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Hello and welcome to World Business Report from the BBC World Service.
I'm Roger Hearing and on this edition, market euphoria on Wall Street with record highs.
but is there a risk that the bubble may burst?
Also, the US Treasury eases sanctions on some businesses selling arms to the military regime in Myanmar. Is it a sign of a change of attitude in Washington?
Finishing off our 140 -year cathedral building programme in Barcelona, we'll also hear about Texas facing an energy crisis and with Donald Trump doing diplomacy on the golf course in Scotland, is doing business on the green a good idea?
But first, it's been a wild few weeks on Wall Street.
Stock valuations are close to record levels.
The S &P 500 index hit a string of all -time peaks this month, while US corporate borrowing costs are nearing their lowest level in decades.
And Nvidia became the first company worth over $4 trillion.
Bitcoin has soared, and meme stocks, as we reported earlier in the week, are back.
And all this in the teeth of uncertainty caused by the president's mercurial tariff policies.
Well, now there are warnings that all this might be a bubble and it could be about to pop.
As I heard from George Steer, the Financial Times stocks correspondent in New York.
It's unusual, right, because there's so much economic uncertainty right now because of the tariffs and the way in which Trump is rolling them out and then bringing them back.
The jobs market is holding up, but, you know, there are cracks beginning to appear.
And yet we've had, I think, five record highs for the S &P 500 this week alone.
So it's a kind of it's a strange rally.
Ali. Big investors have said it's disgusting, revolting.
They hate it, but they have to buy into it because it doesn't look like it's going to stop anytime soon.
Yeah, because the factors all seem quite strange.
At the same time, we're seeing the cost of borrowing seems to be dropping quite a lot, which obviously, I guess, encourages it.
But the signs of overheating really do seem to be there.
Yes, and I think that's most evident in the sorts of stocks that are suddenly doing doing very well.
We've had in the last week a kind of revival of the meme stock mania that swept through markets in 2021.
So unprofitable or smaller companies that haven't suddenly become more profitable are suddenly doing very well.
GoPro, Krispy Kreme, Kohl's, a department store, they're hundreds of percent over the last week or so driven by this kind of online Wall Street bet style fervor.
But are we also seeing some of the stocks that are very well thought about maybe at the moment.
Tech stocks, obviously, with the AI boom.
Is that where it's really coming through?
I mean, I know Nvidia has reached $4 trillion the first time over that threshold, but is it in general tech stocks?
Yes, tech stocks have led the market, have dominated the market for years.
As you said, Nvidia has done incredibly well this year.
Tesla less so because of Elon Musk's travails.
But yes, it's the growthier stocks, the expensive tech stocks that have done well over the last few years, that have driven the market higher over the last few months.
companies like Palantir, too.
And yes, this exuberance in the tech space has kind of spread throughout the market and has kind of now swept up smaller, growthier tech stocks as well.
So I guess there are two questions here.
One is, why is it happening?
And the other question is, how long is it going to last?
Hard to say how long it'll last. Why?
I think it's just there's a sense that Donald Trump is now that the worst of the tariffs, the worst of the unpredictability caused by Trump's initial tariff announcements in April, now that that's passed.
And there's a sense, you know, that he's going to start deregulating over the next few months in a way that he's already started to.
I think all of these things are conducive to higher stock prices.
There's a lot of cash on the sidelines still.
There's a lot of positivity, depending on your political persuasion, too.
So that's driving a lot of this, the rally and a shortage of alternatives.
European stocks have lagged behind again.
China has its problems. So there's nowhere else really for investors to go but the US.
But I've seen words like euphoria, exuberance.
I mean, all this sounds like pride coming before a fool.
Are we at risk of being in a bubble and that bubble bursting?
Oh, yes. I think, yes, by certain measures, price to book, price to dividends, price to sales.
You could say that, yes, the stock market is in or approaching bubble territory.
Betting on when that bubble will pop is a very, very tough game, a fool's errand almost. most. So, yeah, no one could put a date on when it might deflate or pop.
Something, a black swan event, something will happen that will cause some kind of correction, you'd think, but yeah, hard to say when.
But we're currently, we're in holiday -ish times.
I mean, is it possible to say optimistically that nothing's really going to change much until everyone's back in September?
