say the shanghai composite. futures markets are down. futures are down by six and six points. -- 66 points. a choppy day ahead. caroline: a third day of losses on the stoxx 600. cardiac arrest is what the london capital group said the expected for the stop market. awful by 0.3% in the u.k. but the cac 40 is up by almost 2%. we saw gyrations last monday risk aversion concerns. jpmorgan barclays all expecting base case scenario now is greece admits the eurozone. we wait half an hour to see how the greek market reacts.

we are seeing greek debt selloff on prices falling in the yield rising 2.6%. we are at 17.25 percentage points. money out of italy and spain. the fear is contagion. 2.37%. we are up 11 basis points and a bit of a selloff. back in 2011, 7 .5% here. contagion under wraps by the ecb. the fact quantitative easing will be there. florida to the safe havens of the united states and german. -- flowing into the safe havens of the united states and german. yanis varoufakis, the finance minister leaves him his greek exit out of politics. we saw the euro spike ever so slightly higher. generally down.

that is where we trade. very quickly, a look at some of the stuff we could be keeping an eye on. some of the periphery. down by 4%. one of the most exposed to the italian sovereign debt market. that will hurt. bcp as well. the portuguese lender is down 5%. an eye on rolls-royce. the engine maker said that are cutting a profit guidance, four-year might be 75 million pounds last. jennifer: thank you. periphery banks getting hit hard. east to hong kong with david. i what's well pre-recorded it -- i might as well pre-recorded this. another shaky day on the composite. talk to me. day bank you could. -- david: you could. a different result. they managed not to do it but

they announced a series of measures on the weekend halting ipo's. da whatv we saw today was topsy-turvyid in a percent higher. a percent swing down. -- what we saw today was topsy-turvy and 8% higher. there was talk in the market especially the last 30 minutes to deploy some of that cash to prop up the market. we cannot concern just yet. what we can tell you is a a lot of these blue-chip companies in china. they said they will be targeting and buying got heavily weighted stocks. massive games. let me give you the big three. the three heaviest weighted stocks. petro china, the big 2 banks. further down the line, further

down, six 7, 8, 9 substantial. whether it was a money back to buy government were speculating these will be targeted, this list -- lifts the overthrow market. that is not the case around asia. the worst day in five months. nikkei 225, $16 billion wipeout. the worst case. look at holcomb. 3.5% down. worst day since november 2011. -- a look at holcomb. a lot of risk ask -- a lot of risk appetite. -- look at hong kong. also the case of the dollar/yen is back down. the dollar is stronger but the yen is stronger than the dollar.

let me end of the bond market here. yields back down. jjb the u.s. 10 year to give you size and scope. jjb, 47 basis points. jonathan: david ingles. back to the top store. yanis varoufakis steps down proclaiming he will "wear the creditors' clothing with pride." first to you, guy. varoufakis is out. it may get greece back to the negotiating table. does it really move the dial? guy: it moves of the dial a little bit. i think a great deal. the rumor last week he would quit and he is done some kind of a deal with mr. tsipras.

we asked him if he will quit but he said he would. turns out he was going to quit if that was a no vote as walk. the margin, it might make a different. i do not think in terms of a bit substantive points, it will make much difference. he has not been front and center over the past few we's. -- few weeks. i do not think it will make an enormous difference. who replaces them might make a difference. if there are a couple of possibilities. we will find out after the leaders' summits. you should probably think of it the other way around pretty a who is the new guy will make a difference more than the old guy. jonathan: hans i want to bring you in. merkel, hollande meeting.

