janet yellen will try not to mention greece or china as she speaks to house members. the september meeting is nine weeks away. earnings season is upon us. it continues. bank of america. good morning, everyone. this is "bloomberg surveillance ." it is wednesday, july 15. i am tom keene with brendan greeley and vonnie quinn. rendon, i guess greece -- brendan i guess greece, hans nichols is the most important person. brendan: the action is still in what germany is going to do. the most important conversation is happening between the imf and germany. do we recognize the reality that greece is insolvent? tom: right now we need an update. here are our top headlines with vonnie quinn. vonnie: in greece, the parliament votes on a deal that

will determine whether the country gets a new bailout. prime minister alexis tsipras is counting on members of the opposition to get the plan through. last night the prime minister said he agreed to the deal only because he had a "knife on my neck." >> the result of the euro summit and the eurogroup was the result from the pressure put on a country and on a people who have decided to go in different way. vonnie: a new report questions whether greece can deliver those economic reforms without debt restructuring. in china, better-than-expected news about the economy did not boost investor confidence. the benchmark shanghai index fell. earlier china said second-quarter gdp rose at an annual rate of 7%, which beat

estimates. china's central bank has cut interest rates four time since last november. the fight over the iranian nuclear deal has shifted from vienna to capitol hill. negotiators said the agreement would prevent iran from building a nuclear weapon. but hours after the announcement, house speaker john boehner called the deal unacceptable, and president obama's fellow democrats want to take a closer look. >> i think preventing iran from becoming a nuclear power is important for the safety of that region and for u.s. national security interests. therefore, i hope we are closer to that goal but i want to reserve judgment until i have had a chance to review the agreement. vonnie: congress has 60 days to review the agreement. president obama says if president obama -- says if congress passes a deal rejecting the solution -- the resolution he will veto it. before a single sale is made,

amazon's shareholders are already winners. the stock closed at a record high yesterday. the company's market value is now $217 billion. in baseball, mike trout of the los angeles angels made history at the all-star game. he hit a first inning home run to help lead the american league to a 6-3 win over the national league. he was selected as the most valuable player. the first one to win the award two years in a row. tom: very cool. home advantage for the world series. this is when the red sox overtake the yankees. brendan: we have for the morning brief -- 9:15 we get production numbers to see whether we are working to capacity or not. janet yellen testimony -- we are

going to wonder whether or not she talked about things being under control. tom: testimony comes out at 8:30, and then the q&a later. brendan: first we will listen to a lot of grandstanding from congress. i know tom does not care about the asian book but it isn't -- about the beige book. tom: a data check all attention on athens this morning. the euro is holding up 1.1022. oil churning. on to the next screen. let's get through it as we can. the dow over 18,000. the two year sliding south. that is important to see that continued flight to quality out there. not an urgency in flight to quality, but nevertheless there. let's look at the knockout effect.

john farrow was all over this from london. i rarely show this to a u.s. audience. this is euro-sterling. here is before the crisis. a week sterling -- a weak sterling, and then here is a stronger sterling. on an access -- on an axis, this is a big deal. this is huge united kingdom wins, euro loses. we have broken them down into sterling strength. you wonder if we get back here to where we were, round-trip. mike trout went round-trip on the all-star game. sterling goes round-trip as well. brendan: as they stumble forward to some resolution on greece, we will see as they look to possibly -- lots of other countries will want this explicit carve out of the euro. tom: you saw a couple of years ago the ess m in the alphabet soup the united kingdom focused

on it because sterling is involved. let's begin our discussion on the crisis of the moment maybe something i have never seen in my years. this would be the desperation seen in brussels and in athens on the future of greece and its people. hans nichols is in brussels this morning. tell us how they get to that late-night vote this evening. hans co. as we understand it, they began meeting a couple hours ago expected to continue to meeting committee until about 6:00 this evening. they would take a short break, have dinner perhaps then come back to full parliament. the expectation is that this will go well into the early morning hours. as you can see, outside parliament, we are seeing crowds gather. a lot of public-sector unions staging strikes.

pharmacists, public-sector unions, certain metro workers as well. a lot of action is having a -- a lot of action is happening in parliament and right outside. tom: one of our staff in bode miller's main translated that message out front, "erase the debt here go -- brendan: when you listen to it alexis tsipras' rhetoric, is he trying to sell it to syriza or other parties? david david: he had some very strong, visceral language. as you heard earlier at the top of the show. it was a chance for him to justify the decision he made, to go through that plane -- through that plan in a point by point fashion. broadening the tax base, raising the sales tax. talking about tension reform --

talking about pension reform and raising the retirement age. he said that is something that greece should have done on its own. going through that one by one to talk about each part of the plan. tom: let's go to hans nichols in berlin. i am absolutely taken by the moment with what the imf is saying. the basic idea of debt forgiveness, some form of re-profiling or restructuring or an outright grexit. tell me where the grexit zeitgeist is this morning. hans: it is marginally higher because you have three sets of negative news. you have the imf projection about the debt not being sustainable. remember, the eu had that over the weekend. it is a little bit dated. we have this new eu debt analysis. hopefully we can put that screen up. they have 165 debt to gdp ratio

in 2020. that is the best case scenario. then we have the notion that mr. schauble yesterday was pretty open to the idea and maybe openly hinting for a grexit. those things on the margin has made a deal less likely. it is not likely today at all. it will happen later at night. the vote in athens will not happen after -- until after midnight. that is my only production for the day. brendan: this has been a redline for germany. it was there in the friday draft, it was there in the monday agreement. can angela merkel tale -- can angela merkel tell her people that the money is gone? hans: there is a very german argument -- they say the rules have to be obeyed, and in eu treaty rule says they cannot allow a right down -- a write -down. whatever fairytale, whatever

brothers grimm analogy that you want, that will have to be it. tom, who wears a yellow dress? tom: please. vonnie: brendan, you should put your hand up. brendan: the answer is belle, from "beauty and the these." how did we get here -- "beauty and the beast." how did we get here? tom: janet yellen will be front and center before the house this morning. bob it is a cacophony of stuff and all i can think of as i look at jpmorgan earnings yesterday -- basically, away from the nuances, they are printing money. is america printing money while we are distracted by all these other things? co well said -- bob: well said.

