25/01/2016 BBC Business Live


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Hello, this is business live from the BBC. Running out of steam, the


mini rally in oil prices comes to a halt despite the cold weather in the


US. Live from London,


that's our top story It was nice while it latest for oil


producers but the spike in the price of oil is quickly fizzling out -


so where will they stabilise - Adidas ends its sponsorship deal


with athletics world governing body four years early -


over the doping scandal sweeping And this is how European markets


look in the first half We'll discuss the week


ahead for investors. And can Europe be turned


into a technology hub to rival for Adidas to pull out


of its sponsorship deal? Oil on the agenda -


and crude has taken a steep fall in the last couple of hours,


reversing its gains from earlier It comes after a volatile week that


saw oil prices drop to 13-year lows. So - the big question -


what happens next? Oil has seen dramatic falls over


the past 18-months - and is now just a fraction


of its peak in the middle of 2014. Between one and two million barrels


a day are being pumped over and above what is needed -


it's all a big battle between producers to try


to gain market share. The International Energy Agency says


unless something changes then the oil market could


drown in over-supply. So what going to happen


to oil over 2016? Here are a few expert


predictions from Davos. I could see a price, 30-40 in the


middle of the year is towards the end of the year could be in the 50s.


I think the oil price in six months will be at the level of 35- $40 per


barrel. I think it will be about $35 in six months. There is oversupply,


very little demand, we all want to blame China for our awards and


couples, but this is not the only problem. Nobody knows exactly what


it will be but my protectionist $30. I want to bet at $20, the reason?


You guys know, the oil price in six months will be $15 per barrel


because of the extraordinary glut in oil on the planet. It might even go


to $5 per barrel, maybe even that low. The price of oil in six months?


Sure it will keep on going down and down. That is safe, notice she


didn't put a price on that. Richard Mallinson, an analyst


from Energy Aspects joins us Put your money where your mouth is,


what do you think? There are visited the different opinions. We think the


first half of the year oil prices will remain under pressure, not


necessarily, slower than the scene, necessarily, slower than the scene,


but not come much higher. The second half of the year we will see a


recovery, the market is beginning to rebalance. That is not the focus but


when that becomes clear we can see a rally later in the year. You say the


first six months six months around 28- $30 per barrel and the last six


months, when you save recovery come what you mean? Exactly where? We


think the fourth quarter this year we will see prices above $60 per


barrel for Brent big recovery. It's interesting when you look at oil


price and equity market, commodity markets are clearly suffering


volatility and has been replicated with the equity markets. How much


can be read into the link between the two? How much will depend on


what oil does this year for the wider market and economy? I think


the last few weeks we saw this interesting spiral were oil price is


headed lower and that pushed equity markets lower but because equity


markets went down, oil sold off again and that does not really


follow. If you look at the theory and think about the world, the


biggest economies are net oil importers, benefiting from lower


prices and should get a boost. The volatility and uncertainty are bad


for economic growth but generally lower oil prices are a boost for the


global economy. We saw that in terms of oil demand last year and we will


see that continuing to be a benefit. In countries like India, very price


sensitive customers appointed by soil. As we were hearing from the


people we talked to in Davos and the other people quoted widely in the


press, many think much lower, $15 per barrel, one person said $5 per


barrel, why don't you believe it will go below $28 per barrel? We


look at the fundamentals, the supply, demand, and when you think


about the cost of producing oil, yes, there are low-cost regions, but


the marginal barrels can the last few barrel is the world needs, even


in a Channel 4 supply market, frock -- come from and higher cost region.


If we get a series of negative headlines you cannot push prices


beyond that. We are already beyond prayer pure fundamentals would


justify. As we saw last week, the further you go, the more attentive


for people who were putting positions on prices going down to


take that profits to come out and it pushes it back you. It is the


conversation we will have again, I'm sure.


Sportswear giant Adidas has told the athletics' world governing body


it's to terminate their sponsorship deal four years early,


The company informed the IAAF of its decision -


understood to be a direct result of the doping scandal


the move will result in tens of millions of dollars


Four senior executives are to leave Twitter as the social


media giant attempts to halt its tumbling share price.


Since co-founder Jack Dorsey returned as CEO last year,


the company's value has fallen by over 35%.


