are out of patience. we could be just days away from an actual default. olivia: jeffrey jackson says he for greece, go ahead and default, but find a way to pay in the euro. scarlet: and there is no way to repay $72 billion in debt. ♪ olivia: good morning, everybody. i'm olivia sterns. scarlet: and i'm scarlet fu. let's took -- a look at how things are shaking out right now. certainly not as bad as some had anticipated. for -- of a a climb the s&p 500.

certainly, futures had indicated things might be a lot worse over the weekend. olivia: i checked the bloomberg terminal last night about 8:00 p.m. and it looked like the dow at theng to be down 1.5 open. it's not as bad as was expected. the losses for european equities. the euro stoxx 50 down 3.5%. the frankfurt down about 3% as well. and the cac and the paris office well. off as well. i do want to show you what is happening to the euro. you might be surprised is not moving more. we will see a bigger move in the euro-dollar when we get jobs report on thursday. scarlet: that speaks to how the ecb is the driver and how it differentiates from what the fed is doing. on the top take

headlines. the supreme court is wrapping up his term today with several key rulings. justice supported efforts to make federal elections more competitive as they upheld in a result of state law that gives an independent commission power to draw congressional districts. and they also ruled on whether state continues -- state can drugnue to give a lethal that has been busted several state executions. angela merkel says the greeks have no one to blame but themselves. greece closed its banks to keep them from failing and depositors -- limitedimited of on daily cash withdrawals of $66. the german chancellor said they will have to be flexible in order to get the debt crisis resolved. merkel: we need to say that the willingness was lacking on the greek part for compromise, which then

led to the failure of negotiations and the decision for the referendum. scarlet: next week, they will be deal with the aid. alexis tsipras is urging voters to vote no. the governor of the u.s. commonwealth told the new york times that public debt is not payable. he says they should be working to reduce debt obligations. and close to a deal on the iran nuclear ram. they want to make sure iran is not trying to build any -- a nuclear weapon and in exchange will ease sanctions. sales of existing homes hit a nine-year high in may. they were just below economist estimates. sales were strongest up here in the northeast. and jurassic world was the box office champ or a third straight

weekend. took insaur thriller more than $54 million on the third weekend. it is now the fastest movie ever to make it to the $500 million mark in north america. meanwhile, the sequel of the foul mouth teddy bear took in $33 million in second place. $33 million seems like a lot for a foul mouth teddy bear, as i like mark wahlberg. scarlet: the first one was pretty good. have you seen jurassic world yet? olivia: i thought that the first weekend. that was a given. scarlet: people are lining up for hours to take out the maximum $66 from a machine. let's get to erik schatzker. you have been there for 24 hours. what have you seen? ik: i expect to see worse, if

you will. capital controls are a serious thing. if you are a greek citizen and you can only take $66 out of the bank atm every day, that is a severe limitation, a curtailment on the ability to live, the life you think you are supposed to be living. i've greeks seem to be doing -- but greeks seem to be doing pretty well. greek businesses are not doing so well because they are confronting the possibility very soon that they will run out of imported goods. they cannot import sub they cannot send money out to pay for it. -- cannot import goods because they cannot send money out to pay for it. olivia: our business is in athens prepared for a default and also a great fit? --grexit? least adefault, at

default tomorrow which would be a failure to pay the imf, it would unlikely -- be unlikely to affect business in the short run, because we are already living under a government imposed bank holiday. the degree to which it would affect the financial system does not really translate to the greek economy and greek business immediately, because they don't have access to the banking system be on the use of red card and the withdrawal of the 60 -- the use of credit cards and the withdrawal of the 60 euros per day. scarlet: thank you so much, erik schatzker. we are joined by morgan stanley chief equity strategist adam parker. as you talk to your clients, how is the thinking on greece evolved -- evolving in the last

two weeks? as earnings kickoff, you will probably go a whole day without mentioning greece. to me, i'm bullish. i think the economy in the u.s. is likely to be better in the second half of the year than the first. and equities are really not that ambulance. is only a market that 2% off its all-time high. i think people are waiting for earnings to come in. i am bullish. morgan stanley now says a greek exit is the base case scenario and that has no implication for your strategies? adam: it does. two experts on the economy in europe have had a good call about what could happen there and you have this sort of holy of beingthey call it, in the euro and being in power and making demands, but one of

