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All that Glitters Is Goldman; 25th Suicide at France Telecom; Consider the Rat-Catcher

Aired October 15, 2009 - 14:00:00   ET


RICHARD QUEST, CNN INTERNATIONAL ANCHOR: All that glitters is Goldman. Tonight, how they banked the gold.

The 25th suicide at France Telecom and the company is responding, it's a worrying trend.

And when pests means profits. Your "World at Work" with the rat- catcher.

I'm Richard Quest, back in London, where I mean business.

Good evening. The Goldman Sachs steamroller keeps powering along. The group has banked more than $3 billion in its third quarter. Net profits that crushed Wall Street's estimates for the third time running. Stocks on Wall Street hesitating just marginally.

If we take a look at the Dow Jones Industrials, you'll see, well, we're actually down off the -- still holding 10,000, down 10.2, just off a little, a fraction. The reason, of course, much of the market is off is because Goldman's numbers were good, there was just a scintilla of some people had hoped that there were going to be better at over $6 a share, instead of the $4.31.

The market is off, but perhaps we shouldn't put too much paid into that just today. Still over 10,000.

Now we do need to talk about tonight, we're going to make sense of what everything is happening in the market. We do need to talk about Goldman Sachs, and how the company made its profits.

Goldman (INAUDIBLE) trading and investment was the key area for -- the net revenues and principals just over $10 billion. Much higher than the Q3 estimate. But lower, 7 percent lower than the last quarter. So year-on- year the company did better, month-on-month -- I'm sorry, quarter-on- quarter, not as good.

It included mortgages, it included equities. It included commodities. And it included the company's own shareholdings.

If we take a look at what was lower -- because it wasn't all (INAUDIBLE) good for Goldman Sachs. If we take a look, lower on investment banking, down 31 percent, lower on asset management, lower on security services, and operating expenses were 49 percent higher than expected. So it's not all brilliantly blue for Goldman -- green for Goldman Sachs.

In the end of the day, this is what people will be talking about with Goldman Sachs, 43 percent of the company's revenue goes towards compensation. It's not estimated that some $16 billion will be with -- revenue for employees. That's an enormous amount of money for the company, and no doubt the bankers' bonuses will be the issue that people are going to be talking about.

Goldman Sachs, good quarter, an excellent quarter, but frankly don't forget that now we are going to make sense of that in the hours and days ahead.

Here on QUEST MEANS BUSINESS, we're going to put perspective to you, and we're doing it through the Q-25. It is the way we navigate our way through the market, making sense, of course, of the results. So if we take a look at the Q-25, hopefully we're going to be able to show you some of the -- of the companies that we're going to be looking at, 25 stocks that in detail we're going to look at.

We need to put perspective into it. Maggie Lake is in New York. Maggie Lake hopefully joins me now.

Maggie, good evening to you. We need to know, the Q-25, we're talking Goldman Sachs, we're going to talk Citigroup, we're going to talk Nokia, but start with Goldman if you'd please.

MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: And it's a good place to start, Richard, because without a doubt, they get a green, they're absolutely positive, you did break it down already, the only thing I'll say is that weakness you were pointing to, it's very seasonal. Everything traditionally slows down in the summer in terms of trading and in terms of deals.

So that's not any great surprise, and maybe not totally limited to Goldman. So if that's the only fault you can come up with, it looks like a pretty darn good report. They continue to set themselves apart from their peers. And the recovery in just one year from the depths of that financial crisis has really stunned everybody. Absolutely a green.

QUEST: Maggie, as we talk about that, we said a green, so let me bring this into play, because we're...


QUEST: I hope you're noticing here, Maggie, the brand new vases that are going to be...

LAKE: Indeed.

QUEST: Yes, but -- so those are the new vases that we had specially made. And we decided apples was all a bit -- oh, lordy, lordy, here we go. We decided apples was a bit wasteful for the Q-25. So instead we've gone for balloons.

Now Goldman Sachs, are we agreed, it's a green?

LAKE: Absolutely, without a doubt.

