tv BBC Business Live BBC News May 31, 2019 8:30am-9:01am BST
this is business live from bbc news, with jamie robertson and samantha simmonds. trump's trade bombshell. the president says he'll hit all goods from mexico with tariffs until they curb illegal immigration, rattling global markets. live from london, that's our top story on the last day of may. us president donald trump has announced tariffs on all goods coming from mexico in a bid to curb illegal immigration. plus — cbi no deal warning. britain's bosses write to conservative leadership hopefuls to tell them the damage of leaving the eu without an agreement
would be "severe". and transport tech giant uber has released its first set and briefly on the markets, all of them looking down as a result mr trump's comments last night on twitter. we will have more on that ina twitter. we will have more on that in a short while. and transport tech giant uber has released its first set of results since listing on the new york stock exchange earlier this month. and it's losing a huge amount of money. and we want to hear from you on today's stories. join the conversation — just use the hashtag #bbcbizlive. hello and welcome to business live. welcome to the programme. we start in washington, where president trump has dropped a new bombshell on global markets still reeling from his escalating trade war with china.
late on thursday, he announced on twitter that he will impose tariffs on all goods coming from mexico until it curbs illegal immigration into the us. tariffs will start at 5% in ten days‘ time, then gradually ratchet up to 25% unless mexico takes action. with us now is simon french, who's the chief economist at panmure gordon. welcome to you, thank you very much for being with us. so, donald trump has opened up a new front on the trade war, this time with mexico, america's largest trading partner, has he shot himself in the foot this time, do you think mexico will retaliate in kind and he will find himself in a world of trouble? he has shot us consumers and businesses in the foot because ultimately, these tariffs we must not forget our paid by us businesses and consumers, so paid by us businesses and consumers, so there is a parallel with what is going on with china. you're right,
the retaliation function from mexico is key for markets to this may ramp up is key for markets to this may ramp up orwell at whether the relative size of the mexican economy and the us economy means that the mexicans will have to make concessions. what is going to happen to the us mca, the deal which they signed just a few months ago, it hasn't been ratified yet, but this is the new nafta between mexico, the us, and canada, what has happened to that in all of this? of this potentially moves to the right in terms of ratification. it was always going to bea ratification. it was always going to be a partisan setup right now in america, heading up to the elections in 2020. we had some good news in terms of north american trade in relation to the removal of steel ta riffs last relation to the removal of steel tariffs last week, and so we thought that part of the geographic map was improving. does he want to reopen it, well, potentially, in terms of the impact of mexico... that's remember, the trigger to this is the
ongoing porous southern border, will that get wrapped up into what up until now has been a debate over goods and services, now bringing the people flow into it? we have seen the markets reacting in isolation over the past week or so with china coming out with words of terrorism, calling this economic terrorism, and each step—by—step, is they're going to bea each step—by—step, is they're going to be a tipping point if this continues with the widen of —— widening of this trade war where they go into freefall potentially?‘ lot will hinge on the 18th ofjune when the federal reserve meets to discuss monetary policy. why that is releva nt discuss monetary policy. why that is relevant is that equity markets, capital markets, this year, have really been driven by the quite dovish commentary coming out of the federal reserve in december, leading toa federal reserve in december, leading to a big rally in equity markets in the first chord. will the fed effectively come to the rescue of the markets again? this is what investors will have to price in in terms of offsetting the price of
ta riffs terms of offsetting the price of tariffs with cheaper money. for the moment, thank you. while the markets are of course concentrating on the mexico announcement let's not forget, china is set to hike tariffs on a range of us goods tomorrow. let's talk to our asia business correspondent karishma vaswani, who's in singapore. what are some of the products that china is putting tariffs on and what impact is this likely to have? yeah. it doesn't seem like it is tariffs, tariffs, tariffs, every time president trump has a tweet to send out. and in retaliation, of course, beige is going to start raising tariffs on $60 billion worth of american products. this set of ta riffs of american products. this set of tariffs will hit more than 5000 goods from the united states, and remember, this is a raising of ta riffs remember, this is a raising of tariffs from the range of 5% to 10% which we had seen earlier, to as much as 25%, things like meat, alcohol, oilseeds, fruits, frozen foods like peas and corn, lots of
other stuff is on this list. higher ta riffs other stuff is on this list. higher tariffs means that goods will become more expensive for chinese consumers, american goods. and that basically means that chinese consumers will look to see and find other options. it is already happening. tariffs on american wine, for instance, this time around, will go for instance, this time around, will 9° up for instance, this time around, will 9° up by for instance, this time around, will go up by 15%, making that a class of californian chardonnay far more expensive for chinese consumers, and already, the wine industry, the american wine industry, has seen a hit from this. some 25% of their exports in 2018, because of tariffs, hit by the trade war. and they've seen a decline in exports to china. karishma vaswani, in singapore, for now, thank you. let's take a look at some of the other stories making the news. jp morgan will pay $5 million to settle a discrimination case involving parental leave for fathers.
