>> from bloomberg world headquarters in new york, i am alix steel in for mark crumpton. this is "bottom line." today, president obama ordering a new round of sanctions against russia over the crisis in .kraine then, why the president's top advisers oppose the keystone pipeline. we will take you inside a lab that develops tasty new flavors. to our viewers here in the united states and those of us joining -- those of you joining us from around the world,

welcome. we have full coverage of the stocks and stories making headlines. reports on the latest forecasts for flooding this spring. ryan chilcote is in brussels, where eu leaders are discussing how to put more pressure on russian president vladimir putin. that's begin with peter cook on how the u.s. is ratcheting up sanctions against russia. give us the highlights for president obama's -- from president obama's quick speech today. >> things are escalating. laughing quite as hard at this list. things have gotten tougher from the administration. the president designated 20 more russians with asset freezes and travel bans on the including 16 government officials. list, russia's 17 the biggest bank. a latest executive order also 17ths the u.s. -- russia's biggest bank. the latest executive order also

allows the u.s. -- >> this is not our preferred outcome. these sanctions will not only have an impact on the russian economy but could also have an impact to the global economy. however, russia must know that further escalation will only isolate it further from the international community. time, the the first action taken today includes russian business leaders seen as close to vladimir putin, part of his inner circle. the group includes the russian railway chairman. he is a putin confidant. they used to be neighbors outside of moscow. and the cofounder of a commodities trading firm. also the head of the volga group. he is seen as close to putin. putin himself may have investments in gunvor. this is the first time the u.s. has moved against the russian 17th targeting russia's

largest bank that has $10 billion in assets. it is the personal bank for senior russian officials. it freezes the bank out of the u.s. financial system. it has repercussions not just for their assets in the united states that potentially's overseas -- but potentially overseas as well. this one didn't take lying down. they might have laughed a little bit, but they were a little scared. what did they do? >> we do have a response from russia. russia moving to ban nine u.s. officials from entering russia. that list includes some top members of congress who have been very critical of vladimir putin, john, harry reid, and john boehner -- john mccain, harry reid, and john boehner among them. mccain says his spring break to siberia is officially over,

laughing himself at being targeted by the russians. the russians -- the spokesman for vladimir putin says russia will retaliate further based on the latest round of sanctions. the tit-for-tat has begun. >> john boehner saying he is proud to be on that list. peter cook in washington, thank you so much. in brussels, european officials are meeting to decide if they will -- to decide if they will impose more sanctions against russia. what theested to see response has been to president obama's earlier sanctions. >> there is no question that the eu leaders want to punish president putin for fast tracking the annexation of crimea. david cameron, the british prime minister, angela merkel, the german prime minister, said they would like to see the sanctions -- the german chancellor, said they would like to see the sanctions strengthened. the first option is to expand their blacklist that they have

that subjects russian officials to asset freezes in those -- and those travel bans. there is a perception that they went after smaller-fry russian officials and they should go further up the food chain to some of the closer associates of president putin. the second option would be to go after -- impose wider economic sanctions. keep in mind the european union is comprised of 28 different nations. they make decisions here by consensus. there does not appear to be the appetite from all of the ae you countries to -- of the eu countries to go forward with economic sanctions at this point. for example, cyprus has said they do not see the need for any more sanctions. they do have a vote. meanwhile, interesting, in moscow, you have the russian president meeting with the un's secretary-general -- the u.n. secretary-general ban ki-moon.

thead the lower house of russian parliament go ahead and improve the -- approve the annexation of crimea. now the bill goes to the upper house. the federation council. they will approve it tomorrow and it is a done deal. >> what does the you think the sanctions will accomplish? think thees the eu sanctions will accomplish? it cannot be in response to crimea at this point, right? >> that's exactly right. they wouldn't say this publicly. most people have written off crimea. they understand russia will have control of crimea even if they don't have -- recognize it as part of russia. they are moving their troops and fortifying the border because they don't think the russians are done yet. >> so, it is crystal clear for us that russian authorities will try to move -- [indiscernible]

