>> from bloomberg world headquarters in new york, i am mark crumpton and this is "bottom line." today, a government panel calls for revisions to the u.s. spy program. then iran nuclear talks in vienna reach an impasse. plus a look at the latest in technology innovation. the curved television. 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 stories making headlines today. jon erlichman details efforts to

get kids to watch sports on new media platforms. indira lakshmanan reports on the nuclear power talks in vienna. we begin with peter cook and a new review of a controversial u.s. surveillance program first leak by edward snowden. what does the reports say? >> of this report from the privacy and civil liberties board, a group appointed by the president and confirmed by congress may give reassurance to americans that the government is not reading all of their e-mails and it could provide political cover for tech companies accused of offering up too much of their customers in from -- information. critics of the program will satisfied by this report. one of the biggest revelations to come from edward snowden about one year ago, it immediately raised serious questions about whether the nsa was sweeping up electronic indications in the same way that it was collecting phone records. the bipartisan group era appointed by the president has found in their report that that

is not the case and have concluded that the program is not only legal, but effective in keeping the country safe. i spoke to david earlier today. they have thwarted more than one terrorist plot and provided valuable information to the president and other decision-makers. it is important to continue the program but we do think that reforms are necessary when it comes to people's communications that are caught up in the process. >> again, the board is recommending specific changes here, some of the ideas require the government to provide more targeting justification with a intelligence purpose for the queries. more limits on fbi access to the data, though the board was split on how far to go on that. more written guidance for analysts on what to do when a query produces a u.s. citizen's communications and more technical filters to exclude certain communications in the first lace. it is only an advisory panel and it is up to congress and the

administration to see that any of these ideas make sense. privacy groups criticizing the findings, calling the report legally flawed and factually incomplete. the debate will continue. >> have we had any reaction from the companies involved? >> it has been really quiet from them so far, we have not received any explicit reaction, but this report could give them political cover against the criticism they are facing, especially overseas. snowden released a long list of companies that were forced to turn over information, much to the dismay of the company. these companies show that they were not willing partners in the government's surveillance programs and providing more transparency on the programs, something that these companies have been lobbying for. it provides details on how the information is collected and processed, which could alone help the companies going forward. >> peter cook, thank you. another distressing

week, with crises across the middle east and the collapse of the cease-fire in the ukraine. our foreign affairs reporter, indira lakshmanan on, joins me from washington. bring us up-to-date on the efforts to form a compromise between russia and the ukraine. intensified in the eastern ukraine, but just minutes ago talks wrap up in berlin between the russian and ukrainian foreign minister. those talks were brought together by france and germany. all four of the ministers urged ukraine, and pro-russian separatists should meet again no later than july 5 to try to bring about a new cease-fire. that would be monitored by international observers. they also called for the swift release of the remaining hostages. remember, the french and german leaders have already had long phone conversations with vladimir putin and the new leader of ukraine and they have been trying hard to keep a cease-fire in place, but as we

know the effort failed earlier this week. today the german foreign minister condemned the escalation of violence. there have been hundreds of deaths among government forces and the foreign minister claimed that his country is trying the best it can to win a cease-fire and said that they will try to work to get the release of those hostages. the ukrainian foreign minister emphasized that his country needs and deserves to take control of its borders. >> what about iraq? any new progress on forming a new government? >> not so far. earlier this week we saw the adjournment of parliament, which was trying to meet you bring together a new coalition government. meetw that they will not again until july 8. the grand ayatollah, the top shiite cleric in iraq has called for a unity government and asked everyone to work together to in volvo all parties -- involve all parties. a kurdish delegation this morning said the message was that a rack must not give an

opening to this horrific terrorist group hauling itself the islamic state by being disunited. the kurds are now speaking currently in washington and have said that they are going to work towards this kind of unified government, but we have already seen that the meetings so far have collapsed, we will have to see what happens next week when the politicians meet again and whether they can get a new one, prime minister malik has been forced to step down as he has been seen as a divisive figure. >> iran, back at nuclear talks. what are the prospects for a deal this month? >> today we have the deputy secretary of state, bill burns, with a full delegation along with the iranian foreign minister talking about whether they are going to be getting a deal. we have until july 20 until the interim deal expires. i think that what we will see is various groupings, talks continuing over the next 10 days

