10/02/2017 BBC Business Live


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10/02/2017

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This is Business Live from BBC News with Aaron

:00:00.:00:07.

Japan's Prime Minister is in Washington to talk trade

:00:08.:00:11.

with President Trump but who'll come out on top of the leaderboard?

:00:12.:00:15.

Live from London, that's our top story on Friday

:00:16.:00:18.

Yes, touchdown - the leader of the world's third biggest

:00:19.:00:37.

And when he takes to the golf course with President Trump,

:00:38.:00:43.

he's going to have to defend why Japan sells more to the US

:00:44.:00:46.

Also in the programme - it's back!

:00:47.:00:53.

Greece's debt crisis returns to haunt Europe.

:00:54.:00:57.

Can its lenders agree a new deal, or will we have

:00:58.:01:00.

And we'll tell you why some solid numbers from China continue

:01:01.:01:06.

And those Trump promises pushing Wall Street to more record highs.

:01:07.:01:17.

And as President Trump orders a review of the financial rules

:01:18.:01:21.

designed to stop another nightmare on Wall Street, we'll be getting

:01:22.:01:24.

the inside track from our Economics Editor Kamal Ahmed on that

:01:25.:01:27.

and the rest of the stories he's been covering this week.

:01:28.:01:30.

As snow hits New York City, how much do you think it costs

:01:31.:01:34.

to clear an inch of the white stuff off the streets?

:01:35.:01:36.

One dollar? One hundred Dollars?

:01:37.:01:38.

We'll give you the answer at the end of the show.

:01:39.:01:42.

We start in the US where, as you've been hearing,

:01:43.:02:04.

Japan's Prime Minister Shinzo Abe meets President Trump later.

:02:05.:02:07.

Remember, one of Mr Trump's first actions as President

:02:08.:02:16.

was to withdraw from the 12-nation Trans Pacific Partnership trade

:02:17.:02:20.

deal - signed by Obama - and strongly supported

:02:21.:02:22.

Mr Trump called it a 'terrible' deal for the US.

:02:23.:02:33.

He wants a fairer trading relationship with Japan -

:02:34.:02:35.

Last year Japan sold almost $69 billion of more stuff

:02:36.:02:44.

to the US than it bought from the US.

:02:45.:02:48.

That 'trade surplus' as it's called is one of the biggest any

:02:49.:02:50.

To give you an idea of why - look at this.

:02:51.:02:57.

In 2015 - the latest figures we have - the US exported a little over

:02:58.:03:01.

Here's how many Japanese cars were sold

:03:02.:03:10.

that year in the US - 17.5 million - that's

:03:11.:03:13.

Here's a vital point though - most of those cars are actually made

:03:14.:03:20.

Mr Abe is expected to stress that 1.5 million American jobs rely -

:03:21.:03:27.

either directly or indirectly - on Japanese carmakers.

:03:28.:03:32.

On top of this - you have the so called

:03:33.:03:35.

Mr Trump has claimed the Japanese Yen is kept

:03:36.:03:41.

artificially low against the Dollar to help Japanese exporters.

:03:42.:03:55.

A weaker yen makes Japanese goods cheaper.

:03:56.:03:59.

And there's another big figure that is causing tension.

:04:00.:04:03.

$5.5 billion was the bill to keep US troops in Japan last year.

:04:04.:04:10.

Japan actually paid for almost half of that -

:04:11.:04:15.

according to their defence ministry, but Mr Trump says the US

:04:16.:04:17.

is shouldering too much of the burden of security

:04:18.:04:21.

So - how best to diffuse all this tension?

:04:22.:04:28.

Fung Siu, Asia, Regional Manager - Economist Intelligence

:04:29.:04:30.

Thank you for joining us. Let's start with trade. Aaron has given us

:04:31.:04:43.

the figures, what looks like a huge trade surplus, but part of that is

:04:44.:04:47.

caused by the car sales, which are supporting American jobs. So maybe

:04:48.:04:52.

that headline figure is not as bad as it looks. Completely, most of the

:04:53.:04:58.

car sales in America are actually manufactured in America by

:04:59.:05:05.

Americans. Yes, there are exports from Japan, auto exports to America,

:05:06.:05:11.

that is not the whole picture. You have machinely exports and optical

:05:12.:05:16.

goods. But America doesn't just have a trade deficit with Japan, it has a

:05:17.:05:21.

trade deficit with the world and has done for a few decades. President

:05:22.:05:25.

