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tv   BBC Business Live  BBC News  June 23, 2017 8:30am-9:01am BST

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this is business live from bbc news with ben bland and rachel horne. as us energy producers ramp up production, can the opec cartel halt the decline in oil prices? live from london, that's our top story on friday 23rd june. oil falls prey to the bears. crude is down some 20% this year — despite opec's attempt to prop it up — and it could have further to go. also in the programme, we'll cross live to asia where the world's biggest bank has moved to calm fears over the level of debt held by chinese companies. it's caused some cautious sentiment on the asian markets that flat lined up on the asian markets that flat lined up the end of their trading session. here's the european markets at the
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start of friday. and we will look ahead to wall street as well. the british prime minister offers to ensure the post—brexit rights of three million eu citizens living in the uk. later we'll have a wrap up of this week's big economic stories with our correspondent andrew walker. research in the daily telegraph has found well—qualified people who voluntarily talked about theirflaws injob interviews were more likely to win the role. today we want to know, what are your weaknesses? being gay perfectionist is not allowed! get in touch — just use the hashtag bbcbizlive. —— being a perfectionist. always horrible when that question comes up. we will share hours with you later. hello and welcome to business live. we start with the price of oil, because once again despite the best efforts of the oil producing nations to prop it up, it is on the slide.
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let's show you what's been happening. this week the talks all been about this guy — he's back. traders refer to a "bear market" when the price of an asset falls 20% from its recent peak. it often signals a loss of confidence and further falls to come. since the start of the year crude has done just that — it's down over 20% — from above $56 per barrel injanuary — to below m5 by the middle of this week. back in november the organisation of the oil producing countries — opec — together with 11 other countries — agreed a landmark deal to restrict oil output to try and prop up prices. between them they are supposed to be cutting production by 1.8 million barrels a day. although there are questions about whether everyone is sticking to it. and last month they agreed to continue that policy for another nine months, to march 2018. but there's still too
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much oil around. one of the main reasons is this. us shale producers were hit hard when oil prices crashed in 2014 — many were put out of business. but this year, thanks to opec‘s action to boost prices — as you can see here, the number of active us oil rigs has been creeping up steadily. that's just added to the global glut of oil. cailin birch, commodities analyst at the economist intelligence unit is with me. the problem with a bear market is once you get into it it can be difficult to get out. it can become and we have seen a switch where we have seen future prices for 2018 lower than current spot prices, signalling a loss of confidence in the market. what can be done? opec
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have come together in a way that's been very surprising compare to what they have done in the past. you said earlier they don't always keep up their promises on production, but they have pulled together. the problem has been us shale gas. we have seen a couple of times in the last couple of decades where opec has tried to get together around a table and limit production to impact prices, and both times we saw compliance of around a0 and 60%. we have seen compliance of close to 100% this time because of the saudi arabia approach. that's a real progress. we think of opec representing around a0% of oil production, and the us has risen rapidly in recent years. the problem in terms of keeping prices stable is the us is able to respond to even modest increases in prices. shale
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drilling is relatively cost—effective compared to offshore. it's a more nimble industry that can react faster. do you sense that at this level it's reaching, this lower level, is the new norm? as far as we see every time opec take action to boost prices, it encourages shale to come back on stream. will we see oil at these prices for the foreseeable? i think so. and it could potentially go further down. we tend to see a six—month lag between where the us rig camped moves and the us barrels per day. at the moment we still see rigs going up meaning to us production will continue to rise. a lot of it is confidence based on because confidence is weakening considerably, it could go lower than a7 dollars per barrel. it's not
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gangbusters by any stretch of the imagination yet, but it is growing, and it will probably not fall back to the $30 per barrel level we have seen, unless something dramatic happens in the market, which is not our forecast. thank you forjoining us. let's take a look at some of the other stories making the news... uk government plans for a new $23 billion nuclear power station have come under fire from public auditors, who call it "a risky and expensive project". the national audit office say the case for the hinkley point c plant as "marginal". it says the deal with state—controlled french energy firm edf and chinese company cgn to build the plant is "not value for money". the 3a largest banks in the us have enough money on hand to withstand a severe recession, according to the us central bank. the finding comes from an annual "stress test" conducted by the federal reserve. the tests were put in place after the financial crisis to strengthen financial capacity
