and the germans say no new billions for greece. the chinese government scramble to put the air back in the bubble. chinese stock markets move from correction to bear market. and it is ugly out there. american apparel scrambles to find cash and customers. good morning, everyone this is "bloomberg surveillance" live from our world headquarters in new york. i'm tom coen and joining me is brendan greeley. brendan: i'm watching the tape and wondering at what point we take surveillance to china. tom: the china story would be front and center but we have the greece thing overwhelming all and we'll do a little bit on oil this morning as well as china. right now we need to catch up on combreeze and here with you are top headlines is bonnie quinn. bonnie: they're running out of patience with greece. they're headed to brussels.

it's the last attempt to get a lifeline and keep greece in the euro. german chancellor angela merkel says time is running out. angela: we've shown much solidarity with greece. our last offer was very generous. in these time of challenges be it refugees or terrorism, europe can only keep strong and stand together if every country asumets responsibilities. vonny: they have to decide whether they can cooperate with cyprus and walked out of talks and called the referendum. they're trying to prop up the falling stock markets. foreign investors are selling shares at shanghai listed stocks at a record pace. vonnie: obama warns it will take time and went for a briefing with the top military

commander and called the fight against the islamic state a generational struggle. president obama: this will not be quick as a long-term campaign. isil is opportunistic and it is nimble and many places in syria and iraq including urban areas, it's dug in among innocent civilian populations. it will take time to root them out. vonnie: the white house is looking into whether there are any links between the islamic state or terror attacks. some places jumped at starbucks, the cost of many drinks going up from five to 20 cents. food prices are unchanged. the latest price increase was a about a year ago. at wimbledon, top seed novak djokovic will try to avoid an upset in his match against kevin anderson and the match was tied at 2-2 when it was suspended due to darkness. the williams sister beat her sister venus to proceed to the

quarter finals and venus is on track for the grand slam and won the australian and french open. tom: it was like an hour in london time. vonnie: they went until they couldn't see the ball anymore. tom: that's how i used to play. vonnie: it wasn't because of darkness but liquor, tom. tom: never done this where the ball is coming down at you. vonnie: i play golf. brendan: never done that thing where i play tennis. vonnie: is it not the same as hockey but only in the other direction, tom? brendan: i can't begin to convey to you and the audience how urgently we're asked to move from this conversation. tom: let's do an important data check. markets are on the move, futures up nine and the equity markets are immune to what we see and the euro broke 110 to 109 and it's a important weaker euro and dovetails with bond market tension. oil we will discuss.

francisco blanch will join us in the next hour and on radio with an important conversation with everett morris. on to the next screen, please, if you would. the greek yield is 53 and combrinds higher on a two-year yield and that's not a typo but correct, at 55%. the german two-year will be front and center discussion in this hour, the euro and swiss are churning as well. let's go to the german two year and show you the greek two-year yield is up in the ceiling. it's literally on this chart off the chart and up on the ceiling. this is portugal with a positive statistic. here's germany rolling over, lower yield. we'll go through these recent lows. this is sweden and switzerland down here fighting off deflation. this is the fight for flight in negative yields. brendan: when you see it long term is that a flight for

quality or the economic condition when you look what's going on in sweden who just took their benchmark rate like so many other countries on the periphery below zero. i don't know that's just a reaction. tom: i strongly agree it's not just greece. denmark is overlaid on top of germany as well. jeff rosenberg will join news a moment. right now it's not good in athens. european leaders may look for pragmatic compromise to steal a phrase from mohammed, in athens, it's about food and rent and also with medicine. hans nichols is in diplomacy and joe is in athens looking at the real economy. joe, what have you simply learned walking the streets of athens? joe: once again, we're seeing the return of a.t.m. lineups. i had a discussion this morning with a greek entrepreneur and one of the things he told me was it was almost disturbing the speed at which people had already adjusted to the limited

banking. and he was disturbed at how quickly people thought that was the new normal. you have to figure out this is a country that's been in economic crisis for several years now, very used to becoming inured to hardship and despite the fact we have this extraordinary situation with the banking system life here almost appears normal. tom: dot people of greece support mr. ciypriot as he travels to brussels? hans: there is hope they can get a job done. i'll hear people cite the report for the need for debt relief and the view that tsipras is fighting on the right side and all the yes voters would hope tsipras gets a deal that won't ensure their

position in the euro zone. tom: you have to go to brussels with the drama is today. brendan: another late night negotiation. hans nichols is there 24 hours a day waiting for this to happen. has there been any movement on the german side or is this the same red line we've been seeing the last six months? hans: no movement on the german side, it's very clear. the body language from the e.u. commission president has been very negative. you can can't their looking for a little optimism and can say what the wrench prime minister said debt relief should not be taboo but in the kfings and it was called unaccept for being called terrorism and what he said yanis varoufakis is what

they were doing. brendan: and hanging on was an interview that thomas did and pointed out germany got its own debt relief in 1953. did that change anything in your berlin? hans: historically accurate but practically not helpful. if you want to convince the german public to do a sort of dead profiling and reminding them about 1871 or world war ii is not going to be positive so it was met with a shrug. a lot of what merkel is saying has been very consistent. she's willing to help and extend a hand but has to be tangible evidence greece will implement those reforms before there will be any release of funds. there will be no unconditionable money. vonnie: any word increasing things on greece making it

difficult in terms of collateral rules. they seem to be tightening the screws. hans: they tightened the collateral level and didn't raise the ceiling and puts pressure on the banks and didn't give them any sort of lifeline and now looks like the banks won't open in at all until later this week. tsipras' pledge that the banks would be opened today has been disproved. tom: thank you so much, in brussels this morning, those meetings starting in a bit, joe why wiesenthal as well and we'll continue our coverage. markets are disported by different levels of greece contingent. jeffrey rosenberg is the chief income strategist at black rock and must contend with divergent levels of fear and a little bit of trumanic this morning i guess in china there is a little bit of that within the equity markets. what i notice, jeff, is an unrelenting move to negative yields in germany. the markets are voting, aren't they? and they're going to flight to

quality. jeff: they are and we have to put the negative yields in context that it was an older story of european deflation and expectations the e.c.b. and q.e. and had that and then a recovery. the old story was european bond yields went from negative to zero to 100 basis points before the latest greek -- tom: what's the quality of the world right now? jeffrey: it's telling you there's flights to quality and the panic is not anything more than what would been. this is a relatively muted reaction in equity markets and fixed income opportunities. tom: does it provide opportunity for investors or is everyone frozen waiting for the diplomacy in brussels to play out? jeffrey: it's hard for investors because at the center of our conversation is the

political economics ratings. it's been clear a long time the greek situation is untenable and requires debt relief and its conditionality. but now the center of the negotiations is political and it's hard for people to handicap. tom: i got gold brendan, down six dollars, to $11.67. there are interesting moments on a tuesday. >> and the market strengthens some negotiating positions in brussels and do you see any movement or any theory? brand that's correct. the long time threat will be worse for you, the rest of europe than for us because of dwhrobal market contagion. you saw some -- global market contagion. you saw some people still talking that story and last monday's market reaction was more negative than yesterday's

