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Russia Bombings; F1 Champion Schumacher Ski Accident; Winners and Losers; Year in Perspective; Dow Hits 51st Record High in 2013; European Markets Down; French Millionaire Tax; Lebanon Shoots at Syrian War Planes; Lebanon Arms Boost; Israel Releasing Palestinian Prisoners; Out with the Old; In with the New; 2014 Economic Outlook; On the Ball; Profitable Moment

Aired December 30, 2013 - 16:00   ET



RICHARD QUEST, CNN INTERNATIONAL HOST: It's the last full trading day of the year. The Dow is closing at a record, over 6500. Hit it! Because today is Monday, December the 30th.

Think of this as Lucky 2013. Stock markets are finishing the year in bullish style.

There's the case of more money, more problems. France's millionaire tax gets the green light.

And having a ball in Times Square. I go behind the scenes at the world's most famous New Year's bash.

I'm Richard Quest. I mean business.

Good evening. We will have our full business round-up in just a moment, but of course, we must address two major stories taking place in Europe this evening: the twin explosions in northern Russia and the condition of Michael Schumacher, who was critically injured in that skiing accident.

Let's start, though, in Russia, where the country is now on high alert after two suicide attacks in the city of Volgograd. More than 30 people have been killed in these attacks, and it's now raising serious concerns about security ahead of the Winter Olympics, which are just a few weeks away. Our correspondent Diana Magnay is in Moscow tonight.


DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: As the rest of Russia celebrates in the new year, the city of Volgograd will be holding three days of mourning after twin attacks devastated the city. Here's a look at the events of those two days.

MAGNAY (voice-over): Two deadly terror attacks in the southern Russian city of Volgograd in less than 24 hours. Monday's attack on a crowded trolly bus in morning rush hour, more than a dozen killed. Authorities say the blast the work of a suicide bomber, possibly detonating his device towards the back end of the bus, where the damage seems worse.

Many onboard were students. This is exam time in Russia. Among the injured, a baby boy, now in a coma with multiple skull injuries. Authorities say they don't know who he is or whether his parents were killed in the blast.

This follows another attack at noon on Sunday in Volgograd's main railway station, the moment of the explosion caught on surveillance video. Seventeen people were killed in that blast, authorities saying that was also the work of a suicide bomber.

These attacks come less than six weeks before the start of the Winter Games in Sochi, which is around 600 miles southwest of Volgograd. Russia's president, Vladimir Putin, has vowed the highest possible security around the Games themselves in the town of Sochi, but it is clearly hard to police the whole of southern Russia to the same level.

Russia is fighting an Islamist insurgency in the North Caucasus, not far from Sochi. In July, Russia's most-wanted man, Doku Umarov, a Chechen extremist and leader of an Islamist faction in the North Caucasus, threatened to unleash, quote, "maximum force" to prevent the Games from happening.

The US State Department has a $5 million reward out for Umarov. Former intelligence officials believe further attacks are entirely possible.

BOB BAER, FORMER CIA OPERATIVE: I think if we don't see one -- an attempt on the Olympics, I'd be very surprised.

MAGNAY (on camera): Even if the high security around Sochi means terrorists may find it hard to strike there, they are proving themselves more than capable of spreading maximum fear by targeting cities elsewhere in the region with deadly results.

Diana Magnay, CNN, Moscow.


QUEST: The International Olympic Committee says it still has faith in Russia to safely deliver the Winter Games. In a statement, which was released today, the IOC president Thomas Bach said, "I have personally written to the president of the Russian Federation to express our condolences to the Russian people and our confidence in the Russian authorities to deliver safe and secure Games in Sochi.

"I'm certain that everything will be done to ensure the security of the athletes and all the participants of the Olympic Games."

To our other top story tonight, and there's been an outpouring of support for Michael Schumacher after his ski accident. The German chancellor, Angela Merkel, offered her well wishes and said she was extremely shocked, along with millions of German citizens.

The former Formula 1 world champion is being looked after by a team of specialist doctors in France. Amanda Davies reports.


AMANDA DAVIES, CNN SPORTS CORRESPONDENT (voice-over): After so many battles on the racetrack, seven-time Formula 1 world champion Michael Schumacher is now fighting for his life in hospital in Grenoble having suffered severe brain injuries.

JEAN-FRANCOIS PAYEN, CHIEF OF ANESTHESIOLOGY, UNIVERSITY HOSPITAL CENTER OF GRENOBLE (through translator): The situation is critical, is judged as critical, yes.

DAVIES: The 44-year-old fell and hit his head on a rock while skiing on unmarked slopes in the French Alps resort of Meribel on Sunday morning. He was airlifted to hospital and, after an operation, doctors are working to relieve pressure on his brain, keeping him in a medically-induced coma and lowering his body temperature.

