's cross over to elliott, down on the street in athens. elliott, what's the public reaction? we've seen some of the imagery of people queuing to try to get to use the a.t.m.'s over the weekend. what's the reaction of people in ath tones these capital controls? elliott: no sign of queues here, i'm afraid. this bank is well and truly shut. there were some people talking about opening it, but no sign of that. over here is a relatively rare sight. we've got a brinks lawyery t. doesn't seem to be bringing money to the cash machines for them to take out, even if they are restricted to 60 euros a day. i think that is one of the big issues, is that it's not so much that there are these capital controls it's finding

an a.t.m. that's got cash and finding one that's open instead of being inside a bank. one girl i spoke to just a short while ago was telling me, yeah, it's very terrible for them as well, but her sbrore studying in london. how do they send money to her brother? they can't. so there are these problems. we've heard stories of greek holiday makers who are struggling to get cash out. there are many, many problems that these capital controls are creating for greek people that go way beyond the simple possibility of being able to get 60 euros out of the cash machine with one of your cards ever day. francine: elliott, referendum, five days away. is there a sense that you're getting from people on the street about how they're going to vote? are people angry that there are capital controls? are they angry the way that he handled the last 48 hours, or is there support for saying no to the creditors? elliott: it depends on who you

speak to. there was a colorful argument while one chap was having his shoes shined. he was having an argument with a couple of other greek people. he was very much against what alexis has been doing and the other people who he was talking to were very much in favor. some people are saying yes they are angry, along with the institution. there are others who just think that alexis tsipras overplayed his hand. it's very hard to tell precisely how the referendum is going to go, because we don't know the specific questions that are going to be asked and if those questions relate to the bailout conditions that the institutions were looking to have greece impose. if that deal is any way still on the table. there are a lot of unknowns right now. just going back to what guy was saying, we have heard that it looks like they're going to set out a way to pay pensioners to usually go inside banks to receive their pension. there will be some mechanism publicized for pensioners later

on today at about 4:00 p.m. local time, in about four hours' time. certainly, a lot of uncertainty here in greece a lot of fear not just about the capital controls, but what about the bank's solvency. what if the banks are unable to open after this is lifted and they're unable to get their money out, at least in its current form as euros? manus: let's cross over to berlin now. hans, we're hearing from a variety of voices this morning, finance ministers. i mean, what seems to be the take? hans: earlier this morning, finance ministers seemed to be suggesting that talks could restart at any moment, but just maybe an hour ago, we heard from the french president, francois hollande, and he said talks can only restart after the referendum. so what we're going to have now, between now and then, is going to be one part common, we've heard that this morning finance ministers trying to assure that the contagion will be localized, it can't escape greece. and then the other part is planning. crucially on the planning, what

do you do to a, influence the vote? do you try to make it seem as though the deal is as sweet as possible, the deal that's on the table, the current offer from the creditors? and then after that vote, how would you restart negotiations? could you restart negotiations with a government that's led? could you only restart that's led by a technical team? we'll be looking for some of these answers. angela merkel will address -- she'll address her own party. we're expecting to get some comments there. then later on in the morning, afternoon, rather, she has meetings with party leaders. and then after that, she will do a press conference at 2:30 local. that's 1:30 london time. some key questions for merkel, particularly is debt relief on the table? what will she say about reprofiling, refunctioning some of the debt burden? that seems to be a big sticking point. they simply cannot grow if they have debt that's at 180% of g.d.p. manus, francine?

francine: there seems to be talks, and actually it will be quite easy to restart negotiations at least if there's a will from greece, then the creditors are already talking about it. how quickly can they do it? do we wait until the referendum is over or could they potentially start tomorrow morning? although it's unlikely to try not to default. hans: if you called off the referendum, there would be space to have renegotiations start sooner. as long as the referendum is the operative assumption, it seems like, and i'm going off of mr. hollande's comments you need to have a negotiation start after the referendum. you know, one quick thing on this feent referendum goes no, this is a position we have heard from the junior partner in merkel's coalition, he says that aid will continue for greece, and it could be humanitarian aid. so it's a question of what form of aid gets sent to greek. if they do vote against this, but they do stay in the europe, what will european partners do? i think it's a key question

here in germany. what sort of pressure is pout angela america toll help greece even if they decide they do not want to accept this final offer? francine? francine: hans thank you so much. we have hans in berlin, guy johnson, elliott gotkine in athens. manus: all bases covered, and that includes the markets. let's get to mark barton. this is reflected back to 2011. mark: it is, and i think on a day like today, you want to put everything in perspective. things aren't as bad as they were two hours ago. that's my message. look at the german 10-year. 79 basis points was as low at 70 basis points. look at some of the other markets. the italian and spanish yield early, they're not as bad. so the contagion, the worst of it was just after 7:00 a.m. london time earlier. that's the bond market. this is a chart you cannot get away from. the greek 10-year yield has risen the most ever.

