06/05/2016 BBC Business Live


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This is Business Live from BBC News with Victoria Fritz


narrows its losses as it largest producer of steel,


of a collapse in worldwide demand for the metal.


Live from London, that's our top story on Friday 6th May.


ArcelorMittal's first-quarter profit dropped 33%, as the world's biggest


steelmaker has contended with slumping prices of the material


the markets where Japanese markets the markets where Japanese markets


have seen investors turning their focus to the closely watched US job


numbers later. I will gather myself to stop


Our Economics Correspondent Andrew Walker will be here to give us stop


the inside track on some of the big business stories of the week,


including the latest on US jobs due out later today.


And time is money as the old saying goes, Facebook has 50 minutes


we want to know from you, do you give them 50 minutes? Let us know.


The world's largest producer of steel, ArcelorMittal,


has posted a 33% fall in profits in its first quarter to $416m.


We'll have more on that in a moment, but the past few years has seen


Here are the reasons why: As you can see from this graph showing one


of the most commonly traded types of steel, rebar,


the price has been hit by oversupply, cheap raw materials


You will just have to trust me. There you are, the red line I was


looking for. China produces half of the world's


steel, more than the United States, the European Union,


Russia and Japan combined. But demand for steel in China has


shrunk for the first time in a generation as economic growth


has slowed and policy makers have tried to steer


the economy toward consumption. Declining sales at home have


seen mills in China ship record volumes overseas,


with China accused of dumping steel on foreign markets,


or selling it for less than it Jason Kaplan is a steel expert


with IHS Purchasing Service. Great to have you in the studio. Can


I stuff, Victoria then with the graphics, making it seems we talk


about the doom and gloom but that little Arctic, what was behind that?


??HOTKEY craziness from China again. Everybody believes there is not


enough stock and they are ordering materials and the first time you can


buy it on an exchange. Not only is this not holding but in fact these


steel mills are suddenly saying, we need more. It is craziness. I guess


there were no surprises with the numbers from ArcelorMittal. When we


look at the oil industry they are falling off a cliff. My own


wandering what of the ones that are doing better than the ones


doing worse are not doing? ArcelorMittal is actually one of the


better ones. The US steel mills are doing considerably worse. Their


success is really about geographic focus on India. One of the stronger


markets. They also go back into iron ore. They are benefiting from


low-cost throughout the supply chain. I want to ask about results


we have seen today, losses narrowing slightly. The net debt in


quarter has actually risen to over $7 billion. This seems to be a real


structural weakness in the entire industry, the whole commodities


sector really. Yes it is. That is the thing that is hampering and


precipitating the Tata Steel demise. ArcelorMittal recently did another


rights issue to keep things going. We have two wrap it up but is still


price bottoming out? We think so. Upwards from now. Good on you.


In other news... News Corp, the media giant


controlled by Rupert Murdoch, has seen revenues fall 7.3%


in the first three months of the year -


amid a decline in advertising sales in the print media.


It's the fifth drop in quarterly revenue in a row and was


It's also been hit by the strong dollar which dented its


News Corp lost $149m in the three months to March -


after a big one-off charge to settle monopoly claims at its in-store


The former owner of UK retailer British Home Stores,


Sir Philip Green, has hit back at the politician responsible


for looking into the collapse of the high street chain.


Sir Phillips says that Frank Field, chairman of the Work


and Pensions committee- should resign.


His comments come after Mr Field recommended stripping the former BHS


owner of his knighthood if he did not repay ?571m


North Korea's ruling Workers' Party will open its first full


Foreign reporters have been allowed in, to witness a display of national


unity, but their movements are closely managed.


Our Korea correspondent, Steve Evans, is among them


That the building behind me, just across the square,


In front of it, you probably can't see it, but there are rows and rows


of buses which have bussed in the delegates.


And right around the perimeter of the building there are men


standing absolutely stock still, all with umbrellas.


And those, we are told, are Kim Jong Un's personal guards.


