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White House's Press Secretary Says She Can't Confirm Reports that the 3 Americans Held in North Korea Would Be Released; Intense Dust Storm Pummels India, Killing 110; Cosby and Polanski Expelled from Oscars Academy; Cisco CEO: U.S. and China Need Each Other; Charlie Dent: Trump Made Tactical Mistake on Trade; Alibaba's Jack Ma Meets Israeli PM; Women Accuse Uber Drivers of Sexual Assault; Elon Musk Cuts Off Boring Bonehead Questions; YouTube Host Questions Elon Musk on Earnings Call; Dow Recovers from 350-Point Selloff. Aired 4-5p ET

Aired May 3, 2018 - 16:00   ET


PAULA NEWTON, CNN HOST: We've got a gain in the final seconds. I really didn't think they'd get there. They were down there 350 points at some

point today, proves you cannot leave this market alone for a second. It's Thursday, May 3rd.

Tonight, Elon Musk's bonehead move, Tesla assures tumble after a testy telephone exchange.

The President, the porn star and yes, the payoff. Rudy Giuliani sparks the game of follow the money.

And let the Beijing bargaining begin. The US-China trade talks are finally under way. I am Paula Newton and this is "Quest Means Business."

Tonight, Wall Street is questioning Elon Musk's leadership at Tesla, the company shares closed down more than 5% after a bizarre earnings call. We

have to say at one point, they were down almost 8%, the stock as we were saying, down and Tesla and its CEO were already on thin ice with investors

even before this phone call.

Now, the car maker is losing money and has been slow to ramp up production of its Model 3 sedan. Elon Musk though didn't want to talk about it.


UNIDENTIFIED MALE: So, where specifically will you be in terms of capital requirements?

ELON MUSK, CEO, TESLA: Excuse me, boring bonehead questions are not cool. Next?

UNIDENTIFIED MALE: Of the reservations that actually opened and made available to configure, can you let us know, like what percentage have

actually taken the step to configure?

MUSK: We're going to go to YouTube. Sorry. These questions are so dry. They're killing me.


NEWTON: They were killing him, were they? Clare Sebastian is here. You were on the call. I can't imagine what you were thinking when you were on

this call. Could you really believe it?

CLARE SEBASTIAN, CNN CORRESPONDENT: To be honest, it started off bizarre and it only got more bizarre and you could literally sense his frustration,

but it did knock investors confidence. I was actually - I got some notes today from those analysts who you just heard who were dismissed by Elon


This is from RBC, Joseph Spak. He said, "Investor feedback to the call was shock that the CEO would be dismissive and the general sentiment was that

the defensiveness spoke volumes. Now, that is crucial because it isn't just the theatrics around it. It isn't just the fact that he said things

like "bonehead" in a comment and things like that.

It's the fact that he didn't answer some of their questions. Now, Elon Musk as we know is a long time thinker. He is looking ahead five to ten

years and obviously, these analysts want to know what is going to happen in the next quarter and the quarter after that and you know, small details of

that growth margins and what happened with the uptick of the Tesla Model 3 orders.

But nevertheless, you know, him not answering the question has raised a lot of questions to people, and that's why you see the share price falling


NEWTON: You know, he broke the golden rule that I have about these calls, is "First do no harm." And if you think you're going to do any harm, get

somebody else. Get your CFO to do it.

Where is the market though now on TESLA, I mean, we just see the stocks down. It is burning through cash. What did the analysts tell you today on

- are they long on Tesla?

SEBASTIAN: There is a mixture. Some people have lowered their target of the markets today, not just because of the call but because there were some

issues with the earnings. Obviously, they were reported a lot, which is narrower than some people expected, but listen, they are still burning

through cash, $700 million in the last quarter.

Moody's has come out today and reiterated that they think they are going to have to raise $2 billion this year, something that Elon Musk categorically

denied on the call, but the real interesting part of this is, even though this did dent confidence and the theatrics, and certainly not something

that anybody welcomes on this call, there is still a feeling that people do believe in Elon Musk and his vision for the future, and practically, they

must do, Paula, because this is still a company that has a market. It got bigger than Ford even after today's $3 billion loss on its market cap.

It's still bigger than Ford. They made 100,000 cars last year, Ford made 2.6 million, so I think if he wants to keep the market on his side, he has

to live up to some of these promises that he is making.

NEWTON: He is supposed to be revolutionizing the car industry, not the analyst phone call. I think you know, he has been kind of a bit off from

the last few month's shall we say. In terms of where this is actually going to be critical, we are still waiting on another quarter results,

another two - how much more patience do you think the street is going to have?

SEBASTIAN: I think, certainly, we always say this, the next quarter is going to be crucial because he has promised that he will ramp up the Model

3 to 5,000 a week by the end of the next quarter. He's promised that in the quarter after that and in Q4, he will be cash flow positive, so those

are the key metrics that everyone is going to be watching. How he does with the Model 3.

I think people are going to give him some leeway if he didn't quite hit 5,000 a week. Then, you know, he just has to hit the ballpark, as they

say, and if he does that, then, they're going to continue to be on his side, but these investors have supported him all along. They believe, as I

have said, in this vision, in this man who is not only trying to put humans on Mars, but trying to solve the LA traffic problem, and despite the

theatrics, despite the defense that we have seen leading up to this, despite the worries that the company is running out of cash, they still

believe in him.

NEWTON: And they say, its dreamers and builders in that sense in the mold- -

Q4, he will be cash flow positive, so those are the key metrics that everyone is going to be watching. How he does with the Model 3.

