JPMorgan Under Fire: Bottom Line (07/29)

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July 29 (Bloomberg) -- On today's "Bottom Line," Mark Crumpton provides insight at the trading day's critical hour, with careful analysis of big events for investors. (Source: Bloomberg)

? this is bottom line.

U.s. regulators accused jpmorgan chase of manipulating energy markets.

And how three big deals are shaking up advertising, retail, and health care.

And we will see how bmw stacks up against it does la.

To our viewers in the united states and those of you joining us from around the world, welcome.

We have the stories making headlines tonight.

We have a newly confirmed fbi director and the final days before congress breaks for a monthlong recess.

We have details on allegations of energy market manipulation.

These are serious charges that come from the energy regulatory commission that jpmorgan chase allegedly obtained tens of millions of dollars in overpayments from electricity grid operations out west.

They unveiled the allegations and in the mail saying the bank was shown to preliminarily have engaged in a manipulative strategies in california and the midwest from saddam for 2010 to june 2011. the regulator has been investigating for more than one year now.

They agree to sanctions of a fine of about $400 million and the deal could be announced as early as tomorrow.

For jpmorgan chase, the fine comes as the bank said last week that it may sell or spin off the physical commodities business.

That was after a hearing examined were the banks are using their ownership to manipulate markets.

A spokesman declined to comment on the action.

We have gotten developments into other scandals.

Will start with stephen cohen and the multibillion-dollar hedge fund.

He is asking an administrative law judge tuesday or delay the civil case against the founder steven cohen.

So the government can focus on the criminal case against the firm itself.

He entered a not guilty plea on friday for five counts related to insider trading.

Both sides rested in the civil case against the former goldman vice president and the third week of trial.

Closing arguments are set to take flight tomorrow.

The defense rested its case without calling one witness.

They were scheduled the call john paulson and observers say it is a sign that this goldman trader is confident that he could be acquitted.

We will have more on jpmorgan and accusations later.

We will reach out to bloomberg contributing editor and wall street veteran william cohen.

The senate voted to confirm the next fbi director to replace robert muller.

This is the first of several votes of the senate could take as the clock ticks down to a month-long senate recess.

Megan is in washington with more on this story.

It went down just about an hour ago.

They did vote to confirm james to head the fbi, the former deputy attorney general in the george w. bush administration.

The term of the current director expires and september.

Senator dole was threatening to filibuster until i got more information on the use of drones, democrats complained that republicans were acting as obstructionists.

No democrats filibustered president bush, reagan, or nixon.

We all worked to get the fbi director there.

This filibuster from my friends on the other side of the auto is unprecedented.

Senator paul decided not to block the vote but he was the only vote against him.

There are potential battles later this week.

Possibly the congressmen to head the federal housing finance agency.

There also might be a vote on the candidates for national labor relations board.

What is happening in the other chamber of the house?

One major item is student loans, expecting to sign off on a compromise with sought take shape last week.

It ties the seven student loan interest rate to the rates of treasury bonds at rather than a fixed rate.

They doubled on july 1. students will start heading back to school.

They will pay 3.86% on the mac's loan.

It went to 6.8% july 1. some democrats did express concerns about pegging this market rate.

What is not on the agenda, no major votes on spending bills.

A government shutdown is possible in october if the house and senate can't come to a deal on that.

The return on september 9 and won't have a lot of time.

We will have more on the student loan debate and we will bring in michael green is the owner was the chief economist at the white house council of economic advisers during president obama's first term.

John mccain says that democrats may be more opposed to a potential larry summers nomination for fed chairman than republicans.

Hans nichols sat down with senator mccain earlier today.

On the decision to pick the next chairman.

Mccain doesn't intend to fight the president on who should run the federal reserve.

Mccain is agnostic.

I don't have a choice between those two.

Elections have declined as and the president should be given the benefit of the doubt.

It seems there is more division among democrats than republicans.

In terms of what he has done to expand the monetary base, you talked about problems in phoenix for that.

Ic an still take you -- i can still take you down to arizona and show you the businesses closed or the homes under water.

If the stagnant economic conditions, although there has been some improvement because the housing market is starting to improve.

It seems to have been an uneven end of nicor recovery.

Major financial institutions are making record profits while unemployment stagnates.

I don't give mr.

Bernanke very high marks.

I give him bad remarks because i think his priority was wrong.

I think it depends on who is, and elections have consequences.

There are points the president has made that i don't agree with.