PAYEN (through translator): He's in artificial coma. He is suffering from hypothermia to reduce brain damage, which is increasing brain pressure. We need to reduce the rise in intra-brain pressure.

DAVIES: The German was a regular on the annual Ferrari ski trip during his time with the team. He owns a house in the Alps and is a keen and accomplished skier. Doctors say the fact he was wearing a helmet went a long way.

PAYEN (through translator): I think given the violence of the shock, his helmet did partly protect him. This kind of accident without a helmet would not have reached this stage.

DAVIES: Schumacher reached heights that others hadn't during his career as a Formula 1 driver, winning more titles, more races, and more pole positions than any before him. He returned from serious back and neck injuries suffered in a motorbike accident to race for Mercedes in 2010.

And there, among those in the motor sport community, to pay tribute, saying we all know the depth of Michael's fighting spirit and send him all our strength and support in this latest battle. We sincerely hope that he will make a full recovery and will be with us again soon.

Schumacher's family is at his beside at the hospital and have released a statement thanking the medical team and those around the world for their messages of support. Doctors say it's too early to give a prognosis and right now, they're working on an hour-by-hour basis.

Amanda Davies, CNN, London.


QUEST: So, you're up to date with the two major stories happening in the world at the moment. When we come back after this short break, we'll turn our attention to our regular diet and bring you up to date with the business world.


QUEST: It is the 51st record close of the year on the last full trading day of 2013. The Dow Jones Industrials, if you take a look, the winners and losers over the past 12 months, the Dow Jones is up 25 points, over 16,504, the first time the market's claimed over -- or closed over 16,500.

The S&P and the NASDAQ, they both lost somewhat ground in the session, but the Dow, of course, rallied. Come and have a look and see how the markets have performed over the course of the year.

If you look at the Dow, this is really quite extraordinary, a gain of some 26 percent. And with the exception of two little areas here and here, where there were these hiccups around tapering, it's been a consistent trend throughout the course of the year. Even more so if you just look over the last three months. So, that's the way the Dow Jones has traded.

Look at the DAX, where the DAX has traded up 25 percent, similar gains, but a much greater hiccup in July. A very steep fall down in the market on the eurozone crisis earlier in the year.

The Nikkei, the best performer of the lot. Now, obviously, if you'd been with the Nikkei, you might have had a currency risk from yen to dollars if you were doing that in reverse. But 56 percent, a hiccup here. Abenomics has absolutely moved that market in one direction.

It's the best year, by the way, since the 70s. As for the biggest loser, that has to be gold. Gold is down 26 percent for the year, 1213.24. The days of gold being up 1700, 1800, seem a long time ago. In fact, it's the first loss for gold for 13 years.

Putting it all in perspective, Mohamed El-Erian is the chief executive officer, CEO of PIMCO. Season's greetings to you, Mohamed. Good to have you with us this evening for our nightly conversation on business and economics.

MOHAMED EL-ERIAN, CEO, PIMCO: Thank you, Richard.

QUEST: Now, of all -- I can hear people saying to the television screen, "But my portfolio didn't show a gain of 26 percent. I didn't see anything like that gain." So, what's this differential?

EL-ERIAN: So, it depends on where you invested in the world. If you invested in the markets you showed, the US, Europe, and Japan, you did really well. If you invested in Turkey, you're down 27 percent. If you invested in Brazil, you're down double digits as well.

And what we saw, Richard, is a year in which the fundamental driver was not fundamentals. It was the role of central banks. And with hyperactive Fed in the US and ECB in Europe and the Bank of Japan in Japan, markets there did really well. But the rest of the world did not do as well.

QUEST: But those -- that central bank activity, Mohamed, could turn into fundamentals if, for example, next year we get the 3.5 percent growth out of the US, then you really have had a self-fulfilling prophesy.

EL-ERIAN: If it happens, yes. And you've said it really well -- valuations up here, fundamentals are down here. And the hope is that central banks bought enough time for the economy to recover. Enough time for the economy to heal so that people can invest, so that companies can invest.

If that happens, Richard, than fundamental would not only validate valuations, but could push them higher. But it's still a bit "if."

QUEST: I get the feeling you are -- you are trying to sound like a canary in the coal mine and give us a bit of a warning.

EL-ERIAN: What I'm basically saying is, understand why we've done so well. And it's not because the fundamentals are good. It's because central banks have been markets' best friend. And like any best friend, you've got to make sure they're still there for you tomorrow and the day after.

So, it's just a warning to understand that this is not a fundamental-driven rally. This is policy-driven rally, and we therefore need a hand-off from policy-induced growth to genuine inclusive growth. And that's a difficult hand-off.

