>> i am mark crumpton, this is bottom line, the intersection of business and economics with a main street perspective. today president obama says --sia must present evidence and then pallet is -- palestinian casualties rise arian bill ackman discusses his next move in the battle against herbalife. to our viewers in the united states and those of you joining us from around the world welcome. we begin with the recovery

efforts for malaysian airlines flight and age 17. -- flight mh17. bloomberg's ryan chilcote joins me on the phone on brussels. good evening. the 298emains of 282 of people killed on flight 17 are now into refrigerated train cars and they are finally in route -- family and route to a city -- they are finally and wrote to a city. it could take as 12 hours to get there. their plane took off a full four days ago from amsterdam. it should be comforting news for the families waiting for those remains. not good news for the 16 who have yet to be found. the other news we have is the have been handed

over to malaysian investigators. it happened in the last couple of hours. they have been waiting for those black boxes for a very long time. four ministers from the european union are scheduled to meet on sanctions against russia. what can we expect? >> perhaps more sanctions. the prime it is to has been speaking tougher than any point -- then it any points in this crisis -- then at any point in this crisis. whenever they make a decision they have to do it unanimously. there are some countries like france, italy, austria that have been concerned what it might mean for their own economy if there is retaliation. even the dutch are a little bit concerned about ratcheting up sanctions, jeopardizing the recovery effort.

another meeting of eu officials has been called for next week. it is possible we will have to wait until then until we get some sanctions with some real teeth. >> how has russian president vladimir putin reacted to the pressure from the u.s. and the eu? especially following the plane crash? >> initially his reaction was perceived to be wholly inappropriate and lacking by western leaders. he did come out with a statement late last night where he said security must be provided for international investigators. they must be allowed to the site. that statement should have been welcomed. he said no one should have used this crisis and the tragedy for political gain. actions people say his don't jive with his words. he still has a chance to try to

avert what is increasing isolation for russia. >> president obama is calling for more to do -- calling to do more in the recovery effort. housecook is at the white with the president's latest comments. we just heard from ryan some developments on the ground with regard to the bodies as well as the black boxes. it the president was calling for the russian government to specifically al lau -- specifically allow for unfettered access. as you said, to do more to de-escalate the larger crisis. the president once again putting the ball in vladimir putin's court.

the president carried once again another trademark of further costs down the road. >> if russia continues to violate ukraine's sovereignty and the separatists become more and more dangerous and our risks to the people of ukraine but the broader international community, then russia will further isolate itself from the international community and the cost for russia's behavior will only continue to increase. .> that message reiterated here the united states is looking at the possibility of further u.s. sanctions aimed at russia. -- >> cemetery estate john kerry is in egypt --

secretary of state john kerry is in egypt. 20 israelis have been killed since fighting between israel and hamas resumed two weeks ago. gotkine joins us now on the phone from tel aviv. the remissy was today -- was the remiss today. day.immest reportedlyk shells hit a hospital, killing four and wounding 50, taking the palestinian death toll to 537. an initial investigation found there was a cash of antitank missiles in the vicinity of that hospital and therefore the blame for those casualties lies firmly with hamas and other militant groups. in another incident, israel has spotted what it describes as to terrorist squads emerging from a

tunnel dug underneath the gaza strip into israel. he said the air force has struck one of the militants and soldiers arriving on the scene killed a further 10. the israeli death toll now at 20 as well. >> a question that i asked the former u.s. ambassador to syria last week, emily pose a question me pose aand let question to you. is it israel's goal to stop the flow of armaments and stop the bombing of their territory or is their goal to crush hamas? israelink the government has said from the start that the goal was not to topple hamas. there are other groups that are .ore radical the goal is not to topple them politically. it certainly they want to deal a

very severe blow. most importantly he wants to destroy these tunnels. what is technology and its -- thegence cannot do last thing we want to see happen is for militants to emerge from the gaza strip or carry out a massacre in a civilian center. >> we know from the pictures we that there are definitely humanitarian concerns in that region. what are the economic concerns right now as the violence continues? as the economy goes there really isn't that much going on right there.

was a pretty shoddy state before the current outbreak of violence. , there is ansrael impact. people aren't flying in. -- half of their staff has been called up to the reserve. there are factories close by to the gaza strip that cannot offer it because they are constantly under bombardment and the people who work there have to stay at home or move elsewhere in israel. there is an impact. an economist said to me ask me next week and i will have a better idea. m elliott gotkine joining us from tel aviv. coming up the fourth anniversary of dodd frank. ofwill take a look at some the unintended consequences of the law and if any new

regulations might be needed.

