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house correspondent phil mattingly joining me here in new york, following development as the u.s. government prepares to say north korea's behind the cyber attack on sony pictures. click last night, president obama said americans should go to the movie theaters, but behind the scenes at the white house there are serious reverberations about what has been going on with sony. there have been a series of meetings between the president's national security team, law enforcement officials, and intelligence officials as well. that u.s.sion investigators have determined that the north cream government has had a significant role as an actor in the attack on sony. what does that mean? u.s. officials are still debating how to respond, but there are a number of responses in play right now. and the big question white house officials are trying to answer is, what should they do? class the other big question, why? why was this done? >> why was this done to sony? >> yes. >> on the investigation site has the fbi, north korea played a significant role. they have not determined, and there is disagreement on whether or not they have played the sole role here. they are trying to determine if there are sympathetic parties that helped. the interesting thing from the justice for his perspective, so far, they want to bring charts against who ever is responsible for this. they are nowhere near that place. that shows you how much more than you to find out for the >> are there any good options for the u.s. at this point? >> what we saw in may, actually, was the justice department bring charges against five chinese military officials for espionage. there's the law enforcement component. and there's always the diplomatic component as well. there are many questions within the intelligence community about how to respond to something like this. there are not international norms here, and there are not even really rules about response. >> this goes right to the heart of one of the tenants of the united states of america, which is free speech. how is this being observed, calculated, discussed on capitol hill? what are lawmakers saying? >> lawmakers are set by what is going on right now, and obviously public -- republicans are getting a little political because they are being -- blaming the obama administration. but there is general concern over buckling to demands what is being considered a terrorist organization. john mccain is going to take over the armed services committee in the new republican congress and he's going to put together a subcommittee to look into these things. he made very clear in a said, thetoday, he need for sony pictures to make that decision ultimately arose from the eight obama administrations inability to kind of put things together to address this issue. lawmakers will be looking for the administration to take a more offensive approach. >> phil mattingly joining us here in new york. thanks so much. russian president vladimir putin is taking a defiant stance at his annual news conference. he blamed the u.s. and europe for the economic crisis gripping his country. he also warned his citizens to prepare for a slump, but reassured them that russia would emerge stronger from the crisis. >> how long will this take? in the worst possible scenario, it will take around two years. i repeat, though, after this, growth is inevitable. and this is also because the external economic factors will change. growth in the international economy will require further energetic resources. >> bloombergs ryan chilcote covers russia. he joins me now from london on the phone. good evening, ryan. he is playing to his base, electric -- an electorate that continues to show him overwhelming support. what about his statement that their economic problems can be fixed within two years, as president putin says? >> no, that depends almost entirely on the price of oil that russia really missed out on its opportunity diversify away from a petrol economy. interested in russia, at $60.as oil is is priced likeil that, they are not really interested in russia. when the ruble was hitting 80 rubles to the dollar, it was interesting. click on the sidelines of the eu summit today in brussels, the -- the french president francois hollande told supporters -- reporters that if russia was to give back ukraine, they could see some concessions. how were those comments received by other eu leaders? >> not very well. while countries like germany maintain good relations with russia, she thinks -- chancellor she needsd she thinks to see if behavior change in ukraine. after a group of sailors left france without their worship, they had intended to buy two warships from the french, but in the last couple of months and under huge pressure, president friends while aunt agreed not to sell to the russians. a lot of people -- francois hollande agreed not to sell to the russian. i think it is the first sign of ft.ig ri sanctions are in place until at least july. if there is not a big push for sanctions beyond july, they could be removed. >> president putin also discussed the ruble's collapse. he said they would work in the government to stabilize the currency, but not through