QUEST: All right. Now, let's then talk about Citigroup. Citigroup had numbers as well. Oh, raising yourself up there, tell me about Citigroup. I liked Citigroup, it made a profit, $101 million, against a loss of 2-point-something billion last quarter. Lower provisions, but you didn't.

LAKE: Yes, this one we definitely disagreed with. I say this one gets a red. You're right they made a profit, but they just about did. I mean, something like $100 million on a net basis. That's not a lot when you're talking about the world of banking, especially a bank this big.

And they still are having issues with the consumer and the consumer credit-lending thing. And investment banking did not do well. I mean, this is the area where their rivals in some areas, JPMorgan, Goldman, are knocking it out of the park and Citi is not.

So all of this against the backdrop of the fact that this is a company that has received the most amount of government money from any other bank. I don't see how you give it a green.

QUEST: All right. We took a vote. There was a whole load of us. It's not just Maggie and myself, there is David (INAUDIBLE), a whole load of us. We go through the numbers. They have all outvoted, I mean, I'd have given a green, but they want to give a red.

(INAUDIBLE) the balloons, they're quite the goodies (ph). Let's hope the air stays in them.

LAKE: I love them.

QUEST: All right.

LAKE: I love them. They're great. I'm so glad they're back -- some things back.

QUEST: Finally Nokia. Now, I think, you know, there is no -- there is no -- it's a red, isn't it?

LAKE: It is. And I'll tell you, the thing that worries me the most, I mean, Citi we're obviously in disagreement and getting less worse isn't a reason. But Nokia, I mean, they're losing market share in the smart phone area, that is a big growth area, it's where mobile phones are going. And if you're losing market share in the area of growth, boy, you've got a problem. That worries me a lot.

QUEST: Maggie Lake in New York, many thanks, indeed. Maggie there joining us. That's the way the Q-25 looks. Just three so far, two reds and a green. We need to dig further and we need to dig deeper into the numbers.

Jerry Wattenburg is in -- good evening, Jerry.


QUEST: Well, first of all, do you believe -- do you agree with our preliminary analysis, agreeing on two reds?

WATTENBURG: Yes, I do. Absolutely. I think Goldman had great numbers across the board. You can look deep in to find out the weak points, but you have to realize now that with the competitors being eliminated, both Goldman and JPMorgan have really dominance in the U.S. market.

QUEST: So tell me, how did they do it? How did they make the money? Don't please just say "trading and investment." What were they doing that made them money?

WATTENBURG: Well, it wasn't one specific thing that they make the money on. I think it really is a competition -- elimination question here. A lot of the largest players in the market are not there anymore. A lot of liquidity is taken out of the system so that, you know, really, there is only a couple of people versus two years ago, there might have been five or six or seven large providers.

European banks have pulled back from markets, and you know, in the U.S., banks have consolidated. So if you're a big counterparty that wants to deal with a big bank, you really can only go to one or two places.

QUEST: They used their own money for a lot of the stuff, didn't they? They used a lot of their own money, but if you look at the M&A, if you look at the investment banking, in fact, if you look at all of the other aspects of Goldman, and I'm trying not to be dog in the manger about it, but their numbers were lower.

WATTENBURG: Well, I think you have to look at some businesses, in turn, mergers and acquisitions was lower across the board in anything, that's actually driven beyond Goldman Sachs' control. What they do have control over, however, is the risk of their trading, their ability to understand the markets, and have positioned themselves correctly.

QUEST: People watching us tonight will say, JPMorgan Chase made a bundle, even Citigroup pulled back from terrible losses into profit. Is there not something a little bit offensive about banks making vast sums of money after we've bailed them out and barely out of recession?

WATTENBURG: Well, I think you're looking at the difference between Wall Street and Main Street. And this is an issue that's going to come up towards the end of the year that on Wall Street can continue to make money even in good times and bad times, you know...

QUEST: But they're doing it on our money! They're borrowing cheap, central bank funds, and they're lending expensive.

WATTENBURG: You know, they are not in control of how they borrow. The governments around the world have supplied the credit, you know, to them. You know, they have dictated where interest rates have been. So if you're trying to figure out, OK, where is this easy money coming from? It's coming from the governments, it's not coming from each other.

