10/01/2017 BBC Business Live


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10/01/2017

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This is Business Live from BBC News with Rachel Horne

:00:00.:00:00.

The leader of the world's biggest economy gets ready

:00:00.:00:09.

What will the world make of the Obama legacy?

:00:10.:00:14.

Live from London, that's our top story on Tuesday 10th January.

:00:15.:00:33.

The US economy has grown, but wage growth has lagged behind.

:00:34.:00:37.

We'll assess the impact of the Obama Presidency.

:00:38.:00:40.

We also have news from the world's second-biggest economy.

:00:41.:00:44.

The goods it makes might be about to get more expensive.

:00:45.:00:47.

Stay tuned to find out what that could mean for you.

:00:48.:01:01.

The Ftse chalked up its tenth straight daily session

:01:02.:01:03.

Are you taking a break from the booze after the excesses

:01:04.:01:07.

We'll meet one man who hopes to turn abstinence into

:01:08.:01:10.

But can non-alcoholic drinks really take over from the real thing?

:01:11.:01:18.

During yesterday's metro strike in London, Uber prices

:01:19.:01:22.

Are companies right to reflect increased demand?

:01:23.:01:27.

Or do price hikes leave you feeling ripped off?

:01:28.:01:33.

There are just a couple of weeks of Barack Obama's Presidency

:01:34.:01:50.

remaining, and later today he gives his big farewell speech.

:01:51.:01:56.

As well as being commander in chief he's also overseen

:01:57.:01:58.

the world's biggest economy for the last eight years.

:01:59.:02:01.

Well, since his inauguration in January 2009 more than 11 million

:02:02.:02:08.

jobs have been added, with the unemployment rate

:02:09.:02:11.

It peaked at 10.0% in Obama's first year in power.

:02:12.:02:20.

The typical American family brings home nearly $54,000 a year.

:02:21.:02:26.

That's almost exactly the same as 20 years ago,

:02:27.:02:28.

Wage growth has been very low under Obama,

:02:29.:02:33.

and has been called the "missing piece" of the recovery.

:02:34.:02:36.

The economy has grown about 1.5% a year over

:02:37.:02:40.

That compares to about 2% under his predecessor George W Bush.

:02:41.:02:48.

One of the costs of that has been that US Government

:02:49.:02:50.

debt has nearly doubled, from $10 trillion to $20 trillion,

:02:51.:02:55.

during Obama's eight years in the Oval Office.

:02:56.:03:01.

Marianne Schneider-Petsinger, US geo-economics fellow

:03:02.:03:04.

at Chatham House, a think tank in London.

:03:05.:03:14.

If you ask any president, you would not want to take on that economy. If

:03:15.:03:27.

you were a teacher, you had to grade him on his economic, what grade

:03:28.:03:31.

would you give him? Overall, let's not forget where he started. When

:03:32.:03:36.

you talk about the economy, it was on the brink of depression. He

:03:37.:03:40.

averted that, it was just a recession. Compared to when he took

:03:41.:03:47.

it over, he has done a solid job, but it was not anything spectacular.

:03:48.:03:51.

If you compare him to other presidents, he falls in the middle

:03:52.:04:00.

range. Some may suggest it did not fall into depression because they

:04:01.:04:03.

threw a lot of money at it. They pumped a lot of money in. Some say

:04:04.:04:11.

not enough, though. I did not catch the wage growth. It is the missing

:04:12.:04:18.

link. You have created these jobs, they lost a lot but they created

:04:19.:04:26.

some. Why hasn't wage growth gone up? Many of the jobs that were

:04:27.:04:35.

created were in low-wage sectors. There is pressure from overseas and

:04:36.:04:38.

from technological change, automation is a key worry or stop

:04:39.:04:44.

many of these jobs had that have been created are part-time. Many

:04:45.:04:47.

people feel they are not making headway. There are a number of

:04:48.:04:52.

issues that go together. How do you think Barack Obama will be feeling?

:04:53.:04:58.

