in greece. we will go to erik schatzker and hans nichols in a moment. america prospers. we and janet yellen consider a better job economy. the kids have stopped watching tv. mtv is so last decade. good morning, everyone. we are live from our world headquarters in new york. it is july 1. we have raking headlines. suresuresure bull says flat-out he needs clarity from greece and right now. we will keep you updated through the morning as greece spreads right now. much more on the american economy. a thursday jobs report. right now let's get to top headlines with vonnie quinn. vonnie: eu creditors are set to still see the greek referendum as an issue. the element that could and the standoff -- that could end the

scent of print alexis tsipras has sent a letter to the creditors last night. they have been demanding changes in greece's pension system. tsipras has proposed that the bailout deadline be extended by two years. president obama said the president ♪ problems increase would be felt worldwide. president obama: it is painful for the greek people and it can have a significant effect on growth rates in europe. if europe is not growing the way it needs to grow that has an impact on us brazil. those are major export markets. that can have a dampening effect on the world economy. vonnie: reporting of chaos outside greek banks, about one third of them reopened to make

partial payments to some retirees waiting for their pensions. another problem has hedge funds scrambling to save investments. puerto rico may try to delay a payment. that sent bond prices down 17% in two days. among the investors in the past a restructuring could keep investors away for years preventing the hedge funds from selling their positions. the u.s. and cuba are taking another step toward normalizing relations. today they will announce the restoration of diplomatic ties and plans to reopen embassies after 54 years. in the last six months the u.s. has removed cuba from the list of state sponsors of terrorism. shareholders will decide whether to greet a merger. the third-largest food and beverage company in america, the

deal was put together by warren buffett and 3g capital. the women's soccer team has gone to the final in canada. the u.s. lost japan in the final four years ago. it could be a reboot. tom: i watched a little bit of it for brendan greeley, and it was fun. the germans missed a penalty shot. they had a penalty shot and they missed the net. vonnie: it was predicted that germany would win the whole thing 2-0, so that has gone by the wayside. tom: let me do a data check. futures bounce up today but let's wait and see where we are at 1:00 or 2:00 p.m. carl riccadonna is looking at the euro-dollar.

not through any key resistance but nevertheless a stronger dollar over the last two days. nymex 58.74. this is what you watch if you are watching greece. the vix elevated back over 18. the german two-year is the litmus paper of the european system, and that is not good. from 0.22, pushing down that huge inertial force. euro-swiss is a little weaker. and gold 1172. carl riccadonna, help me with this. the unemployment rate, 4% unemployment in 2000. up we go, grim and this is what carl riccadonna thought would happen, and every other legit economist.

karl: we have a very linear decline in unemployment. this tells us that this path continues in the chart and it will far exceed the fed's expectations for year end, which means the fed will be a little bit rushed. tom: the news again, the jobs report out tomorrow. they get to 4% unemployment rate . it is different than this 4% isn't it? carl: i think we could hit 4.7% by the end of the year. the fed is looking at 5.2%. tom: we need to go back to greece right now. the spread market clearly shows greece has worsened, and you see that with flight to quality of those german bonds. dramatic and further hardship this morning. the dawning awareness that

greece's sunday referendum is a lose-lose proposition. hans nichols follows the suits and ties in berlin, erik schatzker is following the people of greece in athens. erik the photos are dramatic. how much have things deteriorated in less those two days, and how does greece get to the sunday referendum gekko erik: we may not even be getting to the sunday referendum. this is the piece of paper that could change everything. it is a letter that alexis tsipras, the prime minister sent last night, dated june 30, to juncker draghi, and lagarde. it says i am prepared to accept the conditions for a new bailout with some modifications. the modifications are not unimportant. i would not describe them as minor. they include maintaining a discount on the value-added tax

for the greek islands. this is a hugely important issue as far as the greek tourism industry is concerned. there is concerned, or at least worry, that if you eliminated the discount, the islands would collapse. furthermore, an unwillingness on the part of citrus -- on the part of tsipras -- a question as to whether this is a faithful attempt to restart negotiations or another ploy on the part of the tsipras government. tom: let's go to hans nichols in berlin right now. it is a movable feast. we saw mr. schauble a few minutes ago. does he speak for angela merkel? hans: yes. when you heard from merkel later

yesterday is that negotiations would not start until after the referendum. what mr. tsipras has done, he has tried to expand the negotiating field. he has tried to give himself more chips. that additional chip is this referendum on sunday. he can always call it off, maybe get some goodwill on that. he can also switch his position and say i have extracted enough from the creditors let's vote yes. he is entirely in control on what happens with the referendum. tom: what has changed is the polling that no vote is feasible. what does that news meet to the people with suits and ties that you follow in brussels and berlin? if they get a no vote how does their body exit change on thursday and friday and saturday before the referendum? hans: a no vote makes it easier. i would say the suits and ties

in brussels and berlin are discounting the poll because it is from a pro-series of -- a pro-syriza newspaper. one thing the poll did show was movement toward the yes vote after capital controls were imposed. later this evening we may be getting more polls, but remember, if the polls look bad for syriza, they look bad for mr. tsipras, he can always cancel the referendum. tom: thank you so much. i am watching the greece-german spread. it is now through 1000 -- it is not through 1500 basis points yet. we are only basis -- we are only a few basis points away. we attempt to begin two days on the american job economy before the fourth of july. it is the jobs thursday. the job -- the drop back -- many

are doing better in america. that is a fact carl riccadonna has told us about many times. there are many, or not. we get a huge response when our guest is on. many of our viewers and listeners agree with you about an economic slowdown and the sluggishness. what are the recession characteristics of the low gdp sluggishness? >> stepping back from the month to month, quarter to quarter, we are in a long-term decline in trend growth. when that happens, a whole bunch of assumptions that we have fall apart. when you have a cyclical downturn and if your altitude is at 40000 and you hit an airpark -- an air pocket, you can handle it. when you're out is at 10,000 you have to pay attention. doug: absolutely.