QUEST: Which means, if we had -- let's face it. Investing during this year, yes you wondered when it was going to come to an end, but by and large, it was a -- for these markets, it seemed to have been a one-way bet.

Next year becomes much trickier, because no one wants to exclude Turkey, Brazil, even China. You know you've got to be part of that market if you're going to have broad-based gains over the long term.

EL-ERIAN: You're absolutely right. And that speaks to a bigger theme, which is differentiate. Investors, I think, can navigate 2014 well be differentiating. So, there's themes within the markets. For example, new tech has done extremely well. Old tech has not. That difference cannot persist. Either old tech recovers or new tech will lose ground.

Similarly, some of the really well-run emerging markets, Mexico, cannot lag behind the US by so much. So the key theme, I think, for investors in 2014 is to differentiate inside markets as opposed to simply betting on markets as a whole.

QUEST: Now, regular viewers to our nightly conversation will be well familiar that I'm not a huge lover of gold. Never have been. Always thought it's a rather stupid metal that has an attraction for certain people who really are probably paranoid most of the time. However, gold really got its comeuppance this year.

EL-ERIAN: It did for two reasons. One is the central banks eliminated the risk of a complete meltdown. Whether it's the ECB back in July or whether it is the Fed, they managed to convince people that the tail risk, what economists call the tail risk, which means the catastrophic risk --

QUEST: Right.

EL-ERIAN: -- is down. And therefore, people didn't use gold for insurance. Secondly, it was a technically unbalanced markets. There were lots of weak hands holding gold. So, you got a massive correction.

Like you, I think gold's role should be more limited, but it does perform a function in a well-diversified portfolio.

QUEST: Oh! That -- excellent thought. A well-diversified portfolio, which we should all aim for in 2014. Mohamed, thank you very much. It's the last time we'll speak in this year. Thank you for always being so kind and courteous and coming and talking to us on the program.

EL-ERIAN: My great pleasure, and happy New Year to you.

QUEST: Happy New Year to you, too. Now, the Dow ended its 51s record of the year. Zain Asher is at the New York Stock Exchange. I mean, 51, 52, 53 --


QUEST: You heard Mohamed. It's just going to keep going in that way as long as we get this unbalanced non-fundamental rally.

ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Hi, Richard. Yes, but today was a particularly quiet day on the market.

QUEST: How many shares?

ASHER: I was speaking to traders --

QUEST: How many shares?

ASHER: Traders -- well, roughly between 200 and 300 million --


ASHER: -- shares traded. So not that much at all. I've been speaking to traders who tell me that the last few days of the year is really about traders actually buying and selling individual shares as opposed to watching out for any dramatic movement in the market as a whole.

One trader described it as a market of stocks as opposed to a stock market. You've got 10 percent of the volume really coming only from a handful of shares.

I spoke to one trader, and I asked him, what is the biggest thing on your horizon for 2014? He tells me that they're really waiting for this correction they think is long overdue. That's what they're waiting for. Each time the market sort of pulled back in 2013, you had people buying in and seeing it as a buying opportunity, a so-called buy the dip, sell the rip, that's what traders refer to it as.


ASHER: One share I do have to tell you about quickly, Richard, is Twitter. They ended the day down by 5 percent. That's on top of the 13 percent plunge we saw last week after an investment firm basically downgraded the stock, saying it was overvalued. So, not a good day for Twitter.

QUEST: The phrase "The emperor's new clothes" comes to mind.



QUEST: What a shame we're not with you tomorrow, or we're not here tomorrow on the program. We could have had our rendition of "Wait 'Till the Sun Shines Nellie."

ASHER: Oh, yes!

QUEST: I know!

ASHER: I would love to sing that with you!

QUEST: Next year -- (singing) "Wait 'till the sun shines --"

ASHER: Next year.

QUEST: Zain, have a lovely happy New Year --

ASHER: You, too. Take care.

QUEST: -- when we'll have another exciting year in the market. European stocks closed lower on Monday, the last trading session for Germany and Switzerland. The UK and France are open. It's a half day. And they were all lower.

Overall, 13 was a great year for autos, telecoms, and media. Basic resources, like gold, as we've been talking, copper, they were down.

If you think you've got tax problems, a millionaire tax aimed at France's wealthiest citizens has finally been approved by the country's top court. It's 75 percent. It's a super tax. It aims to help pull the ailing economy out of the doldrums by putting a levy on businesses who employ the richest workers.

Now, the 75 percent tax was a key policy of President Hollande, and the tax will last for two years and will take companies that pay the salaries of more than $1.5 million. But it's led to fierce criticism from entrepreneurs and even celebrities.

