♪ anna: writing in athens, lawmakers face austerity. and the ecb will give greek banks more liquidity. mark: janet yellen delivers an upbeat message on the economy. she says a rate increase is likely. anna: more international subscribers press play. mark: welcome to countdown.

anna: it is 6:00 here in london. let's talk about what happened in the u.s. markets. guy: looking quite nicely untold the pictures and headlines appeared. this is the s&p 500. if we zoom out a bit further there it is. that is the point at which we see the greek writing. anna: show what happened yesterday. guy: that was really positive. probably a tail coming through in today's session. the greeks having a global effect once again. anna: we broke the longest rally in u.s. equity since january. as you say, the netflix story complete the different -- up 10%. and internationally -- annaguy: you are one of them. anna: this is a business growing

fast internationally. it is the fast performer on the s&p 500. guy: let's turn to athens where lawmakers passed the bailout that keeps them in the euro. for now. alexis tsipras pitched his deal as the best for the greek people. >> despite the fiscal measures and restrictions, we are capable of a lot in this country, which will serve the benefit of the majority and restore the injured pride -- the injured pride of the greek society. anna: that was a passionate greek prime minister alexis tsipras speaking. despite the bailout passing, 32 of the naysayers were from his own party. a he could lead his own majority in parliament. guy: protesters taking to the streets, shining a light. mr. tsipras faces an economy

already deep in recession. let's get to correspondents. anana: caroline, bring us up to date. what is happening now? caroline: a phenomenal night. it is now though, after the storm. there is another storm brewing. the question on every greek lips, who better to be speaking to than a political analyst and a pollster from the research company, none other than maria. you have of course been previously a vice governor of this area. a spokesperson for the party. what is next for alexis tsipras? does it power take a hit, 38 members of his party voted no. >> in terms of his parliamentary power, the is dangerous.

i would have to say that alexis tsipras is a domino figure in greek politics. generally speaking, he has the power. and he is able to do whatever he believes is best for him and the country. he is the only popular leader the only leader now according to our polls who has more positive views the negative views -- in terms of what people think. caroline: as the most popular leader, the man wielding the power, will he form a new government entirely? bring in the opposition? >> currently, he can be a prime minister and have a minority government. he has the acceptance of other political parties, the opposition parties. who voted for him yesterday. however, it is not ready for

greece to have a minority government. by asking other political parties to join his government. caroline: you think that is the option? >> that is the more likely option, instead of trying to go to an election. this is not a time for elections. caroline: how soon could we see it form? >> 15 days. caroline: the members, will they exit the party? will they remain? >> whenever he tries, he is willing to do. those people said that we are still members of the party. we are still in the parliament. what they said, they support the government of the house. most probably, he can do other political moments. caroline: if he is the most

powerful man still, we have a man who was voted for these particular changes in policies -- the raising of the at and the pensions. he thinks they are rational, many of them. what about implementation? will we see these policies? >> the necessary reforms in greece, you have to explain them to the people. he has the power to explain. he explains why these reforms are necessary, i believe he can apply them and people will still support him. caroline: do you think he will? at the moment, he is saying the rope is that my neck. maria: i think that he has to. caroline: he has to follow the rules. next week, we get the next set of votes -- about the 50 billion euro assets that will pass through. maria: i think they will pass the same way as it did yesterday. caroline: what next in terms of what the greek people are

looking for? we had the protests just outside the parliament yesterday -- 13,000 on the street. are you expecting more? maria: not during summer. [laughter] caroline: after summer? maria: probably, it depends. caroline: what effect will that have on the government? maria: usually, governments in greece fall on the people who choose to abstain from the party. caroline: as a greek person seeing the protests going on are you now confident that you will see the bailout continue? will the banks start to reopen here in greece? maria: i certainly hope, and it is up to the prime minister to do it and accelerate the greek economy, and the banks to open again. caroline: from your point of view, do you think he played his cards well? did he use the right tactics to

the right to the edge on the referendum, to then come back and have the greeks face even harsher terms? maria: he did things a bit different. however, he chose the referendum. and just after that, he is the most dominant figure in politics. it is just him and all the other politics on the other side. caroline: wonderful speaking to you. take you very much, indeed. she is a pollster and political analyst for the research company here in greece. she also used to be a vice governor here. she spoke to us on behalf of the party. back to you. anna: caroline hyde in athens. guy: let's move into the wider story. hans nichols joins us now from berlin. hans, walk us through how the ecb will deal with this? hans: yeah, i mean we are not

expecting a huge rate decision. what they have single up to this point, if greeks take the necessary action, they will pick up again. when you look at the collateral again this is pre-crisis. the 95 billion was the fall. even if they raise it by 6 billion, which is remarkable, it is unclear if you can open the banks with that. because they have much bigger problems. just because we have the votes on it doesn't mean we will get capital controls or lifting on the banks. the u.s. secretary of the treasury jack lew is meeting with his counterpart. can he invents him to do something? something substantial on the mountain of debt, the debt relief. debt relief is what everyone has agreed to. does that mean a haircut? or does it mean extending maturities. the imf warned that because

of greece, germany's own growth is being threatened. take a look at what the european union said about debt sustainability, the percentage of gdp. have a worse case scenario. if you look at the baseline scenario, it is 165% in 2020. but the adverse is always up to 187%. and as clear there is going to be a big push on germany to do something. will they give? we could find out and about 10-15 minutes. that is when mr. schaeuble is giving and address. later in the week, we have parliaments will have to act on this. it looks like it will pass. we get an early since tonight when there is a caucus meeting in the german parliament of the cdu. we will get a preliminary view looks like estonia doesn't have to vote. that is where we are at right now. we shift our attention to frankfurt in the mid afternoon to see just what they doa on ela.

what the number is and how quickly greek banks can open, if at all. guy: hans nichols running us through the angles. anna: talking about what ecb might do, the governing council is meeting today. that scheduled policy meeting looks like it will be dominated by the greeks. you can watch that here followed by the press conference. 1:30 u.k. time. we will bring you that lives and in full here on bloomberg. guy: i'm actually looking forward to the press conference in a weird way. right, coming up on countdown, our exclusive interview with hugh henry. he will talk about china and the feds. he will talk about china in greece as well. hugh: greece is tragic. but the thing i just told you my triumphant language about the

triumphant society, greece has a blown up political society. it has to be imported. some of the polls i see, the greek people one of the things they like the most the normal political economy that needs to come to be accepted. it is normal. anna: and janet yellen says she is on track for a rate increase. janet yellen: if the economy evolves as we expect economic conditions would make it appropriate at some point this year to raise of the federal funds rate target, thereby getting to know normalize. ♪

guy: it is 6:15 in london. here are the stories you need to

know this morning. anna: both inside and outside the parliament, as lawmakers passed a bailout deal prime minister alexis tsipras will have to rebuild his government after more than a quarter of his own mps rebelled against his legislation. guy: janet yellen delivered an upbeat message. on capitol hill yesterday, she told congress the fed is likely to raise interest rate. she repeated plenty of less important information. she also noted progress in a labor market that has generated more than 2.9 million jobs in the last 12 months. anna: a decision is expected on emergency aid for the crisis-hit nation's banks. they will announce interest rates at 12:45 u.k. time. with a press conference later, we will bring you both of those

life here on bloomberg. guy: we will be obsessed with greece at that point. we are pretty obsessed right now. anna: i don't think we could get more access. guy: members of the party voting against the bailout through parliament and say night, it leads the governing coalition divided with creditors. we spent the afternoon with one mp who voted against the deal. >> you don't give up. >> does it have added symbolism for you? >> you don't give up. i care about the future of the greek people. and the future of my children. and the future of my country. this is not a matter of the future of the parliament.

