06/02/2018 BBC Business Live

This is Business Live from BBC News

with Ben Thompson and Sally Bundock.

Correction or collapse?

Global markets turn red

as the Dow Jones suffers its biggest

one-day fall in history.

Live from London, that's our top

story on Tuesday 6th February.

The sell-off began in the US,

caused, unusually,

by positive economic news,

jobs and wages rising

quicker than expected.

And that could prompt

another surprise rate rise

for the world's largest economy.

We'll explain what it all means.

Also in the programme:

Profits at oil giant BP

soar to $6.2 billion,

but can it regain its former glory

nearly eight years after

the Deepwater Horizon disaster?

And this is how markets

are trading in Europe,

down by 3% across the board -

following heavy losses

in Asia and the US.

We go beacon with the boss of a firm

cashing in on the boom in healthy

eating, but it is delivered to your

door. We are asking whether the

door. We are asking whether the

market volatility is a long overdue

correction or a market panic. Let us

know your thoughts. Where do you put

your money?

A warm welcome to the programme, a

lot to squeeze in today.

There seems to be no stopping

the global stock market sell-off.

Sparked in the US,

it swept through Asia

and the malaise is happening now

across European bourses.

The start of the week

saw the biggest decline

on Wall Street for six years.

So let's look at the numbers:

Moments ago, Europe is trading right

now, but this is how things went in

Japan, closing down nearly 5% lower.

At one point today in Japan, in

Tokyo, it down nearly 7%. That is

the big fall on the Dow Jones.

That's the biggest one-day fall in

terms of points in its history. The

SNP 500 also losing ground.

In a moment, we'll go live

to a trading floor in London

and our team based in Singapore

but first Yogita Limaye in New York

looks at what sparked the sell off

on Wall Street.

, S&P.

This trading floor saw its worst day

since the financial crisis.

After months of hitting record

highs, US stocks went into freefall.

The trigger - wage growth

has been faster than expected,

sparking fears that there will

be a rise in interest rates.

Certainly not what this

man would have wanted

on his first day in office.

Jerome Powell took over as the chair

of the American Central Bank,

the body that makes decisions

about interest rates.

And it was bad news

for this man, too.

President Trump has repeatedly taken

credit for the massive gains made

by financial markets

in the past year.

But addressing factory workers

in Ohio as stocks plunged,

this was one record

he chose not to speak about.

The White House has said

the president is focused

on long-term fundamentals,

which remain exceptionally strong.

And many on Wall Street say

there's no need for alarm just yet.

People are taking profits

after an historic climb,

it's very quiet in there,

very orderly, no panic.

Whilst the share market is falling,

gold and the Japanese yen are on the

way up.

Michael Hewson is senior market

analyst at CMC Markets.

We are under

analyst at CMC Markets.

We are under way

analyst at CMC Markets.

We are under way and

analyst at CMC Markets.

We are under way and it

analyst at CMC Markets.

We are under way and it is

analyst at CMC Markets.

We are under way and it is not

analyst at CMC Markets.

We are under way and it is not

looking good.

Indeed, Sally. But not

as bad as it could have been. I

talked to you 45 minutes ago, and we

were looking at a significantly

lower open. We have rebound it a

little bit since then, but we still

remain below the closes yesterday.

We may get a rebound today, we could

well find that we could see further

tests on the downside.

What is the

talk in the City about how long this

may last, and when what we deem is

normality may return?

I am going out

on a limb here, but I am saying that

we could potentially have seen the

highs for the year this year. A

large part of the reason we have

sold off quickly is, a large part of

the rising US markets has been on

optimism about Mr Trump's tax

reforms, and rising inflationary

pressure and what have you. But also

fuelled by a sharp rise in margin

debt, that is where US investors

borrowed debt to buy stocks. If

interest rates go up and stock

markets sell-off, the margin debt

becomes more expensive to maintain.

We did have a self-fulfilling

prophecy interims of a sharp

sell-off. In the wider scheme of

things, the sell-off is modest

compared to where we were at the

beginning of 20 Zepeng team. If we

don't get a rebound soon, we can see

further declines in US markets,

which is what worries me the most,

the rise in margin debt particularly

in the US.

Thank you.