So, the millionaire tax has seen strong opposition from every corner of French society. The court originally said that hitting the country's top earners was unconstitutional because it failed to guarantee -- failed to guarantee equality. President Hollande was determined to carry on regardless as he struggled to cut the deficit down to Maastricht 3 percent.

The actor -- wind him up -- Gerard Depardieu was so disgusted he decided to cozy up with Vladimir Putin and take Russian citizenship. The French screen icon left France claiming he'd already paid 85 percent tax on his income. He called this a tax on success.

And even the French football team's up in arms, threatening to strike for the first time in 40 years. The strikes were eventually called off. Even so, the high profile clubs warned the extra tax would kill French football by forcing well-paid players to move elsewhere.

As for ordinary citizens, do they support the tax? It is late tonight in Paris. Jim Bittermann is there for us tonight. It's 20 past 10:00. Good evening, Jim. The president says it's a symbolic measure because companies who can afford it pay it.

JIM BITTERMANN, CNN INTERNATIONAL CORRESPONDENT: Well, he's absolutely right, it's symbolic, because it's only going to bring in, according to some estimates, about 260 million euros in extra tax revenue. He's got billions of euros to find if he wants to even approach a balanced budget.

And they've already lowered their sights in the deficit spending. They promised the European Union they'd end up the year around 3.9 percent of GDP for deficit spending. In fact, they're going to be more like 4.1 percent. According to the government's own statistics, it could be even worse than that.

So, in fact, the problem is growth here. The growth is almost flat and may come out of the end of the year about 0.1 percent. But in any case, that's what this is all about.

QUEST: Right, but --

BITTERMANN: It's more about public perception than anything else.

QUEST: So, if the wealthy don't like it, do the ordinary people, if such one can tell their views, are they in favor of it?

BITTERMANN: Yes. According to the opinion polls, most people on the street are in favor of it. They think it's a good idea, and it may hurt them in a different way than one would expect, and that's what you've mentioned about the football clubs. Soccer here is very popular, of course.

QUEST: Right.

BITTERMANN: And these middle-level football clubs are really being squeezed by this because they're got to come up with the 75 percent tax payment if they're paying their players more than a million euros a year. And they may loose the players if they can't pay them that. So, it's really -- they're really in a bind.

QUEST: Jim, lovely to see you this evening. Normally we see you with the Arc de Triomphe behind you. Tonight, we have the Eiffel Tower. No doubt they're getting ready to fire vast numbers of fireworks up the side of it. Is that right?


BITTERMANN: I don't think so, Richard. I think that's going to be more along the Champs-Elysees. But we thought we'd give you a little New Year's gift here, Richard.

QUEST: A gift, indeed. And it is well received. Jim Bittermann, who's at the Eiffel Tower for us this evening.

Coming up after the break, the Lebanese army received a major boost from the government of Saudi Arabia. It came in the form of $3 billion. What do they intend to do with the money? This is QUEST MEANS BUSINESS. Stay here.



QUEST: For the first time since the start of the conflict in Syria, Lebanon's military has fired shots at Syrian warplanes. The incident happened over the border town of Arsal. A security official has told CNN the shots were intended to show a warning to the Syrian air force for violating Lebanese air space.

Lebanon is bulking up its military muscle, $3 billion gift from Saudi Arabia, the largest ever aid deal for the Lebanese army. The deal is almost twice the size of Lebanon's entire defense budget last year, according to estimates. The country says it will use the money to buy weapons from France.

Joining me now is Simon Henderson, the director of the Gulf and Energy policy program at Washington Institute. Simon, I can see why Lebanon needs or wants these resources, but it sort of -- the initial gut reaction is, oh, that's just what the region needs, more heavily-armed militias and armies to take up the battle.

SIMON HENDERSON, GULF AND ENERGY POLICY PROGRAM DIRECTOR, WASHINGTON INSTITUTE: Yes, it would be my gut reaction as well. It's a huge amount of money. I assume that it will come through, but that it will come through over a period of several years. You can't spend this amount of money just in a few weeks, and an army, particularly the Lebanese army, can't absorb this amount of new equipment except over several years.

QUEST: OK. Now, the bomb blast last week killing Mohammad Chatah was -- was seminal in one sense in that it brought the battle back into the heart of downtown Beirut. But Lebanon has been battling a form of insurgency and a refugee crisis as a result of this civil war pretty much from day one. So, what's changed?

HENDERSON: What's changed, I think, is Saudi determination to see the end of Bashar al-Assad. And this determination, which has been there for some months, has been renewed as a consequence of the chemical weapons deal, and then by the Iran nuclear accord.

Neither of those things in a Saudi perception have served their purposes, and indeed have only reinforced Bashar al-Assad's position. So --

QUEST: OK, but who --

HENDERSON: -- the Saudis are upping the ante.