my name is rachel, and i'm a member of the greek parliament. the party of syriza. it is a bad sign but we must realize this for the greek people. i call the prime minister alexis tsipras to say a great note to this blackmail. i know that he was blackmailed. the government of greece, i prefer to die before i betray

the people. the greek monuments i want you to head to the acropolis. guy: she brings up mr. schaeuble on german radio. he is talking about greece. i don't think he actually wants the acropolis. he said that basically greases in a difficult situation. it is interesting, coming out of the esm. anna: the esm chief talking about and giving conflicting messages, the greek banks pose risk to euro's ability. the banks are sovereign, he goes

on to say the contagion risks are no longer there. that is what this whole thing is about, putting a firewall between the banking sector. guy: i think he may be overemphasizing that at the moment. i think those two are very closely linked, look at the capital base of the greek bank. the two are investing which will. anna: let's get some other thoughts on it. let's talk to david lee, senior analyst at control risk. saying that the greek banks still pose a risk, the contagion risks to sovereignity are still there. did they pave the way for a bailout> how has it managed to move the banking section away is that a sort of destination they're trying to get to? david: i think that is the direction everyone he wants to move in. but it is questionable how fast we are moving. the banking system is still very

unstable. and that is going to have the effect on the greek people and how greek people and businesses can function. it will be that political change rather than anything else. guy: the party is fragmenting and looks like. you had rioting out on the streets. give us a sense of direction for greek politics now. can alexis tsipras fashion some sort of government and connect the policies of the bailout? david: i think if he gets the policy leaders in the room, he did last week. creating some sort of documented unity. i think that was a good idea. it does bode relatively well for forming a national government. i think it will in the next few weeks. however, i am not sure that is going to be too long lasting a

thing. i still think it is possible that grace might have an election cycle this year. alexis tsipras is not by his nature a bridge-builder, a consensus politician. he is a campaigner. is he the right man? he pointed out several things. anna: he was saying he was not going to. he was the last person to say i disagree that was one of the few things he said last night. it took him to the early hours to talk about it. who else can lead a unity government there in greece? are there other contenders who seem obvious? david: this is a big question because the main-center-right party, the biggest party in the last government, is in the process of changing the leader. the other party is very weakened. could there be another figure from syriza? it has been alexis tsipras and

varoufakis. a like this was always going to happen to the party. that is why it has been so strongly focused -- guy: are they being undermined by the imf and other institutions? they talk about debt relief over the last 24 hours, they indicated they feel the greeks need debt relief. mr. schaeuble is on german radio right now talking about this. i do find debt forgiveness is important. nevertheless, we have a lot of people around the world questioning whether this deal is the right way to go for greece. and if that chorus grows louder, how will that ripple back into greek politics? david: i think it is very important how large it has gotten nationally. as opposed to alexis tsipras who

was pulled his own troops in somewhat. one of the interesting things about this, the previous ones -- pretty much everybody hates it. within greece, outside greece, institutionally, politically. guy: not a great starting point. david: no i heard people saying that the one thing that keeps us together is it everybody hates it. anna: everybody can say i know it is not great. but it is the best we got. david: it is much more likely that it will fail because nobody is invested in it, really. guy: would it be weirdly better if somehow we had a left-leaning administration carrying on an enacting the legislation required to make this work? greeks clearly need a lot of economic reform. the right has proved incapable of doing that, in bed with all the vested interests. you need a left-leading administration to enact this.

david: absolutely, the same thing for china. it will take a left wing government tofor greece to realize the reality of it the fiscal situation. i think perhaps alexis tsipras is not a man to lead the government, giving his campaigning in the past. he is a popular figure in the moment. anything he can push through has to be money. anna: do we know anything about the timing that is going to happen in the coming weeks? if we are going to see his leadership brought into question, how long would that distract from the process of delivering these reforms? as you know, watching what the greeks are delivering and they're going to act accordingly, they are waiting -- the germans are waiting. is that going to be made incredibly impossible?

the domestic issue surrounding politics? david: the focus has been entirely on that boat last night, getting those initial conditions pass. now how that comes out in the next few weeks, if greece does not have the usual parliament overall, this is all going to commence. i do think there are a lot of goals to be past year. but at the same time, you have position policies now that are about alexis tsipras. i think i can be good. anna: david, thank you for joining us. senior analyst at control risk. guy: he is saying greek debt forgiveness is not possible in the euro. then he is saying it is unclear how to restore the debt without a haircut.

he is implying that the haircut is necessary. anna: that is what he said last night that mr. schaeuble wants them to leave. coming up, senior advisor at credit suisse joins us for the next half hour. ♪

anna: welcome back, 6:30 in london. here are the stories you need to know this morning. guy: overnight protests outside the parliament as lawmakers passed the bailout deal to keep the country in the euro. alexis tsipras will have to rebuild his government after a quarter rebel against the legislation. independence on opposition votes continue. anna: u.s. president barack obama mounted a robus t dependent of the opponents to criticize the accord. president obama: for all the

objections from the republican leadership that has spoken, none of them have presented to me or the american people a better alternative. guy: staying in washington janet yellenn delivered an upbeat message. she told congress the fed is likely to raise rates this year. the timing would be noted upon the labor market that has made more than 2.9 million jobs in the last 12 months. anna: with us now to discuss the fed and her optimism is bob parker. senior advisor at credit suisse. ask for joining us for the next hour or so. 70% of economists say september is a day. >> i think that is absolutely

right. we have unemployment down to 4.3%. there is a high probability that within the next month, unemployment will go lower. by the end of the year, we could easily see the headline on an and unemployment rate lower. one looks at the headline cpi numbers currently close to zero. i think the inflation numbers will start to creep up. we may get close to 2% inflation by the end of 2016. at the risk of being too precise, my forecast shows the 50 basis points in october. first quarter of next year marjorie april, to go to 75 basis points. second half of next year, we could easily see a rate of 1.25%. the pace of which they will increase is going to be very slow. and the quantum will be very small.

it is going to be this very gradual process. guy: currently trading, we have been up north of 100. how does that fit into the currency market at the moment? you always get a bit of a shock when it actually happens. how much of the strengthen the dollar? robert: the answer is marginal. the game, we will make precise forecasts here. probably a trading range on the euro, a low -- close to 103 ceiling. with the fed raising rates, it will stay stable at around four points. but the ecb continues with qe. that stops the euro from appreciating. but there are a number of factors which our supportive of the euro. countless surplus, europe now

house a current account surplus. germany's is 7% of gdp. we are seeing the undervaluation of the euro, very significant action. frankly, europe is up for sale at the moment. asian and american buyers are coming in. anna: some of the u.s. banks seem to be doing well as a result. if the u.s. is going to increase interest rates, we saw big moves in a quantity currencies overnight as result of the canadians cutting rates. asking if other quantity countries are going to cut rates, as well. will we see a stimulus wave coming through them. the ecb is still in qe. it says the fed increasingly at odds with the world. robert: probably the bank of england at well. as the fed moves, the bank of england will raise rates. the pace will be very slow.

anna: are we the only allies? robert: japan qe continues well into the second half of 2016. the ecb policy i think will stay intact probably until september 2016. the commodity currencies you mentioned there, obviously under pressure at the moment. but with oil prices post the iranian deal, under further pressure, industrial metal prices -- iron and copper copper is close to 5.5. i think it is inevitable that the currencies will see easing. probably we have not found the floor yet. guy: we are going to carry on this conversation a bit later on. thanks for mixing in with everything else. bob parker, he is staying with us. angela merkel, she just finished a radio interview.