The election dictate he should be able to name his own team.

Fiercely critical on president obama on egypt and edward snowden but gave more advice on a senate delay than a filibuster.

Student loans are one of the bill's waiting to be addressed on the congressional to do list this week.

On what may lie ahead for a 11 million students, and acts.

? ? welcome back, this is bottom line on bloomberg television, streaming on a tablet, phone, and bloomberg dhaka on.

-- bloomberg.com.

Equities fell, halting a gain from the s&p 500. energy shares led losses as reports show a drop in pending home sales.

Let's go to the numbers, the index was down six points.

Off by 36 points, the nasdaq composite index down 14 points.

Let's get to the story behind the numbers.

Let's start with the d.o. in retail.

The largest department store chain scooping up sacks for 2.9 billion.

The lord and taylor chains, reading a company that will operate 20 stores and 3 e commerce sites.

That is a 30% premium to the closing price on may 20, the day before reports surfaced on a potential sale.

Two giants merged to become the world's biggest ad agency.

It will bring in $23 billion in combined revenue.

Ad agencies are now under pressure from google and other tech players.

The plan, each of us separately, we will sit down with major clients and discuss their needs, our needs, and whether we can develop a meaningful solution to the issues that they have.

And used to buy the irish drug maker.

The merger will allow the michigan company to move the domiciled ireland or the corporate tax rate is 12.5%. we have a showdown in the cable world is taking place in the next hour.

What is the latest?

The battle has begun between cbs and time warner cable.

It has been extended until 8:00 p.m. tonight.

Time warner cable refusing to give in to the demands for a 600% fee increase in certain markets.

Cbs is the highest-rated network.

If there is no agreement, cable customers will lose cbs and potentially showtime shows.

Of the house of representatives is scheduled to vote on the student loan compromise before leaving town for the five week summer recess.

It will affect 11 million graduate and undergraduate students.

Michael brings down as a professor at mit.

He also served as chief economist for president obama's council of economic advisers and joins us from washington.

Sir, the bipartisan d.o. was a lengthy process because some lawmakers would not go along with creating market-based rates for higher education financing.

What is your take on linking them to the yield of the 10-year treasury?

Like all other sources of credit, it is important that student loans be sustainable and the bipartisan d.o. is an enormous step forward.

Time where it is very hard to get bipartisan agreement on almost anything, it is a remarkable agreement and it sounds like the prospects are good in the house.

The president is likely to sign a compromise bill.

There was a sense of urgency after they failed to reach an agreement before the july 1 deadline when the subsidized loan rates doubled.

Is this the best they can come up with in your opinion?

What is absolutely clear is that it is critical for their country pose a future that there be a stable and reliable interest rate for student loans for students to count on as they make incredibly large decisions about what school to go to, and how much to borrow to do that.

Dodged the new york times quotes elizabeth warren as saying that students should not be used to generate profits for the government.

How much does the federal government stands to make?

Of the details will depend on the final form of the bill, but what is clear is that you can't have a lending program that is not self sustaining.

It costs money to service alone and cost money and address that the falls that have been more than we would like.

There has to be a way to make this self sustaining.

They compared the compromise student loan plan does the prime mortgages, or worse will pay lower rates initially at drought and that later on.

Is there truth to that comparison?

I find the whole discussion about student that that focuses on the cost to relieve the a negligent discussion of the issues.

What is clear is that going to college alter's people's lives in unbelievably important ways.

Imagine if wal-mart was selling a product that would make you less likely to be unemployed and cause you earn more when you're employed and make it more likely that you'll be married and have children in wedlock and leave a longer life, people should be willing to borrow a lot of money for that product.

People earn $600,000 more than people that just get a high- school degree.

Having a flexible source of lending for people for them to engage in these investments is critical for the people themselves and also for the country as we deal with an increasingly competitive global labor market.

And the question about the student loan d.o., does it do anything to help students from low and middle income families.

Will they be susceptible to rate increases?

It seems to the way the d.o. is working out, it will likely be pegged to the high rate.

It is relative to the benefits . three decades ago, the united states led the world in college completion rates and we are somewhere in the teens now.

It is very important that we find ways to get people to go to college and help them stay . i understand your point, but for a lot of people, it is the money issue.

There is almost $1.20 trillion outstanding in the united states.

Does this do anything to reduce that?

We are slowly talking past each other, but it will not reduce the amount people go.

It will set forth clear terms that people can borrow against going forward.