Trump picking a fight with Japan, he would have too pick a few fights

:05:26.:05:31.

with the other countries. What do you think Shinzo Abe wants to

:05:32.:05:36.

achieve from today? He obviously was not pleased that America pulled out

:05:37.:05:40.

of TPP, in terms of trade agreements, what do you think

:05:41.:05:44.

they're looking for? I think Shinzo Abe is disappointed that TPP has not

:05:45.:05:51.

been ratified. Japan had ratified it. But to say that in that front,

:05:52.:05:59.

Shinzo Abe at the start thought he could persuade Trump to come around

:06:00.:06:03.

to his idea that TPP is a good thing. I think he has ditched that

:06:04.:06:08.

idea and I think Shinzo Abe is prepared to enter into by lateral

:06:09.:06:19.

trade agreements. The US have said Japan is manipulating their currency

:06:20.:06:25.

you go from there? The weaker yen you go from there? The weaker yen

:06:26.:06:32.

quantitative easing that Japan quantitative easing that Japan

:06:33.:06:37.

launched in 2013. One side effect is the weak yen. That is because Japan

:06:38.:06:42.

is lacking inflation and wants to import inflation. This policy will

:06:43.:06:52.

go on, but it has ups and downs a and last year the yen appreciated,

:06:53.:06:56.

so I don't think President Trump has much to say on that front with

:06:57.:07:00.

regard to that particular year in the yen's performance. Thank you. Do

:07:01.:07:06.

you know anything about golf? No, #3w I do know that Super Mario is

:07:07.:07:12.

high on the list and they will play golf. I'm wondering who will win.

:07:13.:07:20.

They can play golf on the Nintendo. But it is, not quite the same thing.

:07:21.:07:26.

Some of the other stories making the headlines.

:07:27.:07:29.

Renault has posted record annual sales -

:07:30.:07:31.

up 13% with net income rising 16% to 3.5 billion euros.

:07:32.:07:37.

A series of new product launches boosted Renault last year,

:07:38.:07:39.

helping it increase its market share in all regions.

:07:40.:07:45.

Lower-cost models such as the Duster and Kwid also sold well.

:07:46.:07:55.

Arcelor Mittal, the world's largest steelmaker, has posted its first

:07:56.:07:58.

annual profit in five years, showing signs of recovery

:07:59.:08:00.

The Luxembourg-based group reported net income of $1.8 billion in 2016,

:08:01.:08:06.

even as sales fell just over 10%, but its debt pile shrank.

:08:07.:08:13.

This is in contrast to the $7.9 billion net loss that ArcelorMittal

:08:14.:08:19.

made the year before - its worst financial performance

:08:20.:08:21.

since the mega-merger of Mittal Steel and Europe's Arcelor in 2006.

:08:22.:08:35.

Now golf, Trump and Shinzo Abe will be playing golf. We could join them

:08:36.:08:42.

for a four-ball. I think President Trump will have to play more golf

:08:43.:08:48.

with the Chinese president. We had numbers from China. If President

:08:49.:08:54.

Trump is not happy with surplus from Japan, he won't be happy with the

:08:55.:08:58.

surplus from China. Lisha, this is an astonishing number

:08:59.:09:20.

and it is just one month's worth? Yes since we are all about the

:09:21.:09:25.

numbers today and deficit, according to US data, the US/China deficit

:09:26.:09:33.

last year was $347 billion. So they will have to play lot of golf to get

:09:34.:09:39.

through these tensions. So we have been speaking about that call

:09:40.:09:44.

between President Trump and president Ping and how that

:09:45.:09:48.

alleviated tensions over the one China policy. But this issue around

:09:49.:09:55.

trade will be the real battleground. China's trade surplus is at its

:09:56.:10:01.

highest in nearly half a year, that is $51 billion and President Trump

:10:02.:10:05.

has been arguing that China is benefitting at the ex-pension --

:10:06.:10:10.

expense of America and we saw exports rise in China and we are

:10:11.:10:13.

going to have to watch and see how the game goes. Watching and waiting

:10:14.:10:15.

indeed. Have a great weekend. Going to keep the market wrap short,

:10:16.:10:21.

but yes Asia stocks liking those Chinese trade numbers

:10:22.:10:25.

as well as the continued record Europe, following suit as investors

:10:26.:10:28.

keep their eyes on President Trump as he promised to unveil a major tax

:10:29.:10:34.

announcement to lower OK, let's go and find out what'll be

:10:35.:10:37.

making the biz headlines in the US. Much of the attention on Friday will

:10:38.:10:58.

be in washing tovn when President Trump meets with Prime Minister

:10:59.:11:01.

