was soft in late june when the debt crisis deepened. thanks were shot -- banks were shot and capital controls were in place. a key economic indicator is pointing down for greece. manufacturing shrank last month at a record pace. president obama is stepping up the fight against global warming. the plan is sure to call plenty of heat. -- to cause plenty of heat. the president previewed his plan by hosting a video on twitter. the proposal told for reducing emission from u.s. power plants by nearly one third within 15 years. america accounts for about 1/7 of the world's in missions, and about half of it is from plants -- of the world's in emissions. you can see the president's announcement right here on bloomberg television this afternoon at 2:30 p.m. eastern. a joe biden that presidential campaign may be more than a whim. there is a political action committee urging the vice president to run. few democrats have come forward to challenge hillary clinton. the party's presumptive favorite for the nation. one of them, vermont senator bernie sanders, does not think he would bring anything new to the table. bernie sanders: i have known joe for 30 years and i am very fond of him, but i think the american people who are seeing the middle class disappearing, massive inequality, a campaign-finance system that is literally corrupts now, want to go beyond a conventional establishment politician. vonnie: the death of joe biden hot sun prompted an outpouring of support. anything percent climb -- in 18% climb -- results were listed by higher of -- income and shares hsbc is also selling its brazil business. the deal is valued at $5.2 billion. american pharoah proves once again that he is one of the all-time that she thrilled a crowd in new jersey, winning a race at monmouth. after two months. his connections might take into saratoga at the end of this month. tom: this is sort of cool and unusual, right? they don't do this. brendan: people are desperate to have him. tom: i don't know anything about horseback riding, and i would go to saratoga. vonnie: i think the horse wants to race on his own. tom: there is your news for the morning. we have a lot going on at some terrific guests to give you insight. let me do a data check. equities, bonds, currencies, commodities. a churn to the market and the euro -- 1.5%. it will be one of our themes today, in freefall. we are trying to get out in front of a commodity collapse. vix showing complacency in the market. ruble, see the russian 360, 61. 62.53 has to make vladimir putin sit up this morning in moscow. we say good morning to mr. putin if he is watching. down 17% right now, down 20% earlier. this is oil. i want to show the march bottom, which is rapidly approaching over here, 4% a lay. what is interesting with this fancy mathematics -- did you know it is logarithmic august? tos curve is on a log scale pose as a huge thing. this signals momentum or inertial force. brandon, you see, something like this. there it is -- right there. extremely well behaved serious. brendan: for the most who are not worst in technical -- not versed in technical, bouncing, and this time are they going to fall through the floor and find the basement? tom: a jaw-dropping chart of commodities. degrees this morning. greece is always front and center. athens is open for business, and it is ugly with a one-day bear market repricing. all of greece is looking forward key -- we have the unemployment data and cpi coming out, hans nichols. how important is that particularly to mr. tsipras? hans co. it matters when they have a negotiation on the third bailout package because they had take all of those numbers in, put it into an economic model, and figure out what the budget surplus is going to be because they agree to those targets. i am live inside the athens stock exchange. you see nothing but read around me. this was the band-aid that needed to come off. pmireal story today is the number that came in at 30, and the expectation was 46. tom: that is stunning. brendan: is there any green behind you at all? things that people need to buy the matter what? hans: no, there a few stocks ticking upwards. telecom is ticking of birds. -- ticking upwards. gambling was ticking upwards. i spoke with the president of the athens stock exchange earlier. he says we may see some stocks in the green by tomorrow. i have been waiting for that all morning. tom: give us an answer on the imf and what berlin is looking at this morning. hans: what berlin sees from the imf is basically a lot of intransigence, saying they are not going to join the bailout unless there is real debt relief. berlin is clear that if you want substantial debt relief, it is possible. greece just wants to be out of the euro. angela merkel seems to be in the same place. tom: hans nichols, thanks so much. oil is the lead story this morning, but first, the international monetary fund changing their tune late last week, within the troika and with tsipras. that is the most interesting story. dr. weinberg is with the high frequency economics. you have been so right about what they need to do. why are we waiting? dr. weinberg: the german view is that german taxpayer money should not go to give greek pensioners better deals than german workers get. that is the obstacle. it would be like me saying i am in new york and i pay taxes, and it is helping people in arkansas. that is the spirit of it. that is where the german head is right now, and the imf the say you cannot do that. you have to provide some kind of debt relief, and she is right. there is no way they can neve pay it back. brendan: that comparison to the united states is amazing. there is an astonishing amount of intrastate solidarity. we have these things. it is one of the things that makes the united states work. tom: that is why friends want says -- that is why francois hollande says we need more europe right now, not less. bigsparently, rather than a negotiation and sovereignty -- and sovereign default and all that hanging over their head. vonnie: who is it going to be? carl: this is my expression that i have said before, that europe needs a king to do this. she is giving merkel -- madame lagarde is giving angela merkel and out. she is saying i did not want to do this, but the imf said i had to do it, so i am doing it, but it is not my wish for the german people. that gives her the ability to back out gracefully. they are negotiations. one of the keys to negotiating is if two different parties are head-to-head, you have to give each one a way to back down peacefully. is it possible that the imf is now saying we have a rule, too, and it is important, and we cannot do this unless there is debt restructuring, and that is the kind of logic that would appeal to german voters? german rules are being made to satisfy the psyche of the german population. the germans wish it were so, but it is not in the treaty. there are no rules for any of this. you could interpret them in several different ways. the european court of justice is interpreting it differently member german courts. brendan: coming up, u.s. automakers are on deck to report monthly sales. you need to know only three things -- trucks, china, and trucks. my father needs a new f-150. ♪ tom: good morning, everyone. "bloomberg surveillance. oil is front and center. a gallon of gas is going to be $1.95 at some point. let's get to our monday top headlines with vonnie quinn. officials in northern california are calling for thousands of evacuations. wildfires are threatening scores of homes. affected 84 square miles. more than 9000 firefighters are battling 21 major fires across the state. wildfires are burning in washington and oregon as the west coast endures the effects of drought and summer heat. on a remotet found indian ocean island is being tested in france. investigators are trying to determine if it is from a malaysian airlines jet that vanished last year. they already proved it is from a boeing 777. image 370 is the only missing -- mh 370 is the only missing plane of that type. impossible""mission starring time crews took in -- starring tom cruise took in $56 million. those are the top headlines. you have to see "mission impossible." brendan: evidently throughout the film they keep talking about the imf, which is not the international monetary fund. it is the "impossible mission force." vonnie: i love it. madame lagarde working with that. vonnie: that is really subtle. maybe we need a german leader of the imf. brendan: i cannot even begin. u.s. automakers report sales later this morning. west texas intermediate reporting 350 as we speak. let's start with ford with matt miller. 