>> from bloomberg world headquarters in new york, i'm mark crumpton. this is bottom line. today, secretary of state john kerry and russian foreign lavrov discussed the crisis in ukraine. college basketball is in the spotlight as march madness it's underway. underway. to our viewers here in the united states and those of you joining us from around the world, welcome. we have full coverage of the stocks and stories making headlines today.

olivia sterns follows efforts in california to protect children from deadly toxins. phil mattingly reports on bp's agreement with the eta to compete for leases in the gulf of mexico. alix steel looks at enrollment in strategic petroleum reserves in russia. john kerry and his counterpart from russia held talks today on the crisis in ukraine. or is mr. kerry in his post meeting news conference. him that clear with the president has made it clear there will be consequences if russia does not find a way to change course. we don't say that as a threat. we say that as a direct consequence of the choices that russia may or may not choose to make here. chilcoteerg's ryan joins us now on the phone from london. this latest diplomatic effort,

did it accomplish anything echo >> i don't know. i just came back from the postmeeting press conference of the russian foreign minister who was meeting with kerry. i didn't hear anything that's adjusted that russia is prepared to stand down in ukraine. or anything that would suggest that this train wreck in the making can be averted. >> is there any way that russia could face sanctions echo >> there is. this vote in crimea is basically the people of crimea deciding whether or not they want to remain in ukraine or join russia. just because they want to join russia doesn't mean that russia has to have them. so russia will have to make that decision. if they choose not to annex crimea, that might be something that would go some ways in appeasing the united states and the european union in coming up

with a double medic solution. the foreign minister says that russia has no plans to invade eastern ukraine. that's another big concern. at the fact that he said that is not part of the plan is somewhat comforting for the west. >> kerry has said the results of sunday's referendum in crimea are a conclusion. what can we expect the next day ? >> we have a full schedule of punishment for russia. the eu gathers on monday. they will lay out the punishment. they will say up there is no change this week, then this will happen to you. that is likely to be be so restrictions, asset freezes. restrictions, asset freezes. on thursday, that's when the leaders gather in brussels. i expect action by then if russia does not change course. >> ryan chilcote joining us on the phone from london.

thank you. joining me now from washington with analysis of the situation, -- any further incursions by russia -- you heard some of the comments that both gentlemen made after that press conference. what do they really mean? kerry's pressjohn conference live from washington. i got to say, knowing kerry, in some ways he was in his home polite, diplomatic's eco-way. speak way.ic they met for five hours. they have no common vision on what is happening in crimea. rov has said that kerry issued threats, kerry is trying to make the point that the obama administration is

.eady to take serious action took voice by saying we know russia has legitimate interests in crimea and we recognize that and we hope the president does not misunderstand and do something we don't understand that. as far as reassurances that we rov that russia is not planning to invade eastern ukraine, letter member that he gave those same reassurances to carry about crimea. -- kerry about crimea. >> it seems they are talking across purposes if you parse mr. lavrov's comments. the u.s. is telling russia that you have violated international law. russia is telling the u.s., mind your business. is that where we are at? >> that would be the translation

from diplomatic speak and to regularly which. said,ing that lavrov "crimea as more integral and more important to us than the balkans were to great britain -- were tolands unde great britain." we know the boat is happening in crimea. the russians will respect the outcome of that vote. the u.s. is hoping respecting the outcome does not mean annexation. i think they are prepared that it may mean that. in which case, as ryan said, we're talking about sanctions coming out on monday. eu far is the u.s. and willing to go? will there be economic warfare? >> who stands to lose the most from the sanctions? >> whoever they want to designate in terms of seizing their assets. those could be ukrainian as well

is russian. those could be those oligarchs. it could go all the way up to the leadership of the russian government. i don't think the u.s. and the eu are repaired to do that right away. it was interesting that on the lot merkel has gotten the buy-in of the german business community by saying that trade sanctions would not affect germany that much. merkel.a the new war of the 21st century, on the economic front as opposed on the battlefield? >> that's right. the u.s. has made it very clear that it won't take military action in crimea. it would not make any sense. at the same time, it is hoping it can isolate russia diplomatically and the threat of economic warfare without having to act on it. i think it's stunning because russia has recently joined the wto.

