31/01/2017 BBC Business Live


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31/01/2017

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This is Business Live from BBC News with Rachel Horne and Sally Bundock.

:00:00.:00:07.

As many big US businesses rally against President Trump's travel

:00:08.:00:11.

ban, will he be able to get them back onside with lower taxes

:00:12.:00:15.

Live from London, that's our top story on Tuesday 31st January.

:00:16.:00:36.

With $2.5 trillion stashed overseas, can America's biggest companies be

:00:37.:00:41.

convinced to bring it back and boost their own economy?

:00:42.:00:45.

Also in the programme, jitters in Japan.

:00:46.:00:47.

Profits fall at Canon and Sony sees a big write-down on the big screen.

:00:48.:01:00.

The FTSE 100 up slightly, the Dax is flat.

:01:01.:01:14.

And, how a wine industry is trying to put Lebanon's vineyards back at

:01:15.:01:21.

the top table. And, bad maths skills

:01:22.:01:23.

could be costing us as much Let us know, have your maths

:01:24.:01:25.

skills ever resulted US President Donald Trump has only

:01:26.:01:29.

been in office for 12 days but he's already turned every Presidential

:01:30.:01:50.

convention on its head. Temporarily banning immigration

:01:51.:01:54.

from seven countries may have emboldened the President's

:01:55.:01:58.

supporters but it has been Leading experts now say those

:01:59.:02:01.

international relationships could be further tested and even result

:02:02.:02:06.

in a trade war if Mr Trump follows through on his

:02:07.:02:10.

radical plan for tax cuts. There are around $2.5 trillion worth

:02:11.:02:13.

of US profits currently overseas held by some of the biggest US

:02:14.:02:18.

companies like Google, Microsoft and Apple that would get

:02:19.:02:22.

hit by some of the highest tax rates in the world at 35%

:02:23.:02:26.

if they were repatriated now. Donald Trump has "proposed" three

:02:27.:02:33.

areas of tax reform. A "one-time tax rate of 10%"

:02:34.:02:37.

for companies bringing money earned in other countries back

:02:38.:02:41.

into the United States, he's also talked about a cut to 15%

:02:42.:02:44.

in US tax rates to improve competitiveness, and potential

:02:45.:02:49.

border taxes on firms that outsource With me is our Business

:02:50.:02:53.

Editor Simon Jack. You were talking to some of those in

:02:54.:03:14.

the know about this recently. Businesses have been very

:03:15.:03:16.

enthusiastic about the proposed tax reforms? Yes, the less tax a company

:03:17.:03:22.

pays, the more of its own profits it gets to keep, and the more valuable

:03:23.:03:27.

the company is, and you have seen share prices rise since the

:03:28.:03:34.

election. But crucially, trillions of dollars are held overseas, and

:03:35.:03:40.

getting those back, there is a massive disincentive. The Chief

:03:41.:03:45.

Executive of the Boston consulting group sits on Donald Trump's policy

:03:46.:03:50.

Forum, he explained what is keeping the money overseas.

:03:51.:03:55.

That creates a discouragement to bring it back, you leave it

:03:56.:03:58.

overseas, you show higher earnings, because you have not pay taxes on

:03:59.:04:04.

it, but the money cannot be put to work in the US, so it creates

:04:05.:04:07.

challenges the companies. Most of the rest of the world does not

:04:08.:04:11.

operate that way, and there has been pressure for years. It is by both

:04:12.:04:19.

parties, the system is antiquated, but the gridlock has prevented any

:04:20.:04:22.

action from being taken. Trillions coming back into the

:04:23.:04:25.

country would be good for the economy? It depends on what you have

:04:26.:04:31.

it. If it came back into the country and you put it to work on building

:04:32.:04:34.

would be one thing, but some people would be one thing, but some people

:04:35.:04:40.

fear if they buy back shares and the financial engineering with it...

:04:41.:04:44.