market reaction. so what's happening is that position from the greece, that the exit would be very negative for financial markets is really being undermined it. so with that the reality that is setting in is perhaps at the end of the day greece exits. and it's not the end of the world for either. it's much more negative for the greek people than it is for the rest of europe. tom: we haven't talked about the fed in three days. fed-free. what does the bank of england think of it? jeffrey: the key to the fed or bank of england or any other central bank is what are the contagion or the spillover effects to the real economy? does this damage confidence? tom: i agree. jeffrey: does it bring down economic growth to postpone what has been a path for the fed and a normal path for the

d.o.e. and what single bankers in the united states will be focused on and what the next couple days will be critical. the lack of spillover in financial markets and con teenageon suggested you won't have significant slowdown in the economy because of what's going on and depends on how the end game plays out. tom: we'll see with our hans nichols and jeffrey rosenberg with us the whole hour. brendan: and coming up we'll take a hard turn from alexis tsipras to apparel. they're in the worst trouble we thought they'd be in. is another american realtor moving closer to a real estate problem or american apparel. tom: i tried to cut back to going there twice a week. brendan: tom constantly searching for basics.

♪ >> bloomberg television is brought to you by servpro. making water and fire damage like it never really happened.

tom: we welcome all of you worldwide, particularly those watching in continental europe. the euro breaks through 1.10. a indication of the bid right now on markets. let's get to our top headlines with vonny quinn. vonnie: a pripses is setting a brisk pace in his south american trip. the pontiff has a full schedule in ecuador before heading to bolivia tomorrow. he had so much energy he slipped out to greet well-wishers last night. the pope who only had one lung showed no ill effects from the high altitude in ecuador's capital. that he are trying to calm down widespread usage. ellen powell apologized for a history of broken promises. users undertook large sections

of reddit and tack them online and didn't like that a well liked employee had been fired. a high speed run in the tour de france turns into a jumble of bike riders. the leaders was among 20 that crashed yesterday in belgium. canalara quit the event after suffering a back injury. there are always spills but this was particularly a bad one. tom: i flat-out don't get it but boy is it dangerous. brendan: watching them come down the mountains is hard enough but that was on a flat. tom: they're terrifying. vonnie: they travel in packs. brendan: there's an honor they'll protect everybody. tom: dramatic video. this is amazing explosion. if we look at the tour de france i like to think of myself as just a report writer.

american apparel announced it will close stores to lay off workers to find $30 billion of cuts. knoll joibs us from -- noel joins us from princeton. were they caught on the wrong side of changes and retail or just on the wrong side of dove charney. noel: from a retail standpoint you have this shift of basics that helped everyone whether you're talking about gap or air poss till -- aeropostle. there's a dov charney dynamic and trying to move arment from the explicit sexuality of the company to more of a edgy, metro sexual type of dynamic. tom: perfect for me. you've got to be in bloomberg intelligence to see met edgy, metro sexual with a straight face.

noel: particularly from princeton. brendan: that was in fact $30 million and not $30 billion. they have to find $30 million of cuts. how burned is the brand? can you just go back to selling basics as american peril or will you always be branded with the legacy of dov childreny. -- dovcharney. noel they have to outline what they're doing and since nasha came on in november and then the other one from december. how do you take the company from the charney era to a standard brand? i don't think they've figured it out yet. tom: they brought in a rock star to face this contract. they're going to readvance merchandise assortment. let me cut to the chase.

is there too much product out there? is there just too much stuff in american stores right now? noel: yes. tom: there's a massive glut of successful in every different price point. >> they have to figure out what their pass is, obviously. one of the big thing for american apparel they manufacture in the u.s. and it's the u.s. manufacturing that's been a part of their identity that adds to the cost base and makes it more difficult for them to compete so you're talking t-shirts at $30 and shorts at $60, etc. tom: we look forward to you giving us more on metro sexuals across all of america. come up to new york and we'll talk about it? we're looking at bond this our and jeffrey rosenberg and the equity markets will joins us and mohammed as well. we'll look at oil twice this

morning with francisco blanch as well and the euro breaks down to a new weakness. stay with us.

>> bloomberg's morning must read is brought to you by columbia thread needle investments. your success is our priority. tom: what you need to know right now. there is a wait to the market and we're really seeing it with euro a 1.0970. gold, weaker by a dollar in the last 15 minutes. let's go to a morning must read right now. this guy elerian has been writing up a storm and always writing for bloomberg view and is a smart, smart quote, one of his 10 consequences and it is quite doubtful that greece will be able to restore its status as a full member of the euro zone and europe needs to ensure that greece's exit from the

19-member euro zone doesn't also result in the disassociation from the larger autopilot even union. jeffrey rosenberg is with us from blackhawk and your offices in the acclaimed wall, kitty corn tore deutsche bank. this is all about european finance keeping the experiment together. is the european experiment at risk? jeffrey: for the last 40 years it's been about enlargement and greater membership and this is moving away from that, euroship euro zone. and there's a distinction here that what we're talk about today is about euro monetary union as opposed to european union and there's a potential spillover effect but exit from monetary union doesn't necessarily mean exit from european union. tom: like the united kingdom is in the european union because it uses the euro. jeffrey: that's a potential

avenue here and clearly from the political side is what you'll reinforce, that's you're a still a part of the union and there's man therien aid and a transition. and if today's talks fail it's about supporting greece in its transition to a new currency and limit the fallout. tom: i want to come back and talk about it later in the hour and you may have the transition we see. and in our next hour dr. el irian will join us. ♪

tom: good morning, everyone "bloomberg surveillance." fragile markets, the euro, 1.0966. watching it tick by tick and listening to the top headlines with vonnie quinn.

vonnie: euro zone leaders made it clear it's up to greece to explain how it will pull itself out of the crisis. tsipras heads to brussels, seen as a last attempt to get greece bailed out with europe and stay in the euro area. yesterday angela merkel outlines what she expects? angela: this means by tomorrow it will be important the greek prime minister tells us how to proceed and what precise proposals he can offer regarding a midterm program that will lead greece to prosperity and growth. vonnie: greek banks will be closed through tomorrow and the stock market also remains closed. diplomats may miss another deadline in those negotiations over iran's nuclear program. secretary of state john kerry and his iranian counterpart held talks in vienna until early today and negotiators have a self imposed deadline of midnight to work out a deal. the u.s. and other global powers want to stop iran for building nuclear weapons and in turn will ease economic

sanctions. in south carolina the state senate has voted to remove the confederate flag from the grounds of the capital and a second vote is needed to send the measure to the house. more than eight decades ago it was raised to protest integration. second quarter profit came up short with samsung, the korean galaxy 6 cell phone didn't lure enough people away from iphones. a the earnings fell for a seventh straight quarter. the final numbers are in in the women's world cup final was the most watched soccer game in u.s. history. more than 25 million viewers watched the u.s. defeat japan sunday on fox. that was more than watched the nba finals or the world series. tom: or the stanley cup. vonnie: well yeah, that can be expected. brendan: it's amazing, not just the most watched women's soccer game but the most watched soccer game, period. tom: what did you take away

from it? you were not with us to give us official world cup surveillance. michael key provided that. brendan: i'd take away from it anecdotal but heard more people talking about this world cup than certainly the last women's world cup and talked to a lot of people who watched every game in the way you would follow an nba final series which is new because usually people tune in for the finals. vonnie: for as many that watched the entire game, so many more watched just the gold on youtube. brendan: we're lengthening out and watching the entire tournament and that's a big change. vonnie: after two years, diplomats say they're closer than ever to sealing an accord with iran world powers and they're in their 10th straight day of talks. more even seeking an accord over the islamic nuclear program. our own is in talks in vienna where the talks are being held. with the deadline set to expire tonight in vienna, do you think a deal will be reached or do we miss this one yet again?

