>> manhunts in france. 40 hours after the attack to the suspects are still at large. we will be live in paris. >> china's losing streak. the crisis slump for a record 34th month, bolstering the case of monetary easing. >> dave lewis faces another blow to his turnaround strategy, as moody's cuts the supermarket giant below investment grade.

welcome to "countdown." >> the other major story of the day we have been following -- the u.s. jobs figure. what will it mean for the outlook for interest rate hikes in the world apostle are just economy? >> but first let's get back to our top story. the hunt for the two suspects in the french massacre is intensifying. >> antiterrorist police have sealed off a group of villages northeast of paris. is a densely wooded area. >> the brothers have been at largee for more than 43 hours. police believe the brothers may be in possession of a rocket launcher and other weapons. >> we will be live in paris a little later to get an update

from hans nichols on the ground. >> let's turn our attention to china where producer prices fell the most in over two years due to sluggish demand and low commodity prices. let's go to yvonne man. hello yuvonne. >> that deepening slump we are seeing ppi numbers are down .3%, the most in two years. lower commodity prices extending that ppi decline for a record 34 months. we are seeing the tumbling oil prices, tumbling metal prices really adding deflationary pressures worldwide as china's export prices drop. we did speak with thom warlick

earlier. he said there could be good and bad news. the falling oil prices are lower in cost for the industrial sector that actually is a good thing for profitability. but overall, it could be a negative sign in the factory sector that there is overcapacity. >> yvonne, china inflation is showing signs of stabilization in december. what is behind that? >> we haven't seen ppi reflected in the numbers yet. the fact that it rose 1.5% in december, matching median estimates there are some things behind this -- there is a lower base effects, meaning inflation was lower. so you had a lower base to compare.

again food prices at this time of year are very volatile especially with the weather. and prices are coming up. if you take a look at the bigger picture, that is actually falling from 1% in november. i could be a worrying sign that the chinese consumer demand remains weak and suggests that ppi could be on the right course in terms of more easing in the year to come, following up on that november interest rate cut lowering reserve requirements. >> there you go. thank you for joining us. yvonne man there in hong kong. >> that you the story in paris -- let's get back to the story in paris. hans nichols is there. good morning. what have we learned overnight? >> good morning. overnight we have learned that the older brother receives

terrorist training from al qaeda affiliate in yemen. he received some light arms training it was there for several months. it may explain the accuracy with which those bullets were distributed. both u.s. and french officials were aware that the older brother had been to yemen for training and both have been on the u.s. no-fly list, according to the "new york times." we have learned more about the younger brother who had that terrorists conviction in 2005, trying to follow jihadists to erect. -- to iraq. the tissue that has emerged is that he is a hapless young man searching for a role. overnight, his former lawyer spoke urging his client to turn himself in. >> i would have only one piece of advice to give.

it would be to hand himself over to the police authorities so that all light can be shed on this case. it turns out he did not commit the act he is accused of, he could bring elements which could exonerate himself. >> this is a city and country still very much on alert, still morning. -- still mourning. there are still candles lit here overnight and bouquets have been highly not -- has been piling up. the area to the northwest west of paris is heavily wooded, and french authorities have contacted neighboring countries to make sure borders are secure. that is the latest from the north. we will have more through the morning. >> thank you. hans nichols, reporting live in paris.

>> join the conversation with us on twitter. #jesuischarlie and #parisshooting. we are still looking at those stories on bloomberg. join myself and anna and manus. >> coming up, high price of silence. more on honda's record fine. and tesco is cut. more on what it means for the company's turnaround plan. ♪

>> on to today's company news. tesco plans to raise seven and a half alien euros to strengthen its capital. will also cut its dividends. it has offered investors. the decision to seek funds comes after santander's investors concerns that buffers aren't as strong as competitors'. has agreed to pay a record $70 million in fines for

underreporting injuries and deaths linked to potential defects. the automaker failed to tell the u.s. government about more than 1700 errors. it says the submissions were due to inadvertent data entry or computer programming errors. starbucks chief operating officer is going on extended leave. the company says it was a personal decision and order to spend more time with his family. starbucks's second-in-command helped plant a similar break in 2008 was persuaded to stay by the ceo. apple has that back at criticisms were manufacturing devices overseas. the iphone maker says it has created over one million jobs at home. 2/3 of which result from the burgeoning app market.

apple has worked to boost u.s. manufacturing, including a $100 million investment to begin mac assembly in texas. >> the relief and tesco may prove short-lived. it was up a record 15% after they revealed improved trading and a new strategy. one of the writing companies cut it. we have more with our european business correspondent, caroline hyde. as there always been a concern -- has there always been a concern? >> all the rating agencies have warned they were worried about tesco's overall debt levels. it seems that even though we are starting to see -- it wasn't enough to alleviate fears. the cfo got up in front of those meetings, trying to show the moves they were making were improving the balance sheet. not enough.

