mark: 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 in the united states and to those of you joining us from around the world, welcome. we have full coverage of the stocks and stories making headlines on this wednesday. a roundtable discussion on the next phase of the banks stress tests with allison williams and michael moore. our chief washington correspondent, peter cook, will

have new details as iraqi soldiers and shiite militiamen enter the islamic statelet's check out how equities are doing after yesterday's selloff -- it was the worst day for equities in two months. dow jones industrial -- excuse me, the s&p 500 is down fractionally. the dow jones industrial average , also declining on this wednesday, down fractionally. and the nasdaq composite index is down a little more than .1%. we have not seen the dollar this strong against the euro in almost a dozen years. it is almost approaching parity. the dollar is up 11% this year up 22% since last june. the stronger dollar will hold down inflation and consumers will eventually see lower prices on imported products. for europe, it means their exports are more competitive

than the global markets. customers of apple's itunes had app stores have not been able to buy or download items worldwide due to an extensive outage that has lasted more than eight hours. the itunes app and mac app stores are unavailable. service for the ibookstore was also interrupted. those interruptions came two days after apple release details on the apple watch. that's a look at the top stories we are following at this hour. in iraq today, a sign of progress in the fight against islamic state. iraqi forces backed by iranian forces battled their way into the city of tikrit early this morning. it is their biggest advance since the islamic state took saddam hussein's hometown in june. fighting to lace without u.s. air support which remained focused on other parts of iraq. a top commander from iran is on the front line.

this comes as top numbers from the obama administration tried to sell congress on a new authorization for the use of force against islamic state. peter cook joins me now with more. does the administration think the progress is a good day given the iranian role? >> there watching very closely. josh earnest calls the movement a positive development but stresses that it is the iraqis leading the fighting with the help of the iranian backed militias. the big concern in front of the senate foreign relations committee is what those shiite militias and iran will do next in the sunni dominated region. >> the militias, they call themselves the popular mobilization forces. when they recapture lost territory or engage in acts of rest or be shouldn't -- acts of retribution, there's no question that is a widespread event at

this point but we are watching closely. >> sectarian violence or a return to that would be a big concern for the u.s.. he did say the iranian support was a positive thing from a military standpoint, but they are watching it very closely. >> what does the obama administration think of the developments into crete? >> again, they think it is a positive move at this point, but they still have a ways to go on other fronts, including the u.s. role in iraq going forward. getting new op -- getting new authorization for the use of force in iraq and syria -- that was a big focus of the hearing today. he faces skeptical democrats who think the authorization is too broad, especially when it comes to the use of u.s. forces. republicans think it may be too limiting antidepressants hand. the new secretary of defense act the language in the resolution and general dempsey said it was

suitable to the campaign as currently designed. secretary of state john kerry appealed for bipartisan unity. >> the president already has statutory authority to act against isis, but a clear and formal expression of this congress'backing at this moment in time would dispel doubt that might exist anywhere that americans are united in this effort. >> he also flatly rejected the idea of any bargain with iran linking the nuclear talks with expanding influence for iran and iraq will stop he was asked about that by marco rubio. a pretty tense exchange over that. mark: that letter to iran possibly to sign by 47 republican senators came up in today's hearing. >> it did. there were some fireworks over that. john kerry calling the letter stunning and irresponsible.

several republicans push back including rand paul. he said the letter should have been copied to the white house because it should ensure congress would have a vote if there is a deal. march 24 is the deadline for that framework. mark: thank you very much. international has made a takeover for its pharmaceuticals. let's go to scarlet fu for the details. scarlet: we are just learning details on this. both have been halted from trading. they are trying to trump the offer from valiant pharmaceuticals. endo is based in dublin and is offering to pay between $170 and 170 five dollars a share. valiant had agreed to pay $10 billion in cash overall, 158 dollars a share after it failed to buy allergan even with

