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 bank of england decision, for us the more important decision this month is the ftc decision. They meet on june 17. The record of the meeting isnt announced until july 1. So we will have to wait a little bit for that. One of the reasons why, in addition to optimism on potential output, one of the reasons why we are dovish is the belief that the bank of england is likely to tighten through marker potential markets first in the has a market. It is a substitute to a degree for tighter monetary policy. So more on the macro prudential side means more on the monetary think policy. Do you think the treasury will work handinhand . Fiscal side of things need to be part and parcel of this . The big issue, the big controversy is about they how to buy scheme. I wouldnt be surprised in ee theber to s mortgage guarantee being withdrawn or begun to be withdrawn at that stage. More immediately come away expect them to tighten mortgage lending standards following the mortgage market. In fact, you can argue this tightening has already begun. It has begun. One sees the headlines that u. K. Banks are already tightening their mortgage lending standards. Why, because it is better for them to do so independently in advance of being told the ftc to do so. We are already seeing a tightening on mortgage availability. Thank you. Lets turn our attention to china. It is the 25th anniversary on the deadly crackdown on protesters in tiananmen square. Now, a bloomberg columnist and all of his are expressed are his own. Talk to me about the relationship between tiananmen and policy reform in china. It is having an impact. Indeed, it is impossible to delink the two. The main concern is social instability. When china looks back to 25 years ago, that is an object lesson in the evils that come from that. In many ways, you see the government at the moment has a vast and herculean reform job ahead of them. They have to turn the economy upside down, make it less reliant on excess investment, make it less reliant on exports and make it more reliant on domestic. Growth target is all about maintaining social stability. Aggressive efforts come increased analyst to get the central bank to do more. There is a lot of about letting the economy slow. Intern, to rebalance the economy the way it is needed. They are very much in the room when the president and other policymakers figure out what to do because they are worried about social instability. That is something they have to risk, if you will, to rebalance the economy. The closer the growth remains at 7. 5 , the more you have to say that the ghost of tiananmen is in the room. We talk about rebalance income a conversation that has been going on for so long. But in reality, how much rebalancing is theyre taking place . Very little. I am willing to give president she sometime. It is early days. Administration spent 10 years doing nothing. They clamped down the internet. That is about it. The president has a very big task ahead of him so give him some time. What worries me is we hear a lot of talk of how we are reforming the economy, rebalancing the economy. I dont see a lot of evidence that that is taking place. Toared to other nymex abenomics in japan. China have the same phenomenon in japan where there is a lot of rhetoric and not a lot of action at this point . The longer the growth remains at 7. 5 , the less is going on. When china gets under the hood and starts shaking things up, growth has to go to 6 , toward 5 . Unny about what is going on in china is that they are stopping the slowdown before it even begins and that is not a good sign. Thanks for sharing that with us. Coming up, a star chef who has opened his restaurant in an airport. 2 restaurant prepares for takeoff. We will see what is on the menu when we come back. Inone of the things we want terminal 5, it is not about opening day but what you do overtime and passengers today love terminal 5. It is the best airport terminal in the world. Now with terminal 2, we have its twin sister. This makes heathrow once more one of the great airports around the world. That is chief executive of Heathrow Airport john hollandkaye. Our next guest is standing by with olivia sterns. What is on the menu . Thanks so much. I am here with pesto and all, the creator of baconflavored ice cream, the creator of snail porridge. Chef. E a michelin star why do you want to open a restaurant in an airport . When heathrow approached us a year or so ago, i said to them why do people like airports . Pittsburghers come its fish and chips. Im thinking, its burgers, its fish and chips. Im thinking, each dish was one show. I flew to naples and pick tomatoes and measured the temperature of its ovens. The got really into background and the history and the technique of every dish. In everyone, i developed my own little twist on it. This was the perfect opportunity. It was three years of development. It is called the perfectionists cafe. The perfectionist perfection is not real. Theidea is that we have wood oven. We managed to pump liquid nitrogen into the airport gam. Really impressive because most airports dont even let you have a gas stove. How did you convince Heathrow Airport to let you open up a wood burning oven and let you pump in natural gas . When they got they head around the whole concept, it was a challenge. They accepted it as a challenge. The great thing is they were both committed about making it work. Liquid nitrogen is not flammable. Liquid oxygen is a different thing. It is just super cold. So it is amazing there is no gas. But weve got nitrogen and we have a pizza of an. And the canister and the canisters will be escorted across the tarmac with security. Operationthis covert with this nitrogen swat team under the carbon the cover of darkness. What will be on the menu . How do you feed the traveling passengers . Question everything and see if things exist if they are best that way or they can be improved . Figures they are obviously not going to buy some clothes and get some food. They will get on a plane somewhere. They allow an average of 40 something minutes in which to do getr shopping and something to eat. They go to the new unit the newsagents and get a newspaper article can and get some food. It is about 10 to 12 minutes you need to be able to get their food. When you think about it, things like pizza, the faster a pizza is cooks, the better. Is cooked, the better. Thereddest tomato, mozzarella is the what, and the basil is the green, the italian flag. If the pizza is in the oven for too long, it is no good. So you want a pizza for one minute. It is at its best when its fast. Liquid nitrogen, in 30 seconds, you have ice cream and it freezes so fast and you get this super smooth ice cream. Gourmet food on the quick. It sounds fantastic. And perfection. With all have come up of these incredible new foods and chemical techniques to prepare the foods, what else, what are you working on . We are currently working on a space project. We are really looking at it. With the advancement in space travel powdered ice cream . That is exactly it. The same has been dead for years. With modern technology, space travel, that has moved on so much and food hasnt changed. With gravity, our bone structure, the way our bone support our body changes. And all of this affects how we perceive flavor. It also might get me in a space suit. Blumenthal will be catering the next Space Shuttle cap what we have to get you to do is make the inflight meals because they need a lot of help. Thank you so much for joining us. Pizzas. T one of his olivia will be back in little bit later. Just an hour into the trading session, one of the stories today is tesco. But not have been worse much. When the ceo of a company has in their for 40 years and he has like that, itp puts it into a perspective. So you would expect the shares to plummet. But the reality is that the downforlike sales are 3. 8 when the expectation was it would be down number four percent. So we saw shares go up as much as 2. 5 . Onhink we had Charles Allen earlier, brown was talking about tesco. He made a really good point. A lot of investors have a big problem, since we have seen the shares give up gains as morning, navy we have seen people waking up to maybe we have seen the waking up to the problem that analysts are looking at profit. They were north of 5 . Now tesco doesnt know exactly where they are going to be. If you are looking to buying the shares, it is difficult at least from the price oftenearnings ratio how much they are going to be worth. Pricetoearnings ratio how much theyre going to be worth. So they are playing catchup. An important distinction. Thank you very on that note, we will leave it. We will continue the conversation. Caroline hyde and i will be back. The pulse will be coming up next. We have great guests lined up for you. We will be back at heathrow talking about what is going on there. We will be talking about m a as well. We will talk about what is a fragmented industry. What you see is a bit of a rollup. They be you will see a few more rolloffs in the sector as far as m a activity. We will be talking about markets of cry or park its acquired. We have ecb tomorrow and payrolls out of the united states. Lots to talk about. We will take a break. President obama meets the ukraine leader as battles rage. Are as bad as feared. Chaos of thevoids last major opening. We will be at the airport during the hour