those things has to change. ultimately, we think that equities should trade more substantially with european equities. scarlet: what kind of premium? can you quantify it? adam: in the last 13 years you have traded forward earnings. you had a big european stock trade go on for quite some time. there are all these things and what people forgot is there is no path to a fiscal union and there are still some challenged nations in there. i think you have never several beats and the economy will get cleaner. -- numbers that will be and the economy will get cleaner. that is pretty good, i think. so far, the market is not reacting too much. is janet yellen going to delay the rate hike because of what is

happening in europe western mark adam: -- in europe? into this has played right the call and everyone loves ellen vander. she doesn't love me because we that ish other, but another story. i think her call has been corrected. the market was split 50-50 between december and september. do get probably goes to the margins in december based on his news. it of the day, the economy is a little bit better in the second half than the first half. our view as they get it done this year. we talk about how so often bad news is construed as good news in the equity market. good news is also seen as good news. is the fed exquisitely looking to raise interest rate based on data that good news is good news and bad news is that -- is also good news? adam: and no news is no news.

you are stuck waiting for the earnings to come up. i see this set up exactly like you one where the bottom numbers are too low. where the bottom numbers are too low. i think as earnings, you will see the price-to-earnings ratio set up. we see about 4% of earnings growth and about 2.4% growth buyback and a 1% dividend. they get you to a mid to high single-digit return this year. olivia: and that is better than what we were expecting in january. adam: certainly, but i think the street numbers have come down so sharply -- if you look at consensus never say were at 14% in january and they are at zero now. we think they will come up at the year unfolds. scarlet: why is that? why are analysts so overly optimistic that they have to revise the numbers?

adam: you are right. only six times out of the 40 years we've had the data at the numbers been too low. year, the 40 here, they are too low. you had an energy recession and the big dollar strengthening will stop analysts came -- dollar strengthening. revised came in at their numbers. but not have data on this, you guys probably know this as well as i do, i think statistics are probably more arrogant than normal people. they say things like "i don't want to set expectations too high" and things like that. probably saves a little bit as income get better. i think this catalyst will unfold over the next couple of quarters. and we could see the s&p 500 get out of his range.

adam: i think if you look back to her three weeks from now you will see earnings come up. olivia: none of our guests are arrogant. scarlet: never. adam: none of the host either. olivia: a. , commentary on the european debt crisis. ♪

olivia: welcome back to the bloomberg market day. i'm olivia sterns. scarlet: and i'm scarlet fu. let's go over to julie hyman with a look at what is going on.

the stock is deepening, which is interesting given what you would have thought, that it would go in the opposite direction. the dow jones is now negative for the year. his worst daysng since may 5, so not a huge amount of time, the lowest since april 7. and the nasdaq mother worst april 17, the worst one-day loss his april 17. and as an -- at adam arkin -- adam parker pointed out, it just below the record high close of the s&p 500. still relatively close to that record given the one-day selloff. also, wanting to point out what we are seeing in europe, because --there too, stocks are down 4.2%. futures liket the that, you would have thought we

would have seen a much deeper decline. take a look at my math as well as the futures on the s&p 500. a two day intraday chart on the s&p 500 futures. you see the big gap downward when the futures straight trading last night. this is initially the losses and then we sort of worked our way back up. is inn now the concession place, this is the s&p 500 today and it is trending lower. still, the futures have actually been trending up from where they were last night. scarlet: i love that chart. you have to show me how to make that later. julie: it is no big deal. scarlet: thank you, julie hyman. kraft foods is in the bloomberg terminal at this hour. there is another crisis that does not involve the euro. --e is in puerto rico bonds prices on puerto rican bonds are at the lowest level payable.

