In the era follows the crisis in ukraine. Lets begin with Michael Mckee and more on the unexpected slump in the u. S. Home sales. What is the take away from this latest report . Concern about whats going on with housing in the United States. This was supposed to be the prime spring selling season and we were going to see housing take off after 70 years of being in the bowl. It lands with a thud. Sales plunging in the month of march. To the lowest level in more than eight months. This follows news that mortgage originations took a plunge to a 17 year low. This is not just temporary. This is a longterm problem for the u. S. Housing industry. As the banks reported, their two ofast quarter the biggest mortgage lenders saw many fewer mortgage originations than they had in the past, even though they had been loosening their credit standards. Score average has dropped differently. Tell us what is really happening at this point. There are a couple of things. Builders have increased price is too much. The real problem has been that Interest Rates are going up every sense the fed taper tantrum last year. Ortgage rates are up by 1 so. Inventory is going on. There are fewer homes to buy. Of aso have the problem lot of speculators coming in and buying up houses for cash and taking them off the market and when Winter Weather you look at existing home sales, go back to fall, they were down as well. Around,r if things turn what then . Do they turn around and how quickly echo what we have seen is that existing homes, based on closings, sales that took place a couple of months ago might have a weather rebound coming. Newroom sales are more contemporaneous and they should be up right now. Sales. Home a real concern about what this means the economy going forward. Do we have any sense of what the Ripple Effect might be . Unfortunately, it was supposed to create jobs. The return of housing, all of those construction jobs that were going to come back, a lot of them have. But banks have been laying off mortgage lending officials as fast as Construction Companies have been hiring workers. Only a small gain of the employment from any kind of housing rebound so far. Michael mckee with a look at housing. Thank you. The finger pointing in standoff in Eastern Ukraine as Russia Threatens to retaliate if Ukrainian Government takes actions against militants. And your News Reporter lodgment has more in the situation. She joins me now from washington. Ministeran foreign said today that his country would retaliate if its is attacked. Kraine he compared it to the 2008 war in georgia. Diplomatic that agreement in geneva last week. As russia preparing for war now . It is certainly alarming talks from the Russian Foreign minister. We have to parse out what he said and understand what he means. When he talks about russian citizens in ukraine being attacked, he said that this would be grounds for russia to go to war with ukraine, i want to know what russian citizens he is talking about. Those Russian Special forces that the u. S. Insists are the ones stoking the separatist feelings . Or is he talking about all of russian speakers in ukraine . It raises a lot of questions and a lot of concerns at the u. S. State department and throughout the administration. The u. S. Has said that ukraine is sticking to their end of the bargain in these geneva deals that were made last week. Even the European Union has said that russia has stuck to the deal and they have not invaded ukraine yet. We have seen some climbing down with the pulling back by separatists from some of the government buildings. Have talks comparing into the 2008 war and you have to worry about what wooten has up his sleeve what putin has up his sleeve. Anythingany new new on the sanction front . The first resort when diplomacy fails is economic warfare. See the u. S. Ing to going to war over this. That said, the u. S. Has shown e of its military power Army Paratroopers have arrived in poland. The Defense Department made an announcement at the u. S. Was going to be sending hundreds of american troops are joint exercises in four countries that ring russia. Three of those former soviet republic states are neighbors of ukraine. We just had the u. S. Ambassador to nato within the past hour say that russia has not been able to make any incursions into baltic country airspace in the last 40 days come even though it used to do so in the past. Flexingthey are partly muscles on the part of nato, talking about later in the year there might be discussion of longterm nato bases in eastern europe. Were looking at more sanctions coming at the end of the week. What about that hard power strategy that has been used by both sides . Russian special forces in position and russia moves its troops. I thought it was very interesting that Russian Media who have been very propagandistic yesterday released their own counter images to the state department circling the actual individual faces and mixing is of some of these apparent Russian Special forces who they said had been in georgia before and now are in Eastern Ukraine. They were trying to call into doubt the u. S. Governments intermission. What you see is the u. S. Going for things like photos 50 million promised by Vice President biden. Soft power while putin is using hard power. It is a bit asymmetrical at this point. Thank you so much. His four obama begins nation tour of the asiapacific region. We will have that story when bottom line continues in just a moment. Will come back. President obama is in japan. The first up in an eightday, four nation trip designed to underscore americas commitment to the asiapacific region. Peter cook has more on the story. The trip began with some worldclass