, june 29. you are watching "market makers. " i would eat my way back in i am not. scarlet: erik schatzker is on assignment read we will get to him in just a minute you. stephanie: he thought he was on vacation and then he was sent over to greece. a busy morning not just in greece, but markets are reacting to greece sitting down their banks and imposing the capital controls. scarlet: on top of that you have the drama in chinese stocks. they moved into a bear market even after the central bank tried to revive confidence over the weekend. we will speak with marc faber. we are also minutes away from an interview with the athens chamber of commerce. stephanie: that is get more details on today's top stories across the globe.

chances are rising that greece will indeed be forced out of the euro. greece has closed its banks to at least next monday to keep them from collapsing. daily cash withdrawals are limited to $66 from atm machines. that came after the ecb prose the ceiling on emergency aid to greet's banks -- greece's banks. >> if you had to put a gun to my head and said give me a probability that greece is in the eurozone in the next few weeks i would tell you it is about 15%. there is an 85% probability that greece will be forced to leave the eurozone. not because it wants to do so but because it simply is not able to stay in the eurozone. stephanie: it doesn't seem like can kicking is even an option. next week, they will vote to

accept proposals that would open the door to more financial aid. the current program expires tomorrow. the chinese stocks are now in a bear market. the benchmark shanghai index fell more than 3% today since hitting a peak on june 12. it is now down more than 20%. that marks an official end to china's longest bull market ever. the central bank tried to revive confidence by cutting interest rates over the weekend, but the market is up believing it. scarlet: an agreement on iran's nuclear program. the two sides are close to a deal. the u.s. and other global powers want to make sure iran is not trying to build a nuclear weapon. in exchange, they will ease economic sanctions. iran agree to sections will not be lifted until after inspectors verify limits have been implement it. the three week, over to escape murderers from a new york is and is over.

police shot and wounded david sweat yesterday in a rural area new the canadian border. is now in critical condition. he has been on the run since june 6. his fellow escape he was killed in a confrontation with law enforcement officials on friday. lebron james reportedly will become a free agent again. relax cleveland fans, he is not expected to go anywhere else. he will decline the option on his contract with the cavaliers but will not meet with any other team. that will set him up to get a bigger longer-term contract next summer when the nba's new contracts taken. stephanie: you thought those were your top headlines, but we have breaking news. >> we are learning that cisco is terminating a $3.5 billion bid for u.s. foods. it will have to pay a $12.5 million breakup fee to do that.

instead, it is setting a $3 billion buyback. shares are higher in the premarket are. that is a possibility that because of all of this, the credit rating may be downgraded. it will buy back $3 billion with of shares. once again, cisco stopping its bid to u.s. foods this morning. stephanie: i have not seen erik in almost two weeks. i want to give you more perspective of what is really going on on the streets in athens. that is where my main man is. erik schatzker, you look great. you sound great. let's be honest, what does it really seem like there? i am not talking about standing in front of a podium. what is it like there? erik: good morning. it is different than what you might think it would be.

if you think for a moment about the fact that capital controls were imposed at 3:00 this morning, you might jump to the conclusion that it would be chaos here in the streets of athens. absolutely the contrary. if anything, there is an eerie sense of calm. there are lineups at the atm machines, but beyond that -- and that is of course unusual. because people are limited to 60 euros a day or $66, they are going to the cash machine to make sure they get their daily allowance as early as possible. walking around the streets of athens, and everything feels he must like it felt the last time i was here in february. over my shoulder come easy parliament. tourists are watching the changing of the guard. they can still go to the cash machine so they don't feel the difference. it feels like pretty much normal. that could change to the end of the week when the banks begin to run out of cash. back to you. stephanie: many people would say

any recal -- an ererie congress carrier that -- calm is scarier. julie: global markets in the red. if you are talking about equities that is. i have been watching what has been having an european stocks in the u.s. futures. we have had pretty deep selling across the board here. euro stoxx 50 taking the worst here. remember that with the athens stock exchange closed, there is no way for investors to bet then directly there. i am also looking at the spanish index down more than 4%. as for the u.s. futures, we are seeing declines, but they certainly come back from where

they were when they began trading after the news came out indicating a drop of about 1%. stephanie: we are definitely going in the direction one expected. i reached out to a number of investors and said is this a big buying opportunity today? they said not really. you will not see the reaction you are expecting. i really thought we would have fallen out of bed more than we already have. scarlet: we are accustomed to these things at this point. this is a well telegraphed drama crisis that has been headed our way. perhaps a lot of positions have been built into it. stephanie: let's get you to number two. looking at the bond and currency market. >> that is where we are seeing more quality trade today. the euro trading at 1.11. earlier, a traded below 11.10.

it may only be 1% or 2%, but that is still a big move. if we look at the euro, that's trading now by 6/10 of 1%. this was national bank intervened overnight. he said they basically had to be very careful and watch what was going on. a quick look at spreads. the greek and german spreads now at 402 basis points. is a massive spread. stephanie: i will take you to the next one. credit risks has surged the most since 2008. the cost of insuring corporate bonds against the fault jumped by the most since the day lehman brothers failed. with that in perspective,

remember what a grim day that was with the the best with the uncertainty. when you see a surge this much, investors are saying i have scared and will take anything to ensure myself. scarlet: that is the rate of change that has everyone freaked out. number four is chinese stocks. they are down, sending the index into a bear market. it marks an end to the nations longest ever bull market and it overshadow the central bank's attempt to bolster confidence by cutting interest rates over the weekend. we will be speaking with simon later on to get his take. he is fairly cautious. he also says the symposium and shiny stocks does not necessarily affect the rest of the world because shares of domestic. stephanie: i spoke to stand a couple months ago so constructive on the china story. scarlet: depends on your time spent. that time span.

