>> from bloomberg world headquarters in new york, i'm mark crumpton. this is "bottom line does quote -- the intersection of business and economics. the european union imposes tougher sanctions against russia. lobby tobedfellows make drones legal in the u.s.. tv executives raise for ad dollars in her newest primetime lineups. to our viewers 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. phil mattingly looks at cashing

at a the financial crisis theater near you. and netails on the fcc neutrality. we begin with new developments in the crisis in ukraine. yesterday's were vote in eastern ukraine? >> that's a good question and it's when the unit b -- the european union and united states are questioning big time. we saw the self-declared peoples republic both claiming they had separatism,port for independence and eventual annexation by russia. but in fact this is a lot of disparity to some credible polls we saw over the last couple of weeks, including the pew center who did a poll showing in western ukraine, more than 90% of the people supported a unified ukraine while even in eastern ukraine, where largely russia is -- russian is spoken, you have 70% support.

our reporters on the ground have seen a lot of people to support unity and remaining part of ukraine did not even bother going to the polls because they considered the vote to be rigged in advance and not cluttered -- not credible in any way. the eu today came out with a statement, concerned about program russian separatists groups continuing to destabilize the situation, kidnapping, the seizure of buildings, and keep in mind this is part of the reason that these sanctions went forward today. everyone is looking forward to may 25th and how they are going to behave around that election. >> this was as a result of the vote yesterday. how far do these new moves go? >> very much so. it is significant on one level. as the first time the eu has gone to stage two sanctions. that means sanctioning entities, companies, not just individuals.

are sanctioning 13 individuals and to companies and crimea -- they haven't listed the names yet and we'll have those out as soon as we know who they are. last week in brussels, the ambassadors got together and discussed sanctioning some russian companies and crimea that sees crimean assets. what they have done at this point is sanctions done on crimean companies that are effectively now russian companies. the next stage we want to look at is whether there will be stage three sanctions against entire sectors of russia's economy. because aeen delayed lot of countries are concerned about the impact it's going to have on their own economies and the trade they have with russia. the pledge and had today and said we are going forward with this massive $1.5 billion sale to russia of two helicopter carriers. they have to do this otherwise

they would be paying huge penalties to russia for nondelivery and they point out military sanctions do not exist at this point. so at may 25, we will be looking at possible sanctions to distribute the pain across europe if it comes to that. >> we also heard that gas prom, the world's biggest natural gas provider, is threatening to cut off supplies to ukraine. how likely is that threat? >> this is a very big deal. the ukrainians 03.5 billion dollars for gas that has already been delivered and they need to pay that by the end of this month. behind that is a dispute over the price of feature gas and i can see the possibility of gas prompt cutting off over this pricing dispute over the summer. bythey don't dissolve it fall, you're talking about an effect for ukraine and possibly the european union. >> thank you. ukraine and russia,

coming up, we have a geopolitical intelligence firm ceo joining us and -- on "bottom line echo lawmakers are getting an earful about the potential of opening up their space to drones. the lobbyists are not all coming from the drone industry. megan hughes has more on the story. who is spending and who are we talking about? >> a big shift we have seen over the past five or 10 years when you talk about the drone lobby. it's not what you might think. traditionally we have seen in the past your traditional defense company's like norfolk elder of the atomic and the predator drone -- those companies are still very involved in washington, but joining in the mix, you've got the motion pictures as he asian, the national association of realtors, amazon, other delivery

companies, agriculture groups, there are actually 68 groups reported lobbying on some aspects of drone issues. in 20 12, 2013, take a look at the landscape of that and half of them were weighing in on domestic drone use. withg nothing to do defense, it's really just a sign of how many industries are hoping to make money from these drones. usingtalked about amazon the drones for deliveries, but what about those other companies? what do they hope to get out of the use of drones? >> a huge disparity in what the goals are, but a lot of it has to do with some aspect of'. you that the movie industry -- drones can save money and provide dramatic footage like this shot on the movie sky fall. but it's technically not allowed under faa rules, so it's pushing a lot of that drone use

