>> from bloomberg world headquarters in new york, i'm mark crumpton and this is "bottom line" -- the intersection of wall street and main street with a -- of wall street with a main street perspective. 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 making headlines on this thursday. shall be holiday examines the high cost of maintaining a measles outbreak. julie hyman looks at one of the key players in the staples and office depot deal. but we begin with our chief

washington correspondent, peter cook and john kerry's diplomatic trip to ukraine. our peace efforts yielding any results so far? >> right now, he might be more of a side player in all of this. he's not the only foreign visitor trying to forge a medic solution. at this hour, german chancellor angela merkel and the french president are in kiev and they brought with them a new cease-fire initiative. they did not provide details on the proposal itself. they had next to moscow to meet with vladimir putin directly who has offered up his own peace plan. this is their response and this will be angela merkel's first visit to russia since 2013 with a goal to end the violence between the government forces and russian backed separatists. fighting has escalated as the rebels mounted a new offensive stop the conflict has claimed more than 5000 lives.

in his own meetings today, kerry says russian -- russia needs to ds goalie crisis. >> russia and me separatists are seizing more territory, terrorizing more citizens, and refusing to participate in serious negotiations. let there be no doubt about who is blocking the prospect of peace here. >> he says the u.s. is supportive of the peace efforts on the part of francoise -- france while -- and they will find out more in munich. he has left and will meet with his russian counterpart. vice president biden will also be attending the conference. >> do we have any idea if the united states is prepared to start providing weapons to ukraine?

>> that has been a big focus of the debate. john kerry says the president is considering all of his options and a decision will be made soon. the white house has been hesitant to expand u.s. aid to include lethal defensive weapons. other europeans have been opposed to that action. that position is clearly now being reassessed by this white house and the white house is facing pressure from capitol hill. a bipartisan group of senators calling on the president to provide lethal weaponry. >> not one person is suggesting we send american soldiers into ukraine. we are saying we have a struggling democracy and they need our help and we are not going to let tell us what to do. >> in a strongly bipartisan group, showing support for that. angela merkel, the busy time of travel for her, she will be here on monday, meeting with president obama. >> let's get you some of today's top stories we are following at

this hour. a huge deal in the pharmaceutical industry --pfizer has agreed to buy hospira. the price tag around $17 billion , with pfizer paying $90 a share, a 39% premium to hospira 's closing price on wednesday. the fbi is investigating a massive hacking attack at anthem, the second largest health insurer. data on tens of millions of current and former customers and employees was stolen. the company says it will provide credit and identity theft monitoring services for free will stop we discussed the impact with the connecticut attorney general. >> it seems that hackers are always one step ahead. the credit card industry needs to have some kind of shakeout where we shift from magnetic bands to embedded chips which are used in europe will stop we have reached a tipping point on

these data breaches. >> under armour is going high-tech -- the maker of sports apparel and shoes is making a bid to become the world's biggest tracker of fitness information. under armour just acquired two apps for $560 million. that's a look at the top stories we are following on this thursday. congressman paul ryan addressed the washington international trade association today. he said passage of new trade rules is a top i were to. former michigan governor john engle is a u.s. trade advocate and joins me now from washington. welcome back. pleasure to have you on the broadcast. >> great to be back with you, especially on an important topic like trade. chairman ryan point out one in five jobs in america is impacted by our ability to trade. >> how has the u.s. been on the

geopolitical stage? has the u.s. let china set the rules for global trade? >> i don't think they have set all the rules. that's what are the reasons we need this trade agreement. the transpacific partnership is a group of asian nations and hopefully we will have some high standards and their and enforceable trade provisions to protect intellectual property and make sure when you have a state sponsored enterprise or national champion being promoted by a government, if there are violations of the norms of trade, you have to have a redress of this grievances. the international system is not working as effectively as we would like. it's why these standards in these upcoming trade agreements matter and why the president needs to begin as much authority as he can begin to negotiate the very best deal. congress is in this process.