we talked about greek debt sustainability. mr. schaeuble says it is on clear how we will sustain without a haircut. now angela merkel facing princes him of her handling of the crisis. germany still driving austerity debates. yesterday, the founder of hedge fund eclectic up set down with me and somewhat surprisingly you would say said germany will come out on top. >> it reminds me of some of the most magnificent micromanagers in the world. where if you go back and read all of their commentaries and prophecies for 2018, you find that nothing they write about happens. and you say, how much do they use? oh my goodness they made so much money. everything wrong about the intellectual debate, and yet it

seems to get stronger and stronger. guy: is that because greece is paying the bill? hugh: i don't think that is the case. i still think greece is a significant mover. greece is desperately tragic. but the thing i just told you my triumphant line about the robustness of society. greece needs a grown-up political society. maybe it has to be imported. some of the polls i see on great people, the one thing they loss the most was the normal economy. guy: wrapping things up china has had this pic. this understanding they need to get the house together. that they need to create domestic growth. when you look at the volatility

in the stock market over the last couple of weeks, is that part of the transition? something they have to go through to see and try and figure out to get inflation going? how to get into the sector, how to kind of progress? what is going on there? what are we seeing as a future guide? hugh: let me tell you why i believe we are seeing a boom market in equities. we have long seen the disassociation between economic growth and stock market performance. especially in china. and it is not a mystery. china's economic model was a bit like one of these corporate retailers test grouping the long series, where you kind of increase the capital employed by opening stores. but the marginal return is collapsing. and analysts can see it before you left. china is there, it was a gdp machine.

marginal return for being obliterated. once they came to reject that model, you saw an improvement in marginal returns and capital employment. that pivot can be extreme. you go from having no intrinsic value to being something with perpetual value. that is important. secondly, china is very much like europe in 2012. it had a debt problem. china had it in its local administration. and there is a textbook response. banks can do outcome he. they can take that that paper and do it as collateral and you get free money to put back in the economy. china can do that. china is the own beneficiary of their boom market beneficiaries. what we have seen in declines the tiniest currency -- it is a safe harbor. it reflects all of that. chinese currency is refracting the terms of trade.

all of these facts give you the ingredients for a longer-term boom market in china. the mystery is why is it so distrusted by the investment community overseas? to my analogy of living in the future remember, and 2000 and 10, i was looking into the world where gdp growth was now. people would say to me, you are so bearish. how can you be long-term? this model works better. and so the danger is that we are displaying too much shade and hade. things got out of hand. yes, but the thing is, we cannot try to forget this. and my biggest problem was i was not keeping up with the markets. the 50 largest companies, and i owned the enterprises. with trades like a discount.

we are all happy running that today. guy: you hugh hendry, a man who has changed his tune quite a lot. for those of us who have known him for a long time, used to be very positive on gold. not a big fan of equities. anna: now he is positive on china. guy: you can weigh in on all the top stories. we are on twitter. anna: coming up on the program we would take a look at the top stories on bloomberg.com. including one mining business. ♪

anna: it is 6:44 in london. here are the stories you need to know. guy: inside and outside the parliament, lawmakers passed

the bailout. alexis tsipras one now have to rebuild his government. up to a quarter of his own legislation rebel. the opposition vote will continue. anna: reset the top the agenda, a decision is expected on emergency aid for the banks. mr. schaeuble welcome now his latest interest rates plan. the press conference of course follows after that. we will bring you all of that here on bloomberg television. guy: nasa has released the first ever close-up photos of pluto. which is 3 billion miles from the new verizon spacecraft. the images show and 11,000 foot mountain, ice towering over, all kinds of geological activity. and one of its moons charon.

anna: legislation passed in japan that will see them move away from postwar cataclysm. that is despite protests from lawmakers and demonstrators. the bill will cut military ties with the u.s. when a time when they are embroiled in a territorial dispute with china. it would allow the forces to defend other countries in certain circumstances. guy: now back to the markets. kicked off in the united states come around with remarkable speed. netflix out last night, the real story there on the fact that we have seen the international acceptance of netflix really starting to pick up. even anna has now subscribe. anna: and i am no form of leading indicator on that front. guy: it is definitely on the front. anna: it has been the best performer on the s&p 500 year today.

intel also out with numbers they are keeping sales better than estimates. that helps that particular business deliver something to impress investors. process is the backbone of the data center, and that is where they are delivering. even if they missed out on some of the provisions the smartphone industry. today, we have a busy earnings calendar out of the u.s., as well. guy: the big banks are up. goldman sachs citigroup's, and we have ebay. the story will begin to accelerate now. we will see how the u.s. bank's are doing. anna: let's talk little bit more about the earnings season. robert is still with us. also joining us, and his thoughts on metrics, 10 from bloomberg's website. let's bring you in on netflix. an impressive performance

international business is driving it. tim: it really is, the number is 10% growth -- more than 2 million international scriber's coming in. the latest ones come from new zealand and australia. and they haven't even opened in china you. that is the big thing they are looking at, trying to find international partner. that is a big market they have yet to even enter. guy: when you look at the u.s. earnings season, what will it tell us about corporate america? robert: the big thing is huge divergence between different sectors. commodity companies energy it will be disappointing. if we look at year on year earnings from the energy sector they will be down significantly on the year basis. likewise company that are exposed to the strength of the dollar are going to suffer. and that is by the way one of the reasons i do not see much

for the website coming back to the dollar. companies like netflix which are going through a major expansion internationally on a fairly insensitive dollar amount, they will do very well. you talked about the banks. i think the recovery in the picture is now very sustainable indeed. the fact that we have a sharply positive yield curve help the banks. we have mortgage lending and consumer lending, and default rates are low. also, the. of very heavy fines on the american banks is now behind us. anna: and the wages helping. robert: notably goldman, they are a huge beneficiary of that. guy: let's talk about gold in northern ireland. two things that i don't often hear about together. tim: that's right. we have an interesting story looking at the opportunities for

trying to build a gold mine in northern ireland. it is an investment. they have known about the possibility of gold there for hundreds of years. in the 16 30's, they first started looking at alluvial mining. they look at the deposit in the 1970's and walked away. somebody thinks that now they can make a go at it. they say they can produce -- guy: even where the gold price is at the moment. it has come down. it is still economic. tim: they say they can produce at $800 an ounce. well below most of the international break even rates. they're trying to raise money. we will see. robert: years and years ago, hugh is to be you want to focus on gold. why do you buy gold? you buy those if you think the banks are going bust. bank failure now is a risk close

to zero. with the exception of the ukraine restructuring, greece restructuring, venezuela is under stress. but with the exception of those three, why the you buy gold? i cannot think of any reason except that he has come down from 1900 to close to 1100. having said that, there is no investor interest. anna: a used to be that flight to safety. robert: you do not need safety. you need other things. anna: people felt nervous about greece, not the greece had to say because it is small. but there were a lot of people putting on that risk aversion trade. the goal never seems to fall into that trade. robert: the flows of investor capital over the last few weeks into gold have been ridiculous. what has been very interesting, all this pressure on the great

negotiations -- particularly the referendum, which was the containment of risk in the european bond markets. it was very small indeed. today, we have 10 year italy and tenure spain back to 2% yield. tim: another rally we saw in gold came with commodity prices and oil. oil is back in the 50's and going nowhere fast. anna: gold was really a commodity all along. it was in the currency, a safe haven. it was a quantity. tim, you have another story on iran. the deals are aplenty at the start of the week. we had a great referendum and the deal indiana on iran. what is happening there? tim: it really is quite a good read. and it is a look inside the room as the negotiators reach this historic deal. you know, bob kerrey, a vietnam veteran. his message to the group when they finally reached a deal was we must pursue diplomacy for we

