18/07/2017 BBC Business Live

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

The streaming giant Netflix wows markets as it surges past

Live from London, that's our top story on Tuesday, 18th July.

Shares in Netflix surge during after hour trade -

as it beats expectations - boosting its revenues.

Renegotiating trade in North America - the US says better access

and reducing its trade deficit is at the top of its priorities

all eye to the UK and inflation figures due out in a few hours time.

Can artificial intelligence give you the edge in sports betting?

We'll meet the man who claims his algorithms are going to turn

the industry on its head. Today we want to know how

The video streaming giant surprised investors overnight

The company added 5.2 million subscribers in the past three

months, boosting its global customer base to 104 million.

It's a company whose growth reflects the changing culture of TV viewing

Since its transformation from a DVD rental service to video

streaming ten years ago, the firm's share price has

rocketed - from just over $3 to more than $160 a share.

And Netflix is splashing the cash - this year it will spend $6bn

on content - that's 25% more than its rival Amazon

It's all in an effort to lure viewers away

Netflix has been aggressively expanding abroad -

and says it is now in more than 190 countries.

But with one notable exception - China.

In April the firm agreed a deal to licence its content to one

of China's biggest streaming sites - which is controlled by Baidu.

Jon Porter is the Home Entertainment Editor at Tech Radar.

Business Live. Welcome to Business Live. So, when

there is so many competing demands for time, what is it that Netflix is

doing that is pulling people in, that is helping it do so well. It

has been concentrating on its original content. It has put out a

lot of critically acclaimed shows, like House of Cards, Stranger Things

all very popular, that is with these exclusives Netflix is prove you to

subscribe to them if you want the original programming. I suppose they

have taken gambles of productions that otherwise may not have been

made. No, that is true, I mean, and interestingly the CEO says they

haven't been cancelling enough show, he says they are not taking as many

risk as they would like them to. It is a data driven company, that I

know what people are interested in and what they want to watch. The

shows are calculated on Netflix's part. We mentioned that Netflix is

more than 190 countries which is an achievement as the UN says, there is

only 195 in the world. One country they will be really focussed on is

China, we mentioned that tie up with Baidu. How significant is that to

feature growth China is every market they want to get into, it is a hard

nut to crack. Netflix is already licensed House of Cards through a

local provider, but it has been pulled because of censorship

concern, so, China is a important market to get right but difficult to

get right. And big competitors like Disney are having trouble get into

the market. What about the relationship with its competitor,

there is an uneasy relationship with Hollywood but it is facing

competition from Amazon Prime. That is right. The uneasy relationship

with the traditional movie industry has been well documented, Netflix of

course doesn't allow cinemas to release movies that eare Netflix

produced. It likes to keep everything contained on its service,

that contrasts with Amazon Prime, they like to get cinemas exclusivity

and then release it on their serve, in terms of the Netflix versus

Amazon, it seems as though Amazon is pouring a lot of money into origin

content, they have done very well, but the amount of content on Amazon

isn't as enough as Netflix. Netflix outspending Amazon in that regard.

Thank you very much. Let's take a look at some of

the other stories making the news. The US government says that

improving its trade balance will be its top priority

as the Trump administration prepares to renegotiate

the North American Free Trade The US President has previously

described Nafta as a "disaster" and officials are due to meet

with their counterparts from Canada BNP Paribas has been

fined $246 million by It's the latest bank to be punished

over traders who allegedly shared information about currency bids

without adequate oversight BNP Paribas says it deeply

regrets the misconduct - which was a clear breach

of its own standards. The electric car company Tesla has

added two independent directors to its board,

including the boss of 21st The move comes amid criticism

by some shareholders of a lack Some investors believe that too

many of the company's board members have personal or professional ties

to boss Elon Musk. Citigroup has chosen

Frankfurt in Germany as it's new European trading hub,

in part of its preparations According to various sources,

the US bank will present the choice to its board of directors this

week for approval. Plenty more stories online. Harry

Potter still coining it for Bloomsbury. Another wizard quarter.