formal orders. will that be enough to the russians when seen their savings take a huge hit complex we will see. i thought it was interesting -- a huge hit? >> we will see. but it was interesting. he talked about how russia uses its reserves to meet its budget commitments also paying pensioners, the power base, the military, the army. banke said the central should not use its reserves to support the ruble. and in fact, he criticized the central bank for not stopping ruble interventions earlier. he thinks that the oil price is going to recover. and at the same time, while the isl price -- the oil price where it is and the ruble is we, that actually helps his budget commitments. i don't think this is a president that is exceptionally interested in saving the ruble at the expense of his economy. >> bloombergs ryan chilcote joining us on the phone from london. thank you so much. tosident obama is looking end the more than five decade old embargo on cuba. normalizing the relationship between the two countries would not only mean big business, but could also change the landscape for credit card companies. mia saini has been doing some digging on what this means for the likes of mastercard and visa. first tell us, what presence do these card companies currently have in cuba? >> mastercard and these are widely accepted at hotels, car rental agencies, and official restaurants and shops, with the caveat that they cannot be issued by a united states bank or financial institution. right now, they are issued by places like barclays or hsbc. diners card is also accepted, but to a lesser extent. american express, those cards are not accepted anywhere on the island. i spoke to bloomberg's credit card expert and she told me that stands american express to benefit the most, they are going from zero to some possible exposure. >> how big an opportunity is this for the credit card company? quest it is a good question we are all trying to figure out. i have been working the phones with other analysts, and one of them, equity director at he said itapital, would be revenue, but not meaningful from an earnings perspective. i also spoke to analyst josh olson from edward jones, and he said that cuba will not likely have a material impact on growth. let me put this in perspective. we were just talking about russia, which is much larger than cuba. it represents only 1% or 2% of payment volume four these critical players. networks will likely participate in any opportunity in cuba, assuming the operating costs are in line with ever geographies, the aggregate impact, the total impact will likely be less than 1%. shallost is assisting and point -- part of visas revenue. id. through and found it is one third of their operating revenue. >> then what are the challenges? >> this morning, i spoke to carlos gutierrez, the former secretary under george w. bush. could be as nightmare for credit card companies. what is unclear is how this could work. chargean government may an extruder a fee, which may be unacceptable for these credit card companies. there are a couple of challenges, and we are talking predominately a cash society and the lack of merchant exception -- acceptance. this will not happen overnight. >> mia saini, thank you very much. coming up, the eu summit is underway in brussels. we will take a look at why the president of france is going against other european union leaders in proposing sanctions relief for russia. stay with us, bottom line on bloomer television continues in just a moment. ♪ >> welcome back. stocks are rising after the biggest jump of the year for the s&p 500 of global equities rallied on the federal reserve -- federal reserve saying to be patient on increases. the dow jones industrial is rising at this hour, up 1.6% at 17,461. , it is on the rise as well. the s&p is up at 1.6% as well, at 2045. >> it is not so much the volatility is spiking or going back to normal. that is the key word here, is the big going back to that 20 range echoed that is where it used to be. we have had an unusual time of a function ofrtly accommodation. as the fed normalizes, volatility should as well. >> the nasdaq composite index this hour, it is at 4728. let's take a look at crude oil on this thursday. crude continuing its live. intraday, down nearly 3.5% at 54.53. boston marathon bombing suspect sarkar tsarnaev -- dzhokhar tsarnaev appeared in court for in some time. he faces the possibility of the death penalty if he is convicted in the april, 2013 bombings, which killed three people and injured more than 260 others at the boston marathon. bloomberg news has learned former florida governor jeb bush will give up his senior adviser role at our cleat -- at barclays at the end of the year. this comes after he announced he may run for the republican nomination in 2016. according to persons with knowledge of the matter, the decision will -- was reached mutually and will allow mr. bush to focus on politics. john cahill, who has been the nonexecutive chairman is replacing tony vernon, who is retiring from craft. -- kraft foods. brands include maxwell house, miracle with, and bill veto. an airbagending recall, adding 4000 vehicles to the list of those recalled by takata. they can explode with too much