the european central bank has run out of ways to help the eurozone. he endorses the new government of france we are seeing this week. hans is in berlin. >> we will be looking at potential sanctions against russia eu leaders will be meeting in brussels tomorrow. brussels. meeting in we will have more and a little bit. >> talking about the tough troubles at tesco. ning. capitals the dividends are slashed.

it is the time it takes the new ceo to get in the door has also been cut. newly three years of toldioration. i have you the stock could fall 12%. >> i will be talking about that shortly. gains. week of is still there. you look at inflation in germany. this was the bane of the european central bank. spoke to city tomorrow. they say euro needs to drop another five percent.

you need to see it down one dollar 20. add.ould there are 1000 russian troops on ukrainian soil. obama is talking about consequences. equity market seemed to be focused on the ability of mario draghi to deliver something. equity markets are trading higher. they have not uncrossed yet. we see a range from four percent lower to possibly 10% lower. have a cut in terms of x

then the teacher. caroline will take us through those numbers. when it comes to luxury this is a different story. the first of 2014 justifies the outlook for the rest of the year. earnings driven i asia, driven by supply constraints. that is the stock to think about. the euro will read -- will react a little more moderately to the data when it comes up. declines for the eurozone. the longest losing streak since 1999. draghi has run to the end of the road as far as the ability to spur growth. it actually pushes countries to

change. lacks that is your market open. open.that is your market nato has more than 1000 troops over the border. finance their -- finance and mr. addresses the relationship with europe. take a listen. >> everybody wants to have a partnership. course everyone has to stick to what has been agreed. we cannot accept it will be annihilated by force. >> we will bring more of the exclusive conversation in just a few moments. we are joined by the chief invest and officer -- investment officer. good morning.

when we talk about the relationship with russia we understand the importance of the trade art ownership with russia. when you talk about conflict else's -- trade art ownership -- partnership with russia. when you talk about conflict. said what is required, it would be asked tension of that deficit. -- expansion of that deficit. it is out of the question. if you look at the challenges and say, do you want to push through reforms that will be difficult and painful? i think we need to focus on companies where margins are reasonable but capable of the spending. they are becoming more and.

>> if we get a weaker euro, heading towards one dollar 30, may even go below. next we talked about that. they are during white well. i would say this is the right moment. depending on which numbers you look at. it is extravagant. valuation in terms of capital 15 and 17.tween >> give me an understanding of how much lower it makes earnings. >> the whole shift in terms of decision and. -- envisioning.

they all are in the same sort of they've. when you are up against the great cars in japan and the united date, people will buy more. >> that might be a good case for the euro. what about tensions with russia? the likes of daimler are going to be head. altogetherort-term economically leaving as i'd russia remained difficult. >> we will talk about that after the break. out of option. done all he can to boost european growth. more on rx was of conversation after the -- on our exclusive conversation after the break. nato claims russia has boots on

the ground. international outcry grows louder. test those trouble continues as the company slashes forecast and dividends. more when we return. ♪

>> welcome back.

tesco stock is down over eight percent. the biggest drop in two and half years. caroline has details from the newsroom. it. the worst since 2012. what happened then? as philip clarke was forced to take that hit. the news kept on the deer your .ating -- deteriorating they have slipped in terms of market share. they say trading conditions and ongoing invest and are hitting their financial performance.

they cut their expenditure spending. lewis that on david much quicker, he joined one month earlier. .t is clearly focused every aspect delivers sustainable returns. for the moment tesco cannot catch a break. >> things must the terrible to say the least. you have got tesco trying to revamp. >> maybe it is a question of time.

they have already spent about one billion pounds. it has been tailored trying to hit. it is more focused on indian spices. is it a question of ramp up? we are seeing bigger tesco's doors trying to be revamp. all of it might take time to bed down, but investors are losing patience. there does seem to be concerned around the board. salesad the worst drop in basis for two face

decades. centered and poor said profitability is not going to improve. we need a grandiose change from dave lewis. he needs to rebrand. >> thanks very much. fors, the news comes in september as the start date. i was inking, is that the new date? a month early? >> they are cutting the interim dividend. it is about being able to generate cash flows. that doesn't require cutting the dividend. i think we will expect a much more substantial structural

review. time between now and april, that is actually useful. youif you are looking back see them thinking affect the plea this morning. the stop down seven and a half percent. you like costco? >> in order to turn bullish on tesco we need a resolution. format thatgacy of are not attracting the customers. that needs to be changed. we can change that. we just need time. the first factor, i think we need to see some upturn in the long-term consumers bending.

