>> from bloomberg world headquarters in new york, i am mark crumpton. this is "bottom line." presidentrussian vladimir putin revokes the mandate to use force in ukraine. then, bloomberg's exclusive interview with alan mulally afford. lebron james test the free agent market. to our viewers and the united states and those of you joining from around the world, welcome. full coverage of the stocks and

stories making headlines today. matt miller has highlight of his exclusive interview with the ford ceo, alan mulally. michael mckee with good news from the suburbs of america. we begin with vladimir putin saying the weeklong cease-fire in ukraine should be extended. lex good afternoon. the white house welcomed the call to resend authorization to use force in ukraine. but maintained a healthy dose of skepticism about the leaders true intention. echo listen. >> and action not just words that will be critical. this is what the president conveyed to the president in the telephone call. est the white house press secretary emphasizing that cease-fire.

underscoring the situation that the country is far from on any sort of guide path towards de-escalation. >> this crisis has roiled markets for months. what has been the reaction to the seemingly good news today? >> it has been positive. the gesture has been viewed as conciliatory. it's in the ruble higher and i think the primary thing, interest -- addressed and eu concerned to use the mandate for force. they say this is a move designed to push off any type of increased sanctions. on july merkel said new sanctions could come as soon as the june 26 eu summit. the entire sector has to be viewed as positive economically. that said, eu officials have made very clear patience is running thin. the steps walking back a little might be swept.

phil mattingly joining us from washington. thank you. the london-based head of the emerging markets research at commerce bank. i'll come to bottom line. thank you for your time. how are investors in russia and the ukrainian markets reacting to the prospect of the easing of tensions? i as it was said before, think we should see this positively. we have seen the constant step towards de-escalation. i think today's moves are removed in the right direction. you are bound to get issues in the eastern ukraine because of the issues of the key up forces around but should see this as a de-escalation. >> how badly has the russian economy then punished since the crisis began in the spring? thing to watch is the

local capital. people pulling money out of russia itself. you have the capital outflows. billion in net private outflows. this will mean more capital outflows itself. around one percent. four percent german. 90% is reinvested. really not much foreign direct investment and that. >> we also saw the gas problem. energy producer gained over four percent, the highest rise since last october. gas from still insisting ukraine has to pay it almost 2 billion dollars in outstanding payments before russia resumes talks over new gas supply returns. the cease-fire news today, do you think it will have an impact on those negotiations? >>

absolutely. this is not only about ukraine but other countries including venezuela, syria, and iraq. all of these things need to get results. if we see a resolution, then we should start seeing a resolution to issues in syria and iraq as well. >> about a minute left. pointing --or reporting about talk before today's news that maybe there will be more sanctions implemented against russia. do you think it will make the united states and european union rethink the strategy and further economic sanctions? blow everyone take a breather to see how the cease-fire plays itself out? >> absolutely. the u.s. is probably one step --ther and third staying third stage sanctions. step behind.

i think this will cause pause for thought essentially ahead of the summit that comes in a weeks time. london-based head of emerging markets at commerce bank joining us live on the phone from london. thank you for your time and respect it. we appreciate it. >> the ceos of at&t and directv defending their 48 billion dollar proposed merger. they testified today before the house judiciary committee and will face senators later this hour. megan hughes on capitol hill for both hearings. bottom line they say this will be good for consumers. they say they will be offering bundled packages and will be able to compete with major cable providers. take a listen to the ceo making the case. no significant competitive overlap between at&t productct to be and the consumers are overwhelmingly

demanding, broadband video bundle. the consumer benefits are significant. being able to offer directv nationwide is a game changer in terms of the economics for deploying broadband. he laid out several statistics i want to share with you in making this cell. he said content costs would be lower by 20%. $1.6 billion in cost to synergies over the first three years and would extend rod band expansion to 15 million locations, especially rural areas. a big priority for lawmakers. senate will pick this up this afternoon. thisll be hearing more in hour. >> speaking of lawmakers, do they seem opposed? >> hard to say. there really were not a lot of direct criticisms to this deal

but a lot of expressions of a general, broad concern over the .ra of megamergers we are in time warner comcast, t-mobile, sprint -- what does this mean for consumers generally. specific concerns about the overlap. i mentioned at&t in making the case is saying we're very strong and broadband. directv is very strong in page tv. these are really complementary services. >> what about any other components? rex there are opponents. consumer groups, competing smaller cable providers that say the issue is at&t is a paid tv service as well. they do offer limited video service in 21 markets. is a nationwide service and you have at&t in the 21 markets. so they say it will be an upward pressure on pricing.