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in the event of a downturn. american airlines has received an "unsolicited" approach from qatar airways which wants to buy 10% of the us carrier. in a regulatory filing, american airlines said qatar intended to buy at least $800 million of its shares — and it would respond "in due course". analysts say qatar could be trying to strengthen its relations with the us amid the diplomatic crisis with its gulf neighbours. to asia now — and the industrial and commercial bank of china — known as icbc — has moved to calm fears about the health of loans to some of the country's biggest companies. mariko oi is in singapore. what a ground can you give us to this story? before that i have some breaking news. we had news break that toshiba, which has been trying to sell its chip unit in order to
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raise enough money to cover the losses in its us nuclear division, its shares have just been downgraded to the second section of the tokyo stock exchange as of the 1st of august after the company repeatedly postponed earnings results. the last we heard we were supposed to find out by the end of this month but the company has just applied for another extension until august ten, which it got the approval for, but in exchange its shares have been demoted to the second section of the tokyo stock exchange. you are asking about china and we are talking about some of the massive overseas acquisitions that have been making news headlines lately, such as the purchase of hollywood studios. yesterday when authorities appeared to start cracking down on overseas acquisitions, the shares fell. one
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fell 10% until they were suspended. them the icbc came out and said it was just a routine and we should see shares recover this friday. the message is that chinese companies and their spending and shopping spree isn't yet over. thank you. we can see the effect it's having on the markets... asian shares flatlined but remained on track for a weekly gain. crude oil prices pulled away from this week's10—month lows. crude enjoyed a rare positive day on thursday after hefty selling that sent it to a 10—month low, but the gains were small change as concerns over a global supply glut and us production overshadow output cuts by opec and russia. the sharp losses — oil is down around 25% from its recent highs seen injanuary — has hit energy firms and, despite another pick—up in the commodity, they continue to struggle. the european markets starting friday
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with a modestly lower start across the board. in the us, investors are eyeing donald trump's revised healthcare bill hoping its success will open the way for his economic agenda. and we now have the details about what's ahead on wall street today. remember the blackberry? the company that bears the name of the once very popular smartphone will release its first—quarter results. remember, the company's on a big turnaround effort, so this will be the first chance that investors will be able to take a look at their progress. these days, blackberry is better known for losing in the smartphone wars to apple, samsung and google. but the canadian firm is gaining traction as it tries to really reinvent itself as a maker of industrial software. in economic news, new us single—family homes sales, those numbers will be released on friday, and likely rebound in the month of may,
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suggesting that the housing recovery remains intact. joining us is lucy macdonald, cio, global equities at allianz global investors. we were just talking about what she wa nted we were just talking about what she wanted to start with. is it health care? tell me more about the bill they are trying to get through in they are trying to get through in the states. part of donald trump's plans to repeal obamacare. looks like they might have some issues, but what impact does it have on the stock markets? the health care sector has been very strong in the last couple of weeks but it's not actually to do with the health care bill as such. it's more to do with relief about pricing of drugs. that's because there has been a lea ked that's because there has been a leaked draft of a order that trump is preparing, that is much more
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lenient towards drug company pricing than he was saying even six months ago. that has created enormous amounts of relief in the market, so the biotech sector has been the strongest area in the last couple of weeks. we will watch and see that. it has been a complete u—turn as far as that's concerned. pointing more towards using deregulation to keep pricing under control rather than regulation. the other interesting thing in the states is the federal reserve moving from a policy that has been broadly loose in terms of interest rates to starting to tighten up. do you anticipate there will be much response in the markets? it has been very well flat and you can give the federal reserve and you can give the federal reserve a lot of credit for that. we have seen a plan that has been set out on how interest rates are likely to move. but now, as of the last
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federal reserve meeting, we have a better idea of how the balance sheet will be unwound. a.3 trillion of treasuries mortgage—backed mortgages on the balance sheet. it's over a time that is yet to be defined, but that's the path of travel. that it is being seen as another way of tightening. therefore the impact of thatis tightening. therefore the impact of that is being taken in conjunction with the rates as well. so managing thatis with the rates as well. so managing that is going to be quite something to do, particularly as there will possibly be a change of the federal reserve governments next year. you willjoin this again at the end of the papers and think of your floors to announce at a job interview. i would imagine there are none! the british prime minister offers to ensure the post—brexit rights