I think people are going to give him some leeway if he didn't quite hit 5,000 a week. Then, you know, he just has to hit the ballpark, as they

say, and if he does that, then, they're going to continue to be on his side, but these investors have supported him all along. They believe, as I

have said, in this vision, in this man who is not only trying to put humans on Mars, but trying to solve the LA traffic problem, and despite the

theatrics, despite the defense that we have seen leading up to this, despite the worries that the company is running out of cash, they still

believe in him.

NEWTON: And they say, its dreamers and builders in that sense in the mold- -


NEWTON: -- of Elon Musk that has really given us our great innovations. We will see. Clare Sebastian, thanks so much. She was here late last

night in that phone call. You couldn't even talk to anybody. Was anybody around for you to say--


NEWTON: There was no one in the office for Clare. Anyway, from faulty phone connections to faulty CEO's, there are many reasons that an earnings

call can go bad.


UNIDENTIFIED FEMALE: Good morning and thank you for standing by.

UNIDENTIFIED MALE: You know, people as they become more aligned on push notifications, they've sort of relaxed the standards there and I think it's

important for our business--

UNIDENTIFIED MALE: Our next question is from Mark Mahaney with--

UNIDENTIFIED MALE: I didn't even understand his response.

TIM ARMSTRONG: Believe in it, and I'm going to be very specific about this, is patch from an experience, Abel, put that camera down now. Abel,

you're fired. Out.

UNIDENTIFIED MALE: It's a multipart question, so apologize--

JIM HAGEDORN: Yo, dude. How many questions can you ask as part of one question? But can - somebody better write that (inaudible) down, so like,

we can remember all of that stuff that you goddamn said.


NEWTON: Yes, and let's be clear. They do field some crazy questions on these calls sometimes, now for Elon Musk, it wasn't as much about the

number of questions. It was clearly the content that had him going.

Either way, Wall Street didn't like his response. Daniel Ives is the Chief Strategy Officer at GVH Insights.

Okay, now, you and I were just talking while I was on. You're surprised, you're saying the stock wasn't actually down that much considering the


DANIEL IVES, CHIEF STRATEGY OFFICER, GVH INSIGHTS: I think investors just sort of see through some Musk antics, and look, I'll tell you in decades of

calls, thousands of calls, it's probably the strangest one I've been on, but it's really - but it really comes down to fundamentally you look at

them all through production, can they close that gap? What the cash burn situation looks like?

And I think when you sort of parse through the trees, it's when you don't have great confirm from the call, but now, it's really instead of talking

the talk, it's walking the walk on the production side. If that could be successful, then ultimately, the stock rallies from here.

NEWTON: Okay, can it be successful when we're talking about the stock, but if we take Elon Musk and we're long on Elon Musk, he is really trying to

transform many industries here. He has to transform this car industry because if he doesn't, the other things aren't going to look like good

bets, are they?

Production, this is something that's very key. This is elementary. This is really one, two, three put together. He made a cardinal mistake. He

admitted it. There was too much automation in the process. Now, he's sleeping on the factory floor. What's the secret sauce? Where is he going

to go now? I mean, what have you been hearing in terms of him being able to solve this problem?

IVES: Yes, I mean, look, they're definitely backed against the wall in terms of that 5,000 sort of production number and they are going to look -

could they really hit it? I think they're going to get close. It's going to be tough to actually hit that number, but I think part of the issue for

investors here is given all the things on the plate, I mean, it's not obviously just auto, you're talking you know, call it five or six major

initiatives, plus with the cash burn, you need to have confidence that there's a pilot on the plane here that can navigate through this next few


Musk is not a street savvy CEO. You obviously saw that last night in full sort of bloom, but--

NEWTON: But it's what some people like about him.

IVES: Well, that's part the visionary, and we've seen it over the years for decades with different CEO's, I mean, this is an extreme case. Look,

you compare it to a Zuckerberg at Facebook or Bezos at Amazon, you know, maybe not sort of straight and narrow in terms of how investors want to see

it, but they are able to conform.

This was one - I mean, you put it best, you know can a CFO sort of get in to sort of put it in between Musk and the street. Because the last thing

you want to do here is give investors further concerns, just given the core fundamental issues what I would call as a very handholding time for Tesla.

NEWTON: Yet, he wasn't holding anybody's hand, he was slapping people around. And I think you mentioned a good word there, conformity. He is

not going to conform to what an analyst call looks like. He does have to conform to what a balance sheet looks like.

When we talk about cash - burning through cash, how much patience do you think, you know, Moody's was talking about it today. I mean, look, if I

look at the numbers, I am thinking, "I don't know about this cash burn." You could be brilliant, you may have developed a brilliant business, can

you really see it through? How much more runway do you have?

IVES: Ultimately, is there another capital raise and that's really the worry out there. You know, if cash burn is there. So, that's why I really

think like this next quarter, too, is instrumental because ultimately, you start to do the math, then you look at eight to ten quarters of cash burn,

you know that really gets him to a dangerous situation.

So, that's why I really feel like this quarter is going to be a seminal quarter in terms of that production narrowing it. Can they prove in

lowering the cash burn? Otherwise, not just Moody's but I think you start to see investors lose faith.

Today was definitely something where I think the bears, you'd be seeing a 10% to 15% down stock. You didn't see it. It's a--


IVES: -- confidence booster, but now, it comes down. You've got to see it in the actual results over the coming months.

NEWTON: And we will be watching. One more quarter to go there for Elon Musk. I think, hopefully, he's learned his lesson on the call. But you

know what? He could come back and have the same kind of call.

IVES: Yes, I think he might do the call when you see him next time.

NEWTON: That's just what he's like, he's like, "I'll show you. I don't care." Anyhow, thank you so much, Daniel, I appreciate it.

And later on, we will speak to the person on the call. You'll want to hear this, who Elon Musk was keen to talk to. Yes, there was only one, a Tesla

fan, with his own YouTube page. You've got a personal invite on that conference call. You don't want to miss it.

