21/10/2016 BBC Business Live


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compensate for the plummet in the value of the pound. We want to know


what we can do as consumers to fight those price


rises? A warm welcome to the programme. We start in Brussels,


where European leaders are meeting to try and save a free trade


agreement with Canada. The comprehensive economic and trade


agreement has put -- has caused a public backlash and is being blocked


by a Belgian regional Parliament. The row has called into question the


credibility of the EU when it comes to agreeing a major trade deals. A


far bigger deal, the Transatlantic Trade and Investment Partnership


partnership with the United States, has yet to be concluded. And there


is the issue of a future trade deal with the UK following Brexit. CITA


aims to eliminate 98% of tariffs between Canada and the EU and to


boost the economy is by billions of dollars, but critics say a treaty


will weaken European consumer rights. This is the problem,


Belgium's government supports the deal but it cannot be signed off


without the agreement of the country's regional parliaments as


well. The mostly French-speaking region of loonie voted against CITA


and last night refused to compromise despite new concessions. There are


wider implications, the row demonstrates how hard it will be to


do a post-Brexit trade deal with the UK, in the words of the EU's trade


Commissioner... A big story is the situation with


Petrobras, the state oil dried in Brazil were for two years, Petrobras


has been at the centre of one of the's biggest corruption scandals.


The new Chief Executive is the man now responsible for salvaging the


company, no small task, he is selling assets and striking


partnerships with foreign firms to bring in vital investments as Brazil


has some of the largest offshore oil reserves in the world. He told our


correspondent that in five years' time, Petrobras could be back to its


former glory. We have just announced a new


strategic plan, this is a plan for 2017 opted 2021. However, it was the


easiest part because the most important one is to deliver the


plan. I think that after this period, we will see the company back


to its best days. You'd think foreign companies are willing to


partner up with Petrobras? The company still has the image of


corruption it is trying to shake off and there is the question of very


high levels of debt and there is nothing to guarantee you will be


here after two years because a new President will be elected in 2018.


It is not a good idea to depend only on one person although I don't think


it is work done just by one person, it is worked on by a team, working


very hard to really see the company at the levels I mentioned before. So


this two years, your work is to improve the institution, the


organisation of the company. Can you give an example? Two years from now,


a completely new political group comes into power in Petrobras and


the company still runs with a state mindset, it appoints political


people to key positions, but that's not happen again in 2018? What is


important to know is we have changed a lot of internal rules related to


the decision-making process. For instance, in the past, during the


days in which the problems happened, you could take a very important


decision to buy or to hire or to sign a contract by just one person.


It is not possible any more. You need at least two Executive


directors signing of this contract, you need at least five different


committees assessing this operation. We do believe that these measures


will make it very difficult for anyone that would come in the future


to try to break up and do whatever they want. As it was in the past.


That was Pedro Parente speaking to the BBC in South America.


Other news now and a big breaking story today, British American


Tobacco which produces things like Rothmans and Dunhill cigarettes, has


made a merger of the two American company Reynolds that makes Camel


cigarettes, the biggest deal by a British company in recent years,


valuing get at over $47 billion. It already owns 42% of Reynolds and


this offer is for the remaining 58% it does not. Sorry huge deal.


Microsoft shares have gone up more than 6% to hit an all-time high


after it reported better earnings than expected. It has been boosted


by soaring sales from Cloud computing business as more companies


shift away from owning their own hardware and storing data in the


Cloud. Mobile telecom equipment maker


Ericsson says North American sales have declined in the third quarter,


highlighting the depth of the crisis it announced with its profit warning


last week. It said it would introduce further cost-cutting in a


deal with the weaker broadband market for its business as well.


I just want to bring you this story, you might remember the dam that


broke in Brazil, prosecutors in Brazil have charged 21 mining


executives over that dam bursting which killed 90 people and polluted


hundreds of kilometres of rivers. The men were charged with


manslaughter and other environmental crimes. This is some Arco Valley


Brazil, this was a huge scandal -- son Marko. It costs people, 90


people, their lives, and it has caused huge amounts of consternation


for those mining companies, so huge story.


And you like this story! Yes, I was listening to this on the


way in, the suit company must brass, school promise taking off in the UK,


they have been shipped in for the United States -- from the United


States, and schools here, the rise of the Proms has boosted Moss Bros


because of people hiring suits and increasingly buying them.


Glee has a lot to answer for that! Let's talk about what is going on in


the Philippines, the President is in Beijing for talks on what he calls a


new commercial Alliance with China. Yesterday, he announced a separation


from the United States, the huge concern in Washington. The trade


Minister of the Philippines has been trying to minimise the damage caused


by the President, saying the company will maintain its economic ties with


the United States -- the country. Our correspondent is in Singapore.


Do you think there is support for the President's move to veer away


from the US and towards China? I think it has generated more raised


eyebrows than support because the Philippines and the US historically


have strong partnerships which has stretched more than seven decades.