force, spewing shrapnel into drivers and passengers. be sure to check out the latest edition of bloomberg businessweek and the cover story on toyota. it is on your newsstands and tablet today and you can read it on the go with the bloomberg businessweek. businessweek app. we are joined by a senior fellow at brookings and a senior professor in tray at cornell stop he joins me now. welcome back to "bottom line." today, president putin said that his economy would overcome the situation. when asked how long, he said in the most favorable circumstances it would take about two years. what about the most unfavorable circumstances? what should the russian people expect? >> it will be a long road for the russian people. the numbers in russia just don't add up. about half of the budget revenues, a quarter of the economy, and more than half of the export revenues are dependent on oil, natural gas, and other sources of energy. that, the sanctions are having a bit of a bite in terms of access to the financial markets. in addition to all of the economic mismanagement in russia, these external factors will put enormous pressure and it will take a very great deal of effort to pull out of this. >> this week, russia's central bank raged it -- raised its benchmark interest rate to 17% from 10.5%. the country has already spent $87 billion, about 17% of its foreign exchange reserves, trying to prevent and collapse -- a collapse in the ruble. with that much pressure on the currency, how will russians be able to protect their savings? >> that is going to be very difficult, and it is part of the reason we are seeing global plummeting, because there is concern about the weather. there will be -- about whether there will be significant inflation in russia. if you look at the debt, a lot of the death of the russian corporations, especially those owned by friends of president putin, essentially all of them have been monetized. be higheruence will inflation in the long run. everyone who can take money out is doing so. that is what the russian central bank is trying to stem, and they have had no luck so far. the dramatic increase in interest rates in the middle of the night was meant to signal strength, but i think signals desperation more than anything else. >> can russia's banking system withstand a seismic shock of that magnitude? >> russia's banking system does not have that much exposure abroad in terms of foreign debt. and even though russia has spent a good chunk of its foreign exchange reserves, there is about hundred $20 billion left still in the kitty. although there is dubious business about how much of the stated official reserves is available in liquid form, because some of it is already held high certain national enterprises. i think they can get by without lessor banking crisis, and panic intensifies further and russians start pulling all of the deposits out of the banking system. i don't expect a banking collapse, unless again, oil prices continue to fall and we don't see any significant reaction from the government in terms of better economic policies. and there is a possibility of that. >> we mentioned earlier that the european leaders have opened their two-day meeting in brussels, and one of the topics on their agenda was the sluggish economic growth in the euro zone. one possible solution that has been discussed is the immediate creation of the strategic investment fund. would a move like this be enough to attract private investment long-term? very logicallike a move. the big difficulty in europe right now is the lack of deck -- lack of domestic demand. the european central bank is trying to push more money into the system, but without demand it will not have much traction. and certainly, europe will need more infrastructure spending, but -- investment spending, but they will use about 21 billion euros of european union money, about $5 billion coming from the european investment bank, and hope is that it will bring in private money over three years. the idea of a public-private partnership is appealing, but whether the european union will for the right projects private sector to get into is far from obvious. it is a good gamble, but i have serious doubts about whether it will pay off. always aasad, pleasure. thanks for your time today. up next, matt miller joins us with an on the markets report and an equity market in rally mode. and later, willem marx with a bloomberg special report "global scam: chasing the scammers in latvia." "bottom line" continues in just a moment. ♪ >> don't miss the latest edition of studio 1.0 with emily chang thielypal cofounder peter tonight at 8:30 p.m. bloomberg television is on the markets. my colleague, matt miller, is standing by. on this thursday, we are seeing a market in rally mode. >> we are still looking at a strong rally today. take a look at the major indexes 1.5% acrossgains of the board. some of the stocks were falling today -- we are following today, kicking off with yum! brands, falling the most in 2.5 years. red arrow after the company cut it 2015 sales forecast and issued disappointing earnings guidance. the parent company of dunkin' donuts and baskin-robbins delicious ice cream cited consumer pressures and lower package copy sales. also, better than estimated quarterly earnings in production drug sales, and the retail drug chain rite aid boosted its forecast. shares of almost 12%. 