Transcripts For BLOOMBERG The Pulse 20240622

I am manus cranny. Coming up on the pulse, well be speaking to the former a tie in finance minister and the bank of italy director general emeritus the british co simon money emeritus fabrizzio saccomoni. Angela merkel warned that the clock is ticking. Time is running out. Where emphasizing the social cause they need to be made. And on to resolve the situation as it is. Manus let us get to our team. Guy johnson in athens. Once nichols in brussels. Hans nichols and brussels. Guy, let us go to you. It is about the banks. European Central Banks is holding Europeans Bank is holding firm on what they loaned to the banks so far. Guy paul will give you the details of what is happening. The Banking System remained shut. This economy is grinding to a halt. The agency said about depression. That is what it feels like at the moment. Businesses are shutting up. They cannot get more credit. Npls were already bad. They are going through the roof at the moment. The greek tagging system has enough cash to last until the middle of the week. It is all getting very tight. We are in a situation as well where we are waiting to see where the politics start to that situation. If we get a deal, great. At the moment, it is very hard to see from the greek and of the table exec he was going to change the greek end of the table to see where its going to change. The incoming guy there factors. He resisted and said this country deserve more. We cannot accept the nonsustainable solution. Ordinary people, the middle class, those who lost their business say they want to trust a business that will bring back a sustainable solution. Guy there is only one point that matters, tsipras is in a very difficult addition. A difficult position. Any deliver a deal . That is pretty much what it is going to take that is pretty much what it is going to take. Manus guy, let us see what the day brings. Let us talk to hands he is in brussels. Just let us talk to hans he is in brussels. Let us talk to hans, he is in brussels. Hans go they want hans they want specifics. They want to be prepared to make a full cuts. It cant be all tax increases. We heard from Jeanclaude Juncker earlier. It is remarkable some of his language. He said it is unacceptable to be called a terrorist by another government. It was varoufakis who used that term. Varoufakis is no longer a part of the government. Looks like juncker is holding mr. Tsipras responsible for some of that link which. One note on juncker, he said it is not going to be done today. You can have some progress toward a deal, but do not expect a deal. That is from him, who in general has been the most positive. Youre not going to have the greek ranks open again until you have some sort of fern firm deal. The only negative news we could have is a quick resolution. That is just an exit. If you end up having a short meeting tonight, then that is a pretty bad indication. Manus hans go today is a critical day hans today is a critical day. Crossing into the ecb, they have continued their liquidity to the banks. This time there increasing the collateral by a little bit more. Paul the ecb is make sure the game continues a little while. The big question how long it can continue to do that. It has allowed liquidity to continue to be extended. This made it harder for banks to get a hold of that collateral. To get a hold of it they have to post more collateral. They were pretty close to their limits already. At some point, banks will not be of to get it, because they do not have the collateral. The ecb has bought time. They have said to politicians, go away, talk. Tomorrow, the Government Counsel will get back to discuss greek liquidity once again. You would hope there would be political progress. If they havent, it will be a difficult decision. Manus thank you very much. Let us turn to our first guest. He joins us from rome. The former a tie in finance minister mr. Suck amani, welcome to thes mr. S accomonni, welcome to the pulse. Mr. Saccomanni thank you for inviting me to your show. The fact that the negotiations are going to resume. The referendum was highly political event. I think it was a problem for mr. Tsipras to get full support because it was known he was facing internal opposition from his own party. He has indicated that he wants to remain in europe. I think they are putting a lot of effort into rescheduling restructuring. This is a highly political a significant restructuring an answer to greece. In fact, there is no immediate [indiscernible] 2021. The key issue the maturity of the obligation [indiscernible] and now there is on july 20 another obligation coming through to the European Central bank. Manus you mentioned july 20. Obviously another critical date. The banks are closed. Capital controls are in place. Can greece survive in this situation . A liquidity crunch. No additional funding from the ecb. Can greece survive with liquidity from politics . Saccomanni i think there is no doubt that greece will need some additional Financial Support and the short run support in the short run. Some overdue structure. Manus where do you think that liquidity could come from . Should be from europe . Should it be from europe . Is that how you see this process aligning the politics . Mr. Saccomanni there are several ways assistance could be provided to greece. They would get an additional amount under the program that has expired. To restart that program. I think that would allow the repayment to the imf and eliminating the situation that normally applies. There are no longer eligible to use the imf resources. It is a combination of a way otherwise i agree with you, there is no immediate shortterm financing the situation. This looks rather difficult to sustain. Manus thank you for joining us on the line today. A need for shortterm financing that may give politicians more time. Steve Williams Joins me right now. You and i caught up before the start. You said this will come down to political word. Fairly entrenched. Im the im going to call it separates to find out what this im going to call tsipras and find out what its all about. It is about to liquidity. I do not remember the start to the if i remember correctly of the original dozen, only three passed the test to join. This clearly needs a political solution if greece is to remain in the zone. I think the threat of grexit has increased because of referendum. Greece does not seem it is not on the departure launch departure landed just yet. Manco manus i would love to know how you work out percentages. Neil i believe there is a 50 chance that greece will have to leave the system. The