>> absolutely. >>k nominal gdp growth, everyone would agrees you see a long-term decline in that, and that cap's your longer term interest rate. so if you are hiking on the short end, you do not have a lot of room before you start seeing some inversion in the yield curve. tom: are you predicting an inversion in the yield curve? lakshman: we are not in a window of vulnerability at the moment. we are a little closer to one them at the beginning of the year. at the beginning of the year -- vonnie: are we where we were at the beginning of the year? lakshman: we are in a slowdown of cycles. tom: do you agree that we might mow migrate down? >> i think

we will have a four handle in the second half of the year. my view is that low productivity is actually a good prescription for the economy. tom: something to talk about in the hour. we have a wonderful twitter question. we have had a ginormous response the last two days for our twitter questions. we thank you for smart responses. will there be a greek referendum? if you are just waking up, the no votes have it in the early polling's increase. there has been a real flip injuries, something mohammed el-erian and others have spoken about and out front on. stay with us worldwide this morning. this is "bloomberg surveillance." good morning. ♪

tom: good morning, everyone. futures up 18, dow futures up 1.58 in greece. the dow spread a little bit better then a few minutes ago. here is vonnie quinn with top headlines. vonnie: fire erupted at an african-american church that was torched 20 years ago by the ku klux klan. the south carolina town church was devastated last night. at least two -- a new report is raising questions about the link between companies that make drugs and those who prescribed them. the government says drug and melded device -- drug and medical device companies -- much of it was used to entertain doctors or pay them for non-research consulting. the president greets some

intruders outside the white house. ♪ >> ♪ but keep them all -- ♪ vonnie: grading the girl scouts was part of michelle obama's campaign against childhood obesity. tom: they toughed it out. they got the old coleman stone out -- the old coleman stove out and the bug spray. i wonder if they went canoeing. vonnie: the campfire -- i am not sure they would one want to have the white house lawn set on fire anyway. tom: did you sell girl scout cookies in ireland? vonnie: i was not a girl scout. they turned me away. tom: triple t's as we look at

the girl scouts and brownies in america. america's productivity challenges -- a little bit of disagreement on the desk on that. carl riccadonna had attained him and said he would not come on the set this morning unless we talked about -- we are going to talk about the dot plot slater in see which way the dots are plotting. vonnie: the dots have faces today. i am not even joking. tom: good to know that. beavis and butthead are part of the faces. vonnie: they are all from another time and place apparently because mtv has been hemorrhaging viewers. that is the tip of the viacom iceberg.

they blame faulty measurements, and not the rise of netflix and youtube. we are joined now by our guest with a preview. thanks for joining us. >> my pleasure. vonnie: is sumner redstone making rational choices? >> who knows? he has disappeared from view in the last year. for years sumner redstone was the face of the company. he defended it, and in his absence, viacom has hit this turbulent patch. it is a fascinating time in tv business, where there is this mass migration of viewers from live television to on-demand options. tom: first, let's make this clear. is he the chief executive officer? does he have executive inability? felix: no, he is the executor chairman.

philippe, his longtime chairman, -- his longtime lawyer, is in charge. they are in the best position to take over viacom and cbs. vonnie: at that point, who will be making decisions? felix: that is a big mystery. the company has been underperforming even at this time when everybody in the linear tv business is watching ratings go down. it has been really bad at viacom. you're talking double-digit percentage across all of their networks -- mtv, comedy central, nickelodeon -- they have all been down a lot this year. felipe dumond, the ceo, says it looks that from the outside, but it is a measurement problem. tom: let's go to a chart that shows a difference. disney has done better than good versus viacom.

is this a company that will be put out of its misery? felix: what is fascinating is they had this incredible risk-taking innovative culture of television. they came up with all these new formats in tv, and recently you look at it and it has become a very risk-others company. you see no pioneering shows coming out of their various networks. they have not diversify. they are still basically in the business of selling ads to teenagers and young kids who are not watching them. vonnie: beavis & butthead go -- tom: can you get up before 9:00 a.m. some other time? felix gillette joining us on what is an amazing trend. the collapse of viewing television. coming up, james lockhart working with wilbur ross --

they're looking for distress, opportunity. maybe they are looking at greece. this is bloomberg surveillance. ♪

tom: good morning, everyone. we welcome all of you worldwide. pretend it is thursday. it is wednesday. jobs day tomorrow because of the holiday. bill gross and jim claxton will join us later on the radio for jobs day. our morning must-read is about something crowding out a discussion of the american labor economy. that is puerto rico. matt levine writing up a piercing note -- order rico obviously has -- puerto rico has obviously borrow too much money.

tom: carl riccadonna with us at bloomberg economics. to you first -- i think this is an important point. there has to be someone on the other side of the trend. someone has to be dumb enough to buy greek debt and take it on board, and puerto rico debt and take it on board. carl: absolutely. when you look at the fundamentals, the puerto rican economy has been struggling terribly. they cannot pay their bills if they are not growing. tom: lakshman yields do not go higher. that is when prices go down, so they can be confident right now. is that part of the reason puerto rico got in trouble? lakshman: as you were saying, there are two sides to the

trade. there are also lenders. there are a lot of strange things that have happened with easy money and high liquidity. and the search for yield. we may be seeing aspects of that popping up here. when you are in a recession, it is tough to service your debt. luckily, a lot of the world is not in recession, and that is helping for the time being. tom: we will cover puerto rico in the next hour. coming up, we will look at the mystery, the mass of america's productivity. ♪

tom: good morning, everyone. "bloomberg surveillance." we are watching greece spreads stable, but worse this morning with the no referendum vote part of the issue. let's get to top headlines.

