>> from bloomberg world headquarters in new york, i'm mark crumpton. this is "bottom line." the intersection of business and economics with a main street perspective. to our viewers here in the united states, and to those of you joining us from around the world, welcome. we have full coverage of the stocks in stories making headlines on this monday. su keenan kicks off a big week for energy and commodities. alix steel has exxon earnings in the big cost for big oil. we begin with peter cook, and the budget storm clouds now on the horizon as president obama

sends his $4 trillion spending plan to congress. >> i was hoping to have the budget plan with me, but it's too heavy, elected on my desk. it's dead on arrival according to republicans, that's how they describe this latest spending proposal great. the white house insisting this budget is reflective of the president's priorities. the totals nearly $4 trillion, blowing past sequestration limits. he's offering tax relief for the middle class, and he wants to spend $478 billion on infrastructure, asking corporate america to foot most of the bill. he doesn't make a dent in the deficit, but it also doesn't make it worse. it arrived with a warning from the president. >> i want to work with congress to replace my list -- mindless austerity to strengthen america. we can do so in a way that is

fiscally responsible. i'm not going to accept the budget that locks and seek was ration going forward. it would be bad for security and bad for growth. -- sequestration going forward. >> they will start selling this proposal tomorrow. they won't get a warm reception from republicans. house speaker john boehner says the country's debt afford the failed policies of the past. republicans are promising to write their own blueprint by april. >> was the biggest surprise in the spending plan? >> the in the structure investment components. the president is trying to tie corporate tax reform to them for structure investment, but this is the most detailed plan we have seen. it could provide the starting point for negotiations with republicans. it called for a 14% tax on the $2 trillion parked overseas. that's less than what is under current law.

he calls for a minimum 19% tax rate whether companies bring that money home or not. it's called a broader overhaul of procedures. look at the president's numbers here essentially as an opening offer compromise in the realm of possibility when it comes to this issue. >> peter, some very powerful companies will want to weigh in on this as well. >> absolutely. the companies are all brand names, a lot of them advertising in the super bowl last night. ge, microsoft, some of the country -- the companies with billions parked off shore. whether they stand in the way her support reform going forward to make a big difference to those companies. key players in this debate going forward. >> peter cook joining us. thank you. peter ortzag is with citigroup and a columnist for us. he deserved -- he served under

president obama, and he joins me in studio. welcome to "bottom line." let's try to get through this budget. as peter said, it's too big for them to bring to the studio. let's get some immediate reaction. he's the president of the committee for responsible federal government and she released a statement saying we need this opportunity to begin tackling the drivers of our growing debts. she added the budget plan does too little to get control of the long-term debt or it to the white house miss an opportunity today? >> they might have not fully capture that opportunity today, but they did something very important last week, which is the key driver of the long-term fiscal deficit is health care. last week, the department of health and human services secretary of burwell came out with specific goals for moving away from fee for service payments in medicare. that's more important than anything in this budget document with regards to where we wind up in 20 30 or 2040 in terms of our

debt. >> will it make a dent? >> i think that will. it's the most important thing that drives our long-term fiscal features. the best way to contain costs is stop paying for quantity. when you pay for quantity, that's what you get. >> yesterday, paul ryan was on. he criticized the budget even before he came out. he accused the president of trying to come in his words, exploit and the economics. this chairman ryan have a point given that part of the budget proposal includes higher taxes on wealthy americans and corporations? >> i don't know the rhetoric there is important. the question is are these proposals reasonable and likely to be enacted? i would say most of them are reasonable and not likely to be enacted. we are living in a highly polarized environment in which the two parties have dramatically different visions for how to move forward. a good example is it mentioned earlier is corporate tax proposals.

it sounds like they are moving together, but in 19% minimum tax on global profits is very close to a system that taxes global profits and not the territorial system that republicans want. it's easy to say they are flying together ideas that sound similar but they are actually quite different. >> the budget is based on certain economic growth assumptions for the coming years, the gdp will increase him of the unemployment races going to fall. are those assumptions at least in part also based on the legislative branch doing its part to help this economy gain momentum? >> administration's budget will have economic assumptions that assume its budget is enacted. there's a bit of a disconnect. >> ok. let's assume you talked about on the tax front, the president wants to raise the top rate on capital gains and dividends to 20 -- 28% from 23%.

