:00:00. > :00:08.This is Business Live from BBC News with Sally Bundock and Ben Thompson.
:00:09. > :00:15.Can Opec fire up the price of oil without fuelling
:00:16. > :00:38.Live from London, that's our top story on Thursday 25th May.
:00:39. > :00:41.The price of Brent Crude is already on the rise as the Opec cartel
:00:42. > :00:50.recommends a nine month extension to production cuts.
:00:51. > :00:57.President Trump comes under pressure from European leaders to stick
:00:58. > :01:03.with the Paris agreement on climate change.
:01:04. > :01:11.He is meeting with them today and we will tell you all you need to know.
:01:12. > :01:14.Markets are trading higher, taking their lead from Asia.
:01:15. > :01:17.And I sit down with the man who makes Hollywood Blockbusters
:01:18. > :01:21.Jason Blum tells me why making movies on the cheap gives him more
:01:22. > :01:27.And as the boss of J Crew says he underestimated how technology
:01:28. > :01:34.We want to know how has it tech changed the way you shop?
:01:35. > :01:59.Do get in touch about your online retail shopping experiences. What
:02:00. > :02:01.did you buy in the midnight hour after a big night out? That will be
:02:02. > :02:03.interesting! We start with the price of oil
:02:04. > :02:06.and whether that goes up or down will be decided later at a meeting
:02:07. > :02:09.of the world's top producers. Opec - the Organisation
:02:10. > :02:11.of the Petroleum Exporting Countries is led by Saudi Arabia,
:02:12. > :02:14.with other major producers including They're being joined by non-Opec
:02:15. > :02:19.members inclduing Russia and are expected to announce a deal
:02:20. > :02:23.later to try and push prices higher. In December Opec and non-Opec
:02:24. > :02:36.countries agreed to cut production by 1.8 million barrels
:02:37. > :02:38.per day, about 2% Those cuts were agreed for six
:02:39. > :02:45.months, but that expires in June. After yesterday's meeting to monitor
:02:46. > :02:48.progress on that a nine month The price of Brent rose sharply
:02:49. > :02:53.in December when those That was the trigger point in
:02:54. > :02:59.December last year. But it's been volatile
:03:00. > :03:01.since then and struggling Russia can cope with this level -
:03:02. > :03:08.Moscow has based its budget But the biggest Opec producer
:03:09. > :03:18.Saudi Arabia wants $60 per barrel. Shale oil production
:03:19. > :03:27.in the US fell sharply when prices hit rock bottom -
:03:28. > :03:30.it just wasn't worth their while to But now prices are higher they're
:03:31. > :03:35.back - and their technology is improving making it cheaper
:03:36. > :03:39.and more efficient. And it means US oil production has
:03:40. > :03:44.surged by a million barrels a day over the past year
:03:45. > :03:49.and all that is adding With me is Alan Gelder, an expert
:03:50. > :04:11.at oil analysts, Wood Mackenzie. Welcome to the programme. A lot to
:04:12. > :04:19.get through, Saleh laying out some of the issues and that is what Opec
:04:20. > :04:25.the break even point, what price do the break even point, what price do
:04:26. > :04:31.certain countries needed to be. That will be a key point of the
:04:32. > :04:34.negotiations. Saudi Arabia has declared 60 and other countries need
:04:35. > :04:40.a higher number to achieve a fiscal balance. If not, they need to borrow
:04:41. > :04:46.Opec need a higher number, Opec need a higher number,
:04:47. > :04:53.Venezuelan would be the highest. How hopeful of a that they will get the
:04:54. > :04:58.higher price? If they sustain production cuts over the next nine
:04:59. > :05:01.months, we might get to level the Saudis are expecting towards the end
:05:02. > :05:08.of the year, but something that is high 50s by the end of the year. We
:05:09. > :05:12.should say non-Opec members, Russia involved in this. They are concerned
:05:13. > :05:16.about the United States. We talked about shale production coming
:05:17. > :05:23.online. A real contender because it is the traditional producers we
:05:24. > :05:28.associate this with. When the price fell saw a lot of the production
:05:29. > :05:35.falling away, but this is coming back? This is Opec's dilemma, there
:05:36. > :05:40.is a new player in town. They can do it in a commercial way, so the
:05:41. > :05:44.challenge for Opec is, with these cuts, when do they online the cuts?
