Transcripts For BLOOMBERG The Pulse 20240622

A lori warm welcome to the pulse. Im manus cranny. Lets take you to the site of where the next debate on greeces future will take place. This is the German Parliament where we expect the debate to start. Already, theres a little bit of this and within the german ranks a little bit of dissent within the german ranks. A member of merkels Christian Democratic Union, the systemic importance of greece for the eurozone hasnt been demonstrated. There can only be one vote, and that is no. How many of the German Parliament will vote against the outline basis for a great deal . The german lawmakers say their countrys 86 billion euro a package today. Lets move it along and get to our reporters. We are going to cross to Caroline Hyde in athens, paul gordon in frankfurt. Caroline, lets kick it out to you first. I love the line that i heard this morning. You were given a hotel bill. On that hotel bill, the rate has changed already. Caroline not happening across the board. Many of the smaller restaurants have been given until monday to update their system, but at my hotel, i was charged 23 on my food and beverages. Just a couple days ago it was 13 . Implementation is already happening on the ground in greece. This is a problem already for the shopkeepers. The Business People are less likely to want to flash the cash. This is clearly what everyone is thinking about when they can get access to more cash. We just heard from the greek government, banks will open their doors monday at last am three weeks of closure. There is no relief in terms of capital control. If you are an exporter, you can send money abroad more easily. If you have a son or daughter living abroad, you can transfer 5000 euros every three months. But if you are living in athens still 60 euros max per day. You can save that until the end of the week, but still, there is no relief in terms of access to your money. A jeweler i was speaking to is still having grave problems. For three weeks, he has had no business. No one can afford the jewelry that hes making at the moment. Manus paul i listened to mario draghi. He never doubted greeces position. Im paraphrasing. He believed greece what main part of the eurozone. Are we being overly generous in terms of optimism . Paul you could argue he wasnt overly generous either in the sum of money, but the optimism it is a matter of conjecture. Not long ago the heavyweights on the board were saying a greek exit can no longer be ruled out. Now, draghi is saying we always acted on the assumption greece would stay in the euro. He is now assuming greece will stay. He is assuming the greek banks will in some form or another open. Still wants to see the ecb have its debt repaid, but he believes it will be repaid 3. 5 billion euros on monday. The mood seems to be at the ecb, time to move on. Manus lets get a little more that also seemed to be the intimation. He was quite clear this is partly because of the flaws within the euro area structure. Paul right. Youve got 19 sovereign countries using one currency. They are not always on the same page. We will see that today in the German Parliament. The level of dissent is what is going to matter on the vote. In france, michels upon michel sapin said nothing can happen when france and germany disagree. France is saying they should stay. Draghis point was, you have to get over these structural flaws. There has to be more cooperation. He referred to the report in late june which said that you could have a joint treasury within 10 years. In other words, lets move from a pure Monetary Union and get closer to a fiscal union. Maybe one day a political union. It took 100 years in the u. S. We are a little of the way there in europe. Manus sometimes the best things in life are worth waiting for. Thank you both. Bloomberg spoke exclusively with the European Commission Vice President about the ongoing greek crisis. Right now, we need to finalize the decisions to start the third Bailout Program for greece. Once the decision to start the negotiations is taken institutions, European Central banks, imf, can start understanding the memorandum with greece. Debbtt sustainability is one of the issues which is going to be discussed. Manus for more on the greek discussion, we are joined by Morgan Stanleys senior european economist. Great to have you with us. I dont know where to start. Madame lagarde says the greek plan is not viable. Capital controls are being lifted. The politicians are squabbling. What do you make of it . It remains to be seen whether implementation will follow. It is difficult to make the assumption at the moment because the imf has to be involved. Also, theres no nominal haircut in europe. At best, there will be long extensions of maturity. The imf has one option at this time. It is all very uncertain. You would expect many troika reviews and negotiations in case they dont go well. Manus a lovely line this morning, id love to say we will be back here in a year or two. It is more likely a few months. From the imf from the eu, from the ecb, these are the creditors. They havent got their house in order. How are we supposed to expect a deal to be done in three months . This is not a harmonious creditor group, is it . Daniele there are differences. I think it is much less about where there should be relief and more about what kind of relief one should have. There is equivalence between those maturity extensions and a haircut on the debt. They want to strike a responsible balance between the two. Manus you are the last economist of the week, so you get to call the debt extension that would work. What in your view is the maturity level we need to see to form a good basis for greece . Daniele imagine i owe you one Million Pounds. You can add a couple extra zeros. You can see that even though i have debt, in reality, you are giving me equity. It doesnt need to be that extreme, but it has to be very long, with a long grace period such as, greece doesnt pay anything at all for a couple decades. Manus lets talk about the capital controls. In many ways, this is symbolism for tsipras witches, the banks are open, you might only get 50 euros out, but they are open. Do you think capital controls are here for a protracted period of time . Daniele i think so. There is a distinction between a bank holiday and capital controls. People will be able to access the banks more easily. But capital controls will remain for a long time, probably for many months. It doesnt need to be that restrictive all the way through. Some of them will be lifted overtime. But i think they will stay. One has to strike another balance between the damage of those controls and the prospect of removing them too soon. Manus stay with me. We have madame merkel making her speech inside the German Parliament. Shes saying that europe has seen some of its most dramatic days, in reference to the greek crisis. This is the lower house in germany beginning its session on the greek bailout package. The Greek Parliament has already ratified the terms. One of ms. Merkels Christian Democratic Union domestically, there is a little dissent in germany. The systemic importance of greece hasnt been demonstrated. Theres only one vote that can be. They we understand there is near 50 potential voters of dissent within the bundesbank. As we get more headlines from ms. Merkels speech, we will bring that to you. Next, to end . Bank of England Governor Mark carney says the timing for a rate rise will be clearer before 2016. Then electrolux gets efficient. The appliance maker feeds estimates as it improves its european business. We will speak to the ceo. A