do you understand the other side of the argument, when people say that is seen as analyzing success -- penalizing success? >> the key is what is the economic impact? is much less adverse effect from either -- from a higher capital gains tax than would believe when you listen to most cable news coverage. >> given what we've heard on bloomberg, there are people who say i've earned this, i worked for this, now we are basically realigning funds. you are taking money that i have made my hard work and sweat equity, and you are giving it to the middle class. can it not be seen as class warfare as the president's critics suggest? >> everything is within some limit. we do have a capital gains tax rate, the question is what the right level is. you have to balance various considerations. i do think the capital gains tax rates that are under consideration here -- it's not like these are out of historical

experience. i don't think they will lead to economic disaster. they are also not a panacea. let's put anything in context. >> peter serves as the director of office of -- under president obama. if the real drivers of debt such as entitlement programs are not addressed, do they threaten the president other priorities? >> ultimately, of course. this raises back to the most important thing we can do. we had a great experience over the past five years or so of much slower growth in health care. medicare spending per person and in inflation adjusted terms is lower in 2014 that in 2014 and 2013. that's unbelievable. that needs to be continued, we need to be doubling down on that. we are on a very sensitive moment. we could be a tipping point, without becomes reinforced. only back off. we've got to reinforce the trends that are so encouraging and health care. >> even though the democrats

took a beating in the polls in the midterm elections, are you surprised the presidents budget strategy is so aggressive, given that it seems that the overwhelming majority of americans opted for some a different? >> no. i think this is consistent. the depressing part of this is very little if anything of the stuff that's in the budget will be enacted legislative lee. if that's true, the question is what kind of document do you send up? we are seeing the reaction that should have been predictable, which is that a lot of this is dead on arrival. >> a lot, but not all. are there some areas of compromise, such as corporate tax reform? >> i'm skeptical. it's easy to say corporate tax reform has the -- everyone is in favorite -- in favor of high-level. the specifics are hard. the administration started to put out specifics, that's challenging. there are some things that are likely to happen. both parties seem aligned on

repealing something called a medical device tax, that will probably be gone at some point this year. there will be a series of things that happen, but in terms of broad skill corporate tax reform or immigration reform, i wish this were true, but i'm a skeptic. >> have to delve into presidential politics. is this a budget or a blueprint for hillary clinton? >> we will see. [laughter] >> peter ortzag, chairman of the corporate and investment banking and citigroup flying in today from the super bowl. >> i was born in boston. go pats. >> thank you. let's get to the other top stories we're following on this monday. we learned the radioshack is preparing to shut down the chain. it is a bankruptcy deal that will sell about half its doors to sprint and sell -- and close the rest. the location sold to sprint will operate under the wireless carriers name, that means radioshack would cease to exist as a standalone retailer.

the world's biggest energy company is feeling the pain of the collapse in oil prices. fourth-quarter earnings plunged at exxon mobil, still, exxon beat estimates, but u.s. refining losses at a billion dollars, and cash flow fell 36%. the u.s. justice for department stepped up a investigation into movies. they're looking into whether they inflated ratings during the housing boom to win business from wall street banks. prosecutors are wrapping up a similar case against standard & poor's. the biggest tv rating in super bowl history, that's according to pre-luminary data from nbc. the network says the last-minute win over seattle was seen in 49.7% of homes in large u.s. cities. more on the super bowl ads coming up at the bottom of the hour. that's a look at the top stories we're following on this monday. coming up, the g.m. ignition switch controversy raises on -- rages on.

we hear from ken feinberg, the lawyer handling the payments. that in more when "bottom line," continues in a moment. ♪

