27/10/2017 BBC Business Live

This is Business Live from BBC

News with Rachel Horne

and Ben Bland.

Online retailer Amazon leads

a barrage of tech earnings.

Its sales were up 34%

as the retailing giant

continues its global growth.

Live from London, that's our top

story on Friday the 27th of October.

Google's parent company Alphabet

reported a 24% rise in sales.

We'll find out what's

behind the upward trend.

And it's bye bye bye

to floor trading on the Hong

Kong Stock Exchange.

After more than 30 years,

it's going fully electronic.

The markets in Europe are open. I

should be able to tell you where

they are. The ibex is slightly down.

I'm here, I'm waiting! There you

are.

It's been a big week

for central banks -

we'll round up the week's events

with our business editor

Simon Jack.

Spending on Halloween is expected

to hit a record $9.1bn

in the US this year.

Today we want to know

is it scary how much

people are spending?

Just use the hashtag #BBCBizLive.

Hello and welcome to Business Live.

Thursday was a huge day

for technology company results.

Four of the big global tech giants

reported their latest earnings.

Alphabet - Google's parent company,

Microsoft and Twitter

all posted their key numbers.

But let's start with

a look at Amazon.

The retailer reported revenues

of almost $44 billion

in the three months

between July and September.

That's a jump of 34% over

the same period last year.

But profits were virtually

unchanged since last year.

That's because this is often

the quarter when Amazon chooses

to pile a bunch of money

into its own projects -

like tech gadgets, streaming

video and warehouses.

The company has operated on this

model for years and it seems

to have served it well.

In fact, analysts now estimate that

Amazon will command about 43.5%

of all commercial online sales this

year - that's nearly half

of all the stuff sold online.

Quite a staggering figure.

James Collier, co-founder

of the data monetisation

firm Prism, is here.

Rachel was talking about the

absolute dominance that Amazon has

online. What is interesting is the

move into bricks and mortar retail

with the acquisition of Whole foods.

Given they have been doing the

online thing so well do you think it

was a sensible decision?

Amazon have

been diverse in other areas, media,

video, bricks and mortar is a

natural transition as they bring

off-line data into the online world.

Alphabets are also doing very, very

well, the parent company of Google.

What are the reasons for that? Where

is the growth coming from?

Lodged

its coming from an increase in the

volume of clicks. Advertising is

really the big story for Alphabet,

but they have seen growth in other

areas, other bets are starting to

come through. Google cloud services

have seen an increase and it

represents 5% of market share.

Let's

talk about Microsoft, often seen as

the grandfather of tech, but they

have reinvented themselves under the

chief Executive and it is all about

the cloud?

They set themselves a

hard goal of $20 billion from cloud

services. They achieved that this

quarter and now they have

transitioned. If you look five years

ago it was 5% of the business, now

it is 20%. That includes services

from 360, the cat marked office

suite, all the way through to the

enterprise package.

The other thing

we keep hearing about is how much

they are interested and investing in

artificial intelligence and the

internet of things, home connected

devices.

Right, again, it is all

about information. The internet of

things is about your fridge being

connected to the internet, it is

about your car and self driving

things, AI is driving a lot of that

and it helps businesses make better

decisions. For companies like

Microsoft and Amazon, where they

have huge infrastructure to support

AI, it is a massive area of

interest. Self driving cars, moon

shots, it is a big topic for them.

Going back to Alphabet and Google,

the increasing clicks is partly what

has given them the increased

revenue, but what countries are

willing to pay for those clicks has

declined significantly. What can

they do to combat that?

They are

doing deals, so there is a plan for

Siri to be the surge of choice. But

it cost them a huge amount of money.

They have something called TAC,

traffic acquisition costs, and that

has gone up significantly. The cost

per click has gone down by 20%. It

is a transition to mobile, so it is

where they start to compete with

services like Amazon, and how they

bring in things like Google Home,

which they are investing in

massively which is going to

transition that back-up.

Let's take a look at some of

the other stories making the news.

Royal Bank of Scotland has settled

a US criminal investigation that

accused its traders of lying

to clients over investments

between 2008 and 2013.

The US Department of Justice said

RBS will pay $44 million under

the non-prosecution agreement.

RBS said it self-reported the issue

to the US authorities.

Toymaker Mattel is suspending

its quarterly dividend

after being hit by the bankruptcy

of its largest retailer Toys R Us.

Mattel shares fell after the company

announced losses of over

$600 million in its latest results.