little later, blankfein enters the billionaires club. Tweet me up here. This is our question. Is Lloyd Blankfein the epitome of american industry . It would not seem unreasonable to me to expect that once Monetary Policy mobilization begins, Interest Rates would proceed slowly and rise to a level in the mediumterm that is perhaps about half as high as historic averages. And in my view, the decision as to when to start such a process will likely come into sharper relief around the turn of this year. Manus welcome back. This is the pulse. That was the bank of england governor, mark carney. We are still joined by daniele antonucci. All of these global central bankers, not all of them, but carney and all of them, they are ringing the bell the death toll of 0 rates. Is the world economically ready to deal with hikes from carney and yellen . Have they missed the boat . Daniele Interest Rates will begin to rise in the u. K. Next year, in the first quarter, but with the potential for this to start somewhat sooner depending on what happens to wage growth. It is not very strong in britain, but it is coming back to some degree. This is what we will be watching. We think the fed will start sooner than that. Manus we like brave callers who make up their mind as to what will happen. This goes back to the European Economic debate. We are seeing more, some would say panic reactions from china. Another 4. 5 trillion yuan available to the market. Some say stop worrying about the equity market. But, chinese growth is absolutely linked to the european story. Daniele i think it is. Fundamentally, we are seeing that the china story is more important when it comes to the Growth Prospect of the eurozone. Yesterday, mario draghi mentioned the complex situation in the emerging market world as a risk. Manus im just going to get back into the merkel images that we have. This is Angela Merkel talking to the bundesbank. She is making some very forthright, not shocking comments, but she is saying that a debt haircut would be illegal. Germany wont agree to a debt cut for greece. The most important currency is trust. This goes back to the fundamental issue that germany is having with greece, which is about reestablishing trust and believe that the greeks will an act their program, will actually enacrtt the Structural Reforms that theyve suggested they make. This is no debt haircut. Germany needs to agree germany wont agree to a debt cut for greece. Lets bring back in daniele antonucci. This is clearly making the german position so clear. Debt relief, dream on. Daniele to come back to your point about trust, this is also the biggest deficit, i think. It may make quite an effort. It remains to be seen where that happens. If it does, we might be looking for those that reprofiling extensions that we talk about, but a haircut is not in the cards just yet. Manus i think its interesting that she says the timeout decision is with greece. What is your base scenario . Will they stay . What is your call on grexit . Daniele we havent really changed our view. The situation remains quite uncertain. We suspect it could take a year year and a half before greece risks exiting the eurozone. They might just do it because the numbers are daunting when it comes to the adjustment. It remains to the scene whether it can change so soon, so quickly. Manus great to have your take this morning especially when we have merkel on her feet in the bundestag. Morgan stanleys senior european economist, daniele antonucci. Coming up, we will be speaking to the ceo of electrolux. Off the back of better than expected secondquarter earnings. Stay with the pulse for that discussion. Manus welcome back. Electrolux has beaten analyst estimates for profit in the Second Quarter but a legal battle looms over its plans to buy ge. Joining me now on the line for our discussion is the electrolux ceo, keith mccloughlin. Welcome to the pulse. The numbers are good. Give me your view on europe. It sounds like things are right sizing. It is difficult to assess. What do you mean by difficult to assess . Are we not out there shopping . Keith western europe is getting stronger. What is difficult to assess is eastern europe, and in particular russia and the ukraine. Western europe is strengthening. Demand in western europe increased by 4 in the quarter. We are seeing that pretty much across the board. The weakness and uncertainty is eastern europe. And as i mentioned, russia and ukraine. Europe is strengthening. Manus keith, in terms of having confidence for the rest of the year how confident are you for the rest of the year . Youve made some big structural changes in europe. Wheres the rest of the big structural change for electrolux . Keith the team is doing a nice job on all cylinders. The efficiency, the operating cost performance of the business, is stable and improving. The mix is quite good, makes meaning lots of new products at better Gross Margins, better pricing. Demand is improving. I would say the business is improving. In a stable way, which is what you want. You dont want dramatic swings either way. The business in europe is healthy. Manus lets get to the big issue in the room. Electrolux was vigorously contested on its efforts to to oppose the ge deal. How are you going to challenge the department of justice . How optimistic are you that youve got a defense position that is going to shift them . Daniele keith we have been challenged. We are in litigation, so i cant go into too much specifics, but we are confident that their assessment doesnt reflect the marketplace that the appliance market in the u. S. Is and continues to be competitively intense, and this acquisition will offer consumers more choices of higherquality products at lower prices. That is what we intend to show in court. Manus what are you prepared to give up . It comes down to convincing regulators that it is good for me to have one Company Selling me the same not the same washing machine, but ultimately they are all made by you. What are you prepared to give up to actually get a deal done . What would you be prepared to give up any assets . Keith our primary position will be to explain to a neutral judge with facts what the Competitive Landscape looks like in the u. S. , and that it is the competitive intensity is increasing given many new entrants into the market. Manus should i be worried about margins in the u. S. . You say it is a competitive place. If i go to the other side of that equation, you must be fighting hard on price. Keith we are in the appliance business, so it is a tough, competitive business. Part of the reason for doing the acquisition is, their are significant cost synergies. Up to 3 million u. S. Dollars annually from this acquisition. It is quite accretive to the shareholders. Manus as a good ceo, a vanguard of the business, everybody has a Disaster Relief program in place. If the deal doesnt get done what are you lining up . Keith of course, our strategy isnt acquired ge appliances. That is not the whole strategy for the company. We have a strategy around innovation and profitable growth and geographic expansion and brand. The strategy doesnt change predicated on one single transaction. Obviously this is a big one and we want it to happen and we think it is valuable for our customers and our shareholders. But if it doesnt happen, we go forward and look at other opportunities. Manus the other dynamic for anybody watching this who owns your stock, you have some challenges in the u. S. Introducing new products upgrading some of the plants. Most ceos probably balk at this word, but when do you see American Business getting back to normal