they would have a lot to lose if the sanctions went forward. to the extent that they could. thank you. more followed from the scandal surrounding the london interbank libel or. a lawsuit against a dozen banks it accuses of manipulating libor from 2007-2011. peter cook has the details. good afternoon. >> good afternoon. there has been a lot of talk over the last couple of years ever since the first allegations of manipulation of this inchmark lending rate 2008. you have had to traders who have been fired or put on leave. you had investigations in the u.s. and abroad over the interbank scandal. now you have the fdic filing a in new in federal court york that accuses more than a

dozen banks of manipulating libor. they are alleging that that meant oblation -- manipulation -- they are seeking to recover losses suffered by those close banks. the fdic took those banks over and is trying to get this money back by suing these banks. a lot of these banks -- very big names here. more than a dozen banks that includes bank of america, thesehe bank -- some of banks have had to deal with investigations already. here,s complaint, it says "in the absence of inclusion, the panel bank defended the banks involved here. the banks that helped set libor could not have set

the rates." suggesting the manipulation of this rate led to the closure of these banks here in the u.s. thatis significant here is there have been all these investigations and we have not heard that much from the fdic on this front. this lawsuit comes as a surprise to some. now the banks will have to take on the federal government in court. punitiveasking for -- libor rate affects everything. this is a global benchmark. if you think it doesn't affect you, you are mistaken. >> it sets everything from a mortgage rate to a car loan rate. that is why this is such a big deal when it was first uncovered back in 2008. why this has been a spiraling investigation, not just here in the u.s. but abroad.

in asia as well. more fallout from this investigation. probably not the last. >> thank you. coming up, with rising military conflicts abroad, the pentagon is landing drastic cuts to the military. what in impact will that have? ♪

>> welcome back to bottom line. the pentagon plans to scale back the size of the u.s. army. the 450,000 active-duty soldiers -- the lowest level since this will -- since before world war ii. hamlin is the senior fellow at brookings institution where he specializes in u.s. defense strategy. he joins me from washington. welcome to bottom line. >> nice to be with you. the defense get to

cuts, the news of the day is still what is going on in ukraine. following those talks in london today between secretary of state rov, how do you think both sides should be going about reaching an agreement? >> we will have to sanction russia or its top ruling elite at some level if it annexes crimea. i think we need to stay a little calm here about the stakes. i don't think that reference to the imperialist russian leaders of the past or hitler or anyone else is appropriate here. putin is acting in a way that is brutish and bullish but i don't think it's particularly threatening the major western interests. i proposed that we actually work out a compromise where crimea would have the option of joining russia but not right away. this weekend's referendum would

be a nonbinding one. then it would pave the way for a more calm, properly monitored binding referendum in a year or two when tempers and fears have cooled. that would not be radically different from how certain other crises have been handled. i think we can come up with creative solutions. >> a lot of people don't agree with your assessment because they think this referendum is under the threat of force. how do you counter that? >> i agree. that's why this cannot be a binding referendum with the possibly of annexation. we need to stand firm. the punishment may not need to extend to the general russian energy sector but painful enough that they learn a lesson. that they don't do this again. and that they even rethink it down the road. what i'm suggesting is, we need to get putin -- give him some

way out. this is the biggest dispute between russia and the west since the fall of the iron curtain. what are the economic stakes, particularly for russia, after two days of cooperation with the west? you may be right at one level. i would much prefer this kind of crisis over the one we had in the 1990's. we were worried about what would happen to their 25,000 nuclear weapons. as bad as this is, i would rather have a russia that is intact and can pay its army and pay its weapons scientists and guard its nuclear arsenal. putin has staked that are economically powerful enough that he is not likely to go to the next level and march tanks into eastern ukraine. it's a serious crisis that i'm not going to call it the biggest in obama's presidency or the

biggest since the cold war. >> last month, you wrote an op-ed in usa today about this proposed cuts to the u.s. military. you pose this question. how much army is enough? and politicians talk about the modern military, they say it has to be slimmed down and it has to be nimble. at what force level does the slimmed down start to impact variables? >> i don't think we need an army to deal with russia. i don't think this crisis will move in that direction. i'm not trying to link that into the current discussion of ukraine or crimea. i would say that we can go down to the 450,000 active-duty army that mr. obama has recommended. you pointed out correctly. it's the smallest since before will work too. it's only 10% less than what we had in most of the 1990's. since the 1990's, iraq has changed. saddam is not threatening invasion against his neighbors.

