We are getting breaking news out of the eurozone. Eurozone pmi numbers coming in pretty much as expected. Im trying to get them up for you in terms of what we are seeing overall. They are we were expecting a figure of 51. 5. They came in at 51. In terms of services, they arrived at 53. 9 versus 52. 7. Overall, it basically shows the divergence in which some of the countries find themselves. Germany had betterthanexpected figures. Some of the weaker countries actually showing that they didnt grow as much as they were expecting. Brinkmanship over the bailout. Greece and germany face off in brussels for the second time this week as the clock ticks toward the deadline for a deal. Just hours after greece requested an extension of its loan agreement, the finance minister of germany dismissed it. Our International Correspondent hans nichols, joins us from brussels. It is not just the germans who are going to insist that greece completes its bailout program. Hans thats right. Weve heard from the finnish finance minister saying that greece needs to stay in their program. Weve also heard from a deputy in the Minority Party in germany , saying they need to be unified on the need for greece to stay in the imf program. It is clear that the german establishment there was some talk about a split, and that doesnt appear to be the case. Take a look at some of the greek headlines. These are greek papers. Sure block, thirsty for blood. Schaeuble divides europe another one. One from we are sending away our allies. It seems that domestically in greece and germany both sides are not only girding for a flight but demanding a fight. Take a look at what mr. Varoufakis told the telegraph in the u. K. What we cannot accept is that the fiscal adjustment by the last government he carried through just because the rules say so. There is no macroeconomic argument i can be made. That is the negative side. There is some reason for optimism. German officials are saying that you could potentially use yesterdays letter as a starting point for negotiations and not require greece to submit an entirely new proposal. Angela merkel and Alexis Tsipras are talking. They had a conversation last night which mr. Tsipras described as positive. Yet the leaders may be taking a more conciliatory tone and working towards agreement. Very hard to actually figure out what is going on. Francine so what kind of measures is the ecb considering . Hans heres what we have some great reporting out of our colleagues in frankfurt. The ecb would likely intend would likely ask greeces banks not to accept, or at least reduce their reliance on greek debt. Thats crucial for a couple reasons. They are the main buyers. If greek banks are being told to no longer by greek debt, you could have a Funding Crisis for the greek government. You could have a funding government much sooner. There is a 4. 4 billion bond coming due next month and a 2. 4 billion the following month. When we reported the original strategy, it was to wait and see until may or june, when germany would be in a more advantageous position. This could be one of those things where they see they have an advantage. Francine thank you so much, hans nichols in brussels. For more on the continuing greek saga, we are joined by unicredits chief economist. Thank you so much for coming in. First of all, it seems there is quite a strong debate. Is germany and is the german finance minister pushing too hard . I dont know. It is a matter of politics. I dont think it is a matter of the ecb. The germans have a problem. They are ones who pay a big part of the bill. The german public, maybe because of the media and germany, were extremely hard towards greece. I think hans made the point that there is not a big split inside the German Government because there is no wind for germany to give that away. Do you agree . You have talked against austerity measures in the past. Does there need to be a realization that the timing was flawed and germany needs to back down . Absolutely. Just on your previous point about whether mr. Schaeuble might have gone too far, he is on the record as having wanted greece out of the eurozone in 2012 when the suppose it costs of exit were much higher. It is very clear and his hardline stance is something he fundamentally believes in. He is willing to pull the trigger. I think the point that erik made is important. This is always going to be a political call. The stakes are so high. This is well above the paygrade of finance ministers. The numbers matter, but what matters more is what Angela Merkel decides with tsipras in consultation with president obama. It is not just a european problem. Every leader of every large state in the world is involved as is the head of the imf. Nobody for the most part wants greece out. Francine yet weve talked about the potential that greece accidentally leaves because the politics arent sorted or it gets too heated. We are beyond that, it seems. This is negotiation tactics. Erik the risk of an accident is not very high in my opinion. It comes down to whether the ecb provides money for the greeks to get their money out of the greek banks. Again, that is not a typical point. It is a political decision. I dont think it is right to say it is just merkel and others. Anything they do has to go through parliament. It is for the democratic processes in europe. I share your view but at the end of the day somebody has to explain to the rest of the eurozone taxpayers that the burden sharing between the greeks and the rest of the europeans if you took something close to what the greeks originally wanted, you would end up having italy, spain, and portugal having their taxpayers pay a bigger share than the greeks would. How can u. S. The portuguese for help if it actually burdens the portuguese beyond the greeks . It is a matter of burden sharing. Francine and you think we will find an agreement today . Erik i have no clue, but my gut feeling is yes. There always seems to be an agreement. Francine sony, are you confident that we will get something . Does it matter if we get an agreement today . As long as they keep talking, they will find a solution. Sony i think the fact that there is an agreement is more