>> from bloomberg world headquarters in new york this is "bottom line" the intersection of business and economics with a main street perspective. the u.s. and european union says russia is not honoring the geneva pact on ukraine. elon musk discusses the future of reusable rockets. is there a way to protect your credit card from hackers? 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 in stories making

headlines today. it yang yang has the latest details of the launch of the latest spacex program. cook andin with peter the latest on the crisis in ukraine. good afternoon. >> good afternoon. g7 nations preparing new sanctions aimed at russia even at this hour. the crisis in ukraine escalate even further on the ground. that aorts of violence team of international monitors from the osce had been taken hostage by this -- pro-russia activists. they did nothing to ds glade he crisis -- and the escalate the crisis. is president saying the u.s. prepared to further isolate russia economically. >> president putin is not a and recently

acknowledged this has already had an impact. certainly, if the situation gets worse and sanctions are broadened to the entire sector, that will have a more severe impact on the russian people. >> more signs of the economic for a fifthing straight day after the s&p lowered the sovereign rating to just above junk status. the ruble has lost 9% against the dollar as well. in terms of sanctions, there will be no new sanctions announced today according to two u.s. officials kne. this could change by the start of next week you're the president is traveling right now. it seems pretty clear that the u.s., eu will take an action against russia. . how deep will it be or how far will it go? in u.s./russiaon tensions is putting some

american ceos in a deposition. some are planning to join vladimir putin in may will stop is that still on? -- >> the state st. petersburg festival is still on. it was originally scheduled to participate in the session in may. the group included labeling fine up goldman sachs, a whole host of american business leaders and pepsi as well. it is putting the companies in a particularly tight box. you have these rising tensions with russia will stop a lot of them do a lot of this mess as well. some of the companies talking about why they would know here. they have officials going to understand better the current economic environment. you have a statement about why the company is going to continue to participate. we continue to watch it closely to determine what impact if any

there may be on our ongoing business. that couldompanies be willing to risk some concerns on the part of the united states government by going to this event. just in the last few days michael corbett of citigroup announcing he will not be attending as initially planned. one of the considerations for a host of americans doing businesses in just a few weeks time. heard anything from capitol hill? has there been any comment from any of the house or senate leadership about american ceos continuing on with this forum with resident food and in russia putin in russia? >> there will be critical of any ceos who make this trip. we have not heard any official proclamation. congress is on recess. you have members of congress who are arty criticizing the administration for not doing

enough in terms of sanctions, calling for even structure -- tougher sanctions. go companies that choose to into city business in russia are doing so at their own risk. >> peter cook, thank you. we are receiving word that the saying that he will not be in attendance at that conference with president .utin in st. petersburg sinners and purse has announced a sovereign rating outbreak on the crisis in ukraine i'll stop they cut it from negative to stable on march 21 because of the economic impact of u.s. and european union sanctions. we will talk about that and a lot more with don chambers. this is about in 10 minutes on "bottom line." the latest chapter of space is underway as elon musk holding a

news conference moments ago. it yang yang is back in joins us now in washington. the contact is quite a mystery. >> that is true. late last night, overnight, we heard that we got an e-mail from spacex saying that elon musk will make in a norman spacex announcement today at 1:00 p.m. the venue to be announced shortly. very mysterious. it happened to be the national press club where it elon musk said the company said it would file suit in a claim -- claims court to protest the rocket launch monopoly held a united .aunch anions -- alliance what we are contesting here is program is a $70 billion markets. it is the government answer to reducing the cost of military satellites spaced launches. it is the only company with a certification to do so.

back in december it was awarded a block grant for 36 more much is over the next five years. that is what elon musk is protesting today will stop what he wants to do is open this up. he said it is wasting the taxpayers billions of dollars at spacex can do it on the cheap. here's what he had to say. >> this is not spacex protesting and saying these lunches should be awarded to us. we are just saying they should be competing. if we compete and lose, that is fine. juston musk saying he wants the contract that has arty been awarded to be reopened to make it competitive. i asked him why. one of the arguments was that why couldn't the air force have just waited a few months when the air force had awarded this contract back in december? one of his answers was that he

