tv Bloomberg Bottom Line Bloomberg February 12, 2015 2:00pm-3:01pm EST
>> from bloomberg world headquarters in new york, i mark crumpton and this is "autumn line" -- the intersection of business and economics with a main street perspective. -- "bottom line of" -- we have full coverage of the stocks and stories making headlines on this thursday. alix steel tells us why a decision by india may transform the global gold market. our chief washington correspondent, peter cook, is tracking the delicate cease-fire agreement in ukraine. we begin with our international
correspondent, hans nichols in brussels where european leaders are meeting to discuss the potential greek debt default. where do things stand now? has there been any progress in stalks collapsed last night? >> good evening. eu leaders are having a conversation. the portion dedicated to greece will happen at the end of the evening. they have dealt with ukraine and other issues. on a technical matter, and this is important, if there are going to be advisers working with the greek side on what the common set of numbers is going to be. the idea of having technical experts and a solid, trusted data set is going to be crucial if there is going to be any progress on the talks. they need to agree on the numbers for there to be any meaningful opportunity for progress. >> how close to they come to a deal last night?
>> it was reported they had a deal in principle and we were among the organizations that that they were moving toward a deal. the greek finance minister then checked with athens and from athens, the line was he could not sign off on the common language that everyone in the room. they had agreed to. to give you a sense of how final people thought this was, the german finance minister was in his car, in the parking garage ready to leave and received a message that no deal yet and he ends up leaving. then they had another few hours of negotiations where they did not make progress and at the end, they had two as they did not have a deal, just greater clarity of both sides positions. next the british prime minister had some strong words for the greeks. who else has been critical? >> in some cases, cameron did
have -- did have some strong words. some of the more peripheral countries -- let's say the premise or of finland was quite strong. you are hearing from countries that have helped greece with their bailout. this hard, almost austere line is continuing with the greeks and angela merkel, who is not really changed her tone continues to say the greeks must abide by the rules regardless of whether there's an election. they must continue to honor their commitments. >> hans nichols joining us from brussels, thank you. thomas miller is a former u.s. ambassador to greece and is the president and ceo of the international executive service corps, a not for profit based in washington. welcome back. appreciate your time today. we have been hearing about greece's financial problems for
the last seven or eight years. how vital is greece to america's interest? >> in some ways it is peripheral but in some ways it is very important because greece is a member of nato, it's a member of not only the eu, but the eurozone and those are core u.s. interests. >> the greek prime minister said "we will need to find a solution that respects the positions of all parties." but the german chancellor said although her company is ready for compromise you have to say europe's credibility depends on us sticking to the rules. where is the middle ground? >> i think there is middle ground. i think the rhetoric has got to tone down because that makes finding a middle ground very difficult. particularly out of the greek side. they can't be speaking to the domestic audience and european audience with the same words.
i think there is a middle ground. not so much debt cancellation but extension of terms, relaxation of terms on the debt. i think there might be some things they can do on the austerity front. i don't think anyone is in favor of hiring more civil servants back on, but i think there is a deal if both sides want it hard enough. next gary jenkins, the chief credit strategist at lng capital said if you change the terms and conditions of the contract, have you created a new contract or do you have the same contract with minor adjustments? he noted greece wants the original bailout terms decreased. does a deal involved both sides
saving face at this point? >> that is a very important point. both sides have their domestic constituencies and while the greeks are making a strong point that a were elected on the basis of what the voters wanted to see , the reduction of austerity the germans the finns, the dutch and others have their domestic constituents saying we have already helped enough. >> has austerity made things better or worse in greece? >> for the common person, no question, they have done much worse. i go to greece a couple of times you -- a couple of times here and it's not hard to see. when you are looking at the standard of living of your pensioner or person who does not earn a lot of money, they are definitely worse off than they were a couple of years ago. >> in your opinion, the prime minister has only been in office a little while -- he and the party, did they understand what
they were up against as far as greece's debt and it financing? >> i think you have to ask them. to go from a politician who came in third in the athens mayor's race to being prime minister of the country's white elite. adding in terms of their opening sell those on the rhetoric, i would have done it a different way. i'm not sure they fully appreciated the reaction they would get from european colleagues. >> as a former diplomat, what do you think is going on in the room? how are these negotiations -- what are the -- what is the main sticking point? >> i think there are several sticking points. the big one is making sure you come back with a minimum to satisfy your domestic constituencies. the greek party was elected on a platform the sole platform of
