12/01/2016 BBC Business Live


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This is Business Live from the BBC with Ben Thompson and Sally Bundock.


America exports gas for the first time,


but, as prices slump, is it really financially viable?


Live from London, that's our top story on Tuesday 12th January.


It is a landmark moment for America, but comes as oil prices


China makes a move on Hollywood -


China's richest man splashes $3.5 billion on a stake in the studio


Here's how Europe opened after Japan's Nikkei slips to lowest


close in nearly a year, as China's sell-off leaves it down


We'll get the Inside Track on a big name in the alternative car industry


- Tesla's Elon Musk tells the BBC all transport will eventually go


He will tell us who he feels most in terms of competition.


And we want to know what you think is the best technological invention


Let us know - just use the hashtag #BBCBizLive.


I hope you will say the best invention of the last 12 months is


this programme! Let us know! Today marks a significant day


for the world's energy markets. America has become a supplier,


rather than consumer, It's the first time ever


that it's exported gas. But the celebrations


could be short-lived. Like oil, the price of gas has


fallen sharply and is now worth only a third of what it was


just two years ago. So while the venture


is less financially viable than when it was originally


imagined in 2011, it is Many estimates put the US


as the third largest exporter in the world by the end


of the decade. And what we're talking


about is liquefied natural gas or LNG, and whilst it requires


costly tanks to transport, once converted back into natural


gas, it can be used for almost anything from cooking to heating


or powering a factory. Giles Farrer is the research


director for Global Gas and LNG How revolutionary is this? It is


kind of a big deal for the world gas market. The US, it is going to


change the way that LNG is sold traditionally. LNG is sold under


long-term contracts from one country to another on prices linked to oil.


The start of energy exports from the US can be sold flexibly, so anybody


can buy it, and it is going to break down the mechanism of linking Gaster


oil by introducing US gas prices to the world markets. What is being


introduced today and in the days ahead is a drop in the ocean in


terms of the world market, but many are saying in the future America


could be a big player. Your thoughts? Currently global


production is about 250 million tonnes a year, and over the next


five years new production from Australia and the US is going to add


about 50% to the world market. At the same time, what we are going to


see, what we are already seeing, is faltering demand growth in Asia and


a surplus of LNG supply in the market. Presumably that means gas


prices will come down even further? Does that mean good news for the


customer, those of us using gas all the time, seeking cheaper bills?


Yes, it should do. What we are expecting to see is a lot of this


excess LNG will end up in the European, north-west Europe and UK,


where there is an abundance of infrastructure already built, so it


will naturally go into this market. What that means is that you are


going to have new gas competing with existing suppliers into the European


market, so Norway and Russia. They are going to see competitive


pressure, and we expect that to drive gas prices down. From many


countries already under a lot of pressure, Australia is a big


exporter of gas, brusher reeling from low prices, Australia battling


with the Chinese economy slowing significantly and not consuming a


lot of its commodities. For some of these countries, this is not great


news at all, they are already facing quite difficult economic times? Our


view is that gas prices in Europe are going to be about one third


lower than they have been nevertheless to five years in the


next five years. Gas prices in Asia the stock market are expected to


come down significantly as well. We expect the revenues the big


producers to come down a lot. Should be tough times ahead. Thank you so


much for sharing your thoughts on that.


Oil prices have fallen below $31 a barrel to new 12-year lows.


Its fallen almost 20% since the beginning of the year.


A slowdown in China has added fears of slowing consumption


Irish drug-maker Shire has won its six-month battle to buy


The deal is worth $32 billion and will put Shire in a strong


position as it looks to develop vaccines for rare disease.


Baxalta specialises in unusual blood conditions, cancers


The world's biggest coffee chain, Starbucks, says it aims to open 500


Starbucks aims to create 10,000 jobs in the country every year over


the next four years as it continues to expand.