and spacex did not actually know it was a sole source contract until march, one day after he and michael gatsby appeared before the senate. since then he has made no progress in discussions. they had no choice but to bring this lawsuit foreword. it is a very big deal. elon musk suing the air force. he will not make any friend to help him. this seems to be a play date want to make to make themselves more competitive. one thing he did mention was good news. he confirmed that spacex did successfully launch and return the spacecraft. cory johnson joins me in studio. what are we to make of his comments? >> there is the business aspect and the discussion of the rocket itself. there is a lot of money out there to be made launching these

government satellites. the government needs or demands are only to do this. there is a very big business k'sre that mus company is facing. the knee get to the cool stuff, trying to -- and then you get to the close-up, trying to get to the new technology. this is not an applied to the space industry lately it ever. and a lot of them are about mattel are -- material science since the 1960's. this notion of reusable rocket. iit is a difficult thing to pull off because the trade-off." , you need more propellant in the rocket to get it to fire upon her entry. that means less room for the satellite. it means less revenue for the business. while the cost of the actual

thing i go down, you're also talking about lower revenue. am always a skeptic when it comes to the numbers. there's something thelonious monk said. the only cats he mean anything are the cat t who take chances." these are the things here going after. johnson,ght, cory trying to find a way to weave elon musk and thelonius monk. >> nicely done. 4% at this hour. russia's creditworthiness, the last time s&p downgraded russia's was december 2008. the chairman of the sovereign rate committee. we'll get an outlook when "bottom line" continues in just a moment. ♪

>> standard & poor's cut russia to its lowest investment grade of the standard & poor's rating service. he joins me from his office in new york will stop welcome back to "bottom line." say that it&p did would reassess the risk to russia's creditworthiness. what have you seen in russia's external profile over the past four weeks that led to today's our grade? >> we have seen continued outflows in the balance of payments and the first quarter. we estimated to be about $50 billion. about $50e it to be billion. it can continue in the next four months. russia still has about $450 billion in reserves. this is a trend that warranted taking the rating down a notch. >> you spoke of the outflows.

how much of a threat and russia's overall economic growth? >> i think it will take it down to about 1% which is quite low. it will complicate policymaking. there is downside risk to the 1% gdp growth for 2014. if sanctions are turned up, it could be more -- much worse than that. bank raisedcentral interest rates and is trying to keep the inflation rates under 6% this year. going to be enough to stabilize the ruble which is the second worst performer among 24 emerging market companies? >> it will help. the issue for russia right now is they have a lot of external debt and needs to be rolled over. mostly with the banks and with the corporations. probablynal creditors are going to have other considerations when they are

looking about rolling over the external debt. >> such as? >> such as sanctions. such as the credit standing of their counterparties. >> in a bloomberg view column today, contributor wrote the following "standard and poor's downgrade of russia to one notch above junk trade makes sense as a reaction to political news from ukraine, not as an economic judgment." do you have any reaction to those comments? can make at views market. otherwise you do not have a market wil. not a veryays had constructive view on the institutional settings and russia. really have not changed. they have been validated i think.

i think what motivates the change today as opposed to a month ago or in 2013 is the deterioration and the lower growth. >> you spoke about the institutional aspect of it all stop do you expect action from moscow to deal with the structural obstacle that threatens the long-term growth aspects? what is needed for s&p to changes negative outlook? >> improvement can come on a number of fronts. in terms of deep structural reform to make russian less reliant -- russia less reliant on energy exports and productions, i have very low expectations for that. also saying the same thing a afferent way, it it is [indiscernible] society. as what he could take, i think

if the geopolitical attention it eased you with ce using on the islands of payment. that would certainly help. president obama and european leaders discussed a possible expansion of sanctions against russia. secretary warning that russia is running out of time to ease tensions in ukraine. if more sanctions are imposed on russia, what is that going to mean for the country's medium-term economic growth and for its credit outlook? >> it would bring the medium-term growth prospects down. we think they would be running around 2%. it could certainly make it hard for them to achieve that this year and next are or the year thereafter. heck of a pressure on the rating. it depends on the extent of the sanctions and whether they are effective and what the response is a moscow.