assistance from bill ackman. sales did jump ahead of the halt. it was up 6.4%. i was just looking -- 11 billion shares changing hands, four times the full-day average over the last three months. and gave up its games before was halted from trading and valiant is lower right now. representatives could not be reached for comment but we know these companies, and oh and valiant, followed the strategy of acquiring smaller companies and then cutting r&d spending in the aftermath. i want to go to the bloomberg terminal to show you the enterprise value. that's the theoretical takeover value of a company when it is in takeover talks. a market cap of $10.8 billion. takeaway the cash of $422 million and add the that of $1.85 billion, you get an

enterprise value of $12.2 billion. we will continue to keep an i on all of these discussions and let you know of any update. mark: scarlet, thank you. the 31 largest u.s. banks past the first round of the federal reserve pass stress tests this week. next week, we will get the more difficult second part of the test. allison williams and michael moore join me here in the studio. today, we learn if the fed approves the banks tests or request to raise dividend and if they want to buy stocks or make acquisitions. what criteria does the fed use when it grants that request? >> it's basically testing all the banks across a series of capital measures under an adverse scenario and a severe stress scenario. basically using an assumption that are as bad or worse than

what some people call the great recession or the financial crisis. mark: our colleague at bloomberg news writes that analysts say the big unknown is whether the fed will fail any banks by forcing the quality of their internal planning rather than her strength. in theory, a bank could have enough in capital reserves to withstand some sort of shock, a seismic economic event, but still be penalized because their strategy is lacking? >> is not so much the strategy is the process of going through these tests and having a handle on all of the risk involved in the bank. we've seen that with citigroup and the number of other banks that failed on the quantitative side. now that we have the results where banks passed on the numbers that would seem to be the only way any banks would fail today is on the qualitative side. >> in layman's terms, it seems like the fed wants the bank to

be able to see this coming. you have to identify it before it's on your doorstep. >> the fed wants to make sure the bank has robust systems and processes in place to measure the potential risk out there and how it would perform under these scenarios. mark: an analyst from edward jones said some banks still don't have it right six years after the process started. we are still in the phase of trying to figure out what the fed is testing exactly. is this a failure of communication on the fed's part or is it a failure of interpretation on the bank off part? >> you can argue it's a bit of both. the banks have said we would like to have more of an idea and the fed in response has introduced the mulligan system, where basically if your first request is too high and you fall under the minimum ratios, you can resubmit in that week and

have it approved and not have to go through another lengthy process. that gives banks another chance and perhaps offsets some of the blackbox nature of the tests. ask how have the banks been doing on these mulligans? >> i think one of the banks everyone is watching this year is bank of america will stop bank of america performed very well on the quantitative tests and you have some people worried at the qualitative aspects. they successfully used the mulligan last year. another couple of banks people might be watching this year might be goldman and citigroup will stop goldman came in very close on one of their ratios, the risk based capital ratio. when you look at their scenarios and results, they were much more optimistic than the fed so they would have a chance to resubmit. there's also a chance their

capital plan includes different types of issuance that under the stress test and capital planning process may allow for a buyback. >> oldman also use the mulligan last year. that would be two years in a row if they had to use it again. mark: you wrote that goldman's extra cushion of capital is not enough to match the dividends and share repurchases. did the toughness of the first rounds of tests catch people by surprise? >> i think the way it was measured seem to catch them by surprise based on the way they estimated they did in their own version of the stress test. each bank runs their own version and goldman certainly had a big gap. it makes you think they are either going to have to lower their request or change the structure of it and possibly issuing some preferred to offset the buybacks or maybe changing

the timing of it so that they are buying stocks where their capital ratios are higher rather than in the earlier time. mark: michael moore and allison williams, joining me here in the studio. thank you so much. we will get the results of those tests after the close of trading today. up next, check on the top stories and we will check on nutrition guidelines with ohio congressman, tim ryan. "bottom line" on bloomberg television continues in just a moment. ♪

mark: welcome back. what do you some of the top stories we're following on this wednesday. in florida, 11 soldiers and marines are presumed dead after nighttime helicopter accident. the wreckage was discovered off the florida panhandle. the seven marines and four soldiers were on a training exercise with another helicopter. president obama has said there

will be a full investigation. in france, 15 armed robbers stopped to armored vans on a highway and made off with almost $10 million worth of jewels. no one was injured but burned out vehicles were found nearby. potential bad news for new jersey commuters. new jersey transit may have to raise fares for the first time in five years. they are expected to run and $80 million deficit in the next year. transportation experts say fares may have to go up 15 to 25% to fill the gap. the associated press filed a lawsuit against the state department to force the release of e-mail correspondence and government documents from hillary rodham clinton's tenure as secretary of state. the legal action comes after repeated requests filed under the freedom of information act gone unfulfilled. it includes one request the ap made five years ago and others since the december -- since december of 2013.

