04/02/2016 BBC Business Live


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


Oil prices jump back above $35 as some call the bottom


But it's little comfort to oil giant Shell -


the latest to report a big fall in profits.


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


Royal Dutch Shell sees its annual net profit plunge by 87%


as the volotile oil price hits profits hard.


One of world's biggest ever trade deals has been formally agreed.


The Trans-Pacific Partnership will cover 40% of the global economy


but critics say it's a recipe for job losses and low pay.


A surge in oil prices has helped to lift investor


confidence across most markets with energy-related


The oil majors are among the big winners.


And Ford is revving up to take on the European market -


but it could mean heavy job losses and cost cuts.


The boss of Ford in Europe will join us live later.


So do you have a question for the boss?


Let us know, get in touch, use the hashtag BBC BizLive.


Shell has reported an 80% drop in full year earnings as the oil


producer has been buffeted by falling oil prices.


The decline is the company's sharpest fall in


Shell is just one oil giant that's had to make major cuts as a result


Let's take a quick look at the market as a whole:


America's biggest firm Exxon Mobil posted its weakest


The company is planning to cut capital and exploration spending


Fellow oil giant BP will cut 7,000 jobs around the world


It's also planning to sell $5 billion in assets.


Shell - which posted those bad numbers this


morning - has sold more than $20 billion in assets


since the start of 2014 and plans more through 2018.


It cut capital investment by $8 billion in 2015.


In fact Shell's results come just days after the company sealed


a ?47 billion takeover of BG Group Plc.


Capital investment for Shell and BG for 2016


is expected to be $33 billion, down an eye watering 45% with 10,000


jobs confirmed to be cut as part of the takeover.


Our economics editor Kamal Ahmed is here.


It highlights how difficult it is for the big oil firms to make any


sort of plans and predictions based on the oil price which is so


volatile. Where are we in terms of where the oil for -- firms are at


the moment? Show is less affected, because they produce gas and the gas


price has not fallen as badly as the oil price -- Shell is less affected.


So they have some protection there, but if you speak to oil chief


executives they believe that the oil price will strengthen over the rest


of the year, as demand from China and America increases, and all of


these companies, the big companies, they are relying on that. Or they


will have to go through more cuts in costs, yet more investment decisions


which are negative. I was speaking to law John Brown, the former chief


executive of BP and I asked in his thoughts about the future of the oil


price. -- Lord John Brown. The big thing I think we've learnt


in the past is that it takes time for supply to stabilise and allow


the gap between supply We're back to a period of lower


prices, much as we had from '86 to 2004 - a 17 year period


where the price was around about 30 to $35 in real terms


which is sort of the price today. You asked about the North Sea? Yes,


Shell has said it is pulling out of its exploration in the Arctic and it


will have less exploration in Africa. The North Sea is one of


those expensive areas and I asked him what he thought the


future was for the North Sea. It has some future, clearly there is gas


oil, which will continue to be in selective parts, but it is not the


same as it used to be, no doubt about that. It is a very diminished


part of the global supply equation. Can I say, one of the things which


is extraordinary about the UK North Sea, I remember when it started, and


we thought it would the over by the year 2000. That we turn off the


lights in 2000, but back came and went, and actually, the North Sea


was doing very well, and so we have had a lot of extra time here, which


we should be very grateful for. There is the merger between Shell


and BP, probably the worst time they are thinking about doing this. It is


nearly a $50 billion deal, but I think the chief executive of Shell


is more concerned with making that deal work than he is the future


trajectory of the oil price. One important thing for our pensions and


savings, Shell has committed to its dividend, so did BP, they are two of


the biggest dividend payers in the UK so at least for investors they


will be some reassurance. We will watch that closely. Thanks for


joining us. Now some other business stories.


Credit Suisse has reported its first full-year loss since 2008 as it set


Trading losses also contributed to a slump at the two


Switzerland's second-biggest bank posted a net loss of $5.8 billion.


The Zurich-based lender is accelerating plans to cut 4,000


Sumner Redstone has stepped down as executive chairman to be replaced


by president and chief executive Leslie Moonves.


There's also speculation that Mr Redstone will also step down


as chairman of Viacom, which owns MTV and Nickelodeon.


The 92 year-old has been facing questions and legal action over his


The former head of the International Monetary Fund,


Dominique Strauss-Kahn, is joining the board of a bank owned


by Ukranian billionaire Viktor Pinchuk.


Mr Strauss-Kahn resigned as IMF managing director in 2011,


allegations which were later dismissed.


The Trans-Pacific Partnership, one of the world's biggest


multinational trade deals, was formally adopted by the 12


But the massive trade pact still needs years of tough


negotiations before it becomes a reality.


Leisha Chi is in Singapore with the details.


It has felt like forever, but it has only taken five years. Thousands of


hours of negotiations and multiple missed deadlines, this ambitious


deal has finally been signed in New Zealand. This is the world's biggest


trade deal in two decades and will cover 40% of the global economy.


