16/03/2018 BBC Business Live


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16/03/2018

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This is Business Live

from BBC News with Jamie

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Robertson and David Eades.

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Trading threats - raising tensions.

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Fears of a global trade war set

to dominate as G20 finance chiefs

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gather this weekend.

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Live from London,

that's our top story

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on Friday the 16th of March.

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With jobs and trade

on the line, the United States

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is demanding more from its biggest

partners so will they hit back

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with action of their own?

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Also in the programme...

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Singapore-based chipmaker Broadcom

hints it will look to buy smaller

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rivals after President Trump blocked

its $140 billion deal for Qualcomm.

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The market is starting down but not

a huge amount of change. Less than a

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10% movement on the European markets

as they open today.

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And we'll be getting

the inside track on the business

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impact of those growing tensions

between Russia and the UK and all

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the other big stories of the week

with our Business Editor Simon Jack.

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And we begin our Future Of Work

series with a look at commuting

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so we want to know what unusual

journeys to work you have.

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Just use the hashtag BBCBizLive.

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Hello and welcome to Business Live.

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Tensions are growing

over global trade.

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As President Trump continues

to protect US industry there have

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been threats of retaliation

from around the world -

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raising fears of a trade war that

could seriously damage

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the global economy.

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People putting up tariffs to protect

their own industries against others

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around the world.

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The issue will top the agenda

when finance chiefs from the world's

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biggest economies meet

in the Argentine capital

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Buenos Aires this weekend.

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This week the Trump

administration raised

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the temperature with China again -

demanding a $100 billion

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cut in Beijing's

trade surplus with the US.

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It also turned its

attention to India,

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complaining to the World Trade

Organisation about export subsidies

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to Indian exporters worth

an estimated $7 billion a year.

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That's what he reckons, anyway.

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And there's just a week to go

until US tariffs of 25%

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on imported steel and 10%

on imported aluminium

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come into force.

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Many countries are seeking

exemptions to stop any

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damage to their economies.

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Since they were first announced

at the beginning of the month,

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global stock markets have been

confused as investors try to assess

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the potential damage

as the European Union and others

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threaten to retaliate

against those US tariffs.

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Chris Watling is the Chief

Executive of the global

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consultancy Longview Economics.

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Thanks for joining us. Just to get

the short for you first. We have a

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raft of demands from Donald Trump,

but it's all coming to a head.

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What's going to happen, two days to

sort it out.

It's classic trumpet,

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go in hard and aggressive, make a

lot of noise and shake things up and

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see how things fall, and hopefully

go from there and end up with

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something fairly sensible. We have

seen this several times in his

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presidency in the last year or so,

whether it was Tpp on many of these

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deals. He goes in hard and then

pulls back and see what happens.

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With China, would you expect some

movement from them? This sort of

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technique has some effect.

It does

have some effect. We saw some

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movement from Japan when he raised

it with Japan several months ago.

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Whether or not we'll get movement

with China who knows, only the

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Chinese leadership will know. The

problem I think is misdiagnosed by

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the administration. It's not simply

a case of, we have a $100 billion

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deficit, you are clearly doing

better than we are. It's a

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reflection of overconsumption in the

US and under saving, essentially.

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When the shouting stops and it dies

down, will he get anything out of

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it? What are his targets? Is there

anything specific, there is more to

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him than just making a noise.

There

is more, his place in the political

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constituency, old economy, a lot of

it in the midwest. There is

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something in this. There are unfair

trade practices in the world and the

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WTO does not have a much bite as one

would hope. China has all sorts of

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industries, there is too much steel

capacity in the world and part of

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that is because China keeps

businesses that are basically

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loss-making going through the

government stimulus and back door

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credit programmes. There is

something to what he says, but I

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think it misses the main point about

the trade deficits and

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overconsumption.

When it all dies

down, whatever happens here, if

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there is give and take, it has a

ripple effect. It's not just

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necessarily a one-off, we are done

and move on.