reducing austerity. so they have to come back with something that minimally satisfies those who elected them. by the same token, the europeans, led by germany and others, have to make sure they don't give in here because if they do not only are they worried about their domestic constituencies, but they are worried about the spillover effect in two places like spain and italy. >> if germany does not get on board, does this mean the deal doesn't get done? >> i think germany is an extremely important player but it is not germany alone and i think people should not mistake this as germany versus greece. one of the things that is not helpful to this whole situation is the prime minister keeps referring to german war reparations from world war ii. if anything infuriates the
germans as horrific as a german atrocities were, that was settled many years ago. >> greece's that is more than 170% of the country's gdp. at that level, even if they optimize is reached, what does the country's economic future look like in the near term? >> in the near term, it's going to be dire. and the longer term, greece is starting to grow. it has a primary budget surplus, one of the few countries in europe that does. it has a vibrant tourism season so they have plenty of potential and i think if they can reach an agreement i would say extend and pretend. extend the loan provisions and pretend you still got these loans out there. you can't just this miss them. i think there is a potential
greece could recover. >> bloomberg news is reporting, according to government officials taking part in his discussions, they are pursuing a deal on conditions required to continue the greek bailout. germany will not insist all the elements of the current aid program continue as long as the program is prolonged and germany would be open to talking about the budget surplus requirement and conditions to sell off government assets. is this a good enough starting point to reach a deal? >> i think it is. i noticed yesterday one example. they said no more privatization, we are going to cancel the ongoing deals and just yesterday, they agreed to go ahead on the sale on a large part of the big concession on --
which was a big concession on their part because they said no. i think there is the makings of a deal here. i've been appearing on this program's you -- that on this program many times over the years and we always come to the precipice. i think we will again. >> mr. ambassador, it's always a privileged to have you on the broadcast. thank you for your time. still to come, and all-night bargaining session has led to a cease-fire in ukraine. now the question is will it last any longer than the previous cease-fire agreements? peter cook will give us an up date when "bottom line" continues in just a moment. ♪
>> welcome back. 15 minutes past the hour. let's check bloomberg world news. the governor of the bank of england says interest rate could be cut further of low inflation persists. mark carney went on to say the uk's likely to see inflation turned negative in the spring. the governor said the biggest factor contriving to falling inflation in the u.k. was the drop in oil prices. after reporting a $5.7 billion loss for the fourth quarter of last year, oil giant total is cutting spending and imposing a hiring freeze to deal with the following oil prices. the company's ceo said they had to react.
>> if we do it, it is a reaction. it is not a noble reaction, to be clear. we don't want to overreact, but we have to react. it represents $10 billion in cash. >> a former korean era executive has been sentenced to a year in prison for an onboard tantrum over macadamia nuts. the daughter of the korean air chairman did not like how the nuts were being served and heard behavior sparked a debate on whether family-owned conglomerates and south korea have too much power. that's the latest world news. we will have another update at 45 minutes past the hour. the obama administration is cautiously welcoming word about a cease-fire in ukraine. our chief washington correspondent, peter cook, has the latest. is the u.s. on board with this deal? >> the u.s. was not the bigger
shooting table, but the white house calls it a potentially significant step forward toward a peaceful resolution, but the administration is taking a wait and see approach. during those all-night talks by the german chancellor, the french president and they russian and ukrainian president takes effect on midnight sunday and calls for a 30 mile buffer zone, the removal of foreign troops from ukraine and the release of hostages. the u.s. wants to see those terms carried out. >> our view is words are words and action and implementation is what we are looking for. a piece of paper is a piece of paper until it is implemented. tax a white house statement called on russia to withdraw its soldiers and clement from ukraine. the u.s. expressed concerns --
some concerns about though violence even as negotiators were working. >> what happens to u.s. sanctions and the prospect of shipping more arms to the ukrainians? >> the reality is the sanctions will stay in place right now, though john kerry said the united states is prepared to consider rolling back existing sanctions if russia honors this agreement and the earlier one from september. but the threat of further sanctions seems to be on hold. likewise, the u.s. is not taking the threat of sending more arms to ukraine off the table but that decision is on hold until everyone sees the cease-fire is holding. more than 5400 people have been killed in the ukraine crisis and in chancellor merkel's work today, this is a glimmer of hope. >> peter, thank you. up next, former florida governor jeb bush and the search for big ticket donors at egg park avenue dinners.