There are a lot of big issues, like his health care or trade deals,

:04:59.:05:03.

which may not be lasting. How will he look at this? He hopes that with

:05:04.:05:11.

some Democrats still in support of the things he has done, they will be

:05:12.:05:19.

attempts by the Donald Trump administration to overturn them, to

:05:20.:05:26.

chisel them down, but we will see, it is an open question. We have

:05:27.:05:34.

spoken before, looking forward, Donald Trump and his economic

:05:35.:05:39.

policies, there is a lot that people would look favourably on. Animal

:05:40.:05:46.

spirit is back. In terms of the promised tax cuts and cutting down

:05:47.:05:51.

on regulation. Businesses react favourably to that. They question

:05:52.:05:57.

whether he can deliver on many of those promises.

:05:58.:06:00.

Two prototype models of a highly-anticipated gaming

:06:01.:06:03.

laptop have been stolen at the Consumer Electronics

:06:04.:06:05.

They belong to the gaming company Razer, and each

:06:06.:06:09.

It's the first portable laptop of its kind.

:06:10.:06:13.

Razer said the devices were taken from its press room on Sunday,

:06:14.:06:16.

and the Chief Executive Min-Liang Tan said they were treating the case

:06:17.:06:19.

Volkswagen's chief executive for the North America region says

:06:20.:06:26.

the company was "surprised" by the criminal charges laid

:06:27.:06:29.

against the executive in charge of complying

:06:30.:06:31.

The German carmaker has admitted installing secret software

:06:32.:06:37.

On Monday Oliver Schmidt appeared in court in Miami charged with fraud

:06:38.:06:44.

He chose not to enter a plea and was remanded in custody.

:06:45.:06:51.

There are question marks about the future of Yahoo's

:06:52.:06:53.

influential chief executive Marissa Mayer after it was revealed

:06:54.:06:55.

she will not serve on the board of the company that is left behind

:06:56.:06:59.

once Yahoo's core assets are sold to Verizon.

:07:00.:07:03.

Five other directors will also not serve on the board.

:07:04.:07:17.

We are looking at our web a cracking site. We will work with our UK

:07:18.:07:27.

audience later, but Snapchat, or the company Snap, which owns it, they

:07:28.:07:34.

are choosing the UK for anything outside the US.

:07:35.:07:38.

It is a vote of confidence in the UK. If those companies come to

:07:39.:07:42.

Europe, they go for Ireland. Says the Irish lady! Luxembourg, the

:07:43.:07:48.

Netherlands. Could this be something to do with

:07:49.:07:53.

the fine that Apple could be facing, 13 billion tax rebate?

:07:54.:07:58.

It could be. Snapchat expected to go to the market this year.

:07:59.:08:03.

A big float. It hopes to raise $25 billion.

:08:04.:08:07.

We've had some numbers out of China which show that the world's

:08:08.:08:10.

second-biggest economy could be about to push up the prices

:08:11.:08:12.

of the things we around the world all buy from China.

:08:13.:08:15.

Sharanjit Leyl is in Singapore and she's got the figures.

:08:16.:08:24.

Just explain, how could these increases in China affect us as

:08:25.:08:29.

buyers elsewhere in the world? Will it cause our prices to go up?

:08:30.:08:35.

Possibly. Let me give you those figures, because they are

:08:36.:08:39.

interesting. They grew at their fastest pace in more than five

:08:40.:08:46.

years. The index for December was up 5.5% from the previous year, against

:08:47.:08:55.

expectations of. That could lead China to export inflation two

:08:56.:08:58.

nations around the world through its vast supply chains. This may prompt

:08:59.:09:04.

manufacturers who are enduring those higher input costs to raise their

:09:05.:09:08.

prices and pass them on to everyone around the world. Whether that

:09:09.:09:14.

rebound will be sustained depends on how the global economy fares,

:09:15.:09:20.

possibly under Donald Trump, and whether trade tensions flare between

:09:21.:09:24.

the US and China. Consumer prices remain stable, rising just over 2%.

:09:25.:09:31.

Others say that is an indicator that the real inflation seems restricted

:09:32.:09:36.

to the industrial sector. Hard-hit is the mining sector, prices surged

:09:37.:09:41.

over 21% in December from a year earlier.

:09:42.:09:46.

The US dollar started 2017 at a high but it's been sliding,

:09:47.:09:50.

along with the Dow on Wall Street, which closed down yesterday.

:09:51.:09:58.

