On the latest snapshot from the federal reserve. Bloombergs washington correspondent peter cook has the details on the release of the latest beige book. Good afternoon. A pretty upbeat picture of the u. S. Economy in this latest a book. It was compiled by the new York Federal Reserve information 23rd. H may all 12 districts report Economic Activity expanded. Seven report moderate growth. Only kansas city reported growth slowing during the. Consumer spending helping to drive that growth. Especially car sales around the country. Growth with aof mixed performance among nonauto retailers. Risk growth in vehicle sales and moderate growth in tourism. Sales did lag behind somewhat. Words and picking up on the eastern seaboard. Service sector activity grew most districts. There was good news on the manufacturing front. Manufacturing activity expanded in all 12 districts since the Previous Report with a pick up in the pace of what was reported in several districts. You had activity expanding robustly in the boston am a new york, atlanta and kansas city districts. Chicago, st. Louis and philadelphia lending activity increased with two thirds of districts reporting rising loan demands. Make signals in housing. Mixed signals in housing. Inventory set as a constraining factor. Prices continue to increase. E positive signs labor Market Conditions and strengthening activity study to stronger across most of the country. All in all, a beige book pretty consistent with the feds own outlook. , thanks. Cook for more on the base book, we turn to the chief financial economist at bank of tokyo. Welcome back to bottom line. Good to see you again. All 12 ofook reported the feds districts reporting Economic Activity expanding during the current reporting period. Has the u. S. Economy finally found its footing . I was struck by his comment 12 come up 12, 12. That is pretty unusual for every single district to be exhibiting moderate growth. This is important information. It was done by the new York Federal Reserve. Dudley has already come out and said that the markets and the fed are in agreement that a rate hike might take place somewhere around the middle of next year. This report today about the moderate expansion of the laysmy in all 12 districts the groundwork for rate hikes coming. Maybe sooner than we think. Looks very solid. Data before may 23 we know since may 23, 16. 7 million. The best level we have seen since the recession ended. Things look pretty good. Also noted an expansion in Manufacturing Activity across the nation. Especially strong showing on the east coast. And in st. Louis and kansas city. His production coming back to the eid states from overseas . Is tricky. It is tricky. We have gdp component data that suggested tdp might be more like 3 in the second quarter. Just aial production month ago in march made an alltime record high. This report is consistent with that. It did come off a little in april from march and we get made data. May data. The figures for the west trade deficit in april moved to their highest level in two years. What impact is that going to have a gdp . Some people saying 3 . Whispering may be up to 4 . Is that going to happen . Yes. Before the trade data came out, they did a huge benchmark revision. It will drag gdp in the second quarter. What i did is i had growth may be at 3. 6 . I had to knock it down to 3. 0 . Remember all the talk about escape for solac philosophy for . Twoill be hard to get to point 3 this year. It was 2. 6 in 2013. It is not quite as fast as we thought. The chief financial economist for bank of tokyomitsubishi. U. S. Companies adding 179,000 workers in may. Called forforecast 210,000 workers. What happened . I dont know. The head of the fed believes there is still significant slack in the economy. They are still doing qe purchases, let alone hiking Interest Rates for the first time. I would be a bit concerned here. The fed may not think this is that gloomy of a report. It sets us up for payroll jobs on friday. Estimates are very high. I hope we reach that. Adp has suggested, no, we will not get the 210,000 number. Is that a warning flare for friday . The weekly unemployment claim it says something to me when economists overreached. Of 200,000e months less numbers. They say, skyhigh. Highest forecast we have ever done and we may have overreached. I hope we can get there. Lastminute, what headwinds are using between now and the end of the year . We are in june. Not a lot of risks out there. That is why we felt we could get 3 gdp. We are not getting it. The only risk i could see seems to be from housing. That increase in the mortgage of 4 last year seems to be calling down newhome sales of. Housing construction is not what we thought. Chief financial economist of bank of tokyomitsubishi joining us in studio. Thank you very much. Leaders of the worlds most advanced economies are in brussels for a two day meeting. The summit was originally scheduled to be held in sochi. Leaders of the worlds top industrialized nations are meeting without russia. Tom nichols joins us now from brussels. Will we hear about more sanctions against russia in this summit . Hear could potentially about more sanctions. The leaders are just entering in here for a