>> welcome back. it's 15 minutes past the hour. let's check bloomberg world news. the new prime minister of greece is looking for allies in his fight against austerity. germany and others in the euro want the prime minister to stick to the terms of the existing bailout agreement. he will travel to paris, rome, in brussels, seeking a new deal. here's greases finance minister. >> we have resembled drug annex craving the next dose. as we are now, we should be taking another bunch of loans? no. is not that we don't need the money, we are desperate, because of certain commitments and

liabilities that we have. >> greases new government wants the debt written down so we can increase public spending. in ukraine, rebel leader is calling for a full military mobilization him and the country's president is calling for a cease-fire. the peace talks broke down over the weekend fighting between ukrainian troops and rebels backed by russia has intensified. budget airline ryanair is warning lower oil prices could bite into its bottom line. cheaper fuel means airlines can cut prices, neck and trigger price wars. profit for this fiscal year will be about $950 million, that's higher than previously forecast. that's the latest world news. we have another update in 45 minutes past the hour. in other news, an important deadline for general motors has come and gone. victims of accidents involving 2.6 million gm cars recalled for faulty ignition switches had

until saturday to submit claims. that was an extension from december 31. gm set aside about $.5 billion to pay those who prove they were injured or lost loved ones due to those switches. bloomberg spoke with a man making the judgment calls, ken feinberg, administrator of the conversation fund. >> g.m. was looking at direct evidence. they looked at the car. they looked at the blackbox data with the car. we are much more generous, we are much more lenient in applying a judicial approximate cause standard, based on circumstantial evidence. i'm not surprised the g.m. found 13 deaths directly attributable to the switch, and we are already at 51 using a different standard. >> mr. feinberg also said it will likely take until spring to finish those claims. coming up, we get a gauge of the

energy industry in britain as a north sea oil summit in aberdeen gets underway. that and more, when "bottom line," continues. ♪

>> and north sea oil summit is being held in aberdeen's industry executives, politicians, and unions try to tackle the problem poised by falling oil prices. it follows the threat of thousands of job losses as oil firms cut investment in the region. bloomberg travel to the city at the heart of written's energy industry to gauge reaction. -- of written's -- britain's energy industry to gauge reaction. >> if we didn't have the oil

industry, i wonder what aberdeen would look like? we won't see them for two or three month at times, i will member their name -- remember the name. >> within a have been in, will get them a free drink. >> is unbelievable how much, you when you take a step back and look at everywhere in aberdeen how much this affects us directly or indirectly from our businesses, we don't rely on it but it is a big chunk of the business. to begin with, it was more a case of let's see what happens. there has been fluctuations before. but now, starting to have a more of a sect. it's becoming a reality.

clicks you get up in the morning, and you have your breakfast from then you go down and you do day job. but outside, your working hours on end. it a lot of people are afraid it's going to happen to them. people are e-mailing me asking if we have jobs, give me an e-mail. >> we need things in the state as well if oil does dry up, what happens? >> at least another 15, 20 years. >> i hope things i believe things are better. i'm fairly confident they will

come around. at the same time people already aren't, who knows what happens next? >> in the biggest walkout in the oil industry since 1980, united steelworkers told members working in over 200 refineries, terminals, pipelines, and chemical plants to stay home and. alix steel is following the story, she joins me now. talk to us about this. how money workers does this affect, and what does it mean for oil prices? >> it sounds really bad, but is not that big of a deal. to put it into perspective, overall, union workers in the wool industry represent about half of all oil workers. this union steelworkers only represents 30,000 of them. it's a fraction of the employers, and really not that many have been affected as of yet. only seven refineries, and only one has been shut down. overall, you are looking at 10

percent of refining capacity, about 1.8 million barrels a day could be affected. that said, analysts say if this continues for a long time, the last right we saw in 1980 lasted three months, that could be causing some pain. 63 refineries could be a risk, as much a 75% of reduction. >> exxon had 21% drop in first-quarter profits. why is big oil having so much trouble making money? >> because of the cost. they made $6 billion in profit, but that was a drop. to put this in perspective, track down an estimated cost of what it cost exxon to build a well in oklahoma. first you have the drilling cost, things like the rig, casing, tools, is about $5.7 million. once you drill, you have to fill. that's when you deal with fracking. water, sand, big, that comes in and shakes the rock out. that came in at about $3.2 million. all told, we're looking at about

$9 million worth of cost. the question becomes if you spend all this money, why would you stop production? you need production. they were looking at a three point percent -- 3.8% decline your dear. >> are they going to have to stop producing? >> analysts say you already spent the money, it will cost you money to keep your you might be losing some money. it's worth it, you already did the work. shale has quick decline rates. will they be drilling extra wells to keep production flat? that's the issue going forward, but probably not until the back half of 2015. >> i have people stop me and ask that alex watch the game? >> i did, i totally understood it, i felt very proud of you. i mentioned to my husband, mark crumpton is awesome. >> thank you.