the imf has approved an aid package for ukraine of about $17.5 billion. christine lagarde says the minsk cease-fire is largely holding for now. the package is a four-year arrangement. that's a look at the top stories we are following on this wednesday. coming up, the university of kentucky's wildcats are having a great season and that's making some people very nervous. we will tell you why, next. ♪

mark: welcome back. the university of kentucky's basketball team has been undefeated in the regular season. this is causing some bookies to break into a sweat. we've been following this story

and our reporter joins us live. >> a lot of bookmakers put out odds at the beginning of the season for kentucky to go undefeated throughout the entire season. the odds were long because it didn't seem that plausible. they weren't particularly great even know they did get into the ncaa finals. but there was a lot of action and a got that down to 20 21 as they kept winning and william hill, a sports book in las vegas is looking at a high six figures of exposure just on that that alone. certainly, there's interest in vegas for kentucky to finally lose the game. >> aren't futures bets usually profitable? >> that is rare for a casino. you change the odds so that no matter what happens, you make money. some results might be better, but it's rare to be in a situation where there's a team that can win more than you have

taken in. i think you will see books doing that by changing the odds for other teams here and there, but it is certainly an unprecedented situation. >> is it up to a casino to limit the amount of exposure they take on? >> it is smart of them and they are in rare air here. they can change things around and if they are worried about kentucky, and if you have watched kentucky play, there may be good reason to think they could go the whole thing undefeated. they could take in more that's on duke and wisconsin so that maybe there's less pay out if kentucky does the whole thing. mark: take us through the process of how these odds are constructed. what is the casino due to come up with those odds? >> they put out the futures and try to determine to the best of their knowledge how things are going to shake out. kentucky was one of the favorites to start the year. as more bets come in, they can

alter them a little bit. kentucky narrowed it as they came in. for a book that wants to narrow it. take a team like duke, if you make it 10 to one and move it out a little bit, the people in vegas looking to bet on arizona or duke are going to do it at your casino because you have the longer odds and it helps you balance things a little more. >> does somebody, maybe a highroller go to a casino and say even before the season starts, i want to put eczema out of money on kentucky going undefeated? >> the genesis for this bet was two years ago, a guy walked in to one of the casinos and said i want your odds on kentucky to go undefeated. they put it out at 400 to one. he bet $100 and they lost their third game of the year. so the book made a profit just

like that. this year, he asked again. kentucky was a better team, so they put it out at 400 to one. >> how often does a team in college basketball go undefeated? >> if you have followed kentucky, there have been many games -- was a double overtime game and they needed a run in the second half to pull ahead. there are games this team could have lost. they think 50 21 was the right odds and if they end up losing, that's how things go in that world. mark: if they end up losing what kind of hit are we talking about? >> they don't say specifically but they are looking at six figures. there are other sports books out there that put out odds as well, so they are going to put out a few others that want the same route. mark: how good is kentucky?