150's.nnot make enough f matt: they cannot make enough yet. hopefully they will get back to production in this quarter and have enough inventory. typically in the pickup truck market, turnover is about 70 days. right now they are looking at a turnover of 30 days. are lower gas prices driving that bump right now? matt: american consumers are already used to these prices. in the last few weeks we have seen them climb a little bit. a lot of it has to do with the fact that it is more -- it is a more if you'll -- that is -- it is a more fuel-efficient truck. you are even saying your dad needs a new f-150. it is in the same boat as other americans. tom: carl weinberg joined a meeting with the state police of new york this morning. carl?as nice, right, carl: that's right. he's going to listen. to the new york state police force, good morning, and thanks for letting carl weinberg get to the set. brendan: the average age is 11 years old. tom: that is a critical distinction. some abounds, or are there legs to 17 million units? matt: i think it is both. you see it bounce from the recession lows. i brought a chart if you want to check it out. u.s. car sales. it matches u.s. gdp. white, see gdp there and car sales in yellow, just to show how strong the correlation is. ..s. car sales dive gdp follows after it. car sales recover with gdp over time. the reason i brought this -- brendan: they are recovering slower than gdp. it takes a while for that to kick in. matt: i brought this chart not to highlight what is going on in the u.s., although we do have auto sales today. but to show what automakers feel will happen -- what automakers fear will happen in china. they are seeing their auto market turned down for the first time in 20 years. surpassed the u.s. as the biggest auto market in the world, and everyone rushed there and invested billions. now ford is expecting the possibility of a downturn in chinese auto sales. nissan warned last month that is having -- that it is having problems in china. they want to turn it into a consumer driven thing, and it will be hard if they do not buy cars. : ford sales in china might no, forddown? matt: sales are going up. we are seeing 23 million sales -- 23 million auto sales in china this year as opposed to last year. tom: the auto industry is one of the few industries that goes up the income statement to gross profit. is it the same kind of money as there was 10 years ago? all, 10 years ago -- where are we, 2015? they may have been starting to lose money already at that point. they were doing different things than trying to boost sales numbers. now makes a lot less money per hour, am i right? matt: labor took a cut. the is something that has most expensive labor. they are trying to work that out. they are trying to take that down to what is average across an industry, $52 or $53 hour. tom: our twitter question of the day. let's get to it on climate change. president obama -- can he get a global climate deal, come december? in our next hour, we will look .t your new assumption we will focus on the new low rates of return. stay with us on this monday. "bloomberg surveillance." ♪ tom: good morning, everyone. "bloomberg surveillance." stan collender helps us out in washington. a few minutes ago he raised his probability of a government shutdown from a small 40% to 60% this morning. one of the dynamics as we go into the autumn of this year. our monday dynamic is a morning must-read. here is brendan greeley. brendan: an editorial in the "ft" that caught my eye. there is a button on tom's shoulder. rubin dollar.- for the reason for the dollar strength is the lack of a credible alternative. brendan: i am going to push tom on the shoulder -- and you say -- tom: rubin dollar. brendan: do you agree with that thesis, that the dollar is strong and that is the end of the story echo -- and that is the end of the story? carl: no other major central bank in the world that matters is going to follow, and the dollar will get stronger. brendan: we keep talking about a flight to quality, to the u.s. dollar. is that it, or is the u.s. a good investment opportunity? carl: keep it simple. pay people, and they will come. widen the differential, more people will come. right now it is being played out, historic reality, more clearly than ever before. euro that hasthe been mostly weakening. what will it be from now on? will he be emerging-market currencies, treasuries of some kind? sovereign debt? what will be the other side of the stronger dollar trade? carl: i think it is across the board. the fed will pay higher interest rates. short-term money in the u.s. is going to pay more in other places, and we will see that reflected in investors coming over here. u.s. treasuries may be a little less attractive than other places because we will see some drop in u.s. treasury values. you cannot make sense out of the either, sond prices the u.s. will outperform across the board. brendan: we will look from european sovereign debt to american municipal that. this is "bloomberg surveillance" on bloomberg television. good morning. ♪ the only way to get better is to challenge yourself, and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. tom: good morning, everyone. "bloomberg surveillance." we are watching oil this morning. handlerude touching a 50 through some of the morning -- brent crude touching a 50 handle through some of the morning. vonnie: the greek stock market is back in business today, but the opening after a five-week shutdown was not worth waiting for. not lookprospects do too bright. the athens stock exchange was hit with a 22% loss. shares of two major banks fell the maximum the market allows, 30%. banks were shut and capital controls were imposed. a european commission spokesperson is saying the eu see cost serious deterioration -- the eu sees serious deterioration in the economy. president obama will make a televised address this afternoon. he previewed his environmental proposal on twitter. he calls for cutting emissions from u.s. power plants by nearly a third within 15 years. republicans are already fighting the plan. mitch mcconnell is telling all 50 governors not to obey the new rules are in america accounts for about 1/7 of the world's emissions. half of that is from plants releasing carbon into the air. you can see the president's announcement live on bloomberg tv at 2:15 p.m. eastern. john kerry is on a fence-mending swing through the middle east. the secretary of state's stop today is qatar, where he will ease concerns about the nuclear deal with iran. it -- he restarted formal security talks after six years. have new u.s. warplanes been delivered to egypt, and the