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39 Dead, Manhunt for Nightclub Shooter; North Korea's Kim: We're "A Nuclear Power"; Trump Teases He Has Inside Information on Hacking. Aired 6-7p ET

Aired January 1, 2017 - 18:00   ET

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


[18:00:07] POPPY HARLOW, CNN ANCHOR: Top of the hour, 6:00 p.m. Eastern. I'm Poppy Harlow in New York and you're live in the CNN NEWSROOM.

We begin with the first terror attack of 2017 and brand new video of what is believed to be the lone gunman who opened fire in a crowded Istanbul nightclub, killing 39 people. Right now, a manhunt is under way for this man seen in this video. First, he shot and killed a police officer who was outside of the nightclub guarding it. Then, he walked inside and unleashed bullets, quickly turning a lavish New Year's celebration into a blood bath.

Panicked club-goers fled. Some raced outside and jump into the frigid water of the Bosphorus Strait just trying to escape.

We now know 69 people are currently hospitalized. A U.S. citizen is among the wounded.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I got shot in the (EXPLETIVE DELETED) leg, man. This crazy people came shooting. I don't know. I saw one person. They're shooting. I'm hiding.

(ENDV VIDEO CLIP)

HARLOW: No group has yet claimed responsibility for this attack.

Our Sara Sidner has the latest for us tonight from Istanbul.

(BEGIN VIDEOTAPE)

SARA SIDNER, CNN CORRESPONDENT: Poppy, law enforcement spent the entire first day of 2017 trying to track down a terrorist who massacred dozens of people and injured dozens more inside an upscale nightclub here in Istanbul.

(voice-over): Police sources tell us this is the very moment a gunman blast his way into a New Year's Eve Party at an upscale nightclub in Istanbul. He kills a gunman and private security guards before entering the crowded Reina nightclub on the banks of the Bosphorus. The first hour of 2017 turned out to be the last hour of life for more than 30 people.

UNIDENTIFIED MALE: I saw a blob coming outside. People were falling down because of shedding. It was a terrible thing.

SIDNER: On this New Year's Day, a father is forced to say good-bye to a child, a wife is left without a husband and friendships are ended with a single bullet.

UNDENTIFIED FEMALE: I'm feeling so sad. I can't understand. I can't talk. I can't explain my feelings.

SIDNER: She didn't expect to find her missing friend here in the morgue.

Officials say 24 of the 39 killed were foreign nationals from all over the world.

(on camera): Outside the club where the massacre happened in the first daylight, there's a line of police along the sidewalk. We also heard from witnesses who came to the club to get their things like their cell phones and they said the scene was horrific. They were sure that they heard the gunman's speaking in Turkish and saying, "Allahu Akbar". People were jumping into the Bosphorus, which is just over there.

And now, in the daylight, you're seeing mourners leaving flowers and candles remembering the dead.

(voice-over): The Arabic word for "God is greatest", those words a clue for police, who have investigated nearly a half dozen attacks in Istanbul in 2016. Some 75 minutes into 2017, hope for a better, less violent year dashed in a barrage of bullets.

(on camera): At this hour, police have identified almost all of the victims who died in this attack and we do now know that an American has been injured in this attack. Giving you some idea of the kinds of people that were here, you had every one from Americans to Israelis to Saudi Arabians who were inside this club trying to enjoy a New Year -- Poppy.

(END VIDEOTAPE)

HARLOW: Sara Sidner in Istanbul for us, thank you so much, Sara.

This night club shooting is just the latest in a violent wave throughout Turkey. Less than two weeks ago, a gunman assassinated Russia's ambassador to Turkey in broad daylight in this art gallery. On December 10th, two bombings after a soccer game killed 44 people in Istanbul. ISIS is expected in a June terror attack on Turkey's largest airport where 44 people were also killed. Also, a failed military coup in July was violent. Nearly 300 people were killed during that uprising.

Let's talk about all this with Ambassador David Logan. He is a former British ambassador to Turkey.

Nice to have you on the program. Thank you for being with us.

DAVID LOGAN, FORMER BRITISH AMBASSADOR TO TURKEY: Good evening, Poppy.

HARLOW: As you know, this is the fourth terror attack in Turkey in less than a month. You've got hundreds and hundreds, I believe 400- plus people killed in these terror attacks in Turkey since 2015.

What is your reaction to this latest attack and why Turkey keeps experiencing these horrific attacks?

LOGAN: Well, as you say it's horrible, shocking and tragic start to the year. I'm very, very sorry to hear that an American citizen was among those who are injured.

It, as you also said, there have been these series of attacks, which either from the PKK, the Kurdish terrorist organization, or from ISIS.