Depends. You would see the dollar shirt as well. If you move to put $5

:04:45.:04:50.

trillion in a short order, something will happen, there will be some sort

:04:51.:04:56.

of disturbance. Christopher Smart is a former adviser to Barack Obama, he

:04:57.:04:59.

explained what the problems could be.

:05:00.:05:04.

The potential is for a great deal of instability, both on the financial

:05:05.:05:07.

market side and on the political side. For the financial markets the

:05:08.:05:14.

issue is a large amount of money destabilising things, but the

:05:15.:05:17.

political issue has to do with the potential for retaliation, and areas

:05:18.:05:21.

that we have been removing start going up again, it could lead to a

:05:22.:05:26.

trade skirmish. This is the problem. People cannot

:05:27.:05:31.

figure out whether Donald Trump is good or bad for American business.

:05:32.:05:37.

We have this story about Washington State following through with legal

:05:38.:05:41.

action against the travel ban that was signed off last week. Companies

:05:42.:05:49.

are unsure what it will mean for them. There is no such thing as a

:05:50.:05:55.

tax free lunch. Anybody that has you reform is simple is crazy, occurs

:05:56.:06:00.

lots of administrations have tried to address the issue, without

:06:01.:06:08.

success. Businesses are cheering less regulation and lower taxes.

:06:09.:06:15.

Putting boulders up, that is the one thing that could throw sand in the

:06:16.:06:18.

engine of the global economy. And the travel ban. You have seen some

:06:19.:06:25.

of the big tech companies come out strongly against this, Google,

:06:26.:06:29.

people walking off campus. We knew that tech was anti-this in the first

:06:30.:06:34.

place. What is more interesting, some of the big banks are getting

:06:35.:06:40.

involved, sending a text to the Goldman Sachs employees, saying,

:06:41.:06:44.

diversity is at the heart of what we do. Business was excited about tax

:06:45.:06:52.

and regulation reform, but these barriers being erected, they think

:06:53.:06:56.

it might be a barrier to trade, and that is what might go the wrong way

:06:57.:07:00.

for them. A lot more from Simon on our

:07:01.:07:01.

website. Royal Dutch Shell says it will sell

:07:02.:07:03.

some of its UK North Sea assets to the oil company Chrysaor for up

:07:04.:07:07.

to $3.8 billion. Around 400 staff are expected

:07:08.:07:09.

to transfer to Chrysaor once the deal, which is subject

:07:10.:07:13.

to regulatory approval, Deutsche Bank has been fined

:07:14.:07:15.

$630 million by US and UK regulators for failing to detect and stop

:07:16.:07:23.

a Russian money-laundering plan. Under the scheme $10 billion

:07:24.:07:28.

was moved illegally out Deutsche Bank says it is cooperating

:07:29.:07:31.

with regulators and has put aside money to cover the cost

:07:32.:07:36.

of the settlement. Japan's central bank has

:07:37.:07:39.

finished its first meeting of the year by leaving interest

:07:40.:07:41.

rates unchanged, but upgraded its forecasts for the world's

:07:42.:07:44.

third-biggest economy. The Bank of Japan cited rising

:07:45.:07:48.

exports, easy lending conditions and stronger government spending

:07:49.:07:51.

ahead of the 2020 Olympics The strong yen is causing

:07:52.:07:55.

difficulties for some It is causing problems. Some of the

:07:56.:08:29.

biggest names in corporate Japan are posting results, and it is a less

:08:30.:08:38.

than stellar report card. We heard from Canon, their profit tumbled in

:08:39.:08:41.

the last three months of last year, hurt by the strength of the yen

:08:42.:08:48.

after the Brexit decision. Its operating profit fell 25%, following

:08:49.:08:56.

the UK's vote to leave the EU. We have heard from Sony, it is more

:08:57.:09:04.

than just the Sony, it includes movies. Their movies

:09:05.:09:10.

excite cinemagoers at the global box excite cinemagoers at the global box

:09:11.:09:15.

office, so they are having to take a hefty write-down on the value of

:09:16.:09:18.

their movie business. It is due out with its results this Thursday. I

:09:19.:09:28.

did see Angry Birds, but I was not their target audience!