>> the international president of the united steelworkers union during a conference call last month told reporters that they are going to push for no fast track. what if they are going to have fast track, it has to be one that part text jobs stop does giving president obama trade promotion authority fast track as it is known, does that compromise american jobs? >> the fasttrack is a process question. the trade agreements themselves are what we need to focus on. the fast-track process gives trade negotiators the strength and muscle to go out and get the best deal to protect jobs here and make sure it is a fair high standards enforceable agreement. that is what we need to have. we could agreement don't protect jobs away strong agreements do. protecting international --

protecting intellectual property strengthens jobs. i think he is talking about something that is important. he should have as much confidence in president obama as i do to negotiate the best possible deal. >> how firmly should the u.s. address pacific rim trade negotiations? is a goal to get a deal done and leave the fight for another time? >> i think congress is going to make it clear that consideration of currency has to be part of the conversation. japan is one of the nations at the table. it wasn't that many years ago that the u.s. and japan were at a showdown over currency and the treasury department under secretary jim baker really step up. this is something where the treasury department has got to work in the international arena they have to work with the imf and any other number of international organizations that can have an impact. this is something where congress

says you have a good trade deal but if you haven't thought about the impact of currency, and we seen current to markets roiled in recent months so it is a factor for sure. congress is going to say to the u.s. negotiating team the treasury department is going to have to step up and jack lew is aware he's going to have a role to play in getting good strong agreements done. >> president obama recently released his 2016 budget proposal. the business roundtable put out a statement giving the white house credit for identifying importance of reducing the importance -- of reducing the corporate tax rate. but unfortunately they propose steep tax increases that will negatively impact competitiveness. is there common ground to get a deal done? >> i think so. the first part is important. the president recognizes the

corporate tax rate of 35% is the highest in the competitive nations that are our main competitors out of the world for trade and investment will stop the rate is too high. we have a silly international system where we are virtually the only nation that says go out there and do business sell in foreign countries and if you want to bring the money back, we got a new tax for you. everybody else says pay the tax in the country where you make the sale and bring the money home. $2 million short. that money needs to come home immediately and we are working hard to see that gets done. i think the president has recognized that system is broken , so the first step to reform is to admit there's a problem in the president has admitted there's a problem. i think congress gets it and they've got a green light from the white house will stop >> the president's budget proposal calls for a 14% tax on repatriated foreign earnings.

that would be used to pay for infrastructure projects. in michigan, voters will decide whether to raise the sale tax and those funds would go to ward road improvement projects. with michigan thinks a tax increase for infrastructure improvement a good idea, they -- is it a good idea for the federal government? >> the federal government is talking about tax increases on one part of the u.s. economy. they've used general fund taxes in the past. i would say a little bit of apples and oranges. michigan is doing about what 15 other states have done and that is raise user fees to say we've got to get these bridges under -- that are under standard backup to worthiness. we've got to get these roads fixed it may have come up with a strategy to try to do that. there's a lot in that proposal.

at the national level, what the president is talking about is a conversation being had around washington and it could be part of the answer. clearly, $2 trillion is trapped off short. to the extent it can be brought home, it ought to be but the rate the president proposes is probably twice what chairman camp proposed last year and way above 2004 the last time there was a repatriation holiday. we need a permanent text. the entire tax system in the united states is way out of whack, so we are to fix it and make it permanent. i think the rate is too high but the conversation is going to be multifaceted in both houses and both hearties, so we have a long way to go.

i remain an optimist that we can get tax reform done. >> governor, always a leisure to have you on the broadcast will stop >> thank you for having me in today. >> coming up, credit derivatives make a different name. ♪

>> welcome back. let's check bloomberg world news. jordon may be following through on its pledge to step up the fight against the islamic state group. state tv sister dania warplanes bombed islamic state targets today. no word on whether the targets were in iraq or syria. jordan is part of a us-led coalition has bombed islamic state targets in both countries but until now, jordanian planes are only known to have carried out raids in syria. this comes after the militants burned to death a captive jordanian pilot.

