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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