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QUEST MEANS BUSINESS

America's Mixed Christmas; Shop `Til You Drop on Britain's High Street

Aired December 23, 2009 - 14:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


RICHARD QUEST, HOST , QUEST MEANS BUSINESS: America's mixed Christmas. Higher incomes, more spending, the housing market stutters.

They'll shop `til they drop on Britain's High Street; it is the busiest day on the calendar.

And never a dull moment down on the farm. The pleasures, the pressures of growing the food we eat.

I'm Richard Quest. A busy hour ahead, because, together, we mean business.

Good evening. Millions of people around the world have taken the last chance before the holidays to finish off their Christmas and festive shopping. As they brave the crowds we are learning more about how people have got to spend, and what they are doing with the money in their bank accounts.

Wednesday's big economic data came from the United States. There was plenty of it and it interestingly, it gave and entire variety of views about what is happening at this crucial time in the year.

Let's start here, with earnings, for instance. Personal income in November was up by the fastest pace in some six months. Income rose very sharply spending also rose. Perhaps not surprising of course, Thanksgiving, and then onwards after that. And savings, also, totaled nearly half a trillion dollars in November. So, that looks like a reasonably encouraging picture.

Factoring in, as well, the warm feeling that came from consumer sentiment, which saw growth for income and people were much less gloomy on jobs. The December reading on the Michigan Consumer Sentiment, forgive me getting technical with you, but if you look at that number it was the highest since September. Now, you may say, well that is not very far back, Richard. That is only a couple of months. But the trend on consumer sentiment, taken with earnings, and savings, and all these other things, shows an interesting view. But, just when you thought that it was all airplane sailing ahead, new home sales fell 11 percent, the biggest decline since January. And you will recall that contrasts with the number yesterday, of existing home sales that I told you about.

And I'm told, by my next guest, that it is a statistical anomaly the difference in the way they count new and existing homes. And it is that difference that gives us the different results. But if you look at all these data, that we have had, from earnings, to consumer sentiment, to new home buildings, well, bring in David Wyss, in New York. And David is the chief economist at Standard & Poor's.

Pull the strands together for me, David, in terms of what these numbers we are seeing, mean.

DAVID WYSS, CHIEF ECONOMIST, STANDARD & POOR'S: If we take as a whole I think the economy is clearly coming out of recession, but it is going to be a slow and uneven recovery. We see this as sort of a half speed recovery.

QUEST: You see, many people believe - I think I'm probably in that camp -that actually as we go through 2010, we may be surprised on the upside. Thinks actually might be better than they look at the moment. Am I just being naive?

WYSS: Well, I think things will look better than they do at the moment. But I still think it is going to be slow. Problem is the consumer is still over extended, debt is very high, people are reluctant to borrow, banks are reluctant to lend. It is hard to get much real strength, much impetus behind the recovery without the consumer leading the way. The rest of it, you know, construction, we still have problems in non-residential construction. It will be another down year for that. So what is going to really lead the economy strongly? It is hard to find a sector.

QUEST: If that is the case, then we can pretty much write off the bounce that we saw -or not bounce, the sharp rise in the stock market, as being really a reaction. And a correction to the over selling during the worst days. And fundamentally, there is not real strength there.

WYSS: I think the big point is it got way over sold in March. And a lot of the bounce we are seeing it -we are now still 30 percent down, remember from where we were in October of 2007. So it is not like we have recovered all the way. We have only recovered about half the losses. And, you know, that is fairly typical at this stage of an expansion. I think you get the market going forward next year but it is not going to go up another 60 percent like they had since March.

QUEST: So, the risk next year, as we push forward, possibly, we know there is going to be no withdrawal of stimulus. Or at least, the U.S. even gets more of its stimulus that had been front-loaded into next year. But I am worried then, because that clearly means that there is no action, serious action, being taken on the deficit. And that eventually is going to hit the bond markets.

WYSS: They're going to have to do something about the deficit now. The stimulus is scheduled to expire at the end of fiscal 2010. But I think a lot of that is going to be extended into 2011. We also have the expiration of those Bush tax cuts scheduled for the end of next year. And how many of those will be extended is still an open question. But I think we really need to see some action on the deficit in fiscal 2011, or the bond market is going to get nervous.

QUEST: What will happen? Because I've heard - let's just, we're lucky tonight, we have a moment or two more, so we can delve into that David. Because people always say the bond market is going to get nervous. Or the bond market will get spooked. In real terms, does that mean the rise in yields, to help pay - to help attract money coming in? What does it mean to ordinary people when the bond market gets spooked?

WYSS: We used to always talk about the bond market vigilantes. They are the people who really enforce fiscal discipline on a country, or on a state, or a city, for that matter. When they get scared they start funding (ph) more money to cover the risk of higher inflation, or the risk of just higher deficit. So, higher bond yields, then, in turn tend to choke the economy off, regardless of what the Federal Reserve does, because the long- term bond yields go up even if the Fed keeps the short-term rates low.

