13/04/2017 BBC Business Live


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This is Business Live from BBC News with Aaron Heslehurst and Ben Bland.


Can America's banking giants back their sky-high share prices


Live from London, that's our top story on Thursday the 13th of April.


JPMorgan, Wells Fargo and Citi kick off the earnings seasons where we'll


get to learn the strength of any Trump bump.


Also in the programme: "They're not currency manipulators" -


the US President makes a big U-turn on his view of China's


And as always we'll give you the latest lowdown on what's


happening on the markets all around the world.


And we'll be getting the Inside Track on the key


The founder of UK high street stalwart Timpson's will be


here to explain why he's expanding his key-cutting and shoe


repair business overseas, and why Brexit was the right


Today, as Burger King launches a new ad that hijacked


Google's home assistant, we want to know: Do adverts


need to be more creative to get your attention these days?


We start on Wall Street, where it's a hugely


Now, we know the share prices of banks have soared in the months


following President Trump's election, led by America's biggest


But in recent weeks, doubts have been creeping in,


let me show you what we have put together.


Today we get first quarter results from the biggest US bank,


JPMorgan Chase, and later from its rival Citigroup.


They're the first of a barrage of reports


But will they be good enough to justify the Trump rally,


or confirm those fears that it's a bubble waiting to burst?


President Trump has famously promised to throw out the mass


of banking regulation brought in by the Obama administration


after the financial crisis - the Dodd-Frank Act of 2010.


But he's been struggling to pass other legislation


like healthcare reform, so this is all up in the air.


Still the banks have had a boost from rising US interest rates,


which have now hit 1% and are expected to hit 3%


This means more profits, because it helps their lending margins.


That's the difference between the interest rate they offer


to savers and the rate they charge to borrowers.


Professor Thorsten Beck is Professor of Banking and Finance


Welcome to Business Live. The banks, big time of the year for them,


revealing their profits. Do you think they have already priced in


the anticipation of looser regulation, or do you think we are


yet to see that affect them? I don't think we will see that in the


reports coming out of the next couple of days. What the banks have


been benefiting from his healthy credit growth over the last couple


of years. The US financial market looks different from the European


market. They have come out of the crisis much quicker than we did in


Europe. And as Aaron just mentioned, this will drive the only rates. The


higher share prices are more driven by the expectation of future


deregulation. Do you think that this set of results is going to be the


last one where they are really feeling the pressure of the interest


rates that have been so low for so long that have hit their


profit-making ability? Probably, yes. You might see an offsetting


effect in the future of the growth slowing, but of course on the


investment acting side, there are probably more deals to be had given


the general deregulation trend that we see in the US and of course the


animal spirits that have been released over the past couple of


months, but there is also a high certainty along the way, so it is to


be seen. Thorsten, can I ask you this. For the uninitiated out there,


these numbers are backward looking. The markets are looking for what is


in front. And something we don't touch on with the US banks much is


the carload market. -- car loan market. It is very similar to the


housing sub-prime market, and we know what happened to that. I would


not be as concerned as the sub-prime mortgage market, but yes, it is


often hidden from investors' eyes across the banking sector. I don't


think it would be as bad as in 2006/7, but yes, care is to be


taken. So is it the right time to be talking about deregulation, or if


there is a simmering problem in the car loan mar market, isn't this the


time when we need that regulation in place to stop that happening? If you


tell me that you want to reduce the 1000 pages of Dodd Frank and the


regulation that comes with it, that is one way, but it is more about the


general regulatory approach that will see change over the next couple


of ears potentially. I don't think we are looking at a reform of the


Dodd Frank act any time soon, because it is not top of the


legislative agenda, and that has kind of stalled over the last couple


of weeks. I think what they will look at our two things, number one


in the budget appropriation process, the regular treat framework might be


starved of funds, such as the financial protection, the equivalent


to the FCA, and second, there are three open positions at the Federal


reserve board, two more potentially opening up next year, and so five


positions out of seven to be filled by the Trump administration, and


that can set the tone for a different type of regulatory


approach. That is what we will have to keep our eye on. Professor


Thorsten Beck, thank you for joining us.


Let's take a look at some of the other stories making the news.


United Airlines' chief executive has said he will not quit


amid an explosive backlash to video of a screaming man being dragged off


Oscar Munoz said he felt "shame and embarrassment",


Let's take a look at some of the other stories making the news.


and vowed it would never happen again to a seated passenger on one


The embattled aviation boss said the passenger


in question, David Dao, deserved "certainly an apology".


A group of shareholders has written to electric car-maker Tesla


questioning the independence of its board, warning it's too close


They urged it to re-elect members annually and to add two


new independent directors to the board.


In a tweet Mr Musk said the investors "should buy


The French supermarket group Carrefour has posted a strong rise


of 6.2% meaning it hit almost $22.7 billion. Its Brazilian business was


one of the main reasons why, with 38% growth in turnover, mitigating


the impact of its poorly performing French business.