The ones you mentioned just now, the most recent ones were by the PKK, the bombing attacks in Istanbul and then there was the attack on the murder, assassination of the Russian ambassador, probably by one of those people who supported the aborted coup attempt back in July. So, there's range of sources of violence in Turkey, PKK, ISIS and the like of attempted coup.

In this particular case, it seems to be highly likely to be ISIS. PKK generally attacked military or police contingents, personnel. This was against civilians. PKK denied responsibility for it. ISIS, on the other hand, had been inciting their followers in Turkey to make this attack.

And for basic answer your first question is that Turkey is tremendously vulnerable to all of this. It's --

HARLOW: Let's talk about, Ambassador, why you believe Turkey is so vulnerable, because obviously you got the proximity to Syria, sharing a border, and the fact they are fighting ISIS in Syria. What has made Turkey so incredibly vulnerable? I mean, it is a place that has -- I mean, the time I spent in Turkey, I was there last three years ago, I could not have felt more safe. It's changed so much, so quickly.

LOGAN: You're absolutely right. It's shocking the way it's changed so quickly. It's a dangerous part of the world. I mean, that's a cliche, but as you know, they have an 800-mile border with Syria.

It's a border which is very porous, very difficult to prevent infiltration. It's been infiltrated by ISIS militants above all. And it's very, very difficult for them to stop.

The PKK had been extremely active and they are in a war situation with them. There's multiple sources. I think that, you know, the particular, immediate context is what the agreement Turkey and Russia reached in connection to Syria. Remember, the Security Council of the United Nations adopted a resolution sponsored by Turkey and Syria. So, Turkey and Russia just on the 30th of December. So, this was the resolution. This was an agreement where the Turks

protect their vital interest, because the one thing they really want to stop are the Kurdish on the Syrian border joining up a complete Kurdish take oil well on the Turkish border or the great stretch of them.

HARLOW: Do you think at all --

(CROSSTALK)

LOGAN: I've got to say, Russians are great supporters of President Assad. The Turks have had to moderate their position so they are being more hostile to ISIS than they have been in the past. So, here is ISIS taking a revenge for the way the Turks have shifted their policy to achieve this agreement with the Russians.

HARLOW: Do you believe, Ambassador, that this will alter the way that President Erdogan believes that Turkey should be involved in the fight against ISIS in Syria in particular?

LOGAN: No, I don't, because I think that he sees and comes to the crux of it, but he sees peace in Syria, something that must be achieved, even he has to shift his position somewhat to get that, in order to prevent this infiltration of ISIS terrorists across the border. So, that's the key thing above all for this stage. So, I don't think that you will see much change.

I think it's worth (INAUDIBLE). But you talked earlier about this polarization of society in Turkey between conservative supporters of Erdogan and the secularist elite if you like, a minority8 in Istanbul.

Now, this is an attack on a nightclub. So, it's a secularist venue, drink flowing and so on. And even certain amount of social commentary immediately after the event saying this is what they had coming to them, good Muslims don't celebrate the New Year like this.

So, instead of being in any way focus reunification against terrorism which threatens all of us, it's already become something which is even further divisive at a time when Turkey needs to end this.

HARLOW: Absolutely. Ambassador David Logan, thank you for your expertise tonight.

LOGAN: It's been a pleasure.

HARLOW: Elsewhere overseas this weekend, in North Korea, North Korean leader Kim Jong-un New Year's speech is full of the expected and usual self-congratulation and anti-western rhetoric. But analysts are really paying attention to Kim's claim that North Korea is close to testing an intercontinental ballistic missile.

Our Saima Mohsin tells us there's a reason to take Kim's threat more seriously than in years past.

(BEGIN VIDEOTAPE) SAIMA MOHSIN, CNN CORRESPONDENT: Kim Jong-un chose his New Year's day address to talk called (INAUDIBLE) an in bolstering national defense capacity. Now, he talked yet again of a hydrogen bomb test which we simply can't independently verify and then he said this.

KIM JONG-UN, NORTH KOREAN LEADER (through translator): Research and development of the cutting edge tech weapons are actively progressing and strengthening our defense capabilities, including last stage preparation of test for intercontinental ballistic rocket launch have been continuously succeeding. This will protect the destiny of the mother land.

MOHSIN: Now, nobody knows if at all how close North Korea is to test firing an intercontinental ballistic missile. But we do know that in February 2016, they launched a satellite into the sky which many experts said could be a template for a long range missile test. And so, there was concern about the capacity North Korea had, and, of course, conducting its fifth and largest nuclear test on September 9th, 2016 which resulted in yet more sanctions.

A few days ago, the highest level diplomat detector from North to South Korea, Thae Yong Ho, told South Korean media that as long as Kim Jong-un is still in power, he will continue with his nuclear ambitions. He's determined to complete the program by the end of 2017 no matter how much money he is offered.