And so I think what you're really going to see is, going forward, there is going to be a public, you know, concern about the difference between Wall Street and Main Street, which is going to be a real question that needs to be answered.

QUEST: Two-to-one on the Q-25, it's early days.


QUEST: Any -- care to take a guess how we're going to end up at the end of it all?

WATTENBURG: I think we'll have more greens than we will reds.

QUEST: And I think we'll have to let some of the air out of the balloon. Jerry, many thanks, indeed. Thank you very much.

Now the European stock markets struggled to get off the ground this session. Markets in London, Frankfurt, closed around half a percent lower. Paris's CAC 40 edged just over a whisker. In London, the retail group Sainsbury jumped 10 percent, there is the speculation of a takeover bid.

In the mines sector, Xstrata fell and Anglo American fell sharply. Xstrata has pulled out of a possible merger just days before the deadline for put up or shut up.


Resounding rally in Asia. Investors reacted to the Dow's surge. They were the first markets to so do. Upbeat earnings in the U.S. exported. Japan's Nikkei highest point in three weeks. Hong Kong Hang Seng, new high, 2009. You're up to date.

A wave of suicides is sweeping through one of Europe's largest telecoms companies. In a moment, the turmoil at France Telecom.


QUEST: Welcome back. Now these headlines and Fionnuala Sweeney is at the CNN news desk.

FIONNUALA SWEENEY, CNN INTERNATIONAL ANCHOR: Richard, a string of attacks in Pakistan killed at least 37 people. The Taliban claiming responsibility for coordinated bombings at three police facilities in Lahore. A suicide bomber struck in northwestern Pakistan, and a car bomb exploded in Peshawar. Attacks have increased recently as Pakistan's army prepares to launch an offensive in the Taliban-controlled heartland near Afghanistan. Pakistan's president says the violence will not stop the army from carrying out its mission.

An American father arrested in Japan for allegedly trying to abduct his children from his former wife has been released from jail. Charges against Christopher Savoie were put on hold after he promised not to take the children back to the U.S. Officials at the U.S. consulate said that it will work with the Japanese government to find a long-term solution to the joint custody problem.

The United Nations Security Council will have five new members: Nigeria, Brazil, Bosnia, Lebanon, and Gabon faced no opposition in voting by the General Assembly. They'll begin serving two-year terms on January 1st. The Security Council is 15 seats in all with 10 of them filled by regional groups for two-year stretches.

A dire warning from British environmental scientists. New data just released suggests the polar ice is melting even faster than previously feared. A study by the Catlin Artic Survey and the World Wildlife Fund says the Arctic Ocean will be largely ice-free during the summer within a decade. Scientists hope that this new data will spur world leaders into action.

Those are the headlines. Don't forget to tune in for more on the day's biggest stories, including a look at what is causing the disappearance of the king of the jungle, "WORLD ONE" at 8:30 p.m. London time.

Richard, back to you in the studio.

QUEST: We thank you for that, Fionnuala Sweeney, who will be with us again in just about an hour and 20 from now.

France Telecom says a 48-year-old employee committed suicide early on Thursday. He was engineer, the 25th member of staff to take their own life since the beginning of last year. Labor unions are blaming France Telecom management for the spate of deaths. They say the restructuring and major layoffs are to blame because of the strains and pressures they're putting upon staff and their families.

France Telecom's chief exec, Didier Lombard, is said to be very affected by the latest deaths. CNN's senior international correspondent Jim Bittermann is in Paris.


JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): The stories have been dramatic and painful. A 32-year-old sends a last e- mail to her father, asking him to take care of her rabbit and cat and then throws herself out the window of the France Telecom office where she works.

A 52-year-old France Telecom employee in Marseilles kills himself, leaving a note blaming the company and complaining about its, quote, "management by terror."

Workers driven to despair, France Telecom unions say, by the company's restructuring plans, which have been forcing some workers to change job functions and move from one location to another.

While that sort of thing may be common elsewhere, a union leader says it's difficult for many employees here because they've grown used to the protections of a state-run company, which is now increasingly privatized.