Turning to Wall Street now. It was, as I was saying, a topsy-turvy day. There you go. It ended up, oh, my goodness, just 5.17 points. Fears about

trade between the US and China pushed down the Dow. More than 350 points, that's what we were dealing with there in the morning.

It climbed back over the course of the afternoon, and as I say, ekes up that gain. I spoke with traders at the Stock Exchange, you know, the low

point of the day. Alan Valdez, of SilverBear Capital, yes, you guessed it, the picture is complicated.


ALAN VALDEZ, SENIOR PARTNER, SILVERBEAR CAPITAL: The traders are just a little confused right now. I mean, the earnings were good. The earnings

have been strong. Everything - unemployment is strong, but you know, we're on the sidelines where we don't know which way the market is going to go.

We have been holding in this area, down five days in a row. So, things are just on hold really for a lot of guys, but they're selling. They're not

buying the dips anymore. They're selling.

So, things are changing right now. We'll have to see what happens, the China deals, I mean, the Korean deal is still on. We're watching that

closely. The China deal, we've got a group over there now from Washington.

So, a lot of things on the table that we are keeping an eye on.


NEWTON: Keeping an eye on and yet, the Dow has been down quite a few sessions now. It wasn't technically down today, which was also a miracle.

Paul, I say this, if I am looking at the 10-year, I am thinking, "Okay, it's not three years, but it's kind of three." If I have made - this is

what I think is going on in the market, if I have made 20%, 25%, 30%, I am thinking, no, I am just going to sell here. I am just going to park it for

a little bit. I can make the 3% over here, I'll get in later on.

PAUL LA MONICA, CNN CORRESPONDENT: Yes, I think that's a great point. You can sit back and just say, "Hey, you know what? I'm good. There's more

volatility now. All of the concerns that people should have had last year about the White House for example, kind of just got glossed over.

And now, all of a sudden, people are nervous about trade tension with China, that is a big worry. You mentioned rising bond yields. We have a

new Fed Chair, the market is still trying to figure out, Jerome Powell, could he make a mistake and raise rates too aggressively, not raise rates

quickly enough? There are a lot of people wondering you know, what's going to happen next.

So, with all of that uncertainty, you have this volatility.

NEWTON: And that volatility, I think, is what is pushing more and more people out of the market. And I am not talking about retail investors, I

am just talking about people who want their quarters to look good, "I am going to close the books out on this one, I am going to my 3%. I'll stay

on the sidelines for a while."

You've mentioned the Fed which is a good point. Two things I want to bring up that I am not sure if the market is worried about yet. You know, the

economy in the United States is not exactly on fire, you know--

LA MONICA: It's not bad.

NEWTON: Not bad, but you know, when this President sets the benchmark at three and we're not going to be close to three and you're seeing some

problems even with hiring lately, you're kind of saying, "Okay, what's going on there?" One and two, inflation which you had mentioned before.

Do you think either of those could really trip up the market and which one is more likely to trip it up?

LA MONICA: Yes, tomorrow, Paula, we're going to get some information about both the job market and inflation and it's going to be very fascinating to

see what happens because we have the most recent monthly jobs numbers that will be coming out. There are economists suspecting about 190,000 jobs

added, which would be better than last month, which is a disappointment, not as good as two months ago. Of course, there are going to be revisions.

Unemployment rate might slip a little bit to 4%, some people think it could go a little bit lower, but there's not much lower it can obviously go, and

then there's the wage growth number. People are expecting about 2.7% annual growth, which is good, but it's getting closer to that 3% number

that starts to freak people out because it might mean more inflation, more rate hikes from the Fed.

So, could we get a job's number that looks good on the surface for America, say 300,000 jobs added again, but wage growth above 3%. The market might

freak out about that because they may all of a sudden think that the economy is too hot and Powell and the rest of the Federal are going to have

to raise rates more aggressively.

NEWTON: Right, right. The Federal has been painting a new corner, which brings up the American dollar, which also does not do a good thing for

those trade numbers.

LA MONICA: And yet, the dollar has been on fire lately in the past couple of weeks.

NEWTON: It has in fact, and I think keep in mind, yes, get used to the volatility. It is definitely here to stay. Paul, thanks so much.

Appreciate it.

LA MONICA: Thank you.

NEWTON: Now, European stocks ended the session lower. Investors got their first chance to react to the US Fed's decision that Paul and I were just

talking about, Wednesday, to leave interest rates unchanged. There are also questions though about the European Central Bank's next move.

Euro zone inflation, unexpectedly fell last month, that is bad news, raising questions about the ECB's stimulus package.

Coming up, a political bombshell delivered on cable TV sends shockwaves through Washington. We will tell you how Donald Trump's new lawyer just--


NEWTON: -- unraveled months of denial about hush payments to a porn star.

All right, a bit of bizarre news just in to CNN. Twitter is asking users to change their password right now.

The company says it found some password store encrypted in an internal log file. Twitter says the problem has been fixed and there is no indication

of a breach - that's good news. But everyone get on your Twitter apparently, and change your password.

Okay, it's the mystery of the President, the porn star and the $130,000.00 payoff and it boils down to one question, "Who helped Donald Trump's lawyer

give hush money to keep Stormy Daniels quiet during the 2016 election campaign?"

One way to find the answer is just follow that money.


RUDOLPH GIULIANI, FORMER MAYOR OF NEW YORK CITY: That money was not campaign money. Sorry, I am giving you a fact now that you don't know.

It's not campaign money. No campaign finance violation.

SEAN HANNITY, FOX NEWS HOST: So, they funneled it through a law firm. Funneled through a law firm, and the President repaid it. Oh,

GIULIANI: Oh, I didn't know, he did. Yes.