:09:29.:09:29.

US stocks saw their biggest selloff yesterday since

:09:30.:09:31.

The markets looking unnerved by President Donald Trump's

:09:32.:09:36.

The dollar was down and the Japanese currency the yen and gold gained

:09:37.:09:44.

A rise in the yen often pulls down the Nikkei,

:09:45.:09:49.

and you can see its biggest daily decline since November.

:09:50.:09:55.

In Europe, figures out this morning showed an unexpected fall of almost

:09:56.:09:58.

1% in retail sales in Germany for the month of December.

:09:59.:10:10.

However, this indicator is often revised.

:10:11.:10:12.

But let's find out what's ahead on Wall Street Today.

:10:13.:10:18.

The Federal Reserve, America's Central Bank,

:10:19.:10:19.

starts its two-day policy meeting on Tuesday.

:10:20.:10:23.

The Fed has forecast three rate hikes this year,

:10:24.:10:25.

but it is expected to leave rates unchanged at this meeting.

:10:26.:10:32.

This is the first since Donald Trump became President.

:10:33.:10:34.

The Fed lifted interest rates in December by 25 basis points.

:10:35.:10:38.

Apple will be reporting earnings on Tuesday.

:10:39.:10:41.

It seems the revamped iPhone 7 will give the tech company a boost.

:10:42.:10:50.

Apple is predicting record-level revenues for this quarter.

:10:51.:10:52.

Analysts will be looking out for comments on the smartphone

:10:53.:10:54.

industry and expectations for the next iPhone.

:10:55.:10:58.

Finally, ExxonMobil, the world's largest publicly

:10:59.:11:01.

traded oil producer, will be benefiting from rising crude

:11:02.:11:04.

prices and it should be reflected when it reports fourth quarter

:11:05.:11:07.

Joining us is James Quinn, Group Business Editor

:11:08.:11:17.

A busy time in the US, it seems to be orientated and around the US,

:11:18.:11:29.

especially with Asian markets closed. Markets yesterday were

:11:30.:11:35.

focused on the travel ban, imposed late on Friday, eight. Have a chance

:11:36.:11:40.

to react Friday. The Dow Jones having its worst day since the

:11:41.:11:48.

president was elected in November. The bump was surpassed last week,

:11:49.:11:56.

but now investors are questioning whether or not the momentum can to

:11:57.:12:03.

-- continue. It is only a little bit down. Not terrible, it is all about

:12:04.:12:10.

momentum. A slew of results coming out today from corporate America and

:12:11.:12:19.

over the next week, so we will get a test of how the big culprits and the

:12:20.:12:25.

economy are doing, as opposed to whether the president will be good

:12:26.:12:27.

for the economy, the hopes and dreams. What impact are we expecting

:12:28.:12:34.

the president to have? There is the question of whether Janet Yellen can

:12:35.:12:39.

remain as Federal Reserve chairman, that is up to the president and

:12:40.:12:49.

Congress. The Fed will take a balanced view and hold rates. A rate

:12:50.:12:54.

hold is expected from the Bank of England as well. Central-bank week.

:12:55.:13:01.

It is also tech week. We have Snapchat's parent company's IPO. If

:13:02.:13:11.

you are a central bank watcher and a tech watcher, this is your week. We

:13:12.:13:18.

will see you again soon. He got away with me asking about his maths

:13:19.:13:19.

skills, we will tell you why later! We'll get the inside track why wine

:13:20.:13:22.

is making a comeback in Lebanon. You're with Business

:13:23.:13:26.

