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Quest Means Business

Stock Market Fall Across Continent As Far Right Gains; New Video Shows Moment Hostages Were Rescued From Gaza; Melbourne To Overtake Sydney As Australia's Biggest City; Apple Announces Major A.I. Features For iPhone; Jury Deliberates In U.S. President's Son's Gun Case; Trump Meeting With New York Probation Officer Monday. Aired 4-5p ET

Aired June 10, 2024 - 16:00   ET

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

[16:00:10]

RICHARD QUEST, CNN INTERNATIONAL HOST: Closing bell ringing on Wall Street as the Monday session comes to a close. A slow start to the week with small

gains. The Fed meeting starts tomorrow. A strong gavel. Well, I think it is sort of -- firm. I think we call that a firm gavel, but a small gain on a

market, a bifurcated session, if you will.

Those are the markets, and these are the main events we are following today.

Investors in Europe ARE nervous for good reason. The far right candidates have swept to victory, creating uncertainty in EU elections.

UN Security Council has passed a US resolution calling for a permanent ceasefire in Gaza.

And Apple has just revealed its biggest push into artificial intelligence yet. Investors, it would seem are not impressed.

Good morning to you live from Melbourne, Australia on Monday, June the 10th for you, Tuesday, June the 11th here. 6:00 AM. I am Richard Quest, and in

Melbourne, as elsewhere I mean, business.

A very literally good day to you. Good evening in Europe and parts of Asia. Good morning from Australia. It is QUEST MEANS BUSINESS tonight, live from

Melbourne and we are at The Langham Melbourne here and delighted that they have given us their lobby this morning for this morning. It is just 6:00 AM

in Melbourne.

Now, we had hoped to be on The Langham Melbourne's delightful forecourt overlooking the skyline, but it is winter here as these pictures show. The

weather was wet and windy. This was the scene just a few moments ago. In fact, it was pretty awful. For us to come indoors has to be bad.

Now, we are in Australia's second city. I am here for "Quest World of Wonder" and that was the perfect opportunity to see why everybody is

talking about Melbourne these days.

Because if you look on almost any list of the world's best and most livable cities, you will see Melbourne is somewhere near the top.

Over the course of the next hour, we will explore why and we will certainly enjoy Melbourne. I have my Melbournian coffee.

We will get to all of that in a moment. We must turn our attention though, to the European elections.

A resurgent far right has roiled markets on their first day of trading since the election results over the weekend. All the major averages across

the major bosses in Europe fell as a response and as a result to Sunday's vote. The sharpest drop was on the CAC 40 in Paris, in France, and for good

reason, because that is where President Emmanuel Macron has dissolved the French Parliament and is looking to form a new government in response to

the drubbing that his party took at the polls. The far-right took twice as many votes.

The euro is sharply down against the dollar as the centrist parties in Germany and Italy also lost ground, and exit poll shows, the far right is

set to win roughly a fifth of the seats in the European Parliament.

Now the EPP's center that will still have the most seats, but it means there is a different shaping of EU policy for the next five years.

The far-right often serve as de facto referendum, these results shows a referendum on incumbent national governments.

Anna Stewart is covering the market reaction in London, Melissa Bell is watching the political fallout in Paris. Going to start with you, Melissa,

if I may.

Why does a bad result in the European elections mean Macron goes to the polls when arguably he would run the other way and wait as long as

possible.

MELISSA BELL, CNN CORRESPONDENT: Well, there are those who felt he should have done exactly that. There was a great deal of surprise, and any

consternation actually, Richard, that he announced this decision as dangerous as it seems it might be, clearly, the fact that the far-right

have done as well as they have in the European elections does suggest that they might do really well now in this parliamentary elections that are to

be held in just three weeks' time.

Now, if they do as many expect they will, then it will be with a far-right prime minister that Emmanuel Macron will have to contend and function for

the next three years of his presidential term, which could make it can even harder for him to pass legislation to get his business done, and to

continue weighing on the big decisions in Europe as he has so far.

[16:05:09]

So, there are those though, who say that he had no choice but to do this, given the dropping that is party had in these polls, given the fact that he

didn't have a parliamentary majority, anyway, and that this gives him at least the possibility, Richard of galvanizing, focusing minds around the

threat, the far-right might present, and getting the traditional parties or traditional voters to rally around him this time, but it is clearly a

gamble.