stephanie: it is not just greece at number five that is in the midst of a crisis. so is puerto rico. the commonwealth is in a $72 billion whole. and puerto rican governor says it's public debts cannot be paid. they want to do late payments while negotiating with creditors. they want to delay it so they can negotiate with creditors but who? those that have invested in puerto rico already are underwater. you are talking about a governor that does not have the public. you saw the head of the government development bank of puerto rico leave his post and go work for a bank. 's huge infighting within the political system. it is a hot mess down there. people were comparing it to detroit but at least detroit had the expertise and support of the u.s. the situation when we go is in

right now is grim. scarlet: it is grim and something we will be discussing later on in the hour. for more on greece, i want to turn right back to erik schatzker who is joined by the athens chamber of commerce president. take it away. erik: this is constantine, the president of the at this general commerce. i was describing other was an eerie sense of, among the people that sense of calm among people. it is a different story for business. >> absolutely. the circulation you referred to is too. first of all, we have to understand that this withdrawal of deposits has been taking place over a long. of time come over the last 3.5 months. it is understandable we don't see long queues at the moment.

at the moment, businesses are suffering because although they can through the electronic system internally within the greek frontier to be able to transact, the greek economy is not a production-based economy and therefore, we are heavily reliant on imports. at the moment, with the electronic transmission system being under, we can operate. this is something that needs to be resolved quickly. erik: when you are telling me is the greek economy has been cut off from the global economy? constantine: if we strictly look at the real economy, the electronic transmission system which is extremely important perimeter of our daily business i would say yes this is true. we hear this will be rectified within the next three or four days in the sense that we first of all have to secure the requirements for basic food and

pharmaceuticals. these are two main categories we need to secure. erik: when you as a president of the chamber of commerce where individual companies go to the government and plead for the ability to pay for food and drugs, you believe you will be given approval? constantine: we have the understanding i am sure. this is more of a banking issue. this is the reason why we will remain with the central bank of greece which is in direct -- erik: you are meeting with them, when? constantine: later today. on an open line with the ecb, if the approval comes from the ecb, i think they put humanitarian reasons primarily because we are talking about two basic categories, food and pharmaceuticals.i am sure we will have their understanding and assistance. erik: some put the probability of the greek exit from the eurozone at 85%. where would you put it? constantine: i would not like

percentages. i would like to say we still have time. we are in the 11th hour and we still have time for the great government to sit around and negotiate so that we find a solution. it is becoming a truly difficult and improbable that we will have for practical reasons. erik: what do you mean? constantine: we are talking about six days away from the referendum and still have not had questions from the government that will work to the week collectors -- to the greek collectors. it is becoming almost impossible for the ballot papers to be printed, cut and sent to the ballot stations in greece. erik: it is a practical matter. constantine: and i think we should take advantage of it and once again try to negotiate. erik: thank you.

a perspective there on the challenge of doing business under capital controls. stephanie: thanks so much. he will be rejoining us at the top of the next hour. liquid founder and ceo joins us next. we will ask whether the situation in greece is the first affinity test for the bond markets. stick with us. we have a lot to cover. no better place to be than bloomberg today. there is so much information you can only get in this terminal. we are delivering it to you live. ♪

stephanie: welcome back to a very important market makers. we are talking about the bond market which may be getting its real test as a situation in greece deteriorates. our next guest knows a thing or two about bond market liquidity. is the founder and ceo of liquid net.

welcome. seth: things for having me. stephanie: this is going to be a moment where we see how liquidity is being tested. we know it is getting more and more difficult over the last few months. you are about to open a dark pool there. seth: it can work and it will have to work quite frankly. that has been no technology applied to the bond market. if you want to create a bond you have to go to a human intermediary. degrees crisis -- the greek crisis will hit the european banks the hardest and they have pulled back from trading bonds. generally they use their best they will have to be able to trade and go agency. they have to find the other side. if someone gives in order to buy

bonds to one bank in order to sell box to another bank, there is a good chance they will never meet each other. stephanie: why? every salesman and traitor on the street and broker is hounding the phones finding the other side of the train. seth: historically, the banks have put their capital to work in these situations. if there is no liquidity, they open up the sprint and make more money at it. without the capital to apply, they have to find the other side of the trade. what the market needs is decentralization of all this liquidity. what liquid net brings is decentralization. everybody that owns bonds into one central point. stephanie: is talk about the ways the word liquidity gets thrown around. central banks around the world are trying to increase rate cuts. there is insufficient liquidity in the u.s. government and

provence corporate bonds. seth: they try to put more money into the markets, but the banks -- the capital that the banks have are severely constrained. stephanie: that doesn't mean if the buying side wants to absorb the liquidity right now. it guys on the street are saying they are not treating anything in the markets. it is wall-to-wall conference calls with everyone having their pencils down. seth: that is correct. the problem is traditionally the facilitation of all these trades have gone through the banks. when the banks stop facilitating the trading, it is difficult to buy back bonds so the only way they can do it -- the banks had millions of dollars of capital to apply to this announcement is about 20 or $30 billion worth.

stephanie: when we return, puerto rico.

stephanie: welcome back. julie: welcome back. i want to talk about a different kind of futures, and that is oil. has fallen to a fresh three-week low. we will see an economic contagion essentially. joining me now to discuss oils next move is scott bauer, the senior market strategist. oil bears mentioning not just

because of greece, but also because of iran. how are you weighing the issues as you look at the trades this morning? >> looking at this phase, i don't want to say greece is a nonfactor, but the focus has to be on iran and what will be the decision coming out of the end. will iran get the concession or not? it do, more oil will come into the marketplace. we have seen oil trade over the last three months or so in such a consolidated place. we were down around 58 earlier this morning. you discount greece and in the long run you almost discount the news coming out of iran. we may see some spike if the news out of vienna about iran is such that iran is not getting

this concession. even if they do at this million barrels a day to the marketplace, i still see a pretty decent floor set in here in the 57 to 58 area. i would be a buyer in this area. julie: as we look at the oil futures this morning, it has taken a dramatic leg up and is closer to 59. we were talking during a break and it was unclear what is causing this. as the iran talks continue, do you expect to see a pickup in volatility? scott: absolutely. people will be playing both sides of the coin. if you look at the uso, you will see major volatility at least over the next couple of days. i think the 57-62 area will still hold well.

