06/01/2017 BBC Business Live


06/01/2017

A look at the global business stories.


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This is Business Live from BBC News with Aaron

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Samsung Electronics expects to report a 50% surge in fourth

:00:07.:00:12.

quarter profits despite the fiasco with its flagship Note 7 phone.

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

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Samsung's on track for its best profit in years -

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and pledges to put the Galaxy Note 7 debacle behind it.

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And the power of a Trump Tweet - the President-elect threatens

:00:49.:00:53.

Toyota, and the result - $1.2 billion is wiped off

:00:54.:00:55.

the value of the company in less than five minutes.

:00:56.:01:01.

The markets appeared to be risk on mode. We'll tell you why.

:01:02.:01:10.

Can economists be compared to weather-forecasters when it comes

:01:11.:01:13.

Our Economics editor Kamal Ahmed will be here with that

:01:14.:01:17.

and a look back at the rest of the business week.

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And following the impact of Donald Trump's Toyota tweet,

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we want to know what's the biggest Twitter storm you've ever sparked?

:01:23.:01:24.

We start with Samsung - because in the last few hours

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the South Korean tech giant has said it's on track for the best quarterly

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It's a major boost for the company after the exploding smartphone

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scandal that put a serious dent in its reputation.

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In the three months to the end of December, Samsung is forecasting

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That's up by half on the same period last year,

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much better than expected and the best quarter since mid-2013.

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That might come as a surprise, as we know Samsung was forced

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to scrap its top of the range phone, the Galaxy Note 7, after a spate

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Hugely embarrassing and hugely expensive.

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It has warned the scandal sent more than $5 billion

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Samsung makes chips and screens for the whole tech industry.

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Samsung hasn't revealed the details but it's thought to have been

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the best quarter ever for its semiconductor division.

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It makes the complex chips that are more and more in demand

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as phones get smarter, and the prices of those have jumped.

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So despite the exploding phone scandal, Samsung's investors have

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had a pretty good year, shares up by almost 50%

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Cyrus Mewawalla, managing director of global technology research

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Thank you for coming in. Looking at those figures, giving everything

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that's happened in the past year, it sounds like a pretty positive result

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from shareholders but how will they be feeling? I think Samsung

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management have done a very good job this year. Record profits and the

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share price has gone up 50%. Looking forward, Samsung's future may not be

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that rosy for the rest of 2017. Earnings momentum will carry it for

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a few weeks or months, but there are big roadblocks ahead of the Samsung.

:04:09.:04:12.

It's a very successful hardware company, the eighth largest tech

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company in the world, but it's week on software. If you look at the fact

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Samsung are strong on chips and smartphones but that is yesterday's

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story. Tomorrow's story is a whole new theme of technology, artificial

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intelligence, virtual reality, internet TV, cyber security, the

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Cloud. All these things have one thing in common which is software.

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You need to have a software ecosystem to plug into which is

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where Samsung is weak. I was talking to an expert this morning who was

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telling us about the price of chips. Normally chip prices have come down

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but some of the chips, D-Ram? Those prices are up, why are those prices

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up? Prices of D-Ram have risen because there was an unexpectedly

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good demand from smartphone makers all around the world. If you ask any

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analyst, he'll have a massive supply and demand model. They will move out

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of sync and when there is too much demand prices will go up. This can

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change very, very quickly. What's more important in 2017 as far as

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Samsung's chip division is concerned is new chip technologies. Samsung is

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a specialist in memory chips, but what is happening around the world

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is chip architectures are changing so logic chips and memory chips are

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coming closer together and new type vulnerable types of chips are being

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developed. AI chips are going to be big. Intel and Micron are developing

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a new chip that could blow the technology out of the water. Thank

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you for joining us this morning. The Australian economy has

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recorded its first trade surplus The latest official numbers show

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the country exported more than $900 million more goods

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and services than it The resource rich nation saw big

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growth in exports of coal, It means Australia is likely

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to avoid the recession that some economists had feared,

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after the economy's suprise in contraction in the third

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quarter of last year. Mexico's president has

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defended a sharp increase in the price of petrol

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despite protests and looting. More than 250 people

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have been arrested. Fuel prices went up by as much

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as 20% at the beginning of the month Enrique Pena Nieto said the changes

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were necessary because of the rise The average price of a gallon

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of petrol is now almost as much You've got the live page. What did

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you find? In the UK we've got some results out today. We mentioned

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Next, a huge UK retailer. Share is continuing to fall after a

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disappointing Christmas sales. That story is being reflected around the

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world. What about this, outsmarted by your toothbrush. This is from the

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consumer Electronics show. I think it's smart, it tells me how long

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I've been doing it for but it also says if you are pressing too hard.