But only focusing on the costs is just half of the picture.

The other half is there really incredible large amount of money that people earn on average better able to go to college.

It is a pleasure to have you on.

When we continue, bmw makes a move on tesla and we will show you the company pose a new electric car when we come back.

? ? bmw review the -- revewale the i3 today, but how does it compare to the competition?

We pitted it against the tesla model s. does la ended the session up $5.23. shares rose 04% on the day.

A reminder to get the application for free, full of new features that gives users instant access to business news.

Watch the broadcast and get access to topics.

You can send your comments on twitter or suggest questions or topics.

There is more evidence of child of's slowing growth.

The top stories in asia are next.

You're watching bottom line on bloomberg television.

? ? welcome back to the second half-hour of bottom line on television.

Let's check for the markets finished the day session as we finish the bottom of the hour at the 2013. investors waited for a series of major economic reports due this week.

The broader market s&p 500 index down over 0.33%. the dow jones downed 0.25%. the nasdaq composite down nearly 0.4%. let's check some of the top stories we're following for you at this hour.

Israelis and palestinians sitting down for dinner with secretary of state john kerry.

The chief negotiator says he hopes of peace talks can start right away.

The been pushing to get those talks back on track.

One of the top economist tevatron candidacy for the head of the central bank because of an old shoplifting case.

He mistakenly thought his companion paid for an item he was carrying at a hong kong airport seven years ago and decided to withdrawal after a government committee raised questions about the incident.

Fewer americans signed contract to buy previously owned homes last month.

They dropped 0.4%, the job less than forecast but shows rising mortgage rates are beginning to have some impact on the housing market.

Let's get a look at the top stories in asia, the more data showing a slowdown.

We're joined from hong kong with the details.

China as 31 theory as or regions each responsible for reporting their own figures.

So we have more cities that have essentially reported a first half numbers below the target.

They missed their target by as much as three percentage points.

The said it was because there were too aggressive.

The question is, why do we care?

Highlight the risk of missing the overall gdp target which is 7.5%. and later on, we are going to get the industrial production figures.

How is this going concern about growth affecting the credit markets?

Think about it this way.

Money is needed to grow or expand and that money is now out of premium to they are demanding higher yields.

It is the highest at 16 months.

Essentially, about loans have increased.

The question is why should they care?

Because loans default, it increases, and if growth suffers in china, your side of the world will feel the pain of this as well and can really hurt the united states recovery plans.

Time for the commodities report.

One of the biggest members of the day is trevor.

Sugar futures were on a three- day rally.

And cocoa was another major mover.

Cocoa fell 2.5%. signs that the rains are easing.

Energy, natural gas the big mover and the lowest price since february.

That tropical storm literally fell apart.

We did see hedge funds raised bullish bets by a record amount.

She rose by almost 10% and likely to be of the recent plunge in oil supply.

For sure, we will be learning about the settlement jpmorgan chase is said to have made in connection with allegations that it manipulated power markets dating back to 2010. we know regulators have been investigating were looking into the jpmorgan trading unit for more than one year according to court filings.

Another area of focus is the decline in coffee prices.

It has been a boon for retailers.

Global coffee production is forecast to exceed demand and extend supplies for the highest we have seen since 2009. this is a result of the past two years and we will look at starbucks stock, risen by 88%. profit margins have been improving.

Income doubled in the most recent quarter, in part to franchisees benefiting from cheaper coffee.

A lot more people finding it easy to spring for a cup of coffee.

Amazon keep growing, and we will return.

? ? amazon is going on a hiring spree, planning and at 5000 jobs to its warehouses.

This comes ahead of a visit to an amazon where house in tennessee on tuesday.

Corey johnson has been inside the center and joins us from san francisco.

I have not been deep in the heart of chattanooga.

But i have vegas for you.

I have scottsdale, and i have fulfillment centers.

They want to feel fulfilled.

This is the heart of the business.

This is what they think will keep competitors at bay as they grow.

They are spending at an unbelievable pace to hire people, and one of the biggest changes is to embrace sales tax at a local level.

Where they can get goods and products, quickly and closer to them.

The employment numbers have just blown out.

It jumped last year alone.

Spending like crazy, it involves hiring of the entry-level workers as well.

How does this reflect changes in the amazon business?

It says a lot about wall street's expectations, but the company is barely profitable because they're trying to grow like crazy.

They are spending money like their pants on fire.