here's vonnie quinn -- surprise on greece. vonnie: always, but this time it is that greece has moved to break the impasse on the bailout. alexis tsipras has agreed to creditor proposals with minor changes. there are some sticky points. tsipras wants changes on pensions from the greek islands. there has been a response from germany. wolfgang schauble -- talks on iran positive the program have been extended until july 7. secretary of state john kerry the russian foreign minister says the situation is moving in the right direction. the u.s. and other global powers want to prevent iran from building nuclear weapons. in return, they would ease economic sanctions. >> an extension is important because it provides extra

reading space. but no one is under illusions are trying to race to that day as sort of a got to have it buy. if we can get it, we can get a deal in two days, three days. or we can get no deal at all. vonnie: congress is skeptical of any agreement with iran. yesterday president obama said he is willing to walk away from a bad deal. the government has released 3000 pages of hillary clinton's e-mails from when she was secretary of state. it has to do with revelations that she used private rather than government e-mails. they show that she and her staff fretted over press coverage. new balance is taking direct aim at its biggest competitor, nike. the company launched the biggest ad campaign in its 109 year history. has been known for its running

shoes and now wants to become -- new balance has been known for its running shoes. tom: that is very cool. vonnie: the ceo of nike has been tapped to become the company's next chairman. he has been ceo since 2006 and had expects to be pointed chairman -- to be appointed chairman sometime next year. and a hollywood couple is calling it quits. ben affleck and jennifer garner are divorcing after 10 years of marriage. there had been speculation that the marriage is in trouble during ben affleck will live on the company -- on the couple's property in a separate house. tom: why was it viable on twitter? vonnie: they are adored, their marriage is adored. tom: i sent a note to my staff

last night and said blow up the show, we have to do all affleck and garner, and get me scarlet fu. vonnie: they will continue making great movies and their kids will grow up happy and beautiful. carl: as economic cycles go, the current cycle is no spring chicken. lakshman achuthan blames low productivity. watchmen, how far are we out from the next recession? lakshman: hard to tell. there is no exact answer but if you look at forward-looking indicators, there is no recession in sight, so for the next few quarters we are going to continue to grow, albeit slower. that is important because it is

when we enter these windows of vulnerabilities -- of vulnerability that shocks. at the moment it is not there so it takes -- so take some solace in that. tom: alexis tsipras to address the nation. that is shortly. here is a chart that explains carl's lethargy or sluggishness. there is 1987 to 2007, and it was a 3% gdp. that little itty-bitty redline is what all the young people have lived the last couple of years. we are not back to what we knew, our wait? carl: we has averaged about 2% to 2.25% growth per quarter.

lakshman: people are starting to realize the street is starting to come out and say we have downgraded long-term gdp growth. so when you look at what is gdp it is how much you are working, what is the growth in the hours working, and how productive are you. let's stick with the math for one second. longer-term labor force growth is close to growth in hours worked. the cbo says that is running half a percentage growth for the next decade. now look at productivity. over the last four years, it has averaged half a percent growth so half percent growth in productivity, half a percent on the labor side, adds up to 1% real gdp growth, and that is a far cry from the 3% that everybody --

tom: lakshman achuthan is in the same camp as dean maki. pushing against this caution against labor force growth. state the opposite case from -- felix: labor costs are low, so when labor is cheap, you had labor. the natural flip will be as wages laois emerges, those sideline workers will reenter the labor force. carl: no -- lakshman: let's go to average hourly earnings. it is going up, close to a five-year high. as sherlock holmes put it, there is nothing more deceptive than an obvious fact. when you look at why is hourly

average earnings growing, it is growing because the hours worked is falling faster than the decline. that makes hourly -- average hours worked -- this is why main street says wait a minute, there is a disconnect because they are earning less. they are working less hours for less money, but there average hourly earnings went up. tom: why is consumption in disposable income so good right now? lakshman: go back to my last interview in early may. tom: i cannot remember monday lakshman. lakshman: the service sector where most of us work almost nine out of 10 of us the service sector, that has been growing fairly well even though the industrial sector has been on

its back. that is starting to slow, and that is why we are not going to see this proverbial second-half rebound that everyone is always banking on. tom: how will janet yellen react to this very good debate, which i'm sure she is carl watch my cup she is hoping that she is going to be up to raise rates. and i hope she is successful too. tom: lakshman achuthan, carl riccadonna. vonnie, this is great. we will rip up the script and come back with these two. it is like did laws io -- it is like di blasio and cuomo. vonnie: what does paypal's coming ipo indicate about investors? we will tell you in the "single

best chart." this is "bloomberg surveillance." ♪

tom: my head is spinning. it is time for the "single best chart." we are spinning, we are

spinning. vonnie: this has to do with yesterday's news -- today's "single best chart" all about spinoffs. 87 in the final quarter of 2014. it drops to 64 in the first quarter of this year, followed by 51 in q2. the next big one paypal. paypal begins trading separately from ebay this year. it is about strategy, and activist investors as well. tom: i agree that the activists are pushing. the strategy used to be five years. i would suggest now it is five minutes. carl: part of the story is strategy but also currency strategy. you saw the dramatic move to currency and expectation is that the dollar was going to parity and whatnot. there was lots of horse trading

among sectors of companies. tom: part of this is about cheap money. what does your cycle research say about low real rates and interest rates that are impossibly wonderful. lakshman: low-inflation, when you have this long-term decline in growth which i assert and argue and you have seen it -- when you have that, that is cap in your inflation. you are stuck in loaf laois and -- in low-flation. with the fed and the central banks to the the game in town to try to jumpstart things, they can pull the band a little bit forward but it does not fix the fundamental problem of a demographic issue and a lack of productivity growth issue. there is a long-term decline in productivity, the trend growth

of productivity, interrupted by the check at the end of the 1990's. when you look at your app, it is not making the american workforce more productive each hour. that is not happening. that is a fundamental problem. when you look at what the fed says janet yellen says i hope it goes back. tom: how do you respond to the strange hope -- i circle the word "paradigm." and i always circle the word "hope" in economic print. that is a dangerous word, isn't it? carl: hope is a dangerous word, but we have to make forecasts. janet yellen is hoping and also forecasting that we have a larger cyclical component with the swing of labor market, so the labor force dynamic impacts the long-term productivity trend.