it's up by 378 basis points to 14.63%. going back to perspective, though we're nowhere near where we were on the yield level. back then when greece reorganized its debt. the yield on the 10-year was at 35%. today we're at 14%. the theme of this is about perspective. it's difficult to put this one in perspective. the stoxx 50 the euro stoxx 50 the benchmark of european blue chips across the eurozone, because every single stock is trading lower. but at 8:14 london time, this index was down by 4.8%. now it's down a mere 3.2%. that was the biggest fault since 2011. the best performer is vivendi, still down. the worst performer, these italian and spanish banks. they hold a lot of their national sovereign debt. i'm going to leave with you this chart. it took me forever to organize it. i'm going to leave it to you,

just get in there quickly, get in you see all these numbers i've painted on. it's the chinese bear market. that was the first day when it started its decline, second day and so on and so forth. biggest point swing today since 1992, and that's even before i joined bloomberg. francine: mark thank you. greece is trying to prevent of collapse by closing banks, limiting cash withdrawals to 60 euros a day and banning transfer as broad. the move comes ahead of this week's referendum. the island's finance minister joins us now on the phone from the capital. minister thank you for once again giving us the time. can greece avoid a default? will you start negotiations? will it have to be after the referendum, or can there be any leeway this week? >> minister: negotiations have

to resume, and they have to take place within the frame work of the eurozone and of the euro group and we were hoping that we would have a breakthrough last weekend. that's why the euro group was called to meet on a saturday in order to give its seal of approval an aagreement, even at the last minute would prevent them to come. this has not happened. greece is in a difficult situation already. so i can only hope that the talks will resume the soonest, possibly indeed after the referendum. manus: does debt forgiveness need to be on that agenda if talks resume?

minister: well, i wouldn't necessarily refer to debt forgiveness. but since the 2012 decision the issue of sustainability arrangement remains open. it has been on the agenda. in any view, it should remain on the agenda. they remain ready to do its part. once again, as part of a broader solution, a broader arrangement, which will primarily see the implementation of an ambitious reform agenda, which will put the country back on growth rate. that's the challenge. that's what is needed.

greece is a country with an immense potential which remains largely unutilized due to significant structural deficiencies. that should be at the core of any program, any effort. together with that yes, we should continue looking into the issue of debt sustainability. as i have said, there is a framework dating back to november 2012, and that should be explored further as part of our arrangement. francine: how worried are you about capital controls? they were instituted before we could reach an agreement with the creditors, and so are you concerned that it's going to be very difficult to lift them, which means they may be permanent and just a precursor to a exit? minister: well, i hope not.

i hope there's a temporary measure, and i do hope as of next week we shall be able to resume talks on better grounds that will ensure that greece remains in the eurozone toward the implementation agenda so that these restrictions can be lifted. let me remind you that cypress also found itself in a difficult financial situation two years ago, and we did have to impose restrictions back then but since then we have been able to fully lift them through the implementation. francine: it was a very defrpblt situation. minister: well, it is a different situation, but i think the remedy should be the same. it is through the

implementation of reforms, through fiscal consolidation, and through the establishment of the growth potential. that allows the restoration of confidence and that's what we did. i know the situation is not the same, but the remedy could be similar in implementing the program of positive change addressing the relate short comings of the greek economy, which are holding the economy back and in that way restoring confidence and the lifting of these measures. manus: minister, the one thing -- and this goes on francine's question which was cypress implemented capital controls. you were in a program there were destination landmarks for allowing your residents, your

citizens to have more money and more access to money and businesses. greece has walked away from the negotiating table and is in fault tomorrow. this is structurally a different scenario. there are no bench marks for to us work towards the capital controls. minister: well, i agree. there is no doubt that it is a very difficult situation. actually it's a very grave situation, and i'm very, very concerned for the greek people who have been there and fear that they will face even more difficulties in the times ahead. but i insist the way out is no different. there should a determined policy implementing structural reform fiscal consolidation, taffling the real problems of the economy doing our best in