the region is a mess in a different way. the change in threats has shifted the appropriate responses for the united states a bit away from large land forces. i'm comfortable going two for 50,000. cutting more would risk deterrents in places like korea and would take away from our ability to respond in modest ways and elsewhere. any deeper cuts would be a mistake. >> we have less than a minute left. let's expand outside of the military. how much impact will the proposed cuts have on overall u.s. economic growth, particularly private sector jobs? what will the ripple effect through the supply chain look like? >> i don't think that will be a huge concern compared to other ways we might have cut defense spending. we are staying robust in our approaches to equipment. the industrial base and scientific base -- these are greater concerns to me than the

exact number of soldiers we have in the active-duty army. the economic effects are coupled. the real problem is that our budget deficit is still too big. discretionary accounts are being streamlined. perhaps they can afford to be. but entitlements and taxes are not being reformed. our long-term economic future and long-term national security are still at some risk from the size of these deficits. that's the real concern. >> senior fellow at the brookings institution joining us from washington. it's been a pleasure. thanks for your expertise. >> my pleasure. >> up next, we will get you the latest on the markets update. buyer beware. california regulators are looking to ban spray foam and solution -- insulation. that story is next. ♪

>> california regulators have identified three toxins they want to ban from consumer products. the states department of texaco willxic substances control target a new law that could affect retailers and consumers across the u.s. olivia sterns joins me with more. what are these problems -- products? >> these are substances that can be found in everyday products and ordinary mirkin in homes and are already accepted as hazardous in high doses. the first is something called tb cpp. it is still winning a lot of foam products. has been linked to asthma and commonly used as a sealant for windows. the third is paint strippers with methylene chloride.

is a carcinogen that is commonly used in furniture stripping. thatey take away here is what this law is doing is shifting some of the burden of proving that chemicals actually are safe. a chemical is potentially dangerous until it is been prov proven safe. goods thatho sell contain the substances now have to replace them or risk a statewide sales ban in california. the california retail association is warning this will be a huge program and very expensive. they were involved in the drafting of these rules. so these rules really aren't taking anybody here by surprise. many are actually disappointed that the rules aren't even stricter. if you compare the number of substances that are restricted or banned in europe versus here in the u.s., european regulators are much stricter.

we've seen companies like johnson & johnson moved well and thoroughly to take controversial chemicals out like formaldehyde. is a 180 day analysis of replacement substances. it's going to be a year or two before anything makes it standard. thank you. it is 26 past the hour. that means bloomberg is on the markets. alix steel is standing by. >> where stocks are trading. we did see the dow slipped into negative territory. down 15 points. the s&p also negative and the nasdaq flat. all this on the heels of thursday's record decline. the biggest decline that we have seen in five weeks. traders are watching the s&p. a long way until we get there with the issues in china and ukraine. we are keeping our eyes on liberty media and sirius xm

radio that the virgin media dropping its bid for full control of the satellite radio company and reselling rights to a unit that will be called liberty broadband. we are back on the markets in 30 minutes. bottom line continues, next erie . ♪

welcome back to this second half-hour of bottom line on bloomberg television. i'm mark crumpton. let's check the top stories. ofew twist in the mystery that missing plane. malaysia's government is investigating whether the crew was involved in the disappearance. the search has expanded to the ocean.- indian officials say satellite signals indicate the plane flew for several hours after the last radar contact. differences remain between moscow and russian following negotiations in london.

the strategic crimea region has voted this weekend on whether to -- on whether to secede. , the u.s. anddes european union plan to stop sanctions -- start sanctions as early as monday. that's a look at the top stories in the news at this hour. we want to focus on the oil ties between the two nations. the u.s. is selling 5 million oil from itsels of crew stash. the first time that the u.s. will be testing it's really system. alex deal has been digging into those details. she joins us on set. 5 million barrels. >> a drop in the bucket. as less thanat it 1% of the entire stockpile that the u.s. has.

billion have 690 barrels stashed away in the gulf of mexico. demand, we use 19 million barrels of oil a day. is 26% of justls one day of demand. it's an indirect effect here. supposedly this has been planned for a wild. these things take a long time to set up. the direct purpose is to test the infrastructure. it had a lot of pipeline reversals over the last few years. they wanted to see if it was all working correctly. it's a good time to do it. refiners are in maintenance right now. demand is like. we're talking to michael cohen. is department of energy undergoing a review right now of transmission and distribution of energy all across the country. this could play a part in a review that was commissioned by

obama. we talked about russia. are we flexing our muscle to show, we have our own oil. we can live without you. ake whitner is calling it warning shot. this is not a game changer but this oil is diverted elsewhere, maybe it makes its way back to europe, that is going to directly compete with russian oil. that is where the issue lies. >> folks who are going to the pump, talk less about prices. what effect will this have gekko >> don't worry about it. you did see a knee-jerk reaction in the u.s. oil prices. hitting a five-week low on thursday when we got this announcement. overall, it might have impact on global crude. it's a different quality. aobal oil prices could see short-term effect. 5 million barrels is not enough to move the needle. if the u.s. wants to do some kind of permanent damage here, experts are telling me what they are really considering is exporting crude from the west,

