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The Talks May Be Constructive, But The Tariffs Have Gone On And Stocks Are Fighting Back; Uber Premiered On The New York Stock Exchange This Morning; Elon Musk Pokes Fun at Jeff Bezos' New Space Plan; Former Russian Oligarch Mikhail Khodorkovsky Tells Richard Quest Russia May Never Be a Good Investment; Dow Pares Losses After U.S. Calls China Talks "Constructive". Aired 3-4p ET

Aired May 10, 2019 - 15:00   ET


RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: The last hour of trade on Wall Street. Do not expect me to explain this sort of

weirdness. We go all the way down at 11:30. We come all the way back up again. We bounce around, and we're now actually positive having been more

than 400 points down. Now we're gradually up 55 points.

If that isn't weird enough, Uber came to market today. It is under its IPO price. The markets have been betwixt and between, and these are the

reasons why.

Tariffs, tariffs, tariffs. The talks may be constructive, but the tariffs have gone on and stocks are fighting back from a 350-point drop.

No surge pricing for Uber, there wasn't a pop in sight. The year's biggest IPO is struggling. It's actually below its IPO price.

And pick on someone your own size, Elon Musk is trolling Jeff Bezos on Twitter.

We are, of course, live in the world's financial capital, New York City on Friday. It is the 10th of May, end of the week. I am Richard Quest, I

mean business.

Midnight came and midnight went and the tariffs are here. The markets have spoken. In the final hour trade, stocks are inching higher, and it needs

to be explained and understood.

Perhaps the damage of the new tariffs on $200 billion increasing from 10 percent to 25 percent, perhaps, the effect won't be as bad as had been


The Dow now is following the same path it has all week. Sharply lower in the morning, followed by a mid-session and late recovery. The trade talks

themselves wrapped up in Washington without a deal and investors cling to the hope that an agreement can be reached.

The US Treasury Secretary Steve Mnuchin says the talks were constructive. Donald Trump is in celebratory mood. The tweet said, "Tariffs will make

our country much stronger, not weaker. Just sit back and watch." Abby Phillip is at the White House. We need to parse this into one, two, three.

First of all, the talks are over described as constructive, but no agreement.

ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: No breakthrough in those talks from yesterday and this morning. They finished up around midday

today with both sides seemingly cordial, but there's clearly no breakthrough toward ending this tariff war that has been going on for

months now.

And we haven't gotten any indication that President Trump and Chinese President Xi Jinping have actually spoken. Now, this is one of those

indicators that it is somewhat unusual, but in the case of these two leaders, they like to deal one-on-one.

President Trump in particular likes to deal with his counterparts, and sometimes these conversations have been seen as efforts to break through

log jams in the negotiations between the people underneath them people like Steve Mnuchin and Liu He.

So in this case, I think both parties are agreeing that there's not really any breakthrough going on and President Trump is upping the pressure on the

Chinese, making it clear to them that he is not going to back away from his tariff strategy.

He believes that even though this will hurt both economies probably over the long term, the U.S. economy is so strong that they can withstand that.

So he is telling China, this is going to hurt you more than it's going to hurt us. And in fact, I'm willing to do even more down the road. That is

a clear message to Xi Jinping that it is time for them to really be willing to come to the table on this.

QUEST: Abby, thank you for bringing us up to date. We've got the picture now from how the talks have finished and in Washington, we need to

understand exactly what's behind it.

The President has for years repeated his claim that these tariffs force Beijing to pay vast sums of money to the U.S. Treasury and they hurt China

whilst benefiting the United States.

Well, is this actually the case when you put it into context? Do the tariffs put on Chinese goods actually hurt China and are paid for by the

Chinese? The President this week tweeted, "I'm very happy with over $100 billion a year in tariffs filling us coffers for the U.S. Not good for

China." But what's the reality?

All right, this is the reality. The reality is the Chinese -- China pays none of these tariffs directly.

[15:05:13] QUEST: China sends the goods from China to the United States. However, at the border, here, the importer, not the exporter -- the

importer pays the tariff. It is the U.S. manufacturer, or the U.S. importer that is paying that bill. The increase -- 25 percent. What do

they do with it? They either hold it and reduce their own margins, cut back their profits, or they pass it on, they raise -- simply raise the

goods to the U.S. consumers.

At the shopping mall or the grocery store, the U.S. consumer pays more and picks up the tab. Money is definitely filling U.S. coffers. But it's

coming from the Americans pockets, not the Chinese. Remember, they never paid a penny.

The only downside for the Chinese is that their goods are more expensive because of what happens here. Therefore, they may lose the sale. But they

don't actually pay the money. These people do.

Ambassador Froman -- Michael Froman is in Washington. He is the former U.S. Trade Representative and Vice Chairman and President at MasterCard.