when matters is the direction of the u.s. economy and u.s. earnings. they are ok. good enough. tom: billions come in, the register goes. within that and within a five to six year old market, how do you participate? bob: you have to focus on companies that can grow their units and do not need pricing power. we are in a slow-growth world, and therefore those companies that take care of themselves -- that leads you to health care. it keeps you away from energy and materials. tom: how does your radar go off when you hear executives say we need to acquire revenue? bob: i think getting revenue growth has been elusive since the beginning of this bull market. we started with cost-cutting. we broadened it to cash flow and share buyback, and we have had some, but not enough, revenue growth. you are not going to get it

through pricing. if you can get unit growth and revenue growth, you win. tom: bob dole is with us -- bob doll is with us and we will touch on this throughout the hour. on twitter today, we'll janet yellen mention greece and china in her testimony this morning? stay with us. "bloomberg surveillance." ♪

tom: good morning, everyone. let's get right to top headlines with vonnie quinn. vonnie: in colorado, a jury begins deliberations today in the 2012 movie theater massacre. james holmes is accused of killing 12 people and wounding 70.

he pleaded not guilty by reason of insanity. families will not spend as much as usual on back-to-school shopping according to the national retail federation. pretty say 5.8% drop in spending. retailers usually view the back-to-school season as an indicator for the holiday shopping rush. it is the end of an era in new york city. the famed toy store fao schwarz is closing its doors. it will not have a retail presence for the first time in 53 years. the lease is expiring and the landlord wanted a much higher rent. fao schwartz may reopen next year. tom: it is a lousy store. you go in and you cannot find what you want. i am like 0-6 on fao schwarz. brendan: you had fao schwartz and the apple store right next

door. kids toys, adult toys. we are going to talk about bank of america, and i quote, "increased rhetoric on cost cuts." bank of america reports at the top of the next hour. we are joined from london by chris wheeler of atlantic equities. chris, i hear cost-cutting, i hear operating efficiencies from analyst reports. is banking just boring old widget making now he at go chris: good morning. you could say that in the current environment because we are not filing -- we are not firing on all cylinders. we are not getting clarity. brendan: what is the single number you are looking for this morning? is a drop in fixed income trading? chris: we were with the cfo a

couple of weeks ago, and he was making it clear they are making about $21.5 billion revenue every quarter. i think most of the focus will be on our we actually going to see some optical views of these cost-cutting's. brendan: how much -- vonnie: how much do we have to see of cost-cutting? tom:chris: i think it is really clear that if they make those cuts, they will not be in the united states. it is pretty evident that u.s. banks are picking up market share from the european players and indeed the u.s. markets are much better than the european markets and the asian markets. tom: that is where i wanted to go, chris wheeler. you have such experience with this. i saw the other day that mcfarlane wants to buy retail and merge retail, and they will

pull the rabbit out of the hat. where is the future of retail banking, whether it is in topeka or in helsinki? where does retail banking end up? chris: this strange thing we are introducing called ring fencing. we heard yesterday from jamie dimon and also wells fargo -- traditional banking is where things are going. if you talk to the ceo of the royal bank of scotland, his answer to where is your biggest branch, it is the 710 to paddington. that is like saying the 710 from connecticut to new york city. brendan: bob bdoll, what are you looking for with these results? bob: the income statement for

how many years has been all about the balance sheet. i think it is great news for the financial sector and the banks in particular. we're looking for revenue growth, looking at margins, looking at efficiencies, and we saw some of that with jpmorgan yesterday. vonnie: chris, that to you. we have seen some litigation costs as well. what will we see this quarter for litigation? chris: i think we will see a few hundred million. it was 4 billion in the last year. maybe $1 billion, $1.5 billion this year, which is more than we have seen in the last five years. tom: in the next hour, we will focus on bank of america. at the top of the hour, chris whalen will join us. he has been a critic of those too big to fail. stay with us. "bloomberg surveillance."

good morning. ♪

tom: good morning, everyone. tom keene with brendan greeley and vonnie quinn. let me get to a morning run street. mohamed el-erian is writing up a storm. of course on europe and those silly red lines -- bridge financing, as hans nichols would say, would need to be followed quickly by more external funding to recapitalize banks and help counter economic implosion. the longer this bridge financing is delayed, the higher likelihood that they get out over their skis and up over $100 billion. i would to just they are already

there. we do not even know where that number is. where is it? brendan: the problem with protracted negotiations is that things change on the ground as you negotiate, something that the imf was saying -- at the time last weekend during negotiations, this is much worse than you think it is and it is arguable that for the entirety of the bailout, every new bailout because -- it has made reality worse. tom: let's do economics with bob doll. if you do not have a depreciation or devaluation back to a drop or's -- back to a drop, or pseudo-euro, what is the investment to get back into greece? i do not get how siemens nestle that's why they go in under a euro?

bob: i am with you. there is no way that this valuation level makes any sense for greece. we know if we release the currency, it would go down here. therefore, why? tom: what is the incentive for siemens to go in if they do not get an immediate kobe, which is a depreciation -- an immediate bogey which is a depreciation? bob: it is actor what tom said earlier. reese is insolvent. -- it is back to what tom said earlier. greece is insolvent, and when we'll it -- when will we accept that? this is the reason, of course, that germany is doing all it can , france is doing all it can, to find those band-aids because it is concerned about that. in one sense greece could fall

into the sea and it would not matter for the global economy. they are this big. it is the currency connection and therefore you have to move on to get them out in some way shape, or form. tom: some of the debate this morning -- we will continue this discussion. brendan greeley talking with hans nichols in the next hour at some length. he is a master of taking two and three questions from one reporter. a news conference with the president. 1:00 p.m. this afternoon. stay with us worldwide. "bloomberg surveillance." ♪

tom: a quiet to the markets. maybe waiting to what we see out of athens tonight. here is vonnie quinn. vonnie: the prime minister of greece is counting on opposition

