>> manhunts in france. the brothers suspected of shooting 12 people are still on the run. one of the suspects is reported to have surrendered. >> france begins an official day of mourning. we are live in paris to examine the implications for french politics. >> dave lewis prefers to update the market on his strategy for the supermarket giant. we will analyze his plans to restore investor confidence. >> welcome to "countdown."

a huge police operation -- reports this morning that one of the men suspected of carrying out yesterdays attack as surrendered and is in custody. he has been named as an 18-year-old. >> french police released pictures of the two still at large. 12 people died in the attack. >> overnight, police have been searching the building in the northeastern city of rimes 90 miles from the french capital. police have not released details. >> france remains in the highest state of terror alert. francois hollande is holding an emergency cabinet meeting this morning. there will be a national day of mourning. our international correspondent

hans nichols is on the ground in paris. good morning. what is the latest update on the search? >> the latest update is that the searches ongoing. this is very much a city and a country not only in search for two suspects but in search for answers. how did this happen? how did two french nationals, 32 and 34, how do they become radicalized? we do know that the younger brother was arrested in 2004 in connection with potentially recruiting jihadi's to fight in iraq. at the time he told his lawyer that he was delivering pieces that this was a young man is urgent and self. the question is how did he and his brother become radicalized?

what was that transformation? when you look at the bullet spread -- i am standing right outside the office -- when you look at the bullet spreads, you see they are in tight formation, in clear indication that they may have had military training. the question is where do they train and when? it is estimated that 1000 french citizens or residents have been fighting in syria and/or iraq. the other side of the story is the search for political answers, for sociological answers. vigils are gathering all across paris. this is a city that is resolved and resilient, and continuing with life as usual. there is a heavy police presence. we heard yesterday from the president that he will be having a moment of silence later on today. let's have a listen to what he said yesterday. >> today it is the entire republic that was attacked.

the republic is the freedom of speech, the republic is the culture, the creation, pluralism, democracy. this was the target. the ideal of peace and justice that france carries out everywhere on the international scene. this message of peace and tolerance that we also defend with our soldiers to fight against terrorism and fundamentalism. >> it is a national day of mourning, and as the search goes on, the political search will continue. >> hans can you describe the mood in paris? >> it is a mixture of grieving and anger but resolve, there were makeshift vigils. in berlin and london we saw an outpouring. already this has been taken over by politics. marine le pen weight in. listen to what she had to say.

>> the objective of these barbaric acts is to terrorize, paralyze through fear, to subjugate or to censor. undoubtedly, this attack that traumatized the nation there is there. it is my responsibility to say this must be overcome in to say this attack must liberate us in the face of islamic fundamentalism. we must not stay quiet and we must speak up about what happened. we must not be frightened of words. this terrorist act was a denial. >> in attending some of those vigils, i stopped by. it is remarkable how quickly this has shifted to a political debate. there is a very frank, open, and robust conversation about what may have to be done. also what it means to have a free press in the west.

it will continue as the search for the subjects goes on. >> thank you. our international correspondent hans nichols, in paris. >> for more analysis of the terrorist attack, we are joined by pauline neville jones. he is currently a member of the u.k. parliamentary national security committee. thank you so much for coming in. lots to talk about in terms of the political and geopolitical application. sticking with the security angle, take us behind the scenes. tell us what is happening across europe, across france, in terms of the security. >> they will be encin close touch with each other. one thing you have to guard against is any follow-up action.

they will be vigilant, they will be looking for the possibility of copycat action. they will be briefing their political masters. that has already happened in the u.k. and will happen again today. they will be looking to see what further security measures need to be taken. if we see extra vigilance on the street today it will be a direct conflict. all those things we put in place. it is partly reassurance but also partly to make sure it is possible to safeguard against this kind of attack. >> safeguarding -- we are going to have a meeting with the cabinet. give us a sense -- you have been involved in times of heightened tension -- give us a sense of what will be involved, what kind of issues will be raised. there is obviously a high state of alert and a day of national

mourning. >> there will be the formal and procedural side -- how do we handle this as a nation? how do we give due prominence to the act, but also create a situation in which it is handled properly? the church will be involved. the other side is the immediate. what -- how much do we know by the fugitives? what do we know about their escape? are we able to chase them? what are we doing -- what are they doing? they may intend to get out of -- to get out of the country. they may have planned a rou te. there are some areas that are pretty porous not difficult to get across that they had to.

if they got helpers -- what kind of assistance might they have outside the immediate terrace area -- immediate terraceparis area? and what kind of cooperation might they need? that is part of the urgent to talk. the other thing -- they will want to prevent them doing anything else. one of the things they might attempt to do is go out in a blaze of glory. >> can you give us a sense, pauline, of how difficult it is from an antiterrorism standpoint to guard against these "lone wolf" attacks, people who are motivated by the islamic state? >> i think they are the most difficult. this is not a lone wolf attack like what we saw with rigby. there were two individuals involved.