whole problem right now is the tech file. If greece were to leave, that pile still exist. On what becomes foreigncurrency debt. Tough though it is, it does seem to me that greece is going to give it one more shot for this to work. Manco everyone talks about debt restructuring. Manus everyone talks about debt restructuring. All the other european nations. If your rolls over and must blindsided now how can you restructure . Neil i believe the definition of and the definition of insanity is doing the same thing over again and expecting different results. I think from guys report earlier, he is saying the same thing. The new package must be based more on growth led the targets. Perhaps the chance for greece to lock in on low Interest Rates rather than the floating rate that their date that their debt faces. It seems like the final leg of negotiations, each side could capitulate and come up with a final agreement. Manus we have touched on liquidity. The banks have close. The country is running out of euros. This could the pressure that is exerted on separates again to accept a deal on tsipras again to accept a deal. Could it be that the banks are going to need recapitalization . There is a real risk of bail in. Newco a positive for Financial Markets the debt is largely within the family. 80 of the debt is owed to the institution, such as the imf. The bulk of the rest is owed by the banks. Where the majority is owned by the banks, it seems inevitable that the banks are going to have to remain closed. Let us face it, when you look at cypress or iceland, want to slap on capital controls, it probably takes years to remove. Manus you are going to stay with me. A lot more to get through. The political will come signed to that. Neil williams. Heres a look at what is coming up on our radar this tuesday. China, the shanghai composite fell for the fourth time in five days. The sings encompass it fell 5. 3 the shenzhen comps it the shenzhen comp posit fell 5. 3 . Publisher Axel Springer. Discussions are said to be at an early stage. Almost a decade ago, he was blocked by german authorities. Samsung has posted its Second Quarter profit. Missed estimates. And shortages a shortage of smartphones made it difficult. 1. 6 billion. Samsung demonstrates proper jobs from galaxy s6. It fell short. Iran is on the verge of missing another deadline. Diplomats are in the 10th straight day of talks in vienna. That brings us to todays twitter question. Limited debate over this. What impact would lifting sanctions on iran have on europe . That is our twitter question of the day. You can join me on twitter. I am there. We just want to bring you a bit of breaking news. French police say traffic has been disrupted. Join me on twitter there. French police are not telling us are telling us that traffic has been disrupted. There is been bilateral meetings between the british delegates going into fronts going to france. Discussions on how to beef up the controls. Have to ensure good discipline how to ensure good discipline between the british between britain and france. Manus welcome back to the pulse. Where live. We streaming on bloomberg. Com. Chinas shanghai composite for this morning for the fourth time in five days. Lets bring in the master, mark barton. A lot of this market and very little seems to stick. Marco and what stays, the shanghai composite was down 5 . The lowest since march 19. A closed down 1. 3 . It has been an astonishing run. Today, to put it in perspective, just 54 stocks rose. Those bigger companies. 800 625 stocks fell 865 stocks fell. 10 is the daily limit. We had a flurry of measures to stabilize this market. Two by 120 billion worth to buy 120 billion worth of shares. And less than a month. Trade is cutting 93. 6 billion. That is purchased with borrowed money on the shanghai exchange. On monday, since 2010. That is the index. There is the fall from the 12th of this month. This is the daily percentage movement. The 15th was the beginning of the climb. They. 15 incline. 3. 15 decline. It is spilling over into the hong kong markets. Eight shares today and hong kong dropped into a bear market here it market. This is chinas shares lifted in hong kong. From the peak, i have charted it. The peacock the peak was may 26. It is in a bear market. It is astonishing. Despite more measures today, the China Financial Futures Exchange announced it will limit the daily trading. 500 627 mutual funds pledged. 567 mutual funds pledged. Manus one of the biggest political headaches there for the administration. Neil williams is here. This is going to be his biggest test in his first two years of power. Controlling the stock market putting a floor under it. Neil in terms of chinese consumers. And as i go much toward balancing. What gives me comfort about china is on their policy dashboard, they have more buttons to press. They do not care about inflation. They got ample chance to stimulate. They are cutting rates slowly. They could step that up. They could take some of that pain away. In terms of growth, looking at china, i would probably lose more sleep about the eurozone. Manus the chair at ubs says he is more worried we spoke to a variety of people that says greece is a risk. You are more worried about europe . Neil inflation is a symptom. We have monetary union, but we do not have enough economic union. Greece is a testimony to that. Im not sure if we in london fully appreciate the efforts that have to be made to get inflation low and keep it down in the eurozone. Greece has lost 25 of its gdp in the last five years ago is it that austerity. To put that in context, the share of the economy, that is equivalent to the u. K. Losing scotland. It is painful. I do not expect too much growth from the eurozone in the next years. Manus thank you very much for covering all of our basis. Coming up, a seventh straight profit drop at samsung. What happened . We do not buy the new galaxy did we go stay with the pulse. A little touch after the break. Get excited for the 1989 world tour with exclusive behind the scenes footage all of taylor swifts music videos interviews, and more. Xfinity is the destination for all things taylor swift. Manus welcome back to the pulse. Breaking data on u. K. Industrial production and manufacturing. Unexpectedly rising in may. Oil and gas outputs surging upsetting a drop in factory outputs. Economists were expecting a drop of. 2 . That equates to an increase of 2. 1 . Economists forecasting an increase of 1. 6 . Manufacturing production is the weaker part of the economy. It is driven by the services output. Decline of. 6 . Economists expecting a 1. 