or so. by the middle of the month we may know if there is a deal, meaning that foreign ministers from all the countries involved would show up in vienna to try to forge the final deal. don't forget the john kerry said this week that major gaps still remain between the two sides and iran is going to have to get serious, according to the u.s. and its allies, about reducing its enrichment capacity if it really wants to get all of those sanctions lifted. of course, the business community is waiting for that, hoping that oil and banking sanctions will be listed -- lifted. we will be checking in on that again later in the month. >> all right, indira lakshmanan on, thank you. more on iraq and the middle east, political capital host al hunt, paul wolfowitz will be his guest. also on the broadcast, ken feinberg on the latest round of recalls for the troubled automaker. "political capital," ride a

night at 9 p.m. washington time on bloomberg. at theup, janet yellen international monetary fund. we will take a look at what the fed chair had to say today about monetary policy and its impact on financial stability. that story and more when " online" continues in a moment. -- "bottom line" continues in a moment. ♪

i do not presently see a need for monetary policy to deviate from a primary focus on obtaining price stability and maximum employment in order to redress financial stability concerns. that said, i do see pockets of increased risk-taking across the financial system. and the next celebration and a broadening of these concerns could necessitate a more robust macro approach. >> dallas janet yellen speaking today at a lecture at the international monetary fund's

headquarters in washington. dr. yellen said that there is no need to change current monetary policy to address financial stability concerns, but she did say that she sees what she calls pockets of increased risk-taking in the financial system. the maki is the chief u.s. economist at our place, joining me here in new york. welcome back, good to see you again. said that monetary policy faces significant to promote as a tool financial stability. our interest rates the first reininghen it comes to in financial excess? >> certainly not according to the chair. she thinks that what the fed should be doing to try to control financial stability concerns is what she calls macro prudential measures. regulatory measures, but only as a last resort would monetary policy be changed to address those concerns. >> she then shared the same

returns as her predecessor, that some of those regulatory measures must pass congressional muster, but with so much tension in washington, what is the fed to do? chair believese that there are measures that the fed can take without legislative action. the fed is ine, control of banking regulation. they can try to encourage banks not to make risky loans, as an example, without asking congress for a resolution to that effect. >> last he can international settlements released its annual report and the bank said that impart a powerful and pervasive search for yields has gathered pace. out at the playing fed? how long can policymakers keep the benchmark rate near zero? >> they think they can keep it there for quite some time. there is a difference in view amongst central bankers on this front. waser governor jeremy stein

a proponent of the view that monetary policy had to account for financial stability concerns. we just heard from the chair that she is not on the same page mostat front, at least in circumstances. i would put the b i s more in the governor's camp, that they think that this is something that should be front and center for central banks, but again there are differences in view. >> does the not seem to be a difference in view in terms of what the effects could be? a lot of people we have spoken to europe bloomberg said that if ae rate stays near zero for longer. of time, there is the danger of creating more asset levels. are you in that camp? >> i am concerned about that down the road. we don't think that there are currently asset doubles in the stock or housing markets, but if we continue on the path we are on that does become a concern. >> dean share yellen says she does not see the need for

monetary policy to deviate from its primary focus, price stability and full employment, but we are seeing a steady drop in the unemployment rate. should inflation get more of the fed's attention at this point? >> i think inflation is likely to rise more than they expect. their view is that it will be below target throughout this year and into next year. in our view the number will be moving above target by the end of this year on a headline basis and the core basis. we do see more of a rise in inflation coming than the fed. >> i am speaking with dean maki, chief economist at barclays. her comments came one day after the dow industrials set a record. what is moving this market? even though concerns have been expressed that volatility is too low? >> i think part of it is the easy monetary policy. fors a positive force markets, the economic data is enough to keep the labor market

improving at a robust pace in terms of job growth and the unemployment rate falling. it is not so strong that the fed is going to raise rates any time soon. in this kind of environment the stock market seems to do white well. >> adp figures show u.s. companies added 281 thousand workers to their payroll in june. that is a big number. has the u.s. economy finally shifted into a higher gear? >> we do think that tomorrow's number on job growth is likely to be robust. time i would highlight that we have averaged over 200,000 throughout the year . even though gdp growth numbers were weak in the first quarter, we were consistently adding jobs throughout that time. i think the labor market has proved to be much stronger based purely on the gdp numbers. >> in just a few minutes we are going to take a look at the increase in student loan interest rates. student loan debt in this

