21/07/2016 BBC Business Live


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This is Business Live from BBC News with Ben Thompson


The European Central Bank is set to give its first policy decision


after Britain took the decision to leave the European Union.


Markets are awaiting any news to changes to the ECB's


quantitative easing progamme- as reports suggest Japan is about to


The US Department of Justice alleges that


$1 billion has been "misappropriated" from the Malaysian


government fund founded by the country's Prime Minister.


The DOJ claims that stolen money has been used to help fund


the Hollywood blockbuster The Wolf of Wall Street.


We are not making that up and that is what the markets are doing.


Also in the programme - riding the currency markets.


We'll get the Inside Track on how businesses cope with big swings


And the world officially has gone mad as Pokemon fever sweeps the


globe. A software programmer has combined an app with dating dating.


We want to know which apps you would like to see crated.


-- created. There are unnamed presenters at the


BBC who have caught Pokemon in this studio. We say no more.


We start today in Europe - because the European Central Bank


lays out its latest policy action later -


the first meeting since the UK voted to leave the EU.


So what's weighing on the mind of the ECB?


Well, as well as Brexit, the collapse in oil prices saw


the Eurozone slip into deflation in April and May.The ECB's job


is to maintain price stability - and that means preventing both


inflation and deflation - and stopping either gaining


In recent weeks, political uncertainty - especially surrounding


Brexit - has put a squeeze on bank lending as businesses


and individuals hold off from taking decisions on investment


In March, the ECB launched a landmark stimulus package


It has an aggressive bond-buying scheme, but it can only buy certain


types of bonds and now some economists suggest those constraints


are tying the hands of the central bank.


With me now is Kallum Pickering, senior economist at Berenberg Bank.


What Ben was saying is giving us an idea of the problems injected into


the eurozone economy, as a result of that what state is that economy in


at the moment? Eurozone economy has been growing at modest rates.


Nothing vigorous since 2012 but it has been growing at a stable base.


Balance sheets are improving and there are employment gains we have


enjoyed. You say generally growing but within that average growth,


there are some real basket case, Greece and Italy which have not


grown at all. That is right. France and Italy have real issues with


their labour market, they need reform to help increase employment


but Germany has been grow, unemployment is low. Spain and


Ireland the two basket cases during the crisis year have been having the


strongest rates of growth. OK, so given that situation, what does the


ECB do now? What it needs to do is off set the confidence shock that


has happened since Brexit. It needs to preserve the positive trends.


Just pick you up on that, the confidence shock from Brexit, how


big has that been in Europe itself? The eurozone? We only have a few


breadcrumbs of data so far. The index for the eurozone fell earlier


this week to the lowest level since 2012, but these sentiments can often


overreact to what is happening in the real economy, so we will


probably see a dent to growth in the second half of the year but I am not


sure, given the existing aggressive stimulus the ECB will ratchet up its


programme. Go back to what it can do. You think it hasn't got enough


data do do anything but it can say things that will make a difference


It, it can. They Couch their phrases when they say OK this is the way we


see the economy, there are some risks to inflation, remember all


central banks need to immediate a target. The ECB's is 2%. If they say


we won't meet our target, that send a signal to financial markets they


could increase or extend its monastery stimulus. And Mario Draghi


will say something about European Governments doing more to help out


the heavy lifting that the central bank has been doing all these years?


He is right to do so central banks cannot increase the size of the


engine in an economy. They can only provide the fuel, so it is the


reforms in the labour markets fiscal policy in the surplus countries,


that will raise the rate of growth in the eurozone.


Lufthansa has cut its full-year profit target after a big fall


Germany's biggest airline blamed "terrorist attacks in Europe"


and "greater political and economic uncertainty".


British Airways owner IAG and Easyjet have also issued profits


Shares in online retailer eBay jumped 6.5% in after hours trading


after the company reported better-than-expected


They were up 5.7% compared to the year before.


The online retailer also raised sales forecasts for the year ahead


Elon Musk has unveiled his "master plan" for the future of Tesla.


He said the electric car maker is working on several new vehicles,


including heavy trucks and buses that could be launched


Musk also used the speech to defend the company's autopilot system,


after an autonomous car crashed earlier this year,


The online retailer also raised sales forecasts for the year ahead


Jet jet's cost which have gone up as a result of the falling pound, the


investigation into sports direct but there is one other story I


desperately wanted to get hold of. Commercial property. I can't find.


Standard Chartered. I have got it. They are all linked, this is the


first time we have heard about this, linked to this probe going into one


MDB, this fund in Malaysia, which has been accused by the US yautsties


of money-laundering, or at least Simoning off money to pay for


movies. It is interesting and we will


Let's head to Asia now where the US Justice Department has launched


a billion dollar lawsuit as part of its investigation


The fund was set up and overseen by the country's Prime Minister.


But, the US claims money from the fund was misused -


even though the Prime Minister is not directly


Our Asia business correspondent Karishma Vaswani has the details -


Yes, MDB. The to help develop Malaysia 's infrastructure. The


The heat is sticking round in the south-east,


but elsewhere it is a


We could have that insight into their thoughts life after Brexit but


it does mean investors remain cautious. It was slightly better


yesterday, thanks to good corporate results, so that is the state of


play so far in Europe, that is how markets are looking, we will talk


about that more in a moment. Let us head to New York.


