25/08/2017 BBC Business Live


25/08/2017

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This is Business Live from BBC News with Ben Bland and Jamie Robertson.

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The de facto boss of the South Korean giant faces five

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years in jail for crimes ranging from bribery to perjury.

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Live from London, that's our top story on Friday the 25th of August.

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As a court in South Korea finds Samsung heir Jay Y Lee

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guilty of paying bribes, we ask what it means

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Plus, the flying kangaroo bounces ahead of its rivals.

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Qantas has posted blockbuster results today, despite

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This is how the European markets look at the start of the trading

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day, investors around the world will look to the meeting of the world's

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Central bank happening in Wyoming. Slowing demand for the latest

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smartphones. Our own technological Guru Rory Cellan-Jones will be with

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us. It's announced self driving lorries will be tested on UK roads,

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so we ask if you would be happy driving next to a 44 tonne

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driverless juggernaut. Use the hashtag to get in touch.

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Some tweets coming in, one viewer says it's terrifying but exciting,

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the thought of driving next to a driverless truck.

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A court in South Korea has found the heir to the Samsung

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empire guilty of bribery, embezzlement and perjury.

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Jay Y Lee, the de facto head of the $300 billion

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business empire - and grandson of the founder -

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has been sentenced to five years in jail.

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It started with this - $36 million donated by Samsung

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to organisations linked to former South Korean president

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She was removed from office and is also facing corruption charges.

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Back in 2015 the Samsung conglomerate was undergoing

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restructuring, with a controversial merger of two of its businesses.

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Prosecutors argued the aim was to boost Mr Lee's personal

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power over the company, which he's been running since his

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The deal needed shareholder backing from the national pension fund,

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which is run by the South Korean Government.

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Prosecutors argued the donations were bribes to win

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The affair has once again raised concerns

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about South Korea's business culture - and the huge family-owned

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They've long been seen as too cosily linked to government -

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and not sufficiently transparent in their dealings.

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To give you an idea - sales by Samsung companies account

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for around a fifth of South Korea's entire economy.

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Our business reporter Yogita Limaye is outside the courthouse in seoul

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All these pieces linked together by the prosecutors and the judge

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believed there was a proper link between the payment of this money

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right the way through to basically corruption at government level?

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That's right. What the court has said is that this money was paid to

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get President Park, the former president of South Korea's support

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for the merger of the two Samsung companies to pave the way for Mr Lee

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to eventually become boss of the firm. The court found him guilty

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also of embezzlement, perjury and hiding assets over seas. The

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five-year sentence is significant. This is not the first time the boss

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of a big conglomerate has been found guilty or convicted, but in the past

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the sentences have been suspended or they have presidential pardons. Mr

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Lee's lawyers have already said they will appeal, but if he does end up

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spending a significant amount of time in jail, that will be a

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departure from what we have seen here in the past. The new president

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who won elections after the former president was impeached over this

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entire corruption scandal, the new president has said there will be no

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more presidential pardons and they want big conglomerate 's ear to

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clean up. If we see Mr Lee Knauss is now spending a large amount of time

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in jail, it gives a message for other businesses to clean themselves

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up. How significant is this for South Korean business culture?

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Firstly, think about what the Samsung group means for this

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country. It would be hard to find a person in the country who has not

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used a Samsung product or service. They are not just smartphone makers

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in the country, they are into construction, shipbuilding,

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insurance. There are Samsung hospitals and universities and even

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a Samsung amusement park. They account for a fifth of the economy

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here. Speaking to people about what they think about the trial, I have

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seen a distinction between what the younger people think and older

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people. Younger people are anti-corruption and want to see

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justice done, whoever it is. A lot of older people remember Samsung and

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big conglomerate seer as being the companies that pulled the country

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out of poverty after the Korean War in the 1950s and into a good

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economic place. That's way they say there should not be a severe

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sentence. Outside the court we have seen protests both ways, people