QUEST: All right. Okay, so to Anna Stewart in London. The EPP is still going to be the biggest party which suggests that President von der Leyen

will get her second term. I guess the issue becomes the force that the right wing parties are able to bring on policy committees and the like.

ANNA STEWART, CNN REPORTER: Yes, within Europe and of course, just speaking to what Melissa was talking about there in France, the market reaction

we've seen today has been pretty spicy while you've been sleeping, Richard and I think the concern here was that people were already worried about

France's huge debt levels and now looking at a potential hostile government for Macron, can he even get a grip on the budget deficit, which people were

wondering whether he would be able to do anyway, if he has a hostile government and potentially a hostile prime minister as well to boot.

So we've seen a lot of reaction in France, a little bit of reaction in Europe, the Euro falling about half percent against the dollar earlier

today, but of course, much less in terms of a real impact versus France.

QUEST: Melissa, everyone is putting a brave face on the Olympics, and you know, the IOC is saying, well, countries have elections all the time. It is

not going to affect, but to call an election just barely two weeks before you are hosting the world in the most complicated -- I mean, the result of

this will be known. The final result will be known before the Olympics.

But Melissa, what to do?

BELL: What to do, Richard? We already knew here in this little Paris bureau for CNN that we had our work cut out for us now, more so still. You're

right. We are going to have the result of this election on the 7th of July, just a matter of days before the Olympics kicks off.

And of course, what could now happen is that you're going to have not just President Macron presiding over this opening ceremony, but a far-right

prime minister, and that really would be an extraordinary symbolic change with who is leading Paris, with all the effects that we will have on the

next three years and politically, economically for this country. Of course, even as we head into this period of some of the most ambitious Olympic

Games yet to have been held.

So a lot for France to contend with, a lot riding on this result -- Richard.

QUEST: Melissa, thank you.

Finally, to you, Anna. Now, we need to extrapolate these EU results, the parliamentary results into national elections. Now, we know, of course

Germany will be having elections, other large countries will have them, too.

The question of course, whether a more populist, nationalist right-wing does better in national elections, and we will have a good example of that

after the French elections later this month and the next.

STEWART: We will, and it is always interesting when you look at these EU parliamentary elections because people vote maybe for a trend that they

wouldn't actually vote for within their own country. And the very real prospect of having a far-right government in France may actually put some

people off.

Also, just the system of the elections, the way in which the election is run in different countries around Europe means that you get very different

results, even if you had the same people making the same votes, if that makes sense.

So a two-part election for France. So I think, we will have quite a different results and Richard, you and I will be busy, too, because you

know, we are not short of elections, are we, this summer?

QUEST: No, we are not and I will see you for the British election, of course, next month.

Anna in London, Melissa in Paris, both stories we will watch carefully in the days ahead.

The US Secretary of State Antony Blinken has met for two hours today with Israeli Prime Minister Benjamin Netanyahu, today being Monday, of course

where you are. The Secretary of State told the prime minister, the world would back a ceasefire deal leading to the release of hostages and

humanitarian aid to Gaza.

Israel has rescued four hostages, you'll be aware, held in Gaza over the deadly raid this weekend. Palestinian officials, meanwhile in Gaza say 274

people were killed during that operation. The Israeli Defense Forces disputes that number.

CNN's Paula Hancocks reports.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT (voice over): New video from the Israeli military shows the rescue of Israeli hostages from Central

Gaza. It says hundreds of personnel were involved in this rare daytime operation, three hostages locked in an apartment in one multi-story

residential building, another held in a flat 650 feet away in a densely populated neighborhood.

Models of the buildings were built weeks before to train forces.

[16:10:10]

This is how Israel's hostage rescue mission looked from the ground. Airstrikes, explosions, residents running to find safety that does not

exist in Gaza.

Hostages were flown by helicopter back to Israel and to emotional reunions with family who had dreamed of this moment for eight months.

Families who only heard about the mission once their loved ones were safe.

ORIT MEIR, ALMOG MEIR'S MOTHER: I haven't stopped smiling since my Almog was returned to me, but the remaining hostages need a deal to get home

safely.

There is a deal on the table, we ask the Israeli government to move forward with the deal.

HANCOCKS (voice over): The doctor who has treated the hostages since they arrived tells me, despite appearing in good condition, all four are

malnourished.

DR. ITAI PESSACH, TREATING RESCUED HOSTAGES: Their muscles are extremely wasted. There is damage to some other systems because of that.

HANCOCKS (voice over): He says, they were moved frequently and beaten by their captors.