the reason we are seeing low productivity is because businesses are not investing in the capital infrastructure. labor costs rise and then productivity will rebound. tom: we have to talk dot plots. meanwhile, let's look at photos. vonnie: we are going to hong kong first because our number three top photo, pro-democracy activists burning a picture of the city's chief executives. july 1 is traditionally a day of protest in hong kong because it is the anniversary of the city's handover from britain back to china under a one-country, two-system agreement. it is a process that will be bigger this year. the election will be later on and there is a big movement toward electing a pro-democracy candidate as opposed to a pro-china candidate. number two, nasa solar dynamics

observatory captured this footage of an irruption on the side of the sun. -- on an eruption on the side of the sun. a giant cloud of solar material traveling through space. it is a little bit creepy. it is giving me goosebumps. tom: it is amazing what they have done the last couple of years. now we are up by pluto. that is the sun. vonnie: ballerina misty copeland has been -- she is 32, promoted to the highest rank of american ballet theater. i vote that we take a field trip

the american ballet company. tom: this is great. somebody said she is not with nike. vonnie: is a victory for under armour as well. talent spotters have been very good. tom: there it is. ok, let's come up here in we are going to talk about the fed and we have been doing that. lakshman active fun -- lakshman achuthan disagreeing. spreads are more than stable increased, but headlines continue to come out. we will keep you abreast of the events in greece. this is "bloomberg surveillance." ♪

tom: good morning, everyone. let's get to our top headlines. vonnie: they widespread investigation is underway at the new york prison where two killers escaped. the inmate who was captured is revealing new details about the breakout. david sweat says the pair

rehearsed their escape. three officials and nine security workers at the upstate new york prison are on paid leave. the fbi is investigating a possible heroin ring. a big expansion plan for a major airport. construction of a third runway at heathrow in london is getting the go-ahead. officials say it is better to expand heathrow rather than expand london's other airport. it is the most expensive dollar bill ever, created by andy warhol. his silver certificate will be auctioned off at seven these in london -- at sotheby's in london today. works by francis bacon and david hockney are also on the block. there it is. it does not buy you anymore though. tom: it is art. it is art. vonnie: tom, are you bidding?

tom: in my dreams. we will see when alexis tsipras will speak. it could be one minute, or one hour from now. we then move on to what would be the dominant story except for greece. arrigo with him in -- arrigo -- to rico -- republicans push back on a puerto rico immediate to her. we will focus on mr. lockhart and the interesting relationship in housing with fannie and freddie. everyone continues to adjust to except maybe gary shilling and paul krugman. carl riccadonna suggests again that once again they will adjust the dot-plot will some -- in some way mysteriously move. carl: the 2015 dot plot tells

you that -- what is more relevant, look at the 2016 dot plot because at the end of this year, one hawk rolls off. next year we get three hawks and one dove. what they are telling us now is that the fed will raise rates by 100 basis points next year. our expectation is actually that will be scaled back because what is happening is, as the fed funds rate gets to 1% to 1.5% the fed will pull the plug on the balance sheet, refers quantitative easing, and that will mean a similar pace of rates. tom: when i look at the complexity of this, i have one basic thing. we know the econometric research as a blue-chip advisors group is pretty darned good. are the dot plots more accurate

than the private surveys of economists see ec? carl: the fed has been way off on the on implement rate for this cycle, and they have continually readjusted their interest rate expectations as well. vonnie: janet yellen has told us to ignore the dot plot. carl: now that they have come into closer agreement, the fed has scaled back his criticism and is recognizing it to be an important signaling tool. lakshman: the fed was off on the unemployment rate estimates, but they were also way off on gdp. and on how fast we would grow. and on the cyclical rebound. we have often heard about the second half rebound. and here we are kind of ready for it. i am afraid it is going to

disappoint again. you are going to get the slower growth again. if you actually got anywhere near 100 basis points of fed rate hikes to over 1% or something, think about what that is going to do to your term structure. you are high risk of parts of it inverting. carl: i am very skeptical of the second half rebound because if the fed is raising rates and europe is not, and you can -- and europe continues to ease the dollar will continue to strengthen. i am bearish on the second half of the economy because economist are impacting -- are -- lakshman: i think the dollar and the currencies are pushing on cycles that are already happening. tom: a 9060 x y because of greece? lakshman: i do not think that we can assume the path of the u.s. and the path of europe will be

-- carl: it clobbers the domestic producers, which are in a tidal wave of chief -- of cheap imports. tom: she was the one that led with reticence. are we going to have to wait and wait because we are over hoping? lakshman: i would play the other side of that for a moment. they have got to height. if they want to remain credible they have to get off this zero. they are saying look, you might hike, but after two years you are back to zero. carl: the fed is not going to raise rates just because they have room to cut. lakshman: yes, they will. carl: the best insurance of having to raise rates is cutting them now. tom: carl riccadonna and laxman

ashes on -- lakshman after chuthan missing it up. stay with us on greece. this is "bloomberg surveillance." ♪

tom: the polls begin to tell the story of the greek people. tsipras getting momentum toward a no vote and greece may go it alone. america prospers. and puerto rico is at the precipice. it is a most original default. good morning everyone. this is "bloomberg surveillance." we are from our world headquarters in new york. we are thrilled to bring you this morning carl rick a donna with bloomberg economics. straight to our top headlines. vonnie: conflicting new claims in the greek debt crisis as markets are awaiting. the scene in the streets are increasingly chaotic and huge crowds gather this morning with some reopened. bloomberg news is reporting that

the greek prime minister is now agreeing that -- to most of the master alexis tsipras, the germany finance minister is reporting that the claims and the letter is confusing. wilkins shyla says -- wolfgang schaeuble says greek must be clear about what it wants. and the eurogroup says missing payments are unacceptable. >> i understand it because the situation in greece is going backward fast and they are trying to get a grip somewhere and it is difficult in a situation where the old program is de facto expired and the new program will take time and include tough measures. vonnie: greeks have until sunday to decide whether to accept or reject austerity. another debt crisis is forcing hedge fund managers to scramble.