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protesting against corruption, and also people who are pro the former

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president and therefore pro-Samsung. A bit of breaking news. The British

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Foreign Minister Boris Johnson has told the BBC that he thinks some of

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the sums for Brexit seem to be very high indeed. In his words, he says

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we should not pay a penny more or a penny less than we think our legal

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obligations amount to in the Brexit built talks. That was the British

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Foreign Secretary on his thoughts on the British exit will. The

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government will be publishing its position papers as it entered the

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next stage of negotiations. Let's take a look at some

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of the other stories Music streaming service Spotify has

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signed a new licensing deal with Warner Music Group -

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paving the way for After deals with Sony and Universal,

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Warner was the last of the three big record labels to agree to renewed

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terms to make its catalogue available to Spotify's

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140 million users. Investors have been selling off

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shares of supermarkets in the US after Amazon said it

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would complete its takeover The e-commerce giant plans

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to sell Whole Foods brand products on its website,

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integrate its systems to offer Prime members discounts and provide Amazon

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pick-up spots at Whole Foods stores. Walmart, Target and Costco

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all saw their shares fall. Small convoys of partially

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driverless lorries will be tried out on major British roads by the end

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of next year, the government A contract has been awarded

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to the Transport Research Laboratory to carry out the tests

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of vehicle "platoons". Up to three lorries will travel

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in formation, with acceleration and braking controlled

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by the lead vehicle. We have been asking you for your

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thoughts about that. Steve has said he prefers the idea of driverless

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lorries than me sometimes swerving human version. Let us know if you

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agree with Steve or if you take the opposite view. They call it elephant

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racing when the two trucks are racing each other. As you not heard

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that expression? Elephant racing up the motorway.

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Australian airline Qantas has posted its second best

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annual profit ever - despite fierce competition from its rivals.

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Boss Alan Joyce is calling it a vindication of his three

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year turnaround plan - which has involved

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Christine Hart is in Singapore for us. Three years of pain for some,

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but apparently it has paid off. It's paid off in a very spectacular way.

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Pre-tax profits at just over 1.1 billion, the second highest profit

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the airline has seen in its entire 97 year history. That's saying quite

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a bit. They also on Jet Star. Qantas credits those result to effective

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cost-cutting measures and a very robust domestic travel market. Its

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loyalty business has seen very strong growth. Going forward,

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improving the customer experience, we talk about Wi-Fi, better Wi-Fi,

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lounges and services, all those offerings will be more important in

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its strategy. It will also expand offerings for trips. It will have

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Perth to London direct next year. It will also be working on Sydney to

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London by 2022. For now, Alan Joyce has said the turnaround is complete

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and that's what we have to go on. Thank you, Christine. Let's take a

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look at how the markets are doing. Asian stocks advanced on Friday.

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Once again shrugging off a sluggish day on Wall Street. Tokyo stocks

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rising, as Tokyo and Honda chalked up games with investors focusing on

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the key meeting of the world's top central bankers gathering in

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Wyoming. We can flip the boards to show you the European markets.

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That's how they start the trading day, all in positive territory. We

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can take a look ahead to what we might expect from the Wyoming

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meeting in Jackson Hole. And Michelle Fleury has

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the details about what's ahead Investors' attention this

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Friday will be on a small resort town in Wyoming -

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not for the fly fishing, but for the annual gathering

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of central bankers from around US Federal Reserve chair

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Janet Yellen speaks in the morning. Mario Draghi, the head

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of the European Central Bank, In the past, this meeting has been

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used to make big announcements - not this time, according

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to many market watchers. Well, because even though the US

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and Europe are stepping back from the stimulus measures

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introduced after the financial crisis, Ms Yellen and Mr Draghi have

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good reasons to keep their cards With Janet Yellen's future

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at the Federal Reserve uncertain, few expect her to make

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any ground-breaking statements. And even though Mario Draghi's