>> what happened to the housing recovery we were expecting? the job market is booming and yet housing starts plunged last month. michael mckee has the real deal on the construction conundrum. the report we got from the national association of homebuilders on wednesday, it took homebuilder confidence way up. on thursday we got this. not only were new home sales down -- housing starts, rather, but may housing starts were also revised lower. 2%.r shares are only up it is bad for the economy.

contracted and we are still short one million jobs in construction. this was, as you say, the year that housing was supposed to come back strong. the best guest of analysts and economists is we don't really know why. that is not completely true. there is a group that might have a clue. a lot of homebuilders are reporting today and a couple more later to -- later this week. there calls should be interesting. permits starts this year. you don't normally take out a permit because it costs you money. >> we could see a jump. that is what will play out in the coming weeks.

any perspective on why builders are not building on this? >> it certainly does not have to do with the weather. we will know more by the end of the week. seeonly are we going to those builder reports but we are going to get existing home sales. new home sales, they are expected to be down. why build it to? >> michael mckee with the real deal. today marks the fourth anniversary of the dodd frank law. house financial services committee concludes that the law has not ended too big to fail. it represents the nation's $13 trillion banking industry.

he joins me from washington. welcome back to bottom line. it is a pleasure to have you on the broadcast. >> it pleasure to be on. them aware has dodd frank succeeded and failed? it wasowing the collapse not unexpected to see a significant reform law. sometimes bad facts make bad law. there are some things in that law. for example, to say that no institution is too big to fail, to provide a mechanism that that is the case, though that is arguable with some of my republican friends, to provide for a resolution mechanism to require that nonbanks be regulated. that is important. and obviously to have different types and stronger types. that is certainly healthy for the financial services sectors. things have worked well.

the argument will continue to rage. there isn't enough oversight. also the mortgage process you , it isard your report on very difficult and time-consuming to get a mortgage. >> are the banks out of the risk business now with the regulatory environment? >> my twin brother was a banker. to redo our kitchen. i need to borrow $5,000. he said put a $5,000 cd in the bank and we will do the deal. we can all have a good laugh over that. i think two regiment inking

requires a rigid rule. 40% debt to income. i think that those harmed the generation of the aspiring capitalist entrepreneurs. i think that is a mistake. >> he believes lowering of standards for people to obtain more digits was the root cause of the financial crisis. was he right? >> you have to have assets and income to borrow money. i bought my first house at 27. i had a three year work history. i came home to be a state prosecutor. the banker said we will do a deal to you have your dad cosign the note. they said have the co-owner cosign the first $1000.

i said yes and lived in my first house. those would not be qualified mortgage loans today. generation, the current generation of young people would be denied that. i think that is a mistake. of course there is an art to this and there is a size. any institution whose failure would cause panic in the market place where markets could not work, they were so laws which -- bailout theto institution, those are systemically important. to sweep in a lot of smaller institutions into that definition that are nonbanks , it isce companies

progress. >> why are about half of its rules still not implemented. >> 14,000 pages, the proposed and final rules, with the average bank-30 five employees, how do you read 14,000 pages? have an opportunity with major investments in staff to get through all that merck. it smaller institutions -- smaller institutions, not so. we harvest our economy and to and those things that saved us from reckless lending. be a new threat lurking on the horizon, some -- subprime auto lending. they're being sold to banks as

securities. you see similarities between the housing crisis and what is going on with used car loan seattle -- car loans? >> i don't know what they would look like internally. but if people are making loans to people with no job, no assets, and no income, the likelihood of default is very high. as aose are rated low result of a lot of fragile borrowers, then that makes sense. i think that would get people like you and me, the investing public, the assurance it was a good estimate. low income and poor people need transportation. there will be fragile loans in that market. >> president and ceo of the american bankers association. joining us from washington. it is always a pleasure to have you on. thank you for your time.

up next matt miller brings us and on the markets update for this monday. later stephanie ruhle and erik schatzker will speak live from pershing square. 2:45 p.m. newt york time.