reporter: i think a deal will be reached but unclear whether it will be reached today. don't forget the power involved with iran negotiating this deal have missed four deadlines before since 2013 so they've extended whenever they need to. the first deadline is midnight tonight vienna time. they could simply extend the interim agreement if they need to negotiate a few more days. ooze another deadline behind it, july 9, and if they go beyond july 9, congress in the u.s. will get 60 days instead of 30 days to review this deal and are watching that. vonnie: are they watching oil prices at all? indiria: absolutely. and i think we both know that whatever happens with this deal will very much affect oil markets. iran is the number two natural gas reserves in the world the number four oil reserves in the world. and so this is really going to depend on what happens with

sanctions relief when more iranian oil will be allowed to come back on to market. and you know also all about banking, ports, and insurance shipping. iran is the most sanctioned country in world history. so if these sanctions start to come up and come off it will be a real opportunity especially for european businesses. vonnie: i read on nolets commerce bank among them, they're anticipating a deal. why this week? there seem to be sticking points that are really sticky indira. indira: there are. the iranian news media reported late last night four out of the five an ex-s or technical agreement vts been agreed upon but they're arguing over the u.n. security council resolution that would lift those sakeses. -- sanctions. the united states said there are several big issues they're fighting over. i think they will ultimately come to an agreement this week because they've been doing this for 22 months now and want it to end and the united states i think feels this is the best time that they're ever going to

get something good, at the same time, i think they're ready to walk away if they don't get the deal they want. but i do think this is the best time for both sides at this point to get a deal to lift sanctions and to curb iran's nuclear ambitions. tom: indira, thanks so much in vienna this morning. we have markets moving in greece. brendan, tell me what the german newspapers are saying. we saw one headline. brendan: we have a report in one of germany's respected broad shates saying what the new finance minister of greece came to brussels with is not a plan all that different from the referendum -- from the referendum plan. they want to keep the discounts on santorini. tom: the tax details. brendan: just some small details and basically it seems like even though they rejected that plan they're returning with that plan. tom: euro is up at a 1.10 level and what we saw when we opened the show. jeffrey rosenberg with us from

blackhawk. these are these conditions that were called brutal you don't like. you don't like to see abruptness in markets and what greets cyprus this morning. 1.0952. jeffrey: it looks like that on that scale and we're seeing in in other markets as well and if they come back with not much of a change might be what markets are reacting to that. tom: is your basic framework to be optimistic, the u.s. in recovery and really europe away from this drama is actually doing pretty well, isn't it? your core framework. jeffrey: that was the story and the question is, does the greek events as they proceed from here undermine the european recovery because of the confidence shock. tom: american oil going to 53. brendan: we talked greece is a game of chicken and you talked about it greece is alone driving towards the clip.

europe is not facing the cliff and watching greece drive off. jeffrey: that seems to be the case in the sense these are negative moves but they're not dramatic or nowhere near what contagion once looked like and what greece once meant for the global financial markets. we separated ourselves and there are limited financial linkages and the debt restructuring is a public sector issue, a taxpayer issue and fiscal policy issue but not a financial market issue the way it was back in 2009 2011 and even 2012. so to that extent the spillover what happened the next couple days we don't know but to the extent that remains contained and up until the last couple weeks, the story in europe was recovery. tom: do you shift, then, with that optimism and removal from greece, do you shift your 10-year yield u.s. benchmark call? jeffrey: our 10-year call wasn't that aggressive for this

year. we had 2350 the end of the year and hit that at a time and obviously bounced lower off the greece news. so we're going to shift that year end forecast if the events over the next couple days spiral to the negative, to the downside and the way that will be manifest is there is a broadening in terms of the equity market reaction which is really negative for broad economic confidence. tom: jeffrey rosenberg from blackhawk and we see gold is becoming weaker and the euro giving away distant from 1.10 right now. and part of it is the headlines moving and the general headlines about greek intentions, brendan? brendan: it looks like the euro group, the finance ministers are looking to extend a little bit of good faith to the finance minister. they're looking at the headlines here and basically will meet with tsakalotis.

tom: is there a change in the greek proposal? brendan: the smallest of changes but juncker send the last stand two weeks ago and greece is basically taking that proposal, just tweaking it barely. we're talking about shifts in the value added tax in some interests and bringing it back to brussels so i'd assume there is reason for hope if the deal. vonnie: i love the headline and said we'll do whatever it takes to strengthen the euro. tom: with all of us going on, jeff rosenberg, are you taking the month of august off? jeffrey: i wish key. i'll take some vacation. brendan: aetna and humana strike a $35 billion deal. who could be next in the health care merger mania? what is driving these deals has to do with the affordable care act. thank you, john roberts. and it's also time for our twitter question. starbucks raises its prices

today. are you downgrading for a grande or just buy something at the greek diner like we used to? tweet us.

tom: good morning, everyone, futures up eight and other markets a bit challenged. we need to get to a single best

chart. here's brendan greeley. brendan: aetna acquiring humana. anthem and cigna may be next. what is driving the m & a? we're looking at growth in health care cost. this is not premium growth but the underlying cost and you're seeing a chain reaction and since the aforeand care act passed with mergers in primary care providers, so hospitals, and what we're seeing now is insurers are trying to keep up. that growth. there was a brief dip. you see the spike there in 2014 after the marketplaces kicked in. the long-term trend is going to continue to climb. people are getting older and more people are acquiring insurance and there's more money in that pool. tom: and it's way above inflation. and the real growth is breg taking -- breathtaking within the sector.

what does it say about the affordable care act? brendan: one is making sure people are covered and the other is dealing with runaway costs. we have addressed one. there is a lot more to do to address the second which is run away costs. there were experiments in the affordable care act, some have changed the way people provide coverage. but you know, we really haven't addressed this huge problem. as i think everybody at the table knows, our health care spending per capita is beyond all proportion of any other country. vonnie: spending is slowing, the growth of spending. brendan: but you see in the chart long term, again people are getting older and those costs are rising. so one of the things we'll be looking for is as -- we do not have a single payer system but as we see these consolidations, how much will justice allow these mergers to go on? we have the top four now considering deelts with each other. tom: they'll all move into one.

