manus: shanghai surge. stocks hit the biggest one-day gain since 2009. the chinese unveil more market boosting measures. midnight deadline. greece scrambles to pull a plan to keep the crisis-hit nation in the euro. contagion concerns. fears over greece and china. today's bank of england rate decision will discover whether carney has pulled an acute greek risk.

welcome to "the pulse" live from bloomberg's european headquarters in london. i'm manus cranny. the shanghai composite index posted the biggest one-day move since 2009 after chinese authorities introduced more measures within an attempt to restore confidence in a stock market that has taken a battering in recent reeks. regulators announced that banks can roll over loans backed by shares after officials banned major stockholders from selling in affected companies. having marked 10 days of actions by the central bank by regulators, by the government, does it look as if this is a short-term -- at the moment? >> that is the question isn't it manus? it worked for at least one day. another day of wild swings

manus. the index dropped to 3.8% at one stage. it rose as much as 6.9%. the most since 2008. the government battling to restore investor confidence in this market. they have unveiled market-boosting measures almost every day the last couple of weeks. late wednesday regulators banning stockholders from selling shares. they announced on thursday that banks can roll over loans backed by shares. china's public security agency is stepping in to investigate. malicious short overing stocks according to the exinwa news agency. about 600 stocks today rose on the benchmark index. another 1439 companies were halted on trading. that means they are lobbed out of 30% of the chinese market.

yesterday at least 1,300 companies halted training on mainland chinese exchanges locking up $2.6 trillion of shares. about 40% of the market's capitalization. given that so many stocks are suspended now, many strategists think the selling pressure may still be there. margin is the big phrase of the last few weeks. unloading 112 billion won. 18 billion of shares purchased with borrowed money on the shanghai stock exchange on wednesday. the 13th straight day of decline. let me show you what happened today. there is the shanghai composite over the last year. 3.9 trillion dollars has been wiped from the value of chinese equities through yesterday.

i love this function, manus. i'm going to keep returning to it. this is the function that shows the market capitalization of stock markets around the world. look at china. the market for china is 6.1 trillion dollars. 3.9 trillion dollars has been wiped from the chinese stock market in the last three weeks. 3.9 trillion is bigger than the u.k.'s stock market. it is worth 3.6 trillion. it is bigger than the french stock market, 1.9 trillion. bigger than german stock market which is worth 1.8 trillion. it is astonishing. how is the market valued right now, manus? the median price to earnings ratio in china has dropped to 53 from 108. the height of the rally. evaluations, though, are still more than twice as high as those on the s&p 500.

i want to show you the hang seng index. this is the intraday chart. it rose by 3.7% today. earlier it rose by 5% the biggest rise since december 2011. you'll remember the market slumped by 6% yesterday the biggest drop since 2008. interesting call from fund managers l.t.g. group and capital investors. they say the steepest drop since 2011 is a buying opportunity for hong kong shares as authorities stand ready with steps to boost the mainland's economy and very quickly hsbc says the worst may be over for chinese equities and they have reiterated their preference for eight shares the chinese listed shares in hong kong. it is exhausting even talking about it.

manus: i suppose that is the debate out there. as to whether this market offers value after such a -- and that is the question. let's cross over and talk about the measures. tom is in beijing for us. mark was outlining again another set of measures. if you ever wanted to try and participate in a market which was dirty and i use that in a sense of utterly stood up and supported measure after measure after measure, this is a series of interventions. this is not a market that you necessarily say has any real value at all. >> i think that is a very real question manus. china's government has said consistently for the last several years it wants the market to play a bigger role in the economy. it wants to market to play the decisive role in allocation of resources.

that's how they think they are going to put the economy on a sustainable growth trajectory in the last week or two in the mainland market that is not the current direction of policy. astonishing intervention as the government bans major shareholders from selling 50% of stocks in the mainland markets. have been suspended so no one can buy or sell them. the central bank wading in to provide liquidity support. the ministry for public security saying they are going to investigate malicious short sellers. whether or not the government succeeded in drawing a line under the fall in the market and on the evidence of today's 5.8% rebound in shanghai, they might have done so, i think it is certainly true they have taken a step back from that bigger market agenda.

manus: tom, let's see what happens. what more measures they bring. putin saying china faces economic difficulties. this is the issue. wanted ux more market participation. tom in beijing. thank you. just days before the peak on the shanghai composite, bill gross called called it the short of a lifetime. the index has fallen more than 30%. unfortunately gross paid too. >> the chinese market is a bubble and that the bubble has been popped over the past two or three weeks. to my credit, yeah. that trade has been right on even though we didn't do the trade. manus: we're joined now by the editor and publisher of the gloom, boom and doom report. he joins us from shanghai.