we still maintain control. we still preserve the fragile stability in this region. >> one thing the leaders are clear on, should we see intervention in the east of ukraine, then they would be prepared for economic sanctions. the polish prime minister is talking about that. that would be the red line. if president putin crosses that, we could see economic sanctions. >> unanimous is the key word. thank you so much. we appreciate all your hard work. ryan chilcote in brussels. we will have more on that and what the u.s. can do to increase pressure on russia with a former official at the u.s. treasury. he will be joining us in about 10 minutes on "bottom line." i'm looking forward to this interview. stay tuned. spring has sprung. it says it on the calendar. today marks the first day of the new season. we are looking forward to the beach weather at the end of this terrible winter.

economics editor mike mckee wonders if winter weather woes aren't a bit exaggerated. why do you think? >> let's get in the mood for this. walk roll the tape, take a down memory lane here. back in february when the snows were piling up -- that should get you into the mood right there for what we are going to talk about. it was a bad winter in terms of snow and cold. the weather bureau map shows that across the country it was much colder than usual for much of the winter. there is a bit of an excuse, but there is not as much information as the data as we once thought. first go back to housing starts. if you're going to be put inside by the cold, construction workers are not going to work. look at housing starts. they didn't fall significantly during the winter. as a matter of fact, higher than in september and in october. as many, shouldn't see

construction workers. pretty much flat for the last five years. no real winter-whether effect there -- winter-weather effect there. retail sales -- we know they fell off, but take a look at the white line. they fell off during years in which there were excessive amounts of snow. what was different about this year? it doesn't necessarily seem to be the weather. >> in some areas, it can highlight the weakness we have already been seeing, but you can use weather as an excuse is what you're saying. >> that seems to be the excuse janet yellen was making yesterday, that it was weather and some other things. companies are using this as a major excuse. 81% more citing whether as a factor -- citing weather as a factor in poor earnings than last year. it is not over. weather map shows another storm

is coming next week. you should get very excited. that is next week's forecast. look forward to that. >> these companies have to deliver payback. we will see if they can deliver. economics editor michael, thank you for that horrible news. coming up, the crisis in russia. we will -- explore whether releasing oil from the reserves could help put a squeeze on russia's economy. ♪

>> more on the crisis in ukraine. the u.s. has limited options for applying true economic pressure on russia, but our next guest is proposing another option. philip verleger is an industry consultant and a former director of the office of energy policy at the u.s. treasury. he recently wrote in "the financial times," a viable alternative to gas exports is

releasing oil from the u.s. strategic petroleum reserve. if the u.s. did this and all else for his -- remained equal, the oil world -- the world oil price would drop by $10 to $12 per barrel. thank you for joining us on this topic. explain to me this thought process. how did you arrive to this conclusion? hethe president said that wanted to impose meaningful sanctions on russia. primary source of hard currency earnings come from sales of oil and sales of natural gas. and then natural gas prices russia receives are tied to the price of oil. if the price of oil goes down, russia suffers. price$10 decline in the of oil cuts roughly $40 billion from their export earnings. it probably trims gdp by 2%.

about $110 per barrel in order to keep making money. why not just export all the oil that we have here? i know you can't do that right now, but in a couple years. limitations in any op-ed prevent you from listing everything. >> i know the feeling. >> i would also list export restrictions. one wants to do something now, not two years from now. one analogy i've used is to land ii.es before world war fdr least a number of old destroyers to the u.k. -- fdr leased a number of old destroyers to the u.k. he could've said, we will build you knew destroyers, -- new destroyers, in two or three years, they will be delivered.