anything 758 is a by that anything -- anything sub is a byuy8 is a buy. this area we are trading in will hold because there more supply coming into the marketplace the already has oversaturated, surprises should go down, but the support is holding. julie: what would be the downside if there was not a deal? scott: if there is no deal, we can see prices may be hitting 60 or 61. i don't say anything taking this oil market in the near term meaning the next 4-8 weeks out of the range we have been trading the last three months. julie: thank you so much. appreciate it. scarlet: let us get to our top stories right now.

we begin with greece. its membership in the eurozone in jeopardy this morning. it shut down its banks and opposed capital controls after the ecb refused to raise the amount of aid. greece will vote next on a on creditors proposal for extending the bailout. jeff says there is a simple solution out there for greece. >> the should be relief on this mounting of bad debt. if europe will not give the relief cooperatively greece should take the relief by saying we cannot pay. scarlet: jean-claude juncker makes it clear what is at stake. david cameron says the u.k. cannot hide from terrorists. at least 15 british nationals were among those killed when a gunman opened fire friday at a resort in tunisia. it was one of four attacks that they blamed on muslim extremists.

meanwhile, the fbi is warning of multiple attacks targeting the fourth of july holidays. >> there is great concern. there is more concern now than any time since september 11. there are these lone wolf attacks. isis have a multilevel sense of operation. there can be some coordination among these lone wolves out there. scarlet: critically, there has been no specific threat. stephanie: dow electric is speeding up the sale of its finance operations. ge will sell its fleet management business to canada's element financial. the price is $6.9 billion. ge plans to sell off 200 billion lending assets so they can refocus on industrial operations. cisco is dropping its planned

$3.5 billion takeover of u.s. foods. a judge blocked it last week. regulators warned the agreement involving two giant food distributors would raise the cost. cisco says it will buy back $3 billion worth of stock. those are your top headlines. scarlet: angela merkel set to speak in berlin any minute now. we will bring you her remarks when it begins. stephanie: puerto rico's catch-22. the island is running out of cash. the hedge funds going to the rescue are asking for a very deep price. that is called loansharking. we will have more in just a few. ♪

stephanie: this is berlin where angela merkel is said to speak on the situation in greece. she has not yet appeared.

when she begins speaking, we will bring you that. in the meantime, let's look at another economy facing a debt crisis, and we go to puerto rico. the territory's debt is not payable according to the governor and he needs to pull the island out of a depth i wrote spiral. laura, why is this a critical week? last week, i sat down with the governor and he said we are in great shape. we are having the energy system restructured and mathematically we cannot default. this is a guy that does not have a finance background. how have we consult or so ugly that's how have we come so far so quickly? they are on a distress levels similar to a loan shark. what is the situation? laura: it has been breaking down

quickly. we had the report today that painted the dire picture in puerto rico in a way that has not done before. it was done by an imf consultant. this is coming to a head like you said. there is a big payment coming up. they have this report coming out. stephanie: that they be pulled out of this that could they be pulled out of this? even wealthy puerto ricans have been hurt because they are the only ones who have been taxed here. it is foreign investors that have come and went. for city sales are up in puerto rico -- worse 80's mercedes sales are up in puerto rico. laura: you are looking at all

the problems that they know. this is not an easy situation. creditors are trying to give money to puerto rico thinking this is something that might help. stephanie: way to qualify creditors and help. these are private investors who want to go in there and make a ton of money off of this. laura: they do, but if they do not give economy to where it needs to go, they do not get it back. it is difficult. is hedge funds are going in and dictating. they are business savvy and know how to do this. scarlet: what indication do we have that the puerto rican government understands? stephanie: not. -- none. they have done nothing to adjust infrastructure. there are thousands of teachers, cafeteria workers, custodians, public workers, who should have been laid off because the middle income population has shrunk so

much. the government is not having that hard conversation. laura: they have the best advisors they can get. stephanie: are these hedge funds working with each other? is it inflating infighting? laura: it is not quite infighting yet. scarlet: these are the hedge fund creditors we are talking about. they know a thing or two. stephanie: these are extraordinarily sophisticated investors who understand the distress debt market. you are talking about an island who does not have the expertise. a current government has not been in a situation like this. they have had this restructuring plan over the last few months for the power plant, but nothing is happening. laura: discussions are going on

and they have been for months and months. there will be some kind of conclusion to it. there has to be. scarlet: we have a payment due on july 1. what else is on the horizon? laura: we have a 100 $40 million payment in august for a different set of creditors. stephanie: they have their back against the wall. when they lost the credit rating, they cannot borrow at 11% which they could less than a year ago. they can't get that at this point. laura: they don't want that to happen again. it just may not work. stephanie: thanks to laura. we will be checking in with you on the puerto rican situation. when the governor says it is something mathematics, not

politics it is mathematics and politics. scarlet: i am sure that will come back. stephanie: a year ago, he said structurally we cannot default. when you say distressed debt funds are coming in to save them, come on now. scarlet: we are still waiting on angela merkel. she will be speaking in berlin on the situation in greece. when she begins speaking, we will take you there when it happens. up until a few weeks ago, chinese stocks seemed virtually unstoppable. no more though. do we have further default? we have now entered a bear market. ♪

