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QUEST MEANS BUSINESS

U.K. Strikes Brexit Deal with European Union; Tough Losses for Bitcoin as Craze Continues; Solid Jobs Numbers Pushes Wall Street to Record; DUP Says, No "Cherry Picking" in Final Brexit Deal; EU and Japan Agree on Free Trade Deal. Aired 4-5p ET

Aired December 8, 2017 - 16:00   ET

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


[16:00:00] RICHARD QUEST, CNN HOST: Closing bell ringing on Wall Street. Bristol-Myers Squibb ringing the closing bell. Push the button. Trading

going to end. And I do believe the Dow Jones -- if you look at the graph in moment -- is the best of the day so far. Nasdaq up as well. S&P 500 --

we'll let you know if there were any records. Yes, two, three -- oh, I'm afraid that was a rather languished gavel for a record-breaking day. But

trading is over. It's Friday. It is December the 8th.

Tonight, the art of the deal. Britain and Europe make their divorce plans official. Here today, gone tomorrow. Bitcoin investors are holding on

tight. And U.S. stocks work their way to new records. It's on the back of more impressive job numbers.

I'm Richard Quest. Tonight, live at the CNN center, where, yes, I still mean business.

Good evening. Onward to phase two after a frantic night of negotiations in Brussels, the talks ended with a breakthrough on the U.K.'s divorce from

the European Union. A diplomat victory for Theresa May whichever way you look at it. She can now put a tumultuous week of talks and in-fighting

behind her. But it came at a cost for both sides.

(BEGIN VIDEO CLIP)

JEAN-CLAUDE JUNCKER, EUROPEAN COMMISSION PRESIDENT: Todays results is of course a compromise. It is the result of a long and intense discussion

between the commission and those of the U.K. As in any negotiation, both sides had to listen to each other, adjust their position and show a

willingness to compromise. This was a difficult negotiation for the European Union, as well as for the United Kingdom.

THERESA MAY, BRITISH PRIME MINISTER: I've consistently want we want to build a deep and special partnership with the EU as we implement the

decision of the British people to leave at the end of March 2019. Doing so will provide clarity and certainty for businesses in U.K. and the EU and

crucially for all our citizens.

(END VIDEO CLIP)

QUEST: Now, the deal -- take a look and you'll see what's involved. First of all, the exit bill. The U.K. is to continue to contribute to the EU

budget until 2020, as if it's still in the union. The other aspect to that, of course, is that there may be some bills and some costs that will

go beyond 2020, and that's highly controversial. The estimates at the moment have that bill at around $50 billion. EU citizens and U.K. citizens

have the right to live, work and study in each other's jurisdictions and will be protected -- and this was a controversy bit -- difficult cases,

although they will be started in Britain, the U.K. can refer them to the European Court of Justice for eight years after Brexit. In other words,

there still remains to be an ECJ element -- the European Court of Justice element into all of this.

And the question of the Irish border. That is punted further down the road. The U.K. will follow customs union rules until they find a solution,

and if one can't be found, well it will keep as close as possible as it can. It is committed the U.K. has guaranteed, in the words of the Prime

Minister, to avoiding a hard border.

We're following developments on both sides of the channel. CNN's Bianca Nobilo is in London and will be looking at the U.K. political side of it.

Erin McLaughlin is in Brussels to talk about this from the European side. So, let's start with you, Bianca. By any definition, Theresa May managed

to pull this off. But I'm wondering just how much -- how many concessions did she have to make?

BIANCA NOBILO, CNN PRODUCER: The phrase people keep using today is, kicking the can down the road. And she certainly seems to have done that.

So not too many concessions have shown themselves just yet. One which is important is about the jurisdiction of the European Courts of Justice. And

that is because ECJ oversight is the biggest bug bear for many of the Brexiteers. Some sort of compromise has been struck with the EU, but there

will be at least eight years of continued oversight of the ECJ on certain case law, which is definitely going to ruffle the feathers of some of those

who want a hard Brexit in the U.K.

[16:05:04] QUEST: Right, but Erin McLaughlin, on that point, as I read the agreement, the deal is that the British courts can refer to the ECJ for

rulings, or at least for decisions or for guidance on this. But there seems to be a very neat and acceptable get out for both sides.

ERIN MCLAUGHLIN, CNN CORRESPONDENT: Yes, that's right, Richard. And in some ways, it is seen as a concession for the EU. I was speaking to one

senior level EU diplomat who told me he would actually have liked to have seen more direct oversight from the European Court of Justice on the

citizens issue going forward. But they have settled for this agreement, which he says is sufficient to move forward in this process.

QUEST: The price to be paid Erin, stay with you the price to be paid, $50 billion give or take change. This question -- does the EU feel that it has

got sufficient in terms of future commitments?