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speech is seen as perhaps more significant this time,

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he may choose to play it safe. The markets got excited

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after a recent speech he gave at another central bank conference

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in Portugal, and he was forced On the economic front,

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watch out for the latest durable goods orders,

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that's due to be released Joining us is Nandini Ramakrishnan,

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global market strategist at Good to see you as always. Plenty to

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talk about. All eyes on the world's Central bankers and whether we will

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get hints from any of them about balance sheets tapering and moves on

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interest rates. The big ones to watch our Janet Yellen and Mario

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Draghi. Both central banks doing a lot with their policy this year.

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Janet Yellen of the Federal reserve, will they reduce the amount of

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assets they have lost tonight all the bonds they have been buying in

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the last few years, all stuck in a vault somewhere. That's how I like

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to think of it. It's been ten years since the crisis, starting to reduce

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that will have an effect on the market, specifically longer term

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government bonds in the US. They suggested that they would do it so

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slowly and other such a long period of time, some of the bonds will

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mature and disappear anyway so we will not even notice. That's a bit

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of an overstatement and I think we will notice in the market. We will

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see yields and interest rates over the longer ten or 30 year bonds will

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go up because there is less demand from the big buyer, the Federal

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reserve, buying them up over the last ten years. All the idea of

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long-term and short-term interest rates starting to rise over the next

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couple of years. Ticking up slowly. Different dynamics will be reflected

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in the yield curve and it will move differently across the world. On the

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mind of Mario Draghi as president of the European Central Bank, if he

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starts to raise interest rates for the Eurozone, we could see the euro

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strengthened and that could be a problem for the European exporters.

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For the ECB, compare to the US Fed, they are behind. They are not

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reducing the amount of assets, they are thinking about reducing the

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amount day at every month. The euro has been one of the strongest

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performing currencies over the course of the year and it could

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affect big exporting nations like Germany who have a lot of revenues

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coming from abroad. Watching that currency will be very important.

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Stick around, we will talk to you about the papers later in the

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programme. Still to come, this

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week's digital takeaway. Technology correspondent

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Rory Cellan-Jones will chart a path through all the big tech stories

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of the week, including the news that Estonia is looking

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at launching its own You're with Business

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Live from BBC News. Now, big brands influence

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what we buy through clever advertising on billboards,

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TV and social media. But in an increasingly

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crowded world, how are they going to connect

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with consumers in the future? Let's talk more with our business

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correspondent Ben Thompson. He's at a 2,000 square feet

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showroom called The Home Where is it? Here is by the fridge

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at the back! Here is getting a beer! Increasingly backed fridge this

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morning, as well as the media market, in which all of this works.

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We are at the house of the future, and if you think it is dark, this is

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all wired up, so let me try this. Kitchen lights on. And there we go,

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the lights come on. So this is just one example of a wired home, and all

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of the stuff in this place is pretty hi-tech, so your TV can speak to

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your fridge, it knows what is in the fridge, because it has got a camera,

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and it will know from your online deliveries when it is due to go off.

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It will suggest recipes, it will even turn on the oven to tell you

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when to put it in, and when to take it out, crucially. Just some of the

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examples of things you can do in a wired home. Simon, good morning, you

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are a futurist here, you have been showing me all sorts of things, this

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looks a little bit more day to day, rather than some of the high tech

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stuff. Shall we by a chair in augmented reality? We will select

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this wicker chair, and with millimetre accuracy, it is now going

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to PA on the floor, OK? I can adjust the position, rotated, then I take a

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photo, click, share that photograph on my social networks and ask my

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friends whether I should buy it or not. Really interesting stuff, the

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technology is an increasingly big part of our lives, and it is

:17:09.:17:13.

changing the way that brands sell to us. Traditionally they would have

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used billboards, radio and television, but now they know we

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bought a shirt last week and you will need a pair of trousers to go

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with it this week. More from me later.

