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Industrial Giants Drive The Dow Higher; Strong U.S. Data Is Pushing Wall Street To New Records; The White House Is Pushing Back Against A Blockbuster Report That We All Woke Up To In This Morning's "New York Times;" Aston Martin's IPO Stalls Out; White House Defends Donald Trump's Attack On An Alleged Sexual Assault Victim, Christine Ford; Ronaldo Denies Rape Allegations; Chinese Actress Ordered to Pay $130 Million in Tax Penalties; New USMCA Free Trade Agreement Will Shut Out China; Magic Leap Unveils Its Mixed Reality Headset; CBS Senior Executive Placed On Administrative Leave; Pot Stocks Continue To Make Gains; Green Growth Brands Makes Plans For Cannabis Sector. Aired: 3-4p ET

Aired October 3, 2018 - 15:00   ET


RICHARD QUEST, CNN INTERNATIONAL HOST: We are an hour to the closing bell on Wall Street. What an interesting day it has been. The good gains that

we saw right at the open and throughout the day, they appear to be evaporating. The Dow was up by as much as 177, and the reason the gains

are holding though, such as they are, Caterpillar and Boeing, two of the biggest names on the Dow, the heaviest weights and they are sharply up,

Coke and P&G are down.

When you look at the market, this has been what's driving the day. Industrial giants drive the Dow higher, strong US data is pushing Wall

Street to new records. Follow the money - a huge "New York Times" investigation accuses Donald Trump of tax fraud. We'll be talking to one

of the reporters who did the investigation.

And Aston Martin's IPO stalls out. You'll hear from Chief Executive on this program. Live in the world's financial capital, New York City, on

Wednesday, October the 3rd, I'm Richard Quest, I mean business.

It's the rally that will not quit, although it might be running out of breath towards the close of play. Tonight, one of the world's most famous

investors tells us that we are not at the peak yet, but we are well into the cycle. Oh, I've got to bell now. Well, the Dow is off the highs of

the session with an hour left of trading, it is still heading for a new record and it's been boosted by some of the strong manufacturing numbers.

It's up almost 9 percent for the year to date, and in a moment you'll hear from the billionaire investor Howard Marks on how he's trading the market.

First, though, let us go to the trading post, the QUEST MEANS BUSINESS trading post. An overview of the Dow, the S&P and the NASDAQ.

And now throughout the course of the day, before we start, we must just check because last night, the Dow ended at a record, so although we've now

got 14 records on the Dow, 19 on the S&P, 29 on the NASDAQ, that was in record territory earlier for the S&P, but that's evaporated, and as we come

to the close in just an hour or so, the Dow is losing its momentum.

At one point, it was up more than 170 points; now it's just up 55. The S&P could even turn negative before the close. Only the NASDAQ seems willing

to hold on to the gains with the tech stocks.

So, with records being falling, the worries about the future, speaking to me on the "EXPRESS" on trade and said this rally is still being driven by a

strong US economy.


ALAN VALDES, SENIOR PARTNER, SILVERBEAR CAPITAL: The big number was the ISM number - the manufacturing - our non foreign manufacturing number. It

was great, it really was. It was the highest level ever that shows a real strong economy, not only for this year, but probably into next.

QUEST: That would clearly suggest the reason why the bond, when the ISM number came up, you've been up about three or five basis points, now, it's

up over 60 and it's over 3.1 percent.

VALDES: Correct.

QUEST: So the 10-year treasury is suggesting higher rates.

VALDES: Correct and it's going to happen. I mean, if you look at what the Feds have been saying, if you look at the strong market, you know rates are

going to go up, maybe two more times this year.


VALDES: Maybe, you don't know.

QUEST: One is what they've been talking about.

VALDES: Well, it's the same one, but it's getting stronger by the day here, it really is. So we'll have to wait and see.


QUEST: Now that ISM number, the manufacturing data show - is at its highest level and the payroll number was good and that is what's driven the

market so far, but it begs the question why those gains have slipped away as the session went on.

Overall, taking a look at the records, you've got quite a moderate amount, nine, one and two for European, many more in the US, which begs the

question on this side, where are we in the cycle?

The billionaire investor Howard Marks says while you don't want to miss out on the rally, it's time to start preparing for what's next. Now, Howard

Marks is a legend in the investment community. His Oaktree memos are some of the most closely watched reports on Wall Street. He joined me on the

floor of the exchange and said, now, looking at the cycle, it's time to get defensive.


HOWARD MARKS, CO-CHAIRMAN, OAKTREE CAPITAL: You have to know where you are in the cycle. That has implications for where you're going. It doesn't

tell you where we're going, but it shifts the probability.

QUEST: Give me an example.

MARKS: Well, you know, nine years ago, in '09, we were at the bottom of the cycle and everybody was depressed emotionally, financially,

economically and when you're low in the cycle, it shifts the probability distribution of future returns favorably.