working dinner that kicks up the g7 meeting. The draft communique of what they hope to come out of this did mention the possibility of additional sanctions. There is a giant copy on all that. Additional sanctions if russia makes further incursions. Is, what wouldre the trigger before additional sanctions . It seems to me, there is a great deal of unanimity if there are further incursions into eastern ukraine. What wouldss on actually trigger sanctions at the status quo stays the same. That is what we are at right now. We will try to get a readout and report back when we know more. The significance of this the significance of russia not being at this meeting. This meeting was supposed to be held in russia. After that annexation, the leaders decided they would hold it in brussels for the first time. What are you hearing about this move . There is more talk about how you unwind that move and what steps would need to happen to reinvite russia back into the g8. Most of that talk is premature. The idea to kick russia out has been made. They do not think the general thinking was that it did not make a lot of sense to have russia be a participant in these forms when they were not actually on the same page on so many security issues. You heard president obama talk about this earlier in poland today before he came here. He talked about the march towards liberty. Have a listen to what he had to say and notice the clear message to other countries in eastern europe. As we have been reminded by russias aggression in ukraine, our free nations cannot be complacent in pursuit of the vision we share. A europe that is whole and free and at peace. We have to work for that. We have to stand with those who seek freedom. [applause] concretems of deliverables, 5 million in aid for nonlethal weapons. He also announced his plan to ask congress for another billion dollars for some sort of relief fund for eastern europe. That needs to go through the political process. Before i let you go, the that are there at that meeting are they expecting the United States to lead on the issue of russia and ukraine . The expectation will be unanimously. The u. S. Or eu to get too far out in front of the other bodies. At the idea is to come out of this with a unified statement and have everyone be on the same page there. The idea of the u. S. Playing good cop and the European Union playing bad cop is the one leadersthat all of the dont want. Joining us live from brussels. Thank you. We will have more on that summit meeting coming up. We will find out why the issue of sanctions will be a top priority as the worlds top leaders decide how to deal with the russianukraine crisis. Bottom line continues in just a moment. We continue our focus on this weeks g7 meeting. Stuart is a former u. S. Ambassador to the European Union. He was the deputy chairs rate deputy treasury secretary under president clinton. Welcome back to bottom line. Good to see you again. Always a pleasure. Toas i was just speaking haunts him moment ago, this was supposed to be a g8 summit hosted by the russians. After russia annexed crimea come it became a g7 summit. What signal was sent when the location was moved to brussels and do the russians even care at this point . I think they do care. They dont want to be isolated. This is the first time in 17 years that they are not here. It was supposed to be in sochi. Its in brussels. The first time a g7 or g8 has been enlisted by the European Union and in brussels. Significance will be what comes out of this g7. Its very important for the g7 leaders to make it clear that they understand what president putins goals are. Those goals are to keep ukraine out of the western world come out of the eu come out of beta. Are the sanctions already in place having the desired effect . The sanctions have some limited impact in assuring that the elections on may 25 are able to go forward. And to get some limited by in by president putin. And some limited withdrawals of troops on the board. Not enough going for it. Whats happening now is very ominous. Youre getting a d stabilization estabilization engineered by moscow. Take overble to maj buildings. Wants us to have the same degree of control over those provinces as the breakaway provinces in georgia. This is extremely serious. Yesterday, president obama announced lance to increase military deployments and exercises throughout europe at a cost of 1 billion. If Vladimir Putin feels pushed into a corner, how will he respond . He understands force. And unanimity by the west. That means the following. First, we need to announce as quickly as possible that if this continues, there will be a new round of sanctions that will go well beyond those we have in place now. Targeted,ll them sectoral sanctions. They would go after sectors like energy, minerals and finance. Transfers mb d transfers t and military transfers. You have major g7 countries were still transferring military equipment to russia. That needs to be done and announced. Need to go beyond president obamas announcement of nonlethal aid. We need to provide training and light arms and enabled the ukrainians to be able to take these increasingly well armed prorussian groups on so they can retake their own eastern sector. We