12/03/2018 BBC Business Live


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12/03/2018

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This is Business Live from BBC

News, with Sally Bundock

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and Alice Baxter.

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Taking on the tariffs -

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Australia secures an exemption

to US duties on steel

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and aluminium imports.

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Live from London,

that's our top story

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on Monday 12th March.

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The European Union and Japan

are also looking to be let off

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the hook by President Trump, as

fears of a wider trade war heat up.

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We will add an expert view.

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Also in the programme -

the oil isn't flowing just yet.

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Speculation grows that Saudi Arabia

won't sell of a chunk of its state

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oil company until next year

at the earliest.

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Financial markets trading right now

in Europe have seen a bumper start

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to the week following the lead from

Asia. We tell you all you need to

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know.

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And pouring your

money into alcohol -

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we'll find out how you can

turn wine into profits,

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and how Asia is driving

the demand for wine investing.

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Today we want to know whether you

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think life on Mars -

including a Mars Bar -

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could be a reality anytime soon?

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Because that what the maverick

entrepreneur boss of SpaceX

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and Tesla, Elon Musk, thinks.

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Let us know know.

Just use the hashtag BBCBizLive.

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Hello and welcome to Business Live.

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Yes, Elon Musk has been talking at

an event in Texas. You can hear what

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he had to say about Mars, would also

about his company, space X, and

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Tesla. Let's talk trade.

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With the clocking ticking down

until President Trump's

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tariffs on steel and aluminium

imports come into force, countries

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are scrambling to seek exemptions.

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And in the last hour or so,

Australia's Prime Minister has

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welcomed his country being given

a waiver, which he said

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on Twitter was important

for thousands of people who rely

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on the industries for work.

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And the EU and Japan are due to hold

more talks this week over

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getting their own exemptions.

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The Trump administration

says the tariffs

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are necessary, because the sheer

quantity of steel and aluminium

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in the global market is threatening

to impair the "national security"

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of the US.

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But America has made legally

binding trade commitments

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as part of its membership

of the World Trade Organisation

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rules, and other countries

are likely to use the WTO

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to challenge the tariffs.

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But whilst WTO rules allow

members to seek a "national

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security exception" for industries

regarded as important

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for the defence of the country,

some experts have already questioned

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if that can apply here.

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One of the United States' defence

allies is Australia, and its

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Prime Minister, Malcolm Turnbull,

welcomed his country's exemption

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whilst touring a steel

works in Wollongong.

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This is a real example of a win-

win. We have got jobs in Australia,

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jobs in the United States. The

tariff would simply have put jobs on

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both sides of the Pacific at risk.

It is a very important outcome.

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There are 77 anti-dumping measures

in place. 51 relate to steal. Seven

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related to aluminium. We are very

vigilant in ensuring there is a

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level playing field. We are

committed, passionately committed to

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free trade. But it has to be fair.

That is the key.

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Aline Doussin is a trade lawyer

at Squire Patton Boggs,

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specialising in international trade.

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She joins us in the studio. Good

morning. Australia has secured an

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exemption, joining Mexico and

Canada. We know this week we will

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see lobbying from EU officials and

other countries around the world

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trying to secure the same. Liam Fox

from the UK goes to Washington this

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week. What is the likelihood of

other countries securing a similar

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exemption?

It is a very good

question and very difficult to

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answer. We are entering into this 15

day timeline where members are

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apparently allowed to seek exemption

on a measure that most trade

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lawyers, including myself, view as

completely contradictory to the

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philosophy of the WTO rules. The EU,

even though it reserves its right to

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challenge the measure, is focusing

on negotiating an exemption. It is

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very unclear, the legal business

research exemption, where it

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resides. Which criteria it uses. It

seems to be discretionary.

Although

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not totally unprecedented, this is

uncharted territory, using this

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national security exemptions under

article 21 of WTO rules to justify

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tariffs being imposed. One guest

that we spoke to rarely went further

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to suggest this pick and mix

approach to is entitled to an

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exemption and who isn't, is actually

illegal. What do you think?