as it were . Keith i think we will be back on track by next year, north American Business. Manus tell me this. We sit here and debate at bloomberg whether the Federal Reserve will raise their rates before christmas whether the u. K. Will raise rates as well. Ultimately, there is a debate about the capacity of the american cymer the british consumer, to tolerate higher Interest Rates. Is that a concern for you for the business, in terms of the timing of Interest Rate hikes or is it something which lags and we dont need to worry about it for 18 months . Keith in the appliance business, Interest Rates and housing activity and Consumer Confidence and employment, those are the key variables that have high correlation to appliance demand. Interest rates matter. But given the low rates they are coming from to go up 50 or 100 basis points is not going to dramatically affect the appliance demand. Manus thank you for joining us this morning on the pulse. Lets see what the department of justice and yourself can come up. That is keith mccloughlin, ceo of electrolux. Some of the top headlines now on bloomberg. German lawmakers will have their say on greeces next bailout today. Chancellor Angela Merkel just finished speaking. She said germany wont agree to a debt cut for greece. Voting begins at 1 00 p. M. In berlin local time. The eu off rights bridging loans for greece and the ecb extended 900 Million Euros of emergency aid the greek banks. The greek deputy finance minister says the banks will open on monday but the daily withdrawal limit will remain at 60 euros. Bank of England Governor Mark carney said last night that the outlook for the u. K. s first Interest Rate hike will come clearer toward the end of this year. The remarks came after carney and policymaker david miles said on tuesday that the time is approaching to raise the key Interest Rate from 0. 5 . A Chinese Agency said to have funding available to support stocks. People close to the matter say they have about 3 trillion yuan on tap. The funding will be used to support brokerages and purchase stocks. Lets get more on that story with enda from hong kong. I dont know whether to be delighted that the chinese want to bail their equity market out or be fundamentally worried that here we go again. This is Central Bank Funding of an equity market. Good morning. It is all of that. It is yet another buildup of risk, more meddling. Until a few weeks ago, people were saying it could have been in the msci index. We are talking about almost half a trillion u. S. Dollars. That is five times the money that is going to be on the table for greece. Massive bailout by any calculation. One economist said he thinks it is one of the biggest ever government interventions of the stock market. Back in the u. S. It just shows you how fearful the chinese authorities are of the chinese stock market getting out of control and undercutting their own authority, and the extent that they are ready to go to to ensure that stocks are propped up by putting so much money in the system. Manus slowly, they are opening the equity market again. In terms of the number of stocks that we are able to trade. What is the sense over there at the moment, you are based in hong kong, what is the sense of trust that the chinese havent got a major locomotive credit problem running out of control here . Enda i think they have a major credibility problem at the moment. Lets take one example. One of the big pushes by beijing is to make the currency more international. What they want to do is have it accepted by the imf as a reserve currency. They are promising reforms. They are promising to play the rules of Global Markets and free up Interest Rates and let money flow more freely. On one hand, they say that. On the other hand, here we are talking about half a trillion in u. S. Dollars worth of money they are willing to put into the stock market just to shore up share prices along with banning companies from selling shares. While the reform process has not stopped, they are taking a dent to their credibility and it will take a few years to get back on track after this. Manus thank you very much, enda curran in hong kong. The lord mayor Boris Johnson spoke to bloomberg this morning about proposals to build a second cross rail line from southwest to northeast london as well as surrounding counties. Anna edwards spoke to boris. Anna Boris Johnson was in the building, launching what he calls the cross rail growth commission. He had been speaking downstairs at that conference. He says hes got the banking of top Business Leaders to urge the government to back his new rail link. It goes from one end of london to the other, from the southwest to the northeast. Cross rail 2 as opposed to cross rail 1, which is not up and running yet. I asked him, was this going to be a bit of an indulgence . He exceeded conceded that cross rail 1 is going to be too small. It is not going to meet londons needs. I spoke to the British Chamber of commerce about in the u. K. For intrafacture projects. I wanted to get his take. Here is what he said. Mr. Johnson if we dont get cross rail 2 going, people will wonder what we are playing at. By the time cross rail 1 is finished, there is no question that whole Network Running eastwest will already be at capacity. When i became mayor of london, we had about 1 billion people a year on the tube. It has grown. It is going to be more by the end of this century. Anna so cross rail 1 will be too small . Mr. Johnson it will be. Cross rail 2 fills a huge need in the Southwest Quadrant and the northeast. It is an 18kilometer tunnel right through the middle of the city. It is what people used to call the hackneychelsea line. It goes through and by sex with cross rail and bisects cross rail. It is important for people coming from hampshire and seri who are being funneled into waterloo. Plus it anna it sounds like an abyss ambitious project. I spoke to the bcc and they think we should compensate people more fully and then objections will drift away. Do you think there is merit to that argument . Mr. Johnson i do. That is the difference between us and the french and one of the reasons they tend to bash on more rapidly. We are a bit measly when it comes to compensation. We should be buying properties at top dollar. When they inevitably inflate in value after the project has gone in, you will find that the status is still good. Anna so he says we are a bit measly on the compensation front. He says that londons population is set to top 10 million. He also sees this as a way of creating jobs and building more housing. Manus . Manus he also talked about brexit and greece. What does he have to say about that . Anna we talked about the possibility. He says it is not sensible to leave the eu. Thats have a listen. Mr. Johnson i dont want to leave the eu. Ive never campaigned for leaving the eu. I think the stakes are much lower than they used to be. I think the arguments changed from 40 years ago, when britain last had a referendum on this subject. The eu market is smaller than it was as a share of global gdp. It is a very different proposition. Anna he argues that we are in a stronger position to negotiate with europe. I pointed out that the last country that tried to play hardball with germany, things didnt go so well. Speaking of greece, he said he thought it was a sad state of affairs. On a slightly lighter note, i pointed out that the Greek Embassy owes 1. 