have about one minute left. What stepsisis can the European Union take to reduce its dependence on russian gas . There are several things. Ukraine can become much more energyefficient. There could be reverse flows of gas so countries like slovakia can send it back to ukraine. With respect to the eu, the Prime Minister of poland just talked about a Common Energy policy. That would include things like the following. Pipelines anchored by the southern corridor pipeline that would send natural gas from azerbaijan through georgia to turkey and europe. It would supply all of europe and unite all of europe. The policy we are using for energy which we call all of the above. It alternatives, nuclear, fracking of shale. There is a lot of shale in france and germany and poland. All of the options. This is critical to send a signal to mr. Putin because he is using energy as a geopolitical tool and europe has to reduce its dependence. Building more facilities to receive the lng natural gas that we will be able to supply. Always a pleasure to have you on and get your perspective. Thanks for your time. Up next, we get you in on the markets update. As we wait for a decision on the Keystone Pipeline, and were worked out on the pipelines vulnerability to a terror attack. How did the fouryearold company overtake apple and china . Find out thursday during a special edition of bloomberg west. Rising. We will have an indepth look at one of apples biggest threats. Coming up thursday, 1 00 p. M. New york time. Right here on bloomberg television. Past theming about 16 hour. Bloomberg television is on the markets. Lets get you caught up with the action. The equity markets across the board. The s p 500 dow jones coming in with some gains. Pacing eige book painting an optimistic picture of the u. S. Economy. Lets get to one of the big movers. The canadian dollar. The bank of canada leaves rates unchanged. The statement that moves the market. Their concern about inflation. That one right there, the canadian dollar, the worstperforming major currency over the last 12 months. Morning, payrolls on friday. Looking for over 200. We have 179. Welcome back the second halfhour of online on bloomberg television. The taliban released a video showing the handover of sergeant dahl which shows the moment. He was freed saturday after five years in captivity in exchange for five taliban guantanamo detainees. They were released to qatar. Intoars ago, tanks rolled Tiananmen Square in beijing to face student protesters. Tomorrow, the findings of an internal investigation. Mary barra world hold a town hall meeting with employees followed by a news conference. It is time now for the commodities report. Wake up and smell the coffee because we talk about coffee futures falling in a bear market earlier in the week. Now it has happened. Futures have plunged 22 from a twoyear high in april. Rain, coffee prices soared due to drought. The maker of folgers increased prices by 9 . Damages from brazils drought are probably not as bad as people feared. A couple of weeks. Ago, coffee futures lower today. Today. Higher oil not moving much. Gold moving higher. Read to the close. Close right up to the close. The Energy Supply repot. More of a seasonal drop. Oil just closing down a fraction of a percent. The keystone of so oil pipeline has been a controversial issue here in the United States. Boostters say it will economy and jobs and critics say it is a threat to the environment. Stier is looking at keystone is more than just a threat to the environment. He is looking at it as a possible terrorist target. Released this afternoon says a catastrophic attack would be easy to execute. Formeriu spoke with the navy seal hired by stier to make this assessment. This is disturbing to say the least. It is disturbing. Stier will stop at nothing to keep the Keystone Pipeline from being built. Dave cooper is part of the raid on osama bin laden, he was hired to see if the pipeline is a soft target that terrorists could go ouafter. Cooper said yes. He said he did not know much about the Keystone Pipeline but he spent several months investigating it. He said absolutely it could cause widespread damage if terrorists were to go after it. If i were a terrorist looking at the Keystone Pipeline, the one thing that comes out is that it is so much in the press lately. That makes it a highprofile target but it is also a very soft target. Some of these areas where the pipeline crosses go through some very remote areas. Is basically impunity for a wouldbe terrorist or domestic terrorists are saboteur criminal, whatever you want to call them. I can say that a terrorist group would necessarily choose the k xl over a school or a mall or Something Like that, but its lack of security, complete and utter lack of security makes it a very easy soft target. There is lots of vague question cheer. Would a pipeline be more of a soft target then say setting off a bomb at a school or a public place like a mall or an airport . Wouldnt that be more emotionally damaging . Arehe second thing, there pipelines all over this country. Terrorists have plenty to choose from, not just keystone. Beene controversy that has going on for years about infrastructure and how it is not