moody's cut the rating of tesco to junk. it is now rated ba1, late last night. interestingly, the debt market may have preempted this. we saw a rise ever so slightly on tesco's bonds yesterday amid all the euphoria. its competitiveness in the market -- this is what really gave euphoria to the stock market. soaking in that price market means that the operating margins and profitability are under stressed. profits are going to be improved. and it will take time for the balance sheet improvement to work. all the things -- cutting the final dividends, they also plan to sell the analytics behind the

club cards. but it will not happen overnight and there is risk. these are the concerns outlined by moody's. >> what does it mean when ahead of yesterday's strategy may be tesco needs to announce the rights issue. is that now more likely given the boot's announcement? -- given the movies announcement. >> what was interesting in a press conference with dave lewis, tesco went to great lengths to tell you that it has no liquidity problems. there will be no unnecessary selling. we might start to see some other assets be put on the block. they said everything was under consideration. we could see tesco bank of the sale - - bank up for sale.

deadly was kept on repeating that there will be no sale and that liquidity is robust. there was a 5 billion pound credit line earlier last year. that means they are covered, but clearly there will be concerned. i think that 50% rally could come up today. >> thank you, caroline. >> let's turn our attention to china. factory gate prices have a record stretch of declines with the sharpest drop in two years in december. for analysis, let's welcome beecroft. let's talk about what's happening in china. 32 months, a record stretch of

declines. this matters because china has been such a big exporter it goes global. >> this is a vital part of what will be this year plus main story, deflation. china isn't going to be immune to that end it is going to be exporting deflation to the rest of the world. other asian companies have been benefiting with freely floating exchange rates. one suspects china will have to allow the same to happen. there may be shrinks of protests from the state and from japan, but that will be somewhat rich on japan's part. >> how will they do that? the currency -- it will weaken by the halfway point.

>> we saw a high of 6.25 in may. i think we could easily see 6.35 6.40 through monetary policy. cuts will be required anyway to keep the chinese economy on track. that will be this year's story, the currency wars. >> on inflation -- or deflation -- let's move the conversation to the united states. they released the payroll report. the number of participants highlighted their concerns over low inflation and how it could stay for a lengthy. before the 2% target. -- for al engthy period before the 2% target. >> if inflation drops to 1% by

the middle of the year, it is extremely difficult to raise rates. there were comments about looking through development, with reasonable confidence that we could get back to the 2% target in a reasonable period. i think it will be quite difficult to raise rates. it is interesting, the way the jobs figures have been demoted as the key figure of the month. >> everybody has their moment in the sun. [laughter] >> i love the euphemism. basically ignoring it. how it the markets going to react to this jobs report number, given what you have said? demoted in the face of

inflation? >> there may be a trading opportunity, and asymmetric reaction. it could amplify concerns about inflation and a weakening economy. is strong figure will be shrugged off because inflation is what counts. there is a chance of an asymmetric reaction. >> there is -- they rounded up. negative government debt in europe is almost a quarter of all the debt. it is a whole new asset class. the whole inflation story -- tied together force the u.s. story, the china story. is this 2015? >> this is the story of 2015. how central banks react. the kickoff on the 22nd with the

ecb -- ultimately whether this spooks markets to the extent that we see real selloffs. then, of course, we are into a further round of quantitative easing. >> lots of people told us last year -- now it seems they are pulling back a little bat, investors are increasingly questioning just how confident that that is going to be to increase rates in this globally weak inflation environment. >> it will be a real test of central bankers resolve. there is a concern in the fed about this pricing of assets. the fact that this week ar -- this could lead to a resurgence in leverage loans and a real

concern -- they know in their heart of hearts that we ought to do something to withdraw liquidity. >> you may even see more qe. >> they must be having an internal mental battle between the principles and the urge to maintain -- >> the economy. and had 31 of its major trading peers last year. it currencies are rising. what i picture trading opportunities that present themselves this year against the dollar? >> if you are in the camp that doom and gloom may dominate if people become very concerned about deflation, the implications are the same. if you are worried about oil

prices leading to a scare in the energy bond markets leading to some kind of credit crisis, then buy the yen. that is the other safe haven in the world. but if you do that, be quick on your feet. [laughter] >> thank you very much. more from him when we return. ♪

>> still lives us, nick beecroft. let's talk about the eurozone. i was mentioning to you that we have this new asset class which is negative government yields on debt. fear, or concerned that greece could exit -- what is the position? to me a position. -- give me a position. >> i would say maybe a 20% chance. over the next three years. >> i love the way he expresses things in percentages. another one in here said it was nonsense. >> 20%, that's not very valid.

