>> i am mark crumpton. this is "bottom line." russian president vladimir putin calls for the annexation of crimea. then, the u.s. treasury says regulation will support virtual currencies. elon musk takes advantage of u.s. dependence on russian rocket engines. to our viewers here in 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. musk'sng details elon

hall for the u.s. to reduce dependence on russia in the space program. peter cook, with the latest on russia joining -- on crimea joining the russian federation. busy 24 hours. we had the crisis escalating today when the russian president, after that big speech in front of the parliament in moscow, basically officially absorbing crimea into russia, with a signature on a document. you had western nations condemning that russian action, and promising to respond by stepping up sanctions. they warning the crisis is entering a new, more dangerous phase of live ammunition. the greenlight for that in ukraine. president putin effectively bringing crimea back into the russian fold. kremlinally televised speech where putin defended russia's actions in ukraine. >> the referendum was open, and it was fair.

the people in crimea, clearly, expressed their will. >> putin says russia has no plans to move beyond crimea, but reserve the right to defend russian speakers in other parts of ukraine. in crimea, tensions clearly rising. a soldier was killed. an unidentified masked gunmen stormed a military installation, reading the prime minister to declare the crisis entering a military phase. the greenlight a short time ago for live ammunition. in poland, jill biden condemning russia's latest moves. condemning russia's latest moves. >> justifying what is nothing more than a land grab, including what was said today. but the world has seen through russia's action, and has rejected the logic, the flawed logic, behind those actions.

>> biden promising the u.s. will respond with more sanctions aimed at russia. sanctionss effectively mocked in moscow. some of those targeted sitting on the front row as fodor putin delivered his speech. like you had a chance to talk to the point man on the sanctions. are they ready to dial things up? quick david cohen is the undersecretary in the treasury department, the guy responsible for this hit list. i asked him, does the u.s. have credibility? is that going to be a credible threat to the russians? here is how he responded. >> it is a powerful tool, a flexible tool, and one we think we have in other circumstances demonstrated we are quite capable of using. i know the russians understand that we have a very good track record, in terms of applying sanctions in an escalating

fraction -- fashion in response to an escalating threat. >> he did not identify who the next targets will be. will the u.s. go after state-run banks? will it go after top executives of russian energy firms? >> peter cook, joining us here in new york. for more on the crisis in ukraine, former nato supreme allied commander james joins us on the phone. welcome to "bottom line." thank you for your time today. >> nice to be with you. that russia has increased its military presence near ukraine's border, even as president vladimir putin promised to oppose a further division of ukraine. are these military movements just for show, or is russia preparing to annex parts of ukraine? >> i personally find it very unlikely that russia will make an immediate move into eastern ukraine.

i think vladimir putin will take a strategic pause and see what the reaction is around the world. that is why it is so important that nato, the united states, and other allies around the world -- you saw japan unknown sanctions. it is so important that the world stand together against this violation of international law. >> the ukrainian prime minister said the crisis has shifted from political to military. peter cook was just telling us that one ukrainian military personnel was killed today. what needs to happen to prevent a full military confrontation? >> i think one thing nato could be doing is working in cooperation with the ukrainian military. ukraine is not a nato ally. there is no question of boots on the ground or sending military force. but we can support the intelligence with

logistics, equipment, servers, and advisors. that would have a tendency to show russia that there is concern in the west, in very real ways. the second thing nato should be doing is reassuring nato allies lithuania,a, latvia, poland, and so forth. that is why you see vice president biden there in poland today. we need to reassure them the nato alliance is the gold standard of security. >> when you were supreme commander, you worked with ukrainian troops. assess their capabilities. are they battle-ready? what does military preparedness mean in terms of ukraine's overall economy? >> they are very weak in terms of absolute military power. they were willing. they were spirited. they operated with us in afghanistan, in the balkans. they made efforts in the beer. they sent a ship for

counter-piracy. they cannot stand up to the russian war machine. you put your finger on it. they have financial constraints that are going to be very top. this is where the west can be helpful with the eu package, the imf package, the u.s. announcing a billion dollars. all of that, i think, has a deterrent effect on the russians. >> putin told lawmakers crimea was, in his words, an inalienable part of russia. is that nationalistic talk in the russians or the international community? >> i think both. he is certainly playing off very high approval ratings. this is the kind of red meat he can throw out to russian nationalists at home. by the same token, he is bearing his fangs to the west. i think it is going to be very difficult to climb down out of crimea. ensuringgame now is