very contrary from what we heard from stephenson today. >> thank you. coming up, senior analyst paul sweeney has been watching the at&t to wreck tv proposed merger very closely. he will join us new york time to get best when -- details on the hearings being held today. that is coming up. new signs of a rebound in the housing market. is it enough to get my next guest to turn bullish on housing? michael for rowley chief economist at jpmorgan joins me when we continue in just a moment. ♪

>> taking a closer look at the health of the u.s. housing markets. sales soared in may to the highest hubbell a 2008 jumping 18.6%. chief economist at jpmorgan joins me now to break down the

latest reports. welcome back. good to see you again. sales make up a small percentage of total home sales. dumay's numbers signal a housing recovery that is slow but steady? numbers?ay's >> i think so. existing sales numbers were also up nicely. look readyme numbers positive right now. i think we're finally shaking off the nine month malaise. trackk things are back on for pretty good increases in home sales and hopefully housing starts as well. increasing home prices hurting affordability for prospective buyers. to see the current environment as an ideal time to get into the market. are they being shut out?

>> i think that had been a concern but we saw a moderation in home price gains. at least the data we have through april. it shows home prices have been increasing very risk way. initially it was good to have house prices pick up and support household alan sheets. arguably they have been getting frothy. >> bloomberg lp senior economist says that is the video among high income fires has been the spring housing market primary development. our home builders targeting this segment of the u.s. population? only growingot part of the housing market but have been a big part of the consumer recovery overall. i think that largely reflects

what everyone knows is happening with the distribution of income so far and the recovery. hopefully if things continue, the labor market will see them spread out. >> speaking with chief economist at jpmorgan. talking about housing. those who have considered buying a home have been putting it off for the past few years. now that things seem to be stabilizing, how much pent up demand is there out there it? >> a fair bit of pent-up demand for housing. yeargh the middle of last seeing pretty good gains in home sales. 10-15%.e up then we had a big move up in mortgage rates that took time to digest but seems to be fading now. not only pent-up demand for housing but more important for the overall economy. for gdp,ld be good

construction employment in the overall economy. >> you referenced last summer home sales decline after the fed began hinting it would pull back on monthly bond purchases. has the housing market fully digested the fed tapering program to go >> i think so. historically it takes between 6-12 months for the mortgage rates to wear out some home sales. i think arguably we're getting to the time where should -- where we should expect to see housing demand recovered from mortgage rates. it is well telegraphed so hopefully we will not see an abrupt move higher in mortgage rates this time around. >> we are almost at the end of the first half of 2014. does the second half with good for housing and your opinion?

>> i think it does. he not only see the latest data look better, but a lot of the surveys we look at, including the real -- realtors survey suggest things are gaining traction. >> always good to talk to you. thank you for your time. miller's exclusive interview with ford ceo alan mulally. are we headed for a transportation fiscal cliff? out ofted states running money to build roads and bridges. we may get there sooner rather than later. when wetails and more continue. ♪

>> every thursday ford

executives and other to discuss business, a strategy alan mulally implemented in 2006. made it soe -- what revolutionary is he encourage people to speak up about failure . the first person to do this is he takes over in july. hean exclusive interview tells why he is leaving the company he turned around and insight into what he will doing -- be doing after he leaves the country. >> this team created the product strategy and the production plan and the business plan review process. they had wonderful success. it served everybody well. i think mark will continue the major processes going forward. >> do you think mark will do something different from what you did? you can hear and it was a revolution. now the best thing for him to do in the eyes of the board would

be to continue your administration. does he have his own changes to make? >> mark and the entire team created the process that created the strategy. we are serving all the markets around the world. we are restructuring euro. well.s. is doing there are lots of opportunities for us to continue and grow this corporation. >> you say we're just getting started. even though the end of the month is officially -- have a few more days to be a part of the week. >>, and a more days? you still have a sizable position in this company. >> i think i will maintain many of the great relationships i have. i have fallen in love with ford and a great company. so important.