3 Million Pounds to the london mayor and his colleagues. I wanted to find out from boris if he was in any hurry to collect this money. He was keen to point out that there are other debtors in that camp, notably the americans. Mr. Johnson the americans are owed about 8 million. You might talk to Mike Bloomberg and his friends. Then we will see about the greeks. Anna all joking aside, one other serious subject was heathrow. I asked if he was prepared to resign over the matter of heathrow. He is not supporting expansion at heathrow, even though the Babies Commission Davies Commission concluded that heathrow should be the point of expansion. He says he will not resign over this. He will not resign any other position. A london mp said he will resign over heathrow if that decision goes against him. Manus thank you so much. You covered a broad church of issues with the mayor of london. Joining me to talk about the plans of crossrail 2, the rail line linking the north and south west of london, it is a former mp of planning and transport for london. Right to have you with us this morning. Is crossrail 2 a luxury . Crossrail 2 certainly isnt a luxury. We are growing. The population will be 1. 5 million more people by 2030. A massive increase. You can see it on the streets today. That is on top of the visitors we are getting to london. We are putting a lot of investment into london. We are making the tubes run more frequently. We are adding capacity. We are doing stuff on the rail network. We are building crossrail 1. Because the population and employment growth is playing catchup, by the time crossrail 1 opens we will need more. Crossrail 2 is a megaproject. It is twice as big as crossrail 1. To have it open for 2030, we need to start planning it now. It is a necessity. Manus you are calling on government for making it move from paper to inception. It is breaking away from a myriad of reports. What do you need from this government . Give me a pound. Michele we need government support. We are making the case. If you talk to the mps and politicians, they are behind crossrail 2. The public supports crossrail 2. Weve got overwhelming support for crossrail 2. What we are asking for is 250 million, because this is a megaproject with 50 stations along the route 72 kilometers of tunneling. We are asking the government for 250 million. That is what is required. We would then be asking for part of the money to build it. Manus how much do you think they will chip in . Michele we can raise locally half of that money. If we take the mechanisms in place this is the money that the mayor can get from developers. If you want to do a building you pay a levy associated with the size of that building. That exists already. If you continue with that if you continue with the business rate settlement, if you look at the revenues that get generated, all of those will constitute half of that 27 billion. Manus i live in london and i use the public transport system every day of the week. What are the biggest criticisms . Ive read about this. The hotspots that crossrail 1 is developing. Crossrail 2 will just bolster those hot property markets which are already many would say in a bubble territory and pushing workers further and further away from the heart of london. This ostensibly is not bringing benefits to the real people. It is bringing benefits to a few Property Developers along the route. Michele crossrail 2 is all about homes as well. Youve got to have jobs. But building homes is an equally important part of that case. Theres no point having jobs if manus [indiscernible] michele crossrail 2 will open up areas of land which can be developed. They havent got good public transport access at the present. You put a crossrail in there youve got a massive increase in frequency of trains that will take you from that area to Central London and beyond, and will connect you to places which need workers. Those areas become places that developers will want to build. We are opening homes for normal people in those areas. If you can add 200,000 new homes, that is going to see house prices start to level. It is about homes. It is about homes for normal people. Manus i hope the economics match. Michele weve done manus very girlishly, let me talk very briefly, let me talk about crossrail. If 100,000 dollars were lost last year in industrial action, double that in 2013, the industrial relations involved in getting crossrail running efficiently, do you start with a clean sheet on how you are going to run crossrail . How do you think it will work . It is pretty tawdry, isnt it . We cant get a night shift and weve got crossrail. Michele the people want a night shift. People do want a night shift. People want to see the nighttime economy served. We are engaging with people on this, as with all things. The more people you talk to about the scheme, the more you talk about opportunities that will open up, the more support youve got. Crossrail 2 is one of those schemes that has support from all sectors. Manus lets hope it comes to fruition. I look forward to enjoying the benefits of crossrail 2. Thank you for joining us. That is michele dix the managing director of crossrail former managing director of planning for transport for london. Still to come, google shares soar on the company reining in spending. Manus welcome back to the pulse. Lets talk google. The stock jumped more than 10 after hours trading as the Second Quarter results beat analyst estimates. Our tech reporter joins us now with a little more of a breakdown. Roderigo, costs and spending have been a big concern for investors. How did the Company Perform . Have you got a handle on it . Have they got a handle theyve lowered the pace at which it is increasing. In the previous earnings, they reported a 21 increase. Now it is down to 13 . They still have all of them operating expenses, but they seem to be working to get rid of that problem. Manus google has highlighted commercial improvements in youtube. We are showing some stats. Watch time on youtube is up 60 . Revenue has risen by 11 . The trends that are in place in regards to youtube, it is one of the key takeaways, isnt it . Rodrigo it is. I would say youtube and mobile are the takeaways. Engagement on youtube was the highest in two years, which is pretty good for them. There is something definitely that is going to keep on improving. Theres more people watching video on mobile, they said. That is only going to continue. Manus tell me this. Where are the next set of investors . We saw this with facebook. They made a series of acquisitions in the messenger space. Where is the future for google . Theyve tried some big new ventures, which havent necessarily worked out. Rodrigo that is the operating cost and expenses weve been talking about. Theyve been spending so much looking at new things, hot air balloons to do Energy Projects google glass, the cars they are working on. Theyve been trying a lot of things, but that has been ballooning their expenses. Where is the next thing . The easiest thing to pinpoint is mobile. That will be generating money soon. Bigger project, but harder to know what is going to happen. Manus thank you very much for the breakdown. Coming up on the next week, tech earnings top the agenda. Tuesday is the beast of them all, apple then yahoo , then microsoft. Thursday, amazon. Though oh, to be 20 again. Amazon prime, did you like it . Was it as good as black friday . Recent developments in Financial Markets which reflect greater uncertainty have not changed the governing Council Assessment of a broadening of the euro area economic recovery and a gradual increase in inflation rates over the coming years. It would not seem unreasonable to me to expect that once Monetary Policy normalization begins, Interest Rates would proceed slowly, and rise to a level in the mediumterm