>> we are on the web at bloomberg.com, on your mobile device, on apple tv, and on amazon fire tv. we are coming up on 26 minutes past the hour, that means bloomberg television is on the markets. matt miller is standing by with the latest details. >> the market has been

recovering from the losses we saw earlier this morning. take a look at the index. the dow jones industrial average at one point down 120 five points and is moving closer and closer to unchanged. the s&p 500 at 1794. watching is are herbalife. they're following -- they are 'slling ahead of bill ackman presentation. he claims that they mislead distributors, misrepresent sales figures, and sell commodity products at inflated rises. u.s. regulators and law are investigating those claims. more markets in 30 minutes. bottom line up next.

>> of them back to the second half-hour of bottom line on bloomberg television. it is time for the commodities report. , oil prices continue to show leading theural gas climbers. favorable weather, forecasts for this boost a bumper crop. yield of 171 bushels

per acre. cites a lack of heat throughout the midwest is giving a real shot in the arm to the pollination and soybean growth. there was impressive figure size. -- that smashes yields according to economists. natural gas futures fell more than 3% at one point. it was all about cooler weather ahead. pretty -- been some some pretty big storage numbers. what are we hearing about metals? >> one big focus on a metal we

don't hear about, that is aluminum. aluminum trading in london for all the rough and tumble trades are done by men in suits. it has been active duty speculation of surging demand. that put alumina much i. the rally in gold is a long stretch of -- it is starting to cool off. we are seeing gains better than our year to date. >> thank you. according to military intelligence officials it is increasingly likely that malaysian airlines flight mh17 was shot down by a missile system known as the sa-11. it can reach targets more than twice as high as the plane was

flying.

>> up next the latin america report and later stephanie ruhle and erik schatzker will speak with bill ackman. that is coming up in 10 minutes right here on bottom line.

>> brazil economists cut their 2014 growth forecasts for the eighth consecutive week. above target inflation is curbing demand in the largest market. the latest central bank survey says brazil's economy will expand just below 1% this year. to combat theg fastest inflation in a year

without further pressing demands. five brazilian soccer players in argentine are refusing to return to ukraine's richest soccer club. a players were -- players were supposed to fly back with teammates following an exit mission game and france. that is your latin america rolls-royce is known for their luxurious features but the rate is also one of the most technologically advanced cars in the market today. matt miller took one for a spin to see how rolls-royce stays connected. >> this is a $400,000 fastback and it has that incredible classic design. and it has the superpowerful --

it is the most powerful engine rolls-royce is ever produced. there are little luxury touches rolls-royce delivers. you have the suicide doors. it is handstitched leather. the starry night sky liners. the doors close automatically at the push of a button. >> it is actually more high-tech than any other car on the market. it is the way to gps and satellite systems work with the transmission and headlights. corner,re going to a the satellites leeward your gps system.

headlights into the corner to make it easier. the other cool feature is even if you didn't have headlights that turned around the corner, even if you're headlights were off you would still be able to see a deer or a child who wandered into the road with this car because it has an infrared night vision system. a gives you an audible tone. of other system that rolls-royce has really perfected for this car, that is the adaptive cruise control system. it allows you to set the car at a certain speed even in bumper-to-bumper traffic. you can figure out what kind of distance you want from the car behind you. willkind of technology

eventually trickle down into the kind of cars that the average wealthy person can buy. >> up next, bill ackman. the founder and ceo of capital management talks with market makers anchors stephanie ruhle and erik schatzker. it will get his latest views on herbalife and more.

