bloomberg world headquarters in new york, i am mark crumpton. this is "bottom line." reservehe u.s. federal releases minutes from its april meeting. then president obama thomases to fix the veterans affairs agency. we will look at the winners and the losers of last night's political primaries. 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 and the stories making headlines today. but we begin with breaking news

and the release of the fed minutes of the meeting on april 30. let's go to peter cook with the details. -- at its late april meeting, the fed offered a pretty upbeat assessment of the u.s. economy. it cut its bond buying program by another $10 billion. also signaling that the economy is not yet strong enough to consider raising interest rates. these minutes further reinforce the notion that the fed is not in a hurry to raise rates because it does not see inflation as a major threat right now. that, becauseoted inflation was expected to remain 2%l below the committee's objective and the and implement rate was still above participants estimates of islam the committeeel, did not, at present, face a trade-off between the them ointment and inflation objectives, and an expansion of

aggregate demand would result in further progress. there was a discussion still is spelling out even more details. "some thought it would be helpful to the rfi their reasoning underlying the language indicating that even after unemployment and inflation are near mandate consistent levels, economic levels may for some time or and keeping the target federal funds rate below levels in the longer run." also give us another glimpse into the future with a description of the staff presentation on the tools available to the fed when they do decide to start raising rates. this was described as a prudent planning exercise and those onls include interest paid excess reserves, fixed-rate overnight reverse repurchase operations, term reverse repurchases, repurchase agreements, and the term deposit facility. these are all ideas that bill dudley talked about yesterday in his speech in new york.

the minutes say -- the minutes say most participants charged the committee should consider a range of options to be ready to adjust to the mix as wanted. but the discussion was for planning purposes only, not any indication normalization is right around the corner. >> peter, thank you very much. let's do a deep dive into the fed minutes. michael mckee is here with me now. i got all choked up just talking about it. what did you see? discussed the possible exit strategy, market participants had thought they might have done that because they did it in a special meeting before a fed meaning -- fed

meeting in 2011. they did do it and they did come up with a list of options. you can't use the fed funds rate like we normally have done in the past because, at this point, with the balance sheet so high, nobody needs to borrow money overnight because they've got a lot of excess reserves. so how do you control that? they gave us this list. bill dudley discussed at yesterday which i found interesting because he came out one day before the minutes were released? it's almost as if they are trying to buttress their communications strategy instead of us trying to parse through this and figure out may be the ranking or ask more questions about how they viewed each item. he went through them one by one. to come out the day before the minutes? to doticularly if it had with policy. but in this case, it's planning. so it didn't have the market effect of other possible comments by bill dudley. but it does give us the view of the thinking within the core of the fed because he is felt to

represent janet yellen and those who are the real drivers of fed policy. >> michael stanley fischer, if we can use a boxing analogy, we had a split decision today. he is going to be on the fed board of governors. he was confirmed for that. but the vice position is not decided yet. decision.r he was nominated for a term on the board and to be the vice chairman. they allowed the vote to go forward for him to be on the board. that was a most necessary because next week we lose jeremy stein. he is resigning. that would leave the fed short of a quorum. they could not even meet in the hallways necessarily if they didn't have another body. for some reason, they decided they wanted to hold another vote on whether he becomes vice chairman. there doesn't seem to be any indication that he would not be approved. they also did not approve the

other two nominees that the president has sent forward. powell already on the fed but his term expired. he has been renominated. they haven't set a vote for them either. at a time when the fed is discussing exit strategies making critical decisions about the future monetary policy of this country, it is extremely shorthanded. >> you said shorthanded. some might say shortsighted as well. it is the casablanca line. michael, thank you. more on the fed minutes coming up later. michael for rowley will join me at the bottom of the hour right here on "bottom line." president obama said today those responsible for delaying treatment for veterans will be held accountable. his remarks, missed growing political pressure for -- his remarks, amidst growing political pressure. come amidstks