pursue force. and it was an historic moment. people felt very emotional inside the room. it is a great read. guy: put this in perspective should we see it similar to the kind of those we saw with china? put it in historical context, some of these massive deals that have come through -- big changes geopolitically. how do we rate this one? where does it fit? tim: it is really an important breakthrough. i was actually in tehran in 2004. and felt like it was 1979. literally, like the clock has stopped 25 years prior. nothing had changed. literally, this is iran. a giant oil reserves, giant gas reserves -- isolated for the rest of the world. coming back to foreign investment. anna: where you see business is

making the most of this. do you see opportunities for oil as a commodity x or? or do you see western businesses getting involved in the consumer? what is a story for you? >> clearly that economy has had massive underinvestment in infrastructure and energy for many years because of sanctions. i think the big opportunity for global business in iran wants the sanctions are 100% cleared is obviously to invest in iranian energy assets, subject obviously to your confidence that the iranians are not going to sequester your investments. political risk has not just going away. i would say it has been reduced area significantly. yes, there are opportunities. you mention the consumer and sectors in the energy have been

on invested in for 20 years plus. that is why all this talk about iranian oil exports moving quickly are exaggerated. i think you are going to see the oil export and gas exports probably move up slowly. anna: thank you very much bob parker. and tim from our website. guy: before we get into the next break, let's hear a little more from what we heard from hugh. we talked a lot about greece and the wider world. he is really positive about china. he talks about china like it was europe in 2012. take a listen. hugh: it had a debt problem. europe had in peripheral companies. china had it in his local administrations. and it was a textbook response. banks can do alchemy. they can take a bad paper and use it as collateral, and you get free money to put back into the economy. china can do that.

china is a profound the beneficiary for the end of the boom market in commodities. who stands to benefit more from what we have seen in the declines of chinese currency? it is the safe harbor that reflects all of us. chinese currency is reflecting the terms of trade. it has improved dramatically. all of these facts give you the ingredient for a longer-term boom market in china. the mystery is why is it so distrusted by the investment community, the investment community overseas? it is my analogy to living in the future. and 2010, i was looking into the world where gdp growth we had these great numbers. people would say to me, you are so bearish. how could you be long-term? and this model works better. anna: on china. guy: the ecb ways emergency funding for a bailout

vote. we get to frankfurt to find out what we can expect. anna: the ecb is meeting to talk about interest rates. that is being overshadowed by all things greece. we will be right back. ♪

anna: rioting in athens as lawmakers vote to accept you a stuart measures demanded by creditors. the focus shifts to frankfurt and whether the e.c.b. will give greek banks more liquidity. guy: on track federal reserve chair janet yellen delivers an upbeat message on the economy and repeats the 2015 rate rise is likely. anna: netflix soars as more international subscribers press play. guy: welcome to countdown. i'm guy johnson. anna: i'm anna edwards. welcome to the second hour of the program. 7:00 here in london. let's look at what happened in the u.s. yesterday. those greek pictures we started at the top of the hour had an

impact. guy: they certainly did. when they started hitting tv screens state side this was the effect. let me show you what's happened. this is the s&p 500. going along very nicely and the greeks start chucking some petrol bombs around and that's the impact. the sense maybe it's not a done deal that everybody thought it was in greece. and as a result of which, that was -- that started to factor in. we also had quite a nice long run and maybe the market is looking for an excuse to do a little bit of selling. anna: the longest rally since january in u.s. equities. just getting to some breaking news because this could be pertinent. going into our conversations about greece among other things. e.u. car sales, posted their biggest rise in nearly six years. so car sales in the european union picked up strongly in june. it seems. so the biggest gain in 5 1/2 years. just to -- nearly six years. i'm not sure i was rounding up a little too aggressively, wasn't i? that seems to be the headline coming through. in terms of -- in terms of the european car making story and

goes into a conversation which will no doubt pick up and how much the greek crisis is impacting across the euro zone. and perhaps supported by those figures. let's turn to your attention to athens where greek lawmakers passed a bailout that keeps the country in the euro for now. ahead of the vote prime minister tsipras repitched his deal as one that was best for the greek people. >> despite the fiscal measures and restrictions we are capable of a lot in this country which will serve the benefit of the majority:and will restore the injured pride. the injured pride of the greek society. guy: a passionate greek premier alexis tsipras speaking to law marx. despite the bailout passing 32 of the naysayers, one were from his own party, that suggests that he could lose his majority in parliament. anna: let's get to our correspondent who is covering this story. caroline hyde is in the greek capital and hans nichols is in

berlin. tsipras must now fight then to rebuild his government. he faces something of an uncertain future with that revolt within the syriza ranks. caroline: you're right. more than a quarter of his own rank of the syriza party that he leads did vote either no or abstain yesterday. rebelling against the bailout. and surprising when your very leader is saying that it's irrational what they had to vote for. the hikes in -- the changes in the pensions of course and said he would only agree to it with a knife to his neck. but still he needed this to go through to set in process the negotiation of the bailout. what now for his government? he could leave with a minority government in the short term. and they still got to vote next week. the second stage to pass through that $50 billion euro asset fund they need to vote through. and it seems the opposition parties will vote with him on that.

but in the longer term, that support isn't guaranteed. so does he have to every time wrestle to drum up support as a minority government leader? or does he form a new coalition, a unity government for the interim when he can bring opposition parties onboard to get through this period of struggle? or does he call elections? he is still the most pop leader, most popular m.p. so says the political analyst i was speaking to earlier. it seems as though many feel for the interim he will lead a minority government because it seems as though they know they're between a rock and a very hard place with a bank still shut for three weeks. they need to get these reforms in place. guy: caroline, so it looks fairly peaceful now behind you. talk us through what happened last night. talk us about what that means for the way to the greek people feel about what is being going on. caroline: calm after the storm. there is a storm inside the government. inside the parliament of

course. and there's m.p. spoke out against the bailout. behind this building behind me. but there was a storm of protest outside in the constitution square, which you know so well, guy. it's phenomenal scenes as i came into athens. hundreds of protesters bearing flags through -- marching through the streets. 13,000 descending. initially peacefully in the square. but as dust started to settle, as it turned dark, so the anarchists dressed in black came out and suddenly a hurl of monthly could have cocktails exploding outside our hotel and a snap change in really the way in which it felt outsigh on the streets. we had the police reacting. there was spray of course coming tear gas being used. and it hung on the air in your eyes and stung my nose as i walked through the streets later on. but they did manage to quash that violence quite swiftly. the protests continued late into the night. there were helicopters swirling. and now perhaps i'm satisfied

and uncomfortable calm seems to be descending. we will see where we go but with three weeks the banks shut, with the economyit would seem that many feel that these are very bitter pill to swallow. but swallow it they must. back to you. anna: caroline thank you. caroline hyde joining us there from athens. guy: on the radio this morning talking about haircuts for grease and whether such -- greece and whether such things are sustainable. hans nichols on what the german finance minister had to say for himself. hans: he's not very positive about a solution for greece within the euro. i was listening to this interview and i thought it was remarkable. he said debt forgiveness is not possible within the e.u. so that's off the table. but it's hard to see how you make greece's debt sustainable without a haircut. how you can square those two statements and actually keep greece inside the euro is the challenge for everyone. mr. liu will be meeting -- jack liu will be meeting later today here in berlin. we'll see him make that pressure on this -- over this