PESSACH: It was harsh, harsh experience with a lot of abuse almost every day, every hour -- both physical, mental, and other types and that is

something that is beyond comprehension.

HANCOCKS (voice over): Dr. Pessach also treated some of the hostages released in November and says the psychological damage of these four is

significantly worse.

PESSACH: All of them had faith, but losing that faith I think is where you get to the breaking point and I am happy that these guys are here, but

there are others losing their faith in us, in human kind.

HANCOCKS: Residents in Nuseirat, Central Gaza are in a state of shock, struggling to deal with the aftermath of Saturday, which neighboring

countries and the EU's top diplomat have called a massacre.

(UNIDENTIFIED FEMALE speaking in foreign language.)

HANCOCKS (voice over): This woman says, most of those trapped under the rubble are women and children. Houses are filled with displaced people.

Israel committed a massacre.

Hospital directors and Gaza officials say more than 270 were killed, hundreds more injured. The IDF says there were fewer than 100 casualties.

There is no breakdown of civilians versus fighters, but this hospital is filled with women and children.

(END VIDEOTAPE)

QUEST: Now, these are live pictures coming to you now from the United Nations. The UN Security Council has just voted to pass a US resolution

calling for a permanent ceasefire in Gaza.

It also calls for the release of all hostages. The resolution says Israel has accepted the US ceasefire proposal and now urges Hamas to do the same.

Richard Roth is at the UN.

Significance here, Richard. Firstly, it is a resolution for a permanent ceasefire. Secondly, it has now passed, but will it have any effect in your

view?

RICHARD ROTH, CNN SENIOR UN CORRESPONDENT: A usual good question. The Palestinians are a little suspicious of this Israeli acceptance of the

resolution and/or President Biden's three-point plan announced the other day.

This resolution is designed to put more pressure on Hamas though the language is somewhat mild. If Israel have signed on, we are still waiting.

The countries are waiting for Hamas. We are not sure what that will ever come.

This is a phased in plan. You get a ceasefire, you get hostages released, Palestinian prisoners released, but it all has to start with some kind of

step one. I don't see that yet, though the Council is happy that they are generally unified for once on this story, though, Russia abstained on the

resolution.

QUEST: Now, we are learning that Israel has accepted the Biden three-phase plan which is in a sense, is a step forward as they now wait for Hamas'

response. Is that in a sense the glue that is holding the resolution together?

ROTH: Yes. Maybe a shady, shaky kind of glue because somebody still has to act and prove they are ready to live up to the resolution.

Antony Blinken is doing the hard work now, more than I think the Council and all of the speeches. He is traveling around and headed to Amman. He has

got the best sense of where things stand at this moment, in my opinion.

QUEST: And so what happens next? What role does the UN play? Now the resolution has been passed, Israel, will predictably, probably not follow

it. And so where does the UN role go next?

ROTH: A very bad relationship between Israel and the UN. The secretary- general has not spoken to Prime Minister Netanyahu since October 7th, since the start of this war. The Palestinians are --

[16:15:08]

Every day, you think it is quiet at the UN after something is done, but there are so many developments in the Middle East. Last week, we had the

Israeli ambassador to the UN, Gilad Erdan play on Twitter, X, play a portion, his portion of a phone call with a senior UN official, which a UN

spokesman said he had never seen in 25 years on the job here.

Now, we are getting Danny Danon, the former Israeli ambassador to the UN, he is coming back to replace Gilad Erdan. The Israeli mission to the UN

says, Erdan was going to leave any way and there is no relationship between the secret transcript phone call and his departure.

QUEST: Richard Roth at the United Nations on a Monday. I am grateful to you sir.

Tuesday morning here in Australia, in Melbourne. We are at -- we are in one of the world's most livable cities by all measures and accounts, and that

despite the rain. This is where were hoping to show you where we were meant to be this morning. The view is spectacular from The Langham Melbourne's

pool deck. I assure you, if we had been there we would not be spectacular.

But certainly after the break, the mayor is with me and probably wise that we are all indoors.

In a moment, QUEST MEANS BUSINESS live from Melbourne.

(COMMERCIAL BREAK)

QUEST: On almost any list of the world's most livable, the world's best cities, you will find where I am at the moment.

Melbourne is not only on the list, it tends to be near the top and that reputation of being livable in the most enjoyable ways, that has resulted

in a population and economic boom.

(BEGIN VIDEOTAPE)

QUEST (voice over): Melbourne, Australia's second city only 500 miles from Sydney, but seemingly always overshadowed.