US President Trump has said his administration will not


The huge U-turn comes despite his campaign promise to do


Rob Brandt is in Shanghai and joins us. Good to see you.


It is another U-turn, but in general terms, this is good news for all of


us? We don't want these countries having a trade battle? You talk to a


whole range of people, I interviewed the CEO of Ford a few minutes ago,


they also the same, nobody wants a trade war between the United States


and China, the world's two biggest economies. It is a substantial


U-turn for the president, he spent months on the campaign Trail saying


that China was a currency manipulator and had been taking US


jobs, but now he says they are not. The figures for the past few years,


it has been appreciated in value and growing in strength against the US


dollar. Maybe what we are seeing is part of this grand bargain that


President Trump appears to be offering China, we saw that detailed


in Florida, and at the heart of that is North Korea, trade deals a key


part of that. Thank you for the update, Rob.


Let's look at the markets kicking off around the world.


expected to follow more of a cautious trading session as it has


done in the past, and again, just important to note that the dollar


has dipped off the back of President Trump saying that China is not a


manipulator. central bank to keep


interest rates low - because the dollar is


getting too strong... OK - let's turn our


attention now to Brazil - one of the world's biggest emerging


economies - it's finally cut its main interest rate by 1%


but it's still 11.25%. Here's Daniel Gallas


in Sao Paulo with the details. We haven't seen interest rates to


this fast in Brazil for almost eight years. Back then it was a completely


different country, the B in Brics, one of the fastest-growing countries


in the world. Now it is mired in corruption scandals and facing one


of its worst recessions in history. So there is this drop in interest


rates, does that mean Brazil is back on track and back to the good old


days? The answer is probably not, at least not so fast. The interest


rates drop is partly because Brazilians are unemployed and they


have no purchasing power left, so prices are falling, and that means


that interest rates can drop as well. The fundamentals of the


Brazilian economy are in bad shape. Growth is supposed to be very modest


this year, also the Government has high levels of debt. So economists


are watching whether the country will keep cutting it interest rates


in the next coming months. That could maybe signal that the country


is back on track to a very slow recovery.


Joining us is Lawrence Gosling who is editor in chief


Plenty there to talk about. Let's talk about some of what Daniel was


mentioning there and this cut in interest rates in Brazil. As he


mentioned, the Brazilian economy is still heavily indebted, and if you


are the central bank in any country, you have two weapons at your


disposal, they can't pump money into the economy, so they will steadily


use this interest rate weapon tool to try to revive the economy. Let's


turn our attention closer to Europe. Everybody keep an eye on what is


coming up with the elections. The French election around the corner.


Turkey's election this weekend coming, an important one because


there is still a state of emergency in Turkey and it is a big economy,


so that is important. And then the following weekend, the first round


of the French elections, it could be all over in wonder if one of the


candidates gets 50% of the vote, not expected, it is very tight. So these


other two next key elections. And especially the French election, does


that affect European market at all? European equity markets have cooled


off a little, and the sovereign bonds of France in particular have


eased off a little bit as well. So investors are nervous, albeit most


people don't expect Marine Le Pen to end up being elected after the


second round. And the Turkey referendum rather than an election.


That is the key thing about that. Thank you very much, you will be


back to go through the papers with us shortly.


The inside track on why one of the UK's biggest high-street chains


thinks it has the key to success in China. You are watching Business


Live on BBC News. Sainsbury's Argos are opening


their 50th digital store today. It's part of plans to


transform the retailer after Sainsbury's bought


the Home Retail Group in 2016. They're also announcing plans


to open ten mini Habitat stores in branches of Sainsbury's -


and 90 stores will have Argos John Rogers is the CEO


of Argos he joins us now. I'm sure some people will be


delighted by this, but are you not potentially putting some people off


who are not quite so, double, they love that traditional catalogue? I


think it is about giving customers choice. Many of them do love the


catalogue, but many of them like to be above the shop in-store in an


easy and convenient way through the digital tablet, so it is about


providing customers with choice, whether it is home delivery, picking


up stuff in the supermarket or indeed going into one of our Argos


high-street stores and giving customers that choice to grow sales,


giving us a successful six-month sales and a winning market share.


One other interesting is, when you look at your rivals, like Amazon,


with big warehouses is out of town, if they don't have the same sort of


business rate overheads that you inevitably do in stories in towns


and city centres, where you concerned by the recent changes? As


a business, with, say, Argos, we pay over half ?1 billion in business


rate and we would ask the Government to look at reforming the system, and


out of date tax clearly focused on property, and with those retailers,


in in this digital world, it is becoming less relevant so I think we


welcome some of the small changes made to the system and processes are


the last 12 months or so but fundamentally we are asking for a


major freehold. John, many thanks. John Rogers, Chief Executive of


Argos. Don't forget you can find plenty on the Business Live page.


