>> from bloomberg world headquarters in new york, i am rock come to an -- i am mark crumpton. the united states charges five chinese officers of economic espionage. the russians president orders troops near ukraine to their home bases. and at&t's planned purchase of directv gets a federal review. to my 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. alix steel will follow the

executive controversy at the new york times. julie hyman examines a new bloomberg poll on targets data breach. we begin with phil mattingly and the cyber spying charges against five chinese monetary officials. >> an escalation of what has been a years long running battle between the u.s. and china over economic espionage and cyber security issues, the u.s. justice department by far took the largest step in this fight with direct ties to the liberation army. it charges are for economic espionage and the theft of tracy good. the u.s. felt it did not have any other choice am a something underlined by the attorney general eric holder in his press conference today. >> when a foreign nation uses tools against an american exit -- american executive or corporation to retrieve specific information for this -- for the

state-owned companies, we have to say enough is enough. >> a total of six companies were identified for monthly include companies like westinghouse electric and marcoux up the namebrand companies we all know were targets of these five individuals. >> what has been the reaction from china so far? >> predictable. he took a little bit to respond but they called the charges absurd. he said the u.s. needs to go back and correct what they have done here. face thatidn't say at didn't say this there's no chance of any extradition. if you talk to u.s. officials, that was never really the expectation. the chinese government would like to send these five individuals over to the u.s. to face these charges. this isthe key point is

a message, it is being sent and especially with pretty jake economic dialogue coming up in july and further diplomatic efforts between these two countries, this is one u.s. officials hope hits home harder than others have in the past. >> phil mattingly joining us from washington. looking ahead, target reports earnings on wednesday and investors will find out just how much the retailer has recovered from last holiday season's massive data breach that affected tens of millions of customers. a new bloomberg national poll may give us a hint and the results are actually reassuring. julie hyman is following that story. to shopre still willing at target. >> it does seem so. whohe past year the folks are poor, 59% of them said someone had to buy something in target. here's the interesting result of the poll. 85% of the folks surveyed said in the coming year they are not going to change their behavior.

that seems to suggest that we have not seen that much effect on consumer behavior. let's take a look at their opinions directly related to that data breach. the question they were asked, how confident are you to keep your credit and debit info safe? then it goes down to 35%, somewhat confident. pretty two percent not at all confident. look at itif you versus retailers overall. how comfortable are you overall that retailers will keep this information safe? the numbers are not that different. they definitely skew into the somewhat category. tos seems to give credence the idea that consumers know this is a risk across the spectrum and they are going out and shopping anyway. made some changes, including firing its ceo. improve thedid that

perception? >> it did not make any difference at all. 84% said it would not make a difference. target has made a lot of changes that might not be immediately noticeable to shoppers. retailers also going to implement a different kind of chip technology, the embedded check that -- embedded check technology. that will be a big change. that visible ouster not really having an effect on the opinions of shoppers. target's business more broadly? how is its doing? >> this is something we talked about when he left the any. this is not the only problem. it is the latest that came on top of some other problems. the online business is far behind that at some other retailers, particularly walmart, has online businesses that held up as a good example of retailers. you can see comparable sales figures over the past several

years. there's also that if the cold to describe freshness to that many analysts and consultants said it sort of loft under. in recent years that has fallen off to some degree. >> julie hyman, thank you. astrazeneca rejects another takeover offer from pfizer --ay, saying the number investors are not happy. it sent astrazeneca shares down as much as 15%. olivia joins us live. what did mr. johansen have to say about this latest rejection? here now ishe issue whether or not there is really any hope to salvage a deal. pfizer has said this is their final proposal to buy

astrazeneca. he didn't exactly say this was the end of the road. theren't really say wasn't a window of opportunity and the nuance was really in the language. here is how he put it. road at the end of the this engagement and certainly at these terms. we did reject the offer of 55. he had other things that concerned us also that we did not get the resolution to because of the hurry of the bid itself. the last and final affair from pfizer. >> what you're seeing there is as these terms -- that sort of indicates the willingness if the terms change. not saying it is 100% impossible. i also asked if the astrazeneca board was unanimous.