coming up, super bowl ads. the winners and losers with a price tag of $4.5 million of 30 seconds of airtime. which advertisers got their money's worth. "bottom line," continues in a moment. ♪

quite welcome back to the second half hour of "autumn line -- "bottom line." another massive recall involving potentially dangerous airbags. more than 2 million previously recalled cars will be called back for more repairs on the safety devices. among them, acura, dodge, jeep, pontiac, and toyota vehicles. sears spun off lands end last april. the ceo says he has accomplished

what he set out to do with the company. he will be replaced with the president of dolce and bonnie u.s. tired of snow, cold, and ice? you are out of luck this groundhog day. pox upon a phil saw his shadow. -- pucks at tony phil -- pu xatawny phil saw his shadow. time to look at which super bowl ads scored the viewers. i'm joined in studio. welcome back. nielsen putting the viewership -- let us talk about that first. 100 12.8 million, the largest tv audience in history. what did the numbers look like if you had in the streaming vehicles? >> and people who were out at sports bars and parties. there are two or three companies that have been tracking that. they get the total viewership

well over 150 million which makes it the biggest tv event in history. we knew we were going to have a very tight close exciting game, and that is exactly what they delivered. >> 15 first-time advertisers. 16 advertisers who dropped out. who were the winners and losers? >> i think we reached a tipping point. the advertising on the super bowl's, despite the fact that it has this huge audience -- it does not deliver a return on investment. the big winners probably will not sell another can of beer. anheuser-busch and coca-cola will not sell another beer or a coke, but they have heartwarming commercials that were extremely well produced. the budweiser commercial with the lost puppy -- 49 million people during the game on facebook downloaded and looked

at that budweiser commercial. that is on top of the 150 million people who saw it on their tv screens. >> who did not get their money's worth? >> some of the newcomers. jublia, the toenail fungus -- >> i think most people who saw that said, why? >> imagine you are sitting around at the super bowl party with your children. >> did they pay $45 million for that? >> they did. others for the first time spent $4.5 million. no one even today knows what loctite is. why do that? the biggest advertiser was nbc. they had 15 ads. they advertised two or three months ago that the super bowl was sold us. -- sold out. they had a most $100 million worth of promotional spots for black list and some of the other -- snl and some of the other nbc

programs. why didn't they sell that space and make the money? >> do have a personal favorite? >> i did not like any of them. my favorite was newcastle brown ale. they were two weeks before the super bowl, all over the internet. they sublet space -- product placement space, on their commercial. they sold out, and got basically a free commercial. >> go daddy -- did it redeem itself? they had an ad and they said it was promoting puppy mills, so they took that out. >> they took it out. i do not think go daddy needed to advertise. am nobody got it. the interesting ones where the public service ads for women, and the domestic violence. those were actually contributed by the nfl. they have a little problem there. >> about $12 million worth of

commercial time about domestic violence and sexual assault from the national football league. as you mentioned, rightly so, the lee has been under a microscope because of some of its players. did the message of zero tolerance get across, or was it more damage control? >> damage control. they have to do something specific. roger goodell has been way too soft on that subject. he will speak out. he has to. the players union right now is going to be pushing that, along with the concussion issue. >> you talked about some of the more popular ads. which likely saw the best return on their investment? >> probably the movies and the video games that premiered today and this week. people can rush right out, because all of a sudden, they are aware there is a new game. movies are one of the few things that give you a decent return on investment. >> the 16 advertisers who dropped out -- are we in such a world of social media where they

realize, we are going to get millions of eyeballs online anyway? why we going to spend $45 million to advertise during the game? >> we have reached a tipping point. if you go back to super bowl xlix the commercials cost $45,000. 100 times less than the commercials that ran last night. i think you are going to see a harder and harder time for the networks to try to sell ads on the super bowl. $4.5 million is probably the highest anybody is willing to pay. >> why do you think the super bowl has become such an unofficial american holiday? >> women make up now about 35% to 40% of the audience. it is a social event, a national holiday. interestingly, despite my comments about the lack of r.o.i. on advertising, the advertising is a big draw to most of the people.