derek rotondo said the bank denied him a parental leave benefit available to all employees who are "primary caregivers" of a newborn. he filed a lawsuit against the firm in 2017, and a class action led by the american civil liberties union followed. us vice—president mike pence says the white house is committed to ratifying a new north american trade deal by the summer and has already submitted initial documents to congress. the pact, a replacement for nafta, was signed by the us, canada and mexico in november but needs approval by lawmakers in all three countries. hsbc is planning to cut hundreds ofjobs in its investment banking business by the end of the year, according to reports. bloomberg says the cuts could begin this month, as the company tries to reduce costs. uber has posted a $1 billion loss as the ride—hailing firm delivered its first figures since a disappointing flotation earlier this month. amit pau is the co—founder of empaua ventures.
so, still making massive losses, apparently, it is never going to make a profit... actually, these figures were welcomed by the market, weren't they? yeah, they were, we need to put it into context, in ten yea rs, need to put it into context, in ten years, uber has built an amazing franchise, 63 countries, 700 cities and 93 million consumers. however, despite its high profile ipo, the shares have flopped. you may ask why. the main reason is the real lack of certainty on how uber will have a clear path to profitability. how much of this is down to the huge investment which uber eats? that is a great question, uber is shifting from being a ridesharing company to being the global platform for transportation and commerce. they have made a significant investment on over rates, which has grown by 100%, which reflects the return. however, it is operating in a hugely, fiercely competitive market,
and that competition is going to increase with amazon's investment in delivery. last year they grow at 100% but despite that, they actually lost market share on uber eats from 1296 lost market share on uber eats from 12% down to 10%. thank you. let's have a look at the markets now. we have a look at the markets now. we have got the nick a, the hang seng, all of them down. the total loss for the month on the nikkei is about 7%, really quite considerable. and this last announcement by president trump has not helped things. the hang seng, in hong kong, down three quarters of 1%. the dow, this was before the announcements yesterday but i think we back in that the market is going to be down again later today when it opens at midday european time. and the nasdaq as well was up yesterday. looking reasonably healthy but we know what
awaits later on, during the day. and the ftse up three quarters of 1%, down, i beg your pardon, already starting in negative territory as i said earlier. the dax suffering quite badly as a result of those comments overnight, which we will be dealing with throughout the programme. simon french, who's the chief economist at panmure gordon, is back with us now. let's talk about signs of a recession because we understand that they are increasing, especially with they are increasing, especially with the bond yield curve, which you can explain to us? this is the situation where the interest rate on short government debt is higher than the interest rate on long government debt. there is lots of different definitions but it has been such a great indicator, typically around six quarters out, from when a us and global recession comes along. since the 1960s, each time we have had a yield curve inversion in the
economy, a recession has followed. that happened first at the back end of the first quarter this year and it has happened again recently in a more sustained fashion. and how much ofa more sustained fashion. and how much of a sustained fashion do you need to see for that trend to take over eventually? one of the question mark is you have to ask is whether the $24 trillion worth of quantitative easing, money printing, which has taken place easing, money printing, which has ta ken place over the easing, money printing, which has taken place over the last decade, has changed the shape of the yield curve, whether the interest rates are prohibitive for people to take out credit. this is the thing, people in markets love these patterns but it is not clear actually that things are the same this time. this is what is dividing investors right now. on the chinese economy, which of course is so critical to the global economy now, and which we haven't really seen contract, even during the financial crisis, what is happening to it now? at the moment they are repeating the stimulus programme which they tried successfully in 2015 and 2016, a weakening of the currency, it is all designed to stimulate the domestic