MARKS: It makes it easy to make money, hard to lose money, that was the lesson of '09. Now, the question is, where are we today?

QUEST: And taking your last answer, one would assume, we're late in the cycle.


QUEST: Therefore, the probability has shifted the other way harder.

MARKS: Exactly.

QUEST: -- to do, therefore, what strategy do you adopt and to implement particularly as you said in your recent note, tech stocks for example which

you described as being very highly priced.

MARKS: Well, you know, everything you want to do in the markets -- stocks, bonds et cetera -- there are aggressive and defensive ways to do them. If

we are elevated in the cycle, if the probability distribution of future returns has shifted unfavorably, then I think we want to do things in a

defensive way and that means ..

QUEST: And would you think that's where we are the moment, that we are at an elevated level and we should be adopting a more defensive strategy.

MARKS: Elevated. This is not - I am not saying get out. I am not saying evade, I am not saying a dangerous bubble, but I think we are well above

the midpoint of fair value and if that is true, if we are selling - if things are priced full relative to intrinsic value, then I think that

defense is more important than offense.

QUEST: Explain then what a defense looks like in terms of an individual investment strategy?

MARKS: Well, you might want higher quality stocks, lower valuations, defensive industries. These are all ways to implement defense.

QUEST: Fascinating, so this is a way of remaining fully invested in equities.

MARKS: Exactly.

QUEST: But at the same time, basically taking a safer - going to some thicker rise.

MARKS: Exactly. I think that being out of the market is pretty dangerous today. And I think it would be a mistake to raise cash, but I do think

it's not a bad time to shift toward defense.


QUEST: The White House is pushing back against a blockbuster report that we all woke up to in this morning's "New York Times." It is a report about

Donald Trump's taxes, and while state authorities are opening a review into President Trump's taxes, in a moment, we will speak to one of the authors

of this report.

So, it's extraordinary, the sheer length and depth of this. It's a report in the "New York Times" that covers eight and a half pages and it refutes

the image of Donald Trump as being a self-made billionaire who's hid it all on the back of a million dollar loan from his father, Fred Trump.

But more seriously than ego and pride, it alleges tax dodging, that's their words and outright fraud. In today's dollars, if you look at what you've

got now, Fred Trump - that's Donald Trump's father - transferred $413 million to his son over the lifetime, $413 million in today's dollars. So,

he'd already given him $200,000.00 a year by age three.

Donald Trump was therefore, by all of this money, a millionaire by age eight. The biggest payday came in 2004. Now, putting it all together, you

can see part owner receiving a million a year, amassed $9 million, largest payday $236 million.

Russ Buettner put together the pieces. He is the investigative reporter and your byline is on the article. Congratulations, sir.


QUEST: Essentially, what they were doing, if I read it correctly was laundering money.

BUETTNER: That's an interesting interpretation. I mean, there were several prongs to this. One of them, you're right, it does look a bit like

that. There's loans that Donald borrowed - money he had borrowed from his father that he didn't pay back, converted that into investment in one of

his projects, then his father wrote it off as a loss. That does sort of look like they just washed away that loan.

There's other things where they're invoice padding, as a way to just pass money through to the kids, and then there's sort of very aggressive,

perhaps fraudulent tax maneuvers just on their own where they are undervaluing their father's property in order to take them through trust,

with as little money changing hands as possible.

QUEST: So the goal here throughout was you allege to move the money to the children without having to pay gift tax, inheritance tax eventually or any

other form of income tax at a higher rate?

BUETTNER: That's exactly right. Their father was a billionaire by any standards, by modern standards and certainly, at a fairly young age and

they started trying to plan to move that through to the kids. If they wait until he dies, that's a 55 percent estate tax at a point in time.

QUEST: When I was reading it this morning, and I'll frank, I haven't finished it because I want to digest it in great detail, but you do say on

Page 11, "Fred Trump was relentless and creative in finding ways to channel this wealth to his children."


BUETTNER: It's an amazing thing. We found 295 unique streams of income from Donald Trump's father to him. When he was three, his father gave him

land -- and his siblings -- land under one of his building projects and then signed hundred year leases to pay them every year for the rest of

their lives and beyond to rent the land on the buildings he had built.

He treated them like bankers where he pretended to borrow money from them and they collected interest on them

QUEST: How much of all of this should have reputable set of accountants said, stop this now. This is not valid.

BUETTNER: There are some key junctures where they were doing things, as you said, an accountant should have done it. One of them was the project

that I mentioned where there was an investment in Trump Palace that his father wrote off as a complete loss. That's just flat out not allowable to

write off a loss in an investment in a related party.

QUEST: But things like the boiler contract where that was a straightforward example of padding an invoice, marking it up to basically

extract money from a subsidiary at a lower rate.

