9 00 in london. Good morning. You are watching the pulse. Im guy johnson. Francine lacqua is not here today. She will be back on monday. We are speaking on ifo, but right now im going to bring you the numbers. Hans will be able to break them down. Ifo confidence may number at 108. 5. Median forecast 108. 3. The Current Assessment index 114 point i think we are seeing a slight dip. Essentially, fairly stable numbers being generated. At the moment, what youre seeing is while you are seeing a reduction in things like pmi and maybe headline gdp numbers what you are starting to see is a pickup in investment again. We will break that down further in a moment. Lets talk about greece. Lets talk about what has been happening over the last 24 hours. Speaking in riga, Angela Merkel has reiterated their is still a lot to do regarding talks with greece. I will have some bilateral talks and have already spoken last night with the french president and the greek Prime Minister. It was a very friendly constructive exchange, but further work with the institutions is necessary. There is still a good deal more to be done. France and germany have offered the greek Prime Minister help. The agreement must be made with three institutions. Guy the german chancellors comments came after talks in riga between her, alexis tsipras, and the french Prime Minister. Those talks broke up without any sign of a breakthrough. Lets talk to because crystal norris. Nicos chris alarmist. Everyone seems to have had a nice time, but no real progress. We saw the twitter picture. What we didnt see was progress. Nikos we didnt expect much and that much happened. Angela merkel said that greece has a lot to do, but we already knew this. We have seen this play several times. Each time the negotiation between greek officials and creditor institutions hit a stumbling block, greek leaders escalate and take the market to political leaders. The answer they get from political leaders, from the german chancellor, is always the same. First, strike a deal with creditor institutions. The imf, the ecb, and the european commission. Only when you strike a deal with the technocrats from the institutions, then we can disperse money. The answer that mr. Tsipras got yesterday was no different. Guy is there any softening . Is there any change in the town beginning to emanate from paris, from brussels, from berlin . We are getting very close now, and maybe there are bits of light for greece. Nikos the mood music is definitely better. Officials from creditor institutions report some progress in the process for sure. Significant differences remain in key areas including Pension System overhaul, labor market reform, fiscal targets for this year, and sales tax reform. We are not close to an agreement for sure. The german chancellor, the french president , and the greek Prime Minister have said that we should aim for an agreement by the end of this month. We have said this several times before. Always, hopes for an agreement have been rebuffed by lack of complete action. We will see if it is going to be different this time around. Guy what happens next . Nikos well, patience is definitely wearing thin in the governing council of the European Central bank. If the deadlock persists, sooner or later, euro area centralbank governors will raise in exchange for emergency cuts. This emergency liquidity assistance that keeps greek banks afloat. We know for sure that the greek banks dont have much time. Also, greek state coffers dont have much time. Their payment is coming due to the imf. Their position is so tight that the next that can happen at any time. Guy nikos chrysolaras joining us from our athens bureau. Lets take another quick look at that picture of merkel, tsipras and hollande. The body language is absolutely fascinating, particularly with mr. Aland on the righthand side. This brings us to our twitter question. If this is a game of poker, if these guys are sitting around the table, who would have the best hand . The obvious answer is Angela Merkel and Francois Hollande but is that actually the case . Let us know what you think. If this was over, who has the best hand . Is it about playing body language . Lets talk about greece. Lets talk about europe. Mr. Draghi is speaking at that event in portugal. We have some analysis on that as well. We are joined by jacques. Friendly, constructive, but no deal. Im getting a bit bored of this. Jacques they are still far apart from each other, and i think that every side is sticking to his own view on this. Clearly, theres not enough pressure to reach a deal. Pressure has to increase much more for a deal to be reached. We havent probably reached a peak in that political crisis. Guy who do you think has got the best hand . Jacques i think the greeks have a number of cards that they can put on the table. Unfortunately, i think the greeks have a few more cards to play and they will probably play them. On the same side, the europeans have their own mandate. Guy what are the cards . What will they put on the table . Jacques theyve already started playing the default card. I think that is going to continue. That is a painful one for the europeans. The second one is refusing essentially to put to the greeks what it is the europeans want. The sovereignty of the greeks allow them to make the decision on the referendum. If they refused to conduct the referendum, that is also painful for the europeans. You cannot put that card on the table. The europeans tried to impose it on them, but they dont want to use that. That will be a turning point in the crisis. We think that is the ultimate outcome but we are not there yet. Guy the final hand has yet to be played. Lets talk about what is happening in the european story. Draghi is down at the ecb even in portugal. Hes going to be talking about unemployment and inflation. The consensus seems to me that europe is getting back on its feet. We saw the pmi numbers. Germany was disappointing. The rest of europe is starting to show traction. Is the optimism in the market at the moment about europe overdone or underdone . Where is the middle ground . Jacques optimism is overdone, i think. If we try and analyze what was driving the recovery of until march, we think the nine months of declining oil prices, that is gone. If that is the true story and we think the data suggests that this might be the case, a peak was reached already in the Business Cycle in europe. From here on, we are growing but not as fast. Secondquarter gdp might be slightly weaker than the first quarter. Thats very difficult for those who have acceleration in their forecast from here on, i. E. The ecb which has a non a 1. 