The

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national security exemptions exist

under WTO agreements. There is an

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Article 21 and 14 which allows a

member, for national security

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threats... It was raised before in

the past. The UAE and Qatar got

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exemption. It has never been

adjudicated at the WTO panel level.

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So it is uncharted territory. Having

said that, the president and the

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administration are not at this stage

raising Article 21. Everybody is

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commencing on this exemption being

used both so far there is no

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challenge at WTO level. The WTO

cannot enter the dispute. A country

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as to raise a complaint. Japan have

indicated they will do so. They have

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confirmed it is something they are

currently looking to do if needs be,

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but nothing has been launched

officially as yet.

And all of this

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really increases the focus on the

WTO as an organisation. Is it really

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fit for purpose? You mentioned the

processes involved. It is very long

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winded, isn't it?

Yes. I worked at

the WTO years ago at some point, and

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it does take a long time to agree on

negotiations because there is no

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voting. Having said that, it is the

only forum where trade disputes can

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be judged. There is no other forum

in the world that has these

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disputes. It is still very relevant.

It has some issues that it needs to

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deal with. Including respecting the

length of a judgment and the

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negotiations that sometimes take a

very long time. But I think at this

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stage it is not the case the WTO is

dead. It is a very resilient

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organisation.

Thank you. Fascinating story that

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has been unfolding for weeks. We

will keep you up to date.

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Let's take a look

at some of the other

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stories making the news.

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The takeover battle for UK

engineering company GKN has

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intensified with a new $11.2

billion bid from Melrose.

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It also raised the amount GKN

shareholders would own in Melrose

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following the deal, and said

that this offer is "final".

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Britain is in danger

of losing its status

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as a "credible military power",

according to the former commander

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of the UK's Maritime Forces.

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Rear Admiral Alex Burton told

the BBC that budget cuts and rising

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military threats meant the defence

budget needed an urgent boost.

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It comes a day before the UK

Chancellor's update on the state

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of the public finances.

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The superhero movie,

Black Panther, has taken

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an estimated $65 million

on its opening weekend in China.

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It means the film has now made more

than $1 billion globally.

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China is the world's second-biggest

movie market and has

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become a lucrative country

for Disney and Marvel.

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The founder of SpaceX

and Tesla, Elon Musk, said

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colonisation of the moon and Mars

could help preserve human

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civilization in the event

of a Third World War.

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The billionaire entrepreneur

Elon Musk was speaking at the South

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by South West conference in Texas.

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We have asked for your views on some

of his comments. He had a lot to say

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about Tesla. We will talk about that

later.

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One of the world's biggest carmakers

looks like is hoping it

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may have a new lease of life

in South Korea.

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America's General Motors

could get an injection

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of cash from a bank funded

by the South Korean government,

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which would mean it doesn't need

to close more factories.

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Leisha Santorelli is

in our Asia Business Hub.

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What more do you have on this?

There

have been large protests in South

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Korea over General Motors' plans to

close at least one of their four

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factories. The South Korean

government is assessing whether they

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should contribute money towards a

rescue of GM business in the

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country. GM is the third biggest

car-maker in South Korea behind high

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Hyundai and Kia. It has been losing

money for several years. Sales at

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home and abroad have been falling.

The outlook is not good. GM the

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business decision seems clear. Their

strategy has been to focus on the

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big market of and China,... They

have done this in Russia, Australia

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and parts of Southeast Asia. When it

comes to Korea, GM has offered a

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lifeline. They have offered nearly

$3 billion investment plan and

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offered to upgrade its operations in

the next ten years. This is critical

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the South Korean government can

contribute money, and if they don't,

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we could see tens of tens of

thousands of workers lose their jobs

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in South Korea when those factories

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close.

Thank you. Let's show you financial

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markets. Across the board in Asia we

had strong gains. Also in Japan. And

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in Hong Kong at the close. Asian

stocks, following on from what

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happened in Wall Street on Friday,

the Nasdaq closing at a record high.

