01/11/2016 BBC Business Live


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


Oil giant BP takes a beating as the low price of crude


But it's a different story for its rival Shell.


It posts a surprise rise in earnings.


Live from London, that's our top story on Tuesday 1st November.


BP's profits virtually halved in the last quarter,


We'll get an expert view on the differing fortunes of these


Also in the programme, dramatic numbers from


Our team in Asia will tell you all you need to know.


And, the trading day in Europe has just begun.


Shell shares have spiked, BP shares are slipping.


Plus, two key central banks in Asia made decisions today.


And we'll get the inside track on 50 years in the entertainment business.


The nightclub mogul Peter Stringfellow joins us


later to talk clubs, cocktails and Brexit.


But with the closure of several iconic nightclubs, we want to know,


do nightclubs have a future, amid rising costs, falling visitor


Oil doesn't just help our engines run, it fuels the world economy too.


And in the last couple of hours global oil giants BP and Shell have


given us the latest snapshot on how things are going.


Their latest results come amid the continued slump


BP posted profits of $933 million in the third quarter of this year,


but that's down 48% on the same period a year ago.


But there was better news at its rival Shell,


which beat expectations to make $2.8 billion in the same period.


In January, it dropped to its lowest level in over a decade,


It's currently hovering around $50 a barrel,


weighed down by persistent oversupply.


In September the Organisation of the Petroleum Exporting Countries,


or Opec, agreed to do something about this.


At a meeting in Algeria they announced a modest limit


on oil-output levels in order to prop up prices.


This is the first cut in production since 2008,


but the details of how the cuts will work are yet to be finalised,


and any further agreement has yet to be reached, following a meeting


of both Opec and non-Opec members over the weekend.


Alex Holburn is a director at the merchant bank Hannam


What is so interesting is the diverging fortunes, BP reporting a


nearly halving in earnings, but a 20% rise at Shell. Both companies


have been in different positions over the past couple of years. VP


has had a number of legacy issues and has been shrinking, not least


the oil spill issues in the Gulf of Mexico. Meanwhile, Shell has


capitalised on the downturn in markets and purchased BG earlier


this year, and is starting to see that reap rewards. When we are


looking at the low oil price, we have seen all of the big firms


having to change their business fundamentally. Shrinking their


business, reducing profiling. Is that the story now for the future,


the only way they can win any market or profitability back, by reducing


what they do? Absolutely. There has been a deemphasis in the parts of


the business but are not profitable, and the refining marketing has


bailed out some of the integrated in the past couple of quarters. The oil


price bottomed in January, West Texas intermediate did in February,


and since then we have seen a substantial uptake, and the upstream


divisions are starting to see the benefits. The clear focus amongst


all oil and gas companies is on being able to continue to pay their


dividends going forward. They are substantial contributors to


pensions. The emphasis is on cash flow, trying to maximise that, and


do every thing they can on the other side to reduce costs, a combination


of reducing capital expenditure, some companies have introduced


prescription dividends, offering shares instead of cash, but an


emphasis to maintain the dividend yield, which is around 6%. When we


talk about Opec, basically cannot come to an agreement anymore. It is


to be what they said went. Now they cannot seem to get their act


together. It looked as though we might see some kind of agreement at


the end of September in Algiers. We are now awaiting confirmation of how


they are going to potentially achieve that 32.5 to 33 million


barrel a day production level. The meeting will take place in Vienna on


the 30th of November. There are a number of nations which require


volumes in addition to the prevailing oil price in order to


maintain and meet their budgets domestically. A reluctance from the


likes of Iraq, Nigeria, Iran to be a part of those cuts.


Activity in China's manufacturing sector has expanded at a faster pace


than expected in October, adding to views that the world's


second-largest economy is stabilising thanks


The official Purchasing Managers' Index stood at 51.2 in October,


compared with the previous month's 50.4, and above the 50-point


mark that separates growth from contraction.


It's a week for central-bank meetings, and the latest


to announce its decision is the Bank of Japan.


No surprises this time, it's kept its existing level


of asset purchasing and interest rates, but it's reduced


its inflation forecast for next year to 1.5%.


In September, the Japanese central bank pledged to hit its 2% target


at the "earliest possible time", though inflation still remains


Lots of stories on our page, including an update on sterling. It


is following the news that we got late yesterday from the Bank of


England boss, saying he will stay in position until June 2019. Sterling


is up now slightly against the dollar. And against the euro. That


gives a sense of the markets breathing a sigh of relief. The


announcement came at 6pm London time yesterday.


We will talk more about that yesterday -- later, especially to do


with timing and the UK leaving the EU.


Sony's profits have taken a dive in the second quarter.