9 gdp forecast. Im closer to 1 for next year. I think there are dynamics in the system in terms of the 45 increase in the oil price, the lack of depreciation in the currency, i think they all add up to a slow growth environment. The confidence in portugal, very interesting. The topic is unemployment. When one looks at the unemployment situation across europe and when one looks at the under employment situation, the euro area has 20 of youth unemployment, twice as much as what the u. S. Has. The idea that you can generate wage growth as most observers seem to believe, seems to me a low likelihood scenario. I think they have to be able to generate this 2 inflation. That is probably the message we get out of portugal. Guy draghi has just started speaking. Governor kuroda is going to be attending the event. Draghi or kuroda, which one is going to get to 2 inflation first . Jacques if you take the package of the reflation strategy that japan has put in place, there is far more focus on reflation than in europe. There is a lot of coordination between the boj and the minister of finance. There is communication around waging around raising wages. In europe, there is a focus on competitive devaluation. As long as that is the case, it is very unlikely that europe will be able to reach anything comparable to the package that japan is trying to put in the system. Not to say that japan hasnt got its own challenges, but still, there is far more emphasis on reflation strategies in japan than there is in europe. Guy . You joining us Jacques Cailloux joining us. A great deal has been achieved in Structural Reforms according to mario draghi. I wonder whether hanswerner sinn feels the same way. We will find out later. He is coming out in around 10 minutes time. We will continue to bring you the headlines from mario draghi. What else is on our radar screen . The bank of japan has refrained from increasing monetary stimulus and signaled a more optimistic view on the economy as governor kuroda thats on stronger growth. The central bank will continue to boost the Monetary Base at ¥80 trillion. U. K. Prime minister David Cameron wants to start talks on European Union reform at the meeting in riga. Cameron says there will be ups and downs in the negotiations. It is in britains interest that it is a success. It is in britains interest to start some of the discussions. There will be ups and downs. One thing throughout all of this will be constant, and that is my determination to deliver for the british people a reform of the European Union. So they get a proper choice in that referendum before the end of 2017. Guy coming up, we speak to the Ifo Institute for economic research. That as climate week wraps up in paris. We will speak to the ceo of axa about what his company can do to reduce the impact of Climate Change. We will speak to the ukrainian finance minister, natalie jaresko. Guy welcome back. You are watching the pulse. We are live on bloomberg tv. You can get is everywhere. The European Partnership meeting in riga is focused on the eus relationship with postsoviet states. Leaders have released criticism of russias actions on ukraine. Russia has been making accusations about outside forces interfering in another Eastern European nation. Lets find out what nation we are talking about. Ryan chilcote joins us now. Ryan the country is macedonia. The story in a nutshell is weve had a good amount of unrest over the last month. Over the last week, weve seen protests, violence that preceded that, a lot of turmoil. The russians say what is going on in macedonia is the west trying to foment a revolution. Because the government, the Prime Minister in macedonia, is for, among other things, a pipeline. This is something i discussed yesterday with russias ambassador to the eu. The pattern of events and the pattern of statements coming from both the opposition inside the country and those from neighboring countries, and those from other countries further outside, they create a picture which is quite sinister, and quite resembleant of what happened in ukraine last year or in a number of other countries who became the venues for socalled revolutions. I can admit that macedonia is not void of corruption. That is probably in the the case. But this doesnt make the country unique in the balkans, or in the broader geographical context. But other countries of the region are being invited to join the European Union. They accede to them. In spite of similar corruption allegations. But the protests being fomented in macedonia creates a picture of a deliberate effort to punish the government for its fairly independent stance on Foreign Policy issues including its decision not to abide by eu Foreign Policy rules for candidates and subscribe to restrictive measures against russia. Also, if you look at the geography of the region macedonia is the best place for constructing the extension of the newest Energy Infrastructure project in the region, the socalled