Live from BBC News. Britain's commercial aerospace

:13:27.:13:30.

industry is celebrating its sixth successive year of growth,

:13:31.:13:35.

that's according to figures More than 1,400 planes

:13:36.:13:38.

were completed in 2016, and it raised ?27 billion

:13:39.:13:45.

for the UK economy. Paul Everitt is the CEO

:13:46.:13:50.

of the trade body ADS. What could happen once Brexit kicks

:13:51.:14:08.

in? We do not tend to produce whole planes in the UK, we are integrated

:14:09.:14:14.

in a European system. Brexit will be a big challenge for us. We have a

:14:15.:14:21.

long cycle industry and we have record order books are fed of us,

:14:22.:14:26.

something equivalent to seven or eight years of work at current

:14:27.:14:31.

rates. It is not an immediate problem, but we need to use the next

:14:32.:14:33.

two years to get the conditions right for a successful Brexit, both

:14:34.:14:40.

for the UK and our European industrial partners, because we are

:14:41.:14:44.

an integrated industry, with complex supply chains, so for us the Brexit

:14:45.:14:50.

negotiations are important, but we believe they can deliver a

:14:51.:14:54.

successful outcome for our industry. Can you be specific about what a

:14:55.:14:59.

successful outcome is? Is that being out of the customs union or being

:15:00.:15:05.

firmly in the single market? There are key priorities. The number one

:15:06.:15:09.

is remaining part of the European Aviation Safety Agency, the

:15:10.:15:12.

regulatory regime for Aerospace in Europe, because that, in addition to

:15:13.:15:20.

providing our route to market, it is the organisation that negotiates

:15:21.:15:24.

technical equivalence with major partners in the US, China and other

:15:25.:15:30.

parts of the world. The regulatory regime is important, and achieving

:15:31.:15:34.

this frictionless trade is also important. We are not impacted by

:15:35.:15:39.

tariffs in the way the car industry is. The cost and administration of

:15:40.:15:44.

multiple border crossings, because our supply chains are integrated,

:15:45.:15:49.

our products are developed and produced in many sites across Europe

:15:50.:15:53.

before being brought together either here and then exported out

:15:54.:15:54.

elsewhere... Thank you very much for your time

:15:55.:16:04.

this morning. So good news for the British aerospace industry.

:16:05.:16:10.

You're watching Business Live. Our top story:

:16:11.:16:12.

As many big US businesses rally

:16:13.:16:15.

against President Trump's travel ban, one of his

:16:16.:16:17.

top economic advisors tells us that they should repatriate

:16:18.:16:19.

billions in overseas profits so they can put that money to work.

:16:20.:16:22.

A quick look at how markets are faring.

:16:23.:16:25.

They have been open for 45 minutes and you can see actually they are

:16:26.:16:30.

all in the green. We mentioned some retail sales figures out in Germany

:16:31.:16:34.

which were disappointing for December, but it doesn't seem to

:16:35.:16:37.

have had that much of an impact on investors.

:16:38.:16:43.

Now, think of the global wine industry and places like France,

:16:44.:16:45.

California and South Africa will probably spring to mind,

:16:46.:16:48.

but one of the oldest wine industries in the world is to be

:16:49.:16:51.

The country's civil war caused a lot of disruption for the sector.

:16:52.:16:57.

Well, now there is a revival of interest and our next

:16:58.:17:00.

He's the boss and head wine-maker of Domaine des Tourelles.

:17:01.:17:06.

The company was founded way back in 1868 by a French engineer,

:17:07.:17:09.

making it the oldest winery in the country.

:17:10.:17:11.

It's thriving, producing 300,000 bottles of wine a day and 350,00

:17:12.:17:14.

bottles of the local alcoholic drink, Arak.

:17:15.:17:27.

But just think about this - the Syrian war is raging

:17:28.:17:33.

Faouzi Issa is managing director and head wine maker at Domaine des

:17:34.:17:37.