scarlet: world's best performing starts year has entered a bear market. investors looked past the central bank in china over the

weekend and sent the composition lower for a third day. has dropped more than 20% since it's june 12 high. simon is the head of asian equities at one company says think again. what is your interpretation of the rate cut? simon: there was an idea of some warning behind it, but i don't think that was the primary motive. i think it is another in a series of cuts to stimulate the economy. the chinese economy has been slowing consistently for several years now. stephanie: how did you point to the chinese market having able run? how do you explain it? simon: there has been a

certain amount of government support in the bull run. a booming stock market gives them the exit, the ability to see secure some of that. they want the stock market to generate wealth with in china and one of the things the chinese economy needs -- i think the wealth effect of the stock market rising, i don't think it is necessarily -- if you look at retail sales, they are up around 10%. if you look at some categories of retail consumption, they may be even weaker than that. one of the positives of the market comes down, i don't think you will see a particularly disastrous effect on the economy from a decline in the stock market. scarlet: there is a big role in chinese government is playing

here. what creative measures does the government have up its sleeve to prevent an uncontrollable fall out? simon: in the stock market, very few. they can talk. that can be very important. this is a very retail driven market. retail investors take their cue from what the government says. retail investors are also aware that if government is not omnipotent, fundamentals come to bear. stephanie: the government is not omnipotent but is the chinese government on it? as an outsider possibly looking at china as an opportunity, how much do you honestly rely on data that we get from the chinese government? simon: i think everyone has known that you take data from the chinese government with a

pinch of salt. stephanie: a pinch or a pound? simon: the direction of data is accurate but the absolute level is a question. if you compare the growth level which is 7% at the moment we have very reliable measures of growth such as electricity consumption which is barely growing at all at this moment. it is not going because manufacturing is not going in china. china is going through a difficult transition to what they need to be which is consumption-based. scarlet: there is inaccuracy in the data. simon: but the direction is correct. scarlet: investor quotas, ease of access were among the reasons i did but what impact this having right now? simon: i am not sure -- the concerns are the constraints are getting into the market. it is not a completely open market for foreign investors. scarlet: if the collapse

continues, they will not factor that in? simon: i don't think so. i think they are looking at the technical issues of war and investors going into the market. scarlet: is the chinese government change its approach to opening the market and its economy because of the selloff? stephanie: candy chinese government -- you are talking about a titanic size shouip? simon: it is not something they have ever done. it has been a very slow measure development. they don't want to take any risks and risk opening up the market or opening the capital markets straight away. they are worried about a flow of money out of the country. i do not believe you will see short-term market moves like this affect government policy.

scarlet: thank you so much. stephanie: when we return, will dr. doom predict gloom or do for greece?

scarlet: will come back. -- welcome back. we are waiting on angela merkel. she is set to speak in berlin at any moment now on the situation in greece. she said earlier today that if the euro fails, europe will fail. we will take you to the news conference as soon as it starts. stephanie: futures indicating an eventful open. julie is dressed for the occasion and rent -- in red.

she has the analyst action that you need to know. scarlet: that was subconscious. stephanie: we knew which direction we were going this morning. you look in your closet and said black and red. julie: action may be for the greek market. stephanie: trying to ease my way back in. julie: macy's is being downgraded to a sell. the same-store sales run is continuing. and analyst says the company will continue to see category challenges, tourism headwinds, and the kleins of sales of some vendors.

you see it is choppy at best. the latest quarter decline is 7/10 of 1%. we are looking at j.p. morgan this morning. it was downgraded from oppenheimer. we are seeing a broad-based selloff in stocks today. in the of financials getting hit. jp morgan a couple of days ago was trading at a record high. we were seeing that with some other financials as well. we are seeing an upgrade for shares of chesapeake this morning. chesapeake energy one of the few stocks we are seeing in green. this stock has been hammered recently by many analysts. it is being upgraded by two notches to a buy because the

issues the company is facing are not fatal. any good news could present a short squeeze says and analyst -- ann analys. we are nearing 28% of shares in the stock traded short, one of the highest we see in the s&p 500 on that basis. if there is any spike in the stock, you could see people getting out of the shorts and we could see the gains magnified. stephanie: thank you so much julie hyman. scarlet: now we have to show you some of this morning's best photos in picture this. stephanie: we have to start in greece. it is not only erik schatzker out there. people are waiting hours to withdraw their cash.

only 40% of atms are said to have any money left in them. great banks have imposed a 60 euro daily limit on withdrawals. let us put this in perspective. even though we were told there is an eereie quiet this morning people are waiting in line for hours and all they can take out is around $66. desperate times call for desperate measures. they are taking out money any way they can. scarlet: i wonder to what extent you can use the cards and credit cards. stephanie: there is probably not that many opportunities. maybe if you have global stores. if you are a local business in athens, i highly doubt you will take credit. scarlet: did you see the proud buildings? they were all lit up in rainbow colors. stephanie: i love it.

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>> live from bloomberg headquarters in new york this is "market makers" with erik schatzker and stephanie ruhle. stephanie: good very busy monday morning. you are watching "market makers ." scarlet: erik schatzker is on assignment in athens. we are watching the latest fallout in greece while chinese equities have entered a bear market. stephanie: we will speak to marc faber. he is coming up in just 30 minutes. angela merkel is holding a news conference in berlin. we will bring you all of that when it begins. here is a look at our top stories of the hour. greece is moving to make sure

his banking system will not collapse. it is also moving closer to an exit from the euro. greek banks will be closed. cash withdrawals will be limited to $66 a day. the ecb has no frozen the limit on how much emergency aid it will give to greek banks. >> this decision today has led the ecb to not increase the liquidity to great banks and forced the bank of greece to recommend measures for bank holiday and limit bank withdrawals. it is more than clear that this decision had no other goal but to blackmail the will of the greek people. stephanie: not just work choices, but he has some leather bound books behind him. he is serious.