>> repeating the heirs of 2010 and 2011 win in the anglo-saxon countries we failed to realize that it is all politics. i do think the width of compromise the unpleasant whiff of compromises in the air. merkel was incredibly accommodating in london this week towards greece, conciliatory, some pallets of comments. and he is attacking a little less extreme. >> are we a number of weeks away? what are they going to unveil? >> full-blown qe possibly not with all the detail as they wrangle with the bank. >> good. >> thank you very much. nick beecroft. >> coming up, the manhunt in france enters its third day.

we go live to paris with an interview with armor chairman of france's business confederation on how the attacks are affecting business. stay with "countdown." ♪

>> 6:30 in london. how is the world looking as we wait for the biggest data point? the jobs report read the dollar -- jobs report. the dollar's march up the hill has been halted. down 0.2%. breaking rates in the u.s. could hinder growth. that is one strong voice.

reflecting some of the views on the open market committee. jobs report specs to show a gain above 200,000 for the 11th month. there in mind the international monetary monk -- market, the future reading -- the biggest leverage is being short euro-dollar. the euro is higher, dollar is lower. have a look at the canadian dollar, strengthening ever so slightly as the dollar dips. barely one week in and -- traded through the 117 level. toronto dominion -- getting ready to revise the loony

targets. rbc says, we have paste through our levels for 2015. 2016 target at 122. looks as if it could be met. it looks as if the dollar run is on a pause. >> these are the bloomberg top headlines. these suspects in the massacre -- the hunt for them has intensified. police have sealed off a group of villages northeast of paris. the suspects have been at large for 43 hours. police believe they may be in position of a rocket launcher. andrew parker is warning al qaeda is planning a similar

attack. the indonesian military will attempt to raise the tale of the crashed error asia jet. -- crashed errorair asia jet. divers checking on a possible ping from the vehicle. a total of 48 bodies have been recovered. china's producer price index fell from a year earlier on falling oil prices. that is the sharpest drop into lang years. -- into paying years. -- ionn two years.

tesco's chief executive facing a setback to his turnaround strategy. they have cut the supermarket to below investment grade. this will probably increase pressure to raise capital quickly. >> let's return to france. provisions -- parisians -- determined to carry on with their lives and businesses after the shooting. let's get to hans nichols's come alive in paris. -- hans nichols, live in paris. >> is that determination of the french community we want to get at. thank you for joining us. we had a remarkable moment, the moment of silence. tell us how it is being perceived in the business

community. >> most of the companies observed this moment of silence huge huge companies. -- moment of a silence. huge's companies. in many companies, ceos delivered a speech. to remember to the employees that we are united. we feel this is a big shock for all and each of us. we share the same feeling of that something very important just happened. the business community is like the whole french community in the situation. >> france is divided politically. is this going to bring everyone together? >> maybe. this is very what important what happens.

it reminds to each of us what france means. what france stands for. we are in a shock because the terror attack was an attack to freedom freedom of speech freedom of thinking. suddenly we remember we are very attached to these core values of our country. it may have an impact on political situations. it has a more important impact on the image we have of ourselves. and maybe also the image we offer to the rest of the world. this past month, maybe the past year, many people were wondering what is happening to french. even french people were asking themselves this question.

with this horrific situation, we realized we have the same values. we are a solid community. we just want to show to the rest of the world we are able to stand up. >> will this affect business confidence? >> it might affect business. i suppose the retail industry -- and the tourist industry will -- maybe also the building industry but nothing long-term.

>> nothing long-term. >> i don't think so. the way reacted show we want to go on and maybe with more strength than before. it is awful to say that but it might sound like a wake-up for us. >> are you confidence in the desk confident in the police sponsor far? does it give you confidence in the french state? >> i am personally competent in the police and the french ability to manage the situation. i have to say that personally i knew some of the cartoonists who were killed. were killed. i also knew one of the police officer's who was in charge of protection. those guys are doing a great job

to protect the french people in this situation. >> one final question on the politics of it. we saw the call for a reinstatement of the death penalty. but what happened here -- will will it give more strength to the right-wing parties? >> i'm not sure. you have to remember that it was said those muslims, french muslims who make the prayer in the street -- they do that like an occupation. it was insane to say that. the reaction the french had, french people realized you are

catholic, you muslim and jew, protestant. we do not care. we are all french. we do not want to see more discrimination according to your origin or religion. the way marine le pen has put -- on the contrary, there will be a reaction to that way of doing politics. >> thank you very much for your time to read i apologize for your loss, you knew people personally. we will send it back to london with a view of the resoluteness of the french people. >> thank you very much. hans nichols's live in paris. >> joining us after the break led zeppelin's former sound engineer.

they are all on his client list. he is one of my heroes. ♪

>> the next company we were --

are talking to was founded by led zeppelin's former sound engineer. they are rating -- writing -- riding the wave of disruptive technology. 25 years ago they were founded. a lot has changed since then. how have you evolved? have you involved with the industry, or has it even old with the -- of with you? >> the company started out making studio consuls and got a great reputation for sound quality. that is unusual, to have a consul that size. you can have what used to cost one million pounds in your bedroom for a couple hundred pounds. >> you recently ipo the business.