QUEST: Right, but if the Saudis are upping the ante and they are using the vehicle of the Lebanese to do so, the Lebanese and Lebanon per se -- not to put too fine a point on it -- becomes classically the meat in the sandwich.

HENDERSON: Absolutely. It's a bit of a bet, and I can only assume and perhaps hope for Saudi information on the -- what's happening in Lebanon is rather better than mine. But it has all the potential, I would have thought, for making the situation worse rather than better.

I think the Saudis want the Lebanese government to take on Hezbollah, the Shiite militia, in Lebanon, which has also been sending its forces across the border into Syria to bolster the regime of Bashar al-Assad. And --

QUEST: So we've got here a situation where the Saudis -- where the Lebanese will not only be taking on Hezbollah on their own doorstep, they'll also be taking on, perhaps, Assad in a direct confrontation in its own right?

HENDERSON: Absolutely. That's assuming that Assad has enough spare capacity --

QUEST: Right.

HENDERSON: -- to swat the fly of Lebanon occasionally. And he's -- not sure about his capacity, but he's probably got the will and, if given the opportunity --

QUEST: Right.

HENDERSON: -- he'll take it.

QUEST: Simon, thank you very much for joining us, putting that into perspective. Simon Henderson, good to have you on the program tonight, sir. Appreciate your time, as always.

There's an important milestone in the Middle East peace process tonight as Israel plans to release a group of Palestinian prisoners within the hour. Ian Lee is standing by. He's in Ramallah in the West Bank. Ian joins me now. Who's getting released and when?

IAN LEE, CNN INTERNATIONAL CORRESPONDENT (via telephone): Well, Richard, there's going to be 26 Palestinian prisoners released here tonight, and I'm at the presidential compound, 18 will be delivered here. These are residents of the West Bank. Five will go to Jerusalem, and three will go to Gaza.

Here, right now, at the presidential compound, there's hundreds of people waiting for them: friends, family. These prisoners haven't been free in over 20 years. A lot of these people here haven't seen them in over 20 years. They will get a hero's welcome when they meet with the Palestinian president, Mahmoud Abbas, as well as all other family. They have festivities planned for them.

And this is the third batch out of four, a total of 104 Palestinian prisoners that are supposed to be released by March. This is part of the peace process. There could be a wrench thrown in it, though, Richard, as Israel has hinted that they might end up new settlement construction to coincide with this release.

Now, this move could -- would likely appease the Israeli public, who is unhappy with the release of these prisoners. But at the same time, any announcement of new settlement construction, which has been condemned by the United States and EU, would infuriate the Palestinians, and the Palestinians have said that any announcement of settlement construction could derail the peace process, Richard.

QUEST: So, the government in Israel, Netanyahu not only has to do this to keep some form of peace process going forward, but he's going to find criticism at home from those who say why are you releasing a bunch of terrorists, in their eyes, albeit those who have suffer -- have been in prison for many years.

LEE: Well, that's right. I was talking to some people yesterday who have family members that were killed by people that are being released, and they said they can't fathom why these people are being released earlier. They said that these are murderers, these are terrorists, and that this only shows people that if you do kill someone, you can be released early --

QUEST: Right.

LEE: -- as part of some sort of peace deal. So, they are very unhappy with that. But this is a difficult decision for the prime minister of Israel, but it is one that is a confidence-building measure, so to speak, for these negotiations going forward.

QUEST: Ian Lee, who is in Ramallah this evening. And Ian, come back to us the moment there's more to report on that. When we come back --


QUEST: -- after the break, if you made money on the market --


QUEST: -- good for you. We'll have the winners and the losers and maybe look to next year to get some ideas.



QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN and, on this network, the news always comes first.


QUEST (voice-over): The United Nations has put its forces in the Democratic Republic of the Congo on alert after fresh attacks in the capital and two other cities. A government spokesman told the Associated Front (ph) press that more than 70 people have been killed in attacks on the Kinshasa Airport, state media offices and the military headquarters. We cannot confirm the casualty figure.

Two back-to-back bombings in the Russian city of Volgograd have killed more than 300 people in just 24 hours. Monday's explosion hit a trolley bus during rush hour just a day after another bomb tore through a railway station. Both attacks are being blamed on suicide bombers.

The most successful driver in Formula 1 history remains in critical condition in a French hospital. Michael Schumacher was skiing in the French Alps on Sunday when he fell and hit his head on a rock. He's now in a medically induced coma and doctors say it's still too early to say what his prognosis may be.

In the West Bank, Israel's preparing to release a group of Palestinian prisoners. It comes ahead of the U.S. Secretary of State John Kerry's visit to the region later this week.

The Israeli prime minister's office says the release is intended to advance the Middle East peace process.