the meantime to alleviate the debt. and in that way, moving forward. what you're describing is a current situation which is very difficult. i'm very concerned about the current situation, and that's why i do hope that as of monday we shall be able to resume talks, negotiations aiming to a swift agreement on a program, along with the lines i have described. francine: do you think greek banks will need recapitalization, and what impact will it have on the rest of europe, including cypriot banks? minister: well obviously in a banking sector we need

recapitalization. that's not something that one can determine ahead, but i can offer you a clear answer to your second question none at all. we were closed interlinked with the greek economy and with the greek banking sector, but that was until 2 1/2 years ago. we based our own crisis, but since then we have essentially no issues. it's not really significant. since then we are following our own path of stabilization and economic recovery. we have been able to, as i've said, we have been able to lift our own restrictions to establish market access and to bring our economy on growth rates once again.

so no i'm not concerned for the possibility of contagion, bearing also in mind the very clear euro group decision that all the tools, and all the mechanisms at the european level are now in place ready to be activated in any case. that's my position. i'm very concerned about greece and the greek people. i hope that there could still be a way out of this difficult situation for greece but i am not concerned given that we have been and we shall continue to implement a very determined policy of consolidation reform, and economic recovery.

francine: minister, thanks so much for your time. a lot of finance ministers are briefing their own countries. we're just getting that word from mr. osborne, who will give a statement to parliament on greece. that's according to the treasury. manus: and according to twitter as well. we've had word that the french doors are open, they're ready to renegotiate when and if there's a will to bring back the negotiating table. when that starts, we're not sure. joining to us try to digest everything that we've heard, a very patient sitting with us, it is jim mccormick from barclays joins us, as does chris wheeler, bank analyst at atlantic equities. gentlemen, thank you for your patience. jim, let's start with you. we had this very initial dramatic selloff in the futures and currency. we've seen some reprieve. what's your take on the scenario? jim: i think we're seeing a couple of things. one is, it was clear to us that

there wasn't a lot of positioning heading into what happened over the weekend, so equity markets have taken down positions quite substantially over the past four to six weeks, so you're not getting a lot of contagion. the problem is this situation is very binear. it's up to the referendum, the implications are probably pretty positive or quite negative, and the market really isn't going to be paid to be betting on that heading into the referendum. francine: chris, is the referendum a distraction? actually what we know about the banks, we don't know what they know. are they solvent, and if they get pulled later this week because of technical reasons, because they do a deadline, then do we have a zombie backing system? chris: we have lots of questions. we're not sure what the exact impact, is but they do own greek bonds, and clearly today we're seeing, we have a fall in the bond market. that's why you're seeing the italian, spanish, portuguese

banks, and the french even, despite the fact they got out of greece after the 2012 crisis so you know, clearly i'm concerned about what the secondary effect is. once we get some kind of resolution as whether they're in or out, we don't know that, may not even know that on sunday. manus: let's jump forward, because we don't know what's going to happen between now and then, but the polls show 2/3 of the greeks to want stay in the euro. 57.5% say that the government should back them. can greece continue to have a currency the euro in this part of the state? jim i don't see why not. the best-case scenario is we have a referendum. we don't know what the wording is yet. if it's yes, you start negotiations, and we're two weeks behind. but the probability of that has gone down quite substantially relative to where we were but

there's a possibility of a positive outcome, it's just smaller. francine: but capital controls they may may say for six days, they may stay a lot longer. how fair is it to have a referendum under that and then my question to you, chris, is how do you get out of capital controls and will you absolutely have to have some kind of parallel currency? this is six days where there's a complete shutdown of the banking system. jim: the e.l.a. has been frozen from levels of last week. without capital controls, you were completing a banking system that would fall apart, so i don't think there was any choice ahead of the referendum. what happens afterwards is anyone's guess. chris: the trouble i'm having here is i don't think there's any resolution after the referendum, because i don't know the question yet, and i think the question is going to be quite muddied. manus has already explained where people are thinking. the view is we'd like stay, but