rescuers worked through the night to recover bodies and wreckage from trends asia airlines flight 235 stop him new details of the final moments of that crash. the pilots made a distress call just two minutes after being cleared for takeoff stop the plane clipped a taxi before plunging into a river. both the pilot and copilot killed along with 31 other people. 15 others survived, including a two-year-old boy. we will have another up a coming up in half an hour. credit derivatives got a bad reputation because of the financial crisis. so how can angst get investors to buy them now? give them a makeover and attach a new name. lisa abramowicz is following that story. what are these new debt securities and how different are they from the ones in the 2008 crisis? >> what is happening right now as there are these synthetic cd is being created.

the bank will take a pool of credit default swaps that are basically offering protection for a single name companies like radioshack or kmart. they will package them together and pool them out and sell slices of varying risk in return for investors and it's a way to magnify bets on specific country -- on specific companies without having to on the bonds. >> history is always repeating itself will stop why not just go greek sovereign bonds? why get into something this structured and complicated? >> it comes down to pick your poison. do you want to bet on vladimir putin ordered do you want to bet on the ecb and the greek government or do you want to bet on companies you have a good research on and magnify those

bets that you get bigger returns? a lot of investors, especially those in the u.s. that have had prior research are opting for companies a no. >> searching for yields will stop >> exactly. it's hedge funds, at some insurance companies looking for higher rated portions of this that -- of this debt and there are some alternative asset managers but the banks are not buying what they are selling. that's a benefit for them. they are not taking on the same degree of risk they once were. >> went -- what banks are we talking about? >> citigroup is probably the most active. the np, goldman sachs has been marketing one in particular this year. -- bnp goldman sachs.

arranging these with not a lot of risk. they can distribute some of the risk they might have to take on the books to other investors. >> what is this doing to the bond market? >> right now, it doesn't have an effect. the bigger consequence if it were to accelerate is the banks might not be taking on the risk but there are firms taking on the risk and when you have derivatives, that means somebody could be on the hook to pay out more money than they put down. these are unfunded commitments and that means if the company does default, that could force companies to have to pay out large amounts of money if they are big enough. the question is to what degree could one of these investment firms become systemically important? especially because these are not regulated way banks are. the big concern is how much risk is moving away to a shadow banking system? >> thank you so much.

stay with us. when bottom line continues, the best-known names and activist investing are there but the up and comer took the title of best activist investor last year. ♪

>> staples'by of office depot was the latest victory for a rapidly rising activist manager -- jeffrey smith of star board value has been targeting companies across a variety of industries and in the past year he has been getting what he wants. julie hyman joins me now with a look at some of the activist funds. he's not a household name. who is he? >> he started his firm in the

early 2000's and was joined by couple of partners, but it's been in the past year that we've been hearing more about jeff smith. he's not a household name like carl icahn or bill ackman, but he's getting there because he has become more active, more vocal and has had a lot of success. one report i saw from a research group looked at what they called the activist top 10. for 2014, this guy was actually number one. he targeted 11 companies in public campaigns ended very well as a result. there was darden restaurants will stop justin smith's firm notoriously put out multiple hundreds of pages saying what darden should change operationally and it has made a number of changes. he's replaced the entire board as well and forced out the ceo.

there's the office depot transaction. office depot had already bought officemax, which is something geoff davis had pushed for as well and yahoo! selling its ali baba stake is something he push for as well. he says yahoo! and aol should merge that has not happened yet. >> any others that are under the radar? >> he has push for changes at one that is being acquired by rock 10. he has a number of smaller semiconductor makers were he's made changes to the board of directors. one of them is exploring options, which is wall street speak for potentially looking for a sale. there are some outstanding situations among these smaller players. >> thank you so much.

coming up, global investment opportunities -- we will talk to mark t's at pimco about how global monetary easing will impact investments this year. "bottom line" continues in just a moment. ♪

>> welcome back to the second half-hour of "bottom line" on bloomberg television. i'm mark crumpton. thank you for staying with us. let's start with the price of crude oil as floor trading comes to a close come ecb intraday chart up 4.3%, ending the session at $50 and $.55. oil traded the greatest volatility since april 2009 after u.s. crude supplies rose from the highest level in three decades. fewer americans than estimated file jobless claims last week.