The metals and mining firm Alcoa has announced a net loss of $500 million


for the final quarter after incurring heavy costs to close


The New York-based company has been cutting back on capacity as a result


I feel like we are always mentioning companies, countries or


organisations that are struggling with the price of commodities around


the world. It is interesting, the aluminium


producing subsidiary of Glencore filing for bankruptcy. All of this


part of the restructuring that Glencore is having to go through to


deal with that falling commodity price. That news just in, the


aluminium producing subsidiary filing for bankruptcy.


This story caught my eye, Murdoch to marry or, surely the most


interesting announcement from a businessman today! -- Murdoch to


married Jerry Hall. Rupert Murdoch, owner of News Corporation, has


married the model Jerry all, who has not been married before but had a


long relationship with Mick Jagger. Apparently they started courting in


the Rugby World Cup... They came out in public.


I love that they announced it in the Times.


This is not an April fool, by the way, and January the 12th!


Chances are you won't have heard of China's Dalian Wanda Group.


Today it's confirmed a $3.5 billion deal to buy a controlling stake


in Hollywood film studio Legendary Entertainment,


the makers of Jurassic World and the Batman film The Dark Knight.


Steve, why is this so significant? We have talked about many people not


knowing this company or indeed knowing China's richest man but it


is a significant stake? It is significant because it puts


China right at the heart of movie-making. What you have got is


big Chinese money buying a big Hollywood company, a maker of


movies. At the moment, China is poised to become the biggest movie


market in the world, a lot of people in Hollywood think that takings in


China next year will exceed those in America. If you can make Hollywood


films in a great big studio, perhaps the world biggest, being built in


eastern China, you will then tap into that big market. You then raise


the prospect of a global movie industry with films tailored for


China and Chinese censorship, and Hollywood and Europe. It changes the


way we think about movies. OK, good stuff, thanks very much.


Just to look at some of the numbers, falls in Shanghai fuelled by ongoing


worries over China's economy, taking its toll on the other main markets,


the nick a down 2.71%. Shanker's market down about 15% so far this


year, we're only halfway through the month and it has been a pretty


dreadful time. The impact on commodities is all too clear, Brent


Crude falling another 2.2% at $30 a barrel. In the UK, we will get an


update on all sorts of things, including the manufacturing sector,


expected to beat up about 0.1% after expected to beat up about 0.1% after


a fall of zero point 5% in October. But the focus here will likely be


on the retail sector with a string of updates on Christmas trading,


not least supermarket chain Morrisons managing to reverse


its downward spiral with a small rise in sales, and Debenhams doing


much better than expected. We will talk about that and other


more in a moment. What about Wall Street?


Neda is in New York with the details on the trading day ahead.


We get fourth-quarter earnings results for CSX, which has been hurt


by steep declines in call, so investors will be interested to see


their outlook on the mining industry. They will also be looking


out for news on whether a possible merger could be on the news with


Canadian Pacific after their bid to acquire CSX's closest competitor was


rejected. We will see how optimistic small businesses are feeling when


the confidence index for December is released. Marc fields will speak at


an auto industry confidence in the trade -- in Detroit where he will


give his projections for 2016. Joining us is Anne Richards,


chief investment officer Nice to see you. Behind us we have


got Germany and London but also the oil price, down another 2% today.