that ukraine itself is not divided. if any, vulnerability does russia have? where has it made miscalculations about the resolve of the international community? --i have two words for you gazprom and draws not -- and rozneft. sanctions they go after the energy side of the house of the one trick pony are going to be in the mix, in the conversation. you should not underestimate the effect of personalized sanctions on high-level executives in those industries. he will have bite over time. is a two-edged sword that will have impact in western economies, but i think it is time to show that the west will stand against this economically, diplomatically, politically, and supporting the ukraine militarily. >> we have about a minute left. sanctions against russia have

been imposed by the united states and european union. there is already criticism they do not go far enough. are the sanctions enough to isolate russia and reduce military tensions? >> i do not think so. i think they will need to be increased if we want to have real effect. conversations are on european capitals today, connecting with washington and other nations around the world, will be along these lines precisely. how far and how quickly do we need to raise these to get the attention of vladimir putin? >> the former nato supreme allied commander, currently dean of the fletcher school at tufts university, joining us on the phone. thanks for your time and expertise. we appreciate it. >> my pleasure. >> ukraine's crisis filters through talks on iran's nuclear program. we will have those details in a moment. ♪

>> the u.s. federal reserve's today meeting to set interest rates is underway. the sure to join us for special coverage of the fed's rate decision, and janet yellen's first news conference as fed chair. that is wednesday, starting just before 2:00 p.m. new york time. diplomats from united states, russia, the european union, china, and iran, are back in vienna to resume negotiations. but the crisis in ukraine is casting a shadow on those talks. joint -- -- indira joins me on the phone from vienna. how is the conflict in ukraine affecting the negotiations? like the specter of crimea is hanging over these talks. you have the u.s. and the european union, who have both sanctioned russia not only this week, but also two weeks ago, over its actions in the ukraine and crimea.

and yet they are supposed to be sitting on the same side of the table with russia and china to pressure iran at the talks in vienna. case overnteresting whether great powers can separate the problems they have between themselves, when they are trying to cooperate over something else. we have asked repeatedly about this. the u.s. side insists that they believe it is in russia's own interest to stop iran from getting a nuclear weapon. they do not think it is going to interfere with the talks. at this point, it is pretty delicate. long as you are sanctioning the deputy prime minister of russia, who is in charge of the defense programs of the country, you never know what might happen on the other side. >> speaking of what is happening, let us talk about the sidelines. anything behind-the-scenes to report? >> we know right now that the u.s. and iran have, minutes ago, gone into a bilateral meeting.

that is significant because it is the first bilateral meeting they have had in these talks wase the interim deal agreed upon. whatises a question of, are the issues on the table? we know they are talking about enrichment at low levels and medium enrichment. andu.s., europe, china, russia want them to stop all enrichment. they are talking about the military aspects of the program. they are talking about the possible plutonium from a reactor. there are a lot of issues on the table. they have got a limited time before july to try to get a final deal. >> last week, official media reported russia will be building at least two nuclear reactors in iran. how is that playing into the negotiations, even the current tension? >> that raises a really interesting question. russia supplies

nuclear fuel for iran's only operating atomic power plant. on one hand, it would be a commercial disadvantage for the russians to allow the iranians to produce their own fuel, if they bought more reactors from russia. hand, given the problem we are seeing between russia, the eu, and the united states, that is one way they could stir up problems. saying, they should be able to enrich their own fuel. a very interesting question to follow. >> joining us on the phone from vienna. thank you so much. when we continue, preparing its reputation. alibaba has enlisted high-priced talent to lobby washington as it gets closer to an ipo. ♪

>> we heard from david cohen, the undersecretary for terrorism and financial intelligence, about the crisis in ukraine. he also came to speak about the regulatory challenges of virtual currencies like it coin. bitcoin. >> we have different regulatory requirements we deployed in different financial products. we are veryency, comfortable that we have the appropriate regulatory tools in place. but just as the industry continues to evolve, we are going to continue to look at our regulatory approach and evolve that we are staying at least abreast of the risks that may be developing.