The shake-up will see the departure of key staff from the company's


product, media and engineering divisions.


Federal government offices in the Washington area will be


closed on Monday after a blizzard over the weekend dumped more than 21


The government shut down the offices at noon on Friday ahead


of the storm, and they remained closed Saturday and Sunday.


Let's take a look round the world at what's


business stories are making the news.


Russia must work with Opec. Since quitting the vice president of Luke


oil saying that Russia needs to work with Opec on cuts in oil supply to


world markets in a bid to support prices. Opec is always in the


background in terms of pressure on or off it dealt with the price in


general. And a quick word on Saudi Arabia. Not one country you might


expect to be trying to boost tourism but it can be expanded to encourage


more visitors to the country. Questions already about why you


would want to go there. Of course, lots of religious tourism but why


the tourism? Infrastructure is not particularly well for tourists. I


have been there, and it's not someone that makes ranking to get


back to given that they threw me out last time. Journalists not


necessarily welcome, but that's another story. Let's look around the


world about what business stories are making the news.


And Japanese shares have risen - despite the latest trade figures


showing exports falling for a third straight month ...


Chinese shares have begun the week on a stronger footing,


extending the gains we saw on Friday after that rally in oil prices.


Xbox in Japan have dropped from 8% in the year earlier. More than


expected come in Port set fell by 18%, suggesting the slowdown in


China is continuing to affect demand. Why is it up by all 1%? One


of the reasons is hoping the Japanese Government will take action


after this bad news and late last week the markets surged after media


reports suggested Japan's Central bank would continue monetary easing.


All eyes will be on the bank of Japan, which is meeting at the end


of the week and will be watching to see how it sets out its monetary


policy. Thank you. We will all be watching that, more from our


Singapore business bureau later in the week. Shares in Asia gained only


got a stronger footing, extending begins on Friday after the rally in


oil price. Shanghai's market up


just shy of 1 percent, In Europe, those gains on Friday


came somewhat of a surprise after one of the worst ever


starts to a trading year, driven by concerns over falling oil


prices, disappointing earnings, And as we've discussed,


there'll be a lot of attention paid to where oil prices stabilise,


and if it recovers back towards $40 a barrel,


especially with the cold We have the details on what will


happen on Wall Street today. McDonald's are a suspected child


lived their fourth-quarter sales but there second largest oil producer,


Halliburton, is expected to because a steep fall in fourth-quarter


profits, the surprise given the struggle in the aisle industry the


reports from other big corporations including Apple and Boeing and the


Federal Reserve will not get quite as much attention this time but


investors will be anxious for any region on whether the central bank


plans to slow its path of interest-rate hikes. Also a host of


economic data out, most importantly fourth-quarter gross domestic


product, confirming worries the US economy should -- slow sharply from


the third quarter. That is quite a busy week.


Joining us is Richard Fletcher, Business Editor at The Times.


A very busy week that started unusually the stock market high-end


oil price high. Did not start long. The first positive Monday this year


in Asia! The first time we had a Monday Asia stock, without it would


be a good week but unfortunately it seems to have gone red since then.


Obviously a busy week. We have the Fed meeting and the central banks


have been behaving like parents of badly behaved toddlers, they threw a


suite into the pen but any of us who have had toddlers, the treats that


last furlong. The tantrum seems to be coming back. It is a very busy


weekend wheels of GDP, but it will be quite a bumpy ride, despite last


week's gains. Despite the volatile nature of last week, we did end up


in London. It's incredible when you think about how the week when. If


you look at that they are, the excitement did not last long at all,


is such a equally say where we talk about markets and certainty but what


is it they want? It's got to be more? The markets love the idea of


more stimulus last week, we had big hints from Mario Draghi and it looks


like we'll get hints from Japan at the end of the week and markets have


been becoming more about the Fed and expect three hikes from the Fed this


year, whereas the Fed made it as clear as they ever make anything,


lots of hints, it would be for this year. It seems the markets want more


stimulus but is free money has to end at some point. We keep being


told that, don't we? Thank you. You will be back shortly to talk us


through some of the other stories out there today.