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Basically concerned about a trade

war taking a back-seat. Economic

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optimism kicked in as regards the

jobs report out on Friday. It showed

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more people employed but wage growth

not as robust as some thought. Let's

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look at Europe right now and how the

European Day is starting. Not such

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strong gains seen in Europe. Germany

must up a percent. We will talk more

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about marketing a second.

First, Joe Mellor is in New York.

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After a bust employment figures

drove markets to the close on

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Friday, Monday will give investors

time to breathe ahead of Tuesday's

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inflation report, which last month

showed the price of goods and

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services in the United States had

grown at nearly 2.9%. Wall Street is

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expecting the yearly figure to have

risen to 2.2%, but a significant

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uptake in the rate of inflation

would weigh on markets and could

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prompt the Federal reserve, under

the new leadership, to be more

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aggressive with interest rate rises

in the coming months. And in a week

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to void of major company news, we

will hear whether sports retailer

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Dicks has been hurt by its decision

to stop selling assault rifles in

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the wake of a shooting at a Florida

high school.

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Joining us is Mike Bell,

Global Market Strategist,

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JP Morgan Asset Management.

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Good to see you. Let's talk about

those numbers. Unemployment was

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expected to fall and actually it was

flat. What does that tell us?

It is

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quite complicated, but what happened

was actually very positive. The

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number of people who are working is

now more than 300,000 more than was

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previously. The reason that didn't

cause the unemployment rate to fall

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is because the number of people

looking for a job went up. The way

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the numbers are calculated meant he

didn't go forward in the

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unemployment rate. The simplest way

to think about it is, if nobody was

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looking for a job, then even, than

the unemployment rate would be zero.

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As soon as more people start

looking, the unemployment rate would

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rise. That is how it is possible to

have job gains put the unemployment

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rate to be flat.

Strong numbers,

softer wage growth. Potentially the

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Fed increasing rate rises sooner

than thought. What are your

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thoughts?

I think there is positive

news on that front. It may seem

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counterintuitive that lower wage

growth numbers is viewed as a good

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thing. What everybody got concerned

about last month is that low -- wage

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growth numbers were picking up quite

quickly. We have seen it has become

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clear that that was due to weather

distortions. Even the wages are

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rising gradually, it is at a much

slower pace than people were

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concerned about. The central bank

would have to put interest rates up

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as fast as they might otherwise have

two.

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In terms of the week ahead, there

was so much economics at last week,

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European Central Bank, the bank of

Japan, the jobs figures in the US...

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I think the ECB was interesting.

They removed the easing bias, the

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view that if things got worse they

might have to do more QE. I think by

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the end of this year they will have

stopped doing QE. We don't think

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that means they will stop -- start

putting interest rates up but we

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don't think that will be the case.

Thank you.

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Still to come...pouring

your money into alcohol.

0:15:140:15:16

We'll find out how you can turn wine

into profits and how Asia

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is driving the demand

for wine investing.

0:15:190:15:21

You're with Business

Live from BBC News.

0:15:210:15:30

A record 660,000 customers switched

electricity supplier in February

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with over 1 million doing so this

year so far.

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Energy UK, which released

the figures today, claims

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the energy market has never

been so competitive.

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We're joined in Salford

now by Clare Bailey,

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founder of Retail Champion.

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Thanks for joining us. Why do you

think so many people have chosen to

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change at this time?

I think there's

a couple of factors in play. With

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the energy switch guarantee we have

procedures that make consumers more

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confident in the process of

switching, and nine tenths of the

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market are already subscribed to

that which is a process that ensures

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that when customers choose to switch

the processes run seamlessly. Also,

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looking at other figures out today,

there has been issues around

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consumer confidence, reductions in

consumer spending and people are

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tightening their belts. So actually

looking to make savings on moving

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energy provider to reduce costs of

gas and electric is contextual with

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everything else in the market in

terms of seeing reduction in

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spending and trying to tighten their

belts.

