18/05/2017 World Business Report


18/05/2017

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Now it's time for World Business Report.

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US markets have their worst day since the presidential election

:00:19.:00:22.

China's $300 billion e-commerce giant looks to America -

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Also in the programme, Japan's economy

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grows for the fifth quarter in a row - has Abenomics finally paid off?

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But first, we start on Wall Street where for months optimism

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about the Trump presidency, the markets have been powering

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But late on Wednesday the Trump Bump turned into the Trump Slump -

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as US stocks and the Dollar suffered their worst day

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Growing concern that the President's promised tax cuts and pro-business

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reforms may never materialise, as the White House battles one

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The Dow Jones industrial average fell 372 points,

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and both the Dow and S 500 suffered their worst falls

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The Nasdaq had its biggest loss for almost a year.

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In fact the last time the Nasdaq fell this much was on June 24 -

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The US dollar has also tumbled to the lowest in six months -

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This is the US Dollar against 10 leading currencies over the past

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year - as you can see it's lost all its gains since Donald Trump

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became President and is now back to where it was in November last

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year, around the time of the election.

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Some analysts say this correction was inevitable.

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I think the Trump trade was largely a group fantasy,

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so I don't really know that it was all that deeply

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or well-rooted at any point, to be honest...

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Part of, a significant part of what's produced the six month

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market rally is the notion that we're going to have radical

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deregulation particularly, but not exclusively,

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around financial issues, and we're going to have massive tax

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cuts, particularly, but not exclusively for large companies.

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The weaker the president is, the less likely you are to get those

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tax cuts, and some of those premiums start coming out of the market.

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And I think that's what we're seeing right now.

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Jeremy Stretch is market strategist at CIBC World Markets.

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Good morning. We have talked about this many times since November. We

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knew that some kind of correction would be coming. All the promises

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have not materialised, deregulation of banking, tax cuts, bringing back

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ports of cash from overseas, they are just not coming through? That's

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right. We have seen a lot of promises on the agenda, ultimately

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investors have reacted to that. The fact that we have seen this slew of

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allegations or uncertainties, not just relating to Russia at the

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difficulties that the Trump administration felt, healthcare for

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example, that has pushed this reform agenda further back down the

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process. Ultimately, it is the case of realisation that the great hopes

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and dreams of an enormous fiscal boost to drive the economy on a fast

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at trajectory has been postponed. In the last 48 hours, it has become

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very intense because of the nature of the controversy surrounding the

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Trump administration. Some people out there say that we could see an

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impeachment. There is that kind of conversation going on, that does not

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bode well for markets around the world? We have seen the same story

:04:27.:04:31.

in Asia and Europe? Indeed. Political instability is one of the

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greatest threats to any market. We have seen in the last 24 hours has

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amplified that. The announcement of Robert Mueller does appear to have

:04:42.:04:47.

provided at least a little bit of temporary calm. Look into the

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future, it looks as though they may have found some stability. It is

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fascinating, despite this slew of uncertainty that has been emanating

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around the White House, market advertisers have been really high.

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Volatility trading has been very low. Perhaps it is a temporary blip.

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Thank you for coming in and providing an analysis. We will show

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you how Asia is staring at the end of the programme. It is being felt

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in Asian trading as well. We are also looking at Alibaba -

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the Chinese e-commerce giant that has been described as the country's

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eBay and Amazon rolled into one. It certainly makes more revenue

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than both put together. It's expected to report another jump

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in profits later today, its shares have soared since it

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floated in New York and it now has a stock market value

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of some $300 billion. But the vast majority

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of its business is in China - something its billionaire founder

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Jack Ma wants to change. A great entrepreneur, one of the

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best in the world. For President Trump, the best way to show his love

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for this country is to make it easier for Americans to sell their

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wares to China. This sneaker shop is an example of that. It has a

:06:23.:06:27.

physical store, but 90% of its business is done online. Since

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August, they have been selling on Alibaba. That has been a big boost

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to their Empire. We earned over $100 million this year. They run like a

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start-up. That has been really refreshing. We are not dealing with

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lots of competition. They treat us like we are a trusted,

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multibillion-dollar company. The leader of China's biggest e-commerce

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retailer has big ambitions. He wants to bring a million American

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businesses to China and 2 billion customers in next decade. There have

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been talking about making a big push out of China for the last several

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years. Perhaps even prior to that, when they filed to become public a

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number of years ago. You look at the revenue, it is almost entirely

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contributed by China. They may well have aspirations and they may well

:07:28.:07:31.

talk about that, but the numbers suggest there is a lot of work to be

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done. The chief President is not afraid of a little hard work. He

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will be in the US next month to make is pitched directly to the

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businesses. -- his pitch. To Japan now where in the few hours

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official figures show the economic growth picking up fast -

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in fact, much better than expected. Japan's economy grew at an annual

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rate of 2.2% in the first three months of the year -

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up 0.5% on the last quarter of 2016. It's the fifth quarter in a row that

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growth has improved - that's the best run

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in more than a decade. So does it mean that

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Prime Minister Shinzo Abe's massive stimulus programme has

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finally done the trick? Joining us now, Hiro Shirakawa,

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Chief Economist, Japan, Thank you for being on the

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programme. Good afternoon, in Japan! Give us your take on these numbers

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and what you think about how the Japanese economy is faring? First of

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all, it is true that the economy is doing quite well. If you look at the

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GDP numbers, it is. There are two risks. One is the global outlook,

:08:53.:09:02.

the US situation is getting messy. Number two, we tend to think that

:09:03.:09:09.

any fiscal stimulus, it cannot be sustained. Projects are not

:09:10.:09:16.

necessarily about doing well in stimulating the economy. So we think

:09:17.:09:21.

those are the two risks. Despite the fact that the economy seems to be

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heading in the right direction, there still seems to be concerned

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about the Japanese economy. What needs to be done now? I think that

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the country has done a massive... They have done a monetary easing. We

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have experienced or implemented a large number of fiscal stimulus

:09:43.:09:49.

packages. Still, economists and others. We now shift our focus to

:09:50.:09:56.

economic reforms and we tend to think that Labour market reforms

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should be the most important thing, because we are now suffering in

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their sales industry. We tend to think that Shinzo Abe house to shift

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his focus on the Labour market and stimulate productivity. Thank you

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for your time today. US and EU officials have decided against a

:10:28.:10:31.

laptop ban on flights from Europe. That was after a meeting to discuss

:10:32.:10:35.

the threats to aviation security. They said other measures were still

:10:36.:10:40.

being considered. A previously said they were looking at extending a

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Europewide ban on electronics on flights from eight mostly Muslim

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countries. The measure was introduced over fears that a bomb

:10:49.:10:50.

could be concealed in a device. Looking at the Asian markets now,

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nearly all of them are falling. Japan is down, a lot to do with the

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fact that the yen has strengthened in value in the last 48 hours. You

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are now up-to-date, I will see you soon.

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Representatives of Britain's GPs say the system of local family medical

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