time is of the essence. we have the strategic reserves. we don't need them anymore. 30 years ago, we did. the united states announced a test sale of the strategic reserve, the first sale since 1990 when george bush did it after iraq invaded kuwait. -- international agency energy agency issued a press release that says the united states has 204 days of inventory covering that imports. it is only required to have 90. it could sell a lot of oil. >> unless you have full support from the obama administration, even if the u.s. did release some of its oil, at some point, it has to buy it again, which would also influence the price to move up. >> that's the mistake everybody imakes. we don't have to buy it anymore. the strategic petroleum reserve is superfluous. ago,eded it five years

four years ago when our imports weren't so high, but thanks to fracking and of natural gas and conservation, we could sell the whole strategic reserve off now. we do not need any of that oil. and in fact, we will. based on the sale, it is worth about $70 billion or $80 billion and the government could use that money. we could sell it, don't have to buy it back. the other point is merely allowing exports wouldn't do anything to the global supply and demand situation. the supply remains the same am a so the price remains the same -- the supply remains the same, so the price remains the same. >> what kind of international cooperation would you need? in essence, a lot of oil-producing companies would have to be lower -- ok with lower prices if the u.s. did this. >> we need the cooperation of one country, saudi arabia. saudi arabia right now is at loggerheads with russia over syria.

and at loggerheads with russia over iran. so, the country that probably would really like to see lower world oil prices to squeeze russia is saudi arabia. i think if the united states were to take this step, the saudis would quietly say thank you, they might even boost their own production a little bit. for once, the united states has taken a step that they really approve of. they are very unhappy with us since we refused to bomb syria after syria used the chemical weapons. this would strengthen our hand with the saudis. >> the thing saudi arabia would have the ability to be the -- to do this -- do you think saudi arabia would have the ability to do this on its own, to put the squeeze on russia? >> the saudis don't ramp up their production directly. they said discounts or premiums

to world prices when they sell their oil. they can go out and offer more oil at larger discounts to their buyers. we may hear that in the first week of april, to help do this. i think that the saudi's would really like -- the saudis would really like to see us do this. we do not need the 700 million barrels we have in the strategic trolling reserve anymore -- strategic petroleum reserve anymore. >> i know you have been a big proponent of ending the petroleum reserves for a while. what kind of support have you found in the obama administration? what was the reaction? >> i move from washington out to colorado. i've heard very little. quietly, i know they thought about it as the tool -- a tool to raise revenue, but it really has not, till now, reached the top. last week, they did a test sale.

the only reason they did the test sale, i'm certain of, it was trying to send a signal to russia that, yes, we have this technique. the sales knocked about four dollars or five dollars -- about $4 or $5 off of international crude. what isast question, the oil community saying? i can't imagine they want all this oil released. >> you hear various statements. one of the things is everybody realizes it has to be sold sometime. it depends where they are. refiners would love it. >> they would definitely like that difference. oil producers, not so much. >> if they approve exports with this, the oil producers would embrace this as a good idea. thank you soleger, much. we appreciate your insight on the strategic petroleum reserves.

coming up next, the government releasing its flood forecast for the spring. more weather drama. we will have the latest on what it could mean for farmers and food prices. ♪

>> welcome back. this is "bottom line" on bloomberg television. relativelyh this depressing weather fame, today may be the first day of spring, but the winter cold isn't going this relatively depressing weather theme, today may be the first day of spring, but the winter cold isn't going away. >>m expect below-normal --

expect below-normal temperatures from montana eastward. that is according to noaa's annual spring outlook, outgrew your this morning. they warn that all of this bad weather is causing -- out earlier this morning. this bad that all of weather is causing delays in planting. in some places, frost reaching as far as downed -- as far down as five feet or six feet into the soil. the message is, expect a delayed planting season in that region. at this time, they say they see no real great concerns for crop reduction.-- will businesses and farmers use that as an excuse, like they have been doing? i'm going to guess yes. >> are we going to see continued drought here in the u.s.? >> that's the expectation right now. we're looking at california, texas, the usual players right now.

they are warning that wildfires are going to be a risk in april, may, and june. >> definitely not what california needs. definitely not what the midwest needs, especially if they have to delay the corn planting. it is 26 minutes past the hour. that means bloomberg television is "on the markets." what is take a look at going on in stocks at this hour. we had a rally, coming back from yesterday's the lines after -- yesterday's declines. in terms of individual stocks we are watching, we are looking at sink you -- at zynga. the ceo sees the turnaround as being halfway through. founder mark pincus step down from role -- the role last july. we are watching walter energy, shares down sharply. it is a metallurgical coal producer.