stay close to four going forward. >> work will call you if he ever needs to? >> i said absolutely, any time. >> what will you do after this month is over? i heard you say you have not given a lot of thought to it. >> i have not spent much time on it because the focus i want to have is on the orderly transition, not only the leadership team but the management system. i had the fortune to go all and visit theld fantastic dealers and suppliers and thank them, congratulate them and wish them the very best and share with them i have all the confidence in the world that ford will be fantastic going forward and are part of something very special and wish them the very best. >> the way you deal with any kind of crisis that type -- pops up, your focus on concession plan has been focused for so many other bunnies.

you could easily have a very lucrative practice advising other leaders. forwardreally looking to what i might do. i know the world has lots of opportunity for service. focused on this orderly transition, and i look really forward to what the future might bring and maybe even a chance to talk to you every once in a while. >> we you take a couple weeks off and play some tennis? >> i think what i would like to do is call you july 2 and tell you what i am thinking about. i am probably going to call you from starbuck's. let's call me on second? promise. matt miller joins me in studio. i have said it before coming you probably know him just about as well as any other journalist in america. what advice does he have for the

company he is leaving? >> he really wants the company he is leaving to continue doing -- he stays on message so well. i think he wants mark yield to do the same. surely he will. mariadvice do you have for -- mary barra at gm? the veteran administration who so badly needs advice from him right now. to steveen advice ballmer. has given advice to president obama. it will be very interesting to see where he goes next. >> is he aware of his legacy? he seems very humbled i it. >> i think you must be aware of it. made $400 million over the past eight years. over 6 million shares of ford. they do not just give you that for showing up. he is very humble.

kansas always wanted to work building airplanes. he married his wife in 1970. they're still married. he goes to bed when the sun goes down and gets up when it comes back up. a farm boy. definitely focused and stays on message, which is why it is hard to get any news out of him. maybe on july 2 when he calls. >> thank you so much. 26 minutes past the hour, bloomberg on the markets. jonathan ferrell standing by. nowhere.g a little bit earlier on in the session. down on the s&p 500. a whisper lower yesterday. numbers,ew-home sales up amongst 22 years. not hire any more. treasury to the 10 year yield

down by three basis points. almost four. check out sterling quickly. little but lower. day goes to the u.k. calling the bank of england an unreliable boyfriend. be back in a bit. ♪

>> welcome back to the second half hour of "btottom line." stories ofthe top this hour. vladimir putin's founding a conservatory note. he said a weeklong cease-fire in ukraine should be extended, accompanied by talks. he has also asked lawmakers to resend approval to use military force in ukraine. there to meet with european officials who helped broker peace talks between russia and ukraine -- ukraine. seen here withs

her husband leaving court was found not guilty of phone hacking, reiber he and perverting the course of justice by a london jury. triggered by one of the biggest media scandals and british history. andy colson went on become a guiltydvisor was found of one count of hacking. espn reporting lebron james has opted to opt out of the contract with miami heat. that means he will become a free agent on july 1. this does not preclude from re-signing with the team. james has two years and 47.2 million dollars remaining on his deal with the heat. same deal that michael mckee has, too. the federal government highway

trust fund funnels $35 billion per year to states for road construction but not collecting enough revenue from the gasoline tax and could run dry this summer. officials warning the u.s. is approaching a transportation fiscal cliff. phil mattingly reports. >> what you have is four sets of columns back here, all of which have varying degrees of damage. >> delaware discover the columns of the i-94 bridge work building fast. immediately shut down a road used by 95 million vehicles per day. >> the bottom line is, we have to -- we got it closed in time and no one was injured and now have to get it back open. needed tolion more finish the job. the federal department of transportation is footing the bill. people all over the states that depend on this. >> this is a real risk confronting delaware and the 49

other states. the nation's primary source for public road projects had shrunk from $8 billion. one reason for the shortfall stack of the federal gas tax accounts for 72% of the highway trust fund has been stuck at $.18 for regular fuel for night -- since 19 90 three. u.s. transportation says unless congress acts quickly to fix the fund, states will suspend summer construction plans. >> late june, middle july some will start to pull back objects and even stops him. >> most get a majority from the federal dot. high of 98% in rhode island. the bridge is one of 600-7000 bridges in the u.s.. r ratedof nine

structurally deficient by the american society of civil engineers. it define it as an infrastructure deficit. the most we're aggressive talking about trying to get the funding levels to where they work last year? connecticut from and bob corker from tennessee are proposing to increase by $.12 over the next two years. that will not be considered until after lawmakers move to keep the highway trust fund solvent the summer. >> the romance of the frontier, the chance to stake a claim and make your fortune. all of that is kind of gone now, at least the metaphor is. michael mckee says there are still places out there filled with opportunity and has found the fastest-growing cities in the united states of america. man, and i young mean further west the new -- new