done, as far as i can tell, planned. it didn't require an enormous amount of planning. the thing about this attack is that it has been very well-planned. it hasn't been done overnight. on the other hand, it may have been done reasonably quickly. it involves people in the same family. do they need to communicate by telephone? no. electronically, any traces at all? no. they can't put this kind of operation together -- they can put this kind of operation together. i don't know that they were in the french armed forces, but they have been active. we ask the question -- what did the police know and where should they have been? france has been on alert for something to happen for many months. we have seen is make videos --

seen i.s. make videos but failing that, calling on people to make acts of violence. will they increase -- >> it will be interesting to see what kind of -- who claims and on what basis. part of the propaganda -- in particular, it is media savvy. they have been encouraging this kind of behavior and they will seek profit for this brutal act. >> pauline neville jones, former u.k. secretary and counterterrorism minister. thank you for joining us and giving us your insight. let's turn our attention from the terrorist acts in paris to our top corporate story of the

day tesco and the problems it is facing. a strategy update to come as well. caroline, the ceo -- what is on his plate? what is at the top of the agenda? >> an awful lot. not only unveiling sales, but a new strategy. dave lewis earned himself the nickname "drastic dave" due to his overhaul. will he be drastic today? many think he wants to attack three key priorities -- improving competitiveness, the balance sheet, and rebuilding trust. in terms of competitiveness, we have already seen some numbers. they will be cutting prices on average by 25% over 400 products. this price wars building in the

u.k. -- how far will he go in terms of investment in prices, given that has two key competitors are investing $1 billion? also, is when drastic comes into play when looking at the balance sheet. tesco is not concerned about its debt rating -- could it fall into junk territory? how do they shore up their balance sheet? they could sell assets. already there are reports that they could sell their tv streaming business for 5 million pounds. tescobank, their asia business the analysis behind club cards. there are also things they could sell in terms of their pension scheme. that would be relatively drastic. there could be changes to their supply chain but most of all, what everyone will be looking out for is the cell of

new shares. that would shore up the balance sheet that many people think that is a needed. in terms of trust, it is all about getting more staff in and hiring a new ceo. it is building confidence in terms of that supply chains of that we never, ever see a statement of profit like we saw at the end of last year. >> caroline, let's see what mr. lewis is up to. he was here in london. i think you can probably guess what the most popular subject matter today is, the one that is trending the most. "#jesuicharlie. let us know what you are following today. >> coming up, most recent minutes from the fed.

optimism about the u.s. economy and worry about inflation being too low. will the fed raise rates? we will ask morgan stanley's -- ♪

>> let's turn to the u.s. there are suggestions that a rate rise will be likely. we are joined by morgan stanley's head of global

currency strategy. hi. one of the surprising elements of the minutes was that a number of participants were worried about inflation undershooting the fed's targets. with inflation well below the fed's target of 2%, can the fed really hike interest rates possibly around midyear? >> it looks like it is well -- it is going to hike in the first quarter of 2016. in that sense, we are very comfortable with this. we think the undershoot of inflation is a very important thing for us, for the central bank. the other thing about potential debates of inflation expectations -- we are coming out for a of a huge economic slump. you do not want to low inflation rate that could reduce the

escape velocity. that means that that will come late to hike rates. then they may go at a quicker pace. there has been this debate about, going now, flatten the profile out -- i think that is not going to happen. what you will have is let's develop the escape velocity, make sure the economy is borrowing, make sure wages are increasing, that you can be assured that it is not going to lead to a second round of fact, taking core inflation levels lower. then when you see wages increasing, when you see core inflation going in the right direction, then the fed is going to act. but that will be time-consuming. >> i noticed this morning that you are absolutely g3 currency. these are three ostensibly long

dollar trades. >> i guess it was in november -- i was emphasizing that, too. what you have to see here is that this is not about the u.s. dollar in light of policy. what you have to see is that there are growth differentials. >> to say that is what fx traders have to look for? >> it is a gross differential and you have to look into debt. in 2005, a where the u.s. dollar had a very brief one year rally, and emerging markets continue to perform -- in that year the dollar denominated by about 300 billion. that makes the difference. that level in dollars around along u.s. dollar story for much longer than you may think. >> thank you. it will talk to hans when we

come back about the risks of political fragmentation. we will be back with more on "countdown to." ♪

>> welcome back to "countdown." the morgan stanley head of global effects has let us try to digest what we saw in paris and what it means for risk.

do we see a heightened risk of political fragmentation in europe? is that the implication? >> i certainly think so. political fragmentation is the main risk for euro business. parties -- there are far right and far left's. there is going to be further fragmentation. when you see the current debate about greece what may happen after a new government comes in to greece the political wars are completely justified and maybe they are -- >> would talk to any government they went right off the greek debt.

>> that is something to look at. the restructuring of europe is under german guidance: auto liberalism. -- call it autoliberalism. it is about market and it is about law. you candidate if it is a successful law or not but the germans don't want to change it. if greece comes in and says i want to negotiate, and greece a successful -- and if greece is successful, others will ask for the same. the currency union would convert into something else. the alternative is that germany is going to stand very firm. the greeks are talking about, well, we can really negotiate. all of a sudden you have two positions which do not understand each other and you would have an exit.

nobody wants it but all of us -- like a sleepwalking situation. i hope that everything -- i could see us the second most likely situation, auto liberalism goes out the window. we have this weakness in the european economy. we are restructuring, we have rear rates being negative. you have fiscal multipliers always operating far above 1. that means if we are getting into fiscal looseness for a. , you are getting -- for ap period, that leaves an impression. they could temporarily rebound but only to fall much faster.