There is two families that run this company now. Yes. And you are from

:17:38.:17:50.

one of those families? Yes, we are two families running the winery. We

:17:51.:17:58.

are a committee of four younger team all from the 30s, so we are the

:17:59.:18:03.

youngest team running the oldest winery. I bet you'd love to be

:18:04.:18:10.

making 300,000 bottles a day. I would be the leader worldwide! It is

:18:11.:18:14.

an interesting story. It goes back many, many years with the French

:18:15.:18:19.

influence at the beginning, but now it is purely a Lebanon wine grown by

:18:20.:18:24.

two Lebanese families, isn't it? Domaine des Tourelles is a wine that

:18:25.:18:32.

was the first winery to launch a ready bottle to the market because

:18:33.:18:39.

at that time it was producing wines for the monks. Today, we are putting

:18:40.:18:50.

Lebanon back on the map by producing high quality wines and most of the

:18:51.:18:53.

people everywhere in the world, they don't know that Lebanon has wine.

:18:54.:18:58.

Well, that's what I was going to ask you. Being in Lebanon, it is not a

:18:59.:19:03.

traditional wine making region. What specific challenges do you face

:19:04.:19:09.

being based in Lebanon? It's a fabulous work because you are really

:19:10.:19:14.

taking something exciting, something sexy to the world. Tell them,

:19:15.:19:18.

listen, you know, all the negative things maybe about this region, but

:19:19.:19:23.

come on, taste some good wines. Taste some great potential we

:19:24.:19:27.

produce in Lebanon. This is what we're really trying to make and

:19:28.:19:31.

we're succeeding. We're in 17 countries today. Your vineyards,

:19:32.:19:36.

where you are, is eight kilometres away from an enormous refugee camp

:19:37.:19:41.

full of Syrian refugees. You are keenly aware of the 1.5 million

:19:42.:19:46.

refugees in Lebanon. Your population is over four million. What impact

:19:47.:19:50.

does that have, if any, on what you do? The security impact, but

:19:51.:19:55.

globally, I mean, that's fine. I mean we are the closest country to

:19:56.:20:02.

Syria so we are the number one responsible country to solve their

:20:03.:20:05.

problems. If they want shelter, we're ready to cope with this. There

:20:06.:20:14.

is no direct impact on our business exactly, but of course, on in the

:20:15.:20:18.

long run it might be catastrophic. You can't employee any of the

:20:19.:20:21.

refugees, can you, because they haven't been processed and they're

:20:22.:20:25.

not in that position? No. Syria is one of your main markets, you export

:20:26.:20:31.

to Syria? We export a lot to Iraq as well. Now days a Syria, big quality

:20:32.:20:37.

industries are down. They stop producing so they are importing lots

:20:38.:20:42.

of niche products from Lebanon. Tell me about your Arak, how many bottles

:20:43.:20:47.

of Arak do you produce and tell me about the aniseed? We produce

:20:48.:20:55.

300,000 bottles of Arak a year. We are the leaders in the market, in

:20:56.:20:59.

the niche category. We use Anna seeds. It is a cocktail, isn't it?

:21:00.:21:05.

It is a spiritment we use it for cocktails as well, the Lebanese

:21:06.:21:10.

spirit, the Lebanese national spirit is the Arak. And you have had to

:21:11.:21:16.

start growing your own aniseed? Because of the problems in Syria, I

:21:17.:21:21.

launched my new plantation and last year we had the first produce and it

:21:22.:21:26.

was amazing, amazing and I think we will divert to Lebanese aniseeds

:21:27.:21:30.

very soon and I hope that we will play this, we will play a role of

:21:31.:21:36.

diverting aniseeds plantation from Syria to Lebanon. Well, we shall

:21:37.:21:41.

keep an eye on what you're up to. Thank you for coming in. It is

:21:42.:21:44.

fascinating and I know your wife is watching you in Lebanon. Just say

:21:45.:21:50.

hi. Hi Ruba. The whole family is tuning in. It has been good to have

:21:51.:21:52.

you. In a moment we'll take a look

:21:53.:21:55.

through the Business Pages but first here's a quick reminder of how

:21:56.:21:58.

to get in touch with us. The Business Live page

:21:59.:22:01.

is where you can stay ahead with all the day's

:22:02.:22:03.

breaking business news. We'll keep you up-to-date

:22:04.:22:05.

with all the latest details with insight and analysis

:22:06.:22:07.

from the BBC's team of editors around the world and we want

:22:08.:22:10.

to hear from you too. Get involved on the BBC

:22:11.:22:12.