not under these circumstances. so do we renegotiate on the fact the greek people say they want to stay, but not under these circumstances? you touched on it. the only real solution here, and i'm afraid i lived in the debt crisis in the early 1980's, is forgiveness. it's the only thing that's going solve this. however, how we solved it that time, the creditor banks were creditor banks. u.k. banks, american banks, it wasn't government entities particularly one sitting in frankfurt. manus: but if there was an appetite for debt forgiveness, and it's not forgiveness, not forgiveness, goodness knows, let's not use that word. there's no real -- there seems to be a lack of appetite to get this issue off the agenda. jim: it's obviously very politically difficult for northern countries to allow debt forgiveness. it's a taxpayer transfer to greece which is why we've

struggled all along. ultimately it's part of a long-term solution, but it's just very politically difficult. francine: on the ground, what's it going to look like, chris? i mean, do we need this i.o.u.? the banks are closed for six days. what happens afterwards? are you confident that actually the government has taken precautions that the bank of greece is looking into possibly printing things that we're talking about a possible i.o.u.? we tend to forget that the person on the street needs to eat and go shopping and do day-to-day stuff. chris: i think what the government knows, what everybody probably understands, at the end of the day the e.c.b. aren't going stand by and let the banking system collapse. clearly they want some support before they just stand behind the banks, but they don't want the whole system to start to come under pressure. we start to move into what the lehman brothers tell us, which is the interconnectedness of all of this, and exactly what it means, if you just say, ok,

the banks are gone, i don't see that happening. there has to be some sort of support provided. you've seen that today with what happened with the italian banks, the portuguese banks, you could see what could happen. let's see what happens when the funds open today. they'll put their money. manus: they also said contagion or not, we're not concerned about that, it's going to be limited. francine: no one is concerned about it. manus: well, they're all very sanguin aren't they? how do you think the americans perceive it? jim: the americans always have the benefit of 12 to 14 hours of a head start. manus: good suggestion. jim: the market is probably going to open up less than we thought. and it's probably going to be that way until sunday, because as i said it's very binary. i think from the contagion point of view, if greece were

to default on its fault, what would northern europeans how would they respond to that in terms of further buying of peripheral debt? that should be the big question people are asking. it's not about the size of the economy and whether banks are holding greek debt. to me, the political implications of explicit default of greek debt is to me the question we should be asking. that to me is where the contagion starts to kick off. francine: will the e.c.b. will be there strong? jim: i think the e.c.b. will certainly be there. you've seen that time after time after time in the last three to four years. i'm not saying that the central scenario is suddenly the northern europeans step back, but it is a political event when you get a default of greek debt that's being held by the public sector. francine: chris, what are you most concerned about? is there a bank you're more concerned about?

chris: they're going to look and say is there a big zpwhact is it going to impact directly our numbers? there's been so much battening down of the hatches. jamie dimon spent a lot of time talking about greek exposure in 2012 not talking much now, and that's the important thing. francine: thank you very much, jim and chris. manus: let's get you up to speed on some of the other top headlines on bloomberg. greece shut its banks imposed capital controls. the move comes after the prime minister underlined a referendum on austerity measures. the banks will be closed at least until july 6, and daily cash withdrawals are limited to 60 euros. francine: the former pimco c.e.o. said greece is likely to be forced out of the eurozone. he spoke to bloomberg earlier this morning.

faup you were to put a gun to my head and say give me a probability if greece is in the eurozone the next few weeks, about 15%. there's an 85% probability that greece will be forced to leave the eurozone, not because it wants to do so, but because it simply is no longer able to stay in the eurozone. manus: and china's benchmark index has ended a bear market as an interest rate cut failed to stem the biggest rise. it fell 3.3%, taking declines up from its peak on june 12 to more than 20%. meanwhile, sources say that chinese regulators are considering suspending initial public offerings to stabilize the economy's crumbling stock markets. francine: now, we know what happened this morning. let's check in on the markets. jonathan has the latest. john: the dax up by 3%. losses on the periphery of

almost 4% in spain and italy f. you're just tuning in, the dax was off by over 4%, head for the biggest daily loss since 2011. we're off session lows. things were ugly, and they were uglier. the ftse down in london by almost 2% so far this morning. the early move not in the f.x. market. yeah, sure accident we saw some euro weakness, but the beg move came when that bond market opened at 7:00 a.m. u.k. time. peripheral bonds falling out of bed. once again, not as severe as they were. it's up by 15 basis points. at the open, they were down 20 basis points. once again, the biggest move since 2011. the indicator, spreads widening. we talk about con takenion risk. yields in germany going lower. spanish yields up by 22 basis points to 2.33%. yields in italy to 2.38%, 23