MCLAUGHLIN: Well, you know, it's interesting. That number, Richard, is coming from the U.K. I have yet to speak to an official here in Brussels

who is willing to put an exact figure on that Brexit bill. What they're saying they agreed on today is a framework. A formula for the U.K. to make

payments into the EU budget going forward.

NOBILO: And the issue of the Brexit bill, Richard, and the practicalities of that is a big one for politicians in the U.K. But I would say about the

bill and in fact about the ECJ laws we were talking about, a Downing Street spokesperson told me that those referrals to the ECJ only constitute about

two or three referrals a year. So, we're not talking much in terms of practicalities. And the Brexit bill in terms of practicalities makes sense

that money needs to be paid back to the EU. For Brexiteers that will be a headache for the Prime Minister is about principle. It's about

sovereignty. And trying to be one step ahead of the EU in these negotiations.

QUEST: Erin and Bianca, thank you. In Brussels and in London. I have no doubt you'll spend your weekend poring over the fine print of the 16-page

document. And we'll talk about it next week.

Undeniably, a political victory for Theresa May. The leaders say the issues in yellow on our tracker are now resolved. Remember what they were?

So, you had the sequencing of the first phase versus the second phase. You then had the EU exit bill, solved. Citizens' rights, solved. Irish

border, solved. When I say solved, I don't mean solved, undusted and over. I mean, you can now go to the right hand of the screen, which is the trade,

legal, security, and transitions. And Donald Tusk is warning that the next bit is going to be even trickier, with trade and the transition period and

all that follows on. Businesses waiting to see if they need to trigger contingency plans. The head of the trade policy at the British Chamber of

Commerce told me business, not surprisingly, is frustrated.

(BEGIN VIDEO CLIP)

ANASTASSIA BELIAKOVA, HEAD OF TRADE POLICY, BRITISH CHAMBER OF COMMERCE: The businesses are really tired of all of the politicking. They are tired

of all of the playing around the edges with the wording. What they want to understand is what are going to be the practical implications with them

going forward. And at the moment, we haven't had these discussions yet. Businesses are hopeful early on next year they will start to get an idea

what it will look like. But unless there is some real movement, I'm afraid there will be frustration once again from the business community.

(END VIDEO CLIP)

QUEST: The issue now, of course, is what this means for certainty, and U.K. companies. Joining me is Edwin Morgan, the director of policy at the

Institute of Directors. We have seen the agreement. We now -- or the British now move on to stage two. That in itself is an achievement. Isn't

it?

EDWIN MORGAN, DIRECTOR OF POLICY, INSTITUTE OF DIRECTORS: It is. It was a very important step forward that we took today. It is just a small step,

but it makes that wen now start talking about the transitional periods for -- once we leave in March 2019. And for that final trading relationship

that the U.K. secures with the EU. So, it is an important step.

QUEST: What is it that the IOD wants, other than certainty, which everybody wants? What sort of deal do you want out of phase two?

MORGAN: So, we're working on the basis that the government is leaving, making sure the U.K. leaves the customs union and single market, so we are

looking for the next step down. Which is a comprehensive free trade deal, no tariffs, very easy flow of goods across the border and British companies

still being able to access EU workers, really. That's the key components for businesses.

[16:10:00] QUEST: Is that trying to square the circle? It's simply not possible to have that. Because, I mean, you summed it up at the beginning

of your answer when you -- you know, you're looking for one step down from single market access and I'm not sure that exists.

MORGAN: Well, we are in an unprecedented position of trying to work our relationship that no one currently has with EU. We are not going to be

Norway. We're not going to be Switzerland. We know what we're not going to be. What we don't know now is what exactly the British government wants

us to have and what is possible. From the business perspective, it really is a small range of key things. It's customs, it's trade, it's access to

workers. Those are the really key things for us.

QUEST: This transitional period, are you envisioning a status quo?

MORGAN: So, the chancellor, the British chancellor, talked about a stand still transition, which is exactly what we would want. So, during that

period, movement of people stays pretty much the same. Custom arrangements stay the same. If you're a company that wants to export goods across the

English Channel to France, say, it's going to feel pretty much as it is now. You're going to pay more tariffs. It's going to be more red tape.

That's the kind of transition that we need. Because businesses just are not in a place yet where they could adjust to that from March 2019.

QUEST: Is it realistic or what people are thinking of ultimately -- look, if we kick the can down the road long and far enough, eventually people

will forget where we started from and this transitional arrangement will become the daily norm.

MORGAN: I don't actually think so. I think the inevitable logic of where we are now is that we will cease to be members of the EU on March 2019.

And that period afterwards, the government has been very keen to stress that it is -- it's going to be -- it's not going to last forever. Politics

in Britain being what they are, we are moving away from the EU. Over time we will probably diverge more and more, and I think that is actually just

inevitable now and that what businesses are preparing for.

QUEST: Summing up on today's announcement then, you would say what?