puerto rican bond prices have plunged 70% in two days after the country's governor says he seeks delays. restructuring could prevent hedge funds from selling their provisions. the u.s. and cuba are moving closer to normal relations today. today they announced restoration of diplomatic ties and plans to real and embassies after 54 years. in the last six months the u.s. dropped the u.s. and cuba from the countries that sponsor terror and lifted limits on traveling there. shareholders are meeting today. the deal would create the third biggest food and beverage company. the u.s. women's soccer team has headed to the world cup finals. they upset top-ranked germany 2-0.

they will face either england or japan in sunday's final. the u.s. lost to japan and the final four years ago and we have breaking news. >> an important transaction involving not that many employees. evan greenberg and john finnegan. a very well-known american insurer doing a high-end american insurance business, a $28 million cash and stock transaction. what i find quite important as the gross up in stock from $95 per share to $124 per share. this is a lark -- large transaction among elite insurers. $28 billion transaction. very much in greece influenced equities, currencies and commodities. the euro has been quite dynamic in the spreads have improved in

the last five minutes in athens and the backdrop is a movable feast on the path to a presumed referendum there it fax are a sign of real hardship across the economy. many european leaders are more than quiet with what we have seen. first we go to the movable feast in athens with eric in athens. the headline moments ago that mr. tsipras will speak. are we certain he will speak and what will he speak about? >> we aren't certain about anything right now. this is according to one of the more reputable newspapers at tsipras is going to address the nation. if he does chances are it will be on state television. what is he going to say, that remains an open question as well. as of this morning it looks like we were heading toward a referendum and he sent this letter to the ecb, ec and imf

proposing that he is willing to accept the bailout in a certain condition. it is really important to wait and see what direction he is going in. is it a genuine offer to the europeans or is it a domestic negotiating ploy intended to move greek voters in one referendum on -- one direction on the referendum. tom: tell me about the drama that we see. they may take letter a through k and a through h and some but he gets $130 a set of $600 and what is the reality that you and elliott were able to observe in athens? >> no doubt that you have to pity these people who are told they can go to a bank strictly for pension withdrawals and half of them being told they have to leave. the pictures are as dramatic as the live events themselves.

it all happened fairly quickly but your point they're only allowed to take out 120 euros on a weekly basis. you can see the tension beginning to grow. the temperature is rising and that explains why you have seen holing numbers for the no vote which is the pro-government vote in the referendum beginning to drop. that is an issue for mr. tsipras. tom: and you see the drama from our guest and will no doubt be back within the hour. this as the chancellor begins to speak. shoretel speaks and merkel speaks, are they speaking to mr. tsipras this morning. >> it is pretty clear that he was saying the letter mr. tsipras sent tuesday night wasn't sufficient. it did not do enough to bridge this happy talk that we're close to a deal and that tsipras is willing to accept creditor terms did not look at the fine print.

that would make it very difficult for angela merkel to get anything through and they need to get a third package. >> tom: what has been the response and brussels and or lynn to the polling showing a no referendum. mohammed really talking about that a few days ago. he looks remarkably prescient. >> they are looking for better polling. if the polling switches, he can always poll the referendum. he can pull it and saint never mind. in the last 48 hours we had mr. tsipras call a referendum saying he is urging voters to vote against the package and he sent a letter to his creditor saying i can accept most of the package. tom: hans nichols, thank you so much. there may be opportunity out there but it is a movable feast

areas if you are just joining us, catherine marini speaking with mr. tsipras. we are very unsure when that will be and of course elliott gotkine is monitoring that in athens. james lockhart is with over ross and they are known for finding opportunity where there is distress. have you ever seen as much distress with greece? guest: i have seen a lot of ugliness but it is really chaotic and the sad thing is for the greek people where they can only take 60 euros from their bank and 25% unemployment. this government was elected to prevent austerity but it has created more problems. tom: i wrote yesterday about feta cheese and syringes and olives and things people have to buy. vonnie: makes you wonder if

merkel isn't waiting for greece to call off the referendum before going further. she also says that the euro area has the right to respond to greek decisions but it sounds to me like she is saying, if you are serious than call it off. tom: do people who are opportunistic like you or more speculative like hedge funds or traditional institutional investors, what do they want to see from greece right now? if there is a vote they want a yes vote. a no vote would be the end of the euro and the reemergence of the draw,. what they would like is a deal cut with the eu and other institutions. tom: do you and mr. sutra suggests a drop but would be beneficial and with that depreciation your money would go to help them? >> it would not be helpful at all. there would be a years worth of

trauma and greece has a balance of payments that they import more than they export so a drop in the currency would actually hurt the imports. tom: but does the capital then helped greece with that depreciation? >> they are not going to get capital if they go to drop my. there will be no investments. no one will come in for a while. tom: this is amazing. >> merkel is leaving and the ramp open. tom: stay with us on this immovable feast.

tom: good morning everyone. chancellor merkel speaking as she seems to speak about every six hours on greece. the headlines are simple. germany is waiting on the referendum. they don't need to fear a catastrophe from greece. she is sending messages of optimism. the backdrop is the mystery of when will mr. tsipras speak.