It's a risky business.

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You are clearly upsetting the global

consensus. Growing global trade is a

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good thing, falling tariffs is a

good thing. All that stuff is very

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powerful. We saw in the 1930s,

rising tariffs was a dangerous

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approach to global growth. It's not

a great way to go about things, but

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it is Donald Trump and hopefully it

will follow the usual pattern and

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calm down.

We will see, Chris, thank

you very much.

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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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A committee of British MPs say

they have been unable to find

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a technical solution anywhere

in the world that would be capable

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of avoiding a hard border

between Northern Ireland

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and the Irish Republic after Brexit.

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The Northern Ireland Affairs

Committee has called

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on the government to set out more

details on how it will manage

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the movement of people

and goods across the border.

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The Swedish music streaming

giant Spotify says it

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will start selling its shares

on the New York Stock

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Exchange on April 3rd.

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In a pitch to investors

the company's boss Daniel Ek said

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he would put growth over profits

to try and fend off competition

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from the likes of Amazon and Apple.

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More than half of Spotify customers

use the free services and the firm

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has yet to make a profit.

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Deutsche Bank says it does not

expect to cut costs by $1.1 billion

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in 2018 as previously announced.

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However, Germany's biggest

lender is forecasting

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an increase in revenues,

with banker bonuses returning

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to levels not seen since 2015.

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Profits are up at

Singapore-based computer chip

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maker Broadcom which has been

outlining it's plan for the future.

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This week it formally

abandoned a $142 billion

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attempt to buy its US rival

Qualcomm after President Trump

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blocked the deal.

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Mariko Oi is in Singapore

with more details.

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Interestingly, in the conference

call with investors,

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the company's chief executive didn't

really comment about that block

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deal by President Trump,

who cited national security concerns

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to which the company said

there shouldn't be any concerns.

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But he also said that the company

continues to look at the US

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as a potential market,

prompting speculation that broad,

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as a potential market,

prompting speculation that Broadcom

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might be looking at smaller,

probably lower profile targets

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in the market as well.

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In terms of the earnings number,

they came in stronger

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than analysts expected,

but the company warned

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that they are seeing a slowing

demand from its US customer,

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which many analysts believe

is Apple, but growing

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demand from South Korea.

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Again, analysts are speculating

that's probably Samsung,

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which is ramping up its production

of the latest Galaxy smartphones.

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We can look at the Asian markets.

Trade and the G20 meeting this

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weekend in South America. What will

happen in terms of protectionism and

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the amount of tariffs that will be

put on over steel and aluminium. A

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slightly confused message there but

we have the Dow Jones up about 0.5%.

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Asia is a little bit worried, it's

down. Europe, pretty inconclusive,

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up a tiny fraction.

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And Kim Gittleson has the details

about what's ahead

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on Wall Street Today.

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On Friday, investors will be eyeing

a raft of economic data to better

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gauge what the US Federal Reserve

will do when it meets next week.

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Housing data released

by the Census Bureau is expected

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to show that new construction slowed

in February, partially

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as a result of poor

weather here in the north-east.

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Two key measures of US manufacturing

activity will also be released.

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A miss in any of these figures could

worry America's central bankers,

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especially after retail sales

and inflation data came in lower

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than expected this week.

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The expectation is that the Fed

will continue to slowly

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raise US interest rates.

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But in order to do that,

it will need the American economy

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to be growing at a healthy pace.

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Joining us is Simon Derrick,

Chief Markets Strategist,

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Bank of New York Mellon.

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In terms of occurrences, we have

this trade war, a great euphemism,

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for general chaos in the trade

sphere. What effect is it having on

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currencies generally? I'm thinking

about the three main ones.

I think

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the one that is really starting to

emerge as being a beneficiary for

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this has been the Japanese yen.

Maybe because a little bit it is a

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safe haven, but it's worth noting

over the last 40 years, one of the

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trade policy has come up as an issue

in the US, more often than not it

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has also focused on people

manipulating the currencies and

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Japan has come up time and time

again, more often than not, the

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pressure has been upward on the yen

because that is the easiest way of

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fending off concerns from the US.