greeks will vote on whether to accept the latest basel of creditors and open the door to more bailout aid. investors are scratching their heads right now and saying what exactly are they voting on? his there going to be something to vote on? the vote will take place on sunday after the fact. i am talking to people asking what they are hearing and it is conference call after conference call across the board. investors are scratching their heads asking what this means. the supreme court is expected to issue the final three decisions of the term. among the cases is whether the epa unreasonably provided costs when it limited power plant emissions. there is a case involving lethal injection and a another that can change the way congressional

districts are redrawn. scarlet: general electric is selling another chunk of his financial operations. it agreed to sell in bulk of its management business to a limit initial. the price is $6.9 billion. ge plans to sell off $200 million so it can focus on its industrial operations. the parent of the discovery channel is showing it is a lot more than just shark week. it is paying one point $4 billion for exclusive european broadcast rights to the next quarterly -- four olympic games. those are your top headlines. stephanie: we have been talking about it all morning long. greece has entered a new phase of its stand up with european creditors -- stand off with european creditors. erik schatzker is life in athens. what is next? erik: a lot people are focused on the weekend because that is when the prime minister has

promised to hold a referendum. is effectively a referendum on euro membership but a referendum on austerity because it is supposed to be about a bailout proposal or in extension of the bailout proposed by the eu. that is what we have been talking about for the past several minutes. anyone's guess whether the referendum will happen so my attention is on what will happen tomorrow. tomorrow is the day greece is supposed to make 1.5 billion euro payments to its creditors. it is also the day the current bailout agreement expires. if both of those things happen on schedule, and there is no reason they will not, what are the implications for gree ce's banking system? i spoke with a former board member at the imf and former advisor to a previous greek

prime minister in the early 1990's. here is what she said the implications of those two events are. >> it will be hard for the european central bank when the assets of the bank are sobering. there is a question of whether the ela provided by the ecb. we will see after tuesday. erik: is that make the greek banking system insolvent by tomorrow night? >> yes it does because 90 billion ela have been provided by the ecb. erik: is the european creditors refuse to accept greek bank assets as collateral, this banking system is done. there is no way these banks can possibly reopen on schedule next week? >> that will be very hard. erik: that is a fairly dark scenario.

as early as tomorrow, the greek banking system may be insolvent. there is a question of whether they will reopen next week on schedule. it could change everything and make a referendum almost moot. stephanie: especially given the long timeline here. this is a bank holiday until then. what about the businesses? are they still operating as usual or is it cash only transactions? erik: it is not only a cash only transactions system. credit cards are still being accepted. people have been stockpiling cash. they are lining of the atms today to withdraw $66 or 60 euros, the daily limit they are allowed. people can continue to transact but little by little, that will become more difficult because there are no payments or transfers allowed outside of the country.

nobody can import anything. if this continues, the shows will begin to run bare people will run out of money the atms will run out of cash, and that is when the situation becomes more dire and the erie sense of calm may as closer to panic -- may inch closer to panic. we heard from angela merkel today. they talk about the importance of sticking to principles. you will hear the same thing tomorrow from the greek government. everybody wants to stick to the principles. there is no room for compromise. scarlet: thank you so much. we will be checking in with him in about a half-hour. stephanie: athens is not the only town in trouble. the pressure is building on puerto rico to deal with its cash crunch as a major deadline

approaches this week. we will ask one investor why he decided to get out a long time ago. he is up next. ♪

>> it is a big week all around the world, and especially for puerto rico. island faces a july 1 deadline in which an authority on a massive payment. the commonwealth those $73 billion to its creditors. puerto rico's governor says it cannot pay. joseph rosenblum is here with us now. you said you got out of puerto rico years ago. why is that? we looked joseph: at the economic statistics --

joseph: we looked at the economic statistics and said it did not make sense for our investors. stephanie: governor video selling a different story when i sat down with. >> we have a liquidity problem. we have been out of the market for the next nine months under the next fiscal year without a problem. if the market stabilized, we will go there. we are not in that rush. if the markets move on a factual base, we will see puerto rico is in better shape than it was when yuriko -- then it was one year ago. stephanie: you look at the situation and the debt levels. what does it tell us that the governor of pr said one year ago we do not need to go to market and we are in great shape? as he delusional -- is he

delusional? joseph: his efforts were probably sincere. perhaps a year ago he may have believed they can cure the problem. stephanie: do they have the tools to do so? joseph: his efforts were probably clearly, the market has not been responsive. the level of debt and where the economy has been going is not help them. scarlet: he said the debt is not payable. there is no other option. i would love to have an easier option but this is not a latex this is math. that is a next ordinary statement that it is not payable. when you hear and something like that, does it raise your antennas? joseph: it definitely does. there is concern across the market. it is not coming as a surprise to many investors. the economy has been going downhill since 2006 or so and

the population has been declining for a number of years. we saw a large number of traditional buyers leaving the market. stephanie: what does that mean? joseph: the mom-and-pop and institutional buyers. those looking for safe returns. scarlet: the non-hedge fund investors. joseph: exactly. scarlet: what can congress and other parts do? joseph: under existing law, they cannot file for chapter nine. that would have allowed them an orderly process or at least a better process to negotiating with creditors. congress could move in that direction. as we have seen in the past there is potential to guarantee loans or something like that to maximize grants. i have not seen much response on the part of the federal government. scarlet: hold on for a second because we have angela merkel now speaking in berlin. angela merkel: we talked about

the way forward. i want to be available not only to my political group, but also to the other factions in parliament. the finance minister reported on the negotiations in the eurogroup and made it clear again that the very generous program was put forward as an offer. the negotiations were meant to be continued on saturday. the greek government then decided to stop the referendum and that is why the negotiations were not able to be concluded. europe reacted much more forcefully. it is about the banking union