and cisco is dropping its planned takeover of general foods. warned thatdiators -- antitrust regulators warned that it would bring too much cost to consumers. and general electric is speeding up its sales of finance operations. it has agreed to sell to canada's element financial. the price tag is $6.9 billion. ge plans to sell off $200 billion in assets so he can refocus on industrial operations. back to let's get puerto rico's debt crisis. the governor there told the new york times that this is not politics, but math. they have more want that per capita than any u.s. state, which is a complete 180 from what the governor told bloomberg just 18 months ago.

listen to this. >> puerto rico will never default. it we wouldault, need to close the government. it is physically impossible. second is the moral obligation. i will pay all the debt. byvia: with more, i'm joined laura keller. what happened. laura: they have this report came out today, which was extremely dire and painted a broad picture of all the things that have gone wrong, and therefore his tune has changed. scarlet: is there any chance that this is a bit too pessimistic and it's not as bad as some think? at that is of them being used, some people are saying it does not include some of the new taxes that are being passed and it doesn't include

the cuts that will probably be approved on this budget. isvia: one of the think that tricky for puerto rico is that the people who hold their debt are some of the most aggressive bond traders out there in the market. what does that mean for the outcome? laura: if you get into the situation where you have the governor tonight -- you know, he is coming on at 5:00 to address for to begin the -- address puerto ricans. if he comes on and says that they will not pay on the general obligation debt, that is a gene -- a game changer. you will see them go in there and fight for the right to be repaid. scarlet: do they start suing on july 1? governor can have a little bit of time to pay on deadline. there is a legal framework before you can file suit. but he would see the preparation for these kinds of things start to happen. olivia: you cover debt more broadly, not just puerto rico. why should we care about puerto

rico question mark -- puerto rico? does this mean we will see a repricing of muni bonds across the country? puerto rico is considered a bad actor. you could have a lot of buyers makeni debt say, we will that stay over to our credit. -- make that state over here and never come over to our credit. places likesee chicago start to have these problems. scarlet: is there a way out other than giving into domains? laura: in terms of a way out, yes, they can go out and say, we are not going to pay you. but in the end, there has to be some kind of agreement on both sides. scarlet: what about the u.s. government question mark can congress do anything? laura: they can. we actually guarantee bonds from

ukraine. i don't know if there's the political appetite for something like that to occur. olivia: very true. thank you very much, laura keller. we should have you on tomorrow. laura: it should be very exciting today. onrlet: we will keep an eye that one. keeping aning up, eye on the markets. from parker said now is the time to be buying. but not that many people are seeding data guys h --eeding that advice. ♪

olivia: welcome back to the bloomberg market day. -- scarlet: welcome back to the -- right now, we are near

session lows on the u.s. equity markets. resilientas been so in the face of the fact that greece is on the edge of default. to? you attribute that the ecb backstopping. that is what we think we see in core european debt. if you book the charter of the german bund, you see the rally and the euro coming down by about 10 basis points right now. we have seen yields creep up in italy and in portugal and we are seeing banks selloff. this is the story of my life in 2012. it is happening with the game -- once again. merging -- the year has gone up to 3.5%. italy, gdp ratio

has been trading at a 10 year yield the need that. scarlet: we are so a custom of looking at the 10 year -- so accustomed to looking at the 10 thisdebt in greece that seems unreal. the question is, what happens tomorrow? the bile out -- the bailout expires tomorrow. all indications are that greece with theplay ball latest proposal from creditors. olivia: and the imf spokesperson for christine lagarde started using a phrase that is a euphemism for his ball -- four default. it is going to have a different technical outcome. scarlet: in arrears is not the same as default.