bank of america says fundamentals for the commodity will be depressed over the next couple of years because of excessive supply and the use of substitute commodities. we will have more "on the markets" in 30 minutes. more "bottom line" next. ♪

>> welcome back to bloomberg "bottom line." i am alix steel in for mark crumpton. let's check some of the top stories we are following for you. president obama has expanded u.s. economic sanctions against 20 individualsng inside and outside of the government, as well as a russian bank. the president signed an executive order that would allow the u.s. to penalize key sectors of the russian economy. --ntime, as in be has meantime, s&p has lowered its outlook for russia.

investigators are focusing on part of the indian ocean west of australia. that is after satellite images showed two large objects in the water. that search will resume tomorrow. the federal reserve will release the results of its latest bank stress test today. that is later on today. the stress tests are designed to see how the banks would fare during a significant financial downturn. the results are expected at 4:00 p.m. eastern time. in february, president obama told the governors association that he would decide on the controversial keystone pipeline within a couple months. bloomberg's white house correspondent julianna goldman joins us from washington. i'm curious how the president's top aides are lining up on this pretty controversial issue. >> it is a controversial issue. -- timing the consensus seems to be emerging from inside the walls of the west wing that the president's advisers, some of his top advisers are urging him

to reject the keystone pipeline. this is according to people familiar with their thinking, who all spoke on condition of anonymity because of the sensitivity of this issue. they say they are leaning against approval. we all know that john put esta , before heesta joined the white house, had publicly spoken out against the keystone pipeline. he says he is recusing himself, while not legally, he won't be playing a part in the decision-making process. consensus among the president's top advisers that he should reject it. what does the president think? he thinks that the arguments on both sides are inflated. bonanza that jobs republicans and unions are claiming, but it is also not the environmental catastrophe that some of his top donors are warning of, too. what all this boils down to is it makes the likelihood of this

coming down to a political calculation. according to lots of democrats with whom i spoke, they say that over the last month to 60 days, the president, others in the white house have really woken up to the fact that democrats could lose control of the senate in november. so, the politics of the midterm elections are going to really weigh heavily on the president's decision-making, whether or not he rejects the pipeline, approves it, or maybe looks for ways to delay it until after the election. >> the oil community just doesn't think anything will happen before that midterm election. i'm curious though, in the debate for or against, if the increased scrutiny of transporting oil from -- by rail has changed the political conversation at all in the last six months. >> if the president were to go ahead and rejected before november, that could really hurt some vulnerable democrats in energy states. a real big one who it seems to threaten is mary landrieu, the

chairman of the energy committee. like mark and others, pryor from arkansas -- they have urged the president to approve it. if he goes ahead and rejects it, it makes them look pretty ineffective. if the president goes ahead and approves it, he risks hurting the democrats'warchest -- democrats' warchest. tom stier -- he has promised to put $100 million into the midterm as a counter against the koch brothers. he is threatening to withhold that money if the president approves keystone. >> it is the latest technological my -- marvel for divers. it is a suit that helps them fly underwater as they search for species never before discovered. a diver will put on a 530 pound submarine for your body for this

first mission in the sea. take a look.

i don't know, does anyone think they look a lot like buzz light lightyear?z existing home sales fell 4/10 of 1% in february. us. with ♪

>> welcome back. " on is "bottom line

bloomberg television, streaming on your tablet and phone. housing -- existing home sales 1% in february. in light of bad weather and low inventory, today's report is basically good. and president ceo of the nation's fourth-largest real estate company. you have your hands and lots of pies. you just opened your first office in l.a. give me your broad take on housing. >> low inventory, high demand, sustainable growth. you are not going to see the double-digit growth at we did the last couple of years, but you still have very tight credit -- growth that we did the last couple of years, but you still have very tight credit. a cutoff for interest rates for mortgage rates? is there a number that scares