he wouldn't say. he said his u.k. legal counsel has advised him not to qualify what the board's decision was. overall the board did reject the bid. mark? >> what are analysts saying about the price? do they think astrazeneca should have taken the latest offer? >> this is interesting because the map for the deal is changing rapidly. i said whether there was any hope for salvaging a deal, it certainly doesn't like astrazeneca shareholders think there actually is. the deal was raised up by 10%. premium versus5% the original bid, which was launched privately back in january. i asked chairman johanson about that and he dismissed the idea, referring it to a 45% premium because the value equation has changed because they unveiled some promising new drugs and

their pipeline. pfizer or astrazeneca should have taken the 50,000 ash the 55 pound offer per share from pfizer because that really would be a fair price. in particular they're saying because it is not astrazeneca is ofr hyping it -- the sides these two big drug players are, they really are the r&d machines they claim to be and what they have become is marketing vehicles rather than research. fromivia sterns joining us london. thank you. another proposed takeover under scrutiny. -- theproposed merger deal promises to create another giants in the telecom and television space. will it win the approval of u.s. regulators? peter cook has more on that story. first comcast time warner and now the steel. deal between this

at&t and directv is a direct response between the proposed comcast time warner merger. randall stephenson saw the competition getting bigger, effectively moving quickly to do just the same thing. -- would with night unite the nation's biggest satellite-tv provider with the second-biggest broadband provider and second-biggest wireless company. with this deal at&t could combine satellite service and existing packages of wireless phone and high-speed internet service, that is the upside for them. they will also get access to directv content as well as the ticket. the combined company would have more leverage in future content deals going forward. thiser big reason for deal, at&t gives access to the cash flow. 38 million video subscribers and a footprint in latin america. investors are not completely sold on this transaction based on the shares of both companies, down on the day so far.

some analysts are wondering why at&t would spend this kind of money. more people are watching video over the internet as opposed to satellite. >> what is this going to be like? >> the challenge in washington specifically, that is going to be a concern. of the day i am talking to lobbyists, a lot of analysts who say they do expect done.his deal will be one area of overlap is paid tv. nearly 6 million at&t universe customers, you combine that with directv's 20 million. the other thing you have, you have an aggressive action by at&t to address those regulatory concerns. concessions they're offering .nclude a net neutrality rule

they are offering to bit as much as $9 million for that brought past -- for that broadcast spectrum. it wants big money in that auction. at&t is offering to do it if this deal moves forward. the preemptive strike him and from at&t as part of this deal. cook, thank you. when bottom line continues, russian president vladimir putin orders his troops to pull back from ukraine's borders. new take a look at whether that will be enough to ease some of the tensions between russia and the midwest when we come back.

>> russian president vladimir putin ordered russian troops near the cranium order back to their bases. that is according to the kremlin. troops are returned directly after completing exercises. chris is a senior political scientist at the rand

-- randion for corporation where he specializes in military interventions and deterrence issues. welcome to bottom line. thank you for your time. >> today's move by president -- n >> if it is true, if large numbers of the 50,000 russian troops that have been stationed along the border of ukraine are pulling back, that would be a positive step. it is hard to see how you can have a political negotiation, which is needed right now. to verify it has happened first. >> is there a possibility russia could be pushed into a more aggressive strategy? i think they would much prefer to solve this crisis

politically and avoid taking any further military action. if he is unable to do so it certainly is within the realm of that you could see covert moves or russian forces into eastern ukraine. this would be very serious and would bring into account a whole number of economic sanctions and very severe deterioration, much more severe than we have seen so far in the relations between russia and the west. >> would russia be willing to take that gamble? >> i think it is possible. they would prefer to resolve the situation politically but i think it looks like they are not going to be able to achieve their object its, extending their influence into ukraine and preventing it from moving towards the european union, except by military force, they will choose to use military force. would suffer the most damage for targeted sanctions?

the key sanctions that are on -- any kindght now of package that you would see would probably have to include some degree of getting all three of those. i think it is important term number while all the sanctions are painful for europe and for kind ofed states, the sanctions that are on the table right now are much more painful for russia. is, if anything, one of the main things that pushes putin towards some kind of a peaceful resolution. >> russia is adamant about receiving guarantees that a root -- that ukraine will not join nato. what would russia's likely response be? >> it depends on the circumstances. obviously one of those

big questions no one wants to talk about directly right now. it is such a divisive issue. in the midst of the crisis, making any kind of clear statements on the part of nato about that particular issue could be viewed as highly escalate tory and there wouldn't be a love of unity within the alliance. question is further down the road, after the situation stabilizes, will ukraine still have the ability to join nato if it wants to? my own view is that it is very important that we keep that possibility open. >> joining us this afternoon from arlington virginia, thank you for your time and perspective. we appreciate it. >> thank you. >> a bloomberg exclusive, russian prime minister dmitry -- dmitry med events medvedev meets

-- we'll hit -- we will hear from john carlin when bottom line continues.