it is not like tomorrow comes and goes and greece doesn't pay and they switch the light on and something happens. olivia: how is erik schatzker on 66 euros per day? scarlet: he has the corporate pen. i'm sure he'll be ok. he will be back with his take on what is going on in greece, his observations as people line up outside the banks. much more coming up on the bloomberg market day, including germany turning away from greece in the final hour. columbia university professor just sacked gives us his take. -- jeff sachs gives us his take. ♪

scarlet: welcome back. i'm scarlet fu. let's get you to the top stories at this hour. reeks are lining up to take

money out of atms -- greeks are lining up to kick money out of atms, but they are not walking away with much. they are limited to cash withdrawals of $66, or 60 euros. german chancellor merkel said there is no basis to give money to greece without a formal agreement, but she said she is willing to negotiate. merkel: the situation for us is unprecedented. it is also a agile situation for greece at the moment. -- a special situation for greece at the moment. i would not want to speculate, and if somebody wants to talk to us, we are prepared to have those talks at this time. scarlet: next week will see a moreof whether they want eight. prime minister alexis tsipras says to vote no. supreme court justices stroke -- the ruling for

mercury and acid gases. that led to the closing of dozens. was two minutes into its flight yesterday when it blew up. it was carrying supplies to the international space station. is installing a new feature on the iphone. apple suppliers have started making phones that include for stretch, which senses how hard , whichre -- forced touch senses how hard users are pressing down on the screen. markets are closing in europe. we need to check in with bloomberg mark barton in london. mark: it is a countdown to referendum. a couple of major hurdles along the way. the imf debt repayment, and the

deal on the second great bailout all on the 30th of june. what a day. no trading on the athens stock market. not only are the markets close, but the banks are closed. 600 15stage, the stoxx minutes after the opening fell as much as 3.2%, the biggest drop since november, 2011. 40 at one stage down by 4.6%, against drop since 2011. -- the biggest drop since 2011. the banks are leaving decliners across the board. this was a market that was read right across the board. price the board. eight out of the worst -- out of the 10 worst performers were banks today.

i started with euro stoxx 50 up i want to finish with euro stocks. 4.8%, the was down by biggest fall since 2011. that was 14 minute after the market closed. it came back a little bit, but then in the last hour fell again. performance for the european blue-chip benchmark since 2011. scarlet: mark barton in london, thank you so much. coming up right here on bloomberg market day, craft beer is dominating the beer market, but will anyone be impressed by a craft budweiser? why they are about to go local. bigchinese stocks are on a roller coaster this month and what the government has been doing about it. openster on, bill gross up to bloomberg nine months

after leaving pimco. he talks about regrets and investing and what he had in common of -- in common with kobe bryant of the l.a. lakers. back to our big story, germany and france turning away from greece. that is the wrong course of action according to columbia university professor jeffrey sachs. that europe is "hiding behind a mountain of rhetoric." he spoke to the bloomberg surveillance team this morning. a circumstances that should never have happened and shows very poor economic management from the european side and, basically unfortunately a lot of germany, but from also other partners who decided a few months ago that they would not really negotiate with this left-wing government in greece and they just wanted to push grades out of the euro.

-- push greece out of the euro. ironically they cannot push greece out of the euro. panic,n push greece into but they cannot push them out of the euro. there is no exit from the euro mechanism. basic idea is currency depreciation or restructuring, or the dreaded word "forgiveness." do you see any indication for a catalyst to forgiveness of debt? here's the point, when macroeconomists at the imf and the u.s. treasury look at this and look at it together with me, they have seen the case for debt reduction. germany has held firm there will be no debt relief. that is what has brought us to .his juncture and it is extraordinary, in fact, that with this breakdown we have the u.s. treasury secretary jack lew publicly

saying that greece needs debt relief and europe immediately saying no way. tom, what is going to happen is that greece will go into default and they can -- because they cannot pay. but what is happening on top of the fault, which could have been happily -- could have been handled cooperatively and fledgedally is a full banking. this is adding misery to a country that already has the scale of great depression. tom: go over to ireland, which had a very different emotional sequence than what we are seeing in greece right now. absolutely, and ireland got out of it. and not without a huge amount of pain will stop -- of pain. if there is no way for greece to exit the euro and no other solution, then what happens question mark dr. sachs: miley

