Caroline is standing by. At the moment, it is the fx that is painting the real picture diverging policies at the moment. The euro is trading lower. Add of u. S. Jobs, optimism for the economy picking up. Could we see a ring back in stimulus on the dollar . They euro trading though. Clearly, euro trading lower as we expect mario draghi to unveil rate cuts. But will it also be stimulus in terms of lending for Smaller Companies . A look at how we are trading on the market. A little bit of caution ahead of all this data. The adp, the rabbit payrolls number coming out. Private payrolls number coming out. Lower. Ot the dax trading see, caution after yesterday. We saw the stoxx 600 drop from the sixmonth high the sixyear high, i might a. I might add. I want to check out how tesco is doing after those numbers came in. Had been expected. Up 1. 6 . Apparently, the picture is. If you are a customer. Prices are being slashed. Higher noting anytime soon, not for several months. Companys never been so added. Volkswagen is selling shares. All to get their hands on skandia, the swedish truck maker, selling shares to be able to pay for that acquisition. By is off by half a percent. Once again seeing sales drop. Car sales down 11 across this brand in italy. Thank you. Lets talk about what else is happening today. G7 leaders meeting in brussels today without president and 10 president cute and president putin. Despite its absence, russia likely to feature prominently on the agenda. Unless you want to talk about stalled eu trade talks with the u. S. , the entire conversation will be dominated on what is next in crimea, in russia, in ukraine. It is crucial to take a look at what is happening in eastern ukraine. Although language from brussels and london is setting a predicate for additional sanctions. That they also want to preserve the opportunity to dial back, to use the next phase when everyone meets in paris and normandy to be inclusive and tried to mend fences with vladimir putin. Listen to how William Hague put it last night. It is an important moment for ukraine. There has been an election without very clear results. We now do want to see russia work with ukraine, including bilateral discussions between them. I think that is the way to reduce tensions. So yes, all of these things are things we want to press upon mr. Putin. Mr. Yesterday. Nded he meets with the newly elected president. And the business of summitry, the business of brussels gets started. Behind closed doors, you see the protocol. How close do these two guys get over the next couple of days . They lunch table is circular or square. If it is one big buffet table. They are having lunch together in normandy on friday. They will likely meet. The question is does this lend itself to a longer discussion, a longer shouting match, or perhaps a coming together, maybe a little fencemending. Obama was more conciliatory on and then i have seen in the past. We will see if that changes in the next 24 hours. Hans nichols joining us from brussels. A lot going on in the next couple of days both on the geopolitical level and the economic level. The ecb meets tomorrow. Pivotal moment in time for these markets. Lets pick up and think about where we go next. Youve got a lot going on obviously, there is a lot of expectation around the ecb meeting tomorrow. Expect mario draghi to deliver, to make the plunge into a new policy in terms of cutting rates, negative rates for the [indiscernible] well obviously some targets similar to what we saw that is all expected. Everybody expects it. What will it take to move the dial . They key will be that they are ready to do some Asset Research asset purchases. Probably [indiscernible] of the european super nationals, the european union, the eide, esm and so on, they us ff. It will create some momentum. The french continues to be a concern for so many of us. Lets talk about why at the moment. The pmi data out shortly. How concerned do you think the ecb will be that the u. S. Regulators are whacking european banks with big fines . I dont think it is specific to european banks. Banks that settled a few months ago get away with much lower [indiscernible] usually, they have to pay much more in a. Much more now. Stay with us. We have plenty more coming up. Welcome back. You are watching on the move. This wasbased company, some m a in the retail world of this morning. The stock is up 5. 7 . We will be talking with the companies ceo in zero later on in the program. Good news out of the ceo in zurich later on in the program. Good news out of the retail sector. Numbers better than expected. The historic low could be good news. Shares climbed this morning. Lets put it in perspective. Ryan, remind us of the numbers first of all. The big thing here is philip clarke, the ceo of tesco, saying that in his 40 years at the company, he has never seen a sales drop like this. Saving grace, shares were up as much as 2. 5 this morning. The drop in likefourlike sales was 12. 8 . They were expecting sales to 4 . By investors were very welker. And this has been a negative development. It wasnt quite as bad as investors were expecting. Where is this coming through . What is the problem here . Problem was originally consumers wanted to spend less money so they went to shops that had smaller selection and they went to shops where the prices were cheaper. Bigo, huge stores, selection, customers did not want to go there because they were tempted to spend too much in the prices were too high. Is likes to think of itself as focusing on price. It likes to take money out of the supply chain to pass it on to customers. Are they overly focused on pressure now . Are they doing the right things . When we will when will we see the effects of what they are doing . They could be as much as a year. And france, christine know the noices in a big way costi lowered prices in a big way. In terms of what tescos turn to do in terms of price at the moment, i think it may be a bet on economic recovery. Consumers will start spending more money. Discounters dont have the range. They dont have a selection for people who want to spend a little bit more. Tesco wants to be in the game when people have got a little bit more money to spend. Give us a bit of context on the shares this year. It seems dramatic. Chart. A year to date massively underperformed in the european level. Morrison outperforming even tesco. When you talk about the share price and in general, clark strain has been the decline in market share. To start, point out that tesco still has 29 of the market here in the united kingdom. But a report said, in the first three months of this year, tesco lost 1. 