That might be about to change as Melbourne is expected to overtake Sydney as Australia's most populous city in the next decade. If it does take the

crown, well, it wouldn't be the first time.

In the 19th Century, Melbourne was Australia's largest city. Thousands of people moved here seeking fortune in the gold rush.

[16:20:05]

By the 1890s, Marvelous Melbourne as it became known, was the second largest city in the British Empire behind London.

Today, workers still flock to Melbourne seeking their fortune at some of Australia's largest companies.

QUEST (on camera): One of the great attractions of Melbourne is its livability. And large companies come here because employees want to live

here.

So, you have the large mining groups like BHP and RioTinto, and the big banks like ANZ. They've all set up shop in Melbourne.

QUEST (voice over): This is a city of immigrants. Melbourne claims to have the largest Greek-speaking population outside of Europe, and there are more

Italians here than almost any other town outside of Italy.

Little wonder then, it is the venue of choice for the country's biggest international events, such as the Australian Open and the Ozzy Grand Prix.

Australia is always known as the lucky economy relatively immune to many of the financial crises that have gripped other nations in the past three

decades.

QUEST (on camera): In the heart of Melbourne's shopping district, there is this sculpture, the public purse. It is appropriate for an economy that

before the pandemic hadn't had a recession since 1991.

Now, things are much more difficult.

For instance, the trading relationship with China, the country's number one partner is tough, and inflation remains stubbornly high.

All in all the private purse is starting to look very strayed.

QUEST (voice over): Even though the residents here are feeling the squeeze, Melbourne still ranks amongst the happiest and most prosperous cities, not

just in Australia, but in the entire world.

Marvelous Melbourne.

(END VIDEOTAPE)

QUEST: Joining me now, the mayor of Melbourne, Mayor Sally Capp.

Mayor, thank you for joining us, getting up very early this morning. We hoped to be outside, but I guess, you're rather grateful that we are not

since it is raining out there.

MAYOR SALLY CAPP, MELBOURNE, AUSTRALIA: I am.

Welcome to Melbourne. We love all seasons here, so we hope you're having a good time regardless of the weather.

QUEST: The city itself, you were just telling me you have now actually overtaken Sydney as the largest in terms of population. But this battle --

economically, politically, socially between Sydney and Melbourne, the eternal debate as AI calls it.

CAPP: It's a great rivalry. We are highly competitive, Richard as well, all Melbournians one, but look, we are very different cities and we really do

work well together with a small population, 25 million people in Australia dispersed across an enormous country.

We've really got to work together to project to the world.

QUEST: Australia had -- we all had hard pandemics, but Australia with the lockdown and even the intrastate travel that was banned. It has taken

Australia quite a long time to regain economic footing as result.

CAPP: It really has. Melbourne was one of the cities with the most days in lock-down, not just in Australia, but around the world. That bounce back as

we call it has taken some time, but we are really seeing positive traction in our economy now.

QUEST: What are the strengths of this economy? Because here in Melbourne, you have tourism, which you still need to grow more, obviously.

CAPP: Yes.

QUEST: You have the arts, you have the culture, you have the restaurants, you have the indigenous, you have the first -- but what are your strengths,

do you think?

CAPP: Look , many of those elements may cast highly livable, but what drives our economy are the financial services sector. One of the biggest

superannuation systems in the world, managed from Melbourne, a very vibrant education sector, which leads to research centers as well, in fact, for

being the biotech research center of Australia.

QUEST: I hesitate to say this, although I am not within distance from you, Mayor, but Sydney gets, if you will, the glitz as the largest city per se.

Canberra is the capital. Does Melbourne fight for a role in a sense?

CAPP: Well, I think fighting for our role is fantastic. It means that we are never complacent. We are the arts and culture capital of Australia. We

are the events capital and we are the only city, for example, in the world that has both a tennis Grand Slam and a Formula One Grand Prix.

We really drive a lot of our economy around events, and it makes this a very vibrant and economically successful city

QUEST: A lot of our viewers will not be as familiar with the federal system --

CAPP: Yes.

[16:25:01]

QUEST: -- in Australia, which is sort of an interesting halfway house between the US federal, the parliamentary system, the state system, and the

local system as well. You have a lot of government here.

CAPP: We do. We love government -- three levels of government. I think that focus on delivering programs and projects that really drive economies, but

also drive communities is important.

