in years. a u.k. trader accused of causing a flash crash in the u.s. five years ago to appear at an extradition hearing. we're talking about tesco. futures markets are dead flat. dax futures are high, up by 28 points. euro stoxx 50 futures, 13 points higher. i had to take you back to tesco. their epic annual loss. let's get to the bottom of this . we're joined by caroline hyde michael houston, and retail analyst charles allen. i will kick it up with caroline. the biggest loss and all they century at the company. bigger than almost everyone expected. caroline: you are right. that is what is going to be dragging shares lower. phenomenal numbers when you look

at them. when you look at 5.7 billion pounds, that is a net loss after-tax. a one-off charge of a cool 7 billion pounds. property is where they take the hit. goodwill is where they take their head. stock is where they take their head. restructuring costs. still it looks frustrating for the future. the market is still challenging, so says dave lewis, the chief executive. dividends have eased the situation. times very tough over a tesco. i think the real issue is what about the future? you have dave lewis trying to talk up the volumes they are selling. more people going into tesco. they have invested in prices. they are investing in front of house staff. people actually serving you. they outlined the numbers. more than 4600 customer-facing roles to be made and they are improving the pricing of numbers

of brands. what about asset sales? that is what i want to hear about. the analytics business behind the card, could that be sold? no news there. portfolio review. ongoing. what about the asian businesses that many wanted to see sold? what about the banking unit of tesco? would that be on the block? no tangible news about what could shore up the company's finances. we have an increase in debt which is why we have standard & poor's downgraded to a junk status. we have overall issues because of their pension fund being in deficit as well. the thing that -- bt having this problem and they say they will help the deficit. they will be pumping about 250,000 in each year. does that shore up the accounts? we see tesco pickup 1.8%. maybe it is kitchen sinking the

issue. we bring on matt davies and he previously estimated. there are tangible things they are changing the they are improving pricing. they are getting a new u.k. ceo wants what her. no news on asset sales. i think that could be a concern going forward and that will be news we have to look out for for the rest of the year. jon: the stock opening a little higher than the ftse 100 up by .33%. the dax up up by 0.5%. the nikkei closing above 20,000 points for the first time in some 15 years. i want to keep it on tesco. we're bringing in michael houston, chief market as do it -- chief market analyst. let's start with an easy one -- or a hard one, depending on where you're coming from. what is this over lining? michael: i think the silver lining is dave lewis is living up to his name, draft pick dave.

he has taken a meat cleaver to the balance sheet, written down 7 billion pounds of property, and really taken the hit out front. for me that is the silver lining. there is no fiddling around the edges. caroline talked about the fact there is no details on asset sales, but i think it is too early for that. mr. lewis appears to be keeping the market guessing while offering us a little bit of goodies. if you look at the underlying picture in terms of group sales, there is some evidence that we are getting a bit of a turnaround. q4 like for like sales posted the first improvement in four years. according to a british consortium, march retail sales are very good in terms of food. i think going forward there are silver linings. i think we have seen a significant recovery in the share prices. the lows that we saw in december. i'm actually quite encouraged by these numbers despite the fact

that everyone will focus on the headline here. jon: the biggest annual loss in his almost-100 year history. michael houston is looking at this with the glass half filled player -- glass half-full. is this the kitchen sink? everyone last year across the u.k. was saying, is now the time to buy tesco? a month later, something else happened. is now the time to buy tesco? michael: sorry, are you asking me jon? jon: i am, mike. michael: [laughter] sorry. i think so. we may see a little bit of a pullback in the short to medium term. i'm fairly encouraged. the only concern i have is the cuts to the dividends. his act which would increase over time? i want to see more details on asset sales. i certainly don't think we're going to see or encounter any problems offloading that.