5 of the market. That is an awful lot to lose. In fact, its biggest market share since theyve been looking at the numbers in 20 years. What you see is walmart as the picking up, the only one of the big four supermarkets who had a gain in market share. Part of the reason is they cut prices earlier. They did back in november and they had, in comparison to the decline we have seen for sales just now from tesco, at least on to can car, an increase in sales for the first three months. Then you have all at the bottom, heels. G at tescos you have the upper and taking away some of tescos customers. I guess the big problem is how are they going to hold onto the lines share of the market that they have had forever lions share of the market that they have had forever . Issues one of the hanging on the share price. Is there anything that he could be doing that he is not doing . People are going to Start Talking about him being the right man for the job. Investors remain unconvinced that the stage. How will the next 12 months look for him . Could somebody else to the job better . I think there is a wish that someone could do the job better. I am not entirely convinced that there is someone who could do something better. Orbe he should have done something zero later than when he first did them. Maybe they should have done the price cutting, said go and be ahead of the game is that of behind it. The other point is what is happening to the margins. No one is quite sure whether the tesco margin is going to stabilize. He doesnt want to say where it is going to stabilize, but people want to get a feeling that the decline in profit estimates is going to come to an end. Thank you very much. Analog going on this week. Marknt had a he sent market quite some time. Point of view, do you anticipate that actually some sort of correction will be coming in the near term or did you leave we are likely to see consistent enough returns . Overall, the situation is quite benign as long as inflation stays low. The longterm yields stay low morehe central bank does in policies. Overall, the market is quite supportive of the equity market. Investors are buying. We saw this in emerging market or technology. The first consequence where people jump back into the market to ride market for four percent or five percent. The market will not have performance like last year. We dont expect double digit returns this year. Nevertheless, it is hard to see right now what could be the trigger which will creaa bi selloff. Protection is very cheap right now. Yes. The one thing that is incredibly cheap is the most attractive right now, volatility. The vix is almost at a sevenyear low. Bulls have been quite depressed for some time now. How much of an upset will you get involved . You have to be invested. Obviously, if you have cash, you will not get a return. Being invested, it is nice to have some comfort that you can buy some Downside Protection cheaply. Volatility, if theres is a big selloff, you will benefit from it. Right now, in the market, we have to look at what is good value. Volatility is good value. Overall, the world is more volatile. Look at geopolitics. But you have the Central Banks suppressing that. You have low inflation, Central Banks that are pretty benign, that will lead to low vol. We might be in a time where year Central Banks are diverging. The European Central bank is doing more. You can u. S. Going in opposite directions. Historically come in those times, volatility was going up. That could be a trickle. The third possible trigger is you have to keep in mind that banks are not able to have a large inventory on bonds and liquidity. If there is a selloff, they will not be able to absorb those selloffs. That could create another volatility as wealth. You better have the Market Makers making the market. I talk to the credit guys, they tell me what is going on in the boris. Is that making you nervous . Are we starting to see areas where we are getting far too frothy right now . It is true today, any single big company can issue a one billion bond. One billion euro gradual bond with a coupon between zero and 18 . 1 . And 8 percent. You dont have a lot of opportunity. We see in the market some outflow out of peripheral european government bonds which are yielding much less today. So there is info on corporate ons because of that. Ok, lets move on. As we head into break, lets go to olivia who is standing by at heathrows new terminal 2. What have you got for us . Good morning. You can expect a lot more luxury, a lot more efficiency at the new terminal 2, the queens terminal. What you are not going to get is any more capacity. Heathrow really needs that third runway. I was talking with john holland today. He explained to me why he thinks this new hub well make heathrow more globally competitive and secure that third runway. It is also a destination in and of itself. There is fantastic retail and restaurants, including a new blumenthal restauran. T restaurant. I will be speaking with the chef and owner coming up. That was the chief executive of Goldman SachsLloyd Blankfein explaining why he calls his bank a tech company. Lets go from tech to telecoms. We are back talking about them these days. It is interesting that we are looking at a lot of m a in the sector. This is clearly part of a regulatory story when it comes to what is happening with kp ns e plus story. Brings usally, this back to what is the basic problem that the devils the European Telecom sector in most countries have four operators. The big ones wanted to be three because they believe it has better effect on pricing and they want to invest. Telefonica is in talks with germany and various socalled Virtual Network operators to try to bulk up of their operations as part of getting antitrust approval for its merger there kpm. Anything out of