And Asian stocks were mixed, with a decline in Japan.

:09:59.:10:00.

The Nikkei pretty flat, offsetting gains in Hong Kong,

:10:01.:10:07.

This week we should keep an eye on the oil price.

:10:08.:10:13.

It crept back up today after a fall on Monday over concerns

:10:14.:10:15.

about whether output cuts by major exporters will be enough to support

:10:16.:10:19.

the oil market as other producers have increased supplies.

:10:20.:10:26.

And Samira Hussain has the details about what's ahead

:10:27.:10:28.

More automotive news happening, General Motors will be telling

:10:29.:10:40.

investors what they can expect from the number one American auto-maker

:10:41.:10:45.

in 2017. Top officials will present the company's financial outlook at a

:10:46.:10:49.

butcher bank conference in Detroit. It is held at the same time as the

:10:50.:10:56.

Detroit auto show. Also happening, the Ford motor company CEO will

:10:57.:11:01.

outline forecasts for 2017 financial performance at a conference during

:11:02.:11:05.

the Detroit auto show. Investors will be watching for news on 2017

:11:06.:11:10.

American market forecasts, as well as the outlook for Asia and Europe.

:11:11.:11:17.

And Barack Obama will deliver his farewell address in his home city of

:11:18.:11:18.

Chicago. Joining us is James Bevan,

:11:19.:11:21.

chief investment officer at CCLA We want to talk about the American

:11:22.:11:35.

market. But let's talk about the FTSE 100, the main market in London.

:11:36.:11:39.

One record after another, but this is a story about the pound. The

:11:40.:11:43.

pound goes down in value, the FTSE goes up. A very large chunk of the

:11:44.:11:49.

earnings are overseas, either through export all through selling

:11:50.:11:52.

overseas, and bringing the earnings back. Whenever the pound goes down,

:11:53.:12:01.

profits go up, and vice versa. More bang for the buck. The American

:12:02.:12:11.

markets, all eyes are on January the 21st, the President-elect takes

:12:12.:12:16.

over. In the UK we have the weakness of the pound, in the US we have a

:12:17.:12:20.

strong dollar, and many people think, if you are going to talk

:12:21.:12:23.

about markets going up on the weakness of the pound, white is it

:12:24.:12:28.

that American equities have gone up with a strong dollar. Donald Trump

:12:29.:12:31.

is promising to cut tax substantially. Corporate earnings

:12:32.:12:36.

will rise because the Government will take less money. If you join

:12:37.:12:40.

and you should be tax cuts passed and you should be tax cuts passed

:12:41.:12:43.

straight through to the bottom line is terms of earnings, the index goes

:12:44.:12:50.

all the way. It is an overly optimistic perspective, but if you

:12:51.:12:54.

said, let's cut the difference between some deflation of the

:12:55.:12:58.

optimism and a revaluation on the back of that earnings numbers, maybe

:12:59.:13:02.

2500. Looking at how the markets have gone up in the States, a lot of

:13:03.:13:07.

it is on sentiment, we now know Donald Trump will be the president,

:13:08.:13:10.

and he will invest in infrastructure and cut down on regulation and

:13:11.:13:15.

taxes. Once he is in power and things either do or don't begin to

:13:16.:13:20.

happen, at one point -- at what point will be see a reality check?

:13:21.:13:26.

Have at least six months, because he will have to take the tax cuts right

:13:27.:13:30.

through the process, and we don't know if you will backdate them to

:13:31.:13:34.

early 2017 awful the date them to 2018. But the markets would begin to

:13:35.:13:44.

focus anyway forwards. All of the sentiment we have had for the global

:13:45.:13:47.

economy has been good, that has to remain in place, because it fits

:13:48.:13:51.

begin to slide back down the hill, no matter of cutting taxes will lead

:13:52.:13:57.

to better numbers. The US equity market is looking for 5% growth this

:13:58.:14:02.

year and next year, and that is what we have to focus on. We will see you

:14:03.:14:03.

shortly. We're all getting a lot more health

:14:04.:14:05.

conscious these days, but can non-alcoholic drinks really

:14:06.:14:07.

take the place of booze? We'll hear from a man who's hoping

:14:08.:14:10.

to capitalise on the trend You're with Business

:14:11.:14:13.