Good to see you, Mike, as always.


QUEST: This argument -- first of all, we'll get into the philosophy at the moment, is it your understanding that the talks are closer to a success or


FROMAN: Well, like the first rule of trade negotiation is that nothing is agreed to until everything is agreed to. So my sense is when people were

speculating a week ago that we were on the verge of an agreement -- that was probably an overstatement.

When people are expressing worry now that it's a catastrophe that's probably overstatement, as well. These are just long, difficult

negotiations. They're hard issues. And it's going to take time for both sides to see the whole package and make sure that they're comfortable with


QUEST: But are you surprised that this allegation that the Chinese are -- reneging is a hard word -- rowing back, walking back on commitments being


FROMAN: You know, look, trade negotiations are not a linear process. It's two steps forward, one step back. As you resolve one set of issues, then

you feel like you need more on another set of issues.

And so I think it's again, you've got to keep all of the issues open and on the table until there can be a comprehensive agreement. I don't know

whether it's reneging or not, but it's not out of the ordinary for there to be a lot of back and forth before a negotiation is done.

I've been in some negotiations where they were almost done, 95 percent of the text was done, and as one of my colleagues said, 95 percent is done,

that means we're halfway there. It's the last 5 percent that's always the most difficult.

QUEST: Right and the idea of slapping tariffs on or increasing the tariff, is that a valid strategy if you've already put tariffs on and if you

believe the other side is dragging their heels?

FROMAN: You know, I think the Trump administration's tendency to put tariffs on has certainly gotten the attention of China's leadership, it has

certainly focused their attention on trying to reach an agreement.

But you know, they have their own politics, internal. They've got their own dignity to maintain in these negotiations. I think it's a very

difficult step to go down or a road to go down to assume that by assuming - - by increasing tariffs, you're going to extract additional concessions.

Both sides need to be able to sell this agreement back home. It has got to be a strong agreement from the Trump administration's perspective, and it

has got to be a defensible agreement from the Chinese leadership's perspective. And so, I think that's difficult answer they're going for


QUEST: Okay, so bear with me, I want you to listen to what the CEO of Union Pacific said yesterday. He says while tariffs do worry him, the U.S.

is doing the right thing, putting the pressure on China.


LANCE FRITZ, CEO, UNION PACIFIC: I think the United States is trying to do the right thing. China clearly needs to come into the world economy as a

developed economy, right, and heed the spirit of the WTO. And I think that end objective is the right end objective.

The use of tariffs can be very disruptive to the economy. And so what we're looking for is relatively rapid conclusion of a good deal, of the right



QUEST: How do you get that, Mike, how do -- you're an expert on this. How do you get that last 5 percent and you get the deal done without causing

more damage of tariffs.

[15:10:01] FROMAN: Well, look, I think you need to be very transparent and very clear about what you need to have a successful agreement. Both sides

do. And then they need to find ways of identifying theoretical landing zones, you know, hypothetical solutions that might work for both sides, and

you play around with those until you see a package of possible solutions that both can sell back home.

But I think everybody wants there to be an agreement. I think the challenge with tariffs, one is that it is introducing a lot of uncertainty

into supply chains, into decisions about investment, we want businesses to invest more, but until they really understand what their costs are, it's

difficult to do so.

And secondly, tariffs are easy to put on and difficult to take off. We have a 25 percent tariff on imported pickup trucks because of the Chicken

War of 1963 with the European Union. They kept our chicken out, we imposed 25 percent tariffs, they've been in place for 50 years. And the longer

these tariffs are in place or the more terrorists are in place, the harder it might be to take off over time.

QUEST: The role of the private sector in all of this when government is gridlocked. When there seems to be no way out, you just heard the CEO of

Union Pacific, calling this -- time and again on this program -- and we've still got more to come. The private sector has a role to play. What do

you think that is?

FROMAN: Well, I think at a time when politics are polarized and governments are paralyzed, the role of the private sector is even greater.

Whether it's by taking actions as we're doing through some of our products to try and facilitate trade, make it easier for small and medium-sized

businesses to engage in international trade, or taking actions to help contribute to a more inclusive economy, inclusive growth.

There are things that governments should be doing, but if they're not doing it, the private sector very much has a role to play in helping to promote

inclusive growth and to try to address some of the tensions and frictions at an international trading system.

QUEST: Completely and fair question from which you complete the Fifth? Do you think they'll get a deal?

FROMAN: I think in the end, they will because both sides, I think very much want one. But you know, the, the easy deal to get is the shopping

list, how much more soybeans or LNG or oil China might buy from the United States? That would not address the underlying problems. So hopefully,

they'll get a broader deal.

QUEST: Good to see you, Ambassador. Have a great weekend.

