17/10/2016 BBC Business Live


17/10/2016

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This is Business Live from BBC News with Sally Bundock

:00:00.:00:00.

Chinese authorities have detained at least 18 people employed

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by Australia's biggest casino company under suspicion

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Live from London, that is our focus today -

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Australian casino company Crown Resorts has confirmed that

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at least 18 of its staff have been detained by authorities in China.

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Also in the programme: a new report says Britain's economy faces

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a "prolonged period" of weaker growth as consumer spending slows

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And it is a brand-new trading week for Europe. So far, not so good. We

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will talk you through the winners and losers.

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And we'll be getting the inside track on advertising.

:01:17.:01:20.

The boss of MC Saatchi - one of the world's biggest agencies -

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will be here to talk Brexit, ad blockers and US politics.

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And later we're going to talk about Hedge funds -

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they are struggling and it's because of robots.

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Let us know who you'd back with your cash - humans or robots?

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When it comes to your money, cash or robots, who will make the right

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decisions? Do send in your thoughts. It is a packed programme. Let's get

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started. Shares in Australia's

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biggest casino company - Crown Resorts have fallen by more

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than 12% after it reported that at least 18 of its staff including

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a senior executive have been It's believed that the arrests

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could be linked to a move by China to go after foreign casinos that

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attempt attract Chinese citizens overseas to gamble -

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which is against the law But while gambling in China

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is illegal, many Chinese people participate in state-run lotteries

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and engage in legal gambling in the special administrative

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regions of Hong Kong and Macau. The Chinese government operates two

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lotteries: the China Sports Lottery The Chinese government does

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not legally consider Illegal gambling in China

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is still common, including unofficial lotteries,

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clandestine casinos, and betting in games such as mahjong

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and various card games. It sounds like a murky world and

:02:58.:03:17.

many arrested? That is right, Sally. It is a murky world because the

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Chinese love gambling, but the government is trying to restrict

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what is known as illicit money flows through casinos and lotteries. As

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you mentioned earlier, we are seeing a hit to Australia's crown resorts

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which are owned by the billionaire James Packer. Some employees had

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been detained in China. That includes three Australian nationals

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as well as the head of the international operations. This is

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the guy who brings the big spenders to the casinos as well as the

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resorts overseas. China's Foreign Ministry did confirm in a statement

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that it has detained some Australian nationals for suspected gambling

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crimes but we did not get any further details. We are seeing this

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crackdown on gambling because it is illegal on the mainland and they are

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also cracking down on companies who have an exclusive advertising to

:04:18.:04:23.

Chinese nationals to come to these casinos abroad. We have seen another

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Korean operator get into trouble over similar violations. It is

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called Paradise. Last year several employees were arrested as well. The

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BBC are looking into the story and managed to speak to the husband of

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one of the local Crown employees who was arrested. He said he has been

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dumbfounded by the move because his wife only does admin work. Thank you

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very much. Britain's economy faces a "prolonged

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period" of weaker growth as consumer spending slows and business curbs

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investment, according to a report. Although the EY Item Club think tank

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predicts the economy will grow 1.9% this year, it expects that

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performance to fizzle The economy's stability

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since June's Brexit vote Joining us is Martin Beck,

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Senior Economic Adviser to the EY It is all to do with the fall in the

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pound, I presume that is the one hard thing we can hold onto which we

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know has been a result of that Brexit vote? I think that is a fair

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point. The fall in the pound is pushing up import prices which will

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lead to a rise in prices for consumers. There is a positive, any

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UK company selling abroad in dollars is benefiting which is acting as a

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shock absorber to the economy. We really need to know what is in

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Philip Hammond's Autumn Statement, what the government does in terms of

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infrastructure spend is key? That is an important point. We assume no

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change in the forecast but there seems a reasonable chance the

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government will allow some sort of fiscal stimulus in the Autumn

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Statement. There has been a tendency in recent weeks to row back a bit on

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what might be in the Autumn Statement. The other thing we saw

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last week was guilty of ticking up. That basically means borrowing costs

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for the government are getting more expensive. We are also seeing that

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happening in the States as well. It will be harder for the government to

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finance these infrastructure projects? Let there in mind the