That is the way you tell he's in there.


If you ask anybody what is going on they say, we don't know.


What we assume is happening is that we are being called


What we assume is happening is that we are being corralled


here while Kim Jong Un is in there speaking and we presume


we will go in and see the remainder of the proceedings.


This thing is important because it is happening.


Technically it is the body which runs North Korea but it is not


Its significance we think is that Kim Jong Un is cementing his hold


on power, it is his way of appearing to the nation,


though it is not currently going out live on TV but no


It is him cementing his position in the nation as the man in charge.


What we don't know is whether there will also be some kind


of policy announcement, a big signal of a change in policy,


perhaps a liberalisation of the economy or something like that.


Stocks in Japan dropped, and the yen strengthened as trading


Caution dominated the mood in other Asian markets ahead


They suffered their worst weekly loss since February.


This is how the trading day is opening up across Europe.


Markets have been open about 40 minutes now.


Italian banks firmly in focus in Europe.


Provisions for bad loans fell to a four year low.


Michelle Fleury in New York has the details on those


Has the US economy gained enough momentum to continue creating jobs


We will find out in a few hours' time.


The US Labor Department releases its latest


Wall St will be watching closely to see how the


data may influence the outcome of June's rate-setting policy meeting.


Economists are predicting 202,000 jobs were created last month, and


the unemployment rate is expected to remain unchanged at 5%.


There are two things particularly to look out for.


The first is the number of Americans searching for work,


also known as the labor participation rate.


The job prospects have improved and that figure has gone up.


The other number to watch is wage growth, which, well, it's been


Richard Jeffrey, Chief Investment Officer


Always good to see you. Thanks for popping by. Let's stay with the US,


not so much about the detail, what about the market focus? Earlier in


the year it seemed like there was not so much focus on the markets, it


was more inflation, salary growth, are the markets focused on these


numbers today? Earlier in the year the markets were looking


internationally because that is what was influencing the Fed. What tends


to happen is that people initially look at the jobless numbers which


hits the headline and then they start to analyse the detail. I think


the detail is the labour cost, the average hourly earnings. I disagree,


I think there is some sign of more wage inflation coming from the


Saints. That is why the markets will be sensitive. That comes into the


reaction function for the Federal reserve, it starts to think about


wage infection picking up solution to warrant interest rates going up.


The markets look forward and we have just had a whole slew of data


surveys coming out from purchasing managers right across the world and


they are fairly uniformly week. We are seeing rhetoric from central


bankers that suggests things are a bit better. Why do we have this


disconnect and who should we trust? You have to be careful about


overanalysing monthly changes in any economic financial series. You love


the purchasing managers surveys but actually I would say rather


the purchasing managers surveys being week I would say they were


dull. World growth is relatively dull but that is safe, when it is


exciting, the stuff you like, it is unsafe cost of going too fast. I


think the numbers are OK at the moment. I would not want to see them


get much weaker but at the moment we are seeing a little volatility, some


a bit weaker than expected, but I think the key is that after a poor


first quarter in the US economy, which was probably related to some


statistical seasonal adjustment problems, I think we will see a


rebound in the second quarter and that is what visual banks are


looking at. You are a glass half full bloke. That is the one. Best to


be that way. You will come back and take us through the papers. Talk to


you shortly. You Still to come: What is the future


You for the Transatlantic Trade Our Economics Correspondent Andrew


Walker will be here to tell us more. You're with Business


Live from BBC News. Despite being surrounded by water,


many people feel the UK doesn't currently make the most


of its natural resources - Mark Shorrock says he's ready


to change that and start building a tidal lagoon in Swansea Bay


which could generate 8% I wonder how much power you think


you can generate. What we can do, this island nation of ours gets a


vast body of water coming out of the Atlantic notion into the Severn


River and Liverpool Bay. -- Advanta Goshen. About eight metres- 12


metres of tidal range, you could get 10% of our electricity by harnessing


a series of tidal lagoons, filling and emptying man-made tidal lagoons


around the coast. How does this around the coast.


alternative energy generator compared to others already in play?