adequately guarded, that is another topic. Counterattacksay might be carried out . He did. He basically had a playbook for terrorists on how you go about attacking this pipeline. He extracted the key paragraph that would give that playbook to enemies. Did say, look, overall, it would be a very easy thing to do. There could be one way to do this. If i were to even take a simple scenario, say, a dozen terrorists, even less, a small amount of explosives and targets three critical nodes along the Keystone Pipeline, the terrorists could trigger a catastrophic spill in the neighborhood of 7 million to 8 million gallons of hazardous, into the area. Cooper hired by stiers, stiers of the heavenly post to the Keystone Pipeline. A cooper says i am bipartisan here. I have no politics in this. But come on. He was higher he was hired by stier. It is another feather in stiers cap to not fill the east of pipeline. He is the Sheldon Adelson of the democrats. He spent tens of millions of dollars for this cause. He will stop at nothing to make sure that the keystone will not be built. Asked himr, when i that question, look, do you have an opinion over whether this pipeline should be built, he said i dont want to way into the politics of this in i will leave that to the state department on the president. Is there a sign here that we have not heard from the president what decision is going to be made on keystone . We probably will not hear it before the midterm elections. I agree with you. Expect some sort of decision in the first order of this year and we have not gotten anything. Ask it is because it goes across state lines in the decision has to go to the state department. A story to be continued. I do so much. Will get toe todays latin america report, the latest on mexico. It is time for todays latin america report. Tropical storm or as we can to become a depression and will continue to soak eastern mexico today. Is expected to drop as much as 20 inches of rain in the region. The depression will move inland slowly so the area may be drenched for days. Boris was the second Tropical Storm of the eastern pacific Hurricane Season which began may 15. Women are choosing to be entrepreneurs at record rates. Womennt study finds that are starting more than 1200 new businesses a day. That is double the rate from just three years ago. One of the worlds leading experts in the field of womens Enterprise Development joins me now. Welcome to bottom line. Glad to be with you. As i just mentioned, your report includes Census Bureau and data showing that, in the past 17 years, there has been a lead in the number of womenowned businesses in the u. S. , increasing at 1. 5 times the national average. What accounts for this search . Surge . It is a trend developing in the 20 plus years. Women have higher levels of education, more work expands, more managerial expands, and entrepreneurship is the next frontier for many women. What type of impact have these womenowned firms had on the overall u. S. Economy and how have they emerged from the recession . We took a look over the past 14 years to see that, since the recession, the only companies that have been creating jobs are the very large publiclyheld corporations and womenowned businesses. They are the energizer bunny of the privatelyheld business population. Shows that women owned businesses, a total of 9. 1 build 9. 1 million in the United States. They employ one point they employ 7. 9 million people. Is that shown in the jobless numbers we see every month . Bays but thatthe you are talking about at the top of the hour, this has been a jobless recovery. Businesses have not been creating jobs, whether they are male or femaleowned. But the firms that are creating jobs outside of public he traded businesses are womenowned businesses. We see the impact not just starting Small Businesses but growing and employing more people. What geographics trends stand out . Wood states show the fastest growth and would still have work to do . It is mostly where there is growth in population trends. The Southern Tier states, georgia, texas, florida, and midwestern states where i am sitting right now have not been growing as fast. If you look at every single state, womenowned firms are growing faster than their male counterparts. There helping to lead growth of the economy statebystate. What about city by city . Which mr. Politan areas are showing strength in terms of combined economic doubtful which metropolitan areas are showing strength in terms of combined economic clout . It is taking into account the smaller population segments plus Larger Population cities. ,an antonio, atlanta, texas washington, d. C. Is a strong metropolitan area. Perhaps in most impressive data involves a women of color. Between 1997 and this year, the number of firms owned by African American females increased from just under one million to nearly 3 million. That is a jump of 216 . What are the factors that led to this huge increase . Absolutely. Women of color of all colors are increasing by a fabulous rate. I think the reason behind it is very much with respect to all womenowned firms. Higher levels of education and experience. Women of color are not finding the job growth that they could, that they want