Dramatic numbers. Explain this for us. We have seen tough times. Really


bad numbers coming in from Sony. This is largely due to the soaring


value of the Japanese currency. Over the last few years Japanese


companies have benefited from a weak yen, it has made that products


cheaper overseas, but since the uncertainty over Brexit, nobody


expected it, investors have rushed to pick up the game, because it is


seen as a safe bet. That has pushed the value higher, even from earlier


in the year, when we saw the negative interest rate policy pushed


in, people rushed to the yen and pushed it higher, which means that


now it is more expensive than ever before to purchase the firm's


products overseas, and that is why you are seeing such bad numbers


coming out of Sony. The news coming after the trading day finished in


Japan. Japan up slightly. Shanghai and Hong Kong given a massive boost


in the manufacturing data coming out of China. No change from the bank of


Japan to do with its policy. No change from Australia either. They


also have their meeting. BP and Shell dominating in Europe. We saw a


chart with oil share prices, because not updated, and nor are these! It


is not possible they are all on zero! Our data is not working. But


BP shares are down around 1% of the back of their earnings, but Shell


opening up nearly 4% higher. That gives you a sense of how markets are


digesting the news. And Michelle has the details about


what's ahead on Wall Street today. Third-quarter earnings season rolls


on. On Tuesday the biggest name in the spotlight is the pharmaceutical


giant Pfizer. The largest drugmaker in the US beat rivals in a bidding


war to acquire medication in August. Investors want an update on how the


takeover is working out. Also, Kellogg are reporting, it's over


seals sales are forecast to have fallen, thanks to the weakness of


currencies in key South American markets, and the important market of


the UK, with its much weakened sterling. The other big market event


that we issue will generate no news is the latest meeting of the Federal


Reserve's open market committee. It meets the two days, and everybody


expects business rates -- interest rates to stay on hold, at least this


time. Our market numbers may not be


working, but Simon is! Yesterday Mark Carney was the story,


how long would he extend his stay. He is going to stay for another year


beyond the five years, but it is not the full term. It is fascinating.


When he came into the role, he talked about only staying in for


five years and staying until 2018. Then there was talk about taking the


full term and going until 2020. Most people's expectations were that he


would serve the full term. There has been a lot of negative comments


aimed at him in recent weeks from Conservative politicians, columns


written in newspapers, there was a sense he was come under increasing


pressure. Interesting last week we heard the slightly ambiguous comment


from -- and the sense he would make a statement this week. What is


interesting, it is a half and half, by only going one year. He has that


2018 will be the darkest point in the negotiations, so he has said,


you need a safe pair of hands, but going to 2019, he is saying, as soon


as we have got out of the woods, I am off. Maybe that is a measure of


the political criticism. Neither too hot nor too cold. Sterling reacted


on the back of that, but the lack of a big recovery in sterling tells you


investors see what he is doing. It is an enormous week, we have the


Federal Reserve decision, the Bank of England this week, the bank of


Japan today, so many earnings stories, and we have an American


election next week, so there will be a lot of inactivity. The Federal


Reserve is highly likely to move on interest rates. They will wait until


December. Interestingly, over the past few weeks, markets have


factored in a Hillary Clinton victory. With the shift over the


weekend, the comments coming out, the prediction markets are moving


sharply the other way, they now have only a 70% chance of Hillary Clinton


Winick. What is fully priced in suddenly looks at risk. It is giving


you busy! Something has been! The inside track on 50 years


in the entertainment business. The nightclub mogul


Peter Stringfellow joins us later to talk clubs,


cocktails and Brexit. You're with Business


Live from BBC News. Business confidence rose


in the three months to October, according to the latest assessment


from the CBI. Exporters saw the largest boost


in confidence as they cashed Theo Leggett is in our


business newsroom. We could be forgiven for thinking


business would be pessimistic, given the uncertainty around the


referendum and the vote to leave the EU, but not so? Absolutely. This is


a survey of over 400 small and medium enterprises, the companies


which were a bit more keen on leaving the EU than their big


business colleagues. What this survey has shown is that a small


increase in overall confidence, you expect that, because there was a lot


of uncertainty, but the big area where confidence is increasing is


related to export. Let's go to my chart, which is working. This shows


what happened to sterling over the past month alone. A big fall at the


beginning of the month. That is on top of falls earlier in the year. It


is looking up for small businesses who export, because their products


when purchased overseas will be cheaper. But there is a downside.


Things coming into this country that manufacturers need, they are getting


more expensive, so unit costs are more expensive, so unit costs are


rising. It is a two-way street, it is good news if you are an exporter,


if you import products, it is not so good. The other problem is they are


struggling to recruit enough qualified staff. They struggling


more than they have done at any time since 2007. The picture is


confidence is increasing, export confidence in particular, but costs


are rising and well-qualified staff can sometimes be hard to find.


you. Let me take you to a story on the live page. This may not come as


a surprise to employers. 80% of school leavers lack essential


business schools. This is a story from the chartered Institute of


accountants. That is actually worse than last year, when it was 75%.