great to have you with us on "the pulse." let's get to it. 3.6 trillion dollars wiped off the chinese stock market. how worried are you about china and the meltdown in the equity market? >> well, there are two issues here. a, the stock market and b, the economy. the economy has been weakening very considerably. i think that could be a period right now where there is hardly in growth or even in some sectors there may be a contraction. car sales in june were down year over year. the first time that car sales have been down for a very long period of time. exports are not performing particularly well. imports are down. a symptom of all of this, a weak

industrial commodities prices. they didn't go down because over the stock market weakening. they went down because of economic we canness not just in -- weakness not just in china but globally. a year of accelerating growth. i think we'll end the year essentially in recession. but the stock market in china is another subject. as you know, it went up by more than 100% over the last 12 months. and it became a bubble a couple of weeks ago. and since then, the bubble has bust and lots of people lost a ton of money. and confidence has now vanished. manus: what kind of growth? you just used the word recession

there. the world expects a rate of growth in china of around 6.8% to 7%. are you saying that china is going to -- or are we talking about a global recession? >> i have to say i wonder who is expecting a 6.8% growth rate in china? yes, i will tell you who. investment banks that want to do business with the government and refrain from telling investors the truth about the state of the chinese economy, which is a much, much worse than what the government publishes and the investment banks that are kowtowing to the government of china. manus: what is the real rate of growth then? >> at the present time, as i said i think there is probably no growth. growth before of around 4% maximum. but this is maximum. at the present time, i would suggest that some sectors are contracting. some provinces are contracting.

others may still be a mild expansion. overall, my view would be that there is no growth at the present time. manus: if there is no growth in china, that is a big have you for us in europe and for the federal reserve. let's deal with both the issues. no growth in china. bleths generous. call it 4%. i don't want to wipe out china. does that stop the federal reserve in its tracks from being able to raise rates in the united states? >> the fed can raise rates. it is no problem. but knowing the way they think, they will use any excuse for not raising rates because they are afraid that may be it will disrupt the market. i think the fed is looking at the s&p 500. if the s&p 500 -- may i remind

you it is not even down 5% from the top. it is down less than 100 points and it is likely to rebound strongly in the next few days. but if the s&p were to drop, say, 20%, i think the fed would actually initiate q.e. 4. manus: so no rate hike from the united states and the possibility of q.e. 4. what would cause the u.s. stock market to drop by 20%, mark? >> i don't know. may i remind you that airline shares are down 30%. a semiconductor company is down almost 50% from its high. g.m. is down more than 20% of its high. so you ask me what causes stocks to go down? they go down because they are overvalued or because the stock

market is a discounting mechanism. the stock market is -- something is not quite right in the world. manus: we'll hear from the i.m.f. later and what they think about growth. >> row mention the i.m.f. manus: why do you laugh when i mention the i.m.f. ? >> because i wouldn't listen too much from central bankers, the i.m.f. , the e.c.b., all of these people. these are academics. manus: let's talk about the reality of the markets. we're looking at the possibility of one family in europe being pushed out. greece, will they make it? should they stay? should they stay or should they go and have their new drachma and allow greece to flourish again? what is your call? >> my view what will happen and what i think should happen might

be two different issues. what the best would be for greece and for the e.u., but it is costly, is to kick them out and for greece to live the e.u. it creates a mess in the near and in the immediate term but in the long run, the greeks would be on their own. then they can solve their own problems instead of relying on credit from the e.u. and the e.s.m. and the e.c.b. and the banking system. remember, before greece joined the e.u. greece had a very weak credit. nobody really would want to lend money to greece. but after they joined the e.u., because over the so-called convergence trade, greece and also other countries like portugal and italy and france they could borrow money at very

low rates because you had essentially the e.c.b. led by mario draghi. saying whatever it takes. whatever it takes, now they can prove whatever it takes. they can give more money to greece. but it is not going to be good for the euro and it is not going to be good for the e.u. the best would be a split. manus: we'll have to leave it there. thank you so much for giving us your time this morning. q.e. 4. stocks under pressure. a real rate of growth in the china market of some 4%. that was mark far ber. joining us from china. we finished talking with him about greece. they are rushing to pull together i suppose the details of the document to submit by midnight. that is the deadline for the economic package to convince

e.u. leaders it can stay in euro. meanwhile capital controls in greece have been extended through monday after the e.c.b. kept its funding for banks unchanged. guy johnson is in athens for us. hans is standing by in brussels for us. guy, let's go straight to you first of all. can greece meet this deadline? what is the sense there on the ground fingerprint this is a lot -- what is the sense on the ground? this is a lot of details. guy? guy: they will meet the deadline. they will meet the deadline because they have to put the proposals up. whatever proposals they put up, they will meet the deadline. question is as you say manus, what are they going to be? in talking to the parliament, talked about the fact that he would put forward very specific