The stronger currency makes the

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trade situation better.

Down on the

dollar.

That's the main story. In

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fairness, playing out against the

Asian currencies. Stirling and

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Europe are pretty much sidelined the

moment.

We talked about the

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Australian dollar and its impact

potentially on smaller currencies.

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That's the one currency that really

has been under pressure over the

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last few weeks. Most obviously

because Canada is the largest

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exporter of steel to the United

States, so if you are looking to

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currencies heading in different

directions at the same time, the yen

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and Canadian dollar are eight right

now.

Something many people don't

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follow, unless they are in the

market and following day today is

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the weakness of the dollar and how

it has weakened over the last year.

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It's getting on 15% or something.

Will that continue?

I think it will.

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What's interesting is that it has

broken the relationship with yield

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because relatively speaking interest

rates are going up in the United

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States, which is normally good for a

currency. Instead people are focused

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on two things, first of all, the

administration seems to be less

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supportive about the dollar in the

rhetoric.

He doesn't talk about

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stronger dollar any more.

And people

are talking about increased spending

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plans and where the money comes

from. One of the main areas it comes

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from in the past is the far East,

people like China. Maybe if China is

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allowing its currency to move more

freely, there is less money coming

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in to be recycled to the US is about

looking ahead to next week, the Fed

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has a decision to make. Interest

rates up? Definitely next week. What

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will matter will be the rhetoric and

how concerned they are about

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inflation and what happens with

trade.

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Still to come...

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We'll have all the implications of

the UK and Russia trade and more

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from Simon Jack, business editor.

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You're with Business

Live from BBC News.

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JD Wetherspoon has reported pre-tax

profits of £54m for the six months

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to 28th January -

up 36% on the same period

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in the previous year.

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Joining us now from

London Stock Exchange

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is Tim Martin, the founder

and chairman of JD Wetherspoon.

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Thanks for joining us. These are not

easy times for the casual dining

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market. Give us your secret.

It's

hard to know, really. It's a

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thousand components of a BMW, you

work on different components all the

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time and you eventually come up with

a good car. We have been going a

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long time, we sell a lot of things

that have been unfashionable over

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the years, like real ale, which is

doing very well for us. We are now

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selling quite a bit of draught beer,

which is at the trendy end of the

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market. Over the years we have moved

into breakfast and coffee which do

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very well. Coffee is particularly

going great guns at the moment.

What

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about your costs, the weak pound,

food costs going up, and business

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rates going up next month. You have

the national living wage, which is

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putting upward pressure on wages.

Will you be able to keep costs under

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control to the point where you can

still increase profit?

Can we keep

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them under control when it comes to

the things that you mention, the

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answer is no. What we can try and do

is make sure we are running the

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business well, everyone else has got

the same costs. If we can get all

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the different components running

better, we will be able to sell

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people a pint at a reasonable price

with a good atmosphere. It's

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difficult enough. The main sword of

Damocles for the pub industry is

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that it pays much higher taxes per

pint or per meal than supermarkets.

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That disparity has increased over

the years. Eventually, when things

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settle down and people have a chance

to look at it, we have to say, do we

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want pubs and restaurants,

particularly in small towns and

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unfashionable suburbs. If the answer

is yes, then you have to equalise

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tax.

Tim Martin, we wanted to talk

about Brexit, but we are running out

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of time. I'm sure you would have

lots to say about that, but we will

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save it for another day. I'm sure he

might be relieved, or maybe not!

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A quick look at how

markets are faring.

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There is not much happening on this

Friday morning but coming off the

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back of an unsettled week with Asian

markets waiting to see what's going

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to emerge from these trade tensions

as they mount, courtesy in large

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part to President Trump of course.

We will talk more about lead the

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second because we have Simon Jack

here and a round-up of all the

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stories.