Shinzo Abe at the White House. There is still some other economic news,

:11:02.:11:08.

including labour department report showing that import prices rose in

:11:09.:11:13.

January after a 0.4% increase the previous month. The update to

:11:14.:11:18.

consumer sentiment index is out and it seems it may have spliped

:11:19.:11:23.

compared to the previous month and for an economy that relies on

:11:24.:11:27.

consumer spending, it is important to see how confident people are

:11:28.:11:30.

feeling and how much that will influence how they spend and finally

:11:31.:11:40.

earnings still continue, the advertising company Inter Public

:11:41.:11:45.

shows a slight rise, as the economy showed momentum. Thank you.

:11:46.:11:52.

Joining us is Sue Noffke, UK Equities Fund Manager at Schroders.

:11:53.:11:56.

Let's start with the markets, because Aaron mentioned about

:11:57.:12:03.

President Trump's promise to help with regulation and he has promised

:12:04.:12:08.

a phenomenal new rules on regulation. But still no detail. No,

:12:09.:12:13.

but a timeline of two to three weeks. The market had begun to pause

:12:14.:12:19.

a bit about where was the detail, it was looking more complex in terms of

:12:20.:12:24.

border adjustment trades and taxation and the deregulation with

:12:25.:12:32.

industries. And he ignited the airlines with further deregulation

:12:33.:12:36.

and tearing up lots of red tape around that sector. So that got the

:12:37.:12:41.

market excited again. Pushing it to further highs. It is highlighting

:12:42.:12:47.

the markets. You said, we don't have any details, he just said in two or

:12:48.:12:50.

three weeks I will tell you. Phenomenal. About a tax deal and the

:12:51.:12:57.

markets react. It would be a big deal. If he can do things with

:12:58.:13:02.

deregulation and stimulate the economy. The markets will love it.

:13:03.:13:08.

The attempts to tackle taxation, which is very complex and high in

:13:09.:13:12.

the United States, it has not been easy for any of the administrations,

:13:13.:13:18.

because they haven't had consistency between political parties. Now we

:13:19.:13:23.

have got the Republicans in all the various seats, something could

:13:24.:13:26.

happen. That would be no doubt a corporation tax, you said taxes are

:13:27.:13:30.

high, they have one of the highest in the world around 35%. For

:13:31.:13:36.

individuals it is simplification of the tax code and helping investment.

:13:37.:13:41.

That tax cuts and the corporate boost to the US economy. That is the

:13:42.:13:47.

plan. If he can get the tax cuts through that would be the result.

:13:48.:13:50.

You will be back to do the papers. Still to come: We'll get

:13:51.:13:55.

the inside track on the big economics stories of the week

:13:56.:13:58.

from our Economics You're with Business

:13:59.:14:00.

Live from BBC News. The UK's high street has just

:14:01.:14:06.

experienced its worst January January's like-for-like

:14:07.:14:08.

sales declined by 0.1%, marking the first negative growth

:14:09.:14:15.

in the crucial January discounting period since 2013 and comes hot

:14:16.:14:19.

on the heels of a dismal December. This according to accountancy

:14:20.:14:24.

and business advisory firm BDO who's head of retail,

:14:25.:14:26.

Sophie Michaels joins us now. Great to have you with us, really

:14:27.:14:40.

poor numbers, what is going on here, are we spending less, is it the

:14:41.:14:46.

weather, is it Brexit? That's right, so January followed a poor Christmas

:14:47.:14:52.

sales, which will lead retailers concerned into 2017. But if we break

:14:53.:14:58.

that down, the first two weeks of January we saw positive sales.

:14:59.:15:02.