>> thank you very much for coming in today. head of global effects strategy at morgan stanley. >> coming up, france begins a day of mourning. the manhunt in france continues. ♪

>> 6:30 this thursday morning. this is "countdown." the dollar is the story. the fed minutes really set the tone, which is that the federal reserve stay focused on the core inflation rates. the market believes it will get a raise hike this year. the dollar index is training in a manner we haven't seen since 1998. we just had a conversation with morgan stanley, telling us clearly that no rate hike in the

united states until the first quarter of 2016. why is it trading like 1988? there was an oil collapse and a falling commodities, a recession and the russian events are reminiscent of that. period. let's have a look at the euro. we made a new nine-year loan. -- low. 11802. back in 2014 they said it would drop to $1.20. by the end of 2016, the median forecast was -- and that is pretty much where it is. the bank of new zealand says the dollar appreciation is the cause of their strategy. >> these are bloomberg's top headlines.

france will observe a national day of mourning in the aftermath of yesterday positive y's terrorist attacks. one of the suspects has surrendered and is in custody. a massive manhunt continues for the other two. french police have released pictures. they are still at large and thought to be armed. the federal reserve held a market committee meeting. they revealed agreements among the committee that the u.s. economy will continue to grow, but some members have concerns that inflation could persistently remain below their 2% target. janet yellen's said in a statement that an interest rate increase is unlikely before the april meeting. david cameron and angela merkel are speaking in london at a joint press conference both

condemning the terrorist attacks. cameron said the problems in relationships with europe can be solved. merkel said she wanted to see the u.k. remained part of a strong and successful europe and that she supports keeping greece and the eurozone. >> tesco will be updating the market on its turnaround strategy at 7:00 london time. bloomberg has been taking a look at the scale of the task ahead for tesco's cheat executive. -- chief executive. >> tesco became britain's biggest retailer in 1985 stop the next 17 years saw huge expansion, both at home and abroad. as well as grocery stores, the country launched a bank a network, and a record label. but in 2013, tesco's fortunes began to slide. annual profits were down for the first time in 20 years, and they

began to trim the fat of its global business. 2014 began badly. the company issued a profit warning. following another warning in july boss that clark is removed. he is replaced by dave lewis. tesco says it plans to slash its dividends by 75%, and shares plummet wiping 1.3 billion pounds off the company's value. then, the bombshell. tesco overstated profit by 250 million pounds. for executives are suspended. -- four executives are suspended. tesco issued a fourth profit warning, saying trading revenue will be half-a-billionaire is less than it predicted. >> wielding wringing the details of that strategy update just after the top of the hour at

7:00 london time in roughly 25 minutes. >> let's return to paris. the youngest suspect in the shooting has surrendered himself to police. hans nichols is on the ground in paris. hans what do we know so far? >> you know that the search continues for the two other suspects, a 34-year-old and a 32-year-old. that is what the focus is on. this is a city in search of those two men. also a search for answers. how into french nationals who by all the accounts grow up here become radicalized and militarized? right behind is the office that was the focus of this attack. what you see there and when you

look at the spread, clearly, it may indicate that they had some military training. some thousand french citizens are estimated to have fought or have gone to syria and iraq. that is another side of the question -- how did this happen? what is next? we know that the 32-year-old has been in and out of risen and was convicted -- and it out of prison. somewhere along the line authorities lost track of him. they will be a moment of silence at noon today. france was a long talked about -- francois hollande talked yesterday about the need for french society to persevere. >> today it is the entire republic that was attacked. the republic is the freedom of speech. the republic is the culture, the creation, the pluralism, democracy -- this was the assassin's target spot it is the

ideal of peace and justice that france carries out everywhere on an international scene. this message of peace and tolerance that we defend with our soldiers and fundamentalism. >> this is a city in morning. it is also a city that is asking itself certain questions about how it can be pluralistic if some of the morning's vigil's that will continue today -- it is very vibrant in the french press. we will continue to follow this and give you updates when we know more about those two process act and whether or not they are in custody. >> when we spoke to at the start of the show we got the feeling that the politicization was happening quickly from a tragic loss of life. that was represented across europe. what is the mood like -- i know you stepped into one or two of those.

give us a sense of what it is like in paris. >> there is a great deal of sadness, that can't be understated. there is also a resoluteness and a feeling that life is going to go on. there is also apprehension that this could be politicized in a way that may be unhealthy for the overall political debate, here in france and across germany. there were vigils in the southeast -- in the eastern part of the country. there is concern about an anti-islamic movement. listen to what marine le pen had to say. >> the objective of these barbaric acts is to terrorize, to paralyze, to subjugate, to censor. undoubtedly, after this act, this attack traumatize the entire nation. it is my responsibility to say

that this beer must be overcome, to say this attack must liberate our speech in the face of islamic fundamentalism. we must not stay quiet and we must speak up. we must not be frightened of words. the terrorist act committed in the name of radical islam is not an option. >> one note on that -- the 32-year-old suspect his lawyer claimed that he was a young man a draft -- man adrift. the question is how did he change from that to someone who may have committed horrendous acts just behind the here in paris. >> hands thank you -- hans, thank you. hans will be with us throughout the day. join the conversation on twitter. one of the key stories that all

three of us have been focusing on this morning is of course the parents tragedy. -- the paris tragedy. a case of islam against the western world -- but we are seeing at as an ongoing battle within the muslim world. that is one of the messages coming from the muslim community. >> there will be many cartoon relieve -- there have been many cartoons released the pen is mightier than the sword. banksy has a fan page with a wonderful cartoon. >> a nice image. >> 6:40 here in london.

who will take a short break. when we come back, car companies are keen to show their tech ware. and we will discuss another avenue for cybercrime. ♪