Well, that's what people said this time last year.
And there was a huge sell -off in August that knocked tech stocks stocks in the US are particularly hard. So it's in part because so many people and big traders are away on holiday during August, there's less liquidity, there's less cash flowing through the system.
So when something bad does happen, things tend to sell off even more aggressively.
So if it wouldn't take much to knock this rally over, basically, it's a fragile rally.
George Steer, the Financial Times stocks correspondent speaking to me from New York.
Now, for many years, the US has imposed economic sanctions as a way of putting pressure on the military government in Myanmar. But now suddenly, several individuals and companies accused of supplying arms to Myanmar's military regime have seen restrictions on them lifted.
The White House hasn't commented on the decision, and it comes after Myanmar's ruler, General Min Aung Hlaing, wrote to Donald Trump.
The letter praised the U .S. president's leadership and applauded the closure of U .S.-funded media outlets which have been covering Myanmar's ongoing civil war.
Human Rights Watch and other campaign groups Groups say the lifting of these sanctions could indicate the U .S. is moving to accept Myanmar's junta.
Well, I spoke to Vicky Bowman, the U .K.'s former ambassador in Myanmar and former director at the Myanmar Center for Responsible Business.
What does she make of the lifting of sanctions about U .S. policy towards the Myanmar government?
It is absolutely a coincidence.
And indeed, there's been a senior Trump official saying this was just a decision taken in normal course of business.
But when you look at the people who've been taken off the sanctions lists, none of these are people that matter remotely to Senior General Min Aung Hlaing.
And the kind of sanctions lifting that he was asking for in his letter to Trump would be things like unfreezing the billion dollars of blocked Myanmar funds, which the Federal Reserve.
So this is not what he was asking for.
Is the bigger issue likely to come through, though?
Is this just the start of a change of policy, do you think, from the White House?
I don't think there is a policy and I think this is part of the problem.
I think that Myanmar is just caught up in the slipstream of all sorts of other chaotic decisions which are taken particularly around things like USAID, funder of many Myanmar projects, both humanitarian and also work with the local democratic groups, freedom of the media.
So those kind of things have hit the Myanmar opposition hard. In terms of trying to change the policies of the Myanmar government, I mean, these sanctions have been on for a long while.
they haven't really had much effect anyway, have they?
Well, I think there are multiple forms of sanctions.
And what these are is sanctions on individuals who are business people who have over the years decided to engage in business with the military in different ways.
And it's not all about arms trading.
I mean, there's a couple of the people taken off today who were accused of working with the military -owned company on non -arms trading related stuff.
stuff. So this is kind of chump change in the wider political economy.
It's really not significant for the wider political environment.
So a bit of US Treasury housekeeping rather than anything else, effectively?
I think so. I mean, these people were mostly put on sanctions lists in 2022, 23.
It would have taken them a while to hire lawyers.
Those lawyers have to go through a sort of approval process with the sanctions body OFAC of the US government.
And then they've have got to submit their case on behalf of the clients.
And they'll have to say either that the case against them was wrong or that the client has stopped doing the kind of things they were being accused of.
So, they'll have had to go through all of that.
And that will have taken probably over a year.
And probably, the OFAC department will have wanted to take these as a batch. Indeed, there's one of the lawyers that supported some of these clients who just posted on LinkedIn saying that he'd had sort of three victories in this delisting, both related to North Korea and related to Myanmar. But what about overall, Vicky, the economic pressure that the West in various forms has tried to bring on the Myanmar government?
Is it actually having much effect?
I mean, the government's now caught up in a civil war.
You can't imagine that there could be much more pressure that could be brought.
But is even the pressure that's there making any difference?
I really think that the West and its economy is pretty irrelevant for most of what what goes on in Myanmar. It's always been a quite self -sufficient economy because of the long isolation that it imposed on itself from 1962 onwards.
It's imports of manufactured goods from China, mostly.
So the West's interaction with Myanmar's economy is minimal anyway.
Is there any kind of financial economic support going into the rebel -held areas, which are, as I understand it, fairly substantial now within Myanmar?
I think most of that was previously coming from Myanmar diaspora.
A lot of those funds, I think, have dried up because this has now been four years.