important than the timeline. Our track record is clear. It is always a few minutes past midnight. There will be an agreement. My gut instinct i hope im right francine i think everybody hopes they are right. Sony there is that possibility that thats not the case, but it will not be an accident. This idea of a grexit by accident is silly. Francine it would be even of the greeks voting out. Sony absolutely. That takes are two big for an accident. Francine erik, in terms of the ecb, they may or may not have capital controls. There were sources saying that they were going to impose them or try and put pressure on greek banks to do that and that was denied. At the same time, theres them asking the banks not to hold so much greek debt. Do they need to have a bit more of a counterpart . Erik this is problematic on both sides. They did not discuss the issue of capital controls. I think that is just a wording issue. You can be sure it has been discussed. Was it on the agenda . Maybe not. But these guys talk all the time. It would be out of the question in my opinion that they would not have considered this issue. Francine considered, but put to one side . Erik i think it was mentioned and batted aside without much discussion. At this point, this is highly counterproductive. It would actually be quite selfdefeating and shooting the ecb itself in the foot. Francine all right, thank you so much. A little more about the ecb after this very short break. Erik and sony they stay with us and we will talk a bit more about the ecb and some figures out of the eurozone today. That brings us to our twitter question of the day. Greece versus germany, who should back down. Tweet me. Guy johnson is also taking part in the conversation on twitter. Later in the show, we will talk greece and centralbank divergence. That is with a former fed governor. For the first time ever, London Fashion week and the Chinese New Year coincide. We will explore chinas thirst for luxury. Francine welcome back to the pulse. We are live on bloomberg tv and radio. The standoff between greeces new government and its creditors risks triggering a cash and credit crunch. That could of course severely hurt greece financially. Tom gibson breaks down the numbers in this report. If greece fails to find a bailout solution, it could be push out of the eurozone and lose a lot of money. Without an agreement, 10. 9 billion euros from any you rescue fund will be canceled. Another 5. 6 billion comes from euro area member states, with money made from profits on greek bonds pledged in 2012. Those creditors have no obligation if greece rejects bailout terms. Another 1. 8 billion euros comes from belttightening. Failing to agree with european leaders also affects 12. 5 billion honest by the imf. These hinge on the same austerity measures. The largest amount, 68 billion euros, comes from the European Central bank, which has been keeping the greek banks afloat. This will only reach greece if it stays solvent. Should the eurogroup agree to a sixmonth extension, greece might hold on to the muchneeded cash. Francine back with us for more, erik and sony. We were talking first about the standoff germany versus greece something that we that has been bubbling in the background. Sony, you were saying tsipras has to fight, otherwise there is a risk that the government wont hold together if they end up signing something that is too diluted. Erik as we talked about, it is overwhelmingly likely there will be an agreement. On a scale from one to 10 it is coming in at 9. 99. That means the greeks have a domestic problem. I wonder whether the Syriza Coalition can pull through this for very long. Francine and you are concerned about it as well, sony . Sony this is why i was so harsh on germany yesterday. I think this is a deliberate ploy. Mr. Schaeuble doesnt just one greece to capitulate, but he is almost intent on public humiliation of the kind that will destroy syriza domestically. It is equally important for surveys a tough fight back. I dont think we are going to end up in a compromise close to the european position. I think the greeks will get 20 to 30 of what they set out to do, which is realistic given that they are one state pitted against 18 or 19 others. They were never going to get all of their way. Most of the greek electorate knows that. Theres about 75 to 80 support for severus strategy. The deal is important. But the phrasing is important. If he shows he fought the good fight, he tried his best and you always have the possibility of taking a deal to a referendum francine . Francine the problem, i guess, is that greece is just one country. Are the germans so tough because they are trying to find some kind of solution, or they are trying to placate possible parties that are more extreme than we have at the moment . Erik i think there is a degree of concern about contagion to other countries. There is something to that. Also, i dont know if it is personal or not. I would say that given the way the germans have treated greece if it is personal it is so unforgivable. The nasty ofiness of this has been terrible. Hopefully it is not personal. Francine one quick last question on the markets, because theyve always been here in checks. There are no checks anymore. Equities are soaring. Is qe distorting the European Crisis . Sony i dont think so. I think the equity markets are doing what they are doing because the recovery is underway and nobody really thinks that whatever happens in greece can unravel that. And then of course qe is more like a backstop. We have the various institutions , we have the qe, but the underlying rally in the equity markets is not so much qe as it is the stimulus effect and the recovery that seems to be coming. Francine sony, do you agree . Sony i think the overestimation of how easy or how low the cost of a grexit will be there is huge complaisance because this has never happened before. The second part, i think, is the fact that for the first time we actually have a nascent recovery that might achieve escape velocity. The Exchange Rates and qe, that is the reason not to inject additional uncertainty. That is gratuitous. I think that will be a stabilizing influence that will