parties to come to his rescue. the greek armament vote today on a deal that would lead to another bailout. alexis tsipras faces a revolt in his own party. they do not like the pension cuts or tax hikes. tsipras said griefs -- said greece was left with only two options. alexis tsipras: we were made to go to the most powerful people in europe with the circumstances of blackmail and suffocation. first the agreement with specific -- or go bankrupt. or leave the eurozone. vonnie: there is a warning from the imf that greece needs more debt relief than is considered so far. investors are waiting to hear what janet yellen has to say about interest rates. the fed chair goes to capitol hill for the first of two days of testimony on monetary policy. janet yellen said it would

probably be appropriate to raise rates later this year. morgan stanley index based on futures rating said the fed will not do that until earnings next year. a new national survey shows donald trump leaving -- leading the crowded republican pack. jeb bush drew 14 present. white house candidates from -- white house candidates from both parties have already raised $70 million. there is a big takeover in the drug making business. the price for receptos -- celgene agrees to buy recep ptos. the acquisition represents a 16 for return. scientists are getting insight about pluto after a probe came

within 8000 miles of the dwarf planet. data from the new horizons spacecraft shows a hint of geological activity. staffers cheered last night when the probe finally phone home. it is about -- it has traveled nearly 3 billion miles since launching a decade ago. tom: you said 481 days until the election? vonnie: how many polls yet can we measure in kohl's. -- in polls. tom: do i need a comb-over? brendan: let's just spend this hour on your hair. moving to china, please. today china's national bureau of statistics found 7% growth in the second quarter. that beat estimates. tim craighead, who runs asia

research for bloomberg intelligence, is on the phone. were you surprised? tim: not really. we have been looking with a lot of the work from our economist about the slowing economy, and we knew that the financial sector would be a positive impact this quarter for the gdp perspective which it was maybe that was part of the reason why we had better than expected -- a better than expected gdp number. the market today, i do not think it was that much related to the economic issues as it was the trading issues that are technical in nature. brendan: is it fair to look at the markets right now, where so many stocks -- and say they are completely untethered from the economic reality? timko that gets to a good point. there are two items here -- tim: that gets to a good point.

longer-term, there has been a history of huge spikes much more oriented to chinese retail speculation and momentum than underlying economic fundamentals. secondly, with regard to the current situation, we have had a number of stocks unleashed from being halted or suspended and that sort of opened up the field for the state support to be a little less concentrated. after a few days of a big rally it is not a huge technical surprise to see the market pullback as there is a bit more of a broader market. a 3% drop in the shanghai composite, actually understates the situation of financials and energy, which are supported and were down less and other industries were down a lot more. brendan: tim, let's look into

the real economy of china. when you dig into those numbers from the second quarter, do you see any evidence of a move toward rebalancing that we keep waiting for? tim: that is an interesting point as well. there is ongoing evidence that -- this on a bottom-up industry basis that is really the crux of the work we do at bloomberg television. steel capacity is being reduced. there are other elements of rebalancing from an excess capacity and perspective that are coming through. the industrial side and infrastructure side of the equation is subdued. exports are subdued. it is more the consumer side. there are some aspects of the consumer side as of late that has been a little better on the margin, and so this is a long-term transition story, and i think it is being sort of sucked into the near term

dynamics of what had been overhyped with the market having rallied this much. brendan: something to look forward to. tim craighead on the phone from another time zone. we have bob doll at the desk. i want to play you as we look -- i want to play you something as we look forward to janet yellen's testimony. this is from ruchir sharma head of equities for morgan stanley. ruchir: historically, the u.s. economy has matter the most. every recession in the last 50 years has been caused by the u.s. economy stumbling into recession. my take is, in the next couple of years the next global recession will be made in china, just like many things are in the world today. brendan: bob doll is china the

new vector for a virus? bob: absolutely. china just told us they grew 7%. was that 7.000? they always tell us that they grow 7%. if you look at the innards of china, they are not growing 7%. it is slowing. investment toward consumption is underway, but that is a multiyear if not a multi-decade thing. tom: i can find out asia exposure, the rates of growth, etc. we all know every company needs to be in asia. what is the best way to be in this game? bob: the safest ways is to have that part of your portfolio minimal. if china is slowing, if europe is caught up in its own underwear with all these financial and credit problems and u.s. growth is ok why not

have more of your portfolio u.s. oriented? we are overweight in u.s. earnings and underweight in non-us earnings. brendan: what are you going to look for that will tell you in the next five years that china's stock market is grown up and ready for investment? bob: when the chinese market moves in with the chinese economy. brendan: we will come back to that often in the next year. coming up, cash is king. a new survey shows investors are holding the highest amount of cash since lehman collapsed during we will show you the numbers. that is the subject of today's single best chart. this is "bloomberg surveillance ." good morning. ♪

tom: gold, 11.54 now. right now we digress. here's our single best chart. brendan: on a rainy day, go to cash. but also when the sunshine's -- when the sunshine's -- but also when the sun shines. you are seeing tracking on the white, that is an index. the graying in the background is the cash they said they are holding in surveys.

in the past when equities go down, cash goes up. now we have equities up and cash up. tom: there it is. it is a rare occurrence and also an important rule when cash builds up. you usually end up putting this to work. we are fortunate, and this is robert doll's absolute and total wheelhouse. michael hartnett, worship that bank of america -- we are not at 7% cash. by prospectus, long only manager's have to be in equities. so 4% cash is a lot of cash. bob: it is a very big amount of cash. there is caution everywhere. tom: when you are on the road you feel that caution? bob: absolutely. it is deer in the headlights and also caution. i do not understand the world where the market is up a lot, i have this cash, i feel like i have missed it.