country is now at $1.2 trillion. how is that -- that impacting the overall economy? >> it varies. we are not as concerned as some about college graduates graduating and having lots of student loan debt. of far more concern to us are those that do not graduate and have the equivalent amount, because they don't have the increased earnings power that graduates do, but they have the big hills. that is where we see the most concern on the student loan front. >> dean maki is the chief u.s. economist at our queries. you onlways glad to have the program. thank you for your time. >> thank you. >> coming up, the caribbean college investigation, why have that not -- why have they not been able to reach an agreement with the u.s. department of education? ♪

ways to are multiple watch bloomberg television. we are on the web, bloomberg.com, on your mobile device, apple, and amazon fire. corinthian colleges failed to reach an agreement with the department of education to sell or close its 100 seven campuses. the for-profit college chain is under investigation for allegedly falsifying grades and job placement data. janet morin joins me now with more on the story. janet, corinthian faces multiple state and federal investigations for his recruitment and lending practices. that shuts down, what will mean for its 72,000 students? >> a good question. right now you have state community college systems trying to reach out to students to see if they are interested in

continuing their education. they may be able to find a place that different community colleges. do their credits transfer? that is the question. ideally if they move on to other colleges they may be able to continue, but it is not clear. >> will students attending schools owned by corinthian that closed before they complete their degrees, what happens to their federal loans? >> very good question. the department has a provision that if your school closes, the loans could be canceled. that could mean a lot of money for the u.s. government, a lot of these for-profit schools get most of the revenue from federal student loans. if students are not able to finish their education it could be costly for the government. >> does it mean the money goes back into the pool? >> the loans would be discharged, so yes. >> the problems at corinthian, what might that mean for enrollment at other similar businesses?

>> there seems to be a lot more scrutiny in the last couple of years and if some of these lawsuits and investigations, either by the state's attorney general or consumer protection bureau with the justice department with other arms looking into these, there is a lot more perhaps students asking questions, perhaps making different choices -- we don't really know. there seems to be a lot of heat on the industry. itt, on other for-profit operator, announced in a filing that the education department was asking for some data that should have come in about one year ago. >> it sounds like the corinthian story because it sounds like the feds were troubled by the fact that they did not get the information that they requested in a timely manner either. >> there has been a lot of investigation into these schools, it just takes a long time to actually do something. you may see something happening soon. >> interest rates, the rates for

federal student loans increased yesterday, july 1. why? >> last year there was a lot of discussion about interest rates because of provision in congress was expiring. congress decided rather than having a fixed student loan rate, they would depend on the treasury. that rate was set in may after an auction and it is going to go up eight tenths of one percent for each type of loan. the bottom line is it will be costlier to borrow. this impact borrowers? >> more money. you may want to think about how much you are borrowing, the rates are higher when you go back. >> families getting their bills for the false a master this month and next -- explain the loan process, especially for freshman. >> if you are a freshman and are starting the process new, you have to sign what is called a master promissory note. you can do that online. most colleges require online

loan counseling. many do the federal government online counseling. you know, you try to familiarize yourself with the process and pay attention to what it means for accrued and capitalized interest. right, janet morin with an update on corinthian and the increase in student loan rates. janet, thank you so much. >> thank you for having me. >> we are getting headlines from an interview on french television, the former french president nicolas dark cozy faces charges in a federal corruption probe. he was questioned for 15 hours by a team of anticorruption magistrates. the piece has to do with his campaign financing. he called the charges against him grotesque and says that they are in an effort to cope -- to humiliate him. he said he was shocked by the manner of the questioning and that westerns around his private

his campaign, that was funded by mo market off he was absurd. 26 minutes past the hour, bloomberg television is "on the markets." alix steel has the details. >> stocks losing a bit of steam as the trading day continues. the s&p is relatively flat, flipping over into negative territory after that hot it of adp employment report today showing that private jobs added were 280 1000 in june. utilities in particular are getting hit pretty hard. individual stocks that we are watching, salesforce.com, the maker of marketing software irking to acquire a german company according to ceos. the deal will help them reach the target of $1 billion in sales throughout germany. beengan, the banks ceo has diagnosed with throat cancer.