You've mentioned the livability rankings. One of the key elements of that is a focus and investment in people and in Melbourne that's been a real

driver.

QUEST: But what do you need more of besides investment? What is the thing that is holding you back?

CAPP: Well, Australia overall is a migrant story. Richard, more and more people is absolutely a key element to our future success.

QUEST: Which is an interesting thing when you compare it to the rest of the world, that is saying less, you're saying more.

CAPP: Look, it is a live debate here in Australia as well. But our economy is built on more and more people. We need more housing . We definitely need

to -- go on, I can see you want to interrupt.

QUEST: Now, you finish your housing.

CAPP: Housing, we need to keep responding to climate change, it is a massive opportunity here in Australia and for us, we want to make sure that

that livability retains us as a talent magnet city.

QUEST: So, you're going to tell me both. But where do you see Australia naturally? Melbourne naturally?

The strong trade links with China, which can be disrupted by the US or the traditional Anglo American, if you will, links -- the English speaking

links to this and the country, up towards the US and the world. Where do you believe this country naturally lie?

CAPP: Well, actually you've just described it beautifully because the advantage we have is that we can really play that bridge from traditional

western cultures into this Asian region.

It is absolutely imperative that you have the language skills, the cultural skills in the time zone, in the proximity to these major Asian markets and

Australia and Melbourne play a brilliant role to create that bridge.

And it goes both ways because the Asian nations are very interested in participating in western economies as well.

QUEST: You do have a very weird bit of road traffic, which we are going to look at later. The hook turn.

CAPP: We love the hook turn.

QUEST: The hook turn is enough to give me a jitter.

CAPP: It could be one of our best exports ever, Richard.

QUEST: I would never disagree with the Mayor, never disagree, but can you do a hook turn?

CAPP: I can. It keeps the traffic flowing around our busy city.

QUEST: We will talk about the hook turn, Madam Mayor. Thank you so much for joining me.

CAPP: Lovely to see you, Richard.

QUEST: Thank you very much.

You will see an example of the hook turn coming up later in the program.

As we continue tonight, Apple is updating its iPhone to include new AI features. Investors, while unimpressed. It was a long waited announcement.

The shares are off two percent. Clare Duffy will discuss Apple and its AI in just a moment.

QUEST MEANS BUSINESS live down under.

(COMMERCIAL BREAK)

[16:31:54]

QUEST: Hello, I'm Richard Quest. A lot more QUEST MEANS BUSINESS from Melbourne when Apple announced its first major push -- new push I should

perhaps say into artificial intelligence. And skeptics are wondering perhaps a little too late. And I visited a formula -- a former Formula One

engineer who says he's perfected the recipe for the croissant and you'll get to see my pathetic attempts at making a croissant.

We'll get to all of that only after the news headlines because this is CNN from Melbourne. And on this network, the news always comes first.

Jury deliberations are underway in the Hunter Biden's federal gun trial. President Biden son's accused of illegally buying and possessing a gun that

has been addicted to drugs. He has pleaded not guilty. The trial is the first against the child of a sitting U.S. President.

Donald Trump starting the week off by meeting with a probation officer. The former U.S. president must attend a virtual pre-sentencing interview

artists conviction last month on 34 felony counts of falsifying business records. The sentencing will take place on July the 11th.

A search and rescue operation is underway in Malawi after a plane carrying the country's vice president went missing. Officials say the plane carrying

Vice President Saulos Chilima and nine others failed to make a schedule landing on Monday. It is no longer detectable by radar.

And this Austrian Airlines aircraft was badly damaged during a hailstorm on Sunday. An Airbus A320 was traveling from the Mallorca when it hits a

thunderstorm before landing. The storm damage the plane's nose on the top of the cockpit. None of the passengers or crew were injured, the plane

landed safely in Vienna.

Apple has revealed its biggest push yet into artificial intelligence. It's unveiled the upcoming features of its new flagship development at its

developer's conference. CEO Tim Cook said the company's newest devices will be capable of what he's calling Apple Intelligence.

(BEGIN VIDEO CLIP)

TIM COOK, CHIEF EXECUTIVE OFFICER, APPLE: We've been using artificial intelligence and machine learning for years to help us further that goal.

Recent developments in generative intelligence and large language models offer powerful capabilities that provide the opportunity to take the

experience of using Apple products to new heights.

(END VIDEO CLIP)

QUEST: Now some of the new tools involve proofreading, but it is an improvement to Apple's virtual assistant Siri which will familiar with.