HANNITY: There is no campaign finance law.

GIULIANI: Zero. Just like every, Sean, everybody was nervous about this from the very beginning. I wasn't. I knew how much money Donald Trump put

into that campaign. I said, $130,000.00?


NEWTON: Now, for those of you who weren't up when that happened, that hit like a bomb here last night. So, that was Mr. Trump's new attorney, Rudy

Giuliani, single-handedly, he changed the narrative by claiming his predecessor, Michael Cohen was paid back the $130,000.00 by Donald Trump,


Now, the admission took even White House Press Secretary, Sarah Sanders off guard.


UNIDENTIFIED FEMALE: When did you specifically know that the President repaid Mr. Cohen for the $130,000.00? You personally.

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: The first awareness I had was during the interview last night.


NEWTON: Okay, stay with me here. There's still one thing that doesn't add up. You know what? There's more than one thing, but let's stick with the

one thing. Why Donald Trump deny any knowledge of the payment when asked about it just last month?


UNIDENTIFIED FEMALE: Did you know about the $130,000.00 payment to Stormy Daniels?


UNIDENTIFIED FEMALE: Then why did Michael Cohen make those if there was no truth to her allegations?

TRUMP: Well, you'll have to ask Michael Cohen. Michael is my attorney and you'll have to ask Michael.

UNIDENTIFIED FEMALE: Do you know where he got the money to make that payment?

TRUMP: No, I don't know.


NEWTON: Okay, basically, the "I don't know" means that Rudy Giuliani was basically calling the President a liar. Now, the White House says Trump

eventually learned he repaid Stormy hush money, yes? If you can believe it, Jeff--


NEWTON: -- Zeleny is here to explain it all. Jeff, they are all speaking English and I still need you to translate this for me. I mean, what

happened? I mean, why did this happen? It seems like it was calculated because Rudy Giuliani went on the air late last night, but then he was also

back on the air repeating it this morning.

JEFF ZELENY, CNN WHITE HOUSE CORRESPONDENT: People at the White House, Paula were just as surprised as others were. The fact that there was a

complete contradiction of this narrative that has been really in existence for several months here, that the President claimed no knowledge of this

payment, and let's think fact. The payment was for hush money to Stormy Daniels who is an adult film actress and this was in the final weeks and

days of the 2016 election campaign.

She was threatening to go tell her story, so they made this payment there and the President has always acknowledged not knowing anything about it.

He has answered the question directly only once on Air Force One there, but from the White House podium, White House Press Secretary Sarah Sanders has

always denied it.

Well, today, she said, she was answering questions with the best information that she had at the time and she only learned about this by

watching television last evening.

But Paula, this is what is going on here. This is the bottom line. Rudy Giuliani is a new member of the President's legal team here, and he is also

signaling a new approach. They are fighting harder and they are focusing on the political fight here more than the legal one at least at the moment.

And by that, I mean, they are trying to sort of get all of the stuff out in the open, if you will, trying to discredit the investigation, so they can

say in weeks to come there is nothing to see here, you know, all of these has been handled.

But it's certainly injected more questions into all of these because Giuliani also was taking some lawyers by surprise, but he said, he was

doing it with the blessing of the President and we have no reason to not believe that, because the President has made very clear, if he does not

like what one of his subordinates is doing, he will tweet about it.

This morning, he tweeted a series of legal tweets explaining why he helped make that payment. So, they are more certainly focused on the political

fight. That doesn't clear up the rest of it. One thing is clear, there is a credibility crisis here, Paula and it's rooted right in the Oval Office.

NEWTON: And I want to get to that point, Jeff. You know, I asked Congressman Charlie Dent earlier, just a little earlier. He is a

Republican Congressman who has been very keen that Robert Mueller stay on the job and not get fired. I want you to listen to him for a second about

what he says the political fallout of this will be.


REP. CHARLES WIEDER DENT (R), PENNSYLVANIA: I believe most people are not so focused on all of this issue of Stormy Daniels or the Mueller

investigation or Russia. I really believe that. Most are not that focused on it. They are more focused on these other big issues. They are worried

about taxes, healthcare.

The trade issue is certainly something through its own people's minds. I think they are more focused on the more substantive issues, believe it or

not, than much of the drama that surrounds the White House.


NEWTON: The question I have here, Jeff, and remember he is Republican. He has butt heads with the President several times even though he is a

Republican. Having said that, I am thinking - tell me what you think that this is the calculus that the White House has made. That look, people just

want to hear from the President, "Okay, maybe he lied. Maybe he paid hush money. Maybe he didn't." And that they are betting that everyone will

forgive him.

ZELENY: I think that is right and Charlie Dent of course is an outspoken Republican, but he is leaving. He is not running for reelection, so that

often gives American politicians a bit of truth serum if you will.

They suddenly are more forthcoming here and he's one of the ones who is outgoing here, but look, I think the more pieces of evidence of news and

development, it simply adds to this soundtrack, this very loud soundtrack, very confusing, so people simply tune it out.

The President knows that very well. He wants all of these things in the bloodstream, in the atmosphere, in the conversation here. So, when

something, if something comes out, a headline if you will, a finding from the Special Counsel's investigation, people may be so sick of it by that

point, they are not paying attention.

I think that may be the grandest strategy as sloppy as it may seem and messy as it seems in real time. I think that that is the underlying goal

here, Paula.

NEWTON: Yes, it seems sloppy at times during the campaign too, and then there you are. So, Jeff Zeleny, thanks so much. Appreciate it.

We are now joined by Brendan Fischer, he is Director of FEC Reform at the Campaign Legal Center and he is with us live from Washington and thank

goodness, Brendan that you are. I have many questions about this on a legal level.