vonnie: british prime minister david cameron and london mayor boris johnson carrying floral breathes -- wreaths in a ceremony for the victims of the july 7 2005 london bombings. can you believe today is the 10th anniversary of the tragedy. four suicide bombers struck the public transportation system in central london, killing 52 and injuring more than 770 in simultaneous attacks. it was a terrible day. brendan: it also was one of the first days where you could get news quicker through social media than you could. i really remember that shift in the newsroom, realizing there were some things you could find online that were sort of more brutal and terrifying and quicker than what was coming out of the news desk. vonnie: number two, parm loana -- pampalona, spain, running with the bulls. tom: is that reduce costerich ahead of bull number three? vonnie: i think i saw brendan

in there. tom: have you been to this thing? brendan: never been and never waved a red bandana. is that somebody getting gored? vonnie: one person was gored. brendan: that got real serious real quick. vonnie: in calgary canada. daniel borreo was arrested for using $120 balloons and a chair to fly. who needs engines? with the help of his 20 employees he filled balloon with $12,000 of purchased helium and was all in an attempt to raise awareness about his cleaning project company but intense wind conditions meant the landing didn't go as planned and he jumped from the chair opening the parachute attached to his back. he did have a parachute so does it count as good advertising? brendan: i love the world so much. vonnie: like the movie "up." brendan: there's a finite amount of helium and some of it

just disappeared. vonnie: $1,000 worth. tom: he would keep going up? vonnie: until he can't go anymore. brendan: jeffrey is giving a smile where he either has something to say or no comment. vonnie: we don't know the name of his cleaning company. brendan: that's the hot point, right? tom: let's continue to the hot air seen in brussels. they won't need helium in brussels as the two parties go back and forth. we'll turn our attention to the united states and what contagion in greece means with investors and do that with jeffrey rosenberg of blackhawk. the futures up seven. watching gold, $11.65 an ounce a bit of fragility across bond and gold this morning. ♪

>> stay tuned for the forex report. tom: good morning, everyone. "bloomberg surveillance." let's get to our twitter question of the day. i'm outraged. i think the mocha latte triple is something like $80. vonnie: go to a venti. the best place is the grande. tom: dunkin' donuts small black, hot, please.

starbucks is raising its prices. will you be downgrading to a grande? starbucks is raising its prices today, will you be downgrading to a grande? brendan: can you still walk into a diner and get a coffee in a little cup? tom: i think you can do that. we need your answers on starbucks. let's get to the top headlines with ms. quinn. vonnie: one hiker dead and four hurt after a partial collapse in an ice cave in washington state. authorities say warm temperatures are causing chunks of ice to fall. emergency crews will return to the site today to recover the victim's body. the evident was stopped yesterday to protect rescuers from further collapses. the mountainside park, a popular tourist destination is now closed. teva is preparing to raise its offer for competing drugmaker milan to $43 billion. bloomberg news reports the new offer may be announced this week. earlier they rejected the bid. they've been producing and pursuing its own acquisition and trying to buy an irish

drugmaker. long time hollywood producer jerry wine straub -- jerry weintraub has died and produced movies like "karate kid" and was a friend of g.h.w. bush. tom: fun movies with a certain vibrancy to them. we have vibrancy in the markets and try to digress from greece and get back to a u.s. economy. there is contagion. the two-year deal in germany is decidedly negative and moving lower this morning. yields are lower in the united states. jeffrey rosenberg is chief income strategist at black rock and suggests it's not decidedly all about greece. if we weren't looking at greece we'd be looking at puerto rico. how does puerto rico dovetail into the u.s. mix? jeffrey: for u.s. investors, puerto rico is a bigger and more important story. the biggest difference between the two is that investors still

hold puerto rican debt. investors don't hold greek debt anymore and we had the default and restructuring back in 2012. what governor padillo announced over last weekend and monday a week ago was really a fundamental change in the government's approach to how it was dealing with its debt sustainability crisis. greece has a debt sustainability crisis and what we're dealing with today. in greece, puerto rico similarly had a long running debt sustainability crisis and the answer was an admission, a long overdue admission the debt is not payable. they also need to a fundamental restructuring of what's going on in their economy. brendan: you described when debt collapses the five stages of grief. and using the elizabeth kubler-ross model. where are we for puerto rico, what stage are we in? jeffrey: we just passed

deniable. it is on a long sustainable trend is exiting the denial face you can postpone and roll over and use liquidity extensions to keep the game going is exiting denial. tom: the larger question is with this turmoil, puerto rico, the chinese stock market among others, does it set up a frank work that drives interest rates higher or does it drive them lower? jeffrey: some of those issues are more about risk and economic downside risk. the story in china is about the inability of stimulus measures to first and foremost, everyone is focused on the inability of stimulus to support the equity market but am not underlying that as their concern to stimulate the economy the way the past efforts have. and that's a much more bigger issue for the global economy because the chinese economic performance influences the rest of the world and that influences the outlook for interest rates.

vonnie: exactly. to tom's point, are we waiting for the federal reserve to do something before we see higher rates? jeffrey: the federal reserve is focused on the performance of the u.s. economy and if not for all these other issues we might have been talking about the payroll report we had last friday and the lack of wage growth and how that's at least coming out of that payroll report, a lot of other indicators are highlighting a disagreement with average hourly earnings that comes out of the labor report that are showing higher wages and that wage debate is really critical to the outlook for higher interest rates because higher interest rates will follow if the fed acknowledges the strengthening in the economy through higher wages, validating that through higher interest rates and what we otherwise would be talking about if not for some of these global risks. vonnie: looking september or december? jeffrey: our baseline is september but because of spillover effects we heard this morning that's in play.

tom: and of course the headline with germany and they are waiting. jeffrey: can you tell us the difference between a subdued or excited man? tom: is janet yellen waiting for excitement with the new data? jeffrey: with regard to the data that's their framework and they're focused on the data which has been strengthening. the data is backward looking and are real time events and will impact the data we'll see in the future on third quarter european performance and critically the u.s. performance and what she'll be focused on, the data that comes out in the next couple of months before it comes to september and what the market will be focused on moving through the issues in greece. tom: thank you, jeffrey rosenberg with blackrock. that was a nice break from greece greece, greece. let's go back to greece and it's forex induced the euro at 1.10 and not weakness but a.109

.75 and the euro swiss was a little weaker in the last few minutes. in this hour, francisco blanch on oil and mohammed elirian on greece. stay with us. . .