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increase is from a record low level. The government currently pays 1% a

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year on borrowing. But the more we spend on borrowing and below the

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pound it goes, the more expensive it will be for the government? That is

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a fair point but we are talking more expensive from a relative position

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which was very cheap. The government is still borrowing at a rate far

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lower than we have seen in most of the past century. Thank you for

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talking us through that. More on that story on our website. Let's

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talk about some other news now. China's president -

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President Xi Jinping - says the long-term prospects

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of the Brics countries - Brazil, Russia, India,

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China and South Africa - are still positive despite

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a precarious global economy. Though they are currently enduring

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slower economic growth, he has stressed that the potential

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and strength of the group A flight ban on Samsung's Galaxy

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Note 7 smartphone has been announced by more airlines after reports that

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some of the phones had caught fire. Carriers in Australia,

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Asia and Europe put the phone on a prohibited list over

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the weekend, which comes after the US banned

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the device last week. Samsung stopped making the phone

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last week following complaints We have talked little bit about the

:07:55.:08:13.

impact of Brexit, or we have had more organisations trying to predict

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what it means for the UK economy but this is a story in the Financial

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Times. It is a big story. The UK to pay up for city access to the single

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market. There is a theory that the government is going to have to pay

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if they want to keep that. It is an interesting story. Let's

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have a look at the financial markets now. Europe's main markets have not

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started well. We are seeing declines across the board.

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the details about what's ahead on Wall Street Today.

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Earnings continue on Monday, Bank of America is going to report. It will

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take questions about how it's banking and consumer incentives

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compared to Wells Fargo which is recovering from its own banking

:09:12.:09:17.

scandal. IBM will also be reporting on earnings. It has been focusing on

:09:18.:09:22.

building its cloud business that houses the company's artificial

:09:23.:09:27.

intelligence platform but it struggled to show meaningful revenue

:09:28.:09:32.

growth elsewhere. Finally, we will also hear from video streaming

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service Netflix. It has launched in almost every country around the

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world, but now it faces the task of adapting the service to different

:09:42.:09:46.

markets and cultures, in the face of increasing competition. Key for

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investors will be Netflix's subscription numbers for the Court.

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Joining us is Nick Hungerford who is the Chief Executive

:09:54.:09:56.

What has gone wrong? It is a bit of a pull-back. We have had a great run

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over the last month or so, hitting record highs in the FTSE. This is a

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reaction to two things. One is that sterling is strengthening a tiny

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bit. We know that story has rallied the markets. The second thing is we

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have a serious round of the gauche nations this year with Theresa May

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heading to Europe for discussions with her peers. People are concerned

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about how those negotiations will be and whether or not it will be a hard

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or a soft Brexit, whatever that may mean. What are you looking out for

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in the markets? The big market stories this week will be an results

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from America. We had Citigroup, JP Morgan and Wells Fargo last week. We

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have Bank of America and Wells Fargo this week. Can they maintain their

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good loans? And secondly, the vice chairman of the Federal Reserve will

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speak today. We had the chairman Janet yellow and and Bob Dudley

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speaking with some mixed messages so we are looking for clarity today.

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You talk about the Brexit negotiations being critical on the

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markets. What does a canny investor do in an environment like that? A

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canny investor it ignores all of that and says I invest in the

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markets for the long-term. I know things will go up and down but I

:11:30.:11:33.

will spread my risk and put my money in and I will not worry about

:11:34.:11:36.

whether these Brexit negotiations change from day to day. Should the

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canny investor have a robot investing on their behalf?! There is

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no emotion there. That is really interesting. It is a way to take the

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emotion out of it. If you think about your house you cannot see the

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price going up and down every day and isn't that a good thing because

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you leave it there? You can look on websites. Quickly, you must just

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check! Nick, good to see you and we will

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keep an eye out on what Stanley Fischer and co-have to say as the

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week progresses. Still to come: What role did

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advertising play in the run up We'll speak to one of

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the world's leading ad men. You're with Business Live from BBC

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News. A warning against a potential

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Brexit brain drain. A group representing nearly half

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a million engineers is calling on the government to take serious

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steps to keep integration with the European Union

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once the UK leaves. Engineering-related sectors

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contribute ?280 billion - that's $343 billion dollars -