bull markets end whenever but he says why don't i have more of this today. tom: you look at this and the big blue chips in dividend growth. how does cash get deployed? brendan: can we fire that chart again? in the past it has been such an obvious inverse relationship but watching the slow growth of this bull market, that is what i do not understand. what is different about the beginning of this bull market? bob: what is different is the recession that preceded it. it was not the usual. we had an inflation problem the fed put the foot on the brakes that brought us into recession, and we had a typical recovery. a lot of people think we are still in a recession, so they are cautious. my neighbor lost his job, my kid cannot find a job. this is what fosters this uncertainty, this conservativism this concern. brendan: we are still not in a

normal world. that is the transition from newtonian physics to particle physics. we are still in this thing we do not completely understand. we are waiting to get back to newtonian. bob: and we will not this cycle is my guess. this is a very abnormal period. tom: how cheap are the big ugly blue chips? we are going to talk about netflix and amazon. 20 years ago today, you bought your first amazon thing, right? brendan: there is a great story in brad stone's book where they cheered when the first person they did not know bought from amazon. bob: let's pick a neutral name -- microsoft. the yield higher than the 10-year treasury bond. tom: all cash flow.

all the others wanted them to say, hey guys, get it back -- bob: let's go to apple computer. somebody stepped up and said you have all this cash all this cash flow, give us a little bit more. and they did. they have benefited from that. tom: there it is. we have photos today. do we have mike trout photos hitting a home run? vonnie: we are going to start with the mexican drug lord, the first pictures released from joaquin "el chapo" guzman escaping through the tunnels. it had a motorbike on wheels. officials believed he spent $50 million on the underground escape route, which took engineers about a year to complete. brendan: couldn't he have walked

the echo i am confused by that. i understand that you want to get out. couldn't they have just given him a headlamp? vonnie: our second top photo, a young great white shark stranded on the beach in massachusetts. it was kept alive by viewers. he was released offshore. brendan: every once in a while you will see -- there was a 10-foot great white that was stuck in a saltwater pond for a wild. you could walk out and watch it on the shore. vonnie: tom, would you be dousing it with water? tom: the official "surveillance" vote the boston whaler pulling the shargh. this will be outside -- pulling

the shark. this will be outside the orleans yacht club in two days. brendan: i have to say this right now. they are going to need a bigger boat. tom:vonnie: in munich, pedestrian crossing signals shows a male-female same-sex couple with little hearts. the new signals are at a limited number of traffic lights because of a gay pride march, but the city has decided to keep them. europe has seen a surge in gay rights awareness since the referendum in ireland. tom: i wonder if there will be one of angela merkel and alexis tsipras. brendan: holding hands? a much more conservative city. it is great to see it there. vonnie: very catholic.

brendan: very catholic, very straightlaced, very investor. tom: let's go to the twitter question of the day. thank you for the response so far. janet yellen speaking this afternoon. michael mckee will help us in the next hour. will janet yellen mention greece and china in her fed testimony echo i think she will. futures up all of one point. stay with us. "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance." let's get to top headlines with vonnie quinn. vonnie: the search will resume today for six people swept away by flash flooding. waves of water were sent through a small town in the appellations. 150 homes were destroyed. phone and power service was knocked out, and a state of emergency is in effect t-mobile has a new challenge for larger competitors like verizon. for families of those co. t-mobile is offering 10 gigabytes of data to each person for a total of $100. additional lines are $20 each. the verizon plan may cost twice

as much. disney has unveiled a theme park in shanghai. ceo bob eiger and mickey mouse were at the announcement. it will include a rafting adventure, and the largest parade at any of its resorts. disney shanghai will open next spring, the company's largest foreign investment ever. tom: seriously, no casino? that just seems to get things done in china. brendan: i think we will know something is going on with disney shenzhen. tom: janet yellen today, the so-called humphrey hawkins testimony from another time. she may set the tone this morning, but the reality is we are all living in a new era of lower returns and lower real returns. stocks have enjoyed a banner five-plus years of

outperformance, but even the standard & poor's 500 has fallen back into the single digit 7%. robert doll tries to get out front of what is going to happen and out front of dividend growth . it is still the game, isn't it? cash and dividend growth -- when does that script end? bob: i think it will go on a long time. increment cash flow will return. how are you using your cash when dividends are -- tom: help us with this. that theory is more important in a single digit bill you -- in a single digit milieu. bob: absolutely right. is stocks are only going to be up, dividends will be only half the return. brendan: i was going to ask a question, but i am chastened because i got a tweet saying to

know your guests -- it is bob doll not bob dole. evidently i have been mispronouncing your name for of the hour. tom: within that debate on dividends, is the idea of the pressure to have too much dividend growth. do you see more companies faking it, or is it for real? bob: i think it is for real. when you raise your dividend, you do not want to ever have to cut it. tom: the lights are brighter. bob: they are. the focus on buybacks there has been a lot of criticism there. vonnie: why are you so positive on companies increasing earnings? you are still seeing them do that by cost-cutting, and they are barely leading reduced earnings estimates. bob: you bring up a good point.

for the stock market to do ok from here to the end of the year, we need better earnings growth, and that will have to come from the consumer. we will spend some more money -- better jobs, a few wage gains, the oil dividend, increased confidence. vonnie: what are your bond guys saying to you? bob: the curve is going to move up. the fed is going to raise rates. it is about case. it is about case. he will be slow but noticeable. brendan: we were talking about how hard it is to get organic growth what is happening now with revenue through acquisition. when are we going to see organic growth? what will change that makes that possible? bob: it is a matter of degree. we are seeing organic growth. the question is when we will see more of it? 70% of our economy, consumers

will have to spend this money and i think they will. if we do not, we will be in this two steps forward, two steps back. brendan: we hoped gas would do it. what will do it? bob: there is a long history of when the consumer gets a tuck -- gets a cut in taxes, there is a long lag of when they will start spending. tom: you have been briefed by your municipal pond -- municipal bond experts over puerto rico. how serious is puerto rico? bob: there are all kinds of problems and it is not unlike greece in some ways. who is going to bail them out? tom: bob doll. i need to go from puerto rico over to forex. all the focus today is on athens

and a very late night. you want a proxy euro-swisse churning ever slightly. we continue from new york city with affluence -- with athens and berlin. stay with us. ♪

tom: greece's fiscal picture

deteriorates by the day. tsipras says that eu had a knife at my neck. janet yellen will try not to mention greece or china as she speaks to house members. the september meeting is nine weeks away. bank of america is out with their earnings report. this is "bloomberg surveillance." it is wednesday, july 15. after what we saw with j.p. morgan and wells fargo, here is funny quinn -- vonnie quinn. vonnie: right now we are seeing earnings per share of $.45 reported. the average estimate in our survey was $.46. the range was $.31 to $.40. vonnie: the quarterly earnings

include $.44 and favorable adjustments. tom: i will notice some numbers that are nicely above nominal gdp. it is still single digit. up 9% in global bank loan balances. a tough shop environment while doing what i'm sure you will find deep within the report on expense control. net charge-offs. as we listen to christopher whalen -- no, i am kidding. vonnie: much better than yesterday for j.p. morgan and wells fargo. tom: we will get more out on that. as i mentioned it at a jpmorgan with a press release. doing a put a good as well.

