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Speaker 1: Is Bloomberg surveillance. The economy and the markets can move

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Speaker 1: themselves apart um and don't always move in the same direction.

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Speaker 1: But from a feet on the ground economy perspective, things

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Speaker 1: are okay right now, and it will take another eight

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Speaker 1: theme month of two hundred thousand a month in non

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Speaker 1: farm payroll rates before we see anything like a big

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Speaker 1: jump in wait growth that you see it all employment

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Speaker 1: companies who don't have a clear purpose in life and

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Speaker 1: don't execute well obviously vanished, and they vanished faster than

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Speaker 1: they used to because people can see the lack of

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Speaker 1: performance more quickly than they used to. Bloomberg Surveillance your

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Speaker 1: link to the world of economics, finance, and investment on

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Speaker 1: Bloomberg Radio. Good morning everyone, Michael McKain cham Kin Bloomberg surveillance.

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Speaker 1: Markets are on the move, are real interesting cross as

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Speaker 1: a day, a little bit of recovering the last hour,

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Speaker 1: but still await to the tape to your yield point

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Speaker 1: seven two are really beginning to move down Bloomberg Surveillance.

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Speaker 1: But to my Cone Resnick accounting, tax advisory, regulatory changes

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Speaker 1: can impact your business. See all the experts at Cone

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Speaker 1: resident can help you navigate these complexities. Find out more

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Speaker 1: at cone Resnick dot com. We look at Greece right now.

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Speaker 1: Greece is a worn out story, but it's not. Michael,

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Speaker 1: You've got the view. Grexit is back. We have thought

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Speaker 1: that Greece was in the rear view mirror, but it

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Speaker 1: is not. A Recent discussions about the I m F

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Speaker 1: finding it hard to make a deal to join the

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Speaker 1: mailout process for the Greeks now have investors again considering

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Speaker 1: the possibility that Greece will fall out of the Eurozone.

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Speaker 1: And the timing couldn't be worse because the big debt

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Speaker 1: payment is due just after the Brexit vote, so we

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Speaker 1: may have Brexit followed by Grexit. It could be a

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Speaker 1: summer to remember. Nick Malcutus is our old friend, the

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Speaker 1: editor at Cathmarines English Edition in Athens and the founder

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Speaker 1: of Micropolis, the website for political news and analysis in Greece.

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Speaker 1: And Nick um it never went away for you, obviously,

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Speaker 1: but all of a sudden it's back. How dangerous is

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Speaker 1: the situation now compared with what we've lived through? Well,

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Speaker 1: you're right, never did really go away. I think what

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Speaker 1: if we wind back about twelve months or so. We

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Speaker 1: had obviously a very extreme period of uncertainty and concern

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Speaker 1: the last year, when the appeared to be no way

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Speaker 1: that the Greek government and its lenders could reconcile their differences.

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Speaker 1: That ended up with an agreement in July, which theoretically

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Speaker 1: puts the threat of greg'sit or killed it off once

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Speaker 1: and for all. But it didn't really because it's always

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Speaker 1: the case that these Greek bailout packages, because they come

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Speaker 1: with conditionality and tough conditionality. Once the government, the Greek

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Speaker 1: government has to start implementing that and has to agree

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Speaker 1: on the details of the majors and the reforms with

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Speaker 1: the lenders, then difficulties arise. And we're in a similar

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Speaker 1: kind of position this this year. Right at the moment,

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Speaker 1: the lenders are back in town trying to close out

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Speaker 1: with this this bailout review in order to release the

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Speaker 1: next round of funding. And there are difficulties because there

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Speaker 1: are a lot of majors to agree. You know, three

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Speaker 1: percent of GDP in measures for this year and another

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Speaker 1: three percent for the next two years, pensions, taxes, nonp

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Speaker 1: the sale of non performing loans, it's all very politically

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Speaker 1: sensitive stuff. Well, our Francine Lakwise sat down with the

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Speaker 1: magic director of the I m F, Christine Lagarde this morning.