u.s. is counting on egypt to help stabilize the region. john kerry: we have a significant amount of increasing military to military cooperation. the president has listed the on other equipment and goods, which are essential to the fight against terrorism. vonnie: the last security talks between the u.s. and cairo were in 2009. they were star -- they were stopped because of the arab spring unrest. clear sign this morning that a joe biden presidential campaign made the more than just -- may be more than just talk. a political caption -- a political action committee is urging the vice president to run. his son, beau biden, died of brain cancer in may. those are your top headlines. tom: is the joe biden thing picking up? to be clear, he did not pick it up, right? brendan: when goes to thendly times about his late son's wishes, i do not think that is an accident. tom: great authenticity about how he is perceived where he lives. a lot of america does not have that. brendan: in the sense that i had visited delaware before. tom: seriously, a lot of people do not understand the obtuse politics of maryland and delaware. "we do not have the money," said the governor's chief of staff. michelle kaske is with us. are we going to find out today that puerto rico is in telling -- is in technical default? michelle: they have the end of the day to pay because the deadline was on -- things get pushed off until the next business day, which is today. they made it clear on friday, they said we do not have the money for this payment. the public finance corporation, the agency that owes the debt, will not be making the payment, they said. $72 million. who owns it? shoko hedge funds, -- michelle: hedge funds, mutual funds, local residents, and credit unions on the island. carl: what does the restructuring committee have to do to make this work? shoko they have to sit -- michelle: they have to sit down with the holders and make this work. carl: is it a restructuring, a haircut? what is the restructuring committee going to have to do to make puerto rico have to repay something? analysts look at this and they say the $72 billion does need to increase -- does need to decrease. peter hayes of blackrock says this is an awakening. dovetail them together. what do the government people, the politicians of puerto rico, need to do on this day of awakening? michelle: they need to think seriously about how can they , either the bondholders give them more time or lower the actual debt load. tom: what are we going to see at 3 p.m. this afternoon or 5:00 p.m. tonight? michelle: it is not what puerto rico does now. the ball is now in the investors' court. are they going to sue or sit down at the table to talk? ofndan: we can do a scale restructuring possibility or sustainability, right guy: greece and argentina are over here. where are they on that scale? how ugly is it going to be? michelle: it could be ugly in the sense that you have all of these different types of investors. some are buy and hold for a long time. the other ones, hedge funds, they want to get in and they want to get out. they have different angles. how do you get all those different types of investors to the same angle? vonnie: there has been a decision. it has been formerly -- it has been formally announced that puerto rico has defaulted. are there sellers right now? michelle: over the past few days some credit has dropped, and their may be more today. are bondholders saying they will or will not do x? oppenheimer has said they will fight for their shareholders. tom: full disclosure, folks. i find this whole process in puerto rico bizarre. colonel weinberg, you are the expert. oppenheimer funds -- whom are they suing? michelle: none of the suits have started yet, and already oppenheimer and others, including bluemont and capital hedge fund, they have sued puerto rico against a local debt restructuring law that was passed last summer. carl: think back to new york in the 1980's. they said we do not have any money, so we will skip a payment. the court said -- they were sued in court by a guy on behalf of shareholders, and they said you have to come up with the money. so they dug into the budget and found the money. in the case of puerto rico, it is complicated because you cannot get a loan from another state. tom: the imf is not going to come in. could i ask a dumb question? where are we tomorrow morning? i want you to predict -- brendan brought this up and he is 100% right. where are we going to be tomorrow morning? vonnie: -- michelle: investors will be talking with their lawyers to find out what their remedies are and what is the best tactic for them. carl: the creditors now have different periods of time to resolve this arrear or write it down. that is the concern. if they are a hedge fund or a bank, regulators have different periods of time to determine -- usually it is 90 days for a bank , 120 days for a hedge fund, so the clock is ticking to find a solution. there is real money on the table. brendan: that is an alarm bell. if i hear anyone say the clock is ticking, it means we will be talking about this for the next eight months. michelle kaske from bloomberg news. we are all going to san juan next month to get to the bottom of this. coming up -- carl weinberg can come, too. president obama wants states to use less coal, oil, and natural gas. we will have to figure out how to save the world next. out twitter question of the day -- is that even possible? can he get a global climate deal in december? let us know @bsurveillance. good morning. ♪ tom: good morning, everyone. "bloomberg surveillance." the president will speak this afternoon and we will have that for you worldwide on bloomberg television. a smart single best chart. here is brendan greeley. brendan: president obama is --ected to announce changes climate change solutions today. that is the subject of our single best chart. this is pretty straightforward. carl weinberger was mimicking what this looks like with his hands just now. the u.s. has been using less coal. india's use has been rising. world use is rising with chinese use. his words. eric wrote the book "the carbon age." good morning. looking at this chart. when we say we have a carbon problem, do we actually just coal problem? nominally shows coal usage, but that is the core diplomatic problem, that nations have been struggling with regeneration. everybody pollutes. who is going to go first? brendan: we are seeing countries make pledges ahead of time. is this part of the dance, that you need to show up in paris with promises already intact? eric: the climate process at the u.n. has been going on in 20 years without much to show for it. it is changing. the new regimen that nations are imposing on each other is that everybody shows their hand before they show up and talk. that is what those announcements are. they are not adding up to what environmentalists would say is the deal we need. brendan: everybody who studies this, including you, says the most efficient thing to do would be to let the market work after imposing a tax on carbon. that is not what anybody is saying. that is not what the president or hillary clinton are saying. what would need to happen for us to do that? eric: republicans would have to come on board. , andook at washington now there are pockets in the republican party that understand the problems. they are starting to poke and prod at the notion of carbon tax. action would be a couple years away. the larger political story that is interesting is you go back to 2008, the campaign, 2009, the first year of the administration -- there was a complicit threat from obama and congress that it congress -- status congress did not give him legislation, they were going to just regulate. that is what we are seeing. seven years later, this is the big piece. this is in lieu of what obama wanted to do in 2009, his first year in office. brendan: eric rosten, we will be coming back to you. we are all going to paris together. vonnie: it is time for our top photos of the day. we have scoured the photos and found three beautiful ones. the top one, on friday, the heat index or the "feels-like" temperature. at the airport in southern iran. a brutal 165, the second highest ever recorded. 