BUETTNER: That's exactly right, and then they also used those inflated bills to apply for rent increases on their rate regulated apartments, which

then passed along a punishing rent increase to their tenants.

QUEST: I'm just going to take a punt for this because - on this question for you - it's important stuff. You spent 18 months looking at it. It was

obviously extremely difficult, but what do you hope it says or shows? That some Americans didn't - I mean, many people already knew that there was

something probably dodgy in the tax affairs of the President and his family, so what do you hope it shows more then?

BUETTNER: I don't think we pursue these things hoping for some certain outcome. We pursue them because we are curious and it seems like an

incredibly un-mined part of his life, one that he's misled people about for his entire life really, and we want to explore what the truth is and then

people maybe, what we hope, the most we hope is that when people are making decisions about how they want to evaluate who he is, to have some real

information to deal with.

QUEST: Right, now, do you think that makes any difference to the core Trump voter, the fact that he and his father may have swindled on their


BUETTNER: I haven't seen any evidence that the core Trump voters are much interested in anything that has to do with him that runs counter to their

support of him. He has a very strong base of support as we've all seen and we see that repeatedly.

QUEST: Extraordinary. Thank you.

BUETTNER: Thank you, sir.

QUEST: Award winning. Thank you very much. Now, to help us understand the legal trouble that the President of the United States may be facing,

Shan Wu is a former counsel to the US Attorney General and a CNN legal analyst. Well, you've obviously read at least a good portion of this. How

much culpability - forget pride, ego and whether it's simply embarrassing, but legal culpability, bearing in mind the New York state tax authorities

are looking into it. What's the liability for the President?

SHAN WU, FORMER COUNSEL TO THE U.S. ATTORNEY GENERAL: Most likely, the liability is going to be a civil one. There is not going to be a statute

of limitations on either the Federal tax authorities or the state's going back to see if there was an underpayment of taxes. They are quite

relentless in their own way on that front.

On the criminal front, much more difficult. There is going to be statute of limitations. Many of these actions are quite outdated in terms of being

able to prosecute them and perhaps, most importantly on the criminal front, there is going to be walls and layers and more walls and layers of defenses

in terms of accountants, lawyers who may have brought in things like these are quite complex.

I mean, there is a tremendous job of investigative reporting to explain in plain English for people like me to understand. If that were to go to

court in a criminal investigation, it would just be armies of accountants defending that these were discretionary, these were creative ideas, very

difficult case to criminally prosecute.

QUEST: Donald Trump has never released his tax returns claiming that he was being ordered and therefore, he would only release them after the audit

and then into the first few weeks of his election, basically he said, no, you're not going to get them at all. Does it matter? Does it matter do

you think if the President of the United States has been involved in shady tax affairs?

WU: I think it does matter. I think the great value in stories like this is it kind of deconstructs the mythology about this idea that he is a self-

made man, and politically, as opposed to legally forces him ultimately to release those tax returns in conjunction with things like Michael Cohen

turning government evidence, there may be more current illegalities that surface because of that, so disclosure of those tax returns is not only

just to a political egg in the face for him, but I think that does potentially cause criminal liability possibly.


QUEST: And can the United States population be assured that the IRS won't be instructed to ignore this. I mean, yes, it is independent, but at the

same time, a lot of those people who would be controlling and making decisions are political appointees.

WU: Absolutely. I think that's a very valid concern at that level. It's quite possible that there could be some type of direction. It would need

to be not very overt. I think that the structure of these institutions, if there is a direct order like don't do this, don't look into this, that's

not going to go all too well, but there can be subtle pressure for Donald Trump.

QUEST: I have to say, it won't be as vulgar as though - it is who will get rid of this troublesome priest or whatever that is called. Good to see

you, sir. Thank you.

WU: Thank you.

QUEST: Aston Martin is James Bond's car of choice. Today's IPO left investors neither shaken nor stirred.

Before we go much further, please do go and get your device, your phone, your laptop. We are going to be asking you to go to to engage

and give us some direction, some guidance and some thoughts, and some views and it is all about the automobile industry, because there's

plenty going on in the automobile and the automotive world.

Let's join me and welcome to Quest Motors where we've got a nice little runner for you. Look what we've got in the garage, Honda is joining forces

with General Motors on self-driving cars. The Japanese giant is investing $2 billion in GM's autonomous vehicle division which is called Cruise.

Now, there are other aspects, open the door again, we've got Daimler and Renault say they may cooperate on autonomous cars and battery technology

and wanting to know why they are getting together, well, Renault says it is seeing extra demand for electric vehicles and sees value in doing a deal

with Daimler.