One of the key things is, the way the water flows around Great


Britain, the times change. When you have tidal lagoons in the Severn


estuary, and they are off, tidal lagoons in Liverpool are on. So you


have 24-hour generation, you always know when the tide will be rising


and falling. They are stacked around the country. The big comparisons


with wind and nuclear, but intervals of offshore wind and nuclear, tidal


power will be cheaper than both. In terms of certainty, we know exactly


in any year in the future when we will be generating for how long on


any day. Price-wise we expect tidal power to be the cheapest possible


source of power for the UK. It will last a very long time, if we build a


tidal lagoon in Swansea Bay it will still be there in 120 years. Thank


you for your time, Mark. This sounds fascinating. Did you know, one


quarter of all UK workers not only want to take off for the weekend,


they want out altogether? I am surprised it is just one quarter.


Job satisfaction at the lowest for two years.


People saying they feel very insecure.


This is Business Live. ArcelorMittal's profit for the first


three months of this year dropped 33%, with the slump in prices of the


material, steel prices have gone straight down. Let's get more on the


US jobs numbers, we've them all morning. They are coming


out later today and implement is predicted to rise again and how will


that affect the Federal Reserve's thinking when it comes to setting


rates. One person with some insight into that is Robert Kaplan, the


President of the Federal Reserve bank of Dallas and one of the people


who sits on the big table of the Federal Reserve and


least looks at what direction US interest rates should go and here is


what he has to think. My own view is we know


the consumer's capacity to spend in the United States


is getting stronger. You know, their incomes,


the job market is strong, wealth, home prices,


so then the question is, is it political uncertainty,


is it the financial turmoil Our own judgment is you will


see a rebound at some point in the second


quarter in consumer spending, and we still believe GDP growth


will be 2% this year. Robert Kaplan is optimistic, Andrew,


he is optimistic, reasonably. 2%, remember, in the context of a


disappointing side in terms of disappointing side


economic growth, it is OK, but over the longer period it is not grateful


stop the US's economy long-term trend has been higher than that. Is


he right to expect a rebound? Probably, yes. There is an


expectation of a rebound, Richard mentioned seasonal adjustment


issues, the US economy has had a pattern


first quarter of the year, which raises the question, they do have


the statistical techniques for smoothing out routine seasonal


fluctuations and maybe there is a debate about whether the methods


they are using are no longer up to the task and not capturing what is


going on in the first quarter. Nonetheless, it was a weak figure,


the signs are it will get better in the second quarter. Inters talk


about what is going on with TTIP, the transatlantic trade investment


love it on this programme, will it partnership. We love that! We all


love it on this programme, will it happen, won't it? It has been a


terrible week for the negotiators, first of all we had Greenpeace the


environmental campaign group releasing documents which they


the negotiations and they said it business in what they regard


the negotiations and they said it pointed to their concerns about the


deal leading to lower standards of consumer protection, environmental


protection, health protection and so forth. So that was certainly a bad


start to the week. French officials, including


President Holland himself saying the deal potentially on the table as it


stands would not be accessible -- President Hollande. You could argue


Donald Trump's success is another setback because he has focused his


trade rhetoric on other things, the transpacific partnership, Mexico,


China, but it is a fair bet he would be at least a little sceptical.


There are a lot of people in the states who don't like his trade


deals but I'm along the lines of this is not going to happen, is it?


President Obama wants to get it done before his term is over, the clock


is ticking and the Europeans are not that much in favour anymore. If it


doesn't get pushed before Obama is out, let's be frank, the way it is


looking Donald Trump goes in, it is a done deal, not a done deal, it is


out of I do think we can say that but we


can save Hillary Clinton is also not a huge fan. Regardless of what


happens. There are two questions, they get the legal agreement done


before President Obama steps down, there are quite a lot of technical


issues. Both sides have said they are committed to making the effort


to get it done but both sides say it is important to get the right deal


rather than just any deal by the deadline. Even if it is


be ratified by the US Congress. With whoever is in Congress, with whoever


is in the White House that is going to be really tough. I think perhaps


little over doing it, something I to say it is out of


little over doing it, something I would never normally accuse you of.