turkish stream towards europe. It is a suspicion. I dont have any facts. Neither does my foreign minister who alluded to this as well. But, i think this is a logical suspicion. Ryan so you think the United States and the European Union are trying to topple the government in macedonia because lets say the government in macedonia is prorussian in a nutshell. Is that it . I wouldnt call the government of macedonia prorussian. Some people some people would say that the current government in macedonia is centerright as compared to centerleft, the opposition. Ryan so there you heard the ambassador to the European Union from russia saying he has no hard facts. The u. S. And eu deny that they are fomenting revolution in macedonia. This is one to watch. We did see macedonian yields yesterday rise to a record amount. Something to keep your eye on. Guy what are the other nations in this region saying about it . This country borders some fairly interesting nations. Ryan it is all about how you get russian gas into the European Union. First, the gasas goi to come through bulgaria. Then bulgaria said no. The new plan is the turkish stream. It wou go through turkey, to greece, although the geks sa that it cant be called turkish stream. Greece would be the hub, but then its got to go rth. It has to go through macedonia now we are in our balkans young worthy. We are going through serbia. Guy my question on this is, europe doesnt want more russian gas via this in a of the woods, so what do the russians think . I struggle to understand how you sell something they dont want. Ryan there is a conversation to be had. This would be a pretty elaborate, sinister plan, to Block Russian gas. The reality is, the eu still has a final vote on these pipelines. When the eu talks about diversification of gas supply they are not talking about russgas supp. Ey want gafrom other parts w thank you very much indeed ryan chilcote. Germanys fio number out. Is there evidence that we German Economy . This is too elyo make but has improved, and the internal economy construction is strong. So, we dont make too much out of one month. If such a change in the indicator occurs for three months in a row, we would say it is significant. Hanswerner what have you made of the bond Market Action that we have seen inb unds . What is your sense of what the market is signaling about europe . Hanswerner this seems to be more a speculative attack coming from special deals but im not sure this is already a turnaround, because the ecb has just begun with its program. Yes, it is always the case that the anticipation of the Program Leads to Market Reaction and then comes the normalization phase, but there is still a lot of government bonds to be bought by the ecb. 60 billion per month, and that will go on for quite a wild. I dont think this is a turnaround. It is just a normalization. Guy is your sense do you think we are going to get wage growth inflation in europe anytime soon . Youth unemployment remains elevated. Do you think we have to see qe for an extended period of time in europe . Hanswerner for two years or so, we will have it. The euro will stay low because all that money that the ecb pumps into the european economy has to go somewhere. Some will try to go into the stock market. Thats why the stock market is high. A little bit will go into investment of companies. Much more will try to escape into other continents. That keeps the euro low. I think the revaluation the devaluation effect of the euro is the driving element here in the efficiency question about qe. I think it will be efficient. Guy very briefly, what happens with greece . Hanswerner if only i knew. This is a political game where the greek government tries to postpone things because they are improving their threat point. Guy hanswerner sinn, thank you very much indeed. We will take a break. [beeping] ooo come on everybody, i think this is my grandson. [lip syncing] little girl you look so lonesome oh my goodness. I see you are feeling blue come on over to my place hey girl were having a party happy birthday, grandma well be swinging dancing and singing baby come on over tonight [baseball crowd noise] [x1 chime] [crowd cheers] oh i cant believe it [cheering] hi, grandma guy im guy johnson. Here are the Bloomberg Top headlines. The Company Behind coffee and hotels has turned to the finance industry for its new chief executive. It is appointing the Current Group director of lloyds retail division. He will replace sandy harrison, who is stepping down in february. Richemont reported an unexpected decline in april sales. Retailers delay purchases. s shares are down more than 1 . Climate week comes to an end in paris. Today is climate finance day, where business and government leaders will be discussing how to finance a greener economy. Caroline connan joins us from that event. Caroline yes, good morning. Im joined by the ceo of axa, one of the biggest Asset Managers in europe. We are here at the final day at unesco headquarters in paris. Can we ensure ourselves against women change . The answer is not an easy one. As long as Global Warming and Climate Change is not too strong, yes, we largely can ensure ourselves area ourselves. If the warming goes beyond two degrees, it is going to become probably impossible. The way to insure yourself is not only to buy protection. It is to change your behavior. Caroline axa has commitments to fight Climate Change. Could you tell us what axa is doing . Insurers have very large Balance Sheet. Insurers often mirror what happens in the economy and society. Climate change is really embedded in what we see. It is embedded in the risks we see among our clients. What we do is, we try to increase what we do on the prevention side. We try to improve what we do on the resilience and recovery side. Today, we are announci