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Speaker 1: Here's what she had to say about Greece. We continue

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Speaker 1: to be focused on addressing the Greek situation by negotiating

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Speaker 1: in at faith with a twofold objectives. One is to

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Speaker 1: restore the financial stability of the country and to give

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Speaker 1: it death sustainability, and number two, to equip that economy

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Speaker 1: with the competitiveness, the productivity, the structural reforms that are

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Speaker 1: needed for it to be independent. Now, the key question

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Speaker 1: nick seems to be whether or not the dead is

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Speaker 1: sustainable from the I m F s point of view,

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Speaker 1: and they argue that given what the Shippers government has

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Speaker 1: not done, it's not sustainable at this point. Well, exactly,

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Speaker 1: this is a big issue that's dividing the lenders at

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Speaker 1: the moment because for all the differences between Greece and

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Speaker 1: the I m F and Greece and the Eurozone lenders,

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Speaker 1: there are also differences between the I m F and

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Speaker 1: the European lenders. And the key one here is what

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Speaker 1: level of austerity to demand from Greece, What kind of

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Speaker 1: primary surplus gets to we set Greece and how can

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Speaker 1: we offset that with debt relief? And the I m

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Speaker 1: s position is that they would prefer a lower primary

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Speaker 1: surplus target for two thousand and eighteen rather than the

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Speaker 1: three and a half percent that had been agreed as

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Speaker 1: part of the bailout package, to lower lower it to

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Speaker 1: one and a half percent, but for the difference to

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Speaker 1: be made up by debt relief on the European part,

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Speaker 1: and that of course then becomes a problem for the Eurozone.

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Speaker 1: Nick recalibrate the grease economy. For us, it was a

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Speaker 1: runwady of four and all hell broke loose. You go

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Speaker 1: down a literally a negative ten percent real GDP, and

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Speaker 1: the miracle is it's rebounded to a recession. I mean

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Speaker 1: basically zero, maybe a little bit negative g d P.

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Speaker 1: Did the people of Greece feel their in recovery, No,

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Speaker 1: not at all, Tom. I think one of the interesting

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Speaker 1: things last year because we had a really exceptionally difficult

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Speaker 1: last year in two thousand and fifteen, because of the

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Speaker 1: prolonged negotiations, the uncertainty UH and of course banks were

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Speaker 1: shut down, we had a bank holiday for five weeks.

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Speaker 1: Capital controls were introduced and they're still in place, and

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Speaker 1: everyone was expecting the economy to really do very, very

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Speaker 1: badly and one of the key reasons that it didn't

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Speaker 1: do so badly was that people had been withdrawing their

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Speaker 1: deposits for months before the capital before the bank's closed,

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Speaker 1: and before the capital controls were put in place, and

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Speaker 1: this had a kind of dampening effect on on the recession.

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Speaker 1: The problem now is that with the bailout review still pending,

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Speaker 1: and as Mike mentioned, the idea of Gregg's returning, no

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Speaker 1: one is really willing to put their money into the

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Speaker 1: Greek economy, whether that's at the local level, you know,

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Speaker 1: small medium sized enterprises, or whether you're talking about major

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Speaker 1: privatization project. Everything is in on hold and that's obviously

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Speaker 1: very damaging for the Greek economy and no one can

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Speaker 1: really feel any sense of recovery or certainty. Mike I

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Speaker 1: just put out on Bloomberg Radio Plus a Greek GDP

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Speaker 1: and it shows that fragile rebound towards the negative GDP. Well.

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Speaker 1: In the fourth quarter, Greek economy contracted by eight tenths.