QUEST: David, I am not mistaken you have Christmas trees on your tie, which, of course, is probably the most festive things that you and I have managed to talk about in our discussion this evening. Have a good festive season, many thanks.

WYSS: Thanks.

QUEST: David Wyss, joining me from New York.

Now, the perspective that you can see, of course, from the economic numbers, the market had been rallying in a very nice Santa Clause rally for most of the week, until that is, we saw their housing numbers.

Susan Lisovicz is at the New York Stock Exchange, wearing the gold. She's got the gold out today. So we know things are going all right on the market.

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Yes, and you know, you mentioned Santa Clause. Santa Clause has been with us this week. There is no question about. We do have snow on Wall Street and we do optimism in spite of a real setback 30 minutes into the session, Richard. When we learned that new home sales shrunk more than 11 percent. It was surprise.

And really was a contradiction to what we heard on Tuesday when we saw that existing home sales, used homes, if you will, surged 7.5 percent. Kind of a disconnect. We can sort of go into it a little bit, if you like.

QUEST: No.

LISOVICZ: But the Dow is hanging in there.

QUEST: No, no, no. We have discussed -we've already, I've already glossed over this with our dear viewers tonight.

LISOVICZ: OK.

QUEST: On the basis that it is all a statistical blip, in terms of how the two are counted. And look, trading is thin. It is one of those session where you really want to get to the end of the year without too much damage having been caused.

LISOVICZ: No question about it. The lights are on, Richard, but it seems like nobody is home, or at least nobody is doing anything. This is a time for handshakes, for hugs, for thanks, for phone calls. To give thanks that we are still here and that the financial system didn't crash. I mean the volume is just abysmal. I mean, we are looking at a volume that is half of what would be considered light trading. And that is not surprising because most of the pros have finished weeks ago, really. And so we have had, you know, we still have economic reports, but they are really not doing too much to change the trends, all three major averages up in the double digits, as you well know.

QUEST: Stay where you are for one second, Susan, and because tomorrow afternoon, Christmas Eve, the last trading session before the festive holiday begins. And I want to show you some video. This is what tends to happen. Have a listen.

(BEGIN VIDEO CLIP)

TRADERS AT NEW YORK STOCK EXCHANGE SINGING

QUEST: So the traders .

(SINGING)

QUEST: The traders are singing the song, "Wait `Til the Sun Shines Nelly" and, Susan, what is the history of that song and do you know the words?

(END VIDEO CLIP)

LISOVICZ: I do. Well, I mean, that is the chorus. That is the famous chorus. Wait till the sun shines, Nelly. And the clouds go drifting by. Let's see if I can remember the last -

QUEST: We will be happy, Nelly, don't you sigh. Down lovers lane we'll wander.

LISOVICZ: Don't you sigh.

QUEST: Yes, it is a Depression era song.

LISOVICZ: It is a Depression era song is right. And it is one of the things that traders held onto, amid all of the trauma of the 1930s. There used to be the lure on Wall Street is that there used to be quite raucous parties on this very trading floor with bands and much bottled water and other beverages consumed. Well, of course, during the Depression all of that went by the by, but one thing that survived was a cappella singing, which I'm happy to say I've witnessed a number of times. As have you, and it is very sentimental but that song is the song of optimism that the clouds will pass, we will be here. And it has great, great meaning on this particular year, no question about it, Richard.

QUEST: Susan -

LISOVICZ: And it will be sung tomorrow, Christmas Eve, two hours before the closing bell sounds.

QUEST: Susan, I won't speak to you again before Christmas. Have a safe and a peaceful one.

LISOVICZ: Merry Christmas. It's a pleasure working with you, Richard.

QUEST: And as always, wait `til the sun shines, Susan. Susan Lisovicz in New York.

OK.

(DESK BELL CHIMES)

I think it is worth one of those. Absolutely.

Shares in Europe mostly ended higher. The last full trading day before the holidays, the third straight day of gains.

(DESK BELL CHIMES)

That is well worth another one of those.

(DESK BELL CHIMES)

The closing numbers: London's FTSE up for a third straight session. Xetra DAX and the Paris CAC were also higher by a third to a quarter of a percent.

So, the news headlines now. And Becky Anderson is with us at the CNN News Desk.

(NEWS BREAK)

QUEST: As we continue, for some it is the nightmare before Christmas. For the shopkeepers it could be do or die. Come with us to the front line, where consumer and retailers collide, in a moment.

(COMMERCIAL BREAK)

QUEST: So, to shopping. They've got this day marked in the red on retailing calendars. Whether it is in France or Germany or here in the U.K., shopkeepers say today is the busiest of the year and for a very good reason. If you listen hard you can just about hear the cash tills ringing on Oxford Street, which is London's main shopping thoroughfare, just about a couple of hundred yards, or feet, from where I am.

Morgan Neill is in the thick of last-minute shoppers in well-known London department store, Selfridges.