>> this is "bloomberg surveillance." tom: after the resounding no

vote, there are less reasons to compromise. merkel and eu leaders will listen one last time to stsipras in brussels. the chinese government scrambled with the air back in the bubble. chinese stock markets move from correction to bear market. and oil rolls over. in this hour, a conversation with merrill lynch's francisco blanch. good morning, everyone, we are live from our world headquarters in new york. i am tom keene. joining me brendan greeley and vonnie quinn. fragility in the markets literally moving headline by headline. brendan: headlined by headline, but the big story is the lack of movement in spain, portugal, and italy. i am looking at the generic five-year and not only downs from the highs of 2011, the yield, but down since 2000. tom: clearly a lack of contagion

versus what we saw two years or three years ago. let's get to top headlines. here is vonnie quinn. vonnie: thanks, tom. a meeting of european finance minister starting in brussels. this is the first meeting since -- in exchange for bailout money. the debt crisis is hitting home in the streets of greece. lines that atm's are growing as they withdraw what little cash they are allowed. a meeting with european leaders is set for five hours from now. during the session of european commission today. the greek prime minister is in brussels for the talks. alexis tsipras is expected to outline a new plan to please creditors and getting loans. in china, despite the government was the efforts to prop up the market overseas investors are selling shares listed in

shanghai at a record pace. it hasn't fallen more than 24th percent since hitting a record high -- moreit has fallen more than 25% since the record high. after a pentagon briefing yesterday with top military commanders, president obama called the islamic state flight a "generational struggle." president: this will not be quick as a long-term campaign. isil is opportunistic and is nimble. in many places in syria and iraq, including urban areas, it has dug in among innocent civilian populations. it will take time to weed them out. vonnie: the white house says it is trying to determine if islamic state is behind recent attacks in france and tunisia. it might not jolt you as much as the caffeine, but some prices jumped this morning at starbucks. because of many drinks going up between five cents and $.20.

starbucks' last nationwide price increase was about a year ago. and novak djokovic was tied with kevin anderson last night when their match was suspended due to darkness. on the women's side, serena williams is on track for her third grand slam title. sereanna already won the french open this year. tom: very good. tennis. with the data check with fragility, equities go from +7 to +4. these are not constructive headlines. brendan: i would say they go both ways. we have peter kashmir saying that she has been a very vocal -- saying he has been very vocal against the greek issue. vonnie: futures point higher so

there are clearly opinions in the market. tom: the review here as we go to joe weisenthal in athens is markets are decidedly on the move. in athens, challenging this morning particularly with banking and the real economy sector. european leaders look for compromise in brussels, but in wiesenthal's athens, is about food and the rent due. hans nichols, joe weisenthal. joe i just want to know, are the greek people riveted to what hans is observing in brussels, or are they removed from the debate? joe: i think people are incredibly attuned to what is going on. i noted yesterday how jeroen dijsselbloem was on the cover of greek newspapers. all of the papers are covering this debate. it is like nothing has even

changed. you have the various eurozone leaders had let out the ball is in greece's court. his headlines could be anytime in the last two months. brendan: joe, german papers are reporting that the finance minister from greece went to brussels with roughly the exact same proposal that was rejected in the referendum. do we know what he has in his hands as he arrives? hans:joe: i do not think we know the specifics. obviously the question of nominal debt relief appears to be a huge redline for both sides. i think the question we will have to wait to see today is whether there is any ability to bridge that divide. i am sure hans knows more about that than i do. tom: let's go to hans nichols. i want brendan greeley to jump in here. our schaeuble and merkel in agreement? hans: not only are they in

agreement, marble is in agreement with her coalition partner. mr. sigmar gabriel has been one of the arsonist critics of greece. mr. kashimir said no nominal debt line. i did not take his redline, to be entirely a dealbreaker, although clearly he is setting parameters. brendan: hans where you are in brussels, is some kind of debt relief, nominal or structural, on the table? hans: yes, it is in the either. -- ether. it was always on the table, but because we are out of that 2012 program that last one greece did not make its payment june 30 that is technically off the table, so if you want to do that

money back on the table, you have to do an incredibly complicated process, which is the european mechanism, and that is why technically and legally no one is optimistic for a short-term deal, a deal that gets banks open this week in greece. we will get clarity in a little bit -- i doubt we will get a result. tom: onset nichols, thank you so much in brussels, and joe weisenthal with us from athens. again, fragile markets moving headlined by headline, a cacophony right now. u.s. companies have responded but have been largely immune. are you immune to what is going on in greece? we have some ruts that be with us managing real money at douglas lane and the real united states of america. have you done a dam thing because of greece? guest: no it has been contained. the question is how far does greece affect the rest of the market? tom: critically if greece

affect the bond market the debt market, like the slope of yield curves, how does that full into people's retirement plans? sarat: in fulton into the equity markets because discount rains are checked -- discount rates are changing. tom: give me the july answer -- is a good for me or not it for me echo? sarat: it is not good for you. the bottom line is uncertainty causes more volatility, people sell off the equities, and you will get more people afraid of being in the markets with rates being so low. brendan: what would be the news today's it were not for greece is the collapse of china, is your faith in the chinese government's ability to manage the economy at all shaken by this? sarat: it goes back to our view of not investing in china directly, it goes back to investing in international

companies. the whole economy is very opaque . it is very hard as an investor to make money. this is a trading exchange, and you see 25% moves in the year. if we had that in the u.s., going back to 2009, we cannot have that as an investor. you look at that and say that it's going on, there will be people that are leveraged and we do not want to be part of that game. brendan: as a pro, you want to stay out. sarat: we want to stay out. it is. speculation. it is gambling, it is trading -- which is exactly why people like to go to china -- to gamble. blue chip and companies that are going to grow, companies that are going to do well -- yesterday you saw oil dropped 7%. that is good for global industrial multinationals. that is the largest and but they haven't has been going on for two quarters or three quarters. that input is going to provide output. tom: sarat sethi with douglas

lane. what are we looking at this morning with "bloomberg surveillance"? coming up, oil falls to a five-month low. coming up, francisco blanch will join us, and then edward morse will join us an hour or two down the road from citigroup on oil as well. next blanch on your new oil price. oil $52.86 a barrel. i need a cup of starbucks. vonnie says forget the veniti i am all grande. we have had in the store exist wants to this twitter question. here is new york clamoring for another starbucks. ♪

tom: good morning, everyone. "bloomberg surveillance." brendan greeley, vonnie quinn with me this morning. how about a morning must-read on oil? stephen short writing about the minutia of pipelines full every barrel is in the united states. the baker hughes oil rig/by 60% however, despite this purge, u.s. production peak at the highest level in april 9.7 whatever barrels, whatever million, bazillion barrels.

the eighth highest level ever. we need to speak with the next word, francisco blanch with us from bank of america merrill lynch. the chart is stunning, and i think it is a chart most americans do not know. it is a moonshot of oil production, and it has not turned around, has it? francisco: no, it continues to go up. it has kind of flattened out in the last weeks. we were around 9.6 million barrels a day. we will go lower, however, by the end of the year, we will be closer to 9 million barrels a day. tom: everyone is talking $65, $70, with the new rollover -- francisco: remember, right now we are seeing the decline because just last weekend was the peak of the season for gasoline. as you hit that july 4 weekend the amount rolls over, typically prices do rollover right? we also have the iran deal, we

have the greek story we have potentially the fed hiking rates, so all of those factors are negative for oil. so we remain negative. we think it goes back to $50 per barrel. we have been saying that for a well. brent goes back to the mid-$50's, low $50's. once we have that, we go to a tighter credit for the energy companies because right now there is too much money in the energy space. once that happens, you are looking for higher prices. tom: but voninie production has not reversed, and a lot of our guests have predicted that. vonnie: the margins are very high. it will be until they contract a little bit. francisco: production has not declined yet mainly because there is a lag. if you stop drilling for oil today, it takes about six month or seven months for production to be impacted.