>> there's no question they've been the best team of the country this year. the fact they haven't lost speaks for itself. mark: i mean this not to knock the next, but i've seen kentucky take most of the siege and -- most of the season and i think they could beat the next. >> you are a march madness fan. this tournament never seems to work out the way you think. the best team rarely wins and you get a team like yukon that runs the table in march and april so i don't think the bookies are sweating too much now. mark: how badly does vegas need this first kentucky loss? >> march madness is a huge event for them, but they have ways of offsetting it. more interest means more betting. mark: you can read his stuff online.

thank you. got my education. coming up, healthier food policies for americans. we will talk to tim ryan from ohio and what he's doing to move our nation toward cleaner, healthier foods.

mark: welcome back to the second half-hour of "bottom line" on bloomberg television. i'm mark crumpton. let's get you to some of the top stories we are following this hour. let's get to crude oil and the close of floor trading -- crude oil down about .3%, trading at $48 $.14. the largest u.s. banks get their second report card today -- the fed releases results from the second phase of stress tests. goldman sachs barely passed the first tests and is hoping for stronger results from the second one. citigroup flunked last year. the ceo needs for the bank to

pass or his job may reportedly be in jeopardy. the general election -- general electric ceo had a better year than his ceo did. his compensation more than doubled to $37 million. ge shares in the meantime fell 10%. he will see all of the increase right away. most of it came in his pension. his base pay was raised 8% to almost $4 million. the company said it was because of his unprecedented efforts to reshape ge's for folio. the jolly green giant may be getting a new home. there is a report that general mills may sell its jolly green giant frozen food business. the sale may take place this summer. green giant makes more than 160 products and generate revenue of about $700 million. that's a look at the top stories we're following on this wednesday.

federal, state and city government are enacting policies to promote healthier foods and improve the quality of food and lower served communities. tim ryan river since a 13th district of ohio and is the author of the book entitled "real food revolution." congressman ryan joins me here in the studio. thank you for your time today. why did you write the book? >> we have a messed up food policy. we subsidize crops that lead to highly processed food. that highly processed food has us very sick where half the country has diabetes or prediabetes in the next five years. we get sick and then we subsidize health care to take care of the people who get sick from eating the cheap subsidized food. i wanted to point that out so we can talk about how we can change the food system. mark: is this about cost or

nutrition? i mentioned underserved and low income communities. many families eat what they can afford and plan meals around hectic days, family schedules and kids activities at school. >> we need more accessibility to fresh, locally sourced food. we have many young children in urban areas who live in food deserts. that means there's not a grocery store with a mile or two of their home. so the ea fruit rollup doritos and a soda for breakfast and we wonder why we are struggling in math and science with the international standards. mark: how do you propose changing american's mindsets about how they eat? this is something ingrained in them. they eat at a certain time and they eat certain things -- it might be a soda pop, but it fills them up. >> more and more, people are understanding that what they are eating is causing the sickness.

food was the original medicine before we had pharmacies on every corner. more and more people are understanding that in that's why we need to teach this in our medical schools. most medical schools don't meet the national recognition of teaching that to patients. we do have a kitchen and every schoolhouse and a salad bar in every school cafeteria so we build out a new food system. mark: that brings me to my next question -- cost. where are the funds comforting -- coming from question >> we are paying for it now. what is medicare going to look like when everybody has diabetes in the next decade or two? it's going to be unsustainable. all of the things that make america' engine go, we're paying for it now. how do we move it on the front and and create markets for farmers and help them convert

from these big crops to the more healthy sustainable farms that can feed our kids good food. mark: who are the unsung heroes? >> the sustainable farmers, folks in urban areas that are starting urban tag programs to take care of the food deserts. the teachers and nonprofits hitting into our schools and save warming up processed food is unacceptable. the moms and dads fighting to get soda machines out of schools and make sure they have access in the schools too good, healthy food. those are the heroes and it is an organic movement happening. mark: the seventh chapter in your book is the farm to table movement. tell us about the miller family. >> they are local farmers who have a sustainable farm with grass fed cows and free range chickens.