when you get comparisons, bring it in. vonnie: let's interest -- mention that net interest yields. tom: the critical margin which is somewhat related to yield terms. christopher whalen of the bond rating agency. a sophisticated critic of too big to fail banking. he joins us now. that christopher whalen is terrible -- for those of you listening i am spilling the vodka out of my cup. looking at bank of america and the difference for j.p. morgan, for the amateur what is the difference? guest: fortress monahan is less of a universal bank. they have merrill but they don't do the intensive training at goldman sachs.

tom: bank of america is more retail? guest: a huge commercial bank. tom: is it a diffused hodgepodge of retail that mr. moynahan inherited or is it more of a national bank? guest: it is still very much in bits and pieces. that is a difference with j.p. morgan. jamie is the old legacy of chemical banks. this is ancient history when i was at the fed in new york. that legacy remained and many of those people have been there since then. tom: a little more color. vonnie: and a couple of headlines. sales invading revenue there. the estimates to drop 6% beginning with jefferies early on they would be down all over the place. should bank of america be concentrating on this at all?

guest: i think everyone on the street is focused more and more. they are forced to really focus on a high-end customer well over 745 for scores -- it limits. their opportunity tom: the first four words out of moynahan's mouth is solid core loan growth. brenda boy i told you on the break i have been quoting from you all week because you talked about the most boring aspect of banking -- mortgage growth. we were talking about the high-end customer both in terms of mortgages and coming into the storefront. guest: you will only do those customers to meet regulatory requirements. you will have to sell to the fha. the banks are not doing this and

loans. they want to focus on a qualified mortgage. tom: i want to go on the bigger and broader picture. you and whitney have been out front saying the industry is going to change. how many bodies are going out the door? do you have a working number? guest: on the transactional side i think you will see further reductions. i spent the past few days with axel weber. the bank will be so deep -- tom: where does retail go? we are talking 200,000 jobs nationwide? guest: retail branches? yes but on the investment banking side, the volumes have been relatively tepid. we have been fortunate to see a lot of smaller and medium-sized now. tom: to your foreknowledge do you have a better idea of the

balance sheets of these banks? guest: when we talk about shadow banks we are not talking nonbanks to make loans or do leasing. we are talking passive the vehicles. you have to remember that when people prattle on about the danger of nonbanks. they are the one to take risk. brendan: the subhead on the article in the terminal right now is that legal costs are down -- have we seen the back of that? guest: as far as residential mortgage is concerned, yes. there are always things regulators can race and it is nice getting those big checks. look at eric holder who is still purdue much unrepentant. the bad news for the top four as far as housing is done. tom: thank you so much.

the rating agency as we look at banks. the major story of the date without question is greece and the challenges in europe. here is vonnie quinn. vonnie: facing a vote before they send bailout money. alexis tsipras needs the backing of opposition to get it passed. many in tsipras own the party don't like it. tsipras says he agreed to the deal only because he had quote a knife on my neck. >> the result of the euro summit and the eurogroup was the result coming from the pressure put on a country and a people who have decided in a democrat wave. vonnie: greek and it's european neighbors grapple with the crisis the trouble is deepening on the streets. banks have been close in tsipras is hinting they might not open until august. better than expected and vest or

growth -- investor growth is helping investor confidence. stock market gains sparked by the government intervention over the last few weeks have now reversed. china says that it's gdp rose at an annual rate of 7% feeding estimates. the central bank has cut estimates four times since november. the fight over the a radiant nuclear deal has shifted. negotiators said the agreement would prevent iran from building a nuclear weapon. house speaker john boehner called the deal unacceptable. president obama says the deal will a couple should's goals. pres. obama: we have cut off every pathway for iran to develop a nuclear weapon. the reason we are able -- the

sanction regime that crippled the iranian economy and brought them to the table, was because the world agreed with us that it would be a great danger to the region and allies and the world if they possessed a nuclear weapon. vonnie: congress has 60 days to review the weep in and the president has said if they reject the deal he will veto the resolution. they are shopping for bargains on the site. before a single sale is made the shareholders are already winners. putting nearly $5 billion in the pockets of amazon investors. more on prime day in just a moment. for mike trout being the most valuable player is another night at the ballpark. his first inning boosted the american league to the sixth straight win over the nationals.

trout was m.v.p. last year as well. tom: it is a scandal how late the game starts -- for kids. vonnie: for you you made? tom: i get the pop and circumstance but start the game at 5:00 p.m.. brendan: i'm not a kid and i have not been able to see the all-star game in years. tom: the first pitches at like 11:30. vonnie: your time. tom: first base, second base, third base -- twitter question. vonnie: how many bases? tom: three bases plus home plate. will janet yellen mentioned greece or china today? ♪

tom: brendan: at -- amazon it is a huge deal. brendan: it is amazon prime day which means you are not 20 years older than you were the day amazon launched. brad stone is with us from san francisco and he literally wrote the book on amazon. give us a survey, how many industries has amazon went in 20 years? guest: i guess ruined is a strong word.

they would argue made more efficient or better for customers. the big one was book sailing selling by one third of all print books. authors and publishers subject to antitrust scrutiny. the list goes on and on. brendan: jeff bezos -- you are the best biographer he has so far. what we're looking at right now, was this his plan? is this according to something he wrote on a napkin? guest: absolutely not. 20 years ago they were looking more than being an online bookseller. they didn't know what would work. when it's hard to take off quickly the ambition became more extreme. i don't think 20 years ago they conceived or something like amazon web services. tom: there is a massive mystery about their management process.