and this has a law of repercussions because we were able to deal with the crisis a lot better than we would have been able to a year ago. the finance ministers on saturday made it clear again that would be available to do anything possible to protect the euro. the program that we tried to negotiate is running out at midnight tomorrow. this results in the fact that there would be no basis for a program in the future. we made it quite clear to the greek government after the referendums should the greek government request for the negotiations we would not be averse to those. let me emphasize it would be

legitimate of the greek government to call the referendum. it is also the legitimate right of the remaining 18 eurozone countries to have a position to any such decision. this is exactly what has happened when the eurogroup or the 18 eurozone countries decided not to extend the program. they let it expire at its normal turn. what is this about at the core? for me, the focus should be if the euro fails, what does that mean? they monetary union is filled. we have certain principles. the fact that we have joined and currency means there is a

certain degree of trust between the european partners and as y 19 countries decided to have a common currency. secondly europe can only act and react. it is about dealing with crises in a country. it is about solidarity. we have a tension between governance and solidarity, but nobody can get 100% above of both . there needs to be a willingness to compromise proposed a different program to the second program that the greek government committed to on the 20th of february which was

the foundation for the extension of the existing program. the general proposal was our contribution. that is why we need to say the willingness was lacking on the greek part for such a compromise, which then led to the failure of the negotiations and the decision to call a referendum. that is why it is important and there will not be any changes to this position that there needs to be efforts and solidarity that are inextricably linked. if this doesn't come to fruition, the euro might help. this is not what we want. -- the euro might fail. that is not what we want. what is suggested is still on the table. we made it quite clear read we are prepared to help should this

be required for greece. we also agreed that on wednesday we will hold a debate during which the minister for economic affairs and finance minister will take the floor, and the chair of the parliamentary group will inform each other of anything else that needs to be discussed. yes, ladies and gentlemen the roman treaties in europe with regard to the crisis are called upon. it is about the upcoming nationalist movement in europe. this is putting a test on europe. together, we need to make sure that we are able to live up to this test.

it is about responsibility, governance, and solidarity. we tried to avert crisis over the coming days and weeks. representatives of the ecb, the commission, and the imf, and the eurogroup itself offered a comprehensive package. it was a proposal that is far more reaching than the initial proposal and more far-reaching than anything else that has been suggested so far against the crisis financially and socially. it is new in terms of quality and offers a way out of the crisis and takes account the economic figures. it is not about the second

program. it is mainly about what is put forward afterwards in order to have a sustainable exit from the crisis but always linked to the prerequisite that greece had accepted certain measures and they need to be adhered to. this offer has prerequisite that need to be observed. in order to be successful, both parties need to agree upon a set of reforms in order to review the debt and regain economically sustainable situation and solution to the crisis. a lack of commitment to come up with a compromise in order to do away and come by the crisis. it was initially the commitment to do away with vat especially

on medical drugs. the greek government has not continued to negotiate. they chose a different route. that planned on potential future assistance measures in the frame of a third program. it did not want to link its own funding program but has the intention to negotiate a bail out without having to offer something in return. the euro cannot except to give financial aid without any positions it is not just a. british government that needs to justify its action, it applies to all governments, including the federal government or it we need to expect our own population what it is that we have done because certain sacrifices need to be made and

need to be proportionate to the probability of being successful. we cannot expend the crisis infinitely. the commitment of the german government and all other governments is not just limited to negotiations. it is mainly linked to the fact that the greek government did not accept the conditions and voted to change the terms and have the right not to adhere to those terms that were negotiated. the greek government is against requirements linked to bailout programs. therefore it is not observe the minimum requirement for observation. politically speaking and

ideologically speaking, it was a different eurozone. i am convinced the eurozone would be endangered if we had gone down this road. at the end of this development, the eurozone overall would become instable and would fail. gracefully fail also. we cannot risk of this. the euro will not fail because of our friends in greece. it will fail certainly if we did away with the repercussions and the preconditions linked to this deal. it has become clear that we need more commitment within the euro and that it requires a better corporation and financial and economic policy and not watering down certain requirements. there are a number of issues at stake. it might sound harsh, but we need to see that the greek

government -- stephanie: you have been watching and listening to a news conference by angela merkel. hunt nichols is standing by. she said a couple of things most notably that they worked hard to get some kind of agreement working and most critically that germany is still open to negotiations if greece wants. >> i think the most important thing what we heard there was not so much the words but the fact that the vice chancellor who is from the opposite party and angela merkel, were there imparting the same message. it is a message about how they are open to having further discussions. yes they want to make sure greece eventually makes the right decision, but more importantly what they are really making is an overall

statement about the strength of the euro. you are starting to hear an argument from the. you hear them say preserve the euro and keep it strong. presumably, the currency and the eurozone. there must be rules and regulations and all member states have to protect and respect those rules. that as an indication of how sour things have gone with greece. they did not feel as though greece was an honest undershooting partner. you heard that earlier from the eu commission president. he was talking about how they made generous offers to greece and mr. superset to be honest with the greek people on what they had received. i think we have a fair amount of bad blood between all the sides between greece and the partners in europe. there will be a referendum on sunday. we still don't know how it would go. if they vote yes, that could mean the collapse of the cyprus government.