economy because they are worried that their balance of payments and trade that their balance of payments and tra d e flows that their balance of payments and trade flows are going to be impaired by the trade war. simon, thank you. still to come... a no—deal brexit scenario would do "severe" damage to businesses — that's what uk business bosses are telling conservative leadership hopefuls. we'll be getting the inside track on some of the big stories making waves this week. you're with business live from bbc news. despite a tough time for the high street, outdoor retailer mountain warehouse has recorded record results. sales were up 13% to £255 million with like—for—like sales up 5.5% year on year. it meant pre—tax profit was up 14%. mark neale is mountain warehouse's founder and hejoins us now. secret of your success?” secret of your success? i think it isa secret of your success? i think it is a relentless focus on value for money. always great prices and
trying to stay a little bit ahead of the customer and constantly broadening the range that we offer. online sales are at 23%, how much of thatis online sales are at 23%, how much of that is a focus for you and how much is it in bricks and mortar, how are you differentiating? is it in bricks and mortar, how are you differentiating ?|j is it in bricks and mortar, how are you differentiating? i think for any retailer, online sales have really got to be front and centre these days. but for us it really works hand—in—hand with the stores. so, we're still opening more stores in the uk and outside the uk but the online business is growing even faster. but you're basically competing on price, aren't you? some of your major competition is slightly more upmarket, people like cotswold, a re slightly more upmarket, people like cotswold, are actually having quite a hard time, and basically people are going for cheap stuff, is that right? it is notjust price, its quality as well. we only sell our own brand of mountain warehouse gear, a lot of it is made in the same factories where some of the better—known brands also get their products made. where do you source
stuff from? primarily from asia, from china and elsewhere in asia. has that not become a lot more expensive with the pound falling? yes, it did do that but we work very ha rd yes, it did do that but we work very hard with the factories, we absorbed some of those problems ourselves because at the end of the day customers don't like paying high prices. because we only sell own brand, then we can offer better prices to the consumer. there must bea prices to the consumer. there must be a trend in people who are obviously using your stuff, who are camping more, doing outdoor activities more, is that what you're seeing? we're definitely seeing that and if more people are holidaying at home, then that is also good for us. but we have a really broad range of products now, shorts, sandals, even some addresses which are couple of yea rs some addresses which are couple of years ago i some addresses which are couple of years ago i never some addresses which are couple of years ago i never would have thought a company like mountain warehouse would sell. and we've got something for all seasons, for all the family. thank you very much forjoining us. you can keep in touch with all the
stories we're covering online, head to the news website. your're watching business live. our top story... i beg your pardon, the top story suddenly disappeared come? i've remembered it now, mr trump's comments on declaring a tariff or with mexico. because he is worried about the immigration and he wants them to stop letting people over the border. a quick look at how the markets are faring. they opened in europe all in negative territory. now, it's been a busy week of business news, not least in tech world, where mark zuckerberg, boss of industry giant facebook, faces challenge to power at shareholder meeting. meanwhile, the uk's business lobby group the confederation of british industry warns of no—deal brexit damage to business. here's the group's director—general carolyn fairbairn.