work. all of the fastest-growing city for the next decade will be west of the mississippi. four of the top five are there, including number one, midland, texas. where george h w bush made his fortune. george w. bush was reared. it will grow 8.4%. on the list, st. george in utah, the only eastern city, naples florida, and the fifth city, named greeley, colorado. this comes from a new conference of mayors. a big -- among the big cities on the list, texas still leaves the way. austin includes -- included. four cities in the lone star state. none of them are in the north or

northeast. driving the growth? resources in construction and mining. low-paying administrative and support services jobs are expected to be the fastest growing. may not be as great of a deal as it sounds. the priest low taxes and low regulation boosts your economy. >> does it cut both ways? >> it does cut both ways. unfortunately the slowest growing city still in the northeast. most of them, all but one, east of the mississippi. sadly, five of the 10 in upstate new york. something of an ironing. the biggest, most important that of thet twice number two city, which is los angeles. itnew york were a country, would be the 13th largest economy in the world.

dealing with percentage changes in the law of large numbers. for new york, 2.4% growth rate on that which is what is forecast is about 29 billion dollars. midland, texas make wrote that 5.4%, only 5.4 additional in the economy. country?rk is not a michael mckee, thank you. coming up, we will look at how proposed u.s. rules for faster lanes on the internet are helping a company in the middle east. that is next. ♪

>> stay with bloomberg all day wednesday as we bring you live coverage from the clinton global initiative conference in denver. willow bay will interview former president bill clinton.

that is all day tomorrow right here on bloomberg. a special guest from the clinton global initiative to met the mayor of the host city, michael hancock will join me tomorrow. is -- israeli company is getting a boost from proposed rules to have fast lanes for internet providers. a make technology used to track wireless traffic. elliott gotkine spoke with the incoming ceo on the potential of the so-called net neutrality rules. it is a win-win situation for everybody. consumers will get services better and operators will allow services better. revenues at 58 million. that is a recommend -- record for you.

what is driving growth? messaging service? >> two factors. mobile networks are growing. phones have three g or four g services. 3g or 4g services. the other are applications. they want to purchase more applications that are connecting with their environment. doing different things on the internet, in control for example. thate service will enable over the network. this is another growth engine. usage andly networks the things customers are fighting. >> $28 million of revenue. what is driving the growth? >>

we see the markets in general are favorable. we see mobile networks are playing bigger and more important role. we see mobile operators are looking for more services to deliver to the end user. are focusing and building the right solution to accommodate the growth. >> time for today's latin america report. victory against argentina turning into a windfall for all of the nation's bondholders. argentine note soared to a three year high after the government said it is seeking a negotiated settlement to a decade-long conflict with holders of defaulted bonds. that bolstered optimism the country will avoid a debt crisis. june 16 the u.s. supreme court declined to hear argentina's appeal for malone court ruling that ordered it to pay the holdout creditors at the same time it pays holders of the restructured debt. argentine government began to work toward rather than

following through on holding the payment again. this was led by bondholders. they have sued for full repayment. that is the full latin america report for this tuesday. when we return, and analysis of the at&t directv merger plans as the party faces a senate hearing at this hour. we will continue in just a moment. ♪

>> welcome back. the second of two congressional hearings on the planned merger for direct to the end at&t underway. randall stephenson and michael white testified before the house subcommittee on regulatory reform. now they are about to speak before the senate antitrust committee. looking now at key issues to watch in the proposed merger.

the head of northern american research ship or bloomberg nurse -- news poll sweeney joins me. >> anyone on the distribution side of the entertainment business is for mergers. comcast and time warner cable have already announced a $60 billion plus merger. at&t and direct to be followed up. all of the distributors in the me go -- media inconsistent saying we have to get bigger because the can't -- cost of content is going up and we need to get bigger because the world is getting more complex. the opposition is clearly coming from consumers who recognized -- consumer groups testifying that when our merger resulted nothing but lower cost and higher prices for consumers. clearly the consumers are concerned. a lot of consumer watchdogs paying attention. >> what about competitors? >> if you are a cable company or