And so what we're now seeing with many of those rebel -held areas is that they are self -funding through a combination of mining.
So there's a few artisanal mines, some of the rare earth mines up in the north of Myanmar, which export across to China.
And then extortion, frankly, of the local population as well.
That's been a common complaint that we're hearing.
The economy is in a mess as a consequence of the conflict, but I don't think that anything that's happened around this sanctions delisting matters a jot compared to the wider humanitarian crisis that's in the country.
And no sign of an end to the civil war or the humanitarian crisis in the country as a whole?
I don't think so. I mean, we have from the senior general, Minnan Lai, his intention to have elections at the end of the year.
And I think that it's quite clear those will not be democratic or free and fair.
Whether or not they provide an opportunity for the next chapter, I don't know.
But certainly they're not going to produce a peaceful outcome.
Vicky Bowman there speaking to me earlier with World Business Report from the BBC World Service.
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Right now, with zero commitment, Well, let's pick up on what's been going on on the markets.
Joining me now is Chris Lowe, Chief Economist at FHN Financial in New York.
Chris, thanks for being with us once again.
You probably heard what we were talking about at the top of the program.
Do you think that the markets, the Wall Street indices are actually going perhaps to the point where there could be a bubble?
Look, I think what this comes down to, Roger, is a question of who's going to be paying the tariffs, because if you look at corporate earnings in the U .S., they're actually quite robust. bust, we've got the fastest profits growth in a very long time, at least in recent years.
But going forward, obviously, if they're eating this big tax increase, which is what the tariffs are, that could be an issue.
And this morning in The Wall Street Journal, we read that, in fact, it is corporations that are absorbing the tariffs at the moment.
I think that's going to be the issue that has to be resolved.
If they can pass along the tariffs to consumers, then I would say equities are within the range of fair value.
And as long as the economy keeps growing, we're fine.
But at the moment, stocks are rising pretty much on optimism only.
Well, I was going to say, and the investors clearly believe that there is a way of riding out the tariff storm, pretty obviously.
So they must believe that this can be passed on to consumers.
Yeah, and I think, you know, especially if you look at trading in the last three or four weeks, that's being fueled by the fact that we have reached trade agreements with most of our major trade partners.
And those are at lower rates than were originally proposed back in April, and obviously that's positive for everyone involved.
The glaring exception is the EU.
And perhaps we can reach a deal before August 1st, I know.
Oh, Chris, are you still there?
I have a horrible feeling we've lost Chris.
Chris, can you hear me?
It sounds as if we've lost lost contact there with Chris.
Chris Lowe there of FHA and Financial.
We will, of course, be talking about in part what's been happening with those negotiations between the EU and the United States, perhaps occasioned by the arrival of Donald Trump in Scotland and potential talks, in fact, with von der Leyen and other officials from the EU.
We'll come back to that later in the program, probably.
But now let's move on to Texas, because in Texas, the temperature has been rising.
In fact, in Houston on Friday, it reached 28 degrees Celsius, and it's hot enough all by itself to put major pressure on the state's electricity grid.
It's close to unmanageable when you throw in a growing population and more data centres.
Monthly energy demand in Texas is expected to double roughly by 2030.
That's according to ERCOT, which is the state's grid operator.
Now, to make sure supply keeps up as best it can, investment is being made in new power generation, including natural gas and solar.
But energy companies are desperate for every extra electron they can get their hands on.
And that includes pooling at -home energy resources.
Marketplace's Elizabeth Troval reports.
In Houston's trendy Heights neighborhood, I'm touring what Texas energy company NRG calls their smart home.
In this two -story house, the company shows off its latest tech to make the most of every kilowatt, which is important in Texas summers, even on what passes for a cool July day like today.
It's in the mid -90s.
So we're walking out of the house now through the backyard to the detached garage.
NRG's Wayne Morrison is showing me around.
You can hear the air conditioners humming.
I'm about to see just how much energy that giant AC is using to cool the smart home.
We go to the second floor in this test home's garage, where there's a large screen with a moving graph that shows the entire home's energy consumption in real time.
This is what's actually going on in this house right now.
NRG's Mark Parson shows me what happens when we plug in an electric vehicle.