this is a way for the guy who founded the business to reduce his holdings. what else does it enable you to do now that you have the cash? >> phil, he is still a two thirds investor. we did not raise money to buy companies. we have always been self-funded. we have money to do what we need to do. if there was an acquisition or something that makes sense access to the markets is easier. >> i hopped onto your website. singer songwriters, producer dj to banging young guys singing together. -- two young guys singing together. i can only presume that is transformational. >> that is right. people not long ago were listening to vinyl and the neighbors into to cd -- and then they listened to cds.

now people are listening to spotify or music on youtube. youtube is 40% music. it is amazing to 40% of the videos are about music. we think that is a big change. we are making to look -- create products for that. >> in his era when people are listening to stream the music, does that mean recording artists put less of a premium on the quality of the sound? i'm sure you will tom reed at is not the case. do you need to have such a high quality sound when people are not forking out to buy the stuff? >> we used to worry about that as mp3s came along. at the production level, the customers are musicians. they care about the sound quality and they wanted to sound the best it can. lately, there seems to be a reverse in what people are listening to.

final is coming back. people are buying more expensive systems that are higher quality, higher bandwidth standards. the tide has reversed which makes it more important to record in high quality. finally, there is the archiving. who is what people are going to be listened to in -- listening to in 10 or 20 years. >> how easy is it to record music now? what it in perspective. -- eight in perspective. -- puty it in perspective. >> you can buy a million pound studio for 200 pounds. but where is the engineer who helps you record? one of the things that we want to do is make music easier to make. that is because you do not have an engineer.

technology is very difficult for you decisions who just want to plate and sing. >> can i record a decent sounding album on your ipad? using anna's voice. how good is the quality? >> it is outstanding at the price point. >> you have some wonderful anecdotes. i hear the stories from people who work at various record companies, various production facilities. give us the flavor of who has what. >> you talked about how things are changing on the production side. people are using tablets and even smartphones to record music. we have a product we sent a copy to pete townsend, an old

customer of ours. we got an answer and he said, thanks but i gave it to my brother. then we read further. he said, that is because i already have four. the townsend is using a tablet at least to start thinking about ideas. >> thank you. great to hear the story. dave joining us. >> we will be back after the break. >> some of our favorite stories from bloomberg digital. ♪

>> welcome back to countdown. there is a huge event going on in london. it is the boat show. we had unique access. >> when you see them in the show, it is very impressive. behind that, there is a supply

chain. even though you buy this for 5 million pounds, you will still need equipment. the managing director -- they will start off, often launched into the water. sailed around to the thames. they have to be lifted out using 8000 pound crane -- once they are in, there are four smaller cranes that lift them off. we have six world leading rands. all launching brand-new products. it is very strong from the far east, from china and russia. wes africa and south america as well.

the situation in russia and ukraine does have an effect. the manufacturers are monitoring that. a lot of the time, they see that money is still in the country. the buyers are coming to london. >> time for a look at our favorite stories on bloomberg's digital. i will kick it off with mine. i like the story about markets. a wall street's guide to surviving the emerging market despair. they reminded me that currencies are trading at 12 year lows. i love what they say a couple of big -- cobbled together some recommendations. invest in brazilian interest rate swaps. that is the first one. 12.5% to review never going to make anymore hypes there. sell the african brand.

and the hungry arian -- and hungarian currency and buy developing nations. turkey taiwan. the nations with the most to gain from the plunge and oil. >> you can see where the electronic show has been taking place in las vegas. here are six things you wish had stayed in the past. sony back with a walkman. it is essentially just a device that focuses on high-quality audio. a lot of money, 1200 pounds. samsung has announced a portable device, a flash drive. with the cloud do we need flash drives? vinyl is bad. a stand at the consumer electronics show.

that is big. and polaroid is back. the social medic resembles an old lord film camera. >> i have an emerging market story. jim o'neill, the man famous for coining the phrase brics. we have been asking about his predictions for the bric regions. he said brazil and russia may be expiring. >> he says, you might be tended to call it i see. -- ic. 2019. he is pointing to the strength of that comes from the ics in b rics.

>> you came out with the dance music line earlier. >> we will be back. more from paris when we return. ♪

>> you are up alerts. two subjects are still at large. >> china possibly losing streak. prices slumped for a record month -- 34th month in a row. >> and tesco's chief executive faces another blow as moody cuts the supermarket giant to below investment grade.