working for somebody else. They are reaching that glass ceiling. It is probably a little bit to care for women of color. So maybe they are saying, hey, the heck with this. I am going to start my business. Thank you so much for your time today. My pleasure. Up next, spacex president had plenty to say about a u. S. Air force lusted over satellite contracts during that story is next contract. That story is next. A top spacex official standing by a controversial decision to sue the air force over a satellite launch contract. But the company is not ruling out a settlement. Peter cook is back with more on the heated competition to carry the militarys hardware into space. Ref theand the air force at the negotiating table . Are their settlement talks happening, she would not comment directly. But she did say that a settlement would be the best outcome. Shotwell is elon musks top lieutenant. She came on to spell out the growing commercial government business. Docex has launches on us to list. In april, the company sued the air force, challenging a sole source contract awarded to united launch alliance, the joint venture between boeing and lockheed martin. Top air force officials have questioned why spacex would sue what could be its biggest customer in the future. Today, i asked spacex if they had any regrets about the legal action. Lawsuits are difficult things. But it was the right decision. Think its the wrong decision now. So no regrets. Again, she did open the door to the idea of a settlement with air force. At the same time they are dealing with this air force, with this lawsuit, they are still working with the air force. Taught to us about the process and how it is going. Shotwell says the process is going well. It is difficult. The two sides or try to work things out. She hopes he is certification by the end of the year from the air force to allow them to launch military satellites into space. Only uli has been certified to do that right now. She says she does not believe the air force is holding against spacex the lawsuit that has been filed separately over the original contract. Different tracks. She believes the air force is being fair with spacex as far as the certification process. Thank you. Stay with us. Another check of the Market Movers is on the other side of the break. Catch charlie roses interview with Lloyd Blankfein and mayor bloomberg. At 8 00 endght 10 00 p. M. New york time only on bloomberg tv. Get the latest headlines at the top of the hour on Bloomberg Radio and streaming on your tablet and on bloomberg. Com. Thanks for joining us. Markets is next. 56 minutes past the hour. Lets see the of the markets for you. Pushing higher across the board. The fed doing very little to dissuade the bulls. Days the paints an optimistic picture of the u. S. Highs, we have said it so many times that we have become desensitized to what it really means. The wtit contract and contract, thus bread has fallen to a sevenweek low. The price of oil has grown more than 200 over the last decade. Even as the u. S. Has produced more and consumers have consumed less. Jeff, welcome to the show. Production of, consumption down, prices higher. You are just talking about the u. S. Balance. We are drowning in oil. But globally, the balance is very different. You have countries like libya and iran really, offline in terms of supply in the world with crude oil. You have other countries really come online in terms of demanding it, countries like china, even saudi arabia now the fifthlargest consumer of oil. Emerging versus developed world balance out of tilt. The emerging markets and now accounting for more of oil demand than the developed markets. Lets talk about the politics in these countries. Saudi arabia, russia, they have a line in the sand. It falls below that, they cant balance the budget. Does that mean that 80 oil is extinct . Oilt is likely we will see go down sharply again barring another major global recession, bordering on a depression. We have a much higher price tag not only in the countries you mentioned but here as well as you take a look at where the new sources of supply are coming from the u. S. Would break even at 80. We have a strong for onair energy prices. Prices are quite a bit higher than at the start of the driving season in each of the last couple of years. Lets talk about the price at the pump. Advocat this is harmony economy . At what point does this harm the economy . Hitting three dollars and . 80 to four dollars on , local at the pump prices may differ, we are not quite there yet. We are about 3. 70. High as theyices are and pulled higher by brent prices, we may see higher prices over the summer. Thank you very much. Stay with us. I will be on the market for the next couple of hours. Street smart is next. Around recordring levels. Better than forecast data in services industry. A Monthly Employment per port. Report. Yment welcome to the most important hour of the session,. Coming up today, has Edward Snowden been working for the kremlin all along . We asked of the current and former directors of the nsa. Recent Insider Trading allegations may be putting phil nicholsons endorsement in jeopardy. We will look at what the program also needs to do. The directors