this that tells us where regulators are . Go into this deal and maybe extrapolate and talk about how european markets are going to go . Are they go from three to four . There things telefonica is doing to understand what is happening . Everyone who follows this space in europe is looking to see what happens in germany. If a merger between two mobile carriers is ok and the largest European Telecom market, then in principle, it should be ok in most other places, too. Certainly from the perspective of the european commission. Every syllable coming at a brussels on this, you can imagine, is being parsed very carefully. I dont think there is much expectation this deal will actually be blocked out right. But everyone is looking very carefully at what the concessions will be in terms of sale of network spectrum, allowing as we were discussing access to these Virtual Network operators and helping them become a bit more robust. Becomee remedies prohibitive, that becomes a reason in other countries not to do deals. But if they are seen as manageable, of course if they are seen as manageable, what does it mean in terms of what other deals can be done . The rest of these european markets that have four players come back into focus. Clearly italy is on everyones mind. There was a reuters story about the book being back in talks to merge their italian unit. This has been on and off for years but italy is one of those countries. Spain is another obvious one. France has had discussion about some kind of merger involving week and orange or we get really odd. Wiig and iliad. Welcome back. You are watching on the move. We are 30 minutes into the european trading day. Equities not doing a great deal. That is not a surprise. In the next couple of days, you have the ecb tomorrow, a fairly decent event. Then we have payrolls on friday. Asia fairly quiet. Europe fairly quiet as well. Of stockshat a large p, the national grid, w d second leading loser on the ftse 100. Deeper. T a little into these markets. A lot of individual stocks to watch. Dohe free operator called free, they disagreed to buy another retailer called duoance. Putting the stock up more than six percent. Bouygues has been cut by tesco. Ceo said, since he has been in the company, the shares were up as much as 2. 5 . Thestors are settling into reality that those results, even though they were not quite as bad as investors thought they were going to be, are a little bit better than anticipated. This is obviously a tough period for tesco. More tesco later this morning. Get to the top headlines. The top industrial powers meet in brussels. They will discuss additional sanctions against russia. Ukraine said yesterday it deployed heavy weapons and Armored Vehicles to the eastern border with russia. Thousands of songbird investor protesters gathered. Hundreds were killed 25 years ago. And mario draghi is likely to signal that any Interest Rate cut wont necessarily be the last. Hisill probably reiterate commitment to low borrowing costs and policymakers are debating a cut in both the benchmark and the deposit rate which will go negative. The decision tomorrow. Lets stay with the central bank fame. Coming out of the bank of england, it is set to make its decision earlier than the ecb. A lot of things surrounding the uks economy at the moment are very interesting. The sustainability of the recovery and the finances remain central to it all. Questioning some of the relationships between some of the critical numbers . Year, the whole issue was whether demand would recover this year it focuses on how sustainable the recovery is, whether potential output and productivity will recover and whether the recovery is in balance. The u. K. Deficit in the last two quarters has risen to about five percent of gdp. Close to a record level in terms of gdp for the current count deficit. It has let a lot of people to question how sustainable that is. In our note, what we discussed is come over time, although the u. K. Has run for many years, not really says the 1990s has it to account. Ing current deficits so the stock, the accumulation of all these flows, negative flows over time is nevertheless still positive. Which seems remarkable. But the justification or what has accounted for that is that long as has been invested in a lot of equities and fdi a crawl fdi abroad which has appreciated over time investors in u. K. Have invested into bonds predominately which have done less well over time. Itsu. K. Has benefited from that investment position off account deficits. Accountt the current deficit is around two percent to 2. 5 of gdp. Better than many people suppose. Many people have a significantly noller significantly lower number than that. We have seen a downgrading in the last few weeks of the rates in the state in the states peg the u. K. Is a little bit different. We have a policy decision tomorrow. No one is expecting a great deal. Are you comfortable with the rate right now as it is projected by the market . Are you comfortable where the terminal return going to be and are they as low as connie thinks its going to be . Our big picture view is that we are above consensus on growth. Onare below consensus inflation reflecting our optimism on potential output of productivity and reflecting are below consensus views on inflation. Slightly more dovish on policy on the market. We expected the first rate hike in q3 2015 versus Market Expectations around the turn of this year. In terms of where policy ends out in the mediumterm horizon, to 3 able that a 2 expectation is reasonable. Would very longrun, i expected the bank of england itself would also acknowledge that, in the very long run, something higher than that is likely but not within the trading horizon i think. When you look at the advice given to the british at the moment, and there is a lot of advice being given up a moment, is there justification for it . Is there any need to start pulling the levers on macro policy . Is there a need to put a more progressive tax into the Housing Market . Are those the sort of things that the advice is clear that that needs to happen. Do you think it will be taken and do you think is necessary . To a degree, yes. Argue,nth, we would although we are on either of another