8 increase. It is the consumer that is driving this economy. This is the part of the economy that may be that George Osborne has to focus on tomorrow. He unveils his emergency budget. Any details or movement in name power against the dollar, not really peeling not really. Not a big move, but it does highlight the imbalanced nature of the u. K. Economy. Manus that is up to George Osborne in terms of rebound thing the u. K. Economy. Angela merkel has warned time is running out for greece to save its place in the euro. That comes as leaders and finance ministers gather in brussels to discuss the next steps over the crisis. U. S. Tries her free u. S. Treasury secretary jack lew spoke to tsipras and the finance minister to work towards a constructive item. Shanghai confidence is down for a fourth time in five days. The confidences up five point 3 . Chinese stocks less the month. The German Television group is in talks with Axel Springer. That is according to people familiar with the matter. Lets dig into this with our team leader. Aaron newspapers, tv, why they want to get together . Digital. They have been pushing into that space. Proceed been procieben can compete with the likes of google and youtube. Manus i want to know the history between these two. They tried to do a deal a number of years ago and it was blocked. Aaron Axel Springer tried to buy prosieben. The German Cartel authorities rejected it, saying they would be too dominant. Manus the landscape has changed. The competition landscape has changed. Business needs have changed. Do you think the authorities will see this as being a reason to object . Aaron that is the question. It is too early to say whether the antitrust authorities will block it or supported. Anyone knows the landscape has changed. They will argue that. We are no longer competing against ctv newspaper publishers. The chances of them getting this through our higher than a decade ago. The german politicians may like the idea of creating a year champion to compete with the americans. Manus media m a has been explosive. There are new deals, smaller acquisitions in terms of content. Technology deals being done. What does the landscape look like relative to the big boys . Aaron it is booming across various sectors. It is a broadbased boom compared to the internet boom of 2000. We are seeing a lot of moving pieces. The 2002 deal, the telefonica deal, these Telecom Companies trying to get more content. You see in the u. S. , time warner comcast. Once you see the u. S. Players moving in the u. K. You almost see the continental european players, the germans, following suit. Manus great to get you down here. Aaron, our team leader on deals. Galaxy smartphones have posted the seventh straight profit drop after Second Quarter. Caroline hyde has the details. What is the woe of galaxy . Caroline maybe it is shooting itself in the foot. The edge, the phone everyone got excited about in april. Demand was there, supply, not so much. They seemed to have a marketing misstep. Analysts downgrading the amount of. Higherpriced models need more margin and more profitability. When you are not able to supply those devices, they hit themselves where it hurts. It was their own making shortages. Two, the competition is still rife. The cheaper devices, the chinese makers, they have the lower price points, very highend, luxurious smartphones. That is eating away at sales. That was behind some concerns. Sales down 8 . Profit down 4 . They have had to delay payments. Not music to the investor base. They are trying to steady the ship and rectify the situation. They are trying to make more curved screens. A new factory could double production. That could help them in the future. This is a company shifting itself, trying to become more inwardly profitable. It is about making their own screens, making their own chips. Away with qualcomm and their highend devices. This helps their own areas of the business. They have the displays and chip units which make up the rest of their profits and sales. That could help them in the future. It does make them more exposed if it does not sell as well. The two adversaries, those relations are slightly soaring. Samsung is trying to rejuvenate it self, trying to make it less of a copycat. They are willing wooing apple itself, they may supply the new iphone with chips. It has not done that well this year because of the concerns of the s6. Manus the British Library has many of the audio treasures that will be lost in the next 15 years unless urgent action is taken. They are hoping to raise 40 Million Pounds. This is to digitize the sound archives of more than 6 million recordings. Bloomberg was there to find out more. Here is a degrading disc from 1950. It is a radio broadcast of a jazz performance. It is unplayable now. The disc has begun to deal him in a. The campaign is designed to raise awareness of the richness and importantce of sound. We are worried about the degradation of many of the carriers, disks and the tapes are falling apart. The technology is a worry. Magnetic tapes, most of them will outlive our ability to play them. Tame machines will wear out. Tape machines will wear out. Our ability to play them and extract information from these is finite. We have maybe 15 years to play them. A much more, common item the cassette. We have about a million and a half disks and tapes in the addition. We want to raise 40 Million Pounds, it is an enormous amount of money. We are lucky that the Heritage Lottery fund has earmarked money for us. We need to save this stuff. It is a brilliant encapsulation of world culture. It is remembered through audio recordings. When you think about winston churchill, we think of his voice. To be the first to retrieve it. When we hear someone speaking the pauses, the emphasis, the vitality of what they have. With music that is the case as well. A sound recording is a moment in time. To be able to replay a moment in time is a magical thing. Manus coming up on the pulse , we look at how the weather has seen a sales cooldown. Manus welcome back to the pulse. Here are more top headlines. After suffering decline since february, oil prices have stabilized amid signs the deadline for a nuclear deal between iran and the west will be missed. Investors avoid risky assets worried of deepening the debt crisis in greece. Samsung missed analyst estimates. Shortages of new smartphones made it harder to lure customers away from the iphone. Samsungs seven straight profit drop comes as the s6 phone sales fell short. Samestore sales mostly clothing, fell 0. 