measures. my understanding, that letter was better received than the previous letter has been. you talk about the fact that it is going to have to be tougher retirements. the greek economy is flat o its back now. as a result of which the deal just has to be a little bit more harsh because the numbers, the size of the economy simply are not what they once were. yes, it is going to be a lot tougher than it was and that is the big question. can the greeks stomach that? i think that is what wire going to find out -- we're going to find out over the next couple of days. manus: we have where i know the up as a fuller story. mario draghi having made comments and saying basically it is going to be tougher. draghi says this time it is really hard to find a greek solution and of course that takes us back to the issue of the banks, guy, doesn't it? this time it is really

difficult. an e.c.b. spokesperson declined to comment on these reports, i should add. guy: it was a fairly open question he was asked. he was getting on a plane in brussels when he was asked the question. it is worth noting i think it is but the banking story remains front and center. there is all kinds of rumors swirling around here about whether or not this greek banks will be merged. we'll wait and see what happens on that front. if we don't get a deal monday morning that may be a reality. it is all down to whether or not we get a deal. the e.c.b. met yesterday and will meet again monday. there is talk of some of the collateral being guaranteed. manus? manus: monday morning is going to be perhaps one of the most -- moments in greece's history and

market history and it may well be in the greek banks and we move the all other considerations. guy, we'll speak to you later in the show. let's switch our attention to hans. you're in bruzzles for us. again, what is being said on the issue of greece? madam lagarde, report came out friday that trumped everything saying there is a need for -- to reconsider the debt. she is saying you need a two-pronged approach to greece. hans: and madam lagarde joined with the u.s. secretary. the first time the americans have come out and put their thumb on the scale and said yes greece needs a debt resturring. listen to how madam lagarde had to say it. the timing of when she said is it important. >> we have always advised that programs move on to two legs, if you will. one leg is about significant

reforms. and physical consolidation. as we have advised in the case of ireland, portugal, cyprus and outside the eurozone, iceland and it has worked. and the other leg is debt restructuring which we believe is needed in the particular case of greece for it to have debt sustainability. hans: a quick comment from here. we capital controls need to be in place until you have a new deal. manus? manus: let's leave it there. guy johnson and hans nick nols brussels. still to come on "the pulse." what caused the new york stock exchange to close for almost three hours yesterday? we'll have a look at that coming up next. ♪

manus: welcome back to "the pulse" live on bloomberg television and radio, streaming on your tablet and phone and bloomberg.com. official minutes from the federal reserve's june meeting show that officials saw the u.s. economy moving toward conditions that would support an interest rate increase. however, they also expressed concern about the risks from china and greece which have only intensified since the june 15-17

meeting. the bank of england will make its latest interest rate decision later. 41 economists surveyed by bloomberg forecast they will keep the rates at a record low 0.5%. millions of londoners are contending with the strike. i have that to look forward today. the 24-hour walkout dwan at 6:30 yesterday evening. the mayor of london boris johnson described the action as divisive and unacceptable. probably behind a computer mall naungs knocked out the nyse for three hours yesterday. >> for three hours and 40 minutes the u.s. stock exchange halted all trading and the world didn't come to an end. the technical glitch forced the

company to cancel all floor orders and send them back to specialists. trading in u.s. stocks continued at a higher clip than average as they went through dozens of other exchanges. tom farley told bloomberg that was his focus. >> the most important thing, hippocratic oath. do no harm. my first concern was do no harm during day. those stocks continue to trade elsewhere. get the problem fixed and back up and running by the close. >> the dow jones industrial average resuming trading where it left off. less than an hour before the close although they are rare on this scale computer breakdowns have become a fact of life for american investors operating in a market that is sped up and spread out. nyse management said the problem

was internal and not related to cyberbreaches. farley said it was more likely to do with a software upgrade gone wrong. matt miller, bloomberg, new york. ♪

manus: welcome back to "the pulse." i am manus cranny. shanghai ins -- shanghai index has posted. chinese authorities introduce more measures in an attempt to restore confidence in the stock market. regulators have announced banks can rollover loans backed by shares. that after officials banned the stakeholders from selling

shares. he will walk away from a bad deal. negotiations are continuing in vienna with the deadline pushed until tomorrow. the biggest differences are on and ran the demand for the immediate lifting of sanctions and an agreement on new punishment should the deal be breached. greece rushing to a med night -- to a midnight deadline to convince european leaders a can stay in the euro. alexis tsipras's government has one last chance for a credible plan. let's dig deeper into this

story. greece races to that deadline of midnight tonight. head of the imf said the jewel -- the jewel of reproach are needed to get greece out of the black hole. >> we have advised that the program walk on two legs if you will. one is about significant reforms and fiscal consolidation as we have advised in the case of portugal, cyprus and latvia iceland. it has worked. the other leg is debt restructuring, needed in the case of greece, for it to have debt sustainability.