The California-based company

was also hurt by weak demand

for products like Barbie,

Hot Wheels and Thomas & Friends.

Strong pickup truck and SUV

sales in the US boosted

Ford's bottom line.

The carmaker saw profits jump 60%

compared to the same period last

year when it faced a recall.

However, it still faces

an uphill battle in China,

where sales have been

have been lower.

More revelations about

Japanese companies.

Nissan reportedly carrying out

faulty checks on vehicles sold

in Japan since 1979.

And reports Subaru carried out

illegal inspections on its vehicles.

Leisha Santorelli is in Singapore.

What more can you tell us about the

latest reports about Subaru?

Well,

Rachel, shares in Subaru took a

tumble on these reports that an

certified technicians were allowed

to conduct a vital vehicle

inspections at one of the factories

north of Tokyo. If confirmed, Subaru

might have to conduct a major

recall. One report put it at about

300,000 cars. Subaru is scheduled to

hold a press conference at 8am GMT.

If the situation sounds familiar, it

is. Subaru is facing the same

problem that Nissan admitted to.

Bloomberg is reporting that Nissan's

certification scandal might have

stretched back to 1979, nearly 40

years. It was actually because of

Nissan's for the inspection process

that Japan's transport Ministry

ordered all domestic car-makers to

conduct internal investigations.

That is why we are seeing these

revelations and reports coming out

about Subaru facing the same

problem.

OK, thank you for the

update. Let's see how the markets

have been going on. We have the

Australian all ordinaries up.

A court has ruled that the Deputy PM

Barnaby Joyce and four other

politicians were wrongly elected

because they held dual citizenship.

Spinnaker that has stripped the

government of the one seat majority.

In Hong Kong, you can see that

stocks were up overnight, inspired

by strength and Wall Street. You can

see the Dow Jones up after strong

earnings figures.

And what about Europe -

yesterday the European Central Bank

said they will extend their stimulus

programme although they will

start the cut the levels of bond

buying from January.

And we've got the Spanish stock

exchange up - the Ibex -

because today the Spanish Senate may

approve the take-over of Catalonia's

institutions and police,

Barcelona could respond

by declaring independence.

Let's go to Wall Street.

On Friday we will see just how

fast the US economy grew

in the last three months.

In the previous quarter,

between April and June,

the US economy grew 3.1%.

For this quarter, however,

many are expecting to see a bit

of a slowdown and estimate that

gross domestic product, or GDP,

will be coming in at about 2.5%.

Two oil companies will be

reporting earnings on Friday.

Exxon Mobile, the world's largest

publicly traded oil producer,

is expected to show a rise

in profit, while cost-cutting

is likely to help Chevron also

report a jump in profit

for the quarter.

Finally, the pharmaceutical giant

Merck will be reporting earnings.

Investors will be on the lookout

for information on the sales

of its cancer drug Keytruda.

Updates on a cyber security attack

that Merck said last quarter

would likely impact its profits

will also be of interest.

Joining us is James Bevan,

Chief Investment Officer at CCLA

Investment Management

The last time we had growth figures,

pretty robust, 3.1%. What do we

think this time?

Definitely a slow

number, the Fed's own numbers

suggest 2.7. There are some people

expecting a higher number on the

back of hurricane interest, leading

to faster car sales. Better numbers

coming out of China, international

dimension is as well.

At the top of

the programme we were talking about

the tech titans.

Fascinating stuff!

How dependent is Wall Street on the

big tech stocks?

Very dependent.

They have been the principal driver

of market progress to date. It is

not surprising because the numbers

are sparkling and people are really

betting on the long-term future.

There are companies like Twitter who

are yet to report a profit.

Just

looking at President Trump and his

plans for tax reforms in the US,

what impact could it have on tech

companies? In his election campaign

we heard a lot about him saying he

wanted to reduce tax for the big

tech company is to bring profits

back to the US. Do you think that

could still happen?

Absolutely.

There is a bi- location of issues

for Trump on tech companies. He

would dearly love to see the money

off shored backs The Backed the

United States, providing the push

for growth. The second issue is at

what point does he get bored of

these companies really driving the

shape of the US economy? Think he

has real reservations that Amazon,

example, in purchasing Wholefoods

was more about getting market share

than driving profit.

I suppose that

is the other concern, traders and

investors will lose patience with

the promised tax reforms. They had

been promised them for a long time.

They cleared a hurdle in the last

day or so. The hope must be that

there isn't a market correction

before the tax changes come in?