Of course, there are two things that need to make sense here. It needs to make sense politically and it needs to make sense legally.

Boil this down for us in terms of any hot water that the President could be in or is not in when it comes to campaign finance?

BRENDAN FISCHER, DIRECTOR, FEC REFORM: Sure, well, first of all, any payment that's made for the purpose of influencing an election is a

contribution or an expenditure. Contributions--


FISCHER: -- need to be reported as received by the campaign and if the contribution is made by another person, it can't exceed $2,700.00. We now

have plenty of evidence that Michael Cohen made $130,000.00 payment to Stormy Daniels with the ascent at a minimum of Donald Trump and $130,000.00

is a lot more than $2,700.00.

So, Michael Cohen could be on the hook on for exceeding campaign contribution limits. The campaign could be on the hook for accepting an

excessive campaign contribution and failing to report that contribution.

And there's also plenty of evidence that these violations were knowing and willful, which brings this into the territory of potential criminal

campaign finance violation.

NEWTON: Given all of that, why do you think Rudy Giuliani seems so comfortable with his explanation, meaning, the President did nothing wrong?

FISCHER: Well, it appears that Rudy Giuliani may not have a good handle on the law. There are certainly some indications that more evidence was about

to come out, so this may have been an effort by Giuliani and his legal team to try and get ahead of the story. They just have not done a very good job

of it.

Perhaps what they were thinking is that it is permissible for Trump to fund his own campaign. He can give as much as he wants to his own campaign, so

perhaps, they thought that if Trump himself had made this $130,000.00 payment, that that would therefore be permissible, that that would

therefore not implicate excess campaign contributions.

But that's actually not the case because the evidence indicates that Michael Cohen fronted the money himself. He effectively made a loan to the

campaign and a loan is treated as a contribution and contributions have to stay within contribution limits and they have to be reported.

NEWTON: Okay, understood. But, Brendan, tell me this, why in the big picture does this matter and why can't you convince Americans that it

matters? Because polls show, they are tuning out, just like Jeff and I discussed.

FISCHER: Well, I think there are two things. First of all, there is the simple political question of honesty. We have heard multiple explanations,

multiple conflicting explanations over the past few months for this payment. Cohen said that he was not reimbursed, now we know that he was


Trump claimed - Trump and the White House claimed that they knew nothing about these payments, and now we know that they in fact did, and Trump

reimbursed Cohen for these payments. But also, this goes to the underlying purpose of campaign finance disclosure laws.

The public has a right to know who are funding our candidates, who are funding our elected officials and how those elected officials are spending

their money. The reason that we would have wanted this payment reported in October 2016 is because that is relevant information to voters' ability to

exercise their right to the franchise.

The public had a right to know how Donald Trump was spending his campaign's money and if this information had been disclosed in October 2016, it's very

likely that the public would have known about the hush fund payment to Stormy Daniels.

And that may not have - that may have meant that Trump still would have won the election, but this is information relevant to voters' ability to cast

an informed vote.

NEWTON: Well, we'll see if any of it resonates, Brendan. I contend that Donald Trump is a stock that's already been discounted. They know he

sometimes stretches the truth and the $130,000.00 is already on the balance sheet.

But Brendan, thanks so much. We will continue to check in with you especially legally to see how all of these goes down. Appreciate it.

FISCHER: All right, thank you.

NEWTON: Coming up, the US sends a delegation to China to try and avert a trade war. After the break, a Republican tells me the White House has the

strategy all wrong.


[16:30:00] NEWTON: Hello, I'm Paula Newton, coming up in the next half an hour of QUEST MEANS BUSINESS, a U.S. Senator calls for action from Uber

after a special Cnn investigation into sexual assault by drivers.

And Alibaba's Jack Ma is on VIP tour of Israel. I'll speak to one of the Israeli companies he's decided to invest in. First off, here are the top

headlines we're following this hour.

The White House is downplaying a report that the Americans held in North Korea would soon be released. The press secretary says she can't confirm

that. Earlier, one of the president's own lawyer said the three would be let go on Thursday.

An official with knowledge of the negotiation also said their release is imminent. At least 110 people are dead after a power dust storm battered

northwestern India beginning Wednesday. The weather system also brought fierce winds and lightning strikes.

Authorities say many deaths occurred after walls and roofs of homes collapsed during the night. Figure that runs the Oscars has expelled Bill

Cosby and Roman Polanski. The Academy of Motion Picture and Arts and Sciences voted to remove them on ethical grounds, Cosby was found guilty of

indecent assault last week, Polanski fled the United States in 1978 from being charged with statutory rape on a 13-year-old girl.

The CEO of Cisco says the trade war between the United States and China would hurt all sides. Donald Trump's top economic adviser have arrived now

in Beijing for trade talks that will last through the weekend.

Maggie Lakes -- Maggie Lake asked Cisco's Chuck Robbins if he shared the Trump team's concerns about China.


CHUCK ROBBINS, CHIEF EXECUTIVE OFFICER, CISCO SYSTEMS: Regardless of what country you're operating in, we have intellectual property theft in the

United States of America, so I think the -- this is an issue that needs to be dealt with everywhere.

I think false technology transfers are you know, a similar issue that needs to be dealt with everywhere. But we have -- we have partnerships in China

where we're actually working in a joint venture, but it's really around them leveraging our technology to deliver more holistic solutions to their


So we've experienced an openness there that others perhaps have not, but we've actually seen that.

MAGGIE LAKE, CNN: Have you aired that view with the Trump administration because that doesn't sound like the narrative they put forward.

ROBBINS: Well, I think that it's -- you know, different industries have different issues, different groups within the technology sector have

different issues because we're not a company that actually relies on the monetization of data, so we have a different, you know, business model than

others, so there may be different issues.