mass says you are today's man of greece. it is a moving piece. they are struggling to put together a proposal. i had a conversation and he said it was a frustrated detail. how realistic is that going to be that it is going to be enough to satisfy the alliance? >> it is likely to come with a thick french accent. a lot coming from both sides to make sure athens will put something together. lots of progress on the european commission, probably from some friendly countries, who have turned vocal to avoid the grexit. in the end, it is not necessarily the cop call -- the economics and politics of this. what is requested from mr.

alexis tsipras is to ignore the referendum and come up with something which is slightly tougher than what was an offer before the referendum. manus says that is political suicide. there is precedence for -- we have had to preference -- two referendums in europe. governments and parliaments found a way to push through. you could call it --, when you are faced with the of this. it dawned on the greek side late that the europeans meant

business with grexit. since the prospect of the grexit is here, it is focusing a few minds. how far germany can go, that is another issue. we have heard christine lagarde call for restructuring. manus : will that be in this? >> we have had tougher marks from a spokesman. any kind of debt restructuring. it takes a complete -- for it to go through. manus: the economy is under

pressure. we will get more data at 10:00. is he going to have to sign something worse than what was on the table with younger -- with juncker? >> the stopping point has changed. a few months ago, annie kind of stability said they would have -- and we have lost both of those. in any case, you have to offset this and come up with something that is credible. you have to accept the fact that the starting point is worse. the other side of the equation if you do not say now what kind of quantified debt release --

debt relief greece can count on, it it is artificial. we are going to ask a certain magnitude of fiscal tightening on the basis of the current level of debt. if we learn this is -- some of this will be less. manus: why have a negotiation? you're going to jump off with a baseline of the debt being the same as it was saturday week ago. it is a misnomer. you cannot move forward under that assumption. >> it is about politics, creating a sentiment in germany that -- all of this referendum was a waste of time. greece has expect -- greece has

accepted the rationale from europe and they accept debt relief will come later. what is amazing is that you would still find enough goodwill in the system to keep things going. if greece stays in the eurozone, it will hold a dig debt to francois hollande. this last reprieve is based on the idea that germany cannot be humiliated. the majority, if not the entirety of the gap that needs to be filled needs to come from the weak side. manus: let's see what this brings us.

chief european economist at bank of america merrill lynch. bloomberg went to me a successful boat builder and asked if the shipping industry is paying its way. >> my company is 40 years old. my family has been shipping for 150 years. this is the biggest yacht yard in the world. we sell a lot of votes. the most important thing, it is the know-how we have. big shipping families have the traditions and shipping. we know how to do it.

this is the bigger advantage. they have more tax system the greeks. i hope one day you will have common policies regarding taxes salaries and all of this. this is a small process. >> how much concern is there abovmong shipping families? >> people have a different view of life. >> they are more relaxed. >> they take life differently. manus: coming up, how good are

central banks that economic forecasting? we will bring you the details after the break.

manus: welcome back. here are some top headlines. vladimir putin has welcomed his

chinese counterpart to russia, saying they can't overcome economic difficulties i working together. the chinese leader will attend the brakes -- the brakes -- brix trade summit. a computer software was responsible for knocking out the new york stock exchange for more than three hours yesterday. tom farley decided to suspend trading when it became apparent that investors could not rely on the market to provide accurate data area >> we chose the least disruptive planned for customers. manus says: a 24-hour walkout began

at 6:30 yesterday evening. the mayor of london described the action as unacceptable. and analyst expects no change. jen bryan cranston numbers. she joins me on set. -- jen brian crunches the numbers. she joins me on set. bank of canada, why do they get it right. >> there are a lot of economic factors. the recession put a hole in the

forecast. the most complex economy was the bank of japan. manus: i did read this story. great story. great interactive graphics. they all underestimated the downdraft. they sailed in terms of catching their view -- they failed in terms of catching their view. >> it is a fairly well-established idea. we know a lot of people did not

see it coming. manus: it is a question of our way building? do you think it is going to change anything? give me your crystal ball for dissent. not a lot to do in a minute and a half. >> what the budget looks like is continued austerity. similar to what happened in the last parliament. that means roughly offsetting with monetary policy. if pay starts picking up and that starts leading into

inflation pressures, that will be a signal that the time is coming to think about raising rates. manus: johnny found a new chart. looking at where interest rate hikes on the market, it is still the middle of next year. >> we had a speech last month it is picking up closer to the inflation target. leaving that aside, there is a lot of headwinds. we started talking about greece. we do not know how that is going to pan out for the u.k. outlook. manus: jen crunching the numbers

carried him next, a taste of mexico in the city of london. chipotle makes its debut. very tasty. ♪

manus: welcome back to "the pulse."