The coffee giant is focussed on more lunch offers, to get more people


through its doors, and low borrowing costs have made it cheaper to buy a


car, but how much has that helped General Motors? We should find out


when it reports second quarter earnings, strong demand for trucks


and SUVs are expected to drive sales at home. With other companies also


scheduled to turn in their accounts investors hope the message is bun


that suggests the US consumer is in good shape.


That was Michelle in New York. Joining us is Bronwyn Curtis,


an independent economist and governor at the London School


of Economics. What are the markets telling us


about post Brexit Britain? They are not really telling us anything at


all. The surprising thing we have had Turkey, we have had all sorts


of, every time get a hit you expect the markets to go down and it is not


happening, in fact, they are going up, and I think they are just


waiting, they have had so many hits they have become blase. You said


they are going up. Looking at the UK market it readjusted. The pound went


down, shares went up, we readjusted. Certainly in the UK, that is true,


they just readjusted prices because if you look at the smaller companies


in the UK, they haven't really gone up, but elsewhere, you know, they


have done pretty well. One indication we might get tomorrow is


the market, the flash data, we get it for the UK and the eurozone, that


will give us an early indication of what is happening in the real


economy. That is the important thing isn't it. In the real world what is


happening, away from the market, away from the numbers. Numbers. This


will be the first time we have had any real world data. This is an


early flash PMI for the UK. It has been especially early, that will


give us a good indication of well, the first indication of really what


is happening to companies and PMIs are about the expectations of


purchasing managers in companies, and we expect that you know, they


will have put their investment on hold, they will put their hiring on


hold and so on, we don't think it will be a good number.


Nice to see you. Briton win will be back to talk us through some of the


Selling sterling or ditching dollars?


We get the inside track of life on the currency markets.


As the Uk's vote to leave the European Union sent shockwaves


through the foreign exchange markets, we'll assess what it


means in the long term - and why a fall in the value


of the pound is good news - and bad news - for investors.


Stay with us, you're watching Business


Now - one of the first casualties of the UK's vote to leave the EU


A number of funds suspended operations, as investors


Well, a new report by surveyors across the UK shows investment


demand is falling and the market could be taking


But does that stack up with evidence on the ground?


Just this week Wells Fargo struck a ?300m deal to buy new European


headquarters in London, while China's largest property


developer has been given the go ahead for a hugely ambitious project


Theo Leggett is in our Business Newsroom.


is the question, what is going on? Who do believe the the surveyors on


the data on the ground? You have to drish between individual property


deals and generalised sentiment. What we have seen with the Wells


Fargo deal is a single company deciding it has extensive business


interests in the UK and it is in its own interests to set up its European


headquarters here. Likewise with the investment by a Chinese firm, they


are coming in to invest in real estate in the London, market because


they think it's a good deal for them. With the pound at its current


level they may think they are getting good value. The broader


picture is that sentiment across the country is fall, this is a survey


that is carried out according to interviews with several hundred


chartered surveyia yours and they are reporting that interest in


future investment in the London property market is declining. Also


across the rest of the country, it is falling but the biggest effects


are in London. I do think you have to distinguish between those


individual deals, and the situation across the country, where surveyors


are being asked not only what is happening but their own opinions,


what people are saying to them, and that shows that sentiment as a whole


is falling, that expectations are, that in London, the property prices


are going to fall, in the rest of the country it depends which market


you are looking at, but the sentiment is also going downwards


and rents are expected to fall as well. A couple of seconds but what


has happened to the property funds? People were investing in them,


difficult to get their money out because property is Ilicic wed. Are


they still in trouble? People with money in those funds


can't get money out quickly because if you want to sell money it takes


time, particularly in the current market, it will take longer than


usual. Thanks very much indeed for that.


Bank is set to give its first policy decision after Britain took


the decision to leave the European Union.


Markets are awaiting any news to changes to the ECB's


quantitative easing progamme - as reports suggest Japan is about to


That is of course designed to kick-start ailing economies.


A quick look at how markets are faring...


There you go. The FTSE is one third of 1% down. It is not a big moving


day. The pound against the dollar, remember, the strongest was 1.30


three. The weakest was 1.28 after breaks it. -- after Brexit.


Now - for most of us - when we think of foreign exchange,


we think about holiday money before a trip overseas.


But playing the currency markets is one of the fastest


Small movements in the value of the pound or dollar can have huge


The UK's decision to leave the European Union sent shockwaves


Today, nearly a month after the vote - the pound


is still around 10% weaker against the dollar.


for British tourists visiting abroad, everything becomes


But for foreign investors looking to buy shares


or indeed whole companies in Britain, it costs less.


It also makes UK-made goods cheaper abroad.


Western Union Business Solutions helps companies transfer


currency overseas and manage their foreign exchange risk.