argument on the overall size of greece's debt. you can look at the i.m.f.'s projectionez. you can look at the e.u.'s projections and we have the e.u. projections up. and you see what their debt is as a percent of g.d.p. will be even on some rosy scenarios. so guys, i think you got some breaking news back there. i will throw it back to london. anna: and well fascinating to see what liu and shobler and whether they're making jokes with each other again or swapping countries and ireland. and where is the e.u. on bridge financing to greece then? hans: well, it looks like they're getting very close to an agreement. this would have -- come out of a bailout fund which all 28 countries would subscribe to. so it looks like technically they're on their way to a solution. politically there's always been a will. it's seven billion that they have and maybe up to 12 billion depending how long it actually takes to negotiate that program. one quick note greece does have a bond an interest payment due

today from a three-year bond and 71 million interest payment. and up to this point they paid their private debtors and going into arrears. we wouldn't say default. arrears with the i.m.f. guys? anna: hans nichols and caroline hyde. the governing council meets for a scheduled policy meeting. hans was referring to teller in the program. the rate decision is going to be announced at 1:30 u.k. time. and the relevant times on your screen and expect focus on greece and all that will be live on bloomberg television. and we have some breaking news. guy: the commodity story is represented in the news flow this morning. we've seen a significant dip in commodities. and having to make an impairment as a result of that. and confirming that they see impairments of up to $4 billion. this is related to iron ore and related to coal and i think you will see a lot more of this. as commodity prices have come down farley sharply. going to change the mathematics

fairly dramatically. anna: the u.k. regulators is seeking views on a potential b.t. group breakup. this is fascinating. sky and -- talking about this on a number of occasions. they have both been calling for open reach which is the b.t. infrastructure division to be spun off into a separate entity and been calling for that for years. and some have said that the european commission and other regulators won't favor that. they'll favor some sort of functional separation. rather than a structural separation. but it looks as if they will consult on whether that's necessary. i spoke to mike rake, down in south africa, just weeks ago and he just like -- and both of them say that they sort of boast about the amount of investment they put into open reach and say this would not be possible if this was a separate business. that's the b.t. line. guy: interesting that they're firing shots back at sky as well. and looking at involvement in sport and etc., etc. this is a crashing of sectors together basically.

at the moment as you see broadband content and everything really coming together into these single entities. so as a result of which the regulators will figure it out. anna: and our senior advisor bob parker talking about european car sales. and it seems they're at a 5 1/2-year high. and just before we saw that news you had said i don't think we're -- you said i don't think the greece story is having much of an impact on consumer behavior. or the -- i think that's what you were talking about. and you seem to be right. from the car sales. robert: i think just two points. the first point is i stick to the view that actually contagion risk in european capital markets is going to be minimal. so as a result the minor selloff that we saw in the spanish italian and portuguese government bonds was exactly that. it was minor. and it was short-lived. and now we've seen the rally back to i think probably a sustainable level. so those bond yields. the second point is that the impact of all the problems of greece and greece this year has gone back into recession.

i think at best, we're going to see feeble growth, perhaps less than half a percent growth year on year in greece in the first half of 2016. i think the rest of this year, you're going to see the economy contract again. but i think the impact of that on the rest of the euro zone and the european union more broadly is actually going to be very minor indeed. and one has to emphasize the amount of stimulus whether it's the devaluation of the euro, whether it's low commodity prices, whether it's e.c.b. q.e., a huge volume of stimulus being thrown currently at the euro zone economy. and i think you'll see economies like spain, which in the first quarter of this year grew nearly 4% annualized. i think that is going to continue. guy: would that still be the case if greece had left the euro zone and seen the grexit would there have be a an effect? robert: there would have been a massive effect on the greek economy. because -- guy: not the rest of europe. robert: not rest of europe at all. the greek economy would have gone into a major economic meltdown. because anybody, greek who had

euro liabilities, a new dratch ma -- drachma and the i.m.f. was right that the drachma if it had come back would be devalued by 60% or 70% against the euro and would have meant the greek banks and greek companies, greek individuals -- guy: so talking about this earlier. -- talking about the banking system is potentially instability. robert: you have three stress points on greece. number one the banking system which is absolutely credit tal. the fact the banks are closed, is jamming up the economy at the moment. and absolutely critical that we get the greek banking system reopened. and that's why this bridging finance and why the e.c.b. decision today on e.l.a. is so critical. and more money needs to be put into the liquidity and needs to be put into the greek banks. anna: bob, what chances would -- for grexit last week and what chance this week? robert: i take the -- i took the view that capital controls were a very high probability.

we've had that. and i think now it's critical that capital controls come off. i thought that the probability of a grexit was less than 50%. but if you wanted a probability, i would have said -- and had this conversation two weeks ago the answer would have been 30% to 40%. i think it's still likely that greece at some stage in the future, and that could well be the second half of 2016, or going into 2017, that this problem comes back. and they do actually have to reinterviews the drachma and done in an orderly way and what would have been zast russ if you had greece kicked out of the euro over the last 10 days in a very disorderly way. that would have been very disruptive. but for greece less disruptive for the rest of europe. anna: bob parker stay with us. guy: coming up a subscription success story. netflix passing 65 million members inity second quarter. as international growth surges. we will bring you that story after this short break.

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guy: it is 7:16 here in london. that means of course that it's 8:16 in frankfurt. here are the stories you need to know. anna: angry answer scenes inside and outside of parliament as lawmakers passed a bailout deal to keep the country in the euro. prime minister alexis tsipras has to rebuild his government after more than a quarter of his own m.p.'s rebelled against the legislation. that makes tsipras dependent on opposition votes to continue in government. guy: janet yellen delivered an upbeat message on the economic outlook. the lawmakers in her semi annual testimony on capitol hill. she told congress the fed is likely to raise rates this year. but repeated the timing is less than important than the -- and yellen also noted progress in labor market that has generated more than nine million jobs in the last 12 months. anna: the e.c.b.'s governing council meets today with greece set to top the agenda. a decision is expected on

emergency aid for the nation's banks. the e.c.b. will announce its latest decision on interest rates at 12:45 u.k. time. that's 1:45 central european time. with a press conference an hour and a quarter later. we'll bring you that live here on bloomberg television. guy: prime minister alexis tsipras' capitulation to creditors sent a signal to critics of austerity that they need to double their efforts. bloomberg sat down with a major figure in the anti-austerity movement. italy's five-star party founder, and the party like the foof star, it may lead to new shots in the european political fabric in coming elections. some people are saying. grillo told bloomberg europeans need a plan b to the euro. >> there are 28 countries in europe. 10 of them are outside the euro. and part of the e.u. most of them are not in default. they go on pretty well. so i don't understand.

the euro is a subter e-terfuge. -- subterfuge. when we talk about going back to the lhira people start panicking because they think of the lhira 20 years ago. strong lira. 1-2-1 cross rate. what would happen? we would have an immediate shock. a 20% 230% g.d.p. reduction. but that's what we already had. since we joined the euro in 10 years we have lost to germany 25% of our industrial production. we have doubled our youth unemployment. we have increased our public debt. our unemployment rate is among the highest in the world. there is not a single sector doing well. anna: let's talk to bob parker, senior advisor at credit suisse asset management. bob, before the break we were talking a bit about how you think greece, the possibility of a grexit could be back on the agenda. so do you think that the -- the germans continue to be as big of fans of the euro as they've been and is that the key

deciding factor as to where this currency goes from here? robert: a very interesting debate going on at the moment as to what are the conditions for the long-term survival of the euro? and we've obviously monetary union and currency union but not fiscal union and don't yet have capital markets union. i think we're trying to persuade ourselves that we have a banking union but that's work in progress. and i think it's very clear that unless you get some form of increased fiscal union that may require a european minister of finance. which we don't have. i think it is very difficult to see how the euro is going to remain problem free in the long term. so i actually sympathize with those people who say we need further economic integration. because if you don't get further economic integration, actually the viability or the survival hit of the euro in the long term, i think is questionable.