sushi. It absolutely did. The Prime Minister taking the president to dinner tuesday night at a chinese sushi bar. It only seats about 10 people but its world famous word sushi. He said the president declared it was the best sushi he had ever eaten. I hope it would be pretty tasty. The dinner kicking off a threeday visit to japan. He will talk about the 12 nation trade agreement. Your call the hope was the two leaders could be signing a final bill at around now. At least telling some sort of breakthrough. President obama still trying to win over Congressional Democrats here at home. U. S. Officials hope this trip can give the talks some traction and the president has already n interviewews in a coming said he wants to see a peaceful resolution in japan. He repeated the u. S. Policy position that it recognizes that is notle sitting well with china. We have already heard a response from some chinese officials to that. A the two leaders will have News Conference tomorrow. The president will be meeting Business Leaders during his trip, hoping to convince them to invest more in the west where is president headed next after japan . He will head to south korea where that carry tragedy could dominate a lot of the visit. He will be holding a News Conference with the president. The continued threat from north korea sure to come up during the discussion. This is his fourth trip to south korea. He could become the first president since Lyndon Johnson to visit malaysia. The cooperation for the search for the missing jetliner. He has to the philippines where he and the president are expected to sign a deal to expand u. S. Military access to parts of the philippines. A byproduct of the u. S. Help the typhoon. Hine one country not on the strip, china. For more on president obamas agenda in asia, former National Security counsel senior official and brookings senior fellow joins us now from washington. Welcome to bottom line. Where are we in terms of the socalled asia pivot . Do you think that is a correct characterization . I think it is a poor characterization. That our shift towards asia is at the expense of what were doing elsewhere. It should be called the asia reinvigoration of policy after being bogged down after 9 11. It is an ongoing process. I think peter accurately summed up the agenda for this trip. To show the president really cares about asia and does show up there. It is to draw strong a security alliances and push a multilateral investment agreement. How should the United States go about enhancing its engagement in the region . Behind what has been called the rebalance towards asia was that we would increase our security activities in the power lines with five we have joined the east asia summit and other bodies over the course of the past two years. The key issue here is one that peter referred to at the end of this. Where does china fit in this . The trick here an important , is to build relations with china that make china a central player in this process. Trade tiesbiggest throughout the region, including with our allies. Rather than have this be something that makes china the bullseye and forces the countries do think that they have to side with us or with china. Peters saidabout apiece. He did note that this trip did not include a stop in china. What are we to make of that . It does not. The president will be in china this fall for the aipac leaders meeting. Beyond that, all of the items that were mentioned in peters piece have parallels with what were doing with china. We are a good shooting a bilateral investment treaty and have significantly expanded our military contacts with china. We have very active diplomacy going on with china. Significant expansion of our diplomatic contacts with them on a regularized basis. The trick is, how do you do this with friends and allies in the region who are worried about chinese assertiveness and with china and not have the two sides of that effort and up in conflict with each other rather than reinforcing each other . Hasou believe that asia confidence in americas ability to display what you call real economic dynamism. Doesnt that assume that washington politics dont get in the way of things like the Transpacific Partnership which is the centerpiece of the president s engagement in the region . It is absolutely the case. The president will have to if this is negotiated and we have a good agreement, he will have to get this ratified by capitol hill. , i thinkls to do that there will be a serious price to pay in terms of u. S. Credibility in the region. It there is a lot at stake here. There was a threat not to raise the debt limit. His previously scheduled trip to asia was canceled because of the government shutdown. All of those things raise questions that he is now working reassurance provide that we can follow through and make washington work well enough to meet our commitments are out asia. Thanks for your time and your expertise. We appreciate it. Thank you. Going to the movies can become located. 4. Gital, imax and now fo 4d. Nd now is the next frontier . Bloomberg is the only Business News service being offered on amazon fire tv. If you missed any of our interviews, you can now watch them on bloomberg on apple tv, which features Live Streaming and ondemand videos. International audiences love films. G 4d theyre bringing a fix like moving shares, sent, smoke and the winds into a theater in the nine states. The local audiences embrace the new technology . 