I

think a correction would be fine. A

descent into a bear market would be

a different proposition and we are a

long way from that. We are a long

way from having a US recession. As

perverse as it might seem, if we got

a rapid growth, followed by a

clamp-down by the Federal Reserve,

if Professor Taylor were to become

chairman, the market would be

uncomfortable.

We will delve into

that with Simon Jeff later in the

programme. Thanks for coming in.

Lots of speculation over who'll be

the next Fed Chair -

and we'll get some more

from our business editor Simon Jack

as he wraps up the week's

biggest economic stories.

You're with Business

Live from BBC News.

IAG, the parent company

of British Airways, has

reported passenger and cargo

revenue growth today.

Passenger revenue rose by 1.6%

to £5.15 billion between July

and September while cargo grew

by 7.9% to £213 million.

Our Economics Correspondent,

Andrew Walker, joins us now

from our Business Newsroom.

How have they managed to achieve

these figures?

Well, it is a

striking performance. In one sense

they managed quite an increase in

profits for the first nine months of

the year of 11%. That goes up to 1.9

billion euros, and as you indicated

a significant part of that is down

to what has been going on on the

revenue side. Passenger numbers were

up. They took an extra 2.5 million

people in that period, just over 80

million passengers all told. There

was actually a slight fall in the

weight of cargo that they took. They

seem to have taken it further and

they actually increased revenue from

that as well. The company says that

there were particularly strong

performances on the passenger side

in East Asia, Latin America,

especially Latin America, and the

Caribbean, although they say that

the biggest markets, Europe and

North America, also did well with

British Airways in particular making

good sales of some of its premium

fares, business class and so fourth.

What about the cost?

The movements

have been in the right direction

from the company perspective. Total

costs down by 1.8%. Fuel in

particular is down by 8.4%. This is

reflecting what is going on in

markets. There is also hedging

activity going on which does tend to

dampen the impact that market moves

have on the cost that airlines

faced. But overall, encouraging

performance and cost side as well.

You know when you look at hotel

rooms online, you get that message

saying that six other people are

trying to book a? The authorities

are looking into that to see if

you're getting the best deal or not.

They are worried about the clarity

and accuracy of information given to

consumers. If you think you're not

getting the best deal, you may not

be, and you can read more on that on

our website.

You're watching Business Live.

Our top story: Online

retailer Amazon leads

a barrage of tech earnings.

It's sales were up 34%

in July to September,

while Google's parent company

Alphabet also reported bumper

sales for the period.

Now, it's been a big

week for central banks -

with speculation about who will be

the next head of the Fed.

While in Europe, the ECB indicated

it'll start slowing down key

bond-buying stimulus measures

And there's been movement

on Trump's tax policy.

Simon Jack is our business

editor and joins us now.

Thanks for coming in.

Good morning.

Let's start with the new head of the

Federal Reserve - who do we think it

will be?

Janet Yellen, the

incumbent, her term expires in

February. She has been comfortable

with unconventional monetary policy,

quantitative easing. The big task

for the next person will be

reversing some of that. Donald Trump

was critical of her in his election

campaign. Having said that, last

week, he said she was to rhetoric.

He said the stock market was going

fine and warmed up to her. The two

front runners are John Taylor, an

academic from Stanford University. A

hawk, meaning he likes to put

Upminster -- interest rates faster

than other people -- put up interest

rates. The other candidate has

talked about easing the stress tests

that have been put on the banks.

That chimes with Donald Trump.

Whoever gets the job, it will be

interesting because they have two

reverse the biggest monetary policy

experiment of all time, when the

Federal Reserve bot $4.5 trillion

worth of assets. -- bought $4.5

trillion worth of assets.

I lose

track of how long we have been

talking about the promised tax

reforms. Finally, some progress?

They seem to be inching towards it,

passing a bill last week which got

it to the next stage. Everyone

agrees in the US that corporate tax

is too high, 35% in the US, whereas

it is only 20% in the UK. The big

debate is about how you pay for it.

A lot of people are saying, we could

take away some pension relief,

reduce the tax thresholds, so you

would raise some money from them.

Some people worry that that is a tax

on the middle classes, not what

Donald Trump promise. The question

everyone agrees on is that it should

happen, it is how it should be paid

for. The Ronald Reagan economics

that Donald Trump is talking about,

the bet is that economy grows

faster, so the tax take goes up,

even though you reduce the rate.