Live from BBC News. Snap, the company behind

:14:14.:14:22.

messaging app Snapchat, is setting up its international HQ

:14:23.:14:24.

in Britain, where it will book Many tech firms have

:14:25.:14:28.

preferred Ireland, Luxembourg or the Netherlands

:14:29.:14:36.

as their European tax base. Theo Leggett is in our

:14:37.:14:45.

business newsroom. Snapchat, why this decision, it

:14:46.:14:55.

bodes well for the UK economy and for London? A lot of social media

:14:56.:15:00.

companies like Facebook and Google have run into trouble over setting

:15:01.:15:04.

up tax bases in lower tax jurisdictions in Europe and then

:15:05.:15:08.

diverting profits from other large markets into those jurisdictions in

:15:09.:15:12.

order to minimise their tax bills. So schnapping is not doing that.

:15:13.:15:16.

They are setting up in the UK and they're channelling the profits from

:15:17.:15:19.

the UK first of all, but also from other countries where they don't

:15:20.:15:23.

have a major base and that includes Australia and Saudi Arabia and

:15:24.:15:26.

paying tax on them in the UK. Now, that tax bill at the moment won't

:15:27.:15:29.

actually be very high because Snapchat's revenues are not that

:15:30.:15:33.

high at the moment, but it is expanding rapidly. It is taking on

:15:34.:15:37.

more advertising and it is expecting its revenues to go up in the near

:15:38.:15:41.

future so there will be more money coming in and the money will be

:15:42.:15:43.

going through the UK. Let's not forget. The UK itself as a major

:15:44.:15:48.

economy has a low corporation tax rate. 20% at moment. It will fall to

:15:49.:15:56.

17% by 2020. So by doing this, schnapp is avoiding the prospect of

:15:57.:16:00.

big regulatory problems, like like the UK Government and the European

:16:01.:16:03.

Commission clamping down on companies which have aggressive tax

:16:04.:16:07.

policies and at the same time, it's basing itself in the UK where it has

:16:08.:16:11.

a relatively low corporation tax rate. So I think that's what's

:16:12.:16:15.

behind it. By the way, some of our viewers may not be familiar with

:16:16.:16:20.

Snapchat, it is an app aim at younger people. If you're under 25,

:16:21.:16:24.

you almost certainly will have heard of it. If you're over 30, maybe you

:16:25.:16:30.

won't, but that's changing as well. Snapchat allows you to take pictures

:16:31.:16:35.

and videos and send them and then have them deleted. It is becoming

:16:36.:16:40.

more popular among people the same age as myself and dare I say it, you

:16:41.:16:47.

too, Aaron. I'm older than you Theo! Thanks, mate.

:16:48.:16:57.

Morrison, Christmas sales up. They are doing well, aren't they? Good

:16:58.:17:00.

news for Britain's fourth biggest supermarket.

:17:01.:17:04.

Our top story, President Obama is getting ready to make

:17:05.:17:07.

He's expected to focus on his economic legacy especially

:17:08.:17:10.

A quick look at how markets are faring.

:17:11.:17:14.

We can see there the FTSE continuing that winning streak up and up,

:17:15.:17:21.

pretty much every day since the start of the year. It is up almost

:17:22.:17:28.

0.2%. The DAX up and the CAC down slightly. All the markets keeping an

:17:29.:17:34.

eye on the oil price which had its biggest fall in six weeks over

:17:35.:17:37.

concerns that some producers are making too much oil despite the Opec

:17:38.:17:43.

agreement. You do like the markets! Let's talk

:17:44.:17:48.

about something more interesting before I spit on the desk!

:17:49.:17:51.

Now let's get the inside track on distilling and I don't

:17:52.:17:54.

Herb and plant distillates have long been a medicinal tradition

:17:55.:17:58.

in the east but when Ben Branson, a British tee-total marketing

:17:59.:18:01.

executive stumbled across a copy of The Art of Distillation.

:18:02.:18:03.

A solution to the problem of what to drink when you don't want to drink.

:18:04.:18:09.

So inspired by craft techniques he set up soft drink

:18:10.:18:11.