Also has the weather had

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anything to do with it? The fact we

are experiencing quite adverse

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weather conditions and people might

think that is a trend that is here

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to stay.

We would typically get the

seasonal cold spells some time

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between December and February every

year. It has been late this year but

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that might encourage people to think

harder. But from my point of view it

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is around the confidence and

process, and the fact suppliers are

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making it a lot easier. There's a

lot of the and the fact people are

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finding things difficult. The

statistics show people are spending

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far less in terms of the consumer

side of the market so I think

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looking savings in any of your

bills, energy as well as telecoms,

0:17:270:17:34

our ways consumers will try to

ensure they moderate the fact that

0:17:340:17:38

income growth is not catching up

with inflation and I think switching

0:17:380:17:42

energy provider is a great way to do

that in terms of immediately taking

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a saving.

Thank you.

0:17:470:17:57

Clare Bailey,

founder of Retail Champion.

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You're watching Business live -

our top story: Australia's Prime

0:18:270:18:30

Minister has welcomed his country

being given an exemption

0:18:300:18:32

to US tariffs on steel

and aluminium imports.

0:18:320:18:34

It comes as the EU and Japan step up

efforts to secure their own waivers.

0:18:340:18:37

A quick look at how

markets are faring...

0:18:370:18:42

We talk about trading

in commodities like oil and gold

0:19:030:19:05

but did you know you can also bet

on the performance of burgundy,

0:19:050:19:08

chardonnay and Champagne?

0:19:080:19:09

It's pretty popular too.

0:19:090:19:11

In 2016, wine was the top performing

asset class on the Knight Frank

0:19:110:19:14

Luxury Investment Index,

with growth of 24%.

0:19:140:19:16

Last year it came in

second place, after art.

0:19:160:19:18

So what's driving it?

0:19:180:19:19

Well most of the demand

is coming from Asia.

0:19:190:19:22

According to Cult Wines, sales

there increased by 123% in 2017.

0:19:220:19:27

Cult Wines is an investment

manager in fine and rare wines

0:19:270:19:31

and currently manages assets

in excess of 90 million dollars.

0:19:310:19:34

The company has around

2,400 customers spanning

0:19:340:19:35

70 countries worldwide.

0:19:350:19:38

Tom Gearing is the co-founder

and Managing Director of the firm.

0:19:380:19:48

Thanks for joining us. That return

figure is something a lot of asset

0:19:490:19:54

managers would really like to have

on their balance sheets, isn't it?

0:19:540:19:58

Talk me through the thoughts behind

the company, is what got you into

0:19:580:20:03

wine?

My family background helped to

lead me into this as a career and I

0:20:030:20:11

was lucky to go around some of the

greatest vineyards at a young age

0:20:110:20:14

with my father so I was always

growing up around wine. He started a

0:20:140:20:19

price comparison website for fine

wines in the early 2000 so I spent a

0:20:190:20:26

lot of time typing in prices, and

data. Winds have historically

0:20:260:20:32

increased in value because the best

wines in the world are produced in

0:20:320:20:36

small quantities and it's a

consumable product so every time a

0:20:360:20:39

bottle is opened that wine doesn't

exist any more and it will keep

0:20:390:20:44

dwindling until there's none left

some fine wine prices will always

0:20:440:20:48

continue to rise.

You started this

company more than ten years ago?

0:20:480:20:53

Yes.

When you were at university

with your brother and friends, and

0:20:530:20:58

your dad is involved as well because

of his expertise. Talk us through

0:20:580:21:07

how you made a success of it through

the financial crisis.