you can wonder why madison avenue did not give tom brady the most valuable player for advertisers, because he kept the game exciting. in between the commercials -- again, remember, nbc had 15 commercials. every four minutes, there was another nbc commercial. those commercials are very appealing to people, because they play all over the internet for several weeks before the super bowl. >> i thought the best ad was the one with, after 100 years, you learn something. >> unfortunately, mercedes fell absolutely flat. the most expensive commercial they played four weeks before. they try to trap you into watching. who knew what that commercial was all about? >> it seemed like a fiat commercial. viagra as well. that is another time. always good to see you. thank you so much. coming up the latin america

report, and a setback for the brazilian president. we will tell you what it is. ♪

>> welcome back. this is "bottom line." i am mark crumpton. it is time for today's latin america report. brazil's president has suffered the first political defeat of her second term. the lower house of congress elected a rio de janeiro congressman as its president for the next two years. cunha is an economist serving his fourth term in the lower house. he defeated a member of bruce f -- rousseff's workers party. a standout ad is the first ever spot against domestic violence the national football league

wanting to show it is serious and fighting domestic violence. was the ad effective?

♪

>> it is 45 minutes past the hour. an australian journalist has been released from prison in egypt, seen on the right of your screen. he worked for al jazeera english and spent 45 days behind bars arrested in 2013 while covering the crackdown on islamist protests. he was tried on charges of spreading false news and aiding the muslim brotherhood. two of his colleagues remain behind bars. some express contest the court to answer pimping charges. the former imf chief and presidential hope are is accused

of helping procure sex workers for an international prostitution ring. this is not the first sexual allegation he has faced. he was accused in new york of the attempted rape of a hotel maid. casino revenue in macau fell more than 17% in january. the slump has hit its eighth straight month. that is the longest-running of losses on record. the chinese government's continued corruption crackdown along with this economy are being blamed. macau plus casinos lost $73 billion in market value last year. that is a look at world news. we will have another update in about 30 minutes. su keenan is here with the details. >> we have a lot of green on the screen for energy. a rebound is the big story. it is extending the bounceback from a six-year low on

expectation investors are closing out their bearish bets. and well workers strike is also pushing gas futures higher. that strike in its second day. oil was above the $50 mark the first time since early january. just futures initially spiked more than 10%. what is going on? the momentum is now starting to look a list. you talk about the huge rally on friday, sparked after baker hughes released a report that drillers had pulled 93 recs from u.s. field in one week, almost a record. it is also a big week for oil earnings. companies are letting us know that about $20 billion in spending cuts are taking place. >> commodity producers have gotten a business plan of producing as much as they can no matter what the advices. you had enough exploration and

you found deposits of iron ore and energy in particular. you have this short time when the margin of profitability was a norma's. now you are in this battle to the death. >> a battle to the death indeed. he points out massive oversupply is the issue, not demand. we have the u.s. pumping the most in three decades, according to the government report. >> it is all about the gas rally. how serious is the strike? >> on the back of the rig report, they say fundamentals could be changing. the labor issue involves the united steelworkers union. following a breakdown in negotiations -- refinery plant still in operation, but this is a situation. >> su keenan is joining us with the commodities report. the winter storm battering the northeastern united states is

expected to leave as much as 16 inches of snow in the boston area. the storm already dumped up to a foot and a half of snow in the chicago area, and blanketed much of the planes in the midwest. american airlines, us airways and the regional airways have canceled almost 1800 flights today. an advocacy group focused on public awareness of domestic violence aired and add of a woman calling 911 to order pizza to covertly report partner abuse. the nfl donated the spot. street smart anchor chris regan joins me now. i talked to a media partners member, and he said it is more damage control than anything. >> i have been in damage control mode from the very beginning, back when they only gave ray rice two games. for his suspension. i think that the reality here is

for better or for worse, like it or not, these athletes are role models. as such, there is almost a greater responsibility that comes with that. i think as a league as a team, you need to hold your players more accountable. if you were an executive in corporate america and a tape like that had come out, you would have been done immediately. and that is not the case, for whatever reason, in football. you look at the whole issue of deflation of the football that is going on with the patriots. >> more conversation about that. >> i think some people have said to me, it does not matter because it would not have changed the outcome of the game. it does matter. it is the integrity of the game. we assume that players are playing by a certain set of rules. the minute you violate those rules, you are violating the spirit of the game. they are very different issues.