-- spending. i worry there is a gap emerged between what is being spent in the highest rate. -- high street. i worry there will be a lot down in spending. but that think it is worth underlining as well. you have market shares under 30%. going forward, has the growth ship already sailed. tesco is in the middle and doesn't know where to go? >> we cannot worry too much about the share of the market. the profitability is sure it goes out. will they have the balls to do that? i don't know. going to talk with the german finance minister.

he has only good things to say about french president along new cabinet.ande's you have beta four is now. >> he is expecting to be so much in the spotlight. of course the minister told me he was not happy at all that the common are among those who called off their it to -- called .ff their it he dogmatic the minister also told me he endorses the new government minister. he says he has the right focus

on competitiveness, and that is a main problem of france. >> we are fine with it. . have met my french colleague we will continue. >> do you think this french economic ellis he is going in the right direction? >> to be frank, we were not pleased. the new minister of the economy is the same as the finance minister.

some of them will welcome competitiveness. to choose our differences. he have to regain confidence. by markets, by investors and consumers. they regain confidence. >> you think they will be able to meet their deficit targets by next year? now we are optimistic that france will deliver. >> are there economic reforms in germany that could be a model for france?

>> they have the tradition of market economy, and it is a good partnershipip -- i think theanies. responsibility which has been announced by the french republic is the right direction. we are very supportive that they are able to implement social reforms, which is needed. implement. >>t to

more flexibility on deficit cutting. this is the advice to the french government here in france. he is actually confident france will the to the rules even though the deficit target of around deficit will be gdp percent of the bp -- of . >> we will bring you more of that act leave the conversation through the show -- exclusive conversation. james, the euro keeps going lower. there is no incentive to change right now. spain borrowing at two percent on the 10 year. can this continue? can this go lower? >> it is extraordinary. we have a real challenge because

we cannot make sense of valuation. are going under. thatat sense i worry france spends more money. if you have to choose between equity and debt i would much rather have my money in all it he equity than that. any pickup in inflation. >> we have seen concern about periphery yield turning neutral. does it flat line? but i find it extraordinary. as always. thank you very much. stock. at one luxury

earnings beat estimates. we will get or later this hour. on the move is back in two.

>> welcome back. m companies on the move this money. deutsche telekom may be able to renegotiate. the german telecom giant said they would have to have $75 a

share or more. bidsche telekom rejected a this month for $33 a share. google is making drones to handle delivery. if the move squares google london property market has stagnated for a second month. the latest survey shows values were unchanged eco-suppliers are a reluctant to accept high asking prices. steve joins us. a look at equities markets in europe.

we have a higher market. if you want to talk markets, you know where i am. ♪

>> welcome back to "on the move." i'm johnathan ferro. happy friday. 30 minutes in, this is what markets look like. dax climbing higher by 0.5%. we are set for three weeks of gains. 10:00 a.m. is the big one. eurozone inflation data expected to come in at a very small 0.3%. here are the stocks. manus cranny with three of them. >> we'll talk about the ripple effect from tesco. they had to reduce their dividend. caroline is taking you through the step by step nshtive they are taking.

98% of the normal day's volume has changed hands. you're looking at nearly 100% of a normal day's volume for the past 30 days. less volume has gone through. about 43%. that was the tidings of doom and gloom. let me bring you some releave in the market. it comes in the shape of luxury. erragamo has had good numbers. europe absolutely banging beat. 8.7% rise in terms of sales. north america storming the way along with latin america. fiat not having to spend as much money as originally anticipated. astrazeneca looks like they may be on the cusp of new trials for a colon cancer drug. it would be a multiblockbuster

opportunity is what some of the analysts are talking about. more than $1 billion. astrazeneca potentially in play. >> thanks. here are three top headlines from bloomberg. david cameron is making another plea for scottish voters to remain a part of the u.k.. he said there are huge benefits to being h the union. >> our single market is one of our union's greatest advantages. if we stay together, scottish businesses have better opportunities. consumers have more choice. scottish people have more secure jobs. why put all of those great advantages at risk by going into the great unknown? >> and president obama says the united states does not yet have a strategy for confronting the islamic state outside of iraq. he added that air strikes on

terrorist havens in northern iraq will continue. the u.s. blames russia for the escalation in fighting in ukraine saying that president putin's groups have crossed into the country. they are discussing the possibility of added sanctions. hans nichols is in berlin. first there was the u.n. security council meeting and then president obama speaking. is the world united against russia when they are talking about consequences, i've said it earlier. the only consequence i see is the prospect of a recession in europe. >> clearly the view from the u.s. and some european allies, the consequences would mean additional sanctions, potentially the consequences of forcing russia to withdraw what nato says are there troops inside the ukraine. there are consequences for the wrerpian continent weighing on everyone's mind but also