>> now we are starting to consider cars how we have been

making them -- it is exciting to see each year how are automobile sevcon. they are increasingly becoming connected. pandora is a big part of providing the right entertainment option. >> that is my caring of pandora media -- that is miek herring of pandora. wearable technology has been the buzz word in the consumer electronics show in las vegas. our next guest says this is the first year it a could deliver real benefits. >> good morning. >> is this the year where i am going to be wearing wearable technology? >> this is the year of the internet of many. everyone carries their smartphone. but increasingly, you are seeing

sensors and other communication devices built into all kinds of things, from clothing through bicycles, belts and cars. >> on the internet of things -- we move the on the cliche into something that delivers real things. >> yes. the reality is that it seems like health care applications that can monitor vulnerable patients or older people applications that can help understand where children are -- those kinds of things are clearly coming in addition. also, the home is going to be connected and everything in your home was going to be potentially connected and able to be managed remotely. >> julien, at a personal level

this could be one of those moments for industry and productivity change. what comes to mind is -- moving to a new paradigm. is at that moment? >> it is a challenge, because it is that moment in technological terms. the capability of this, the capability of batteries, of connectivity and all other things is now here. but we have to change the way we do things. just carrying on doing the same things is going to drown us. you saw it with e-mail. what we are looking for now is doing things differently using robotics and software agents as well as mechanical devices. >> at the show, we saw lots of

cars and car technology being demonstrated. do you see this as another area where we could be introducing new risks around cyber security? >> yes, the other side of all this connectivity and knowledge and presence is the security. you saw that big-time with the recent hack at sony. but in the era of the internet and a connected world, there is also personal risk that needs to be dealt with. you can imagine and next partner some other person that knows you very well and knows about all of the connectivity you have. the possibility of malicious activity is extreme. you leave your house unattended, he has the capability to turn everything on or off. >> isn't that just frightening? isn't that frightening us all into this paranoia?

>> there may be a business opportunity in that paranoia. >> they say just because you are paranoid doesn't mean they aren't out to get you. they are out to get you. they are out to get you on a daily basis. there is a huge amount of exposure and people have to change the way they do things and they have to be secure. >> coming back to robotics -- what threat to jobs does robotic s pose? >> there is a study that says up to 50% of all jobs will be affected by this kind of technology. that is not just the obvious factory type jobs. when you think of robot to think of those things with welding machines. it is not going to be that -- it will be insurance agent travel agents, and the obvious driverless cars. >> what you have to do is get

into the new jobs, and this is a great opportunity. it is true that opportunities affect jobs but it could create jobs. half of all new jobs created are coming from this kind of technology. >> thank you very much. this year is about the internet of mark. >> i'm going to get away and get sufficiently paranoid. thank you. we will be back after a short break. some of our favorite stories from bloomberg's digital effort, including the top trending has htag #jesuischarlie. ♪

>> time to look at our favorite stories from bloomberg's digital out. jim o'neill, a friend of the show has written a bloomberg piece. is a columnist for bloomberg. he wrote a piece saying three good reasons to be bullish on china. back a decade ago, he made assumptions that the bricks

would outperform. five years that he says china is only one of the war to have slightly surpasses expectations and the others have disappointed. many commentators, he says there are three reasons why you should be bullish on china. first, the collapse of crude oil prices will boost consumers. and yes, property prices have stalled -- china will avoid a serious credit crunch. the third reason is the subdued nature of inflation. this allows for more monetary policy going forward. jim o'neill is still the china bull. >> let's talk about technology. the consumer electronics show has been taking place in las vegas. another piece i found fascinating -- the biggest car show is now the consumer electronics show.

they say in the last five years the automotive technology has become ever more commodified. rather than trying to impress the auto industry with new concepts, they are trying to make themselves relevant to a broader technology business. you have seen self drive in-d ash infotainment. bloomberg is suggesting that there could be five years between when we see these concepts and driverless cars out there for real. even then, the legal system may not keep up. >> they could swivel the seat. >> of mobile living space more than a car is how bloomberg described it. until self driving technology

takes hold cars will continue to have an uneasy relationship with the gadget that has replaced them as major objects of consumer lust. that is really what the car industry is dealing with at the moment at a time with their business model is being threatened. they are also being challenged as examples of things to be covered. >> it is an expensive privilege to have a car in central london. >> there is a car sharing lot that you are not going to use. >> i suppose the sentiment of the day is in regards to the horrendous events that happened yesterday in paris. a point of come through in social media. 10,000 people gathered in berlin, in lis, in marseilles.

we have the hashtag #jesuisc harlie. we also had -- this shows you the power of social media. as you said, whether it is bank sy or a parity -- in a lot of these gatherings, they have pens in the air. >> anything in their pocket as an expression of self-expression. >> and speech. many of the commentators invoke this spirit -- where are we with this attack in terms of the journalist community, in terms of what cartoonists do. it took pitch at the pope, and

many pillars of power. >> we will be live in paris with more on that. we will take a break. ♪

>> manhunt in france. the brothers convicted of shooting 12 people in paris are still on the run. one other suspect has surrendered to police. >> we are live in paris to examine the implications for french politics and the global fight against terrorism. >> tesco's cheif executive -- chief executive dave lewis. we'll analyze his plan for restoring investor confidence.