Will it go below $30 per barrel? We are watching its every move at the


moment. It feels like it will go lower from here, you have seen a


number of forecasters radically talking as low as $20 oil. There is


a lot going on behind the scenes. One of the things you can see in the


background is that quite a lot of the oil producing countries have


been in pegging themselves from the dollar, giving them a bit more


scope, bit more slack, in order to manage the balance between cost and


revenue. Costs are no longer dollar-denominated, which means they


can cope with the oil price longer. They need to do everything they can,


don't they? Countries like Nigeria, Angola, not the big players like


Saudi Arabia but the other Opec members that are struggling,


Venezuela? The smaller countries have, you mentioned Angola, that is


an example, have begun to give themselves the slack. As long as the


big producers like Saudi are pegged to the dollar they will feel the


pain from this. The demand side has not picked up enough to cope with


the increase in supply. We know there is limited storage capacity


left out there now. We have not yet reached the bottom of this oil


price. When we are looking at this state of the worst start to the year


for a long time in the global markets, it is difficult to see what


will get us out of that pessimism and fear that things will get worse


before they get better. The Chinese central bank today


pumping $12 billion into the markets, doing all they can as well


but it seems to be lingering, the pessimism. The Chinese have got


themselves hooked on this interventionist mantra, they are


nervous about letting the market, the stock market, decide the level


of the currency. Part of the intervention China has been doing is


part of a long run strategy to become one of the IMF reserve


currencies, in which case it needs to keep a relatively tight spread on


the offshore market. You have got that intervention going on. But the


other thing worth pointing out is that economic lead this is not a


particularly bad start to the year. We have had a good data point from


the US in terms of jobs data, we are seeing some sign of improvement once


again coming through in Germany, so the macro environment is not what


you would expect, so we might actually find it better once we get


through this dispiriting period at the start of the year. That is very


positive, we appreciate that! You will be back later with more to talk


about, lots of stories in the press as ever.


Some breaking news. News of an explosion in the Turkish city of


Istanbul. Local media reports are saying several people have been


injured. The blast happened in one of the city's main tourist


districts. The area has been cordoned off by police. The cause of


the explosion is not immediately known. As soon as we have more


information about what's going on in Istanbul, we will update you, but


that's something we're just hearing about at the BBC. Another line


coming in to us. This is on the AFP News Agency, a strong explosion.


This is in the tourist quarter near the church and the Blue Mosque. This


copy saying several ambulances and the police are on the scene. There


are pictures on the local TV channels. We will bring them to you


as soon as we have them. A strong explosion reported in the tourist


centre in Istanbul. Still to come,


forecasting the future. We sit down with entrepreneur


and innovator Elon Musk. Owning a car that is not


self-driving in the future is like owning a horse.


It's a big week for results in the UK grocery sector.


Sainsbury's are out tomorrow, it's Tesco's turn on Thursday,


but today Morrisons published its figures and they're


The supermarket says like-for-like sales rose 0.2% in the nine


Let's get more from Paul Thomas who is able to join us from our news


floor. Paul, the share price is a big reaction, but when you look at


the figures, it is a tiny weany move. Put it in prospective for us?


It is a small move, but they have had a number of months and quarters


of reporting sales in decline. So this is great progress and festive


cheer for Morrisons and for Dave Potts, there is more work to do, but


perhaps an indication that they are heading in the right direction with


their recent work. It is a busy week for retailers, but the supermarkets


seem to have been hit badly. Next were down and John Lewis bucking the


trend doing reasonably well, but Marks Spencer's, a difficult time,


it is hard to pick out the winners and the losers of the Christmas


period? By the end of the week we will have a better idea. Indications


are Morrisons was a surprise coming in at 0.2% increase. Likely to be an


increase for Sainsbury's and like to be a drop for Tesco's. So what is


Morrisons getting right that perhaps its rivals are not? I think they


have focussed back on through David Potts' strategy, reducing costs at


head office, more colleagues for the shop floor to improve the customer


experience within the shop. There is a lot of work to do in terms of


range and freshness, and a lot to do on marketing. They have a provenance


with their fresh, but their own farms and vertical supply chain, and


they could do more to drive that home, but getting the basics right,


the customer journey and that's what helped them and that's what they


need to focus on in the coming months and in the future.


Paul Thomas, thank you. Shares up about 8%, up nearly 15 points so far


this morning as a result of the figures. Lots more on the website.


More detail and analysis, Sainsbury's to come next.


Our top story, the US starts exporting gas with the first


But with falling prices how significant will it be for consumers


Now to a big name in field of innovation, a man known


for increasingly making futuristic ideas a reality.


Elon Musk is Chief Executive of Tesla Motors, a company that


grabbed headlines after its all-electric sport luxury cars.