Morgan, surely, surely, surely people must have done their Christmas shopping by now?

MORGAN NEILL, CNN INT'L. CORRESPONDENT: You would think so, wouldn't you, Richard. But it seems people really never do learn, whether it is this year or previous years. So there are plenty of people out here. Just take a look if you can, behind me. Lot's of shoppers still out. And to be a bit more precise, we are not really even at the last minute, yet, are we? We are still got another day, albeit a short day of shopping open on Christmas Eve. We talked to a lot of shoppers who seem bound and determined to go right up to that last minute.

Now, this is, of course, an important holiday season here in the U.K. One of the last major world economies that has yet to emerge from recession. And a lot of people are hoping for a big holiday season. Signs are that this one will be better than last year, certainly. And a lot of people have predicted this might wind up being the busiest shopping day of the year, certainly a lot of people out and about. We'll have to the end to see just how well we did compared to other years.

Now we did get a chance to talk to a couple of those last-minute shoppers. And here is what they had to say.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I can't believe the discounts already. I don't see any sign of the recession at all, here, today, or in the run up to Christmas. I think next year is going to be really hard, though. I think people are just swept up in the whole festive season. But it is actually, you know, reality is going to hit again next year.

UNIDENTIFIED MALE: Obviously, it is not a year for great excess, so - and the weather has been very cold and that sort of thing. So, you don't want to be spending too much time out of doors. So, I'm hoping to do it all here.

(END VIDEO CLIP)

NEILL: Now, you heard a good bit about there, in there, about sales, discounts. That is something that you will know better than I will, Richard, that you are generally not used to seeing in the U.K. before Christmas. But we certainly saw a lot of it last year and there have been a lot of sales this year. Of course here at Selfridges, the big one being on Boxing Day, so that will most likely be the maddest day of the year, here, Richard.

QUEST: Morgan Neill at Selfridges. Morgan, Mens' Wear is on I think the second or third floor. Don't spend too much on my gift this year. Many thanks. Morgan Neill, joining us from Oxford Street.

When you see all the bustle down there you can just about believe this figure, which comes to us from the VISA networks. On the Saturday before Christmas, last year, 2008, VISA processed as many as 42,000 electronic payments, per minute! 42,000 a minute! This year they are expecting things to be even busier. VISA Europe's commercial director, Steve Perry, joined me to put it into perspective.

(BEGIN VIDEO CLIP)

STEVE PERRY, VISA EUROPE: Today is my busiest day. I expect to see 11,000 transactions a minute in the U.K. That is some 900 million pounds worth of transactions on these accounts in the U.K. alone. In Europe, another 1.5 billion euros are spent, my busiest day.

QUEST: With so much money going through your systems, how do you keep track?

PERRY: The systems, fortunately, operate independently and they are very efficient. We have spent hundreds of millions of euros over the last two years redeveloping out systems. So, I'm comfortable that we an track the data. What's really key to us is we are able to write settlements everyday. And we haven't failed at all in this big and busy time.

QUEST: What trends have we seen this year in the festive season of purchasing. Because if we look back at last year, I mean, there was real gloom and dismay. Shops were closing, companies were going bankrupt. Are you seeing a difference in the numbers this year?

PERRY: I'm seeing a phenomenal growth compared to last year. But I need to giver you a half warning. In VISA in the UK, we see one in every four pounds. So, what I'm seeing is a lens (ph) of only one quarter of the total market. And so what I am seeing is a movement from ordinary, old fashion ways of payment, the old credit, cash and checks. I mean, all checks are dead in the U.K. to debit cards. That is my first trend.

The second one is if I go back the end of November, it was our busiest day on the Internet, 204 million pounds in the U.K. alone, spends on the Internet, a rise of 25 percent. So, one in five, one in four to five transactions today, in the U.K., is on the Internet.

QUEST: Are these people spending more, or I mean, of course, the first one, are they spending more this year? And secondly, these transactions are the new transactions, or are they additional, or are they replacement? That is the big question.

PERRY: Well, the total pool is up about 17 percent year-on-year, in the U.K. And the average ticket value is still around about 50 pounds. So, what I'm seeing, though, is a broader distribution of transactions. Consumers, in fact, are starting to use our contactless cards to make everyday payments, cups of coffee. I use my contactless card on the metro system in London today.

QUEST: Hang on, they are called contactless card?

PERRY: OK, it is a card that doesn't require you to chip or dip, it doesn't require a signature. I simply wave it on the oyster machine, which most of us in London are used to, when we travel. I can use it on a whole range of merchants now, to go and buy things like coffee and sandwiches.

QUEST: I'm still trying to understand, is this Christmas better than last year?

PERRY: Yes, absolutely, much better. About 17 percent higher than last year.

QUEST: So people are buying more, spending more and doing more?

PERRY: On VISA cards. And they're doing that on a debit card.

QUEST: Well, since you have 25 percent of the market, it is not a hugely prophetic to say we can extrapolate?