20 -- inrket again in 30 minutes. more "bottom line" on the other side of this break. ♪ >> welcome back to the second half hour of bottom line on bloomberg television. i'm mark from to in new york. thanks for staying with us. investors from around the world were suckered in by a website called secureinvestment.com, which masqueraded as a managed forex fund before vanishing may with millions of dollars. willem marx worked to track down those responsible for this scam. but at the very edge of europe a financialsense is wild west. the syndicate based in former soviet states traded a site called secureinvestment.com who persuaded investors around the world to wire millions of dollars for massive returns in forex trading. but this was really clever. what was clever about it was not only did you want to invest with him, is the way it was structure, you did not want to take money out. greg david is a seismologist in texas. he had been a day trader for years when he opened a -- an account with website. he was instructed to wire money to an account in cyprus. and he watched as his virtual profits grew on 90 state. but in may of this year, secureinvestment.com and much of simplytial invest vanished. >> everything was just a lie. >> it had to be. >> but a convincing lie. >> one of the best ones ever, yeah. >> we wanted to find out where his money ended up. our investigation led us around the world, and the most directly for where the funds ended up was the only director of a holding company, and his address was 5000 miles away in europe. the lawyerer -- registered this roving as his address, but according to the landlord can he had not been seen or worked here for well over a year. theeclined to discuss cyprus bank account, which handled more than 4 million euros before the suspicious bank officials flagged and then froze it. ownlso exploited latvia's banking sector. at least two accounts received tens of thousands of dollars from purported investors. >> latvia is not necessarily a new switzerland, but maybe a want to be switzerland. ? is a global affairs -- >> mark is a global affairs professor. -- [indiscernible] secureccounts linked to investment.com were 10 times larger than domestic ones. the account became active just weeks after latvia joined the euro in february. >> it was a potential opportunity for money launderers and criminals. the holy grail was always to get the money into the most difficult financial systems and the most solid and sound currencies as possible. >> the accounts were opened by a citizen of another nearby for mere -- former soviet state that plays no role in europe. >> driving for the border with belarus, the very edge of the eurozone and the financial education goes with it. >> this border fence, marking the boundaries of a pariah nation under u.s. government sanctioned, served as a very real barrier for our cameras. but in terms of trade, crossing to or from belarus has really been so easy. it is now considered a new backdoor to your, for men, materials, and of course my money. the head of latvia's financial regulators denies his country has become a hub of criminal activity. >> if you were a belarusian criminal, would you choose latvia because it has a right -- like regulatory touch? try, and you will see the results. >> the individuals behind secure investment did try and did see results, laundering significant sums of money and innovating protection. innovating -- evading detection. now when you leaders here are finally investigating. willem marx, bloomberg, riga, latvia. willem joins me now in studio. what is the status? >> the big headline here is the department of justice here in the u.s. is investigating. , -- theyto david king have talked to david kane and other victims of the scam. that is a big change. less of a convinced that latvia not a backdoor for these types of activities? the eurozone now, latvia is seen as one of the soft spots. it is easy to open an account there. the diligence is not done. it is important to note that some of these domestic banks, the smaller banks, rely heavily on foreign money, largely russian. >> standby. we will get back to you in just a minute. joining me for more on this global financial scam is cftc former commissioner bart chilton, now a senior policy advisor at dla piper. how difficult is it for regulators in the united states like the cftc to follow up on stories like this, and then investigate these kinds of schemes, which do impact american retail investors? like pulling teeth without any dental tools whatsoever. first, there are limited resources. in therd for regulators u.s. treasury go overseas. then to find cooperative enforcement officials overseas is exceedingly difficult, because they themselves have the same sort of budgetary and enforcement constraints. it is a really unfortunate set of circumstances. and things like this reporting by willem and by david evans, it's good that the reporting is out there and people get alerted to it, and i'm really pleased that people are now investigating. unfortunately, it takes public