chipotle has opened its seventh london-based branch. the business boss says bigger expansion plans lay ahead. >> we have three stores open in london downtown. here, you have international workers. [indiscernible] good food fast, is what chipotle is about. [indiscernible]

people are willing to try new concepts. it is a challenge. you know there is strong and -- long-term, 20 years down the road, [indiscernible] manus: that looks like a hearty lunch. do they do a low-carb version?

oil rebounded from its tech line. -- from its decline. mark barton has looked at the details. mark : love this quote. that is your four horsemen of the apocalypse. we do not think it is apocalypse now. are the fundamentals $10 weaker? i do not think so. this is crude oil going back 12 months. oil falling in nine out of 10 days through yesterday. it closed june 23 at $61 and one

cent a barrel. that is the green circle. yesterday, a was at $51.65 a barrel. peeking on june 10. it fell 15% through yesterday. crude has risen from the lows of the year. that is see march 17 low. -- that is the march 17 low. we are down by 60%. the question is -- what next for the price of oil. the slump will lose momentum. the economic crisis will not dent global demand.

socgen says any nuclear deal will not revive it crude export. others say a persistent surplus in oil supplies is a more important cause of the price slide. goldman sachs says resilient drilling activity in the u.s. will push crude to $45. today, we are at $52. crude oil could fall below $50 this week. the median forecast of strategist is for oil to be at $60 in the third quarter and $63 in the fourth quarter. manus: i like that -- the four horsemen of the apocalypse. stay tuned.

bloomberg the first word is up next. for our viewers here, a second hour of "the pulse." unemployment and inflation. they tuned for that. ♪

manus: stocks see their biggest one-day gain since 2009 as chinese officials reveal more market boosting measures. contagion concerns as fears over greece and china temper the feds optimism.

a good morning to our viewers in europe. welcome to those of you waking up in the united states. the biggest one-day move since 2009. chinese authorities introduce more measures. regulators have announced banks can roll over ponds. -- can roll over bonds. mark, 10 days of roller coaster moves. the bounce we had in the market is it for keeps? mark: it rose by 5.8%. look at the chart.

look at the circle. the index fell as much as 3.8%. it did rise, see the yellow circle, as much as 6.9%. it finished up by 5.8%. not a day for the fainthearted. another 1400 companies were halted. sellers were locked out of 15 percent, given that so many stocks were suspended. some think that selling pressure is still there. this is a one-year chart. in equates to a $3.9 trillion.

this is the function i love. it is my favorite function. this is market capitalization of every major at the market in the world. look at china. the value of the chinese stock market right now. that puts the $3.9 trillion decline in perspective. what does that equate to? it is bigger than the u.k. stock market. bigger than the french stock market. bigger than the german and swiss stock market. you get the gist. valuation, the median price to earnings, yes, it has dropped to 53. one big plus today, the biggest

drop since 2008. the worst may be over. it reiterated its preference for shares. manus: let's see what those policies have on the markets. breaking news on greece, on unemployment. unemployment rates in greece stands at 25.6%. this is for april. consumer price index falls. facing deflation. spiraling unemployment and structural issues. we are focused on greece and a little bit. let's go back to china. the measures mark was going

through. nick joins us now. we just had everything wrapped up. is it there to stay? >> what we are seeing is the gains are illusory at best. if you freeze trading on some 50% of the market, it is tough to get a sense of what is going on, especially when you think about the shares whose trading is suspended they would not be suspended otherwise. the only shares not suspended today were shares that were expected to go up anyhow.

i would look at the performance with a grain of salt and think there is more work to be done by the government. manus: this is japan 1990's. >> this -- when things go sour china has shown it will respond. it cut interest rates.