There is clearly a question about what people are being taught in


schools and whether it is relevant for the world of work.


Profits at oil giant BP have fallen 48% compared to this time last year


as the firm grapples with the flagging price of crude.


Meanwhile, Shell has beaten market expectations with a rise in profits,


but it says that capital expenditure will be towards the lower end


For you and me, they will spend less on things like exploration.


Now, our next guest needs little introduction...


He's a mainstay of the British clubbing scene spanning 50 years.


He is the nightclub mogul Peter Stringfellow.


Now in his mid-70s, Peter Stringfellow is a self-made


multimillionaire who has been running nightclubs and gentlemen's


with the likes of Prince, Marvin Gaye, Rod Stewart Tom Jones


Not content with the business of partying -


Stringfellow also dabbles in politics and has donated tens


of thousands of pounds to the UK Conservative Party -


recently noting his admiration for Prime Minister Theresa May.


Originally a strong supporter of the UK remaining


IN the EU, He now says he wants to make the most of the UK's


decision to leave, saying "it's more romantic to be for Brexit".


Good morning. There is so much to talk about but for the benefit of


our viewers and around the world, tell us how it began. Quite an


amazing story about the hiring of a hall on a Friday night and signing a


little-known band called The Beatles. I left school when I was --


in the 1950s, when I was 21, I started looking at church hall in


Sheffield. On Fridays, it cost me ?3, and a new record came out cold


Love Me Do and some girl said, what about this record. Nobody bothered


with records because you could hardly hear them. So I booked The


Beatles, it took us three days to negotiate it, ?85. I came out


sweating, I thought, I can always cancel them. Luckily I did not. Come


February, their record was number one, they played for me on that week


and the rest is history. Spin forward 50 years. Let's talk about


the market you find yourself in now. You could create an industry from


nothing. Now it's a difficult industry to be in. You can still


rent a hall and put a band on. You've got to start somewhere. I was


a disc jockey for 20 years. By the way, I was fantastic. You've got to


live it like I did and it cannot be a part-time job. When I started with


my church hall, within the second Friday I'd booked in an outfit which


made me ?65. Sheffield had never seen this group. Fantastic. Once you


start that kind of thing, I live that life. I did not do anything


else and I've never done anything else since. Nightclubs for me. What


is the future? I understand you're looking into virtual reality. Very


much. There's always something happening here that other countries


come and look at. I had someone who wants to come into London. There is


something special about where we live and we can do it. As far as I'm


concerned. I was four Remain but we cannot go back to that. We are


Brexit. You spoke about the future and adapting to the way people go to


nightclubs. A lot of people say people prefer to stay inside and


nightclubs are dead. That has fundamentally changed. That is how


it happens, it was Strictly Come Dancing kind of stuff, I was


bringing people from America. Rod Stewart. All it went. Brand-new


stuff, you did not know where you're going, it is like that today, we


don't know where we are going. So what? There will always be people


who want to be together and see each other. Culturally, things have


changed significantly. Gentleman is clubs are no longer viewed in the


same way they were 30 years ago. When I started it was outrageous and


that was 1996, they are accepted now and I'm very happy about that. It is


really good to speak to you. We've only scratched the surface. Come


back and talk to us soon. I want to hear about virtual reality


nightclubs as well. Do stay with us but in the meantime here is how to


stay in touch. You can stay with us and all the latest news on the BBC


website. We want to hear from you. Get involved on the BBC business


live web page. What other business


stories has the media been The BBC's Dominic


O'Connell is with us. This is a great story. The Saudi


king appoints a new finance minister. It tells us a lot about


the oil prices. With them we are seeing the corporate pain but the


real pain is countries that rely on it. It has been running down its


reserves at a rate of knots and trying to rebuild the economy. One


of the visible symbols has been the remaking of the Cabinet. The finance


minister has only been in the job for 20 years. Sony has just done one


of the biggest bond issues in history, $7.5 billion. Timing is


everything. Interestingly announcers before a bond issue. Replacing the


oil minister, who had been there for 20 years, the new Crown Prince


trying to remake the economy so it is not reliant on oil. There is a


big jump to be made there. Your take on Mark Carney. He will stay until


2019. It's about the best compromise, I suspect. George


Osborne, remember, he did not fill out a job application for eight


years. Probably about right. Thank you for your company. That's another


business live. We will see you again tomorrow.


It is time to reorganise the wardrobe. After


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