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Just a quick look at the Business Live page. Business is not able to

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invest in staff because of increased costs.

:17:37.:17:39.

You're watching Business Live, our top story:

:17:40.:17:43.

A court in South Korea has sentenced the de facto boss of the technology

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giant Samsung to five years in prison after finding him guilty

:17:47.:17:49.

of paying bribes in hopes of obtaining government favours.

:17:50.:17:57.

A quick look at how the markets are faring, these are the numbers, a

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little bit mixed. The pound against the dollar, that is falling a little

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bit, just below 1.28. We are slightly on the way down, but also

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down against a strong euro, which is not on the screen at the moment.

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It's been yet another busy week in the technology world.

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Samsung is once again making headlines with the jailing

:18:27.:18:28.

Britain's largest retailer of smartphones,

:18:29.:18:33.

retailer Dixons Carphone, is blaming consumers' reluctance

:18:34.:18:35.

to upgrade for an unexpected profit warning.

:18:36.:18:39.

Meanwhile, the country Estonia wants to launch its own government-backed

:18:40.:18:42.

Joining us now is our technology correspondent Rory Cellan-Jones.

:18:43.:18:52.

Rory, good to see you, so which one shall we start with, Samsung? The

:18:53.:19:02.

company seems to be doing OK despite all of this? I was writing this week

:19:03.:19:09.

about the launch of its new giant phone, this time last year we were

:19:10.:19:15.

reporting on the Galaxy note 7 exploding, a terrible product

:19:16.:19:17.

recall, complete disaster, then we had the news of the bass being

:19:18.:19:21.

arrested, we have seen what happened at there, so you would have thought

:19:22.:19:27.

a terrible year. But no such story, really, it has gone from strength to

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strength, record profits, it made more profits in the quarter than

:19:32.:19:37.

Apple recently, which is quite some achievement. Its share prices

:19:38.:19:40.

hitting record highs. It is showing a steely determination to just carry

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on. It could have abandoned this Note phone altogether, it abandoned

:19:47.:19:53.

the Note 7, it could have retired the brand, but they have loyal

:19:54.:19:56.

customers who have come back, and all the signs are that this new

:19:57.:20:02.

phone will be a success. So yet again, it is Samsung versus Apple,

:20:03.:20:07.

we are back to where we were, two very strong companies battling it

:20:08.:20:12.

out. I'm fascinated about the Estonian crypto currency, I know

:20:13.:20:16.

this is terribly prejudice, but it doesn't fill me with confidence, the

:20:17.:20:22.

idea of an Estonian crypto currency. Estonia is an extraordinary little

:20:23.:20:25.

nation that has prided itself on being very advanced in all things

:20:26.:20:30.

digital, it runs its governor and very largely online, all sorts of

:20:31.:20:33.

services online, and it has got this initiative called e-residency. I am

:20:34.:20:41.

an Estonian e-resident. I have got the right to start a business

:20:42.:20:46.

remotely in Estonia. Did it cost anything? It cost 100 euros. It

:20:47.:20:51.

gives you the right to start a business remotely in Estonia, and

:20:52.:20:56.

they see it as a way of a small nation, little over a million

:20:57.:21:01.

residents, it gives it great power, they think, to advance their digital

:21:02.:21:12.

cause. And they put out a blog saying that the growth of

:21:13.:21:15.

e-residence is higher than their birth rate, and they are thinking of

:21:16.:21:19.

launching their own crypto currency. They float lots of ideas, but this

:21:20.:21:23.

is very interesting, it would be called Estcoin, it would be

:21:24.:21:29.

available to e-residence as a way of trading with all the security that a

:21:30.:21:32.

crypto currency theoretically offers. -- e-residents. But surely

:21:33.:21:40.

there is a contradiction, because crypto currencies do not have

:21:41.:21:45.

borders, no central bank, nothing to do with nations. Exactly, I have

:21:46.:21:51.

been interviewing the guy behind the scheme, and he is admitting that

:21:52.:21:56.

coming says it is time for somebody to float this idea, because central

:21:57.:22:00.

banks are going to have to get their head around the fact that people

:22:01.:22:03.

will be using these currencies, they may be using them to avoid tax, so

:22:04.:22:07.

better that we start to bring the idea within the realm of government.