when you look at the housebuilding sector disposable land is at a premium. going forward we will see something on that. there is an improvement. albion little's market share will bump against the glass ceiling because they will hit critical mass in the number of stores. tesco is the biggest retailer by floorspace and i think that will stand it in good straits. jon: can you give me insight into the client activity you are seeing over at cmc? a lot of people saw the big diff and got it a little excited. are people buying into those dips? michael: they are. over the past month or so we have seen increasing interest in getting into the tesco shares. you have to look at it in terms of the big picture. two or three years ago we were at 400 p. a year ago 160 p. tesco is still be u.k.'s biggest

retailer in it they continue to hit bumps in the road, they still have scope to cut further to reinforce the balance sheets. if you look at the market capitalization that we have seen over the past 2-3 years i certainly think there is potential for tesco share price to rebound due to the competitive nature of the retail space notwithstanding. jon: martin houston, -- michael houston, thank you for joining us. i want to get more insight with charles allen. charles we will go to the highlights any moment. over the last five months there was a big issue. the big question mark, the cloud over the stock whether they would have to raise more money because of the huge debt load on the other side of things. does that still me to be addressed? charles: i think the total amount of debt is over 10 billion pounds now against trading profit that is well down. cash generation is quite low. so yes, they do need to look at ways that they can raise money. asset disposals would be one

aspect of it. i don't think we could rule out some sort of equity offering. jon: big write-downs. the outlook for profit is not great. the market is challenging. he does not see it changing anytime soon. are things going to get better for guys in this sector anytime soon? michael: i think there are --charles: i think there are a couple of things we have seen already. for tesco, customer numbers are a. transactions are quite important. -- are up. transactions are quite important. prices are still much lower year on year. and at a rich people to go back to some of the out-of-town stores because people seem to be buying more fuel. i think that as mike was saying if albion little are reaching a trading ceiling, a lot of the stores are completely packed out and they cannot take much more customers. jon: some people would say this

is the kitchen sink. my final question to you, was that the kitchen sink this morning? charles: [laughter] yeah. 7 billion of write-offs was the kitchen sink and it did cover some of the overseas things as well as just the u.k. there were write-downs across asia and europe as well. jon: charles allen, big thanks for joining us. tesco stock trading high. a glass half-full halfway into the session. this is what the market looked like 10 minutes into the session. the ftse 100 is a bite .3%. the dax is up 95 points debuted japan, nikkei 20k. they close up of that little for the first time in 15 years. we're switching from equities to bonds. the bond king says it is the short of a lifetime. it is just a matter of timing. later, the 2010 crash. one brit has been arrested in

london. we will talk about that as well. grexit versus grexit. ♪

jon: good morning and welcome back. i'm jonathan ferro live from the city of london. this is "on the move." you may have seen a tweet from a gentle and name phil gross, the bond king. because of the short of a lifetime.

german 10 year bonds. really? is it time? the opportunity of a lifetime? just a matter of timing apparently. phil: you probably want to wait 12 or 18 months because that is when the eurozone and ecb quantitative easing program ends. one of the reasons for the overvaluation ofbunds has to do with mary o -- overvaluation of bunds has to do with marion drawdy -- mario draghi. jon: when do you go short german bunds? i will at the chief investment officer at street investment where he manage to point for a $20 worth of assets. rick, you can say you can short something. it is the timing. when with the right timing -- when would the right timing be too short german bonds?

rick: you have got bank buyers who need liquid assets. there is a queue of people who are willing to buy these bunds. the catalyst is hard to see. in the meantime, they are using their opportunity. they are risking, on a client base, taking more credit risk and getting out of those government bonds. it is mario draghi and ecb's plan, to force more risk taking. jon: what have you been doing at state street? rick: we are still risk on. we think the global growth is a little frayed at the edges and is still a reliable story for 2015. overweight equities. we have some overweight positions in credit as well. not a high yield, but in long-dated investment-great credit. taking a little risk in the portfolio periphery. jon: when you look at the euro and markets as well, we had the terrific move in the last three months. the euro plummeting, the markets

surging, everything gets iffy. the call seems to be to the end of this, the euro bearishness is over. could this continue for longer than most people think in your mind? rick: there are different elements. the dollar has the potential to be in a multi-year trend. it could go on for some time. 2015 could be shock free if that is better than the european cyclical recovery is better than expected. the multi-you recovery seems to be persistent. the other is the earnings trend. u.s. earnings have been a little weaker than expected in the first quarter and you have a headwind from the dollar. many of the things remain in place for a broad-based u.s. recovery. a lot of that is in the stock price. we pull back a little bit from the u.s.. if you look at the euro, the potential for catch up. the euro has not got fed through. it is still there.