Can you be made into technology hub to equal silicon valley? That's


coming up. Not great news for investors this


year - with UK companies set to cut dividends for the first


time since 2010. That could mean bad


news for pension funds. That is the issue, not just


investors who stand to lose outcome is associated people who are


related? Yes, it's a big part of the return when you buy shares, not just


the price, but the income you generate and Centrica, Sainsbury's,


Tesco, they already cut their dividends and many more will cut


this year. Dividends were doubly bit last year but the commodity price


bust and oil price crash, all that is cashed up the companies. Then me


show you something. This is an information page about them. This is


for every pound how much income you get and it had a yield of 14%. You


think, crikey, that sounds good, I will get 14p for every pound, but


that is a dead ringer for something that the Devlin -- dividend will be


cut. It will be amazing if they manage to pay that much. Some of the


big miners are expected to cut. A very important component for pension


funds, they get the incoming from there and that gets cut it a


headache for them. Some countries are doing better than


a few years ago, namely the banks. Lloyds, the LLoyds Banking Group is


back on its feet and has begun to pay dividends and that like it could


become a big dividend paying giant. Some of them black -- backing the


trend, but overall space dividends payments to go down. Thank you. HSBC


in the news, the Telegraph looking at the fact that after a nine-month


review of where its headquarters should be located we could find out


this week if it will decide to keep its HQ in the City of London or


Canary Wharf or if it will be on the move to Hong Kong, perhaps. There


has been a lot of debate about this, but whether they are simply using


this to try and argue against things like the bank levy that it says


unfairly penalises aid and whether the Government should reassess the


potential losses that would be a result if they were to move their


headquarters. Some say it's an empty threat, they would not actually do


it. Worth watching. The rally in oil prices has come to


a halt since he called spot in the US.


Websites for this, apps for that and many of them with


Many of them are created in America's Silicon Valley.


So what hope is there for contenders from elsewhere?


Well, one London investment fund hopes Europe can rival


Called Seedcamp, it was setup in 2007 to invest new tech


More than eight years later they've invested hundreds


of millions of dollars into more than 200 new companies -


which operate across the world.One of the biggest areas for investment


is so-called Fin-Tech, financial technology -


which makes up 15-per cent of their portfolio


With me is Reshma Sohoni, founder of the investment firm


So much when it comes to tech start-ups, and the thing that stands


up -- stand out from me that we try and find finance for them and what


you do is how you spot them. How do you work out what is viable? There


are so many every year that come online, how do you judge what is a


good start up and therefore worthy of money? I think the ecosystem you


have around an experience, we've been at it about a decade, that


helped a lot. What we look for is how is the technology instructor for


the industry of choice and also perseverance. You look for pound --


founders who are going to go to debt and spend the building something


powerful and for us and a lot of the asset class, for it to drive it


needs to be a globally relevant business, world-class. How risky is


it for you? Obviously you are mentioning the key things you look


out for but I issue many companies you invest in gold make it? We have


a 20% death rate and it should really be 40%. Close to half should


really die because it's very risky and trying to get into the hearts


and minds of consumer -- consumers is difficult. When you look at the


new start-ups there are so many that come online together and it's not


necessarily that there is a unique proposition, I would imagine it's


quite a view to quite a few to -- doing a similar thing. Is there a


reason why one takes off and the others fail? ASBOs the skill as a


spot in the one that will take off? You are spot on and it's a multitude


of factors and I think it's that entire network of factors coming


together to make something drive and money. Capital matters a lot,


whether it is going into hiring the top talent or into marketing or


rising above the noise. Your business can you started in 2007.