he plans to undergo treatment, saying it will be business as normal. that does however bring up issues and concerns over possible succession. back in 30 minutes, more "bottom line close on the other side of this rate. -- break.k -- break ♪ ♪

>> welcome back to the second half-hour of "online." thank you for staying with us. time now for the commodities report. su keenan is standing by with the details. >> good afternoon, mark. potential hurricane on the horizon, tropical storm arthur strengthening off the coast. could be a hurricane by tonight or tomorrow. arthur is building power in the waters east of florida and causing alerts as far north as virginia. one meteorologist told us that it is a strong, tropical storm right now that could reach

hurricane strength as early as tonight and would be the first to hit the u.s. since 2012. at a minimum causing heavy rains up and down the seaboard. oil, check it out, at its lowest level in three weeks. storya very different from when hurricanes were aimed at the refinery ridge golf. oil futures rallied as high as 105 as the government's latest supply data showed inventories falling more than forecast. north carolina officials will make a decision later today on whether to call for evacuations of the outer banks, where one quarter billion vacationers are headed for the holidays. >> copper is the big gainer today. >> limiting to an 18 week high on large part because of the strength of adp jobs data. gaining roughly six percent in the second quarter, posting gains and to quote one

strategist, payroll cut the whole market by surprise. when you have employment growing demand for industrial commodities like copper will be higher. finally, the second-most accurate precious metals price forecast out there as far as bloomberg stats go says that gold rallying is about to reverse. corp. sees gold and silver posting losses for the year. >> all right, su keenan, thank you. that is how many fireworks will light up the skies on friday night for fourth of july celebrations, but it is also big business for local retailers and states. alix steel is doing double duty and looking into these explosive moves. >> you have to had you -- you had to have the pond. boom. we are looking at $675 million according to american pyrotechnics.

that is just the stuff in our backyards. not counting the millions that will be sold in terms of display fireworks. over the past 15 years we have doubled what we spend on fireworks, lighting up more than 100 63 million pounds of the sparkly stuff. people really save up for this. buying fireworks is more widely accepted, injuries have fallen somewhat. states have been relaxing firework restrictions. now, plus d.c. and puerto rico allow for people to buy some kind of fireworks, although not the really generous. >> which companies sell the most? >> they are all private, so in terms of the ones that sell to consumers, phantom fireworks has 70 throughout the u.s.. they told me they get 80% of their revenue on the week before iny 4. in fact one dollar the off-season is 100 times on the days leading up to the big show.

in terms of the display side, companies that sell to people putting on a big show, piracy respect -- pyrotechnics spectacular lead the way there. but it is not about online for these guys. it is about her ken quarter, you want to touch them, see them, look at them. there are restrictions that make it difficult to order online. all of that is solved by going to the actual store. >> is a really he half fireworks? >> i guess. i have never lit one in my life, i am kind of excited, but in massachusetts that ptolemy do that. like there you go. the big show in the local neighborhood, where is it? >> over the past five to six years they ran out of money, now it is all about corporate sponsors. the granddaddy is a new york city sponsored, macy's, the gold standard for these shows.

also, nashville, tennessee is pretty huge, sponsored by almost everyone under the sun. dr., kroger, even delta. the interesting thing is that there is a trickle-down effect for the local economy. specifically red, white, and boom told the apa that the july 4 fireworks display had an $11 million impact on the city andrew 250,000 people and an thetional 150,000 in surrounding area. if you see fireworks in your dreams, it means you're being creative. just wanted to let you know. if you dream about it, it sparks your creativity. >> that's funny, i thought it meant something else. [laughter] alix steel, thank you so much. are you behind the curve when it comes to the newest tv technology? the answer may surprise you. we will take a look when "bottom line" continues in a moment.