it's a number usually associated with an improving labor market. we will get the genuine jobs report tomorrow morning at 8:30 washington time. bloomberg news will have live coverage. for the first time in three years, sprint has added subscribers will stop that helped third-largest wireless carrier post better-than-expected earnings. sprint has been aggressive in offering promotions like cutting bills in half for customers to switch carriers. bloomberg news has learned prosecutors are investigating whether one of switzerland's largest banks help americans of eight taxes. according to be familiar with the matter, the issue is whether ubs used securities that let owners hide their identities. six years ago, ubs settled another tax evasion case with american authorities. that's a look at the top stories we are following this hour. global monetary easing may prove to be a big positive for the u.s. credit markets is year.

mark kiesel chief investment officer of global credit pimco joins me from newport beach, california. good to see you again. >> good to see you. >> the united states is distancing itself from other major economies. is there anything domestically or geopolitically that can throw the u.s. off its stride? ask -- >> the u.s. looks pretty good and a lot of it is because the private sector is doing well with job creation, income growth, and a strong banking sector. everything seems to be going well in the u.s. interestingly enough just back from europe and clients are looking to put money into the u.s. market and the catalyst is global qe. mobile qe is compressing yields outside the u.s. down to zero and negative rates in places like europe and japan.

-- global qe. they're looking to invest in the united states now. >> will week growth and developed markets, the strong dollar and global inflation and back -- in fact -- affect janet yellen and raising interest rates? >> we don't think so? -- we don't think so. they are looking at the labor market and hours are up and income growth is up and job growth is up 2%. the u.s. economy is doing well in the unemployment rate is coming down .8% to .9% so we think the fed is about ready to raise rates and we think it will happen in june and september. what could push it out is a slowdown in inflation or a slowdown in growth overseas but the indication is they will raise rates in june or september. >> what impact will that have on

global monetary decisions especially given the central banks in europe, japan australia and china have instituted growth friendly policies? >> that's a really good point. for the first time in four or five years, we have monetary policy divergence between the u.s., europe and japan and we have economic convergence with the u.s. set to grow at 3% whereas europe will struggle to grow even at 1%. we think the investment implication will be a much stronger dollar. we think the trend of dollar strife will continue -- dollar strength will continue so we suggest holding dollar assets and belong dollar versus yen and euro. >> markets are following the situation in greece will stop the european central bank decided to restrict access to funding lines for greece us financial institutions. what message did the ecb sends

to the anti-austerity government? >> the messages both parties are pretty firm in their demands. you've got new leadership in greece but i think europe is going to be firm and drive a hard bargain. this is obviously posturing, so clearly the two sides are far apart right now. ultimately, it's in the best interest of greece to stay in the eurozone. over three quarters of the population surveyed want greece to stay in the eurozone and clearly germany and the partners want greece to stay as well. so what you are seeing is posturing, but over time the two sides will come together. >> the central banks have been opting to increase stimulus. how much is that compressing global yield and how much more attractive does that make u.s. bonds? >> great question. is having a huge impact.

it started with the fed and is now the bank of japan and ecb. central banks are taking risk-free assets out of the marketplace by putting them on central bank balance sheet and is creating a supply and demand and balance for what investors need -- income. with the government bond yield so low now, investors all over the world are looking for something and are increasingly going into credit assets meaning investment grade corporate bonds and high-yield bank loans. investors can earn between 4% 6% on assets. it looks very attractive and that's why we think this will be the year of credit specifically u.s. credit. >> as far as investment strategy goes, he likes cyclicals and companies tied to the consumer. which sectors offer the most opportunity? >> the sectors that offer the

most opportunity are tied to the consumer benefits from low interest rates and low energy costs. airlines would be at the top of our list because eve got industry consolidation, you've got your players raising prices. consumers are back in business travel is back so airlines have significant rising power. the other sectors are the launching -- the lodging industry and cell towers. those industries are raising consumer prices between 2% and 4% for stop of the company has pricing power, it's a good investment theme right now. >> mark kiesel is just back from europe and joined us from newport beach, california. always a pleasure to get your perspective. up next, the latin america report and later, the high cost of measles. ♪