that is perhaps about half as high as historic averages. And in my view, the decision as to when to start such a process will likely come into sharper relief around the turn of this year. They are envisioning it being appropriate to begin tightening policy with inflation below our objectives, but what weve said is, we want to have reasonable confidence before we tighten that inflation will move back to 2 . Manus trinity are tryptic . Those are my favorite words. Those three central bankers all in focus. Maria draghi, mark carney, and janet yellen. Janet did a sort of mimicking me with the hand motion. If you think so, join me on twitter. For our viewers, it is a second hour of the pulse and we have a jampacked show for you. We have a conversation with the European Commissioner dombr ovskis. And we will talk about erickson. And we will talk about goldman sachs. Lloyd blankfein, is he the American Dream . Manus germany gets set to vote. Lawmakers will have their say on the greek bailout today. Angela merkel says germany will not agree on this relief for greece. Governor mark carney says the time for rate hike will become clearer before 2016. China has billions on tap. An agency fund is available to support brokers and purchase stocks. Chinese equities jumped the most in a week. A warm welcome to those of you waking up in the and nine at states, good evening to those in asia, hello to those in europe. Lets get to greece in case you missed it. German lawmakers are discussing the 86 billion euro aid package. Chancellor merkel had a speech in favor of the aid package. She said she is working to keep greece in the euro. For more lets go to our team. Hans, lets take it to you. There is not any debt relief and her language. Hans the most important part of her tone was when she praised the finance minister and the applause that Wolfgang Schaeuble got. That gives you a sense of where the german public is. We had a poll this morning that showed 49 of germans wanted to see this defeated in the parliament. It is clearly going to pass. We had the Opposition Leader in a Minority Coalition with mrs. Merkel and their government, and they say that talk of the greek exit has to end and they have to move forward. The challenge of that position is that it is clear with any german that you talk to is that the negotiation process will be difficult. We heard from madame lagarde and her comments are the most interesting. She claims that the current plan is not viable. She wants to see more done on the greek debt and the debt to. We just heard from the finni sh Prime Minister. He says that the caught he says that the talk of a haircut manus the greek deputy finance ministers at the things will open on monday for basic services. What does that mean . We understand a 60 euro cap is still in place for ordinary people. 60 euros is still all you can get out of the bank. On monday, capital controls will be in place. If you are an exporting company you will seat using in your payments are broad. If you have a Student Living abroad, like a daughter or son, you can transfer five thousand euros every three months. On the street, you will still only be able to get your hands on 60 euros, and a lot of points it is 50 euros because they have run out of 10 euro notes. For three weeks since the moment the banks have been closed, one man says that he has had no business because people do not have cash in their pockets. Other reforms are happening at a faster pace. The food and beverage items on my hotel bill were taxed 10 higher than a couple of days ago. The smaller restaurants and kiosks are not having this imposed until monday but we are seeing people on the streets with less cash, especially when you have 60 euros per day that you are saving up until the end of the week. Manus caroline have a lovely afternoon. Caroline hyde in athens. What does the European Commissioner have to say about what was next for greece . I wanted to get the response to that. How are we seeing the creditors divided on the issue around greece. Who wants to see a reduction in the overall debt, and who says that i haircut is off the table we still trying to get to the bottom of whose ranks what. What member ascus had to say about was that that is the broad concept and still on the table. We need to finalize a decision to start a Bailout Program for greece. And esm program. Once the decision to start the negotiations is undertaken the European Commission, and imf can start an understanding with greece. That sustainability is what that sustainability is one of the issues that will be discussed. And went on to say that euros states are willing to talk about greek debt. But the euro states have ruled out any nominal haircuts similar to what we have heard from some in the german camps. Payments on those debts can be looked at. Around the greek bridging loan noneu members will be protected from any risks surrounding providing a bridging loan to the greeks, something the u. K. Has been worried about in particular. Theyll be signed off on in about an hour in brussels. He said there were two tiers of protection meaning none of this would stick to the noneuro countries. Manus great work anna edwards, Caroline Hyde and hans nichols. Lets bring in ian cameron. The global chief investment strategist. Fate has done us together again. What you make of the situation so far . We have been told to stop worrying about race. Anytime good news comes through, the equity markets charge ahead. Ian what we are seeing is the philosophical difference between imf, who recognizes the debt cannot be read aid without restructuring, and the europeans who have then criticized for a lack of physical discipline. They are holding to that the debt is debt to moving forward. That is similar that they cannot sign up to Debt Forgiveness. I think that is in the finnish constitution. Manus we will have a huge extension over time to get something that works positively for greece, is it around 20 years, 30 years, or more . Ewen in january, the situation in greece looked to be improving. Whatever comes out i think that Alexis Tsipras has engineered a disastrous recession in the course of negotiations. He is responsible for that. The Greek Economy will shrink by 3 or 4 this year, which means the reset is that much harder. It is feasible to see a long workout for greece but with Debt Forgiveness somewhere along the line provided that that that is accompanied by genuine reforms and the genuine ability to increase the ability to repay. Manus we will have these discussions going on. Ewen this is a story that your reporters will be covering for long periods of time. Manus i think caroline will like it in athens, even though it is tricky on the expenses. Are you surprised that the ecb raised the liquidity by only 900 Million Euros . I think that is a real show of faith. Ewen in a sense. They cannot reopen the greek banks without that being the case. On monday there will be long queues outside the banks even to get the 60 or 50 euros out. It wouldve been impossible to reopen the euros without that being in place. We did not reopen the banks then that solvency would come to the fore and then they would of been money down the drain. Manus lets see what monday brings. Broaden this for me. Europe is recovering. The imf did not cut europe. You had a report on the 13th which was fairly of heat on european stocks. Can you hone that down for me . The stoxx 600 recovery turned over the past month showed health care, real estate insurance, all up a percent or 9 . The periphery equity markets have come up a percent or 9 . Ewen theres a story in europe that Credit Demand is slowly