Business Live web page. On Twitter we're at BBC business

:22:13.:22:14.

and you can find us on Facebook. Business Live, on TV and online,

:22:15.:22:17.

whenever you need to know. No excuses. The story about our

:22:18.:22:40.

maths skills. Not many of you have been in touch.

:22:41.:22:41.

It is a revelation? Those of us who have to use maths in our work, the

:22:42.:22:53.

bits that we have to use, calculations that we use all the

:22:54.:22:56.

time, they are fine, but the bits that you learnt in school, thaw

:22:57.:22:59.

don't have to put into practise with your work, they fall away and I find

:23:00.:23:04.

it with my kids, if you're talking about maths, actually I can't

:23:05.:23:11.

remember that! It is cobwebs. Citizen maths is launching this new

:23:12.:23:15.

online course that will allow you to go and refresh your maths skills and

:23:16.:23:18.

get up to speed. Very, very useful. A good idea. I'm on it. I'm going to

:23:19.:23:25.

do that. Will says mental arithmetic isn't needed since we have

:23:26.:23:28.

calculators on our phones. I don't agree. You still need to know how it

:23:29.:23:35.

works. How about when your phone isn't working? Wall Street Journal,

:23:36.:23:44.

we've got Mark Zuckerberg trying to reach China. I love the line that he

:23:45.:23:53.

even took a smog jog in Beijing? To woo over the Communist Party.

:23:54.:23:56.

Facebook has been blocked since 2009. A lot of people won't

:23:57.:23:59.

remember, Facebook was blocked along with Twitter in 2009 and they have

:24:00.:24:03.

tried everything to get back in. Not only because it is a big market, but

:24:04.:24:08.

because of the way that the Chinese use their social media. There are

:24:09.:24:13.

some big players here who are really, they use them in a different

:24:14.:24:17.

way, they use them as banking systems and payment systems all done

:24:18.:24:22.

through social media and Facebook is worried they are losing a

:24:23.:24:25.

competitive march here. Well, losing, they have not got in here.

:24:26.:24:30.

They are worried the Chinese having developed all the fantastic extra

:24:31.:24:33.

services on their social media sites will export them to the West and

:24:34.:24:39.

Facebook will be unable to survive. Do you think that's a worry that's

:24:40.:24:44.

going to become a reality? I don't think that people are loyal to any

:24:45.:24:48.

service. They will go to the one with the best services. Facebook

:24:49.:24:55.

itself is vulnerable to a nimble agile competitor and the chin he is

:24:56.:25:00.

are developing them. Let's talk about Cathay Pacific. They are

:25:01.:25:06.

looking to fly on rubbish. They are switching to biofuels? They have

:25:07.:25:09.

been working on these for years and years, but they are saying they are

:25:10.:25:14.

going to fly 80% flights just on biofuels. One of the hold-ups is

:25:15.:25:19.

safety. If you're a safety regulator, you don't want to certify

:25:20.:25:24.

that fuels are OK. I wonder if you could get a cheap flight and say,

:25:25.:25:29.

"I'm going to donate all my rubbish for six months. Can I have a ticket

:25:30.:25:34.

to Shanghai?" There have been a lot of questions about the real green

:25:35.:25:41.

credentials of bio fuels, if they are diverting fuel that was meant

:25:42.:25:45.

for crops, are you really saving that much CO2? Cathay Pacific are

:25:46.:25:49.

doing the best they can. Thanks, Dominic. What's it called Citizen

:25:50.:25:57.

Maths? That's it. I will test my skills later. Thanks for your

:25:58.:25:58.

company. I will see you soon. The weather is looking pretty

:25:59.:26:12.

unsettled for the rest of this week. Some rain in the forecast and things

:26:13.:26:18.

turn windy for Thursday and Friday. Today though, it

:26:19.:26:19.