So, this would seemingly weave into this announcement that Kim Jong-un has made. Kim Jong-un also said in this 30-minute speech his country soared as a nuclear and military power in the East, and no formidable enemy dare encroach upon them.

Saima Mohsin, CNN, Seoul, South Korea.

(END VIDEOTAPE)

HARLOW: Saima, thank you very much for that.

Straight ahead, President-elect Trump saying he has new information about the alleged Russian hacking of the U.S. election. He says he will tell us what it is this week. A live report from Washington is next.

You're live in the CNN NEWSROOM.

(COMMERCIAL BREAK)

[18:15:11] HARLOW: This just in to CNN, a State Department official telling us that all 35 Russian diplomats expelled under those new sanctions have indeed left the country. They had until today, of course, to leave. This as the president-elect continues to question whether it is Russia indeed definitely behind the election hacking. We know he'll meet with intelligence officials this week.

But at this New Year's Eve party last night, Donald Trump said he claims new information. He said he has new information that no one else has about it. Listen. (BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT-ELECT: I know a lot about hacking. Hacking is a very hard thing to prove. So, it could be somebody else. I also know things that other people don't know. And so, they cannot be sure of the situation.

REPORTER: What do you know that other people don't know?

TRUMP: You'll find out on Tuesday or Wednesday.

(END VIDEO CLIP)

HARLOW: Let's go straight to our Ryan Nobles. He's in Washington tonight.

And, Ryan, that's pretty much all we got. You'll find out more on Tuesday or Wednesday. Do we know -- do you have anymore details on that? Is he going to hold a press conference? You know, what might be behind the timing?

RYAN NOBLES, CNN CORRESPONDENT: I think probably the best guess we have is to the timing of when he's going to reveal more of this information, it's related back to that intelligence briefing that's scheduled to take place sometime this week. This is where Trump is expected to meet with some high level intelligence officials, to ask them tough questions about this alleged Russian hack that he's been very skeptical of since the very beginning.

The question, of course, though is, how open is the president-elect going to be when it comes to this information that comes to him from the intelligence community? Because he has been so skeptical of them from the very beginning. And even last night, at this posh party he held at Mar-a-Lago, when he spoke to reporters very briefly, he brought up past U.S. intelligence failures as a reason for why he may not believe this most current assessment. Take a listen.

(BEGIN VIDEO CLIP)

TRUMP: Well, I just want them to be sure because it's a pretty serious charge. And I want them to be sure. And if you look at the weapons of mass destruction, that was a disaster. And they were wrong. And so, I want them to be sure. I think it's unfair if they don't know.

(END VIDEO CLIP)

NOBLES: One of the reasons this takes on a different scope that it had up until this point because originally we'd just been talking about the Russian influence on the election. One of the reasons that Donald Trump has cast doubt on this assessment because he didn't want anyone to question his electoral victory. But now with this news this week of utility in Vermont that found malware that may have been connected to the Russians, this brings it into a whole new level of understanding for Trump and his administration. We'll have to find out exactly what he thinks of this assessment that he gets later this week, Poppy. But as you pointed out before, we don't know exactly how he's going to deliver that information to the public.

HARLOW: Right. Hopefully he'll have a press conference. It's been more than five months.

Ryan Nobles, thank you very much.

NOBLES: Thanks, Poppy.

HARLOW: Coming up, three weeks to go until Inauguration Day and so far big two groups booked to perform are stirring a bit of controversy. Why a member of the Mormon Tabernacle Choir is sitting out the performance but she's decided to quit.

You're live in the CNN NEWSROOM.

(COMERCIAL BREAK)

[18:21:05] HARLOW: We re less than three weeks from Donald Trump's inauguration and something may be missing -- the big star power. He says he doesn't care.

That, of course, was Beyonce performing there, Kelly Clarkson, Aretha Franklin, just a few other big names that came out to perform at President Obama's inauguration. Still no word on who at that level will come out big for Trump's big moment on the Capitol steps.

We know this incredible choir, the Mormon Tabernacle Choir, will be there. And now, some attention is being paid to one member who not only refused to sing at the inauguration, she quit.

Jean Casarez has her story.

(BEGIN VIDEOTAPE)

JEAN CASAREZ, CNN CORRESPONDENT (voice-over): Marching bands from around the country are going to Washington for Donald Trump's inaugural festivities. Forty organizations will be in the parade, 8,000 participants.

But tonight, a new controversy surrounding those performers. Jan Chamberlin, a four year member of Utah's Mormon Tabernacle Choir, a state Trump won handily, has written a lengthy public Facebook posting that she is quitting the choir because it agreed to sing for the president-elect.