4dn erlichman went to the fou test cinema to get a case for himself. Welcome to the Movie Theater of the future. Cool, tryught 3d was adding moving shares, bubbles, water jets, strobe lights and smoke. Lets do it. Shaking. S the Company Behind this technology is korean theater chain cj. They rolled out 4d in their theaters first aired their ally live venue isa. Rolling out in their theaters. It can cost 700,000. To be competitive and relevant in the movie business, you have to constantly be evolving. All of this Movie Theater magic can be controlled through a tablet. Effect of digital is you have this environmental control. Youre not just shooting the movie out. You have these effects that are timed. Theffects that engage for five senses. It smells like freshly brewed coffee are stored in canisters behind the seats and are piped in at the right time. Rubber. Ike burning its raining. Im in a theater and its raining. The four d experience cost around six dollars more than 3d movie tickets. Enough charge that they hope will pay off. We dissipate that therell be a Strong Demand to roll it out into other Movie Theaters. You are moving with him a little bit. You get a sense of floating a bit. That was crazy. Jon erlichman joins me tell us, what was it like . It is different if you are just going to see the trailer. Saw were trailers where they really try to impress with all the bells and whistles. What they want to try to send it is a message that you will hours. Nce two why didnt it rollout in the u. S. First . Theaters arehe already established. A lot of International Markets like korea have new theaters that are being built and you can build the stuff in. It costs a lot of money to build these or retrofit theaters. That has been the reason why it is low. Some u. S. Audiences are skeptical. 3d started here early but some of the films do not work in 3d. Once it was figured out, the International Market and it fitted from that. The appetite has been large overseas. Jon erlichman still shaking. The shaking seats, no. 26 past the hour, bloomberg is on the markets. Julie hyman has the details. I was tempted to shake and my seat. Take a look at where stocks are trading right now, we have ended the sixday winning streak that we had for u. S. Stocks. We are trading a bit lower today. Not a huge pullback, but a bit of applause and that upward momentum. A lot of what has been dragging trading recently has been that big earnings report. Lets talk about stocks today. Thatds largest Bank Business which helps Companies Profit is becoming less profitable since the financial crisis. We are watching at t after its earnings there are questions ofut the sustainability those increases. We will have more on the markets in 30 minutes. Back to the second halfhour of bottom line. Im mark crumpton. Thinks first thing with us. Some major newsmakers on Bloomberg Television today. Bill ackman made an activismnted move in this week when he and Galleon Pharmaceuticals teamed up for a hostile bid for botox maker allergan. Schatzker and Stephanie Ruhle spoke to ackman. He is in this deal for the long haul. We dont want to partner with everyone. We want people we want to partner with the best management teams and the industries we like. This is not about this is about establishing a large position. That is an attractive proposition for us and allergan valiant shareholders. Herbalife stock overvalued and the pyramid scheme. What theyre telling the market is that there are some serious they see evidence of Serious Problems with the company. The fccs track record in going after pyramid schemes is pretty much 100 . Is currently being investigated by the federal trade commission under the department of justice. Last week, the illinois attorney general announced that his office is investigating consumer complaints into the company. Herbal life says it is confident it has complied with all applicable laws. We also heard exclusively from. Imcos former ceo his first interview since his very public exit from pimco. His move was one that shocked wall street and caused the founder to self reflect on his management style and personality. Liu he hadetty nothing t bad to say about the bond king. Bill is one of the best investors. I had the privilege of watching him in action and he is a great investor. Someone who is able to differentiate signals from noise and someone who is very committed to deliver value. The other thing that has been accurate is that bill is part of a talent pool at pimco. An enormous bench at pimco. That is key for them going forward. He is now chief economic she remains the chair of president obamas Global Development council. He just signed a deal for his second book with random house. Even more newsmakers to come. Warren buffett is in new york for his annual foundation luncheon. Also on his agenda, an interview with betty liu about calls for him to intervene and how cocacola pays its employees. Coming up right here on Bloomberg Television. Lets check some of the top stories were following for you at this hour. A piece of sheet metal that washed ashore in southwestern australia is not likely to come come from that missing relationship. Minister saysime there are plans to bring in more powerful sonar equipment to search deep beneath the indian ocean. The United States is resuming military aid to egypt. The move comes after u. S. Certified that egypt is abiding by its peace treaty with israel. Military aid was suspended last spaced asian astronauts conducted a muchneeded spacewalk to replace a dead computer and get their orbiting home back up to full strength. The computer is a can is a cripple back up a critical backup. They have been working to install a fresh spare as soon as possible. Thats a look at the top stories in the news at this hour. President obama kicked off his eightday asia tour, arriving in tokyo this morning. The trip is aimed at advancing the pacific nations trade pact and