The French basketball star Tony Parker has apologized for a photograph showing him making a supposedly anti-Semitic gesture. The photograph, which Parker says was taken two years ago, shows him making the de nil (ph) gesture, which is regarded as offensive in France.

Parker says he did not know it had any harmful meaning.

Footballer Nicolas Anelka has faced criticism for making the same gesture during an English Premier League game on the Saturday.



QUEST: So the winners and the losers, those who are in and those who were out, as 2013 ends and 2014 is just a smidgen 'round the corner, out with the old and in with the new. And for some companies, it began with an empty seat in the board room.

Let's go into the library with some of those people. Now, let's take Crocs, will need to fill its chief exec's shoes. John McCarvel is retiring after three years and the search for his successor has begun. Crocs announced a $200 million investment for Blackstone.

Also out with the old, Nokia Solutions chairman, Jesper Ovesen, will step down after the mobile phone business is acquired by Microsoft. You'll remember, of course, that Nokia is selling a large part of the business to Microsoft. Steve Elop's already moved across.

Well, the network chairman is out as well. The network deal is expected to close in the first quarter of next year.

And five NHL coaches got -- NFL coaches got cut -- I beg your pardon -- from their teams today on what's known as Black Monday. It's the day after the end of the regular football season. It's a day you certainly don't want to have a losing record; if you have a losing record going into today, you're out of a job tomorrow.

Looking ahead to the new year, Jim Boulden has some prediction about who are the winners and losers might be for next year.


JIM BOULDEN, CNN CORRESPONDENT (voice-over): When making up the list of winners and losers for 2014, my starting point is the big moves announced in 2013. We begin with Janet Yellen. She will become the first female head of the Federal Reserve when Ben Bernanke steps down.

And you could argue Bernanke has done the hard part for his successor by announcing the first taper will take place in January. That's when the Fed will slow down its pace of bond buying as the U.S. economy is now steaming ahead.

Let's look at some potential corporate winners in 2014. I'd put at the top of my list Stephen Elop. He's going back to Microsoft with Nokia's handset business under his arm. The software maker's $7 billion purchase of Nokia's hardware business and patents is the bold and risky move for Microsoft.

But as CEO Steve Ballmer steps aside in 2014, it's possible the other Stephen, Elop, would be Ballmer's replacement. Whoever gets the job will probably be given a lot of money and some number of years to try to make sure Microsoft Nokia remains relevant in this Google and Apple world.

Let's add to that one Jeff Bezos. His purchase of "The Washington Post" in 2013 either heralds in an era of tech giants becoming the voices of the 21st century using old media or it's a folly.

Another vote goes to Angela Ahrendts. She is the outgoing CEO of luxury retailer Burberry. She was the best paid CEO of any of the FTSE 100 companies in Britain. But still wanted a new challenge. After she transformed Burberry stores around the world, she has been lured away by Apple and will be the first female executive in the tech giant's executive suite.

Her task: to transform its retail experience on and offline.

Who else is winning in 2014? Well, I put my money on the treasury of Mexico as it starts to sell stakes in its massive oil and gas industry. Off limits to foreign companies since 1938, but now open to bidders while hopefully the Irish economy continues to recover post-bailout restrictions. Growth is strong; unemployment is falling.

Who might lose out in 2014? Well, spare a thought for BlackBerry. It had two CEOs in 2013. The newest one, John Chen, is still interim. He has to decide what to do with the crumbling handset maker in 2014.

It could just be that BlackBerry goes the way of Nokia and splits the hardware from the software. It's well regarded as secure software that handles email and instant messaging has to be worth something to someone.

Of course, throughout the year, there will be surprises on the upside and meltdowns, maybe a glowing IPO or two to match Twitter and its newly minted billionaires.

But as the year kicks off, the focus, I think, will remain on Janet Yellen as she takes the helm at the Fed at the end of January -- Jim Boulden, CNN, London.


QUEST: Now how about your new year's resolutions for your finances in 2014? Fidelity Investments put together a list of goals it says are especially important. Now the goals might see a little obvious. But bearing in mind how you probably performed and I know how I performed, these may be (INAUDIBLE).

Don't be too risky with your investments. Oh, it's so tempting, just put a little bit more in the emerging markets, a little bit more in Brazil or Turkey. Take a bit of a risk on the yen. Well, you know what happens. It's down 15 percent before you can say hello, good morning and good night.

Learn to rebalance your portfolio, not just for risk tolerance, but also for age and for what your needs are at the moment. And -- I need to learn this one -- refrain from checking your statements constantly. Don't obsess over short-term market fluctuations. If it goes down a bit, that's the nature of the market.

Ultimately take advantage of low interest rates because they won't stay this low for very long.