hello, welcome to "countdown." >> a warm welcome. breaking news coming through from tesco. we have been waiting to get details of their most recent trading. we are hearing from them this morning, that tesco europe has returned to positive comparative sales growth. they say that grocery home shopping business is up by 12.9% for the past 19 weeks. they will not pay a final dividend for 2014 and 2015. because of all of the turmoil surrounding the business, the series of profit warnings we saw in 2014, the accounting scandal that prompted those, there had been suspicion about the change to the dividend policy from now. their comparative performance is -- we are waiting for details on the strategic change of direction we might got from this

business. we are getting the like to like sales number. uk comparative sales. excluding fuel. down by 4.2%. we are hearing they named a new uk chief executive officer, matt davies. >> we've had a little bit of breaking news. talk talk acquires blink box movies. this is in some way connected to the strategy. they have acquired blink box release from tesco. >> that is the like for like sales number, excluding fuel down by 4.2%. analysts have been looking for a

like to like sales drop down 4.5%> .we will look/ are. tesco to close 43. >>un profitable stores. >> blink box is to go to talk talk. progress across the business. home sales up nearly 13%. you're looking at clothing up 52%. their express format -- around a lot of cities, up 49%. >> here's the exact comparison with estimates. the uk excluding fuel down 4.4%. >> are you going to do mark steyn mns? -- m&s. marks & spencer has announced

third-quarter updates as well. and it is disappointing. the guidance was for non food to decline by 2%. we doubted -- we got a decline in the third quarter of 5.8%. that is general merchandise. that is much bigger than anticipated. food itself, like for like sales in the third quarter, up a mere .1%. because analyst we surveyed before the release of today statement expected food sales, which is the strongest part of m&s's portfolio, to rise by 1%. general merchandise and food have both disappointed. the reason why is the retailer in the last month has experienced delays in fulfilling online orders at the busiest time of the year. it's distribution center in central england, it struggled to

process a surge prompted by black friday weekend. that undermined attempts to restore online sales. experience periods of being unable to place orders online for the next day. standard orders for dresses took twice as long than normal. the delays to online orders adding to the company's digital woes. m&s saying that we design website introduced in february would weigh on sales for six months as customers re- registered accounts and learned how to navigate. so the disappointment has come from the distribution center. and m & s has said that. it says it was hit by the distribution center. international sales down by 5.8% as well. food margin guidance is

unchanged. general merchandise is unchanged. that general merchandise figure much weaker than expected. a 5.8% decline. the ceo, who has been there since may, 2010, like the chief executive of sainsbury and tesco . he has got a lot on his plate still. >> dave lewis, i knew there has been the accounting scandal not under his watch, but stock is down 44%. caroline hyde is outside one of tesco's stores in central london. trading profit -- to get the number for this year. note -- no dividends. they are selling blinkx box. christmas at tesco's. christmas was good. no final dividend. they are sticking to their full-year numbers. and matt davies is the new ceo at uk. what is your take? >> yeah, a flurry of news.

the takeaway is in terms of trading, better than expected. christmas brought some good cheer to dave lewis. known as drastic dave, because of the changes he made it unilev er. he joined tesco september last year. already making big changes. progress in sales. though in terms of investors they will be upset by the lack of dividends for next year. he's try to tackle those three key points. improving competitiveness. they unveiled price changes. a new chief executive for the uk unit, matt davies moving over from halford. they are also restructuring their office in. the headquarters as of now will be closed down. they will be moving their headquarters to garden --

they will also be shutting down on profitable stores. and takinga 300 million pound hit in terms of restructuring. there are some initial upfront costs but it should reap savings in the longer term. 250 million pounds per year in service of savings, restructuring overhead and management structure. all about simple vacation. this is what -- all about simple vacation. -- simplification. it is also about their balance sheet. you say they are selling blink box. they are analyzing as to whether they should be shutting the pension scheme. a laot they have not done -- many have thought they would settle assets of their asian unit so they would sell shares. that does not seem to be on the block yet. still, they are being circumspect, doing slowly but

surely, taking their moves. but tits balance sheet is crucial to tesco. standard & poor's said it could be close to getting a junk rating. it could lose is investor grade because it has a 3.4 billion pension deficit. profits are not going where they used to be. they've had three profit warnings last year. shoring up the balance sheet will come in the form of selling blink box. and selling the analytics behind the club card. many saying that perhaps wpp could be an investor in that business. could be worth 3 billion pounds. this is where they are looking at trying to strengthen their balance sheet. potentially closing down the pension scheme which is known to be generous across the board. their last key priority -- firstly competitiveness and secondly their balance sheet, thirdly regaining trust of the

consumer. they are reducing their prices. in t hose stores. which helped them over christmas. now it's about getting investor trust back, too. they are not going to like the customer dividend. >> certainly not. thanks for that round of. one or two other lines coming from dave ellewis. they are going to consolidate their head office locations. reducing the footprint across the u.k. they are hiring advisers to explore the options on the company they set up -- dunny humby. nothing is definite. tesco bank is up 3% and doing quite nicely. nothing on the bank and nothing on asia so far. >> let's see what investors make of this.

let's talk to the head and investments across bridge capital. good to see you. good morning. happy new year. a company that is invested in tesco in the past. you wrr short -- you were shorting tesco. >> i closed in december. my view was that the stores running to far. it seems we have got the response from the ceo. >> they call this significant this morning. >> i tit is better than expectations. that is the first positive. they will not pay the dividend. there are many people who buy the stock for income. that is a negative. this is been a long story because the first running surprise we had was in 2011. it seems like this christmas is on doing that.

we have to wait and see. my main concern is if they are not going for the -- >> which they have not announced. would you buy the stock? we're at 1.82 today. what's going to make you buy tesco? >> on balance, i would say i am more in the buyer camp than the summer camp. there may be a small -- to get out of the stock, the sellout. if you're taking a medium-term view of six months to 12 months the management is working hard to put that together. the main thing was you saw that tesco started alienating the suppliers, the community. so there is a lot of -- on the w hole i would now start averaging out over the next few months of a quarter if i was going to buy the stock. >> thank you very much.