:05:45. > :05:49.What is the pacing of that, how does the manual group work? We're looking
:05:50. > :05:54.at the extension to nine months because the first quarter is when
:05:55. > :05:59.demand dips and that is not when you want to return barrels to the
:06:00. > :06:03.market. We saw parallels as far as the price is concerned in trying to
:06:04. > :06:07.push shale producers out of business, so there is a threshold,
:06:08. > :06:11.there is no point in getting this oil out of the ground in terms of
:06:12. > :06:17.shale because it is expensive. We have seen technology improve that
:06:18. > :06:21.makes it cheaper to get shale out of the ground, so that argument doesn't
:06:22. > :06:27.work any more? It is a balance. We have seen a number of companies
:06:28. > :06:30.fail, but we have seen consolidation, costs come down and
:06:31. > :06:34.technology improvement has meant it has gone from break evens of 60 to
:06:35. > :06:41.50. The question we have, what the balance between technology
:06:42. > :06:46.improvements and cost inflation as a result of activity which requires
:06:47. > :06:50.higher prices. There has been a big development in West Texas, that is
:06:51. > :06:56.where most of the growth is coming from. Other places near higher
:06:57. > :07:00.prices. Opec is facing a different dynamic now than its traditional
:07:01. > :07:01.market. It is so different how things have changed. Thank you for
:07:02. > :07:05.explaining that. The White House has denied
:07:06. > :07:11.accusations that the President's budget proposals contain
:07:12. > :07:12.a serious maths error. Former US Treasury Secretary Larry
:07:13. > :07:18.Summers says the spending plan $2 trillion of extra federal revenue
:07:19. > :07:22.twice - by using it to both to cut But White House's budget director
:07:23. > :07:29.says he stands by the numbers. The budget unveiled
:07:30. > :07:40.on Tuesday proposed deep cuts Aston Martin has posted a
:07:41. > :07:44.first-quarter profit for the first time in a decade. Revenues in the
:07:45. > :07:49.first three months of the year more than doubled after strong sales of
:07:50. > :07:56.its new model. It was sold by Ford in 2007 to its investment firms. The
:07:57. > :07:59.company has gone bankrupt seven times in its history and is now
:08:00. > :08:03.reported to consider a stock market flotation in London next year.
:08:04. > :08:07.Mongolia has received a $5.5 billion aid package
:08:08. > :08:09.to stabilise its economy and push through much-needed reforms.
:08:10. > :08:12.In return, Mongolia agreed to cut spending and raise taxes
:08:13. > :08:16.as well as build a stronger network for its financial services.
:08:17. > :08:20.The resource-rich nation which holds presidential elections next month
:08:21. > :08:31.suffered a slowdown after commodity prices collapsed, and demand slowed.
:08:32. > :08:36.Not often we talk about Mongolia and not often we talk about the next
:08:37. > :08:37.story either. A Chinese group is buying
:08:38. > :08:39.the world's second Humanwell Healthcare Group will pay
:08:40. > :08:43.the Australian health care giant Ansell $600 million
:08:44. > :09:04.for the business. It is a big deal? It is. It is a
:09:05. > :09:16.condom brand named after James bond. They are selling their business to
:09:17. > :09:23.the Chinese consortium. You have Humanwell health care group,
:09:24. > :09:30.partners and among the brands its selling sounds like James Bond.