Oh yes, and Aston Martin right at the front of the garage. Aston Martin had its market debut in London today on the stock exchange, however, the

stock did fall as much as 7 percent during the session. It closed nearly 5 percent below the IPO but investors are happy at the valuation, which

initially puts Aston Martin on part with Ferrari, which brings us to our cost - our question. Buying electric car stock --


QUEST: -- costs a lot less than buying the luxury car itself. So, which of the three cars that are traded - which of the three car companies that

are traded in the market would you want to drive home? Which would you want to drive home? Would you want to drive home a Tesla? Would you want

to drive home a Ferrari? Or would you want to drive home an Aston Martin?

And related to that question, which of the stock would you be most interested in owning? The Aston Martin? The Ferrari? And the Tesla?

Working on the unproven principle that you would prefer to own the stock of the car that you're driving.

Those are the three, is the choice that we want to make. You'll see the results in just a moment after we've heard from the Aston

Martin Chief Executive who tells Anna Stewart that he is focused on the long game rather than Day One, and listen for the hint about the question

on the next James Bond film.


ANDY PALMER, CHIEF EXECUTIVE, ASTON MARTIN: This was never ever an IPO about the short term. From the very beginning in the road show and in the

350 investors that I met, it's all about the long term. You have to look at the long term. You can find comparisons and you can look at Ferrari and

say, we don't compare to them today and that's basically true.

But the question is about looking forward, looking through the 7 x 7 plan and looking at the execution of that plan and thinking about where we will

get to, so it's very much a long term investment plan, a very much long term investment, investment and you know, in today's trading and in trading

in the first few hours, I don't think you can judge success or failure based upon that.

ANNA STEWART, CNN CORRESPONDENT: Now, since we last spoke, Brexit negotiations haven't really gone anywhere. You could say they've got

worse. Are you ramping up your contingency plans, you know, where having those components, I know you import most of your components.

PALMER: Look, our assumption, our working assumption is it will be a hard Brexit and we are preparing everything on the basis of a hard Brexit and

that means that we've taken our days of working stock from three days to five days. If you think about the two weekends on either side, that means

that we can go - today, we can go nine days without supply.

In addition to that because we are a relatively small manufacturer, obviously, we have the option of using different ports of entry and also

flying goods in. It's not something that I particularly want to do and for sure, if we go nine days with parts stuck at the ports, there's going to be

an awful lot of other car companies in an awful lot more trouble than us, but we do have that contingency to fly if we need to.

STEWART: We got a big announcement today from Honda, they are investing some $2.75 billion in GM's self-driving unit. Now, I know you want to

compete in this space and did announce a concept car, a driverless concept car, but how can you compete. Your such a minnow compared to these big

players with big investments.

PALMER: You know, it's very funny. When I joined Aston four years ago, generally, the rhetoric was, you can't possibly compete unless you are part

of a big car company. Now, of course, Ferrari have successfully spun off as a small unit and are being very successful - Aston today.

And the rhetoric I hear out there right now is, the others, the Porsche's, the Bentley's, the Lamborghini's of the world, they should consider going

public. A complete reversal in a short space of time. I think what's important is that you - if you're going to be a low volume manufacturer, a

luxury manufacturer, you need to be nimble and agile and you get that from being small and independent.

But you also need access to technology and of course, basically, we access that technology though partnership in particular partnership with Daimler

on the one hand for our V8 engines and our electrical systems and on the other hand, Red Bull - and Red Bull Racing in particular for the very high

end sports cars, the Valkyrie and the son of the Valkyrie that we announced just a week ago.

STEWART: Do you think all customers actually want to drive a driverless car considering you're a sports car company, surely, most of the fans

aren't actually driving it.

PALMER: No, absolutely. Look, we are not in a rush. The industry categorizes autonomous driving broadly speaking into five categories. Most

of the industry today is at tier one or perhaps tier two and that's really drivers assistance and likewise Aston is accessing that level on its

current and future cars.


PALMER: We are philosophically against level three, almost to the point of saying that it is reckless, so level four is the ability for a car to drive

itself and not to hand back controls to the customer. I don't see Aston needing to move into that space any time soon, but interestingly of course,

Lagonda, which is our other wing, which is more about chauffer driven cars, the opportunity to go from a carbon based chauffer to a digital based

chauffer with level four and level five is interesting in the future and obviously, that's technology that we are looking at.

STEWART: Now, there are reports that James Bond may switch back to a Lotus car for the next film. Have you got any news on this and how disappointing

would that be for a brand so closely married to that film?

PALMER: Well, I can confirm that Aston Martin will be collaborating in the next chapter of Bond, so read from that what you will.


QUEST: What a battle? I mean, this is extraordinary, so when we started, it was Ferrari clearly in the lead, vroom-vroom, but then,

hmm, Tesla seems to have moved, it has roared ahead, so when asked the best value luxury car which you'd like to drive, Tesla 42 percent of you say

that, 31 percent are Aston Martin and only 27 percent are going for Ferrari. Surprised at that result.