178 is the highest. tom: i do not want to get into the climate change debate. it gives me pause. brendan: i do. was 113.bu dhabi brendan: the broader actual empirical data about what is going on all over the world is obvious and terrifying. tom: to be clear here, and more so than three years ago. brendan: this is what is completely terrifying, that the things that we predicted would take decades are taking years. people number 2 -- --oss the world saw a rarity a blue moon occurs when you have two full moons within one month. the last one was in 2012. the next one will be in 2018. i thought the last one took place in kentucky. brendan: i was at a wedding this weekend, and there was a brass band on the beach underneath the blue moon. vonnie: there is the image that will not leave my head this morning. tom: great shot of the statue of liberty. vonnie: our number one top photo, images of endangered cil the, including ce lion, were projected onto the empire state building to raise awareness. the images covered 33 floors and could be seen for miles. they could be seen for miles on facebook the next day, too. we save thet is how world, through charismatic mega fauna. mr. robertson would say, there was a debate we had, and now there is this amazing new urgency about wildlife in general. simple likeing honeybees, just write in our backyard. tom: coming up, we are going to talk about the chinese economy with mr. weinberg -- not about the gloom and the doom three mr. weinberg is looking at elements a the clearing of markets and very different economy. stay with us. this is "bloomberg surveillance ." good morning. ♪ tom: good morning, everyone. "bloomberg surveillance." the debate continues -- it is a global debate. the prime minister of italy, the prime minister of japan in tokyo right now. brendan greeley, italy is not greece, but they have their own g-7 challenges, don't they? brendan: it is fascinating to see them on podiums next to each other because they are both struggling with the same problem, and i would say matteo renzi is doing a better right now. what you need to do in order to better is structural reform. tom: these of the two nations that really face -- brendan: matteo renzi is turning out to be an interesting prime minister. he has been moving structural change forward slowly, and he is becoming a structural voice -- he is becoming the voice in europe. tom: here are top headlines with vonnie quinn. vonnie: at&t is planning to introduce a bundle of tv and wireless phone services. their first appeal to consumers since completing its acquisition of directv. it will include high-definition tv and mobile service, unlimited texting.nd at&t wants to convert its own monthly wireless customers into directv satellite-tv customers. and persuade satellite-tv customers to add wireless. bmw, audi will pay $3.1 million for the hear unit. 80% of cars have in -- navigation systems in north america and europe. the man who orchestrated the creation of the leveraged buyout powerhouse has died. in 1976, jerome kohlberg, along with henry kravitz and george a system butted later walked away from the firm following an embittered struggle with his younger partners. indied last week at his home martha's vineyard of cancer. he was 90 years old. certainly a history maker. tom: it is a firm of great distinction. there was that bitter argument that mr. kravitz and mr. roberts had moved forward. they do not make the headlines because they have been so steady about it. vonnie: exiting, just another company. it is known by -- tom: you do not even need the names. you just know what those initials mean. right now we need to look at the hard landing crew in china. i want to rip up the script. you have carol -- we have carl weinberg with us. brendan greeley i thought was just brilliant on italy and changing. italy is not greece. in some ways it is worse, isn't it? carl: i was going to say that in many ways it is a lot better. strong structural base. it is like a real economy. there is also a lot of hidden wealth and hidden resources there. personally -- i am personally impassioned about italy. i used to live there and i have a lot of friends there. italy is a much stronger economy then greece's. it can sustain the burden longer. brendan: was matteo renzi right to consolidate his political power before tackling structural problems? i do not think he could have tackled structural problems as things were. he had to get the political base first. i think he is doing it in an orderly way. tom: you wrote an optimistic note on china. you said the gloom is off the markets. you said this was a nation adapting to decisions made on too much capacity. how could you be optimistic about 7% gdp when many are talking about 3% gdp? the population is increasing at 2.5% per year. even if you do not get any increase in productivity whatsoever -- which is ridiculous to think with productivity growing at 5% per year -- you would still get 3% gdp growth with the people moving in and out of the city. china has potential growth at 10%, and right now it is growing at 7% and everybody's pulling their year -- is pulling their hair out. fed is hiking rates in the u.s., and there is no symmetry in the way we are thinking about china's under performance compared to u.s. under performance. is the leadership managing reform well? give them a grade. carl: i would give them a b plus. a rocket that sides, you cannot just fly it in any direction. but they are doing the right thing getting the government out of investment. let market forces do their thing. so: carl weinberg, thank you much for being with us today, with high frequency economics, particularly on greece. hans nichols is in athens today as the stock exchange opens. the euro churns here this morning. ruble, 62.46, a big 1%-plus move. a weaker ruble, this off new low oil prices. stay with us. another hour of "bloomberg surveillance." ♪ announcer: this is "bloomberg surveillance." tom: oil continues its dissent. the russian ruble signals a retest of march lows. will a strong dollar derail the u.s. economy? -- it isjoys a one-day a less productive america. will wait.maybe they good morning, everyone. i am gasping over the price of the athens exchange today. "bloomberg surveillance" from a perfect new york city this morning, this monday, august read. i am tom keene. -- this monday, august 3. i am tom keene. here are top headlines with vonnie quinn. vonnie: degree stock market is back in business, reopening after a five-week shutdown. the athens stock exchange was quickly hit with a 22% loss. shares of two major banks fell the maximum the market allows, 30%. trading was stopped in late june when the debt crisis deepened. the news is no better. president obama is taking his plan to fight global warming to the american people today. he will make a televised address this afternoon. he previewed his proposal by posting a video on twitter. the new rules and to reduce greenhouse gases, call for cutting emissions by u.s. power plants by nearly one third within 15 years. fightingns are already the