smart" expert matt miller joins the conversation. with broke a lot of news us this morning, saying someone from the bitcoin community is on treasury's bank secrecy committee. it is a secret committee, so he would not give us the name of the individual. but i think it is incredibly interesting that treasury has someone who is likely from the bitcoin foundation, or from coin washington,hem in helping them to regulate this currency, helping them to make decisions about what to do with it and what not to do with that. >> and lending it the legitimacy that some people say it deserves. >> can regulators keep up with bitcoin at the pace which it is evolving? the answer is yes. very smart dave: a

man, and the other people at treasury, but they have their finger on the pulse. they are talking to people who are involved with the biggest businesses leading the charge of it coin. they are talking to people involved in the bitcoin foundation. they are reading reddit. they are on social media. they know it can be used for innovations. also, it can be used for illicit activity. they want to keep track of it, make it more transparent, to stop illicit activity. >> where they pressured into this activity? did social media put pressure on them to look at this stuff? >> in a sense, you could say they were pressured into this position because of the explosion of the popularity of it coin and the acceptance. -- of bitcoin. there are 30,000 merchants in this.s. accepting

there are businesses springing up all over the country that except it coin -- accept bi tcoin. the point that david cohen made is, unless treasury gets involved, unless the regulation is set up around this, it will not become the mainstream currency a lot of people are expecting it to be. underground, in a sense. it is interesting to hear them so concerned. >> matt miller, thanks so much. alibaba is headed toward an initial public offering, setting up one of the most high-profile events in years. it was the work in washington, behind the scenes, that may have helped clear the way. atl mattingly took a look the company's work. it starts with the top u.s. trade office. >> the u.s. trade representative keeps a very close eye on counterfeit products and piracy throughout world markets. how does that apply?

it applies in the form of their e-commerce operation. the u.s. trade representative named taubau on the notorious markets list. the response from ali, on that has been crucial. that response included lobbying, $400,000 a year for the last two years, as well as the hiring of a former top lawyer to help push its case. the company clearly recognized this was going to be a major problem, and within a year, that had gotten themselves removed from that list. >> walk us through past 18 months. how did this work? >> i looked at what alibaba did. 2011, they were named to this list by the u.s. trade representative. 2012, they had brought on the former general counsel to be their lead on this

issue. at the same time, they started major outreach with industry groups. motion picture association of america. recording artists, software groups, groups that complained openly to the trade representative about the piracy and counterfeit issues. they filed a 29 page letter with the trade rep, laying out all of the things they had done internally to try to counter and combat the problems they were facing. process,ontinued this i december of 2012, they were off the list. 2013.tinued into they started signing agreements with international counterfeiting organizations. month, the just last ustr announced they would no longer be on that list for the second consecutive year. >> phil mattingly, joining us from washington.

bloomberg is on the markets. senior markets correspondent julie hyman, good afternoon. >> we do have a rally going on today. levels,e up to record but pretty sizable. the s&p up about 13 points. the nasdaq leading the pack, up by about 1.2%. we had better than estimated economic data, particularly on housing. that raises hopes about the spring selling season. it sounds like vladimir putin of russia is not ratcheting up the rhetoric in a fashion that some had expected. or that reason, there is a little bit of relief in the markets today. let us take a look at a couple of tech-related stocks trading higher today. first up is google. the internet giant is working to bring android software to smart watches. google is releasing new products to bring apps like chat that will work on wearable products. fossil shares are getting a push

higher as well. the watchmaker says it is working with google to help support that push into wearable technology. we will be back on the markets in 30 minutes. ♪

>> welcome back to "bottom line." let us check some of the top stories at this hour. president obama is gathering allied leaders for a meeting in europe next week to discuss further action in response to russia's involvement in ukraine. the president invited leaders of the g7 and european union to meet on the sidelines of the nuclear summit next week in the netherlands. it will focus on what steps the group can take to respond to developments in ukraine. with a sweep of his pen, vladimir putin added crimea to

the map of russia. the russian senate plans to ratify the crimea ascension on friday. the associated press said checks to the background of chinese citizens on board the missing malaysia airliner have uncovered no links to terrorism. malaysia said it is trying to narrow the search for the missing boeing 777 and it's more than 200 passengers and crew. the search is now the longest in modern aviation history. the home industry appears to have stabilized after a slowdown blamed on bad weather. housing starts were little changed in february. a pickup in demand may help boost construction in the spring. living with diabetes is a daily struggle. israeli-based company

unveiled a device that aims to make life easier for diabetics, using a smart phone. we showed how the new device works. >> this is a combination of a smartphone and a personalized smart meter. the first piece is the meter itself. it does not need a battery. both iphone and android. the other pieces are a lancing device and 25 strips. they understand the habits and behavior of the specific nation. it will be able to provide the overall experience in order to

advise the user in how to take care of his disease. withll also provide him tangible measures. raised company, you have $17 million. >> we have raised the $20 million. we have $2.5 million left. either that means more fundraising, or profits very quickly. >> we are in a good position to execute in the next couple of months. they think technology will be transformed to other chronic disease. this is why we think along the way we will not be balanced in the next couple of months, but we will expand the technology to other diseases.