4 in the first quarter. Meanwhile, food injuring business continues to outperform britains shrinking grocery market. The Biggest Online fashion retailer expects sales to be at the higher end of forecasts. We are joined by charles. Lets bring it to you. When we look at these numbers, food, general merchandise, it was a brief glimmer in the previous quarter. Charles you have a strong number online, more than 38 tails increase. The instore number is a bigger down than the. 4 they reported. This is the big problem at the moment. They have 200 or so big stores where the food business is being sucked out to simply food stores. It is probably higher now. The general merchandise business goes online. What are they going to do with these stores and how are they going to get people into them . Manus that is the conundrum we have seen, tesco had to take a substantial do they need to change how they do business . I think many of them need to. M and s is losing business. It is one of the least where retailers. There are a lot more coming. Stores are starting to take more and more of the hit. You have to step back. This jump came across a period when they were depressed. Numbers are probably better than they look. More and more volume is going to be done online. Stores need to be costed officially efficiently. Manus it is interesting that in volume terms, the gap has gotten narrow. They say they have no inflation no deflation. The reported number is a volume increase. We are seeing them getting the volume increase. In actual, the amount of food being shifted, there is more in the pack. We have about. 4 . This is an edited range of product. Given the economy, consumers are feeling better about themselves. Marks and spencer should be doing better. Manus lets switch to asus. This is online. In terms of the strong performance, does it come down to we are feeling better . Things are improving. To give credit to asos, they are doing something good. More and more people are shopping online. That is helping them. Something good is happening here. The business is still growing. They have created some brand loyalty. It is unique. Manus is that what they need . They have seen price stability come back. One interesting thing is the sales have grown ahead of the customer count. They are getting current customers to buy more. The Constant Currency sales are up 4 . One has to suspect they are down a little bit in australia. Manus ok. A lot more for Marks Spencers to do. Thank you very much for putting those in context. Up next, one week from its muchheight launch muchhyped launch. Apple streaming Music Service is it music to the ears . Manus welcome back to the pulse. Much hype about apple music. It launched last week. How does the Service Measure up . Stephen has been finding out. Stephen apple has entered the streaming subscription game with apple music. How is it . Making complicated things simple has been apples strength. Apple music is a weird mix of necessities and distracting addons. Streaming and download it works the same as all other streaming services. In addition to the songs you flag additionally, it also brings in everything that you have on itunes. The two tabs to help you discover music are new and for you. These are playlists compiled by people and full album recommendations a somewhat you tell apple about your taste. Apple really nailed it here. There are some quirks in the interface. The colors are constantly changing. Graphics range from clean and legible to headache inducing. Apple threw in a bunch of extra features that feel like little more than talking points. Using siri voicecommands work fine, but i doubt i will ever use them. I understand why hardcore fans will like the connect tab, but most users will likely forget it exists. You will find beats one. If you dont listen to a lot of terrestrial radio, hearing someone talk over tracks a strange. It is free and i expect i will tune in regularly. Apple music has everything you would want from a subscription Music Service and more. None of the extra stuff that is it is interesting enough that i will use it through the free month trial. Manus that is a battle that will rage royal. For those listening on bloomberg radio, the first word close vote is up the first word is up next. More on the greek crisis. What are they doing with the cash guide . A look at the iran nuclear talks. Equity markets are retesting on the downside. 18 western European Equity markets monitored by bloomberg. Down more than 10 from 2015. Lets see what is happening in greece and athens. Manus greece may miss a debt payment as early as this week. They claim the situation is leading to a return of economic depression. That is as Angela Merkel warns that time is running out. Eurozone leaders are meeting to discuss the crisis today. Chinas benchmark index tumbles to the lowest level since march as Foreign Investors had to the exit. A very good morning to our viewers in europe, good evening to those in asia, and welcome to those waking up in the united states. This is bloomberg market day this is the bloomberg market day. The situation is leading to a return to an economic depression. Eurozone leaders will hold an emergency meeting in brussels later to discuss the crisis. German chancellor Angela Merkel warns that the clock is ticking. Time is running out. We are emphasizing the poll this week to resolve the situation as it is now. Manus the greek team is standing by. Guy johnson is in athens. Hans nichols is with politics. And we have one in frankfot. It is not for the greek government. It is not for the greek government to submit proposals. Both sides need to move in greek negotiations. That is coming from scholz as he spoke in jaws berg. Ensure osborne. Lets go to guy. The reality on the ground is that you have capital controls. People are lining up to get their daily 60 euros. You have been there virtually 24 hours a day for the past weeks. What are they doing with those 60 euros . The first thing to say is that the greeks are queuing up to get to the banks, and the cash story is fascinating. There is a sense, at the moment they need to spend a moment. Some people are living on 60 euros a day, that is tough. There are others trying to figure out how capital controls will affect them. Bail lives by depositors could affect them. If the banks will be around it a few weeks. Supermarkets are basically aggregators of cash. They need the banks open to make deposits. That is true of other businesses, as well. People are buying rolexes as a store of value, that seems to be happening. There is another story where people are maxing out their credit cards. Maxing out what they can. They believe the banks will still be around in a couple of weeks, so they are