MORGAN: Today's announcement really is -- it's welcome, it's a relief for businesses. It means they'll be going to Christmas not having to worry

about progress not being made. But it's really just the first step and there is a long road ahead.

QUEST: Thank you, sir I appreciate it.

Now the deal pushed up stocks in London. All the major indices closed higher. Those shares of Poundland owners, Steinhoff, they lost even more

ground in Frankfurt, as if that were possible. They were trading at one sixth of their value at the beginning of the week. Remember, an accounting

scandal with possible criminal overtones that is affecting that. The FTSE up 1 percent.

What goes up must come down. Well, arguably. But then it goes back up again in the case of bitcoin. The roller coaster continues after hitting a

new record. We'll bitcoin after the break.

[16:15:00] (COMMERCIAL BREAK)

QUEST: If you bought bitcoin after watching last night's program, I hope you had a strong stomach throughout the course of the day. The

cryptocurrency plunged after hitting a new record above 17,000 and then it fell down and now it's off 6.8 percent. Prices were not just volatile.

All week it's been frenzied, as investors saw a jump of more than 60 percent. And this year, bitcoin has soared 1500 percent from less than

1,000 where it began. Look at that. Today's high, 17,153, the low, 13,953. The gain of 60 percent and up 1500 YTD. Nolan Bauerle is the

director of the research at CoinDesk where we've been getting all our bitcoin data from, joins me now. I mean, the simple -- the first question,

why has it been so volatile this week? Is there an underlying reason why this has taken place this week?

NOLAN BAUERLE, DIRECTOR OF RESEARCH, COINDESK: I think we're accessing a whole new broad spectrum of users and people who are getting exposure to

it. We have the futures coming online next week from the CBOE in Chicago and the CME a week later. So, a lot of people are thinking that with

institutional money now on the doorstep, there's an opportunity to watch the price climb a bit. So, you've got a whole new group of people who are

getting exposure.

QUEST: How much of what we are seeing is real trading versus just the market responding? Now I know it's a computer driven business in that

sense. So, it doesn't have the same human interventions. It's algorithms versus just marking up and down stock. But the computers can spot when

there is activity. So, how much is actual real trading?

BAUERLE: I'd say a majority of it is real trading. I mean, you've got so many new users coming on board. Just look at the Coinbase being the number

one app on the iTunes store right now. There's no exchanges manipulating that. That's real users downloading the app and interested in trying to

get exposure.

QUEST: Then by the alternative reason, if it goes up that much, the fact it's coming down would suggest that large sales are going through.

BAUERLE: Sure, if it's a super liquid asset. Right? It's a bear instrument. And because of that, people are looking at these returns, they

want in. And so, there's a time to exit and a lot of people find this is a good time for it. Some people are even considering that next week's

futures will cause a dip in price. So, a lot of people are selling, and then they'll buy lower.

QUEST: What is the integrity of the clearance process for bitcoin's transactions?

BAUERLE: The integrity of the clearance process? I mean, this is price discovery. So, you have people who are looking for sellers, people looking

for buyers. And they find price with price discovery that way. We see on --

QUEST: No, but in terms of them getting your money back. In terms of actually, you know -- I bought bitcoins, I've got a profit of, say, 50

grand, I sell it, and I need to make sure I get the 50-grand back.

BAUERLE: Oh, the infrastructure that has developed around bitcoin over the past few years is now bulletproof. These guys have survived difficult

times. These are legitimate businesses. Coinbase is the first unicorn in the space that's got real VC behind. This is a billion-dollar company.

You'll get your cash. They're going to settle and clear for sure.

QUEST: Right. So, the other final point, of course, is without getting too hung up on the issue of regulation and -- I mean, bitcoin seems to

work. The whole mining process seems to work. The block chain integrity seems to be rock solid. But at the end of the day, who do you complain to

if your bitcoin transaction goes wrong?

BAUERLE: Well, service providers -- if it's you with this push transaction, if it's you're doing the transaction, you know, it gets mined.

You're in a block and then the transaction goes through. If it's a service provider, you can complain to them. They have excellent customer service.

They work really hard to respond to their customers' needs. You'll see on Twitter that the CEOs will come out and apologize if there's a lot of

delays, because of traffic. You know, all of the exchanges have really good interactions with our customer base.

QUEST: Now Nolan, finally, over the course of the week, we've covered our hair on QUEST MEANS BUSINESS, predictions that say 60,000, 100,000. Some

say crashing back to 10,000. Now, look, obviously, bitcoin is not going to go away. It's not a bump --it's not tulip mania. But even with tulip

mania, there were some tulips left at the end of it. With this, how much credence should we give to the forecast of six-figure valuations for

bitcoin?

[16:20:08] BAUERLE: I think there's a lot there. If you flip it, if you look at it from a lot of the cryptocurrency users' perspective, they are

still see one bitcoin equaling one bitcoin. What they see as the bubble is the U.S dollar. Or other fiat currencies. To a lot of crypto people,

bitcoin is the pin, not the bubble. So, when you see these valuations, really what they're talking about is the deflation of fiat. The deflation

of the U.S. dollar. Not the bubble around crypto.