Clare Duffy is in New York. Clare joins me now. Is thing -- is this revolution, is it evolution, is it Quantum Leap or is it a yawn?

CLARE DUFFY, CNN BUSINESS WRITER: Oh Well, Richard, I think this is a really big step for Apple. You know, Apple had been behind many of its big

tech competitors in terms of articulating a vision for artificial intelligence.

[16:35:09]

This announcement today about Apple Intelligence was highly anticipated. And what's interesting about this is that it relies on the personal data

that so many of us have stored in our iPhones and our computers. And Apple Intelligence will draw on that personal information in order to answer

user's query. So, for example, I could ask Siri now to tell me about my dinner plans with my mom and it could pull the restaurant and the time for

my text conversation with my mom, as well as driving directions from the office based on Apple Maps, it could tell me what to wear based on the

weather, all without me having to go and search for that information in various apps.

And this is really key for Apple, because Apple Intelligence doesn't just rely on random information about the world in the way that ChatGPT or

Google's A.I. search does. It has that personal information, which makes this tool unique because Apple is really the only company that we trust

with so much of our personal information. And so that makes this tool different from a lot of the other competitors in the A.I. space.

QUEST: Now, it's interesting you say that, because while I was here, I wanted to find out Sydney versus Melbourne. And I asked how to use the Meta

A.I. tool in WhatsApp. And I asked her, you know, what's the -- which is better Sydney or Melbourne? And it just described it as the eternal debate.

But Clare, Apple would have been able to say, well, you should know that Richard, you were in Sydney in March, and you went to X and Y because it

can delve deep into what's in my phone.

DUFFY: Exactly, it can delve deep into what's in your phone. And the other important part of this, this announcement today is that Apple has also

announced a partnership with OpenAI, which means that if there are queries that would be better suited to ChatGPT than Apple's Apple Intelligence,

users can opt in to use ChatGP -- ChatGPT directly from their Apple devices, they don't have to have a ChatGPT account.

So they sort of get the best of both worlds, they get this very personalized digital assistant that's powered by Apple Intelligence. But

they can also ask these big questions that require more computing power from ChatGPT as well. And I want to pick up on just one other really

important piece of this announcement today. And that's that Apple has really prioritized privacy as part of this announcement.

The company said that the majority of user queries will happen on device which means that their personal information, the questions that they're

asking them, their data won't be going to be stored on Apple servers, won't be used to train Apple's A.I. models, which is something that a lot of

people have concerns about in terms of how these A.I. models are trained and how their data is used. So that's a really important piece of this as

well.

QUEST: Clare Duffy, all this talk. Thank you. Thank you, ma'am. All this talk is making very hungry. As we continue from Melbourne tonight. Luckily,

one of Australia's top bakers, who's also an engineer showed me how to make the perfect croissant to have with my flat white. Here they are, they are

baking in the oven. Those all the croissants that I rolled yesterday. Any the moment now you'll see how they have turned out after the break. QUEST

MEANS BUSINESS in Melbourne.

(BEGIN VIDEO CLIP)

[16:41:02]

QUEST: It is coming up to 20 to seven in the morning here on the East Coast, the southern east coast of Australia. The -- everybody's enjoying

their morning flat white coffees. What is a flat white? You'll have to just wait until World of Wonder later on to discover the exact mechanisms. But

the flat white is the Australian nay some say New Zealand exports to the rest of the world.

The origins are hotly contested with some claiming it was invented actually right here in Melbourne. Now the city itself has a thriving coffee culture.

And what is it coffee without a pastry or in Melbourne without a croissant on the side. Kate Reid quit her job as a Formula One engineer to become a

baker. And now she says -- they have many critics, she's got the best croissants on the planet.

Kate describing the business environment here and how she decided to make top croissants.

(BEGIN VIDEOTAPE)

QUEST: So, let's have a look at this. Let's see.

KATE REID, FORMER FORMULA ONE ENGINEER: Well, you wouldn't have a lot?

QUEST: Well and don't want to eat actually, you're not going to let me that, are you?

REID: You need that additional 10 minutes to use the residual heat inside the crust to continue cooking those inner layers.

QUEST: How much of your technical training as an engineer, how much do you believe that training allowed you to create this croissant?

REID: Studying engineering and working in the field changed one mindset of how to approach problem solving. And this idea of like one variable that

it's fun. So, this process of innovation and evolution of a product that most bakeries have their croissant recipe and they don't challenge it. But

every single day at Loon our recipe and every single process around it is up for evaluation and critical analysis and (INAUDIBLE) that's an

engineering mindset.