satellite company, your number one cost is the cost of programming. that is going up 10% per year. handle trying to get a on the cost to try to hold the cost down. merginghe ways is like together. >> talking about the consolidation of the pay-tv business undergoing. how big is it and how is it affecting subscribers? we have had 50 billion announced in the past month. m&a mergers are making money as always. they're making money. as the media business consolidates on the content side and growing and getting thicker, so many distributors feel they need to bulk up as well. not just video but offering broadband. they feel they have to compete against the internet companies such as google. anyway they look at it, distributors feel they need to

get bigger. >> talk to me about the pay-tv providers. >> they have had no success almost whatsoever. all cbs has to do is threaten to go dark, pull the channel off the air. cable companythe points, caves in. they end up paying a higher rate. lex would do margins look like now? >> margins are under pressure. raising prices about three or four percent. that has to change. they are trying to get control over the programming costs but at some point they may say we will not carry every channel everyone wants to carry. we will only carry channel people want to watch. lex how is this affecting your ability to compete in the digital age.co >> they say also

it is not just about programming. in order to compete against the digital world, particularly where the deal is becoming a bigger and bigger part of consumption, i.e. internet delivered video like netflix i meant need to invest in digital lands and become digital and spends a lot of capital to remain competitive. another argument to getting bigger. >> looking at a live shots of capitol hill as the hearing gets under way. i haven't we heard discussion about price reduction? haven't we heard discussion about price reduction? >> i never heard that coming out of her merger. what they say is we will offer you a better product and if the price goes up, the price goes up. the phone they are to regulators is we will bring more broadband to more rural parts of the country and that is a good thing. >> net neutrality comes into play how? >> net neutrality means can

everyone get equal access to the internet? the regulators will come down upon them. at&t said this even after this merger because they still abide by the rules. >> comcast said the same thing. saying just because we're big does not mean we will discriminate upon. we will allow anyone onto the broadband pipe. don't worry about it. media analyst, paul sweeney joining me in studio. it down like you. thank you. stay with us. another check of the market movers on the other side of the break. ♪

>> get the latest headlines at the top of the hour work streaming on your tablet and that bloomberg.com. i am mark crumpton in new york. thank you for joining us. on the markets is next. >> that is right.

56 minutes past the hour, which means bloomberg had of the division on the markets. getting you up to speed on where stocks are trading. -- down by .4%. the s&p down by a third. we continue to pull off the record highs. the dow at 16 16 hundred 60 five. a little bit of tension in the risk aversion in the market. you can find the excuse with ease. remember, we are just coming off of record highs. the markets had been up earlier in the session and had some pretty big new home sales data in the u.s.. sales rose 19% compared to the prior month. up 17% from a year ago. what does the data mean for homebuilders? joining me is the homebuilder in the list rewriting. welcome to the show. very big numbers this morning and the u.s. how sustainable are they? >> a very encouraging sign

for the industry. you have to take the government data with a grain of salt. there tends to be volatility. we have heard from the builders that traffic is improving. looks like they're starting to convert that traffic into sales. he have a consumer confidence number released this morning and data postrecession hi there. improved confidence with improving labor market. strong gain in may, industry sales are 24% below the long-term average? what do we need to see for a fuller recovery? >> that is right. you need a return of the first-time home buyer to get there. typical housing recovery begins at the lower end of the market. purchased based on need. this creates a domino effect on the housing ecosystem. how did we get their? sustained job growth and

improved confidence. >> what are they doing for what are theyers? there arehe u.s.? >> a lot of challenges as far as student debt. mortgage lending remains pretty tight. one of the main things is affordability and lack of inventory. a lot of negative equity issues are really concentrated at the lower end of the markets and that has cap supply off the market. we are starting to see supply comeback. mortgage lending ease on the markets come up which should help going forward. >> what is really underpinning the markets and numbers? we saw this impact rates and some softness in the housing market. is that all it is, a low rate environment helping buyers? what is the outlook? margins, thee pullback in rates recently is

helping. at the end of the day over the next half year, rates will go up. is continuedto see in krugman of the economy along with the rise in rates. as long as jobs improved, it income confidence continues, i think we will see a further rate increase. >> we will have to leave it there. as always about the data. is next.art" equities continuing to fall back in the session. on the markets a little bit later on. ♪

>> we had early optimism leading stocks to new highs, but pressure is pushing stocks firmly into the red. we have stocks now on pace for their worst today's in two weeks. i'm trish regan and "street smart post quote starts right now. ♪ smart" starts right now. ♪ >> oil prices are climbing higher