make political decision on a grexit less likely. You dont want to jeopardize the recent recovery weve had in the past six years. Francine thank you so much for everything. Erik stays with us. Coming up, ukraine at crossroads. After it lost a strategic city to russian rebels, we will look at the options one year off from the main clashes. Francine welcome back to the pulse live on bloomberg tv and radio. The test for ukraines truce. Rebels take the key city of the pulse of debaltseve. Henry meyer joins us from moscow with the latest. Can the truce continue intact . Guest there are continued violations, but not on the scale of the battle for debaltseve which was described by germany as a massive violation of the ceasefire. We are hearing reports of artillery fire close to donetsk, one of the main rebelheld cities, and also near mariupol, a city under government control but which the ukrainian rebels have had their sights on. If they take the city, this would be the last remaining obstacle to a land bridge connecting rebel held Eastern Ukraine to crimea. The osce, the International Organization charged with implementing the ceasefire, has issued an appeal today for both sides to implement the agreement, and warning that it represents a final chance for peace. We are hearing talks that the four countries in the normandy format, germany, france, russia and ukraine, may meet at the level of foreign minister in paris this coming week. That underscores the urgency of these efforts. Francine tell us a little more about gas in the area. Gaprom has said it will stop supply to the rebel held areas. Francine that is an interesting question. Ukraine cut off supplies to the rebel regions earlier this week. Russia then said that it would supply gas instead, and it would charge ukraine for it. I think what you are seeing is these regions which have already been cut off from the rest of ukraine although the Peace Agreement supposedly will see them reincorporated into ukraine, and economic links restored, what is happening on the ground is that they are very much separate entities and will remain so. Francine henry, thank you so much. For more, unicredits chief economist. If we talk about russia, we were saying how the markets dont seem to see the tail risk in greece because theyve seen it play out before. You believe that the rally in indices is not down to qe but because the economy is recovering. Why are they not taking the russia consult more seriously . Erik thats a very good question. When we think about the big risks in the world, this is number one. Russia and how it progresses in ukraine. I think there is a big tail risk here. What are you going to do with the money . There is so much money out there and you cannot invest on the back of risks. You have to think about the key scenario you have. Theres nothing you can buy in fixed income that gets you any return at all. Half of all funds in the core area is now in negative rhetoric or he negative territory. You have to buy something else, otherwise you dont have a job anymore. If you look at all the macro indicators, it is a screaming case of european equities and real estate on this sort of stuff. You have to do it. Just hope that it is a frozen conflict as people say. Francine it certainly is how the markets are seeing it. Erik thank you so much. We will be talking easing next. Francine welcome back to the pulse live from london. Im Francine Lacqua and here are bloombergs top stories. Euro zone finance ministers talks in brussels today over greeces proposal for a sixmonth extension for its loan program. A government leader says that the proposal is a basis for negotiations. The greek Prime Minister said yesterday that he had positive conversations with the german chancellor Angela Merkel just hours after her finance minister rejected greeces request. Today marks the First Anniversary of the maidan massacre in ukraine. 50 processors were shot dead protesters were shot dead in kiev. The shootings sparked protests. The anniversary comes as germany, france, russia, and ukraine reaffirmed their commitment to last weeks ceasefire agreement despite the seizure of the town of debaltseve. The German Economy picked up momentum this month while france showed signs of strengthening. The composite figures indicate that the regions economy is Building Momentum even as concerns mount about a possible greek exit. For more on all of this, we are back with erik. We talked about the conflict in russia. We talked about what is going on between the eurozone and greece. Central banks around the world are easing. This week, we heard that janet yellen is a little bit more dovish. When are you expecting the first Interest Rate rise from the fed . Erik we still stick with june. Weve had it for a long time, but the minutes got us nervous. There was a bit of new aspects to it. It still seems to be the best guess. We dont like to change forecasts. Francine june is quick. June is around the corner. Erik we had it earlier originally, but we put it back to june. I think that it is still [indiscernible] the data will suggest they are clearly behind the curve. For me, the key issue is not the dollar. It is what the dollar does the u. S. Equities. If you look at the financial conditions in america, the dollar is not that important despite the companys often refer to it. If a stronger dollar takes down the u. S. Equities, then we have to move that forecast. Francine but equities are seeing record highs in some cases. You dont think janet has entered a currency war . Erik no thats not what it is. I dont like the term very much. At the end of the day, what we have is 10 years on our numbers on evaluation of the dollar, and 13 of the euro. What weve had the last few months is the creation of that. We havent gone the other way yet. The present level is not far off. It is actually what we have is more a correction of years of weirdness in the market. Francine thats a very technical term but a good way of putting it. Talk to me a little bit about when you say youre sticking to your guns it seems that in the language, what the fed is looking at is wage growth. Do you think thats something the markets can discount or that wage g