There's more to the market there than luxury cars. Later in the program I'll be speaking to the Chief Executive of the marijuana company, Green

Growth Brands. Now, on the program, there's been a lot of hype around marijuana stocks, so as you look at how you would invest, what's your

preference? Never mind the Ferraris and the Aston Martins, if you have a choice, do you prefer marijuana stocks, Bitcoin or luxury car stocks or are

you getting out of the market and buying a luxury car instead? is where you can answer that particular question and we will

look at the results later in the program.

For the President, the focus is on China; while US voters, the emphasis on the upcoming midterm elections, and a likely candidate is emerging as the

Democratic Party's new star.


[15:30:00] QUEST: Hello, I'm Richard Quest, there is more QUEST MEANS BUSINESS in just a moment. But a small clause in the new NAFTA agreement

are the USMCA is raising eyebrows in Beijing. I'll speak to the former U.S. ambassador to China, who also of course has great knowledge on the

border between the U.S. and Canada.

And we'll talk to chief executive who's gone from Victoria's Secret, the world of pop stocks, as you and I continue tonight, this is Cnn, and on

this network, the facts always come first. The White House is defending Donald Trump's attack on an alleged sexual assault victim, saying, he was

merely stating facts.

Mr. Trump seem to mock Christine Blasey Ford at the political rally. The FBI investigates her allegations of the Supreme Court nominee Brett

Kavanaugh assaulted her when they were teenagers. The football superstar Cristiano Ronaldo is denying rape allegations made against him by an

American woman.

"Rape goes against everything I believe in", he said. According to her lawsuit, Kathryn Mayorga alleges Ronaldo raped her in a Las Vegas hotel

room in 2009. Chinese actress Fan Bingbing has been admitted -- has admitted to being part of a major tax evasion scheme. She's been ordered

to pay $113 million in penalties.

Bingbing has been missing for three months while the investigation was ongoing. It's not clear if she was under arrest or just in hiding. It's a

very long agreement, but a clause in President Trump's new NAFTA or the USMCA, it's actually clause 32.10, subsection 1, it's the last -- second to

last clause of the agreement. But this subsection is called non-market country FDA, and it could prevent Canada and Mexico from doing free trade

deals with China.

Now, the Canadian Prime Minister Justin Trudeau is saying that Canada will continue to look for trading opportunities with Beijing. It's a

fascinating conundrum. Max Baucus is the Senator from Montana which shares a long border with Canada and also U.S. ambassador to China. Good to see

you, sir.

MAX BAUCUS, FORMER U.S. AMBASSADOR TO CHINA: Good to see you, Richard, thank you --

QUEST: First, on these exceptions which trade experts say it's extremely - - it's not unusual to have sort of like exclusions, but to have it like this where if anybody goes into an agreement or gives notice, this one

falls, USMCA falls.

BAUCUS: The devil is in the details. This is one detail that's very important, it very much bothers the Chinese, obviously. And frankly, it's

just one more a bit of evidence out in the United States is trying to develop its economy in North America and try to bring many countries

together to gang up against China.

QUEST: Because it's a -- it's a bit uncertain because it also says that look, if this agreement falls because of this section, a bilateral

agreement would be automatically be put in place between the various parties which reinforces the administration's wish for bilateral rather

than trilateral or multilateral deals.

It's almost as if the U.S. is hoping this fails.

BAUCUS: Well, I don't think they hope it fails. I think they're trying to gang up on China, it is pretty clear, and President Trump says he wants to

level the playing field, I understand that, I agree with him. He also says he wants to contain China, he wants to stop Chinese rise. I don't agree

with that, I think that's a non-starter.

China is going to dig in its heels, they're going to be very upset with that, and this clause here is in that direction.

QUEST: OK, but he said at his impromptu press conference in the Rose Garden early this week, he said the time is not right for talks with China.

Do you think that's true?

BAUCUS: This was a concern. I am very concerned about the widening chasm and the deeper chasm between the U.S. and China. In many respects, we're

approaching a new kind of cold war.

[15:35:00] The old cold war with the Soviet Union was nukes, this time it's more economic and it's high-tech and it's -- that's the direction

we're headed. Trump -- Mr. President Trump, I think thinks he can bully China into subservient or at least acquiescence is not going to work. I

think you should not do that or rather work with our allies or try to, you know, coordinate basis get more pressure on China.

QUEST: You mean, the allies that he's already offended --

BAUCUS: Well, does offend --

QUEST: By calling --


QUEST: For example Justin Trudeau dishonest and weak.

BAUCUS: Yes --

QUEST: Angela Merkel who he said basically the electorate was against --

BAUCUS: Right --

QUEST: And Theresa May who he said had ignored his Brexit advice and was going down the wrong road.