he stays with us. we will have more from him later on in the program. >> the first 12 minutes of our 7:00 hour on "countdown." france will observe a national day of mourning in the aftermath on the attack of the satirical magazine. hans nichols is in paris with the latest on the search for the suspects. good morning. what do we know? >> good morning. we know from the french prime minister that this is a country that still potentially fears another terrorist attack from these two individuals. he was speaking on french radio. what we have a city and country people that is both en garde and on the hunt for the two remaining suspects. behind me, a crime scene with an average french street that was turned into an avenue of terror.

along with the search for the suspects, we have an internal conversation in france about what it means to be muslim in france. what the role of islam is. behind me, an individual placed the french flag. you're seeing vigils crop up. . candlelit vigils. people holding pencils to show their solidarity with those slain at the magazine. we are starting to get a little bit of a clear picture of the two brothers that are the lead suspects. the 32 euros brother, the younger brother. he was in and out and present -- the 32 year old brother. he was involved in sending jihadists to iraq. how did these two french born brothers become radicalized? these are questions authorities are asking. we had a cabinet meeting with president françois hollande in 20 minutes. he also meet with president nicolas sarkozy later today. at noon there will be a moment

of silence as the search continues. >> thank you. we will speak to you later. hans nichols there in paris. >> you can join in the conversation on twitter with us. talk to us about what has been happening in paris and talk to us about what has been happening at the fed last night or in the tesco story we are covering this morning. at 7:15 in lodon. -- in london. that is where you will find us on twitter. >> coming up if inflation is now a reality, in the u k inflation expectations at the lowest level in two years. so will the bank of england really hike rates? we will discuss that with a former boe member. andrew sentance later in the hour. ♪

>> welcome back. we back with the head of investment across bridge capital -- at across bridge capital. what we saw in the shape of

deflation now a reality. what he think this means for quantitative easing? will it happen in january? >> the core numbers increase if you take the food numbers out. we look at the headline number. the cost of the debt. now i'm far more contrary that we will see any q.e. announcement on the 22nd of january. what remains to be seen, what are they going to buy in what size and whether greece government bonds will be part of the announcement? ecb should avoid fragmenting the market because what we have seen is that if they were to buy only aaa bonds, limiting to holland germany, austria, and finland it would put far more pressure on the german government. yes, we have a negative deposit rate, but we might have full

coverage -- that may have its own implications of asset bubbles. >> i love your opening line. the fx need to wake up to q.e. in the eurozone. if it is not woken up the euro so far, is q.e. price to the currency markets? for would you agree that parity is on the way. >> if you see a move in the fx market, then the dollar has strengthened across the currency, not just euro. so i do agree that you will see euro weakness when q.e. is announced. the differential in favor of dollars is much higher than other currencies. >> thank you so much for joining us this morning. >> 7:20. ukraine has reinforced its frontlines in the east of the country peace talks edge forward. .

we will bring you an exclusive interview with ukraine's finance minister next. ♪

>> some members of ukraine's government are in berlin for talks today. ukraine's prime minister will meet angela merkel to discuss the countries conflict with russia and how germany can help ukraine. ryan chilcote joins us.

in terms of this crisis, it never ceases to grab attention. she left london last night to go straight back for this talks. >> ukraine is in dire need of all kinds of assistance. one of the things that will be discussed his financial assistance. george soros gave an interview where he said the ukraine russia conflict is a bigger threat to the eu's economy and to the eu's survival than greece.e he said the west was making a mistake by not following through on sanctions against russia with financial support for ukraine. he says kiev needs $50 billion of assistance in the first quarter. the ukrainian prime minister is in berlin. the ukrainian finance minister is in berlin. she's brand-new to the job. we asked her about it. >> we are indeed and a critical

financial situation. that means going from an external payments perspective, but also balance of payments. our national bank reserves. there are many different estimates. we will talk to the imf this coming week. we are looking to all of her international partners from the imf to the world bank to the eu, united states, canada australia, japan and others to support us during a very difficult time. >> i'm not sure if you notice the american accident that that is one of the extraordinary things about ukraine's finance minister. she was born in the united states. they had to change the constitution to allow a u.s. citizen to be the country's finance minister. she was an investment banker. part of a brand-new team of reformers within this government. many of them very young, w ealthy. the idea is they will not be corrupted like their predecessors.

they are the kind of technocrats the country needs to pull off an impossible task. this is europe's worst performing economy. it's i n recession and has been for a long while. they need a miracle. >> what else could be on the table for these meetings? >> there is the security aspect as well as her. so, the ukrainians and the pro-russian rebels in the east of the country are still shooting. there is a choose, and that has reduced violence, but the violence continues -- there is sa truce but the violence continues. there are talks that are supposed to happen next week. >> thanks for that roundup. >> coming up, as france begins a day of mourning for the 12 victims and yesterday shooting, the manhunt in france for two suspects continues. we will bring you the latest live from paris when we return. you are looking at live pictures. 8:26 in paris.

more from the french capital when we return. ♪

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i'm thinking roast beef. want to get lunch? get the fastest wifi hotspots and more coverage on the go than any other provider. xfinity, the future of awesome. >> 7:30 in london. let's see how the currency markets are responding to the fact. the dollar is stronger. the federal reserve is intimating that there could be a rate hike on the card this year. we had a conversation with morgan stanley. not in this year. the first quarter of 2016. the dollar rally has quite a ways to go on a trade weighted

basis. standard chartered said this rally has less. it is a bit like 1995 to 2001. a decline in oil and a follow commodity prices and a small crisis in russia led to a powerful dollar rally. dollar on the. march euro makes a new nine year low. it was 1.1808. we bounced off that level. this was the past five days. ing, the most accurate we have polled. they got it right last year. down 13%. morgan stanley here saying by the dollar, sell the euro. parity is on the way. parity is on the way by the end of 2016. that is a dollar for every euro. the median estimate is 1.16.