international sovereignity. here is what president obama said. he walked right up to calling it invasion and then he stepped back. he basically said this is a continuation of russia supporting and supplying the rebels but he didn't say this was necessarily a step change. it was more incremental. that in a way puts him at odds with what nato was saying, clearly calling it an invasion. clearly mr. poroshenko of the ukraine is calling it an invasion. he spoke with merkel, the white house put out a statement that spoke with merkel. that's where we have consequences, potentially more sanctions as you suggest and tomorrow e.u. foreign ministers meeting in brussels and next week all the action bb in wales for a nato summit. will they be expanding the sanctions or will they just be incremental? one note on this, when you look at what russia and mr. putin is

saying, he is quite clear in praising the rebels hailing their success saying they are opening corridors for the delivery or humanitarian aid. it is quite striking to look at the contrast and rhetoric and there are 20,000 russian troops on the other side of the border. that is a concern for nato. >> putin has a high approval rating. the man in the u.s. and the e.u. o not have that. >> tomorrow will have meet information mosque. -- coss cow. -- moscow. the esks u. wants a two-accept plan. you have a short-term payment and a long-term arbitration. we spoke in berlin yesterday. here is how he put it.

>> he also said the decisions russia makes on gas on the next couple of weeks could affect europe for a generation. crucial talks. the e. sumbings making contingency plans for having gas cut off. it is really a markable story. >> thanks very much. german finance minister says the european central bank has reached its limit in trying to spur european economic growth. those comments send the euro a little bit higher. take a listen. >> what draghi is saying again and again is what is needed. it is not to the e.c.b. to

implement. in this regard, we agree 100%. monetary policy has to take its responsibility. it can only buy time. the underlying problems is the -- fiscal policy and economic policies. he globalized economy. we have to worm orange going again and again. if you look at what is going on in the global economy, there are arying problems. if we will be complacent, even in germany, we are fine actually, but if we would not

continue to enhance our competitiveness in the coming years, we would lose our position. >> should the e.c.b. do more to fight inflation? >> i don't think it has the instrument to fight. the rates are on an historical level low. you can't solve the problem in the liquidity of markets is not too low. it is even too high. therefore we have the problems. therefore i think monetary policy has come to the end of its instrument and therefore what we urgently need is investments. regaining confidence. by investors. by markets. y consumers.

eopolitical risks. growth is driven by internal emand. consumers invested as well. the reason why we have such a we will idence is -- stoic what we have promised and we will continue the stick on investments. to increase. we are working on this. and of course we have to -- research and development. that's what the french government has decided to do. >> that's bloomberg's exclusive interview with the german finance minister talking about the e.c.b. nearing the end of the road, but i keep hearing more calls for e.c.b. action next week and everybody calls

for a weaker euro as the months progress. my next guest has a different opinion on this. the chief economist. good to have you here. >> thank you for having me. >> time to short the dollar. what underpins the call? >> i think it is a pretty mild call considering my call has been that germany would be in recession which made people think i had two heads. what i'm really saying i think there would be more value in having u.s. fixed income relative to the g-7, it is the most expensive it has been ever in history. about 79, 80 basis points. secondly dead in the -- debt in the u.s. is still expanding. the u.s., whatever growth they have, it is very dodgy or whatever, growth they have, 2% for the last five years. i think they will be 5.2% this

year. it is based on people lending money, not producing. on the balance sheet side, people as we talk about the e.c.b. and the balance sheet, the balance sheet of the federal reserve is still expanding. i think the facts and reality is different and what is going on now in the dollar and euro/dollar seasoned is the trading and momentum and expectation. in my opinion, it is too risky. i think probably for the first time in 35 years since -- i agreed with a politician. that is that the e.c.b., whatever happens in the e.c.b. is not going to change the deflation outlook. it is not going to change the growth. underneath this is the lack of structural reforms. >> it could move against you. if they move next week -- you would guess euro dollar would go lower inform in your mind

everyone is jumping on this boat because of a speech from mario draghi. in your mind did he say anything that opened the door to that prospect? >> i think he was indicating you do your job and then i'll do my job in terms of turning around the e.c.b. and the politicians i need to around to get full on q.e.. even if you get it and get a full q.e., it is not going to change the outlook for europe. spain has had five consecutive current account deficits. a minus .5% inflation. this morning retail sales were lower than expected in negative territory. if spain is a great recovery story based on austerity, i don't want to be on the winning side of anything to be honest. the real -- here is the market position. i'm not going to say that euro doesn't go to 130.

i'm a medium to long-term investor. i think this is the end of the dollar machine. as i travel the world, i go to like 30 countries. more and more business people do not trust the u.s. dollar. a local commissioner in new york almost took down b.n.p. paribas, it is a sign of the system which is wrong. not a system which is strong and i think that will be a detrimental impact politically. on top of this i think the globalize igse policies we have, which have been very conducive to funding yourself and using dollars, we have become far more religiously fighting if you want to put it that way. a number of long-term factors. u.s. increases debt every single day. at least in europe we're keeping it relatively balanced. as long as the bundesbank is able to maintain this roughly 3% deficit. what about for the eurozone?