Not me! But it is hugely challenging. Hugely challenging.


know another challenge, Greece. It hasn't gone away.


The IMF wants something, they want a lot of things.


The Eurozone finance ministers will have a crack at getting the bailout


were aiming to have a review were aiming to have a review


completed and signed off back in the autumn and that didn't happen


because of concerns about whether Greece was actually complying with


the programme. They will try and get it done on Monday but the IMF was


saying that it wants to have Greece having what they call contingent


measures to reduce its borrowing needs. That's because the IMF is not


at all convinced that the targets that... The measures Greece has


already agreed will achieve the borrowing targets they have in mind.


And they therefore want to have some additional


in automatically if the targets are missed. And it has to be said, the


Greek government is very unhappy about going down that line. And it's


going to be... Talking about the struggle with TTIP, this will be a


that the Eurozone finance ministers back on the rails


that the Eurozone finance ministers are having on Monday. But, of


course, with the referendum on EU membership in June and also the


possible flare-up of the refugee crisis, the last thing Europe needs


is a Greek drama, another crisis. Do you think the European


may be in the mood for compromise? They maybe in the mood for


compromise for precisely one of those reasons. The political


background for the negotiations with Greece is such that you would like


to be just part it for a long period -- like to be able to just park it.


The agreement is between Greece and the International Monetary Fund, the


Eurozone and the IMF, which thinks the targets as currently constituted


commission's gift to do this. are not credible so it is not in


commission's gift to do this. We appreciate your time, have a


lovely weekend. In a moment we will take you through


the business pages but first a quick reminder of how to get in touch.


The Business Live page is where you can stay ahead with all of the day's


you up-to-date with the latest breaking business news. We


you up-to-date with the latest details with insight and analysis


from the BBC's team of editors around the world. And we want to


hear from you, get involved on the BBC Business Live web page at BBC


.co/ business. On Twitter we are BBC business. Whatever you need to know.


get straight on with the papers. In get straight on with the papers.


the New York Times Mark Zuckerberg has come out and said, those 1.6


billion people who use Facebook regularly every month, give Facebook


15 minutes a day. That is astonishing.


Apparently it is more than measure activity, according to the


bureau of labour statistics, with the exception of watching TV. And


eating. That gets more time, doesn't it? What is interesting is not so


much, crikey, spending 50 units on Facebook, it is that younger people,


anybody younger than you and me, of course! Younger people are spending


much more of their leisure time on things they don't have to pay for.


That is quite interesting in terms of consumer spending, household


spending and those sorts of trends. These things aren't actually free


because they are paid for by advertising so they are paid for


indirectly but consumers don't have to pull money out of their pockets


to contemplate when we look at to contemplate when we look


slightly dull consumer spending trends and they are going on a


different way. We had some tweets. Caleb from my -- Nairobi says 50


minutes is far more than enough. People are getting bored of


Facebook. It doesn't look


recent numbers. After the first flush, the


technology is exciting, but maybe you want more faced time.


I like that, Richard! We are running out of time.


Financial Times, headline, most EU citizens in the UK would not meet


That is absolutely right but the Even more so when the new rules come


That is absolutely right but the Visa rules are set in the context of


the number of people who can come in from the European Union. If there


were tougher restrictions on people coming in from the European Union


Visa rules might be relaxed so have Visa rules might be relaxed


to look at those things in relation to one another. The fact is the UK


has lots of demand for labour and it is sucking in workers and at the


moment most of them come in from the EU.


Richard Jeffrey, we appreciate your time,


have a great weekend. Thank you, Richard.


There will be more business news throughout the day


on the BBC Live webpage and on World Business Report.


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