reassuring allies that the u. S. Will back their security interests. Crowley. D by joe welcome to bottom line. Promiseddent last year that the United States would rebalance its policy toward asia. What type of assurances does washington need to give asia at this time when the russiaukraine crisis leftism of our friends and allies questioning our commitment . The president s trip is a statement. Taking the time to meet with our allies in the pacific. The pacific shift is an important one. Its the right thing to do. Economically, that is where our future will lie as well. I think the president s trip is the right time. Especially something going on like this with the ukraine and russia. The president began his trip in asia the significance of that given chinas growing influence in the region hes showing a united front with the japanese prime and mr. Does he risk grading tensions with china . Its no secret that the niceties and japan have a close working relationship. Caroline kennedy to tokyo. It is showing the significance of the relationship. I think its a reassurance to our allies in terms of our presence within the region. I dont think this should be taken as provocative by the chinese. They understand that there are some issues at play. The islands between china and japan. That has to be worked out in a diplomatic way. Lets switch to Immigration Reform. The president did campaign on the promise to fix a system that he admitted was broken. Where are we in those efforts and what is the likelihood that anything is going to be done during an Election Year . Of theore reflective logjam in washington because of caucusse republican cause and ability to lead. Inability to lead. What steps are they taking to that canl to the floor lead towards a comprehensive bill being passed in the house and being passed in the senate and signed into law . Do you think if this was an Election Year that might happen . I think with pushing the republicans to support this bill is because it is an Election Year and they believe it is important for their political purposes to be viewed as being proimmigrant. Fewpurpose we have months left to get this done. What are the economics of Immigration Reform and how do you weigh that with bricks of any proposal who say that there should be reform but, at the t give a pass can to those who might be here legally . The cbo has said that the bill would be in a chemical be an economic boom to our country. There is no question that, from a money side, conference of Immigration Reform is a smart money thing to do for our country. Overwhelmingly is for a conference of the ration reform. A majority of the people in my district were not born in the unites states. My mother was not born in this country. This is a personal issue for me and something i want to see done during my term in congress. Earlier this year, the chairman of the ways and means started the conversation by putting out a plan. He famously described u. S. Tax code as 10 times the size of a bible with none of the good is. What should it look like . I applaud him for creating this discussion. The draft that he proposed really demonstrates just how difficult it is too simple by the code, which i believe does need to be simple five. To make it a favor code. Fairer code. A i think it demonstrates how difficult it is to lower the corporate rate to 25 without doing that on the backs of middle class americans. About 30 seconds left. I have to ask you, you are no doubt watching the polls. Democrats chances of retaking the house if they do run on the Affordable Care law, is that going to help or hurt them . 8. 5 Million People who did not have Insurance Coverage before have it because they are on the exchange. Vicki Million People 15 Million People now have insurance. What about the folks who did lose their coverage . The white house also changed the rules to allow them to keep the coverage is old. That is not the case. What we did is money mental for the country what we did was monumental for the country. No jobs bill, no infrastructure but to build for the future of this country, they have been absent when comes to legislating in washington and democrats will change that. Crowley joining us here on online. Thank you for your time today. Heree crowley joining us on bottom line. Will come back. It is time now for todays latin america report. Brazils Congress Passed a bill guaranteeing internet privacy. The measure limits the metadata that can be collected from Internet Users in brazil. It makes Internet Service providers not liable for content published by the users. It requires them to comply with court orders to remove offensive material. This comes on the eve of a major conference on the future of internet governments internet governance. Workers in panama are seeking a 35 wage increase. The 5 billion panama allow panama canal expansion project will be impacted. They restarted work last month after a dispute of a 1. 