recovering having been contracted for three years or four years in a row. That story is playing in italy, spain, but not such an extent in northern europe, because they never had such a crunch. The rate of changes picking up. Countries have benefited from a weaker euro and a weaker oil price. This week the iranian thing has come along and has been helpful. This is listed in european stock markets. If you come back to the micro the credit figures that the ecb has been releasing suggest that credit is growing for mortgages and how so purchases even after the greek crisis. That goes back to june 24. That suggests it is still expanding. Financials on both sides of the atlantic are an area with lots of value. We also talk about race rises, which are far more important for the second half of the year than the greek issue. The rate rise point is helpful to financees in general. Manus ewan cameron, the chief executive strategist at black rock. We will have a conversation with a ceo after this break. Plus, the end is near. It is not just the bank of Englands Mark Carney who is suggesting that the time of the rate to will be clear after 2016. We like a billionaire story, and it is mr. Blankfein. He is in the rare five billionaire club. We talk about his life at the top. Is Lloyd Blankfein living the American Dream . Manus welcome back to the pulse. London, paris frankfurt, the stocks are still up at date numeral eight of the longest rally since january. We are the stocks are still up at day number eight of the longest rally since january. This is as the days stands technology, travel, and the media are all still rising. You have within the technology camp, technology is up 1 . Then it comes down to ericsson. Their numbers closely followed by alcatel which is also a little higher. The stoxx 600 is literally just holding on to gains, down. The chinese are supporting their equity market, again. But bill ackman says that there will be global consequences of chinas equity rise. Lets look at the fx board. The euro is trading virtually unchanged. It is the dollar index which comes back. The dollar is the dominant trade, some would say, based on Janet Yellens comments about the readiness of the fed to raise rates. We are back to flat at the moment. The euro sterling is off of the sevenyear high. Who will go first . The fed or the bank of england. Lets talk about ericsson. They had their biggest jump in a year and are leading the charts. They had profits that topped analysts predictions. Joining me is the ceo hans vestberg. Well done on the numbers. People are concerned about the margin. At the harder the issue is this. What are you seeing from the mobile operators in the United States in terms of returning to carfax . Will it be the Third Quarter the Fourth Quarter . Give us visibility. Hans if you look at the north american market, the Largest Telecom market in the world, and erickson has a very good market share. We had a very high investment level. Right now, we see a stabilization and the market where we see a floor investment happening. There still a couple of factors in the market to look into. There are important. Their spectrum coming out in the market that is important for investment levels. On the other hand, the underlying demand for consumers using the mobile Broadband Internet that is very advanced in the u. S. I would say the most advanced mobile infrastructure in the world at the moment. Right now, theres a stabilization. For us, it is a large market. We are going to see what will happen. A stabilization in the three Quarter Results left investments. Manus we did another project work has been taken place in china but that is in terms of higher margins and businesses. We want to know when that rebalance is. This has to do with the United States. You have the Chinese Business going on there. Where are we with in proving these margins . Hans if you look at the margins, we have margin improvements between 11 and 12. We had 3 in the first quarter. We had a drastic improvement on that volume. I think certain never except for 10 operating margins. We have ambitions to be above 10 . Where we are seeing questions from the Financial Markets with growth margins, but not the bottom line. The Gross Margins have climbed between 1. 1 and 1. 2. The professional services are growing 21 . That has a higher or lower growth margin. They are delivering equally good on business. The others are ipo revenues are slightly coming down basically because we are in litigation with one of the big hands of manufacturers in the world. Those are the two main factors for our gross margin. We can still deliver so much more bottom line in this quarter than in the first quarter. Manus what would you say i made a couple of calls to people who will get your stock, and they say that they are hearing that they are going to come out top dog. You have a window to win business. Im hearing that you are chipping away with the price of margin to win market share in this interim time span. Would you deny that . What are you doing in terms of trying to win business in this interim period . Hans we are investing in the new target areas. Everything from the media sector has been changed. There is no changing that. What we see is a huge consolidation among our customers and a round them. We are determined to keep the number one position. We will follow what is happening on our competitors, but we have not changed our strategy because of things happening around us. We are now coming into a new phase in this industry and the digitalization era. Manus thank you for joining us. Well take a quick break and get more discussion when we come back. It would not seem unreasonable to me to expect that once Monetary Policy normalization begins, Interest Rate would precede slowly and rise to a level in the median term that is half as high as historic averages. In my view the decision as to when to start such a process will likely come into sharper relief around the turn of this year. Manus welcome back to the pulse. That was mark carney speaking yesterday. We are getting shots of mr. Wolfgang schaeuble who is making his speech. He is saying that the Third Program is the last attempt to solve the greek crisis. This as this is his point. He is pointing to some of the headlines asking people to prove today. Look enjoyable making his speech after Angela Merkel made it very clear they would be no debt restructuring on the table. Will enjoy both at the first thing for greece to do would be to restore lost trust. We are here with the Global Investment strategist at black rock. You said that the biggest opportunity and challenge was the fed and the bank of england what they will do. Ewen it is the first right rise cycle in eight years. After we have filed returns from the future in terms and equities. We have had the longest bull market in the last few years. It will be a time of navigation moving into this cycle. If you listen to mark carney carefully, he is a man who chooses words carefully there is strong emphasis on the words slowly and saying that it will be half as high as the rate cycle before. That means the destination is not that scary, but the journey given how much has been inflated up, the journey will be a little bumpy. Manus when you do the math on the historical Interest Rates, it is 4. 5 over the time span that mark carney refers to, that would take us to 2. 5 or 2. 