going out and buying electronics and all kinds of stuff, because they do not believe the banks they will own that money to will be around, and if it is maybe it will be a different currency, and some sort of story will happen that will allow them to pay back less. That is what is happening in the background in greece. You have a weird economy that is being generated. In terms of politics, the new finance minister life have to say it is ideologically similar to the old finance minister. I dont think that Alexis Tsipras will not be changing his story anytime soon. We want a debt reorganization. In some ways it is similar to what the greek people are doing with their own money. Manus in terms of what theyre doing with the cash that is reflective of what the government did, which is spend. Lets leave it there. Rolexes and ipads, dont worry about the bank. Hans the creditors will be delighted to hear that is what the citizens are up to. Acting frivolously. The creditors dont want to hear that. They want a robust plan with integrity. Dont they . Hans they want a change in tone and language. This was indicated that he might even want an apology from Alexis Tsipras, because he said it was unacceptable that the creditors were called terrorists. We have seen the euro take a dive, it is below 110 that could be the s p warnings, on the back of those comments, or a warning about a potential depression. Finance ministers will arrive shortly. On the french side they are talking about the debt restructuring and debt relief and it should not be taboo. From every other government they want to see something firm and concrete. A full decisions from greece that indicate they are willing to make difficult cuts from home if they are going to get a new bailout package. Yesterday the finance Ministers Working Group had a Conference Call and little progress was made. There is a talk of a bridge loan, a sixmonth financing bridge, but that things unlikely when you listen to how Angela Merkel has been talking. They either want an overall deal, and they can only get that is Alexis Tsipras is serious about cutting back spending in greece. Manus lets see where that whole discussion comes because if that is the jumping off point, if that is what they think the jumping off point is just because the imf said so last friday, that will not sit that well with Angela Merkel who says time is running out. Time is running out, the banks are closed. There is no cash. Whatever cash there is apple might be benefiting from it, but the ecb, they are in a conundrum. They have raised the hair cuts within the collateral in the greek banks. You heard about the bail in and will the banks be there . Where are we with the ecb . An interesting document has just hit the website for the ecb. It is about financial risk management, but the most interesting section is on the liquidity of systems that flushes out some of the systems that they could reject. One is an overly generous provision increasing the risk of moral hazard. This is the kind of wording we have not seen in documents from the ecb, but you could say that it is implicit from some of the statements of policy makers. They are not minded to go a good deal forward without a political deal or a chance of a political deal. At the moment, liquidity is there for the greek banks, but only just. It has not been increased. The collateral requirements are higher, so it is harder to get a hold of liquidity. They have been told to use the tab available to get a deal otherwise this could be withdrawn, and for the banks, it will be all over. Manus that is the risk. That the banks, the liquidity issue will trump any kind of initiative. Manus lets go to guy johnson for a monitor on the apple and rolex purchases. Thank you so much. Here is what is on our radar this morning. The china benchmarks share indexes deepen. It fell for the fourth time in five days. The shenzhen composite 5. 34 . German television is in talks with a berlinbased newspaper according to people familiar with the matter. Discussions are in the early stage. Almost a decade ago, it was blocked by german competition authorities. Quarter profit, the shortages of use of smart phones made it harder for euro customers to lower customers away from apple iphones. Six point one billion dollars fell from the end of june. This is sam songs fourth straight quarterly profit. The drop comes as the galaxy phone sales fell short. On the verge of missing another deadline. That is to reach a deal of the islamic republics nuclear program. Diplomats are on the 10th straight day of talks in vienna. There is a line of inspections of Irans Nuclear site. In return they will lift economic sanctions. That is our question of the day. We have moved away from greece. What impact would lifting sanctions from iran have on europe . We know renner, show, all of the historical stories about who might benefit from this, but there are much bigger impacts in play for europe. This is the pulse. It appears we are in the eye of a hurricane. I do not think the situation is calm. It will come down to whether the greek debt and the greek standoff whether or not they want a significant restructuring of their 300 billion plus euro debt. It is the bank option. If they default on everything they will basically be debt free. By voting no, 61 of the voters in greece made it clear that they want more understanding, and to be heard. Manus those are some of the top sources on greece. The Prime Minister races against the clock to prove that he can get a deal with the creditors. How likely is that . Joining us is carson, the german chief economist. Carson, thank you for joining us. Getting a deal done with both sides on the table. We had longer this morning saying that it was wrong that you accused us of being terrorists. Angela merkel says that clock is ticking. Do you think they will be able to get a deal done, and how quickly is the time ticking down . Carson they will try to get a deal done. I think the only red line left is the issue of debt relief. Even they are, you can find a compromise. You can put that relief and restructuring at the end of a long successful reform process. That should be a facesaving compromise which allows everyone to stay in the eurozone. Manus so a deal for relief. That will show delivery . Carsten i dont know if we will the deal today but we have heard it very often, it but today is a day of crossroads. If they do not get closer to each other, i think it is almost over and we should prepare for an exit. Todays crucial and will show if the greek government in the eurozone partners can get together where there is a political