basis points higher just this morning on the day. sure, with yields above 2%, it's not 2012 but a move in spreads has been remarkable. we've gone from 88 basis points. italy over germany, we double that now at around 160 basis points. the big question for the market in the e.c.b. going forward is how much will the european central bank tolerate before they pull the trigger. that's going to be about duration, how long the selloff continues for. in the f.x. markets euro weakness is the story, but you've got to look at the individual pairs. when i look at risk aversion, i look at euro-yen, you're seeing a big selloff right there on that currency pair. go to euro swiss, and see something interesting, not down but down by just .4%. that's because the bounce of risk aversion sparks by greece has forced the swiss national bank to intervene in the market overnight. given little choice, the swiss

economy on the first recession since 2009, the president of the s.m.b. telling me two weeks ago that that currency was significantly overvalued. another bout of risk aversion giving them no choice but to react. the markets in europe, phenomenal. but over in china, they've been phenomenal a couple of weeks. last week was a brutal selloff. a rate cut over the weekend, the fourth rate cut on the benchmark since november, not enough to stop. the shanghai dropped by over 3%. china's benchmark is in a bear market the longest bear market on record is over. this trumps what happened with the people's bank of china. back to you. francine: jonathan thank you. that's your market check n. about 25 minutes, tom keene. jonathan was just talking about germany's bonds climbing the most since 2011. you'll get the equity markets, asia fell off significantly. europe was better, and we're actually expecting better on

the u.s. markets. tom: no question there's been a recovery from what we saw last night in new york. i thought his data check there really covered it all. when everything is said and done francine it's about stabilizing at this point. that will be our theme through this morning. we will speak again to the doctor, as you did earlier this morning. jeffrey sachs will join from us ecuador. he has one of the most talked about essays over the weekend. but the moment is very fluid. what i point out is the italian banks having challenges getting open a number of hours ago, along with the swiss intervention. manus: tom we're just getting a little breaking news here from merkel ready for more talks with tsipras if desired, according to seibert. this is merkel's spokesperson. again, we're getting this body

slowly, slowly building in terms. voices of reaching out to the greeks. tom: i would say the political die slog there, but really that's been flipped on its face, starting with the referendum announcement, where we're going back and forth, manus, between a political dialogue and the realities of the banks being closed. and as nicholas of new york university said very emotionally, greece heads for a deep freeze. so it's very one part political, but very much part financial and economic right now. the runs on the banks obviously tangible, but far more than that are the financial dynamics that mr. tsipras and ms. merkel have to speak about. francine: there's no agreement in place for the creditors. tom keene with "surveillance" 25 minutes from now, looking forward to the show. tom: thank you, francine.

manus: the decision to call a referendum may have shocked the country's creditors, but a surprise move is being celebrated by many on the left of the party, who are pushing for an exit from the euro and the nationalization of the key industries. bloomberg caught up with one leading left-wing politician cheering the referendum. >> even if it means exiting the euro, why not? >> everybody now in greece that the troika, they are trying to smash the left government, so it's not possible to have a good or bad agreement with them. the only move is to stand up with the people and say enough, stop with austerity now.

so it's the right choice. i don't know what is it going to happen. it's a new situation. i want to remind thaw banks in greece they belong to the nation now after all this savings, and it's only the new liberal direction of europe that they don't let us take them. so you understand there are ways, nationalize the banks, why not. we must go to the five. socialists are part of the economy. sectors of energy, and some important sector of the industry. this is a bigger problem of the construction of the european union than for the greeks.