which we are not allowed to do currently because that would cause a massive oversupply in the market. >> thank you so much. staying with energy, bp is back in business with the u.s. government after a ban on new federal contracts and leases. free toany is now start bidding. how important is this the bp's core business? >> there's a reason the company sued the federal government to get this ban lifted. it matters. thisyou look at -- before ban was put into place, bp with pentagon's number one supplier. it's their chance to expand across the gulf. they look at the gulf right now as one of their four core areas of growth. dad not been able to work with that under the new contract basis. this matters. >> the company had to agree to

terms with the epa to clear the way for this. where are they now? 2010is all stems from the deepwater horizon accident. in 2012 when this ban was put into place, the epa was basically saying that bp had not done enough in the wake of that and in the wake of agreeing to the guilty to criminal charges. and that's why this ban was put into place. to take it off after negotiations that have been going on for months between both sides, bp has agreed to pay for an auditor that will come in and look on an annual basis and report back to the epa. if that auditor says that bp is not meeting the requirements, epa reserves the right to place new restrictions on the company. the epa said they believe this is a fair deal and this is what they have been fighting for. that deal will be in place from here on out. >> how quickly will they put it together again? >> as soon as next week.

the ban is off immediately. that is the top thing right there. , the federal government is going to be acresning off 400 million of oil and gas leases. bp can participate in that auction. you want to talk about great timing. that certainly is. in play and in the game. they could be bidding as soon as next week. >> thanks. coming up, march madness is here. we will look at the money in college basketball. ♪

>> march madness kicks off next week. estimated 50 million americans will participate in office pools and will be watching games streamed online.

sportshead of bloomberg joins me now. thanks for your time. some of the confidence -- conference tournaments this week. some of them might be a tougher active follow. in today's.re it will all be about the brackets. how does bracketing tie into the trend of gaming laws in the u.s. that are now under attack gekko >> it's very interesting that you have 50 million americans participating in march madness brackets. it's exciting and fun for everyone. i think there is a general trend with in the united states toward relaxing the gaming laws. you have daily fantasy gaming where it's not just a season-long fantasy but you can play for real money online. putting players against each other. everyone isening is actually that betting contributes to fan engagement and the integrity of game when

it's open and regulated and moderated and tax. below u.s. it happens board. nobody can see it. you know it's there. >> the conference realignment -- how has that driven the business of college sports this year? what impact is it having on revenue and what impact is also having a media deals? >> it's amazing to see what's happening in college sports. we've seen a very dramatic shift. ncaaed away from the controlling everything and the powers have moved toward the conferences. it began with a packed wealth and teams being moving -- the pac 12 and teams moving around. realize there is tremendous business here and there's ways of restructuring it. you will see a lot more movement. the new conferences like the big

east, which may not be as strong as it appeared to be years ago, they will put out a very good show at the garden this week. there was a great game last night. even though the influence ha s shifted from the ncaa tour the conferences, the popularity is greater and greater and the money is greater and greater. >> college basketball is in transition right now. is this a fast break or a four corners offense? >> it's moving quickly. in five years, you have seen a huge shift in terms of conference realignment. challenging the refusal of the ncaa to elect to participate in the money generated. there are going to be some changes.

you will see changes quite quickly. >> how much money are we talking about when you talk about the lawsuit and what players think they are entitled to? >> they have fought tooth and nail and tried very hard to that theyir model built four years. >> you're in school to get a degree. not to get paid. >> you get a scholarship. there is value in that. is that it hasng become such a big business and some of us might have wished that the train has no had not lt the station. >> what is the new model? >> we will move toward some sort of model that takes into account all the money that is generated and the fact that student athletes put in a tremendous contribution toward it. i don't think we will go -- >> may be a stipend? >> may be a trust fund that

people participated. >> we are talking about a student athlete getting caught accepting a slice of pizza from somebody, they have violated sanctions. waye stop nitpicking the .he ncaa has a point that is unsustainable. now that it's out in the open, it may take a couple of years to sort through. isone trend we are seeing the technology tracking earlier performances. how is that changed? >> it has increased fan engagement. you mentioned the brackets people play. of data andkinds analytics now being part of a second screen experience on mobile and on the telecast itself. it has made fans get deeper into the game. forreate advanced analytics

soccer and basketball and football and baseball. what we find is that fans really love it and it adds to their heart dissipation and engagement. -- artistic patient and engagement. participation and engagement. do you have a pic? >> yes. thanks so much. your guide to the biggest newsmakers of the week when bottom line continues in a moment. ♪