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today's latinfor america report. the latest on argentina's economic challenges, the prime minister is traveling to the united states to present the to thene debt case organization of american states. they are sending a team to new york to start negotiations on july 7, without the bondholders who have sued for 1.5 ilion dollars in unpaid debts. bmw plans to invest about $1 billion in a new factory in mexico according to a person familiar with the matter. their second plant in north america will produce 7 million cars per year. the factory will be located in [indiscernible] 250 miles northwest of mexico city. it will employ about 1500 people. that is your latin america report for wednesday.

coming up, derek jeter and peyton manning that on a sports and meant for kids. ♪ -- sports network meant for kids. ♪

>> they are the essential part of any man cave. they come in led, four k, 3-d, now curved. that is the latest feature that manufacturers are trying to push on to consumers. sam grobart had one brought to his own personal man cave to test it out and see if this is a home run for the industry or another curveball. >> the world cup is in full swing, which of course means you need your essentials for the big game. i have got mine, funny ins, m.d., the doctor, and my big old tv. today go tv shopping

you're likely to encounter two very new hyped things. curved displays and altra high definition resolution. this $3300 television from samsung? it has both. let's start with the curve. as you can see here, this display has a slight bend to it. why? they will tell you it is all about viewing angles and creating an immersive experience, but mostly it's angst. in fact a curved display in some cases can distort the image. but why should that get in the way of their marketing efforts? feature from this tv is four k resolution, which means it has twice as many pixels as the best tvs out there. increased pixel count should mean better image quality and, way up close it really does. but as you start to move several feet away, the pixel count starts to matter less and less and then not at all.

then there is the question of four k content. right now there is not that much of it. this tv actually comes with a hard drive preloaded with five movies and three documentaries. now, you can't update this hard drive, so i hope you like watching x-men origins, g.i. joe, and "the counselor." consul --ome four k content on netflix, but that is restricted to "breaking bad" and "house of cards your code the tv industry wants you to desperately buy a new television. the problem is most of us did in the past two years, so they need to come up with new reasons to trade in the old sets for fresh ones. -- 10 80y called 180 p worked, thenh

refresh rates, which no one understood, and then 3-d. the next attempt to make us think the tvs that we own are obsolete, which is pretty hard because the tvs that we have our great already and what really matters is what is on. >> this is my favorite throw. can't make it up. staying with media, it is like an espn for kids. a father of three betting on sports television. it is called "the whistle." derek jeter and peyton manning like the idea as well. john west joins me here in the studio. jon erlichman joins us from los angeles. jim, thank you. kids do not watch sports the way that adults watch sports. is that the youthful perception or because sports are not tailored to them? >> great to be here, mark.

we think that this digital generation of kids has very different media habits. they have shorter attention spans and they want to understand the behind the scenes. like they are in a relationship directly with the athletes. they watch it in a very different way and we feel we are addressing an underserved audience right now. >> did becoming a father teacher this? >> i have started a couple of companies and after selling the second one i saw the sports media through my kids eyes. and it really made us aware that there was this big opportunity, that kids were just not engaged in longform broadcast content. they want to be part of the digital conversation, they want it short form and they want to be part of the conversation. >> jon erlichman in los angeles, talk to me about kids becoming part of the digital form that mr. west just talked about. >> it is so important.

in the same way that john got to know what was going on through his kids, you have companies like this in l.a., acquired by dreamworks animation, the ceo there was watching his own kids not turning on the television, just watching the -- just watching the tablets. what we have really seen is the ,ise of multichannel networks new networks graded on youtube that ring together all of these different youtube channels and become the new cable channels. what is interesting in john's case is that we are talking more about sports and moving beyond things like fashion and gaming, which have been the areas that we have talked a lot about so far. >> why sports? >> two reasons. as a parent i felt that sports should be character building for young fans. it should really teach them self-confidence, teamwork, fitness, nutrition, math and

science. sports are a natural and fun way for this generation to learn. secondly, there are 1.9 billion global youth teaching under 70 million in the united states. to john's point, when we look at the segment of media they consume almost eight hours per day. we saw fashion and gaming, and when we got to sports largely the content that they had was made for their parents, which again there are different generational needs for this generation. >> john? sports leagues and broadcasters are very protective of their rights for live games, how do you navigate those waters? >> great question. with thereat hardships nfl, nascar, and several others. really, we are not going after live games. we have research that shows that this generation is watching less live games, so we are going