CHRISTIAN PIGEON, UNION REPRESENTATIVE (through translator): It's not that we don't have confidence in the management, it's simply that when it becomes clear that their policy is to put profitability before everything else, we have to start asking questions.

BITTERMANN: But some believe the unions are doing more than just asking questions, using the suicides, which are occurring at a rate no higher than the national average, and which may not all be connected to problems at work, using the suicides to push back at the company's reorganization plans.

JEAN-MARC DANIEL, ECONOMIST: It's very difficult for the unions to say that we need higher wages, we need to improve our purchasing power, though they have to focus on other types of problems.

BITTERMANN: Even so, the drama of the suicides, coupled with the charges of mismanagement, have proved damaging enough to France Telecom that the company's CEO fired his number two in charge of the reorganization and announced that further restructuring will be put off until at least the end of the year.

DIDIER LOMBARD, CEO, CHMN. & CEO, FRANCE TELECOM (through translator): The first urgency today is to control and stop the contagious phenomenon which is spreading, this kind of infernal spiral of suicides which has started. We must absolutely put an end to this movement.

BITTERMANN: The government, which owns about 30 percent of France Telecom, is asking the country's other large companies to negotiate with unions about ways to eliminate stress in the workplace. A union stress expert denies that French workers with six weeks of vacation, shorter working hours, and an elaborate social safety net are more fragile than those elsewhere. It is, according to her studies of France Telecom workers, related to a lack of respect in the workplace.

UNIDENTIFIED FEMALE: They say that they get no recognition whatsoever in their work. They say that they need this recognition.

BITTERMANN (on camera): France Telecom says it's doing what it can to stop the suicides, including now offering counseling programs to distressed workers, but the company's problem is in a more general way and raise questions here about why a country famous for its joie de vive and workers' rights should have so many people taking their own lives.

Jim Bittermann, CNN, Paris.


QUEST: In a moment, marking a new milestone in aviation, this Qatar plane left conventional aviation fuel behind on the ground, how did it stay in the air? We'll tell you in a moment.


QUEST: Welcome back.

Oil prices have surged strongly. They've now passed $77 a barrel, hitting fresh one-year highs. Investors are feeling hopeful that energy demand is poised to rise, the weak dollar is also making oil look relatively cheaper.

A short while ago, the price of oil was trading well above $77 a barrel. If oil continues to rise at this sort of rate, then it is going to have serious implications for the world's airlines, already battling loses as they go into the winter season, which is why all airlines have been doing whatever they can to try and cut their fuel bill.

And that includes finding new ways and new forms of power for the aircraft. Ayesha Durgahee with this story of gas to liquids that are now powering the planes.


AYESHA DURGAHEE, CNN INTERNATIONAL CORRESPONDENT (voice-over): They refilled all four engines of this Airbus A340 with fuel made up of 50 percent conventional kerosene jet A1 (ph), and 50 percent GTL, natural gas that has been converted to liquid. The combination of two years of testing and research on natural gas by a consortium led by Qatar Airways, Shell, Rolls Royce, and Airbus.

After being certified as safe to use just last month, Qatar Airways was eager to be the first to fly with GTL.

AKBAR AL-BAKER, CEO, QATAR AIRWAYS: It's a very proud moment for (INAUDIBLE) Qatar Airways because we are leaders for the future generation of non-pollutant fuel for aviation.

DURGAHEE: And it makes sense of the airline to be the first for the airline to be the first, since it will have GTL on its doorstep. Qatar, the world's largest exporter of liquified natural gas, is set to become the market leader in GTL production. The Qatar power plant, when it opens in 2011, owned by Qatar Petroleum and Shell, aims to produce about 1 million tons of GTL a year, and will become commercially available by 2012.

AL-BAKER: The biggest challenge will be that we will not be able to fuel our airplanes with GTL in all of the efforts. It will be very limited, at least initially.

DURGAHEE: So far so good, everything seems just like any other flight. For a bit more detail, we need to speak to the man at the front, the captain.