europe is an interesting possibility and within europe it is a very mixed bag. germany clearly is a standout from an economic perspective. jon: when you feed all of that back into the low gross question and shorting bonds -- the bill gross question and shorting bunds, you look at inflation get some traction, how far off the mark is this guy? if we get those to develop maybe now would be the time to go short bunds. what are your thoughts? rick: growth expectations are curious. if you look at real yields, and say that growth expectations are very poor, break evens have risen across the board, even in countries like south africa where they are inflationary markets. there could be a growth story that is we can the intermediate term. from the recovery perspective, it has not been as good as we think but it is close to the 40-year average. the imf averages close to our forecast. that was within 10 points of the

basis. we do not see significant growth in the short term. jon: when we look at the government bond market, wise and the german government issuing more debt and taking advantage of these low rates? how many german companies that you have spoken to are taking advantage of what is going on? rick: the pension fund area is looking at taking more risk. the crushing of negative yields is a serious issue for them. i think it is an opportunity for people to lever up and what you have seen in the u.s. when you have a zero interest rate policy for a long time it has changed over to a furious auction process in the market fueled by easy money. we have not seen that in europe if you get proper economic growth beginning to spread across the eurozone, the leverage effect will kick in as open jon: still to come on the show, -- kick in as well. jon: still to come on the show

we will talk about something that happened five years ago the flash crash. a man is been arrested for wiping $3 trillion off the u.s. market. ♪

jon: welcome back to "on the move." i'm jonathan ferro. let's bring you up to speed with some of the stock stories. rish marked expects profits to fall by 36%. stock is down 1% due to losses of financial instruments. volvo has named a new ceo.

the swedish truck maker is trading up. a change at the top of rolls-royce. the company has named worn east -- warren east as his new executive. navinder sarao was arrested over the last 24 hours on charges of wire fraud, commodities fraud, and market manipulation. he is being accused of contributing to the 2010 flash crash. he is due to appear at a next tradition hearing over whether he could be sent to the u.s. to face those charges. ryan chilcote is live. what exactly has he been accused of doing? give me the scoop on that day. ryan: effectively, u.s. prosecutors say navinder sarao was engaged in illegal trading. they say that he was doing something called spoof and layering, or putting in trades

orders with no intention to actually fill them and can't slay them -- and canceling them in order to push prices in a direction that is advantageous to his trading strategy. it is a legal -- it is illegal. they've accused him of market manipulation fraud and wire fraud and they say that all begin in 2009, right out of his own home in west london. we are in a working-class neighborhood. it is about 11 miles from the city center and the financial district. not exactly the place that you would expect a day trader to cause what effectively was a global crash, even though it was called the flash crash and only lasted a few minutes. that is what they said happened on may 6, 2010. they say they put in a total of 19,000 orders, $200 million worth of bets and personally was responsible for about 1/5 of

the sell orders on that day. that caused a market imbalance and it was that market imbalance that led to a plummeting of the price of the derivatives, the futures he was trading and the dow jones was off by about 1000 points just in terms of u.s. stocks alone. about $1 trillion worth of value was wiped out. the prosecutors in the united states that reveal their affidavit yesterday said that led to navinder sarao making about $900,000 on that one day and that over the course of his five years between 2009 and 2014 he made about $40 million. like you said, he is going to be in court a little bit later today for extradition hearing. we don't know if you will be extradited right away or not. that is something that takes a