guy: we're already there, aren't we? the fact that we got so close to greece living the euro zone means that this in its current form is an exchange rate mechanism. exit is possible. robert: yes. guy: and wolfgang schaeuble is talking about that exit still being a viable option. robert: we don't know the details. but there was a lot of discussion over the weekend. about the germans having a plan b. and that -- there was also some very odd discussion about well, greece can leave the euro for a period of time. anna: like a trial separation. robert: yes, i know. but i think one has to be realistic here. which is if you leave the euro, the probability of you actually coming back -- guy: once that's on the table, we're back to e.r.m. robert: the answer is absolutelyly yes. and you move from one currency to a fixed exchange rate mechanism. and obviously what worries brussels, and i think also what worries the e.c.b. is what is the probability, politically if we do get a shift to the left

in the portuguese, spanish and then later the italian elections? and you heard beppe grillo there. and our other countries, are they going to consider leaving the euro? so you know, this is quite dangerous for the future of the euro. anna: meanwhile, spain does tell a different story doesn't it? in terms of the growth numbers you were talking about. the unemployment is still a big problem. robert: it's coming down. ok. the good news about spain is its unemployment is coming down. and coming down quickly. the bad news is that unemployment is still is an unacceptably high level. but i think it's highly realistic to forecast spanish growth this year of close to 3.5%. spanish competitiveness has improved considerably and spanish exports are up dramatically. so the turnaround in the spanish economy, and particularly the fact that the restructuring of the banking system has been successful, we're now seeing the real estate market recovering. foreign investment is going back into spain. so you could actually argue

that yes, there's still a lot of work to be done. but spain is actually a very good example of economic restructuring within the euro working. guy: the weekend. a couple of observations. first of all, that the nontaxable economy is a significant part of the economy. robert: let's call it the informal or gray economy is still elevated. guy: still very very big and they haven't figured out how to deal with that. robert: yes. guy: and other people are nervous about the banking system. in a way that i didn't expect them to be. they're watching greece and thinking, is my money safe in the bank? if there was a problem here, would i be able to get my money out of the bank? anna: anywhere in the euro zone is scary. guy: and starts to change the nare active a little bit. and once that seeps into the consciousness, i think you end up with a much more fragile system. robert: just to quantify the extent to which money has flown out of the greek banking system. as far as we can tell, there is about 45 billion euros that was taken out of the greek banks by

greeks. where they're either putting the money into banks outside greece or it's a cash -- in their homes. it's money under the mattress. and that is the highest percentage of money outside the banking system actually of any developed economy. now, you raise a very good point. which is confidence in banking systems outside greece. and we all know what exactly has happened in greece. the confidence collapsed completely. and one of the challenges in the very near term, which is why the e.c.b. decision is so important. is actually rebuilding confidence in the greek banks. wanting the e.c.b. and other central banks are going to be very concerned about is the maintenance of confidence in banks outside greece. now, i'm fairly hopeful that will be maintained. anna: bob, thank you. bob parker credit suisse asset management senior advisor. guy: right. netflix' membership base has soared to 65 million subscribers on the success of popular jones like daredevil and orange is the new black.

for more let's get to our tech reporter rodrigo huela in madrid. the international story is what really stands out here. >> it is. i mean, netflix seems to have been able to do something most companies are starting to do. which is to sell subscriptions on the web. and the international division is doing really well. they increased their amount of new subscribers abroad outside the u.s. by over 50% in the quarter which is quite impressive. anna: and are they going to be able to keep that up then, rodrigo? if the international business is such a key driver they're moving into new territory all the time, aren't they? rodrigo: yes. there's two angles there. one, something we've heard in europe from some of the big carriers who provide internet services. is that netflix isn't getting that many clients in europe. so that's -- break this down.

but they thought they were going to see a much bigger amount of people consuming netflix. and that isn't happening. this is what we're getting off the record from some people. now, that means that netflix still has a lot of scope to add clients. in the existing european markets. but also, they're adding new markets. they're adding japan later this quarter. they're adding spain and italy and portugal in europe toward the end of the year. and they're also talking about china next year. which is obviously the big market everybody wants to get into. anna: original series seem to be the -- where they staked their -- where they make themselves different, rodrigo is that the future? rodrigo: sorry. i missed the first part of the question. anna: going into original programming. that's where they managed to make great strides, didn't they? rodrigo: exactly. their who will idea is to change the rules of the game a bit. and that's what they've been able to do with their original tv series or fiction series if you want to call them but they're starting to move into movies and they've announced a couple of movies for later this year which will also be releasing in theaters. and they're also doing

something interesting which is new series outside the u.s. guy: rodrigo thank you very much. we'll take a break and see you in a moment. ♪

guy: i'm jumping the gun. 7:30 in london. and 8:30 in frankfurt. a busy day and these are the stories you need to know about this morning. anna: angry scenes overnight inside and outside the greek parliament as lawmakers passed a bailout deal to keep the country in the euro. but prime minister alexis tsipras will have to rebuild his government after more than a quarter of his own m.p.'s rebelled against the legislation. that makes tsipras dependent on opposition vote to continue in government. guy: e.c.b. governing council meets with greece set to top the agenda. a decision is expected on emergency aid for the crisis hits nation's banks the e.c.b. will announce its latest decision on interest rates. that will happen at 12:45 u.k.

time. and with that all-important press conference an hour and a quarter later. we will be taking both of those events live. and in full here on bloomberg television. anna: the u.k.'s telecoms' watchdog ofcom is seeking opinion on a breakup of b.t. group. the regulator is considering a separation of open reach b.t.'s physical network which is used by most other operators including vodafone, e., and talk-talk. guy: the first-ever close-up photos of pluto which have been beamed three billion miles from its new horizon spacecraft. the images which shocked scientists show 11 thousand-foot mountains of ice towering over the dwarf planet surface. and nasa says the images reveal signs of ongoing geological activity on pluto and one of its key moons. anna: right. let's look at what is happening in the asian equity session. get over to hong kong. and we see some moderately

positive moves, have we across the asian session today? >> that's right, anna and guy. good morning to you. really some sigh of relief slightly from investors here in the asia pacific here this morning. we are seeing some green for the most part this morning. the nikkei 225 closing up .66%. japan equities, up about .6%. so there is some relief. and as one trader said at i.g. limited the gray clouds of greece and china may have subsided slightly. now the focus could be the big macro cloud of 2015. which is the fed lifting interest rates. so we'll see how that goes. but shanghai, talk about a volatile day. we're still up about three fourths of a percent right now. but the 100-day volatility rising the most in six years. let me play it through for you. first we saw -- we ended the session here. down about 3% at the early start of the session. quickly, we took a 5% swing up.

