23/06/2017 BBC Business Live


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This is Business Live from BBC News with Ben Bland and Rachel Horne.


As US energy producers ramp up production, can the OPEC cartel halt


Live from London, that's our top story on Friday 23rd June.


Crude is down some 20% this year - despite OPEC's attempt to prop it up


Also in the programme, we'll cross live to Asia


where the world's biggest bank has moved to calm fears over the level


It's caused some cautious sentiment on the Asian markets that flat lined


up the end of their trading session. Here's the European markets at the


start of Friday. And we will look ahead to Wall Street as well.


The British Prime Minister offers to ensure the post-Brexit rights


of three million EU citizens living in the UK.


Later we'll have a wrap up of this week's big economic stories


with our correspondent Andrew Walker.


Research in The Daily Telegraph has found well-qualified people


who voluntarily talked about their flaws in job interviews


Today we want to know, what are your weaknesses?


Being gay perfectionist is not allowed!


Get in touch - just use the hashtag BBCBizLive.


-- being a perfectionist. Always horrible when that question comes


up. We will share hours with you later.


We start with the price of oil, because once again despite the best


efforts of the oil producing nations to prop it up, it is on the slide.


Let's show you what's been happening.


This week the talk's all been about this guy - he's back.


Traders refer to a "bear market" when the price of an asset falls 20%


It often signals a loss of confidence


Since the start of the year crude has done just that -


it's down over 20% - from above $56 per


to below $45 by the middle of this week.


Back in November the Organisation of the Oil Producing Countries -


OPEC - together with 11 other countries - agreed a landmark deal


to restrict oil output to try and prop up prices.


Between them they are supposed to be cutting production


Although there are questions about whether everyone is sticking to it.


And last month they agreed to continue that policy


for another nine months, to March 2018.


But there's still too much oil around.


US shale producers were hit hard when oil


prices crashed in 2014 - many were put out of business.


But this year, thanks to OPEC's action to boost prices -


as you can see here, the number of active US oil rigs has


That's just added to the global glut of oil.


Cailin Birch, Commodities Analyst at the Economist Intelligence Unit


The problem with a bear market is once you get into it it can be


difficult to get out. It can become and we have seen a switch where we


have seen future prices for 2018 lower than current spot prices,


signalling a loss of confidence in the market. What can be done? Opec


have come together in a way that's been very surprising compare to what


they have done in the past. You said earlier they don't always keep up


their promises on production, but they have pulled together. The


problem has been US shale gas. We have seen a couple of times in the


last couple of decades where Opec has tried to get together around a


table and limit production to impact prices, and both times we saw


compliance of around 40 and 60%. We have seen compliance of close to


100% this time because of the Saudi Arabia approach. That's a real


progress. We think of Opec representing around 40% of oil


production, and the US has risen rapidly in recent years. The problem


in terms of keeping prices stable is the US is able to respond to even


modest increases in prices. Shale drilling is relatively


cost-effective compared to offshore. It's a more nimble industry that can


react faster. Do you sense that at this level it's reaching, this lower


level, is the new norm? As far as we see every time Opec take action to


boost prices, it encourages shale to come back on stream. Will we see oil


at these prices for the foreseeable? I think so. And it could potentially


go further down. We tend to see a six-month lag between where the US


rig camped moves and the US barrels per day. At the moment we still see


rigs going up meaning to US production will continue to rise. A


lot of it is confidence based on because confidence is weakening


considerably, it could go lower than 47 dollars per barrel. It's not


gangbusters by any stretch of the imagination yet, but it is growing,


and it will probably not fall back to the $30 per barrel level we have


seen, unless something dramatic happens in the market, which is not


our forecast. Thank you for joining us.


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


UK government plans for a new $23 billion nuclear


power station have come under fire from public auditors,


who call it "a risky and expensive project".


The National Audit Office say the case for the Hinkley Point C


It says the deal with state-controlled French energy firm


EDF and Chinese company CGN to build the plant is "not value for money".