overseas. the motion picture association spent more than $4 million on lobbying in 2012 ad 2013. they are trying to get approval in the united states. another industry lobbying is journalism and broadcasters. they're looking at a four traffic, news, breaking news and disaster type situations of stop there was footage of the tornadoes in arkansas that aired on a local news station in the faa is investigating that footage. a lot of industries are starting to push ahead and go ahead with using drones when technically it's not allowed right now. >> all of this lobbying is pretty much on the same side, companies wanting to use the technology. >> a lot of them are, but there has to be some controversy or else it would be a very easy case to make. if you take a look even in the agriculture community, you've got one group who wants to see more drone use and another that represents manned planes will chemicalss that fly to fields, they are worried

about safety and operating the same airspace as these drones. groups, defense lawyers, the aclu wants restrictions on police drone use. you have pilots groups concerned about safety. that, yourom all of got huge group of universities and local governments lobbying -- they are not really for or against any kind of specific rules, they're just doing self motion, trying to get their own university to get some funding to do some testing. but there are a lot of entities that see some opportunity here. >> megan hughes, joining us from washington. thank you so much. former treasury secretary tim geithner joined a legion of former government officials who released insider accounts of the darkest days of the financial crisis. and there are more to come. our white house correspondent, phil mattingly, joins me now with more on the business of the financial crisis memoir. good afternoon.

>> they are the people who were leading the effort to save the economy back in the darkest days of 2008 and now they are telling you about it. we've seen a number of former top officials involved in the bailout process and financial reform releasing tell us -- releasing tell all. she let there, the former fdic chairman and hank paulson, the treasury secretary, now we have tim geithner, who was at one point ahead of the new york fed and moved over to be president obama's treasury secretary. we see an effort here to set history. there will be a number of others ,oming out -- ben bernanke currently at the brookings institution working on his book now. also barney frank, the democratic congressmen who led the house effort on tarp will be releasing one soon. as you well know, these books and movies can be equal parts history and sometimes they're just put out to settle scores.

what former officials have fared the best so far? >> that's a great point. the insider account is as washington as a gets. it's not even the people writing them, it's people participating anonymously. i think what you've seen from tim geithner in his public comments and you see in the book as well, they are trying to get their viewpoint of history on the record. they want people to know where they are coming from because as you and i have talked to people who officiated in this -- who participated as prospect, if you are not writing it, you lose control of the narrative. , particularly some outsider accounts that have come out looking very good -- one a believer not as hank paulson. his book is a new york times best-seller and the accounts sorkin,by andrew ross they came out very well. tim geithner has come out well

in a lot of outsider accounts. depending on your perspective ideologically, you may not agree but both of these gentlemen at the tip of the spear -- at the tip of the spear have come out good in the end. ground control for controlling the narrative in washington. thank you so much. -- euoning russia ministers met in brussels today and decided to expand sanctions against russia. we will take a look at how effective they are likely to be. that story and more when "bottom line" continues. ♪

>> european union foreign ministers have agreed to expand sanctions imposed on russia over its stance on the crisis in ukraine. lauren goodrich is a senior political analysis at a geopolitical intelligence firm and joins me now from austin, texas. good to see you again. >> thank you for having me. >> last time you and i spoke was back in march and you said at

that time that sanctions against russia wouldn't be effective without the europeans being fully on board. has anything changed in the past two months? what nothing has changed. extensiveans levied sanctions on russia but it's a mere fraction of what the u.s. has done and even those sanctions are not effective against russia. the current sanctions levied today were an expansion to 13 russian and ukrainian individuals involved in the crimea annexation as well as two crimean-based companies expropriated ring the annexation. russia has shown it is rushing off the visa sanctions on the individuals. it hasn't really affected anyone thus far inside russia. now the eu may be moving toward companies, but they are only thus far targeting crimea-based companies. >> if russian businesses and banks are not targeted, what's the point of this? do further