Looking at the European open, the

FTSE 100 is down 2.5%. Remme,

Japanese stocks, their biggest

points drop since June, 2016, ending

the session down 4.7%. Hong Kong saw

its biggest percentage drop since

August, 2015.

Let's take you to our

Asia Business Hub, where Karishma

has been tracking those numbers.

The falls were significant.

I was

talking to an analyst at earlier on,

who was saying to me that usually

use CV 's falls mirrored out here in

Asia, but at a greater value. That

is for many reasons, the same

reasons we have seen stocks go up in

the US, many Asian share markets

have benefited as well. The flow of

money into Asia over the last

10-year is, thanks to low interest

rates in the US, many investors

putting their hot money out here in

Asia, so when you see share falls in

this part of the world, like in

Japan, at one point it was close to

7% lower today, but as you

mentioned, it has recovered

slightly. They do seem to have

bigger percentage value than in the

United States. Everybody out here

that I have spoken to today has

said, the economic fundamentals in

Asia are still strong. These are

some of the best economic times we

have seen in this part of the world

in recent years. Notwithstanding the

slowdown in China, but the big

question for a lot of traders and

investors in Asian markets is how

long will this US market sell-off

continued? That is what they are

paying attention to when US markets

open later today.

Thank you for

updating us on that.

Let's get onto corporate news.

BP has announced its latest set

of results and the oil giant has

posted some impressive numbers.

The company made $6.2 billion

in profit last year,

that's a 139% increase

compared to 2016.

If you look at the underlying

conditions in the energy market, of

course, they have improved an awful

lot.

Oil soared in the second half

of 2017 and in January,

prices hit a four-year high of $70

a barrel.

With me is Paul Hickin,

the oil director at commodity

pricing group S&P Global Platts.

BP is a funny one, because it is a

firm we only talk about when the

results are out. So much happens in

between. Bring us up to date and

fill in the gaps.

Basically, for

several years now, they have been

cutting costs, tightening their

belts, and that has helped BP and

the oil industry generally with

capital discipline. They have come

out projects like Venezuela and

Vietnam, and focused on core

businesses, the North Sea and middle

east, Iraq, Kuwait, the UAE, all the

safe bets. It has paid dividends for

them.

They have had to get a lot leaner

and meaner. BP, unlike its rivals,

have paid a lot of money out for the

deepwater horizon disaster. Could

you save the results to date marked

a turning point for BP in terms of

that disaster also oil prices being

lower, where are we going?

It still

casts a shadow over BP and its

results. If you look at positive

results, net debt ratio is still

high, a stubborn problem for them.

That weighs against them, compared

to major peers. They have done good

work. Oil prices up, which has

helped, but they announced a bounce,

and they can't close the chapter on

that.

What is important is BP pay

out dividends and keep pension funds

have become it is an important part

of pension funds in the UK.

The CEO

has been very keen to balance the

capital discipline with the

investment in new projects, which is

the lifeblood for investors for an

oil company. They have had seven oil

projects come on last year, and eyes

diversifying will stop gas is a big

part of their portfolio.

Paul, thank

you. Thank you for explaining that,

it is an interesting one.

BP shares down 2% at the moment.

One firm is cashing in on the dim

food, but selling it through your

door.

The former bosses of Carillion

are due to be questioned by a joint

committee of MPs today.

The construction firm liquidised

with a reported £5 billion

of liabilities and just

£29 million left in cash -

less than a year after being signed

off as a going concern

by KPMG in Spring 2017.

Joining us now is the chair

of the Work and Pensions Committee,

the Right Honourable Frank Field MP.

Many will be watching this very,

very closely who feel these people

in front of this committee made a

lot of mistakes.

Well, they have

certainly got a lot of questions to

answer. One is, for example, were

they knowingly trading unlawfully

when they should have actually been

much more honest about how dire

their predicament was? Why were they

raising money, borrowing in fact, to

pay dividends? And why did they take

such large salaries when all these

things were possibly happening, and

we know the pension deficit was

escalating? There are some very key

questions. Then later next week, the

chair of the business committee, and

I, we are doing a joint enquiry,

looking at those people called the

auditors, you mentioned KPMG. There

are four big companies in this

country, they share the prize is out

between them. Why did they give them

such a Bill of health? When you look

over a period of time, nobody with

an A-level or O-level accountancy

standards would say there are big

questions for this company to

answer?