These countries are looking to lower barriers to trade investment, and


the signing is important, but this is only the first step in what will


be a long process. The pact will require use of tough negotiations


before it becomes a reality on the ground. They do so much. -- thank


you so much. It is not quite over yet, but we will keep you


up-to-date. If you were watching the show yesterday. Tom Stevenson from


Fidelity said where the oil price goes, the market goes, and that is


very true. Shares in Tokyo were hit hard. We had earnings from Toshiba,


they were disappointing. Sharp, disappointing. Elsewhere, though,


gains across the board, as the cost of oil goes up, and that is the case


in Europe, as well. Credits Wiese shares are being hammered today. --


credit Suisse. Shell's shares are down, despite the report they


released. We can now go to New York. Some major media companies are


reporting this Thursday, News Corporation will turn in its


second-quarter results, the owner of the Wall Street Journal has reported


three quarters of revenue decline, print sales are partly to blame, and


investors want details on how the Rupert Murdoch controlled company is


planning to deal with these challenges, and the New York Times


is likely to face similar pressures when they release their


fourth-quarter results. Another tech company is turning in its


fourth-quarter results, this is linked in, the operator of the


world's biggest professional networking website. How much revenue


has it made from ads and paid membership? And an oil company


Conoco Phillips is expected to report a loss. It should not come as


too much of a surprise following results from other oil companies.


Bronwyn Curtis, Chair of the Society of Business Economists.


We can talk about oil once again. We can see a correlation with the


equity markets. It is about confidence and optimism. It is. Very


interesting, what happened overnight. We have the number of


non-manufacturing index in the US yesterday and it was not very good,


so the dollar fell and the oil price goes up, then the dollar goes up,


the equity markets about and then we have a good day. It shows you how


sensitive the markets are two quite small changes. This volatility will


go on. All eyes on Mark Carney in the UK, the quarterly inflation


report coming out, and decision on interest rates, quite interesting


how people are looking to central banks for help, but not so much in


the UK as Europe or the US or Japan. They have not got much ammunition


left compared to what we had in 2008. We had quantitative easing and


putting money in, but the economy has now recovered. The stock market


is quite mature, and so is the global recovery. Today I think, from


the Bank of England we will have downward revision to growth,


inflation, and in wages, and that means that rate hikes will be pushed


way into the future, or at least people will expect that, and I think


the economy is starting to slow down. Although there was a chance to


hike rates year ago, the year before that, when consumer spending was


strong, now it looks very difficult, especially with the international


situation. Muddy Waters in which to make an interest rate rise. For now,


thanks for joining us. Still to come -


the future on four wheels. As the global car industry faces


unprecendented change - we'll chat to the head


of Ford Europe. You're with Business


Live from BBC News. The Bank of England will issue


its latest quarterly It's also expected to leave interest


rates on hold at their record low. But just a matter of weeks ago,


Governor Mark Carney was preparing us all for higher borrowing costs,


and a first rate rise Dominic Rossi is Chief Investment


Officer of Fidelity, one of the world's


biggest fund managers. He says it's not just the Bank


of England that has failed in its communication,


but all the major central banks. Part of that criticism is about the


whole case for forward guidance and another part of the criticism is the


fact that the Bank of England's inflation forecast has been poor,


and the guidance towards interest rates has been too aggressive at


times, but the essence of communication, they have


consistently understated the disinflationary forces in the world


economy, and if you look at the ECB, the Bank of England, the Chinese and


the Federal market, they have all consistently, over the inflation


forecast, and subsequently they have been too aggressive in their


communication strategy about future interest rate hikes. They are


constantly rowing back. Talking about the frustration that


many have with this so-called forward guidance which is the new


thing. That central banks in the US and the UK are very much into this.


The two and is, it is designed to give everyone an indication of what


the tank is going to do next -- the two are designed. I remember when


Mark Carney first got the job in the UK, he said when unemployment is at


7%, that is when rates will go up, but he had to change that, as


well. The goalposts keep on moving. You can keep an eye on everything on


the business pages on the website. the business pages on the website.


We are looking ahead to the quarterly inflation report, we will


have plenty of coverage on that on BBC News.


The oil giant Shell has reported a sharp fall in annual profits.


It made nearly $2 billion, compared with almost


The latest big firm to suffer that fall in the price of oil. But its


deal with British Gas and still on track so we keep an eye on that in a


new era of low oil prices. Shot I start? You start!


Now, the woes of the global car industry have been well documented.


It's only thanks to heavy layoffs, closures and bailouts that


many of the world's big car makers survived the downturn.


But on the whole, they've come out the other side much stronger.


Ford's operation in Europe returned to profit for the first time in four


The firm closed a number of plants, which helped propel it to a profit


of $259 million in Europe, compared to a loss of nearly


And the European market is important.


But whilst lucrative, it's only expected to


To stay profitable, the company plans to cut costs by $200 million


a year in Europe over the next few years.


It will do that by voluntary layoffs and improving efficiency.


But what about the rapidly growing market for hybrid vehicles?


In 2014, Ford had only 12% of the market share in the US,


compared to nearly 56% for all the Toyota models.