welcome to countdown. >> i am manus cranny. another story we will be following. the u.s. jobs figure. what will it mean for the global growth story? and interest rates in the u.s. >> let's go back to the top story, the hunt for the two suspects in the massacre in paris is intensifying. >> police have sealed off a group of villages north of paris. it is a densely wooded area larger than paris itself. >> the suspects have been at large for more than 44 hours in which one" people were killed. police believe they may be in possession of a rocket launcher and other weapons. >> the head of the security service is warning that al

qaeda is planning a similar attack in britain. paris still on high alert. hans, what have we learned about the manhunt underway? >> the manhunt is underway. they have the area cordoned off and have support from neighboring countries as well making sure borders are secure. we learned from an official that the older brother had received training from an al qaeda affiliate in yemen. we do not know the exact time he was there. we believe he was there for a couple of months. >> looks as if we have a problem with the camera and paris. we will try to restore the connection and get back later. that manhunt in paris has been continuing. >> let's have a look at what is

happening in markets. it has been quite a week. a big turnaround. the last three trading drays -- days. futures indicating stocks will close next to lower. >> interesting how 2015 is not starting out how some thought it might. whether divergence was going to be the big theme as people said it would be at the end of last year. >> it is already diverging, that team. >> -- theme. >> er also going to get a jobs report. that is expect to come over to hundred thousand. -- 200,000. it's interesting how it has been trimmed by the inflation and there might be more qe in

the u.s.. >> more accidents are worried about low inflation. should we get back to paris? >> hans was updating us on the latest on the manhunt still underway in france. >> anna good morning. the manhunt continues. neighboring countries securing borders. this is a large wooded area 44 miles northeast of paris. we learned a little bit more about the suspect. the older brother, 34 years old. he received training from an al qaeda affiliate in yemen. light arms training career that might explain the tightness of the spread of some of the bullets left behind. we don't know how long he was there and for what kind of weird we know both french and american officials were where he had been there.

in the u.s., according to the new york times, both brothers were placed on a no-fly list. up until now, we knew more about the younger brother, 32 years old. he was convicted for trying to funnel terrorists from france to fight the americans in iraq. we learned -- heard from his lawyer a lawyer who described him as someone who is adrift and searching, he urged him to turn himself in. >>excuse me guys, i thought we had some he loaded up to read >> we do not have that sound. let's talk about the magazine. they plan to run one million copies this week. however they going to publish this music -- this magazine? >> they will get help from other news organizations. google has announced they will

chip in money. the idea is to put the issue out they were planning when they were attacked two days ago. one other note on the politics of this. marine le pen will have a meeting. there is a big march planned sunday. controversy surrounding the inclusion of her. we will get back in another 25 minutes with some of the politics and what it means for the national conversation france is having about the role of islam any response to events like this. >> thank you. hans nichols's live in paris. >> the head of the u.k. security service is warning al qaeda is planning a terrorist atrocity here in britain. ryan chilcote has the details. what do we know? >> he is effectively calling for new powers for mi5.

he worries that the number of terrorist attacks or terrorist attacks has been increasing. the number of capabilities in -- that is available to them has been decreasing. at a time when the threat is on the rise they are finding themselves more ill-equipped to deal with it. it is well your -- it is worth pointing out that the press conference was scheduled before the paris attacks. it was his 2014 in review. he simply so what we saw and paris was a reminder of the threat we all face. he did not suggest the paris attacks themselves might lead to an attack here in the u.k. the only change that we have seen over the last two days is mi5 has increased the country's

securities at the euro star and point into the country. just try try -- to try to stop potential suspects from coming to the u.k. >> do you think the tone of his news conference, makes the case that security cases should lobby government more strongly in terms of access to data? mobile records? >> i think that is exactly what this is. this is mi5's opportunity to push back against the pressure they have been facing in terms of snooping domestically. it has been very controversial. they got battered in the discussion. this is the kind of opportunity for them to say, we have lost some of that capability as a result of that dialogue.

it would be useful for us to have it back. as far as the terror threat is concerned, it is as it stood in august. the second-highest level. it means an attack is very likely. >> we have been here for some time. >> since august. he did point out in the last few months since they raised the security level they have thwarted three attacks that he said would have resulted in deaths. >> when hans was talking to the former president of the business lobby, he asked if there has been a impact on business, she said initially. but medium and long-term, no. what about here on business? >> too early to say is the quick answer. in the u.k., for the last year or two, the threat and focus has

been on cyber threats and cyberattacks from terrorist, hackers. we are in the financial district, the city of london. the reminders of when the security posture was greater are everywhere can read you still go through the obstacles in the road that were supposed to slow down cars. the used to be manned. not anymore. only 1% of the time. >> by camera. >> that is correct. will that change? there is no sign of that and andrew parker was not suggesting that. the legacy of the bombing is there. but no immediate change. >> we will speak to you later. >> in corporate news the relief at tesco may prove short-lived. the stock rose dramatically

yesterday after revealing improved trading. one of the rating companies promptly cut the company's debt rating to junk. caroline hyde you took us through the numbers yesterday. talk us through this. this is something that -- we talked this morning. you said there was a message before the announcements. >> they were very keen to keep saying how liquid they were ever they had strong liquidity. there was going to be no fire sale. they thought they were going to continue to act as an investment grade company even though moody's deems it no longer to be so. late last night at 9:00 p.m. we got a statement saying, we are cutting tesco's credit rating. one step below investment grade. this is going to hit the bonds of tesco. we are going to see borrowing