A lot of people will look at

something like this, people giving

evidence, explaining what happened,

what power do you have to hold them

to account?

Well, I mean, they will

appear in public, so in a sense,

they are appearing before their

friends, neighbours and the country

by television, but you are right. At

the end of the day, we produced a

report on BHS, that was Sir Philip

Green before us, Mr Philip Green

today. The government has not acted.

Again, it comes back to the big

issue, you have rightly talked about

Brexit, but we need reforms on the

home front.

Thank you for your

contribution.

You're watching Business Live.

Global markets turn red -

as the Dow Jones suffers its biggest

one-day fall in history.

We have talked about whether it is a

correction or collapse.

Take a look at that. Many of these

were down over 3% lower. We will

talk to a top market analyst in

around five minutes also to get her

analysis of why we are seeing such

declines, and whether we need to cut

our losses and run or hang in there.

It will take a tough nerve over the

next few days. A lot to get through,

let's bring you date with other

stories making headlines.

Laurent Potdevin, the boss

of athletic wear firm Lululemon,

has quit unexpectedly.

The Vancouver-based company said

Mr Potdevin had fallen short

of internal standards of conduct.

He joined Lululemon, which is best

known for its yoga-wear, in 2014.

Singapore's central bank says

there is no strong case

for banning cryptocurrencies.

The bank has been studying

the potential risks but the deputy

governor says that it is too early

to say whether virtual

currencies will succeed.

Bank of Japan Governor Haruhiko

Kuroda on Tuesday ruled out

the possibility of raising interest

rates any time soon despite his

optimism over the economic outlook.

He said the fundamentals behind

stock prices remained solid.

There is your central bank round-up.

Sammy lives a bit of central bank

action.

-- Sally loves. But now we are

talking food. We will talk about

Vigo and food. One firm is cashing

in on delivering to your door. -- we

will talk about vegan food. Last

year 542,000 British people consider

themselves vegan. The Vegan Society

says there was a 185% jump in the

number of vegan products launched in

the UK.

Writing on the back of this is the

vegan delivery firm Allplants. I am

sorry, I believe I have pronounced

the surname of the founders of this

company incorrectly.

It is a monthly

fee, you can buy once, weekly or

whenever you like. -- it is not a

monthly fee.

And the commercial!

People want to subscribe more often,

people on weekly are getting it

every day, personal trainers are

eating it every day. If you are a

health savvy moaners maybe once a

month you get your six dishes. Of

our customers say it allows you to

feel like you are cheating, you are

having something like mac and

cheese, super creamy and indulgence,

which is made of cashews, which are

in protein.

You have a pile of these

meals. They are ready to go? You can

put them in the freezer, they are

made in your...

Kitchens.

Kitchens,

my brain is not working, in London,

and you deliver them to the door.

We

wanted to make it really, really

easy for people to eat healthier.

Whoever you are, trying to eat

healthy meals that are super

delicious and really, really

convenient is tricky. That was the

main impetus. Alongside that, we

wanted to show people at eating

plants is healthier and more

sustainable but it is also something

you can do every day and it is not

about sacrifice. You can eat lasagne

with walnut mints, for example.

In

terms of the price, it is kind of

middle. I was grilling you in the

green room, it is high and frozen

ready meals that you would see in

the supermarkets, so why would I

even find out about your company

when I can get that at the

supermarket?

People are shopping

online more, that is where we are

seeing growth. We might grow into

supermarkets in the future, but for

now it is learning about customers,

creating a one-to-one relationship

where we can find out what they are

looking for. Do they want asserts as

well? It allows us to scale into

other countries. UK's first. We are

not really talking about vegans, we

are talking about the 56% of people

reducing their meat. We will go UK

first, learn what to do here, make

the best food we can and try to see

how we can do it elsewhere.

I say you have shunned the

supermarkets, getting delivered to

the door. It allows you to know a

lot about your customers. You can

find out what they want, but at the

same time it comes with hurdles, it

is the logistics of getting it to

someone's house, keeping it frozen,

what if they are not in?

It is not

easy for us, we try to make it as

easy as possible for the customer.

The whole recent eat more plants is

about living a healthier, more

sustainable life, it is challenging

to get frozen sustainably to your

door.

How do you deliver? Petrol or

diesel vehicles?