6 billion overrun. This is your latin america report for this one stickered coming up, is the s p 500s winning streak ready for a breather . That story in just a moment. Just on its00 longest winning streak since september just saw its longest winning streak since september. Dan, welcome back to bottom line. The market rotation that we have been seeing over the past few weeks, is that over now . It seems to be. There was a question of whether was indicating there was something we needed to worry about. We dont think that is the case. It did seem to be concentrated in the stocks that did quite well. We dont think they told us anything about the broad market. What are the fundamentals . It is a relatively benign market or benign environment for equity. You have low inflation. We have slow but steady improving gdp growth. We dont really see any big rights in terms of the macroeconomic environment. The environment where u. S. Corporations can focus on increasing profitability. That will support equity prices for the rest of the year. Were some of the sectors the victim of their own returns . That is what happens. Time to takes those profits and invest them in somewhere else. When reason we did not think broadbasedore selloff that was behind this was that come even when we did have these good returns, valuations werent stretched. You still had Earnings Growth behind it. If you had a role fundamental believe in that case, it might be an opportunity to put out more money on it. This has been a pretty good earning season area why are the expectations for the quarter so modest . It does not turn out that youre going to get a lot of growth for this report. The changes for the rest of the year. It will be a bit of a dance for the market. You have probably too high earnings expectations for the rest of the year. Are they going to come down . Theyre going to come down. You still going to get recently strong Earnings Growth. Broad trend up with some volatility around it. We are coming towards the end of april. Has anything that has happened in the markets thus far surprise you . Not really. What we were looking for the weather, we expected things to be modest returns for the year. We do like the general requirement and you dont see anything that will give you a thecatalyst or change in market. That is fine. At that has been an environment we would like to keep going. Valuations are good. We dont want them to go up too much and get stretched because you will have to reverse that. Lets switch to the federal reserve. Tapering is continuing on its present course. Economic indicators are showing growth. How long can yields stay down . Thats a bit of a mystery. Why they are as low as they are. If there is a risk for us to get up that has not happened. That could be something the market would have a bit of a difficulty adjusting to. The best way we can describe europe. Lting in what happens if the European Central bank does not deliver on quantitative easing . Youre going to see that in the old in the yields. Have a store close and portugal. The lowest it has been in years. Iten that they are so low, wont be too difficult. At rates that will hopefully reflect upon the metals. We have about 30 seconds left. In your opinion, where do you see the biggest threat to Global Markets coming from this year . There is always the question of whats going on in china. We just got the numbers from the china gdp. They look good, but people dont believe they are accurate. It is there something going on that we are not necessarily aware of . It seems to be ok. Dan morris from tiaacref. Thank you so much. Stay with us. Another check on the Market Movers is on the other side of this break. Get the latest headlines at the top of the hour on Bloomberg Radio and streaming on your tablet and on bloomberg. Com. That is it for this edition of bottom line. Im mark crumpton. Thanks for joining us. On the markets is next. I will see you tomorrow. It is 56 past the hour. Which means Bloomberg Television is on the markets. The stake you look at where stocks are trading right now. We do have some declines today. Were seeing a pull back i do want to talk about commodities as well. Gold prices, we can start there. We have seen a bit of an upward trend in gold prices. We have been seeing a more downward trend more recently. If you look at whats going on with oil, interesting report coming out on oil today talking about where inventories were seeing them at historic high levels in the u. S. Oil was trading down 100 a barrel. Lets talk about these inventories. What is driving them to these historically high levels . Where is the production coming from . What we have seen here is a resurgence in production in the u. S. We have come out of a tough winter season. Now we are approaching 8. 4 Million Barrels of oil per day,. Hich is up double digits we think about what 14 and 2015, over 9d be approaching Million Barrels per day. This has been driven by 34 key things here. The shale oil . It is legacy and the unconventional drilling like shale oil. It is a legacy premium, which is seeing a resurgence. Those three things that are dropping a large majority of the Growth Driving a large majority of the growth. What does that mean for crude prices . Consider demand and supply, one would expect that these solid production numbers would keep a cap on prices. But there are things its not just about demand and supply. It is being influenced by geopolitical issues elsewhere across the globe. That may not have a direct impact on prices, but it does influence peoples opinion on where those prices e summerlast, som is in sight. What is that mean for gasoline prices . Despite the surgeon inventory surge in inventory, prices are relatively flat. This has to do with the ability to export the refined product. While you have a domestic market for crude, if you have a Global Market for refined product that is being influenced by emand outside of the u. S. Demand abroad for those Refined Products is more Global Marketplace. Thank you so much. That was great. We will have more on the markets in 30 minutes. Street smart is next. Home sales plunging to the lowest levels in eight months. The s p is heading into the red. I am trish regan and streetsmarts starts now. Welcome, everyone, to the most important hour of the session. On cap, we are one hour away from facebook and apple earnings. Stay tuned. Tdo of tv ameritrade feltto will tell us how he how shares shrugged. Shrunk