sanctions risk undermining the economies of some other eu member states? a symbolic, it's move. you have to show it's doing something against russia, so it's doing rhetorical moves. were actual real economic sanctions on russian firms that would undermine the economy, even the austrian foreign minister over the weekend that he would not be in favor of expanded economic sanctions as it would destabilize his own country. in europeans are not agreement yet on actual real sanctions against russia right now. >> what about the high turnout in eastern ukraine? what does that tell us about the will of the people in the region or the influence of moscow? controlunclear how much russia actually has on what is taking place inside ukraine. yes, there is russian support

and russia is in favor of a chaotic and unstable ukraine. but russia itself does not want to annex eastern ukraine. it cannot economically, financially and socially supported. it's a very different region than crimea, which is primarily russian ethnically. eastern ukraine is the front and russia's not ready to support fully economically, financially, militarily at this time. russiadoesn't mean doesn't like the chaos and instability taking place because the more chaos there is in ukraine, the more the government in kiev will have trouble actually passing real legislation that would undermine russia's influence inside ukraine as a whole. >> presidential elections are scheduled for ukraine on may 25. is russia going to try to disrupt the vote? >> russia backed off that last week. president putin said the elections on may 25 could actually be a first good step

toward an agreement in ukraine on decentralizing power. russia is showing there is some wiggle room here in the way for russia, ukraine, eu and eastern regions to all come to an agreement on decentralization. it all comes down to whether kiev will allow some sort of decentralization to the region, especially the eastern region. >> the saint petersburg economic forum is scheduled for may 22 through the 24th. several american businesses have said they will not attend. among the big names who say they won't go -- visa, alcoa, pepsico and conoco phillips. saying theyompanies will attend our caterpillar, boeing, morgan stanley and goldman sachs. what is at stake for those who stay home and for those who go? >> the saint petersburg economic forum is a very important bellwether to see where our foreign investor's ideas and

where did they see investment in russia moving forward? a certain amount of u.s. firms were expected to stay home from the same petersburg economic u.s., but there are many and european firms phil going. the guest list is fairly substantial, some of the largest firms in the world going in which president putin himself will be hosting these business leaders and investment firms. there is increased tension on the rhetorical side against the eu and the businessmen are not showing they are not that unfriendly toward russia at the time. good to see you again and get your perspective. thank you for your time. up next, fcc chairman tom wheeler is in the hot the this week as commissioners plan to vote on net neutrality.

will the open internet rule? we will get the lay of the land when "autumn wind" continues. wind" continues. ♪

>> facing criticism from the tech industry and congress, tom wheeler is tweaking his plan to allow for fast lanes on the internet. the changes come head of a critical vote on the proposal that were thursday. peter cook is here with me in new york with more on this story. >> we are talking about modifications tom wheeler is making because he faced intense criticism when he first put this proposal out there not only from the tech industry but democrats within the federal communications commission who worry his proposal for open internet rules would in fact put net neutrality in depth -- in

jeopardy. there are others who would be in the slow lane and that is the kind of discrimination that should be allowed. our understanding is the chairman has tweaked his proposal that would still allow perhaps for the possibility of the content but the business test for allowing these kinds of deals to move forward would be a samehigher test and the time, competitors get the same short of deal. the proposal would put up the idea and ask for public comment on the notion of separately having the fcc classified internet traffic as basically a public utility. that would mean a huge regulatory change. that would be the stick out there. this is the reality down the road. until the vote.

is he going to have the votes he needs? >> enough pushback from members of the commission when he first put the proposal up there, not just from republicans who don't like net neutrality at all, but democrats who felt it went too far. it did not insured neutrality going forward. dealing with the commissioners and their -- and they need three votes. three democrats are the people to watch here. somehave expressed reservations here. inis this going to end up court? >> this will probably end up in court will stop every time they tried to tackle the issue, that's the challenge. he has to set aside these critics and satisfy the courts and the eagle challenges. a difficult challenge for fcc chairman facing a lot of flack right now. peter, thanks so much.