would agree on the judgment. we tend to take cases only one other judges have disagreed on what the federal law is, whether a statute or constitutional provision. even so i know the focus is often on five to four splits and all would love if some of the unusual lineups in the cases that don't make the big headlines you will see this court does not operate like the congress does. >> you can watch the entire interview with supreme court justice ruth bader ginsburg at bloomberg.com or on the bloomberg tv plus app. warmer governor jeb bush at the fundraising circuit in new york
city and last way hours and the cost for his time was not cheap. $100,000 was the reported cost to participate in last night fundraiser at the home of henry kravis. phil mattingly joins me now from washington. what do donors get for their $100,000? >> there are a couple of ways you can look -- the people who attend these events particularly early on the campaign cycle, as this one was they are the true believers. they are the ones who believe in what this potential candidate brings to the table. they are the people who are going to stick with the party no matter what. jeb bush with his father's lineage and brother, they will back him. this is one of the important elements early on -- they -- there is access. you are getting in at an early stage with big money. you will be privy to early information like pulling data that other people are not.
a lot of this people just want to be part of the game and this gets them an early and probably closer than anyone else. >> governor bush is flexing his fundraising muscle in a big way but of 2012 is any indication, it may only take one person to fund his competitors. is that still the case? >> is an interesting element. what you see from jeb bush from what i've seen from republican aides that he is working hard to wrap up as many big-name donors as possible. that could push his competitors out and strike some fear in the people who might be a trying to dip into that same fund-raising network. but what we saw was fascinating in terms of what the new super pac word -- world looks like. newt gingrich -- sheldon adelson putting in more than $15 million to keep newt gingrich going and you had foster freeze put in $2
million just to keep rick santorum going. both of those candidates gave mitt romney fits because they had individual backers. while jeb bush is making major headway on the finance circuit right now, it mainly take one to give him serious problems going through the next year. >> a lot of donors on both sides will be making their way to the national conventions. for democrats, that might mean philadelphia. why is philadelphia the choice? >> it was philadelphia over brooklyn. it was primarily logistics. the difficulty on the security side of things in brooklyn but also in columbus -- philadelphia offered a better venue, but you always have to look at politics. pennsylvania is an important state and democrats like the idea of the organization they will be bringing to the state early in 2016. >> phil mattingly, thank you. coming up health risks facing
>> welcome back to the second half-hour of "bottom line was quoted on bloomberg television. i mark crumpton in new york. now, another bloomberg exclusive -- the head of the philadelphia federal reserve will retire at the end of february. earlier on "money clip" he sat down with michael mckee for an exclusive interview and michael asked him what could go wrong with zero on from an analytic aces. >> a number of things could go wrong. the fed has opted to want to keep a large balance sheet and
raise rates. we don't know if in some form or fashion we will have to raise rates are how the economy will respond to that and how to respond to the balance sheet. everyone thought would week but buying assets after qe3 that rates were going to skyrocket but they've done nothing but go down since then. i think there are a lot of unknowns and we are in uncharted territory. >> you can watch the entire interview at bloomberg.com or on the bloomberg tv plus tablet app. let's get you some of the top stories we are following on this wednesday. the price of crude oil at the close of floor trading today, up at $51.22. congressional republicans have won a hollow victory on the keystone pipeline. both chambers have passed a bill approving keystone and it's on its way to president obama who has already promised to veto it. neither the house nor the senate have enough votes to override veto.
consolidation in the online travel industry -- expedia has agreed to buy orbitz for $12 a share, a 25% premium to their closing price yesterday. it has an enterprise value of about $1.6 billion. just last month, expedia. travelocity. that's a look at the top stories we are following this hour. the u.s. government has pledged to reduce the case of -- cases of measles in the country to 30 or fewer in next five-year's years compared to 600 last year. the director of the national institute of allergy and infectious diseases one of the 26 institutes of the national institutes join me -- joins me from bethesda, maryland. thank you for your time. is the measles making a comeback in the united states just 15 years after was declared eradicated or is what we are witnessing a medical anomaly? >>
i hope it is going to turn out to be just an anomaly, but there is a reason for the synonymy -- this anomaly and that is the growing number of parents who for one reason or another did not have their children vaccinated against measles. it was a bad year last year and as you mentioned with 23 outbreaks and over 600 cases and this year, we had close to 150 cases. we have a situation where we've got to turn around and get the rational reasoning for why the risk-benefit of getting your child vaccinated overwhelmingly favors getting the child vaccinated for many reasons, one of which is obvious -- we are having these outbreaks that could be told he a voidable if parents got their children vaccinated. there are pockets around the country where the percentage of terence not to them vaccinated
is alarming. >> as you just alluded to measles outbreaks in cities and towns across the united states has started a discussion on the efficacy of vaccine protocols. the medical and scientific communities are of one voice -- the vaccine works. how do you counter what political leaders are saying that parents should be evil to make that choice for their own kids? >> i don't think we should get into any things that has to do with politics. this is a purely medical issue. certainly, we have to respect parents and their need to do what is best for children, but we hope they make that decision based on solid scientific evidence and evidence-based decision-making. one of the things that has occurred over the past several years was this lingering misinformation about the measles vaccine, that it is associated with very bad effects, including autism which has been
completely disproven over multiple scientific bodies that have evaluated it. the original information with actually fraudulent, but that still lingers -- the feeling that the vaccine is not safe. you have to look at the facts -- measles is one of the most transmissible and contagious fires as we know of. number two, the measles vaccine is one of the most effective vaccines we have. and number three, there is a safe vaccine -- put those things together and the conclusion of whether you should have your children vaccinated becomes obvious. the answer is overwhelmingly yes. >> let's switch to ebola. the president announced the u.s. will withdraw all of the troops sent to liberia in the fight against ebola. the president says we have risen to the challenge, our focus is to get 20. how will the community eradicate
ebola and how do you achieve a zero transmission rate? >> you achieve zero transmission by effectively identifying isolating, and contact tracing every single case. there have been 24 outbreaks of ebola prior to this historic outbreak we are experiencing now. in every single one of those, by carefully doing identification isolation, contact tracing and isolating the people who are in danger of having been infected that's how you get down to zero. we have had a significant success and west africa with the cases in the three countries dramatically going down, but it isn't over until it's over. what the president is emphasizing correctly is that we've got to get to zero before you can claim victory.