PERRY: We can extrapolate, and if that is what you are after, I'm really keen to say that consumers are spending far more than they have ever done before.

QUEST: So, red, amber, or green for what you are seeing this Christmas. Bearing in mind we are coming out of recession across Europe. Red, amber, or green?

PERRY: It's green.

QUEST: You want it to flash? Since is festive season.

PERRY: I'd love it to flash that is perfect.

QUEST: Thank you very much, indeed.

(END VIDEOTAPE)

QUEST: I'm still amazed at the sheer number of transactions that are going through the VISA system, well, through all of them, MasterCard, Visa, all of them.

When we return, you and I together, making a livelihood from livestock. We'll be in the English countryside to look at the exhausting job of raising cattle.

(COMMERCIAL BREAK)

QUEST: A life on the land, for some, farming is the ideal way to make a living. No boss in sight, you don't clock on, but don't for a moment think of a live of livestock farming as being an easy one. I think perhaps, you would realize as much as I have that it wasn't a dawdle to make your money on the farm. But in his latest report from rural England, Charles Hodson now shows us just how difficult it is when you make your money out of cows.

(BEGIN VIDEOTAPE)

CHARLES HODSON, CNN INT'L. CORRESPONDENT (voice over): The sun is setting on a drizzly, dank December day. And my neighbor, Martin Greenway's 200 Friesians are being milked. The process lasts three hours and is repeated every 12 hours. Tomorrow morning, long before dawn, these cows will be back, rain or shine.

MARTIN GREENWAY, DAIR FARMER: My father's always told me, if you want to get on in farming, you have got to milk those cows, and he's probably right.

Yeah, the hours are brutal, particularly dairy farming. It is seven days a week, which is probably the bit that gets most people down.

HODSON: The farming lifestyle embraces Martins' wife, Robyn, and their young children, who probably get the best out of the deal.

ROBYN GREENWAY, DAIRY FARMER: It is hard work, but I also feel I'm very lucky. It is a great way of life.

I can't complain. I mean, the children have a fantastic life. It is like a huge garden, isn't it? I mean, we have just got, there are no restrictions to them. We have ponies. You know, we can do what we want.

HODSON: Each cow yields on average 22 liters per day. But the milk prices currently don't cover the cost of production. Any profit is hard- fought. Cheap food for the consumer, means relentless pressure on farmers to cut costs and boost yields.

M. GREENWAY: There is a certain mount of animal welfare does suffer from, which I wouldn't be proud of. Animal welfare costs money and people have got to realize that if they want it, someone has got to pay for it.

HODSON (On camera): But there is more than one type of and style of farming, even here in West Somerset. Just a few hundred yards from where Martin and Robyn Greenway have their dairy farm, Jonathan and Rosary Moorhouse, are concentrating on breeding Hereford beef cattle.

(Voice over): This is enticer, 800 kilos of purebred bull and worth many thousands of dollars but a sucker for a back rub.

The Moorhouses have experience of most types of farming, but have settled into their niche as prize winning breeders.

Compared to when I started, and I've been farming for 40 years, you know, there is a lot more uncertainty in the job. We have had, in the last, what is it, 10 years, we have had two outbreaks of foot and mouth disease. I mean, that is devastating.

HODSON: Disease is still a bit threat. Rosemary Moorhouse checks a Hereford calf just hours old. She worries about losing precious blood lines as bovine tuberculosis spreads through Europe. Transmitted by badgers, plentiful around here.

Back at the Greenways, a tough decision looms in 2012. Should they spend $750,000 or so, on new facilities for managing slurry? Cattle manure that is now collected and spread on the fields. For them, such decisions aren't just about business. They are also about handing a lifestyle on to the next generation. Though the next generation has its own ideas.

M. GREENWAY: Would you like to be a farmer?

UNIDENTIFIED FEMALE: No.

(LAUGHTER)

M. GREENWAY: Why not? Is it because it means getting up early?

UNIDENTIFIED FEMALE: Yes, and uh, it is just too hard work.

(LAUGHTER)

HODSON: Charles Hodson, CNN, West Somerset, England.

QUEST: Out of the mouths of babes, it is just too hard work, she said.

When we come back, the world at work. Let the drums begin.

Our festive world at work has come to an end. As we meet 12 drummers, drumming.

(COMMERCIAL BREAK)'

QUEST: Welcome back. QUEST MEANS BUSINESS, I'm Richard Quest. This is CNN.

The time of the year when investors are taking stock over the past 12 months on the whole. We'll be looking back with a sense of relief at the market gains. Shareholders got something to cheer about after the mayhem on Wall Street. The S&P has gained 23 percent since its lows of March. Doing almost as well, the FTSE, by today's close it had risen 21 percent since the end of last year. Don't forget there was the sharp fall in the spring.

The Kospi (ph) and then some of the Shanghai composite up almost 70 percent, after China threw everything, including the kitchen sink, reversing the economic slow down.