get-- public attention to these investigations going at times. unfortunate, for good that it is being done finally. >> do you think the banks, whether overseas or here have a customersre for their ? when a client like david kane walks to his ranch to wire money to cyprus or to a po box in the virgin islands, sure the cashier question that you present impossible to legislate or enforce? >> it is a great question, but the answer is that this is really beyond any rule or regulation, and it will really take customer information, financial literacy. there are some banks who will do something to slow it down, and actually some of the smaller banks i know have done that sort of thing. particularly for elderly folks who feel the need to do something urgently. the banks may even call the local authorities and have them come down and talk to the individual. but that is a rare circumstance. and once you get to the larger institutions, they've got their own procedures and if you want to move your money, you can move your money. perhaps there should be a bit more due diligence by financial institutions, but i am large this will be fixed with consumer -- by and large this will be fixed with consumer education. why do you suppose this has not seen the light of day? why has this gone on for so long? >> what is amazing, mark, is that it has gone on for so long and in so many different geographies. that may also be one of the reasons it has gone on for so long. there are myriad regulators with no accountability by one single regulator. it is like the old whack a mole where you keep pounding, but they are moving and coming up someplace else. these crooks are crafty and they get away with it, sometimes for decades. >> the big concern there is that these things fall through the crack's, between the different registry agencies. thoses your advice for who have lost money in a scheme like this? what is your recommended recourse for them? class other than calling you? [laughter] -- >> other than calling you? [laughter] i should call the regular's. they should call the regulars and try to get much -- as much done as they can. but once the money is gone, it's difficult to get it back. even regulatory agencies like my old agency, the cpsc -- the cftc , security and exchange commission, the money is already gone. it just becomes a number. it is a really unfortunate circumstance. the answer is about consumer education. >> you talked about the limits of the cftc and the sec, and we have talked about this previously. when you look at other countries , like latvia, lithuania, poland , there are all of these other dish -- jurisdictions involved. how do they match up to the u.s. when it comes to investigating these things? a littled like to feel parochial about it and say that we are the best. i'm not sure that we are the best, but when you look at these other nations by and large, particularly the smaller nations, they have either a less capability of enforcement reviews -- you know, go to the cyprus website and others to see what they've done in enforcement. will him, you have look at this before. it is not much, unfortunately. they do have consumer information and education, but even that is in the last few years. people need to do their own do digital and -- due diligence. financial literacy is a huge problem not just in the u.s., but worldwide. -- hardnvestor hardened earned money unless you know for sure the circumstances. >> in the final 30 seconds, you talk about moving across jurisdictional redtape, if you will. how do you do that? >> it takes individuals who are concerned about it. if you just get regular bureaucrats, you will never get it to happen. go back to libor investigations we've talked about over the years. that took one-on-one relationships with regulators. it is a difficult thing. hopefully, you get the right people involved. >> this -- the former cftc commissioner bart chilton joining us from washington, and my colleague willem marx joining me here in new york. up next, a major move by fitch ratings concerning venezuela. "bottom line" on bloomer television continues in just a moment. ♪ >> welcome back to "bottom line ," and it's time for today's latin america report. venezuela's credit rating was lowered by fitch ratings. the firm cited the country's level of -- low level of international reserves as the reason. oil prices have dropped 40% in the last year. today, fitch cut the foreign currency bond three levels eight levels below the investment grade. columbia iswth in latin america's sixth biggest economies this year. jpmorgan has placed a possibly 100 person workforce at around 10% in columbia. up next, why manchester city just spent millions of dollars trainingd -- brand-new facility and write a football club says it could transform the sport. we will be right back. ♪ >> welcome back. this is "bottom line" on bloomberg television. we will have more on russia tonight on "charlie rose on bloomberg yuriko his guest -- "charlie rose on bloomberg." bremmer, is ian president of eurasia group. that is at 7:00 and 10:00 new york time right here on bloomberg. aubrey david, the world's richest soccer club -- abu dhabi , the world's richest soccer club, has a new training facility. bloomberg went to find out more. >> this is probably as good as it gets. we have researched across the globe multiple swords in old will countries -- sports in multiple countries will stop everything to give us that extra edge as well as insight into how our players are performing. we have the technology to make sure we thought of everything and gave our players every advantage to develop. 