FROMAN: Thanks for having me.

QUEST: Thank you. The Ambassador was talking about soybeans, buy more soybeans. Well, they've already tried that. And that was the first part

of the agreement. The President believes many Americans are bound to benefit from his tariff plan. He tweeted, "Tariffs will bring in far more

wealth to our country, than even a phenomenal deal of the traditional kind. Also, much easier and quicker to do. Our farmers will do better, faster,

and starving nations can now be helped."

Bill Gordon is the Vice President of the American Soybean Association. As always, it's good to have you with us -- for joining us from Worthington,

Minnesota. You don't want a traditional deal where the Chinese just agree to buy a few billion dollars' worth more of your product.

But at the same time, you're going to be hit hardest by these increased tariffs. What do you do?

BILL GORDON, VICE PRESIDENT, AMERICAN SOYBEAN ASSOCIATION: That's correct. We want that trade deal back and we took 40 years to build this market up

and we're talking amongst ourselves this morning. A lot of my colleagues spent their entire adult life with this deal making this deal happen.

And with these tariffs, it looks like it's going to extend into the future, so far that they might not be able to see the market come back.

QUEST: What do you do in this situation? Because the increased tariffs -- I mean, I know the U.S. government, the administration put aside $12

billion or whatever it was to help farmers, but that's long since gone -- that money -- and you're going to need more. But what do you actually do?

Are you seeing a downturn in business from China?

GORDON: Absolutely, we've lost a lot of our trade. They've bought, you know, hardly any soybeans and even the 20 million metric tons that they

promised to buy, they've actually only purchased and had 5 million of it delivered.

So even though the promise is there, we have this glut of soybeans that we're used to shipping out there. So what we've done is we've actually

kept expanding markets to other places. We filled in those markets in the European Union, Southeast Asia, and in different places. Indonesia, for

instance, those people are taking -- they're just not as large of a market. So it's a lot harder to get rid of those soybeans that we were used to

shipping to China.

QUEST: And because of that, what's happening to prices of soybeans? I mean, at the end of the day, you're still growing the stuff and it still

has to be sold -- harvested and sold -- so what's happening to your markets and your members?

GORDON: Well, the markets are definitely down and they're down for many reasons, and we did a really good job of raising a soybean crop last year

in this country, which added extra product to the world market. And then Argentina and Brazil did the same thing. And that that added definitely

some stress to the economics of everything.

But these markets are really low, as much as $1.00 to $2.00 below the cost of production. So meaning in the day, when I get these soybeans planted in

this weather here in Minnesota, I'm already guaranteed loss of a profit or loss of income at all. So I'd have to come up with more money at the end

of the year just to raise soybeans.

So like you said, we're going to raise them because we have to raise something. And so you try to minimize loss, but you're moving the

different commodities and different things like that.

[15:15:26] QUEST: So the President basically said to the farmers today, look, I understand what you're saying, but keep quiet. Let me get on with

it. In the longer run, you're going to be better off with a proper deal. Do you accept that? And I mean, why would farmers continue to support an

administration that has introduced the policies that has decimated their business?

GORDON: Well, it's a good question. And the problem with the deal being great at the end, is will we make it? Wisconsin for instance are losing

eight farmers a day. You have family farmers and family farms, people my age and older people retiring, and banks not giving us loans. Even though

the deal might be good at the end, who is going to be left? That is the question.

And you roll over to government in general. We have a trade deal with Canada and Mexico that can be ratified right now by the Democrat-controlled

legislature, and they won't do it because of politics. So it's a double- edged sword here.

We have an administration that's trying to get a great deal at the end. And, and yes, it's nice to talk about payments and different things. But

that's not what we do. We raise food and we raise products for the world and for the country and we want to sell those products in the open market.

QUEST: We look forward to talking to you, sir. You're always very kind to give us time to talk about it on busy days. I appreciate it, as always.

Donald Trump, by the way, has just tweeted. He has just said and described the talks as being candid and constructive. I think that's -- candid and

constructive and they will continue. Let's see if that has any effect on the market in the last 45 minutes of trade. Remember, we were up. We'll

see -- we'll be able to factor in whether the market follows through.

Uber premiered on the New York Stock Exchange this morning. It was hotly anticipated, but the way things went to were not as anticipated or hoped.

It's QUEST MEANS BUSINESS live from New York.


QUEST: Donald Trump just tweeted on China trade. I told you he said he was candid and constructive. Conversations will continue and he said,

depending on what happens with the negotiations, Paul is with me. We'll talk Uber in a moment. Look at the market and all three indices -- well,

the S&P and the Dow are now positive. And I mean, that market when we started was up 60 to 70. It has doubled its gains in the last five minutes

on the back of this tweet.