bank of new zealand saythe an depreciating dollar is the cornerstone of their policy. >> holland'e cabinet is arriving for an emergency meeting. hans nichols is on the ground in paris with the latest on the search for the suspects. good morning. what is the latest? >> good. morning the latest comes from the prime minister. in an interview he says there is a legitimate fear that there could be another round of attacks. to help put all of this in context, i am joined by our paris correspondent. caroline you were here all day yesterday. described for us how this attack a bit different than previous attacks in paris or france. >> france has been hit by a wave of terrorist attacks over the past two decades.

there was a big wave in the 1980's and the 1990's. the most famous one was an attack against troops stationed in 1995 that killed 8. that was it sure but it to algerian extremists. then of course, a couple of years ago in 2012 you remember the dramatic events in toulouse. they attacked a jewish -- two policemen and three children. of course the question here now that we have the identity of the suspects, is how they are linked to isis to the islamic state. when the scene was filmed by amateur video yesterday, just behind us, one of the gun men left the headquarters by shouting in arabic god is great. that is the same sentence we heard just before christmas when

another extremist drove into a crowd at a market and killed one person. >> there is a concern that this is just the beginning and there is more to come. >> there is a concern. the prime minister just now was saying on the radio that france still feels more terrorist attacks -- still fears more terrorist attacks. one of the most important challenges is not to mix the muslim community in france, the biggest in europe. you have 5 million muslim people living in france. some of them have been here for a second or third generation. some are very well integrated. the challenge going forward is to going to be to not mix these terrorist and extremist, with the peaceful muslim community. >> tell us about the magazine. was it a must read?

was it is important part of the paris cultural scene? >> charlie habdo was a weekly newspaper. they have had a controversial history of publishing controversial cartoons. so back in 2011 this same headquarters behind us was bombed after they published some controversial pictures of the prophet mohammed. but they were not only targeted islam. they were also making cartoons against the pope against the president. it was considered a freedom of speech wher cartoons could express themselvese. in fact fou cartoonists died yesterday in the attack. >> did politicians fear the magazine? or was thought to be more provocative? >> in 2012, they published a

whole issue with the prophet mohammed as a guest editor. at tht timee time, the french government warned them they should be careful. they also publish figures of -- published pictures of the prophet mohammed naked. >> with that, we thank caroline and send it back to london. >> hans nichols, our international correspondent in paris joined by caroline. >> breaking news via france info. shots fired at the port in the south of paris. that seems like the latest we are getting on that french story. let's talk to our next guest charles lit field who joins us

from eurasia group. thanks very much for coming in. what do we expect the implications of what we saw in paris to be from either a domestic or foreign policy perspective in france? >> i think there will be very few policy implications. many implications for national politics. for the next two days, you will see similar national morning to what you saw yesterday. they are trying to show united front defending french values that were attacked yesterday. in terms of policy, i cannot see any change coming. french immigration policy. their interventions in syria and iraq. i cannot see that changing. >> longer-term, the political ramifications inside france and outside fronts a, for the popularity of the national front when marie le pens is ahead in the presidential polls for 2017.

for other countries like the u.k., as we approach an election? >> le pens has been very discreet over the past 24 hours. she has turned that party into a subtle political machine. she was careful not to intervene straight away. but i think when the shock has subsided, she will start turning up on television and saying that she saw this threat before everyone else. that her party is the only one capable of defending france against this type of threat. and she might see her popularity, which is already at record high levels, grow a bit. but that is not necessarily what will be the case. i think, if she is not subtle enough, if people see this as a very simple political recuperation, it could backfire. i also see president hollande benefiting from this. he tends to do very well in this sort of national -- moments of national importance, national

morning. he tends to have the right words, what suits the french people. and it could also help them to an extent. >> watching the global leaders talk about their allegiance with france yesterday. obama talking about one of their oldest allies and strongest allies in europe. merkel and camera on downing street communicating with hollande. they always had the war on terror as a banner headline to rally behind. these are isolated incidences. does this galvanize global politics in terms of its position with islam? >> uyeyes. i think the west was already ready or at least preparing for this kind of attack. it was a question of when. this is what political letters have been warning them of. every day they were looking into new plans of terrorist attacks, trying to dismantle as much as they could, but this one got through the net.

there is a great deal of sympathy from foreign leaders because they face exactly the same thing. >> and sympathy with european leaders in particular because of the increased level of threat the higher level of threat then perhaps returning people from syria and from iraq. the threat they pose on the streets in europe. >> absolutely. it is a european leaders worst nightmare that these terrorists were french citizens. they spoken on accented french. we know the alleged purpose traders, we know they are french citizens. they had been radicalized on the internet by trips to iraq and syria. so it is very difficult for the intelligence agencies that these leaders are trusted to do their job and to find everyone. >> we are just hearing that a french police officer was shot today.

tha officer is being treatedt. the french police officer was shot south of paris, the entrance point to the south of paris. developing news. a french police officer has been shot. we will bring you more details when we have it. >> thank you very much for joining us. 7:41 in london. coming up the tiger, the fox and the phoenix. these are the codenames coined by regulators for beleaguered banks at the height of the financial crisis. we'll talk to a man who was the bank of england at the time. this man was in the room when these words were used. he is a senior economic adviser now, of course. >> should the fed worry about low inflation? we will see what might bart chart says after the break. phoenix, tiger?

