mohamed el-erian spoke with betty liu about his reaction to the unexpectedly strong jobs report. mohammed al arian: this is a good report and lots to like about it. -- netver reviews and revisions and wage growth, 2.3%, the best monthly gain in two years. people are coming back into the labor market. all of this points to a healing labor market. the market reaction with textbook in terms of yields higher, the dollar stronger. the equity market is torn. it is torn between saying good news on the fundamentals and worrying that this may make the fed hike earlier than they would like. is -- the bond markets moved in reaction to this. much earlier and much more visit -- visibly than the equity markets. why is that? : what isl-erian happening on the economy and central banks -- this report said the economy is strengthening. we are bouncing back, and the fed is likely to hike this year. there was a clear message, higher yields. the equity market is torn because people realized central banks have been the market's best friend, and they would like so fed to remain ultra-loose the worry abo

let's begin with mohamed el-erian, formerly with pimco writing up a storm this weekend for bloomberg tom: this morning that is the great debate from mohamed el-erian. he will join us in our 7:00 hour on the idea of the return of the greek drachma. let's get to top headlines with vonnie quinn. vonnie: the german spread now 193 basis points, widening today. greece will be forced out of the euro. greece has closed banks until next monday to keep them from collapsing. a nationwide address, alexis tsipras tried to reassure the greek people. alexis tsipras: the deposits of citizens in greek banks are absolutely secure. equally secure our the payment of salaries and pensions. any difficulties which may arise must be dealt with calmly and with resolve. the more calm way we difficult -- we do with difficulties the vonnie: milder the consequences will be. vonnie: next sunday, -- the current bailout program expires tomorrow. david cameron says the u.k. cannot hide from terrorists. at least 15 british nationals were killed. among those killed when a gunman opened friday at a resort. cameron says

bill gross's former colleague mohamed el-erian was surprised by the move.explained to pimm fox. : it is unusualn for the imf to be so specific about a policy action and it was today. it told the fed they should wait until 2016 even though the data remains very fluid. that is the first way i was surprised. the second that people have not focused on yet -- which i think is important because it speaks to market volatility -- said of officials are going out of their way to tell the market to stop obsessing about the date of the first rate hike because this is going to be what i call the history.ightening in now suddenly with the imf comment, the question of the date is back front and center and that in itself imparts additional volatility to financial markets. what do you believe the effect would have been if christine lagarde had not come out with this specific date you mentioned, the 2016 first half? mohamed el-erian: i would have expected the imf to say something along the line that the fed should because just about the timing of its first rate hike because

earlier this morning on surveillance, our tom keene spoke with mohammed el-erian. eurobout nations, other than germany, are reacting to the greek crisis. guest: it is important to the nature of the contagion. it is not economic. it is not financial. it is purely technical. the next step, if greece control -- continues on the road to an denomination of the currency. that is a different contagion. they will be thinking how do we reduce our exposure to contagion and what can the ecb do to help. you have been out front with the idea of a new currency. canpeople to believe greece stay in use the euro, what do they get wrong? are two narratives. there is the political narrative where everyone says we would like greece to stay in the eurozone. greece is going through what economist's call a sudden stop. when you close the banking system, you trigger cascading failure, and when that happens, it is very difficult for politicians to remain in control of the economy. what happens next comes from having observed what sudden and recognizing it is hard to control your destiny wh

mohamed el-erian told us earlier what may happen now. ian: greece is going through what economists call a sudden stop. closing the banking system triggers cascading failure. when that happens it's very difficult for politicians to remain in control of the economy. my call about what happens next comes from having observed in the past what these due to policymakers and recognizing that it is actually very hard control your own destiny once you hit a sudden stop. olivia: as of now it looks like that referendum will happen on sunday. minister plans to vote no. david cameron says the u.k. cannot hide from terrorist. 15 british nationals were among those killed when a gunman opened fire at a resort leisure, one of four attacks that day blamed on extremist around the globe. cameron says that terrorists have declared war on us. the fbi is warning of terror attacks targeting the fourth of july here at home. the counterterrorism subcommittee chairman spoke earlier on abc. >> i am more concerned now than any term -- than any time in september 11. r

mohamed el-erian, thank you very much.head on the bloomberg market day, we will talk about utility stocks, the worst performer in the s&p. we will find out, is this the time to buy the dividend paying equities echo that is next. ♪ pimm: welcome back to the bloomberg market day. i'm pimm fox. it has been a terrible year for utilities talks. investors piled in last year, but this year they have been selling. one reason is concerns about when the federal reserve will increase interest rate. utility stocks sometimes a proxy for bonds. here to explain is michael regan and chief market strategist. start off with you, wide eu believe utility stocks have sold off a little more than as of thisr? 8% morning. they got way overbought as rates came down. you saw that moving to the upside that ended in january. pimm: they bought the stocks because they were looking for higher-yielding instrument? >> that is exactly right. that worked tremendously well until it did not. sellingeen a nonstop fest until then. -- since then. i was looking a