willingness to compromise on both sides. If it is there, a deal is within reach, if not, we should prepare. Manus you say that there is no deal done in the next 24 hours, then were looking at an exit. The consequences would be what . Carsten the consequences would be disastrous for the greek economy. When already see some flavors due to the capital controls, and this would worsen. We would see more unemployment. It would be disastrous for greece. I dont see how they could benefit return to their own currency they would be an exploit that hardly exists. The shortterm impact for the eurozone should be benign, but the question is whether afterwards the eurozone would be prepare for more integration. Only if they have more political integration it would be manageable. That means more integration with prevent the national in french the spainish to repeat the scenario that we had in greece. Manus i want to get a very german perspective. Ms. Merkel said yesterday in paris that time is taking. It is over to you, to the greeks, to start the process and tell us what is on the table. The domestic appetite in germany, from the newsreels i was watching yesterday suggest that germans are ready for humanitarian aid. Germans do not have a desire to put debt relief on the table. Carsten that is true. If you look at opinion polls, youll see there is no appetite in germany to go for a third bailout package. Then again, it would be up to mrs. Merkel to do the packaging right of offering a new deal. There are lots of tricks to give debt relief without calling it debt relief. The german Public Opinion could change if the debt relief is presented as the carrot at the end of a long ride. The biggest red line is no up front that relief. That is a no go if you listen to the public in germany. Manus the banks are closed. The ecb has changed its collateral at the banks. Liquidity is squeezing greece by the neck. How much longer can the economy go on without them issuing ious . Where are you on the word of theyll in . You think we will see one in greek banks . How much longer will we see controls . Give me your sense around that. Carsten the banks could survive in the current state. I think that is obvious. The capital controls will continue for a long while, even if there is a deal. Imagine if the banks would open now. We would see a bank run with everyone withdrawing as much money as possible. The situation is severe. Manus july 20, you framed it for me beautifully, you said the next way for hours are critical to keeping greece in the eurozone. The ecbs next bond payment is due on july 20. Is there any way that this debacle can run until july 20 . Carsten right now, there is. If they continue with the ela it is possible we could get to the 20th of july if there is political well. There are lots of technicalities. It would take a while before everything is implemented. When the political will is there, europe could give bridging loans to enable the greek government to pay back the bonds expiring on july 20. When the political well has disappeared, there is no way that we will pass july 20 and then we have to prepare for the greek exit. Manus lets see who blinks first in this discussion between hollande, merkel, and Alexis Tsipras. Thank you so much for your time. Coming up it has been a week since apple launched its new streaming service. Has it been a hit . We have the story. Stay with us. Manus welcome back to the pulse. After all of the hype, apple music launched a week ago. How does the Service Measure up . Apple has finally entered the subscription streaming game with apple music. How is it . Making complicated things simple have been apples strength. Apple music is a weird mix of distracting addins and necessities. The downloading and streaming works exactly the same as other services. In addition to the intentionally flagged songs, apple pulls and everything that you have ever purchased on itunes. The 2 tabs help you discover music are new and for you. The selections can be all over the board and for you provides better suggestions. Their playlists compiled by people and our home recommendations based on your taste. I have been surprised at how good the suggestions were. There were quirks in the interface. The colors are changing. Some things are transparent, others solid. The graphics range from multiple a headache inducing. Apple through it and asked her features that feel like little more than talking points. You can play the number one song from 1999. Even this year he voice command works fine, but i doubt i will use them. I can see why hardcore fans will like the connect tab, which is like tumbler for sharing behind the scenes content, but most users will forget it exists. You will find the new flagship Radio Station called beats 1. If you dont listen to a large rest your radio, hearing someone talk over and between tracks is strange at first, and not for all situations. However, it is free, and i will tune in regularly. Apple has everything you would want from a subscription Music Service and more. However, the extra stuff can detract from the overall experience. Apple music is interesting enough i will use it through the free trial, but for now, my auto ring a is off my auto renew is off. Manus coming up, it is deadline day for deal. It has to be done with iran over the nuclear program. Can a new agreement he reached . We discussed that after the break. What is at play for the oil markets . We are there, on twitter. Manus welcome back. Live from the bloomberg headquarters in london. Lets get you up to speed. Angela merkel has warned that time is running out for greece to save its place in the euro. That comes as your his leaders and finance ministers rather in brussels today to discuss the next steps of the crisis. Chinas benchmark share index has slid for the fourth time in five days. The shenzhen composite fell 5. 34 percent, more than 3. 2 trillion has been wiped off of the value of chinese stocks in less than a month. Suffering their steepest decline since february, oil prices have stabilized amid todays deadline with iran. Oil trading at its lowest level since april as investors are wary of the debt crisis in greece. It started well in the equity markets, but it looks like it has given up the initial gains. The dax was down by 4 of one percent. We are up by half of 1 after the substantial losses in mainland europe. The big question is it the calm before the storm as we approach the summit. That is the question for the bond market. It is reflected. Yields were higher than yesterday when we were up 14 asus points. We are down by seven acis points this morning. Outside of europe, interesting moves. Lets take it to china. That story is dominating the market in asia. The shanghai composite down by 3. 