we are expecting to seeing more especially, the key will become trading unlocked for the shares were there is downward pressure. manus: it we will see when that moment of truth comes. thank you for joining us. let's try to break this down. what is everyone saying in terms of the chinese market? how big a situation is this? >> this is not a proper market. we are not looking at the proper index. this is not a real market. a lot of analysts look at the

stock market correlating against various commodities. it shows we are in bubble territory. we may have further to fall. we begin to see whether or not there is still pressure. we have concerns the chinese authorities need to do more. perhaps they need to do more to shore up growth potential. that is where the problem is. it is difficult to convince us chinese growth can keep targets this year. manus: market is good for a line or two about how bad things are. we have had four interest rate comps. we have artificial liquidity for

the stock market. growth is the number one priority. >> it is extending growth more than it is. perhaps it is closer to six, or less than that. these are the same issues. another issue is the cost of debt. a lot of people know there is debt and china and that it is a problem. it was glossing over some of the debt. the individual companies, and did not matter that they were holding debts. producer confidence, we saw the cpi index coming back better than expected. if we look ahead, this is going to affect consumer confidence

and producer confidence. manus: are we looking at a chinese credit crunch? you look at the fed's minutes. they were from the middle of june. they were concerned about china and greece. they refer to a meeting that is

three weeks old. manus: do i continue to buy yen? >> we have seen it selloff overnight. we have had decent data. i think the market will remain nervous. australia, yes we have seen the currency fall a lot. that got some benefit because of the australian labor. we talk about 10 year lows in iron ore. that is bad for australia. there is no bias for this.

manus: you will stay with me. we will speak more. we want to bring you these news headlines. greece is rushing to pull together a package to convince european leaders. they have one last chance to present a credible plan. the heads of all 28 countries will meet in brussels. a software update was behind a new york -- behind what knocked out the new york stock exchange. investors could not rely on the

market to provide accurate data. >> we chose the least disruptive option for customers. there was no work for customers to do. manus: risks from china and greece have intensified. the bank of england will announce its latest interest rate decision. those are the major headlines. let's bring you the breaking news.

it seems like greece is working on conditionality. he would not like a grexit to happen. angela merkel will have to use political capital on greece. politics will have to do a deal. the french are laboring to bring that forward. cipro's will carry a deed. greece owes ireland. 350 million euros. alexis tsipras has a window of opportunity. these are breaking headlines. alexis tsipras has a window. coming up with the midnight deadline approaching, can greece make a case to stay in the euro?

we are live with the latest on the story. ♪

manus: welcome back. let's give you a few more new headlines coming from mr. noonan. we have everybody on standby. hansson brussel -- hans in

brussels guy. noonan says greece has a window of opportunity. the new finance minister is impressed and alexis tsipras will carry the deal. this is an interesting voice. this is a country that went into a programming came out the other side. guy: and drop in the bucket compared with what is owed to germany. they will definitely want their money back. they are working hard to craft some sort of a deal. alexis tsipras is talking about getting a deal together.

i would say he is more amiable and easier to get along with. they are cut from the same cloth. is the greek story going to go far enough to match with the other side wants? will the party be able to deliver a deal that works out? that is the open question we do not know. manus: standby. i want to bring in jane. the discussion, where are you? this is down to the wire tonight. jane: markets have begun to say maybe they will have a patch this time. every step of the way, we have been wrong about the government. we have not been able to predict it properly.

there is going to be a rally tonight. people saying we want to stay in the eurozone. the risk of an accident has to be 50-50 at this stage. manus: it was the imf house report that raised the stakes. hans: you have to have some kind of sustainability. jack lew weight in yesterday. we heard from luxembourg. the finance minister said a negotiator should be open to having a debt restructuring. on the other side, you have the

bund this bank president -- the bund this bank -- bundes bank president questioning the solvency of banks. you have the hardline out of germany that is not necessarily relevant folks at hand. it is relevant because it gives you a sense of how much capital angela merkel have to spend. manus: guy, back to you. we have chatted about this. bank closures are a disaster. it has raised the cost of a new bailout. this is a big piece. the ecb, the solvency of the banks, the ability to get them open again, the higher the risk

of a parallel currency. >> this month's data is going to be horrendous. the fact that they are not open for two weeks is a major headache. the economy cannot operate under these terms. you think about the denominator the structure of all of this you have an economy that is very flat and it will be tough to get going again. the deal is going to be harder on the people. banks need to open.

it is something everyone is talking about. will we see more liquidity pumped in? it depends on whether or not we get a deal. manus: you referred to the data. things have gone worse. we had a little bit of growth. the greeks have to jump off of these negotiations. it has gone worse. >> the economy has stalled under his tenure. the economy has got worse. we thought it was getting better. it is going to be tough to restart the economy.

the language we have heard has not been that encouraging. what happens in the private sector is going to be critical going forward. you need a government positive. if you have those things, maybe things will start to happen. we find ourselves in a story where the economy is flat on its back. they cannot get export credit. it is a difficult starting point to start negotiations. the numbers are worse than they were a month ago. manus: thank you. guy johnson in athens, hans nichols in brussels. noonan just going on. jane, back into the conversation. noonan saying untouchable,

greece does not pay taxes. this goes back to what cipro said. tax evasion had become systemic. jane: a lot of greeks were pushed into a cash economy. they are going to take cash and spend cash. when you have businesses pushed into that environment, it makes it difficult to look at tax evasion. it would be easier to avoid tax completely. we have taken a step back in trying to get to grips with tax evaders. people in greece are suffering. you have to say, they are probably paying very low. a lot of problems in that country.