then you could have a new government, whether that is entirely new or a caretaker government. that government could cut a deal with the likes of germany and france because they are still open to a deal as long as they think there is honest negotiations going on. scarlet: great content. solidarity between the german chancellor and the vice chancellor. thanks so much. stephanie: we will bring in some expertise. a few minutes now from now we will be getting the opening bell. joe weisenthal is a managing editor from bloomberg markets. i hope you are following him on twitter. if there is anyone you want to follow to get an understanding of what is happening in greece it is this man sitting next to me. i think he sleeps. maybe he just needs cheese all

we can. -- all weekend. >> it is a great story. the first thing i want to talk about today i want to talk about something not specifically ungreased though it is grace is and that is eurozone consumer confidence. it is holding up pretty good. it is important to sit back and remember that despite all these negative headlines on greece europe is in recovery overall. there is a clear uptrend in eurozone consumer confidence. it might take a hit now. things are not looking too bad. scarlet: the volatility that so many people expected to see once we did anticipate the exit of greece from the euro, where is that? where is the stress? >> it is not showing up. given the magnitude of >> given the magnitude of this shock, it has been remarkable how shallow the liftoff has

been. you can look across the dollar the spanish yield, the falloff in u.s. equities. it has all been very orderly. as you talk about the u.s. equity markets, what happened last october was really much more violent than what's happening right now. >> when you say that things are not that bad, who are they not had four, the market? >> in terms of the general direction we have seen steady games -- steady gains economically. growth, credit expansion, things like that. the line has been a straight line up. >> one of the main reasons why is that the ecb is there as a backdrop.

>> the working support line has been a hundred day moving average and the one time it violated was october and right now it is holding above it. right? it was not really clear whether mario draghi had the bazooka, if you will, and was capable of firing it and what the ammunition would look like. hans was just referencing euro unity across europe away from greece on these issues. that is a seachange from prior dramas we've seen. >> the spanish bond is one place that you would look for contagion, which was a fascinating chart this morning. initially after the news last night you saw an instant spike up in borrowing costs in italy with a major reversal on that. they are still a little bit

elevated, but this is a great measure into looking whether -- looking into whether there is contagion. you have to figure mario draghi is really relieved that markets are not concerned and that maybe alexis is disappointed that it will not bring creditors to the table. scarlet: what is the main job of the ecb this week? >> they cannot control what will happen in greece. they can do what they can to keep options open for a long time. when you step back, we do know that the greek finance minister is an expert in game. . whether this is just an elevated game of chicken or not is in the back of the minds of everyone involved over in germany and with the ecb right now. scarlet: michael, thank you so much. global chief strategist. stephanie" joe, i'm not going to let you leave.

here he go for more reaction on the evolving situation in greece , i want to bring in mark, the editor of the gloom and doom report, joining us over the phone. give us your assessment on the greek situation right now. mark: i think that they will come to some kind of an agreement in the last minute. but i don't think that that is any positive because greece is basically bankrupt. the debt should be written down by 50% or more. however, i have this to say -- i don't believe that stocks are going down because of greece. i believe that the market has been weakening internally for a long time. on friday there were almost 200

new 12 month loans on the new york stock exchange. the chinese stock market, the shanghai index is now down 20% from the highs. greece is a side play but it is used by people as an excuse to sell stock. marc should -- joe: should people in europe feel confident? or will contagion spread with similar concerns real rising in spain and italy? marc: well, i think a lot of europeans don't like the eu. and the bureaucrats in brussels, they hate them because the bureaucrats in brussels i like the imf and the world bank. basically a corrupt organization that do not pay taxes but then impose taxes on other people and

so forth. i strongly believe that the cyclical european would prefer not to have or be a member of the eu. scarlet: i want to get your perspective on who and what kind of investor is going to profit most off the weakness we are seeing this morning brought on by the debt crisis, negative headlines on puerto rico -- what kind of investor? marc: i will tell you precisely. investors in cash benefit the most. asset prices have gone down substantially in the last couple of weeks. in the case of china within two weeks the market is down 20%. the bond market has given up all the gains since the beginning of the year. there are losses in bonds.

people in cash are not totally wrong. the big losers are people who just vote on the advice of some media stock months ago. they are the big losers because many stock are down. down as much as 46% from the high earlier this year. the many stocks that have lost a lot of money. marc: besides -- joe: besides cash, is there anything else you like right now? marc: my bloomberg terminal. [laughter] i still like the price of metals. they may still come under some pressure, who knows, but in general the world is indebted and the debt burden is so high

that there won't be any substantial economic growth. in japan they just reported for may that industrial production was down 2%. so, money printing does not solve all the problems. scarlet: money printing does not solve the problems yet china is trying to do what it and to bolster its economy. we heard about the surprise interest rate cut over the weekend. what is your interpretation of that move? was it aimed at keeping the rally going and addressing liquidity shortage? marc: my sense is that the chinese economy has weakened so actually area the stock market went up from the year ago by more than 100%. i have maintained that the market would correct that 40%. i think another 20% is likely.

longer term as you know the u.s. through to today has had so many recessions, civil wars and wars and still grew. still reasonably optimistic that the chinese economy after a slump will come out ok. but they need a lesson in terms of arming glass, and tombs -- in terms of using debt and leverage. you understand, following the 2008 crisis the central banks allowed government to borrow even more because of their low interest rates. basically, global gdp his up 30% from 2007. it's not going to end well that's for sure. whether greece is the catalyst,

who knows. but definitely the markets are reacting on the downs tied and largely because corporate earnings will be disappointed. first of all, wages are going up . number two, interest rates will not go much lower. as they do not go lower squeezes corporate profits. number three, the most important economy for emerging markets was china. and china is now growing it back to him 3% to 4% per annum. scarlet: so, given all of that, do we presume that the federal reserve is unable to move ahead with its timetable for an increase? marc: it is my view that the fed will not increased interest

rates under mrs. yellin for a very long time and if they do it will be by one quarter of 1% just to see what the market reaction is. but i personally doubt that she will do it this year. they will find in use not to do it. scarlet: should they? what are the unintended consequences of keeping rates where they are. if the u.s. economy is doing well, should she not focus on that? marc: do you really think that the u.s. economy is doing well? that's not my impression. i think that the typical household is squeezed very badly. i was recently and a limousine and we talked about this and that and the limousine driver told me that his health care premium the insurance premium this year will go up 39%. so, i believe that most