You can see the big spike.
like, energy consumption doubles.
Then we stop charging the EV and turn off the AC.
Now you see everything coming offline.
The graph dips way, way down.
Your consumption, it's pretty much air conditioning.
Which is why setting people up with free smart thermostats is one key to NRG's virtual power plant.
It's a program developed developed to balance energy supply and demand by tweaking energy usage in hundreds of thousands of homes.
Instead of doing everything at 2 o 'clock in Houston when it's 100 degrees outside, charge your car later, cool your house before that, cool your house after that.
Because those tweaks add up.
If you had 650 ,000 thermostats acting together, that's a middle -of -the -road power plant.
A power plant you might not have to build.
Instead, you get that virtual power plant.
And yes, demand -side programs have been used for decades.
But what's different here is the sophistication of these programs. Texas energy consultant Doug Lewin says these programs use machine learning with smart thermostats in your house, so it automatically pre -cools.
Think of like, you always want your house to be 75.
You don't want to go above 75 for in the summertime.
time. You wouldn't necessarily care if it's 72 inside your house sometimes.
Pre -cooling your house when the sun is high saves you, the customer, money and lessens strain on the grid because solar energy is cheaper and is only abundant in the daytime.
These virtual power plants are monitoring prices and the weather and learning consumer patterns to a level a residential customer wouldn't.
No human has to take any action.
Your comfort is maintained And there are also programs like this on the supply side.
I'm talking residential batteries that can be pooled together.
When she worked for Tesla after the 2021 winter storm that caused massive outages in Texas, Arushi Sharma -Frank helped create a pilot program so people who buy home batteries could get paid for the small amounts of electricity they send back into the grid.
grid. We have to squeeze out juice from everything we can.
We need to allow customers who invested insurance policies wherever they can to make a return on their investment.
Though these kinds of programs are growing in popularity, a big question remains, says Doug Lewin, how customers will be compensated.
What you're adding to the grid is very valuable.
What you're actually removing in demand also has a value, and actually ascribing that value and then literally paying the customer for it.
That is a difficult thing to work out the details on.
Still, he says that a large energy company like NRG has rolled out a virtual power plant in Texas.
Mark's a pretty big shift. Elizabeth Troval reporting there from our U .S. partner Marketplace.
Now, Donald Trump Trump has arrived in Scotland.
We're going to have, I believe, dinner at Turnbull with the Prime Minister.
Then we're going to go to the oil capital of Europe, which is Aberdeen, and we're going to have lunches there.
We're going to have a good time.
I think the Prime Minister and I get along very well.
Well, although the US President, as he says, will meet the UK Prime Minister during his trip, his main focus is his golf courses there, which include Turnbury, you mentioned.
It's not clear if he's going to play around with Keir Starmer, but golf has long been a sport tied up with doing business, around being a useful occasion for networking and discussion, and the President himself has often conducted business, politics and diplomacy while golfing.
But is it an effective business tool, or does the sport get in the way?
Joining me now is Arthur Kayser of the Golf College of Kayser University in Florida.
Arthur, thanks for being with us here on World Business Report.
Port. I guess, well, I know that at one point your college put out six reasons why golf can be an amazing networking tool.
So you clearly think it is an effective way of doing business.
It is. It's a non -pressured environment in which you have the opportunity to meet with your colleagues for four solid hours plus.
And where you have time to talk, you have time to socialise, you have time to compete.
I wish I competed better than I do now.
And everybody can play, no matter how good or bad you are, on the same because it's all staggered by your talent and your skills.
So it takes away the pressure and gives you a lot of time to communicate.
Well, Arthur, let me push back on that a little bit because, I mean, a lot of politics and And business, of course, is built on relationships and, you know, comparing each other.
And one man's handicap or one woman's handicap can be compared to perhaps someone who is their boss, maybe, at work.
I mean, that can cause a few issues.
You know, you may be a good business person, but you might not be a good golfer.
Well, I can tell you from the vantage point of being a bad golfer that it does not get in the way.
It is just the time to be out on the, I think as the British call it, a pitch and enjoy the sun, enjoy the company, and be able to have time just without the pressures of a telephone, without the pressures of the office.
So I think it is a remarkably good place to do business.