manus: we have to take this back. they were involved in the market this week. the swedes having to go further into higher quantitative easing. is that more of that? jane: it depends on what happens on sunday. since the 90's, there have been safe haven demand. they were intervening in the markets. it is interesting that if you look at the months of june before the swiss intervened may be some of the interest rate policy is -- maybe we can buy other currencies. safe haven, probably not going to go away quickly.

manus: jane foley, senior strategist. why greek ship ownership should pay more tax. ♪

manus: welcome back to "the pulse." here are the top headlines at this hour. the bank of england will make a decision later. economist surveys at the center bank will keep the rates at a record low. millions of londoners will contend with the tube strike. the 24 hour walkout began

yesterday evening. greece is rushing to pull together the midnight details to convince european leaders and can stay in the euro. the government has one last chance. let's freshen ourselves up with where the markets are. john: citigroup saying an exit is the base case scenario. a four-day losing streak and narrowly avoided the 10% correction.

strong gains on the periphery. 1.5% on the ftse. germany pushing higher by 1.5%. in the bond market,haven bid. spreads narrowing a little bit. you heard the comments. the consensus seems to be there will be a deal. the experience of the last five years. the facts in the reporting on the ground tells you the situation is getting worse and we are heading towards something bad.

the euro is weaker. we are down by 4/10 of 1%. if you are looking at the market, you are not talking about europe. you go straight to china. look at the shanghai comp positive -- the shanghai composite. a recipe for the market to finish in the green, suspend trading and tell the stockholders they cannot sell stock for six months. do you think that is sustainable? back to you. manus: thank you. let's go back to george and the united kingdom. he set out his most radical budget yesterday at lunchtime. putting the whole thing in context, richard jeffrey.

jane foley is still with me. thank you for coming in. it is interesting. he cuts the forecast. he decided to smooth the path in terms of austerity. what does it mean to you having to listen to it? >> there is the package that george osborne presented and then the economics forecast. we take the economic forecast a nice description as they are very benign. growth average is 2.4%. next year, a goes down to 2.3. a benign outlook. that is true through the forecast.

inflation below 2% until the forecast period. at some stage over the next six years, we are going to get disrupted by something we cannot foresee. maybe that gives something to think about in terms of government finances. the package itself, this is the most complex budget i have seen since 1980. more lines to the budget, more to think about, more interactions. george osborne's intent he should be refining the approach he laid out yesterday. firstly, it pays to work. secondly, if you are due to pay tax, you should pay your fair share.

manus: his perspective from the 1980's, one of the more benign in terms of growth. what does it mean for fred? jane: the implications of the budget for bank of england forecast is important. maybe it will come along soon. carney made it clear that the forecast his staff work on, the austerity is already in law. he will look at what happened yesterday. 47 billions worth. they're going to push it through and see if it changes the

forecast. it is still an austerity budget. we know they are probably on the downside. that means there is no reason to rush into height -- into hiking interest rates. it will be more interesting policy meeting. i do not think the majority are going to be in a hurry to hike interest rates. the >> i think you are right. i think they are behind the curve in terms of interest rates. they should have started to raise last year.

manus: where is the inflation? is that -- i thought they undershot on the inflation targets. >> only because of external influences. when you look at inflation, the headline number, disaggregate that in your mind. what are the external implements? take those out. when you look at pressures, they are clearly picking up. that was ignored earlier this century. that is why the economy overheated. you look at average earnings numbers, they have picked up sharply. we are almost at record levels of employment. we have record levels of job

vacancies. this is a tenths situation. manus: let's talk about the federal reserve's. they are finding it tough to stand up and say it is time to hike. >> they are in the same mood as the bank of england. looking for excuses not to increase. greece and what is going on in china, other emerging markets are providing them with that excuse. they have similar circumstances to the u.k.. you have to understand that the art of monetary policy is not to react to what happened yesterday. the art of monetary policy, the reason you have highly paid people is to anticipate what the

economy is going to look like in the future. the forecast is inconsistent with inflation remaining at its low levels. it is going to pick up. it is going to create pressure in the late market. manus: jane, the whole fed debate could be that the said goes too soon. jane: there are similarities. the similarities are that there are pickups. in terms of the labor market we look at productivity growth. potentially, you have more low skilled workers getting jobs. >> that keeps inflation down.