ABDULLAH JOHAR, QATAR AIRWAYS PILOT: There is not much notable except the fuel burn so far has been less than normal. The burn-off we're expecting is 46 tons (ph) a day. And the (INAUDIBLE) is usually 0.08, today it was 0.75 to 0.76. So that means the fuel is lighter than the normal fuel.

DURGAHEE: Fuel that is lighter and burns less means airlines could burn less money. But with GTL being the first alternative fuel to be used on a commercial flight, it is too early to tell if GTL will be cheaper than conventional fuel.

AL-BAKER: Even if it is the same price as gas, because of the higher density of GTL, for the same amount of fuel, we can fly longer distances, which means that we will still burn the same amount of CO2 emission.

DURGAHEE: GTL burns with only traces of sulfur dioxide emissions and hardly any soot particles, unlike conventional oil-based kerosene.

As the industry tries to find its biofuel feet, testing algae to (INAUDIBLE) oils, the progress made with GTL shows airlines may have yet another option.

MAX KINGSLEY-JONES, FLIGHT GLOBAL: There is also the supply of kerosene, the supply of oil, you know, that's not going to last forever. They have to look at alternatives there. So there are lots of different drivers coming into play here. And what we're seeing today is one of those solutions being tested, which is why today's flight is obviously very important in terms of fuel development.

DURGAHEE (on camera): So we made it six hours from London to Doha, marking a milestone in aviation that GTL can be a viable alternative to jet fuel, an elixir that can help reduce the industry's impact on the environment.

Ayesha Durgahee, CNN, Doha, Qatar.


QUEST: Now staying with commodities, and gold's record-breaking run is over for the time being. Prices are lower. Gold hit the all-time high above $1,070 on Wednesday, now it's time to take some profits. There are suggestions the rally may have been overdone. The price at the moment, $1,050 an ounce. If you rise fast, you will fall just as fast, down $14 on the session.

Gold may be lower, it's still 19 percent up for the year and people are throwing up precious metal (sic) at the money (sic), to be sure, themselves, against rising inflation. Consumers are doing the opposite, consumers are doing whatever they can to cash in on gold as Diana Magnay found out.


DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: These are, of course, recessionary times, and many of us don't have that much spare cash lying around. But if you're cash-poor but gold-rich, now might be the time to cash it in. We went down to a very busy pawnbroker to find out what happens when to your gold when you bring it here.

(voice-over): Nathan Finch is a council member for Britain's National Association of Pawnbrokers, and he is also the boss here at Pickwick.

NATHAN FINCH, OWNER, PICKWICK PAWNBROKERS: Had you been doing this five years ago, you would have probably got half the amount of money that you would get today.

MAGNAY: Jane Longhurst is getting 170 pounds, or around $270 for just under 30 grams of scrap gold.

JANE LONGHURST, CLIENT: There are broker bits that sit in -- you know, the throw in the bin, but if you can get a little bit of cash back on them, then it goes towards my grandchildren.

MAGNAY (on camera): So this is just what you've brought in today?


MAGNAY: Wow, business really is booming.

FINCH: Yes, it is.

MAGNAY: So how do you work out the value of that?

FINCH: So we would take a file and gently scratch the surface.

MAGNAY: What? And if it's fake, it goes...

FINCH: It's hardly -- no, no, no...

MAGNAY: It burnishes...

FINCH: That's just the -- that's the just beginning. And then you apply an alkaline solution to it. And depending on the reaction of that solution, you will get a different reaction as to whether it's gold or not gold, and a different reaction as to the carat.


FINCH: That has gone quite stained brown, and the lower the carat, the more that brown staining is evident.

MAGNAY: So now that we have this bag, what would you do? Sell it onto the person who is going to melt it down?

FINCH: Well, this bag is processed by us, and it is effectively then moved securely to a bullion dealer who will then melt it down and it will be turned back into bars of gold as it once was.

MAGNAY: And what should customers be careful of if they're wanting to sell their gold?

FINCH: I think one of the most important things is that where you're buying from someone who could be a member of a trade association, a trade body, I think they should be, because it shows that they'll have been vetted. And if you just send your gold straight off in an envelope, you're pretty much in a difficult position as far as being able to up the price and barter.