mohamed el-erian really out front with this. vonnie: they would still make an effort. their currency is worth, what, 50% of what it had been? tom: we need to begin our coverage, folks. greece spreads are wider this morning. hans nichols is in berlin, but first we go to erik schatzker as he continues coverage in athens. we saw significant protests in athens. give us the color of the protests last night in athens. erik: i would describe it more like a rally if anything. if there was a protest quality to the demonstration, it was against more austerity. this was solid backing for the current government syriza, and the current governor, tsipras. this protest was staged. it was not spontaneous. there is going to be a similarly staged antigovernment pro-eurozone rally tonight at 7:30 at this time. that will give us the sense of what kind of popular support, if you will, there is among the yes forces. i say yes because that would be the alternative in the referendum this coming weekend. tom: i heard mr. tsipras' comments last night. what does tsipras do this day where they do

anna: mohamed el-erian there.es into context as we show you what is happening in the future, where we might open up in equity markets and the bond markets. jonathan stubbs joins us now from citi. it was your economist, i think, who coined the phrase grexit. he is now saying that greece will stay in the euro despite what we have seen over the weekend. >> our economists first talked about the grexit a few years ago. the best case is that we get a yes vote as an outcome from the referendum. the probability of a no vote or a scenario that leaves us down to an outcome where greece is no longer in the euro area cannot be discounted. it is also reasonably likely. it is as hard as we are seeing the volatility and reaction in the markets, hard to have a high degree of certainty right now. anna: we have been keeping an eye on peripheral bond yields. the french economy minister has been talking, saying there is still a chance for talks with greece before the deadline saying that the situation is very different in spain compa

mark: earlier today, mohamed el-erian told us why he was surprised by christine lagarde's said recommendation. mohamed el-erian: it is unusual for the imf to be so explicit and specific about a policy action, and it was today. it told the said it should wait until 2016, even though the data remains fluent. mark: joining us now is uncle schumacher, head of -- is imf andschumacher from lisa abramowicz. but start about the timing about this announcement turned white this -- happen, it will be a pretty risk off event. that's part of it. theybody has an opinion on fed, so it is common for people to talk about it. we still think the fed is going to go into september, but it is data dependent. it is going to look at developments over the next few months. it is probably tied a little bit to greece anyway. that is why the imf piped up when it did. betty: this is not the first time that we have heard an imf head weighing in on policies. they have talked about central banks, including the ecb, before, but the u.s. has been immune until now. that said, the imf has raised some serious concerns about finan

pimm: that is what mohamed el-erian saying about global perspective. well done.etty: you know you want to and masters of sex all the time whenever you are on. now you can. standalone program is starting in july. we will talk to the showtime's eeo next. ♪ pimm: welcome back to the bloomberg market day. i am pimm fox with betty liu. a look at the top stories crossing the bloomberg terminal at this hour. its way to on becoming the biggest city in the united states with plans to gradually raise the minimum wage to $15 per hour, but it is still not a done deal. a city boat passed overwhelmingly but another is because the first one was not unanimous. endorses the ordinance. hsbc says it is paying $43 million to settle a money laundering investigation. geneva prosecutors have been looking at the swiss subsidiary and the probe unfolded after former employee leak a list of thousands of success that -- suspected attack evaders to french authorities in 2008. it has improved practices to keep the bank from evading taxes or launder money. oracle cofounder larry ellison sense

lisa: i think it was mohamed el-erian who said it's not fair to paint under one brush anymore under "erging markets," because there is this bifurcation within the emerging markets with the winners and losers. venezuela,rkey, certain countries that have really struggled. and then you have mexico that has been everyone's favorite for a long time. you are seeing some outflows for emerging markets for the first time in a while. perhaps it has to do with writing benchmark yields. alix: and this strategy that we are looking at on the screen. talking about bond volatility. are starting to shrink. they were at a high of about $12 trillion last august and are now shrinking by about $400 billion. the result is that there is literally less money from government of can recycle into the bond market. lisa, what does that do for the liquidity issue, or lack thereof? for: it's a big concern people. basically, this has been one of the bright spots. people said that emerging markets will not be that bad because they have hard currency reserves they can use to pay back their debt, you know, record volum