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to Britain's economy. Last year the Royal Academy

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of Engineering warned the sector needed at least a million people

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by 2020 to keep everything Ryan Bourne, Head of

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Public Policy, Institute of Economic Affairs,

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joins us now. It all sounds like a stark warning,

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a crisis in the UK. Is this about Brexit or have we not been

:13:09.:13:12.

channelling young people into engineering for years? I think it is

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a bit of both. The report was a bit more nuanced than your introduction

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suggested. The Academy are quite keen to recognise the fact that

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being open to investment and being open to skilled engineers being able

:13:30.:13:33.

to come to the UK is a good thing, and of course, that might not

:13:34.:13:37.

necessarily change as a result of Brexit. I campaigned for us to leave

:13:38.:13:41.

the European Union, but I still want us to be open to foreign direct

:13:42.:13:45.

investment and want skilled engineers still to come here. It is

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the importance of openness rather than Brexit here. Do you think we

:13:52.:13:54.

will be able to hold onto the engineers we have got from the EU?

:13:55.:13:58.

The first thing I would like the government to do is to guarantee the

:13:59.:14:03.

rights of people working here, particularly in academia and other

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industries. That is something they could do. They could reduce the

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uncertainty over night. I think it is dangerous that some messengers --

:14:13.:14:16.

members of the government have been suggesting that using people's

:14:17.:14:20.

status here in the UK could be used as a negotiating chip in the

:14:21.:14:24.

negotiations. We could kill that uncertainty dead and maintain the

:14:25.:14:30.

best talent we have here, yes. Thank you for your time. Interesting

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developments. We have to quickly mention this story on Ladbrokes.

:14:35.:14:43.

They will sell 359 shops. It says Ladbrokes and coral have agreed to

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sell the shops to rival betting firms. Lots of information on that

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on our website. Our top story, Chinese authorities

:14:55.:14:59.

have detained at least 18 people employed by Australia's biggest

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casino company under A quick look at how

:15:10.:15:10.

markets are faring. Not particularly well. Down 0.5%. A

:15:11.:15:26.

lot to do with the slightly strengthening pound and worries

:15:27.:15:30.

about interest rates in the United States possibly going up. Various

:15:31.:15:35.

interpretations of Janet Yelland was saying in the United States.

:15:36.:15:42.

Are you a fan of Mad Men? Oh, I missed it. It is a very popular

:15:43.:15:50.

programme. It is about the global world of tiding and the individuals

:15:51.:15:55.

that work within it. We'll get the Inside Track with M

:15:56.:15:56.

Saatchi. The Saatchi name is synonymous

:15:57.:16:00.

with advertising thanks to two enterprising brothers,

:16:01.:16:02.

Maurice and Charles Saatchi. M Saatchi were founded in 1995

:16:03.:16:07.

and have become leaders They've got offices in 21

:16:08.:16:10.

countries and clients The most recent full-year

:16:11.:16:14.

revenues were $206 million, from clients including Ikea,

:16:15.:16:20.

Lexus, Carlsberg and Etihad. Moray MacLennan is the Worldwide

:16:21.:16:31.

Chief Executive of M Saatchi. Good to have you in the programme.

:16:32.:16:42.

Good morning. With we need Ing to mention, lots of clients and years

:16:43.:16:46.

and years of experience. A name most people heard of around the world.

:16:47.:16:51.

One of the most high-profile campaigns you ran recently was the

:16:52.:17:00.

Remain campaign for the Remain group which was cross-party, it was the

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Remain which was several parties, wasn't it, what happened? What

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happened was we and other people thought that normal rules would

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apply and they are that if people are going to be less well off they

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will vote for the other side. So we thought that the rational arguments

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were the best to put across, it is the economy stupid. Something else

:17:23.:17:28.

was going on and it is interesting because I think people weren't

:17:29.:17:32.

really voting for the EU. It was a rail against the establishment and

:17:33.:17:36.

that wasn't spotted and we know in marketing that's the first rule,

:17:37.:17:39.

understand the target audience and get the right insight and develop

:17:40.:17:44.

your message and we didn't. And it should have been a positive message

:17:45.:17:47.

first and fore most rather than trying to brow beat people. A fear

:17:48.:17:51.

message? A fear message and the establishment wants you to leave,

:17:52.:17:56.

everyone from the Pope to Obama saying you will be less well off and

:17:57.:18:00.

the electorate said, "No, you will be less well off." Apply that to

:18:01.:18:08.