households are struggling, but they are borrowing money again. most households in the u.s. have no savings. i believe that the u.s. economy will badly disappoint within six. stephanie: do you just carry a number of a all day? it always rains. [laughter] marc: thank you for joining us. marc: we have a sure fit of rain. stephanie: i love it when you join us. the executive editor of the " boom, gloom, doom report." joe, no one better in the house than you. i was so whether you were here, so glad you are part of the team. what a perfect time to launch or show. joe: best story in the world. stephanie: perfect timing, i like that. making it happen here on

bloomberg tv. stay with us, it is nine: anyone and we have 20 minutes more to give you here. scarlet: we are off the lows of the session right now. stephanie: there we go. ♪

stephanie: welcome back to "market makers." $66 per day, that so much individuals can take out of the bank accounts in greece right now. capital controls remain in effect. let's go right to my partner, erik schatzker, live in athens greece, standing by with europe securities ceo with insights for investors. eric? -- erik? erik: it is not just

withdrawals, but it's a ban on transfers outside of these, cutting the greek financial system from the rest of the world. george, greek financial markets are closed today. bonds are not effectively trading here. if they were to have opens, where would we see prices? george: the first initial implication is the bond market. we see the two-year greek bond jumping 17%. trading overseas. we are talking 34%, roughly. we have indications in the u.s. with the greek etf trading down 60% on adr. that was the first reference it was trading down 30%. erik: is greece a buy? george: a list of political

situation clears up that is it's difficult to track any type of investment, whether it is underlying equity assets or another line. erik: you do corporate finance, wealth management, trading -- obviously -- is it possible for anyone to transact any business on a financial level? george: the corporate's have been actively managing risk for the last apple of month and managing cost. corporate activity has ground to a standstill. in terms of actual investments in greece -- exactly. i think that most of the ins additional's have been increased in turn of risk and supplying, but it is running practice the.

until the whole situation can get cleared up, there is not much that they can do. erik: we know what the greek consumers doing, like up in front of an atm withdraw a 60 euro limit. what is the wealthier individual doing? the kind of person that you serve in your wealth management business? what are they doing now and in the week leading up to today? george: contrasting cyprus in which they were handling that handed the situation overnight, the greek people regardless of income levels have had three to six months to pretty much prepare for the possibility of capital controls. despite the lines at the atm's, most people have basically managed to secure money. this is basically in the numbers, where the week money supplies right now are under the

mattresses. whereas the average was basically something else. i think that investors, people who are basically invested in greece or the larger affluent people. they have managed to shift assets abroad. erik: is there any of that money left in this country? george: yes. the majority of the money left in greece was predominantly what was left abroad. given the risk association with greece in terms of investments, most investments were conducted on asset management basis for our client 90% eating invested internationally. erik: money, sock away overseas. george, thank you very much. george is the ceo of europe's securities for the largest independent securities firm in greece. a great perspective on the greek

culture environment and investment environment. stephanie: so interesting, when we look at the images of the people standing outside, those are all pensioners. scarlet: that's right, it's very sad. let's move on to some other top stories we are monitoring for you this morning. outside of greece, a few people in washington state are forced to flee a wildfire. still out of control right now, it has stride one dozen buildings, most of them homes. engineers are trying to determine file rock loaded. -- rocket exploded. the flight to the international space station was lost but the crew will not face shortages. iphones are getting a new feature. we have learned that apple suppliers are making phones that include forced touch with how hard users must press on the

screen with the strength of their touch to access functions. those are the top headlines. force touch is what you use on apple watch right now as well. stephanie: you are watching "market makers," live here on bloomberg television.

stephanie: -- scarlet: everyone is dealing with the shock of china entering a bear market and greek banks declaring a holiday to the end of next week, yet stocks here in the united states are doing fairly well. down but not by too much. let's check in with julie hyman. so much for that egg selloff? julie: the s&p 500 is down the most today. and it's wednesday. we are not seeing a huge selloff on this. you could argue that not the whole idea of a greek exit was

priced in, but we're not seeing a big plunge in the major exits at all. the idea that scarlet mentioned earlier, the greek situation pushes out a rate increase over at credit suites. but you can certainly find areas of pain here in the u.s.. i'm calling it the crisis trio this morning. you are looking at a greek etf. even though the underlying assets are close this still trades because it trades in the united states. it is sort of a price discovering vehicle. where should we see greece priced right now? this gives you the best idea. in addition to the national bank here, down 24%. the second leg of the trio would be china. here you can turn to the etf market, an index that tracks the a shares up half of 1%.

one of the most heavily traded down 1.2% after they entered the bear market. how do you track puerto rico? you can look to the bond insurers, down sharply this morning as the analysts downgraded the stock's calling them on buyable until we know the magnitude of losses associated with order rico. stephanie: julie hyman, thank you for breaking down the latest . that will be at for "market makers." we will continue to be all over greece. i'm not going anywhere. stick with us. ♪

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only at a sleep number store. right now, find the lowest prices of the season with the c4 queen mattress set only $1499.98. know better sleep with sleep number. >> good morning, everybody. welcome to the "bloomberg market day." greece may have stepped over the brink and they are out of patience. thanks are closed, we could be

just days away from default. stephanie: european equities falling more than 3%. u.s. stocks falling, money pouring into u.s. treasuries. >> here in the u.s. the supreme court is wrapping up at session and we are awaiting the decisions on lethal injections and gerrymandered congressional districts. ♪ olivia: good morning. stephanie: so much action going on today, i could not leave, unlike erik schatzker. olivia: pending home sales right now, for that we want to get to michael mckee in the newsroom. mike