>> in our last minute, before all of this started before this back and forth between russia and ukraine and before crimea, what was s&p lost thinking about the outlook? >> at the end of last year we had a triple be -- bbb rating. that when negative about a month ago. with our downgrade now, the rating is still investment-grade will stop it is one notch rating at bbb minus. >> does this all hinge on geopolitics? >> i would not suggest it all intel's geopolitics. -- it all entails geopolitics of the that has been interviewed her. -- contributor. >> thank you for your time. we appreciate it.

the tale of two regions in foreign motors earnings report. a strength in asia and europe but weakness in america will stop i will be joined by matt miller wim "bottom line" joins in just a moment. ♪

>> welcome back. ons is "bottom line" bloomberg television and streaming on your tablet, phone, and bloomberg.com. ford reported a big drop in first-quarter profit, earning nine percent, well short of estimates. they blame warranty expenses and the bad weather. matt miller is in the newsroom with more. >> a big mess here. for came out with earnings per share. after one-time earnings of $.25,

analysts were looking for $.31. we were looking for a higher number. it is also a 39% up from last year. when you look at the problems and what happens, the biggest was a $400 million charge for warranty and recall cost. i talked to bob shanks the ceo and listened to the conference call. it is or past issues and for the .ossibility of future issues the company lost $100 million due to the bad weather. some of the issues were shipping issues. .rained and part were delayed it is not in the sense that folks do not go to dealerships of but actual problems with operations due to the weather. there were also issues in south america. we saw the same thing with

general motors, the venezuelan currency issue. 7.3% inins were down to the first quarter. ford is a company, a carmaker famous for its fat margins, over 10% in 2013. it is a level other companies wish for. it will get back to 8% or 9% for the coming year. >> any information on when alan mulally will hand over the keys? >> i asked about this morning. bob shanks about what to tell me when it was going to happen. this is probably the most open secrets in the corporate globe right now. for has not made an official announcement. i would expect it relatively soon considering the fact that it is so out there. the company is not really denying it anymore. they are hardly even offering a "no comment. ."

it looks like a good set up for mark fields will st. they've put out this kitchen sink on purpose to get fields ready for the new job will stop >> matt miller in the newsroom. it is 26 past the hour. julie joins mean. we are bouncing off the session lows of al. a lot of this has to do with various earnings report at we got particularly from amazon. about 1.8%.s down there is concern about reigniting tensions in ukraine and russia. it is also talk about individual stock. this earnings was a positive one. this climbing the most interiors after it beat first-quarter earnings estimate. they're forecasting it will sell off up to $1 billion of assets at years end.

we have pandora. humbly the most in a year -- following the most in a year. they're forecasting the recent this quarter. you'll have more -- we will have more in 30 minutes. ♪

welcome back to the second half hour of "bottom line" on bloomberg television. let's check some of the top stories we're following for you. the ballplayers of northwestern university could change the face of college sports. they voted in secret ballot whether to join a union. directorh a regional for said they are eligible to organize. results of the unprecedented vote will not be revealed anytime soon. weeks or be sealed for months as northwestern

challenges the efforts. it is made of woven fibers and is the latest version of a in 1998.ine debut rising rates have pushed mortgage lending in the united states to a 14 year low. the value ofr says new mortgage loans a fell 50% in the first quarter from a year ago. the average homeowner has risen almost a full percentage point in the last year to 4.5%. that is a look at the top story on the news. export/import bank has wrapped up its annual conference in washington. it highlighted the ongoing efforts to finance u.s. exports

abroad will stop it comes at a time when critics on capitol hill are threatening to close the banks doors all stop peter cook spoke to export/import bank fred about the looming fight over the banks future. >> we have 1200 people here. we have exporters who want to do business. people meeting and making deals. last year to which $5,000 -- 25,000 jobs were saved. >> you had a pretty star-studded event here. elon musk thomas larry summers to name a few. for someone like elon musk, what are they doing for the various businesses at this point in time? withe major one we work

elon musk on his spacex. he competes intensely with the french and the russians. they are both supported by the government. we make sure that he can compete against them. for bulgaria. >> you are providing financing. the money is not actually going to spacex and elon musk. to themoney goes overseas buyer he was using the money to purchase from the united states. it goes to the overseas buyer but comes right back here. it is to buy products made in the united states stop spacex has 4000 employees they have working for them. the money goes to pay those employees. spacex is a domestic company if i've ever seen one. they're launching it into outer space for foreign customers.