Max Foster spoke to Stephen Pope, the chief global strategist at Canter Fitzgerald. And they met in London's historic Butter Market. Now that is a place where every imaginable type of food is on offer. You can haggle for the best price, a bit like in the financial markets. How appropriate, then. If you are going to haggle, what about a place to discuss the successes of the year. And where the market might be headed next.

(BEGIN VIDEOTAPE)

MAX FOSTER, CNN INT'L. CORRESPONDENT (On camera): Well, all markets operate in pretty much the same way. If we're suddenly told, for example, that apples are the healthiest thing that we can eat, then people will rush out and buy them and the price will go up. If we're told, though, that they're poisonous, then no one will go out and buy them and the prices will go down.

Financial markets operate in pretty much the same way. They're driven by greed and fear and there's been plenty of both of those this year.

The one bright spot, though, actually, was apples.

STEPHEN POPE, CANTOR FITZGERALD: I think you can take the company of Apple and realize that all their great, innovative products have been tremendously successful throughout the years and no more so during the course of 2009, where they've literally shaken the mobile phone industry from the roots upwards by bringing out the iPhone, which we've now passed by to the Smartphone.

FOSTER: Which is forming the basis of a whole new industry which will live on, I guess?

POPE: That's right. So many of the other players, Nokia, Sony Ericsson, etc. Have realized that they've got to produce their own versions of Smartphones, which give the user a range of options.

FOSTER: It was a bright spot, wasn't it, unexpected at the beginning of the year. I'm going to use another analogy now -- we've got a pear here -- because at the beginning of the year, actually, everything looked like it was going pear-shaped. We weren't expecting an Apple story to come out of it, were we?

POPE: That's right. I would say for the first two months of 2009, we were sitting there very worried that this little pear-shaped scenario we'd had in terms of the financial markets and the economy were going to carry on throughout 2009.

What was going to happen?

Really, we started to see some improvement, one, when President Obama was sworn in on the 20th of January. That was maybe seen as a new hope. Then later, in February, he signed the big stimulus bill -- $780 odd billion being pushed into the U.S. Economy and that was a capitalist (INAUDIBLE)...

FOSTER: And the markets were climbing throughout this whole period, weren't they?

POPE: They wanted to be involved. They saw that other governments were getting involved on the stimulus suggestion, as well. And that's why, from around March the 9th, markets in the U.S., Europe and Asia started to take off and we've not looked back.

FOSTER: And then it looks a bit miserable again.

POPE: Well, we've run through the course of the year, had a little bit of a setback in July. But every time we've seen a dip in the equity markets, well, there's a step forward, because they have to make a return.

FOSTER: If you start looking around this market, it's interesting, isn't it?

You see you've got lots of the staples here, haven't you?

You've got the apples, the oranges, the pears. There's not that much exotic fruit around you would have had a few years ago.

That's a sort of reflection of the markets, as well, isn't it?

People are -- are going for those safe bets because they're so cautious at the moment in the financial markets?

POPE: Yes, I think we've seen that in terms of the drive to go into government bonds. People literally wanted plain vanilla. They didn't want anything that was too fancy, too exotic and maybe they weren't sure where it came from, how it was priced, how it's structured or who you'd go to if you wanted to redeem those assets.

So now we've had this drive into the plain vanilla market.

But how much longer can we carry on buying and acquiring assets that give virtually zero yield?

FOSTER: And if we look around the market, actually very busy. And if you look at London, a major international capital, the house prices are going up. Our market is hitting new records. Actually, as a city, it's a good reflection, really, about what might be happening next year, isn't it, when people start feeling more and more confident?

POPE: The super wealthy have stayed super wealthy and they've been able to go and buy very high priced products. But what you're finding is that those things that are finite in their supply -- fine art, good quality wine, desirable property, wherever it's located -- that will always have a demand that underpins its pricing.

If you get into the middle market territory and when you're going to the shop, it's all about discounting. People want to bargain. If you're getting into middle market property, again, it's not moving so quickly. It's better than it was.

FOSTER: Doesn't it drip down, though?

POPE: It starts to trickle down, certainly. But it seems -- because the system has been clogged for a while. So we need -- we need to put a bid of dynamite into the system to clear those drains and let this low happen once more.

FOSTER: We want you to put your reputation on the line.

Give us some hot tips -- all those juicy fruits of the markets next year.

POPE: Well, I think...

FOSTER: Where are you going to put your money?

POPE: ...one good area I think you're going to find is anything that's involved with sort of agricultural chemicals, because we have a growing population, people want to be fed. We know that if you try and expand the agricultural end, you start running the risk of tipping over the metrics that cause difficulty in climate change. So I'm looking for the farming and the agricultural chemicals to do well.

I am not giving up on the cyclicals, either -- the miners and the steel, because even if China, India, Brazil aren't going to sell so many goods into the northern and developed world, what I think you'll start to see is they have a lot of infrastructure build to themselves.