QUEST: Nolan, next week on QUEST MEANS BUSINESS, we are going to attempt to buy a bit of a bitcoin, and show just the difficulties or not, as the

case may be, of having a digital wallet. Will you help us?

BAUERLE: Sure, I'd love to.

QUEST: How much is the minimum I can put in for this?

BAUERLE: You can put very little. A dollar, that's not a problem. Bitcoins are divided eight decimal points down. So, they're called

Satoshi's at their smallest unit.

QUEST: After the man of course.

BAUERLE: After the creator, Yes. And if you talk to a lot of crypto people, they'll say, I didn't ask for your two Satoshi's. That's an inside

baseball expression.

QUEST: I will ask for your two Satoshi's next week good to see you, sir. Have a good weekend.

So, Wall Street closes the trading week with more record highs. The trading post, to show you -- to the trading post. Coming over and you'll

see. Look at that our trading post in New York. The Dow is showing records of 65, S&P of 58. The Nasdaq showing records of 70 so far, this

year. Record highs, the Nasdaq didn't manage one. Even the European bosses, no records today, per se. But the FTSE, the DAX and the CAC -- in

actual fact, you really do get to see from our trading post, you absolutely get to see this significance. And green lights to show what a good day it

was. And it was boosted by the U.S. jobs report. 228,000 jobs last month. An unemployment rate of 4.1 percent, which remains at 17-year low. Guru La

Monica is in New York for us tonight. Is it -- was it this jobs report that pushed the market higher, do you think?

PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: I think it was. This was a fairly solid jobs report. We had more jobs added than expected. The

unemployment rate stayed stable at a 17-year low, 4.1 percent. The one negative is that wage growth still not that fantastic. It did tick up from

a month ago, but at 2.5 percent over the past 12 months, that leaves a lot of Americans wondering, you know, just what are they really getting from

their employer. They're not really making all that much money. It's more than inflation, which is a good thing. But a lot of people I talk to say

that we should have wages growing between 3 and 4 percent, given how strong the job market otherwise is.

QUEST: You and I throughout the course of the week we talked about this rotation that started out of tech, into industrials. And now it seems to

have gone back to tech the FANG+ index, which is a new favorite of mine, the NYC FANG index. The FANG+ index was at 1 percent higher. So, has that

rotation rotated in that sense and there's now rotating to rotate back?

LA MONICA: My head is rotating, trying to figure out what you're asking. But, no, in all seriousness, Richard, I think what we're seeing at least

today, because of the positive jobs report, is that everything was green. This was finally a day where we didn't have, oh, well, old economy stocks

were stumbling while tech returned back to its former glory or vice versa. I think Investors realized that the market is in good shape, as long as the

economy is healthy. That's good for the Apples, Facebooks and Amazons of the world and also good for the Boeings and Caterpillars and that's why you

had a brought marked rally today, one not just in a handful of tech stocks.

QUEST: Paul La Monica in New York. Paul, hopefully you'll join me next week with a Satoshi or two as we explain the investment into a bitcoin.

LA MONICA: I'm waiting for the revelation that you, Richard, are, in fact, Satoshi.

QUEST: Well, that you will have to wait for, since I can barely balance my checkbook -- not barely, I can't. Thank you, sir have a good weekend,

guru.

In the past few hours, Donald Trump has approved an emergency declaration for the state of California. There are six major fires burning across the

southern part of the state. Nearly 200,000 people forced to flee homes. Sara Sider in Ventura, which is dealing with a fire twice the size of

Washington, D C. Sara, before we look at the damage, something I need to just understand. How did these fires start? Why now? How did they start?

[16:25:05] SARA SIDER, CNN CORRESPONDENT: No one knows exactly why they started. That's part of the investigation. But I will tell you that the

reason why they have been fueled is partly because it is so dry here and because of the Santa Ana winds. Those winds that usually come through in

October, Richard, came through in December, making this the worst fire ever in December, in California. And that's saying a lot, because California

gets these fires fairly often. At least every year there are some kind of fires.

Now let me get to the damage. We're talking about 132,000 acres that have been burned. That's about 200 square miles. I want to give you an idea of

what that means on the micro level, because that's the macro level for this Thomas fire here in Ventura County. There is a house -- you see those

chimneys. That's all that's left of the house there. You look next to it, that's another house that has been completely destroyed. To my left,

another house that has been destroyed. To my right, another home that has been destroyed. And I'm going to take you down this one road, below this

house that you saw to the right of me, is another home that is destroyed.

And as I take you down, you know, you talked about it being two times the size Washington. It is now three times the size of Washington. And that

means that there is still a major fire burning, even though it is in more of a wooded area. Sort of burning in a huge area where there's lots of

trees and further away from homes right now, the Thomas fire.