can expect the u.s. economy to inch along with a modest recovery this year. that is the headline from the roundtable survey of ceo expectations for the first quarter of 2014. but they caution economic growth will be well below potential. they are calling on congress to act soon on issues like trade and tax reform. john engler joins us from washington. governor, welcome to bottom line. things for your time today. >> great to be with you. delighted to be able to take with you -- talk with you about the survey, which is in its 12th year of looking six months ahead at things like sales and capital spending. >> why such a lukewarm outlook? economy isthe performing in a lukewarm fashion. it is not the potential of what is.u.s. economy

we are sub optimizing the potential of the world's greatest economy. 3.5%,uld see growth of 4%. the investment climate needs a good dose of certainty, needs tax reform, progress on trade agreements, immigration reform, and continued efforts to get the fiscal situation stabilized. very predictable, and eventually balanced. >> you talk about stabilization. the chairman of the business growthble said that starts with the idea that increased private sector capital investment is the critical foundation. that growth possible in a climate of inaction in washington? you need a partner, don't you? sayingo, and ceo's are gdp about 2.4%. that is a bit below what consensus numbers have been.

they are questioning how much growth we can squeeze out of one economy. the number one issue -- let's get comprehensive tax reform done. let us get this corporate rate down near the average of the competitor nations, 25%. let us fix the international tax situation. let us get the offshore money home. let us get things started. let us remove some of the trade barriers. at the same time, let's get the talent there. we are competing globally for talent. immigration reform matters. >> the biggest change in surveys to the first quarter of this year -- it is the sub index concerning u.s. capitol spending over the next six months -- the number jumped from 76.9 two -- to 91.

is that a sign of increased optimism or decreased pessimism? think it is optimistic. it is good news. capital investment has been really low, sort of in a trough. the worst performance since the post-world war ii era. we have been depressed. we want to bring that back. , as our chairman said earlier, are looking at their own situation. it is the biggest jump in three years. it is a nice, positive indicator. averages around 80 -- it is a number. but 80. today it is 91, almost 92. we have not had a gdp year that

has been great since 2005. we have some things to make. >> the critical thing -- is it tax reform? is it getting the burden off of businesses, lowering the tax rate? companies who have money overseas, lowering the tax burden so they can bring it back and boost the economy? >> a lot of our companies compete globally. a want a very efficient tax structure. whereare ways to do this you can give up some of the specific tax credits, expenditures, and get the rate down. get the international problem fixed. that would be hugely positive. the thing we are also strong advocates for is, his changes are permanent in the tax code. the last several years, mike everything else in washington, temporary.as been

we want permanency, certainty. let us get some of these agreements down. we will win in that deal. >> governor, we have a little less than a minute left. janet yellen has left her first fomc meeting as fed chair. what do ceo's want to hear from her? what did they expect fed policy will look like on a watch? i answered that question earlier today. i think everyone is expecting status quo, business as usual. we continue to taper and move forward. we want to see the fed play less of a role, and let the economy loose by letting the private

sector take off. we have to have private capital put to work. playing a good role when we were in the deep recession with so many problems coming at us. today, we have a private sector and the country poised to take off, if we get the right policies, and we get unleashed. theray to congress and administration -- let us go. let us run. >> the former governor of michigan, president of the business roundtable, and a big-time spartan fan. >> see you in new york in about two weeks. >> we will be here. elon musk decries the space program's over alliance on russia. ♪

>> two people were killed when a news helicopter crashed outside

the station located near seattle, the space needle. a man who managed to free himself from a car at the accident scene was taken to the hospital in critical condition. the copter was apparently lifting off from the rooftop when it possibly hit the side of the building and went down, striking several vehicles. as tensions build between united states and russia, spacex ceo elon musk has been talking about problems he sees with the america's space program's technology.russian what is musk's angle on this? >> he is talking about national security, but there is a lot of money riding on it. he was sitting next to his biggest command tour -- competitor in the space market.

ula, a joint project , are the only satellite operator license to operate. elon musk pointed out that ula uses russian engines in the atlas five rocket, which he says poses national security lists -- risks. musk says it makes no sense to reward russia with hundreds of millions of dollars for rocket engines. he called the host -- the whole thing crazy. legitimate are his comments? how over-reliant is the united states? >> his argument is, in fact, solid. an analyst says we won the space race for decades ago, but since we put the first man on the moon, the space program has not been able to figure out what

purpose is served. in that time, the russians have overtaken us. their engines power rockets were our satellites in two space, and we are paying russia for seats to the international space station. it is important we not be beholden to anyone. the actions will lead the pentagon to review the use of russian-made engines. market isaid, the convinced russia will be ok even if the u.s. imposes sanctions. >> $7.1 million per seat? what if russia did cut off the supply of rocket engines? be,s unlikely as that would