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It's not a fancy things. Tesla? That is yesterday's! Let's move on! Let's

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talk about this. The power of a tweet, some can be good, some can be

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bad. Shares in the Japanese car-maker Toyota closed nearly 1.7%

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down. They were at one point down nearly 3%. It is because Donald

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Trump did something. He sent a tweet. He wrote that...

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Sarah, sorry, we are just chatting away! Good to see you. At one point

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that Trump tweet knocked $1.2 billion off the value of Toyota!

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That's right. As you said, Toyota shares fell more than 3% in early

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trade on Friday. But they did recover some ground. Closing down

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around 1.7%. You have do remember, too, that the drop could be due to

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the power of a Trump tweet, but it could also have been influenced by a

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slightly stronger yen which is bad news for the country's exporters.

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Despite Mr Trump's warnings, Toyota's president said the company

:09:26.:09:29.

has no immediate plans to curb production in Mexico. Toyota has ten

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manufacturing plants in the US and the company 's US arm says

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production and employment levels in the US wouldn't decrease because of

:09:37.:09:41.

the new Mexican plant. Lower labour costs and the Nafta free trade area

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makes it attractive firms to make cars in Mexico to sell in the US. Mr

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Trump says he will end this practice as it is costing American jobs. Have

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a great weekend! The markets appear

:09:54.:10:00.

to be risk-on mode. Well, traders suggesting it could be

:10:01.:10:01.

because of the returns on US debt, It could be signs of stability

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in Europe, or a recovery in oil. Anything that has been battered

:10:09.:10:13.

by higher US rates is coming back. On the markets around the world,

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is a correction of the "Trump The markets have been trying

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to fully price in his policies That's what the traders

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are telling us. Talking of telling us,

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let's go see what Samira has to tell us about the big biz news

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on the other side of the pond. Well, if it's the first

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Friday of a new month then This will be the first unemployment

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report for the New Year. It will be an opportunity for the US

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Labor Department to offer insights on trends for the labour market

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for the entire year of 2016. Now for the month of December,

:10:52.:10:59.

economists are expecting to have added about 178,000 jobs,

:11:00.:11:02.

similar to what we saw The unemployment rate

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is likely to have increased Also being released

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Friday is November's It will likely show that the trade

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deficit narrowed for the month. The results of this report could

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impact growth estimates for the US Joining us is Richard Dunbar,

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Investment Director Thank you for coming in. We are

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going to start off talking about BitCoin, the digital currency that

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had headlines a couple of months ago. It fell 20% overnight. Explain

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to us, what is Bitcoin? Digital or crypto currency on the web. Invented

:11:57.:12:04.

by a programmer who we don't know who he or she is. It is

:12:05.:12:07.

peer-to-peer, there is no central bank looking after it for us. Which

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has made it very popular in an era when central banks seem to be

:12:13.:12:16.

falling over themselves to debase their currencies. So no tangible

:12:17.:12:24.

notes or coins? It's all cyber. All cyber but accepted by 100,000

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retailers around the world. You can swap it for dollars... You can buy

:12:30.:12:32.

your groceries with it in some places and swap it for other

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currencies. Wasn't it the best performing currency last year? It's

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doubled, more than doubled over the past year. It's had some wobbles

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over its short history since 2008, but fell 20% overnight. What is the

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appeal of Bitcoin? Appeal is that it's not controlled by central banks

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or politicians. It competes with traditional currencies and since the

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financial crisis we had seen central banks and governments falling over

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themselves to reduce the value of their currencies, boost exports and

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their economy. Which is great for those economies but if you are

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selling these currencies and you either don't trust or trust these

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politicians then maybe something else is better. I suspect, and my

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traditional training would suggest that a fool and his money are easily

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parted but it has been a big performer. Do you have any? No.

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We'll leave it there. Identity then have any real money! -- I don't even

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have any real money! Coming up - what do

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economists and weather You're with Business

:13:43.:13:44.

Live from BBC News. Consultants BDO say High Street

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retail sales last month were down slightly compared

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to the previous year. That's the fourth year in a row

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of falling sales and follows a dramatic plunge in sales

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in December 2015. Our business correspondent

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Theo Leggett joins us now Theo, what does this say

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about the health of the High Street? There has been a fall in December

:13:59.:14:12.

sales for the past four years. This year's were only down slightly on

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last year, but that was after what was really seen as a very bad year

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last year. There hasn't been much recovery, that can't be a good

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thing. Another point I took from this report is that the first three

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weeks in December were pretty awful. The month as a whole retailers was

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kind of saved by the week before Christmas. Christmas fell on a

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Sunday so we had Christmas Eve being a Saturday. That really brought

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people are out shopping. Overall for the month it was a bad period for

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the high street retailers. If they can't do well in December that

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doesn't bode well for them going forward, especially as we are

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expecting inflation to be on the up over the next few months. Internet

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retailers did rather well. They did, but in general consumers are still

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spending, right? They're still putting their hand in their pocket?