>> that makes the demand for the rationale step do know some of the criticism? if you do not get the reauthorization, there are critics on capitol hill who say why do companies like a spacex or boeing need that kind of help from the federal government from taxpayers? >> subarus -- customers like spacex and boeing are beneficiaries. i prefer them to buy from the united states. all the other government support their rocket industries. if we want to compete toe to toe, we have two have a level playing ford. -- we have to have a level playing field. the customer can choose the best product and the best service. >> what is the outlook for

reauthorization? you have this before it prevailed but it is a battle. >> we're better prepared at the export bank. president obama asked for a five-year reauthorization and $160 billion in x poster cap. that is the total amount of loans. we have a very strong bill will stop we have done a lot of work with congress. we had a very strong bipartisan vote last time. we have moretly, and more companies from space spacex but mostly small businesses. 98% that we work with our small companies. >> you have the chamber of commerce promising this time to do more to help. how important is that support to you? last year i gave tom donohue the chairman's award because he doesn't a spectacular job.

>> they do not always the ici with the administration. like they do see eye to eye here. roundtable, national association of manufacturers, are all foursquare behind xm. they realize if we want to compete globally and make sure to support more jobs here at home, we are an essential ingredient to making that happen. >> do you have john boehner and eric cantor on your team? the hilll be up on once they get back from recess. we work with everyone we can. >> the president has been overseas in asia talking about the trade deals in the transpacific partnership but it does not seem like he's coming back with a lot of concrete result.top -- concrete for theiggest challenge transpacific partnership is right here in our congress. we need to make some decisions

here, how we're going to be facing the rest of the world and how much we really want to get the trade influence. if we don't, we will be left out of the marketplace. we will send it back to you. >> tonight on "political capital" penny pritzker will discuss trade and u.s. economic abroad.s aboard -- that is 9:00 p.m. washington time right here on bloomberg television. there are more than one .2 billion credit cards in the united states and only 2% or 3% have a security chip embedded in them. securing u.s. credit cards when "bottom line" continues in just a moment. ♪

>> welcome back. it is time for the latin america read were. it he dominican republic peso one and a quarter billion dollars worth of on.

this is the first time they offered her to your dollar debt in decades. it will be used to fund infrastructure objects. it is rated b1 by moody's and be plus by standard & poor's will stop it is the ninth largest economy in latin america. carlt auto dealership says sales will be worse than forecast. sales are at it to decline by as much as 5% this year, he on the worst-case scenario outlined in point fivef three percent decline. latin america's biggest economy has been struggling to sustain economic activity as inflation rises. this is your latin america report. there is a push to have vulnerable maxtor credit cards with chip cards. he is president of the north american region.

."lcome to "bottom line that goes welle beyond fraud losses. what are the ramifications for the overall u.s. economy? >> the overall ramifications is you need to maintain trust and our payment system. whenever they managed to get data from a credit card, it creates a lack of trust. therefore we need to reinforce the security of our payment system. chipw exactly does the card work? why do you believe it is hack proof? bery enemy seems to embarrassed within individual or a group is able to crack their code. david marcus said when he was in the u.k. hackers probably cloned his red card even though the card was embedded with the

technology. say that in terms of security, in order to have a robust system you need to have a layered system of securities. just one type of security will not do the trick. among the layers, chip knology -- technology is a very important layer. it does reduce considerably the fraud and counterfeiting of cards using in transactions which means the counterfeiting of cards used at a retailer. you are asking american consumers to change the way they shop thomas to have confidence in a product they have never .sed before what will it take you to convince them to join the rest of the world? >> the american public is extremely clear that you would the cardske sure that

cannot be counterfeited. therefore they will embrace the new technology. we have evidence of that will stop we know some of the u.s. financial institutions that have issued a chip cards have a great return on the issues. card asstomers use that a top of wallet card. they like the idea that when they are transacting it is more secure than when they are transacting with another card. >> what about the retailers? are they on board with this? how would it cost them to reprogram or replace the current carburetors? thanks we are talking about multibillion program. the retailers are moving. it is painful to change technology. that theirnderstood brand is at risk if they do not evolve with the technology.