"It is with a sad and heavy heart that I submit my resignation to you and to choir. I simply cannot continue with the recent turn of events. I could never look at myself in the mirror again with self respect. I also know looking from the outside in, it will appear that choir is endorsing tyranny and fascism by singing for this man."

The Mormon Tabernacle Choir says the performance is voluntary and the choir's participation continues its long tradition of performing for U.S. presidents of both parties at inaugurations and other settings.

Late Friday, Chamberlin responded to criticism. JAN CHAMBERLIN, QUIT CHOIR OVER INAUGURATION PERFORMANCE: And I value

the country we have the freedom of speech under the First Amendment. For me, this is not a political issue. For me, this is a moral issue, where I'm concerned about our freedoms being in danger.

CASAREZ: This coming just days after it was announced the legendary New York City Rockettes would be performing at the inauguration. In an interview with MarieClaire.com, one Rockette spoke out about the decision. "The majority of us said no immediately. Then, there's the percentage that said yes, for whatever reason."

The dancers union ultimately deciding that participation in the inauguration will be voluntary. Madison Square Garden which employs the dancers adding, "We have more Rockettes request to participate than we have slots available."

BORIS EPSHTEYN, DIR. OF COMMS., PRESIDENTIAL INAUGURAL COMMITTEE: It's not about the big names. It's about the American people. And that's who will be represented all over this inaugural. And we've got such an outpouring of support of positivity from all over this country. It's been truly humbling.

CASAREZ: Jean Casarez, CNN, New York.

(END VIDEOTAPE)

HARLOW: Jean, thank you very much for that.

Coming up next, few know how to put on a show quite like KISS. You know their name well, their brand, their incredible shows. Founder Gene Simmons getting a little political calling Donald Trump, a true political animal. He's here live with me in New York.

He will give us his take on the president-elect and a lot more in the news, including what he's up to, next.

(COMMERCIAL BREAK)

[18:27:33] HARLOW: The rock band KISS knows a little something about how to captivate a crowd, don't you think? Their stage show is second to none.

(VIDEO CLIP PLAYS)

HARLOW: So, when cofounder of KISS, Gene Simmons, calls President- elect Trump the truest political animal I've ever seen on stage, well, we were intrigued. We wanted to hear more.

Kiss has sold more than 100 million records worldwide. I first spent time with the band a few years ago filming a CNN special report on them and their induction in the rock and roll hall of fame. We talked about their beginnings.

(BEGIN VIDEO CLIP)

GENE SIMMONS, KISS COFOUNDER: It was four guys off the streets of New York. We're nobody.

HARLOW: I have heard that the two of you didn't like each other when you first met.

SIMMONS: That's not fair. He hated me.

(END VIDEO CLIP)

HARLOW: Gene Simmons holding nothing back, co-founder of KISS, and also founding partner in Rock & Brews Restaurants, joins me now.

Nice to have you on.

SIMMONS: Thank you. Nice to see you.

HARLOW: A lot has changed since I saw you last.

SIMMONS: Actually, some of the same and some changes, but that's called America.

HARLOW: I've got a kid. You have no more kids, right?

SIMMONS: We have two that we know of, Sophie and Nick. Shannon, my beloved, is downtown. Even as speak, she's buying Manhattan.

HARLOW: There you go.

Let's begin with this, let's begin with politics because that is what we do on this network. We're actually close to the inauguration. When you called, Gene, Trump a political animal and this is someone's whose entire campaign is based on the idea that he's not a politician, what do you mean?

SIMMONS: Well, I meant was it's a dirty game. And somebody asked me early on what I thought about Donald Trump. There were 15 gentlemen and some ladies up in the dais and they were all running. Someone said, what do you think about this guy? I said, he's in it to win it. And I suspect most politicians are.

And there's dirty laundry on both sides of the fence. So, don't kid yourself. There ain't no good guys and bad guys.

Whatever happened to the respect of the presidency? I just want to say this as a statement effect. I don't care who you vote for. You may disagree with myself and I may disagree with what you believe. Whatever happened to the American principle, it's really very high class.

I may disagree with your opinion but I will defend to the death your right to say it.

HARLOW: What happened to that discourse?

SIMMONS: What the hell happened to that?

HARLOW: It's an important point. You voted for President Obama in 2008. And you say he was an idealist and you bet on that.

POPPY HARLOW, CNN ANCHOR: Who voted for president Obama in 2008 and you say he was an idealist and you bet on that. He--

GENE SIMMONS, CO-FOUNDER OF KISS: Well, his resume was this thin but I believed in the man. His resume, he never ran a company, he was never overseas, never created jobs, well as a private citizen. And then he became the most powerful person on earth and now we have a President-Elect who has been successful in business and has never been in politics.

HARLOW: Did you vote for Trump?