growing typical pressure. simon president did secretary shinseki. the american legion and a growing number of lawmakers, senators have called for shinseki to resign. i made these reports of veterans dying while way for carrot the phoenix facility. there are allegations that workers were hiding the wait data manipulation and weight issues all over the country. colorado, wyoming, texas, florida. the president said, if these reports are true, it will not be tolerated. but first, he wants the facts. >> i know the people are angry and want [indiscernible] i sympathize with that. but we have to let the investigators do their job and get to the bottom of what happened. to know the deserve facts. their families deserve to know the facts here in once we know the facts, i assure you, if

there is misconduct, it will be punished. >> there are three major investigations going on right now. one over at the white house. cast robdent has neighbors with that. he is going to finish to talk to workers at the phoenix facility about the issue. we are expecting a report next month. second, there is an internal audit within the v.a. grilledy shinseki was last week saying that he would have an internal review done by next week. third, the arnold -- the attorney -- the inspector general general's report is expected out in august. today,he same time congress tries to take action on the issue. >> we are expecting a vote on this measure. next hour.th an the -- probably within the next hour. it would make it easier for secretary shinseki to have the authority to fire senior leaders

within the v.a. it is a special category. the v.a. senior executive services. these are civil service workers that have special protections under the law, the kind of notification they are given, the length of reviews, things like that. supporters say this measure would cut through the red tape. >> the current system is so in bureaucratic red tape that it's easier for someone to get a bonus than it is to be given some type of discipline at the department of veterans affairs. bottom line here, a lot of those lawmakers want to see heads roll. this does have bipartisan support. there were some opponents today, including steny hoyer. --y say this is a new year knee-jerk reaction and it is taking away due process. it is likely to pass. >> this week on "political

capital with al hunt," paul wyckoff will talk about eric shinseki and the controversy at the v.a. that is coming up friday 9:00 p.m. washington time only on bloomberg. coming up, the state of the tea party. we will look at the results of last nights primaries and what those numbers could mean for the midterm elections. stay with us.

>> let's take a look at cyber security. ebay is asking its users to change their passwords after a cyber attack exposed a database with login information and data such as birthdays and phone numbers. according to ebay the mother has been no evidence so far of any unauthorized activity due to the data breach. in another cyber hacking incident, three u.s. public companies that were targets of chinese spying did not report that of trade secrets to investors.

this despite rules designed to disclose significant events. i'llf those companies, call and allegheny technologies, say the thefts were not material alcoa and- our co--- allegheny technologies, say the thefts were not material to their business. >> exactly what does this indictment alleged? widespread theft of trade secrets, commercial information, all sorts of havoc commercial e-mails by five chinese military offices stationed in suburban shanghai working out of a pla information-technology unit. we could say charitably, but according to the indictment, a unit, an hacking espionage hacking unit. if you believe what the u.s. has been saying for sometime, this is really the tip of the iceberg and the start of the new normal of how the u.s. is going to

approach this issue of economic espionage. >> why these guys rather than their bosses? >> that is a great question. we don't entirely know yet. the case against these guys is relatively easier to make than against their case -- that against their bosses. these are some of the same people who were written up in 2013 thatt in early we wrote a fair bit about in "the times" that time when we went out and found this building and so forth. here arehe individuals the people who actually sit at the keyboard and have identified themselves or are identifiable at moments when they have shown oron various chat rooms other online activities. identifying their bosses is not only a little bit harder to do but is a lot riskier to do thatmatically because, at

point, the chinese could well retaliate by throwing out u.s. military attaches or indicting american nsa officials who they believe are responsible for some of the u.s. spying in china, including a big case that we wrote about a few months ago. way -- involving wawei, the chinese networking company. tonight atsee a more 8:00 and 10 p.m. new york time on bloomberg television. us turned to politics. six states held primaries tuesday night. let's look at the winners and losers with peter cook and phil mattingly. thank you so much. peter, let me start with you. last night was the busiest primary night of the year to date in what should people take away from the results, particularly on the republican side where the theme seemed to

establishment-that conservatives, like mitch mcconnell, who won against tea party conservatives? >> you should take away that the tea party did not do very well. it was a big day, a big night for those establishment republicans. it shows how those business groups finally got involved in the political season this time didn't want to leave anything to chance. the an indication that establishment is reestablishing itself within the republican party. the tea party is not going anytime soon. but this is a big win for the pro-business side of the party. this was a big night at least for mitch mcconnell and that crew. >> phil mattingly, talk to me more about the u.s. chamber of commerce and its influence in this year's voting. what is the chamber hoping to accomplish voters seem to be