Total revenues for the three months to the end of May were up 19% year

on year. Have you read them? Well, how can I admit that without... I'm

second time round. I have read them all and I'm now, I am about to start

number four. They are yet to be discovered for me. Indian tax

reforms have pushed up the price of cigarettes and hit the share price

of tobacco companies. Lisa is in Singapore. What can you tell us

about this. India raised the rate on July 1st.

It was the largest tax overhaul since independence. Big companies

thought they escaped the tax. The Indian Government have done a big

u-turn and increasing prices by as much as 10% or about $12 per

thousand stick, the market reaction to this has been swift, ITC, the

biggest cigarette producer in India, has seen shares tumble by as much as

15% in Mumbai. That is its biggest drop in 25 year, a small rival

called Godfrey Phillips fell by as much as 10%. Last year, these

companies also clashed with the Government, after they were ordered

to increase the size of the health warnings, so they were ordered to

change it from 20%, to 85%, and India is a major market for them, it

is a $10 billion market so any change is going to be felt really

keenly. Yesterday, we saw a two year

high for Asian shares. The Nikkei open again today

after a public holiday yesterday - remember those solid growth figures

out from China - economy growing at a faster-than-expected 6.9%

in the second quarter - that's created a steady

trading base for Asia. The dollar was down as the passage

of US health care bill seems ever more problematic and investors feel

that the Fed is becoming more cautious raising interest rates -

now thought to be less than a 50% In Europe - all eyes on the UK

when the government will release inflation figures for June -

remember it was 2.9% for May Investors will be keen to see

could another increase prompt an interest rate rise

from the Bank of England. And Michelle has the details about

what's ahead on Wall Street Today. Now, this Tuesday investors

will learn more about the health as the US economy as a mix

of firms publish profits. Two giants of the financial services

industry, Bank of America and Goldman Sachs report second

quarter earnings with One firm expected to see a drop

in revenue is the tech giant IBM. Analysts are worried about increased

competition in the artificial intelligence space, and given

the Trump administration's desire to increase defence spending,

how will this benefit Lockheed The maker of F-35 fighter jets

is likely to report higher revenue Joining us is Kathleen Brooks,

research director for City Index. Welcome to Business Live. Nice to

see you. Thank you. All eyes on the UK inflation, the latest figures.

Yes, these are the figures for June, what is interesting, actually, is

over the next six months we could see a slight shift in inflation,

with pressures starting to dwindle a bit. That is largely because the

inflation that has built up over the last six months has mainly come from

the drop in sterling last year of the Brexit vote. That was a year

ago, that starts to slip out of the index because it is year on year so

we could see inflation start to fall. That may not be a bad thing

for sterling because it will reduce the squeeze on the consumer one

would hope. The weaker sterling and, has benefitted the FTSE 100 over the

past year, since the Brexit vote. Of course, you know, has the

strengthens we may see the markets cool off a bit do you think? We have

that correlation with pound goes up the FTSE falls. It is not as strong

it was, it tends to need big currency moves to do that. If it

gives rise to consumer power, it should be good news for the FTSE 250

which has more UK-based company, the FTSE 100 is impacted by so many

global thing, no commodity prices because of the Myners and energy

company, the smaller UK index could benefit if we see inflation fall,

that, maybe not in month but in a couple of months going forward, this

month we don't expect inflation to rise, that is the first time it

stays still since March. Do you subscribe to Netflix? Do. I think I

am not it will only person who doesn't, in the whole world. How do

their financials work, we heard figures out today, they have more

than 100 million people who subscribe to pay to watch it, what

about their numbers? There is a few things that investors look for, kind

of revenue stream is one thing but the subscribers is critical. What

that have liked from last night earnings has been international

subscriber and they think as a whole it is going to benefit profits and

that is first time ever. If you think how long Netflix has been

going, it hasn't benefitted because there haven't been enough

international subscriber, if they you think only have 104 million

there is billions available to them because they are in so many country,

that could be a massive growth area, that is positive. A slow burner. You

will be back to do The Papers with us.