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Russia says its expelling British

diplomats following the poisoning

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of a spy on British soil but there's

less impact on trade

0:16:150:16:18

ties and global trade

tensions on the rise.

0:16:180:16:21

Let's talk to Simon. Let's talk

first about global trade, is there

0:16:210:16:26

going to be a trade war? People

increasing tariffs and the rest of

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it?

There's been widespread

condemnation of the steel tariffs

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and we will see how other countries

respond to that so that is the big

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worry. Much more so than the Russian

tensions. At the moment we have the

0:16:400:16:49

US which pulled out of the TTP, and

many voices in the US are saying

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that as we withdraw and put up

barriers we are losing influence in

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areas where we had a lot of it, for

example in the Pacific area, we used

0:17:030:17:08

to have a big military presence,

that tilts away, meanwhile China is

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expanding into those areas. So you

have got the most developed economy

0:17:140:17:17

in the world turning away from

global trade at a time when everyone

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else is trying to get together. That

could reduce long-term US influence

0:17:220:17:29

and allow China to get a march on

that. You have the rest of the world

0:17:290:17:35

coming together, promoting trade,

globalisation, the world economy is

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doing well, the fly in the ointment

is the approach of the US.

An

0:17:380:17:43

interesting angle on that, we were

saying on this programme a week ago

0:17:430:17:47

that it is not that surprising China

is the champion of free trade at the

0:17:470:17:51

moment because the dominant economy

in the world is always in favour of

0:17:510:17:56

free trade. You go back historically

into the 19th century, Britain

0:17:560:18:05

getting rid of the Corn Laws. Then

is America became dominant it

0:18:050:18:08

promoted free trade, now China is

coming up and it too will promote

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free trade.

That is not quite the

dominant economy, but it is coming

0:18:110:18:19

soon.

This is one of the symptoms of

it.

One other thing you are seeing,

0:18:190:18:25

this is being looked at through the

lens of Brexit, with the UK going

0:18:250:18:29

its own way. The Government are

saying we are not leaving Europe,

0:18:290:18:34

just the European Union but you have

these tensions there.

Let's move on,

0:18:340:18:42

we have the tensions between Russia

and the UK and we have heard Sergey

0:18:420:18:45

Lavrov the Foreign Minister saying

for sure our response is coming so

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we are waiting for that but there is

still this reticence about

0:18:490:18:54

economically biting...

I thought the

economically biting...

I thought the

0:18:540:18:57

Prime Minister got a lot of plaudits

for the way she dealt with this this

0:18:570:19:00

week, the expulsion of huge amount

of diplomats, we are expecting tit

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for tat. But the word business

didn't come into her speech at all

0:19:080:19:12

and in fact there were words of

comfort for the Russians who have

0:19:120:19:17

come and made their home in the UK.

You think about Roman Abramovich who

0:19:170:19:22

owns Chelsea, and of course the big

one, BP, aren't they already have...

0:19:220:19:35

Have we been dancing with the Devil?

Bob Dudley sits on a board chaired

0:19:350:19:42

by close Putin friend Igor Sechin

and at some point he has to walk out

0:19:420:19:52

of the room in case there is

anything pertaining to him

0:19:520:19:57

personally! I don't think there was

anything in the list of sanctions we

0:19:570:20:01

saw that apply additional pressure

to the business relationships. They

0:20:010:20:06

said we don't want your spies or

assassins but we want to keep doing

0:20:060:20:13

business with you.

And the Royal --

the rollback for banks?

Yes, in

0:20:130:20:28

doing this you are swept up in the

bid to make the to big banks safer,

0:20:280:20:36

you've also swept up lots of

community banks and made it hard for

0:20:360:20:39

them to do their job which is to

lend to communities. There is a bill

0:20:390:20:44

passed in the Senate to roll back

some of these regulations, it has

0:20:440:20:47

got to go through the house and is

deeply dividing the Democrats. We

0:20:470:20:55

are sowing the seeds of another

financial crisis, some are saying,

0:20:550:20:59

but others are saying we have

constrained the banking system

0:20:590:21:03

unnecessarily at a local and smaller

level and this is a good thing for

0:21:030:21:08

the US economy.