All our vehicles

are carbon neutral, we offset the

carbon on every delivery. The

packaging the product comes in is

100% recyclable or compostable, we

were pretty hard on making sure the

liner that keeps it frozen...

That

sounds expensive. You had to make a

decent profit on each meal, you have

been going a year, it is early days?

We have shipped just over 120,000

meals so far. Looking at it from a

business case, in terms of how long

people are staying with the

business, we are already able to

make a small profit and every

customer which allows us to invest

even more in making the food more

delicious and easy.

All the fruit

and veg and everything, I guess, is

going up in price with Brexit on the

fall in the value of sterling?

That

is the meta- view of it all, good

food in general is going up in price

all the time. -- but food in general

is. We always making sure we get the

best ingredients, put them in, make

the most delicious food we can and

make it easy as possible for people

to eat healthier in a hurry.

We talk about distributors in the

industry, your closest rival is

probably less the supermarkets but

the takeaway convenience, you can

get this delivered to your door or

something that is already cooked?

We

are cheaper than a takeaway, if you

look at the way we cook the food it

is more nutritious, with a takeaway

you do not know what is going into

it, with a restaurant even you are

not told the nutrition value.

We

assume what is going in this.

Online

we have the full nutritional

breakdown, we show the customer our

recipes, we have beautiful recipe

videos and health tips and food

hacks on the website. This cashew

Mac, you can see it all online.

You

and your brother of vegan, have you

made a plot of the recipes?

It

started ourselves. This is my

favourite at the moment, it is

essentially like but we have used a

walnut mince and sun-dried tomatoes.

We create the recipes and we work

with a team of chefs. With this

particular one we have worked with a

really great chef who is Indian

himself and has a lot of history at

making delicious Indian food. So we

lean on what we are interested in

from a culinary perspective, what

customers are for and collaborate

with the best # each dish.

Alex, you

are so passionate about your food.

So is Ben.

I wanted to move on! They are hand

signed by the chef who made it.

Alex, it has been really great to

see you, thanks for coming in.

Stay up to date on the BBC Business

Live page. And we want to hear from

you. Get involved on the web page,

on Twitter, and you can find is on

Facebook at Bbc Money. What you need

to know, when you need to know.

We promised some more market

analysis.

Lucy MacDonald, CIO of Global

Equities at Allianz Global Investors

joins us now to discuss.

It is unsurprising we are seeing the

reaction we are at the moment. We

had been expecting correction

because of the vertical rise we have

seen in markets this year. One of

the risks we have been looking for

was inflation surprise, that is what

we saw on Friday.

Was at a big

surprise?

It is a pricing that wage

inflation is the dog that has not

barked in this relatively strong

market with low unemployment.

Listening to Janet Yellen over the

months and looking at why has there

not been more wage inflation, the

quality of the jobs coming into the

market has been part of that. But we

saw the first hint of it on Friday.

We are seeing what you would

normally expect to see at this stage

of a recovery. You get the reaction

and bond markets, which comes into

the relative value. It is textbook

stuff. It is not a surprise that it

should happen in this way. The

question is how far it goes from

here.

There is a story in the National,

the 500 richest people in the world

lose a combined $140 billion, which

shows quite where the money is

invested and what is at stake when

we talk about 2%, 3%, 4%, when it is

a value like $100 billion it is a

lot money.

The percentages make the

difference. It is not an enormous

percentage so far, it just takes us

back to where we were at the

beginning of the year.

Stav says stocks are not aligned to

products or productivity,

realisation sets in, correction has

to happen. -- Steph says.

Nick, a regular guest on the

programme, says try not to be drawn

into the market timing. They make

money from investment. You get Rich

slowly, remember. Trying to call

these swings up or down is probably

a mug's game?

We do not try to be

too cute about these things. When

you get a really big panic, like on

Brexit day, there was a great

short-term buying opportunity, there

was a very short run-up to Trump was

elected, that really went very, very

quickly.

-- very, very short one after Trump

was elected. You do not buy anything

different or lower quality, you do

not trade, you buy stocks for the

long-term. If you can buy won a 10%

discounts, that is nice.

Thanks for

explaining that. The FTSE 100 is

down just shy of 2% in the moment.

More news ahead on the BBC. Stay

with us.