nobody knows these names. it is jeff bezos but we know sort of what jobs did, we have no clue how amazon runs. guest: they keep that deliberately opaque but he does have loyalty -- a loyalty that has been with him a long time. he is probably the guy. tom: is he delegating authority? guest: absolutely. when you think how big the company is and how many pies they have fingers and there is no way he can manage it all. it is a most like a startup. brendan: it is different from other companies. no football tables or massages at your desk. how do they attract talent? guest: frugality is one of their values. people laugh about how cheap amazon is but it is all about giving it back to the customer which is why they celebrate the 20th anniversary with deals, a manufactured holiday.

they are a strategic choice in seattle and they have the stock price. it is attractive. tom: brad stone with us. his iconic book on amazon. we switch gears to another equity success. we're joined from standard & poor's and we will take a look at the reality of cash flow at netflix. ♪

tom: let's get right to our top headlines. vonnie: the colorado jury will begin to decide the fate of james holmes. his lawyers say he was not sane when he opened fire in a theater 12 years ago. prosecutors's say he still knew right from wrong and a conviction could mean life in prison or execution. back to school businesses here

and it could be a hard lesson for retailers. a five pointed drop in spending this fall. google is unveiling a new beacon technology. a competitor of apple products, it is a bluetooth platform that beams low information. google hopes the open software will challenge the id can. eddie stone is a catchy name and that should catch on. brendan: you know? what a catchy name is? tuna moby. that is just an excuse for us to bring on tuna moby and he exclaims to us streaming whenever we needed explained. what is the one number you are looking for? guest: it will always be the

streaming and subscriber growth. we know that international will accelerate. they have provided guidance which seems conservative at this point. brendan: who is right behind netflix? is it hulu or amazon? guest: it is an interesting question because the answer to that question continues to change. the market is evolving at a fast rate. just recently comcast announced their plan to launch a streaming offering. you always have amazon prime streaming. you have hulu as well as hbo and cvs. that market is getting intensely competitive. tom: it is trading at 51 times sales. but a lot of people say -- how do you value this company if it is not off the normal fundamental metrics.

>> it is a question we grapple with all the time. tom: they are only making single-digit. this is that microsoft. guest: we have faith in consumer internet companies and their priced to sell at a premium to that group which we believe is increasingly warranted. brendan: you talk of a international growth and the one number you are looking for today is not financial distance or subscriber growth, when do they run out of room? guest: netflix is only barely scratching the surface of the addressable market. today there adjusting about a quarter of those households. we think there is a lot of headroom left to go. vonnie: rich greenfield came out with his 10 questions one of them is how does netflix grow another that users are spending at least two hours a day.

guest: the gray -- way to do that is to add more futures. they have allowing for family subscriptions. the pricing is one thing they are conscious about and the business model now does not take into account a significant price increase. tom: their 6 billion in revenue versus amazon's $92 billion. do you have the vision of that $6 billion becoming $10 billion, $20 billion or $40 billion? guest: we would have to admit a little bit late in grading netflix. when we upgraded them not to long ago they were around $400. fast-forward today and that seems -- tom: what are they buying forward besides a scriber's --

subscribers? guest: it used to be that wall street looked at international business is something you got for free but that is no longer the case. brendan: will they have to make a new house of cards every year? what does that do in cost? guest: right now they are batting excellent in terms of their original programming strategy. expect that to ratchet up. i don't think you expect them to have a hit like house of cards every time but that seems to be the direction they are moving. with the current content they have in the disney deal with think they are in solid shape. tom: do you have visibility on what they are spending? guest: they will provide that break down. we know that there are content obligations escalating. tom: why am i going to the amazon video library or the netflix? vonnie: the experience a netflix is 10,000 times better.

guest: these are not necessarily mutually exclusive services and the same subscribers actually have a bundle of different services. brendan: is netflix getting more of its views on original programming or this massive archive? guest: they talked about 10 billion streaming hours in q1. it is kind of hard to parse it at the show level but overall there is no doubt that they have a trove of content that plays very well across all demographics. tom: there is a massive debate within standard & poor's -- do you wear a bow tie like david blitzer or a bow tie like tom keene? you have clearly gone with blitzer this morning. guest: you set a high standard on bow ties. tom: -- brendan: tom and two to have

bowties at their neck when a alexis tsipras, does he have a knife? do you like that one? we will be right back. ♪

tom: good morning, everyone. let's get to our top headlines. vonnie: the greek parliament is now debating whether to make the sacrifices that creditors are demanding. the proposal from prime minister alexis tsipras calls for tension

rollback. that has angered many in his own party. while greek leaders and european neighbors grapple with the prices -- crisis, the trouble is deepening in the streets. the economy ministers spoke with bloomberg's olivia sterns. >> as soon \as ela and the financing is back in the picture, -- >> germany doesn't go until friday so the banks are not opening this week? >> they will not open this week. they will open just after ela is back in the picture. the anna: -- vonnie: the imf warns that creditors may have to take something on the value of greek debt.