His cars are also competing in the driverless space too,


One is SpaceX, an aerospace company seeking not only to lower the cost


of space travel, but also enable to colonisation of mars.


His net worth is $12.4 billion, making him the 39th wealthiest


Our technology correspondent Rory Cellan-Jones spoke to him


exclusively and started by asking him, how common


I think all transport will go fully electric. I see the value of Tesla


as a catalyst. I think Tesla maybe when one looks back on it, it might


accelerate that transition by a decade maybe, maybe more.


Are you on the road to producing a model that far more people could


aspire to own? Yes. The model three, that's the third part of our


strategy which produce high volume, low-cost car and we expect to be in


production with that at the end of next year. In order to have a


substantial effect on transportation, we have to make the


cars affordable. So I think the model three is extremely important


as part of that strategy unless there is affordable car, we will as


you alluded to earlier, only have a small impact on the world. So it


needs, we need to make a car that most people can afford in order to


have a really substantial impact. Do you see Apple building a car and


that maybe being a threat to you? Well, I think, I would encourage


more participation by whoever it is to create electric vehicles. It is


quite hard to do. But I think companies like Apple will probably


make a compelling electric car. It seems like the obvious thing to do.


Are you betting that that's going to happen? Have you heard something? It


is hard to hide when you have hired over 100 engineers to do it. So you


think Apple will do it? Yes, do I. You have been a leader in autonomous


driving. How far do you think that's going to go? I mean, I think, the


two biggest revolutions in transport are electrification and autonomy.


Those are the two biggest innovations since the moving


production line. Autonomy is extremely important and I think in


the long-term nobody will buy a car unless it is autonomous. In ten


years time, what will I be driving? Will I be driving at all? Will I be


pressing a button on an app and a car will drive up and take me where


I want to? You will only drive if you want to drive. It will be like


owning a car that is not self-driving in the long-term will


be like owning a horse. You would own it and you would use it for


sentimental reasons, but not for, you know, not for daily use really.


Now, you're in three extraordinary industries. You are in electric


cars, you're in rockets, and you're in solar energy. What unites you,


what unites those three interests? Well, what I'm trying to do is to


minimise future threats or take whatever action I can to ensure the


future is good. I didn't expect these companies to succeed. I


thought they would most likely fail, particularly Tesla and space X. At


the beginning I thought SpaceX and Tesla had a 10% chance of success


and I'm surprised to see that we're alive. It's great. I wasn't


expecting that! You can hear more of that interview


online. He was talking about what he believes are the greatest


innovations over the last few decades, electrification being one.


We asked you for your tweets on what you thought was the best invention


over the past few years. Paul says, it is easy. Publicly accessible


internet changed the world for him. Ozzy, said satellite TV because it


means he can watch us on the programme! Well done. Another one,


internet, followed by GPS changing the way we navigate.


Anne is back. I think Segways. You have been on one? I have been on an


off road Segway. You have got ones with chunky wheels. We want footage,


please! Need to know basis. That might even


top Rupert Murdoch's engagement news!


China, an important market for Rolls-Royce, I imagine. China is an


important market for Rolls-Royce, I imagine at one stage it was the most


important market. It would be in the top three markets for it. But the,


the interesting thing that you see going on here in China is the


anticorruption drive and this desire to shy away from any kind of


conspicuous consumption has come through in the Rolls-Royce sales,


but happily for Rolls-Royce we are seeing in other parts of the world


beginning to pick up, that potential slack that's out there. The Middle


East is going well and places like South Korea also doing well. It is a


great success story as a business, but you can see this pain in China


coming through. Coming through for another company.


Anne, thank you. More to talk about, but no time. We want to remind you


of the breaking news of an explosion in the Turkish city of Istanbul.


Local media reports say several people have been injured and there


could be casualties. Hello there. Good morning, if you


haven't yet stepped outside, well brace yourself it feels cold out


there. A really cold wind particularly in western


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