listening to the reaction from germany that not softened their stand. the greece needs to get through the german parliament. hans: they have not called in the parliament back in session. germany is on holiday until september 7. the kind of holiday that guy johnson deserves. what's where here from the french is you need to have a conversation about the debt restructuring. the meeting is in paris and merkel is going to paris. it looks like the french is clear to me to open a discussion about debt restructuring. the finest minister said earlier that should not to be taboo. it is clearly the fridge moved toward mr. tsipras and whoever his new finance minister will be to potentially cut a deal. one other note on what happens if you got a final deal, we need

a number. you could have a sense of how much a debt needs to be restructured. the big question, you heard this from the mounties finance minister, how much a bigger is the whole because of the actions greece has taken the past week? how much is his referendum costing other european taxpayers? other nations that kobe consider poorer than greece. not just about debt restructuring but getting the greek economy back on track and wife a pretty have to price tag. there can be some sticker shock. -- back on track and it could be a pretty half the -- heft price tag. jonathan: the buck stops, the end game with a ecb. how do they react?

guest: the fact is all buck stops with the ecb is matter of fact. they are holding the reins. the liquidity. that would be game over. the ecb has always waited for politicians to calm of what the deal and sat in the meantime we will keep the greek banks afloat. to measure them enough collateral. here we are with no probe rim and no deal at the moment. -- here we are with no deal at the moment. what does the ecb do. what mario draghi will speak to eu lead leaders and the governing council will meet the later and at that point they have to say deal with get the greek banks and little bit more time, give the politicians more time? has to be a close call.

jonathan: right, i want to bring you in. we have to as the question on wednesday war open. so much political capital spent over the weekend. -- we have to ask the crashed in -- we have to ask the question. if i am a greek person they voted no, does my bank open tomorrow? guy: is that is probably the biggest question. how much money in the greek bank? how much money can they allow? all kind of rumors. the critical thing is when do the banks open. mr. tsipras was on state television and he was making it very clear how important it is. alexis tsipras: our immediate

concern is that expedia opening of the bank for stability. i'm clear the ecb understands and the humanitarian dimension. jonathan: dachshund guy: there is no program, no deal. a long way to go before it can happen. the ecb to raise in the l.a.. keeping it on a hold will not solve the problem. money flows out for you leaving their where it is will not resolve the matter. i have to say i've yet to speak to anybody over the last 24 hours who think tomorrow will see the banking system re-open and functioning normally. jonathan: great job. the state of play across the euro as we begin another week of uncertainty for greece. investors are sounding more

fervor. jpmorgan saying the best case scenario is a greek exit. jpmorgan said quote -- for more, we're joined by global strategist. your reaction from barclays and jpmorgan, share your view. guest: yes, more likely than not. we have gotten down to hard lines about where negotiations with no. can you have a meaningful debt relief deal or not within the euro area? if you have one for greece you have one for the future. that is a very political decision, a tough one. if you ask me to step on messiah or the other, you can do some -- if you ask me to stop on one

side or the other, you can do something. what's at the group voted for is bigger than that. -- what the greeks voted for is bigger than that. it changes the way the eurozone looks and feels. in that choice, the greek exit is probably 65% probable after this point. it is an understatement. i just really struggle to see how you get that kind of an agreement particularly through some of the national governments. jonathan: some say it as fluid as the note written before varoufakis step to down. when you look at the exit maybe more than john saying prime minister tsipras thinking it one of the pave the way toward making the deal.

you have not been following the last five months. it is a pretty big hurdle here. kit juckes: it is clear in terms of the language between the two sides something had to get. now we are talking and we can get away from some of the emotions. is debt relief meaningful? the imf things another 60 billion euros needed over the next three years of new money. by the way, that number goes every day the greek economy stands still. a lot more money needed area you have to go around the table and say, we do not mind opening pandora's box as saying so with the principles of our debt forgiveness within the eurozone will change. jonathan: the imf says that. we know there's a difference between the creditors. whatever they agree on together in brussels is what has to go to the german parliament.