Can artificial intelligence give you the edge in sports betting?

We'll meet the man who claims his algorithms are going to turn

You're with Business live from BBC News.

Royal Mail's latest trading update says we're sending less of them

But it's better news in the parcel business -

Theo Leggett has been going through the numbers.

A bit of a mixed post bag? Oh dear, yes. It is a mixed bag, and it is

for all the reasons that we are only too well aware of. People don't to

send letters to one another any more, younger people don't. They

prefer e-mail or social media, keeping in touch that way, so, the

letters business is suffering. It is falling every year at the moment,

over the past, in the first quarter compared to last year they were down

6%. Revenues only down 4% because there was a lot of money spent on

mailings linked to the general election. But the parcels business

is doing very well indeed. That as you said is because or partly

because a lot of people are shopping online and all the par shells --

parcels needs to be delivered. So a mixed bag. Any plan update on the

pension scheme? Royal Mail said it would be closing its existing

pension scheme to new joiners from March next year. In place of that it

is going to bring in a defined contribution and defined benefit

scheme, so two schemes and it says it has discussed these with the

unions and the union it works with is convinced this is probably the

best deal it will get. The best way for warned will ballot members later

in the year. All right, love that report. Signed sealed is and

delivered by Theo. Can we stop! Return to sender.

New Jane Austen ?2 coin being launched on this day in 1817 is when

she died. 200 years on the Royal Mint tweeting they honour her life

and works with a special UK ?2 coin. Also you can see up a the updates on

the markets. The FTSE opening lower as Rachel

mentioned. One that we will be touching on in the newspapers later,

in the UK, the advertising standards agency wanting to stop harmful

adverts including one that perpetuates gender stereotypes. All

of that you can read more on on the website.

You're watching Business live. Our top story:

Shares in the streaming giant Netflix have surged

in after hours trading after the firm said it now has

The figure was much higher than had been expected

and helped to boost its revenues over the past three months.

A quick look at how markets are faring.

All of them beginning the trading day slightly down. Here in the UK

all eyes will be on the latest inflation figures. We get those

later this morning on average prices and we will keep across the markets

and bring you updates as we get them.

Many of us will have the occasional bet on the outcome of a football

But how would you feel about using artificial Intelligence

Well, our next guest reckons his company is set

to revolutionise the sports betting industry and put you

firmly in control and AI is at the heart of it all.

Charles McGarraugh was a partner in charge of metals trading

at Goldman Sachs before he left to found his sports

Stratagem says it uses a combination of data scientists,

social media feeds and football scouts to help predict the outcome

The company is looking to launch a hedge fund which would use

the Stratagem platform to bet on behalf of investors.

This would only be the second hedge fund of its kind

The first, Centaur, closed down in 2012 after only

Charles McGarraugh, Chief Executive, Stratagem Technologies joins me now.

Charles, so, firstly, how does it work? How do you make the

predictions when and where a goal is going to be scored or a tennis match

point is going to be won? Think of our core asset as like a giant pipe.

At one end you have a big funnel that takes in data streams of all

different kinds. So we have action data, which are the events that are

happening in the games. And then you have market data or the prices that

are moving around different sorts of wagers related to the action data

and then you have all sorts of other data, some of which generate using

our football scouts and we take sports journalism and social media.

That's one end of the funnel. Through the pipe then, you take that

data, you make it in a way that it can talk to each other and then you

start to extract information using various machinery and techniques and

modelling techniques and then at the end of the funnel out pops a zero or

one or a sell or a buy. You want to launch a hedge fund to use the

platform to bet on be-of investors. Some might say that's irresponsible.