But in this area, this is where the firestorm came through and because it's so dry, very low dew point, and it has been so windy, it just tore through

these homes like they were butter. And it is really stark when you look down from this vantage point here, and you notice the extreme amount of

destruction. These are homes -- we saw people leaving this area. We met a family who had just moved in. And they came back to see this. Take a look

at that.

QUEST: Sara, are these homes insured? And by that I'm not sort of asking is there going to be great economic financial loss on a macro scale. I'm

thinking about can people buy fire insurance in places like California against this sort of risk?

SIDER: Absolutely, yes. You can get insurance due to fire. Much harder and much more expensive to get insurance due to earthquakes. It doesn't

cover as much if you get earthquake insurance and a lot of people just can't afford it. Because it doesn't really make financial sense for them.

I do want to mention, though, that as you see these numbers of homes in just one neighborhood that you're looking at there, just home after home

after home, this is going to be an extremely expensive fire. All of these people have nowhere to go. So they either have to go with family or find

somewhere to live, such as a hotel, which is expensive. This is going to be very costly, as you might imagine. 439 homes or structures so far have

been burned to the ground and that is in Ventura alone. That does not include all five other fires that are currently burning. There are only

about 10 percent containment for this fire -- Richard.

QUEST: Sara, thank you. And thank god, of course, that no loss of life or -- that we know of at the moment.

SIDER: Yes.

QUEST: Not that we're ever putting dollars before that. But, of course, if you have survived the fire, thank God, but you then come back to find

everything you've worked your entire life for to be destroyed. That has its own heartache. Which needs to be fully understood. Thank you, Sara.

Sara Sider.

Ta-ra, U.K. Konichiwa Japan. Brussels is moving on to a new trade relationship amid the divorce between the U.K. and the EU.

(COMMERCIAL BREAK)

[16:31:23] QUEST: Hello, I'm Richard Quest. A lot more QUEST MEANS BUSINESS in just a moment. When Northern Irish party in the heart of the

Brexit dispute tells us there's no cherry-picking in the final deal. And while Britain is busy with Brexit, the EU has got to seal one of its

biggest trade deals in history with Japan. As we continue tonight, this is CNN, and on this network the facts always come first.

There's been a breakthrough in Brexit talks with agreements on three key issues. The U.K.'s divorce bill, the Northern Ireland border and the

rights of E.U. citizens in Britain. That means negotiations can now move on to the second phase, which are trade talks.

At least 12 U.N. peacekeepers were killed and 40 wounded in an attack in the Democratic Republic of Congo, it took place in Northern Kivu located in

the eastern part of the country. The U.N. Peacekeepers were all from Tanzania.

The Secretary General of the United Nations has called this attack the worst on the U.N. Peacekeepers in recent history.

Multiple reports now say two Palestinians have been killed in clashes with Israeli forces. On the third day of rage against Donald Trump's decision

to recognize Jerusalem as the capital of Israel. The Israeli military says it bombing militant targets in Gaza on Friday in retaliation for rocket

attacks aimed at Israeli towns.

The U.S. president's travel ban is now fully in effect. It applies to six Muslim countries, Chad, Iran, Libyan, Syria, Somalia and Yemen. It also

restricts nationals from North Korea and Venezuela, the U.S. Supreme Court cleared implementation of the ban on Monday pending an appeal.

In a first for the country, Japan is buying long-range missiles, the defense minister says the missiles are to counter the country's

increasingly severe national security situation, Japan did not name North Korea, but Pyongyang's growing nuclear program is leaving east Asia on the

edge.

Our top story tonight, the British government and the EU are hailing a breakthrough in Brexit talks yet the head of the Northern Irish party

that's literally propping up the U.K. government says nothing is agreed until everything is agreed.

(BEGIN VIDEO CLIP)

ARLENE FOSTER, LEADER, DEMOCRATIC UNIONIST PARTY: There are still issues that we feel need to be clarified. Particularly in and around the issue of

alignment of rules. We think that that needs to be sorted out. But, of course, nothing is agreed until everything is agreed. The final shape of

this deal and indeed the detail of it will come back to the house of commons, and we will make our assessment in relation to the entirety of the

deal, particularly in relation to those areas around the integrity of the United Kingdom and our unfettered access to the GB market.

(END VIDEO CLIP)

QUEST: Dana Magnay is in Northern Ireland, not far from the border and joins me now. I think that everybody is delighted in the sense that

something was done, that ideal was managed to be sorted but if you one looks at the strict wording, there is no question it is a fudge of sorts.

[16:35:00] DANA MAGNAY, CNN CORRESPONDENT: It definitely seems to be a fudge, particularly the issue of Northern Ireland. It seems that the DUP

was appeased as much as they could be, and you got the sense this was a bit of a fait accompli. That they had put their foot down long enough and

couldn't for much longer I sat down with Nigel Dodds, their deputy leader and the man who has been doing all the negotiating in Westminster.