:15:04.:15:07.

Absolutely, just because they aren't going to the high-street doesn't

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mean they aren't spending. We saw a 20% increase in online shopping and

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a 50% increase in the run-up to Christmas. At the moment, consumer

:15:17.:15:20.

sentiment seems to be holding up relatively well. Some areas aren't

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doing as well as others. Home where, soft furnishings are doing well.

:15:25.:15:28.

Retailers who are in fashion are struggling. We had the results from

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Next, they aren't alone. Fashion retailers are feeling the pinch.

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Part of that is because of the weather. It hasn't been cold enough,

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obviously! You Brits love to blame the weather

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and everything. What have you got? Do you check your e-mail for work at

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home? I check it all the time. I don't

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think of it as a chore. I have FOMO, fear of missing out.

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Workers in France have been told they don't have to be compelled to

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check e-mails outside office hours. The French have a 35 hour working

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week. They have got it right! Know they

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haven't, look at the economy. Samsung Electronics expects

:16:23.:16:25.

to report a 50% surge in fourth quarter profits,

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despite the fiasco with its We seem to have a short memory, but

:16:33.:16:48.

it is more their components side that is pushing those profits out.

:16:49.:16:51.

A quick look at how markets are faring.

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Markets are all in the red. But they have had a cracking time of it.

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The FTSE 100, only early in the day, but the FTSE 100 has had something

:17:05.:17:10.

like three new record, continuous record highs in succession.

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You think it is time for a correction?

:17:17.:17:18.

It's only the end of the first week of 2017 and already some of the big

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themes of the coming year are with us.

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There's the incoming US president Donald Trump,

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who yesterday sent a Tweet that caused Toyota shares to plummet.

:17:26.:17:28.

And then there are the ongoing negotiations over Brexit,

:17:29.:17:30.

including the resignation of the UK's ambassador

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Plus, the Bank of England's Chief Economist has admitted that

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economists, like weather forecasters, can sometimes

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When I said the big bloke, I said that with absolute respect!

:17:42.:17:58.

Our Economics Editor Kamal Ahmed is with us.

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What was Andy Haldane talking about exactly?

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Is he a mate of yours? No, and neither is Donald Trump, but his

:18:14.:18:24.

policies, have alluded that they could be inflationary? He wants to

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have this big fiscal stimulus, wants to spend a lot more money rebuilding

:18:31.:18:36.

airports, roads and rebuilding America's infrastructure, which is

:18:37.:18:42.

seen as in pretty poor state. That will have an inflationary pressure

:18:43.:18:45.

as that flows into the American economy. It is fascinating. We have

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spoken about this on a number of occasions on our analysis of

:18:51.:18:58.

President-elect from. Was he going to be the president like the

:18:59.:19:02.

campaigning Donald Trump? Would he change his tone after he won. Would

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there be a more conservative President-elect. What we have seen

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from these tweets and the way he is behaving, how he campaigned and how

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at the moment he seems to be saying how he will be the president, are

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pretty similar. He is very aggressive about car companies, for

:19:24.:19:27.

example, that are producing cars in Mexico. Has been critical of Toyota,

:19:28.:19:33.

General Motors. He praised Ford who said they would move production into

:19:34.:19:40.

America from Mexico. In Billy Macri has been pretty front foot on how he

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campaigned. He can affect things in real-time. People voted, or the

:19:46.:19:54.

election gave us a different type of president and that is what people

:19:55.:20:01.

seemed to want. He's doing that. A notion that the president of the

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United States tweeting policy in real-time, which as you say, have

:20:05.:20:09.

these huge effects on very large companies' share price has come is a

:20:10.:20:15.

new way of operating. Will it continue after his inauguration on

:20:16.:20:20.

January the 20th? We will see, but at the moment campaigning Donald

:20:21.:20:23.

Trump and President-elect Trump is pretty similar. The chief economist

:20:24.:20:31.

of the banker links -- Bank of England says predicting the future

:20:32.:20:40.

is hard? Yes, Michael Fish said in 1987 he didn't believe a hurricane

:20:41.:20:45.

was on its way, 24 hours before one of the most devastating hurricane to

:20:46.:20:48.

hit the South East and caused millions of devastation. The chief

:20:49.:20:53.

economist of the Bank of England has said, we also sometimes get it

:20:54.:20:59.

wrong! The bank forecast that if there was a vote for Brexit, which

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there was in the UK, that there would be an immediate negative

:21:04.:21:06.

effect on the UK economy. That hasn't appeared in the short term at

:21:07.:21:10.

least, to have happened. Consumers are still spending strongly. And the

:21:11.:21:19.