people off? >> well, let me say this, at this time about in -- 10 years 1980-something, interest rates were 17%. and people still bought houses. right now, i think it is a little over 4%. the cutoff would have to be well over 5%. >> we have a little bit of room there. what are the difficulties? a lot of it was blamed on the weather. we have seen some weakness for the past six or seven months. what are the risks? >> the weather has something to do with it, but that's not going to stop somebody from buying. it will just maybe delay it. i think you saw a lot of pent-up demand. you had the fiscal cliff. everybody was waiting. you had to do it before the year changed. rices were starting to rise. people ran out and there was pent-up demand -- prices were

starting to rise. people ran out and there was pent-up demand. >> one of the biggest problems has been a strong rental market eating into overall homeownership. the cofounder of case-shiller talked about that earlier. take a listen. >> americans seem to be more interested in renting now. there is a natural business of converting to rental. that is part of what investors are doing. it is a healthy sign, but it is not a particularly encouraging sign if people want -- that people want to rent. it is not encouraging for detached, single-family home prices. >> what do you think, dottie? >> i disagree with him. i do a radio show. i'm on all the information. every poll that they've made, most renters are renting because they don't have a down payment to buy. most young people that are in their 20's, 30's, a first-time they arer range,

renting because they don't have a down payment or they have some credit issues. if you look at the top 20 big cities, actually buying a home is cheaper than renting. >> especially in new york. do you expect the credit issue and the down payment issue to work its way out for these first-time homebuyers? when would that happen? i think the pendulum, what goes up comes down. it was way too loose when we had the no-win come checks, no jobs -- the no income checks, no jobs. now it is really tight. i think that will loosen up. i think banks and lenders are getting used to it. >> if they make more money with higher interest rates, we will see of that helps out as well. what about the overhaul of fannie and freddie? that was being floated in washington. what do you think, if anything does pass, that might do to the availability for people to buy houses? >> i think there is a lot of

talk. they are talking about interest rates, taking away interest rates, doing all this stuff. i have talked to a lot of lenders. i think that is going to be an individual -- depending on their risk. i encourage people that are buying to have a relationship with a lender, because they are going to be more willing to take that risk and not be so cookie-cutter if they know the person and they know something about them. >> it is not a blanket issue for the housing market. it is lender-by-lender. what kind of investment interest have you noticed? we saw a lot of investors coming in. is that slowing down? >> it is slowing down. we never saw millions of investors in new york city. the country, the investors picked up for nothing. tons of homes. you still see investors, but the bulk of them bought and the prices have gone up, so it is

not as lucrative for them to do it now. >> if they get out, does that create softness? does that remove support we need? >> it would if they got out at the same time. >> thank you so much, dottie. i really appreciate it. i am a first-time home buyer about a year ago. interest rate. i brag about it all the time. coming up, an emotional moment at the white house. ♪

>> iss is a company you've probably never heard of, but they've had a hand in many of the products that you buy. we have a look at the flavor lab in new jersey. >> the tiny, dark bottles are filled with mysterious potions. they hold the flavors that millions of people taste and smell everyday.

>> when you think of snacking, so, maybe potato chips or cereal bars or something like that, do you think of a flavor? wolff is the vice president of flavors at internationa flavors and fragrances, or iff. they make a lot of what we put in our mouths taste really good. how many products on the shelves have iff flavors in them? >> in general about 90% of the products do contain some type of flavor. >> flavor is much more than what our tonk senses. it is also about what our nose smells. all iff flavors start in the kitchen lab with aromas. >> we start with fresh oranges. this is the first step in the process, capturing the sent. this turns on, gathers the scent molecules, then what? >> it is following the aromas into the san like material --

the sandlike material. we take the stand and analyze it to find out what the orange is made of. >> it breaks it down into a molecular map or fingerprint. flavorists use this as a recipe to create scientifically-enhanced flavors. >> we call this one pineapple compound. >> flavors are a critical part of the food industry. they are more reliable and cost-effective than using the real thing. for example, oranges. >> it helps to have some of the real juice, but if the juice is not of the quality you want, adding that flavor will give you more consistency and a better overall flavor. >> a food company might use iff flavor to ensure every ounce of orange sherbet tastes... every tae. -- case delicious -- stes delicious every time.