26 minutes past the hour, that means bloomberg television is on the markets. alix steel is standing by with details. >> here is where stocks are trading -- we have the s&p and dow both at record levels. the s&p up there by .1%. traders looking at 1897 as the next level on the upside. industrials, tech and materials, those names are down. most of that reflected in the nasdaq, up 1.6%. first is this guy broadcasting some assets of 21st century fox. they already own a third of these guy be. that's according to people with knowledge of the matter.

inll be back on the markets 30 minutes. more "autumn line" on the other side of this break. ♪

>> welcome back to the second " on of "bottom line bloomberg television. let's check the top stories we're following this hour. a new video from the boko haram terrorist network purports to show dozens of did that schoolgirls covered and praying in arabic. its first public sighting of the girls since more than 300 were kidnapped on april 14, exactly four weeks ago. the video was received by the associated press and came through channels that provided previous-- premia --

messages from the group. they vow the end -- the objective rules will be did taint until imprisoned militants are release. the u.s. and europe are offering to lift oil and banking sanctions on iran and turn for limits on the iranian nuclear program. the goal is to have a deal by july. the washington monument in washington dc reopens today after being closed for nearly three years. the one hundred 30-year-old monument has been closed since it suffered widespread damage in the august 2011 earthquake that shook the east coast. the repairs for the marble statue -- $15 million. that's a look at the top stories at this hour. goldman sachs at sign gang member staying out of prison. the wall street giant which reported net income of $2 billion in the first quarter is putting in $21 million to help a

boston area nonprofits dear young people away from a life of crime. onre is a fascinating piece bloomberg.com and the author joins me in the studio. this is very compelling and this is not your typical wall street deal. how does this work? >> goldman is putting up $9 million in the rest is matched by philanthropy. if you can't afford to pay for this prevention rogue ram that helps kids not to go back jail. it's not a typical bond, it's more of a loan. it to get them out of gangs and off the streets and if it works, you pay me back and if it doesn't, i lose out. >> what was the blueprint this? >> people compare it to private equity.

high risk, high reward, getting money from not typical searches where you only would. you spent the day with one of the caseworkers for him a case like this is tailored. goldman sachs is relying on a honey seven-year-old former gang member. what is her story? which's the vector by goldman sachs is going to make its money back or not. she knows how powerful it can be and the change in affecting people's lives. her job everyday is to go out and recruit these guys. most are in and out of jail. just to convince them to be in this program and learn work skills and life skills and to ultimately prevent them from going back to jail. but she looks like such a sweet young woman, but she was a gang banger and did some pretty nasty

stuff. >> she did. she stabbed people and got stabbed, she has a scar on her lip which he doesn't even know how got there. >> she apparently said she was arrested or had been behind bars so many times they got to double digits, she stopped counting. >> a lot of the guys you will talk to -- they don't even know how many times they've been arrested. >> who benefits from these social impact bond as they are called? it's a win, win, win. you get social programs that might not be funded if they don't work. it's not a ton of money if they end up losing $9 million. for goldman sachs, it's not a big chunk. this upfront capital that allows them to expand in ways they would not be able to otherwise. this? is goldman doing

why is the wall street giant taking interest question are >> banks would tell you it's customer demand. they say impact him besting is a big day. they can do good with their portfolio while also making money. >> are you are also talking about social mores, about societal, cultural, ethnic -- you are talking about a lot of things that can or cannot be controlled by the dollar. >> absolutely. that's why they give the money to social service nonprofits. much theyrated how invest in the companies and they say helping out society in the greater good is good for us also. >> how much does goldman stand to make off of this? >> it's not like a traditional bond. the returns are couched all stop they would only make a billion dollars if the recidivism drops.

thatu note in your story the united states has 2.2 million people in prisons and jails and the national research council says that the world's highest population behind bars will stop is that ammunition for critics of these social impact bonds? that it perhaps shows the government has tailed? >> it's a way for the government to start eating better and not let those guys go back to jail. that driving millions and to run thoseollars jails, so they say it's a way to cut down on the costs to get prevention programs in the beginning. >> before you go, what did you learn from this young woman? >> how hard a job it was. the persistence with these guys that don't want anything to do with her, that swear and cuss at her. she does so much work and is going toanyone

do it, it's going to be here. >> this is on our website. this is fascinating. >> thank you. for tv adup, buying dollars. showcasing the lineups for the fall this week. we'll get which ones are likely to corner the most ad dollars. stay with us. ♪