responding to the chamber appeals for support. >> the chamber made a decision early on in the cycle that they were going to get involved. the chamber has always been a big player in electoral politics. in 2010 and 2012, they were thrown back by the tea party, folks that weren't just going through a line with big is this. the chamber got an early, picked their candidates early. they threw money at them. over $12 million spent so far this cycle. i think their point is this. if you get behind especially incumbents early and you take challengers very seriously, they can be very difficult to beat. i think this is the mentality they brought into the cycle and one they will keep going forward. >> this election season, is it seen as a power struggle? for control of the republican party? toi think that risk is going continue but not as pronounced as it has been in the last couple of years. i think part of that is because the chamber and other groups are spending to try to get their candidates in the lead here in

these primaries. and also because the tea party luster is fading somewhat. so challenging for a republican to get into a primary season and face a challenger and not feel like they are going to win. yesterday's results show that, with proper business support andy cinko ended its as well, the establishment republicans can continue to win these races. the tea party is not going away though. you can mark that is a certainty as well. >> i was going to say come exactly what peter is saying right now coming to say when you talk with america -- with republican operatives. they don't want to go to war with the tea party. they have done a better job figure out when you talk to the operatives who have been working on this is how to grab that enthusiasm. that is enthusiasm they will need in the general.

they don't want to dismiss those people and turn them off. they want to bring them and them put them under the tent. while they haven't been perfect, they have done a better job especially on the incumbent side. a big test of that is kentucky where mitch mcconnell are veiled over a tea party republican. endorsen did not mcconnell in italy. -- immediately. >> as you alluded to republicans, they have been fielding candidates over the last couple election cycles. they have emerged from those cycles with questions. where those concerns us ways to the rig -- to the satisfaction of the republican establishment? >> there is a lot of memories of todd akin a few years ago. yes, absolutely. conservative than establishment republicans prevailed.

georgia is a perfect example. a runoff, one a former ceo of donald donald, and jack kingston, a congressman in the house right now. ,hose two candidates pro-business friendly candidates, they both prevailed over five other more conservative candidates. now they get to do get out. but they prevailed in georgia. with that, the chance that georgia stays republican enhanced as well. the results last night is not indicative of the demise of the tea party. how are they driving the narrative up to november? think they are absolutely essential. you saw it last night. mcconnell's campaign, the sc, they arehe nr trying to build the bridges. we saw eric erickson, a big-time conservative political activists

already donating money to mitch mcconnell. now it's time to get behind him. the tea party guys are essential to tea party success in november. there are a lot of sore feelings right now but everybody looks at taking over the senate as a good enough and again to maybe he'll things for the time being. things for the time being. >> still more on the fed minutes they came out at the top of the hour. up a littlecoming later when "bottom line" continues.

>> it is 26 minutes past the hour. that means bloomberg is "on the market." let's look at where stocks are trading ahead of the fed minutes. the fed saying the economy -- at the time of the meeting a few weeks ago, said the economy was progressing enough that they were satisfied, at the same time not enough to really heat up inflation. stocks are holding steady, pretty much wherever they were -- pretty much where they were before the minutes came out. if you look at an intraday chart of the standard & poor's, you can see we are at the highs of the session, about six/10 -- 6/10 of 1%. take a look at treasuries to see what the reaction has been there. we continue to see yields move

somewhat higher. 10-year. the look at gold prices in the wake of those fed minutes thomas another asset class we've been watching. asset classanother we've been watching. we will have more on the fed minutes and reaction in a few minutes. ♪

welcome back to the second half-hour of "bottom line" on bloomberg television. let's check some of the top stories we are following for you at this hour. billioneached a 400 dollar deal to supply natural gas to china through a new pipeline over 30 years. resident but -- president vladimir putin is turning to china to increase russia's economy as relations sour with the u.s. and european union because of the crisis in ukraine. today's accord signed after more than a decade of costs will allow state-run gas producer gazprom to invest billions in

developing -- gm is recalling more than 200 house and chevy -- 200,000 chevy aveo's. the problem is with the dashboard light at can overheat and cause a fire. gm has recalled over 14 million vehicles. ben bernanke is set to make millions in speaking fees. hostsrnanke charges his anywhere from $200,000 to $400,000 for one appearance. in march, he spoke in abu dhabi, johannesburg, and houston. the fed minutes from its april 29 to april 30 meeting have been released. let's get reaction from the chief u.s. economist at jpmorgan. he joins me from his firm in new york. welcome back. good to see you again.