And then there are the unexpected competitors, the likes of Apple


and Google, that are actively developing driverless


James Farley Jr is President for Europe, the Middle East


Good morning. First, how did you get involved in this industry? A crazy


industry, it is fair to say. Ops and styles, lay-offs, closures, all


sorts of trouble is the industry has faced. Did you see that coming in


this job? Not really, it was a mature industry. Like many of my


colleagues, we love cars. I always have done and it is still in magical


industry. Moving people from point a to point B, giving them personal


transport, now it means something different with software and


autonomous driving. New technology. So this is a whole new reality, but


so exciting. I understand you were working for Toyota and Bill Ford


phone due at a critical time for Ford to say, please join us. As a


leader at Toyota in the US, we loved our life in Santa Monica and we


decided to join Ford. My grandfather started their in 1911, a chance to


join this iconic company in a time of need. And six months later,


everything changed! After the car industry changed. We pulled


ourselves up at Ford and we did not need any help from the government.


We have been repairing our own business, Europe is very much like


that. We need to keep our costs in line, to be that thriving business


even in bad times. A lot of topical things I would love your take on,


not least that trade deal, five years in the making and not a done


deal. What would it mean? Ford is a free trader and it is a big deal to


have access to markets all around the world. The biggest concern is to


make sure the currency environment is fair for everyone. This is a


great development. Let's talk about Europe. We have mentioned in the


introduction Europe is going to have another very tough year. You


announced yesterday cutbacks and restructuring in Europe. What is


your plan for making the most of what little growth there is? First,


we have a very important operation. We sell 1.5 million vehicles and we


have manufacturing facilities across Europe including in the UK. The


operation is very important and we have a lot of lives at stake as well


for employees. We have seen modest growth in Europe but we are really


well positioned. We have made increases two years in a row, the


cost structure is competitive, we see the automotive industry


recovering nicely in Europe and we are committing to making more money


this year than last year. On that issue of Europe, it is interesting


when it comes to the debate about the UK's continued membership of the


European Union. What would it mean for you as a company whether the UK


remained in left the European Union? We have been on record many times


because of the importance of the EU as an open market, we have 14,000


employees in the UK, we build nearly 2 million engines, we have 3,000


engineers working on global engineering here in Europe, the UK


is the second-largest engineering centre for the -- for the automotive


industry. And having that free available in the UK and Europe is


critical. We export 85% engines, most of them, to Europe. Any


interruption and uncertainty would be a risk for employees. If we talk


about the future and driverless cars and that kind of thing, many argue


you at Ford are in first gear and your competitor is in fifth. We


announced a $5 billion investment in electrification which will be key


for compliance and that the new reality of an autonomous car and


software. We have experiments, some in London, running our own driver


mobility service. It is really interesting learning. We will invest


happily in smart mobility. We think there are three areas in Europe


difference to North America. Difficult to get the balance right,


investing in that while laying people off in Europe. Absolutely,


but it is critical because our industry is in the forefront of


another disruption. And we absolutely welcome the opportunity


for new competitors and for transport is a paid service. We


absolutely see that as a growth opportunity for our company. Ford


founded the company based on mobility and that idea is different


in the next 100 years. And Ford wants to be part of that. And


talking of technology, a word on the industry that has been damaged by


the reputation of VW when it comes to cheat devices, what is your


position? We were very clear up we do not have any devices on our


vehicles and we support for the real world emissions driving standards


for our industry. Customers need to know how their vehicles will perform


in the real world. Our employees, especially in the UK, as the market


leader, we are thankful that we reassured them. Good to hear from


you. Thank you. Good to meet you.


Let's take a quick look at what's making the news


Reuters reports that The Trans Pacific Partnership,


one of the biggest multinational trade deals ever, has been signed


by ministers from its 12 member nations in New Zealand.


The New York Times has an interesting report on toxic debt,


with research on trillions of dollars of toxic loans


While the Washington Post has been looking into coffee pods.


Namely, that sales of them are starting to fall in the US.


Of the booming for so many years, those machines.


And finally, The Telegraph says that Luxembourg has announced ambitious


plans to become a hub for asteroid mining.


Bronwyn is back to look at the papers.


Nice to see you. First of all, toxic doubt, we thought a lot of this had


gone away in the sub-prime era but it is back. It never really went


away! -- toxic debt. Just clever marketing! That is not true, in the


US, we did see them letting banks go bust, other financial institutions,


and writing off that debt. In Europe, they fudged it and we saw


recently that the Italian banks are in trouble and may need bailing out


and there is 1 trillion in debt in Europe alone. It is the China


concern and the unknown. It is absolutely the China concern. These


estimates, we do not really know. They say in loans and financial


assets, it has gone up from seven years ago, nine Chilean has gone.


That is staggering. -- nine Chilean. Up to 30 trillion. That is a huge


number. And it is half the amount of output in a year. If these numbers


are to commit this is very worrying. Time is against us but quick way,


that story, Luxembourg mining asteroids, they say it is the way to


do it because it has all sorts of natural resources we have run out on


Earth including things going in the mobile phones of all things.


You heard it here first! We have to go, nice to see you.


Good morning. The weather today looks very different from yesterday.


Instead of the sunshine and showers, today is milder, accompanied by a


lot of


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