The 34 largest banks in the US have enough money on hand


to withstand a severe recession, according to the US central bank.


The finding comes from an annual "stress test" conducted


The tests were put in place after the financial crisis


to strengthen financial capacity in the event of a downturn.


American Airlines has received an "unsolicited" approach


from Qatar Airways which wants to buy 10% of the US carrier.


In a regulatory filing, American Airlines said Qatar


intended to buy at least $800 million of its shares - and it


Analysts say Qatar could be trying to strengthen its relations


with the US amid the diplomatic crisis with its Gulf neighbours.


To Asia now - and the Industrial and Commercial Bank of China -


known as ICBC - has moved to calm fears about the health of loans


to some of the country's biggest companies.


What a ground can you give us to this story? Before that I have some


breaking news. We had news break that Toshiba, which has been trying


to sell its chip unit in order to raise enough money to cover the


losses in its US nuclear division, its shares have just been downgraded


to the second section of the Tokyo stock exchange as of the 1st of


August after the company repeatedly postponed earnings results. The last


we heard we were supposed to find out by the end of this month but the


company has just applied for another extension until August ten, which it


got the approval for, but in exchange its shares have been


demoted to the second section of the Tokyo stock exchange. You are asking


about China and we are talking about some of the massive overseas


acquisitions that have been making news headlines lately, such as the


purchase of Hollywood studios. Yesterday when authorities appeared


to start cracking down on overseas acquisitions, the shares fell. One


fell 10% until they were suspended. Them the ICBC came out and said it


was just a routine and we should see shares recover this Friday. The


message is that Chinese companies and their spending and shopping


spree isn't yet over. Thank you. We can see the effect it's having on


the markets... Asian shares flatlined but remained


on track for a weekly gain. Crude oil prices pulled away


from this week's 10-month lows. Crude enjoyed a rare positive day


on Thursday after hefty selling that sent it to a 10-month low,


but the gains were small change as concerns over a global supply


glut and US production overshadow The sharp losses -


oil is down around 25% from its recent highs seen


in January - has hit energy firms and,


despite another pick-up in the commodity, they


continue to struggle. The European markets starting Friday


with a modestly lower start across the board.


In the US, investors are eyeing Donald Trump's revised healthcare


bill hoping its success will open the way for his economic agenda.


And we now have the details about what's ahead on Wall Street Today.


The company that bears the name of the once


very popular smartphone will release its


Remember, the company's on a big turnaround effort,


so this will be the first chance that investors will be able to take


These days, BlackBerry is better known for losing


in the smartphone wars to Apple, Samsung and Google.


But the Canadian firm is gaining traction as it tries to really


reinvent itself as a maker of industrial software.


In economic news, new US single-family homes sales,


those numbers will be released on Friday, and likely rebound


in the month of May, suggesting that the housing


Joining us is Lucy MacDonald, CIO, Global Equities


We were just talking about what she wanted to start with. Is it health


care? Tell me more about the bill they are trying to get through in


the States. Part of Donald Trump's plans to repeal Obamacare. Looks


like they might have some issues, but what impact does it have on the


stock markets? The health care sector has been very strong in the


last couple of weeks but it's not actually to do with the health care


bill as such. It's more to do with relief about pricing of drugs.


That's because there has been a leaked draft of a order that Trump


is preparing, that is much more lenient towards drug company pricing


than he was saying even six months ago. That has created enormous


amounts of relief in the market, so the biotech sector has been the


strongest area in the last couple of weeks. We will watch and see that.