:09:31. > :09:38.China's condom market is lucrative, set to triple by $5 million and that
:09:39. > :09:42.is according to a report out. There is a lot more awareness of the
:09:43. > :09:48.benefits of condom is. Sales in China have jumped in two double
:09:49. > :09:57.digits in a year. And also the manufacture of wide range of drugs
:09:58. > :10:01.to contraceptive drugs to HIV test kits. There are many Chinese
:10:02. > :10:06.manufacturers seeking to buy foreign firms to try to expand beyond their
:10:07. > :10:11.home market and no big surprise that the shares have jumped above 4% in
:10:12. > :10:14.Australia today but we note the transaction is still subject to
:10:15. > :10:18.regulation and approval. It is expected to be completed by the end
:10:19. > :10:21.of September. Could be a breaking news story when the regulators give
:10:22. > :10:34.its approval. Thank you very much. I have to say, it is green arrows
:10:35. > :10:39.across the board. The broader market in America, with another record high
:10:40. > :10:46.on Wall Street. Markets across Asia doing well, a weaker dollar of the
:10:47. > :10:50.back of what was said on the back of the Federal Reserve minutes. We will
:10:51. > :10:57.cut that in a second. Let's look at Europe now. Slightly higher. Could
:10:58. > :11:01.see another record high for the FTSE 100? Another record close. It is
:11:02. > :11:04.interesting to see how markets are trading around the world and we will
:11:05. > :11:06.talk about that in detail in a moment, but let's look ahead to what
:11:07. > :11:14.is on Wall Street. On Thursday, Sears will be reporting
:11:15. > :11:18.earnings. They warned investors in March there was a chance it may not
:11:19. > :11:25.be able to continue operating after years of losses and declining sales.
:11:26. > :11:30.But Sears has said it is expecting a net profit as it undertakes a plan
:11:31. > :11:35.to cut $1.25 billion in costs this year. In contrast, dollar tree is
:11:36. > :11:40.expecting stronger earnings this quarter and are boosted by a higher
:11:41. > :11:45.in-store traffic. Several retailers have blamed low traffic in stores
:11:46. > :11:53.for very weak sales. Finally, there will be a new company trading on the
:11:54. > :11:58.New York Stock Exchange on Thursday. Wide-open West is the sixth largest
:11:59. > :12:03.cable operator in the United States and will trade under the symbol Wow!
:12:04. > :12:04.Joining us is Tom Stebenson, Investment Director
:12:05. > :12:15.Good morning. Let's talk the Fed. I like your glasses. Where are your
:12:16. > :12:22.glasses by the way? I just haven't got them on. All eyes were on the
:12:23. > :12:25.Fed yesterday and expectation is still of June rate rise, but some
:12:26. > :12:33.doubts creeping in yesterday, is that fair to say? Yes, two keywords,
:12:34. > :12:36.the first was soon. The Fed rate setters said they felt if things
:12:37. > :12:41.carry Dom on their current trajectory it would be appropriate
:12:42. > :12:44.to raise interest rates soon. The second was transitory. The reason
:12:45. > :12:49.why they think they will raise rate is because they think the recent
:12:50. > :12:54.sockless in economy, softness in the inflation is transitory and it will
:12:55. > :12:57.pass. The odds are very short on June rate rise and another one in
:12:58. > :13:02.September and then potential will turn to how the Federal Reserve
:13:03. > :13:08.starts to unwind its balance sheet. It has bought $4.5 trillion of bonds
:13:09. > :13:13.to try to underpin the economy. It has two let them role off an
:13:14. > :13:20.reversed that easing policy. In the meantime you have the SNP closing on
:13:21. > :13:25.a high, the FTSE 100, it would suggest markets are on the up? Yes,
:13:26. > :13:29.markets are looking at not rising interest rates, but the reason why
:13:30. > :13:33.interest rates are rising. The reason why the Feds feel relaxed
:13:34. > :13:37.about pushing rate is because the global economy is picking up pace
:13:38. > :13:45.and that is what markets are focused on. For now, thank you. Retail
:13:46. > :13:47.shopping disasters, have a ponder on back.
:13:48. > :13:52.I meet the man who makes some of Hollywood's biggest
:13:53. > :13:57.And without the big money pressure, Jason Blum tells me it means he can
:13:58. > :14:08.You're with Business Live from BBC News.
:14:09. > :14:11.Bicycle and Motoring chain Halfords saw a 10% drop in profits,
:14:12. > :14:20.The retailer blamed the weak pound for driving up the cost of imports.