He had just flown back after staying up all night for all these nights this week and I asked him what the DUP's reservation still were, and what

exactly it meant if a goods trade deal isn't done with the E.U. long-term, what does this full alignment with the single market and a customs union

actually mean? Isn't that staying inside E.U. regulations without having any say over them? This is what he said.

(BEGIN VIDEOTAPE)

NIGEL DODDS, DEPUTY LEADER, DEMOCRATIC UNIONIST PARTY: Of course, we would always like improvements to agreements and changes. But you don't get

anything perfect in life, and you have to make what is the best judgment and we judge that our red lines, which is whatever happens

constitutionally, politically, under regulations, economically that Northern Ireland will move in lockstep with the rest of the United Kingdom,

as the U.K. leaves the European Union so where, for instance, talks about alignment of rules in special circumstances between Northern Ireland and

the rest -- the Republic of Ireland, that will mean that the rest of the U.K. will do that, likewise

MAGNAY: But that does mean, per clause 49, that in the worst-case scenario, the U.K. stays part of the single market and customs union.

DODDS: No, no, because, remember, it's only in relation to certain specific measures, which are to do with the Belfast agreement.

MAGNAY: So, is it cherry-picking, single market and customs union access?

DODDS: The agreement -- as agreed by European commission and the European heads of state will endorses makes it clear that this alignment, which will

be for the whole of the U.K., is only in in relation to certain specific purposes, remember, it's alignment that's not convergence, either. So,

it's not a question of the U.K. or Northern Ireland staying inside the customs union in the single market if you read the text carefully, words

matter that's why we've been at our work this week and the prime minister has meant the agreement has been as a result of our contribution, then it's

very, very clear that it's only for specific purposes and in all cases Northern Ireland will move to gather with the rest of the United Kingdom.

(END OF VIDEOTAPE)

QUEST: Diana, you -- words matter, he said. Clause 48 of the deal, the United Kingdom's intention is to achieve these objectives their overall

E.U. and U.K. relationship that's obviously the trade talks the help to get a wider expense. However, should this not be possible, the U.K. will

propose specific solutions to address unique circumstances of the island of Ireland, they have not managed to find those specific solutions so far.

So, if they -- I'm asking you the same question you asked him. If they don't get a wider EU deal with no freedom of movement -- if that's not

possible they're scuppered.

MAGNAY: Well, l that is what it seems like. The DUP at the moment seemed to be priding themselves on the fact that they don't have a special deal

for Northern Ireland. They're big issue, of course, is that they want to remain as much a part of the United Kingdom as they always have been, they

don't want anything special for Ireland they want to stay a part of the United Kingdom. They don't want to have any regulator barriers.

But this seems to be a sort of get out of jail free card for Theresa May to get this deal

through that if she can't get the trade deal that she wants, they will have specific solutions for Northern Ireland. And if that doesn't work, well,

it looks like the U.K. as a whole, because of the DUP's intransigence on this issue, will be forced to align itself with the single market and the

customs union in all but name.

You can be very, very sure that there are Brexiteers in her cabinet were not at all happy about that.

QUEST: Dana, thank you in Northern Ireland. For the U.K., the next phase is the trade deal, now Canada has done a deal, and today Japan showed it's

also done a deal, a colossal free trade agreement with the EU, covering more than half a billion people, nearly a third of the global economy.

Carl Bildt is the former Swedish Prime Minister, joining me now from Stockholm, via Skype. Very good to have you. We need to dissect this

slowly and carefully. Let's deal, first of all, with Northern Ireland and I understand the wish to have an open border, a guarantee of a no firm

border. But if the E.U. does not grant the U.K.'s single market access without freedom of movement, I don't see how that happens.

CARL BILDT, FORMER SWEDISH PRIME MINISTER: It's very difficult to see how they can square that particular circle. It's all dependent upon what the

U.K. is prepared to do, I mean, in essence, it's not that difficult either there is sort of alignment or convergence or whatever you prefer to call

it, the Republic of Ireland and Northern Ireland that is the U.K.

[01640:00] Or in which case there is no border control and if there is not that alignment or convergence whatever you protocol it, there will be

border controls. Now, this has been fudged to a certain extent in order to move the negotiations forward to the next stage. Which might be necessary,

but the devil is clearly in the details, and all will be dependent upon the nature of the final deal and how the United Kingdom commits itself to

alignment, convergence, whatever with overall European rules thereafter.

QUEST: Carl Bildt, explain to us why it's necessary to kick cans down the road when very intelligent people doing these negotiations, you've been

part of these negotiations, where you're quite well aware what you're doing, you haven't fooled yourself for it for one moment that you have

solved it. But somehow there is a magic to kicking it further into the future what is that magic?