one thing we took away from this, the fed policymakers saying continued stimulus to does notployment lower risk sparking an undesirable jump in the inflation rate. i wanted to get your reaction to that right off the top. >> right, i think the main take away is they seem pretty comfortable with the outlook for both growth and inflation. they think growth will rebound after the first-quarter slowdown . with the notable exception of housing. i am pretty optimistic on most -- they sound pretty optimistic on most of the economy. wage and inflation has been quite tame. consumer inflation -- price inflation has been low. the fed sounds pretty comfortable being on hold for as long as the eye can see. >> as you know yesterday, the new york fed president, bill dudley, said inflation would, in his words, drift upwards toward the 2% goal.

thephilly fed said that reserves could trigger more inflation. are we on inflation watch, or is it still at bay? >> i think dudley was saying inflation gradually moving up 2%,ard two percent -- toward which is similar to the view of most of the ofm c and similar to our view. and similarthe fomc to our view. inflation is low, below 2%, but gradually moving up. we see that in a number of indicators. last week we saw producer prices , import prices, even consumer price index gradually move higher. it is a long way to say we have an inflation problem in the strong sense of the word. >> we also learned the fed officials discussed the need to

improve guidance on the likely path of interest rates. what do investors want to know on that front? right now i think there is a lot of confusion as it relates to the dots that are released of the individual participants' forecast and how that relates to the fomc statement. not onlyin terms of when the first rate hike occurs, but the pace of tightening after that. they talked about the fact that there is -- exit strategy, all the things that need to be done before they raise rates. what you saw today is the recognition the market will need better clarity on how that will play out. you're talking about intentionally massive programs, trillions of dollars that will be put in place perhaps 12 months to 18 months from now. that is not a lot of time that the market has to learn and understand how it is going to get back to setting positive interest rate strategies. >> speaking of clarity, what about investors?

do they believe the economy is strong enough to handle further stimulus cuts by the fed? >> i think it is interesting. you certainly see an interest people may behat marking down their expectation of how much higher interest rates the economy can handle in normal times. there does seem to be some pessimism seeping into the markets in terms of investors' projections.owth generally speaking, everyone i talked to seems to be content with the view that the economy will grow at a reasonable pace over the remainder of the year. >> after tapering ends this fall, what is the fed's next move? what is the exit strategy? >> that is what we were hoping to learn more about today and we really didn't. it seems the first step is going to have to be some sort of draining of reserves. they have injected about $2.5 trillion in to the banking system. they will have to sterilize or

immobilized those reserves before they start raising interest rates. when exactly that will happen is unclear. it depends a lot on economic conditions and also depends on what the fed decides in terms of that strategy. hopefully we will learn more after the june meeting, because we didn't learn too much after this meeting. >> we have about a minute left. the senate confirmed governor stanley fischer to the fed's board of governors. what does this vote mean for janet yellen and for the board? >> i think it is good for both. they are understaffed. he is very -- extremely competent. we understand that the chair herself is very happy to have him on board. i think it is good all around. longer-term, i don't see huge differences in their views on the economy, between yellen and fischer. fischer may be concerned a little bit more about financial instability risks.

he could be a point person in terms of clarifying some of the communication issues we talked about earlier that the market is still a little fuzzy on. >> michael full rowley -- michael feroli. always good to have you on the broadcast. technologymaking 4g cheaper. we will look at what a start up is doing to make access to wireless communication faster and more affordable. you are watching bottom line -- "bottom line." ♪