Whereas if you're face-to-face, you can get a much fairer price, in my opinion, for that gold.

MAGNAY: We probably spent about an hour inside that shop, and during that time, they had over a dozen customers, more than twice the amount they normally have. One business on the British High Street that is doing pretty well right now.

Diana Magnay, CNN, Hartford, England.


QUEST: Now it is the day after the Dow went over 10,000.


Oh dear. Well, we're still over 10,000, 10,006, minus 10, just off. When we come back in just a moment, we will be in New York and we'll find out what is likely to happen next.

QUEST MEANS BUSINESS, good evening to you.


QUEST: Hello, good evening. I'm Richard Quest, QUEST MEANS BUSINESS. This is CNN.

The Dow Jones went over 10,000 and like the grand old Duke (ph) of York, march its way up and march its way back again, at least it is today at the moment. The Dow, as you can see in the lower part of the screen, is now still over 10,000, but we are down, down about 9 points. Susan Lisovicz is in New York and joins me now.

Susan, before we talk about the Dow, we've got our Q-25, as you're well aware. We gave a green balloon to Goldman, and a red balloon to Citi and to Nokia. Does that seem fair for you?

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Yes, I think so. Well, I mean, look at Goldman Sachs, I mean, Goldman Sachs shares have more than doubled this year. Citigroup has yet to repay TARP and has something like almost $9 billion in loan losses. So Citi has got its work cut out for it.

I haven't been following Nokia too much today, I've been pretty immersed in financials, but I'll just take your word for it, Richard.

QUEST: Oh yes, dreadful, dreadful numbers from Nokia, don't worry about that, I was more concerned about your views on Citi and Goldman.

Are -- is there a feeling -- because I looked at Goldman's results, actually, strip out their proprietary trading investment stuff, things weren't brilliant across the whole Goldman empire, were they?

LISOVICZ: No. And I think that's why the shares are down 2.5 percent right now, is that, you know, the problem with an improving picture is that the bar is set higher and you do expect better. And so with investment banking, it tumbled quarter over quarter.

And that's a -- that's a core area of business. And so it's -- I wouldn't say that Goldman is exactly suffering, but I would say that there's disappointment. And that's how markets react in earnings season, when it sees something it doesn't like and expected better.

QUEST: As we look, Susan, at the -- (INAUDIBLE). I mean we've only got two to one so far. We had Alcoa last week. We had JPMorgan Chase. And tell me if I'm just being too previous, but am I being a little premature in trying to make any extrapolations on earnings season at this stage?

LISOVICZ: Well, the trend has been quite good, as you know, this year. Maybe that's because everybody thought we were practically in Armageddon. So having said that, you know, there -- you know, I think that we are seeing, still, a lot of cost cutting. I do think we have an improving picture, but there are still a lot of problems.

And if you look specifically at financials -- and that's who we're hearing from in the last 24 hours -- the consumer is a big problem. When there's rising unemployment, the loan losses -- J.P. Morgan, on Wednesday boosted its loan loss reserves by $2 billion because of that.

QUEST: Though all is well in the world, Susan. You've got the Lisovicz gems out. We've abandoned the gold and clearly round the neck tonight. I'm just wondering at what point Susan Lisovicz is finally going to exhaust the collection of jewelry.

Many thanks, indeed.

Have a good day.

We shall see you tomorrow.

Susan Lisovicz joining us from New York. Now, the world of work is forming a fundamental part of our coverage as we come back to recovery and back to economic growth. In this climate, no job is to be sniffed at. We're going behind the scenes of The World At Work.

If you just think about it, we all say we would do anything if desperation really struck home.

Tonight, we'll meet the man making a living on London's vermin.


RICKY CLARK, ENVIRON PEST CONTROL: The rat situation right now in London is very bad. People always say we're only about two meals away from a rat. Sometimes we're a lot closer.

We're at a secondary school. I did want to be a pest controller (INAUDIBLE) I want to kill rats and such.

Where's the rat, Charlie?

But nothing gives me that tingle when a customer comes out screaming at two in the morning saying she's got a rat in her bedroom or a rat in her living room.