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of three million eu citizens living in the uk. later we'll have a wrap up of this week's big economic stories with our correspondent andrew walker. you're with business live from bbc news. today marks the one year anniversary of the day britons went to the polls and surprised themselves by voting to leave the european union. earlier this week, the uk government started the arduous task of negotiating a brexit deal with politicians in brussels. let's talk more with our business correspondent ben thompson. he's at a cafe in south kensington! what can you order for us? good morning and welcome to south london. we are talking about that anniversary, one years since we decided to vote to leave the european union and turn our back on a0 yea rs of european union and turn our back on a0 years of membership of the club. a0 years of membership of the club. a lot has been said since then. all
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sorts of debate about what it means forjobs, trade and the economy on both sides. with meat this morning to discuss it are our brexit panel. it's neatly split down the middle. i have levers and remainers. i can introduce you to a couple of them. lindsay and david. lindsay, you run businesses and there has been so much uncertainty in the last couple of months, but are we closer to getting answers? i don't know if we are closer to getting answers, lease we are getting answers, lease we are getting something coming out of the government now about their plans. what is giving businesses problems over the last 12 months is the lack of planning, lack of certainty of where we are going. the uncertainty is an issue, i think. people i work with, over 50, leaving is an issue, i think. people i work with, over50, leaving work, is an issue, i think. people i work with, over 50, leaving work, they are looking to travel, they need their money safely, they need a pound at a safe rate, they need the
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economy to be strong and support their portfolios. lots of them are setting up businesses after they are 50. they need certainty about what the future is for them. what is the future, david? the future is for them. what is the future, david ? there the future is for them. what is the future, david? there is no certainty, we don't know what is going to happen. it is exciting. the opportunity is to maintain relationships with individual countries in the eu, we have a great big wide world out there. the disgraceful way we have treated the commonwealth, let's have them back, africa, asia, america, south america, so much to go for. a lot of clarity last night. great news. the debate continues. i am staying safely down the middle here, but much more on the bbc throughout the day. see you soon. you're watching business live. the uk prime minister theresa may
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has revealed details of what she's called a generous offer on the rights of eu citizens living in the uk. around 3 million eu citizens would be allowed to stay in britain— let's get more on this now with our economics correspondent andrew walker. how significant do you think this is for business and economics, the offer theresa may has made? for business and economics, the offer theresa may has madam for business and economics, the offer theresa may has made? it is certainly important in that it sets a favourable tone for the whole negotiations, and there are a dozen to areas where they matter for business. she has had a positive response from the german chancellor angela merkel, which is encouraging. what is clear with this area is, there is a political will on both sides to get a deal. there are technical issues, certainly, questions about other things beyond rights to work and live in the uk, access to health care, education,
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writes to have family members joining and forth, and the one politically difficult element in this is the question of the jurisdiction, where will disputes be settled ? jurisdiction, where will disputes be settled? the european union side would like that to be the european court ofjustice, which the prime minister has said is a red line. but it does look like it is going to be a relatively easy thing to resolve, certainly in terms of the political will. it is clear that it is strong on both sides. the settled status is one thing. another issue is migrant workers, we saw headlines yesterday in the uk talking about difficulties that some growers were facing getting seasonal workers this year. bbc research was done but looked at particular issues about migrant seasonal workers. we found that there was evidence that soft fruit growers , there was evidence that soft fruit growers, leafy salad grows, two particular trade association, found that their members were having some difficulty getting workers. they said it will certainly harder than
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the year before. a significant number of their members were concerned about whether we would have enough people for this season. it is partly about the uncertainty to do with brexit, although one has to do with brexit, although one has to say, for the time being, those people have the same right to come and pick the fruit and veg as they had a year ago, but it is more to do with the decline in stirling. people coming here temporarily want to take the money back to their families. in terms of foreign currency, it is worth less than a year ago because of the decline after the referendum. because of the decline in pounds sterling, there is talk about whether interest rates need to rise to prop the value up, a bit of a diverted at the top of the bank of england, it seems. a recent committee decided to keep interest rates unchanged at their all—time low. we discovered, to our surprise, that there was a 5—3 split in the voting on that. three wanting to