SIMMONS: You know, I haven't decided any important point of view of this and I--it's a wake-up call to all celebrities. Shut your damn pie hole. All you do is juggle balls and we're the court jesters and the less important people such as yourself and CNN ask ourselves, people like me, yours truly involved, what do you think about John Kerry's tirade Against the U.N.? Oh my god. I can just see CNN's version of face the nation. From the Washington post we have Justin Bieber and from New York Times, Snoop Dogg, gentlemen? What's your opinion on it? Oh, good lord. Just because I have a long tongue doesn't mean I'm qualified to do anything except wax poetic and prolific.

HARLOW: You know, Gene, on thing you are as I well know having done this documentary on you on the business side of Kiss, outside of the music is you know how to run a business and make a--make a lot of money doing it.

SIMMONS: You're right. And that's what--

HARLOW: Donald Trump--

SIMMONS: Yes?

HARLOW: --knows how to run a business and make a lot of money doing it. It's different when you have to run a country and create jobs. However, he's put a lot of proposals out there, 35, Centerra, fund imports, coming in the United States. He wants to bring manufacturing jobs back.

SIMMONS: That's a good idea. But everybody--

HARLOW: Technology has changed a lot of things. What's your take on jobs in this country in this country and the advice you'd give to the President-Elect on that?

SIMMONS: Who is going to disagree with the Idea that more than Americans should be at work. Why does it--why does it take a political genius or rocket scientist to figure that out. (INAUDIBLE) that sure, you can--remember, you're talking to a guy and I would be remising my inferred producer duty if we don't talk about Rock and Brews very soon and I will--I'll see what the clock says but I'll get you. It's really important to understand that by the way since he was elected the President-elect, those people who are the stock market have made a small fortune because the Dow is approaching 20,000, 14 records--

HARLOW: But as you well know 50% of Americans don't have a single stock. They don't benefit at all from this run up.

SIMMONS: And stock and 50% of Americans don't pay taxes, whatsoever.

HARLOW: So how do we--how do--Gene Simmons.

SIMMONS: I'm right here.

HARLOW: OK. How do we--how do we turn the success for the stock market that we've seen, short term so far, let's see what happens long term into helping those Americans who is need it the most in terms of jobs. What would you like to see the President-elect do?

SIMMONS: Job creation--job--the President-Elect Trump should be doing exactly what we're doing which is we're opening Rock and Brews, our restaurant chain across America. The newest one is opening in St. Louis. September the 11th, on the 12th, we're opening our first Rock and Bruise Resort and Casino with a co-nation which is a wonderful Indian partner that we have. The co-nation incorporated. That's going to be right outside of Oklahoma City in Braman. And what we do on the first day is we honor our troops. It's vets only. Not open to the public. We hire vets. We give them big checks and we do what every American should be doing which is wake up to the idea that Al Qaeda a lots of modus brigade know the one truth that we don't because they don't make a distinction between democrats and republicans. They consider all of us Americans. Hello, we're Americans.

HARLOW: Gene Simmons. There you go. But I'm seeing you got your promotion in there for Rock and Brews. But I want to ask you about the musicians also that we've lost this year. I mean, it is remarkable and incredibly sad all of those we have lost this year. I mean, look at the last week what has happened. When you think of those that we've--those that we've lost from David Bowie to George Michael to, you know, from my hometown, Prince. Which of these artists had the most profound impact on you?

SIMMONS: Well, I knew--I knew some of them. I knew George and David and Glen and so on, you know, look, the sad part about all of this is that when mother nature hits you with a disease, you can't do anything about, you pass, that's what happens. We're all going to take--have our time. But for god sake, drugs and the booze and all of that is not going to help you have a good life. The saddest part of all is, there are people who indulged and over indulged and then they die.

HARLOW: Who had the most--who had the greatest impact on your--on your life personally and musically of those we lost?

SIMMONS: Prince was probably the most all-around talent out of everybody. Wrote, produced, directed, although, you know, look, if you're--Merle Haggard is as good as you can get in country and so on but it's sad when anything happens to anybody that they had to hand him. For god's sake don't hope mother nature, you know, with disease and everything by indulging in drugs, booze, alcohol and especially cigarettes. Cut it out. You have a choice. What if you have a choice in making your life longer and making fans happier and giving joy to the world, god help us all, a world without music and art and so on. So there--it's important.

HARLOW: New Year's message for everyone, Gene Simmons. It's nice to have you on the program. Good luck in the latest venture. It's nice to see you.

SIMMONS: Wonderful to see your baby pictures of your new child.

HARLOW: Thank you very much.

SIMMONS: Happy New Year.

HARLOW: Happy New Year, everyone. We're going to take a quick break. We'll be right back.