we are asking all of the candidates to look at the evidence coming from the face of british business, particularly small companies who've are stockpiling raw materials and goods, wasting money that they could have been spending on training and other things, to look at the cost of tariffs, other things, to look at the cost of ta riffs, wto ta riffs other things, to look at the cost of tariffs, wto tariffs are rudimentary, no other country in the world trade is just on wto tariffs. look at the impact it is going to have on the ability of our firms to compete and grow, and then come look, make your decision as leaders. simonjack is our business editor. this is something we've been hearing from the cbi for three years, we've got to sort this out, no deal is a real disaster for businesses, and now she is directly appealing to those who ultimately will be making the decision, and we've seen so many of those contending for the leadership come out and say, "i will actually consider no deal." yeah, in actually consider no deal." yeah, in a sense there is a bit of deja vu about this, you've got the business
groups say and, remember us, we are the conservative party's friends, free enterprise, we are the job creators, we're old friends, we've asked our members and please, please, please don't do something which most of them think is daft which most of them think is daft which is leaving the european union without a deal that the end of october. so, appealing directly to the 12, as things stand at the moment, candidates are! and we know that at least half of them have said that at least half of them have said that they're prepared, some of them even determined, to leave at the end of october without a deal. so what you're seeing is the cbi really asking, are the conservative party, the centre—right party in the uk, really the natural party of business? and it's not clear in some quarters that they are. you make it sound as though they could quite easily so, you don't do what we say, we will take away your funding. that's the interesting thing, the tory party traditionally relies on a lot of donations from the private sector, from corporate and high net worth individuals who have made
their money in business. if you look at the donations, they are sharply down, down by half, the three months at the beginning of this year compared with the end of last year. and in fact level pegging with labour, the labour party, which gets money from the unions but doesn't get a lot of donations from the private sector. there is a massive opportunity for another party to step in and say, we are now the friends of business, not naming names! the lib dems in the recent european elections had a very good showing, so, you had the pro—brexit party doing well, you also had some of the pro—remain, the lib dems, probably their most identifier policy is to remain in the european union. so, what's happened is, the centre ground has basically been evacuated, and all these traditional alliances that you would normally see, brexit has broken them, as it has broken so many of the orthodoxies that we have seen over the last few years. let's talk about facebook and zuckerberg, who has faced a bit of a shareholder revolt
this week. he has seen it off? he has. it was always going to be pretty tough. he owns 13% of the shares but he controls 58% of the votes, so it was never going to be close! but had he not had 58% of the vote, i think it is possible he would have won. shareholders say it is too autocratic, this is mark's company, that's not healthy for the way a company is one. and also there is an awful lot going on at facebook, trying to launch their own currency, they have had scandals, talking about hate speech, their involvement in political campaigns has come into the spotlight. i've been to facebook meetings with senior people there, i say, why didn't you appear at the select committee in the uk? they say if we did that, we would have to go to germany, italy... we say yeah, may be you do, and maybe you need a chairman who can go and do those things, go and represent the country while mark, according to executives, is trying to fix facebook. but when
you have a lot going on in a company and one person in charge, generally they become more and more obsessed with those things which are going on and don't delegate stuff? when you have companies... i am not saying that they are all the same but if you look at a company like wpp, the advertising giant, founded and run for 30 years by the guy who founded it, eventually had a reputation, martin sorrell, for micromanaging, thinking it was his own fiefdom, whatever. and that can lead to bad business practice. elsewhere in europe, you would never have a company with a chairman, chief executive, with that concentration of power. it looks more like a private company than a public company. but as long as he's got 58% of the voting rights, the only thing which could ever change that is if the rest of the directors decided to do some sort of mutiny and sat him down and had a board meeting with him not in it, and said, whatare down and had a board meeting with him not in it, and said, what are we going to do about it? i can't see
it. why is he so obsessed with keeping absolute, total control? does he just see it as keeping absolute, total control? does hejust see it as his keeping absolute, total control? does he just see it as his fiefdom, his private business, even though he has all these shareholders now?|j has all these shareholders now?” don't know him personally so i can't talk about what drives him and why he thinks he needs to keep such a tight grip. but i think founders, it is not that uncommon to have someone wa nt to is not that uncommon to have someone want to hang onto... it is his baby. it is his baby, and martin sorrell never quite had the control which mark zuckerberg has, but with such a global company, you could say he is in contention for being one of the most powerful people in the world. do you see the shareholders floating a balloon outside the meeting. angry emoji! it might have changed his mind, but it didn't, strange that! there is an emoji for the us president coming to the uk, i