-- theard to turn down ceo of united launch alliance says he has enough rocket engine stockpiled for at least two years of lunches, and they have the capacity to build more themselves if necessary. their spokesperson said it would take three to five years to produce the engines in the u.s., and they are looking at a new american engine as an alternative. but it might not be possible for you l.a. to produce the engines fast enough to avoid a gap in the rocket's availability. the only company that can claim its rockets are completely made here in the u.s. is spacex. it is hoping it can capitalize on this moment. >> in the next hour, president will award the medal of honor to 21 army veterans who are no longer alive. they served during world war ii, korea, and vietnam. another three veterans receiving

the award are still alive. ofgress ordered a review whether service members of jewish or hispanic heritage, and others, were wrongly denied the medal because of budget is. stay with us. ♪

>> it is time for hotshots, they look at some of the most compelling images of the day. in uruguay, it is man against the untamed horse. gauchos gathered over the weekend for the annual gaucho fiesta. riders competed on wild horses without saddles. ofcho's are descendents indians and spanish immigrants. at the clang of gardens, the

ceremony honoring a flower goddess began. ethnic minorities from a southwest romans in china believe azaleas bring good luck. every year, when flowers are in full bloom, locals perform a worship ceremony at high noon to pray for good harvest. azaleas are considered the royalty of the garden. over in europe, we told you about this last year. it is back again. another tradition. wife-carrying. dozens of couples raced through obstacles, dips, and climbs in a town outside of london. the tradition traces its roots from viking times, when neighbors stole womenfolk from neighboring provinces. the prize is beer. the second place prize is pet food. i do not know. another check of the market on the other side of the break. ♪

>> get the latest headlines on bloomberg radio, streaming on your tablet, and at bloomberg.com. i am mark crumpton. things for joining us. i will see you tomorrow on that day. "on the markets" is next. >> bloomberg television is on the markets.

i am julie hyman. let us look at where stocks are trading. about an hour left in the trading session. we are holding steadily on the rally. the s&p and the dow up at least 0.7%. the nasdaq is leading gains, up 1.25%. technology, part of the reason we are seeing the advance. that is highlight a couple of tech movers. berkeley's upgrading shares of hewlett-packard and raising the price target. the analysts saying that hp's execution remain solid in printing. shares in microsoft are trading at the highest level since july of 2000. willeo satya nadella unveil his vision for the company next week, when he unveils a version of office for the apple ipad. for more on microsoft and the rest of the tech sector, i am joined by the s&p capital head

of tech sector research. interesting about microsoft is that so many people sort of got caught in that value trap for so long. he started not go anywhere. when you look at the longer-term chart, going back to 2000, it may be starting to break out from those levels. do you think we are seeing that long-awaited microsoft breakout? >> i do not know if we will see a breakout per se. they have said the stock has not done anything in a decade. some positive appreciation is getting people more excited. clearly, we are seeing some change at the company. maybe that will portend better financial and stock performance. >> what do you think of the latest change potentially happening in the next week, with office for ipad? >> this has obviously been talked about, yet not confirmed

at this point. microsoft clearly needs to come up with a better strategy as it applies to mobile and as it applies to tablets. we think they tried the surface and tried to make the office available forely service tablets, and that did not seem to work. the ipad is a leader when it comes to enterprise tablets. i think about 90 plus percent of tablets activated in enterprises in the fourth quarter were actually ipad. this makes sense for microsoft. we will see how to execute, and if in fact they do this. >> let us talk more broadly about technology. we have seen it leading on up and down days. we have seen some strong performance out of tech in recent weeks. do you think it is going to continue to be a leader as we had through 2014? >> we do.

there are a couple things to point out. sector has not notably outperform the s&p 500 since 2009. in addition, our strategy team just went over weight on the technology sector within the last two weeks. we essentially see stocks benefiting from a variety of different factors, including a healthier global economy. we see attractive valuations, strong balance sheets, and m&a being a major theme in terms of technology companies being acquired, it also acquiring businesses. that is something to think about, going forward. >> looking more positive on tech as a whole. ♪

. . >> i am trish regan, everyone. we are headed into the close. we have little change for the month of february, showing maybe the housing market is stabilizing after all of that bad weather. "street smart" starts now.