BILDT: I would not call it a magic. But sometimes there is a necessity and a lot will be dependent on the final deals. It's going to be the

partnership, the free trade agreement, or whatever. Between the European Union and the United Kingdom and here we are of course confronted with

difficulties there at the U.K. government that is probably badly split over this.

I understand from the media that they have now agreed to have a cabinet discussion for the first time on what they actually want to achieve with

that particular deal. And, of course, it is slightly difficult to negotiate with a partner that doesn't make up his mind. And that has also

meant that it's very difficult to look at the details of what will happen with the extremely important border question on Ireland. So, there's the

need to move on, but time is running. Exit will happen and to avoid that, there will be sort of -- the worst problems at the end of the process that

there would be anyhow. So, it's not magic, it's necessity.

QUEST: So, the two deals, Canada's deal and the Japan's deal, both of which took years to negotiate but, of course, the U.K. rightly points out

that it is already on a par with the E.U. So, getting a deal shouldn't be that difficult with goodwill on both sides.

BILDT: I think it will take quite some time because it is true that the starting point in terms of regulation is the same, but a deal doesn't deal

with sort of the fact that the U.K. is a member of the European Union, it's what is the future, what is going to be arrangements. How do you arrange

further down the road? Five years, ten years, fifteen years down the road?

And will there be guarantees that we will be on the same page in terms of regulation and things like that or not? And the trade arrangement, there

are different versions of that. And there is the fact that for the U.K. and that's got to be the major hurdle. And of course, the entire service

sector. Extremely important. And it's going to be very difficult to get that into an agreement I suspect.

QUEST: Carl Bildt, thank you -- oh, yes, go ahead.

BILDT: No, then I was just going to add that then for the U.K., of course, there is additional problem of catching up with the E.U. on all of the

other trade deals, I mean, they're going to soft on the Japan deal, they're going to be soft on the Canada deal, so they need to do a fair amount of

catch up with the European Union on global trade deals.

QUEST: Carl Bildt, thank you for joining us Friday night late for you thank you, sir. We appreciate it.

A busy week at the White House it ends with a high-profile departure. Officials say it's likely to be first of many.

[16:45:00] (COMMERCIAL BREAK)

QUEST: President Trump is leaving Washington for the weekend. One of his top security advisers is planning to leave the White House for good. Dina

Powell is the president's Deputy National Security Adviser in the former executive at Goldman Sachs. She has outlasted many of her colleagues, her

departure expected to be the first of many as the president comes to the end of his first year in office.

Dan Merica is that the White House, for goodness sake, Dan. I mean, obviously, an administration, any government with vast numbers of people,

there is turnover but are they pushed, or do they fall? I mean, what on earth is this one all about?

DAN MERICA, CNN POLITICAL REPORTER: Dina Powell is unique in this administration so far. She is choosing to leave. She made it clear when

she signed on to the administration she wanted to be here for a year they're coming up on that year mark now, and really, people inside the

White House, many officials are expecting there to be a number of departures around that year mark. And that's basically because this has

been a very bruising, grueling year.

And, you know, traditionally White Houses experience these departures after a year, but as we have reported, as you and I have talked about many times,

this has been particularly bruising for the Trump administration. Dina Powell is significant for a number of reasons. She is credited with

planning the president's foreign trips. She was brought on after advising the president's daughter, Ivanka Trump, and she's a significant person in

this administration, certainly but what we expect to see over the next coming months is that a number of significant people are administration the

names clearly aren't known yet and they're still making up their minds. But she is really what we're thinking about now as the tip of the iceberg

in this process, Richard.

QUEST: Dan, it's Friday night. We can go -- we can helicopter and go big- picture here instead of getting down and dirty. The chief of staff, General Kelly, does he have that iron grip on the White House, whether it

be access to the oval office, the ability to get Jared Kushner to follow through? Does he have the iron grip that everybody said that he was going

to have?

MERICA: Generally speaking, yes, he has been able to assert more control on this president. But it's difficult, it's a difficult task. The

president has access to his millions of followers, just in the palm of his hand on his phone. And what you have seen over time is that the president

will -- or the chief of staff or the White House will try and do something, and then the president will kind of in a word, you know, knock that off the

rails with a tweet. So as much control as the chief of staff may have, that control kind of ends in Donald Trump's Twitter account

QUEST: Dan, have a good weekend.

MERICA: Thank you.

QUEST: There is the president arriving in Maryland there is the president as he heads off towards Joint Base Andrews, used to be called Andrews Air

Force Base where the president is heading. Thank you, Dan, have a lovely weekend.

As risk-loving investors continue to board and horde bitcoin's wild ride. Regulators are warning them safety first. The used to see caveat emptor.