after the crisis. so we have a flaw to stay and fight if we remain outside of european union. francine: the situation on the ground is pretty dire. coming up, we're live in athens . we'll bring you the latest after the break. ♪

manus: welcome back to "the pulse" live on bloomberg television. let's get straight back to athens, where guy johnson is standing by. guy, take it away. guy: thank you very much. we have an independent advisor. we tacked a number of times, we talked last week. are you surprised with where we are right now? >> not at all. this has been a long time coming. it had been announced, speculated about. people had enough time to prepare for it. guy: how do we get out of this situation? we're heading towards a referendum. do we think we get to the referendum, and what do you think it's likely to do in this swace? j nay s: it's probably likely we're going to get to the referendum although there may be a legal challenge to it. but at the end of the day, the government wants it. it has a time table for it. by and large, the european commission, the european

creditors have accepted that this referendum is coming. guy: mr. tsipras clearly has made his voice very well heard on the subject. he feels that the offer on the table is not acceptable. who campaigns for the other side of the story? who campaigns for the yes vote? j nay s: who campaigns, many of the opposition parties here in parliament. guy: hearing from them, yes. jens: they to find their voice, and they don't have a lot of voice. citizens who gather here and want to express they stay here. guy: is that what the greek people are being asked, do we stay in europe or the eurozone? jens: this is about introducing it or staying in the yours. indeed that's the choice, although it's not written on the ballot. guy: why aren't they on the ballot? because they're afraid of that question? jens: they also understand that an override majority of the greek citizens want to stay in the eurozone.

they do not want to go back to a currency that has high inflation, for example, high interest rates. this is the high strategy. guy: restrictions are in place, and they're very hard to lift once they're imposed. what he wants the timeline? jens: we've learned that timeline has to be open, but you should have an exit strategy when you start imposing them, so plan b in terms of how do you get out of the capital controls should be on the table of ministers who are responsible for this. guy: do you think they've thought that far ahead? jens: i doubt it, because it was also introduced in a manner that surprised many. 3:00 in the morning, most people were asleep. on the other hand, in the time remaining, you should think hard and fast, how do i get out of that quag fire case i win or lose the referendum? guy: in tsipras loses the refer

dim what should de? jens: either to resign or he has to call early he elections. he has staked his political future on the outcome of this referendum. guy: do you think if we find ourselves in a situation that he wins the election and the solutions on the other side of the fence say that's it, take it or leave it, he doesn't have a very binary choice, take it or leave t. if he decides to leave it does that mean an alternative? jens: the likelihood is there. we have to talk about do the capital controls continue? we have to continue the insolvency procedure, because it cannot honor payments to the i.m.f., and at the end of the day, we may be facing questions of the currencies in greece. guy: the i.m.f. payment is due tomorrow. i doubt most people think it will be paid. doesn't technically put greece straight away into the penalty bin.

but nevertheless, it changes in terms of the conversation. and it makes the relationship between greece and the i.m.f. a lot more difficult, and it changes the nature of the capital story for the greek banks. i so much could change tomorrow. are we underplaying the importance of that payment? jens: not at all because first the i.m.f. has to be consistent. the e.c.b. decided not to increase liquidity assistance, so the i.m.f. cannot be seen as providing flexibility in terms of repayment to this government. and on the other hand, i also think the credit rating agencies will be challenged to reconsider the rating in the coming days. guy: they've made it clear the two are unrelated, but we'll watch that story very carefully. jens: it should an lockside economics. you cannot separate the greek issue from the region of southeastern europe, and it is the region and in particular they care very much about. jens: thank you very much.

jens guys, it's always been an interesting morning. the day has still got a lot of twists and turns out of athens, out of greece. in the meantime let me hand it back over to you. francine: thank you so much, guy johnson with great insight from underground. here are some more headlines. manus: tunisia has launched a hunt for a suspect who may have helped the man who massacred holiday makers in a beach restart on friday. at least 38 people have died in one of turn united states' worst ever attacks. the killer, a 24-year-old student, was shot dead by security forces. the interior minister says he acted alone, but had accomplices who supported him. francine: a deal with iran is close to completion, according to the european union's foreign policy chief t. comes after a meeting in vienna last night with u.s. secretary of state john kerr and i iran's foreign minister am a deadline to reach an agreement is set for tomorrow but may be extended into july. manus: apple is said to have started early production of its

new iphones, and sources say they include a feature called forced touch. it senses how hard users press on the screen. the phones are expected to have a similar decision to the iphone 6. force touch was first seen on the apple watch and on the newest mac book. francine: a bid by elon musk to transport astronauts on commercial spacecraft was dealt a blow when an unmanned cargo rocket exploded yesterday t. blew up almost 2 1/2 minutes after takeoff. officials are now trying work out what went wrong. >> the rules are simple. a race to and on the moon. that's what it takes to compete in the google challenge. there's history to be made and cash to be won. $20 million for the first privately funded team to let a rover on a moon drive a short distance and transmit pictures