(COMMERCIAL BREAK)

HARLOW: Every January--every January 1st with the New Year come new laws. And big changes, some quirky ones. CNN legal analyst Danny Cevallos--Delly. Danny Cevallos. And I wasn't even up until midnight.

DANIEL CEVALLOS, CRIMINAL DEFENSE ATTORNEY: Me neither.

HARLOW: I went to bed at 10:00. Like no champagne headache for me.

CEVALLOS: 9:00 P.M. myself. Yes, yes.

HARLOW: Danny Cevallos is with us to go through some of the laws. Nice to have you here.

CEVALLOS: Great to be here.

HARLOW: Let's go through the more serious ones and then get to the some of the fun changes. But I mean, biggest change really, I think is the changes in these marijuana laws and legalizing recreational marijuana across, you know, not just one or two states, a number of states. This at a time when the attorney general likely to be Jeff Sessions is incredibly opposed to this. So you got the federal government on one hand and the state government making, you know, their own very different decision on the other hand. What's going to happen? How are they going to play out?

CEVALLOS: Marijuana law is fascinating because I don't think we take it seriously because it often devolves into a conversation of bong hits and joints and whatever. It's very serious the states in this case have basically looked at federal law and the supremacy clause and said, you know what, we're just not going to follow federal law. And we dare you, federal government, to do something about it. And the federal government has basically not done anything about it even though they could, absolutely, federal law covers a marijuana activity in all the states and if the federal government wanted to enforce federal law, it could do so. You know, I hate to be alarmist but the marijuana issue has been for many years now a crisis in federalism, that tenuous relationship between the states and the federal government and it's no joke. Our last major federalism catastrophe was in the 1800s. It was a civil war literally.

HARLOW: So, obviously, Attorney General Eric Holder has taken a very difference stance on this than Attorney General Jeff Sessions like they will if indeed, he is confirmed. What could he do? I mean, obviously one of the biggest federal issues is the banking of it, how the money is processed from these business. That's a--you know, they can go after the banks essentially.

CEVALLOS: It's been a major problem for marijuana companies or the industry that because current federal law still criminalizes that activity. Legitimate banks have been averse to getting involved in the business because they're potentially complicit in a crime. And that is one of the examples of why this is a real problem of federalism. Yes. It may work for now that states are simply an acting marijuana law, legalizing marijuana and the federal government is just saying, all right, we're going to pretend not to see it. But this is exactly the problem. If you have a new administration who decides to simply enforce existing federal law then it will essentially place all of those states in current violation of federal law.

HARLOW: Yes.

CEVALLOS: In literal chaos because now there is an infrastructure that's been build up in states like Colorado or Massachusetts and how do you begin to dismantle that because they've always been operating in violation of existing federal law.

HARLOW: It's fascinating. Minimum wage. We're seeing 19 states, 21 municipalities increasing the minimum wage starting today. Some says it's a small jump, some says it's a really big jump. At the same time you still got the federal minimum wage really 7.25 an hour. That's not likely to change federally but more and more states are doing this.

CEVALLOS: Right. So when it comes to federal minimum wage, the federal law creates a floor and states can add to that and make it higher if they want to. It's an age old argument when it comes to minimum wage. You could say that look, as we keep increasing it, we're putting strain, we're making prices rise. But other economists argue that it hasn't really raised commensurate with inflation in way while the minimum wage has continued to increase if you tie It to inflation, it's actually decreased to over time. It's an interesting economic argument and beyond my pay grade, I might add.

HARLOW: Nothing is beyond your pay grade, Danny Cevallos. We're-- let's have a little fun and talk about weird laws. Some things that struck us. OK. Cat fish will now be legal to catch catfish using a pitch fork and a speargun or a bow and arrow in Illinois. And in Tennessee, this new law raises the alcohol by volume limit. So you can get stronger beer at the bar. So great things happen when you have stronger beer.

CEVALLOS: From the beginning days of this country's history we have debated as states how and when and to what degree citizens can get their booze. And we still continue to debate it today. We started with prohibition where we said no more alcohol, then we allowed people to drink at age 18. And now we're scaling it back. We said 21, and now the issue is how much alcohol can be in your beer and where can you buy your boost? Can you buy it a 7-eleven, can--you have to go to a state liquor store. My home state of Origin in Pennsylvania has only state liquor store, so if you want to get alcohol, you have to give your money to the government. But states are all over the place with their alcohol laws and I blame the hipster movement for the increasing beer laws that are--our beer is getting more and more potent by the minute. It must have started in Brooklyn. I blame Brooklyn.

HARLOW: Do not blame us, Brooklyn Knights. Do not.

CEVALLOS: I am blaming Brooklyn for this one. Yes. And the cat fishing, I got to tell you, I spent a lot of time in rural western Michigan, it's an area that takes fishing seriously. People take their fishing laws very seriously and they fish with everything. They fish on ice, they fish on pet stores.