i am convinced the retailers are moving. long effort. my suspicion is why the ends of this year we will have at least one chip card in our wallet. many will have moved to the chip technology and will have installed pos that art should enable. why our cardholders and merchants left holding the bag for fraudulent charges? most of the cost is borne by the financial institution. what they have decided is that if retailers or banks have not moved to chip technology by october 2015, the liability of to one thate moving

will not have the chip technology. >> of this is not a question of if but when the technology becomes part of american commerce. would you see that happening? >> it is happening today. this is particularly strong and fast growing. we have never had such a strong first quarter in terms of chip hearts are concerned. we expect that to continue. >> i have to ask before we leave , what are you hearing on capitol hill? >> i am not well placed to answer that question. the lawmakers are particularly concerned about fraudulent activity relating to the minute extra cards. they are very much in favor of accelerating the move to

different technologies to reduce the potential for fraud and counterfeiting. washington.s from inc. you so much for your time this is such an interesting subject. >> we look ahead to next week and the latest meeting of the federal reserve. the week ahead when "bottom line" continues in a moment. ♪

>> let's go to what is happening next week. yang yang is in washington with a preview. another week of big-name earnings. >> that is right. full speed ahead next week. on had its annual meeting where a nutrition company has agreed to nominate three additional people for billionaire carl icon. they're all posting earnings.

in a rather bullish move, twitter is reporting on may 5 all stop the company is likely betting and hoping that a strong showing on earnings day will spare that from a large employee selloff. of metlife,likes time warner, mastercard and chevron reporting throughout the rest of the week. we have more interest earnings on the horizon. leaders will gather at the milken institute global conference kicking off in a late on monday. bloomberg will be all over it with a special edition of "market makers." .he next day is decision day according to a survey of bloomberg economists, they are expected to taper monthly asset urges his by another $10 billion and they will keep the interest rate near zero once again. you will hear from janet yellen

the following day when she addresses and independent community bankers of america meeting here in washington. we close out with the april jobs report on right day. expect 20 10,000 jobs were added last month. the most in five months. the unemployment rate should 1%. 1/10 of >> warren buffett is going to be working overtime next week. >> that is right. we had the berkshire hathaway annual meeting that starts on friday and lasts throughout the weekend. we can expect up it to take questions. do not expect the questions to be all that tough. buffett was unable to find an analyst short on berkshire shares to join them on saturday's panel. no bear for buffett. lacks stay with us.

another check of the market movers is on the other side of the break. "bottom line" continues in just a moment. ♪

>> get the latest headlines at the top of the hour on bloomberg radio and streaming on your tablet. that does it for this edition of "bottom line" on bloomberg television. i am mark crumpton reporting from new york. have a great weekend. i will see you on monday. ♪ bloomberg television is on

the market. let's take a look at her stocks are trading today stop we have had these pretty sharp declines throughout the session. the nasdaq ounce since we got the numbers out from amazon. it has been weighing on stocks as well as the heightened tension in russia and ukraine. to get more i want broadly to what is going on in the etf and ecm world. exchange rated notes are going twice as fast as exchange rate funds. quietly grown by 47%. is bloombergs eric. it is great to see you. why are they the bad boys of this world? etn's do not go out and

hold any of the things they trap stop their unsecured debt obligations. into thegrandfathered etf world. they live there as an exotic species. there have been exotic products. more fora little bit adults only, if you will. they did a little bit of a bad rap. a lot of institutions and traders love these things. there are other reasons. space.the mlp massive limited partnerships. the etn's are not subject to the massive task. big get away from the tax.

10% the past year. the etf is at 7%. half of the assets are him appease. p's. >> we talked about people still trying to get yields. there is an etn trying to attract more assetss. >> this is called the barclays fi enhanced high dividend etf. this is a custom-made etn. fishers investment makes this together. the only investment is fisher investments. mainly people can see it on the exchange, trade it. it was tailored for this one investor. they stay open with a billion dollars at least. theylike it because immediately get asset. anyone can invest but these are held up on the site. copy allr thing is

stop >> it is on fire this year, up 100%. you cannot get coffee in an etf structure. ,etn's areatment tracked like a regular etf. they are taxed a little bit differently and is not as easy. >> bad boys getting a little less ad. thank you so much. we appreciate it. we will be here a little bit later. "street smart" is next. ♪

>> ukraine and seven sending stocks into the red all stop week regained. i am trish regan. "street smart" begins now. welcome to the most the power of the session. 60 minutes left until the closing bell will stop russia's economic past. a ruble in real one. -- in ruin.