America now? There are parallels. Huge parallels, the people who feel

:18:09.:18:12.

hard done by for the last 20 years, they are voting because of that. Not

:18:13.:18:15.

because they think that Trump has got the answer to everything? Yes,

:18:16.:18:20.

Hillary can go out with the rational messages, but we have seen that

:18:21.:18:22.

campaign. It is one of those campaigns it is difficult to learn

:18:23.:18:26.

too much from, it is so extraordinary and the Trump

:18:27.:18:30.

supporters aren't actually, even watching the debates at all. So

:18:31.:18:34.

again, it is as someone described, it is a scream in the dark a vote

:18:35.:18:40.

for Trump. You are involved, aren't you, as an agency? We are involved

:18:41.:18:49.

with Emily's List which promotes female politicians in the Democratic

:18:50.:18:52.

Party and it is a negative campaign. It is saying, "Can you seriously

:18:53.:18:57.

vote for this man?" The critical thing in that election is to get

:18:58.:19:01.

people out because in Brexit what happened was, 80% of the people who

:19:02.:19:05.

wanted to leave said they would vote and only 30% of those saying they

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would vote... If you're using a negative campaign, that sounds like

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you haven't learnt anything from the Brexit campaign, saying what are the

:19:16.:19:19.

good things about Hillary. You can learn too much. I wouldn't conflate

:19:20.:19:24.

the two things. In this instance, he is ten points behind now. So I think

:19:25.:19:30.

he's doing a lot of his own negative publicity. Moving on from politics

:19:31.:19:34.

and campaigns to the industry as a whole, I mean, it is shifting and

:19:35.:19:39.

changing so-so, rapidly and mobile devices are pushing that. To what

:19:40.:19:44.

extent are you able to be on top of all of the change? Largely in the

:19:45.:19:49.

short-term I think when you look ten years hence, it is difficult with

:19:50.:19:52.

virtual reality, where is that going to go? You need to be aware and not

:19:53.:19:59.

get ahead with yourself. With internet advertising half of the

:20:00.:20:02.

spend, mobile in the UK increased by over 50% in the last six months.

:20:03.:20:08.

Extraordinary growth. And because it is precise right message, right

:20:09.:20:13.

time, right person and measurable and all those things are important.

:20:14.:20:19.

What about ad blockers? It is up to 20% in terms of people blocking

:20:20.:20:21.

advertisements and I have said before it is a wake-up call and I

:20:22.:20:26.

think it is the global organisations, global advertisers,

:20:27.:20:28.

the coalition for better advertising they've formed in order to do basic

:20:29.:20:32.

things better because you can talk to someone doesn't mean that you

:20:33.:20:35.

should if you can interrupt their conversation online. So the usual

:20:36.:20:38.

rules apply in that you need to be engaging and relevant and

:20:39.:20:41.

entertaining and that stopped happening which is why it is being

:20:42.:20:46.

blocked and it is good to go back to basics and remember those things.

:20:47.:20:51.

With social media you're going for people, your existing customers,

:20:52.:20:55.

aren't you? You're not getting out, the way you're doing it, you're

:20:56.:20:58.

identifying who is buying your stuff and you're going back to them and

:20:59.:21:05.

saying, "Why don't you buy a chocolate cake instead of Marmite?"

:21:06.:21:10.

Right. And I think that's now been learnt by people, by certainly some

:21:11.:21:13.

of the big advertisers, I saw Procter and Gamble last week coming

:21:14.:21:18.

out in public saying they got it wrong through just going through

:21:19.:21:21.

measurable precision marketing because what you need is fame and

:21:22.:21:27.

relevance and to be talked about to emotionally engage, it is a

:21:28.:21:31.

readjustment, well, you have seen the figures of the internet and

:21:32.:21:35.

mobile, they are the dynamic media, but television is holding up well

:21:36.:21:38.

and it is getting the balance right that marketers now need to do.

:21:39.:21:43.