They spent more in the first six months of this calendar year than they did all of 2012. in 2012 was so much bigger than 2011. they're operating margin, the capital costs lead into the income statement and their operating profits are barely profitable.

That is the worst year they have turned out in many.

They have gone battle to the metal to grow this business thinking they need to get big before the have to compete with others on line.

The president can stand in front of a cheering crowd and say, 5000 new hires, what can be wrong with that?

What is the not so subtle message amazon is sending about what it thinks about the economy going forward?

They want to spend and they think people will spend with them.

And this is real hard physical labor, hawking for her 10 miles every day, moving cars around, still intends.

This is hard work.

It is a good hard job for people have but when i walked over, i thought, thank god for the job buyouts because those people are working harder than me.

Remember, for all things tech, to amend the bloomberg -- tune into bloomerg west.

The government was a fight for fraud and continues to grab headlines.

And tonight's top story, jpmorgan chase.

? ? as we reported, jpmorgan chase has been accused of manipulating energy markets.

This involves alleged illegal activities at sec capital.

The bloomberg contributing editor joins me from nantucket.

Welcome back, thanks for joining us tonight.

A person familiar with the case that wants to not be identified says that they have agreed to sanctions that include a fine of about $400 million.

For a bank the size of jpmorgan chase, it is on track to do something like $26 billion in income this year, the fine is really a slap on the rest, frankly.

It is more embarrassing, another public relations nightmare rather than something that will affect the bottom line.

They have been investigating a jpmorgan trading unit market activity for over a year.

What might that imply for the scope of the alleged manipulative energy better?

Until we see exactly what they are alleging, often what happens is they settle them and it gives us an outline of what is that the bank is selling for.

It will be hard to know for sure, but they would not be selling so quickly if they did not feel like they had developed a very good case despite the statements that they have denied any wrongdoing.

It could be another example to segue where they settled for $550 million to make it go away.

There was a congressional hearing last week looking into if banks are using their ownership to manipulate markets.

Are they?

This is a very gray area.

They have piled onto a lot of the media reporting that has occurred.

You know the details of this.

Private equity firms have businesses that are involved with all sorts of raw material acquisitions and you can claim they are manipulating them anytime they buy raw material.

I am not sure they're doing anything worse than coca-cola.

Let's switch to the hedge fund that said it expected to agree with the government on protective orders that would permit them have operations in the ordinary court.

How can that happen if they seek the forfeiture of any and all assets?

This is not good.

The u.s. attorney's complaint filed last week is quite a narrative and is devastating, frankly, in the details and the argument.

They are innocent until proven guilty.

Many of their limited partners have taken money out of their funds had down to stephen collins own money at this point.

This is a devastating blow to that firm.

Does the public need to know more about how they operate?

Have been required now for one year or two to be more transparent about their holdings.

They don't reveal that information.

Maybe quarterly when they have the findings.

When we know, for instance, what that actually invested in is less important to me now that they are not designed to be a shop with outside information.

The hedge fund serves a valuable role and we don't want them cheating on the rest of us.

You criticized the sec chairman , you wrote that while they are trying to make use the poster child of 2008. i spent 17 years in wall street, i was a vice president myself for a long time.

Vice presidents do not do anything , we have the firm's approval.

The vice president , it is beyond ridiculous.

The wall street editor . but now you can have -- still ahead, when we come back, take a look at some of the other things happening in wall street today.

That is next.

? ? that is a look at the futures markets, bloomberg brings your market check at 26 and 56 after each hour of the trading day.

Let's give you the bottom line on what is happening on tuesday.

President obama will deliver another speech on his economic agenda tomorrow, this one in chattanooga, tennessee.

A white house spokesman today said he will be announcing policies to support the private sector creating jobs and bringing them back overseas, investing in infrastructure.

As you see, the chairman will be giving congress enough to talk about regulations.

Also tomorrow, they are scheduled to vote on the nomination to lead the fcc.

The former lobbyist and obama campaign fund-raiser.

We include some banks and airline stock exchange.

Three of the headliners, we'll hear from the drug makers ahead of the opening bell.

Splitting up units and reshuffling management.

Sprint, western union, aflac, and coach.

Closing arguments in the case against the brief door.

In the collapse of the housing market, mark?

Now we look at the most compelling images of the day.

It all started with the old family photos stored in an old tin box.

Nearly 57,000 vintage 10 boxes for collections.

And converted water mills the housing.

This text has been automatically generated. It may not be 100% accurate.

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