bit of time in this country. it is all rather extraordinary when you consider where we are and what is clearly a working-class neighborhood, not the most expensive place to buy a home in the u.k. because we are right underneath the flight path to heathrow airport which is one of the busiest airports in the world. jon: thanks for that. ryan chilcote. let's bring rick back in. let's not go there. let's talk about high-frequency trading. spoofing. it has given such a bad name. for you at state tree, is it useful? rick: we find i'll go rhythm trading is very useful as ways of lowering cost for our clients for we have to make sure the right guard rails are around these types of strategies. that is an important role at asset managers, to make sure we engage so those guardrails are in place. i think it has lowered the

cost for our clients and achieve better outcomes over a longer time period. it has made the markets more complex. jon: the market is very fragile and a story that is a flash crash, the liquidity and fixed income market. how much conversations do you have with clients about the phenomenon in the fixed income market? rick: the potential for fixed income is concerning us more than equities right now. it is the change in technology which has a lot of promise and fixed income markets to create an all-to-all model. we face the potential for airpark it -- for an air pocket. jon: what on earth do you tell the clients? how do you protect yourself in that type of thing? rick: we have to put in place the right sort of guardrails to the extent we can. we make sure we are doing as

much as we possibly can to make sure the clients get the outcome they expect. most of our clients are not trading in and out of strategies very frequently. they want exposure to certain assets or credit spread and so they may not be affected by these transient factors such as you saw on the flash crash. jon: what is worse for germany? greece leaves the eurozone, or greece bails on the eu? ♪

jon: good morning and welcome back to "on the move." 30 minutes into the trading day, ftse 100 up 13 points. staying well clear of that 12,000 point mark. only one story, let's go for a little bit of tesco. caroline: i'm afraid i haven't picked it because it is not one of the biggest movers. but tesco is rising on the back of that which we saw earlier. volvo is up almost 13%.

a new leader at the helm. under shareholder pressure as a truck maker profit margins were under pressure. they're replacing the chief executive. he comes from the rival scanyo group. bounds of previous work, he is the man for the job. the cfo will be keeping the helm as president and ceo in the interim until he can join them in october. plenty of moves that ball though. -- plenty of moves at volvo. a snl up 8%. this is the largest chip equipment maker in europe this is all about extreme ultraviolet lithography machines.

we need to keep the memory of selling more of these machines biggest order so far. the u.s. company comes in to buy 15 machines but on the downside it is luxury. caring -- kering down by 4.5%. we know it is having problems with gucci. the jewel in the crown, bottega vanessa also not doing so well. slowing sales in the growth of the handbag maker as well. back to you. jon: let's move things on and get into the exit debate. what is worse? brexit or grexit? up until now the focus has been on greece but with the u.k. general election two weeks away that may change. for germany britain's departure

of the eu is more dangerous. we are joined now by open europe's general director. great to have you on the show. we spent a lot of time talking about grexit. talk to me about exit and germany. guest: what grexit means for germany? jon: the british exit. brexit. guest: brexit would be a bigger shock for germany and something more difficult to handle. if you compare the two economies, greece's 1.3% of the eu's gdp and the u.k. is about to overcome france as the second-largest economy in the european union. i think germans should be concerned about brexit in the future. jon: one is a monetary union and the other is a trade union.

should i be looking at the tab that germany might have to pick up? guest: that is one aspect. mostly, the u.k. is a favorite destination or german exports. and direct investment. the market would lose 15% if the u.k. would leave. germany would lose their second-largest net contributor. these are economic cost of brexit that germany would feel. jon: would it be good for britain? we hear horror stories about car manufacturers relocating and jobs running abroad. does it have to be that bad? guest: not necessarily. it would depend on the kind of arrangement the u.k. would have after brexit. in london we calculated if rent scenarios of what could happen.

the key issue is certainly how far would the u.k. have access to the single market. when it comes to good, ideal good work rather well because the u.k. is importing more goods from abroad. when it comes to services, it might become somewhat more difficult for the u.k. to have a favorable trade deal after exit. jon: give me more color on that. if you crunch the numbers, what could it mean for the financial sector? guest: in terms of losses the financial sector is a sensible area for other parts. i could well imagine that the uncertainty before the referendum of whether the u.k.