It has been a complete U-turn as far as that's concerned. Pointing more


towards using deregulation to keep pricing under control rather than


regulation. The other interesting thing in the States is the Federal


reserve moving from a policy that has been broadly loose in terms of


interest rates to starting to tighten up. Do you anticipate there


will be much response in the markets? It has been very well flat


and you can give the Federal reserve a lot of credit for that. We have


seen a plan that has been set out on how interest rates are likely to


move. But now, as of the last Federal reserve meeting, we have a


better idea of how the balance sheet will be unwound. 4.3 trillion of


Treasuries mortgage-backed mortgages on the balance sheet. It's over a


time that is yet to be defined, but that's the path of travel. That it


is being seen as another way of tightening. Therefore the impact of


that is being taken in conjunction with the rates as well. So managing


that is going to be quite something to do, particularly as there will


possibly be a change of the Federal reserve governments next year. You


will join this again at the end of the papers and think of your floors


to announce at a job interview. I would imagine there are none!


The British Prime Minister offers to ensure the post-Brexit rights


of three million EU citizens living in the UK.


Later we'll have a wrap up of this week's big economic stories


with our correspondent Andrew Walker.


You're with Business Live from BBC News.


Today marks the one year anniversary of the day Britons went to the polls


and surprised themselves by voting to leave the European Union.


Earlier this week, the UK government started the arduous task


of negotiating a Brexit deal with politicians in Brussels.


Let's talk more with our business correspondent Ben Thompson.


What can you order for us? Good morning and welcome to South London.


We are talking about that anniversary, one years since we


decided to vote to leave the European Union and turn our back on


40 years of membership of the club. A lot has been said since then. All


sorts of debate about what it means for jobs, trade and the economy on


both sides. With meat this morning to discuss it are our Brexit panel.


It's neatly split down the middle. I have levers and Remainers. I can


introduce you to a couple of them. Lindsay and David. Lindsay, you run


businesses and there has been so much uncertainty in the last couple


of months, but are we closer to getting answers?


I don't know if we are closer to getting answers, lease we are


getting something coming out of the government now about their plans.


What is giving businesses problems over the last 12 months is the lack


of planning, lack of certainty of where we are going. The uncertainty


is an issue, I think. People I work with, over 50, leaving work, they


are looking to travel, they need their money safely, they need a


pound at a safe rate, they need the economy to be strong and support


their portfolios. Lots of them are setting up businesses after they are


50. They need certainty about what the future is for them. What is the


future, David? There is no certainty, we don't know what is


going to happen. It is exciting. The opportunity is to maintain


relationships with individual countries in the EU, we have a great


big wide world out there. The disgraceful way we have treated the


Commonwealth, let's have them back, Africa, Asia, America, South


America, so much to go for. A lot of clarity last night. Great news. The


debate continues. I am staying safely down the middle here, but


much more on the BBC throughout the day. See you soon.


The UK Prime Minister Theresa May has revealed details of what she's


called a generous offer on the rights of EU citizens


Around 3 million EU citizens would be allowed to stay in Britain-


let's get more on this now with our economics


How significant do you think this is for business and economics, the


offer Theresa May has made? It is certainly important in that it sets


a favourable tone for the whole negotiations, and there are a dozen


to areas where they matter for business. She has had a positive


response from the German Chancellor Angela Merkel, which is encouraging.


What is clear with this area is, there is a political will on both


sides to get a deal. There are technical issues, certainly,


questions about other things beyond rights to work and live in the UK,


access to health care, education, writes to have family members


joining and forth, and the one politically difficult element in


this is the question of the jurisdiction, where will disputes be


settled? The European Union side would like that to be the European


Court of Justice, which the Prime Minister has said is a red line. But


it does look like it is going to be a relatively easy thing to resolve,


certainly in terms of the political will. It is clear that it is strong


on both sides. The settled status is one thing. Another issue is migrant


workers, we saw headlines yesterday in the UK talking about difficulties


that some growers were facing getting seasonal workers this year.