understand... in a moment, we'll take a look through the business pages, but first here's a quick reminder of how to get in touch with us. stay up—to—date with all the business news as it happens on the bbc‘s business live page. we want to hear from you, too. bbc‘s business live page. we want to hearfrom you, too. get bbc‘s business live page. we want to hear from you, too. get involved bbc‘s business live page. we want to hearfrom you, too. get involved on the business live webpage. let's see what other stories are being talked about on social media. what other business stories has the media been taking an interest in? simon french from panmure gordonjoins us again. the first one, do you genuinely love your work or are you just pretending? this is a long article in the new york times, saying that the younger generation, they have to look as though they're really enjoying their work, even if they're
not. well, this is wrapped up in the signalling, the instagramisation of our lives, some people positively exudein our lives, some people positively exude in the fact that they've been doing 100 hour weeks. rise and grind! is it to do with social media that everybody has to post everything, so you look like you're having the most amazing time all the time, including at work?! we're having a great time! well, we do talk a lot about corporate brands but there is also a personal brand, you're signalling to potential employers, employers who can screen your social media and see what virtues you present, so there is some altruistic behaviour as well, in terms of future employment. we've had some high—profile entrepreneurs, elon musk, talking about the importance of doing long hours. it's called toil glamour! and because you're doing long hours, you're obviously enjoying yourself! to all
these boxes, we're doing very well! but as you say, it's being able to work a long period of time, so it shows you're enjoying yourself. maybe! —— to all these boxes.” think it is generational, i know a lot of people who love to moan about going to work. another story that we're covering here, is about businesses urging the uk to set a net is here emissions target for 2050, coming after the call couple of weeks ago for that goal to be reached, and now we think theresa may might set this as a legacy. she has only got a few days to have some kind of positive... it would be some kind of positive... it would be some kind of positive... it would be some kind of legacy? it would add i think it would be quite positively received in the treasury building here in the uk, the reason being that the government has set a target
for 80% reductions in emissions by 2050, and the caution over moving to a net zero, so, 100%, was the impact on businesses. this letter is from a lot of high—profile uk businesses saying, we are ok with that. i think they slightly cautious that some of they slightly cautious that some of the movement we saw in the last six weeks towards here emissions by 2025 was going to get some support and therefore they're trying to show an alternative path. do you think it would be a huge change in the way we do business? here in the uk, probably not, actually. the profile the uk has been on, it has made progress in this direction so not a huge step change. i think it is far more challenging to see some economies which are on different stages of the development journey to the uk, where emissions are still rising, where this is a much harder target. simon, thank you very much. i want to see you tweeting all about your wonderful office day! toil glamour! we've all had a lovely time
here. we have! that's it from business live today. there will be more business news throughout the day on the bbc live webpage and on world business report. we'll see you again tomorrow. good morning. the weather is going to turn even warmer over the weekend, probably picking on saturday at about 28 degrees in the south—east of england. today is going to be another warm day, it is not going to be dry, we have got some rain in the far north and west and that is going to be particularly heavy for northern ireland and into scotland. especially the western highlands. later on there will be some sunshine developing across the midlands, east anglia and the south—east of england. further north and west, thatis england. further north and west, that is where the heaviest of the rain will be. despite that reign, it
is still going to be pretty warm. up to about 23 degrees in the south—east of england. overnight tonight that rain will move southwards, becoming quite patchy into tomorrow morning, again, quite a bit of cloud developing in the early hours. temperatures no lower than a early hours. temperatures no lower thana10—13, early hours. temperatures no lower than a 10—13, another warm night to come for many of us. we keep the warm conditions over the weekend. the south—westerly air stream is bringing in that warm air, all the way from the mid atlantic. during saturday, there will be some sunshine across southern parts, quite a bit of cloud around the irish sea coast, with some drizzly outbreaks of rain pushing northward into south—west scotland. temperatures here, still about 17-19. temperatures here, still about 17—19. perhaps getting up as high as 27 or 28 somewhere in the south—east. into sunday, we're going
to see this low pressure system moving in from the west and that is going to turn things more unsettled with some showers moving from west to east. some of those could be on the heavy side. for east anglia and the heavy side. for east anglia and the south—east of england i think it is going to be mostly dry with some sunshine and here, temperatures could still get up into the mid—20s on sunday. elsewhere, temperatures down by a couple of degrees but still fairly warm, on sunday. into next week, it's going to remain quite unsettled with quite a few showers around through next week and it will be cooler.
you're watching bbc news at 9:00 with me, annita mcveigh. the headlines: business lobby group, the cbi, warns conservative leadership candidates over leaving the eu without a deal. what we are trying to communicate here is the depth and breadth of opposition to no deal in the business community. donald trump says he'll hit all goods from mexico with 5% tariffs until they curb illegal immigration. the lawyerfor shamima begum has written to the home secretary, accusing authorities of failing to protect herfrom being "groomed" by so—called islamic state. new figures from the gp's magazine pulse reveal nearly 140 surgeries closed across the uk last year — up from just 18 in 2013.