>> be sure to check out the latest edition of "bloomberg business week" with a cover story and radioshack will stop it hits newsstands and your tablet today. you can read it on the go with our new business week out. it's time for today's latin america report stop social media in china are slamming argentina's president who's on a visit to beijing. president cristina fernandez de kirchner published a mocking post will stop she signed 15 agreements with china on issues ranging from nuclear energy to agriculture as part of her four-day state visit. that is your latin america report for this thursday. coming up, more pressure on greece -- the barely two-week-old government hits a bump. the european central bank turns off a source of funding for

greece's banks. ♪

>> we have breaking news on the anthem hacking story. let's go to the breaking news desk and scarlet fu. >> bloomberg news is reporting government investigators are pursuing evidence that points to chinese state sponsored hackers who looked into the personal information from and another health care companies according to people familiar with the matter. hackers are said to be stealing personal information for purposes other than pure profit. they are taking social security numbers and e-mail addresses and home addresses. there has been an increase into sneaking into storage groups whether it's defense contractors

or government workers. and them ensures boeing employees. we do know anthem told us earlier this morning that hackers got hold of personal data on about 80 million current and former customers as well as employees and the fbi is investigating. this is the latest from bloomberg news and not necessarily from anthem. >> scarlet fu will continue to's -- to follow that story. more now on the outbreak of measles in many parts of the united states. how much does the measles cost to contain? shall be holiday is following that story. -- shall be holiday is following that story. >> researchers studied the cost of containing one case of measles and said they were shocked by how expensive it was. $142,452 to be incredibly exact postop the research was done a

few years ago so adjusted for inflation, it's like $180,000. that's just containing one case of the measles. >> what is the breakdown. -- what is the breakdown? >> it's not like the flu rehab the honors system. there are steps the government takes to make sure the public is safe when there's a case of measles. to contain this one case, health officials had to work 2500 hours, make more than 2000 phone calls and drove 2200 miles. that involved isolating the patient, dried blood to make sure contacts have been vaccinated. and vaccinating people who have not protected sometimes they have to quarantine those who are at risk stop it's a lengthy process that can last for two months. the cost of containment -- this is only the cost to the public health system. it did not cover things like doctor and hospital visits, lost

productivity of parents, extra monitoring. sometimes you have to just look at kids who might have measles, so the virus can have huge ripple effects across entire communities. >> what does this study tell us about the outbreak today? >> i assumed we are seeing these pockets of unvaccinated kids, so i thought maybe the cost us were spread out when you added multiple kids that have measles because you are in the community doing the contact tracing. researchers said it's exactly the opposite -- it costs way more money when easy pockets of unvaccinated kids because more kids are at risk and you have to take more intensive steps. you're not just trying blood and sending people on their way. you are doing all of the contact tracing and blood tests were 50%

of the kids instead of just one. today while we think it could cost $180,000, it's probably a lot greater than that. >> continuing the coverage of the measles outbreak we see across the united states. thank you. the european central bank last night shut off a source of funding for greece's financial institutions. the ecb says it will no longer accept greek government bonds as collateral for loans. this puts new pressure on the new prime minister's government. alix steel who will be in for trish regan on street smart joins me now. >> it matt miller and myself, so it's two for the price of one. >> what does this ecb decision mean? >> are clays came out and said the probability of a greek exit is higher now than it was in