plan. senate majority leader mitch mcconnell is telling all 50 governors not to obey the new rules. america accounts for 1/7 of the world's in missions. have -- of the world's emissions. you can see the president's announcement live on bloomberg tv at 2:15 p.m. eastern. biden -- an that joe joe biden presidential campaign may be more than a win. a political action committee is urging him to run. the longtime democratic operative was a funder for his 2008 presidential run. died of a, his son, brain tumor in may. sanderssenator bernie does not think joe biden would bring anything new to the table. bernie sanders: i have known joe biden for many years and i am very fond of him, but the american people who are seeing the middle class disappearing, massive levels of income and wealth inequality, became its -- a campaign-finance system that , want to go beyond conventional establishment politics. vonnie: the death of joe biden's son prompted an outpouring of support for him. funding.llion round of a chinese vacation rental site isen compared to airbnb financing global expansion. lists at 300,000 properties and hopes to list 500,000 by year's end. american pharoah proves once -- he won at monmouth. fans are wondering when or if he will run again. his connections might take him to saratoga at the end of the month. i hope he goes and i hope he wins. tom: that is unusual. rousey he is the ronda of raising these days. tom: let me do a data check. the frontline story this morning is oil. 46.41 per barrel. it is beginning to move toward the march lows. we are not there yet. that would be something as well. technical construction of the commodity market -- it is a challenge to say the least. that does not say anything about the technical construction of the greece stock market. that would be a knife falling. athens is open for business. that is ugly. to of greece looks forward key economic data. the pmi was grim. hans nichols is in athens. at some point it is about the real economy. are you willing to say that greece is in depression? it depends on how we are defining depression, but pretty close. whenever we do the overlay charts, greece's economic output after the list -- after the last two or three years, when i am looking at all these tickers, i see -30%, -20%, -29%. i am just now seeing one that is -7. we are at a point right now where the imf has said it will not participate in a bailout unless there is actual debt reduction. it is appealing to its own sense of the rules. is that the approach, that we have rules and we cannot break them, going to work with germany? germany can say right back at you and we would be at a sandlot name-calling. there is you rules cannot be firm and fast. rules are just as firm and fast. it is the position of not only mr. schauble, but also of angela merkel. vonnie: are they trying to get her hands on some cash because there have been capital controls and it is difficult? retail investors, foreign investors? hans: maybe mostly foreign investors. retail investors are being put under some restrictions. greek buyers are limited on what they can do -- what they can use to buy new securities. they can only reuse fresh cash. it has been pretty onerous on the greeks themselves. the real victim -- and we have been talking to market participants, it is not necessarily a great buyer. the real victim is accuracy. for later tomorrow, look for the real prices to shake out. we may have some green later tomorrow, but that is optimistic. tom: hans nichols, thank you so much. summer hasp for the been the commodity crisis. there is no other way to put it. it continues this morning for global wall street, what has become a rationalization is becoming the reality of lower oil prices. it really falls over into all of commodities. joining us this morning, james mccaw and -- jim a coin. -- jim mccaughan. we start the week with three or four topics, but the elephant in the room's commodities. how will that affect the rest of the markets? jim: commodities are in pretty severe oversupply. it is often talked about as if it were about weak demand from china. it is not really. what is happening from the commodity super cycle is an enormous amount of production. you are so good at is linking the financial into the commodities. when do the margin calls start that get the sweat going to outside things, exogenous things that shocked us? jim: the reason why negative commodity prices tend to lead in the short-term is exactly that. it is margin calls. margin calls caused financial pressure on traders, and when that happens, you end up with a market that is down temporarily. it is a buying opportunity in the more sound equity markets like the u.s. tom: is that true today, this morning? jim: absolutely. lower commodity prices are good for the 80% of the economy that is not commodity producers. the consumer recovery is very slow. we saw that last week with the employment cost data. but it is happening. tois consistent with a 2% 2.5% economy. tom: it is amazing how jim a coffin -- how jim mccall henan can dojim mccaughan that. brendan: we have given up talking about demand for oil. justyou are saying is, like the dynamics of oil, they are changed and they cannot turn off the faucet. jim: absolutely. copper, all the miners were spending tens of millions of dollars building these big mines. vonnie: what sort of job losses will we see from these commodities? jim: that is an interesting question because the commodity sector has been the negative piece of the u.s. job market. the way i look at it is that the losses precede recovery elsewhere, as commodity users have better times. vonnie: most of it is going to be people living in trailers that are quite happy to up and move the next day. jim: i do not know about happy, but they will move on to the next one. one of the glimmers of hope i have seen for jobs and the economy is, believe it or not, the rate count has been stronger. that means employment is not being hit so hard. tom: similar dynamics this morning. speaking of global challenges, all we need to do is move a bit off the american coast to puerto rico. coming up, paul krugman really sounds off on puerto rico's debt challenges and the effect of austerity in america. stay with us. coast-to-coast, "bloomberg surveillance." good morning. ♪ tom: good morning, everyone. "bloomberg surveillance." goal does not show it. gold is holding up as oil is sell, sell, sell. time for the morning must-read. i go to paul krugman. whatever your thoughts are on puerto rico, this goes right to the heart of it. this is a group of investors somewhat like argentina, completely removed from larger institutional issues. brendan: i think we will find out what puerto rico's relationship is with the u.s. hard has always been this to describe sovereignty relationship they have with the u.s. that is a distinction where puerto rico is not at all like appalachia. it may be a problem that is not ours. tom: jim mccaughan is with us from principal group as well. 101, a con -- it is econ but there is a complexity to it. jim: there is a complexity. greece, you do not have a fiscal union with euro. as a result, if the greeks run a big deficit, the kind of sucking in resources from the rest of the eurozone, it is not true when you are part of a more unified fiscal policy. brendan, remind me what we are supposed to see today. there is a default, right? brendan: we will find out failure to pay over the weekend equals default. know, it is the beginning to a long and contentious discussion over what happens. tom: what is interesting is the size of this. ballet is allan missing. why? jim: because the u.s. has a