HARLOW: I take it back. It's not weird.

CEVALLOS: It's unusual I admit, I admit. Look, if you're that into fishing, get a fishing pole. I don't know why you need a pitchfork.

HARLOW: Danny, thank you. Happy New year.

CEVALLOS: Thank you.

CEVALLOS: Quick break. We'll be right back.

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HARLOW: North Carolina has a new governor today, democrat Roy Cooper was sworn into office just after midnight this morning on New Year's day. Former Governor Pat McRory known for the Controversial bathroom bill did not concede for weeks after the election. He signed a bill as well right before leaving office stripping Cooper, his successor of executive powers. Polo Sandoval is watching all of this. He's been on the story since the beginning. It's a real tug of war in North Carolina. Now is the official day. How does this play out?

POLO SANDOVAL, CNN CORRESPONDENT: Well, Poppy, this is clearly a highly contentious political environment here. At this point, Roy Cooper is assuming office but even before he did so, he had already taken some of the republican lawmakers to court. So, with this long court process, this legal fight playing out a question, will he be able to bridge that political divide In North Carolina?

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MARK D. MARTIN, CHIEF JUSTICE OF THE SUPREME COURT OF NORTH CAROLINA: Do you, Roy Cooper solemnly and sincerely swear--

UNIDENTIFIED MALE: Roy Cooper officially sworn in as North Carolina's 75th governor, seconds after midnight. The private ceremony came after the Governor-Elect moved a bitter battle with republican lawmakers into a courtroom Friday. Cooper, a democrat, hoping to block a set republican-backed laws that limit his authority as the state's chief executive.

ROY COOPER, GOVERNOR ELECT: (INAUDIBLE)

SANDOVAL: Just 34 hours before Governor-Elect Cooper took the oath of office, a North Carolina judge granted his request for a temporary restraining order of blocking some provisions of the laws that called for a shakeup of the state's election board. Most provisions have a second law that significantly decreases the number of political appointments the governor can make will still take effect January 1st. Though the Governor-Elect's attorneys made clear he plans to file more motions challenging the law signed by republican predecessor Pat McCRory, UNC law professor Michael Gerhardt believes the first few weeks in office will be challenging for Cooper.

PAT MCCRORY, NORTH CAROLINA GOVERNOR: Early on, he's going to try and to establish his authority with the people in the state and also remind the legislature that he's there. He is the governor. He's got some discretion and he's a--he's a player in the system.

UNIDENTIFIED MALE: Limiting the new governor's power is only the latest chapter in what was a highly contested race.

AMERICAN PEOPLE: Don't you come back no more, no more, no more, no more.

UNIDENTIFIED MALE: Cooper beat out his republican incumbent opponent by only 10,000 votes. McRory claimed fraud and challenged the outcome before eventually conceding four weeks later.

AMERICAN PEOPLE: Shame, shame, shame.

UNIDENTIFIED MALE: Last year, both sides blamed the other for failing to repeal North Carolina's controversial bathroom bill.

MICHAEL GERHARDT, UNC LAW PROFESSOR: He may well want to talk to legislature about any possible revisions to that law, even if some kind of appeal is impossible. So compromise may be a big term that comes up fairly soon when he is governor.

UNIDENTIFIED MALE: Reaching that compromise may be harder with the legal fight just getting started.

(END VIDEO CLIP)

SANDOVAL: Governor Cooper's public inauguration that schedule to take place later this weekend. It will be just a days after the civil case is back in court. There's a hearing schedule for Thursday, Poppy in which as Cooper's attorney will push for permanent blockage of those two laws that we just discussed in piece.

HARLOW: Well, that's Polo, thank you very much. Power ball jackpot, stock market gains and Donald Trump's refusal to release tax returns. Richard Quest and Christine Romans count down the top 10 money stories of 2016. (BEGIN VIDEO CLIP)

RICHARD QUEST, CNN MONEY EDITOR-AT-LARGE: Bank account faking, smartphones exploding

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Markets tanking, then rallying.

QUEST: And a billionaire businessman winning.

ROMANS: Here are the top ten money stories of 2016.

QUEST: Number ten. The biggest jackpot in history, Power Ball mania spread as the prize climbed past the billion dollar mark. Then on January 13th --

CHRIS CUOMO, CNN ANCHOR, "NEW DAY": Three winning tickets and a record $1.6 billion Power Ball drawn.

QUEST: That's $187 million for each winner. Don't forget after taxes.

ROMANS: Number nine, the Donald Trump stock bounce nobody saw coming. The market gyrations began as Trump's victory looked more certain election night.