But we've involved in the discussions and we obviously want to make sure that the outcome is positive because I think it's very clear to everybody

that China needs the U.S., the U.S. needs China and frankly, the global markets need China and the U.S. to be operating together.

LAKE: Yes, do you think that that shared reliance on each other will, you know, will override some of this rhetoric on trade talks, because it's been

tough talk on both --


LAKE: Sides, and investors are clearly -- the markets are clearly concerned about this.

ROBBINS: Right, well, I think that -- I think there are probably issues on both sides and I think that getting to a resolution, I think both

countries, both teams understand that a long term broad-base trade war is not good for the global economy.

So I actually, I'm optimistic that they'll get to an answer that works for everybody.


[16:35:00] NEWTON: OK, so one person who is optimistic there. Now, a top lawmaker from Donald Trump's own party says the administration has made a

tactical mistake in its approach to trade. Earlier, I spoke with U.S. House Republican Charlie Dent, who told me when it comes to talking to

China, the U.S. should be working with its allies, not against them.


DENT: I give the administration credit for taking on China. They're correct to do that, but the way they've gone on about it, I think it's been

a bit misguided.

The issue with China is intellectual property theft, cause of technology transfers and excess capacity in metals and dumping. And the way the

administration went about this, so they immediately started with tariffs on steel and aluminum directly largely at friends and allies, U.K., South

Korea and it's Brazilians and others -- Europeans.

So that's been a big challenge, and so I think that is -- that was a tactical mistake. We should be partnering with our European friends and

allies as well as our friends in the Pacific region and elsewhere and taking on China at the WTO on the issues of technology transfers and

intellectual property theft.

We need a partner and to put the pressure on the Chinese, now we're fighting with the Europeans over steel and aluminum when -- and then the

Europeans respond of course and they threaten Kentucky Bourbon, Levi's Jeans, Harley Davidson Motorcycle.

And the president goes back after German car companies which have invested enormous sums of money in the United States and South Carolina, Tennessee

and Alabama. So these trade wars tend to get out of hand and there are no winners here.

In my state, there are all kinds of impacts. I'm sitting here in Bethlehem, Pennsylvania, which had been one of the largest steel producing

areas of the world. We don't produce steel here anymore, but we have a lot of steel and aluminum users.

NEWTON: But a lot of people --


DENT: Is in my district --

NEWTON: Blame -- but a lot of people blame -- but listen, just to go back to the steel point, a lot of people blame China, you know, for why

Bethlehem steel isn't producing steel in Pennsylvania anymore.

DENT: Well, my dad was 30 years at Bethlehem Steel, an industrial engineer and later in his career, human resources. I can tell you one thing,

Chinese steel is not what caused Bethlehem steel to go into bankruptcy in the 1990s. That was not what did it.

I mean, a lot of the mistakes in the steel industry were made in the 1950s when they failed to move from Open-hearth Furnace Technology to the Basic

Oxygen Furnace Technology when Europe and Asia had gone in that direction.

And that this American industry was quite strong back then. That was an area, we also had very difficult labor management relations with the United

Steel workers. There are a whole host of issues --

NEWTON: You know, congressman --

DENT: But I will --

NEWTON: Congressman, I'm sorry to interrupt, but you know, as a daughter of a steel worker, I know exactly where you're coming from, but having said

that, it still sounds like an excuse, an excuse because America just did not drive a hard bargain to try and keep those jobs in America.

And you know that right now, the president is having a lot of traction with that argument.

DENT: Well, again, just going back to the steel industry, I mean, I can blame a lot of people for what happened to the American steel industry here

in Bethlehem. I can't blame the Chinese, the Chinese really didn't have much of a developed steel industry in 1990s.

Now some would blame the Japanese or the Koreans maybe, and then some of the Europeans. But bottom line is that there's a lot happening and that

all I can say is that this area where I'm sitting right now is being redeveloped in a very significant way.

But I've got aluminum users in my district too. I mean, I've got to tell you, Hershey's, they make confectionary products, 70 million kisses a day

are made in my district. They use aluminum foil for every one of those wrappings.

Their impact, I have Sam Adams and the Yuengling Brewery all in my area, a steel -- a cake manufacturer, all will be very much impacted by some of

these tariffs on aluminum. I now want laundry list of people who are calling me about these tariffs on steel and aluminum and who are enormously


And of course, there's always the retribution. We always anticipated that American farmers will be the first ones to be retaliated against, and we're

seeing that with the -- you know, the soy growers, the corn growers, the hard growers.

We know what's going to happen, that's why I think we have to really smart about this. The type of naked protectionism that some are talking about

really represents the worst form of crony capitalism, protecting the few, the privilege few at the expense of the many.


NEWTON: OK, up next, there's a call for action from a U.S. senator after Cnn investigation uncovers more than a hundred sexual assault activation

against Uber drivers.


NEWTON: On tour in Israel, Alibaba Chairman Jack Ma is visiting the country he's invested in for the last two years now. On Wednesday, he met

the country's Prime Minister for the third time.

Benjamin Netanyahu touted tech branding his country the nation of innovation. Ma also met with Jerusalem venture partners, a venture capital

firm that Alibaba has partnered with since 2015 to invest in promising Israeli startups.

I want to get right over to JVP's founder and Chairman Erel Margalit, he is live for us from Jerusalem. Thank you so much for joining us. Please tell

me, what does Jack Ma see in your company and other ventures in Israel.

I know a lot of people will say upfront that Israel certainly is leading on innovation. And yet, what does China see in the country right now?

EREL MARGALIT, FOUNDER & CHAIRMAN, JVP: Well, I think we're a small country with a lot of technology. So while an American startup works in

the U.S., Israeli startups need to cooperate all over the world.

