14/01/2014 World Business Report


14/01/2014

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Those are the latest headlines from BBC World News. Now for the latest

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financial news with Sally Bundock and world Business Report. In the

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US, earnings season gets into full swing but while the economy is

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stronger, are company earnings keeping up the pace? Revving up big

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engines - as the global economy improves, the appetite for luxury

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sports cars is back. Welcome to world Business Report. I'm Sally

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Bundock. Also in the programme - as Japan's Prime Minister wraps up his

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tour of Africa, we assess how successful it has been. It's

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earnings season and today JP Morgan Chase and Wales Fargo are the first

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two of America's largest banks that will kick off the year-end reporting

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in America. While the US economy is clearly improving, it's not at all

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obvious that company earnings are also on the up. Samira Hussain

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reports from New York. JP Morgan, bank of America, Citigroup, Wales

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Fargo, Goldman Sachs, Morgan Stanley, six of America's largest

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banks, combined they made almost 75 billion dollars in profits. Many

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banks have been cutting expenses and releasing money set aside for bad

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loans. But the profits big banks made last year had not been seen as

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the peak of the US housing bubble in Nest Labs thousand and six. In the

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last 12 months, the share price will some of America's largest banks have

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gone up anywhere from 25 to 35%. It was a big driver for some of the

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record highs been in US markets in 2013. This year that good cheer may

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not continue for financial institutions. One thing banks cannot

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rely on that they could last year was the low interest rates and a lot

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of homeowners were refinancing mortgages. Interest rates rose in

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summer, banks are not getting that source of profit anymore. Further

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hurting banks, regulators are finally going up the financial

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institutions that sold mortgage-backed securities. Those

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faulty lines lead to the collapse of the US housing market and the

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financial crisis. JP Morgan is paying $13 billion to settle charges

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and others will soon follow, including the bank of America,

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expected to pay the steepest fine. Mortgage-backed securities, the

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instruments that drove banks to record highs may be the same ones

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that will temper profits this season. The US Justice Department

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has charged three former traders of a Dutch company with fraud, accused

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of manipulating the libel interbank lending rate over a five-year period

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in Nest Labs thousand and 11. They played $1 million last year to

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settle investigations into rate rigging. For other banks have been

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punished over the scandal. Google has announced plans to buy

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thermostat maker Nest Labs for $3.2 billion. This latest deal continues

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a string of recent acquisitions. California-based Nest Labs was

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founded by two former Apple executives. It produces a thermostat

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capable of learning user behaviour and working out whether a building

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is occupied or not, using temperature, humidity, activity and

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light sensors. A draft law has been proposed in the Netherlands that

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would force convicted prisoners in Dutch jails to pay rent for their

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cell. The government wants inmates to pay 16 euros a day for a maximum

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of two years - a fraction of the real cost. As the global economy

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recovers, car buyers are increasingly willing to spend money

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on more luxurious rides - a trend auto makers expect to continue in

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2014. And the high-end buyer is getting younger, especially in Asian

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markets. Michelle Fleury is at the Detroit Motor Show for us and takes

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a look at the appeal of this segment of the market to both consumers and

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manufacturers. Mix together a dash of retro with high-tech engineering

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and you have a Porsche the carmaker vote will keep its showrooms busy.

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Porsche and it is competitors are coming off a strong year for sales,

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what is the secret? Brand is number one, it is supported by product and

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product as technology. The chief executive of Daimler pointed to the

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new Mercedes C class to prove his point. This vehicle has lots of

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assistance systems which include stop and co-pilot which allows you

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to go up to 20 miles an hour, hands-free. Without feet on the

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pedal. The card will do the job for you. That has been science-fiction a

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few years ago, it is reality now. A few miles from the Detroit Motor

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Show, this dealership has seen Land Grover sales jumped 35%. It comes to

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luxury, not just science that brings people through door. Definitely an

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emotional purchase. Not something that people need to go out and buy

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because they have to get transportation to work. People

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become attached to these cars. That is a status symbol that is very

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important to them. Emotions do not know borders as car makers see

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plenty of opportunities in emerging markets. The outlook generally is

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very good. We have emerging market that have got an appetite. You look

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at markets like China, and the Asia is very strong. Even though car

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companies will not say it too loudly, the most of thing about

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luxury models are that they are the most profitable that manufacturers

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sell. In the car business, the most expensive ride is the one that puts

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you in the fastest road to riches. Japan's Prime Minister, Shinzo Abe,

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is in Ethiopia for the final stage of an African tour which has also

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seen him visit Mozambique and Ivory Coast. It's the first time a

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Japanese leader has visited the region since 2006. For more, we're

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joined by Babita Sharma is in Singapore. Tell us more about this

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trip, when he set off a week ago, lots of expect patients, deals, lots

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of investment, how how has gone? Analysts are saying that in the

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whole, looking at it, the trip has gone reasonably well. It is a three

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nation 's tour. But already the Prime Minister has extended a

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five-year loan of $600 million to Mozambique, to help boost

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development in its coal industry and in total he's expected to pledge

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more than $14 billion in aid and trade deals during his trip to the

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region. Why is Japan doing this? The country is keen to push back against

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a growing Chinese presence on the continent as China currently stands

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as Africa's largest trading partner - that partnership was worth $200

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billion in 2012. Something Japan is hoping to tap into it. And as we've

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been hearing, Mr Abe is the first Japan Prime Minister to visit Africa

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in eight years and he's looking for investment opportunities for

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Japanese companies so they can secure much needed natural

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resources. The proof of course is in the pudding - so we will see in the

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coming months and years how economically beneficial Japan's

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injection of cash in this region will be. You will be seeing him

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presenting from the studio, on Thursday. Ricoh he is in. He is with

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us at the moment. These are the markets in Asia. It has been quite a

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dire session today. Japan down over 3%. They have had some pretty bad

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news, current account deficit for the month of November. Underlying

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the fact of the challenges facing Shinzo Abe as he returned from the

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tour of Africa. He has has economic reform programme, it is a three

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pronged programme, the third prong is going to be an act of this year.

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This -- that is not necessarily why the markets are down today. Losses

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across the board, following suit from Wall Street. Wall Street set

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the tone last night will stop losses across the board. The yen relatively

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strong versus the dollar which is hitting Japan today. Among the

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stories to watch today, US retail sales start out today. European

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industrial output today. In the French President's speech on the

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economy. We will talk about that in the paper review in a moment. Thank

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you to Sally. The amount of money being spent on temporary doctors in

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Accident and Emergency departments has soared by 60% since 2009 - the

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bill runs to tens of millions of pounds.

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