-- what happens? dr. sachs: my believe is that greece should default and stay in the euro. this is not contradictory, but that there should be relief on this mountain of bad debt. if europe will not give the relief property, greece should take the relief by simply saying, we cannot pay. recognizing that the vast majority of the debt is owed to public institutions in europe. in other words, this is not even private market assets we are talking about, or liabilities. this is money that greece goes to various governments. them --d be used to get the bank open and operating again. still to come, can the world's biggest were really get

into the crack -- the craft beer market question mark that is the plan. -- into the craft beer market? that is the plan. ♪

scarlet: welcome back. i'm scarlet fu. let's begin with a look at some of the top stories crossing the bloomberg terminal right now. we begin with discovery communications going for the gold. the parent company of the discovery channel will pay $1.4 billion for use of broadcast rights for the next four olympics. most of the games will be shown on the discovery channel.

the ceo told bloomberg he hopes to buy more sports programming. >> we are always looking for deals in the last nine months for eurosport. about half of the content on eurosport today is olympic programming. with the olympic rings, the euro -- zero sport together with human big games, we are pretty well taken care of. scarlet: discovery says it is the first time one media company has acquired all rights for the olympics. investors are betting big on companies that are working against cyber crooks. investors have put more than $1 billion this year in 20 etf that tracks cyber security stocks. the ticker symbol is hack and so far, this particular etf has gained 24% this year. in the list of president of candidates just keeps getting longer.

has governor john kasich announced that he will be running for the white house. there are now 13 republican candidate already, not including john kasich. and there will be 14 tomorrow because that is when new jersey governor chris christie will announce he is also entering the race. let's take a look at how u.s. stocks are faring right now. we are at our worst levels of the session with the s&p off by -- you know, two hours. i'm getting lost in time here. the dow losing 213 points now. adam parker was on earlier and said he will be buying into this disc. he is bullish on equities and sees earnings down thing that because analysts have gotten far too pessimistic when it comes to earnings estimates. and if you look at how the euro is doing, it has turned around. it he raised his earlier losses and is now firmer against the dollar. speculation that the concern

over greece is overdone and the ecb will come in and back up any fallout-- backstop any over the crisis. craft beer is in and mass-produced beer is out. bud light saw shipments fall more than 3% last year while craft brewing grew by 18%. there is a divergence. they're hoping to join them rather than beat them. bought up for craft breweries since 2011. devon, is craft beer a sustainable craze, or a fad that is due to phase in a couple of -- due to fade in a couple of months? devon: it is here. and the writer8% down, this is the natural place

to be. -- and that budweiser is down, this is the natural place for them to be. they are growing. but ie all pretty small, think they want to see what they are doing and learn from them and apply that. scarlet: we are having a problem with your microphone. i have appalled -- i have to apologize to our viewers. jason, can we have the microphone? there we go. now we can continue the conversation. this also because they're just not getting it done in terms of sales? : it really is. you have billionaires running these breweries. scarlet: running craft breweries question mark --running craft breweries?

devin: definitely some of them. scarlet: what is the difference between a craft brand and one that is supposed to like one? n: the trade association says you cannot brew more than 6 million barrels in a year and you cannot sell more than 25% to a non-craft brewery. scarlet: what is the size of the state that they are buying in these craft breweries? : they're buying it up so that these guys get kicked out of the brewers association. are they looking to make up the difference overseas? : they are still doing pretty well in place like china and brazil. but overall, the numbers are unimpressive. those guys know how to ring

value out of -- wring value out of anything. be that many more chances for them to do big acquisitions. but this is what they have to do. they are keeping all of the leadership in place at these burglaries. they want to learn from these guys. scarlet: final question, what is your favorite craft brew? devin: there are so many, but there is one that i really like and ab inbev owns them now. scarlet: his article is available in the latest issue of bloomberg businessweek out on shelves and online for you today. still ahead, shares of the shanghai composite falling over 3% today. has china school -- bull market officially ended? we will discuss. ♪

scarlet: china's shanghai confidence soared for years and years, but as of today has entered a bear market. the index fell more than 3% overnight. the interest rate cut did not halt the selloff. the index is down over 20% in the last month. bloombergs betty liu joins me now. bear market,ed a but nobody is ready to say the bull market is over either. eddie: no, -- betty: no, they are not and no one can quite figure out why the interest rate we are now down about 20% on