[15:20:18] PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think a lot of people obviously, Richard have been hoping that for all the bluster that

we've heard from the Trump administration since Sunday, that there would ultimately be some deal between the U.S. and China on trade that would be

beneficial to both countries.

And I think once again, granted, we're talking about a Friday, in the last hour of trading things tend to get volatile then. So take this with a

couple of million grains of salt. I'm not trying to rain on the parade, I think --

QUEST: No, but I am just amazed.

LA MONICA: President Trump knows that the stock market is in one way, a measure of his success, or at least he thinks it that way.

QUEST: Yes, I'm just impressed.

LA MONICA: And obviously, he wants it to go higher and a trade deal will make it go higher.

QUEST: I am astonished that the market hasn't tweaked on this yet. It saw the old tweets earlier in the week, and it went down. It sees this -- the

tweet is meaningless, "constructive and candid." It could mean whatever.

LA MONICA: Coming from this President who isn't often fond of positive adjectives, I would say that this is a good thing. I would go so far to

say that it may even be constructive, candidly.

QUEST: Stay with me, it's safe to say the biggest IPO of the year did not go according to plan. It was anything but a story about a market debut for

Uber. The shares priced at 45. And they opened lower, and they've stayed down. In fact, the losses heading back to where they were down earlier,

down 7 percent.

The recovery has been minor, Paul La Monica, but it has recovered some of those losses. There was a lot of fresh excitement at the start of the day,

at least.


JOHN TUTTLE, CHIEF OPERATING OFFICER, NYSE: Exciting morning, I mean placing $8.1 billion of shares, making it one of the top 10 IPOs in the US

markets in the history of the U.S. markets, placing that in this type of economic environment is a success.

EMIL MICHAEL, FORMER CHIEF BUSINESS OFFICER, UBER: It feels pretty good. It feels great for the employees, who I worked with, who had a mission in

their work every day and it came in and said --

BRADLEY TUSK, FOUNDER AND CEO, TUSK VENTURES: It now feels real. It kind of felt like this mythical thing, because I've been doing this now for

years, and then all of a sudden, when I got here today, and there was the big Uber banner, I am so like, that is really happening.


QUEST: I always find it interesting with IPOs -- you can have the biggest, most savvy, sophisticated CEO, but you put them on the floor of the

exchange, and they feel the weight of history. Today, that was not good.

LA MONICA: No, it definitely wasn't. And you're right, it's easy to get star struck when you're on the floor of the NYC, but Uber and Lyft as well,

they're both down more than 6 percent. I think that even though as we talked earlier, there have been some really good IPOs in the past couple of


But investors are growing skeptical of Uber and Lyft because of all the money that they're losing. Lyft held the record very briefly as the

company that lost the biggest amount of money before going public. And now they've been outdone, if you will, by Uber. I think investors aren't happy

with the fact that these two companies are just going toe-to-toe beating each other up.

QUEST: But well, of course Uber is much bigger.

LA MONICA: It is much bigger. But obviously Lyft has gained a lot of ground in the past couple of years because of Uber's many PR debacle.

QUEST: How does Uber reach profitability? Bearing in mind that it is pricing underneath because of Lyft, it seems to be its only hope for the

rideshare part anyway is with autonomous vehicles, which may be 10 to 15 years down the road?

LA MONICA: Yes, autonomous vehicles is an area that Uber and Lyft clearly both want to get bigger in. It's something that Tesla, GM and tech

companies like Google and Apple, all investing in. That is kind of like the Holy Grail.

But we also talked about this earlier, I think it's interesting that Uber is a more diversified business in delivery and food might be something that

helps them a little bit. Uber Eats has been, I think a successful subsidiary for them, it competes with Grub Hub and Grub Hub is a little bit

of a higher valuation than Lyft. So maybe that is something that can help get Uber to profitability. It's the food side of things as opposed to

taking people from point A to point B.

QUEST: Taking your food from point A to point B.

LA MONICA: Exactly. I took the subway back from the NYSE, so what can I say?

QUEST: And so did I.

LA MONICA: There we go.

QUEST: Midday traffic.

LA MONICA: We're old school.

QUEST: Well sensible. Midday traffic in Manhattan.

LA MONICA: I think it's smart as well, yes.

QUEST: I mean, you've got time to married and divorce from the West Side Highway trying to get back to the office in time. All right, good to see

you, sir.

LA MONICA: Thank you.

QUEST: We're going to roll at Hudson yards. All right, Kathleen Shelton Smith is the co-founder of Renaissance Capital. The expert on IPOs joins

me now live from Stanford, Connecticut. Always good to have you back.

[15:25:10] QUEST: Now, from our previous interviews together, one of the things I always remember now is, it's really bad news if a company breaks

its IPO price. Uber didn't even open at the IPO price.