at the end of the day, these players are role models for young people. as such, you have to make sure you are living up to a certain set of standards. the nfl should have no tolerance for cheating and absolutely no tolerance for domestic violence. >> what message did those absent to women, who are now a growing majority of nfl viewers? >> i think that as a woman, look, i like football. i watch the game like everybody else. but as a woman and as a mother how do i explain that two daughters that ray rice would only get suspended for two games? >> that is what hannah storm said. >> an excellent point. it was an important commentary she made. there is a large group of women that liked the sport and want to support the players, but ultimately, you do not want to disenfranchise them. and it is more than that.

it is not even that at this point. it is about what it is actually like. >> we did receive word of the nfl concussion settlement ailing to win final court approval. the nfl saying a number of reported concussion dropped 25% during the regular season. >> we are going to be talking about the budget, president obama's for dollar budget proposal. i am going to be speaking with congressman scott garrett of new jersey, a senior member of the house budget committee. a lot of tax hikes in here. we will see how he is reacting to it. there has been a big push to bring back offshore products -- profits that companies have made. this plan would put it into infrastructure spending. with something like that ultimately work? we're going to assess all of it. >> are a lot of republicans saying it is dead on arrival on the hill. stay with us. our chief markets correspondent, scarlet fu, will have another edition of off the charts on the

other side of the break. ♪

>> the global rally in sovereign bonds has sent borrowing rates near zero. chief markets correspondent scarlet fu will look at some of the justifications for this rally. >> for the u.s. specifically, there are fundamental and

technical regions yields would keep falling. a fundamental reason is demographics. i am going to walk you through the link between falling yields and falling prices, and an aging population. we'll start with the yield of the 10 year. that is your white line. this rally has pretty much been impact since the mid to late 80's. it has picked up a little bit over the past year. you see a little bit of a move up. you cannot rule out deflation. >> at some point, it looked like they were moving in tandem. >> there is a correlation. let me show you the percent of the labor force that is 16-34 years old, the blue line. that he in the 1980's and has been steadily declining as the baby boomers get older. an aging population is less prone to inflationary -- they

are older. they are not paying for tuition, extracurricular activities. they're basically investing less doing less that contributes to economic growth. this was a snapshot of the u.s., that you can pretty much make the case for japan and western europe as well. >> but there is a technical reason for this as well. >> people keep plowing money into treasuries, because where else are you going to get such high yields relative to places like japan and europe, for pretty good safety? the u.s. 10 year yield at 1.66% -- fat and juicy in contract with switzerland, at -19 basis points, or germany at 31 basis points. countries like brazil, colombia mexico, greece portugal new zealand, australia, south korea -- they have higher 10 year

yields, but they are not the world reserve currency. under mental difference. a lot of people say the risk is that the u.s. economy could grow a lot faster than what investors are currently pricing in. if gdp does pick up, the inflation rate could easily top bond yields, which are admittedly not very high. in the u.s., the 30 year is at 2.23%. that would mean, if inflation does pick up, that investors would be losing money if they continue to hold onto these bonds. june for her basically made that case when he spoke with mike mckee last week. he reiterated that interest rates could rise as soon as the midpoint of this year in part because he sees longer-term inflation rising more quickly than a lot of people in the market are banking on. >> there has been a conversation about the dual mandate -- inflation and the unemployment rate. a lot of people think the fed is not paying enough attention to inflation.

>> deflation is a concern a lot of people are talking about, the risk of falling prices. you have wage growth that is not picking up. that contributes to overall negative rates around the world. >> scarlet fu with our off the charts segment. 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." thank you for joining us. i will see you on tuesday. ♪

>> we have 60 minutes to go until the closing. president obama's fortune in dollar budget, setting up another tax fight with washington. we speak with a congressman and house budget committee member, scott garrett. and u.s. oil workers striking