investors are waiting to hear what janet yellen has to say about fed rates. last week yellen said it would probably be appropriate to raise rates later this year. bank of america shares are holding off against on the free market after it posted second-quarter results to the forecast. the company said today there earnings per share reached $.45. the second-quarter net told $5.3 billion and we are also getting delta earnings out for the second quarter at when dollar $.83. that is much better than the 121. estimates tom: 64 million miles of travel and they are working with the resilience and with latin american networks -- it is a continued theme here and the backdrop of the airlines as we

go to the autumn season is a decline in business class prices. this is a test of do they manage capacity correctly starting with them. brendan: there are all of these codewords where they speak completely differently. analysts talk about pricing discipline and a consumer would call that cartel-like behavior. can they keep prices high even though the price of gas has gone way down. tom: they go right into that in the press release. the third paragraph is on fuel. vonnie: passenger revenue for available seat was down 4.6% but once again $1.27 adjusted earnings per share and $1.21 is what we were looking for. let's dive deeper with george ferguson. george, you say that raising

capacity above gdp growth is not a good idea for airlines. guest: when you are raising above gdp growth you risk market capacities trying to hurt your yields and i think we will to see that from delta in this quarter. tom: let me ask you the money question. domestic is up four point 9% and transatlantic is down 6.9%. does the transatlantic saltiness -- do you believe that will filter into the u.s. to mastic flight market? guest: i do. are you talking to him or yield -- prasms or yield? i was a bit surprised to see saltiness in the atlantic. will have to take apart and see if that is a yield basis or a per passenger basis but there is a lot more capitation in the domestic market and i expect

that to leak over. brendan: how important is this greater commitment that they have made the gold? guest: that is part of the strategy to do a lot more in latin america. when they get someone down to brazil they really need to follow in places for them to build some of that traffic. there is no partner for sky team down there. tom: thank you so much. i will never forget my interview the day delta went bankrupt. that was really something there. that afternoon was really something. equities, bonds, currencies and commodities -- i just noted a weight wrapped around the market. the dollar is stronger all of a sudden and greece spreads have widened out.

given what we seat with athens looking at greece versus germany it is an important test today as is the full faith and credit quote with germany and the two year yield at 2.4% which is some of the tension we see in europe. brendan: this is bloomberg "surveillance." tom: back to our coverage on greece. the desperation you're seen in brussels and athens. hans nichols is back this morning and david gora enjoys a summer in athens. there is nothing to enjoy in athens this morning. they are riveted by the parliament behind you. reporter: the parliament has been meeting now for a couple of hours and is expected to continue until 11:00 your time at which point there will be a bit of a break. the expectation here is that the

full parliament debate will go from many hours well into the early morning hours late night in new york. brendan: what is happening in the street in athens as they discuss? are citizens watching this minute to minute? reporter: i have seen that and we have had a number of protests. there is a fairly big one outside a parliament and we of heard reports that there will be more throughout the day. there are strikes going on as well. a lot of public unions on strike. we're seeing a lot of people paying rapid attention to this going into this boat later tonight. tom: a new slow continuing and we are seeing it with the deputy financial minister of greece resigning. let me move on to hans nichols. within greece there has to be

domestic politics. let's focus on germany's morning . you have been way out front on bridge financing. where are you this moment on the german debate? hans: as long as you have something in place for a bridge the german side is discussing iou's from greece to bridge the bridge. i would not get too caught up in bridge financing. it seems they want to get there politically, so they can get their technically. there is an important tweet that came out from yanis varoufakis the former finance minister he is coming up against this proposal and he is comparing it to the treaty of versailles. an interesting switch -- split in syriza. tom: what are you focused in within the alphabet soup that is out there? there is esm< esfm and this

arcane language. what do we need to focus on? hans: forget the alphabet and the roman numeral's. think only of actual numbers and the size of greek debt and ask yourself if any of these alphabet soup agency numbers funding can come together to get us through next month and down the line. how does greece ever grow if they have 200% debt to gdp ratio in two years. that will be the jack lew argument when he meets with his counterparts. then meets with mr. schaeuble invert -- in berlin tomorrow. we'll see how he follows up swapping puerto rico for greece. brendan: david gora, where you are in athens -- we just had this news that the deputy finance minister resigned. is this a one-off or a start of

a larger flight? reporter: i have heard from a lot of people that we will see a lot more reshuffling within the cabinet. that well prime minister tsipras has managed to consolidate people are not happy with the crowd around him. i will say that this is something i have heard from a lot of people. last night in his interview he said that he wanted to put to rest rumors that he would sit down and perhaps after this vote he will be staying on. the reshuffling is not a surprise. tom: thank you so much. the distinction here is that this is a minister who is not the oxford grad or the dashing professor. she ran a hotel in crete. she was a member of the left and the communist efforts in greece. brendan: it is important to remember that part of the

providence of the syriza. tom: let's continue with our twitter question. we got a really good response. will janet yellen mentioned greece and china in her fed testimony? ♪

tom: good morning, everyone. brendan: yesterday and historic accord signed in the anna. -- vienna. we're joined via skype from tehran. we saw barack obama sell this deal to the american public, how is rouhani selling it to the irani and public guest: yesterday he had a press conference after the deal was announced and he was really pushing the positives. he was really outlining from the arabian perspective the way that the deal stock. it was interesting to see his message being relayed at the same time as president obama because obviously there someone to speak to. rouhani is really pushing the fact that iran has not come from iced on anything.

protecting its right to enrich uranium. brendan: in the last 24 hours we have seen so many amazing pictures of people celebrating, are those isolated events or is that really as widespread as it seems? guest: there are a number of very large intersections and junctures. when there are big news events like this such as an election or a positive world cup victory for an iranian national team usually people come out and take that opportunity to go into the streets and have collective communal celebration. there are certain spots that are popular. they are also kind of middle-class heartland's if you like and actually downtown where there are many working-class families. by and large they are happening

across the city. vonnie: what is the talk of new business coming to iran and when might they move their? guest: i have met delegations of foreign investors who have come here, bond managers and people working. the oil industry is obviously very attracted to people and a low labor costs here in some respects are compared to china whom analysts say are very attractive and we have a major german delegation arriving next week with the vice chancellor -- that will be really important. there is lots of interest i think across private and government sectors. brendan: is there any sign domestically or politically that the deal might not be approved?