KATHLEEN SHELTON SMITH, CO-FOUNDER, RENAISSANCE CAPITAL: You know, it is bad news -- there are about two sides of this coin, but I think it's

important to start out by saying, the Uber IPO was one of the top 10 largest IPOs ever and large IPOs often have a rocky road to start.

So let's go back to Facebook, it did not trade well for months, when it first came public and Google, the same thing. So that is always a risk of

these very large IPOs for any investor that's thinking, "I'll jump in on the first day and it'll keep going up from there."

QUEST: But what should we now look for as the price moves? I mean, one assumes the price is settled around 42 to 43, and change. And that seems

to be where the market likes to keep it at the moment. But as we look in the weeks a month said, in terms of the company and its price, what should

we be focusing on?

SMITH: Well, certainly I think the big area of focus will be when management reports its next quarterly results, because we'll get to see how

they're progressing on the progress of what they've said in the road show and understanding if management is going to meet investor expectations. So

that'll be an important thing.

And I think that it's a stock to sort of sit back and wait to own for a little bit because this early trading is kind of a black eye for the stock.

I mean, I feel that for the IPO market, it'll probably help pricing on the next deals that come out because investors are going to be and issuers are

going to be cautious about what price they put on.

But I think this sort of sticks to the Uber-Lyft -- the big money losing IPOs that are real hard to handle. The rest of the IPO market is doing

quite well. Thank you. The Renaissance IPO ETF is up over 30 percent so far this year, it's hit an all-time high last week.

And already the ETF includes Pinterest, which has done well, Zoom, which has done very well. And we own Lyft and the ETF will pick up Uber at the

end of next week.

QUEST: What about -- what about Beyond Meat? How do you describe what happened there?

SMITH: Well, investors were really interested. It's the first time they had a pure play in the meat alternative business, which has a big

addressable market. And this company was growing over 200 percent a year, so investors are willing to tolerate the losses knowing that this company

just had so many orders for its products. That's what happened there. Now it's way over done.

But Beyond Meat, for example, will end up being in our ETFs. We're going to put it in the next rebalance. It's a $4 billion market cap company.

You know there's another company on the calendar that reminds me of possibly what we're going to see -- had seen with Beyond Meat, it's called

Luckin Coffee.

QUEST: Right.

SMITH: This is the fastest growing Chinese coffee pick up coffee network. It is growing so fast, it'll probably surpass Starbucks very soon in how

many outlets that has.

Now the Chinese, they don't -- they drink tea, not coffee. On average, they drink a cup of coffee every other month which is, I can't even

believe. I mean, I know what the statistics are here.

So the minute you get your cup of coffee, and then Chinese you'll throw away the tea and say I've got to have my coffee. I mean, I think the

opportunity for Luckin Coffee is pretty darn good.

QUEST: Luckin Coffee, we will watch it closely and we thank you as always. When we need expertise on IPOs, you are the person we turn to. I

appreciate it.

We're closing in on the last half hour of a rough week on the street, things might just be looking up. We are up a hundred -- actually not might

be, they are, 190. This is weird. Weird.


[15:30:00] QUEST: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. Elon Musk has a blue response on Twitter to the

launch of Jeff Bezos' new original plan. I'll have my part two of the exclusive interview that we had with Mikhail Khodorkovsky who tells me

Russia may never be a good investment.

As you and I continue tonight, this is CNN and on this network, the facts always come first. The Dow bounced back from earlier steep losses today

after the U.S. Treasury Secretary Steve Mnuchin called critical trade talks with China constructive and the U.S. president said they were candid.

Those negotiations in Washington produced no breakthrough. It followed hours of the Trump administration stopping higher tariffs and $200 billion

worth of Chinese goods.

Two French commanders have been killed in a hostage rescue mission in Burkina Faso. The operation freed two French hostages, one American and

one South Korean. A French official say they're working to identify the hostage takers. Networks affiliated with al Qaeda and ISIS operate in the


The French President Emmanuel Macron met Facebook's CEO Mark Zuckerberg. The two are trying to find ways to tackle hate speech and misinformation.

The French government says Facebook needs to be better regulated.

The final half-hour of trade and stock market queasiness seems to have subsided after Donald Trump tweeted that the talks were constructive, we're

up 180, a minute ago, 189. Now, just given back a bit, 144. The major indices have had a difficult five days, all three remain down for the week

as you can look at that -- look at that drop on the fifth.

And that falls on -- that follows directly of course Donald Trump's original tweet. Vinay Pande is the Global Head of Trading Strategies at

UBS. Good to see you, sir --


QUEST: Thanks very much indeed. Now, what do you make of today?