>> bill ackman says allergan should cut jobs a long time ago. the company says it will cut 1500 jobs to prevent all -- to fend off a hostile takeover. square has teamed with valiant in its bid to buy allergan. joins erik schatzker and stephanie ruhle.

ask, if your collective bit is so attractive why have the majority of the pharaoh -- of the shareholders put pressure on the board to capitulate and accept your offer? the think the answer is board has turned a deaf ear to the shareholders and the board is not willing to engage with shareholders. they are not even willing to engage with their largest shareholder. unfortunately the only authorized agents to speak with shareholders is the chairman and ceo, david piatt. to call yourself simply the largest shareholder while you are also part of a very hostile bid? >> put me aside. the other shareholders of the border not willing to speak to them. the only authorized shareholder handling this been is the

chairman and ceo david piatt, who would continue to love to run the fish who wants to continue to run this country. the notion he is leaving this process is absurd. the shyer chairman thomas who is -- chairman, who is a nonexecutive chairman, led the process. that was entirely appropriate. here you have a chairman and ceo who was entirely conflicted leaving the office bin in we try to do a shareholder referendum. the company fought back. it would cause delay. we launched a special meeting process. the company could hold a meeting of the shareholders to ask them what they think. it is what people call defending the company. on the conference call they talk about doing an all cash deal.

i am frightened about that, as is every shareholder. right and allergan is ignoring its largest shareholders, don't you think we would have heard from some of these people before? wouldn't people be speaking up? in a public way they are. here is how they are speaking out in a public way. they sold their stock after meeting with david piatt. the reason they stole the -- they sold their stock is they believe the company could justify the value of a valiant transaction. i think david piatt told him, as he told everyone, that he has no interest in doing a deal over his dead body with valiant. that was a frightening thing.

they are passive, very smart, successful institutions. it is really the shareholder activists or the more vocal shareholders. one of the largest shareholders has spoken up. >> when we spoke to valiant ceo mike pierson, he said what would happen if you walked away? unless my purse and walked away because there was something better for allergan shareholders. we want what is best for allergan shareholders. the higher the price the better. alternative party than the strategic value created by this combination -- we will

have to list that. >> is it possible we might find something better to do? it appears to be dragging this on as long as possible. it also doesn't cost them anything to walk away. valiant's home business is built on requiring -- built on acquiring companies that have near-term prospects and cutting the cost in the r&d pipeline. maybe you will find something better. >> it sounds like it's of theerization business. it is a company that just cuts and cuts and cuts. allergan announced cutting one third of the r&d workforce. it mischaracterize

valiant's business model. i am willing to accept that. itself ont has built acquisitions. it is an acquisition machine. around inticking another six months. it has something better to do. >> lemmie see if i can help you. mike pierson has made it clear that he is prepared to stick around for the shareholder meeting. he is patient. of theson is because strategic overlap of the two companies. the core panicles of valiant operations are present and elegant. this is a very important deal. it is a hostile transaction. a very high-profile transaction.

another company looks at pearson's resolve. it behaves appropriately and enters into discussion to see if there's something in the best interest of the owners. i think mike is very committed to this. the way for shareholders to vote against the valiant transaction -- they were not in favor of calling special meetings. that is one way that would be of no vote. or if we call a special meeting and they did not support the support -- support the proposal withhe new ford to engage valiant. if they say they don't want this deal, michael fulda tends priebus on the shareholders are --board i think the start the stock market is the best. a battle of 2.8%, down 60 basis

points. the stock point up 2.35%. allergan gave it its best shot today. they did a model. it was an early stage development, early-stage research. they caught up 13% of their overall workforce. they are taking of layers in their organization. it is too little too late. >> if there is a chance that he you need some downside protection? >> we do not hedge our position. it is very likely this transaction gets done. the analyst estimates for

the value of this sound alone allergan -- of this standalone allergan and with more certainty standalone transaction requires allergan to completely change the coulter and business model -- the culture and business model of the company. that is a very difficult thing to do. it is a shame ceo is running the business. dam that is what you are up to today. tomorrow you have said it is going to be the day of your career. what exactly are you doing? what if it isn't one. >> i would not have made the statement that i have made -- for me to make a statement today and be proven wrong tomorrow would be a mistake.