I think the pharmaceuticals has a chance, but only if they seriously get involved with biotechs or joint venturing. But I would say if you go into autos, only go with the bigger players, because there's going to be a lot of consolidation in that territory, a lot of joint venturing on sharing common platforms. So look for the big players in the auto world, like Volkswagen, like BMW or Daimler, because they are good, solid names.

FOSTER: And what's your Apple, the safe bet, the non-adventurous investment where you're going to get a bit of a return but you're not going to lose any money either?

POPE: Well, I think in that regard, you probably stay with some of the food supplies, because we all have to eat. So whether you want to get into the actual supermarkets, where you have sense of domination -- and they -- yes, they have price competition. We know that all the time. But people still keep going to those sorts of stores.

But I think, also, if you look at some of the specialist products, we've seen already a move for Cadbury at the late stage of 2009. What I think. You're going to see is further consolidation in that type of area, where people can actually get pricing advantage, economy of scale.

So those are the safe territories to be with.

FOSTER: A perfect place to end, in a food market.

POPE: Absolutely.

FOSTER: On the subject of food.

Thank you very much, Stephen Pope.

(END VIDEO TAPE)

QUEST: Now, some news to bring you this evening.

The Federal Bureau of Prisons in the United States is now reporting that Bernie Madoff, who you'll remember was sentenced to 150 years in prison for embezzlement, fraud and running a Ponzi scheme, they are now reporting that Madoff has been transferred to a North Carolina federal prison -- a prison medical facility.

Now, if you come back and -- and join me, you'll see, if you go to the Federal Bureau of Prisons' Web site and you put in Madoff's name, you get to see his release date is 2139. But it does say his current location -- confirming the rumor -- is at the Butner FMC. The Butner FMC is the federal medical center part of the federal correctional complex.

So Bernie Madoff has been transferred to some form of medical center at the prison where he is being currently held. But we're not told yet why or what the cause is. And you'll recall that the relatives of Madoff have already denied previous rumors that it might be something serious like cancer. But we have no further details.

When we come back, weathering the travel misery -- and I don't mean the December freeze. A year long storm that hit an entire industry -- it's the travel industry.

Simon Calder now picks over the bones of a miserable year for travelers, one traveler to another.

(COMMERCIAL BREAK)

QUEST: Now, snow showers and subzero temperatures were making life difficult for travelers throughout the course of the week. 2009 overall has been a pretty awful affair for the whole travel industry, with changes in how we travel, what we're prepared to pay, all sorts of things affecting the operators themselves, whether it's in the air, on the rails, on the roads.

I sat down with the travel journalist, Simon Calder, a good friend of QUEST MEANS BUSINESS.

We needed to review the year.

This week, the London terminus of Eurostar has not been the place to be, with all the crowds and the delays and the problems. But earlier in the month, it was a delight.

(BEGIN VIDEOTAPE)

QUEST: And in the shadows, unclouded glare, deep blue above us fades to wideness, where a misty sea lion meets the wash of air. The words of the poet John Betcheman reflecting, perhaps, the somewhat bleak state of the travel industry this year.

But I haven't time to tarry. I'm here for a very important meeting.

We'd agreed to meet under the clock, but how would I know him?

How will I find him?

Calder.

SIMON CALDER, TRAVEL EDITOR, "THE INDEPENDENT": Quest. I thought there was a law of the traveling universe which meant that we could never both be in the same terminal at the same time.

QUEST: The Barlow (ph) shed breaks all those rules.

Was aviation all doom and gloom in 2009?

CALDER: On the face of it, the issue was that, according to ARTA estimates, the world's airlines will collectively have lost $11 billion this year, which clearly is not a great thing for any industry. It would look pretty bad for banking. For the airlines, who historically have never made sensible profits, it should be the final nail in the coffin.

But, of course, it hasn't been.

QUEST: But no airline actually went -- no major carrier went bust.

CALDER: I think we haven't seen the kinds of failures that you might have anticipated simply because a lot of the rubbish, as the existing airlines would have put it, has already been cleared out. And, in fact, if you take the case, for instance, of the U.K., which has, by far, the strongest low cost aviation market, all the carriers that -- that you or I would find ourselves flying on, they're -- they're pretty robust financially.

Yes, getting less robust by the day, certainly, but nonetheless, you can really be pretty sure if you buy a ticket now, by three month's time, the airline will still be there.

QUEST: Alliances -- when you talk about alliances, it was the year of the alliance, in many ways -- Star, oneworld and Sky Team. That is clearly going to be the future.

CALDER: I think the alliances generally do travelers a favor. It's very convenient for business travelers who have the right kind of card to be able to seamlessly go from a Lufthansa lounge to a United lounge, to a Singapore Airlines lounge, to know that they are being appreciated because of the business they are generating globally.

QUEST: We're in this Barlow (ph) shed, magnificent, awe-inspiring terminal.

Will the railways play more of a role this year?