So we cooperate with the U.S., with Europe and with China and other locations. And we have a good partnership with Alibaba, and as you know,

technology is changing almost every category of business today.

Retail for example is changing in a big way and Alibaba is very strong in retail in China, healthcare, IT and a variety of industries that need a

boost of technology. And we have a friendship, a partnership just like we have with Cisco and with Microsoft and with Facebook and with American


And we're happy to have the kind of companies here where we can work on new projects together and we're delighted that they've decided again to invest

in JVP, it's one of the leading venture capitals in Israel and we're only as good as the smart young people around us that are inventing new things

all the time and we're very proud of it.

NEWTON: And I appreciate all that. You know, on this show almost every day now, we talk about the commercial tensions with China, and a lot of

times people talk about things like even espionage and commercial spying ventures and things like that.

Israel, such a good ally of the United States and obviously very sensitive on a lot of fronts when it comes to innovation. I mean, at this point in

time, exposing you could say, yourselves to China in a way, why is it important?

Why can Israel not afford to be out of -- you know, out of the game when it comes to China?

MARGALIT: I think you need to remember that there's good cooperation on the innovation front between the U.S. and China as well and between

different countries around the world that innovation is the key to changing society as well.

So good things are happening with food tech, with agro tech, with a variety of technologies that are just improving people's lives. And everybody

needs to be careful where they put their cybersecurity technology, JVP; we're the leading cybersecurity experts in Israel and that we probably --

primarily cooperate with the United States and with the city of New York and a variety of additional companies in the United States.

So one needs to know how to navigate in this complicated world, but there's quite a bit of opportunity and we're delighted --

NEWTON: And --

MARGALIT: To be able to sit around the table, both with --


MARGALIT: Cisco and with Alibaba --

NEWTON: Right --

[16:45:00] MARGALIT: And with a variety of European companies, because that's what we do in Israel, we get everybody together to change things

from a technology standpoint.

NEWTON: But is that the point, no matter how sensitive some things are when it comes to innovation, it's the fear of missing out with China. You

need to bring them to the party.

MARGALIT: No, I think we're very careful, you know, who we cooperate on cybersecurity and a variety of additional sensitive industries. We work

very closely with the U.S. and in close cooperation with the United States.

The U.S. is our closest ally technologically, we at JVP took 12 companies public on Nasdaq, not on anywhere else, and you know, innovation has become

a word for Israel's diplomacy, both with China and the United States and other countries.

But also innovation is becoming the word for diplomacy in our own region. We now have cooperation both with the Palestinians but also with other Arab

countries and are working together with the moderate Arab states in order to bring new ideas and cooperation between people, it's important.

NEWTON: I'm sure it is, and everyone realizes why, as we'll continue to follow this story though. Thanks so much for your time, appreciate it.

MARGALIT: Thank you Paula.

NEWTON: Now Uber is facing mountain pressure as claims against its drivers come to light in an exclusive Cnn investigation found at least 103 Uber

drivers in the United States have been accused of sexual assault or abusing passengers within the past four years alone.

Now a U.S. senator is calling on the company to make it easier for victims to get their day in court. One woman spoke to our senior and investigative

correspondent Drew Griffin about a heroine experience.


DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT (voice-over): Drunk, young alone. What should have been a 10-minute Uber drive home turned into 3


You're in the back seat --


GRIFFIN: You were I assumed passed out?



UNIDENTIFIED FEMALE: Me up, yes, he was already penetrating me and that I'm a bear -- performing oral sex and after that I don't really remember.

GRIFFIN: She awoke the next day with severe pain, like the victim in Miami, she went to a hospital and called police. Her driver, a 47-year-old

man was found carrying her cellphone at a car wash and arrested.

He had been charged with a prior sexual crime, but never convicted, which allowed him to pass Uber's background check. Charges against him in this

case eventually dismissed. The Uber driver insisted the sex in the back seat of his car was consensual. She is now suing Uber.


NEWTON: Drew Griffin is standing by for us now in Atlanta. Drew, this is so unsettling, chilling really on so many different levels. In times of

this woman and her rights, when it comes to being able to make, you know, any one accountable here, what was the problem with the way Uber has set

all of this up?

GRIFFIN: Well, the problem is when we, you, all of us sign up for Uber, we are signing up for their terms of service. And in those terms of service

which I assume, like me, not many people read, is an arbitration clause.

So if you try to sue this company, you actually have already agreed to a private arbitration agreement, which means you can't take this into court,

you can't go public with it.

Senator Richard Blumenthal from Connecticut, a Democrat, upon seeing our report and also seeing a letter from 14 alleged victims of this type of

behavior sent their notes to Uber demanding a change, is asking Uber to change its policy and allow women like that woman there in the shadows to

come out of the shadows, get into court, sue Uber and more importantly, Paula, to tell their story because that's what was the most important fact

about this story.

It's just that it told all of these victims for the pattern, they are riding usually alone, usually after a night of drinking and they are easy

prey for these Uber drivers who choose to violate that trust.

NEWTON: Drew, what was Uber's response to all this?

GRIFFIN: Uber responded only with e-mails to us, they backed out of an interview last minute. What they've told us is that they are trying to

change their app, they're putting a button on their app to allow for a direct line to 911.

They are improving screening of their drivers, but they are not going as far to do what many regulators want, which is have fingerprint background

checks. Uber still insists on doing its own background check which in many cases has failed to detect problems with drivers.

NEWTON: Yes, which is the problem here because everyone wants them to do their due diligence and who knew that by signing up to those terms of

service, that you would actually be locked into this kind of arbitration.

Drew, thanks so much and I know you'll stay on top of this story, appreciate it.

GRIFFIN: Thanks, Paula.