12 . It is the amount of stocks and companies that have suspended trading. Suspending ipos suspending the shares, that is a guaranteed way. 26 of firms on chinas mainland exchanges have suspended trading. That is remarkable. What is interesting is how this plays out. The concern over china, arguably spilling over into the commodity market. Oil was down the most since february. That is back into a bear market sliding for the biggest tuesday drop this january 1. 86 . That means another story to be told in australia. A weaker dollar down by a fresh sixyear low. Thou was exacerbated by comments overnight. The governor of the reserve bank of australia said a little more depreciation is on the agenda going forward. He got exactly that. Manus Glenn Stevens is the central banker of our time who job owns more than i do. Thank you very much. A great roundup. Lets talk more about the talks in our on. Elliott is standing by following developments. It looks like this could be extended again . Elliott it looks that way. We are getting a sense of deja vu. They already missed the june 30 deadline. It looks like they will miss this evenings deadline. The powers have never met one of their selfimposed deadlines. It doesnt mean it wont happen. The Chinese Foreign minister sounded optimistic saying that a comprehensive agreement is within reach. Secretary kerry urged caution. Over the past few days, we have, in fact, made genuine progress. I want to be absolutely clear with everybody that we are not yet where we need to be on several of the most difficult issues. Elliott there are number of issues. One is the pace of sanctions relief. Iran once the sanctions lifted as soon as they sign any kind of agreement. There are other issues such as the snap back mechanism for sanctions. What lifetime will be automatically a position of sanctions would have if iran is in violation of agreements. Iran is suggesting that it be allowed to boost uranium enrichment if it does not receive the full gamut of sanctions relief promised. There are hurdles to be overcome before a deal. Manus lets get this in context. It is not all negative. If there is no deal tonight talks will go on. If there is no deal on thursday, will that cause more problems . What is your take . With the american political system allow that . Elliott congress has 30 days to review any deal done by the obama administration. Secretary kerry is the most senior diplomat there. If they go beyond july 9, they would have 60 days, because they would have to include the august recess. The wider open any window is between agreeing on a deal in the in vienna, the more opportunities for hardliners in around to try to get a deal and Prime Minister Benjamin Netanyahu to try to scuttle a deal. It is not definitely going to happen that we get a deal. We do not know that we will not get a deal either but the longer it is drawn out, the more opportunity for anyone who opposes a deal to have their say to try to stop it. Manus thank you for the roundup and putting that in context. Iran and the world powers are likely to miss that deadline for nuclear deal. Lets welcome our next guest. He is an analyst at jefferies. It is always nice to have you with us. Ive written down five bullet points. Iran greece, china, and opecs. Do you have a test Case Scenario . A best Case Scenario . Jason the best case is seeing some kind of deal reached over the summer. Roman Oil Market Perspective that means there is unlikely to be much of an effect on the balances of 2015, but in 2016 we would expect the iranians to be producing at a higher level. As much as half a Million Barrels a day. That is in an oil market that is already oversupplied. That is a significant pickup in opec output. Manus they will have the impact rampup. In context, are we right to assume they can reach that level of production quickly with the infrastructure they have . Jason it is a matter of months. In 2011, before sanctions, iran was producing 3. 8 Million Barrels a day. The infrastructure has been maintained. I think it will be quick. Manus we have had this sort of bouncing from the lows. We find the zone between 60 and 70. With iran coming back on top, opec having barrels in june, they are fighting for market share. That is their Baseline Strategy . Jason absolutely. There are gaining market share. Last month they were at 31 coming into the share. Manus we have the iran supply potentially coming on board, but iraq is a big portion of this discussion as well. Jason the iraqi production continues to grow faster than expected. A lot is coming through the north. The relations between baghdad will play a big role. They are producing 3. 8 Million Barrels a day, up 400,000 barrels a day from last year. Another big surge in opec. Manus if we think about this benchmark in terms of the reduction going on in the states, the whole production level seems to float between 60 and 70. When you get back to the zones we see the oil come back on stream. Nothing will stop this level of supply . Jason i think that is exactly right. You see a heavy levels pickup when wti hits 65. It is resilient, the u. S. Production, in the face of the count. The fact that it has not rolled over is another signal that the market will be well supplied. Manus where does china fit in . We have the potential stimulus. The reality is that growth is in question in china. U. S. And china were the only two things that were supporting our dragging rest of the world. Iran, china, greece, where does china fit in the story . Jason china is the most important factor. I think that because we are in an oversupplied market, but rapid demand growth has been a bullish signal. China is a huge factor. China has been showing strong growth in gasoline demand, a very consumer driven product. If we see a rollover in the chinese economy and stock market, that could be at risk. Manus lets leave it there. There is a lot at play in the oil market. Jason gammel and oil analyst at jefferies. We want to bring our viewers, a few comments coming from the vice chancellor. This is in a weekly journal magazine. He only sees that reduction in regards to greece with reforms. It gives you a little more where the german view and thinking is. He says it would be naive to accept greece into the euro. It was naive to receive greece into the euro. That is in retrospect. He said that they can be gained by wiping out the debt. A strong voice from the vice chancellor in germany as we wait to hear what the basis of renegotiations, starting between