the first six months, prices go down, the rate count goes down. from four months to six months we think on our measurements, we will see a decline in production. tom: let's come back. francisco blanch with us this morning. we have a lot to talk about on oil. brendan: and the price of gas the price of what propels us here on "bloomberg surveillance " starbucks is raising prices today. will you be downgrading to a grande? let us know @bsurveillance. or if you even know how much you pay. ♪

tom: good morning, everyone. "bloomberg surveillance." we're watching markets, the euro $1.0966. a little bit of fragility. let's get to top headlines. vonnie: pope francis is setting a risk based on his south america trip. he has a post scheduled an equitable before heading to bully the a tomorrow.

he has so much energy, he slipped out last night to greet his well-wishers stop -- he has a post scheduled in ecuador before heading to bolivia tomorrow. eso much energy, he slipped out last night to greet his well-wishers. surveymonkey contacts online polling. sheryl sandberg says she wants to build a lasting company. and 20 racers crashed yesterday in belgium. one driver suffered a back injury and quit the event. it was a 3300-mile marathon. many of those riders will be pain for a few days. brendan: we were talking about this earlier -- i am always amazed to read about this code among the riders, about how they try to protect each other even as they are competing.

vonnie: it is all about formation. likes in soccer -- brendan: is that where we are going? tom: we've got the 10-year yield not -- plunging is maybe a strong a word. the euro touching new weakness $1.0967. let's look forward on "bloomberg surveillance" to this hour. the german two-year driving ever lower. we will take a graphic look at negative yields in switzerland swing in germany. and then a conversation with mohamed el-erian on a need for pragmatic compromise upon greece. sarat sethi will give us wisdom on yellen's new move. she must be buffeted on china and greece. brendan: brent below six he dollars a barrel for the first time since april. francisco blanch spent all fall telling "surveillance" what is

happening. today, stocks falling in china is that what is driving brent? francisco: no, there is a combination of factors, seasonal factors, but in this wrong deal a huge factor for the euro market. the greek story has definitely not helped. certainly, look, weakness in china -- all commodity is lower, but that is not the main story. there are just a lot of negative headwinds on the market side. brendan: we are talking politics and news, events driven by headlines. what does the overall trend look like? is there a way to get the politics out of that and look at the overall economics? francisco: yeah. things are week, producers are now having to go and sell their output forward for 2016. one of the things people may not have picked up in the last couple of days is that of all the moves down, has happened of

across the entire curve. in other words, there has been a big selloff in 2016 prices for oil, which is rather unusual. tom: let's back up on this. the media and our audience focus on the pros, who are looking on a that's 22016. that that is ugly, isn't it? -- a bet to 2016. that bet is ugly, isn't it? francisco: mexico u.s. had great yields and great companies, and canadian remember, all of these companies are pretty lover going into next year, which in my view means that -- are pretty leveraged going into next year, which in my view is a blended basis. tom: i am looking at a blended basis, $96, $91 on bsy. that tells me stronger dollar. not only do i have challenging microeconomics, you have got a dollar pushing against oil right? francisco: that is absolutely

the case. just to give you a sense of the sensitivity, a euro parity puts is around $62 on average for next year. if we bet a $120 number, we get to $7.3 -- tom: so from $62 -- and then what was it -- francisco: $120 $73. that can create a swing. tom: but brendan, if i get mark chandler, $90.90 or $90.81. -- francisco: it probably gets you into the mid-$50's on average for brent. brendan: we do not have to ask hypothetical questions of people who are not here. does janet yellen he to be paying attention to the price of oil in 2016? guy: i thinkest: i think so.

if this is going to be another what we would think of brent prices down in terms of deflation, then that is going to affect her ability to raise rates because you do not want those two factors -- tom: can you buy big oil here? is francisco blanch's world an opportunity for you? sarat: we do not think so. we think longer-term -- and i would love to hear your view on this -- when oil goes up again, people stopped producing more because credit will come back or they have to produce because they are highly levered. how do you make money? using companies -- tom: great conversation, getting off our summer of oil. francisco blanch, thank you very much, with bank of america merrill lynch. a conversation with mohamed el-erian. of course our hans nichols is in brussels where. the headlines have been a jumble but clearly europe is

waiting for greece's next move. el-erian next on "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance." markets have a weight to it right now. equity markets up 7, now up 5. i am watching the 10-year yield go to a 2.27%. let's go to top headlines with vonnie quinn. vonnie: european leaders québec

to the bargaining table today in the greek debt crisis, the cash crunches hitting home. lines at atm's across greece are growing. people are withdrawing what little they are allowed, less than $70 a day. the banks will not reopen until thursday. alexis tsipras is expected to outline a new plan to please creditors and get new loans. finance ministers are meeting now, and top leaders will sit down later. germany's chancellor outlined what she expects. chancellor merkel: this means that tomorrow it will be imported at the greek prime minister tell us how to proceed and what proposals he can offer us regarding a midterm program that will lead greece back into prosperity and growth. vonnie: the meetings are the first since sunday when the greek offered what they wanted in exchange for rescue money. another deadline and nuclear negotiations for secretary of state john kerry and his iranian counterpart met in

vienna. the u.s. and other world powers are offering to lift sanctions if iran promises not to build atomic weapons. south carolina's senates of the confederate flag should be removed from the capitol grounds, but a second ground vote is needed today. the rebel flag was raised over the statehouse to protest immigration five years decades ago. horizon pharma offering to purchase depo med, the developer of drugs with extended release time. and the women's world cup final is the most watch soccer game in u.s. history. more than 25 million viewers tuned in funny to see the u.s. defeat japan on fox. that is topping ratings of the nba finals or even the world series. the previous soccer record was set last year for the men's

world cup soccer game. tom: it is really impressive. brendan: it is amazing to watch a, tension grows throughout the entire tournament, not just be final where we play japan, but really the first round. tom: what do the players do next? vonnie: they go back to their professional -- brendan: sadly, they do not have the stanley cup, so i do not think they all get a day with the world cup i they can take a fishing like they do with the stanley cup, but sadly, there are some veterans who are retiring. abby wambach i think she is the most productive american player and among the top scorers internationally, period. she had been waiting for that her entire career. she had actually never won a world cup. tom: to the bloomberg terminal -- i did not know this. this chart, really, you are kidding me -- a german tw-o-year down to a 2.27 negative rate.