QUEST: All right. But then how do you marry the engineering mindset with the baker's love? Because the engineering mindset says if I do this, this,

this and this, in this particular order, we will get the same results every day. The baker's mindset is?

REID: Yes. But that's also how I feel when I see like a beautiful vintage 911 (INAUDIBLE) like I get, you know, I get feelings of moments of joy

seeing something beautiful in the automotive world. I don't think that they're two different themes. I think if you feel passionate about

something but you follow it with a process, you can still have (INAUDIBLE) for that.

QUEST: What happens inside you when you see that line?

REID: The whole time I worked in Formula One I never got that real feeling of joy. And I discovered just like this, watching somebody eat a bait with

that they're enjoying takes them out of the grind of the day to day, something that might be bothering them or making them upset. If you have

the ability to make someone feel good for 10 minutes through eating a delicious bait could (INAUDIBLE)

QUEST: This is your baby.

REID: Yes.

QUEST: And you are at that inflection point. Do you know that risk is? Everybody telling you to expand. Sound familiar?

REID: Yes.

QUEST: How are you -- how are you fletching that?

REID: I'm not surprised to hear. So the store that you stand in was our flagship store. We have two more in Melbourne. We actually have two in

Brisbane and we're about to open two in Sydney. So, on already in that --

QUEST: She said the S word. A Melbourne (INAUDIBLE) used the S word.

REID: Talking -- we've been talking about opening in Sydney for five years now and I know Sydney siders are very excited about it, as are we and it's

about time. I think the best thing about -- to eat up with engineering marines is figuring out how to expand without affecting the quality of the

product and both heart and soul of the business.

[16:45:07]

QUEST: I was always taught, smell the food because so much I want to taste enjoyment comes from the smell. Cherish rise and smell. Now I'm ready for

it.

(END VIDEOTAPE)

QUEST: And I then went on to roll some pastry. Those were my croissants you saw cooking in the oven half an hour ago and also, they came out of the

oven. Everybody says that my croissants were the wrong shape. By the way, this is where it's falling apart. This is one of my questions. I rolled it.

What's wrong with that aye, go on, have a croissant, have a croissant. Enjoy our croissant. I wrote these questions and very nice they are too.

I'll have one later in a moment.

You saw them in the oven. Slowing economic growth in Australia is pressurizing the central bank to cut interest rates. We heard about the

difficult economic conditions. Australia's GDP grew by just 0.1 percent in Q1. The weakest outside of the pandemic since '92. The Reserve Bank has

kept rates at a 12-year high. Even so inflation has remained stubbornly up there.

I spoke to the treasurer of Australia, Jim Chalmers, at the IMF spring meeting in April. He told me taming inflation for an independent central

bank remains the top priority.

(BEGIN VIDEO CLIP)

JIM CHALMERS, AUSTRALIAN TREASURER: The primary determinant of Australian interest rates is not American interest rates, the primary determinant is

inflation. And then taking into consideration the way that our economy is slowing, our labor markets softening a little bit. The Reserve Bank will

weigh up all of those things and take this decision independently as you anticipated, I would say.

(END VIDEO CLIP)

QUEST: Now, China accounts for more than a quarter of Australia's exports and decades of economic growth there boosted the economy here. The

relationship on economics, you heard of Melbourne talking about that just a moment ago and in China now the economic expansion has caused major changes

and shifts in Chinese society. That will have an effect here. People are abandoning villages to search for opportunities elsewhere.

CNN's Marc Stewart now reports on the ghost towns in China.

(BEGIN VIDEOTAPE)

MARC STEWART, CNN CORRESPONDENT (voice-over): In parts of rural China, time stands still.

STEWART: We're on a road trip to show you what's known as a ghost village. We are technically still in Beijing, about 40 miles from the city center.

And we came here to show how people have moved over time. This was once a thriving village. Now it's almost abandoned.

STEWART (voice-over): Houses in the village are overgrown with weeds. In this home, reminders children were once here. Artwork and school

certificates hang on the wall. Shoes lay on the ground.

STEWART (on camera): We don't know exactly what this once was, but it's clearly locked up. The windows are broken. No one has been here for a

while.

STEWART (voice-over): To give you some context, in the 1980s, only about 20 percent of Chinese families lived in cities. Now that number is closer to

70 percent. This village reflects that transition.