the creditors and the greeks, we are waiting to hear what they want to put on the table. The next 24 hours are critical. Otherwise, you are looking at a high possibility of a greek exit. You can pick up that interview on bloomberg. Com. The conflict between saudi arabia and yemen has claimed more than 3000 lives, half of which were civilians. It does not guarantee military success against the hutu rebels. And saudi arabias largest city, displays of religious devotion, unrivaled wealth and Rapid Development are everywhere. In the countrys burger joints and shopping malls, there is little indication that this is a nation at war. That is where a four months saudi airstrike has been borne by yemen. Does not really affects us. You cannot even feel there is a were nearby. Bezos says this tribal militia provides a second round of defense. That is where he has strong saudi nationalism. Most depend on the state. The jobs are from the government. How important is the saudi army . Most of my tribe is in the army. While the citizen militia members may feel safe on the frontier, real military forces face a serious threat. It is very dangerous, but this is their job. This is what they are trained to do. To look after the border. The interior Ministry Spokesperson insists that the border is secure. The repeated attacks on isis outposts will not frighten the saudi forces. There well a trained and equipped. They are willing to die defending the border of the country. They have been surprised to the extent that the hutu rebels have proven themselves to be resilient and to carry the fight to the border. Not just that they have taken casualties, but the fact the engagements are even happening. The middle east institute of washington dc says the saudis are well prepared for a ground campaign. They cannot back the saudi money, facilities, or formal training. The saudis cannot match their flexibility, ability to hunker down in the mountains, ability to function in small units. They are fighting 2 different wars. In a recent ride alone, the radios crackled with reports of incoming rockets. Tactical training was in short supply with much of the equipment in disrepair. Despite the millions of dollars on american weaponry, on the southern border, the country is protected by a rusty metal fence and a few pickup trucks. While saudi airborne aggression consumes considerable cash reserves, the rebels have remained resilient. They are causing this stalemate to continue. Manus why the British Library needs 40 Million Pounds. Stay with us for that. Manus welcome back. Here are some of our top headlines this morning. The German Television group is in merger talks with a berlinbased newspaper publisher. That is according to those familiar with the matter. Discussions are in an early stage. This was blocked almost a decade ago by german competition authorities. A quarter profit missing estimates thanks to a shortage of new smartphones making it harder to lower customers away from the iphone or samsung. Operating fell for the seventh straight profit drop when the galaxy s six phones fell short of estimates. It is the coolest may since 1996. Store sales fell by 0. 4 , snapping a briefer spite in decline for the ego retailer. Its food and drink business are outperforming britains shrinking grocery market. The British Library has warned that many audio treasures will be lost in 15 years unless action is taken. A campaign was launched hoping to raise 40 Million Pounds to digitize the countrys archive of more than 6 million recordings. Bloomberg found out more. Here is a degrading disk from the 1950s. This is a broadcast of a jazz performance. It is a unique recording that is unplayable. You can see the surface is peeling away from the base layer. Saith our sound is a campaign to raise awareness of the richness of sound recordings in our lives, and the vulnerability they face at this point in time. We are particularly worried about the degradation of the discs and tapes that are falling apart. The magnetic tape will outlive our ability to play them. The expertise to run them will disappear. Our ability to play them and to extract information from them is finite. We reckon for about 15 years. The much more common for most people would be the cassette. We have tens of thousands of these. We have about a million and a half tapes in the British Library collection. In the next eight years we wanted to raise 40 Million Pounds. We are looking at the Heritage Fund at nine and a half Million Pounds which is brilliant. When he to save this, because it is a brilliant encapsulation of our collective memory. A lot of world culture has been captured and remembered through audio recordings. When you think about winston churchill, we think about his voice. When we hear someone speaking the words, the positives, the emphasis the pauses, the emphasis, the details. That is also the case with music. A recording is a moment in time. It is a mystical, article thing. It is almost like time travel. Manus it is a day of decisions and negotiations. Alexis tsipras goes to brussels. The greek place in the euro is at stake. We will discuss what to watch with his meeting with euro area leaders. Stay with us. Manus welcome back. We are live on bloomberg television, streaming on bloomberg. Com and your ipad. A look at what is coming up. It is all about negotiations. The brussels talks, midday at u. K. Time. The leaders are getting together. Youll want to stay tuned to bloomberg. Com you want to be on my twitter account. I will be raring to go. The pulses are at the highest level. The next 24 hours are critical for greece to remain in the euro project. Stay with bloomberg. This is bloomberg surveillance. Tom after the no vote there is less reason to compromise the e. U. Leaders that will listen one last time to sip reduce in brussels. And the germans say no new billions for greece. The Chinese Government scramble to put the air back in the bubble. Chinese stock markets move from correction to bear market. And it is ugly out there. American apparel scrambles to find cash and customers. Good morning, everyone this is bloomberg surveillance live from our World Headquarters in new york. Im tom coen and joining me is brendan greeley. Brendan im watching the tape and wondering at what point we take surveillance to china. Tom the china story would be front and center but we have the greece thing overwhelming all and well do a little bit on oil this morning as well as china. Right now we need to catch up on combreeze and here with you are top headlines is bonnie quinn. Bonnie theyre running out of patience with greece. Theyre headed to brussels