[16:50:00] (COMMERCIAL BREAK)

QUEST: Bitcoin is quite clearly the wild west of currencies, crypto or otherwise. More investors join the frenzy, the feds try to take aim at it,

the SEC issued a warning to investors about scams involving cryptocurrencies. Cyber security is a risk. On Wednesday, the marketplace

NiceHash reported hackers stole as much as $70 million in bitcoin as bitcoin mining company, and starting this weekend, if you can also begin to

trade bitcoin futures on the Chicago Board Options Exchange. It's not clear yet if big banks will clear those trades.

CNN's Jose Pagliery joins me now. Now. Let's deal first of all with the Slovenia business with the bitcoins that went missing 50,000 clients who

are all part of this consortium of a bitcoin miner now the miner says somebody managed to break into the VPN and made off with the bitcoins.

JOSE PAGLIERY, CNN INVESTIGATIVE REPORTER: Yep, to understand why this happened, let's examine why bitcoin functions the way it does of

government. It's supposed to be independent of government, it is supposed to be empowering to the individual. And so, the way you control that

bitcoin, the way you own your bitcoin is because you have the password to your wallet, you have a key that unlocks it. And if anyone takes that key,

it's gone, it's not yours anymore, and that's the deal here, right? What makes bitcoin so volatile in people's hands as a currency is that it is

really about control. If you lose that control, it's gone. There is no safety net for you.

QUEST: I'm jumping in here, because I want you to clarify, since it's digital, and there is a digital track, you can follow really bitcoin went

to. Now I agree, it has gone to another wallet with an anonymous, you don't know who owns that wallet. And it can move to another one and you

can spit out many more wallets. But if there is a proper regulatory authority, they would be able to seize it or at least freeze those wallets.

PAGLIERY: That s right. And to a certain extent there is. Because if you're in an exchange and you are here in the United States, you will be

regulated especially if you're here in New York, the financial center. There are regulations, so you need to know your customer. And now that a

bitcoin is more than $10,000, any single transaction that moves the bitcoin means there must be a report sent to the U.S. Treasury about you, the user.

And so, there are some regulations in place but the problem here is that bitcoin is so empowering to the individual that it's really easy to skirt

those regulations. It's really easy to just go face-to-face with somebody and trade this, it's something you can do with a luggage full of cash, too,

sure but bitcoin by design was made to empower the individual that's why they're able to skirt those regulations

QUEST: We spend a lot of time talking about the nefarious part of bitcoin or others but give me some good news here, are cryptocurrencies, are other

cryptocurrencies, Ethereum for example, are they considered to be more reliable, have more integrity, be safer?

PAGLIERY: I don't know if I would use those words, I mean, let's keep in mind that this is a very interesting technological experiment. There's a

lot of potential here that indicates what the future of money could look like. I wrote a whole book about this for that reason. That there is so

much potential in here for how the central bank in the United States could be the future of money. How banks themselves can track transactions. How

stock market exchanges can track transactions.

But in terms of the actual currencies themselves, I mean, let's be honest look around you, go to local shops and see how many take alternative

currencies. You probably won't find very many of them. And there is reason for that that traditional currencies are easier to use at the

moment. But it's a neat experiment, and I would ask anyone to, you know, buy a fraction of bitcoin and see how it works out for you, trade it around

but as an experiment. Not as an investment. Not as an asset.

[16:55:00] QUEST: Well done, Jose, that's exactly what we are proposing to do next week on QUEST MEANS BUSINESS. Guru Paul La Monica it is already in

with his Satoshi little bit of it. 10 bucks for me and I will put you down for a buck or two, we are going to need you with your book to try and help

us understand where we could go wrong. Are you in?

PAGLIERY: I'm in.

QUEST: Ha-ha-ha. There's one born every minute. Good to see you.

PAGLIERY: You too.

QUEST: We will have a Profitable Moment after the break. I'm trying to work out how many people we've got in this consortium now of

cryptocurrencies is on QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment. The deal that Theresa May has done with the E.U. is to be applauded. And I do not say that cynically or

skeptically. They have to get to the second round of negotiations on trade, because that will unlock the benefit from the first bits,

particularly as it relates to Northern Ireland.

But don't be under any illusions this is the difficult bit because how will the U.K. and the EU come to terms with the question of free trade, single

market access, customs union membership and freedom of movement of labor and people? They can't really square that circle very easily, which is why

they had to fudge it initially now, some would say that's as Carl Bildt did on the program, he said that's a necessity in this unique circumstance.

The necessity of fudge enabled them to keep moving forward and as has often been seen with Northern Ireland, if you keep the momentum moving forward

long enough, eventually everybody forgets what the issue was about in the first place. And the new normal takes control. That is to be hoped but

remember, with Brexit, you're dealing with die-hards on both sides those who want to stay single market, and those who insist on leaving come what

may.

Which is why a blessing to be sure that they're on to the next round. But just don't let go too soon. And that's QUEST MEANS BUSINESS for tonight,

I'm Richard Quest in Atlanta whatever you're up to in the hours ahead, I hope it is profitable. I will see you in New York next week.

END