25 . Ewen you are probably about neutral in real rates at that stage. What he is saying is that debt is so much higher that the impact of raising rates on consumption will cut in sooner. Take mortgage debt. 90 mortgage debt is on an inflating rate. If you raise it by 1 it adds 400 pounds to the cost of interest to an average household in the u. K. You can see how that will have an impact. People will save their mortgages and cut back elsewhere in consumption. Manus how much more volatility in equity markets in the u. K. And u. S. . Ewen they have already risen above the 20 year average in bonds currencies, and commodities. It is below and emergingmarket equities and developed market equities. It would rise somewhere to around medium and the last 20 years, which is not very high, but the proportional jump is something to navigate. We knew this was coming. The market knows it is coming and we will navigate through. This is when an active managers will be better than passive. They will be able to pick the sectors. They will be able to pick the financials from the rising rate cycles. Manus do you avoid consumers in this change . Ewen if the bond yields start to back up a little, the rate cycles back a little, those have been so heavily built up in terms of duration and substitution. Trying to get things you cannot get in the bond market now. They are vulnerable to underperform. Manus always good to get your take on Global Markets. After your next trip, come back and tell me how it was. The global chief economist at black rock. Here are some of the top headlines. German lawmakers will have their say on the next greek bailout. Angela merkel spoke earlier and said germany will not agree to a debt cut to four greece. It will begin new and in the u. K. 1 00 p. M. In berlin. A bridging loan was approved for grace. The banks will open on monday for basic services. With daily withdrawal limits remaining at 60 euros a day. Mark carney said that the outlook for the u. K. s spurs Interest Rate increase will become clear to the end of this year. The remark comes after tuesday it was said that the time is approaching to raise the key Interest Rates from 0. 5 , which is where it has been since march of 2009. A Chinese Agency has funding available to support stocks. 480 billion with the amount changing constantly. The funding will support brokerages and purchase stocks. Lets check in on equity markets. Jon equities are giving up some of the initial stump to the upside. Jon if you look at the dax they snap to seven Straight Days of gains. We are lower by a third of 1 . We gained 10 on the german equity benchmark. We have a marginal loss with a periphery down by 2 10 in spain and liberty. The equity market is on pot is and the rally in germany is taking a breather. The difference in yield between spain and italy over germany is much narrower over the last week or two with the chairman 10 year yield a 0. 81 with italian yields trading over by 116 basis points. 10 days ago that was 160 basis points. The tension and greece continues, and it is a tragedy but there is no sign of it in the bond markets. In china, we talk about the stock market. A lot of people are talking about the funds supporting chinese equity, but in europe i was looking at brent and the deal with iran, that could relieve economic sanctions and bring more supply into an already oversupplied crude market. We are going for a Third Straight week of losses. A move like that in the market touches everyone. Elsewhere another thing that touches everyone in the u k and europe is this. Euro sterling. Euro sterling is down by 3 . We are trading below 70 . We are heading for the worst weekly loss on that pair since january 2009. It is all about the Pound Strength and governor mark carney lighting a fuse under that debate for the first rate hike under the bank of england. We looked at pricing since august of 2016 which has come forward to may 2016. Expectations for that first hike in the u. K. Have changed, and it is driving the pound higher. Manus i like that. Go ahead with those holiday plans. In 25 minutes, surveillance will take the air. Tom keene joins us from new york. Here we are at the close of the week. The debt relief is one of the highest agenda items. The between madame lagarde and madame merkel. The banks will open on monday and greece has more liquidity. Maybe there has been progress . Tom i would note that they have to get the banks open to do business as usual. I do not see any indication of that on monday, but it is a step in the right direction. I loved your interview on the tensions between the International Monetary fund as a proxy for the United States and germany. I was thunderstruck by the body language. Nothing was lost in translation when we heard enjoyable speak. It will be a interesting weekend as germany when we heard Wolfgang Schaeuble speak. It will be an interesting weekend as germany decides where madame lagarde is. Manus another thing, for your reference, we have been watching what is going on in the parliament in germany between merkel and Wolfgang Schaeuble. The word that comes up time and again is trust. It is about trust that the greeks will implement this deal. We often underestimate the soft commodities of negotiation. Tom the diplomacy has broken down. I spoke with charlie rose about it yesterday. With his European Experience the idea is that this is original territory. We will be joined by someone who has been dead on about merkels mediocre. Andrew matus who goes the other way. He is far more optimistic about america and global recovery. This is critically important that you understand. We will speak baseball. They have to spend a lot of money on a good team in l. A. Manus i love that. The best team that money can buy. I have big shoes to fill. We will see you on the other side of the weekend. Have a good one. Bankers are welcoming a new billionaire. It is the chief executive Lloyd Blankfein. Bank stocks have doubled. As the top shareholder blankfeins network has searched. Lets bring in devon pendleton. There are lots of rich ceos in finance, but very few become billionaires in this position. I love this story. His father was a postal worker in the United States. He went on to read law. It is a success story. Is he the academy of the American Dream . Devon he grew up in brooklyn to being a billionaire and the head of one of the most reviled or celebrated banks in america. It is remarkable. Manus i think the only other one in the same league is jp morgans jamie dimon. He is on the same path. Devon the of them are remarkable. Ar ceos. They did not build the banks from the ground up, but they have become billionaires through the banks because they own shares, have good salaries and have had the quiddity events in their careers. For blankfein that was the ipo with the big windfall. Her jamie dimon it was a 110 million exit package from citigroup. Manus you say i like the plague fine story perhaps more because i have more empathy i like the blankfein story perhaps more because i have more empathy. Is it hard when you write the millionaire stories when you say that he did not create a company from scratch . Is that why some of the stories take a harder punch . Devon everyone has heard of goldman sachs. They have been in the press for good and bad reasons. The ceo becoming a billionaire raises eyebrows. It is not like an amazon or google, it is more ephemeral than that. At the same time it is remarkable, and he has worked very, very hard. Manus i want to show the viewers our twitter question. Is Lloyd Blankfein the epitome of the American Dream . Thepulse. Give me your answers marcuscranny. We will be these out. He is the biggest shareholder in goldman sachs. He enters the rare five club. We need to know when he makes it into our index. Donald trump, he has had a few scrapes in the press recently but anyway you cut it