>> is time for today's latin america report. hundreds of protesters marched through the city of tempe go on mexico's east coast, calling for peace and an end to violence. protesters marched through the city to demand the government provide better security. the area has been the scene of deadly turf battles between the gulf cartel and these that the drug gang. although a calm down in 2012, violence has flared up again in

recent weeks. president obama praised trade thecommercial ties with south american president. president obama says he has been consistently impressed with the progress uruguay has made since he took office in 2010, particularly as committed to democracy and human rights. that is your latin america report for this monday. the major television networks are unveiling their fall season that were -- fall season shows two major advertisers. nine $.1will get billion in advance commitment in the so-called up front tv at market while cable programmers get $11.2 billion in commitments. my guest is the director of research at horizon media. for coming on again. what was it like question mark >> it's always a show.

timmy fallon and seth meyers were there, what kind of serves to purposes. another18 the crowd and that says our late-night is that top rated shows and they are on nbc. of what combination these up fronts are. >> for those not familiar with upfront, what are they and why are they important? unveil theirorks fall schedule. that's the most important part. its a sales pitch because you are talking in front of hundreds of advertisers who represent billions of ad dollars and it's an opportunity to sit there and tell them how well they did. >> which networks are negotiating from a position of strength and which ones still have a lot of convincing to do to make their cases to advertisers? >> of the question. theink the ones that move market will be cbs and nbc. showss 20 shows, a lot of

and nbc one for the first time in 10 years. to saynt out of the way even without it, they still would have won. of changing an age viewer habits. you don't have to rush home to see your favorite show. you can watch it on your smart phone or see a couple of days later on demand. how does that change the structure of the upfront presentation? >> it usually doesn't. they still talk about counterprogramming and audience love for instance. the show "the voice" is directly does very well. >> is that because of the time? >> yes and because it has a strong id.. reality show,ed but there has been a falloff.

this is a show the network is very high on. it's kind of a political drama with terrorists, but the egg thing and this is what robert eventlatt does, it is programming. you see more and more event programming, like the sound of music. this year there will be peter pan and they will have "music man" somewhere down the line. series don't live to see a second season. do 70 freshman series failed to get picked up? lex you go to these presentations and they give you the rationale and thought behind it, but sometimes when the show comes on, you just say what is this and what were they thinking? sometimes you can tell just from looking at the pilot. >> they test these shows and maybe what they should do is to

let amazon doesn't put it online and have subscribers vote. they will get thousands of people and set of having just a few hundred decide which shows to pick up in which chose not to. >> we will continue our conversation with more on networks and the upfront when we continue in a moment. stay with us. ♪

>> we have more on the tv upfront market. we could talk about this all day. the crucial demographic for rogue rammer's is still the 18 to 49 age group. agewhy, especially in an right now when everyone is on the go? >> that's an interesting point. adults 18 to 49 is the mo advertisers are interested in. ofhave seen a real graying elevation through the years. the median age on the four broadcast networks now is around 54. >> that evidences itself is you

and i have talked for about the ages for the oscars. >> it gets older and older. the olympics was 55 this year. but only 76% of the viewers who watch the on picks watched it on television. viewers, those watching the snowboarding or some of the other extreme sports are watching it live on their devices. >> it is appointment tv when i say its appointment tv. >> exactly. what is in this for the advertisers, given network viewership is falling because you have so many options like cable come a streaming and the like? are the advertisers going to finally draw a line and say we are not going to pay what they consider to be exorbitant fees? >> i don't think advertising rates have gone up too much in recent years. $9 billion in the upfront him a that's an estimated number, and they don't have to sell, what

they sell is up to them. it has been holding flat. those numbers have been on the increase and the broadcast networks are taking part of cable plus again programming strategy and we will see more regional content in the summer. "ike cbs did "under the dome last year. they will have the return of miniseries -- nbc is bringing back "heroes." fox has brought back "24." familiar characters, he truncated version of a shows available on demand and screening. -- on demand and streaming. >> cbs will have eight nfl games on thursday nights in the fall. will this change the landscape? pro football is the most popular sport in america. our advertisers going to help -- recoup that $3 million