PANDE: Very surprising, it's a pure coincidence as walking, you know, up to you. But most seriously, we -- this might be of interest. We did a

survey before the tweet -- before the Sunday tweet of our clients across the world. Three thousand, six hundred of them, and we're actually quite

surprised by the results.

[15:35:00] And that is a positive attitude to markets especially in the Americas, second, while cognizant of the volatility and the damage caused

in Q4 willing to look at a volatile episode as a point to re-engage in markets and so they have cash on hand.

QUEST: Right, now understand that your clients are high net worth individuals, but explain to those who don't understand or know how. How

can you take advantage of volatility?

PANDE: Well, a part of directives which of course, very sophisticated clients do, it is keeping powder dry, keeping a little cash, and you know,

available liquidity available so that when you have down drops that you think are unjustified, such as the one we had around Christmas eve last

year, that you have something to buy with. So, if you're not in pain, you know, when the market is down that much --

QUEST: But the fascinating part about that down-draft at Christmas because every one of us in the business world looked and thought, should I buy?

PANDE: Yes --

QUEST: But if you looked at the weeks going up to it --

PANDE: Correct --

QUEST: You could not be sure or as much as whatever can be --

PANDE: Right --

QUEST: That there wasn't about to be another 10 percent downward leg.

PANDE: It was always possible. But look at the context in which it was happening. There is such low liquidity at that time of the year, right, it

will be apparent to, you know, even a casual observer of the market, that not very much was being sold to cause such a large down-draft. So it is

the time of the year and the provocation, you know, they were out of luck --

QUEST: So to put it crudely, are you saying we're in a buy on the dips with this current shortfall?

PANDE: Policy is extremely supportive across the world. It has become more supportive, China, U.S., Europe, elsewhere. The bad batch we had for

two quarters is behind us. There are signs of recovery and markets are reasonably valued.

QUEST: And so, there were lots -- that is the place you say, yes, but then, there had been the prospect, of course, even as early as -- late as

February of you know, peeps around recession, not this year, but a recession in 2020. Now, I'm seeing fewer people believe that to be the

case, and --

PANDE: Yes --

QUEST: Most people suggesting that the bull market has life in it still to go.

PANDE: Yes, and I think that's for the reasons I mentioned that the most important reason this policy has become extremely supportive instead of

tightening, we have, you know, stopped tightening in the U.S. and across China.

There's a major fiscal stimulus in place, and you know, ongoing which may even increase, you know, thanks to these tariffs. That's one-third of

world growth in China, Richard, right? That's an enormous amount of contribution to world growth.

Even in Europe, right, they're talking about -- in the ECB, postponing tightening, perhaps extending, you know, the loose monetary policy. These

are great positives, but in the context of the market, that is fairly valued or attractive especially globally. And so the key is to be

diversified, stay invested, but keep powder dry.

QUEST: Powder dry --

PANDE: Thank you, Richard --

QUEST: Cash ready to go.

PANDE: Cash ready to go.

QUEST: Good to see you, sir --

PANDE: Good to see you --

QUEST: Thank you. Ten years in a Russian prison was an interesting experience. That's how Mikhail Khodorkovsky describes him. He was once a

great oligarch, now he says Russia's mechanisms for autocracy must be destroyed before business can flourish. Part of my exclusive interview

with Mikhail Khodorkovsky is after the break.


QUEST: Mikhail Khodorkovsky says any CEO considering doing business in Russia moves at their own peril. He was once thought to be Russia's

richest man in the early 2000s, then came his campaigning for capitalism and democracy. Vladimir Putin responded, he stripped away his fortune and

tossed him in prison.

Our exclusive interview, Khodorkovsky explained Russia is not a good place to invest until a current form is destroyed.


MIKHAIL KHODORKOVSKY, RUSSIAN BUSINESSMAN (through translator): Any CEO who says I'm going to invest in Russia without any protection, without any

personal relations with the authorities, meaning corrupt ones as well, is either a naive person or he's blatantly lying to you.

QUEST: Michael Calvey of course faces some very serious charges. Do you think there's justification in these charges or is he being used as a

political pawn?

KHODORKOVSKY: The example of Michael Calvey is actually a very sad case for Russian business and for foreign investors. Calvey is a person that

you can't say anything bad about him. People are saying he was in some sort of political conflict with the authorities, but that's total nonsense.

Calvey is a pure investor who's always played on the side of business and stayed away from anything political.

QUEST: Right, so why? I mean, to take your answer, you're either suggesting he did do something financially wrong or that this is something


KHODORKOVSKY: Look, when you find yourself in a place where a criminal gang is in charge, and you have a bag of money, sooner or later, at some

point, somebody is going to take that bag of money away from you. Calvey spent a long time in this place. People noticed his bag of money, that's


UNIDENTIFIED FEMALE: Fourteen years after launching his economic empire, Mikhail Khodorkovsky finds himself caught up in a political storm that

threatens to undermine Russia's economic progress.