and the other issue is what will he say as we get closer to a referendum. vonnie: a mart read by -- must read by martin wolf. how i would vote on sunday if i were greek. he puts himself in the position of trying to decide on a yes or no vote through the devil is familiar. people voted in the last general election. the deep blue see the suffering the polls and monetary sovereignty and he says if i am alexis tsipras i think there is a third way. i'm sure he is diluted. tom: part of this is when you give ultimatums and no one speaks that negotiations are broken down. >> merkel is keeping the options open saying that the hurdles are not insurmountable and i think there is a big? on whether the referendum even

happened because if public sentiment shifts toward yes that could be the end of the tsipras government and he doesn't want that. tom: there is a spread between the greek yield and the german yield and they both move. it is a greek dynamic right now. >> absolutely and the? is, are they in or are they out? the latest headlines suggest -- >> it is fascinating that the euro really doesn't move. then bader says beware of headlines bearing gifts. >> it is partial differential july. greece has a dynamic going on. carl: that is the big question do they stay or go and that will dramatically affect their situation. tom: james lockhart, sunday is a

long ways away, isn't it? >> a lot will happen back and force. tsipras with his letter less night is trying to reengage but i think they are tired because it has gone back and forth. vonnie: is it completely hubristic or is he convinced? tom: what it means to me is we will all work friday. the twitter question of the day will there be a greek referendum? stay with us. ♪

tom: breaking news,'s reds improving on greece and -- breaking news spreads improving on greece and germany. she's made it clear that lagarde and the imf must be involved. for those just joining us we are looking at tsipras to give some form of speech in athens.

right now we need our top headlines this morning. vonnie: in other news today fire erecting as an african-american church was torched 20 years ago. the church in greeley bill was extensively damaged last night. the cause isn't known. this is the latest in a series of fires from predominately black churches and at least two were deliberate. and questions between the makers of drugs and those who subscribe the -- prescribe them. the government says drug and medical companies paid out $6.5 billion last year. much of it was used to entertain doctors or pay them for non-research consulting. the president confirmed some intruders outside the white house. ♪ >> the president and first lady greeted girl scouts before

they settled in for a sleepover on the south lawn. the campout is part of michelle obama's let's move initiative. tom: no coleman soaps, no campfires come on. vonnie: they needed compasses to get around. tommy what that must be exciting to sleep on a lot of the white house. vonnie: i was not a girl scout. tom: look a sniper on the roof. we need to move on. there will be headlines this wednesday as greece crowds out any and all of the 3.5 million people. they are exhausted and so to the private investors. phil mattingly is in washington and michelle caskey is joining us here in new york.

how tangible is the so-called puerto rico lobby? is it a valid entity with power? >> the hard part they face right now is that their members in congress do not have a vote. they need to focus on lawmakers who have constituencies in new york like chuck schumer who is dedicated. the bigger problem here is that the lobby of the hedge funds on the other side of the debate have increased grown and brought on a top-tier level of lobbyists with close ties to republican leadership in the last four to five months. that is what they are facing off with and that is a problem for puerto rico. tom: how much sweat is there

among democrats and republicans over a pending default? >> it is on everyone's mind. when is it going to happen? people are wondering when are they not going to play -- pay? tom: who do they talk to when they pick up the phone? >> their advisors are jim milstein. they just recently hired stephen rhodes, a former bankruptcy judge who oversaw the detroit bankruptcy. tom: i look at this, it is the hedge funds and they need people like james lockhart involved in puerto rico paper, is that true? >> we are not a hedge fund and are not involved or to rico paper. three to four years ago we looked at a puerto rican bank and didn't. vonnie: why not? >> partially be cousin of all the bad debt and the economy.

it is hard to invest in an economy continuing to go south. of the other thing that is very important as the political situation and the government has not faced up to all of the problems. they haven't taken the steps that ireland did of cutting and laying off people in the government sector. a lot of things they needed to be done they have not done so it is hard to invest in a company like that. tom: greece has to get to a referendum on sunday, what does puerto rico have to get to or what does washington need to get to to get through the talk shows on san juan? >> the beauty of it is washington is not really here this week. one of the problems we're having right now is speaker john boehner is overseas on a trip with a congressional delegation so according to his staff he hasn't had any time to look at this.

right now just to get took -- sunday you will not have congress weigh in on this one way or the other. republican leadership is not committing and top leaders are opposed so in terms of a pathway through sunday we do not have one. carl: aside from not paying the bills does puerto rico have other saber rattling options? could we see a referendum on statehood? >> it is split down there between people who want to remain a commonwealth and keep the status quo and people who want statehood. strangely, it doesn't seem that the fiscal crisis going on is really pushing either agenda. there are still people who were

raised in a house that was pro-y will keep that stance. tom: we go back to greece and the twitter question of the day -- will there be a referendum? thanks for your huge response. ♪

tom: that is a big deal to get a solid 110 handle on the euro would be a big change from the 1.12 that was seen over the last few days.

vonnie: streets in greece are increasingly chaotic today. conflicting reports about negotiations involving the debt crisis. huge crowds gathered this morning. the government is keeping most banks closed. the greeks will vote sunday to decide whether to accept or reject the austerity debt creditors want. bloomberg news is reporting that the greek prime minister is agreeing to most creditors demands. alexis tsipras sent a letter offering concessions while seeking a few minor changes but the german finance minister calls the rate quotes confusing and wolfgang schaeuble insisting that they must take care of what it once before talks can resume. diplomats in vienna giving themselves another week to reach a deal in nuclear talks with iran. the russian foreign minister

said talks are moving in the right direction. global powers are offering to lift sanctions if iran foust to not build nuclear weapons. >> it is important because it provides extra breathing space but nobody is under any illusions trying to race to that day as -- i have to have it goodbye. if we can get a deal in two days or three days we can get a deal on the seventh or no deal at all. >> the atomic agency will travel to iran tomorrow to meet the nation's president and top security officials. a new batch of e-mails show that she and the state department staffer worried about news coverage. they are being made public in stages at the insistence of news media.

new balance taking direct aim at a competitor, liking. the company is launching its biggest ad campaign and its nine-year history and now it wants to become a global multi-sport brand. mark parker has been ceo since 2006 and is expected to be ceo sometime next year. ben affleck and jennifer garner are divorcing after 10 years of marriage. the ap says he will live on their property in a separate house. i have three children. negotiations all over the place. tom: there will be a four our bloomberg television special tonight over ben affleck and miss garner. i am kidding. scarlet is our celebrity loadstone. she knows any and all.