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Speaker 1: What does the first quarter look like? Is the recession

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Speaker 1: continuing the first quarter? Yes, yes, we we We saw

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Speaker 1: a downturn in the first quarter and we we do

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Speaker 1: expect a recession this year, and Greece is and expected

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Speaker 1: to start to to grow again until next year. And

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Speaker 1: of course we had the first signs of growth after

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Speaker 1: a six year recession in two thousand and fourteen and

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Speaker 1: they disappeared last year and whatever, even a weak recovery

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Speaker 1: was lost. So now it's back to square one and

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Speaker 1: to try and rebuild that. And sadly, you know, nothing

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Speaker 1: positive will emerge until this uncertainty of where Greece stands

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Speaker 1: with in relation to its lenders and whether it's a

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Speaker 1: place in the Eurozone is secured. You know, until those

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Speaker 1: are cleared up, you can't expect much from the Greek economy. Well,

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Speaker 1: I mean, we'll come back in a second, but let

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Speaker 1: me just ask you before we have to take a

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Speaker 1: break here. Why is the i m F so important

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Speaker 1: You've got the money from the Europeans. Well, the I

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Speaker 1: m S is not important in terms of the money.

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Speaker 1: It's important in terms of the technical know how it

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Speaker 1: brings and the assurances that it gives the European lenders.

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Speaker 1: Germany in particular, that the program is being implemented properly.

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Speaker 1: Not too long ago, the German finance minister who but

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Speaker 1: suggested that trying to get his parliament. The German in

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Speaker 1: parliament to approve more loan disbursements agrees without the involvement

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Speaker 1: of the i m F would be like taking a

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Speaker 1: candle into a room full of dynamite. The German political

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Speaker 1: system simply doesn't trust the European lenders, the European Commission,

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Speaker 1: the European Central Bank to implement, to ensure the implementation,

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Speaker 1: to enforce the implementation of the program, and the structural

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Speaker 1: measures that need to be carried out by Greece very quickly.

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Speaker 1: Do we put any credence in the idea that the

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Speaker 1: IMF has put forward that maybe the Greeks recorded secretly

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Speaker 1: recorded I MF conversations and linked them. Well, you know

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Speaker 1: that the situation is complict in enough in itself. And

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Speaker 1: then we had these wiki leaks publication on on Saturday,

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Speaker 1: a transcript between three i MS officials discovered discussing the

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Speaker 1: state of play in the negotiations the The recording was

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Speaker 1: apparently made on March the nineteens, and it does complicate relations.

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Speaker 1: There wasn't anything of a particularly sensitive nature in the

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Speaker 1: uh in the transcript that was published, simply showing that

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Speaker 1: the i MS is concerned that the Europeans on coming

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Speaker 1: around to their position. But it's publications, questions about where

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Speaker 1: the recording came from, the insinuation that perhaps the Greek

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Speaker 1: had something to do with it. It's really eroding. Let's

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Speaker 1: do this, think macusis, let's come back on Greece. It

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Speaker 1: lots to talk about your e haven't addressed it in

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Speaker 1: a while. We'll look at it within the broader perspective

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Speaker 1: of Europe and the comments of Madame Leguard. Today, futures

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Speaker 1: improved a bit negative fifteen. Now for the latest news

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Speaker 1: updated here is blakeab my time, Thank you very much.

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Speaker 1: It is primary day in Wisconsin. Republican Ted Crews and

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Speaker 1: Democrat Bernie Sanders lead and polling in the state. Meanwhile,

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Speaker 1: according to a published report, Donald Trump says he will

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Speaker 1: force Mexico to pay for a border wall by cutting

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Speaker 1: off billions of dollars and remittances by immigrants living in

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Speaker 1: the US. According to a report in the Washington Post,

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Speaker 1: Trump is threatening to change a rule under the Patriot

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Speaker 1: Act anti terrorism law by cutting off money transfers sent

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Speaker 1: to Mexico. The report goes on to say that Trump

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Speaker 1: proposes withdrawing the threat if Mexico makes a one time

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Speaker 1: payment of five to ten billion dollars to finance the wall.

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Speaker 1: North Korea's main ally and trading partner, China, apparently turning

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Speaker 1: up the heat on beyong Yang over its nuclear and

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Speaker 1: missile test. China today imposed restrictions on imports and exports.

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Speaker 1: Global News twenty four hours a day at Michael Barr

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Speaker 1: Mike Top Michael, thanks so much. The end one ten.