[16:50:00] NEWTON: Elon Musk thought investors questions on his earnings call -- well, you know, too boring for him to answer, but not all of them.

One man asked questions that Musk found really interesting.

You want to hear this interview, he joins me next.


NEWTON: Early on tonight's program, we told you how Elon Musk grew, you know, tired of some of the questions on last night's earnings call. Take a



ELON MUSK, CHIEF EXECUTIVE OFFICER, TESLA & SPACE X: We're going to go to YouTube -- sorry, these questions are so dry. They're killing me.


NEWTON: They were killing him apparently. This is what he meant by go to YouTube, right here, Gali Russell, he runs a YouTube page devoted to news

about Tesla and he got on the call after asking Elon Musk on Twitter if he could join in.

Gali, so much, thanks so much for being here. I have to ask you right off the bat, what was your reaction when you got that invitation? And then he

actually called on you during the call.

GALI RUSSELL, TESLA RETAIL INVESTOR: Yes, I was blown away, I mean, the real crazy moment for me was when he replied to my tweet asking if I could

be a call with just the word "OK".

And so that was like a mind-blowing moment for me.

NEWTON: Well, I hate to tell you, you probably annoyed everyone on the call except for Elon Musk, but at the end of the day, what did you want to

know? I mean, you know, you are a man who has most of his money in Tesla right now.

RUSSELL: Yes, and I mean, I was representing retail investors on the call, over 200 people e-mailed in for Tesla, representing over $20 million of

shareholder capital, vouching for me to get a question because they just don't feel like Wall Street analysts or asking the things about long-term

investors --

NEWTON: OK, but what was the question then? I mean, what did you want to know?

RUSSELL: Yes, so I had about 10 to 12 questions that I asked, I wanted to get to everything --

NEWTON: Here's the top line, what was it?

RUSSELL: One of the biggest ones was on the autopilot status of the Tesla network --

NEWTON: Sure --

RUSSELL: Because Waymo was launching their fully self-driving service this year. So I was curious we haven't heard much -- many updates about

Tesla's, you know, robot taxi plans which is something they mentioned.

So we got a lot more clarity on that, which I thought was great.

NEWTON: OK, so now what did you think of the call because most people were quite -- he broke, you know, as I said before the golden rule. When you're

on a call, you just first do no harm. You don't want to come on and be belligerent as he was --


NEWTON: I mean, look, by my estimation, the guy -- that guy is cold, cost you a 1,000 bucks yesterday, you've got to be annoyed.

RUSSELL: I'm not annoyed, I'm a super long-term investor, and I think the Wall Street analysts have this coming. I mean, the question that he cut

them off on was basically already answered in the shareholder lighter --

NEWTON: So then, it's his job to answer it, Gali --

RUSSELL: Well --

NEWTON: I don't know if he's upset about it or not.

RUSSELL: I mean, it's his job to communicate with investors, and I think by talking to me like he -- broader questions that long-term investors

wanted to answer and he's getting towards long-term investors --

NEWTON: But it's not --


It's an analysts call.

RUSSELL: Yes, but I think the questions I asked for more relevant to investing in Tesla than anything the analysts were covering. And I've

gotten, you know, hundreds of e-mails in --

NEWTON: Sure, you have --


RUSSELL: People who are so happy that they finally got a voice --


RUSSELL: And got some value for the call.

NEWTON: We've already analyzed Tesla in this show quite a bit.


[16:55:00] NEWTON: What do you see that Wall Street isn't seeing about Tesla? And that Moody's isn't seeing --

RUSSELL: Totally --

NEWTON: About Tesla.

RUSSELL: Everybody sees them spending money and losses, but they're not diving into what they're actually spending money on. Tesla has pattern of

where they spend significant amounts of capital to build our production lines with its vehicles, and then one or two quarters later, they actually

go free cash-flow positive, this time with the Model S.

And the Model S, and we're about to see the same thing with the Model 3, it's just like the cyclical nature of investing upfront in the auto

business. And so the -- they think people aren't getting is Tesla is a totally unique distribution model.

They have stores built by the same guy who designed the Apple stores. This means that with every new car, they just put it in the stores, they have to

build new stores. This is why the operating leverage turns when the Model 3 hits scale and that's when they're going to hit profitability.

NEWTON: Some people say that the reason retail investors like you are so interested in Tesla is that you just buy into Elon Musk, he's a celebrity,

CEO and that's why you like him, it really has nothing to do with the fundamentals because the fundamentals don't make sense.

RUSSELL: Yes, I mean, that's why people who I believe just aren't doing their homework. If you look under the hood, I mean, Tesla's cash-flows was

down 700 million this quarter, 655 million of that was capital investments to build our production lines.

This is actually not a very capital intensive business despite what you read. And you know, it's not that I believe in Elon, I believe in history

repeating itself, and history has shown that every single time Tesla launches a car, they make it free cash-flow positive.

It dominates the sector in terms of market share and that's what's going to happen again with the Model 3.

NEWTON: Oh, you are a very well spoken young man, I do think as I said though, you were the only person who wasn't annoyed by your question with

Elon Musk. We'll wait to see if we hear you on any other calls.

Do you think there will be any other calls?

RUSSELL: I really hope so.

NEWTON: OK, we'll be listening, thanks so much Gali, appreciate you coming in.

RUSSELL: Thanks.

NEWTON: Just in time though, now we do have a final recap of the stock market action. Tesla shares finished more than 5.5 percent -- I told you,

Gali, it cost you a 1,000 bucks.

Meantime, the Dow recovered from a 350-point drop and closed with yet eking out a small gain. Investors will want a much better Friday. That is QUEST

MEANS BUSINESS, I'm Paula Newton, I'll see you right back here again tomorrow.