carl riccadonna to go with me on the bloomberg terminal. did you know there is a jobs report. here is the 5% unemployment rate for the crisis. up we go. this is what a lot of people thought. we have this improving. 4% unemployment. dean maki, john herman and many others. this 4% is not the same as this one, is it? carl: if we stretch it out to the end of this year assuming the pace that has held a consistently, we get to 4.7% unemployment by year end. as we look toward the jobs report on thursday, last month we saw an increase in the unemployment rate but it was a good kind of increase. there is participation. this is a big question. we have a couple more unemployment reports soweto

with so much on payrolls. watch participation trends. tom: does this push against their call of under 2% potential gdp? carl: the gloom crew is looking at demographic factors like low they were forced participation which is down to where it was in the late 1970's and they are sing it cannot be reversed. janet yellen is saying the opposite and if we redlined the economy and see wage growth those workers will reenter. tom: you change the numerators. carl: with wage inflation and job growth consumer spending can perform pretty well. >> the other thing that it needs is activity to increase. if we don't get that up it will be hard for the economy. tom: adding in the dynamics of productivity into the economy. alan krueger to join us

tomorrow. the euro is what i am launching. a weaker euro with these events in greece unfolding. oil is well under $60 per barrel. vonnie: this is "bloomberg surveillance." tom: it is a fiction. 110% of my mail says i cannot get a mortgage and yet the suits and ties in chanel dresses say that is not true. the american housing market fannie and freddie basically own the mortgage market the result of a massively polarized economy dead in the housing water. james lockhart is a former federal housing regulator. our fannie and freddie serving

the american people right now or are they only serving the elites that can afford the condo? >> the elites are getting mortgages from banks, not fannie and freddie and the mortgages statue and liberty used are not coming from fannie and freddie. fannie and freddie are serving the masses but there are still pretty tight lending standards. tom: i read 300 page documents six years ago on how fannie and freddie might get fixed. the summary was wait, wait wait. is that what we are doing? >> seven years after the conservative ship and nothing is happening. it is dead in the water. they have helped the housing market recover, but it is definitely time to do socialize the housing market in this country. >> politically that doesn't seem

like an option so the question that vonnie was going to ask is when will we see this happen? >> a new administration would be needed and probably -- i think this congress with a republican president might do something. but fannie and freddie is country beating in lessening the budget deficit now. because all of their money is being sent to the treasury. >> are their elephants on your tie? i believe richard lockhart is wearing elephants this morning. have you come out for a candidate officially? >> i have given money to jeb bush. tom: so if we have mr. bush or mr. christie or mr. walker or others, how to they push for congress to make for a better housing economy? >> certainly the house republicans would like to see fannie and freddie text and some of them would like to do away with them anti-early. the senate would be the issue

and whether we can get a consensus in the senate to move fannie and freddie out of the government is going to be the key. carl: is doing away with fannie and freddie fixing the problem? >> it is not fixing the problem. i think that is throwing out the baby with the bathwater. what we need to do is get private capital back to the market and it is hard to get private capital in. we own two mortgage originators. contrary to a lot of reports we are seeing a lot of purchase money activity and first time homebuyers are coming in. tom: did you use your private e-mail in public service? are there 3000 pages of lockhart e-mails? >> i didn't even know you were allowed to do that. within the new republican regime , if we were to see that, there is the idea of two america's. are we more divisive than we

were four or eight years ago? >> congress continues to be more divisive. there are the tea party and the left-wing of the democratic party and they are pulling them apart. what we need is someone who can move us together. vonnie: just returning for a moment. you got out of the bank of ireland, are you looking at any other assets in greece? >> we continue to look at greece but it will depend if they can do a deal. vonnie: are you staying with the shipping side of things? >> shipping is one thing and over the years we have looked at investing with greek ship owners but at the moment we are not investing with them. we're also on the bank of cyprus which is -- that -- is there are working their way through the problems.

they had a big issue. vonnie: we were speaking with the former governor yesterday. james lockhart stays with us for the entire hour and momentum building toward an historic iran nuclear deal. ♪

tom: i will go right now from spreads in greece improved to

dramatically improved. we have seen significant mileage. less fear as we saw 12 hours ago looking at greece versus germany. vonnie: market makers comes up right after the show but they are also in our sightlines. we have just seen an updated mellow old risk revisited. >> with the exception of being known as one of the best investors in the market howard marks is known for these letters. who is one of his biggest fans? warren buffett. every time we see one it is brand new but not this time. it is an abbreviated version of a previous one because howard is

saying we are not paying attention to risk management enough. vonnie: why now? >> i am saying he has said this before and now he is highlighting it and underlining it. because when we have low volatility many investors have been chasing yield and he is saying that the true way to make money is not to chase investment but it is to risk manage. instead of looking for home run trades focus your attention on preventing losses. he says the more risk you take because you believe you are in a low-risk environment, the riskier it gets. if you are putting on bigger and bigger trades because you say we are in a low environment, you blink your eye and you have positions you were not prepared for. >> is he calling the top of the market? >> he is not calling the top of the market.

he is saying there is risk all over the place so stop saying look at the s&p market and look at the tech market, he is saying look at the risk and invest accordingly. tom: with this wonderful track record, the fuel for that risk is always leverage. as a leverage today different from the leverage of 2006? >> it is not as bad as 2006 but risk is mispriced now. hank paulson used to say it was mispriced all the time. so from our standpoint we are probably selling more than we are buying. so it is hard to find good investment. tom: is a critical there isn't a risk feet right now? we are flying lined with negative rates are in that is not real. . >> there is a lot of cash out

there chasing deals. but you can leverage yourself significantly on the marketplace and that could lead to problems. tom: vonnie: market makers will carry us the right from an :00 to 10:00 and mark will be bringing us more.