What a time to start a venture capital company investing in tech


stock! As we enter a volatile period, I would say it's a reminder


to us to look back to those times and say, actually, some of the worst


times in the economy as the best times for start-ups. Why? It is a


tough period and if you can put money down and investing great


founders you have the rise of the market to go after and it helps


everyone float higher, so the worst period is when to invest. What


industries do you look at? Is your door open to anyone or anything that


comes through with a new idea that is a Jean-Julien Rojer or DuPont did


on specific industries? I think we seen a lot of the disruption in


things like coat-tails and transport and travel. Haughey saturated


market, I imagine? Absolutely, you go towards things that are part of


your geography. Being in London and at the centre of gravity of European


industry and capital, we are certainly prevailed towards the


intake and property tech, which are huge, so if you talk about rivalry


versus the US, are trying to say we would not call out at the same angle


and same industries but we try and look at other industries which are


huge. Talking of the rivalry, you say Europe will become a serious


rival to silicon valley, you are from the States, you can tell from


your accent, how close are we to that? I think in the nature of the


competition will not be the same, but in terms of value of quantum it


can seriously rivalled the valley, to industries, financial services,


property tech and others can help detect and so forth, no reason why


the UK and Europe cannot be at the forefront. We're being told we got


to finish it here, which is. Thank you for coming in. In a moment what


the business places -- pages are discussing, but here's a reminder of


how you can get in touch. We want to hear from you. Get


involved on the BBC business live web page. You can also find us on


Twitter and Facebook. Business live, on TV and online, whenever you need


to know. We're looking at the stories we've not mentioned yet.


Richard Fletcher, Business Editor at The Times is joining us


Rahane is out there in the Saudi orders a load of aeroplanes, it


would seem? He's coming to Europe this week, you will be in Paris and


this is one of the deals that will be announced, probably the biggest,


not just planes and oil, we had a story on Saturday about the fact


that pistachio nuts, a range that 60% of the market for sanctions were


imposed. That collapsed and California pistachios, they're


trying to get the Government 's two inches a 200% tariff because they've


been used to having the market for themselves. Saffron in Spain is


another market that will be hit. There is some big deals and small


deals, but not small if you work in those markets. Apparently their


current features 44 planes, so this is more than doubling it. Looking at


the numbers, is an upgrade for a fleet that has an average age of 25


years. Some aircraft predates the 1979 Islamic revolution. The head of


Iran air trying to do these negotiations says don't talk about


it too much because we need to steal this deal. You understand that even


catering is a big issue? We take it for granted that there is these


services but in Iran that is not necessarily the case. He did not


want to fly on Iran air, 1200 deaths since 1980, a large number caused by


criminal failure. Good news for the people of Iran goes their flying on


slightly zephyr planes. It's about proving to the Arabian people that


is letting can be good for them economically because it's about


boosting these, there is a tendency to think all of these foreign firms


will come in as tap into our market but it's a two-way process.


Absolutely, the possession of nuts are example. Busy summer in ring in


money coming into the London property market as well. How


driverless cars could kill the speeding ticket and rob your city.


That is one line. I would imagine most people think, great. This is


the law of unintended consequences. Everyone has worked out driverless


cars are more law-abiding than me and maybe you as well. So


Washington, for example, the issue over 700 fines for cutting red


lights every day. $37 million per year. It is big business. For local


authorities it could be bad news around the world as these


law-abiding cars. Staggering statistics, $307 million in revenue


over ten years just from speed cameras. He said it is an entire


industry, one which could disappear overnight. Yes, leisure can


programme your driver 's car to slightly bruised his bid limits come


yes, I'm sure someone will somewhere. As Mike driverless car to


slightly push the limit. That's quickly mention this story about


Adidas and earlier than expected end of its sponsorship deal with the


IAAF. This is amazing, just a few months before the Olympics, it could


be challenged in court. Adidas are relying on the fact they believe


these revelations about drug abuse allowed them to use disk was in the


contract that allows them to end it now. The IAAF could change that, but


we'll have to wait and see. We dug by the French implication. This lays


bare how much money is involved in sport when you talk with ending


sponsorship from one company which tens of millions at stake? Yes, it


goes to show how close these manufacturers are to athletics and


how much money has been involved. Thank you. We appreciate all your


comments. Let's squeeze in some of yours. You sent us some of your


thoughts on social media. We been asking if you think is right for


editors just drop its sponsorship of the IAAF. Ryan says yes, I believe


there within their rights to leave the deal to do that tarnish


replication -- reputation for the about big business will not wanting


to that is with a business in difficulty. Until it cleans up its


act, good move by Adidas, it should leave more money for track and field


athletes. James says quite right for them to polite, all athletes across


all sports should be up to do that, they need to clean them up or their


brands will suffer. Where Wilshire and oil prices be


tomorrow? See you tomorrow. By life. -- goodbye.


Sunday saw some record-breaking January temperatures. 16.5 degrees


in the Western Highlands. Not quite as mild as that today,


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