guest: i don't think so. one of the first voices i saw came out was the head of the parliamentary commission in iran. he had some concerns about the talk and he was demanding a piece of legislation equivalent to a congress wants to do. brendan: thank you, time for the twitter question of the day. is janet yellen looking abroad? ♪

tom: let's get to our top headlines. vonnie: rescuers in eastern kentucky will resume their search for six swept away by flash flooding. two were killed yesterday when heavy rain sent -- swept through a small town. a state of emergency is in effect. t-mobile is mounting a new challenge to its competitors. the wireless carrier is cutting prices and raising data limits. the plan for two offers 10 gigabytes of data to each for $100 a month. a similar verizon plan can cost twice as much. disney takes the wraps off its

biggest foreign investor ever. i shanghai theme park. it will include attractions based on star wars and marvel characters. dying to see what that park will look like as they tailored euro disney a little bit french. brendan: have you been to euro disney? vonnie: i was there the opening year and it was not fully built. brendan: they've thrown a lot of -- tom: they have thrown a lot of money at this. vonnie: particularly in china. tom: let's move on to janet yellen to the sun does come up in the east. the fed its data dependent and part of that might be the euro getting to 1.09 handle. plunging in the last 20 minutes. janet yellen will be on at 10:00 a.m. this morning.

our twitter question of the day, does greece matter? right now it matters to the euro. how does janet yellen ballet or dance around china and grace? guest: in january when she last testified she did not mention greece at all. she did talk about the possibility of foreign economic developments affecting the u.s.. she did mention china so it will be interesting to see what she has to say. nobody knows whether that number is accurate or not. you can expect them to stick to that fed script you outlined. the economy is getting better not great but good enough. and inflation. tom: at 8:30, we get the testimony. you get the word search off the terminal, what do you look for? guest: if you are a pro you go straight to the conclusion. everybody expects the same

thing. the fed is likely to raise rates if we meet targets but she will not tell you when. vonnie: we will hear some questions about the fed leak investigation. guest: in october 2012, the mentally global advisor firm put out a report that encapsulated everything in the release the next day. there was a justice department investigation of this. in may the chairman of the financial services committee subpoenaed yellen asking her to provide the names of everybody who had the information ahead of time and she has refused saying justice department investigations are ongoing. you can expect some fireworks today over why she is not complying. he has accused her of willfully disobeying the community. brendan: there is pressure going

on from the spokesperson for the finance minister and germany. he is saying germany cannot accept significant cuts in greek debt value. that means maybe there is some cut that is not significant. tom: jack lew is going to stop by frankfurt today. does janet yellen stop by the imf? only like six marble buildings away from each other. guest: they all get together and switzerland for the bank for international settlements. tom: have you ever seen it like this? i can honestly say i have felt tension like this over a political economic discussion. guest: there is certainly tension in europe. the interesting thing is jack lew's involvement is tangential. the u.s. has nothing to say but the pressure both sides. tom: but you heard like schaeuble discussing greece at thursday's meeting. brendan: what leverage does jack lew have at all, over anyone? guest: the u.s. has an address

where the euro goes and they want everyone to settle everything down. tom: where is this september-december debate? september, ellen's it and are was 2016 -- ellen zetner was 2016. where is that now? guest: the inflation numbers and the jobs numbers -- if they don't deteriorate and they come in as they have they want to get started. vonnie: rubber when she talked about technology -- remember when she talked about technology shares and everyone went crazy? guest: the fed noted that valuations for the stock market were down but for social media and biotech stocks they were a little frothy. we have a chart of what is happened to biotech stocks, they are up 58%.

if they were frothy then -- when she talked about it last year knocked the stocks down for a couple days. brendan: in theory this is a conversation between her and congress. do we expect any member to say anything worth remembering? guest: no. they want a sound bite for their constituents and she wants to make as little news as possible. tom: issue going to do that? guest: she has -- tom: is she going to do that? guest: she has been pretty good at it. the markets haven't been knocked off their pins at all. tom: you were in idaho, you are going back to wyoming -- she will not be there? guest: it is just ahead of that september meeting. she probably doesn't want to make any news one way or another. if she didn't say anything they would say september is off the table and if she didn't they would say it is not. tom: how important is christine lagarde? guest: she is important behind

the scenes to the greeks and the germans. if she puts pressure on the germans like we get this headline that says maybe there is some with a room here. brendan: so little wiggle room on exactly that question of greek debt for so long. tom: m i wrong that the catastrophe of the imf walking away from this crisis far outweighs anything? brendan: germany wants to get the imf involved in tsipras wants to avoid it. tom: michael mckee with janet yellen this morning. vonnie: he is sticking with us because that was our twitter question of the day. will janet yellen mentioned greece and china? the first answer -- yes. she will head to that global events are introducing too much uncertainty to hike rates. tom: that is one belief. [laughter]

vonnie: second answer, ignoring an 800 pound gorilla what make it leave. china is great concern especially given bank exposure. tom: good at measuring the pulse of economics. vonnie: third and final answer if yellen mentions greece today she is more likely to quote olivia newton-john rather than tsipras. tom: i think there is a percentage of our audience who don't know olivia newton-john. brendan: how to handle that twitter question without singing which has been banned from the show? i will not that is for certain. brendan: the course of that chong -- song was better shape up. vonnie: i believe that you are

watching greece all day today, tom. tom: let's do yours first on yellen. vonnie: we have data at 8:30 and janet yellen starting to testify before congress around 10:00. we are expecting her treatment run 10:15 and questions after. tom: bloomberg terminal will have the headlines. then a 1:00 p.m. agenda. brendan: this afternoon obama will open up the east room to questions. expect those questions to be about iran. tom: i don't know the time zone but i will say the 3:00 a.m. agenda, whether athens brussels, berlin or washington with great fear i say that. greece front and center. david gora is in athens and we will watch this very carefully. stay with bloomberg television and bloomberg radio all day. all it is euro just took a trip

under 1.10 indicating some of that tension as well. 30 minutes from now, we will see the testimony of janet yellen. stay with us. ♪

>> live from bloomberg headquarters in new york. this is "market makers," with erik schatzker and stephanie ruhle. erik: good morning. eu are watching "market makers"

on bloomberg television. it is wednesday in new york city. i am erik schatzker. matt: i am matt miller in for stephanie ruhle. greek lawmakers again today and bank of america doubles profits. erik: all of that ahead and plus, you know him as the man who tweeted as ts elevator and he has a new book "straight to hell." we will be doing fact checking with john with their -- john lefevre. matt: let's begin with some of the news you need to know. erik: bank of america more than doubled its earnings in the second quarter. u.s. banks profited -- posted profits that beat estimates. here is the big factor bank of america