BBC research was done but looked at particular issues about migrant


seasonal workers. We found that there was evidence that soft fruit


growers, leafy salad grows, two particular trade Association, found


that their members were having some difficulty getting workers. They


said it will certainly harder than the year before. A significant


number of their members were concerned about whether we would


have enough people for this season. It is partly about the uncertainty


to do with Brexit, although one has to say, for the time being, those


people have the same right to come and pick the fruit and veg as they


had a year ago, but it is more to do with the decline in Stirling. People


coming here temporarily want to take the money back to their families. In


terms of foreign currency, it is worth less than a year ago because


of the decline after the referendum. Because of the decline in pounds


sterling, there is talk about whether interest rates need to rise


to prop the value up, a bit of a diverted at the top of the Bank of


England, it seems. A recent committee decided to keep interest


rates unchanged at their all-time low. We discovered, to our surprise,


that there was a 5-3 split in the voting on that. Three wanting to


start raising rates to deal with inflation that has been feeding


through as a result of the decline in pounds sterling. And the delayed


effect of rising international commodity prices. But strikingly, we


had the chief economist, he said that there was a case raising rates


soon, within a day or so of his boss, the governor, saying now is


not the time. Now and soon are not necessarily quite the same, but it


does seem as though there is a division opening up there. One


person, one former Treasury adviser, suggested that Andy Halliday's


position is whatever will oppose the governor. What was your take on the


Queen's speech this week? It was striking. Dominated by Brexit and


the enormous legislative programme that will generate, but wasn't it


striking how so many Conservative Party manifesto commitments were not


there. Social care costs for the elderly, grammar schools, the


so-called triple lock on the state pension, and I think that reflects


something that may also be reflected in due course in the Brexit issue,


which is the difficulty they may have in getting a parliamentary


majority for everything they want. Bearing mind, the details of what


Brexit will mean, something parliament will have a view on, and


there are wide divisions, even with those that accept reluctantly that


it will happen. Thanks for your time.


How did Velcro come to be what we know it is today.


It is sticky, multifunctional and probably in use somewhere in your


house. Velcro! The idea was the brainchild of a Swiss engineer, and


in 1941, George was walking through the woods when he wondered if those


annoying birds had stuck to his trousers and his dog would be of any


use. He began by experimenting, and eventually came up with a means to


replicate the action, with two strips of material. One with


thousands of tiny hooks, and one with thousands of tiny loops. George


patented the technique in 1955, just in time for the space race. And the


Apollo astronauts loved it in the 1960s. They used it to stop their


plates from floating in space. Before long, everyone was using it,


hospitals, airlines, the military, eventually George was selling


50,000: that is a year of the stuff, and he made millions. So where did


George get the name, Velcro? Two French words stuck together.


What other business stories has the media been


Lucy MacDonald, CIO, Global Equities at Allianz Global Investors


Quite a significant one from the US, big banks passing the first hurdle


in the stress test. Things are looking more robust than they were


just a few years ago. The banks have all made a good effort to get their


capital levels up. You can see that. When you look at the minimum


regulatory tier one 4.5%, they are all well above that. Even with the


extra leveret put in, most of them still have a good buffer, Morgan


Stanley was a bit on the weak side, but they are looking better. They


have got better at working through it as well. From that perspective,


it does underline the fact that the whole of the US banking system has


really just mended its balance sheet in a way that we have not yet seen


in Europe. Although we are seeing signs of it in Spain in particular.


Is it the kind of thing that people should breathe a sigh of relief,


they are a bit more spots will looking towards a rainy day, or


getting better at answering the questions? It is definitely the


former. The numbers are a lot better. I think that is known now.


When you look at the valuations of the banks in the US, they certainly


have started to reflect that, but there is a lot of work to do in


Europe. So a survey saying that you should give some of your floors in a


job interview, and you are more likely to get the job. What does it


say in the article, any tips? It is all about self verification. I am a


bit of an expert in this because I have been helping my son, who is


doing a level psychology. It says that if you are honest about your


flaws in an interview, you are more likely to get the job. There is a


secondary part of this that is definitely, having the


qualifications in the first space. If you don't have the qualifications


and you are not confident in the job, it is best... What is a good


flaw to say? Personally, I would say, feedback I have had is that I


can be detached. Therefore, being here in this interview, being on the


BBC, it clearly shows I am trying to do something better. You would never


be able to tell! Asked a flaw, I would say answering silly questions


like that.


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