>> a start up in israel is looking to make lte technology more cost-effective. you can find these chips in hp chrome books and verizon tablets. elliott gotkine spoke with the cofounder and asked him how they can compete with their bigger peers. 4gwe specialize in designing

semiconductors which are very high-performance and cost-effective. there is a vision behind what we do. the idea is to lower the cost of lte solutions to the point where you can integrate them into anything and everything. -- how dong on cost you compare with your main rivals? >> lt and 4g is a standards-based technology -- a standards-based technology. the future is going 4g. you don't need the baggage of 2g and 3g. we are one of the only companies in the market that design we are able tond achieve much lower price points than competitors. to your performance question, we are on par or better than any of our more established competitors, if you will. that has been proven not only in benchmarks, but in actual designs we are shipping to the market, like the google hp

chromebook, the verizon wireless tablet, which are based on our technology. >> it is not just the baggage, if you like, of 2g, 3g, what have you, that means others are not selling their price -- their chips at prices like you. you say it is in their interest not to, is that right? >> they have a strong position in these legacy technology spaces, 2g and 3g. they hold very strong patent positions and they make a lot of money from these technologies. so, while they have embraced 4g, because you are -- if you are a player in the cellular space, you have to, they will not in lemonade or remove the three g component any time soon -- they will not eliminate or remove the component any time soon.

it is time for the latin america report. rizal's inflation rate was -- brazil's inflation rate was the lowest ever. inflation has persisted above target throughout dilma rousseff's presidency, reducing support for the government. soccer fans visiting rio de janeiro for next month's world cup are being told to watch out for taxi drivers who overcharge. said consumer watchdog some drivers are adding another 12% onto fares. rio's government expects to fit all taxis with new meters six days before the start of the world cup. coming up, direct relief. its mission is to provide life-changing medical aid to people in need in the united states and around the world. of thispeak to the ceo nonprofit, charitable organization when "bottom line" continues. ♪

>> welcome back. we turn our focus to direct relief, a nonprofit organization that provides medical assistance to people around the world who have been affected by poverty, natural disasters, and civil unrest. thomas tighe is the ceo. he joins me in studio. welcome. thank you for coming on. your organization has been around since 1948. harry truman was president at that time. direct relief's number one principle is "serve people." how has that involved in the last -- evolved in the economic downturn? >> it has been tough. nonprofits like our our counter cyclical. when the economy goes down, you have to do more, which is constraining. we are privately funded with charitable support. it has been a tough road, but we've been able to expand because of companies kicking in,

individuals kicking in. the organization is built over 66 years, a businesslike backbone that allows us to scale up and help people when we need -- they need it. >> did that businesslike backbone included template for stuff times -- tough times like that? >> we started implementing it in 2008 and finished it in 2009, anticipating for nonprofits to deal with the scale and complexities of this, you would have to do it like a business. a good distribution backbone, a supply chain. although there is not a process -- profit motive, the same cost-saving measures are integral to what we do. >> direct relief has made its mark in serving -- -- in serving underserved

communities throughout the world and here in the united states. the affordable care act here at home, has that made your job easier or has it complicated it somewhat? does it force you to work at dual purposes? >> it remains to be seen. the good news is more people have insurance. what remains to be seen is how good that insurance will end up being at providing actual access to care. insurance is not necessarily a proxy for getting a doctor. if it is a bad insurance, you don't have great access. we have seen large gaps and have worked with the nonprofit safety net health centers and clinics that serve over 20 million people. i think it should be better for them as they have more paid, insured people coming in, but there will still be significant gaps that we anticipate responding to and addressing as best we can. >> i'm speaking with thomas tighe, president and ceo of direct relief. rural communities in

this country lack an adequate health care infrastructure. what are your people on the ground telling you about the severity of the problem? the dilemmas of capitalism. markets respond well where they should, where there is a path to profitability. when they don't see that, they don't engage. the dilemma is that poor communities aren't as well or efficiently serve as those for which there is a business rationale. >> that's where organizations like yours step in. >> to be laser focused on issues and eliminate the waste. that's a big problem that people have with nonprofits. i'm for you, but i don't trust that you will deliver results. we tried to address that head on. we work with businesses all the time to bring that kind of business approach to humanitarian problems. >> you mentioned the private funding.