:14:21. > :14:31.Andrew Walker has been looking at the figures.
:14:32. > :14:42.Did you cycle in this morning? I normally would have done, but sadly
:14:43. > :14:46.not. Let's talk numbers. Halfords, the same tale, the weak pound
:14:47. > :14:52.affecting their bottom right? Yes, this is a business whose revenues
:14:53. > :14:57.are in Stirling, selling stuff to British customers but has a high
:14:58. > :15:04.proportion of its costs on imported goods. It has two convert sterling
:15:05. > :15:08.into Borren currency. That has been reflected in a decline in the
:15:09. > :15:11.profits despite relatively good performance on revenues. The chief
:15:12. > :15:16.executive says she has been pleased with the performance in that
:15:17. > :15:24.respect. The company puts a figure of ?14 million on the cost of the
:15:25. > :15:29.decline in sterling. The way in which it has impacted its outgoings.
:15:30. > :15:34.That is more than the decline in profits. It does suggest the company
:15:35. > :15:38.is, if you like, getting on top of this issue. But it is an unwelcome
:15:39. > :15:47.development for shareholders. It is a striking contrast compared with
:15:48. > :15:51.many in the 100 share index, bigger companies who make a lot of money in
:15:52. > :15:55.foreign currency, they have done well. But those more dependent on
:15:56. > :16:01.the bridge 's consumer have suffered. If you look at the share
:16:02. > :16:04.price, it fell sharply by 25% in the immediate aftermath of the
:16:05. > :16:20.referendum. It has recovered a lot of the ground since car but not all
:16:21. > :16:23.Thank you. Other retailers out, Pets At Home looking pretty good, they
:16:24. > :16:27.are making their money in the grooming service and the veterinary
:16:28. > :16:31.service as well. They saw a big rise in the veterinary business, up 25%,
:16:32. > :16:38.but they are having to admit they will have to bring down their pet
:16:39. > :16:41.food prices, which I would imagine for Pets At Home, that is your
:16:42. > :16:43.bog-standard. I am just looking at that hairdo, quite a bow on the dog
:16:44. > :16:47.in the picture. You're watching Business Live -
:16:48. > :16:57.our top story... We are watching closely the price of
:16:58. > :17:01.oil today, and Opec and non-Opec members who are meeting in Vienna to
:17:02. > :17:06.decide on whether they will extend their supply cuts and whether that
:17:07. > :17:09.will have any impact on prices. Something that might use a lot of
:17:10. > :17:12.oil, a rocket launch. New Zealand has successfully
:17:13. > :17:14.launched its first test rocket into space -
:17:15. > :17:16.the work of a Kiwi-American The seventeen-metre high craft
:17:17. > :17:20.took-off from a private launch pad on New Zealand's North Island
:17:21. > :17:22.and is designed to carry small A company in New Zealand has sent
:17:23. > :17:35.a rocket into space from the world's The launch was a success but
:17:36. > :17:40.crucially didn't get into orbit, explained that for us? This is a
:17:41. > :17:48.Little Rock it, much smaller than something you might see Nasa launch,
:17:49. > :17:51.only 70 metres tall, and designed, as you say, the tiny cube satellites
:17:52. > :17:55.that are revolutionising the markets. They made it into space,
:17:56. > :17:59.took about three winners to get up there but not quite into orbit. The
:18:00. > :18:06.company stressed this is just a test, in fact the launch was
:18:07. > :18:11.codenamed hashtag it's a test, just to make sure everyone knows this is
:18:12. > :18:15.not good for them, and they will launch later this year again, also a
:18:16. > :18:20.test, then on the third test they will take a pay payload with them.
:18:21. > :18:26.This fast developing market is really what they want to get into.
:18:27. > :18:30.It is companies not countries in the space race at the moment, and it is
:18:31. > :18:33.a beak -- a big leap forward for this.
:18:34. > :18:35.Making films on a tight budget isn't easy -
:18:36. > :18:38.One firm that's made its name with micro-budget films
:18:39. > :18:50.One of its first films was Paranormal Activity.