Right now, bad news if you're planning to travel over the bank


holiday weekend. Virgin's Isco sorry, no, forgive me, it is later


in April. Not this weekend. It is later in the month. Just frighten


half the country! LAUGHTER


Is US burning season kicking off? It kicks off with the big banks over in


America and they will tell us how much money have been making -- is US


banking season kicking off? A quick look at how


markets are faring... This is the start of the trading day


in Europe, all down just a shade, very cautious. Now, I want to talk


about this... Imagine taking over a family


business and then more Timpson was founded


in Manchester in 1865 as a shoe store and later expanded


into manufacturing and repairs. In 1975 it had 430 stores


and a new managing director, with John Timpson taking over


the family business. Now the company has


almost 1900 stores in the UK and Ireland,


and one shop in Beijing. Here to give us the inside


track is John Timpson, Welcome to Business Life. Successful


business in the UK and Ireland. What tempted you about China? The




-- welcome to Business Live. Looking around the world, they wanted a


model to copy, they found us, and that is what is happening. Do you


think it is the start of more? Not much point just having one. Yes, a


silly question. But you have a lot of shoes over there. We have one,


there will be more fairly soon. Obviously we have to learn how to do


it, we have one or two of our people over there. A long way to go. I'm


not getting excited yet, but it is a very interesting new direction for


us. Can I ask you this? I know you were watching the interview with


John as well from Argos. Their model was very similar... Asking if this


is the future, you know, click collect, picking up in supermarkets,


and you're opening up a lot of the Timpsons in supermarkets around the


UK. Is that the future because it is with the footfall is? We are in


pretty much every high street you want to be end, and we are opening


lots of shops together with supermarkets, all the big format,


particularly Tesco and Sainsbury's. Most of them are little pods in the


car parks, near the entrance. You obviously are doing something right


with your business, growing and so on. What is interesting is how you


draw up your business plans, 15 years in advance? There is this


little trick I do every three years as a way of stimulating... You know,


we don't have forward planning meetings or anything like that, but


I write a chairman's report for 15 years' time. How do you know what is


coming up? Of course you don't! But it takes you away from today.


Instead of writing a forward plan, most people for word -- people's/ is


just from today, and they say the sales will go faster than costs so


they make more money, so they can put that to bed and so on, but my


forward plan, my annual report for 2032, which I have just written...


LAUGHTER It is trying to guess what will


happen. Actually, do you know what? The most interesting thing about it


is the thing is that absolutely don't change. And the thing that


matters most to me is the fact that in 2032 one of the bits of our


culture we have to keep, and we will still be making sure we take great


people and let them get on with it, what I call upside-down management,


it'll still be how we run our business. Which is in your book?


Absolutely. We have to wrap it up, but upside-down management... The


book is cold Keys To Success and it is 50 different quirky things we do


to make a difference, and the way to give great service in shops, part of


the secret to our success, we allow the people who sell to our customers


to do it how they want, and they do it as long as we pick great people.


OK, thank you. Upside-down management. I wonder if we can apply


that to presenting? Could do, I don't know!


Now, are you happy to have your food delivered...


That's the question being asked of take-out food


It's the first full scale roll-out of technology that could mean


the end of the road for scooter delivery riders.


We think the best approach for this kind of system is one where,


you know, there's constant human oversight of the robots.


The architecture we've chosen is one where a person is capable


of controlling one or two robots, and over time it would build


into more and more autonomous operation so that there is one


person then controlling five, and then ten and so on, so effectively


multiplying the ability of a given person to do more work


over the set of robots that they're overseeing.


What other business stories has the media been


Laurence Gosling is joining us again to discuss.


Burger King, new TV at, designed to interact with your device, and


Google don't seem to like it? No, because it was only running for


three hours and they disallowed the software that allowed this app to


pop up on your phone or Google bomb device. Saw the commercial on the TV


use the trigger words to activate -- Google device. The yes, it would


tell you where to get it, pay it back, so it is kind of stealth


marketing and I am sure somebody thought it was a clever idea. I'm


sure it got a bit of coverage. We asked whether people like the idea


or if it was too invasive. The two best responses - advertising just


needs to be targeted. Tom says simply for something I want to own


or desire, and those things don't matter to me. Look at this picture.


What is going on with Swiss chocolate and appLindt? They are


suffering because we all are getting more healthy -- what is going on


with Lindt? But the cost is going up because of the cocoa beans... Yes,


clearly this with cannot draw their own Kauko. The other thing,


interestingly enough... Why not? They are very good at Cowes for the


milk, but... You know, this is a luxury item. It is expensive and


that is how they position themselves. It is Easter now so we


will all go and buy some chocolate and we will just buy the cheapest


chocolate and consume it quickly. But what about the chocolate? It is


higher quality because it is only manufactured to be on the shelves


for short time so can eat it and it is not quite as unhealthy for you.


Ah! OK, see you soon. Happy Easter.


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