Moray MacLennan thank you very much. In a moment we'll take a look

:21:44.:21:51.

through the business pages but first here's a quick reminder of how

:21:52.:21:54.

to get in touch with us. The Business Live page is where you

:21:55.:22:00.

can stay ahead with all the day's breaking business news. We'll keep

:22:01.:22:03.

you up-to-date with all the latest details with insight and analysis

:22:04.:22:06.

from the BBC's team of editors right around the world. And we want to

:22:07.:22:11.

hear from you too. Get involved on the BBC Business Live web page at:

:22:12.:22:18.

And on Twitter we are at: And you can find us on Facebook.

:22:19.:22:24.

Business Live on TV and online whenever you need to know.

:22:25.:22:29.

Let's see what other stories are being talked

:22:30.:22:31.

Our business correspondent Dominic O'Connell is here.

:22:32.:22:47.

We asked our viewers to get in touch about robots. We had a good guest on

:22:48.:22:54.

the Today programme talking about hedge funds and why some big hedge

:22:55.:22:59.

funds lost their way. Martin Taylor have shut their doors saying that

:23:00.:23:04.

the trading environment has become too predictable. Predictable? Too

:23:05.:23:11.

unpredictable. There are too many computer traders who don't have

:23:12.:23:14.

natural human reaction. Human traders will be used to thinking if

:23:15.:23:18.

Marks Spencer's gets to a certain level of earnings, it is time to

:23:19.:23:21.

buy. The machines don't think like that. The machines do not have human

:23:22.:23:34.

reactions. It makes to a more volatile and unpredictable. The

:23:35.:23:38.

machines are starting to run the markets and the humans don't like it

:23:39.:23:42.

much. To what ex-at any time is what happening? 40% of all share trading

:23:43.:23:48.

is done by black box trading. The image of the 1980s stock exchange

:23:49.:23:52.

floor with the men in red braces shouting at telephones, it is a

:23:53.:23:55.

thing of the past. Does it change the direction of the market? Does it

:23:56.:24:01.

change the day-to-day volatility? Only for a few minutes, as long as

:24:02.:24:05.

you weren't on the wrong side. Five minutes later, we were back... If

:24:06.:24:09.

you look at share price of a company like ex--on, it was 95, it was $85

:24:10.:24:14.

when the oil price was double what it is, now it is $95 Y is that? It

:24:15.:24:21.

is because machines trade up that stock. All these things are driving

:24:22.:24:27.

against things what the humans think. The viewers are voting for

:24:28.:24:35.

humans. James says, "Humans every time. Humans have feelings. The

:24:36.:24:41.

greatest feeling to have on a trading floor is the gut instinct."

:24:42.:24:48.

Can I take you back to the great Tulip Crash and the boom in the.com

:24:49.:24:53.

boom which had nothing to do with machines, apart from people's

:24:54.:24:57.

interest in machines! Humans are just as easy to, just as capable of

:24:58.:25:01.

getting things wrong and badly wrong. The machines were doves. They

:25:02.:25:07.

could move faster than the humans could. It is technology disrupting

:25:08.:25:13.

markets, but volatility is the big thing. It makes things go faster and

:25:14.:25:16.

further. Let's talk about other stories. Wall Street Jurpl how

:25:17.:25:24.

Caterpillar's big bet backfired? Commodity prices were going to stay

:25:25.:25:28.

forever because China was eating so much of the stuff. The Chief

:25:29.:25:33.

Executive of Caterpillar bet big on this. Everybody knows the big mining

:25:34.:25:36.

trucks, he built factories over China and bought a big competitor in

:25:37.:25:43.

the States. The mining super cycle never came to pass. Prices fell and

:25:44.:25:49.

the Caterpillar share prices have fallen. They came back up to 90.

:25:50.:25:53.

Maybe there is a recovery in mining now. You need to be a human to work

:25:54.:25:58.

that one out! A human to finish the show on time. Dominic, thank you

:25:59.:26:02.

very much for coming in. We will see you tomorrow. Bye-bye.

:26:03.:26:10.

Hello there. Good morning. We start the new week with a sunshine and

:26:11.:26:16.

showers Monday. Quite a

:26:17.:26:17.

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