>> the u.s. charging five chinese military officials with economic espionage. let's go back to washington where bloomberg's phil mattingly is joined by the u.s. assistant attorney general for national security, john carlin. >> assistant attorney general, i want to start right off, this was jarring news. five individuals, first state-sponsored charge. how did this come about? this was the product of years of work both by dedicated fbi investigators and prosecutors from across the country. i think it reflects a new

approach we have to these cases. trained hundreds of prosecutors across the country to look at national security cyber threat and our belief has been vindicated today. prosecutors and agents are looking at these cases and we can find the faces behind the keyboards of the people stealing information from our country -- of our companies. >> there are fbi wanted posters of these individuals. is there an element of public shaming or is there an expectation that these individuals will see the inside of a u.s. courtroom? cybern we do these investigations, at the beginning of the case you may not know who the actor is. you follow the facts and the evidence where they lead. they are hard cases and across borders. whether at the end of the day the investigation and the facts lead to a criminal in a country overseas or to someone wearing the uniform of the people's liberation army, we are going to follow those facts and evidence where they lead and bring

appropriate charges. today duringficial the news conference said this is the new normal. this will be a recurring thing. can you say coming cases we expect to see come to this point in the future? >> i think what he is referring to is that we are committed to an approach that says enough is enough, that we are going to follow the facts and evidence of each cyber intrusion and we can and will find the people responsible and do everything we can to hold them accountable. >> u.s. officials have become more comfortable pointing out this issue of economic espionage to chinese officials publicly. it has been a paradigm shift over the last year plus. does this mean the dramatic efforts in your eyes have failed? in ourll say just like approach to terrorism, we need to look at all the legal tools in our toolbox, including diplomacy, including trade sanctions, including designations under commerce authorities and including

terminal charges. we need to use the full range of tools in the toolbox and need to keep doing it until the conduct stops and american companies know they can do business without having to worry that their secrets are being stolen. >> six u.s. companies, household name companies, were mentioned in this indictment. in the indictment it also states that other companies, or other computers, may have been copper mines by these five individuals. why weren't those companies named and are those companies part of future cases? >> that is a great question. one thing that we will see often occur in these cases is that the bad guys use what is called hot points. they will invade a computer that has nothing to do with the target that they want at the end of the day and they use that hot pointed to jump into the system where they are really searching to get the information. we will continue to look at every intrusion that occurs and bring cases when we can. >> assistant attorney general john carlin, big cases today, thank you so much for your time. we will be back with more

"bottom line" after this quick break.

>> welcome back to the last half-hour of "bottom line" on the television. the uproar over the firing of new york times executive editor jill abramson continues with twin narratives over the real reason for her exit. public aton spoke in lake forest university. political capital host al hunt was there and he joins us on the phone from winston-salem north carolina. what did ms. abramson have to

say about the controversy surrounding her departure from the tops? >> she alluded to it and talked and life as bad breaks. and you bounce back up. that was going to be true for the graduates. she also show cans with all 1600. they were inspired by her example and her talk today. >> in a statement last week, arthur sulzberger junior, the chairman of the times, sent ms. dachshund said ms. abramson lost the support of her colleagues and could not win it back. what have you heard about ms. abramson's management style? has theall editors she tractors. record speaks for itself. she has an extraordinary record. question about mr. sulzberger's management style.

ceo and has toe pay her $20 million to walk away. i think that raises some serious questions about his management style. >> have you heard anything about his management style? >> the record again speaks for itself. >> ms. abramson was the first woman to run the times in its 162 year history. what has been lost in this controversy, that she is being replaced by deane the cat who becomes the first african-american to serve as the times is executive editor. what do we know about him? >> he's a respected journalist breed he is an amiable guy. he has big shoes to fill end has a tough time right now. he has a lot of standing room in this business. >> al hunt joining us on the phone from winston, salem north carolina. inc. you so much. for more on the story behind jill abramson's exit from the new york times, here's charlie

rose's interview and a portion with ken auletta. reported that abramson's exit was due to a pay gap between her and her predecessor. >> jill abramson discovered several weeks ago that her pay is less than the person she succeeded. she finds out, she finds out that she is getting paid 500 -- her salary is 500 or $3000 per year. she goes to arthur and mark thompson and complains. payalso finds out that her -- she finds out that washington

bureau chief, her pay was lower than the person -- >> is there any explanation for this? >> there are always explanations. in the case of the washington bureau chief it was phil. he was on the editorial board. he was making more money. >> i don't think that is a good explanation for why the comanaging editor -- >> you think someone does in the glare of the new york times would say we cannot afford to pay any sort of salary a woman has added that is less than a man. here is where the convocations begin. when you just compare salary and not total compensation you are comparing apples and oranges. after i wrote my first post on wednesday he put out a statement