tom: good morning again. tomorrow is job stay. bill gross will join me on bloomberg radio with michael mckee and alan krueger will join us on television to get you prepared for an improved american labor economy. vonnie: a widespread investigation underway at the prison where two killers escaped and the inmate who was recaptured is revealing new details. david sweat said the pair rehearsed their escape and returned to their cells the night before they actually fled. the fbi is investigating a possible heroine ring in the lockout.

she is stepping down as chief designer at cameron international. it is only a painting of a one dollar bill but it could set you back $26 million. andy warhol's silver certificate will be auctioned today and is part of the most valuable contemporary art sale ever held in the city. contemporary art is becoming a place to store wealth these days. tom: john miller with that report on manhattan real estate yesterday i think some of these condos are becoming works of art. nobody lives in them but you can look at them. much more on job stay tomorrow.

vonnie: momentum is building toward a new deadline next tuesday and the prime minister just tweeted out that iran will be committed if and only counterparts show the same level of commitment. we are in vienna now at the talks and around the sidelines. this tweet makes it seem like the prime minister has a hard line and is not going to back down easily. >> i would interpret it another way. one way to look at it is he is backing up his negotiators. the foreign minister went back -- to tehran a couple of these ago and he came back renewed and it each turn he was saying i believe we can get a deal. yesterday the supreme leader tweeted out a picture of all of the negotiators standing in these white scientist jackets and over it he said he had confidence in his rave

negotiators. that has been seen as giving them cachet to make the deal they need to make and preparing the ground in tehran for that to happen. i don't think it is taking hard lines as it is each side positioning itself. this is probably him saying we will not take a bad deal either. tom: it sounds like dr. phil and all that. i think it is about commitment. iran will be committed to the nuclear agreement if and only our counterparts show the same level of commitment. vonnie: what i would suggest is the position has already been decided. rouhani knows exactly how this will play out. >> and the really key new development this morning is that the iaea the atomic energy inspectors have announced they will be traveling to tehran

tomorrow to meet with the iran president and to meet with the national security council. this is very big because they will be talking about the last major stumbling block that remains between the two sides which is how do you grant access to the inspectors to look through the site's the declared once and any suspicious ones that may not have been declared. part of this deal is not just what iran is going to be doing moving forward but establishing to the international community what they were doing in the past. it means establishing the possible pmd file. that is what they will be talking about tomorrow. if they can make a breakthrough than it is possible we will see a deal next week. vonnie: what is russia adding to all of this? >> russia has taken a hard line on the un security council issue wanting to make sure any deal they have will be enshrined and

wanting to make sure that un security council sanctions do get lifted. we do have an exclusive deal that russia and china have given way over the veto of the stat back of stations. bloomberg is reporting that some sort of compromise is coming back and sanctions snap back. tom: i want you to step back and explain to our viewers and listeners in america why this is important. i want you to give us into europe 101 on why these talks are so important to the united states? tom: the primer. this is partly because of the incredible geopolitical significance of a run. economically they are the number two natural gas reserve in the world. the number four oil reserve in the world. they have been cut off from u.s. trade for three decades but there oil has have because of

european sections. this is about opening a major market and it is trying to rein in nuclear ambitions. this is a country that is that a lot of state-sponsored terrorism and human rights abuses on its own people and it is really trying to shift the balance. tom: thank you so much. vonnie, chris davidson at durham university in england once said to me that we don't understand is that this is the only real economy. this is a diverse real economy with a real middle class. vonnie: it is time for our agenda. tom: are we already there? vonnie: after 54 years, president obama is going to address it today. he will deliver a statement on cuba and the vice president will also attend this in the rose

garden. tom: could you buy a bank in cuba this morning? >> i don't think we can at this point but i have never been to cuba. tom: you'll have to go for governor bush if for anyone else. carl: we have jobs tomorrow but what i will watch today is the manufacturing in the isn because they had a surprisingly weak support out of chicago showing the factories section in that region still in contraction. it is grappling with a strong dollar and the stumble in the first half of the year. as we gauge the recovery these surveys are critical. >> isn matters because we're still trying to understand the full impact of the strong dollar. is it just transitory factors or was it other more sustained depression? tom: what i am looking at is

what is not happening right now. what is not happening is the quiet of the headlines out of greece, germany and russell's. erik schatzker reporting. tsipras will speak, we do not know when we do not know if but what i can tell you for certain is that it is quiet this morning on headlines and much of this -- the tangible challenges of the greek people just to get to sunday and beyond. it is got really ugly. vonnie: some real desperation. that brings us to our twitter question of the day. we asked, will there be a greek referendum? there is no time left. even if tsipras gets the last the need for help is not over yet. second answer, probably but it

remains a complete waste of time. even if the estimates are true 125 million euros is truly a greek farce. third answer, no. i think tsipras woke up with a horse's head in his bed. tom: godfather allusion. i am not willing to go there. vonnie: i think he could be a very principled person looking for some kind of solution within his mandate. tom: james lockhart, thank you so much for joining us. please let me know when you put the first dollar in greece. tom: carl, i will give you the last thought this morning, what will you look for? >> in greece you watch to see a tsipras calls off the referendum which he signaled with this next copper mice offer earlier. tom: there is no confusion about what bloomberg terminal says. improved spreads in the last one

hour. we continue on bloomberg radio up next with market makers. good morning everyone. "bloomberg surveillance." ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. stephanie: good wednesday morning. it is july 1. we are here it bloomberg world

headquarters in new york city. you're watching "market makers." matt: i am matt miller that erik schatzker is following developments in greece as they come out minute by minute this morning. the prime minister says he is ready to compromise but there are still sticking points ready to come out. stephanie: we'll talk about all of this and the risks we face with one of my all-time favorite guests. we'll find out why he believes investors should be focused on preventing losses. he is out with a new letter. i know why buffett loves it, i love it, and you will as well. give you the top stories of the morning. greece has offered a new package of budget cuts and other economic reforms. the question is, will this be