Since then Seedlip has gained investment from drinks giant Diageo

:18:12.:18:15.

who seem to be betting on the rise of this adult market.

:18:16.:18:21.

The founder and chief executive of Seedlip,

:18:22.:18:22.

Guess what, he brought us? Nonalcoholic drinks! Sorry, I'm

:18:23.:18:33.

probably not your target market here. Welcome to the programme. Are

:18:34.:18:38.

you serious from a book? I know you've got the book, right? From a

:18:39.:18:45.

book. Ladies and gentlemen, this book is 1664? The original copy was

:18:46.:18:51.

1651. We managed to get our hands on a copy from 1664. This is original

:18:52.:18:57.

recipes, nonalcoholic herbal remedies all the distilling

:18:58.:19:00.

techniques that I found three years ago. So what prompted you? Was this

:19:01.:19:04.

something you were thinking I want a business opportunity, I can see a

:19:05.:19:07.

gap in this market? Was it that you were doing something else that

:19:08.:19:11.

brought you into making nonalcoholic beverages? It was not a business

:19:12.:19:17.

gap, business opportunity. Seedlip is just a product of my upbringing.

:19:18.:19:23.

Halfify family have been farming for over 300 years and we still farm

:19:24.:19:26.

today and that's really important. The other half of my company are in

:19:27.:19:30.

brand design. I grew up in the countryside and then went to work in

:19:31.:19:34.

brand design and I put the two together. You have an unusual, did

:19:35.:19:39.

you go to university? No. No. You did work experience for a big vodka

:19:40.:19:43.

company at the age of 14? I was doing work experience for brand

:19:44.:19:46.

design agencies from the age of 14 and got to work on some fantastic

:19:47.:19:52.

global brands. And so got a real insight into what it means to create

:19:53.:19:56.

one. I imagine the biggest booze maker in the world, Diageo,

:19:57.:20:00.

investing in you, which is kind of strange, but it sort of suggests

:20:01.:20:04.

this is a growing market? I think we're now in an age... Who are you

:20:05.:20:08.

targeting? We are in an age where you can go to a restaurant and have

:20:09.:20:12.

all kinds of food, it doesn't matter what allergy you have got and it

:20:13.:20:17.

doesn't matter what you want from wherever in the world, if you want

:20:18.:20:21.

an nonalcoholic cocktail, you can do the same. If you're not drinking for

:20:22.:20:26.

whatever reason, the options are poor, they are one dimensional and

:20:27.:20:30.

sweet and fruity and there is no theatre, there is no adult

:20:31.:20:34.

sophisticated flavour that we're trying to do. You know, I like a

:20:35.:20:43.

drink. My wife will nod to that. I haven't even tasted this. We've

:20:44.:20:48.

mixed it with tonic water. They are both mixed with tonic. We have got

:20:49.:20:57.

two products. Isn't the problem, it is not a problem, the issue, you

:20:58.:21:02.

were saying, you wanted other options? I have got three children,

:21:03.:21:07.

every time I was pregnant the offers of what you wanted to drink were

:21:08.:21:11.

limited. So I can see the appeal of an item like this, but your price

:21:12.:21:14.

bracket, it is ?27 a bottle. That's expensive. 40 bucks, that's $40 of

:21:15.:21:21.

the that's pricey. It is pricey. Because it takes us a long time to

:21:22.:21:26.

make. So we're individually distilling each individual

:21:27.:21:29.

ingredient. Two of the ingredients come from my farm, my hay, my hand

:21:30.:21:34.

picked peas, the craft that goes into this and the actual time and

:21:35.:21:39.

hand labour means that actually we're creating something that's

:21:40.:21:44.

really grown-up. Here is my point. For a drinker like me, is it all

:21:45.:21:48.

about the taste? It might be, but you don't get the buzz? You don't

:21:49.:21:57.

get the feeling. I'm not talking about pregnant. If it is a Monday

:21:58.:22:02.

lunch time or you're driving or as we are in dry January and you're

:22:03.:22:07.

having a month off, the opportunity to have a great grown-up

:22:08.:22:10.

nonalcoholic drink should still be there regardless of drinking for the

:22:11.:22:13.

effect. I think the effect of wanting to feel part of the group or

:22:14.:22:18.