the next day saying total compensation was roughly comparable to abramson. they didn't ask the question about the managing editor. how is that? you have to look at what the bonus is. they did agree to bump up their $500,000 to $525,000 after she protested. then she did something that offended them. saw that as a warlock action. >> a declaration of war. >> yes. that became too difficult to work with. >> you can see more with our andrview tonight at eight 10 p.m. new york time, only on bloomberg television. let's turn to my colleague alix steel. jeopardize his

chairmanship of the company. how are investors reacting to all of this? >> at the end of the day it really doesn't matter what shareholder actually feel or think about this. here's what the family thinks about this. this comes at the heart of that debate and how the new york times is actually owned. phil has been the chairman and -- here's how it works out. you have a class a and class b structure. you can own the shares, they're publicly traded where we have very little voting rights. >> sunday we will have a huge ownership right. you basically elect 70% of the board and the ceos choose the diffidence and acquisitions. if you bought all the outstanding shares of the times it is for out of the 13 board seats. >> is a typical for media companies to have a dual share structure?

>> it actually is because the theory behind it gives you editorial control. in theory it is a valuable tool. we sought with the washington post. we also see this move into the tech world. google, linkedin, facebook, as the owners try to keep that editorial control. in terms of the sulzberger family and the shares, 90% of that is owned by the sulzberger trust, were you have eight family members that rotate throughout the years that control this. >> public shareholders, are they ok with this one man one vote structure that is in place? >> if you don't like it, don't invest in it. a lot of shareholders say i am not doing this media company think as i not going by this. did just that. they held the shares for 11 years, lobbied for about a year and a half to change the class

structure. i got other institutional shareholders behind them. end of the day they were forced to sell because they could not execute any change. were talking to paul sweeney a bloomberg industries. >> alix steel joining us. thank you so much. theext we'll check situation in latin america and the latest on brazil's economy. bottom line on bloomberg television continues.

>> a river series threatens to man --e serbia posner serbia's powerplant. at least 35 people have died in serbia and bosnia in the five

days of flooding caused by unprecedented torrential rain. it is the next phase in the search for that missing malaysian jetliner. a chinese ship will start mapping the seabed off of the west australia coast this week. officials believe the boeing 7077 crashed into the southern indian ocean back in march. finding ways to attract foreign investment is one of the things on president obama's to do list this week. he's convening business leaders tomorrow at the white house to advertise success stories in the face of continuing public anxieties over jobs and the overall economy. that is a look at the top stories in the news at this hour. today's latin america report. authorities in colombia are trying to piece together what led to the deaths of 32 children when an overcrowded us they were traveling in caught fire. another 22 children and adults suffered burns in that fire that took place sunday as they were traveling home from an event in

an evangelical church. the driver of the bus turned himself in on monday. witnesses said he left the vehicle running when he went to fill the tank with gas from a portable container. slowed economic growth more than analysts predicted the third quarter. prices -- al chile's central banks said gross domestic product expanded 2.6% from a year ago. that is down 2.7% from the fourth quarter. that is your report for this monday. coming up, grandma can now invest like a hedge fund. we will tell you about new funds in the market that let pensioners that on junk related companies. we will continue in a moment. ♪

>> coming up tomorrow, a bloomberg exclusive. down inedvedev sits

moscow could they will discuss the crisis in ukraine, russia is slowing economy, and its relationship with the west. the securities and exchange commission has now made it toier for your grandmother bet savings and funds on derivatives much like a hedge fund. this is a very interesting story. topless first about the growing the etferivatives in market. usually they are associated with stocks. why the change now? >> it really reflects investor demand. the first fixed income etf was introduced in 2002 with blackrock's investment-grade bond etf. to include $17 billion of assets. the fixed income etf universe now includes more than $400 billion. most of these do not include

derivatives but increasingly over the past few years we have seen an increasing number of etf that you include derivatives because of investor demand. investors are looking for ways to hedge themselves against rising interest rates. they are looking to more quickly slipped into asset class that are traditionally difficult to get into. etf to get them -- etf hoss give them visibility -- etf's give them visibility. this is an easy way for them to do that. >> is demand the reason why great leaders are making it easier to get into this? >> i can't speak to the motivation of the regulators but there has been increasing pressure, saying if these etf's are managed with some prudence and they do have enough cash on hand to accommodate for any outflows or liquidity issues, then they can be used as a tool in an appropriate manner and they should be in -- and they should be available to investors.