costs rise. for moody, the thing that was worrying them is the competitiveness. yesterday, with the stock market was so euphoric about was the fact that we saw them cutting prices on key branded goods. this is dragging down profitability and will be an issue for moody's. also, the moves they meet -- made to strengthen their balance sheet will take time. they were going to be selling assets. looking to sell the analytics behind the club card unit. that could be worth billions. it is going to take time and there is risk involved. if debt levels stay where they are, this is not an investment grade company. fitch reiterated that. they say at the moment, it would not be an appropriate -- not be

appropriate for investment grade. >> a lot rides on how quickly assets are sold. in terms of whether we see the company raising money and another way, that could be crucial. >> that is the big fear. drastic days, a nickname which he says is appropriate. in terms of -- many wondered whether they would have to sell shares. i don't will be on the table. what they want to influence us is it is not going to be a fire sale. the asian unit could be up for sale. put together, that would be about 10 billion pounds. tesco's debt is above that, that would reduce that. they said yesterday, we continue to act like an investment grade company.

there is no desperation here. we have liquidity, 5 billion that we can depend on. i checked on the debt situation. it is stable. 500 million pounds of for refinancing. they can cover this. >> can align, i am sure you did yesterday. -- caroline hyde, i'm sure you will cover this like you did yesterday. >> join us. all about the paris shootings, they are the most popular trending subject matter. still the most popular trend today. >> coming up the high price of silence. more on fund upon's record $17 million fine -- more on honda's record $17 million fine. ♪

>> time for today's company news. the lender will cut its dividends, reduce payments it has offered investors since 2007

to read this comes after investors expressed concerns they -- they are not as strong as the competitors. >> honda has agreed to pay fines for underreporting injuries and deaths linked to defects in its cars. they failed to tell the u.s. government about 70 thing -- 1700 errors. starbucks's chief operating officer going on extend leave after 23 years. the company says it was a personal decision. the second in command had planned a similar break and 20 -- in 2008, but was persuaded to stay behind the chief executive. and apple receiving criticism for manufacturing devices overseas instead of the u.s.

they have worked to boost u.s. manufacturing including a $100 million investment to begin mac pro simply in texas. >> let's turn the conversation back to marcus. more signs pointing to further economic decline. we have had breaking news this morning in germany. november, industrial production fell. mario draghi, similar measures. will he get that on the 22nd of january? one man the chief investment officer is with us for this section. straightening district to the numbers, -- straight to the numbers, fear or desperately hoping we will turn it around? >> like will, it is a game of two halves.

there is the fear part of oil which was clear. the losers o like russia, there is a heavy concentration of energy. the fear part has gone through the system. the second half, in terms of the improvements to the economy that is a slow burn effect. we have had the immediate effect. we have seen it many times before. big emphasis in terms of income, focusing on streams of income. the market turns from fear to where can i find an attractive stream of income? we seem to be going back that way. it is interesting that the energy-related stocks are holding up quite well. >> investors are looking for what will benefit them in terms of the oil price drop. we spoke to sainsbury,'s ceo who

said they are not spending it with us. you have to identify what people will do with the money they are saving to read >> it is a slow burn effect. it is marginal, hard to feel. you might collect dust go and buy a new car or some it like that. -- you might go and buy a new car or something like that. when oil has increased rapidly before, imagine it rices had doubled. fears of recession would be -- but in terms of markets, the first impact is on anything energy-related. the focus on the junk bond market and refinancing. we have just gone through that. >> hold that. we are going to go through some of your big investment themes.

a lot more to talk about. allen higgins. code chief investment officer. ♪

>> i'm talking about the smiths. famous band in the u.k.. they have the outlook for 2015. one of the big things is banks.

was that you alan? >> i don't want to get sued by morsi. -- moresey. these are worth a fortune on ebay. >> one of your themes is unconventional views. >> what it means is we have looked back in history and when there is a geopolitical event, russia would be one generally it makes money if you go against it. russia would be one. china would be another, where there are chinese banks. a lot of controversy. other areas will be taking default risks. investing alongside the cb three -- ecb.

packaging loans. >> you would buy that risk that somebody else got rig >> intrinsically, you are overcome its aided in any case. -- you are overcompensated in any case. if you get the timing wrong -- we like default risk. to be fair, there is conventional ideas like european and japanese equities. hundred year mexican bonds. that is unconventional. solid returns. some interesting snippets. you can get it on the website. these hardcopies are worth hundreds. >> let's go out with him singing the b side. >> i am too afraid of the

manchester set. >> chief investment officer allen higgins. >> 7:26. stay with us. ♪

>> you are welcome back to countdown. 7:30 as traders wrap up the week . waiting for the unemployment numbers from the u.s. will unemployment numbers, and non-harm -- the nonfarm payrolls exceed 200,000 for the seventh straight month in a role? the minneapolis fed governor

said raising rates in the u.s. increasing borrowing costs, would only retard the pace of a slow recovery in inflation. a voice of dissent at the federal reserve. the dollar index it comes off to a boil. according to some data the imf markets out of the g 10 currencies, the biggest leverage position is this. euro-dollar. this is where you are seeing people short coming back a little on the day now. canadian dollar, i thought this should be brought to your attention. only a week in and already it has dropped and the dollar has risen. that is what you are looking at. 20 15 into hotel it he, toronto dominion they have revised their view on where the canadian dollar will go.