how about that? ♪

>> time for today's bart chart. should the fed be worried about low-inflation? janet yellen says that the inflation should move up as

employment strengthens. worries were more widespread as suggested by the statement by the fomc. now, we know that the fed's preferred inflation gauge, personal consumption- expenditures price index has remained below target for 31 straight months. 1.2%. core prices serving of food and energy at 1.4%. take a look at this chart. policymakers are struggling to explain a drop in expectations for future inflation. this is a measure of inflation expectations five years from now. it is called the five-year forward break even inflation rate. look at the bottom right-hand corner of your screen. it is currently at 1.9%, the lowest reading in 14 years. the fed did discussion inflation

expectations according to the minutes without any firm conclusionss except that the issue required more time and more analysis. i will let you draw your conclusions from that chart. now, back to the eurozone. >> deflation dangers in the eurozone are a fact now. bank of finland, and when will the bank hiked rates? one man knows who thing or two about the nuances of policymakers is andrew sentance. a former bank of england policy member. good morning. mark's just taken us through the statistical story in the u.s. in the united kingdom, we have declining inflation numbers. we have got expectations on inflation. plummeting.

long-term expectations are plummeting. will the bank of england look through those and crackdown and hike? >> we've should see low headline inflation as a good thing. and we have had a long period w here household income squeezed wage earners. it is holding back economies like the u.k. in the u.s. and europe. we will see a period where that squeezes easing and that should be before consumer growth. we need to look at longer-term inflation expectations, but when i look at the chart we've seen on the u.s., it is only just coming down to around about the u.s. bank's target. we have been through a time in the u.k. were inflation targets have been -- >> i think we should not overreact. thirty-year breaking is the benchmark. 30 year break even. a two year low.

a very far out, distant 30 years. >> if you take us figures at face value, the last time i looked at them, they did still tend to suggest that inflation expectations are only above the target. it is not as if they are coming down into january inflation territory. -- into genuine inflation territory. i think it could get close to zero in the early months of this year. it is only 1%. we have seen in the euro zone figures how much it has fallen there, with the oil price coming down. we have inflationary pressure coming out of food prices. the price wars are happening in the supermarket. i think we should regard that as welcome relief. don't forget it spikes at 5% in

the u.k. twice. >> are you saying the bank of england, the mpc, should ignore inflation at 1%, even at zero which you are suggesting he could head to wars and still raise rates in 2015? >> i am never saying they should ignore inflation but look through the volatility. i think they have done in the past, or i did when i was on the committee, in 2008, inflation was up over 5%. yet we cut interest rates dramatically. i think we are in a mirror image situation of that but not quite so dramatic. inflation in the short term is going to be low, -- >> will they take the plunge this year? >> i think they should think about raising before the general

election. not this month. >> is that very likely politically? is it a hard sell when inflation numbers are not screaming? >> i think if we wait, then we are not going to have the ability to raise interest rates gradually. this is the point. there are two inconsistent views being put across. one is they want to raise rates gradually, which i agree with. the other is that somehow it is not the right time. if you wait until all of the indicators are signaling red, this is the time interest rates need to be higher, you are behind the curve. that is the worrying scenario of waiting and waiting. >> stay there. we will come back to you. lots to chat about. more on the u.s. greek elections. andrew sentance will stay with us. ♪

>> and we are back with price waterhouse cooper senior economic adviser andrew sentance . let's turn our attention to what is happening over the channel. confirmation that the eurozone is in deflation. what worries youabout the eurozone situation and how with the-- is the ecb likely to react? >> what worries me most is you

have the second and third largest countries, france, and italy seem to be underperforming for longer term reasons. you see this in terms of what is happening in investments in those countries. investments falling in france and italy. if you live that the better performing countries in europe outside the eurozone, the u.k. and poland are the strongest performing major economies. we have got quite strong economic -- investment growth. some of the medium term problems some economies have that businesses do not want to invest. and that is because of more structural problems and thus economies, which mean they are not attractive. that we can thing about short-term things to be done to help the economy spirit i think we have got the euro weakening against the dollar. that is the most intricate thing that may help in the short-term term. and that is being encouraged by the talk about q.e. but i think the euro area is

still going to underperform because some of these large economies have structural problems. >> on q.e. how does the ecb respond to greece. does it by greek bonds her way to see what happens with the election? >> i have seen all sorts of technical discussions on how that might be dealt with within the ecb. client not sure that is the central issue. -- i'm not sure that is the central issue. i think the bigger issue with greece is greece still going to be in the euro area? that will be the trigger for other countries. >> thank you. we do not ask you about the fox and the phoenix.

you did not come up with those names? >> certainly not. >> that will do it for "countdown." "on the move" is up next. we will focus on the retail sector and still be live in paris. ♪ .

>> good morning and welcome to "on the move." i am jonathan ferro. let's bring you the morning brief. tesco plans to shut down 43 unprofitable stores. the ceo said the company is facing the reality of the situation. the fed affect. minutes after the meeting, some of the concerns about an early rate hike. france begins a day off morning after yesterday's deadly attacks. we are live in paris.

we will strike out to our national correspondent -- international correspondent, hans nichols. give us the latest. >> two french police have been shot at at the south of paris. they do not know if there's a connection between the shootings and the shooting here yesterday on the french satirical magazine. the suspect initially fled by sub. he has been apprehended. the french prime minister speaking to french radio and set several individuals are being held in custody. on top of that, the country is on alert and the goal is to prevent another attack and find the 2 suspects who remain at large. >> thank you and will be on top of the story and bring you the latest news.