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Speaker 1: That's a little bit weaker than where it was two

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Speaker 1: hours ago, but nevertheless strong yet lead global data statistic

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Speaker 1: today Bloomberg Surveillance. I'm Greece. This news update brought to

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Speaker 1: you by S S and C more experienced, superior technology,

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Speaker 1: independence and expertise. That's how S SNC drives the future

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Speaker 1: of fund administration. S and C near the future of

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Speaker 1: fund administration. Global Business News twenty four hours a day

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Speaker 1: at Bloomberg dot Com, the Radio plus mobile app, and

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Speaker 1: on your radio. This is a Bloomberg Business Flash and

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Speaker 1: I'm Karen Moscow U S Stock Index future as they

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Speaker 1: are following this morning, Let's go to the First Word

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Speaker 1: Breaking newsdesk for today's morning call, and here's Vince Signarella.

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Speaker 1: Good morning, Vince, Good morning, Karen, as you said. US

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Speaker 1: equities are lower following a risk off tone that began

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Speaker 1: on Asian markets and continues to weigh on global stocks.

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Speaker 1: Dow down one oh one s and P minus fourteen

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Speaker 1: and as the trading lower. Crude prices are studying ten

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Speaker 1: year year olds were at one point seven. The dollar

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Speaker 1: mostly higher, with one major exception, the Japanese yen. The

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Speaker 1: dollar trading a seventeen month low at one ten. On

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Speaker 1: the U S economic front at eight thirty week at

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Speaker 1: trade Figures market p M, I S at ten I

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Speaker 1: s M non manufacturing data and jobs Joel's openings in

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Speaker 1: today's top news. FED President Evans, in a Bloomberg TV

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Speaker 1: interview in Hong Kong, noted a risk to global developments,

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Speaker 1: reiterated his expectation of two rate hikes this year and

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Speaker 1: a gradual approach thereafter. New US tax rules may impact

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Speaker 1: the plan one hundred and sixty billion merger between Fiser

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Speaker 1: and Allgan Tesla. First quarter deliveries misfecast full year apparently

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Speaker 1: remains on Trek Live from the First Word Breaking News Desk.

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Speaker 1: I'm Vincent Signerella, Karen, all right, thanks Van, send to

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Speaker 1: here live breaking news of your Bloomberg type squawk and

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Speaker 1: go on your terminal. Let's suu A w u K go.

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Speaker 1: That's a Bloomberg business flash. Tom and Mike karen I,

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Speaker 1: thanks so much, greatly appreciate. The negative eighteen is about

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Speaker 1: where we got and futures has been mentioned negative fifteen

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Speaker 1: slash high Conviction. Michael, you look at the debate on

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Speaker 1: Greece and the debate of the guests that we have

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Speaker 1: is one of the restructured debt that seems to be

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Speaker 1: the five year never ending debate. Well, the interesting thing

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Speaker 1: about what's happened in the market says this news has broken,

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Speaker 1: is that we're not seeing such a reaction in the market,

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Speaker 1: nothing like what we saw before the last default. Two

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Speaker 1: year yields are higher and credit default stomps are higher,

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Speaker 1: but not significantly. We're talking with Nick mal Kutzuz. He's

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Speaker 1: the founder and editor of Micropolis, the political analysis site

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Speaker 1: of four Greece and Nick, I assume that the somewhat

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Speaker 1: muted market reaction has mostly to do with the fact

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Speaker 1: that it's the europe In governments who own most Greek

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Speaker 1: paper Now, well, that's that's right. This is primarily an

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Speaker 1: issue for the Eurozone to sort out, and that's why

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Speaker 1: a lot of people have felt it a bit strange

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Speaker 1: that over the last few months the Greek government the

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Speaker 1: Prime Minister Existius have been repeatedly critical of the I

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Speaker 1: m S because amongst the four lenders that are out there,

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Speaker 1: it's the only one that is publicly and obviously behind

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Speaker 1: the scenes advocating some form of dead relief for Greece,

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Speaker 1: and dead relief which would simply not reduce the stock

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Speaker 1: but woulds then make the primary surplus targets that are

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Speaker 1: being discussed much more achievable. So it's very strange that

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Speaker 1: over the last few months, and in the wake of

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Speaker 1: the Wiki Leagues publication on Saturday, that the Greek governments

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Speaker 1: issue is to question the role of the I m

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Speaker 1: F when it seems to be arguing the Greek case.