JAKE TAPPER, CNN HOST: U.S. stock futures are down nearly 500 points.

ROMANS: Dow futures kept sinking then Donald Trump gave his acceptance speech. Promising to heal wounds. Futures bounced off the lows and by the end of trading day stocks were rallying, the Dow hit a record-high the next day and surged more than 1,200 points in the month after the election.

QUEST: Number eight, the crash in oil prices. A global supply glut drove crude to $26 a barrel in February, a 13-year low. By the summertime gas was the cheapest since 2004. Oil prices eventually found their footing, and then surged because of an OPEC deal in late November, the promises to cut production.

ROMANS: Number seven, Apple versus the FBI. The government ordered Apple to help it break into the phone of one of the San Bernardino shooters. Apple CEO Tim Cook, refused arguing it would compromise security for all iPhone users. A showdown in court loomed until an unnamed third party helped the Justice Department crack that phone, but it won't be the last clash between tech and the law.

QUEST: Number six, the conflict of interest battle. Trump, Inc. versus President Trump, with stakes in more than 500 companies, Donald Trump has more potential business conflicts than anyone ever elected president. He has promised to address the issue in January, but ethics experts say, anything short of selling his businesses and putting the proceeds into a true blind trust don't go far enough.

ROMANS: Number five, exploding Samsung phones. UNIDENTIFIED MALE: This is absolutely disastrous for Samsung.

ROMANS: The company forced to recall millions of Galaxy Note 7s after some caught fire while charging. The fiasco could cost the company $10 billion in sales. But Samsung's pain was Apple's gain. It released the iPhone 7 and even without a headphone jack demand was brisk.

QUEST: Number four, Donald Trump breaks with a 40-year tradition by refusing to release his tax returns. The GOP nominee, blamed in August by the IRS for keeping them under wraps. Then, after pages of his 1995 tax return was leaked, Mr. Trump seemed to confirm what many have suspected.

ANDERSON COOPER, CNN ANCHOR: Did you use that $916 million loss to avoid paying personal federal income taxes.

DONALD TRUMP, U.S. PRESIDENT-ELECT: Of course, I do. Of course, I do.

QUEST: Presidents, of course are under no legal obligation to release their tax returns. So we might still never see them.

ROMANS: Number three, scandal at Wells Fargo. Two million fake accounts secretly created by employees facing unrealistic sales targets. The bank was fined $185 million, fired 5,300 workers and dropped those sales goals, fuelling all that bad behavior. The CEO John Stump was hauled before Congress in September for a tongue lashing.

SENATOR ELIZABETH WARREN (D), MASSACHUSETTS: Your definition of accountable is to push the blame to your low-level employees. It's gutless leadership.

ROMANS: A month later, he was out. Now Wells Fargo is trying to repair its shattered reputation even as it faces a series of class action lawsuits and investigations.

QUEST: Number two, Brexit. Investors around the world are in crisis mode after Britain in June voted to leave the European Union.

The decision stunned the global markets. The British pound plunged to a 30-year low and the Dow dropped more than 600 points.

TAPPER: And the vote as you might expect is having an immediate impact on markets throughout the world.

UNIDENTIFIED FEMALE: A lot of fear and uncertainty.

QUEST: Stocks stabilized a few days later, but Brexit won't be cheap. Businesses are already reporting they are cutting investment in the U.K. The country is facing a $31 billion budget shortfall. Questions about just how Britain will lead the world's biggest trading block is still largely unanswered.

ROMANS: Number one, the deep economic anxiety threatening to end globalization. It powered Donald Trump's victory energized Bernis Sanders on the left, drove Brexit and is spreading across Europe. But even as the working class revolts against free trade, there's a disconnect.

The big headline I'll tell you here is the unemployment rate. 4.6 percent. Unemployment at a nine-year low. Home prices back at all- time highs. Growth picking up. The middle class even got a pay raise. The gulf between those doing well and those left behind is widening. The question in 2017, will populist prescriptions rescue the economically displaced or just deepen the divide?

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HARLOW: Christina and Richard, thank you so much. Thank you so much. Stocks had a memorable run in 2016. Will that rally continue in 2017. The market recovered from one of worst ever starts to the year to hit a series of record highs. The Dow up more than 13% on the year falling just shy of 20,000. Markets are closed for New Year's day tomorrow but Wall Street will watch to see how long this bull can keep running. A market correction is overdue if you look at history. Right now investors seem giddy though over Trump's plan to cut taxes. But what will it look like on paper? That's a big question. Also concerns GEO politically and globally about terror. And also, what will the president-elect's free trade outlook mean? Will there be trade war or will It mean more U.S. jobs? We are not so quite done with 2016 yet. The final jobs report of the year comes out on Friday. Quick break. We're back in a moment.

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