leeson -- lisa: people have actually said -- i think it was mohamed el-erian, he said it's not fair to paint it under one brush anymore, that there is a bifurcation in markets with winners and losers and you have certainvenezuela, companies that have struggled. some outflows from emerging markets in a wild -- and perhaps this has to do with rising benchmark deals. this chart on screen, talking about bond volatility -- foreign exchange reserves starting to shrink, high about $12 trillion and they are shrinking. less moneyis there's from government to recycle into the bond market. what does that do for the liquidity issue or lack thereof? and: this is a huge concern has been one of the bright spots, the incredible surgeon reserves. people are saying emerging markets will be that bad because they have a lot of hard currency reserves to pay back their debts. is as their currency weakens in response to a stronger dollar, there's a question of will they have sufficient reserves to bolster their currencies as well as repay the record volume of debt? joe: what is your take on this question mar

who better to kick off the program than mohammed el-erian.elcome back. >> thank you. >> let's talk greece first. do we get a deal? >> i don't think we get a deal. i think that 55% probability we do not get a deal. let me tell you, compared to my previous visits to europe, it's very clear it's not just the people are exhausted and they're exasperated with greece, there's a lot more confidence in the ability of the eurozone to limit contagion. and there's even talk over the long term, the eurozone would be better off with greece out. so there really say change in sentiment here. and that explains why the negotiators have heartened their positions. >> i've got to say, i'm surprised to hear you say that we won't get a deal. assuming you are correct, what would be the cost be both literal and figuratively here. >> let me say by not getting a deal, i feel that something that significantly buys time for greece. i'm not talking buying one week or two weeks. i'm talking about buying enough time for greece to get its act together. i don't think we get

mohamed el-erian, amongst other things of bloomberg columnist. global development council, former cio at pimco as well. welcome to the program. well, next sunday is this referendum. it really came out of left mohammed: it it? did. he felt the only way that he could deal with that was by going to the people and asking their opinion but he underestimated that it would be fromdifficult to navigate the time of the announcement. these are going to be very difficult and dangerous days for greece. >> absolutely. a little while ago you were tweeting that this could lead to what you call the grexit in -- a gr accident. there is no plan b. suddenly the payment system stops. the banks are closed. the stock market is closed transactions become very difficult. evil run out of cash. suppliers cannot get there is in. this is classic. we saw it or in the russian christ this. the logic of the sudden stop is the massive economic contraction, social unrest, and it is going to make continued membership of the eurozone very difficult for reese. >> indeed, that's what

tom keene: what of the great practices of this is mohamed el-erian.him on game. . players coordinate to achieve that are outcomes than what would prevail in the absence of coordination. if the game is uncooperative everybody is miserable. he is talking about the late john nash. brendan greeley: i brought up cooperative games. i did not know i was capable. tom keene: he is from the united kingdom. this is a cottage industry over in england versus what it is in america. brendan greeley: we are seeing in greece a cooperative game with rules and agreements. it's turning into a non-cooperative game. greece is using a different strategy. want to ask about something different. you talk about regulation. regulation has to adapt to the market. it is a way of designing rules for markets. do we talk about the writ -- word regulation in the right way? alvin roth: the rules can be provided by government or by private dividers. the new york stock exchange has lots of rules. some are provided i the exchange and some are laws. markets need good rules. regulations can

mohammed, thank you for joining me. viewed el-erian, bloomberg columnist.: kind of a hazy day on this friday. welcome back to bloomberg market day. let's look at how the european markets closed as we are watching. >> you take a look at the map, you can see the climb pretty much across the board. a big concern, of course, not just in europe that globally. when you look at the movements that are watching today in terms of equity benchmarks. the worst performing in western european markets today, surprise to surprise, is the athens stock exchange. the only benchmark as well that is posting losses so far this year. the ftse 100, also not doing too well. worst weekly drop, extending a two-month low. finally, europe's equity benchmark extending its lowest level in almost a month. by the way, that has fallen 6% since it hit that record high back in april. if we look at the biggest stock rumors, vodafone down today, we have been watching that after they were in talk to swap assets. they are not discussing a merger. greece, not bank of only the two worst performers

mohamed el-erian formerly worked with you at pimco.he specificity that met christine lagarde gave yesterday. >> it is quite unusual for an official at that level to get into specific dates to which the fed should be rate hiking. i have never seen that before, so i was stunned. tom: i was stunned by it. drew matus, thank you for joining us. yesterday she had that one key headline -- she wants janet yellen to overshoot on inflation. i'm eagerly thought of rudy dornbusch. you teach this at columbia. drew: i took rudy dornbusch's course. tom: would you explain what rudy dornbusch means to christine lagarde and every american. drew: you want a policy that overshoots. mike woodford resurrected that idea of price level targeting. i think the fed and janet yellen will be sympathetic to that. they would not be happy with an overshoot. tom: the first two pages of the rogoff paper, he mentions stanley fischer, who i believe is standing next to janet yellen. brendan: stanley fischer is also earning -- is also urging the fed. i'm curious about some