Simon, thanks so

much.

0:21:080:21:13

Now it's time for the first in our

series about the Future of Work.

0:21:130:21:16

For many of us, the daily commute

can be a combination of unreliable

0:21:160:21:19

trains and overcrowded buses.

0:21:190:21:22

But advances in technology,

automation and artificial

0:21:220:21:26

intelligence are set to change

the way we travel to work

0:21:260:21:29

as Rico Hizon has been

finding out in Singapore.

0:21:290:21:37

People have long dreams of taking a

jet pack or flying car to work and

0:21:370:21:42

that reality is closer than most of

you think. One man passenger drones

0:21:420:21:48

are being tested but widespread use

is yet to come. For now

0:21:480:21:53

battery-powered electric vehicles

are moving people in new ways. For

0:21:530:21:57

many commuters, this is the last

mile solution. When their office is

0:21:570:22:07

there and the train only takes them

here so how does it work?

It is a

0:22:070:22:13

battery operated Scooter, where you

can actually use an app to activate

0:22:130:22:17

it. We see the huge popular demand

in other places we have launched,

0:22:170:22:23

especially places where they need

connection to their offices or

0:22:230:22:31

schools from the station.

Jet packs

were only used by the likes of James

0:22:310:22:38

Bond, but a number of companies are

turning science fiction into science

0:22:380:22:43

fact.

We can get into really

exploring the dream and the idea,

0:22:430:22:47

the concept and the science behind

true human flight and achieve a lot

0:22:470:22:51

of those things that people have

been dreaming about for a long time.

0:22:510:22:56

Jet packs may not be for commuting

just yet but the way we get to work

0:22:560:23:02

is constantly changing and will be

vastly different in the future.

0:23:020:23:14

Simon Derrick is back with us, and

you like the hover board. It's all

0:23:150:23:24

right when you get one person doing

it, it is when you get thousands

0:23:240:23:28

going down Oxford Street! But have a

look at the papers. This is the rush

0:23:280:23:40

investigation and they are going

after the Trump organisation now

0:23:400:23:43

closer and closer...

Obviously we

don't know how this plays out so we

0:23:430:23:52

cannot comment too much about how it

goes but I think what matters is how

0:23:520:23:56

markets react to these kind of

stories. People forget what matters

0:23:560:24:00

over time. People seem to think

politics is a big issue but it's

0:24:000:24:07

never proved a market mover in

Germany. In the US absolutely it has

0:24:070:24:17

been a market mover. Think back to

Watergate in 1973, a cause of major

0:24:170:24:26

market volatility so this story,

talking about concerns within the

0:24:260:24:30

White House, that could potentially

be an issue.

Would you expect flight

0:24:300:24:35

away from US assets if political

things get hot in the states?

If we

0:24:350:24:40

go back and look at the past three

events, they were dollar negative.

0:24:400:24:48

But not necessarily globally?

Noakes.

Shall we go for your

0:24:480:24:54

favourite story of the day, the

scientists who planted a noble card

0:24:540:24:58

in his hand to make it easier to use

the Sydney underground -- an Opal

0:24:580:25:08

card.

He puts the card under his

skin.

The big he got done for was

0:25:080:25:17

mutilating his card, which is the

best bit of all of it! He calls

0:25:170:25:22

himself a body hacking scientist.

There are lots of them around, I'm

0:25:220:25:28

told.

If I put my travel card for

London inside my glove, is that

0:25:280:25:36

low-level body hacking? Most

important, the gentleman changed his

0:25:360:25:44

name... Does he signed it on all his

checks?

He wouldn't have a I doubt.

0:25:440:25:52

I wonder if we have this, body

hacking. Click has it all over the

0:25:520:26:00

weekend! Simon,

0:26:000:26:04