>> let's see if you can tell the difference. >> very orangey. great. >> do you see a bump in the orange in that one, or you are not sure? >> i've got to do it again. yes. this one is more orangey. that one is a little more bland. >> you picked the right one. >> iff is tightlipped about exactly which roddick they've put their mark on, but they work with all the major food companies -- exactly which product they've put their mark on, but they work with all the major food companies. >> once we create a signature for somebody, they don't want us creating something similar for somebody else. >> unbelievable. 90% of products have flavors. it is time now for "hot shots." a look at some of the most compelling images of the day. >> hi. welcome.

at ant one of the stars international robot exhibition in the french city of lyon. robots of showed off all shapes and sizes, some with ipads for faces. the robotics industry is growing by as much as 30% per year, driven largely by humanoids. that's what i think of. this footage shows a state trooper investigating a shoulder on -- an accident on the shoulder of interstate 80. a pickup truck flies through the air and narrowly misses the trooper. they released the video to remind motorists to use caution when driving by vehicles on the shoulder of the road. at the white house, it was an emotional moment, 24 ethnic minority soldiers who performed bravely under fire finally received the medal of honor. they were identified following a

congressionally mandated review to ensure the united states highest recommendation for valor was not --

>> we are coming up on 56 past the hour. that means bloomberg television is "on the markets." let's take a look at where stocks are trading. we are holding steady with the rally that we have seen throughout the day.

we had better than estimated economic data this morning. , the fedlaims philadelphia manufacturing index, beat estimates. that is spurring stocks on today. .ocusing on financials today and next week, the federal reserve will publish results of revealing howsts, the nation's largest financial institutions would fare if there was another financial crisis. test --oint of these does the point of these tests serve a purpose or is it just meant to make us feel better ?bout the system >> that's exactly what it is. crisis went through the in 2007 and 2008, it became a liquidity crisis. the fed was not standing behind a lot of these companies, then they failed. they will not fail institutions. they did not like that results, the panic that ensued ring that

timekeeper -- ensued during that time period. basically, we are not going to allow these banks to fail. we are going to over regulate them, but we will provide liquidity in times of crisis. >> that's a big statement. we are not going to allow these banks to fail if you do have a contagion situation and a liquidity crisis. it is hard to prevent that other than to be the ultimate backstop that says i'm there no matter what. do you think -- should we be in a situation that echoes 2008 at some point in the future -- at the government will in fact be there? have we done nothing effectively to solve too big to fail? >> what we've done is regulate banks to the point that credit quality is much cleaner. banks understand their risk a lot better than they did in 2007 and 2008. the ceos didn't know the risk

they were taking on. today, they do. the banking system is better and they are capitalized. >> you say that, but it is very hard when you are in the moment. think back to the days in 2007 when people were putting everything in the kitchen sink into these subprime portfolios. they thought it all balanced out because you had the good quality stuff along with the not so good quality stuff. people really didn't model in that it could fail. if we are in a situation now where we are not modeling in failure, aren't we running similar risk? >> we are running similar risk. i'm one of those people that thought everything was ok in 2006 and 2007, too. these were giant black boxes that nobody understood the risk. when housing prices started to fall, the whole thing unraveled. we understand the risk in these balance sheets more. is it a science and we know exactly where all the risks are in these things?

no. look at the london whale. there are still black boxes out there. there are still problems with contagion. >> are we running -- here is the flipside of it. the flipside is that we are turning banks into utilities, instead of being entities that do take on risk. are we running the ultimate risk here that we over regulate and therefore we don't have a system where there are real checks and balances and a real capitalist market foundation? 100%.gree with you we have banks that are too big. we are over regulating them. marginal credit is not getting loans. look at the 600 fight go score. it is very tough to get a loan down there because -- the 600 fico score. it is very tough to get a loan down there. loanwon't do a 680 fico for home mortgages. i think that is why the economy

is sluggish and why it is not picking up as much as it should. >> that is it for "on the markets." >> we have stocks rebounding after the yellen curveball.