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start raising rates to deal with inflation that has been feeding through as a result of the decline in pounds sterling. and the delayed effect of rising international commodity prices. but strikingly, we had the chief economist, he said that there was a case raising rates soon, within a day or so of his boss, the governor, saying now is not the time. now and soon are not necessarily quite the same, but it does seem as though there is a division opening up there. one person, one former treasury adviser, suggested that andy halliday‘s position is whatever will oppose the governor. what was your take on the queen's speech this week? governor. what was your take on the queen's speech this week7m governor. what was your take on the queen's speech this week? it was striking. dominated by brexit and the enormous legislative programme that will generate, but wasn't it striking how so many conservative party manifesto commitments were not
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there. social care costs for the elderly, grammar schools, the so—called triple lock on the state pension, and i think that reflects something that may also be reflected in due course in the brexit issue, which is the difficulty they may have in getting a parliamentary majority for everything they want. bearing mind, the details of what brexit will mean, something parliament will have a view on, and there are wide divisions, even with those that accept reluctantly that it will happen. thanks for your time. how did velcro come to be what we know it is today. it is sticky, multifunctional and
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probably in use somewhere in your house. velcro! the idea was the brainchild of a swiss engineer, and in19a1, brainchild of a swiss engineer, and in 19a1, george was walking through the woods when he wondered if those annoying birds had stuck to his trousers and his dog would be of any use. he began by experimenting, and eventually came up with a means to replicate the action, with two strips of material. one with thousands of tiny hooks, and one with thousands of tiny loops. george patented the technique in 1955, just in time for the space race. and the apollo astronauts loved it in the 19605. apollo astronauts loved it in the 1960s. they used it to stop their plates from floating in space. before long, everyone was using it, hospitals, airlines, the military, eventually george was selling
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50,000: that is a year of the stuff, and he made millions. so where did george get the name, velcro? two french words stuck together. what other business stories has the media been taking an interest in? lucy macdonald, cio, global equities at allianz global investors is joining us again to discuss. quite a significant one from the us, big banks passing the first hurdle in the stress test. things are looking more robust than they were just a few years ago. the banks have all made a good effort to get their capital levels up. you can see that. when you look at the minimum regulatory tier one a.5%, they are all well above that. even with the extra leveret put in, most of them still have a good buffer, morgan
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sta nley was still have a good buffer, morgan stanley was a bit on the weak side, but they are looking better. they have got better at working through it as well. from that perspective, it as well. from that perspective, it does underline the fact that the whole of the us banking system has really just mended its whole of the us banking system has reallyjust mended its balance sheet ina way reallyjust mended its balance sheet in a way that we have not yet seen in europe. although we are seeing signs of it in spain in particular. is it the kind of thing that people should breathe a sigh of relief, they are a bit more spots will looking towards a rainy day, or getting better at answering the questions? it is definitely the former. the numbers are a lot better. i think that is known now. when you look at the valuations of the banks in the us, they certainly have started to reflect that, but there is a lot of work to do in europe. so a survey saying that you should give some of your floors in a job interview, and you are more
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likely to get the job. what does it say in the article, any tips? it is all about self verification. i am a bit ofan all about self verification. i am a bit of an expert in this because i have been helping my son, who is doing a level psychology. it says that if you are honest about your flaws in an interview, you are more likely to get the job. there is a secondary part of this that is definitely, having the qualifications in the first space. if you don't have the qualifications and you are not confident in the job, it is best... what is a good flaw to say? personally, i would say, feedback i have had is that i can be detached. therefore, being here in this interview, being on the bbc, it clearly shows i am trying to do something better. you would never be able to tell! asked a flaw, i would say answering silly questions like that. that's it from business live today.
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goodbye. hello it's friday, it's 9 o'clock, i'm chloe tilley. welcome to the programme theresa may puts an offer on the table about three million eu citizens living in the uk — they will be allowed to stay here after brexit. i want to give eu citizens certainty but i also want those same rights for uk citizens living in the european union. we'll have all the details and we'll be hearing from eu citizens living here in britain. it's neitherfair, it can't be a serious offer. we feel it falls short in so many different ways. as residents in eleven tower blocks in england are told they may not be safe, we'll ask how many more buildings could be affected once all the checks are done.
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