greece is up in the ceiling of our world headquarters at 53%. the wrist week in way below greece. this shows the great distortion with a real economy who had successes like sweden and switzerland crushed by greece. can america be the next sweden or switzerland? guy:est: i do not think we will go that low, but this is giving you the classic example of where risk is off come and right now people are running to safety and saying i am going to give you money, and guess what, i am a going to actually pay you. tom: just to be clear -- wait the screen moved. did you see the gremlin move? the bottom line is this is this is under-the-mattress money. sarat: you're afraid you will lose even more money if you move into riskier assets. that tells the people are getting scared. brendan: can sweden switzerland, denmark do anything to keep the money out of the mattress? it just dropped his overnight

rate earlier in july. sarat: not until the european union gets the old greece situation -- there is too much risk off at this point. tom: very quickly, the heart of the matter, our listeners come our viewers want to know -- can they have confidence to be in the u.s. equity markets with these oddities surrounding them? sarat: i think we have more transparency here, we have more ability, and we have been through what they are going through right now in terms of printing money. if you look at kind of where we are, we are in a better economic cycle, more stability, more employments, we have got better things going on in our economy. you can land and get a 2% rate. tom: so quickly, you are long today. the bottom line -- you do not change anything because of athens or brussels? sarat: i do not think so. you look at the fundamentals. the thing we are not talking about his we are starting into earnings season. that will be important and will drive our markets are. tom: vonnie quinn is going,

"yes!" equities, bonds, currencies, commodities vonnie: no, i was waiting for someone to bring it up. sarat: where is the consumer with this? tom: sarat sethi with us. dow futures up 38. brendan: this is "bloomberg surveillance." i am brendan greeley with tom keene. someday we will stop talking about greece. someday is not today. tom: greece as you know in crisis. we see that within the headlines this morning. adam pozen yesterday suggesting on the show that the challenge will be fixed in some ways very soon, and angela merkel will provide key leadership. all thepaul of lsc looks for a restructuring to might of media growth to greece. -- to provide a media growth to greece. hamed el-erian has written more in the last week than i believe i have seen in his entire --

mohamed el-erian has written more in the last week than i believe i have seen in his entire career. as you write about this crisis what we write upon? mohamed: i am still thinking about it, but i think it will keep an eye on two things. and good morning, tom, thanks for having me. one is what is happening in brussels and then what secretary jack lew called the pragmatic compromise, and secondly much more importance what is happening on the streets in greece. this economy has been subjected to a sudden stop. it is grinding to a halt, which has two immediate and locations in addition to the human tragedy. it is a much more expensive economy to save and a much more harder economy to save policy wise, so do not ignore what is going on underground in greece. tom: you have been out front on suggesting that iou's will become some form of grexit in new currency. can you reaffirm that this morning? mohamed: yes, we are going to

see it for two reasons. one is of the government needs to pay its bills. it needs to pay pensioners. it needs to baby several servants. solicitation to offer a -- so the temptation to offer iou's is very high. second, the they need to reopen the banks. you cannot run an economy with your banks closed. the easiest way to open the banks if the ecb is not providing more support is to recapitalize yourself, so the condition to issue iou's goes up everything all day especially there's no breakthrough in brussels. brendan: mohamed, when scrip appears on the streets in athens, does that signal a departure from the euro? mohamed: we have seen this movie many times and we've seen a of course and american markets. one of the tragedies of the european markets from the very beginning is that the leaders have not understood that the best insights come from emerging market crises. so what have we seen? governments are pushing to issue

iou's not because they want to but because they have to for social reasons. the next thing you know, the iou will start creating internally at a discount to, in this case the euro, and they start evolving as a parallel currency and the next thing you know, you have a parallel currency system, but with one big difference -- you control one of them, the issued's iou's, and someone else controls the other. tom: you mentioned the emerging market, i want you to explain to me, dr. el-erian, how stanley fischer does not turn to janet yellen and say, "you have to delay until these markets stabilize." mohamed: for two reasons tom. first, greece is small, so the economic contagion is very little. greece is not even factor in the trading partners, and the impact to europe will be very small. the reason why you can for now

brushed aside the greek element when you look at u.s. rates is ugly because economic channel is not that important. secondly, as was said earlier on your show, u.s. investors have had a long time to get out of great assets, and most of them have. there has been a massive transfer from private creditors and taxpayers. when you look at the contagion elements, you only worry about 1 -- the technical contagion which is you get a spike in risk aversion. so far, the markets are managing this process very well. vonnie: mohamed, with the sugar high from the no defined vote gone, our greek voters now in a worse position to you think? mohamed: i think what you heard from greece is very important. the thing that immediately came into my mind on sunday was the scene from the movie "network" when people start opening their windows and shout out, "i am as mad as hell and i will not take this anymore." the greeks want people to

understand the massive tragedy they are going through, and that is how they voted. the touching moment is 11 came up and said, "i am not voting for myself" -- tom: mohamed we have to leave it there, good morning everyone. ♪

tom: good morning, everyone.

"bloomberg surveillance." we have had a huge response to our twitter question -- no not on greece, not peace and our lifetime, it is a starbucks question. starbucks is raising prices today. will you be downgrading to a grande? matt miller has never had a grande in his life. starbucks is, like, iconic. you're going to cover it today. we are covering it. it is a big deal -- raising prices. matt: it is, although not for the grande only the tall in the and the venti will get an increase in prices. they are really pushing everyone to the grande. most of us, let's be honest, only drink ventis so they are making you healthier by giving you less coffee, and i guess you are saving money. vonnie: coffee prices are actually down 27%, so it is a weird time to see an increase in prices. matt: my main concern on the coffee front is greece. we heard yesterday from a number

of people that coffee imports are slowing to a halt, and there will be a coffee shortage, a scarcity of coffee in greece here it and match and if an entire country did not get of its morning cup of coffee. brendan: i notice also the prices are not going up on frappuccinos, which tells you what is going into frappuccinos is not the beans but a lot of other value -- sugar and chemicals. i want to talk about virtu. you have got the ceo coming on your show today. matt: yeah and it is fascinating because number one there is a lot of talk about high-frequency trading because yesterday survey declared not guilty -- sergey said not guilty. the momentum, that story, and his company, virtu is a high-frequency traders that did not go public last year. in may they got into china

because commodities trading in china is so volatile right now that it is a profitable business for them. he also happens to be the co-owner of the florida panthers, which i thought tom found interesting, though i was told the florida panthers suck. tom: they do, but they are trying to make a restructure of it. brendan: what are they doing in the commodities market right now? matt: they are making markets for high-frequency traders, they operate all around the world, and apparently chinese commodities -- although the market obviously has tanked, it has been incredibly volatile and that is great for a high-frequency trading operation. brendan: hooray for iron right now, we are watching it tank. vonnie: we will keep an eye on chinese markets. brendan: yes. matt: we are looking forward to it, you will be with us through that. brendan: all right, matt miller speaking to the ceo of virtu

financials, he will be on "market makers" this morning. starbucks is raising prices today. will you be downgrading to a grande? or will you just be buying a frappuccino? tom: he uses the fontana white chocolate sauce and everything. brendan: matt miller drinks tea. this conversation is a relevant to him. it is relevant to me. i need it. let me know @bsurveillance. good morning. ♪

tom: good morning, everyone. "bloomberg surveillance." let's get to top headlines with vonnie quinn. vonnie: thanks, tom. one hiker is dead and four are hurt after april of -- after a partial collapse in washington state. the effort was stopped yesterday to protect rescuers from further collapses. authorities say warm temperatures are causing chunks of ice to fall. the mountainside park is now closed. teva is planning to raise its offer for competing drug maker mylan. bloomberg news is reporting that a new $43 billion offer may be announced this week. mylan is also pursuing an