would stay within the single market or not could create some incentives for investors in the financial sector. >> thank you for joining us. but it's an final thoughts from the global advisors. rick you been listening to our guest. what makes you more negative about guilt? the upcoming election with no clear winner or the prospect of a referendum on british membership with the eu? guest: i think the next potential government. because the probability of brexit is low. >> this uncertainty about direction that might persist over a number of years. basically --

for texas not take pace and for us to have a uncontrolled fiscal expansion starting from a 5% deficit. that is not a healthy scenario. jon: for the fx markets the trade is enter obvious one for a lot of evil. for the guilt market rings are more nuanced. france's wanting one under a separate set of circumstances but the yields are's will low. is there a scenario where you could have what you think will happen intentionally that fiscally things get out of control? guest: i it is dangerous to take anything for granted by you get yields to stay reasonably well-behaved and i will not take that for granted. u.k. is a long history of currency depreciation and inflation and deficits that have

not been managed well. i think people worry about a rerun that. >> people go to the ballot. sterling nominated assets. you have to rethink what you are doing? guest: certainly on the equity side. it is really a sector question. you have a lot of minors and things -- other staff that are exporters. they look like good value from a yield perspective but they contain a lot of risks. jon: is it one of those were you have to stick to convictions? guest: that has worked well for us over many years. jon: thank you for joining us. as we head to the break, a quick check on equity markets. three days of gains on the stoxx 600. gains across europe, the dax up

by the four points. the ftse mid in italy up by .6%. ♪

jon: welcome back to "on the move." volvo replaces its ceo with the

chief of the rival truck anchor. martin will assume the helm in october. the shakeup comes as the low is under pressure to boost profit margins. rolls-royce votes warren east as their ceo. rolls-royce cut 2600 jobs last year and is facing investor discontent. tesco reporting its biggest loss ever the u.k. biggest grocer full-year results includes 5.7 billion pounds and that losses after tax. ceo dave lewis is working to rebuild investor trust. richemont reports of profit drop of 6%. they said the losses were due to the adjustment of financial instruments. it is trading lower this morning. let's go to tech.

yahoo! revenue missed estimates. caroline hyde joins us for more. what was behind the miss? so much optimism around the stock. it was a proxy for alibaba and now a big miss. caroline: big miss, but people being hopeful again. first-quarter sales down or percent but profit earnings-per-share, up by 61%. there slashing more than 1000 jobs in just the first quarter alone but it seems like the turnaround plan is stuttering emerging business is what they call their maven their tumbler and blogging platform did see a pickup in sales up 58% for that bit and mobile revenue up 61%.

but google has been eating into their market share off and still seeing deteriorating revenues. you think that overall juicing investment is appointed. she has been in charge almost three years, marissa mayer's, yet still you have market share likely to decline and one group saying display advertising market only has 3.5% come 20 15. jon: it was all going so well you had beats, ibm, sap -- yahoo! lets us down and wii's, what is this company in a -- and we ask, what is this company in a post alibaba world? caroline: how do you placate your investor base? you placate them with payoff and sales.

they've already started to earn the money from alibaba and they want more tax efficient ways to do that, but now it is about yahoo! japan. they hired advisers maximizing their value of a 35% stake that they hold. that is pretty much a punchy shareholder that keeps asking them to sell off assets. they say you could get 11 billion from this if you prove a tax efficient way to do this. how long can they cash in on their asian assets. soon enough you'll want to see that business arming on its own and performing well. jon: under more pressure, marissa mayer. as we had to the break. ftse 100 trading up one quarter of 1%. tesco higher right to percent --

two present. the dax trading higher by one half of 1%. and in italy, up .4%. a quick check on the euro. euro-dollar, where are we? there we go. one euro buying $1.07. grexit risk back on the table. when did it leave? the germany finance minister will present the economic forecast. the ecb will have to discuss emergency liquidity assistance. the highlights next. ♪