Here to discuss what's in store for the economy in 2014, Peter Morici, economist and professor of international business at the University of Maryland joins us from Washington.

Peter, you've got to admit if one played one's cards right in the market in '14, for whatever reasons, Fed money, low interest rates, whatever the reason, you did pretty well next year won't be as good.

PETER MORICI, ECONOMIST: Well, it was really hard to lose money in the market this year, even bad bets, gold stocks, whatever, they've -- people did well.

To '14? Well, it's going to be hard. You don't tend to see two 25 percent years in a row. That's all there is to it. The market will take a break and with quantitative easing going away and interest rates rising, we are likely to have a correction in the first half of the year, likely by April.

But I would caution folks, just as you did, don't obsess day to day. The market will push through that. The economy will grow strongly in the second half. And there will be money to be made.

QUEST: Having done a pretty awful job of telegraphing intentions earlier this year, Bernanke and the Fed has done a reasonably good job at the end of the year for talking us through QE and tapering in '14.

Would you agree?

MORICI: Absolutely. The announcement with regard to tapering was very effectively crafted. They reassured markets that the Fed wasn't completely going to take the slats out from under it or do it very quickly. So my feeling is if you look at the way the market traded those couple of days, they did very well.

QUEST: Overall, as we look at the global scenario, I mean, it's gone on for years this crisis. Peter, you and I have talked about it.

Do you feel that we could at least sleep easier in our beds?

MORICI: No, I'm sorry to tell you that we can't because of what's going on in China. China's banking system looks like the British and U.S. banking systems of the British Irish and U.S. banking systems did in 2009. Lots of bad loans on the books and the authorities there are trying to keep a Lehman Brothers from happening. They're putting liquidity into the system before the crisis emerges rather than after. But there's really a lot of bad debt on the books of the banks.

And China will be going through an adjustment.

QUEST: Right. But is it your gut feeling that the Chinese authorities -- with their new policy, which they announced this year -- are in a strong position to handle that crisis, particularly if the U.S., Europe and the rest and all banking crises may be off the back burner, on the back burner?

MORICI: The trick to getting through with the necessary requirement is that you have hard currency. And the Chinese have lots of (INAUDIBLE) on the books. So they've got the cash to get through this if they handle it right. But you still have to handle it right.

QUEST: Peter, good to see you as always and a very Happy New Year to you. And we look forward to your insights in 2014. It's going to be a very exciting year, midterm elections. And let's face it, the New Hampshire primaries are on us before we even know how we started.

MORICI: Happy New Year.

QUEST: Happy New Year to you.

Now better late than never. Eurostar has reached its goal of 10 million passengers a year. It was a decade and a half after it set the target. But better late than never. All aboard the Eurostar Express.




QUEST: All aboard. Well, Eurostar's trains don't make that sort of noise. But they do make a noise when they've carried more than 10 million passengers in 2013. For Eurostar, which as you well know, runs trains between London, St. Pancras, Paris Gare du Nord and Brussels Central. It's a huge milestone, because when they started,

At 10 million passengers in this year, now that is a delayed target met by some 15 years because when Eurostar launched in 1994, it set a target of 10 million passengers by 1998. Well, that was the original target. But of course it was somewhat delayed for all sorts of reasons: competition from budget airlines, particularly weak economies at certain times. Eurostar says the U.K. economic recovery and the summer travel plans have all helped boostings.

Overall, though, Eurostar has been a tremendous success, a total of 140 million passengers have been conveyed from the U.K. to continental Europe in good stead, in good fashion. It has been a remarkable achievement for Eurostar.

I spoke to the chief executive in October and I asked him, now he's got Paris and Brussels and Provence and a route to the Alps, what's next?


NICOLAS PETROVIC, CEO, EUROSTAR: The London to Germany market is a very interesting one. It's a big air market and there is a appetite of customers, passengers, to have a rail alternative. So, that's one.

And of course, it's how to get more passengers connecting from the north of England towards our services to go on the continent. So, that's the two areas where we are looking at. So -- but we haven't got a material solution yet.


QUEST: That's the CEO of Eurostar.

Samantha Mohr is at the CNN World Weather Center this evening.

Good evening to you. The temperatures are a little more pleasant but (INAUDIBLE) -- it's all relative. But I can see some of those rather nasties out in the ocean.

SAMANTHA MOHR, AMS METEOROLOGIST: Yes. And we had a series of these nasties, Richard, coming in. That's why it's been so incredibly windy across much of Western Europe, specifically where most of these systems have been just buzzing right in off of the Atlantic and increasing the winds here.