ask we are also talking about an economic calamity. we see this time and time again -- earlier to deal with a public health crisis spirals out of control and >> economies. what's the message there? >> if you are talking about wrecking economies, that's one of the issues and west africa because they had such a fragile health care infrastructure. if we want to avoid these things in the future, one of the things we need to do is help as a community of nations, to get the nations that have some degree of health care infrastructure where they can actually address those kinds of outbreaks and public health calamities that i have. >> dr. always a pleasure to have you on the broadcast. thank you for your time. but you're quite welcome. >> coming up, jetblue makes traveling to cuba more convenient.
>> the sure to check out the latest addition of "bloomberg businessweek." it hits your newsstands and tablets today. you can read it on the go with our new business we cap. it's time now for today's latin america report. venezuela's new currency market where companies and individuals can trade freely has started operations. venezuela uses currency controls by having different rates for exchanging u.s. dollars. money used to buy essentials like food and medicine is exchanged for six boulevard per dollar while other goods are exchanged for much higher rates. jet blue is looking to cash in on the easing of travel restrictions to cuba. the airline has added another charter flight between tampa and havana which will begin on june 5. jetblue has three other weekly
>> welcome back. let's check bloomberg world news. there is a cease-fire in ukraine. such is will this would last longer than any of the others? leaders of ukraine, russia germany and france agreed on the trees after 18 hours of talks. it takes effect on sunday. >> it wasn't the best night of my life, but it is a good morning because despite all the negotiation difficulties, we agreed on the main thing. >> ukraine has promised to give more power to regions dominated
by pro-russian rebels, but the rebels will not have autonomy. shares of credit squeeze moving the most. new steps were announced to boost capital. here is the ceo. >> we did feel it was right to acknowledge the impact of the earnings on that settlement and, as a result, the board voluntarily took reductions in compensation as an acknowledgment of the impact the settlement had on the results. >> credit squeeze said the decision to abandon the cap will cut profits by 3%. that's a look at world news. 11 other up a coming up in about 30 minutes. tesla is helping chinese car buyers trade in their old cars if they buy their all electric model s sedan. it's part of tesla's latest effort to crack the biggest vehicle market.