And will we expect to see more of them?

CALDER: If you go back to when railways really began, their golden age, when this place was built, in the late 19th century, that was all about business travel. Of course, though, it was moving millions of people into the big cities so they could work. Of course it was moving goods across the -- the whole of Europe, across the United States, building that great country.

But ultimately, it was a business travel tool. Sure, the airlines came along and, of course, many people migrated to the airlines.

But increasingly, I am unable to understand why, particularly on short haul flights within Europe, increasingly within the United States, as well, people are still choosing to fly and subject themselves to all that unnecessary stress, all that burnt energy that they could devote to -- to their professional time, all the relaxation they're missing out on.

So I think increasingly, people will be including non-tangible elements like that when they're -- they're working out how to -- to travel. And the great thing is 2010 is going to have the best rail links ever in Europe. And there's even improvement in the United States, where, of course, we thought that they'd waved farewell to the last train many years ago.

QUEST: Ultimately, was it a good year for travel?

CALDER: 2009 was a brilliant year to be a traveler, naturally, because, for example, the airlines were losing $11 billion collectively. The hotels saw their rev par -- the revenue per available room -- go through the floor. It's been a buyer's market. Anybody who has been brave enough to travel, whether that's just getting a standard, economy flight between Paris and New York or whether you've got -- OK, this is the time to get into really classy travel -- has had a fantastic deal. And I've been spending as much as I can traveling as much as I can, doing my bit to rescue the travel industry.

Well, I'm -- I'm looking forward to open access, which will be very good.

QUEST: Who on Earth is going to hop on a train on this station?

(END VIDEO TAPE)

QUEST: And you'll never know whether we made that 10:00 train.

The weather forecast now.

Guillermo is at the World Weather Center.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Richard, I think your best shot is the worked. We're going to see dry conditions, probably some sunshine in London. Apart from that, on Thursday we'll see rain. But nothing compared to the Uplands, where we have ice, fog. It's actually freezing fog we have there. Hard frost in the north.

Now, look at what's going on in the next two days here, also, in Southern France, Northern Italy and Northern Spain there. We're going to see a stormy weather system moving around.

What's going on in here is what we have been talking about for days. Finally, the jet stream is moving upwards and it's improving here in the Balkans. But then in these areas, we're going to see those two low pressure centers going through, bringing the unstable weather. And that means, also, rain for the north.

I think that Wales is much better than the east, for example, East Anglia in here and much better than the south. Southampton may see rain more persistently than London, for example. And also the Midlands and the Uplands again, frost and a little bit colder. But on the weekend,. You're going to see like seven, eight degrees. So it's much better.

See -- things are getting better for London. Not for Paris, for the time being. Brussels also with unstable weather. Amsterdam with some windy conditions. The Alpine Region is going to see snow; also, Germany; Poland, the Scandinavia as a whole is going to see snow. And we see snow - - I have some observations, by the way. Nice, Marseilles, Lyon, Geneva, Biarritz -- they're all reporting rain. Biarritz with misty conditions. Berlin, closer to Poland, of course, we see some more snow and more abundant snow.

Milano is reporting rain now. Lisbon is reporting rain. Again, this is the pattern.

Look at the two lows, one after the other, and then bringing the unstable weather. It's going to be a little bit more stable to the north but it will not be very nice.

Look at Great Britain, everything happening in the north. If you are in Scotland, you know what I'm talking about and you see will more of it.

And France still the chance of some more snow. The same for the Alpine Region.

You are watching QUEST MEANS BUSINESS.

Stay with CNN.

(COMMERCIAL BREAK)

(MUSIC)

QUEST: Here everyday I've enjoyed the urge of conducting the Bach Choir as they're singing.

How about this giant Christmas tree?

A Christmas picture from Dubai -- a large shopping mall, a large Christmas tree -- even if the country is not doing terribly well -- or the emirate isn't. They've still got a big tree to celebrate.

In Bethlehem, it's a rock and roll Christmas. They're singing carols -- or at least they're -- it's a different way of singing carols in Bethlehem.

But this is the piece de resistance tonight. Look at that. That is in Tokyo. It is a winter wonderland -- the festive delight of lights. I've never seen anything quite like it.

Tonight, the last of our 12 Days of Christmas. We are on the 12th day. And on the 12th day, my true love gave to me 12 drummers drumming.

(BEGIN VIDEOTAPE)

NEIL BROCKLEHURST, BAND OF THE SCOTS GUARDS: I've always, always wanted to play the drums. And my -- my father used to be in this band. And I used to come into his practice when I was a little kid. And he said to me, you know, you're going to do music properly. You -- you play the piano. So I had piano lessons, which I was -- which was great and everything. But I still wanted to play the drums.

You're the main sort of like part of the band, really, that on changing of the guard. And we're the ones that start the whole thing off. And if you come in wrong on the drums, everyone knows.