after everything else. part of it is the content that we reedit and shorten and make more interesting to today's youth, along with cocreative taking youtube sports stars and bringing them into a sports league facility with pro athletes to create a great collaboration. rexx is this a question of treating kids like small adults? giving them credit for their intellect and curiosity? eating authentic and this generation has a different set of requirements about what is authentic to them. they also want to be part of the content. going back to not being broadcast, they want to upload their video and edit it as part of the experience in addition to or youtubeo sports sports heroes. it was part of the mix. --t week in los angeles until you have been there you cannot really convey the passion

that this generation has for their media. in a very different way than our generation. >> the numbers obviously speak for themselves with respect to the traffic you're getting, but cable companies will argue that getting people to give up live sports is not going to happen anytime soon. my question to you is -- as this new generation grows up -- probably at home right now, if it is their parents cable package and they watch the world cup through that, will they pay for cable to access live sports? rexx that is the big question. the research we have done on digital natives shows us that they want content on their own terms. live,ition to watching it they want background, behind the scenes, how to trick shots. we view it as augmenting the live sports experience. that is certainly what we are doing with our be partners. we try to show up and give this a short attention span generation additional content

socialsports through media. >> mr. west, 30 seconds left. when you give -- get derek jeter and peyton manning to put their seal of approval on it, what does it mean? >> my cofounder has a great reputation in the sports industry. to us what it means is that great pro athletes are behind our mission to create sports content that is authentic for this generation and focused on positive content with family-friendly advertising. >> all right, john west, joining the in studio, and john ehrlichman, joining me from los angeles. guys, thank you so much. stay with us, another check on "market makers -- "market movers," on the other side of the break. ♪

>> tonight, special correspondent willow bay reports from the clinton global initiative conference in colorado, speaking with former president oakland in an top government leaders about the obstacles holding back economic growth and how they plan on overcoming them. tonight, 9:30, new york time, only on bloomberg. get the latest headlines at the top of the hour. that does it for this edition of "bottom line." i am mark crumpton in new york. we are off for a couple of days for the fourth of july holiday. see you on monday. ♪ thet is 56 minutes past

hour, meaning that bloomberg television is on the markets. let's get you caught up on where stocks are trading. stocks are a bit off, down by 2/10 of one percent, the dow jones is relatively flat after earlier gains after that really positive adp employment report showing the private sector at an overt -- added over 280,000 jobs in june. itsk out the vic, hitting lowest level since 2000. you can see it there, under 11. a crazy non-ride for the vix. near record lows, the question is -- buy or sell volatility? what does that actually mean? two of the world's biggest investors are split on what to do. to sell, they are designed help investors do both. joining me with more, there etf expert group. worst of all, buying and selling

volatility by itself is a complicated thing, so i imagine that these are as well. >> it is not that easy. the vix index cannot be invested in. you cannot track it. the best that you can do is attract -- is track vix futures. most people use the futures dtn and it is not that good of a tracker. if you look at it, for example, down 18% this year. this one was down 43%. when it went up 43%, this only went up 17%. it is sort of the worst of both worlds, the futures market from one month to the next is so steep that they can tango the roads to return, which is why this thing is down 99% since it came out five years ago and pretty much just burns money, but it is so popular and trades as much as oracle every day in terms of getting quick, short-term exposure. probably more for the big noise and institutions.

powershares came out with a which basically has s&p 500 stocks with a bit of futures in there that they go further into and obviously monitor based on signals in the market, like a hands-free retail product. >> but not 100% exposed? >> no, no and it does shift. >> how about selling? >> selling is equally confusing. on the business side, velocity shares for the daily inverse short-term index, this one shorts the first and second month futures. in this way you are selling. this one is a huge for former benefiting from three things, a dailygoing down with reset, helping it when it goes on the path one way. in the last 12 months, neutral has really paid off in the past. since 2011 when it started to

come down, this thing is up 800%. but when it crashes up? those people get killed. >> fascinating. thank you for helping me break it down. thank you so much, eric. that is it for "on the markets." for now, "street smart" is up next. ♪ >> we've got stocks fighting for gained. the dow creeping toward 17,000 but it looks like it's all going to come down to tomorrow's big jobs report. i'm trish regan and "street smart" starts right now. >> welcome, everyone, to the most important hour of the session. areung, lg and google rushing to get a computer on your wrist before apple does. new smart watches are hitting the shelves next week, and we will show you what you can do righthe