when i look at the very fact is quitting, seemingly the market forget jpmorgan the best case scenario for the market seems to be we are going to get a deal. is that your best case? kit juckes: no, not my best case at the moment. i do not know if they think that. i do not know how many bullish strategist you get on your show. i will leave that sought -- thought. the euro is not just going to collapse. bond markets are not going to collapse if you 60 billion euros from the ecb and whatever it takes and pretty powerful since first made. i do not think it alters the reality. the solution to this is more money for greece and debt forgiveness. debt forgiveness.

monetization and do we get easing of monetary policy? does it make me hurt joining fx strategists? mno, it doesn't. jonathan: the final question for this part of the show, what does the ecb do? kit juckes: the ecb, if they play straight, the only thing they can do. i do not see how they can increase it that you lay without political gift. they certainly keep it at current levels and whether it takes us. the ecb does not want to be a principal actor. they want to the supporting actor in this game. jonathan: kit juckes will stay with us for chinese markets fail once again. a monster. what can at the market? back to greece.

will a new finance minister make a difference? this very busy monday morning. good morning. ♪

jonathan: good morning and welcome back to. -- welcome back to "on the move ."

the euro dropped to down. we are at 110.54. down by 0.5%. germany yields down by six basis points. spread widely but not mark people expected. the italian 10 year is 3.4%. brent crude is up. below 60 votes a barrel since april. session bucks a barrel -- bucks a barrel since april. cac 40 is lower. the dax in frankfurt germany down by 1.2%. a look at shanghai, at one point over 7% and then into negative territory and came back up again. what a session again on the day

in china. share surging at the open on the shanghai composite. the government shores up to drive up -- fails to drive up a rebound. richard frost with the hardest job in hong kong trying to follow the shanghai composite. richard the market did not buy into the weekend, did it? more measures over the weekend just gone. do you expect it to be higher? richard: absolutely. it did start out very, very strongly. 7.8% at the open. it has been exhausting particularly told to do. [indiscernible] if the index fell more than five percentage point by the end of the day. the small stocks continued their

decline. 2.4% in the shanghai composite. that was largely made of the biggest state owned companies. petro china, agricultural bank of china. all gaining around 10%. the recovery is probably accounted for most of the move on the shanghai composite. what is happening now is again, this reputational risk is emerging. what will and what's can the government due to stem we are seeing? jonathan: richard, as i go to the bloomberg.com story the 1929 playbook and the chart of the shanghai composite versus the dax we know what happened when they put together funds to buy stocks. it carried on plunging moving south. what else can the government do? the question we explored last

week is if they lost control. does it look like they are losing or lost control? richard: well -- how in control were they in the first place. the big issue of why the measures are not working is the fast amount of margin debt in this market. weeks and months, people have been telling us when people stop , it will be ugly. it has played out as people have predicted. half of this margin debt, people are talking about 2 trillion yuan is unregulated. the regulator does not have control. a lot of this margin debt and the smaller companies, whatever the chinese government is doing for managers, they are now buying small caps. four people leveraged up to buy these stocks, they are facing

margin calls and having to sell their shares. it is hard to see how the government can combat such a vast amounts. combine with her official figure of one trillion yuan and as a massive sum. that is not much compared to the margin debt in there. the government will have to work at how it will try to slow the deck unwinding. they are trying to do it by talking golf the market. everything under control. -- by talking up the market. web not seeing that. jonathan: richard frost, always a pleasure britt let's bring in kit juckes. kit, questions we probably need to ask should they try to control it? the pro-market credibility is absolutely shot.

a huge blowup in the market. down by 30% and as they little like they are panicking. it a little fire the authorities are. would you agree? kit juckes: panicking, it is difficult that we have so many markets that do not operate freely around the world for european bonds, treasury. the range of markets where we have politicians and central-bank try to use them for policy purposes as opposed of letting them do what they do and funneling money toward companies and recycling money from investors. none of these markets are working normally. when you're playing with it, it gets incredibly complicated. i do agree, if your problem was excessive private sector debt in china then was that starts to unwind in various bits, cutting

rates to encourage people to unwind it or coming back and asking people to please clue me in and by state -- come in an buy stay on shares does not seem like a short-term fix. you may well just see more volatility. we are going to have to take some of the air out of the balloon before we are done in the form of debt. jonathan: kit juckes will stay with us. we will be live in athens to talk about the meaning of the resounding no vote. we are back after the short break. ♪