This is people's money or pension funds. This is just betting on the

outcome of a football match? Yes, I think it's an interesting line of

reason. We take a different view which is that sports lend themselves

really well to process driven analysis. It is the same thing again

and again or things that are quite related the it is a highly

structured environment and there is a lot of data because the same thing

happens again and again and unlike a stock or a treasury bond or a

commodity where the price can move a lot and stay irrational for a long

Time, a football match is 90 minutes. The short duration of the

asset class lends itself very well to this analytic process and it is

risky, but that's why risk management and thoughtful process

around that is key. How did you get into it? Were you a big betting man

yourself on sport? I have a passion for markets. So I'm, I traded lots

of dimp markets over the -- different markets over a long career

and to maorks sports are, it is like another risk that you can trade and

risk manage around. So my friend actually founded the company a few

years back and spent this time building infrastructure processes

and he joined me to run and grow the business while he resources the

business side. What makes you think that your company can be a something

ses? I can't speak to what happened with the other company. I don't know

them. I don't know their history. We can be successful because we have

signal processing in the same way that any qan tative trading shop

would any other business and hedge funds succeed spectacularly and fail

smarly. I hope we are in the first bracket and not the second. What

football team do you support? Personally, Arsenal. Oh well. Bad

choice! Nice to see you. Thank you.

In a moment we'll take a look through the business pages,

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Business Live on TV and online, whenever you need to know.

What other business stories has the media been

Kathleen Brooks joins us again to discuss.

So, New York Times, we have got looking at the Nafta overhaul plan?

The Trump administration unveiled a list of objectives it wants to get

from the Nafta deal. What is worrying for us in the UK is that I

think the thoughts about the objectives is they are quite

protectionist. It is like the president really likes his barriers.

He is really sending a clear signal that the US isn't going to run

massive deficits. You are going to have to take our stuff and we will

take less of your stuff. What is interesting, yes, OK the US has got

a deficit with Mexico. But they have a surplus with Canada. Exactly. He

does well out of it with Canada, but not as well as he would like to with

Mexico? Well, this isn't just about Nafta, he is using that as a

template for the rest of the world, probably as a direct link to China.

It is very interesting at this stage to see how the US are negotiating

the new trade deals because we want a trade deal with the US so it won't

be a walk in the park and it doesn't necessarily mean that the US will

take all of our exports, but this Nafta deal is a template for

something broader. It is sending a clear message to the rest of the

world, the US isn't going to be taking in products anymore. He is

renegotiating and then etc' not. This is the Trump administration.

The story in The Daily Telegraph in the UK. About to plans to pull the

plug on adverts that per pet wet genderster owe types. A woman in a

bikini and it was deemed to be sexist. How do you judge what is

sexist? It is a complicated story. They don't want to propel the gender

stereotypes, women cleaning up after their families or men being

engineers, that type of thing. I guess, you could argue are they

trying to change the world or late to the game? It is reflecting more

of the real thing. If a man cleans table after breakfast, no one thinks

anything of it. There is more splitting equally between household

tasks and more women are going into traditional male roles. This is a

reflection of reality as well as a need to stop. I was reading an

article and it was a future scholar and a ghirl a butterfly dress and it

was, "Qur future starts here." They withdrew it. A lot of adverts have

been withdrawn because of that. These companies would be wise to

take heed of this article because it could save them a lot of money in

advertising down the road. It goes too show how important advertising

is to our lives. It it is that's a long time coming, I think. Netflix

is the top story. We were asking our viewers whether they watch streaming

on demand or traditional telly. Loads of responses. Luke says, "I

tend to watch TV as it is broadcast live. I use catch-up when I need

to." Simon says, "I watch almost exclusively streamed TV. ." Mark

says, "Either really. Generally recorded. A bit of on demand maybe.

" Lots and lots of tweets. Netflix have achieved the ultimate accolade,

they have become a verb, Netflix and chill. That's what I'm going to do

after this programme. Other subscribers are available. Kathleen,

thank you very much for going through the stories with us. Thank

you for the tweets. More business throughout the day. We will be back

tomorrow. See you then. Bye-bye. Hello there. Good morning, we have

got another warm and sunny day across many parts of the United

Kingdom. But as the warmth starts to build up today there is the risk

later on of