they are a few miles from our home in ohio and they are making it work. one day, i walked into the local butcher and there they were cooking up some breakfast meat. these animals are healthier and it is overall more nutritious to have a grasp -- grass fed cow and meat. at the end of the day, that's the direction we need to move in. mark: you write that in every state in our country, we need to meet the agricultural community halfway. what do you mean by that and why don't people understand farmers are also businessmen and women? >> the idea that the farmers are the villains -- they are getting subsidized to grow things. they have kids in college and they need to make ends meet. our job is to create markets for them so take ohio state university -- 60,000 students in central ohio. if they said 2% of our food a

jet is going to go do fresh, local resource food, the local farmers will shift what they are doing to supply that market. at the same time you are adjusting the subsidies, instead of incentivizing them to do the row crops, much of the stuff that we don't eat anyway to fresh fruit and vessels, you help them make a living and provide good food and you will drive down health care costs at the same time. mark: you are a big proponent of food education in school. where does your philosophy coincide with or differ from michelle obama? >> i think she's on it and you need the exercise piece, but most of this is food and it's got to be a national effort and the resources have to be there. everyone does say how are you going to pay for it and the responses we are paying for it now in large numbers. we are going to bankrupt the

country. there's no way you can be a viable economic force because kids are slothful, eating mass amounts of sugar. the investments into stem are a massive waste. we have all of these opportunities in these growing sectors but if we don't have kids with a high energy level, mental discipline and the ability to sit and focus, we are going to lose. we have two meet these challenges on the front end. mark: congressman, thank you. >> great to be with you. mark: stay with us. "bottom line" continues in just a minute. ♪

mark: welcome back. it's time for today's latin american report. brazil possibly else fell to a all-time low today. there are concerns the nation's budget deficit will widen and the prospect of higher u.s. deficits will sink demand for

emerging market assets. the president is concerned brazil may lose its investment grade credit rating because of a stalled economy and budget deficits that have pushed the currency down 15% this year, the most among 31 major currencies. that is your latin america report for this wednesday. coming up, your iphone as a health tracking gadget. why privacy advocates are concerned about apple's new health app. stay with us. "bottom line" on bloomberg television continues in just a moment. ♪

mark: let's get you some of the top stories we're following at this hour -- a report that iraqi troops have made major gains in an offensive against islamic state. the associated press says iraqi soldiers and their shiite militia allies have entered the city of tikrit one of the largest of these held by isis forces. the us-led coalition is not

taking part in the salt. -- in the assault. u.s. officials are not happy about the presence of shiite forces and iranian advisors. the chinese economy is already running behind the government's outlook. retail sales growth miss estimates in january and the two-month factory output reading shows the slowest start to a year since 2009. analysts forecast china's central bank will try to boost the economy next quarter by cutting interest rates again. in sports it was a day for nfl free agents to cash in and teams to start making trades. in one of the biggest deals, the new england quarterback will return to the new york jets. the jets will pay $70 million over five years. that makes him one of the highest paid cornerbacks. that's a look at the top stories we're following at this hour. apple was hoping to turn your

iphone into a medical research tool and that is making some privacy advocates worried. joining me now is sharon peddie peace and alix steel. how safe is this information being collected by apple? >> so far apple is taking a pretty cautious, slow approach. there are a few different ways health information is being collected. one basically stays in your phone. it's basically shrink-wrapped in your phone and can track various information about your health. but one area where you might want to worry is a new app called research kit. that one is sending health information from your phone or watch into the cloud to apple and that is the area where you get into risk. that can be intercepted and hacked and stolen. at this point, there's no

requirement for encryption when it comes to sending information through this element. that is one thing apple will have to develop, but that is a potential risk. they do say that researchers need to take a careful approach to how they develop these product because of the risk of hackers. mark: and that approach applies to consumers as well? >> they have to approve it. i have to say that it is ok for them to send my information out. alix: apple is very aware of these privacy concerns. >> there was an itunes outage today. the question was is this a data breach or an issue with the system? mark: we have talked a lot about data breaches as it relates to health information. it is more precious for thieves

than credit cards or any other information out there. alix: the people i have talked to says that apple may not be the one you have to worry about. there's a lot of health information we are sharing to a lot of different platforms. whether it's an android device which is more susceptible to hackers. sometimes people can download an app which will attack another app. the job own and all of these other devices, there's a massive amount of information being collected on our health. it is out there and there's a variety of privacy protections out there. the federal privacy law does not apply to anything collected outside of the doctor's office. mark: what protection is there? >> whatever encryption they decide or don't decide to do. people need to be aware that this information is fair game to marketers and accessible to hackers.