80 acres, 16 pages, only four of which will be used by our first team. the other 12 are being used by boys and girls of the youth academy. and a second stadium, a 7000 feet academy stadium this will be the under 21 or under 19 champions league. >> our aim is to have players move through the academy and. -- and up. but football is booming, it's the world's most popular sport -- >> football is booming. if the world's most popular sport. this is an investment in the present and in the future, and in the young people who will come next. what we are doing here is resonating with businesses around the world, companies like nissan, cubbies like his recruitment, who are saying this is a big idea, this -- hayes recruitment, who are saying this is a big idea. all the way from melbourne to japan, they are saying with a good idea and they would like for us to keep pushing. the work that is being done here in this facility, the technical work on nutrition and human great size, this has for companies involved in these sorts of things, company in -- companies involved in data and nutrition, and involved in elite human performance. be trophy this year would amazing. we are a football club, first, second, and third for some it is all about winning. we are reminded of this every saturday afternoon. let's stay with us. we will have another check of the market movers on the other side of the break. "bottom line" continues in just a moment. ♪ >> get the latest headlines at the top of the hour on bloomberg radio and your tablet at bloomberg.com. that does it for this edition of "bottom line" on bloomberg television. i'm mark crumpton. with matt miller is next. >> it is 56 past the hour. i'm matt miller. i want to get you caught up on the gains we are making today. the indexes are all of more than one point 5%, with the dow jones adding 296 point up to 17,653. triple benjamin, basically on the dow. oil has been one of the bigger stories with the ruble, and maybe the cause of that big story. you can see it coming down again today, 5491 -- 54.91 per barrel. brent crude also coming down. it's just the continuation of a long trend. prices may mean higher profits for the nation's biggest banks start joining me with today's sector report with a look at how financial firms are benefiting in the drop in prices, michael moore. thank you for joining us. there are a lot of different reasons, but one of the main reasons is people, especially oil companies, may want to hedge against any further drops, right? >> right, oil has been basically flat for three years. now that we have had this huge move them a war he 5% oil -- move in oil, you get people more interested in speculating at the bottom, and that generates some activity for these commodities. >> some trading revenue. a lot of banks have failed back there commodity trading operations. >> partly because it has not been a good business in the last three years or so, and partly because regulars are putting pressure on that business especially in the physical side. you have seen some banks get out of the business, but a lot of banks are still in the oil hedging business. that will help them. aswhat are we seeing as far benefits our concern -- what else are we seeing as far as benefits are concerned? >> m&a, but that would be six to 12 months down the line because you would need to see sustainment in the prices before companies start to act. but also on the consumer side, this is basically the equivalent of a tax rate -- tax break for consumers. he could give them some more confidence on spending and generate some economic talk to -- activity. >> the retail banking industry could benefit as well. unrelated as we think note to oil, there has been a changing of the guard at goldman sachs. >> yes, we had some breaking news in the last hour. john waldron is the name there, the third -- the third cohead of the banking in investments there. 100 -- john weinberg has been there for 12 years, obviously a defendant of the weinberg that ran goldberg from us 50 years. >> original partners. >> right, right. john waldron came over from bear stearns and has been at the firm for almost 15 years now. he has done a lot of private equity deals. you soael moore, thank much. giving you the latest on how oil can boost revenue, banks, and what is going on as far as leadership at goldman sachs. we're going to take a break and when we come back, "street smart" is up. ♪ >> welcome to the most important hour of the session with 60 minutes to the close. on the fed's lead for patients on reading rate, the s&p 500 is at its best today rally in two years. treasuries are up on speculation that borrowing costs will rise next year. i will get the market and value what you might be expecting next year with pimco's rich clarida. plus, how is
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