Talking about the corporate tax

rate, we were discussing it with

James Bevan in relation to the big

tech companies who have had results

in the last 24 hours. Do you think

they would bring their money home if

the rate was reduced?

It is more

about the money that is already

sloshing over there. Apple has $250

million sloshing around in various

places. The boss of Apple has said

he would be happy to bring it back.

There are a lot of people who think

that companies will buy back their

own shares and reduce the number of

slices of the pie so that each

shareholder gets a bit richer.

People say that is not real

investment in the economy. Jamie

Diamond, the boss of JP Morgan, says

even if they do use it for share

buy-backs, so what? It's all money

and money coming back to the US. I

don't think we are there yet, but

that flood of cash coming back to

the US would have a big effect on

the dollar. It would be an

interesting thing to witness. You

would probably see the dollar go up,

reducing inflation in the US, which

might be a problem for the Federal

Reserve. When it comes to tax

reform, it gets everywhere.

And ECB

talking about bond buying.

They are

reducing it. Downsizing is the word

emerging. Every time you take away

stimulus, people get a bit sweaty

about it, so Mario druggie yesterday

managed to say he was going to

reduce bond buying the 30 billion a

month until September 20 18th, but

decided to leave it open ended.

There was no one facing the threat.

He said it could be done for longer

and that interest rates won't be

increased until the bond buying is

over. He's taking it down a bit but

leaving it open ended in order to

withdraw stimulus, some of it,

without giving people the shakes.

But the euro takes a hit as a

result?

Yes, because we were gearing

ourselves up for a bit more of a

tightening, saying this was when it

was going to be over. When you make

interest rates go up a bit, that

makes deposits in those currencies

more valuable. They will downsize it

but keep it open ended, and that

will loosen money policy, which

brings the currency down, so the

euro took a hit.

Simon Jack, thank

you very much.

The Hong Kong stock exchange

will close its trading floor,

after 31 years, on Friday.

In its heyday, the floor was home to

more than a thousand stockbrokers.

But the rise of electronic

and Internet trading has changed

the industry permanently.

TRANSLATION:

The world is changing.

Financial technology is developing.

We should get with the Times, even

if we don't want to go.

TRANSLATION:

I started as a broker

after finishing school. It has been

over 40 years. There used to be four

exchanges. Then they combined to

become one exchange in 1986, and we

moved into this hole. We started out

as a small, regional stock exchange,

but then Hong Kong became an

international financial centre. I

think stockbrokers working here

contributed a lot. We have gone

through countless financial crises,

and we persevered. Stockbrokers made

great contributions. This is

something we are very proud of.

And

with that, the lights fade on the

Hong Kong stock exchange floor.

James is back to look

through the papers.

Have you been in the Hong Kong stock

exchange itself on the trading

floor?

Twice. I went in 1994, when

it was the only way you could trade

shares. There were 1000 people and

it was exciting. A bit like a

football match - lots of shouting

and lots of red jackets. A poster

child for the capitalist system. I

went again in 2000, and it was

nearly empty, such change in such a

short period.

Is it New York and

Frankfurt left?

If you go to New

York, you will do it as a Taurus

rather than because of a genuine

interest in trading. It is a

marketing tool for the stock

exchange rather than a principal

driver.

Do you think that losing the

trading floor and that atmosphere is

progress?

It is absolute reality. As

soon as light becomes digital,

everything will be on the screen.

Did you enjoy the trading floor?

Sweaty moments?

That was all too

frenetic, lots of shouting. It was a

bit like going to an auction.

It was

like you transported us there! I

also want to talk about Halloween.

It is creeping up upon us, and the

latest figures suggest that the US

will spend $9 billion and more on

Halloween this year. We have been

asking for your comments on this.

Does that thought scare you? Luca

Thorne says: It is frightening but

it shows how popular Halloween is in

America. Kyle says: Dentists must be

thrilled, all those sweets being

eaten. Are you spending any money on

Halloween?

Absolutely not.

James?

There are people buying things they

don't really want with money they

haven't really got, very often to

impress people they don't really

like. And it's a bad cocktail.

That's depressing!

What are you

spending on Halloween?

My children

want to dress up as zombies, which

means getting old clothes and

covering them in ketchup.

In the

States, 16% of households spend

money on dressing up their dogs.

That's true, pet Halloween.

The most

popular ones are hotdogs, for pets.

Hotdogs?

I thought you meant

dressing up hotdogs.

That's it from Business Live today.

There will be more business news

throughout the day on the BBC Live

webpage and on World Business

Report.