>> is friday so we bring you encore carried a look back at the most notable newsmakers from the eust week area >> and the u.s. are looking for

ways to further stimulate their economic recoveries. the potential of having an liberalized trading regime between the world's two largest financial partners would have a very strong effect on our economies. >> the rest of the world will come on board ultimately. i use the analogy of that old movie with kevin costner, field of dreams. if you build it, they will come. i think if the u.s. build our regulations and the eu builds their regulations, rest of the world will come and we will have a safer system. >> we have to take technology goo get itmarket and more culturally grounded. we have to engage with designers early on and make sure that we get the right emotional quality into the product.

what we find is that most small business owners -- what they want the most is consumer demand. you want to know that money is out there to buy their products and services. henry ford wanted to pay its people enough to buy his cars. it is the predominant economic force that we are going to see here. >> this is what the consequences of your actions are. this is what the unintended consequences are. are we willing to take it? he brings next level of hedging by the fed and understanding of the consequences of their actions in uncharted territory. the bottom line of what's happening next week. yang yang joins us from our washington newsroom with the preview. >> congress will be off next week but it is still shipping up to be a pretty big week in the nation's capital. we have janet yellen's first news conference as fed chair.

that will come on wednesday after the federal open market committee concludes its two-day meetings here in washington. cherry yellen has pledged to continue the fed taper as long as the economy continues to strengthen. economists surveyed by bloomberg say that science .2 reducing monthly bond buying by another $10 billion and holding of rates near zero. we will have more fed and on thursday with the release of the result of stress tests to assess whether the nation's largest banks can weather and other financial crisis. such prospects will be far from investors minds as they hear from meg whitman, ceo of a stronger hewlett-packard and the y's monthly earnings. all stocks are expected to report to stronger earnings are

share and then in the year of go quarter. as those companies turn in their scorecards, the west will release and received a few grades of its own with existing home sales leading indicators and account balance data. all out next week. on friday, fixed ratings will announce its review of the u.s. sovereign credit rating, now a aaa. , two ofegative outlook the three biggest ratings firms will give the u.s. a grade lower than aaa. >> yang yang joining us from washington. thank you so much. they with us. we will have another check on the market movers on the other side of the break. bottom line returns in just a moment. ♪

>> we have breaking news. we are receiving word that the united nations security council will vote on the ukraine resolution on saturday. the un security council scheduled to vote on the ukraine resolution on saturday. that yuan action coming put a four hours before that referendum taking place in crimea. there will be

deciding whether or not they want to secede from ukraine and become a part of russia. and a lot of fluid development continuing in that situation in ukraine. we also have some more headlines today. -- a conference committee in the state of new jersey has decided that the cars should not be sold there. we are receiving word that tesla says stores will transition to new yorkleries in city. after april 1, tesla can order vehicles on the website. they will not discuss the price or complete the sale in the store. tesla saying that stores will transition to being galleries in new jersey. that is the latest on bottom line. alix steel looks on the markets. past the hour.

bloomberg television is on the markets. i am alex deal. the dow and the us and he continued to slip into the red. at the nasdaq is off by 2.5%. by .25%. there could be limited downside into early next week. for the short-term term, the fact is that ukraine and crimea and china are not buying any time soon. from stocks to commodities, they have been all over the map this year with breakout performances like coffee. guru joins us to look at options. you mentioned some of these commodities we don't think about. coffee, cocoa, corn. there are some diverse abide --modity etf's des

diversified commodity etf's. copy gets a six percent rating just like oil and natural gas. this one is up 11% year to date. up that much because people rates. it gives the smaller commodities more voice. the oil is much bigger and more traded and more important. it's a thinner market. the market cap weighted version of the commodities market would s db.e power share this one is huge. people like that. a $5 billion etf. energy is a 63% weighting of the portfolio. this one does abide by those. there is credit risk with exchange trade. people -- the tax treatment of

etfis just like an equity where is other two are treated like they hold futures. if they are and they get a k-1 form. some people find that annoying. that etm is a big one. >> i want to get your etf of the day. ticker deserves to celebrate, it is the island etf. this thing is up 44% in the past year. 11% year-to-date. this makes of makes it the best-performing european country out there. it has tripled in size in the past 12 months. people are coming to this to play their recovery story. ireland is leading the way. why would you want to get into something so niche? ireland has less than one percent weighting. you can have the single country route to place bets on ireland. on the markets again in 30

minutes. street smart is up next. ♪ >> i am trish regan. -- and chinwi