The statements he made a mistake visits to China about time to say


goodbye to America, they were separating, has caused a bit of


shock in diplomatic circles. Rodrigo Duterte is known to be the Filipino


version of Donald Trump who is also known for his controversial remarks.


But this is quite a shock and we have has to see his top aides do


some damage control, the Finance Secretary, the trade Minister,


downplaying and contradicting his remarks, said the -- saying they


will not break ties with the US but will maintain their trade and


economic relationship. They are looking for stronger integration


with neighbours like China. Mr Duterte signed a $13.5 billion worth


of deals on state visits so he is forging strong integration with his


neighbour. From Singapore, thank you.


We have got the markets, the Asian markets were mostly lower on Friday,


partly because of the dollar climbing to a seven-month high


against a basket of currencies, dragging down the price of crude


oil. The Hong Kong market closed because of the approaching typhoon.


Let's check in with Europe and European markets, all of them higher


in early trading. The FTSE 100 climbing in London. One of the big


winners is British American Tobacco, that has gone up more than 2% in


share prices after a merger with Reynolds. Talking about all things


American, the details of what is ahead on Wall Street today.


The world's largest fast-food chain will report earnings on Friday.


McDonald's has been struggling as consumer tastes move away from fast


food in favour of healthier options. And lower food at home inflation is


hurting the golden arches as more diners stay away. Investors want to


hear an update from McDonald's on the company's turnaround campaign,


pricing and the impact of wages. Also reporting earnings on Friday,


General Electric. Adomah is feeling optimistic about its earnings this


quarter, saying it expects possibility in its flagship luxury


car division, and many will look to the results of industrial giant


General Electric. It is seen as a barometer for the overall economy.


Joining us now is the editor in chief of Investment Week and a


regular on the programme. Shares in both the UK's tobacco companies up,


claiming after this offer to buy out the rest of Reynolds, what does this


say about the state of the tobacco industry? It is ripe for


consolidation. When you see a mode of the site, you have two companies


with strong brands and they will get rid of weaker brands, and there is


difference in their geographic penetration. You talk about creating


a truly global tobacco business. Reynolds the second biggest tobacco


business in the US. But volumes of falling and we have a situation like


that, and we are getting tobacco companies squeezed by new regulation


including things like packaging and product placing where you have the


health warnings, this is not a great time to be in the tobacco industry,


some might say. Deals are cheap to do because interest rates remain


low. And again if you look at their sales geographically, there is still


growth in emerging markets, Latin America and parts of Asia, China,


those parts of the world. As you say in the US and Europe, we have been


on a 20 year decline in the appetite for smoking. It is more about the


long-term growth prospects in some of those other countries and shoring


up their revenues in developed markets.


This is something that was talked about, and appetite for mergers and


acquisitions, partly helped by a weak sterling.


And as I said, low interest rates. A lot of big deals going on because


companies think they have to do it now before they see this uptick in


interest rates in the early part of this year. There is $2.5 trillion


less worth of deals than in 2015 so it feels like that on more deals in


terms of deal-making, but lower in terms of value. One thing from BAT,


they ping is on the increase, which has taken off in Europe and they are


trying to expand this. It would make sense because it is taking the


appetite for cigarettes out of the market. These are big companies,


they are not stupid and they see the trend for vaping. They are moving


into that as well. We will leave it there, you are back to talk about


the papers and all things including the Kit Kat, we will try not to eat


this. It has survived so far into the


programme! See you later! Still to come, how


economic is editor is waiting in the wings, he is loitering! He will talk


about the foot -- fluctuating pound as China's consistent economic


growth. More than 5.5 million people


regularly log onto gambling websites. It is a ?4 billion market


would you believe. But now the Competition and Markets Authority is


investigating the sector, highlighting examples are


potentially unfair treatment of customers including firms misleading


promotions. The senior director for consumer enforcement joins us now.


Good morning. What are you doing this? Because we have had a number


of concerns, people tempted into promotions that look good on the


surface but they come attached with hidden and context terms which means


that people don't understand the deal they are getting into and we


think it makes it really hard for them to achieve any winnings and get


a pay-out. We are concerned that companies are exercising too much


tax at it over when they might give pay-outs and when they don't and we


are concerned that they are making it very difficult for people to


complain. A lot of problems in this sector. This is an industry that is


trying hard to change with the times and to come under new regulations.


Is it fair to be giving it such a hard time when they have so much


going on at the moment? We think it is critical that we look at this


sector and investigate it. The gambling commission came to us with


these concerns a couple of months ago, asking us to look at it because


5.5 million people are playing online. This is a growing market and


those people need to be treated fairly. They need the right


information to make the right choices and they need to know that


the odds are not stacked unfairly against them. It is really important


that we investigate this now. That is a really good pun if nothing


else! Thank you very much. You could also see on our web page, you can


see the response from the gambling industry. They say there is no


reason to believe there is widespread failings but they will


cooperate with the CMA. They say it would be wrong to prejudge the


outcome of an enquiry that has only just begun. There is also a story


about Homebase, the retailer Laura Ashley is to close its concessions


within the outlet after the takeover of it by an Australian company. The


company says most of the business in the concessions will shift to nearby


stores and websites. That is all on our website on the BBC website.