:18:51. > :18:53.It cost just $15,000 to make - but made nearly $200 million
:18:54. > :18:57.It then went on to produce another horror film called Insidious -
:18:58. > :19:03.production costs there were a bit higher -
:19:04. > :19:11.And it's a niche it's continued to pursue.
:19:12. > :19:13.Get Out - released in January this year -
:19:14. > :19:23.has already made more than $230 million at the box
:19:24. > :19:25.office but cost just $4.5 million to make.
:19:26. > :19:27.So I caught up with the founder and chief executive
:19:28. > :19:28.of Blumhouse Productions - Jason Blum.
:19:29. > :19:31.And asked what makes these low budget films so different
:19:32. > :19:36.It allows us to try very different things. We did the purge, get out,
:19:37. > :19:41.split, all low-budget movies, but they wouldn't have got made at 820
:19:42. > :19:45.or $15 million, typical studio budget, because their ideas were
:19:46. > :19:50.such oddball ideas. But by doing low-budget movies we can try weird
:19:51. > :19:53.ones. So talk us through the financing. This is very much about
:19:54. > :19:56.not spending a lot of money up front, and then with the marketing
:19:57. > :20:01.budget you manage to turn these movies into really big returns. The
:20:02. > :20:05.green light about movies is very simple because again they are
:20:06. > :20:09.low-budget, not a lot of risk. The real big moment for our movies is
:20:10. > :20:19.whether or not they get a wide release around the world or not.
:20:20. > :20:23.And, oddly, the marketing budget for our movies is six times the negative
:20:24. > :20:28.cost. So our green light is we are going to release it in 3000 screens.
:20:29. > :20:31.That we don't determine until after the movie is finished, we determine
:20:32. > :20:37.it with a studio, and that is when we know we have a winner, when we
:20:38. > :20:40.will get a big release. So what does this low-cost model do that you
:20:41. > :20:45.couldn't do if you had a multi-million dollar budget? You
:20:46. > :20:48.don't have two cast movie stars, you can kill the hero of the movie
:20:49. > :20:53.halfway into it, it is a great freedom, and also not to have a 3000
:20:54. > :20:58.screen release hanging over your head. So it really allows us to try
:20:59. > :21:02.different things. Sometimes it works, sometimes it doesn't, but
:21:03. > :21:08.when it doesn't work we don't get hurt too badly. If you had a massive
:21:09. > :21:13.budget, what could you not do? Expensive movies by definition have
:21:14. > :21:16.two appeal to all four quadrants of the audience, so the storytelling I
:21:17. > :21:22.think gets watered down, and the decision is very much by committee.
:21:23. > :21:26.The fun of movie-making is I think if this rated, the bigger the budget
:21:27. > :21:29.is. Then they'll like the storytelling and everything else
:21:30. > :21:34.gets compromised. We only only make a certain kind of movie, thrillers
:21:35. > :21:39.and genre movies, which really benefit from low-budget. I don't
:21:40. > :21:45.presume to think that every movie could be made on a low budget. If I
:21:46. > :21:52.go and see a vengeance, we want to see -- if we go and see the
:21:53. > :21:57.avengers. We want to see big budgets. You have to spend a bit
:21:58. > :22:01.more money on TV, why is that? Micro-budget doesn't work the TV
:22:02. > :22:05.because the television market is a much healthier market. The way we do
:22:06. > :22:09.low-budget movies, everyone works are free, we don't take a fee, the
:22:10. > :22:19.actors, the director, the writer, they all work for low pay scale, if
:22:20. > :22:23.it works, people get paid, if it doesn't, they don't. For TV, in a
:22:24. > :22:27.movie, we say we're not going to pay you but you get to do what you want
:22:28. > :22:29.to do is very a feeling in the movie business. In television if you said
:22:30. > :22:33.that, they would say it is good to hear that, but this guy over here is
:22:34. > :22:38.going to pay me and I get to do what I want to do. So it is much more
:22:39. > :22:40.competitive. For that reason micro-budget in TV is not the