>> $300 million. >> did i say 3 million? >> i think they will. andhas lost the u.s. open tennis to espn. they are splitting march madness with turner and i think they see value with the nfl. nbc and others to get it. you already see some counterprogramming because nbc today is -- said today we are putting our female comedy to counterprogramming nfl. the nfl is watched live, so there's a value to that. the ads are not zapped and there's a social media component. they have been marketing geniuses and we see this whole landscape the wait is now, but it has worked. >> we have about a minute left. looking tonies are spend big advertising dollars this coming season? is it doing to be the automakers

and phone companies? >> i think you can look at the competitive product categories. we are starting to see netflix and amazon. lick service restaurants -- it's going to be typically the same type of lou chip advertisers we have seen in the past. >> who is going to come out up front in the upfront? >> it's going to be a tight race next year because nbc has the super bowl but they don't have the olympics. cbs has eight prime time games, so it's going to be a tight race 12: stop >> is going to get 30 on cbs? >> is a great question. i have no idea. have a show runner who is not going to be doing that. a lot of people want women. >> brad, think you will stop

stay with us. "bottom line" returns in just a moment. ♪

>> get the latest headlines at the top of the hour on bloomberg radio and streaming on your tablet and bloomberg.com. that does it for this hour of "bottom line." on the markets is next. i will see you tomorrow. >> is 56 past the hour, that means bloomberg television is on the markets. i'm out of steel. a record day for the dow jones industrial average. 1.77 --the charge up my 1.7%, led by small cap and tech stocks will stop reversing the losses and spring the rally

today. from stocks to bonds, it's got to come out of somewhere -- investors not that interested in the treasury market. the yield their rising. showing see reports retail sales in housing starts to increase which means less need for the safe haven of the treasury market. year, market rally this bond buyers are keeping as much cash on hand as ever. more than $200 billion. does that mean dark clouds in the future? joining me with a look at why fund managers are being so cautious, is a reporter covers the debt market for us. can you put the money in perspective? >> is 7.6% of their portfolio, which is quite a lot. bonds especially now are not going dutch, so they want to put that money to work as much as they can. that's a big drag on the performance of they are not doing it right now.

it was three percent back in 2010. the portion of the overall holdings, the bond fund asset can balloon. >> is this a harbinger of things to come in the future or is there something else going on here? it both. perhaps they're waiting for today. yields are going to rise and they don't want to get stuck with no one to buy the bonds. this is been the nightmare scenario. >> they are not buying into the rally fully because they're not taking the money and saying forget it. in 30just going to put it year bonds and ride the rally out. they are still being cautious and trying to keep money aside to they can invest it when it becomes available.

they've also been using more derivatives and more interest rates against the yields. they've been investing in derivative yields tried to corporate debt because it's faster. the underlying assets are not quickly and they want to be flexible. >> is there something about redemption we might see in bond funds or you just want to have the cash on hand so you don't have to sell? have cash to meet the redemptions or be invested in swaps where they can get in and out more quickly. both speak to the idea that they want the flexibility. having to liquidate bond no one wants to buy. at some point are we going to have the fundamental say we're losing out here? what is that going to happen? >> that's a great question. if everyone capitulates, treasury yields will just go back down, and it's a really

weak scenario where the economy will be in a low rate environment for a long time and we will just pile our money into long-term bonds and the fed hikes the interest rates and the market in yields pop and they are stuck. that's the worst-case scenario. on the rally, were every treasury yields rise, you have people losing out. on the other side you get this huge -- >> that would be the idea. >> right, keeping cash. >> all right. lisa, thank you for bringing us with the deal is with bonds. we are on the markets again in 30 minutes. "street smart" is next. >> ok, what do you know? another merger monday, off to the races. intradayas hitting its record high. could we make history at the close? we will