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Speaker 1: The Europeans, of course, you know, dead relief for them

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Speaker 1: is a very complex issue because they have to go

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Speaker 1: back to national parliaments and explain to their MPs and

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Speaker 1: obviously to their voters. That despite the fact that we

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Speaker 1: agree three bailout programs with Greece, the biggest they ever

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Speaker 1: bailout in national economic history, we we haven't made it.

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Speaker 1: We need to do something to reduce their debt. Obviously,

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Speaker 1: it's not going to be a writer of We're talking

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Speaker 1: about playing around with interest rates, extending maturities and so on.

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Speaker 1: But nevertheless, politically, it's a difficult discussion for them to have.

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Speaker 1: How has the landscape change. I've got a fancy chart

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Speaker 1: here of European Union topline nominal GDP and the Peakers it, folks,

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Speaker 1: it's radically different than what we see in the United States,

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Speaker 1: and it's down a breathtaking Essentially a fourteen trillion dollar

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Speaker 1: economy has become an eleven point five trillion dollar economy.

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Speaker 1: How has that changed a dialogue between Athens and the

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Speaker 1: rest of Europe. Well, it's a good point, and I

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Speaker 1: think it makes it more difficult to discuss, particularly the

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Speaker 1: issue of dead relief in an environment where other people's economy,

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Speaker 1: other countries economies are going through a tough period. And

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Speaker 1: we're talking here about countries like Finland, which until a

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Speaker 1: year or so ago, had been one of the hardest

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Speaker 1: line and took one of the hardest lines in the

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Speaker 1: Greek bailout discussions. You look around and the French economies

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Speaker 1: in difficulty. The Italian economy is suffering as well. And

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Speaker 1: in this environment for the leaders of these countries who

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Speaker 1: come out and say, look, the Greek bailouts have essentially

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Speaker 1: failed and we need to find a way of reducing

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Speaker 1: the country's that is obviously embarrassing for them, are very

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Speaker 1: difficult politically. You know, the other side of that equation

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Speaker 1: is that it also makes economic recovery for Greece much

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Speaker 1: more difficult because you are in a European environment where

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Speaker 1: there is little growth, and it makes it much more

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Speaker 1: difficult to try and grow your way out of this

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Speaker 1: crisis as well, when when the country's around you are

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Speaker 1: not doing so well. We've got just a minute left, Nick,

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Speaker 1: two and a half billion dollar interest payments do in July,

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Speaker 1: right after the Brexit vote. Can Greece make the payments? Well, look,

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Speaker 1: without the deal, the July payments are going to be very,

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Speaker 1: very difficult. And that's why it's the you know, the

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Speaker 1: hard stop in the negotiations. If you if you like, uh,

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Speaker 1: Greece is probably going to have to have a deal

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Speaker 1: in place and have disbursements by then in order to

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Speaker 1: meet those payments, the coffers are starting to dry up.

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Speaker 1: It's gone through a relatively easy period in terms of

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Speaker 1: real payments over the last few months, but July is

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Speaker 1: is going to be nearly impossible to manage without some

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Speaker 1: kind of outside finance. Agree European briefing this morning from

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Speaker 1: Nick Malcochus. Thank you so much greatly. I appreciate that

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Speaker 1: that's what got to keep an eye on. Yeah, it's

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Speaker 1: been totally after radar and yeah, I think most people

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Speaker 1: look at the minutia and go, haven't we heard this before?

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Speaker 1: But there's some really interesting to me that the backdrop Michael,

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Speaker 1: of a dampened EU and global g d P is

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Speaker 1: the real game change. Maybe as we go into another

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Speaker 1: bout of Greece anamics. We've been inventing a phrase their

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Speaker 1: futures negative sixteen economic data will look at This is

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