jon: welcome back 49 minutes into the trading session. equity markets are pushing higher. the greek three year yield pushing higher by a five basis points. i say teeny tiny because we have seen it move 200 basis points in a single morning. the yield is 29.63%. these highs we have not seen since 2012 when grexit was really on the table. it is still on the table now and a lot of people are discussing it. greece may have bought six weeks of time but today the european central bank needs to discuss

restricting emergency liquidity assistance. hans, i was looking at the agenda for germany, what a big day. the ecb meeting. the economy minister presenting the spring economic forecast. what should i look for? hans: they are related. if there does appear to be lower economic growth than expected that will influence the german political debate about greece. we saw the expectation in january. the economy minister said it would be at 1.5%. we have had some negative news coming out. yesterday we also have the bundesbank. maybe worrying the growth in germany would not be as much. we had some disappointing other figures coming out. today, this number will be a survey of the health of the german economy.

but you can translate that over and say there may or may not be more appetite for some solution in greece because factory orders could be affected. jon: just a follow-up. every single morning, across europe we look at the news coming out of greece. this morning i come in and not as thorough practice saying -- and yana spero practice says -- varoufakis says it is narrowing. that is his perspective. hans: there is no confirmation to buttress varoufakis's optimism. if anything it has gone the opposite direction. we had the european commission president -- in the past when you look at the three institutions, the eu has been the most sympathetic to greece. and we heard yesterday is there still needs to be a lot of work done. he was quite pessimistic.

they are nowhere close to having any sort of technical agreement or an agreement with a can get to the place of a final agreement. while yunker says some of the work has accelerated they are still far away. you contrast that with varoufakis you have to have some kind of discount premium on what is coming out of athens. jon: that is almost it for "on the move," in a couple of minutes the post -- the pulse is coming up. we set here 24 hours ago and said this could be perceived as progress whether they like it or not. does it still come down to a political decision, as opposed to a rules-based decision you -- decision? guideway -- guy: the ecb is in political so you would hope --

jon: -- guy: there are some redline succumb across and financing at solvent banks is one of them. there are areas where they cannot go to -- cannot go. draghi has shown considerable grace. i don't think he could have done what they did without support of anglo merkel. jon: a little bit later have german economic forecasts in the leverage has been in the hands of the creditors. the forecast for growth has been improving and yields are lower. any leverage in the hands of the greeks when it comes to the negotiation table? >> there is but we don't understand fully what it is. we believe. ok. that could be how the conversation goes. it is whether or not the germans

appreciate that there are some risks. we could get a rumsfeld and talk about the known unknowns and the unknown unknowns. jon: let's take it right here to london. a record loss from tesco. then the city's verdict that the stock is higher. this feels like the kitchen sink. we have seen it a couple of times with tesco. guy: this is a big number but everyone expected a big number. good news is bad news in this case. you start with an easier piece of paper and front of you. you know that the next set of numbers will be better so it is only upside from here. jon: they have to be after that. a big week on tech earnings. when beats from ibm yahoo!

very much a yahoo! story. guy: we will talk to the coo of dropbox. expanding and u.k. fast at the moment. greater growth in the u.k. than the united states. the european and u.s. views are very different when it comes to data. so how does a u.s. company storing our data treat european environment? what does he think of the competition commission in brussels? what does he think about the way that the french see the technology? who has the data and i'm keen to find out where he is based for his european operation tax wise. jon: guy johnson coming up with "the pulse" and a couple minutes . let's check out the market. another day of gains. stoxx 600 is higher. ftse 100 coming in lower. the dax up by 26 points.

ftse mid up .5%. the euro-dollar near session highs. then we look at the aussie dollar as well. the euro-dollar is higher. but the aussie dollar is much stronger. higher than many anticipated. then i go to the greek three year bond market and i look at the three-year note with yields at 29.6 sent -- percent. the greek will struggle to have any market access if they pull out of europe and agreements with any creditors. a yield of 29.6%. if you want to talk about these markets, i am on twitter. for now good luck.

jonathan: the man who helped. charging a traitor with counts. we are outside and he appears in court's. >> we will talk about the turnaround efforts. guy: we will talk about the sushi founder.