mohamed el-erian picking up that note on volatility. lisa abramowicz talk about it -- talking about it in bloomberg news. do we foresee volatility? why do i care? jeff: bond markets have seen volatility, but equity markets have not had spillover impact yet. but global bond markets -- just talk about what is going on not just in the u.s. but what we're seeing around the world, particularly centered around europe, with very big moves off negative interest rates. that is volatility. tom: german 10 year comes out at 0.88 this morning. brendan: you quote stanley fischer on the fed board state we are not the world's central bank, but it is disingenuous because he is part of the bank writing within the governor's board about whether or not we should pay attention to other markets. jeff: that was a speech that he gave a while ago, and it is a long-standing debate within the global policy community as to what responsibility the fed has, considering its actions on emerging markets in particular, but the rest of the world. the fed has come in for

mohamed el-erian will be joining us. have 200,000 plus jobs that is proof that the economy is going and that is what we got this morning. pimm: thank you very much. now it is time for today's options insight. julie: i am still trying to figure out how it can be kraft if it is made by a multibillion dollar company. -- craft if it is made by a multibillion dollar company. we have a mixed picture after the big jobs report. the dow and s&p trading lower. nasdaq trading little higher. joining me is mark sebastian. he is coming from the cboe in chicago. we have a jobs report and a big reaction in the treasury market and stocks are kind of shrugging . we are not seeing much movement in the vix. what gives? mark: on the open, things looked ugly. it looked like the s&p but it had a real chance of having a down 1% or 2% days. as the market looked at it, they said this is not that good and said this is more of a meh number. recovered.l interest rates are starting to recover a little bit. really seeing everything go from this is bad

mohamed el-erian told me he things the ecb's reputation is at risk. do you think it is? >> i think the ecb is running a fine line. they don't want to be seen as triggering a massive collapse. their interest is in the stability of the eurozone. the ecb is responsible for the monetary policy which is now subverting the stability of the banking system in the eurozone. the last thing you want to do is trigger a bank crash. that's why i think we are still of the view that the last-minute agreement will be found. the consequence of not finding an agreement and letting the greek banking sector collapse would be catastrophic. jonathan: the bond market, here you are, short bunds. you feel it all the way down to five basis points. you break even, now you are in profit. what did you do with that short on balloons -- on bunds? >> one of the reasons to be short on bund was the pickup in inflation coming from the u.s. i think we can still assume that the bund is above 1% for the 10-year maturity, and for this reason, being short makes a lot of sense. on the other hand, the bund might

you will see someone like mohamed el-erian respectfully disagreeing. daniel juergen will join us. about iran, the oil. jonathan ferro mentioning that china is the other story. over here, puerto rico is a huge story. if greece did not exist trust me, that would be our top story. francine: you are absolutely right. on iran, you need to keep -- we need to keep a close eye on it. the inspectors are not allowed to look at the facilities. it is going to be a great show. tom keene and "surveillance" in 25 minutes. today's headline on iran. talks in vienna are set to continue after midnight. u.s. and european diplomats are confident a group can be -- an agreement can be reached in days. elliott: talks brinkmanship, and a dramatic venue. that sums up the negotiations on an iran nuclear deal. as the deadline approaches, we may be in seeing the same. world powers say a deal can only happen once inspectors verify to ron -- tehran is keeping its word. they say that they will need wider and faster access to places of interest. some iranian leaders and politicians say military sites would be off

manus: the former pimco ceo mohamed el-erian says that greece is likely to be forced out of the eurozone spoke to bloomberg this morning. francine: we are just getting some live pictures. you can see mr. aland. those are live pictures from the elysees palace. that is where a lot of the presidents give their comments. just to recap what he's been saying, first of all, he regretted greece's decision. manus: saying he wants greece to stay in the euro. francine: i guess they all say that. it is difficult for a leader to say they should get kicked out. manus: they went to this point of brinksmanship where tsipras pulled the plug on them. his own negotiators found out by twitter. the question is, has he overplayed his hand? francine: there is concern about the markets. there is also concern on the ground. let's get back to guy johnson in athens. what is the latest on the ground? guy: people here i think are adjusting to the new reality, that they are restricted from accessing their bank accounts. they are restricted from taking money out of the country. this applies not only to individuals, bu