you are a prolific fundraiser. how did it help you during these times when people were saying they did not have a lot of money to give, times are lean? how did your pitch change? what did you tell them about the urgency of the problem? >> i've never been called a prolific fundraiser. thank you. what we've tried to do is encourage people that -- here is the business case for doing this. we have a light cash expense. we try to work with businesses. you get money to convert to goods and services. when you have a company like fedex say we can provide the distribution service, when you have sap say we can help you hit a state-of-the-art enterprise a system so you can make better decisions, when google kicks in, when companies from johnson & johnson engage, the need for cash is not as high, but the output can increase because you have the participation of people

who are each doing their part in a way that otherwise could not happen. >> where is the need most urgent right now? >> right now, it is probably serbia. we are trying to figure out what , if anything, we can do to be helpful. the philippines -- the attention span of people is very short, but it was a major typhoon that hit back in november. there are fires in california, tornado swarms in the southeast. increasing severity and scale of emergencies keeps us very busy, trying to have a system to respond efficiently with local, community actors, who are often off the grid. we are trying to put them on our grid that we can respond and encourage the participation of businesses and people. >> a phone number or website for people you -- who want to get involved? am it everything you could want to know is that direct -- >> everything you could want to know is at directrelief.org. >> stay with us.

another check of market movers is on the other side of the break. ♪

>> get the latest headlines at the top of the hour on bloomberg radio and streaming on your tablet, and on bloomberg.com. that does it for this edition of "bottom line" on bloomberg television. thanks for joining us. "on the markets" is next. i will see you tomorrow. >> it is 56 past the hour. bloomberg tv is "on the markets." let's take a look at stocks in the wake of fed minutes being released. they continue to hold steady. inflation not getting out of control. stocks are at the highs of the session here. treasuries -- we've been seeing yields move up

today, interestingly enough. the 10 year yield is now at -- 10-yeard on the -- brad, thanks for coming in. what's the take your? -- take here, especially as we've seen rates going in the opposite direction? >> there have been some serious distortions in 10-year treasury over the last few weeks. it made sense over the winter as there was a winter slowdown. we saw the conflict in russia and the ukraine. --have seen in a few weeks seen a few weeks of improving key points. distorted, are a bit reacting much more technically than they should be. we will see a reversal over the next several weeks. >> what will drive that reversal? one of the things we talked

about is that pension funds have been piling into treasuries. they are not terribly nimble traders, one could say. once they make a bet, that is more of a long-term trend. how much of a reversal are we going to see and what is going to trigger that? ofthere are a number of technicals. pension funds have begun to invest. deflation fears. there is an argument that inflation bottomed the third and fourth quarter of last year. we've seen a pickup in the cpi and ppi. occurred asueezes well. a number of traders have been have-squeezed as rates rallied lower. generally, fundamentals program -- prevail over time. that is where nonfarm payrolls have shown some improvement.

last week, the jobless claims was at the lowest number we have seen since may of 2007. i think that is what has overwhelmed the market over time. it will be the smelling salts that wake it up. we need to be careful to assume the fed will be low -- careful of complacency that assumes the fed will be low forever. >> are you putting your money elsewhere within fixed income? >> i would prefer to be elsewhere. it is difficult to time this. if i would have said this a year or two ago, it might have made sense, but look where we are now. to be asthing is agnostic as possible with fixed -- with credit dollars in fixed income markets. we have found areas that are more housing related, non-agency mortgage funds are the right mix of the credit investment. those assets should benefit as rates eventually rise. pegged somewhat to a

gradually improving housing market. >> brad, thank you so much for coming in to talk to us about rates. we will be back "on the mar kets" later on. "street smart" is next. onwe have a sea of green wall street today. stocks flying out of the gate and gaining momentum after the fed says it sees no inflation risk. we are less than 1% from all-time highs. i am trish regan. "street smart" starts now. welcome to the most important hour. 59 minutes on the clock until the close. coming up, bnp paribas facing a fine twice the size of credit suisse from u.s. regulators. will the bank be able to withstand a potential client exodus? i will be joined o