STEWART (on camera): This shift isn't without side effects. As young people move to cities for better opportunities in jobs, in some cases they're

leaving parents, even children behind.

STEWART (voice-over): Urbanization on such a massive scale has drastically changed the economic and social landscape across rural China.

STEWART: What's happening here isn't that much of a surprise. Modernization has been a big part of the Chinese government's blueprint for the future,

an effort to keep up with the strength of the West. So, we're seeing this movement from farm to factory and now beyond.

(BEGIN VIDEOTAPE)

QUEST: Marc Stewart reporting. Now, the eternal debate, to dunk or not to dunk? That is the question. Well, you'll need more than a bit of dunking.

After you've negotiated the traffic here in Melbourne. Here they have a peculiar traffic pattern where turning right means getting into the left

lane and doing a hook that will eventually lead to grief I fear. In a moment, I think I'm going to dunk, in a moment the hook turn.

(COMMERCIAL BREAK)

[16:52:15]

QUEST: Welcome back. We're at the Langham Melbourne here in Melbourne, Australia. We had hoped to be outside. That was the intention to show you

the beautiful early morning skyline of Melbourne. But of course, it's raining it is winter. And despite the fact that have been glorious every

morning so far this morning, the heavens decided to open and as a result, well it was just too grim.

In fact, it was almost croissant worthy of a dunk. So, we came inside instead because it really would not have been pleasant. But when you visit

Melbourne in Australia, here, there is a peculiar traffic phenomenon not seen in other cities. Even here in Australia, they abandoned it, it's

called the hook turn. If you have never seen it, it's bewildering, confusing, the mayor it encourages safety, but it's very common.

Any visitor, if you're coming to Melbourne, particularly the CBD, you need to understand -- seriously, you need to understand the hook turn.

(BEGIN VIDEO CLIP)

QUEST: Now watch what happens here. This car wants to turn right. Counter intuitively it doesn't position itself in the center but at the left, it

just sits there and waits while all the traffic continues to move. The idea is simple. You don't get a lot of traffic bunched up in the middle of the

road. So, let's wait for a green light. They've been told to wait, wait, wait, wait, the lights will change, with the changing now they now get the

right to go.

These people will go next. This is more excitement than humans should be allowed.

UNIDENTIFIED MALE: Don't go in the hook.

QUEST: Why am I animated? Because it is not very often that you see things that are completely different. The right turn on red In the United States,

the roundabout etiquette in Britain, the hook turn in Melbourne, which is just one of those oddities and there's one on the hook getting ready. And

if you don't really know about the hook, you're hooked.

(END VIDEO CLIP)

QUEST: Now think about it. You actually -- you want to turn right, but you actually have to go into the left lane and then you wait in the middle of

the road. And only when you get to filter which sometimes people jump and ignore, can you turn? This is most extraordinary. The hook turn. And what's

interesting truly about it, the fact I get really excited at the hook turn is that in Melbourne don't fully understand it anyway.

[16:55:04]

After a hook turn and the weather -- the weather as I explained to a moment ago, it has not been kind to us this morning. The Langham Melbourne have

been very kind and nothing has come inside. That's what we should have been seeing outdoors instead we are indoors warm toasty with flat whites and

croissants, life is good.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment live from Melbourne, Australia. I've always loved my visits to Australia. I've been coming to the country since

1991. It is a fascinating example. Yes, everybody here knows that they are geographically remote. Although they talk about going up to London and New

York as if it's getting on the number 13 bus. Just going up to London. They will tell you.

The business environment here is brutal. They take no prisoners and their businesses have succeeded. In many cases going overseas and being

successful but still there is an Australian way of thinking about business. There is an Australian ingenuity that we showed you tonight, when it comes

to making croissants when an F1 engineer turns her hand to making the best croissants in the world.

Whether it be Vegemite, or whether it's simply be making its own vehicles, or creating an entirely new way of life. Australia seems to have perfected

it and they have a livability here, that's quite extraordinary. All that said, do not be fooled. There are serious issues in the economy that is

resource balance too heavily. Politics is almost a blood sport in this country, where the week gets shoved aside.

And of course, there are whole questions of what happens next with China, the U.S. and Australia's role in the world. All that is for another day

because that's QUEST MEANS BUSINESS for this Tuesday morning in Australia. Monday night to you.

[17:00:06]

I'm Richard Quest in Melbourne. Whatever you're up to in the hours ahead, I hope it's profitable. Enjoy your flat white wherever you may be.

END