back to earth. the a tokyo-based team is taking part hoping this rover will take the top honors. the robot weighs only four kilograms, has a 360-degree camera, and wheels created by a 3-d printer. the team has been testing the rover both inside and outside to gauge its mobility and range. the team leader says such compact machines offer plenty of new possibilities for space exploration. >> they could be used for delivery services to the moon. there's already a demand for that. it's also interesting collecting more data. we know there are american companies that gather information on the moon. >> u.s.-based company is also taking part in the economy. >> our approach here is to

split the cost with some of the teams and also ultimately split the prize, and that way when we land on the moon multiple rovers will drove out together so it will be literally like a formula one style race on the surface happening live for the world to see. we want to make the moon, and we see the moon turning into the it continent of the world, so it will be a place for economic development and pushing the sphere of humanity outward. >> and that journey starts here with private enterprise building a new future. francine: right, that's about it for "the pulse." when we come back, we'll be telling to watch the rest of the day, and it's all about greece. we have a merkel presser coming out. scommoip sarkozy is on the table, saying the fwreeks chose an irresponsible government

tsipras is cynical and lied to the greek people. that's the former french president. ♪

manus: welcome back to "the pulse." we're streaming on your ipad, on bloomberg.com, all things greek. francine: yeah, for a look at what we're watching, we're joined by guy johnson, hans

nichols. hans, we're waiting to hear from angela merkel at 1:30 local time. hans: right now we have one of our top spokesmen briefing reporters in berlin, and that spokesperson is sagan jell amerkel will restart talks any time mr. tsipras wants, a little bit different than what we heard from francois hollande, who said you can really only have negotiations start again after the referendum. really interested to see how merkel spins this, not just to her own party here shortly but to the entire german public when she speaks at about 1:30 london time. francine? manus: hans, let's talk to you, guy. we understand that 4:00, the people the reality of what's actually going on in greece, the pensioners of greece are going to find out how do you live how do you get access to your money? that's on the agenda, and tsipras, do we think we'll hear anything from the government today?

guy: they did postpone a press conference which is normally scheduled for monday and that will take place tomorrow. maybe they're trying to get the message straight trying to find out exactly how they're going to communicate with the people and what they're going to communicate about. so knowing a number of questions still need to be answered by mr. tsipras. let's say communication with the greek people may not be as easy to comprehend as it is with angela merkel. but yeah, a difficult day. the greeks are trying to come to terms with how they get access to money to live on. it's now as basic as that. the economy here in greece is now in the deep freeze. it's going to remain in the deep freeze for the next few days. how do you restart it? how do you thaw it out? i think angela merkel is probably going to play a big part. it's going to be a very, very difficult week for the greek people. francine: i'm interested to hear your thoughts -- we heard

from a german spokesperson saying that tsipras created facts since announcing the referendum. what's the mood like in athens? if you look at the press, is there a little bit of anger in saying look, he was even against the referendum when he was in paris? guy: i think there's confusion surrounding this subject. we still don't know exactly what we're going to be voting on here in athens, not that i'm going to vote, you know what i mean, but what the greeks are going to vote on. it's going to be fascinating to see what is put to the people. everybody i talked to says essentially, though this is not being portrayed as this, this is a vote. do you want to stay in the euro? do you want to stay in the e.u.? it's just that we haven't quite found a way of saying that to the greek people. manus: guy johnson in athens. let's see what the day holds, and hans nichols in berlin, the politics of europe at play, amazing day. francine: that's it for "the pulse." keep it right here on bloomberg tv. stay tuned for the

"surveillance" team up live next from new york. we have our a-team on the ground. hans nichols is in berlin, so we'll keep full coverage on greece. ♪

announcer: this is "bloomberg surveillance." tom: in the dead of night, greece imposes capital controls on banks. overnight, -- now the greek

people confront the past from depression to deep-freeze. china -- a self correction. stocks will have a 30 year golden age. right. sunday, obama and merkel speak on greece. this monday, janet yellen and mario draghi will most likely chat. this is "bloomberg surveillance ." it is monday, june 29. i'm john tom keene. joining me, vonnie quinn. you and i, carl, in the last two hours have talked about not overselling a market plunge. >> it looks like we have a fairly solid buffer in place, so obviously we did see a reaction in the euro and a reaction in equity markets. that seems to be