wanting to feel like you're not the dummy in the corner drinking orange

:22:19.:22:21.

juice. This product, that's filling this gap in the market for adult

:22:22.:22:28.

drinks. There are a lot of other companies rushing in, Britvic have a

:22:29.:22:33.

company launching a similar sort of, more savoury alcoholic alternative

:22:34.:22:37.

rather than the fruity ones. We have nonalcoholic wines being introduced

:22:38.:22:40.

by one of the upmarket cordial companies. Is there room for you as

:22:41.:22:45.

well? We are the world's first distilled nonalcoholic spirits. So

:22:46.:22:49.

we are taking the same rituals of a spirit mixer of a vodka and Coke and

:22:50.:22:54.

of a gin and tonic that sits on the back bar that means you can make

:22:55.:22:58.

something at home so we're taking that side of the market. I guess we

:22:59.:23:05.

want to solve the problem of not drinking. If other people are coming

:23:06.:23:08.

in and helping to build that owication, happy days. Ben Branson,

:23:09.:23:13.

thank you. You can come back and see me when you've put some alcohol in

:23:14.:23:17.

that one and we'll talk them. I'm not your target market, I'm sorry!

:23:18.:23:23.

In a moment we'll take a look through the Business Pages but first

:23:24.:23:26.

here's a quick reminder of how to get in touch with us.

:23:27.:23:29.

The Business Live page is where you can stay ahead with the day's

:23:30.:23:32.

breaking business news. We will keep you up-to-date with the latest

:23:33.:23:38.

analysis from the BBC's team of editors around the world. We want to

:23:39.:23:43.

hear from you too. Get involved on the Business Live web page. On

:23:44.:23:47.

Twitter we're at: You can find us on Facebook:

:23:48.:23:53.

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

:23:54.:23:58.

What other business stories has the media been

:23:59.:24:00.

James Bevan from CCLA Investment Management joins us again.

:24:01.:24:03.

James, thank you for hanging around. Now, earlier we asked people to send

:24:04.:24:11.

in any tweets they might have. We were asking about the Uber story,

:24:12.:24:16.

there was a Tube strike in London and some Uber charges went up by

:24:17.:24:21.

500%! Was that supply and demand? Is that fine? Is it OK to cash in? It

:24:22.:24:26.

is the core part of the Uber business model. Uber pays by the

:24:27.:24:32.

mile and the time spent behind the wheel and there is a loading factor

:24:33.:24:37.

to get people to join the ranks of the drivers when demand rises. When

:24:38.:24:40.

there is a strike in public transport, demand goes through the

:24:41.:24:44.

roof and hence the loading goes up hugely. Some tweets have said,

:24:45.:24:48.

"Look, they are really cheap norm times. This is their opportunity to

:24:49.:24:53.

cash in." There is a legitimate problem when

:24:54.:25:00.

there was too much traffic and you hope you're going to get a fast ride

:25:01.:25:05.

and you don't. The road system is not good at coping with huge

:25:06.:25:12.

volumes. It is not an Uber problem. Another company that is weighing

:25:13.:25:18.

what is it going to do with president trump's dislike for cars

:25:19.:25:22.

made in Mexico and sold in the US? It is made in Mexico and sold in the

:25:23.:25:26.

USment there are successful car companies like Nissan and VW and BMW

:25:27.:25:31.

that manufacture in Mexico and sell around the world, not specifically

:25:32.:25:36.

to the United States. However, Ford and GM have definitely decided in

:25:37.:25:43.

the past that they would want to manufacture cheaply in Mexico and

:25:44.:25:46.

export to the US and they will have to re-think their strategy. James

:25:47.:25:49.

Bevan, thank you very much for joining us today.

:25:50.:25:52.

Thank you for the tweets. We're running out of time to mention them,

:25:53.:25:55.

but a lot of people saying focus on the taxis as well, not just Uber. I

:25:56.:25:59.

will. Bye-bye. Hello. It looks as if it will be a

:26:00.:26:13.

fairly cloudy day for many parts of the British Isles and there is a

:26:14.:26:16.

chance of rain on a weak weather front for many areas too. But it is

:26:17.:26:20.

not all doom and gloom. There

:26:21.:26:21.