:22:08.:22:13.

And another story that was really interesting is phone upgrades,

:22:14.:22:17.

people becoming a little bit more frugal, holding off upgrading just

:22:18.:22:22.

for a while, causing problems. Yeah, we heard this from Dixons Carphone

:22:23.:22:26.

this week, big profits warning, based solely on the fact that it has

:22:27.:22:32.

got a theory, it thinks people are holding off renewing their phones

:22:33.:22:36.

after two and a half years rather than two, and that six months has

:22:37.:22:40.

put a huge hole in their prospective profits. And I have got a theory as

:22:41.:22:45.

to why this is happening - two fantastic modern smartphones, they

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look just about identical, you probably couldn't tell which is

:22:49.:22:54.

which, and they are all incredibly capable, all incredibly expensive,

:22:55.:23:01.

pushing $1000, ?900 these days, and that is looking very expensive to

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people. And people are beginning to think, my current phone is great,

:23:06.:23:09.

what is this new one going to give me that is so different? They are

:23:10.:23:14.

altering off the upgrade decision. Thanks very much, really good to get

:23:15.:23:19.

your thoughts on all of that. You can come again! The phones didn't

:23:20.:23:25.

ring either, so even more welcome expect

:23:26.:23:25.

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

:23:26.:23:28.

but first here's a quick reminder of how to get in touch with us.

:23:29.:23:31.

The Business Live page is where you can stay ahead

:23:32.:23:33.

with all the breaking businesses of the day keep up to date

:23:34.:23:36.

with the latest details with insight and analysis from the BBC's team

:23:37.:23:39.

get involved on our web page, and on Twitter,

:23:40.:23:44.

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

:23:45.:23:57.

Nandini Ramakrishnan is joining us again.

:23:58.:24:01.

We are going to be looking at the newspapers, one particular story I

:24:02.:24:08.

want to concentrate on any financial times, oil prices. It is quite

:24:09.:24:18.

confusing, all influenced by hurricane. Usually when these risks

:24:19.:24:23.

come to oil producing countries, the price spikes, because we do not know

:24:24.:24:28.

if we will get the ground, but what is tricky about this one is that 45%

:24:29.:24:34.

of US refineries are in the area that is potentially going to be hit,

:24:35.:24:37.

and they are different from producers. When you have not got the

:24:38.:24:41.

refinery functioning, the oil producers cannot sell their oil to

:24:42.:24:46.

get refined, and that is causing the price to go down, rather than up.

:24:47.:24:52.

But it does change, I have seen that headline, but also this headline

:24:53.:24:56.

from the Financial Times saying that prices are going to rise. At the

:24:57.:25:00.

moment, the other thing about Hurricane Harvey is that they did

:25:01.:25:03.

not get warned about it until quite late in the day. More importantly,

:25:04.:25:08.

that is tricky, but for market it is hard to price this, the refinery

:25:09.:25:13.

versus produce a fact, as well as the lack of warning. It highlights

:25:14.:25:17.

the changing influence that groups like Opec have, but sometimes it is

:25:18.:25:29.

far? Events. Yes, far beyond their control, and when you think how

:25:30.:25:33.

important oil prices are, affecting inflation and emerging markets, a

:25:34.:25:37.

lot can be paid off a global move like this.

:25:38.:25:43.

There will be more business news throughout the day on

:25:44.:25:46.

the BBC Live web page and on World Business Report.

:25:47.:25:53.

From us, have a wonderful weekend, we'll see you again soon, bye-bye.

:25:54.:25:58.

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