So this is going to be a trend as we head into the new year. Take a look at some of the wind gusts we've had. We've had gale force winds across much of the U.K., stretching on up to the north. So we're going to continue to see these gusty winds, especially in the next 24 hours strengthening as we wrap up 2013.

So here comes the latest in a series of systems, moving on in, jet stream here across the Mediterranean. And we're going to end up seeing another low move in. We've had some incredibly deep lows lately, this one not quite as deep as the last couple. But enough to bring those winds in, howling in to Wales, and across much of the West Coast of the U.K. as we head into Tuesday. There you can see early in the day on Tuesday, how those winds will be up around 64 in Glasgow. We'll see winds up around 64 in Amsterdam as well and then peaking in the mid-70s there in Amsterdam as we head late into Tuesday. In London, batten down the hatches. The winds are going to be on the increase as we head through our Tuesday morning.

So we're already seeing some delays coming in and out of the airports of London, also in Oslo. We're also seeing some delays and anticipating more as we head through Tuesday and that next low moves right across the United Kingdom.

So that's when we'll see those winds peaking early on Tuesday.

So how is this going to affect New Year's Eve here? Well, we're going to see temperatures right around 9 degrees. So you're right, Richard, not too bad regarding the temperatures. But those winds, up around 26 kph. So it'll be a little bit blustery out there as well as in Paris, winds out of the southwest at 18, getting up to around 7.

But I'm sure there's going to be some beautiful sights to see out there with all the fireworks that are scheduled.

QUEST: We thank you for that, Samantha Mohr, joining us from the CNN World Weather Center.

When we come back, we'll turn our attention to one of New Year Eve's most famous moments: the ball drop.




QUEST: Now think of it this way: if anyone had told you I've got a great idea for New Year's Eve, we'll take a ball; we'll drop it down a flagpole and we'll get everyone to cheer.

Now it's not exactly brilliant idea for a booming night. You'd think they were stark raving bananas. And yet that is exactly what they've been doing year in, year out, in Times Square. And on Tuesday night once again, hundreds of thousands of people and millions around the world will witness this tradition, which fundamentally taking a ball, dropping it down a flagpole and getting people to cheer. For most people, it's as close as they'll come to the Times Square ball. But today I got to see it up close and personal. And I promise you, it's a thing of beauty.


QUEST: Times Square: they call it the crossroads of the world -- for good reason.

Where are you from?






QUEST: All these people come midnight Eastern Standard Time will have their eyes trained up, looking to the top on New Year's Eve.

QUEST (voice-over): It is a century-old tradition that has brought millions of revelers to the crossroads at Times Square to take part in this annual event.

But to glimpse this icon of geochronology up close requires a feat of effort.

QUEST: Out of the way!

QUEST (voice-over): Up to the 22nd floor.

QUEST: We're getting quite close.

QUEST (voice-over): And then several flights of stairs to get to the roof at 1 Times Square.

QUEST: Right. Oh, my goodness! Out of the blue, suddenly there it is.


QUEST (voice-over): It is a stunning object, weighing almost 12,000 pounds. Up here we find the chronologists, who deal proficiently with the timekeeping apparatus. And the chief executive of Philips Lighting America, who's in charge of making sure the light from this ball dazzles not only Times Square but the world.

QUEST: So what's different about this year's from previous years?

BRUNO BIASIOTTA, CEO, PHILIPS LIGHTING AMERICAS: Well, you know, it really is about the transformation that lighting is undergoing, Richard. And so what you see is we have taken this ball from the technology of incandescent and halogen to LED. We have approximately 32,256 LEDs --

QUEST: How many?

BIASIOTTA: -- in this ball, 32,236 LEDs.

QUEST: Thirty-two thousand.



QUEST (voice-over): For 107 years, this ball has been falling down the flagpole in Times Square to bring in the new year. What keeps it fresh, of course, is innovation and new technology. But frankly at the heart of it, well, if someone suggested that you'd do this, they think you were mad. And yet it's worked for more than a century -- Richard Quest, CNN, 1 Times Square.


QUEST: Tonight's "Profitable Moment": over the years in which I've spent in Times Square I've noticed that a few New Year's Eve -- New Year's Eve is a very good example of economics, especially when it comes to the trinkets and toys which make the celebration so special.

Take these noisemakers and glasses. Today they were selling for around $4 each. That price will rise quite steeply as revelers fear there will be a shortage and buy at a premium as midnight gets ever closer.

Then at around 11:30 tomorrow night, with midnight, the stock which is left will be heavily discounted towards the point when at midnight itself, the ball drops and when that ball drops and chimes in the new year, well, the bottom falls out of the market. And you'll be able to pick these things up for a song, if you have to pay anything at all.

New Year's Eve economics, a classic case of the market in the real world. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to on New Year's Eve, I hope it's profitable. See you next year.