Bank of England is saying just like weather forecasters, they have to

:21:20.:21:21.

learn the lesson that that prediction was wrong. Economists,

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they have to use the data better. They have to be aware that economics

:21:29.:21:33.

is a judgment of human behaviour. And that will be difficult. It is

:21:34.:21:38.

always going to be tricky and imprecise. What they are saying is,

:21:39.:21:41.

we need to be more honest about that. We mentioned about the UK's

:21:42.:21:49.

ambassador to the EU, a resignation and an appointment already. What

:21:50.:21:55.

would that do to Theresa May's negotiating position on Brexit? It

:21:56.:22:00.

is reported now she will make quite a big speech in the next few weeks,

:22:01.:22:06.

laying out Britain's position to an extent, or at least by which Britain

:22:07.:22:15.

will approach the members of the European Union when Britain sparks

:22:16.:22:20.

Article 50, the process to leave the European Union. The British Prime

:22:21.:22:24.

Minister, she feels like she has to take care. If you reveal too much of

:22:25.:22:29.

your hand in a negotiation, you have lost leveraged and power by doing

:22:30.:22:32.

that. She doesn't want to put herself into the position where she

:22:33.:22:37.

has made her position clear and Britain is unclear what the rest of

:22:38.:22:41.

the European nations want. She has to play it carefully and we will not

:22:42.:22:45.

see a huge amount of detail on what Britain actually wants from that

:22:46.:22:51.

Article 50 process. Thank you very much. Have a great weekend.

:22:52.:22:57.

In a moment we'll take a look through the Business Pages but first

:22:58.:23:00.

here's a quick reminder of how to get in touch with us.

:23:01.:23:03.

The business live page is where you stay ahead of the braking business

:23:04.:23:08.

news. We will keep you up-to-date with the latest details with insight

:23:09.:23:12.

and analysis from the BBC's team of editors from around the world. We

:23:13.:23:19.

want to hear from you. Get Involved on the BBC Business Live web page.

:23:20.:23:26.

And on Twitter... You can find us on Facebook. Business Live on TV and

:23:27.:23:31.

online, whenever you need to know. What other business

:23:32.:23:34.

stories has the media been Richard Dunbar, Investment

:23:35.:23:36.

Director at Aberdeen Would you have liked to have gone to

:23:37.:23:49.

a football boarding school? It seems like a good option in China. $8,000

:23:50.:23:56.

a year. Some academic stuff probably, but mostly football. 32

:23:57.:24:00.

football pitches around the schools and it looks like a great way to

:24:01.:24:05.

spend your education. They have so many fields. 48 football pitches.

:24:06.:24:18.

But they will start churning out probably world-class football

:24:19.:24:23.

players? China has decided it wants to win the World Cup, so it has to

:24:24.:24:27.

throw money at the problem, as it has done in other sports. They are

:24:28.:24:34.

probably going to continue to fuel the football cost boom that we have

:24:35.:24:37.

seen in Europe and our players will be attracted to that also. Can I

:24:38.:24:42.

talk about another big business? Do you like sushi? I love sushi. I love

:24:43.:24:56.

Japanese food. Tell us about that photo, how much did he pay for that?

:24:57.:25:03.

That was sold yesterday morning for $600,000. So when you chop that big

:25:04.:25:07.

fish up, it will be expensive for each little bit that goes into

:25:08.:25:12.

sushi. The man who bought it said it was a little bit expensive! He is

:25:13.:25:20.

known as the tuna PR king. I suspect he is putting bat against his

:25:21.:25:25.

marketing budget. My concern is it is always 24 hours old, when does it

:25:26.:25:31.

stop being fresh gesture marked that is your fault for eating the raw

:25:32.:25:37.

stuff. We cook it. Have you returned any Christmas gifts? No, didn't get

:25:38.:25:43.

any. This is the biggest day for returns in the US. All the stuff

:25:44.:25:49.

that arrived after Christmas, you can now return. Richard, have a

:25:50.:25:57.

great weekend. OK, got to go. Have a good weekend, we are getting booted

:25:58.:25:59.

off. Goodbye. Good morning. Rain on the menu over

:26:00.:26:14.

the next 24 hours or so. Further east, it is a different story. Snow

:26:15.:26:18.

more likely to be coming out of the

:26:19.:26:19.