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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.