you never know what we are talking about tomorrow. >> we couldn't prove it to a certainty. andtandard for going public -- itng a pyramid scheme is a pretty high life and >> you made that claim against herbalife for a year now. with the exception of your first announcement, all we really saw were a pop in the stocks, even after you brought up the people from the company and their soft stories. even after we saw china, which we thought was a big moment. you didn't get the stock drop you hoped for. >> our goal was not to get a stock price drop. our goal was to categorize regulatory interest in the company. a chinaafter presentation, the federal trade

commission launched a formal investigation in the company. the fbi has launched a criminal investigation. i think we have been successful in catalyzing -- categorizing the regular tory interest. we spent the last year with undercover investigators and in the united states. they try to ultimately figure out how nutrition clubs work. we have hundreds of hours of recorded conversation. this is stuff we have not turned over to the government. say is as youill read the last few conference call transcripts, the emphasis

is what has been on daily methods of consumption in which the nutrition club is a big driver. >> you said you have hundreds of hours of video of these clubs. is that right? >> audio and video. were visited of the thousands that herbalife has, how any did you -- fama feel free to add -- >> feel free to ask us tomorrow. >> i can ask you tomorrow but you are the person who just offered to me the fact that you have hundreds of hours of tape. >> that is correct. if i can give you an accurate answer to your question i would do it. >> is it more than half. given there are 5000 nutrition percentage -- >> they all operate the same way. you will hear about that tomorrow and i will be happy to

talk about it in more detail than. you will be satisfied with the answer. i don't want to preview the presentation anymore than i have. if you find it's not credible, you're free to ask me tomorrow. >> will there be a way to link that there could be some sleazy smarmy nutrition clubs out there -- is there a way to link the company at a corporate level to directing the way they behave in this bad -- >> yes. certainty, definitively, we will prove that tomorrow. >> i guess what stephanie was getting at at the beginning is that for a year and a half it has been on comp upon you to demonstrate that herbalife is a pyramid screen -- a pyramid scheme, a fraud. up to today there has been some interesting stuff but not enough clearly to drive any regulator to declare it a fraud, any court of law to declare it a fraud, or for that matter to persuade many

of your fellow institutional investors that it is a fraud because they have taken the other side of your trade. what is to say people will feel differently tomorrow? >> stay tuned. >> how much money have you spent investigating herbalife at this point? >> approaching $50 million. your this your money or investors money? >> our investors money. >> and they are comfortable with that? you had representatives from herbalife try to reach out to your customers, people thought was crazy. what was the outcome? >> our investors are happy with us is my guess. $50 million is a lot of money but we manage $15 billion. it is 40 basis points of capital. it cost us about 20 basis points of return. trust me when you see the stuff we have tomorrow, you will conclude the money was well spent. >> understood.

>> a point i will make that is ,mportant about the government the government cannot afford on a speculative basis to spend $50 million doing research on a potential fraud. that is why, unfortunately, the governments tend to get involved after a fraud has collapsed. most sec investigations take place after a stock rice collapses and the fraud is explosive -- is exposed. investors are left holding the bag. of short-sellers, if i can make my case for shortselling, is that the shortselling position we have taken enabled us to afford to invest the money we have spent researching the company. i think it is a very healthy thing for the markets. that work that we did was sufficient that after they studied this thing for a year and a half, ultimately deciding to launch a formal investigation. that was announced on march 12.

it is 128 days later and the fact that the -- hasn't proven other than they will be thorough and careful. if the market doesn't respond accordingly, what does that say? >> we will see. why don't we see how the market reacts tomorrow. >> if the government doesn't respond, what happens to that short? >> i am an investor. i managed capital as a fiduciary. every day we assessed the risk reward position from the portfolio and i am obligated to do that. this is the more interesting conversation. >> how much more time are you willing to give? i told you from a personal perspective i will take it to the end of the year. if for some reason it wasn't an appropriate risk reward for our investors eye