BAUCUS: Those same allies, that's right, at least he's going to have to backtrack a little bit if he wants to be effective with China.

QUEST: My next question is with respect. You say that he's adopting the wrong approach to China. But with respect, you are a politician and a

diplomat. He would say I'm a businessman doing a deal and I'm in negotiations and this is how they negotiate, and people like you gave away

the shot.

BAUCUS: It's too public, I think to be more effective, if he did engage in diplomacy with tweets, or rather he sits down privately with President Xi

and his people privately with the correspondents of negotiators in China say, hey, we've got a problem here. You've got to do this or we're going

to retaliate.

QUEST: With your contacts in China, how are they viewing what the U.S. administration is doing?

BAUCUS: They're very concerned because they don't know who to talk to. They can't talk to Mnuchin, they can't talk to Navarro, they can't talk to

Lighthizer because they believe that none of them really have Trump's confidence or if they do talk to him, Trump is going to undermine them, so

they don't know who to talk to.

QUEST: And do they worry at the escalation of tariffs against more of Chinese exports because already as you know, the Chinese economy is --

BAUCUS: Right --

QUEST: Suffering --

BAUCUS: Right. Of course, they're concerned, but Chinese can withstand almost limitless pain. They -- that's their history. This strategy of

trying to force China to bend, to acquiesce, to capitulate and my judgments is not going to work. Is like they're nationalistic too.

You gang up on China, they say, oh, wait a minute, we're Chinese, you can't take advantage of us like that. It's not going to work. You've got to

work with our allies as Trump has not done a very good job doing, then we could start to get China's attention.

QUEST: And do you think that farmers and ranchers in Montana and the mid- west as well will be prepared to have the same fortitude as commodity prices hit them.

BAUCUS: Yes --

QUEST: Let's face it, the amount of money that the Department of Agriculture has put on the table is not sufficient.

BAUCUS: Right. The jury is out, they're waiting to see. Can maybe Trump get something past its -- alleviate some of their current pain. They're

going to wait and see.

QUEST: Really, good to have you on that --

BAUCUS: Thank you too --

QUEST: Thank you very much for coming in --

BAUCUS: I'm glad to --

QUEST: Much appreciate it, thank you. It took eight years to develop, now, a tech company called Magic Leap is banking on a future where we can

all interact with holographic work in the living room, Samuel Burke will show us the holographs and the art (INAUDIBLE), what is he wearing? After

the break.


QUEST: It was one of the great mysteries in augmented reality. What is magically working on? Magically, now we know. The secretive company wants

to put augmented reality at our finger-tips. If you played Pokemon Go, you're already familiar with the idea of augmented reality.

Pokemon characters overlaid on the real world. Amazon uses augmented reality to show you what its product will look like in your home. Very

cleverly done. And we're not against using a bit of augmented reality, AI here on QUEST MEANS BUSINESS as we've shown them some pioneering work in

the business.

Look at this, dropping giant crates to explain certain trade details, now you had -- all turning our entire set into a tennis court to explain the

back and forth in Brexit negotiations. And I assure you, we nearly broke a few light bulbs, real ones on the way. Now, Magic Leap wants to take us

further, allowing us to interact with virtual objects.

The company has raised millions of dollars for investors and CNN's Samuel Burke has been to, to discover more.


SAMUEL BURKE, CNN BUSINESS AND TECHNOLOGY CORRESPONDENT (voice-over): Inside the world's oldest working film studio. A new generation of digital

characters like this guy are coming to life.

ANDY SERKIS, ACTOR: I don't know who to relate to right now. I mean, you're looking great, I have to say --

BURKE: I bopped up a bit --

SERKIS: Yes, you've done the work.

BURKE: Who is this guy?

SERKIS: This is a character called Grushneck(ph), he's a bit of a digital no-hoper basically. He was a piece of concert art work that never made the


BURKE: Actor Andy Serkis is a motion capture superstar known for his role as in "Lord of the Rings" and "Planet of the Apes".

UNIDENTIFIED MALE: Do not come back.

BURKE: Now, he and his team are creating custom creatures for a new media, mixed reality.

SERKIS: It's really the beginning of a whole new realm of storytelling.

BURKE: First came virtual reality immersing you in a digital environment. Then augmented reality like Pokemon Go projecting digital objects onto the

real world. In mixed reality, digital conshohocken(ph) like Grushneck(ph) inker themselves in the real world.

OK, so now there's that character right there on the table, his feet are right there on the table. American startup Magic Leap is developing

headsets that allow you to see the world in this mixed reality.

(on camera): This character is aware of the world --


BURKE (voice-over): Can interact with the world, he's also more important aware of you where you're looking and him interact review. So right now,

the goggles are processing the I am stepping back. That's all being calculated --

UNIDENTIFIED MALE: Yes, absolutely, the little camera inside though that look like they're reading your eyes.