up, he has a few dollars. Devon he is a billionaire. How many billions is a different question. He said he is worth 10 billion. We looked at his assets and we would say that it is at least a couple billion. He loves to Read Everything with his name. Buildings, bottled water, cologne. The trump brand, he says it is worth a ton of money, but it is difficult to value. Manus we know that blankfein has stock. Give me a sense of the Square Footage he owns in manhattan. Devon thousands. The best view that money can buy. Manus he is from brooklyn. Janet yellen is from brooklyn. There something in the water. Devon that is why everyone is moving there, i think. Manus german lawmakers are having their say on the next greek bailout package of the vote. Angela merkel faces noises from members of her own party. We will talk about that after this break. We need to finalize a decision to start the Bailout Program for greece. Once the decision to start the negotiations is taken institutions, the European Central bank, imf, can start negotiating the memorandum of understanding with greece. The debt sustainability issue is one of the issues that will be discussed during the drafting of the memorandum of understanding. Manus the Vice President of the European Commission, Valdis Dombrovskis talking to us exclusively earlier. Theres another decline today in forms of the vote on the negotiations of the third greek bailout. It is expected to pass, but not without noise from members of Angela Merkels party. Thank you for joining me this morning. I think that a line from one of merkels Democrat Union was the systemic importance of greece for the entire euro zone over there can only be one vote and that is no. It is not the bundestag that dealt with greece before . Merkels main problem is her own party. The coalition of social democrats has the vast majority. That is not what we are talking about. The problem is members of her own party that say that we do not believe that this is a good program and that greece will do the reforms. We do not want to support this. That is one of the main reasons she had to appear very tough in the negotiations with greece because she is catering to an extremely skeptical german population. Manus it is not only the germans that are skeptical. The dutch Prime Minister says he does not have much faith in the deal where the current greek government. The slovakian Prime Minister says it would take a small miracle. Europe is divided. I do not think it is necessarily divided in terms of the end goal which is to keep greece in even though we have the german finance minister saying that may be greece should temporarily leave. I do think the majority of the eurozone leaders want greece to stay in the euro. Manus theyre prepared to do whatever it takes. Politically, it is killing them. It depends on the perspective. The main problem that we have and does what is relatively sad for me european perspective is the european leaders are catering to their own domestic interests. Rents will hello and was in favor because of his party, Angela Merkel had to be very strict because of her own interests. That is what is worrying from the european respect to. Manus do you think theres something more about the lack of this project . You have written who does not want to back stock keeping greece in. The french want to keep them in. Europe is not a harmonious and together kind of place. It is a dysfunctional, nonunion istic place. This is a very ambitious project. We have 28 states that are trying to integrate on various levels. Maybe there should be more acceptance that a year up several speeds is very acceptable. Manus that doesnt work. Greece is on its knees. Ireland was battered by an austerity program. He in and italy have reformed more so than other countries spain and italy have reformed more so than other countries. Valdis dombrovskis spain and portugal famke spain and portugal are examples of countries that have reformed. Manus i think politician should travel more and understand what structural reform actually means to people. Do they travel . Famke im sure they do. I dont think that is necessarily the problem. I think germany believes that structural reform works because they have done it themselves. Manus and they broke all the rules doing that. Famke that is definitely true, but the main problem is that we are trying to integrate nations with different economic backgrounds and ideology. Germany believes that monetary stability is the most important goal. Others believe there is the growth objectives. It is divergent economic backgrounds and ways of thinking about how the eurozone should function that have always been there, but when the euro was created it was a political decision to go for it. Now it should be a political decision manus two do whatever it takes. Maybe the politicians should have a work with mario draghi. Thank you for being here with us. Here are some of the top stories. This comes after the bidding battle for an Online Gaming company. Holdings has also been vying for control of the b1 party the bwin party which has been on sale since last november. The shareholders of samsung voted in favor of accepting a buyout offer from the groups the fact out holding company. The defeat of billionaire activist investor paul elliott singer who criticized the merger as unfair. It underscores the resilient of the corporate dynasties. Shares in google jumped more than 10 in afterhours trade after secondQuarter Results beat estimates. Sales rose. The companys new cfo says that she will focus on reining in spending. Those are your top stories. Well be back in the couple of minutes about with this weekend could hold for europe. Stay tuned for more. I have never campaigned for leaving the eu. I think the states are lower than the used to be. I think the arguments changed from 40 years ago when britain last had a referendum on this subject. The eu market is smaller as the share of global gdp it is a different proposition. Manus that was lord mayor Boris Johnson telling us first on bloomberg this morning that he was britain to stay within the eu. Lets check out with hans nichols. A very good day to you, sir. Bundestag vote meet up, merkel and Wolfgang Schaeuble have made their points . Hans it looks like it will pass later today pyramid. It looks like it will pass later today. Manus what is on the slate next week. Hans well be taking a little bit of the greek break next week because we have so many earnings coming through. Boeing, mcdonalds, microsoft. In europe we have big ones with the banks starting, we have novartis and daimler, we will see how daimler reports. Especially given the slowdown in china. Then, you will take august off as you always do. Manus ok. Lets leave it there. You have surveillance with tom keene taking up the bat. One response is is blankfein the epitome of a billionaire. Announcer this is bloomberg surveillance. Tom the os else in the room speaks. Lagarde says the imf is not meddling. Merkel faces growing revolt. Greece tries to give the banks to keep the banks open till monday. Markets react to a commodity implosion. Oil, copper they all rollover. Get out the checkbook. Clayton kershaw and the dodgers are the best money can buy. We are live from our World Headquarters in new york. It is friday, i say, july and 17. Without question, the image of the morning was the financement surgery in a wheelchair. Even i can see the bitterness in his voice. Brendan i am reading a headline that is taken from that speech. He says what really bothers me what tortures me is my responsibility to be just. This is his euro. He was part of the building of the