Hey there, mate.

Are you all right?

Excuse me.

All right. Come on. Let's have a look. We always try to find the source of infestation, whether that's from (INAUDIBLE) works or the entrances and exits into the property. After we've found that, we can do our trapping or rope in to decide the strategy, leave for a couple of days, get our control and then we implement a proofing (ph). We block up the holes to make it a permanent solution.

A rat only lives for a year-and-a-half in the world. But he has a gestation period, you know, every four to six weeks they can have, you know, a litter. So, you know, you're talking about a very fast turnaround. The biggest rat I ever caught might properly be best described as a baby wallaby. And if that puts it into perspective, he was probably about that fat.

One of our tricks is obviously Charlie, the Jack Russell. It's quick. It's humane. Let him off the leash and it's (INAUDIBLE).

And the site smells.

We're reviving an old school Victorian method. It's what they used to do in the trenches. It's what they still do it in the countryside. And we're introducing that into London.

He's quite long, isn't he?

UNIDENTIFIED MALE: Yes, he's pretty big.

CLARK: A rat has what's known as neophobia and that's an adverse reaction to any change in its environment. And that's what makes a rat so intelligent.

UNIDENTIFIED MALE: They dug a tunnel to get all the way from there to here so -- so they didn't have to...


CLARK: A rat will know when you've put a trap down. A rat will know when there's poisons in his way and he will go out of his way to avoid those. And that's the challenge of the pest controller.

Rats are a thinking man's game. And that's why I enjoy (INAUDIBLE).


QUEST: Remember, with the world at work, it's about the trick of the trade and the passion of the people.

We want to know how you earn and spend your money. Send us the pictures of the world at work, whether it's putting up a billboard; enjoying a muffin, whether it's any time of the day or night; or, perhaps, you're a teacher in a school.

There are some rules and regulations, but you can send us them. Let's go through the addresses where you can -- you can -- we're on Facebook at QUEST MEANS BUSINESS. You can e-mail at and we will put some of those -- we will -- we'll go through the process with you. But we want the pictures of you in your job at work,

We'll be back with more in just a moment.

Good evening to you.

Thank you for being with us.


QUEST: Welcome back.

Since we've been on air, a few months ago, the markets were there. Now they look like they're a bit higher. According to the numbers, the Dow seems to be up just by nearly 7 to 10 points.

Joining us from New York is Art Hogan, chief market analyst at Jeffries & Company.

Good evening to you, Art.

First things first, the -- the market reacted badly to -- oh, well, there we are. We do seem to remember -- we've seen another one of those extraordinary days where nothing really wants to actually -- to what it's meant to be doing.

Art Hogan, can you hear me?


How are you?

QUEST: Oh, excellent. We did pay the electricity bill after all and you are back with us now.

HOGAN: Right.

QUEST: Art, let's talk about the market and the reaction that we got post-Goldman was down. Now it's reversed.

What's going on today, do you think?

HOGAN: Well, a couple of things. I think you bring up a good point. First of all, we had J.P. Morgan yesterday, which had blockbuster results. And the -- the entirety of the financial space got a lift. So you come into today and I think the estimates for Goldman Sachs -- at least the whisper numbers for Goldman -- were actually higher than what the actual results were. Their results were find. They were actually very good. But there were some whispers out there as early as yesterday that were significantly higher than their printed number.

So there's a bit of a disappointment that the magnitude of Goldman's number was not going to be enough to keep that rally that we saw in the financials yesterday going.

QUEST: Is 10000 safe at the moment or is it teetering and tottering?

HOGAN: Well, it depends on who you talk to. I think that the majority of the investors in the market right now are fully invested bears. I think there's a lot of caution and people have been looking for a fallback in this market for the last two months.

And I think that coming into September that was the consensus. And I think coming into October that's the consensus.

The problem is if you're a professional money manager, you have to be invested in this market for -- for one very good reason. You could be forgiven for having a bad year last year in the terrible market, but you can't be forgiven for having a bad year this year in a good market. So I think there's a lot of performance chasing going on and I think there's a lot of fully invested bears out there.