BURKE: Magic Leap backed by billions from investors like Google, JPMorgan and Cnn parent company AT&T. And visions of future where instead of

looking down at your phone, your mixed reality glasses and one day a contact lens will project tools like Google maps on the road in front of


(on camera): How far away are we from that?

UNIDENTIFIED MALE: From that version of what we're doing --

BURKE: Yes --

UNIDENTIFIED MALE: That's on our road map. I mean, honestly --

BURKE: Can use 20 years?

UNIDENTIFIED MALE: No, I think a step change of two, three, five, ten years.

BURKE (voice-over): For now, virtual augmented and mixed reality headsets are still bulky and pricy. Magic Leap costs more than $2,000 and took

eight years to develop.

UNIDENTIFIED MALE: It's a big task, you know, it's only going to get better.

BURKE: Giving Serkis plenty of time to let his imagination run wild.

SERKIS: Put some energy into it, bring out the fear, bring out the fear in him. You're panicking or you can say things, go --

BURKE: We're going to get out of here! I'll leave that to you.


Samuel Burke, CNN, London.


QUEST: Breaking news to bring you tonight, a CBS senior executive has been placed on administrative leave following allegations of sexual and

homophobic language in the workplace. CNN's Chloe Melas broke the story, now and joins me.

[15:45:00] So who and what is he alleged to have done?

CHLOE MELAS, CNN ENTERTAINMENT REPORTER: So Vincent Vinnie Favale; he is the Senior Vice President of Talent at CBS, and for years before his

current role, he oversaw the "Late Show" with David Letterman and the "Late Show" with Stephen Colbert who took over from Letterman in 2015.

So we spoke to current and former employees of the "Late Show", with Stephen Colbert, we spoke to nine of them, who spoke to Cnn and said that

Favale would sexist, misogynistic and sexual comments in the work place including homophobic language such as calling people gay and homos who were

clearly heterosexual.

Calling guests that were going to be booked on the show, saying that women looked like men and they weren't attractive enough to be on the show. And

also talking about having erections and things like that in meetings in front of men and women, there weren't aside.


MELAS: Thinks that.

QUEST: CBS is --

MELAS: CBS now has said that they don't condone this type of behavior in the work place, and that they have placed him on a leave of absence while

they investigate it further.

QUEST: Now, Favale says "allegations I've retaliated against any one in any fashion, a 100 percent false. I've spent my entire career working at

comedy shows -- and this is a key point here, where there has always been a wide latitude to make transgressive jokes while preparing the program."

Isn't there a certain reality in what he says, you know, in the production of any of our programs, people get a bit ribbled and sometimes a bit far-


MELAS: There's definitely things, Richard that people say behind closed doors, and the idea that an executive might want an attractive person on a

TV show isn't totally out of left field. But the thing is though, is that this is an extreme situation here.

These just weren't aside remarks, these are things said in show rehearsals, in meetings that were very derogatory and degrading. And another point I

want to point out is several people went to HR and filed formal complaint. CBS ended up promoting him in 2017 despite the complaints to human


And it looks as though this was a persistent problem, and you know, again, in light of this Me Too movement that we're living in, in light of Les

Moonves having to step down and other people at CBS like Jeff Fager and Charlie Rose, this is just the latest in that.

Now, look, he was one of the founders of "Comedy Central", he was and has been a good friend of Howard Stern and has been on the Howard Stern radio -


QUEST: So we shouldn't be --

MELAS: Many times --

QUEST: So we shouldn't be surprised, I'm not saying it justifies, but we shouldn't be surprised when he says these jokes attributed to me are being

taken out of context and were not said in the way being presented here --

MELAS: Well, here's the question --

QUEST: Well, begs the question, whether we are talking of an issue of context --

MELAS: Well, here's the thing, I have the full context it seems because I have spoken to multiple different employees who would hear the same thing.

So it wasn't just one person who would tell us a story, it was multiple people that were in these meetings, when talking about a group called the

Girdler Girls(ph); a group of artists, female activists to go on the "Late Show" with Stephen Colbert a few years ago.

He said we should cut their mic. When talking about Gloria Steinem, he said that she was not a hot enough feminist to be on the show. When

talking about Rachel Maddow from MSNBC whether or not she should be booked to appear on the show because he has control and say who could be on the


He said she looked like a man. And to talk about having an erection while watching Jennifer Hudson perform during a rehearsal, it was allegedly said

in front of a standard and practices representative for CBS, that some of the comments he made were made in front of CBS attorneys who were in

control rooms or rehearsals.

And I also would just want to point out quickly, Richard, is that, he was known to talk about his close relationship with Les Moonves. And as far as

I know, it looks as though Les Moonves was protecting him until now.

QUEST: Superb enterprise reporting.