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now it's easier than ever to manage your account. get started at xfinity.com/myaccount jonathan: good morning and welcome back to bloomberg tv. i am jonathan ferro. this is "on the move." 30 minutes into the trading session. the ftse 100, down by 0.7 first that. 40 points lower. compare this morning to last monday. the dax is down by 133 points. we are coming off the back of the worst week all the dax since april. another violent session in china. coming all the way back down.

a series of measures taken a by chinese authorities to support equities once again. that is the question predicts switch of the board and the other asset. a weaker euro is at the story. spreads are widening. italy, 2.33%. brent crude, below 60 bucks a barrel. down by another 1% after the biggest weekly loss since march last week on w-2 crude. a reaction to the resounding no vote in the greek referendum. out to the trading floor or analyst is standing by. michael, i read your note where the ecb, whatever it takes. in the bond market, maybe not yet. maybe that is the key line. michael: no, absolutely. maybe want to avoid getting

embroiled in what i would call political shenanigans. an economic mandate and it will be very hesitant to force a greek exit. take your mind back to 2012 when mario draghi talked about whatever it takes to underwrite greek debt. that ultimately remains the ultimate test. will eurogroup in the face of this no vote continue to underwrite greek debt? jonathan: a big call that the fed will capitulate and whatnot hike in 2015. one person calling for push back away from september and contributing that to the greek crisis. does greece play into the fed? michael: a little bit. take your mind to last thursday's payroll.

pretty much in line with expectations. more importantly, a downward revision of 48,000 and average earnings growth fell 2.3% to 2%. janet yellen suggested at the last meeting that the lack of wage inflation remains a concern. again, i think unlikely will will get september rate hike. the greece crisis will feed into that narrative because of the political uncertainty. there's also one lingering thing and what is happening in china and the fact we are single weakness in china's equity markets and the fed will have to pay attention as well. jonathan: i want to talk about the positioning of your clients. almost everybody i spoke with said we will get a yes vote and we do not. the consensus after a no vote is will will get a deal.

is it reflected in what you are seeing? michael: it is. i am skeptical we will get a dell. yanis varoufakis resignation. the selloff we saw this morning did not take out last week's lows against the dollar or yen. we are seeing some up. some blue-chip stocks. so buying and rolls-royce choice after the profit warning this morning. investors are remaining fairly sanguine about the outlook going forward. jonathan: michael hewson see what. let's continue the conversation and bring in guy johnson. a global strategist kit juckes. guy, looking for leverage was a key part of the referendum. still not getting the leverage from the bond market. is that the missing link for the greek government?

guy: i am not sure it is. i am not sure it will generate contagion. they have some leverage in now. i think it will be hard for them to turn around and go, we're in a position where we do not want to take more austerity and the deal offered. and we think as a result of which we need to renegotiate and find some kind of better package. i still struggle with what the purpose of the whole thing was. to understand all it will do is entrenched positions further. maybe angela merkel was hoping it would be a yes vote and will would have a new government and restart. we are not in their preemptive creditors are in the position as they are looking at a deal they are not happy with. i do not understand how this has progressed of the story very

much. the banking story over the next 24-48 hours will be critical. the sort of capital controls and how data will feed through is going to be critical. apart from that, i do not see how it takes as much further forward. i struggle. jonathan: kit, bringing healing. credit suisse avoided altogether. going forward, it may be difficult. what is it that device as an fx strategist? kit juckes: the advice is go for relative safety and expense for volatility to be high. do not believe you know all the answers to things you do not know. to investors, take risk off the table. this is a dangerous period. anything to de-is the right thing. -- de-risk is the right thing to