very large productive economy, unlike the eurozone, which is somewhat productive in part but does not talk about fiscal union. the status of puerto rico has always been questionable. there is a kind of lazy assumption in the market that puerto rico bonds are like muni bonds. but they are not the same. vonnie: the creditors knew what they were buying, right? they were buying that risk. keep saying that until you are blue in the face, and then the investors will say we will -- coming up, we look at epi numbers from last week. mike mckee will help us figure it out. this is bloomberg surveillance on bloomberg television. good morning. ♪ tom: good morning, everyone. "bloomberg surveillance." let's get to top headlines with vonnie quinn. vonnie: a small number of billionaires and billionaires -- millionaires and billionaires are serving themselves in campaign 2016. nearly 60 donations of $1 million or more account for one third of those roughly $380 million raised so far in the campaigns. hundred thousand dollars account for half of donations so far. in 18% decline for hsbc. new york's largest bank is posting profit of $3.6 billion. hsbc also says it is seeing its brazil business -- is selling its brazil business. the all cash is valued at $5.2 billion. sales are up at heineken despite increased competition and price pressures in the beer business. pharoah.american for all for everything, numbers, thanks to american pharoah. tom: heineken -- did they destroy the brand? brendan: the brand is fine, but heineken is a huge conglomerate. it is a beer holding company. general in the industry, growth is coming from large brewers buying small niche brands and selling them to a broader audience. people do not want to buy -- people want to buy small things, but they want a relationship, too. continue to buy dogfish head. that is a brewery. august.e first week of mike mckee is our economics editor. friday's employment cost index came in at .2 percent growth, the lowest growth since 1982. what does the fed do with that data? mike: there are some complications to this whole thing. one particular area that we saw -- and we have a chart of this -- really shows what happened to this one subset in there. you can see all the way to the right hand side, what looks like a little hat. that is bonuses for sales workers. they went way up in the first quarter, way down in the second quarter. they sorted even each other out. even on a nonseasonally adjusted aces, they go up. that had a normal or miss -- that had an indoor miss effect. -- that had an enormous effect. we are expecting to see wages rise and benefits rise as the labor market gets tighter. he did not happen. thatan: jim mccaughan, is noise yak of jim: i think it is no's. that is an element of seasonal adjustment going wrong. is that this one will probably get revised upwards later if that is the case. vonnie: because government conversation is that -- government compensation is up, it is private that was down. mike: you have 2% growth in the eci in the quarter, year over year basis. what will that mean for janet yellen and the fed? mike: a lot of people are writing off september, which is probably a mistake, because she was asked about this in her march press conference? she said we are not seeing wage growth pick up. we may not see wage growth pick up. i would not say either that that is a precondition to raising rates. she told us we do not have to see it. they could raise rates anyway. brendan: her mandate is employment and price stability, not wage growth and price stability. mike: at this point we are seeing a little bit of inflation, the inflation they want to see. we are getting at a: 30's morning -- we are getting at 8:30 this morning was the overall inflation was during the month. mike, i have been trying to square the eci data from the principal pension plan numbers. $30,000, $40,000, there is no wage growth. but if you get to 70% -- $270,000, to $100,000 per year, that is starting to move. we are seeing the beginnings of wage growth as the labor market tightens. that is not feel inconsistent with 2%, 2.5% growth in the economy. mike: what you are seeing when you put all the statistics together, you are seeing the jobs that are harder to fill, more skilled jobs -- computers and things like that. a lot of people are willing to take minimum wage jobs. we should see the lower-level start to rise. tom: the fact is the debate shifted on friday. you can see it in the bloomberg probability index. how much do we come to december with that news? until wednesday when we get the adp report, and that people will start to recalibrate . friday when we get the jobs report, friday we are expecting no real change in the pattern we have seen. 225,000 jobs created. we are anticipating the mix will be about the same. brendan: what is the number down or up that would cause you surprise looking at the jobs number? mike: the lien for people is below 200,000,s people will back up. -- people will back off. --nie: whitest janet yellen why does janet yellen put so much emphasis on -- mckee, thank you so much. the lead story today is oil again. ,t has simply broken down another level. we saw brent crude go to 51. nowhere near the march lows, but we are getting their rapidly. we will go to houston. stay with us worldwide. this is "bloomberg surveillance ." ♪ ♪ tom: good morning, bloomberg "surveillance." vonnie quinn is here with top headlines. vonnie: the greek stock market is back in business but the reopening after a five-week shutdown was not waiting for. an official said the country's economic output -- outlook does not look right. -- shares of two major banks fell. trading was soft. capital controls were imposed. a european commission spokeswoman is saying that eu serious deterioration in the greek economy. president obama is taking his plan to fight global warming to the american people, making a televised address this afternoon. he previewed his proposal by hosting a video on twitter. he is calling for cutting emissions from u.s. power plants by nearly one third within 15 years. republicans are already fighting the plan. mitch mcconnell is telling all 50 governors not to obey the numeral. america accounts for about 1/7 of the world's emissions. you can see the president's address on bloomberg tv at 2:15 p.m. eastern. john kerry is on a fencemending swing for the middle east, where he willatar address concerns about the nuclear agreement with iran. negotiations had been stopped because of egypt's political unrest but now, eight new war plans dutch planes have been delivered. >> we have a significant amount of increasing military to military cooperation. our f-16s just arrived. our president has lifted the hold on the other equipment and good, which are very essential to the fight against terrorism. vonnie: security talks the between the u.s. and cairo last were in 2009. that the joe biden presidential plan may be more than just talk. the longtime democratic operative was a fundraiser for biting in his 2008 presidential run. his son died of brain cancer in may. tom: let's go over to the bloomberg terminal to look at oil. -- we arel resources looking for that announcement. coal suffering as well as oil. never seen ave chart as elegant as this chart on oil. roomis a log to our living -- logarithmic -- this curve on a log chart in its elegant see, as we come up against this moving line, there is a lot of mumbo-jumbo, but the bottom line, oil cells. brendan: we will talk to skip york in just a few minutes. i do not understand the fundamentals and that is what i want to understand. what are we looking at as far as the fundamentals? isthe