QUEST: When we were talking at our meetings during the course of the day putting together the program, one question that comes up again and again and again, Art -- and I need your help understanding this -- how are the banks doing it?

Is it because they can borrow cheaply from the Fed, lend more expensively?

Are they Midas touches?

Whether it's J.P. Morgan or Goldman or B.O. Late in the week, we expect, how are they managing to make money?

HOGAN: Well, I will tell you this, right now, it's probably the perfect environment if all you're doing is borrowing and lending, because you can borrow at virtually 0 percent interest from the government and you can lend at much higher interest rates. So the spread of income that you make is very good.

If you've got a diversified business model, like a J.P. Morgan, who have great returns in their commodities trading and then in their (INAUDIBLE) trading departments, they do very well.

QUEST: OK. But let me just put a -- let me just be a little bit more brutal with you, if I may. You seem like the sort of chap who can take it. The public -- the public are demanding to know how can this be, barely months after billions of dollars are spent bailing out banks, they're making large profits and seemingly about to offer obscene bonuses?

Square that circle for me.

HOGAN: Well, to -- to sort of look at it this way, I think that the bonus conversation, which is extremely popular right now in mainstream America, circles around one particular investment bank. I don't think the majority of investment banks are thinking about giving out large bonuses and I certainly think that the longer-term prognosis for being a financial institution is going to be an over regulated, much higher need for -- for capital on hand and that -- and a derisked business model.

So to the extent that, yes, in this current environment, if you're a bank and you're borrowing at very low interest rates -- which won't stay there forever -- and when they higher interest rates, you're making a good spread income.

But I -- I sort of think that a lot of that, you know, we bailed you out, now you're paying yourself bonuses conversation really circles around one of the investment banks, not over the majority.

QUEST: Art, we thank you very much.

You made really good sense to us tonight and we appreciate it.

Come back again, please, to QUEST MEANS BUSINESS.

And we look forward to when you talk more about it.

HOGAN: Thank you.

QUEST: Art Hogan joining us from New York.

Now, the weather was warm -- well, as you know, it was very hot in India, where I was earlier this week. London -- well, what can one say?

Guillermo -- it's winter and I've got the thermal heating on. I'm wearing sweaters and wooly sweaters at that.


QUEST: No, I know (INAUDIBLE) time for the winter (INAUDIBLE) suit -- Guillermo at the World Weather Center.

ARDUINO: If you were in Germany, my god, those people in Germany are suffering big time with this winter. London is fine -- totally fine, Richard. And we are going to see OK conditions on the weekend, in fact, in London, compared to the mess that we have in Germany, in Poland, in Scandinavia, Austria, Switzerland. I see so many reports of snow. I mean it's awful.

High pressure now here from Britain. So I don't want to hear any complaints, because it's pretty good compared to the persistent low that we have in here in the east. And temperatures are bad. Also, we have minus - - like minus 5 degrees in parts of Germany. Look at what's going on here with this cold spell that is going to last. This is an early taste of winter that is really unfortunate.

I was checking on Nuremberg. It's snowing over there right now -- many, many place -- many, many sections with even 10, 12 degrees above average.

Now, the west looking OK. Wales and France, look at Munich, probably some delays toward evening hours at the airports because of the snow. Vienna, the same thing. Frankfurt. I hope that London pops up. I don't think we're going to see any delays there. Evening hours in Berlin also with some snowy conditions. Amsterdam there.

London looking fine. Eventually, tomorrow, some rain showers over there. Look at the temps, 14 in Glasgow, 14 in London. Of course, Richard, I have to give you this, in the morning, it's very, very chilly. It's like three or four degrees. I totally agree with you. It's cold in the morning and in the evening. But if you compare that with Berlin, four degrees, it's pretty good. Six degrees in Vienna. And these are the -- the high temperatures of the day. That is going to remain. It's persistent. It's going to remain there. We're not going to see much of a change. But the -- the forecast for you, Richard, pretty good for the weekend, in fact. So I hope you enjoy it -- back to you.

QUEST: Guillermo, many thanks, indeed.

Guillermo, as you know, at the World Weather Center.