Showing that the consumer is out there looking for bargains. The

:15:03.:15:06.

third week we saw sales were dented by poor weather. And going to the

:15:07.:15:12.

end of the month, as retailers transitioned from a sale period into

:15:13.:15:17.

full price, the consumers backed off in terms of spending, leaving an

:15:18.:15:19.

over all drop in sales in January. Looking at specific parts of the

:15:20.:15:31.

sales, were there any bright spots? I believe there was an increase in

:15:32.:15:36.

the amount of discounted home where we were buying, and the seasonal

:15:37.:15:41.

increase in online sales. That's right, particularly in that week of

:15:42.:15:45.

poorer weather. The consumer was taking a more comfortable position,

:15:46.:15:51.

shopping from the armchair as opposed to in the high street.

:15:52.:15:56.

Overall, we saw a decline, and homeware saw an increase in sales.

:15:57.:16:03.

But as we move into a period where there is higher expectation of

:16:04.:16:08.

inflation, perhaps that is the area, the discretionary spend, where there

:16:09.:16:10.

is more of a concern that it would be challenged. Thank you for joining

:16:11.:16:16.

us. Let's take a quick look at the tablet. Thunderbirds... I always

:16:17.:16:27.

wanted a model of Thunderbird two. You can get them. Make your own from

:16:28.:16:37.

cardboard. ?10 million worth of grants for the development of

:16:38.:16:40.

spaceports, but not everybody is a fan.

:16:41.:16:44.

You're watching Business Live - our top story:

:16:45.:16:48.

Japan's Prime Minister Abe is in Washington to meet

:16:49.:16:50.

The leaders of two of the world's three biggest economies will discuss

:16:51.:17:00.

Tokyo's trade surplus with the US, jobs, investment annd currencies.

:17:01.:17:09.

Let's like a quick -- let's take a quick look at how the markets are

:17:10.:17:18.

doing. We're waiting to see if anything interesting comes out of

:17:19.:17:22.

that meeting with Shinzo Abe and Donald Trump.

:17:23.:17:29.

Today Greece has to pay back 1.4 billion euros to its creditors.

:17:30.:17:36.

It's the latest instalment on the country's 320 billion

:17:37.:17:38.

And it's just one in what will become an avalanche of payments over

:17:39.:17:47.

We're now joined by our economics editor Kamal Ahmed

:17:48.:17:52.

Thank you for coming in. Looking at the schedule of payments, it's a

:17:53.:18:00.

couple of payments over the next six months, but they really need to get

:18:01.:18:06.

it sorted now before Europe gets distracted by elections. There was a

:18:07.:18:09.

lot of politics in what is going on. This is the sixth year of the Greek

:18:10.:18:14.

debt crisis, which started in 2010. There is real tension between the

:18:15.:18:19.

two main creditors, the IMF and the EU. The IMF is split itself. It is

:18:20.:18:29.

saying that the economy in Greece is growing reasonably, and it still has

:18:30.:18:32.

on the table the idea of debt relief, that some of Greece's bets

:18:33.:18:38.

just will not be paid. The EU, particularly led by Germany, and

:18:39.:18:44.

with elections coming up, do not want debt relief on the table. They

:18:45.:18:47.

want to keep the very strict conditions around debt relief on

:18:48.:18:52.

Greece, that it has to provide this primary surplus of 3.5%, which is

:18:53.:18:56.

very high, and the two are approaching this at loggerheads. We

:18:57.:19:04.

had this in 2012, and again in 2015, when Greece nearly came out of the

:19:05.:19:09.

EU row, nearly defaulted. We have the same pressure now, and with

:19:10.:19:12.

elections in the Netherlands, Germany and France, as you say,

:19:13.:19:17.

there is a real concern in the EU that this controversy will play into

:19:18.:19:22.

those elections. Come the end of the year, the Greeks may not know who

:19:23.:19:26.

they will be dealing with. I have to move on to the next subject, but

:19:27.:19:32.

with the elections... There could be different leaders. Who may not have

:19:33.:19:35.

an appetite at all to give more money. And a different approach. The

:19:36.:19:40.

paper Germany is that if debt relief Greece comes back onto the table, it

:19:41.:19:44.

will be controversial and could damage Angela Merkel's chances of

:19:45.:19:49.

winning the election. We want to talk about China, but I want to ask,

:19:50.:19:54.

briefly, with Brexit already in play, before Brexit we were talking

:19:55.:20:01.

about the Greeks leaving the EU. Do you think that the Greek exit could

:20:02.:20:06.

be easier now? I think it is politically less likely. Germany and

:20:07.:20:10.

the rest of the European leaders do not believe, and even less than they

:20:11.:20:14.

did in 2015, that another country leaving after Britain has decided to

:20:15.:20:18.

leave would be so destructive that I think there will be even more effort

:20:19.:20:23.

to ensure that Greece remained in. Let's talk about China, we had that

:20:24.:20:28.

overnight phone call between Donald Trump and see Jean Ping. -- Xie Jin

:20:29.:20:42.