2012. so really upping the stakes versus what we saw a few years ago. ask what is the goal? is the goal to get greece's finances in order or to keep greece in the euro zone c don't start a domino effect? >> and appears the new government and greece wants both. it also seems like they need to grow the way out of this versus continually being hamstrung by a recession. if you look at what banks can do, they can use any other collateral to go to the ecb. this is just the junk that. they can get funding, so it might not be as bad. >> isn't it interesting that the ecb made this decision while the greek finance minister was going to european capitals? it seems as if they did not let him sit down across from them and have the conversation postop

they said a deal is a deal and we've been through this before we're not going to renegotiate the terms, this is what we expect you to do, new government are not. >> these are people who have never run a government before. they are babies starting to walk in any to give them a chance to learn how to walk. if you look at what we heard from a german finance minister no aid without conditionality. it feels like we had an aggressive move from greece and then we had the ecb make the next step and now it's back. next the new prime minister has only been in office for a couple of weeks. what does this mean for him and his backers? his whole campaign was about we are renegotiating these terms. they are too draconian and they are hurting us as we try to institute structural reform stop >> you are absolutely right. i like to think of them as a

good cop and bad cop. the finance minister continues hard line of no, we're not doing this. >> what else is on "street smart " today? >> do you like coffee and dunkin' donuts? >> i'm not a fan of dunkin' donuts coffee. i like turkish coffee and ethiopian coffee stop next we are going to talk to the -- ethiopian coffee. >> we're going to talk to the ceo of dunkin doughnuts. their growth is slowing due to increased competition and i want to get by that is and how they feel about this competition. >> there's a small store near me in jersey -- i'm a creature of habit. no doughnuts for me.

stay with us. scarlet fu will have another check on the market movers on the other side of the break. ♪

>> get the latest headlines at the top of the hour streaming and on bloomberg.com. that does it for this hour of "bottom line." on the markets with scarlet do is next. i will see you on friday. >> it is 56 past the hour, and

it bloomberg television is on the markets. i'm scarlet fu. u.s. stocks have resumed their weeklong events. the s&p 500 has more than made up for yesterday's decline moving higher before tomorrow's jobs report. only merck and coca-cola are declining and the nasdaq is the laggard here. where and linkedin report their earnings after the close. that brings us to our sector focus today, which is technology. the group has struggled to gain momentum in 2014. the spider etf that tracks technology is down about 1.5% but with apple's recent success, could the tide turn? here with some answers is the stoxx reporter for bloomberg news. certainly earnings is driving the moves for tech will stop how far in earnings season are we? >> we are basically done. they were better than expected and that's a surprise to some of

the analysts out there who were expecting the strong dollar to hurt these egg tech companies earnings. we have tesla coming up and trip advisor and after the close tonight, linkedin. >> i find it remarkable tesla is considered a tech company. >> they are in a lot of different indexes. >> in terms of how is priced it's priced as a momentum stock. >> i think it is getting increasingly more toward that. you twitter's and netflix of the world that have pretty good stock performance and have these massively big p/e ratios. when people are looking at an excuse to sell off the market research get worried about valuations in the broader indexes, those are the first stocks they look at to sell. >> when you talk to fund managers what do they say about investing in the sector right now?

do they look at it as a cyclical group as they would approach industrials? >> they are looking at more favorably after the positive earnings we have seen. 90% of tech companies have beat estimates. people are looking at other external factors and how they might way the outcomes. the jpmorgan global equity strategist published a note last week saying tech would be among the most well-positioned sectors to benefit from that. >> how is that? more discretionary income for consumers who can spend money on tech ways? >> exactly. you have consumer discretionary's benefiting from the drop in oil and on a three to six month basis, people might be more bullish stop >> let's talk about linkedin and twitter.

you are talking about the distinction is they are not big multinationals like apple or google. >> they are probably getting 75% of the revenue run the u.s. as opposed to big multinationals and that insulate them from the strong dollar is that can weaken your exports and they are not exporting as much. >> that bodes well for their results tonight. our people optimistic as a result? >> people are expecting a 36% one year growth rate, so it will be interesting to see. >> thank you so much. ♪

>> welcome to the most important hour of the session. i'm matt miller in for trish regan. max and i'm alix steel. the benchmark industries racing the benchmarks for 2015 thanks to dealmaking at pfizer and the euro strengthening as investors watch greece negotiate, if you can call it negotiate, with eu leaders. and we are counting's down to earnings after the bell -- twitter, linkedin, pandora activision blizzard. "street smart" starts