then we went back down again. now we're seeing a little bit of green here. but again, very, very volatile day. this is because we saw hundreds of companies coming back online. some also did hold trade about a dozen or so today. very minimal compared to what we've seen before. but less than a quarter of the markets suspended in trading today. we also got a report about china debt. actually accelerating to a record there. so despite the better-than-expected g.d.p. numbers we got, outstanding loans, 207% of g.d.p. you talk about the financial sector here. you know, this stock room has been really fueling the sector quite a bit. in the past year, the past 12 months. and a lot of people trying to get in on this market. so we saw trading volumes spike here. but the second half, there is some doubts here. doubt -- 1% in the financials right now. but what's going to happen now that we've seen the fragility of the stock market here. wiping out what nearly $3

trillion or $4 trillion in that round. guy: tell us why we should link the looney, milk prices and commodity currencyies and what's been happening. >> is that a trick question? no. it really isn't, though. because yeah. we got that surprising rate cut from bank of canada. overnight. and yeah. the commodities currencyies, really the big losers here this year. i want to talk about the new zealand dollar. it really has tumbled here this morning. tumbling to about near that six-year low. and this is because there's just this divergence that we've seen with these resource commodity economies. that really have been hit by these oil prices. versus a strengthening u.s. economy. so the new zealand dollar, weakest level since 2009. whole milk prices we just got those prices in and also at a six-year low. dropping more than 10%. then you got these bets. raising the bets -- and next week that there could be

another interest rate cut in the cards. and in fact some saying 25 basis points to 3% or 2.5% on the interest rates. basically reversing all the rate hikes we saw in 2014. since the start of 2014. so aussie dollar as well. we're seeing a continued weakness here. in the last. and flat but 0.73 cents. the strong dollar with janet yelp's comments and congress about the possibility of lifting those interest rates this year. going to be gradual but dollar strength looking good for the u.s. right now. but it has advanced there. rising to a three-month high. we'll send it back to you. anna: joining us from hong kong. guy: and what's going to be talking about in europe as we head toward the european open in around 24 minutes' time. this is the fair value that we think we're going to get a pricing on a little bit later on. so you got the dax up around .7%.

.6%. for the cac and ftse 100 will be called up .4%. so marginally positive open for european equities now predicted. anna: we have european car sales figures early they are hour. sales were up almost 15%. the biggest gain in 5 1/2 years. joining us now from frankfurt to break down the numbers is tom lavele. good morning to you. what caused such a jump then? tom: good morning. well it's a combination of better economy and also more interesting car models. there's also a calendar effect where there's a couple of extra sales days in june this year that weren't there last year because of holidays and weekends. but mainly it's the -- the increasing confidence that businesses in -- and consumers have in europe across europe. as well as models such as the passat from volkswagen or the 308 from peugot. guy: was there any effect from what's been going on in greece

do you think? tom: very likely not. because greece actually rose. what you saw there was probably part of the wider effect in greece of people buying things because they were unsure about their bank security as well as the role of greece in the euro zone. so there was a bump up there. however, greece is only -- is at this point less than 1% of the market. even before the big slide that started in 2008. greece was only about 1% of the market. so it was never going to have a big effect anyway. directly on the sales. anna: a strangely depressing footnote to an otherwise positive story. tom lavell, thank you for joining us from frankfurt. guy: people out buying macs and you can use your debit or credit card and people were buying cars or macs and worried about haircut on their deposit and send it now rather than give it to the government. anna: really worrying when

people make that choice and don't want to leave that money in the bank and prefer to buy a washing machine. guy: i was looking for more excited than a washing machine but ok. x.l. strategy at u.b.s. is here. nick, we see the start of u.s. reporting season. any kind of reflections from it back into what we're going to see here in europe? >> look, i think the u.s. and europe are actually moving at different speeds now. if you look at consensus earnings estimates for the u.s. this year, they're around about 1% or 2%. for the euro zone they're closer to 13%. and if these come through, that would be the first year for seven years. that europe is actually having higher earnings growth than the u.s. so i would actually say on the earnings side, we're decumming with europe now recovering. and the u.s. may be starting to slow a little bit. margins are at record levels. you got the dollar as a headwind. you obviously had a very weak q-1 in the u.s. and bounced back but europe is more in the driving seat. anna: quite amazing that the greek story is not having more of an impact on the broader economics in europe. isn't it? >> so far that's been the case and only 1.5% of european

g.d.p. so a small effect in terms of the actual weight. we did see some reasonably good p.m.i.'s at the end of june and hearing car sales numbers. reasonably good across the region. i think the underplying recovery in q 1 is continuing. guy: what kind of feedback from clients when they talk about their desire to invest in equities? in some ways equities had a good run and quite toppy but you look at the alternatives. fixed income. very good run. and some would argue incredibly toppy. so what is the feedback you're getting? >> not a very attractive yield and dividend yields on equities 3.5% and much better income from that perspective. and around greece and europe and also china and concerns of a slowdown there, and that gives you more volatility in equities clearly. but i think people are generally starting to be prepared to take that volatility. if you get this earnings

recovery which will come through. anna: and you don't think that what we've seen in china and the stunning moves on the stock market there and lost $4 trillion since the middle of june you don't think that that will have a material impact on the european investment climate? nick: not directly. our china economists believe the transmission mechanism into the real economy are fairly limited. not such a widespread ownership of equity as there is in say europe or the u.s. and we think the banks are relatively, have these assets which are much larger than the margin financing. so i think in reality, yes, it's a problem for the stock market and may be a small drag on chinese growth but we don't see it as something that really changes the outlook there. anna: scary moments coming from various hedge fund managers. and who else? jeffrey gunned latch we've had. bill ackman talking about the dangers around the chinese stock market. and one of them saying it's too volatile and murky to invest in and others likening it to the u.s. subprime mortgage crisis saying that this is going to

have larger implications. with china so disconnected from the sort of global investment community, still, doe spite efforts to open up, is that really possible that this could be bigger than u.s. subprime? nick: i think it's unlikely given that it's not connected. and more the a-shares and more of a retail market and more domestic. not a huge amount of international investors there. the banks and the financial system are still quite closed. so i wouldn't suspect it would be the same thing as what we saw in 2007 and 2008. guy: plenty more to discuss. nick nelson ahead of strategy at u.b.s. and coming up the e.c.b. weighs emergency funding to greek banks. and tsipras wins that bailout vote. to keep greece in the euro. we'll going phog live to frankfurt what we can expect from the governing council meeting today. ♪

anna: welcome back. 7:44 here in london. 8:44 if you're watching in paris. guy: these are the stories to know this morning. angry scenes overnight both inside and outside the greek

parliament as lawmakers pass a bailout deal to keep the country in the euro. prime minister alexis tsipras has to rebuild his government after more than a quarter of his own m.p.'s revolt against the legislation. that makes tsipras dependent on opposition votes to continue in government. anna: legislation has been passed in japan's lower house of parliament that will see the country move away from 70 years of post-war pacifism. that's despite protests from opposition lawmakers and demonstrators. the bills will both -- military ties with the united states at a time when japan is embroiled in a territorial dispute with china. and would allow its sources to defend other countries in certain circumstances. guy: e.c.b. governing council meets later today with greece at the top of the agenda and the decision is expected on emergency aid for the crisis at the nation's banks. and the e.c.b. will announce its latest decision on interest rates. that's 30:45 and we'll bring that to you live here on bloomberg television. anna: let's get back to nick

nelson head of european equities. and nick, you seem to be flying in the face of this wall of worry. not as worried about it as some other people at least talk about. where are you investing then in europe and what's your favorite place to put the money? nick: if we're right about this recovery coming through in europe, we want to be domestic, and we want to be cyclical. and if you look at the sectors there's not actually that many larnl sectors that are domestic and cyclical. the one that stands out are the banks. and a lot of people have quite a lot of resistance investing in the banks. obviously through the financial crisis. and then post regulation. legislation, etc. which has been clamping profit recovery. but we're starting to see for the first time in six months banks getting earnings upgrades. i think the earnings momentum is turning from a very weak position. i think the valuations are attractive and i think that will benefit from broader peckup in europe. and maybe some credit growth. guy: so the banks dominating your agenda and the banks dominating the agenda in frankfurt at the e.c.b. meeting. paul gordon joins us ahead of that meeting. paul, monetary policy playing second fiddle to greece once