proshares trust which is registering these eight new funds, which invest in credit derivatives, both tight to investment-grade and high-yield corporate credit in the u.s. and europe -- proshares trust able to do this for a while. they have a number of etf's that invest in derivatives. overall there are more than 250 etf's that are based on derivatives. this by talking about grandma. how does an ordinary need -- ordinary retail investor like grandma get into etf's? >> the same way they would buy stocks to a company. they can go on their e*trade or scott trade accounts and they could buy an etf share. >> is not the same thing, is it? we are talking about more competent securities. and isproshares trust correlated to twice the returns. >> people were supposed to stand

for all that. you can win and you can't lose. -- and you can lose. that, whichence of is an incredibly levered that -- and incredibly bullish that on treasuries. pick your poison, you could win big. these really are gambles. these are etf's that package trades that are inherently risky. if you lose you lose big. they trade more frequently than the underlying securities. >> what are the returns like? >> they can be good like that one fund. the upside is you can slip into asset classes you wouldn't otherwise begetting into.

you can get into asset classes that are potentially very profitable. investment-grade credit has done very well. i can't go out and buy a bond. how would you get into the bond market? >> people say credits derivatives are part of the reason why we got into the financial crisis in the first place. >> if the bet goes awry you may have to pay up. you have a fund that invests in a lot of that's, the losses could be very substantial. up,he investor can't pay that creates a real problem. it introduces another level of systemic risk. >> the financial crisis, let's fast-forward to area am -- where we are right now.

>> more regulatory oversight. credit derivatives are essentially cleared. there is a central counterparty that make sure that everyone on either side has the right liquidity requirements. you can see this story online at bloomberg.com. california chrome can breathe easy. he will be allowed to wear a nasal strip when he goes for the triple crown here in new york. belmont park cleared horse to use the strip. he won the kentucky derby. nasal strips were not on the list. the track's three stewards unanimously agreed to lift the ban. another check of the market movers is on the other side of

the break.

>> get the latest headlines at the top of the hour on bloomberg radio, streaming on your tablet, and bloomberg.com. that does it for this edition of "bottom line." on the markets is next. i will see you tomorrow. >> it is 56 minutes past the hour, which means bloomberg television is on the market. i am michael mckee. let's get you caught up on where stocks are trading. we are just under our highs for the day. the s&p is up by seven points. 822 point game for the dow. the nasdaq leads on the back of semi conductor makers at 32 points at the moment.

stocks may be higher but this comes after the first back-to-back weekly losses since january. global money managers raising their cash holdings to a two-year high and a survey by bank of america shows they are the worst place in the world to invest. what is that all about? 20 me with a look at why all this is happening is josie oley. let's start with the money managers holding money out, going to cash. why is that a sign that things ?re supposed to get better does it suggest things are going to get worse? >> it's an interesting question. the reason we see cash value so high is because they're putting money aside right now and they are waiting for the economy to get better. toically what we are going see is a few important economic data pieces coming out over the next couple of weeks. hopefully it is a little bit more sign of recovery.

they are getting a little restless. >> it is the clash of the titans last week. , best performing hedge funds manager of 2013. you have to listen to what he says. your point is the same, keep money out of equities and put it into cash until the economy shows a little sign of growth and then get back long. >> we are back to the economy. we are away from the idea of the fed propping up the market. people are back looking at fundamentals. >> i would agree with that. we have a lot of affluence he coming out this week and economic data coming out that tol go a long way positioning investors to where they want to go. >> this money that is coming out, is it to be tell investors or institutions concerned? institutions tend to take a longer-term approach. they may go 12 months plus. it is really the retail investors that are playing the fast money game, pulling out and

going back in, depending on how the market is doing. -- whyinstitutional guys are they down on the u.s. as a place to invest? >> i think if you compare to you the european counterpart, the stocks are a bit more expensive. lower p values there on average. we're seeing somewhat of a potential divergence down the road with monetary policy. the fed is tapering and looking to raise rates into the next year or if there is speculation dtb would be more accommodative. our balance sheet is still expanding and >> it still seems to come down to the fact that we have a lot to worry about in stocks like that. >> that is true. to make money. >> at this point forecast is to look to the u.s. to start to respond again when you see this kind of money come out yet though we see stocks go up yet :00's what happens is since 2000 we have seen 12 different occasions when they were three

months in a row of inflows to this equity markets and then as soon as there was an outflow we saw 2.2% rebound over the following 60 days. so once that bottom is out we can expect a bit more. >> bloomberg news, thank you very much. street smart is up next. >> equities are climbing. -- slowly, surely but surely. trading at over 17 times reported earnings. it is monday and street start "tarts now -- "street smart starts now. ♪ welcome to the most important hour of the session.