canada is the biggest oil exporter in the g7. >> 7:31 in london. let's return to paris for the latest on the search for suspects in the fatal sure -- shooting. hans nichols's is on the ground. good to see you again. >> anna, good morning. i am joined by our paris correspondent to review spent yesterday, right around this time there was a shooting in the south of paris that left one police officer dead. give us an update about what we know. >> there was a lot of mystery surrounding the death of the 25-year-old policewoman. shot in the back yesterday morning. the second person, the city worker injured, is fine at the moment.

the gun man is still at large. it two suspects being questioned. very heavily armed. vehicles going on with the investigation in the north of france. even though there is no link, -- >> it looks as if the picture to paris has dropped for us again. apologies for that. we will continue this conversation with our next guest. >> as hands and caroline were updating us, let's check to -- talk to david lear. to try to put some context around this. what i find interesting is everybody is trying to understand the tragedy of the incident in paris. the ramifications it will have.

you had obama cameron and merkel pledging their allegiance. do you think we can be overstating the impact on a global perspective? >> i think the extent to which this attack is out of the ordinary on the geopolitical stage is perhaps overplayed. there are terrorist attacks in the west. it is part of western life. while each incident is an outrage and has an impact on the politics geopolitically there should not be a great deal of movement. i have read suggestions this might be a trigger for change between russia and the west and i think that is misplaced. >> what can you make of comments we are hearing from the mi5 leadership suggesting al qaeda is talking about attacks in the

u.k.? they are not discussing new intelligence, it is a long-standing thing. does this change anything for the u.k. security environment? >> no, i don't get changes a great deal. we have seen security boosted. but the speech was planned for a long time to read and was going to be a review of 2014. i think it was a somber and realistic assessment of where we are. terrorism in the west is perhaps moving away from the complex logistical plots towards more quick and dirty, shall we say. this is a reminder that the complex plots -- that is very

much what we need to consider in this environment. >> politically, doesn't speak to the right wing? we spoke to a former president who said it does not. she thinks it is not going to be. what would -- will be the political and vocations in france and other countries? >> in france we have not seen a great deal of flacco reaction yet. this is a country in morning, engaged in the manhunt. neighboring countries have had a clear political reaction. the anti-islam protests in dresden, the leader of those has said, this justifies everything i have done. it has been an issue in the greek campaign as well. in france this will come in as the situation develops. in terms of where it influences

-- the debate between the center right and far right will be the interesting feature of it. >> in terms of policy, you say what you see are incremental rather than era defining moves. respectfully we have no idea of what is to come. if there is anything more substantial. we may see a shift and other -- they do not seem to have a collective global mandate in terms of what they want to fight the terror threats under. quite disparate. >> we saw a war on terror 10 years ago. the efficacy of that in the long term is a matter that is going

to be debated for decades, even if terrorism stopped tomorrow which it is not going to. this idea of a new banner, a new slogan, under which we can bring a number of initiatives that relate back to that slogan, in particular france, a country that never bought into the wa r on terror narrative, that is going to be difficult. >> the ability of french businesses to sell to the muslim world might be a secondary concern. remind us what happened to denmark and 26 -- 2006. there was backlash after the publication of cartoons. >> denmark has a huge dairy sector which is strong in the middle east. they temporarily lost a lot of sales. it was interesting to note that

when dutch -- a dutch politician was making a controversial film, the government was more active in seeking to protect its experts and positions the meeting his government had been. that had -- its exports and positions then the danish government had been. >> put some context around this. >> yesterday, bloomberg broke the story that spain's biggest lender was sent to raise capital. it will cut its dividend policy. with european stock set to react the bloomberg reporter joins us. hi, ruth reed flooded the bank do this -- hi ruth. why did the bank do this?

>> she wanted to put her stamp on the bank which meant she asked the ceo -- she has been saying, she is listening to what investors are saying. they have been saying, you need to raise capital and make sure you pass the tcb stress test. you still have to go out and raise money. she decided to be first out the door. >> she was first out the door. deutsche bank got ahead of her at christmas. where is it going to leave set tender -- satander? >> they have been saying -- we are hearing that other banks like deutsche bank with a go back and raise capital? one thing she did, she did this

as accelerated sale which meant they completed it overnight. you usually have a deep discount associated with capital increases. they did not have to face that. you are going to invest -- >> she went at the right time when he story was good, and a clean sweep. >> she took over from her father who died. how much of this is her trying to stamp a different direction on the bank? >> i think absolutely it is. people across the market are saying this. everybody yesterday, because of the size of the deal, was saying , are they looking at an acquisition? she is saying we want to grow internally which is different from her father's strategy. he spent 17 billion on acquisitions. she is saying, i want to get the capital increase out of the way and focus on expanding spain's economy.