acquisition, trying to buy an irish drugmaker. ill tempered movie dinosaurs did not dominate the box office after all. "jurassic world" is the top u.s. draw. the animated movie pulled in just $30 million. those are the top headlines. tom: i watched it. vonnie: you did? you are only telling me this now? it is tuesday. tom: i was dragged to it. i was pleasantly surprised. i have a crush on discussed. she is in green. for those of you on radio, "inside out" by pixar. vonnie: did you learn a lot about yourself? [laughter] brendan: keep talking, oh, keep talking. please do not let us move on. tom is talking about his

imaginary friend. tom: let's move on. a crisis in greece for u.s. investors looking this july. well, the bubbles burst it in china. there is a real question about the u.s. economy. we know this earnings season also we have to get back to the fed as they dash to september. there is no one better to speak to about the parlor game than sarat sethi of douglas ec. l ane. vonnie mentioned earnings. do you see a shift in the overall economy from gains to gains for labor that will change the earnings in the revenue picture? sarat: two things you have to watch for, now that oil prices have come down for a couple of quarters, consumers have been taking their savings and not spending it. will we see some of that, will we see the retailer cedi sales are picking up, consumers are going out? will we see hotels, will we see restaurant saying there is more spending?

we think that will happen, we think consumers will bit down their debt, but every time there is uncertainty in the world, maybe people pull back, maybe they do not. what is the dollar doing? the dollar has been strong. that will affect it, too. we think more positively companies will say things are getting better, and yes, prices are increasing, labor prices are increasing, but i think earnings are going to get better going down the road. brendan: looking to the fed, i will do something tom hates, i will get into the weeds a little bit. i was poking around in the terminal, and what banks hold the on what they are required to hold, it hit a peak last the timber and has been dropping since trend wise. what does that say to you? sarat: that is something we have been seeing with the banks as well. before they were afraid to lend money, so they were holding the reserves, small businesses were not getting the capital they need it. you are seeing that liquidity now flow through the system, so companies are spending money. hopefully that multiplier effect -- that is what we have been trying to do.

that is the whole reason rates were so low, so have the banks lend, but the banks were so afraid after the last downturn this could pretend to be something better for the economy, banks will actually make money on the spread, and if and when rates actually move, it could be a place to be -- regional banks that are lending money to small businesses, to consumers that are going to go out and actually spend money and then actually do things that are better for the economy. brendan: it is such a low hurdle to clear. it is amazing that we are excited at the good news that banks can do something better with their money. sarat: right, and there has been so much negative press about banks. banks have been put in to the penalty box because of what they did in the crisis. but this is something we wanted to see. these are good indicators. you see pricing coming up, oil prices coming down, more liquidity in the system. that could be good for equity markets, which actually need a boost. tom: is greece an opportunity to

buy the visible friendly names of europe?we all go to siemens we go to total of franch.e. sarat: the opportunity is there when you go to the nestlés of the world, all the copies that are adr's but they are affected, and then if you headed out in the dollar gets weaker, i think when you buy the good international global companies they are well devised the fight -- they are well diversified but they are on sale because of liquidity issues. vonnie: buy euros, then the companies. tom: a 3.2% yield. sarat: buy some of the good quality companies that get soul because they are in the basket. tom: what is the number one mistake investors are making right now? sarat: the biggest mistake we see all the time is timing.

investors say oh, it is going to get really ugly, the fed is going to raise rates, the markets going to pull back. standard allocation and then moved to where you think. these will benefit from potentially rising rates. consumers will benefit, who is not going to benefit, right? so look at that. the whole institution trade could actually hurt people. when you have 4%, 5% dividend yields that are not growing that is an area that right now looks really good because it is flight to safety, flight to quality, but you have to have a balanced approach. find a company growing dividends , find a vastly growing dividends. what is wrong with that as opposed to i have a 6% dividend but i have not grown in two years. vonnie: give us one. sarat: i like nestlé for that, i like qualcomm -- tom: the apple no one talks about. sarat: right. it has the underlying fundamentals -- yes, china is slowing down, but fundamentally, no debt, increasing dividends, and you have activists now. vonnie: is it fair to say you

are looking for better forecasts? sarat: absolutely. i'm not looking for -- what is the next quarter doing? -- i want to see a trend, that things are improving, getting better. tom: sarat sethi with douglas c. lane. we have a small twitter response today. vonnie: we had a tall twitter response. brendan: nice. [laughter] vonnie: no, actually a venti response. our twitter question was -- starbucks is raising prices today. will you be downgrading to a grande? tom: that is, like, smaller than a venti. vonnie: it is. it is the medium in dunkin' donuts world. no, i will leave starbucks, now i can get it for the same price, a poor over from a local roaster he. brendan: in brooklyn. vonnie: or argentina. tom: mac swap. you do not get it at a local roaster he. --roastery.

vonnie: sometimes we look at our second answer, and here it is today -- starbucks started social engineering. we will never return. brendan: that will stay with them forever. vonnie: i go straight to the diy beans method no middleman, no arbitrage, pure cup of joe. brendan: what your grandfather referred to as coffee. tom: i have to go to the radio my agenda is greece. we will be watching. the main message is soggy markets. there is a weight to everything. brendan: all right, tom, you have got to get to radio, take that agenda with you, go. vonnie: i have an agenda as well as you. brendan: my agenda is the iran deal, looking at the headlines trying to make sense of it. what we are getting from indira lakshmanan is there is no new deadline that will be available, which means they have got to get it done now or never. that is one of the things we heard yesterday from frederica

marini from the european headlines. vonnie: if we do see an actual deal, this is two years in the making -- brendan: one more thing that barack obama could get done by the end of his presidency. vonnie: yep. i will be looking at international trade, out at 8:30 eastern, get some fed speakers later in the week, but it will be the first time we could see a lot to do with the stronger u.s. dollar, the weaker euro, and gdp data as well of course. brendan: sarat sethi, what is the one these of data you will be looking at this week? sarat: i am going to be more importantly just looking to see what happens in greece. brendan: ok. sarat: that will dovetail into a interest rates, to what the fed is doing, which after that earnings -- earnings are very important, but if you have this macro economic fog, it will be very hard for the markets. brendan: all right, we will try

to cut through the macroeconomic fog here on "surveillance." sarat sethi from douglas c. lane, thank you for coming in. "bloomberg surveillance" continues on radio. up next on bloomberg

>> live from bloomberg headquarters in new york, this is "market makers." stephanie: good tuesday morning. you are watching "market makers

." i'm stephanie ruhle. matt: i matt miller. erik schatzker is on his way back from greece. stephanie: in this hour, we would take you on a world tour. matt: companies mentioned include apple, disney, ibm, samsung, and starbucks, so stay tuned for a packed hour of news. stephanie: we have a lot going on. i want to kick it off with the top news stories of the hour. european leaders are running out of patience with greece. i will say that is an understatement. alexis tsipras is in brussels today for a eurozone summit. it is a last-ditch attempt for him to get a lifeline from europe and keep greece in the euro. angela merkel says time is running out. >> we have shown much solidarity with greece. our last