:22:41. > :22:45.solution. We have a different idea of how to crack TV but it's not
:22:46. > :22:50.that. Are you ever surprised when you see the success of your movies,
:22:51. > :22:55.how well they do? Well, a hit movie is a magical thing. No matter how
:22:56. > :23:00.many times it happens, when we have one, get out was our most recent
:23:01. > :23:04.success, and we thought it was going to do quite well, and it opened, and
:23:05. > :23:08.it had a very good opening, not our best but a very good opening
:23:09. > :23:11.weekend. But when we knew it was something special was the second
:23:12. > :23:17.weekend, because typically genre movies dropped 50 to 60% from the
:23:18. > :23:26.first weekend to the second. Yet Outcrop about forgiveness and. We
:23:27. > :23:30.knew the magic had happened -- Get Out dropped about 20%. If I stop
:23:31. > :23:33.getting thrilled it is time for me to do something else because that is
:23:34. > :23:37.the fun of the business, that no one really knows until these movies come
:23:38. > :23:42.out into the world, and when they resonate or connected a big way
:23:43. > :23:45.there is better. Really interesting chat with him about how he does it
:23:46. > :23:51.on the cheap. That brings in some massive returns on those films. Tom
:23:52. > :23:54.is back and we are going to talk about President Trump, who is in
:23:55. > :23:58.Brussels right now meeting with European leaders. There is lots to
:23:59. > :24:02.discuss. But from the point of view of Brussels, they will be putting a
:24:03. > :24:05.lot of pressure on the US president to stick to the Paris climate
:24:06. > :24:10.accord. Front page of the Financial Times today. It follows on from his
:24:11. > :24:14.meeting with the Pope yesterday, which was a similar theme. That's
:24:15. > :24:20.right, when the Pope handed him one of the that can's in cyclicals, a
:24:21. > :24:23.big report on climate change, to encourage him to changes thinking.
:24:24. > :24:27.Donald Trump hasn't achieved everything he planned to deliver one
:24:28. > :24:29.of the things he has done, a lot of executive orders reversing climate
:24:30. > :24:34.change issues. The Europeans are very keen to change his view on
:24:35. > :24:37.this. The German line is particularly interesting, because
:24:38. > :24:42.what they are saying the President Trump is, look, it is not just jobs
:24:43. > :24:46.or reversing climate change, you can have both, but actually these
:24:47. > :24:49.measures can be good economic growth and the jobs as well. It is quite
:24:50. > :24:53.interesting, because when you think about this, during the election
:24:54. > :24:57.campaign he said many times he would rip up the Paris accord. When you
:24:58. > :25:02.think about the time, the effort and the energy to get to these accords,
:25:03. > :25:06.the transpacific partnership, Obamacare, Paris climate change, it
:25:07. > :25:09.is years of negotiations and hours and hours of discussions.
:25:10. > :25:15.Absolutely, and what we are seeing is a real split in the White House
:25:16. > :25:18.actually between those who are really firmly against action against
:25:19. > :25:25.climate change, and those who are more persuaded. I think Peter this
:25:26. > :25:29.might be his daughter, Ivanka, and her husband Jared Kushner, who
:25:30. > :25:33.really are much more along the European way of thinking that maybe
:25:34. > :25:39.the president. Tom, thank you, really good to see you. I want to
:25:40. > :25:43.talk about shops and retailing. You are getting in touch with us and we
:25:44. > :25:47.have asked about the underestimation of the power of technology. This
:25:48. > :25:52.went as I can't remember the last time I bought something in the
:25:53. > :25:57.street. I use my phone and return it using the label. Not good for bricks
:25:58. > :25:59.and mortar retailers. That is all from Business Live, we will see you
:26:00. > :26:12.very soon. Good morning. Yesterday was the
:26:13. > :26:16.warmest day of the year so far. We got to 26.6 Celsius in
:26:17. > :26:21.Worcestershire. Today is actually going to be even warmer. Hot across
:26:22. > :26:22.most parts of the UK and there