Did I pronounce that correctly? Well done. Talk us through what happened,


it is still about 10% lower, the pound versus the dollar as a result


of Brexit. What happened when you woke up? It was a bit chaotic to be


honest, it was obviously an expected result and for most organisations,


the world turned for them overnight, think about the cost of goods for a


typical organisation, that immediately went up close to 10%


which has a significant impact for the type of company we serve, a


small, medium-size enterprise. If you are exporting the exports become


cheaper for buyers and therefore you benefit. Did you get any idea what


the net result was for most customers? I think everyone was


concerned coming off this, there were some winners and losers from a


currency standpoint but the reality is that it brings a fair amount of


certainty to businesses within Britain. So that was the prevailing


sentiment. Obviously right up front people were concerned about their


financial situation. Largely those organisations that were exposed to


international costs, they were concerned about that because it has


a flow on effect. It is great for exporters. You make it easier for


people to movement here around the world and we know that that is a


global business and people need to be able to move near round but it


strikes me there has always been a lot of middle man, someone creaming


off profit at every stage and you have tried to remove some of that?


We have. To contextualise it as playing the markets, that is the


core of what we are advising businesses not to be doing. Too few


businesses really care about this and actively manage it. Corporate


stew a great job at the bus majority of businesses, 99%... You are


talking about managing exposure? Yes, and the risk. They shouldn't be


doing that? They should be doing that. You were talking about playing


currencies. They should not be playing currencies, they should be


actively managing it. How should they be doing it in this


environment? It is important to understand their cost base and make


sure they are securing that first, if you understand that then you can


build from that and you know what your prices are, how to contract,


ensure you are meeting prize points to be competitive. Understanding


costs and setting cost rates is important. Very briefly, do they


have some certainty now about where the pound is going? It is down, but


it's not going anywhere else? They do have a bit of certainty? The


certainty is that it will continue to move and that is what businesses


should be expecting. They need to proactively manage against


volatility. We are helping businesses to do that through


platforms and products. Going back to your earlier point, the new


platform does help to do that, cut out the middleman and make


transactions easier and faster but also help them to manage their cash


flow better, especially if they are impacted by foreign currencies. It


is good to see you and I wish we could talk more but as always in


this programme time is against us. Thank you or explaining all of that.


It is nice to meet you both. EasyJet has just reported a fall in


profits following a profit warning that was issued at the end of the


month. The British carrier was affected by political instability,


terror attacks, and now the UK voting to leave the EU. The


investment director of AJ Bell says it is still unclear how it will


affect easyJet. The long-term issue is the economic slowdown, we don't


know if there is yet, but a lot of statistics were showing signs of


weakness even before the referendum vote. As the industry added too much


capacity? There was a ?25 million hit from oil increases and the pound


going down. It is priced in dollars. The long-term impact, the company


has expressed concern about consumer sentiment in the UK and Europe


because it is not just flying in and out of the UK. It flies all around


the continent. We don't know about the long-term impact but the fourth


quarter, the most profitable of the year, it is around 65%. They are


worried about consumer confidence but business travel was up 9% and


they have been working hard on that and it has paid off. Brian is back


to take us through the stories. -- Bronwen. Elon Musk does not shy away


from headlines, he says they will create electric cars, trucks, buses


and this sort of thing. We expected this but it's a big ask because an


electric bus takes a lot of power. Yes. He has put this out on the


company blog. He bought or merged a solar panel installation company, so


maybe he is thinking of using solar panels on the tops of buses but I


don't know how many you can get on the top of a bus. It would be a very


big one. The big thing with all of this is that he's talking about all


of this but he hasn't said when the company will be profitable which is


quite important to people. You know, it's all about what we can do, but


what about the battery technology? That is the big thing. Batteries


will change and everything. If we get that right everything would be


sold? That is the big thing if you can do that but no one has so far.


Lots of talk and lots of things in production but he can do all of this


if he gets the battery is right. He is a great dreamer with big


ambitions. Speeding people across the deserts of America. Getting them


from A to B in a couple of seconds. Does he deliver? He has delivered an


electric car and one that had an accident of course as we know. But I


think he has pushed out the barriers, other people follow him,


and electric cars, it's not gas powered cars or other power, other


cheap means of energy, it is electric cars we are looking at.


Let's talk about Pokemon Go. It has now launched a dating service! We


asked viewers about which app they would like that does not currently


exist. One person said he would like one to find peace. A lovely thought


on a Thursday morning. Any morning! David in Florida wants to see an app


called message in a bottle, delivering a message to a random


person years later! Carol would like to see an app which debunks lies


from politicians. Lie detector, I like that. Let's talk about Pokemon


Go is a dating service. It connects, dare I say, like-minded nerds. You


fill out a little questionnaire. I think you have to be on Pokemon Go


first. That counts me out! Exactly right! Then you fill in a


questionnaire, they tried to put people together and they sent


e-mails off to each of them, and the idea is that apparently it is called


Project Six Up. -- Fix Up. The idea is that it is more fun to play with


a friend. Thank you for your company today. Same time, same place


tomorrow. Goodbye, we will see you later.


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