the indexes. and again, anyone can quite figure it out other than the chinese market have gone up incredibly high over just this last year alone. we have seen a doubling of the value of the stock market. we have seen a three-year bull run and it might just the time table take money off the so there isn't anything for those who are vested in the stock market. and there are -- for those who are invested in the -- so that there isn't any pain for those who are invested in stock market. and many chinese are now invested. scarlet: many people decided this was the place they would get return on their money. over the past year, yes, a dramatic decline, but we are still up considerably. if you joined him on

earlier, you would still be holding on to some gains. but the question is, how long will these gain hold? no one thinks this is precipitated by what is going on in greece. other than maybe there is a psychological link for chinese investors. they open the paper and see europe looks like it's going down the toilet, or at least greek, and maybe that is enough -- at least greece does, and maybe that is enough to take down confidence. an enough to take down the entire stock market will stop the -- entire stock market. the economy is at its lowest in 25 years. it may be one reason we are seeing profits taken off the table. in hong kong, the markets were down, but not as much as we have seen in china. there is that kind of buffering effect. what has gone on in china is not necessarily reflective of the wider market and not reflective of what is going on in hong kong. scarlet: you will be speaking with some big names about

presumably china and greece. betty: china, greece, media stocks. in the corporate and leonrio gabelli cooperman. they are both on their way into the studio for a special roundtable we will have in about half an hour from now. we will talk about greece and where the value is. cooperman is famous for saying that through his own data analysis we are in it -- in a bull market. we are not overvalued right now. but what is the numbers tell him is that we will not be into a bull market until we have priced in a interest rate hike. we haven't had that yet. scarlet: a lot of people think it is going to happen this year. betty: exactly, especially with what is going on with greece. is now the time to raise interest rates? we will debate all of that in a

few moments. scarlet: you do not want to miss that. in the meantime, we will check in with julie hyman. julie: the last time we spoke, stocks have fallen to the lows of the session. we will see where they are at the moment. it looks like they are continuing on that trajectory and s&p nasdaq and dow all falling as investors wait to see the potential greek exit from the euro. a derivative strategists. here it is, the event we have been waiting for, sort of. how is it playing out in the stock market? up. the big test pick in our -- the vicks has picked up. has begun.

we think this is an event where you really have to respect the unknown and be more cautious, not believing it is a one-day event, but something that will play out obviously next coming days, but eventually weeks as well. julie: what about the ideology of the side, that it is contained, even if it is the that it ise idea contained, even if it is the worst scenario? jim: going back to the crash of 2008 and then again in august 2011, investors felt the worst was over. people felt after the close was it.y that that is a risk. that said, i don't believe the magnitude of this event will be like those between the fall of 2007 and 2012. the best analog in our view is

probably a taper tantrum of the panic in and 2014. we take the average of the futures curve and compare that to what we have today. what that means is when this is over, we expect the vicks to have a 22, 23 handle. and with that, we see the s&p 500 perhaps pulling back upwards of 7%, if not more. we are only down about 2.5% from the recent highs. julie: he felt like you would be short in the s&p and going long on volatility right now. you would belike short on the s&p and going long on volatility right now. and we would not believe this is a one-day event.

pandora, you are looking out to january of 2016 for risk reversal. walk me through it. jim: the big event comes december 15 at the latest. the copyright board at that time will set rates for the next five years. pandora has been a bit of an underdog. it has underperformed by about 15% over the past year. we think they get a positive outcome in december. there is also a short interest about 13%. we think the downside risk is pretty well mitigated and upside into december. jim: we will be right -- julie: we will be right back. ♪ we live in a pick and choose world.

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so your sleep goes from good to great to wow! 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. >> welcome to the bloomberg market day. >> stocks dropping on concern

europe may have stepped over the brink. we could be days away from a default as greece gets ready to go to the poll. >> i'm going to get inside on what greece crisis means for investors. the -- mariois isze l.a. -- mario gabelli the chairman and ceo of gamco investors. coming up. betty: we get a look at how markets are trading midday. what a wild ride? weities are lower than what have seen in europe. and in asia.