You are watching Business Live. A tiny region of Belgium plucks a


massive trade deal for reasons that Canada and the EU are finding to


understand -- hard to understand. You can go online and have a look at


the package about that. Will only is the place that has blocked this


massive trade deal. Plenty more on that story including a lot of


pictures of cows. And we don't know if the cows are involved in the


blocking, to be fair to them! Let's have a look at the market this


morning. Wigan have a quick look at the


economic week with a tale of 2-mac with very different economies. We


had the curious Case of China's income growth and the fluctuating


pound. Also the health of the coming after the vote to leave the EU. We


have also had the last of the presidential debate in the US


elections. Joining us is Kamal Ahmed. Let's start with the US. For


the first time it seems that we have had perhaps some comments about


policy. We also had an extraordinary comments from Trump about the job


report in America, saying it was anaemic and terrible and the country


was losing its businesses. Is that a fair assessment? The American


economy in comparison to other Western economies has actually been


performing relatively well. The mood in America, businesses and markets


are all looking at whether the head of the Federal Reserve will raise


rates by the end of the year will stop they have signalled a rate rise


many times but then not followed through. Inflation is still very


weak. There is no sign of any real inflationary pressure. The dollar is


Tambe strong for exports, not up people think -- too strong. It is


maybe not anaemic but not as positive as some may have expected


but in comparison to what is going on in Europe, America is in a better


position toward normalisation of monetary policy. European leaders


are trying to rescue this deal with Canada. There is a lot riding on it.


We have been talking about Canada plus as the model for the trade


deals but it is something they cannot do overnight. This is the


most important issue for the EU. We have had Mario Draghi, the head of


the European Central Bank, talking about asset purchases and how long


they will continue for but the real worry is this Canadian deal. Justin


Trudeau is due in Europe next week. This is to show that the EU is open


for business and that it can do deals but suddenly a small regional


parliament in Belgium that represents 3.5 million people says


it does not want to do it. That shows the difficulty. This is


overlaid with the American transatlantic trade and investment


partnership also not going ahead. Europe had a real challenge. If


these deals are seen as good for the EU economy but don't happen, the


argument is that the European economy is going to suffer. At the


time of low growth in Europe more than in America, it is a real issue.


Let's talk about China. Their GDP economic growth came in on target


yet again! But Beijing is seeking to cool its property sector and the


worries about corporate debt level are not going away and in fact have


been exacerbated by these figures. The big issue in China, as they make


this transition to a consumption led economy, can the Chinese authorities


keep the faith of the public in economic growth which has been very


strong in China for many years? And at times of stress, and at the


beginning of the year there were big worries about growth, the


authorities' response is to flood the market with credit, whether it


is business or consumer credit. And these have led to these incredible


numbers. $18 trillion of corporate debt in China, that is over 100% of


GDP. These are big worries because if there is a real slowdown in


China, that debt becomes unmanageable and it becomes a big


problem and their credit growth is far faster than their economic


growth and that always lead to tension. We can't let you go that


talking about inflation rising here in the UK and that seems to be


pushing through. There is not a lot of evidence yet that the weaker


sterling has sped through the prices because businesses are trying to


soak up the increased costs but consumers are negative about price


rises. We have seen this week the first increase in inflation posed


the referendum, and distilling drops, import prices for the UK, we


import a lot of energy and fuel and food that will become a problem --


as sterling drops. As soon as inflation goes above wage inflation


there is a problem because people begin to feel worse off and that


becomes a political problem. Thank you very much. We'll take a look


through the business pages in a moment but first a reminder of how


to get in touch with us. The business life page is where you can


stay ahead of all the breaking news will stop we will keep you


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as well. Business live on TV and online, whenever you need to know.


So what other stories have the media been taking an interest in? Lawrence


Gosling is back to talk to us about those. We have at a chocolate bar


sitting on the desk the whole programme! We were talking about


inflation and this is the practical effect. This goes back to the


Marmite story of last week. The boss of Nestl was saying they were


mulling over price rises of one of the iconic products in the market.


We are back to the weakness of sterling but also some of the core


commodities that go into eight chocolate bar like this, chocolate


cocoa, they have been going up. We were talking of air about how much


one costs, none of us quite remember! It cost me 65p in the


canteen upstairs! BDD go to a petrol station, you would pay more than


that. Some of these retailers are pushing through price rises almost


without us knowing it. Depending on the outlet that you buy from. The


one person says we can eat well for less. Lovely to hear from you, that


is it from us, thank you for watching. Goodbye.


Good morning, it is a slow start for many of us, quite a lot of low cloud


and patches of fog which at its most dent in the west of the UK can make


visibility up and


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