2012 seems to be shades of that now mine us the bond market route. you can thank mr. draghi for that one. will the ard, fundamentals get better? >> doing nothing is not going to do anything good. the same model that sees the lower dollar sees as we come into q one and q 2, we will have strong recovery and strong realization of inflation. i think we're actually in the ninth inning and the final pitch going on in the ninth inning and the market is wrong to think that we're not going to see change. we will have changes if for no other reason is because we need it. i'm the most optimistic i have been in 25 years because its can't get any worse. >> thank you very much for joining us this morning. as we head to break, take a look at the euro.

euro/dollar. a big piece of data come out. euro done c.p.i. it does not print a pretty picture of the eurozone.

>> telecom italia made an offer for the unit just yesterday. caroline hyde joins us now.

are we going to get a deal here? >> looks like it. it looks like winner is going to take all. telefonica offered far more cash. 4.6 billion euros worth. also an option to switch out and into some telefonica italian state. we have three months of exclusive talks. now all the talk is about what happens to tell come italia? does it pull out entirely? guy and i were talking about it yesterday maybe this is the employ all along. -- ploy all along. maybe that's where we're going to get more bids. they have already been looking at how they can potentially carve up their unit in brazil. >> vivendi.

the service of things is what makes sense for a lot of people. what's happening here? >> they are focusing on media. on how to distribute their media as well. basically it is just -- the tv unit and universal, the music. they have to dribble distribute hat out. you can channel out some of your tv content. do the same with telefonica. now maybe they will start to have more partnerships are spotify. this is very clever by the chairman. he came onboard june. he took a 5% stake in vivendi last year since then he has tried to galvanize change. they got out of s.f.r. they got out of g.b.t. in

brazil. they might still have skin in the game when it comes to tell comes because they need that -- telecoms because they need that content. sales took a hit yesterday. sales and profit falling yesterday for vive endi. >> that's a wrapup of all the news. "the pulse" is coming up at the top of the hour. guy johnson joins with us a look at big data coming up in your show. >> definitely worth paying attention to. i was listening to what steve had to say about the story in the eurozone. maybe things can't get worse from here. many believe they can. our guest says one thing that does mirror what he had to say. if spain is a win then i don't want to be on the winning team because that is not success. that kind of unemployment rate to generate that kind of growth

is not what we're looking for here. it is not the story that we should be pursuing. looking forward to hearing what she has to say. we don't talk to her very often. we're going to talk to another guest, an economist. he is saying maybe draghi doesn't pay that much attention to what the german finance minister said. that's a conversation i'm looking forward to having later on. the temperature is rising. we'll be talking about energy. it is going to be big story this winter. one big story is central banks, the other in the ukraine and the energy story here in europe. we'll talk about that and then jon we have to talk about the basket case that is tesco. hard to ignore. >> stock down by almost 7% this morning. we'll leave it there.

looking forward it to. guy sup on "the pulse" in about 10 minutes. coming up on "on the move," a dog may be man's best friend on earth. what about in space? i'll show you more after the break. ♪

>> when it comes to space travel, astronauts face a number of challenges. one of them of course would be a little bit of company. maybe japanese technology has a

solution. >> for such a small robot, it has a big journey. for the past year his mission has been to test how a robot can emotionally support isolated people. but now the submission coming to n end. his character is thanks to toyota what provided kirobo's voice. they are making partner robots to assist people and it is a popular idea. >> i think it is a much more natural thing than most people in the world have thought.

>> kirobo was blasted into stays in 2013, to spend a year with japan's commander in the international space station. but the rocket returned to earth in may 2014. researchers have finding interesting results from the isolated robot. >> i think it felt lonely with its companion gone and that came through to us from the video. it also felt lonely watching the power being switched off. >> luckily, its scheduled return back to earth and companionship come at the end of the year. >> that is just weird and that is the end of "on the move." in the meantime you can follow me on twitter if you want to talk markets. i'm at ferro tv.

the euro 1.3171. the big data comes inst in about an hour's time. inflation, .3%. it is that bad. stay with us for "the pulse". we're back in two. ♪

>> the end of the road. germany's finance minister said the e.c.b. has run out of ways to get europe growing. our exclusive interview this hour. boots over the border. kiev begs the world for help as nato says 1,000 russian troops have now moved in. and a basket case. tesco shares down as the company slashes forecasts and dividends. good morning, yb