again today. what do we expect? paul: well, of course the chief item on the agenda has to be what now to do with emergency liquidity assistance? and the european commissioner report that came out this week suggested that the greek banks were close to collapse. they would collapse inevitably. if they didn't get a bailout. but the key here is what of solvency entail? you need liquidity as well and the e.c.b., the bank of greece has been providing that. so the governing council will sit down and say right. the greek government has -- the greek parliament has signed off on this austerity laws and much closer to a bailout. is that enough? and it may not be just yet. it really depends on how critical the situation is for the greek banks and whether they really need this money now. given they're shuttered and easies liquidity pressures and may give the e.c.b. room to keep things on hold a little longer. anna: and i wonder what the e.c.b. has an update on how much collateral they think the greek banking -- and in terms of what the greek government

currently owns then, paul, july 20 is the real deadline. isn't it? for greece to repay money to the e.c.b., how important is that deadline seen as being? paul: yeah. it's critical. and this is one reason why the e.c.b. may decide to wait. it may want to be absolutely sure that greek -- the greek government is adhering to its pledges. one of which would be to repay its debt. so july 20. 3.5 billion euros. also some principal payments that takes that number to something like 4.2 billion euros. need to be paid back. the money is not there at the moment. and the baleout program is unlikely to be in place. so bridge financing needs to be there. and that is a good reason for the e.c.b. to hold on and say right. politicians, your job is not done yet. let's wait a bit longer. guy: paul just finally, do we have any idea of how much e.l.a. money the greek banks need? frozen at this point. kind of mid 80's. where would we have to be to

raise it so the greek banks could open with sufficient liquidity to meet demand? paul: it's extremely difficult to judge. for one reason is that when the greek banks do reopen how will people react? well, will they flood to the -- their branches and withdraw as much money as they can straight away? or will they take it as a solid sign that the banks are open and the economy is back and an even footing? that's putting it one way. and therefore maybe not withdraw so much. that's what it boils down to. and the e.c.b., on the supervisory side of the e.c.b., said only this week that when the banks do open they they do need to have sufficient liquidity. and wasn't going to put a number on it and i don't blame him. anna: paul thank you. paul gordon, european central bank editor. joining us there from frankfurt. anna: and nick nelson is still with us. and also joining us on set as well. nick, i want to get your -- how do you square your view on the european banks with what is

happening with the greek banking sector? uncorrelated? nick: we think so. you look at the debt on greece 80% of it is in the public sector and 2012 we would be talking about the frenk banks one of with had a stake? one of the greek banks from back then and talking about ownership of greek bonds by european banks. it doesn't occur right now. so the connection is more through periphery bond market and for italian bond markets and spanish bond markets. and this morning both of those were yielding just below 2%. go back to 2012. spanish 10-year bonds were 7.5%. so i think the contagion mechanism i'm not saying it's not there at all. but i think it's much smaller than it was two or three years ago. given the recovery. anna: despite that logic though, which seems sound, nick, on days where investors worry very much about greece, we do see sometimes the car manufacturers and the banking stocks coming under pressure. because people make that link. to the periphery. nick: that's right. if you look particularly at the banks the italian and spanish banks and those banks at the highest ownership of periphery debt mostly greek debt but

periphery debt, as a share of their equity. so those are the guys who get hit the most. guy: central banks, john. right in the center of all of this. the fed overnight. you got the e.c.b. coming up. there's plenty to debate. and i was about to say, we got speaking in a ca t'd ral. -- cathedral. >> this is the most politically unstable the euro zone has ever been. and because spreads are so tight we all sit here and i don't think people are really recognizing enough that it is the most politically unstable that things have ever been. wolf gaung schaeuble speaking on german radio. and saying this isn't a push to say this that if if they want the debt hear cut leave the euro. he's not sighing it -- saying it explicit explicit by but read between the lines. the euro zone outside the u.k. saying i don't want any part of any mechanic fism for a bridge lone you guys come up with. the u.k. aspect inform as well. politically, things are fascinating. you go back to the height of

the financial crisis, yes, spreads have blown out. the least -- france and germany were together. mer cozy and had the same opinion. now so divided and it's public and there for everyone to see. anna: there might be room for common ground and depends how you define fine it. john: 50 years, 100 years, and not a nominal haircut. but clearly the d.d.c.f. on the present value of your debt goes down. and spot on comments this morning, were quite hawkish. but as the german vote that has to go through on friday. so the difficulty is people are playing for their domestic audiences as well. guy: my question to follow up on that. is schaeuble going to vote for this? and the comments from him, he doesn't think the agreement is a good one for greece and thinks they need a haircut they should leave and recognizes the i.m.f.'s view and they need a hair curt and they should leave. does he agree? with what has been agreed? over the weekend? and will he vote? anna: we were talking -- we

were talking to a guest that one of the strengths of the -- nobody likes it. so nobody has to stand by it. guy: if the bundesbank will vote for it and schaeuble doesn't back it, then i think that sends shock waves through the system. anna: but he wouldn't be the only policy -- politician putting legislation -- guy: if the german finance minister doesn't back the bailout deal in parliament. nick: the deal is harsh for the creditors and the more hawkish creditors to enable them to put that to the german parliament and for them to get that through. and i think he's part of that process. john: and what getting this baleout agreement is all about and getting this bridge loan as well paying the e.c.b. on the 20th and paying the e.c.b. in august. and i do wonder what the outcome of the weekend's talks would have been if we didn't have those monster bond redemptionness july and august and could have been very, very different. and if we are setting an agreement and shaping an agreement almost exclusively to pay the e.c.b. in july and

august, i do wonder about a the sustainability of the agreement beyond july. guy: and this is the other thing. you got a government in greece that clearly looks very unstable at the moment. if you would have a technocratic government in place because tsipras doesn't feel like he can do this, you wonder how stable that will be. you wonder whether actually the ability to execute is going to cause problems six months down the road and the germans will go you know what? we gave you the option. you haven't taken it. and we're back to square one. nick: given where the economy is in greece and the shock we've seen of having the banks close. and your credit growth doesn't go negative. your -- credit goes to zero. you can't actually access credit. so precisely. i think the damage will come through. obviously there will be more austerity which will tighten slow growth. and then -- i can't believe we'll have two or three years of this package and we'll run to its maturity. i'm sure there will be a lot of bumps along the way. anna: nick, have we made you suitably less optimistic? you started out so positive. this morning. nick: for europe politics,

greece has been one minute to midnight for five years. that's been one minute to midnight for five years. this is a temporary solution. i suspect and not sure it's the last thing we'll hear but the economy is still improving. john: if we did obsess too much over politics we would have missed the six-day winning streak on the dax and despite the mess that was agreed to on sunday. anna: thank you very much. nick nelson joining us from u.b.s., head of european equity strategy. guy: now the reason why john is here is because in a few minutes' time he will be taking us through the european market open at the moment. it looks like that's going to be broadly positive open. there's still a lot to get through, though. the e.c.b. is coming up later as well. anna: see you tomorrow. ♪

jonathan: good morning and welcome to "on the move" i'm jonathan ferro. just moments away from the european stock market opening. let's get straight to your morning brief. lawmakers and athens vote to accept the austerity measures. citizens vent their frustration. on track, federal reserve chair janet yellen delivers an upbeat message on the economy as you repeat that a 2015 rate hike is likely. a breakup warning, u.k. watchdog said it is seeking an opinion on a breakup. we will be talking about that in a couple minutes.

futures are a little bit high. dax futures up by 17.1. will it make it seven? underscore to take you through the equity market. i will start and bond markets. despite the gyrations around what is happening in greece the bond markets have remained cal m. yields are dropping again this morning in spain and italy. a lower by a basis point, likewise in spain. they stay there flat. it is not just france germany, yields are there down by two basis points. addicted to fx