low productivity growth means you are sucking in more labor and you are paying more for labor. jane: you are giving jobs to workers -- manus: and that keeps a lid on -- jane: we have had an increase early. i would think a productivity would keep a lid on that going forward. >> you are not worried about the pickup in average earnings growth? the pickup in eci growth in the usa? all of these a are coming through saying labor costs are picking up. the pressure on the market is picking up. employers are saying -- manus: does this come back to capacity in the economy?

i am not going to proclaim i understand how to work out the productivity gap. there is a debate. we do not have rising inflation. >> there is a debate. on the federal reserve, good reason, they always react too late. they have a poor track record of anticipating future events and future nasty events. it often triggers the future nasty events by holding back for too long. growth is beginning to normalize. with growth normalizing, you have got to take the first steps. manus: it always interests me

when we get opposing views. you get about 10 seconds each now. when will the feds go? >> i think they will go this year. we will get sets of market numbers. september seems a likely day. jane: we were looking dovish but we are no longer looking for dovish. manus: thank you. great debate here on bloomberg. coming up, how good are central banks? you can stay tuned to find out what our numbers are at bloomberg. report cards coming up after the break.

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manus: welcome back to "the pulse." a rate decision from the bank of england today. every analyst -- they do not expect any change.

how do they do when it comes to making projections? jen joins me. she has been looking at the data. let's kick it off in terms of today, the rate decision, it is not about rates. it is about whether there is inflation. we just had a spirited debate. jen: for today there is no change. august is the next forecast. if you wanted to wait you would wait until the forecast came out. manus: the budget yesterday sticking to the 12 billion pounds of welfare. does that leave mark carney --

he is not going to be as aggressive or up front. jen: you have a budget that is going to be increasing growth. the u.k. being the fastest growing for another year. it is not clear what the budget will do to the broader pay pressures. you can see there are signs of a pickup. the question is how fast will pay rise and how much will it be sustained? manus: how much will that play into the inflation picture. who does best when it comes to forecasting? overall, looking at growth and inflation bank of canada came

out number one in terms of the accuracy of its projections relative -- it was over the whole decade. manus: are you playing to the crowd? jen: that is unfair. there is an element of looking at the complexity of the economies. we use a gauge. the most complicated economies canada is a less complicated economy. there are many elements to look at. manus: i have changed my mind. he had the least complicated economy to work on in the japanese had the most difficult.

are you on bloomberg.com today? jen ryan. coming up, a deadline approaching. can greece make a case for staying in the euro? guy johnson is in athens. he will wrap up the story. ♪

manus: welcome back to "the pulse." greek shipowners control more cargo than any other country. they pay no tax on international earnings. tom mackenzie went to me one of the boatbuilders and asked if the shipping industry is paying its way. >> my company is 40 years old. my family has been involved in shipping for 150 years. this is the biggest yacht yard in the world today. we are selling a lot of boats. the most important thing is the know-how that we have.

the big shipping families, they have big traditions. we know how to do it. this is a bigger advantage. we know the germans have better tax systems than the greeks. i hope one day in all of europe you will have a common policy regarding taxes salaries, and all of this. this is a small process. >> how much concern is there amongst the shipping families? >> we are concerned and they will try to help as much as they can. they have a another different view of life. >> they are more relaxed. >> more relaxed, more adventure.

manus: a look at what we are watching for the rest of the day. all eyes on athens and our very own guy johnson. it comes down to this the midnight oil, the midnight and the devil will be in the details. guy: the deadline is 12:00 midnight tonight, brussels time. we will see. at this stage, we do not know what the greeks are going to propose. we heard alexis tsipras talking about specific proposals. what is he going to suggest and delivered to the creditors? will it be acceptable to creditors and his party? he can pass most things through the greek parliament. will the creditors accept it?

it is very critical. the music has softened a little bit. it remains tough in germany. angela merkel, we have been hearing from she is prepared to let greece go. the next few hours are critical. manus: the french are giving support to trying to get a deal across the line. what is the mood? there will be a gathering in the square this evening. guy: this is by the pro-euro camp. people turning out to make their voices heard. the referendum was 60-40, no vote. the overwhelming sense of the greek people, yes, they want to

stay in the euro. i think we will hear that tonight. manus: we will pick this up tomorrow morning on "the pulse." "surveillance" is up next. ♪

betty:tom: greece will turn into a pumpkin at midnight unless they do debt profiling.

germany says the ecb should not come to the rescue. the china markets open and stabilize and it believed the new york stock exchange will open for business this morning. pepsi is under pressure to perform. good morning, everyone, this is "bloomberg surveillance." i had some lay's potato chips the other day and they were very good. i had not had a bag and years. brendan: such things did not exist in the former universe. fat is back. tom: today is the first feeling of a normal day in ages. brendan: the news is slow this morning. it was said i usually quite