QUEST: What was it like going through that process where you are extremely rich, you are well and truly on the inside, and it all goes terribly wrong

and you find yourself convicted? What was that like?

KHODORKOVSKY: Believe me, in jail, I was being entertained all the time. There were four hunger strikes where I was standing up for my own rights

and the rights of my friends. Once I was stabbed, I was convicted twice, thrown around 6,000 kilometers in one directions and then 8,000 kilometers

in the other direction. No, it was entertaining.

UNIDENTIFIED MALE: Russia's president appears to have Russia's richest man right where he wants him, behind bars.

UNIDENTIFIED MALE: Now it's Mikhail Khodorkovsky's turn to face the wrath of Vladimir Putin. The head of the Yukos Oil Company, this oligarch's

wealth, an estimated $8 billion and political power unprecedented, leading him to openly defy Vladimir Putin.

QUEST: You made your money at that time, you were very fortunate. But could you see -- because let's turn to the business side, could you see at

that stage the corruption, the selling off of assets for favorable friends. Could you see all of that taking place?

KHODORKOVSKY: Back then, we were just kids playing in a sand box. But it did take place and that's precisely why in 2003, I came to Putin with a

proposal to put an end to the story of corruption in our country. I spoke about corruption in the country and proposed that we've got to stop this

because we're getting in too deep.

I said we're the ones that have to put an end to it. After which, a month later, a criminal case was opened against me and I ended up in jail for

ten years.

[15:45:00] QUEST: We begin tonight with an extraordinary story. The former tycoon whose oil company was dismantled by the Kremlin is out of

prison. But after serving ten years, Mikhail Khodorkovsky says he does not want to be a symbol of a freer, fairer Russia.

QUEST: I've read that you do want to go back to Russia, and you would like to play a part in Russian life, but not as president.

KHODORKOVSKY: I believe that in our country, any person who comes into Putin's position is going to become an autocrat. I don't want to test this

on myself. I don't want that to happen to me.

QUEST: So you -- I thought, oh, hang on. So, are you saying it's not possible to have -- or it would take much more to change the system so that

the presidency does not become an autocracy, that there needs to be constitutional change.

KHODORKOVSKY: Absolutely. We have a mechanism for this in the country and it hasn't yet been destroyed as of today.

QUEST: What is your fundamental fear now about Russia and Putin? As we go in towards 2019, an election in 2020 in the United States, but just even

globally. In terms of the relationships and then the nationalism that Putin is riding, what is your fundamental fear?

KHODORKOVSKY: I believe most of all that Russia is a European country for which democracy is just as suitable as for any other European country. My

greatest fear is that our historical faith in a good czar will force us to put somebody in Putin's place. To put a new Putin in his place, and we'll

get into yet another spiral of the same old, same old. I really hope that Russian society has gotten mature enough to abandon autocracy.

QUEST: And you're going to play your part?

KHODORKOVSKY: I am. I am playing my role. I very much hope that this will still happen during the active part of my life, and that I will be

able to play a substantial role in the new Russia.


QUEST: Fascinating, Mikhail Khodorkovsky. As you and I continue tonight, the sky is no longer the limit for Jeff Bezos, the world's richest man is

shooting for the moon.


QUEST: Talking about dominating air travels, and the richest man on the planet is now looking to the moon. Jeff Bezos has unveiled a new

spaceship, it's called Blue Moon.

[15:50:00] And it aim to take off on a lunar mission by 2024. In the 21st century, the commercial space race is a three-way battle between the

billionaires, Sir Richard Branson, Elon Musk and now Jeff Bezos.

Musk couldn't help, but poke fun at the latest Bezos venture on Twitter, he changed the name of the craft from Blue Moon to Blue Balls.

Rachel Crane has been speaking to the other billionaire in the race, Sir Richard Branson. Why are they all doing this?

RACHEL CRANE, CNN BUSINESS INNOVATION & SPACE CORRESPONDENT: Well, if you speak about why they all are going to the moon or have space ambitions,

it's because all of them, all three of them in fact, have spoken to me about how they were inspired by the Apollo program while either watching

that or hearing about it as young children.

That, that really inspired them to want to explore the cosmos themselves. And now, what's interesting is that while Musk today, you know, was quick

to poke fun at Bezos, Richard Branson who I spoke to earlier was very quick to praise Bezos' plans for the moon. Listen to what he had to say.


RICHARD BRANSON, BUSINESS MAGNATE & FOUNDER, VIRGIN GROUP: It's tremendous what Jeff and his team are doing, and yes, incredibly exciting. And I

think the exciting thing for the world now is that you have Jeff, you have Elon, you have ourselves creating, you know, different approaches to take -

- you know, take people into space and to colonize, you know, places like the moon in future years. And so an incredible new era of space

exploration has arrived.