>> raising money next. >> that is the multibillion-dollar question. >> absolutely. >> i will say, when we speak to people, they say a lot of the banks got it out of the way. maybe we'll see some of this. >> maybe you will be breaking and other story. >> i should hope so. >> well done. >> thank you very much. >> it is 7:42 in london. you can join the conversation on twitter. tell us what you think of the show, the story. >> coming up, why you should not get too excited by the rebound in tesco's share price. i will tight white. sick around. -- i will tell you why. stick around.

♪

>> don't get too excited by tesco's rebound to read the shares had their biggest percentage gain ever, rising by

15%. yes, same-store sales beat estimates. i wanted to put these -- the rebound in perspective. the shares are still trading 9% below where they traded on september 22. notice the day and accounting scandal was announced. shares have fallen 36% in the last 12 months. 56% since reaching a record high on december 31st, two thousand seven. let's put the drop in currency terms. this is a chart showing tesco's market cap from 1989 until 2015. the peak as you can see 2007 last day of the year. 37.4 one billion pounds.

yesterday even after the rise in shares, the market cap was 17 billion. it added to billion yesterday -- 2 million -- 2 billion yesterday. but it has lost 20 billion pounds in seven years. that is my geeky stat of the day. only 38 listed companies in the u.k. have a market value bigger than 20 billion. the amount of market cap they have lost in seven years is your then all but 38 companies in the u.k. the chief executive has a massive job, to recover lost value. that was effective in moody's decision to cut the company to junk, saying the measures announced will take time to implement. mr. lewis, over to you. >> our next guest let's acsk

him. 20 billion wipeout. who should be more worried credits or equity? >> to some extent the banks we saw yesterday -- it is interesting to see this incredible dichotomy because the equity market seems to feel they have perhaps reached the floor in terms of profitability. moody is taking a medium-term view and saying, we think it is junk. i have to question how sustained this recovery is going to be. they are going to a massive structural change in terms of achievable margins. tesco, more than any of the other big retailers in the u.k., have bigger legacy issues in terms of redundant real estate.

a wholly dysfunctional management. >> does the news from the credit side make much of a difference to the equity side in tesco? the equity investors made their own reaction. there could be some impact on the cost of borrowing. that could typically happen in this kind of situation. apart from that, is there any kind of read across? >> at all comes down to cash flow at the end of the day. the valuation should be down to the value of the free credit flow. equity investors -- yes, i think perhaps there should be more of a read through in this situation. >> in a week when we have had tesco and sainsbury's rate

them. as in which shares would i rather own? >> tesco -- and s, and sainsbury -- ns and sainsbury. which would you rather hold? >> i would probably go sainsbury tesco mns. i think there is are numbered. --t their days are numbered. >> we will take a quick break. ♪

>> we are back with the market strategist. let's talk about santander. >> perhaps not a complete surprise. there had been speculation that although they passed the cb test, the capital raiders were perhaps not up to par. >>. they have gone for 7.5 billion. i will be interested to see what -- to what extent this is not just about bolstering capital.

although some emerging markets did well china and india, latin america as a whole is struggling. which only came out of recession at the end of last year. >> he came in and brought hard copy with him. he was upbeat about banks. after the conversation about santander, for do think about european banks? >> most religious have said, we will buy europe over the u.s. which was the bed last year. which i went against. the european economy is going to remain depressed. you are buying massive cyclical exposure to read >> the effective declining oil, the discretionary -- deflationary effect is further away. what are the locations of that?

that is what on markets -- bond markets are reacting to. where that may lead you is bond markets have been overly sanguine about inflation prospects. perhaps in the u.s., are being sent the last dust wrong way. the consensus was for u.s. bond yields to be at 3.4%. they are currently to pour cent -- 2%. there is monday room for them to come up rate >> think you for joining us. >> 7:55. at his it for us. "on the move" is next. looking at live pictures of the operation. we will see you on monday. ♪

>> good morning and welcome to "on the move." i'm jonathan ferro in london. moments away from the start of european trading giving it let's get straight to the morning break there may get tesco trashed. moody's cuts the u.k. retailer to below investment grade. the credit rating company says the u.k. grocery market will continue to challenge tesco. spain's largest bank raises 7.5 billion euros in new funds and raised its dividends. the stock is expected to drop at the open. and, jobs day. the market weights.

240,000 is the estimate for the u.s. economy in december. the unemployment rate is set to drop to a post crisis low. we are keeping a close eye on the most recent developments in france after the week's fatal shooting. more on that story throughout the hour. it is time to bring you the market open. >> it is fascinating that jobs day has been trumped trumped by inflation. inflation day in china, down for the 34th month in a row. lowflation in the united kingdom. disinflation in europe. declining rates of inflation in the united states. look beyond those inflation numbers. look to the core. that was the message from the federal reserve. jobs being trumped by inflation. that's my take on where we are. $1.7 trillion has been wiped off equities. i