most interesting thing oil has been in structural oversupply for about two years. you would think that would drive the price down. it took a long time and it only cracked about a year ago. to me that was a surprise, that it stayed so high sometime -- so long. tom: bringing ethanol in its corn beers market, does the issue within metals and mining and metal, does that fall over into the sauce? >> absolutely, and i think what is happening is a. of enormously high commodity prices, a bubble, if you want to call it that, has led to a incentive for producers to produce as much as they can. corn, the highut prices two or three years ago that every popular brand was being planted, every fertilizer was used to increase yield, so there's plenty of soft in the world as well as metals and energy. -- this is a good thing for the economy. it is not very good if you are a commodity producer, and that is what we are seeing in terms of the job loss in terms of the gdp impact. tom: we have a lot to talk about. later we will talk about the terminal rate on investments, which is critically important to your 401(k). markets turning this morning, the euro a little bit weaker but we do have dollar strength. that came down 1.4% on america west texas intermediate. send me to the next screen. brent crude, that is a huge 2% move and you see it in russian ruble. we have not talked about this this morning but we have got to think, what does vladimir putin think? athens having a sporting day. bloomberghis is surveillance. brent cannot get below $50 a barrel but it is trying. we turn to skip york from wood mackenzie who joins us from houston. skip, this morning, tom has been looking at the technicals of oil. or the technicals trying to tell us something? skip: i think the technicals are trying to tell us that july was a month of great uncertainty in the oil market. it started with the eu prime deal. -- iran deal. we do not know how much of that iranian crude will hit the market. we sell volatility in the chinese equity markets, greece, whether it was staying out of the euro. the forward curve is saying none of those uncertainties get resolved anytime soon. brendan: tell me about the psychology of this. we have jim caulking here of the principal glover investors pointing out that oil should have dropped, given what we know about the swing barrel. are we looking at another psychological break point in how we look at it? skip: i think what we may be looking at in the near term, in the next x months, when brent is getting down into the lower 50's, what it will do is potentially encourage another round of capital cut from the producers in 2015, probably steeper cuts into 2016. it is just going to take that much longer -- it is looking like it will take that much longer for the market to rebalance itself. i think the supply side of the market is becoming more pessimistic about the investment decisions they should be making over the next few months and years. we talked about cuts in capital spending, but aren't most of these projects that oil companies have quite long-term? once you started on them, even at lower prices, don't they have to continue? it seems to me that the supply will be extremely slow to react to lower prices, and that many of these energy companies will be producing to get the cash in, rather than to make accounting profits. that is exactly what we have seen in 2015. the supply growth in 2015 has been much more dramatic than people in -- anticipated. was, of that strength because to your point, we had capital strengths that started 3, 4 years ago that would take five to six years to complete. you do not stop those projects 80% of the way through, so that volume is coming to the market. where the next decision is going to be, if i'm going to make a decision about a project that will take five to seven years to complete, i probably am not sanctioning that project today will wait until 2000 exchange or 2017 -- 2016 or 2017. a lot of the 2015 supply growth was baked in by decisions made years earlier. jim: does not mean that the currently amply supplied oil market may take two to three years to tighten, and this could be a long bear market in oil? skip: we do not see a dramatic recovery in prices like we saw in 2009/2010. tom: last time around and march, we go down, we clear, we come back. i see a new tone, we go down and stay down. where is that and result if we go down and stay down? is it $40 a barrel, $50, $60? skip: i think when you go back to the technicals, in january and february we need a couple of runs the 40's and we could not get down to 40. we were covering in the $40 -- $44, $45 range. $50 ise between $40 and where we linger until that market returns to balance, as jim was saying, and then we see the upward drift in prices. vonnie: why is opec choosing not to influence this? they could if they wanted to reduce that a little bit for price pressure. skip: i think that opec is trying to re-exert its significance in the market. i think there is two issues in opec. and the saudi's in particular have a feeling that they are going, taking production of the market would raise prices and bring more non-opec supply. brendan: skip york, we have got to go. this is bloomberg "surveillance." ♪ ♪ tom: good morning, everyone. dollar strength is what we see on bloomberg "surveillance." the first week of february. brendan: we could go the first week in december, i am flexible on when we go to san juan. we are talking about puerto rico and its creditors. ricoweekend, when defaulted on a $58 million payment on its public finance corporation bond. rico at risk is the puerto power authority. erik schatzker is with us. you have tim coleman from blackstone on with you today. what are we going to find out? he is head of the restructuring group and black hawk is advising, -- blackrock is advising. what we are going to be talking about with tim is the difference between the moral obligation bonds, that is what puerto rico defaulted on this weekend, and bonds like kofi know bonds, which are backed by sales tax revenue. you cannot look at puerto rico take a dead monolith. each of those different bonds is going to be handled presumably in a different way. says weernor padilla cannot pay our $72 million in debt, he means it. how that gets applied to different bonds, it is going to very. brendan: i had to take into a textbook to find out what a moral obligation bond is. it is a, no, seriously, we promise this time. erik: it is distinct from a general obligation bond but in the general obligation, in the sense that interest payments and principal payments come out of the treasury, the government's treasury. and other bonds where the interest payments and principal payments are paid out of revenue that the power generation company collects by taking fees in from puerto ricans. the moral obligation is the general account of the puerto rican government. the other bonds are securitized and should be a lot more secure. erik: tim coleman and the blackstock group are advising and bia, a bond insurer, it has guaranteed the puerto rico power. here is a crazy situation. if in fact it were to default, it is possible the bond insurance company, if it were to enforce the seizure of assets, and owning the puerto rican power utility. which is a very bizarre situation, but the securitization of bond payments by revenues is a serious issue and should lead to much higher security, much less risk. it is a piece of puerto rico that would default, not the whole thing. erik: precisely. look at erik schatzker how $72 billion is not just $72 billion. the seniormakers," adviser on president obama's climate change