andy lau and steve mann took the automobile out for a spin and talked about how the year is going to look for automakers in china. >> red is my color. >> red is a very lucky color for chinese. tesla wants to get into china big-time. why? >> it is the biggest market in the world. there's over 1.3 billion people. china is spending a lot of money, doing a lot of r&d, spending money to get people to buy electric vehicles. a lot of cities are very polluted right now. >> i want to see how this baby drives. if you think china is such an
important market, what are they doing since they have such a massive pollution problem? >> they are not only subsidizing purchases, they are spending a lot of money on r&d to standardize the charging infrastructure, the battery technology all sorts of technology. >> are there any competing technologies right now? asked definitely. fuel cells have been catching on . we believe phil -- we believe you'll cells will take longer to be adopted. there is always a concern with safety. fuel cells use hydrogen as a main source of fuel, a very volatile fuel, so a lot of work needs to be done to get the consumer comfortable with having hydrogen in their vehicle. >> drive us into the future and tell us what 2015 will look like for automakers. what should we be looking out for? >> china is going to be a major
market. there's a lot of moving parts in the china market. we had two years of strong growth and i think the consensus believes there's going to be a lot of risk going forward. there will be limits to new car registration, especially in cities that are highly polluted and very congested. the economy is slowing down, the growth and economy is slowing down in the consensus is forecasting gdp to only grow 7%. and there have been downward revisions in the past few months to that number. >> staying overseas, india may announce a policy decision that could transform the global gold market. according to a bloomberg survey the prime minister is expected to cut the 10% gold import tax on february 28. alix steel has been tracking
this development and joins me now. talk to us about the repercussions of this. >> it can be huge. the import taxes 10% and if it goes to 2%, it could add 23 million ounces into india the sport -- this year. that helps offset any weakness we might see in china for overall, gold is huge in india. it's a big staple for them. 8% of family budgets are actually spent on it. it's a huge thing for weddings about 5 million weddings every year. the problem was india bought so much gold that the account deficit widens so much so that the government has imposed a tax of 10% and you had imports drop off 35%. >> what is the government considering? >> it's interesting why now and it has to do with oil. if all in oil is helping the
account deficit. it's estimated for every 10% of a fallen crude prices, it lowers their account deficit by $9 billion. i was talking to an analyst at barclays who thinks it could be 8%, perhaps cut right to. see how the account deficit does and keep lowering it. >> so they cannot go full bore. they have to do it step by step. >> she thinks they will. others think it will be cut back down to two -- golden a record in india last year, despite this tax where he had to re-export everything you imported. so she was saying perhaps there is a stock file and then you could get to actual demand in the marketplace. she said that could be around
april. >> even with restrictions, india still bought gold. why? it's a huge staple in their society, but there's is also a demand for smuggling. this is insane if you look at the ways you can get gold into the country. you can basically makes gold dust into coffee powder. you can hide it in computers or in your shoe or in a soap are. i don't know if you ever held a big gold bar, it's heavy. there are very creative ways of getting gold into the country. as much as 200 tons last year. you are looking at about an $8 billion market. what level with the income tax have to be at to cut off smuggling? some say 2%, some say 5%. >> gold in your coffee. >> who knew? scarlet fu will have another check of the markets on the other side of the break. "autumn line" -- "bottom line"
with scarlet fu" is next. i will see you on friday. >> it is 56 pass the hour and a means bloomberg television is on the markets. with just over an hour left in trading, dow jones and s&p 500 pushing toward matching the record highs on the back of the cease-fire agreement from ukraine and earnings from cisco. however, data on retail sales disappointed and that raises questions over whether the fed would begin raising interest rates in june. the dollar weakened, backing off an 11 year high in treasuries, increasing for the first time in six days. a weaker dollar tends to mean higher oil prices. the fund that tracks energy shares up by better than 1.5%, now at its highest level this year. it is a sign the energy sector has stabilized? >> we think we have stabilized.
we started getting clients a leg in a couple of weeks ago, so we do quite get the bottom, but people are doing well since then we will continue to see this opportunity. we've seen the energy sector's credit stabilize. if you look at a broad etf that has had a lot of inflows, i think that will help to boost the next leg higher. >> credit is leading equities which is not unusual. is this because companies have made announcements cutting dividends, production and laying off workers? >> i think you saw two things happen. some of the junk companies that are really in trouble ours -- are trading at the stress levels. on some of the better companies, where they are starting to take the right steps to protect themselves, you see a higher volume going through, which means you have this turnover. the people who do not want to own energy have handed it to people who are comfortable.
>> as for oil prices them selves, people cite a lower rig count. do you believe that westmark >> not all rigs are the same. some of them coming off-line are old and not very well producing. the new rigs in some cases one new rig might be the case of 20 old ones. it's probably helpful. i think the markets probably overreact in the real oil people see production going up. it is something nice to watch. >> i want to broaden this a little bit because i mention how stocks are rising despite the economic data. why is there a disconnect between equities and every other economic class? >> am not sure. one thing we've started seeing is we have had this risk on -- risk off mentality. we've been moving into this taper tantrum pattern where
stocks and bonds are going up and down together and it's more disturbing to me. today, it's going in the right direction but you've seen this pattern of treasuries go down stocks fall, so i don't like that pattern. >> in the meantime, everyone is just trying to make sense of what the dead might do. >> given today's data, that's one reason you saw treasuries do a big turnaround. >> thank you so much. "street smart" is up next with trish regan. ♪
>> welcome, everyone, to the most important hour of the session. this is "street smart." investors showing optimism among a cease-fire agreement and the ukraine. can you really trust anything vladimir putin said go of triple digit. the nasdaq climbing to its highest level in almost 15 years because of the better than estimated profit and sales. counting down a slew of earnings. "street smart" starts now. ♪