(MUSIC)

BROCKLEHURST: The real purpose to the music that we play on changing of the guard -- or play on anything, really, ceremonial, is to -- is for the troops, not the public. It's for the troops to listen to, stop getting bored and stop falling over, to keep them, you know, their minds ticking over. That's the whole purpose of it. It just so happens that where we are and what we do with the queen there and everything is a lot of people and everyone thinks we're playing for them.

What makes it special, really, is -- is the banter. The atmosphere around here is great and doing lots of different things -- I enjoy doing lots of different things.

This is called the Scots Guards' battle (INAUDIBLE). And these are all the -- the battles that the Scots Guards have been in.

When you've got bass, come on.

It hooks onto you there like that. So you're there like that. So all the battle honors should be -- you should be able to see the whole thing.

Up until the First World War, the drummers were -- they used to play the drums as they went into battle.

(MAKES DRUMMING NOISES)

BROCKLEHURST: And they would just go and marching in toward, you know, the French and -- and they would use that to keep them going. And the -- the drummers would have no -- they would just have the drum. And there -- there were little boys and they would just have the drum and they would just play and get shot, to be honest.

(MUSIC)

BROCKLEHURST: The story is probably -- it's just like a typical normal guard -- your hands are freezing, you know, you drop the sticks. Secretly, if it was everybody we pride and they -- they don't -- a lot of the guards don't like to admit it, but I mean they're out there playing in front of thousands of people. And you won't really get to do that unless you are on a Madonna tour, really.

(END VIDEO TAPE)

QUEST: A drummer drumming at Buckingham Palace. It doesn't get much better than that.

From our festive 12 Days of Christmas.

And if you missed any of them or you'd simply like to remind yourself, here they all are in a roll.

(BEGIN VIDEO CLIP)

(MUSIC)

UNIDENTIFIED MALE: If you come in wrong on the drums, everyone knows.

(MUSIC)

UNIDENTIFIED MALE: It's about the music. It's about the history.

(MUSIC)

UNIDENTIFIED FEMALE: It is up to the lords to say hang on a minute, that is going to result in bad law.

(MUSIC)

UNIDENTIFIED FEMALE: And I don't think it's possible to do ballet without passion.

(MUSIC)

UNIDENTIFIED MALE: The painting has been called "The Milkmaid" for some 200 years.

(MUSIC)

UNIDENTIFIED MALE: A very elegant looking bird and it's in a line of royalty.

(MUSIC)

UNIDENTIFIED MALE: I still love what I'm doing. I still love creating new things.

(MUSIC)

UNIDENTIFIED MALE: There's your finished gold ring.

(MUSIC)

UNIDENTIFIED MALE: I like the ravens, very much so, because they're very inquisitive.

(MUSIC)

UNIDENTIFIED FEMALE: The chicken from Milan is very, very known all over France.

(MUSIC)

UNIDENTIFIED FEMALE: We've got about 50 doves now and they're so lovely. I'm a bit addicted to them all.

(MUSIC)

UNIDENTIFIED MALE: There's a partridge in there running around because they're grand birds. You're not likely to see one in a pear tree, I'm afraid.

UNIDENTIFIED FEMALE: Oh, (INAUDIBLE) a pear.

UNIDENTIFIED MALE: Cheers.

(END VIDEO CLIP)

QUEST: The festive 12 Days of Christmas.

And if you would like to watch them again at your own time, then you can, of course, see them online -- an entire gallery of them at CNN.com. And you'll find the 12 Days of Christmas.

Also, if you've got some thoughts or views, then our Facebook page is at questmeansbusiness, where you can see the pictures, you can see how we made them and the discussion which took place.

Finally, though, we need to thank the man behind the festive 12 days - - and usually -- there he is, our senior producer, Matt Percival, who doesn't normally wear a hat like that. Maybe he looks better like that.

When I come back in just a moment, I'll have a Profitable Moment.

You'll kill me for this.

(COMMERCIAL BREAK)

QUEST: Finally tonight's Profitable Moment.

It has been a treat to bring you our 12 festive days of Christmas, not just to learn about how to look after swans or play the bagpipes, but we've also heard the passion of the people involved. We've heard how taking care of ravens and stuffing chickens -- well, it may not be your or my idea of fun, but for those who we met, it was their world of work.

They loved what they do. They still love what they do. And I believe that came across. Which is why next year, we're going to continue the World of Work series. We want you to get involved, of course. We want to hear what you do for a living, what you love doing for a living. There'll be a chance to send us your pictures, which we'll share on our Web site, and, of course, on Facebook.

And talking of Facebook, QUEST MEANS BUSINESS is the place to find the gossip -- the in story of what we're working on with the World At Work.

With the World At Work, we will celebrate the world and the achievements of the world as we see it.

And that's QUEST MEANS BUSINESS for tonight before Christmas.

I'm Richard Quest in London.

Whatever you're up to in the hours ahead, I do hope it's profitable.

Christiane is next, after your headlines from the I Desk.

END