CRANE: So Richard, we right now are in that incredible new space era as you and I both know, there are so much going on in space. The excitement

surrounding this industry, that room yesterday when Bezos was giving the speech was just pumping with energy, everybody so enthusiastic, blinking

their eyes on that lander.

Of course, because Blue Origin up until this point has been, you know, not very open with the media.

QUEST: Right --

CRANE: It hasn't been very public about their plans, Richard.

QUEST: Keep watching, please, keep watching and reporting back. This is a fascinating race particularly since some of the -- some tourists is going

to go into space before too long. Thank you.

From the old to the new, always with the new to the old. Now, the Quest Transcontinental is leaving the station, we're taking a trip back 150 years

to the moment railroads began carrying passengers from one end of America to the other.

The Transcontinental Railroad was the first to connect the east and the west, completed today 150 years ago. The last golden spike was hammered

down at Promontory Summit in Utah. Union Pacific was the company that made it happen, and Union Pacific is celebrating by sending this big boy

locomotive on a whistle-stop journey along that historic route.

I spoke to the chief executive of Union Pacific Lance Fritz at a party in Utah. He was at the party, not me. He offered his thoughts on the impact

of 150 years of transcontinental rail travel.


LANCE FRITZ, CHIEF EXECUTIVE OFFICER, UNION PACIFIC: Since the meeting of east and west by creating the transcontinental railroad, it's since only

been compared to something like putting a man on the moon. You know, at that time, it was almost inconceivable that we could connect the country

like that.

But before the Transcontinental Railroad was in place, it took six months to go between New York and San Francisco. And when you took that journey,

you took your hands into your life. And then after the transcontinental opened up, that journey was about ten days and it was in relative luxury,

relative comfort.

It changed things like our diet, foods became available that weren't before. And it also fulfilled another long-term vision of Abraham

Lincoln's, and that was to connect Europe with Asia through an incredibly important trade route in the United States. It did all of that and more.

QUEST: Today, rail accounts for a sizable part of the U.S. trade going back and forth. But I don't think people realize just how much goes by


FRITZ: Yes, Richard, about 40 percent of the inner city freight in the United States goes by rail. We touch every aspect of the economy, the food

you and I ate this morning, very likely was transported by a trail. The transportation we took, either the component parts or the vehicles

themselves were transported by rail, our clothing, the furniture, the building material and the buildings' red, we touched every part of the


QUEST: You also can tell what's happening in the U.S. economy at the moment. If it's booming, you're moving things, if it's slowing down, you

have empty freight cars. What have you got at the moment?

[15:55:00] FRITZ: Yes, we've got a pretty good economy to work with right now, and you've got that exactly right. We worry about consumers consuming

stuff, things, we think about the industrial economy and the healthy industrial economy, and we think about trade. If you just look backwards

to the first quarter, GDP up 3.2 percent, that's a pretty darn good quarter.

And it caps a year, last year of 3 percent-plus, minus growth. So if we're at that kind of pace, that's very good for a freight railroad. It's very

good for Union Pacific as we build America.


QUEST: The tweak stand between, there she goes. That very sharp down at 11:00 this morning, you see a rally throughout the afternoon. The

statement by Mnuchin and the president, we go up 180 odd points and we give most of it back in the last few minutes of trade.

The Dow is pretty even stiff, I mean, there was a lot of green -- green was pretty much all the way down. Now, of course the red is creeping back

in again. As for Uber, interesting towards the close, it's virtually back at the low points of the open. It was that, in fact, it is, 7 percent is

roughly where it opened down.

And this is not a good day for Uber, but an OK day for the market. We'll wrap it all up with the profitable moment after the break.


QUEST: Tonight's profitable moment, I don't pretend to understand what happened in this weird week, we opened lower after Trump's tweets on trade

and promising tariffs on Friday. And through the entire week, we are obsessed, the market sees every tweet and like a knee-jerk reaction, sure

enough, it responds.

And that's what we saw this afternoon. Look at it. You get two tweets, one from Mnuchin, one from Trump saying that the talks are going well,

whatever, and the market goes up and then gives back the gains. This market, it's not fragile, but it is on a tenterhook, watching and waiting

for this last piece of the economic jigsaw.

The Fed is already off the table, earnings are good, the market is strong, the economy is good. Growth numbers were impressive. This China deal is

the last piece of the jigsaw, and that's why you're seeing this knee-jerk reaction so often.

And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York.


Whatever you're up to in the hours ahead, I hope it is profitable. Well, the Dow is back up again, the bell is ringing, the day is done -- even for