proposal, that is an interview you will want to see. our twitter question today, do you think president obama will get a global environment deal? ♪ ♪. tom: good morning, bloomberg "surveillance." vonnie: a major insurer turns down one bit and accepts another one. that rakes up a merger plan partner re-had with access capital holding. xor is led by the agnelli family. they're looking to diversify outside of manufacturing. to introduce ag bundle of tv and wireless phone services, the first to be revealed to consumers since its acquisition of directv. tvwill include high death and mobile phone service with unlimited talking and texting, and 10 gigabytes of texting -- data for four lines. they would like to persuade directv subscribers to add wireless. map that willital lead to self driving cars. daimler will pay 3.1 alien dollars for here and will get an equal share of the unit. the deal is expected to close next year. of cars with in -- navigation. the man who organized the creation, cole hamels roberts has died. they created an investment firm not based on earning commissions but on taking control of equity stakes in countries at crossroads. he later walked away from the firm with a bitter struggle against his two partners. jerome kohlberg was 90 years old. tom: they have been consistent, incredibly consistent, below the radar, they do not make the headlines. vonnie: and the longevity. tom: i think maybe is 49er 59. it is amazing how he does not. let's move on to really the arch question for every single viewer and listener. we have a seven year grade distortion. what does it do for you? it will mean lower interest rates. we will see a lower terminal rate. mcgaune, iel on -- can think of only james gorman at morgan stanley with the mathematics you have. when are glided tests, peter or zach would call vectors, and what we're going is a new terminal rate. jim: i think the key issue is there are a number of factors driving down growth, driving down inflation. you have a period of oversupply. we have discussed commodities earlier in this hour, but in manufactured goods, because the move to the city and big countries, and even in services with the sharing economy, you are getting things produced cheaper and more efficiently. tom: the lack of productivity we saw in the last day, our remember the last assumption was a percent and then 6%. they agree with you, it is going to be a lot smaller. jim: probably four and a half to five. tom: are any of our viewers or listeners ready for that westmark my answer is probably no. jim: it is that period of deflation in the world economy that has surprised a lot of people. the other point that his surprised a lot of people is the extent to which this recovery, since 2009, is during a period of high savings. that actually is so foreign to how the u.s. was before 2009 so when you have got savings, it means people are not spending it. that is one of the reasons, along with global deflation, why this recovery in the u.s. is 2% or two and a half percent, not five. tom: dacron one-on-one, that is called the paradox of "surveillance." vonnie: if that is the case and returns will be for the half percent or so, what is the argument? do you save and still try to get the foreign half percent? -- four and a half percent? jim: it is not so much inflation anymore. a half or four and five with very little inflation, that may be rather better than it was in the 1980's. it is possible another long-term consequence would be a shakeout in the financial industry. people did not look at what they were paying in fees. consumers, which do not usually pay attention to that, will be aware. jim: and we are seeing that, particularly in the retail market. the very high fees used to see in the 1990's, you do not see that anymore. they are down to 1% cap fees or less -- rep fees or less. brendan: does that mean higher turnover? you are seeingy this bifurcation of the industry, to pass the funds on the area and high-value funds on the other. tom: you have a floor and in iowa, which is a long-term investment. there's a cone of silence. that is, we have to invest out 15 years or 20 years. how do you do that right now, and help ugly is it to match your obligations with the paper you have to work with? me, key is shut out the noise and think about the fundamentals. if you do that, you will be in u.s. equities because 19 times earnings are not bad and in a foreign a half or 5% world, -- four and a half percent or five and half percent world, you will not be in chinese equities. tom: you cannot get a coupon on the bond market. jim: you have to look for inefficiently priced credit. bond yields will not get it done. a lot of those are held because people need them for derivative collapse -- collateral or capital purchases. year fullou buy a 50 faith and credit government bond? jim: it is probably three and a half or something. tom: can you bind -- can you buy a 50 year u.s. bond and be happy with mark jim: not really. vonnie: what about investment-grade? jim: they have had a bad time the past few months. tom: jim with principal group. what do we have on twitter? vonnie: we asked, can president obama to a climate deal done in december? our first answer, only if india and china agree. brendan: i do not know if it is unlikely. i think india and china know they have so much more to lose than we do. they are aware of what is going to happen. are they aware of the consequences? absolutely. tom: it is different than it was. ansell,our second doubtful, but why not push to put us on even playing field after war on coal? brendan: we do need one way or another to make carbon more expensive. vonnie: the third answer, obama take a lot of people off. getting reports for the environmental reform in december got more difficult. tom: is this the new obamacare for the president westmark -- president? brendan: absolutely, because he had so little leeway. lindsey graham said if you push immigration -- this was five years ago -- then you will never -- we will never vacuum on climate. lindsey graham made good on his promise. at 2:15 today, the president speaks. we know what he will talk about. the best he can do without congressional approval is executive action. there will be a rapid lawsuit, exactly like obamacare. every state's attorney general is dusting off his papers to file now. tom: part of that is the oil response to the president's efforts, they are distracted by the decline in oil. out, we are also watching on the agenda today the continuing implosion of coal. l financial resources struggling this morning as we saw on friday. vonnie: my agenda is going to be the economic eta this morning, particularly -- economic data this morning, particularly financial data. look for the manufacturing data to come in exactly the same as last month. tom: west texas, 4641 a barrel. brent crude moving down as well. we continue on radio bloomberg "surveillance." we continue with "arctic makers." -- "market makers." ♪ ♪ >> live on bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. stephanie: it is on my donkey kong, air k is back. k is back. erik: hello, stephanie. stephanie: he is back in nyc. forever,has been off we are now back. and the beginning of august brings the same headlines as the end of july, greek stocks are plunging, oil is leaving commodities lower, and puerto rico defaults on a bond payment. erik: the devil is in the details. you are going to hear from blackstone's tim coleman in a moment. insurer and dia, which is embroiled in this puerto rican embargo. stephanie: let's check the top headline. erik: the president is taking

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