do. the market has been wrong a number of times. jonathan: i were very note of yours in 2011 is said by the dollar and find a rock to hide under. are we there? kit juckes: the dollar has gone up but i was still like to hide under a rock. the point of that this has to play itself out. i do not know whether we are going to take this forward. i have a sense of what guy is saying pretty it hardens positions and make the difference is clear of what greece needs. the greek government has a mandate, debt relief. can of that to be agreed? i do not know. if it is, i sing it is negative for the year role. -- if it is, i think it is negative for the euro. that does not mean in necessarily embrace below 110

and stays there for 24 hours. jonathan: to bring you back in the leverage and the market, the flip side of their argument is the lack of urgency on the side of the creditors across the euro. not surging like the way in 2011, 20 tell. the 2012. the euro is weaker. great news for germany. do you think after this vote and not really taking us forward in any substantial way, there is not much artistic now? is the banking situation the big flashing light and will push to get a deal done? guy: i think it is the banking system. it'll be the point on which it hinges of the next couple of days. if the banks do not reopen and agree -- of the greek people are promised a is an issue.

and is hard to model and understand. -- and that is an issue. if you start to see failures and all of these things are still to come potentially and they will start to of the ante significantly. probably not to the pressure to do a deal and get a program against the talks going. the banking system is pursing. this economy is not functioning and the way it should. the banking system is the problem. if he gets much worse, that is what it hinges on. maybe look at the talks and everything else and maybe listen to the political language. mario draghi will be listening. the banking system is absolutely front and center now. jonathan: a quick follow-up to wrap up. what are you looking for in the next 24 hours? where are you looking? in athens paris, franfurt?

guy: you draw a line between all of them. though banks are central. i think mario draghi will be looking to angela merkel and see what comes out of the conversation. maybe we do not see that you increased and may be reduced. that is a problem. -- you see the ela increase the may be reduced. the greek economy will run out of money in the middle of the week and that is chatter. all of this is linked. politics into what mario draghi will do into the banking system. you cannot extricate them. if the banks do not open tomorrow, the problems are exponentially.

jonathan: guy johnson, thank you. kit juckes thank you. the dax is off by over 133 points. stay tuned to "on the move" and we will bring you more live from athens. good morning. ♪

jonathan: good morning and welcome back to "on the move." stocks are trading lower.

germany the dax is down by over 1%. a weaker euro is the story. spreads or wider. yields are lower. brent crude is down below 60 bucks a barrel. the top stock stories with caroline hyde. currently bank london capital group said they would have a cardiac arrest this morning. maybe not a heart attack but a banks are feeling different the worst-performing indices group. everything is trading lower of the stoxx 600. maybe the italian lenders. we expected this pre-a lot of exposure to sovereign debt italian debt in particular. also spanish lenders are down. even irish lenders. notably the banking industry hit the hardest by the greek crisis for on of the flip side, other stories, other tales to tell.

rolls-royce is the may want to keep your eye on. down by almost 9%. the new chief executive is helm of rolls-royce. he is shaking things up a getting the bad news out first. he is downgrading the year profit. also stopping halfway through a share buyback of one billion pounds and in the share buyback as well. had went -- headwinds. rolls-royce is down. modern times is up by almost 1%. a swedish company holds 39% of the russian broadcaster. today, a billionaire is offering $200 million for controlling stake in the russian media group.