Ping. There was the controversy over the one China policy. Donald Trump

:20:43.:20:46.

took a call from the leader of Taiwan, which was considered

:20:47.:20:49.

politically insensitive, but they have gone back to the status quo of

:20:50.:20:54.

saying that America believes in the one China policy. Importantly, the

:20:55.:20:58.

temperature has come down between the two largest economies in the

:20:59.:21:04.

world. Donald Trump accused China of raping the American economy. It was

:21:05.:21:12.

described as a cordial phone call, and it eases tension and puts off

:21:13.:21:17.

the notion that America could impose high tariffs on Chinese goods into

:21:18.:21:23.

America. That means that the notion of a trade war, which I think was a

:21:24.:21:31.

possibility, is now less likely. In 30 seconds, the regulations in the

:21:32.:21:38.

US that Donald Trump wants to rip up. Not quite ripped up, but he

:21:39.:21:42.

wants to reform them. Some people say reform is sensible. The big

:21:43.:21:48.

thing is, reform of regulation in America, change of regulation in

:21:49.:21:51.

Europe because Britain is leaving - as soon as regulatory systems

:21:52.:21:55.

change, it leads to financial volatility. Yellow might very

:21:56.:22:02.

succinctly done. You have done that before! -- very succinctly done.

:22:03.:22:11.

The issue of fake news on social media has grabbed

:22:12.:22:13.

headlines since the 2016 US presidential election.

:22:14.:22:15.

But how do fake news sites keep themselves going and make money?

:22:16.:22:19.

Fascinating, wasn't it? You can find out more about fake news on talking

:22:20.:23:30.

business this weekend. The times differ depending where

:23:31.:23:31.

you are and are on your screen now. Sue is back. We are going to look at

:23:32.:23:44.

the papers. Did you find this story? It was Jonathan. Ryan has been

:23:45.:23:51.

googling. You said the average cost to clean up snow in New York, per

:23:52.:24:01.

inch, $1.8 million. I asked what you thought and you said about 5

:24:02.:24:07.

million. I did. There are a lot of streets in New York, and they have

:24:08.:24:13.

to do it overnight. 6500 miles of road. And the budget was $88

:24:14.:24:22.

million. So, if it doesn't snow, do you get to plough that back into

:24:23.:24:27.

schools? Not exactly, because you still have to have the snowploughs

:24:28.:24:33.

and had people on stand-by. Let's move on and look at Australia,

:24:34.:24:38.

Aaron. I saw this today, but I have two sisters in Australia, and one of

:24:39.:24:44.

them said that in the last month, they have had three blackouts. In

:24:45.:24:51.

Sydney, it's unheard of. It is because it is so hot, and everyone

:24:52.:24:56.

wants to cool their homes, their offices, to have cold drinks, and

:24:57.:25:00.

there's not enough power at peak times. It doesn't bode well. I

:25:01.:25:04.

thought we were better than that. You know, there is just not enough

:25:05.:25:11.

supply for the amount of demand. They are asking businesses to shed

:25:12.:25:15.

some load. It is the Chinese, they have bought all our coal. They have

:25:16.:25:21.

no coal left. We have one story left, from the Telegraph. Banks want

:25:22.:25:29.

Labour to tear up -- banks tell France the terror at labour code if

:25:30.:25:34.

it wants Brexit business. Is it shows how long it takes to work

:25:35.:25:39.

through a notice period, as whereas high pay rates, high taxes and

:25:40.:25:43.

possible caps on bonuses. Not a lot of flexibility, which is what banks

:25:44.:25:47.

really want when they are looking to deploy their operations. Hi and who

:25:48.:25:57.

knows who will be elected? -- and who knows who will be elected? That

:25:58.:26:02.

is it from Business Live, there will be more business news throughout the

:26:03.:26:04.

day. Signs of change next week, but for

:26:05.:26:16.

the time being, the weather is stuck in a rut, a cold rut. We are drawing

:26:17.:26:23.