alix: what is disconcerting is we have seen hackers be so much more ahead of companies and any kind of way and there's a difficulty and lining up the fbi and companies to shared data so that the fbi can aid companies and stopping hackers. there does not seem to be a big conversation there. mark: why are the hackers always one step ahead? why is it to steps forward, one step back? >> part of the problem in the health world is that we have this years old privacy law that sets the standard for security but that legislation is out of date, so it's up to industries to put additional security on top of that. health care hasn't been a target for hackers until the past couple of years. that's because financial data was desirable. now because of corporate and

state-sponsored espionage, that is making health information valuable. mark: --mark: the idea was to rely on you to keep up with what is going on, whether it is cardiovascular, blood sugar levels or whatever. >> we have seen apple want to diversify into different businesses -- pairing up with ibm with the assumption they are going to pair up and sell the ipad with your company. that could be a huge entree into this landscape for apple. >> what are the research implications for diseases if you have these apps? >> there are a lot of great things that can come from these apps. researchers can more easily recruit patients. they can have a patient with parkinson's disease have an apple watch and they can send data on their movements and do research in real time. not just five minutes in the doctor's office.

mark: what is coming up on "street smart?" alix: we're going to talk about wall street bonuses how much they have risen and whether it's sustainable. that will be juicy and we will see what kind of hiring we are seeing in the coming year. and stress tests we will be all over that. mark: and i guess the delayed reaction because we will see what the street things tomorrow at 9:30 new york time. >> yes, we will. mark: sandra peddie peace and alix steel will be on "street smart" at the top of the hour. coming up, scarlet: -- coming up, scarlet fu has the charts. stay tuned.

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mark: welcome back. whether you look at the euro yen, or the brazilian riel, the world's most crowded trade is betting on u.s. dollar strength. his most be bad for american companies sales and good for foreign companies bottom line. but it brings pain to us-based investors. scarlet fu joins me again and shows us in today's off the charts. scarlet: even though we've seen the impact of a stronger dollar for u.s. company's, some of that has been balanced out by companies announcing buybacks which is taking away from the sting of the dollar's impact. it makes non-us stocks less attractive to do all are based -- two dollar-based investors. our first chart goes back to

early may when the bloomberg dollar index was at a low. it tracks companies based outside the u.s. as measured by the all country index, excluding the u.s.. these are companies based in emerging and developed markets as long as it's not the united dates. the bottom line shows a gain of 12%. the yellow line shows that same index priced in u.s. dollars. right now the index is lower, so the stronger dollar has negated foreign stock returns. four years us-based investors put money into non-dollar assets and benefited from the weak dollar or stable dollar. they now need to be aware of the potential current see risk in a deflationary -- deflationary environment. mark: all you have to do as look at which stock markets have done well to see the effect of the stronger dollar.

despite making the new highs the s&p and dow are both down. scarlet: they lost their gains yesterday -- wipe them out. western european benchmarks are the best performers, making up eight out of the 10 west performers this year. here's a sampling -- germany's dax, the ftse, the copenhagen index, all up at least 20%. when you convert those into u.s. dollars, it's a noticeable difference. those 20% advances shrink to about 4%. helsinki index goes from 20% to 2%. argentina shrinks -- only saudi arabia's index is unchanged. mark: the focus this week is looking at parity. is at the next stop? scarlet: that is the target.

several banks have said the same. one analyst says the euro bear market is only half hour be as -- half over because there's a lost incentive to hold onto the euros. you have the week euro and low interest environment prompting u.s. companies to issue more euro denominated that. mark: scarlet, thanks. that will do it for this edition of "bottom line. "street smart" is up next. ♪

alix: welcome to the most important power of the session. 60 minutes left until the closing bell. i'm alix steel. cheers based outside the u.s. are you sit -- are losing appeal as the advances to multi-year highs. is this going to prevent earnings growth? and we are counting down to earnings from box and shake shack. less, will bring you the fed's stress tests on thanks. and i will be joined with the man behind the report -- the new york state comptroller. "street smart" starts now.