a nondividing offer for certified percent. he has the biggest company in russia, mobile company. he owns stakes in twitter and facebook and alibaba at now getting at the russian tv as well. jonathan: greases front and center for the equity markets. jpmorgan their best case scenario is in eggs it from -- is an exit from the eurozone. [indiscernible] back out to athens. the greek people voting note to creditor proposals and finance mr. yanis varoufakis stepping down from his post. a shock move. erik schatzker is standing by. we have to talk about options on the table for greece and we

spoke friday about sentiment on the ground. has things changed? erik: well, yes, things changed, jon. the votes in favor of no was far more decisive than anybody thought. you probably saw the pictures in the square where hard-core supporters were partying and the beer was flowing freely. and so, this is the day that greece wakes up to find out what the results of the referenda will be beyond at the no vote. we have to consider the what if scenarios. it is true or possibly true as jpmorgan said a greater is the best case. a lot has to happen. count me in the group of people who said it is time to focus on the banking system. if the european central bank does not increase the liquidity

assistance made available to the greek banks greece faces effectively three choices. we know from the chairwoman of the national bank of greece they're only 24 hours a deposits left before the system buchholz utterly and insolvent. if there's no liquidity, greece will almost.” shudder. -- before the system is orderly -- utterly insolvent. -- if there's no liquidity greece will almost always shudder the bank. one scenario was to sue the ecb and take them to the department of justice and that will not get result anytime soon. the nuclear option if you will is a bail in. let me put it in this way. david serbos said it could be

tit for tat. the greece can find $50 billion of haircuts in the banking system. everybody with more than 8000 euros in bank deposits in exchange for what the imf says greece needs effectively 50 billion euros of aid. david serbos consider that a real possibility. we will have to see if the government gives us any signal if they are prepared to press that button. jonathan: the nuclear option would be the bail in of bank deposits. the other side is at the pressure on the imf to release that debt sustainability report. as we go forward, do you think the voices from the u.s. get a little louder in the days to come? erik: it remains -- it is possible.

you may hear size from the obama administration. what influence does the obama administration have? what a person parachuted to encouraging the two sides. the u.s. has leverage in funding the imf. the imf is supposed to function as independent. will matter lagarde take her marching orders from president obama? jennifer: erik schatzker thank you for joining up -- jonathan: -- eric shatzer, thank you for joining us. a shot exit from yanis varoufakis. the best of yanis after the break. ♪

yanis varoufakis: it was a yes vote, i will not be back. the greek people have had enough. i am prepared to cut my arm off. red lines are necessity. they are flexible. it is common ground. i wish we had -- and make no

mistake, is not the same and i want. i wish would never entered this. i think deep down, all member states of the eurozone would agree with that now. it was very badly constructed. once you are in, you do not get out without a catastrophe. we have the right to challenge the problem that we clearly face. this crisis that began in 2008, instead of helping us come close together is making the political process of unifying even harder. that is something we should lose sleep over as germans, as greeks, as portuguese, as finns, as slavic. we will compromise, we will compromise it will compromise to come to a speedy agreement.

we are not going to end up being compromised. [indiscernible] jonathan: what an impression that man-made overs nhtsa month. he said he would as if the people voted yes. -- what an impression that man-made overs six months. -- that man made over six months. angela merkel will meet with francois hollande and the ecb governing council to discuss what to do about greek banks depend on emergency credit. and in emerging summit will take place in brussels. that is what we're watching as far as the politics. here's what we're watching the markets. over to mark barton. if i take a guess of the

weekend, i would guess that spreads wide. mark: not as bad as last monday when the referendum was first called. a measure of using options to protect against declines. earlier rose to the highest in three years. the three-year chart. coming down a little bit. one month implied volatility for euro-dollar is coming down. last week, it rose by the most. as you say, money moving into the core european bond markets. what about the greek 10 year. it is rising but not as much as last monday. the moves are not as bad as a week ago. jonathan: thank you very much. keep an eye on the marks. 'the -- "the pulse" is coming up

next. they will speak to the former italian prime minister. you what to do about the markets, i am on twitter at --@ferrotv. good luck with the rest of your day. ♪

anchor: shock resignation. yanis varoufakis announced he is stepping down. as greeks vote overwhelmingly to reject further austerity. the euro holds and german bonds surge. more market volatility as china shows a fresh round of measures to stem equities.