Our timing was

0:21:070:21:13

fantastic, sometimes you need some

luck and to be coming into the

0:21:130:21:16

market at the right time. With the

global financial crisis people lost

0:21:160:21:22

confidence, there was a lot of

market volatility. We are in a

0:21:220:21:27

record low interest rate environment

and that's not just in the UK, it is

0:21:270:21:32

globally. People were having to look

outside of the normal areas for

0:21:320:21:35

sources of return. When you spoke

about the Knight Frank index, things

0:21:350:21:41

like classic cars and wine have done

so well because investors want to

0:21:410:21:46

make a decent return. We have been

one of the market leaders in this

0:21:460:21:51

particular industry.

For some of you

who think you might recognise Tom,

0:21:510:21:56

that's because this is not your

first time on television, is it? You

0:21:560:22:01

were on the Apprentice. How did you

find the whole experience, and did

0:22:010:22:06

it help with the business or was it

just something you did on the side?

0:22:060:22:12

From a personal perspective I was 23

years old and it was a remarkable

0:22:120:22:18

experience. It's a

once-in-a-lifetime opportunity and I

0:22:180:22:21

loved every minute of it, regardless

of the pressure and even Claude's

0:22:210:22:26

interview. I want to this day so

that was one of the worst

0:22:260:22:31

experiences of my life! It was

outrageous. Apart from that on the

0:22:310:22:35

business side of things it was great

for us because it gives you a great

0:22:350:22:40

reputation and I get to meet people

like you this morning and on a media

0:22:400:22:45

publication like the BBC so it was a

great helping hand in that regard.

0:22:450:22:50

And you became runner-up which is no

mean feat because it's not easy.

0:22:500:22:54

This was under Alan Sugar in the UK,

how do you think you would have got

0:22:540:22:58

on if it was Donald Trump saying

you're fired?

It's funny because I

0:22:580:23:04

was in Beijing meeting some people,

I told them I was on the Apprentice,

0:23:040:23:09

and they said "Oh, Trump! Trump!" I

thought they probably don't know who

0:23:090:23:24

Alan Sugar is!

We have got to leave

it there. This is how to stay in

0:23:240:23:32

touch, and we will be back in a

moment to talk about Elon musk.

0:23:320:23:40

We have insight and analysis from

our team of editors around the globe

0:23:430:23:46

and we want to hear from you too,

get involved on the BBC Business

0:23:460:23:51

Live web page. We are on Twitter,

and Facebook. Business Live, on TV

0:23:510:24:04

and online. What you need to know,

when you need to know.

0:24:040:24:16

What other

business stories has the media been

0:24:160:24:18

taking an interest in?

0:24:180:24:19

Joining us again is Mike Bell,

Global Market Strategist,

0:24:190:24:22

JP Morgan Asset Management.

0:24:220:24:26

One thing that piqued our interest

was comments made by Elon Musk over

0:24:260:24:35

the weekend. He spoke about whether

life on Mars could be a reality any

0:24:350:24:40

time soon. We have had a few

responses in. We have heard from

0:24:400:24:45

Mark, who says, it depends on what

you classed as soon. I would have

0:24:450:24:49

thought we would want a base on the

moon first as a springboard to Mars.

0:24:490:24:55

I'm sure Elon Musk wants to achieve

a landing in his lifetime. I don't

0:24:550:25:02

know whether you think life on Mars

will be possible in the time soon,

0:25:020:25:08

but what did you make of Elon Musk

said, not only in terms of

0:25:080:25:12

colonising Mars but also when he

went on to talk about the precarious

0:25:120:25:17

health of Tesla and space X.

The

Mars thing seems far-fetched to me,

0:25:170:25:26

it seems like a long time before we

could be going to Mars. On companies

0:25:260:25:31

struggling in the early stages, that

is nothing abnormal at all.

0:25:310:25:36

Obviously start-ups tend to come

into difficulty, if you take Space X

0:25:360:25:42

as an example it requires a lot of

investment with no real revenues. I

0:25:420:25:52

think there will be some people in

the city who will be upset about it

0:25:520:25:59

being delayed, a lot of fees on

whoever manages to list that but it

0:25:590:26:02

will still happen.

Mike, many thanks

for coming on. Goodbye.

0:26:020:26:08