MELAS: Thank you.

QUEST: You're going to ring the bell.


Thank you. As we continue tonight after the break, the Dow is at an all- time high, it's not alone, pot stocks continue to climb in a sector(ph) pot, that knows(ph) investors. And your views, We're

asking you what you would like to invest in if you had your choice, would you invest in pot stocks, bitcoin, luxury cars stocks or luxury cars


And so far, most of you would like to have to read that.


QUEST: There's another record high for the Dow today, and it is not the only thing that's high and rising, one marijuana ETF is at nearly three

percent on the day, it tracks various companies in the pot industry. Now, it doesn't mean we have totally seen explosive growth for weed stocks so

far this year.

Some of them have been up almost 200 percent, 300 percent. Green Growth Brands has completely a major refunding fundraising to buy -- create

industry, beat cannabis brands. In the U.S. and Canada, Peter Horvath is the chief executive of Green Growth Brands. Good to see you.

Your brands or previous and back branded goods, the retailers Victoria's Secret and American Eagle Outfitters.


QUEST: So you've gone from clothes and skimpy clothes at that, to pot.

HORVATH: Yes, well, it's an explosive market as you know. You know, we're looking 28 billion growth in the next five years. Fourteen million new

consumers in my life in retail, wears have ever been that explosive growth.

QUEST: Except it's illegal by the federal government --


QUEST: In the United States --

HORVATH: Yes, there's paradox --

QUEST: And it could be paradox which --


QUEST: Creates enormous difficulty --


QUEST: For anybody involved in the industry on the banking sector which still isn't comfortable about moving out the money. Transportation,

taxation --

HORVATH: Right --

QUEST: So, you've got this stock and you've got this trade and you've got this product, but it's illegal by federal government standards.

HORVATH: That's true, yes, but I think there's an act out there called the States Act that hopefully something like that will pass in the future. It

was allegedly supported by president, the President Trump and bipartisan. We're hoping something like that passes to eliminate the paradox because

there are people who need access to this product.

There are people who need that gap between Ibuprofen and opioids filled by alternative therapies. And I think on the recreational side, there's big


QUEST: Right, now, let's just pull that --


QUEST: To the two sides. There's a difference in argument, maybe not, you'll disagree between the medical marijuana argument and the recreation

marijuana, isn't that?

HORVATH: Well, I think they're just different states, I think they're different status. Most states that have gone medical have eventually gone

recreational, and in California, the demographic in California which was taken when it was medical is that the average was 40-year-old -- most

likely, it will be 40-year-old female with $100,000 household income.

It's not what people think of when they think of cannabis in the recreational fold. The reality is, it's wellness therapy, it's just like

alcohol to release alternative and it can be very healthy for your lifestyle.

[15:55:00] QUEST: We all know that the market loves --


QUEST: At the moment, if you look at some of the examples --


QUEST: For example, you're on the Toronto Exchange --

HORVATH: I will be trading --

QUEST: You will be trading --

HORVATH: In November. But yes, I'm with you, I've been watching, there's $80 billion of aggregate value in cannabis stocks up in Canada now. And

it's hard to imagine --

QUEST: But Canada -- the investments in Canada --


QUEST: Are being used as a proxy for the United States because you can't invest in the U.S.

HORVATH: Well, there are -- most of those stocks, the biggest market caps are cultivators in Canada.

QUEST: Let's have a look at our question that we ask? We asked, where would you put your money, in marijuana stocks, bitcoin, luxury cars or

luxury cars themselves. I'm guessing you're not surprised that 60 percent go for marijuana stocks.

HORVATH: It's amazing, isn't it? It's incredible. I'm watching it, it's beyond believe.

QUEST: As your company progresses, would you please come back and talk more about in the future?

HORVATH: Absolutely, thank you, Richard.

QUEST: Good, which is more interesting --


QUEST: Running a company with pot or skimpy lingerie?

HORVATH: Right now, I'd say it's running a company with pot, absolutely.

QUEST: What a choice to make. Which brings me to tell you that we'll have our profitable moment after the break.


QUEST: Tonight's profitable moment, George Orwell said that "journalism is printing something that somebody else doesn't want printed. Everything

else is public relations." And that seems to be true when it comes to the "New York Times" story that you see here.

It really is not every day that you see eight pages of reporting on a single story. Eighteen months to do it. And now really, it's up to the

rest of us all to follow up with the issues of -- with President Trump and the taxes, what was legitimate, what was not?

What was bothering on fraud and what was simply illegal. It happen years ago, but for a president, it has consistently refused to release its tax

returns against the convention of the day, but it really does beg the question of why and now we seem to know the reasons.

There was plenty there and plenty more to be uncovered. And that is QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York. Whatever

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


The Dow is still at a record, the bell is ringing, the day as they say is done.