But then, of course, we often hear these stories about people who play, let's say, a little bit competitively.
I think, in fact, your president, it's been suggested at some point, doesn't always necessarily stick to the rules.
And that in itself can produce more tension, can't it?
Oh, it can if you allow it.
But I think most people who play golf and who, you know, play it, and again, as a social situation or a business situation, it's more for the just getting out into the open air, being able to have a time of walking around and communicating.
communicating and if it is competitive uh at least i have never been in that environment because again i realize i'm not a good golfer and i play with some people who are really good golfers and uh we then try to go to a scramble where we we play with the same ball so it works out well would you maybe let them win if that would maybe gain you a business advantage if i could yes but that's easy for me that's very easy Arthur, thank you so much for being with us.
I really appreciate your time.
It is my pleasure and I wish you the best. And you, sir.
Arthur Kayser there of the College of Kayser University in Florida.
Now, La Sagrada Familia is perhaps the most famous building in the Spanish city of Barcelona.
It's a gigantic cathedral with unique architecture and it was the masterpiece of Antoni Gaudi.
But he never finished it.
In fact, it's been under construction for over 140 years.
Now, though, old and new technology are coming together to bring the project to completion.
Yasmin Morgan -Griffiths has this exclusive report from the Basilica.
Tony Gaudi wanted to invite people to be near God.
He wanted to create a church of light.
Gaudi is one of the world's most renowned architects.
architects in the 1880s he took over designing a grand basilica in barcelona la sagrada familia it's been under construction for more than 140 years and counting but design tech is helping to complete construction i'm in an elevator going to the top of the temple's central tower the tower of jesus christ which when finished will stand around 170 meters tall all.
It's still a construction site up here at the moment, but you can get some of the most incredible views of Barcelona from up here.
Gaudí's designs for the Basilica featured soaring towers, inclined columns that branch out like trees, and 300 skylights.
Jordi Faoli is the current chief architect of La Sagrada Família, the seventh in line after Gaudí.
He had built the Sagrada Familia using the technique of his moment.
He knew the project, in the future, could be built with new technologies.
Gaudí had to make sure future architects could understand his designs once he was gone, and for that he relied on the principles of geometry.
Also on La Sagrada Familia's architectural team, Esteve Humbert.
Gaudí was using what is called ruled surfaces, which are made of straight lines.
And just by changing the end points of those strings changes the curvature of the surface.
The skylights are hyperbolic.
It's a circle, the skylight, and a huge number of straight lines that surround the entrance of light.
And this form diffuses perfectly the sound and the light.
And these shapes are all over the basilica.
Because they are made of straight lines, these rules can be followed easily.
These shapes, are they quite unique to La Sagrada Familia?
Being applied in that massive scale, it was the first time in history.
Gaudí also used three -dimensional plaster of Paris models to communicate his complex geometrical vision.
The generations after him had to reconstruct this 3D puzzle.
We have more than 8 ,000 pieces being scanned.
And with this information in the computer, we can recreate the same geometry.
But many of these models were smashed up during the Spanish Civil War.
Another challenge the architects face is making the basilica's overall structure strong enough to withstand forces like wind and earthquakes.
That's where Liam Duff from structural engineering firm Arup comes in.
What we have come up with is post -tension stone panels.
So these panels are made of solid stone and they have steel cables which run between them.
And by tensioning them together, we're able to make a solid panel, which is much, much thinner than it would be if it was built out of traditional stone.
Visitors flock from around the world to admire the Basilica.
But some local residents say ongoing construction has been disruptive.
But today's architects and engineers are still working to continue Gaudí's great project.
Next year, we'll be able to build the cross on Jesus Tower.
And once that cross is placed, La Sagrada Familia will become the tallest church in the world.
Yasmin, Morgan Griffiths there, reporting from Barcelona, and that extraordinary building, La Sagrada Familia, a real landmark, a quite extraordinary -looking building, I have to say, looks almost like something out of a sci -fi movie, But it is a work of great, great beauty.
I do recommend if you ever get a chance to go to Barcelona and see it, do seize the moment.
It's well worthwhile.
Anyway, that's pretty much it from World Business Report for me and the rest of the team.
Bye -bye and thanks for listening.
