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7.0 Magnitude Earthquake Off Northern California Coast; French PM Michel Barnier Tenders Resignation; Syrian Army Withdraws From Strategic City Of Hama; Musk, Ramaswamy To Lead New Effort To Cut Government Spending; Bitcoin Surges Above $100,000 For First Time. Aired 3-4p ET

Aired December 05, 2024 - 15:00   ET

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

[15:00:32]

ANNOUNCER: This is CNN breaking news.

JIM SCIUTTO, CNN HOST: I'm Jim Sciutto in Washington. Thanks so much for joining me today on CNN NEWSROOM. And let's get right to the news.

A tsunami warning has now just been lifted for northern California and Oregon after quite a large 7.0 magnitude earthquake struck about 50 miles off the coast of California.

Let's get right to CNN's Natasha Chen in Los Angeles.

Fifty miles in earth terms is pretty close. And I believe the depth of this was relatively shallow. So there were understandable concerns that this might cause not only damage on land, but the possibility of a tsunami.

Tell us what you're learning.

NATASHA CHEN, CNN CORRESPONDENT: Right. So about half a mile deep is pretty shallow in this situation, which is why there were tsunami warnings for a large swath of the West Coast, going from the San Francisco Bay area up to Oregon. I was checking in with family and friends in the Bay Area about this, and we do know that there was shaking felt by people up and down the coast and that there are aftershocks rumbling at the moment.

And we're hearing from the San Francisco public transit system, BART, that service is disrupted. There were a lot of people concerned about the waves potentially coming on shore. And so asking people close to the shore to please evacuate or move away from the coastline, you know, and just checking in with my own mom, who was near the area of the San Francisco airport, you know there was some shaking definitely felt in that moment, though. Not a whole lot of damage seen at least in the immediate aftermath.

But as a reminder, you're talking about a huge city of San Francisco and the Bay Area there, but that is about 300 miles south from Eureka, which is probably the closest point of land from where this earthquake took place where the epicenter was, that is, and so we're also checking in with people and city officials farther up the coast from San Francisco again, all the way up to places in Oregon and we know that Fort Bragg was also in one of the more affected areas.

You know, California is not a very -- is not a stranger, of course, to earthquakes. I do remember the Loma Prieta in 1989, which is a 6.9 magnitude and so this is not something that people here are terribly unfamiliar with. But, you know, 7.0s don't occur very often. Luckily here it was not on land, you're seeing there the breaking news headline that the tsunami warning was canceled there.

So we're just monitoring what exactly is the message for people at the moment as they, you know brace themselves for aftershocks and check around for damage and see what's going on, on the coastline, Jim.

SCIUTTO: We're certainly lifting that tsunami warning is a relief because great and understandable concern given the distance offshore and also the depth that it might very well have generated such a tsunami.

Natasha Chen, thanks so much.

I do want to bring in now Maureen Long. She's professor of Earth and Planetary Sciences at Yale University.

Good to have you on here.

And I have to say, when I was looking at the data initially, I was quite concerned. And I'm certainly not an expert like you, but the distance off the coast, 50 miles relatively close and the depth relatively shallow, 0.6 miles. Are you surprised, given those conditions and the magnitude of this 7.0, that there wasn't a tsunami generated.

MAUREEN LONG, EARTH AND PLANETARY SCIENCES PROFESSOR, YALE UNIVERSITY: Well, I certainly was not surprised to see the initial tsunami warning that went out. Any time that we have a relatively large earthquake and a magnitude 7 earthquake is quite large beneath the sea floor, and as you said, with a shallow depth, there's always the concern about a potential generation of a tsunami. So certainly it was it was great to see that initial tsunami warning go out.

It turns out that, you know, as we learn more about the exact mechanism of the earthquake and whether it involves a vertical motion which can push up that water and, and trigger a tsunami or side to side motion which does not trigger a tsunami as seismologists learn more and as we get measurements from the ocean that tell us that, in fact, a tsunami was not triggered, then that that tsunami warning was able to be lifted.

[15:05:10]

So it's good that it was issued because you always want to be careful when there's an undersea earthquake. But it turned out that they were able to lift that tsunami warning.

SCIUTTO: And listen, of course, there are a lot of ways the earth can move. In these circumstances, I wonder, given that this is along that notorious ring of fire around the around the Pacific Ocean and given, of course, that northern California is no stranger to seismic activity, are there concerns about an aftershock or aftershocks following an earthquake of this size?

LONG: Well, just as you said, and just as your reporter said, you know, California is earthquake country. And you know, this area of northern California actually has three different tectonic plates coming together.

It's one of the most active areas for seismicity on the West Coast of the United States. So we always have to be aware of the possibility of earthquakes. And that's exactly what we saw today.

With a magnitude 7 earthquake, you know, we always need to be aware of the strong possibility of aftershocks for an earthquake that size. The most likely scenario is that the largest aftershock will be you know, a bit smaller, maybe 1 or 2 points down on the magnitude scale than the main shock. There is a small possibility that there may be a subsequent larger earthquake, but the most likely scenario, aftershocks will be smaller.

But yeah, with an -- with an earthquake, this size, we know to expect aftershocks. So, folks who felt shaking from that main shock should at least be aware of the possibility.

SCIUTTO: The -- the last really big one, if I have this correctly, was in 1989, in northern California. That is the Loma Prieta earthquake, 6.9, so even smaller than this one.

And I know this might sound like something of an ignorant question, but does a big one, because -- of course, there's always concern about the next big one in California, given the seismic activity there. Does a big one like this raise the chances of another big one to follow as the earth moves? And, of course, it's always trying to accommodate itself as those plates move around and run into each other?

LONG: Well, it's not an ignorant question at all. It's a terrific question. And, you know, I think for -- I think the bottom line is, is this, you know, this is an active area of the Earth. We know from examples like the Loma Prieta earthquake in 1989 that this area of northern California and offshore, as well as we saw today, we know that that area is prone to earthquakes. So it's very important for people to who live there and who might be affected to be aware, to know what to do when you feel earthquake shaking, you know, drop, cover and hold on is always the advice, if you feel shaking and to be prepared to navigate an emergency.

So, you know, knowing knowledge is power and being prepared for quake shaking when you live in earthquake country is very important.

SCIUTTO: No question. Of course, the quick reaction there to put in that tsunami warning to get people to higher ground in case there were to be a tsunami. There was not, thankfully, but of course, better to be prepared and take action than not to.

Maureen Long, thanks so much for joining.

LONG: Absolutely. Good to be with you.

SCIUTTO: Our CNN meteorologist, Chad Myers, has also been tracking this activity.

And I heard you earlier, Chad, talking about exactly the conditions of this -- the distance off the shore, the depth below the surface not particularly deep. Given your experience tracking these things, are you surprised that there was no tsunami -- tsunami activity to follow this?

CHAD MYERS, AMS METEOROLOGIST: It depends really where the fault was, what fault actually slipped. So we could be a strike slip fault, which means that the ground just goes this way and there's no vertical motion. If it's a subduction fault, where part of the ground rises from the depths and pushes water up vertically, the bottom of the ocean pushes the ocean up. That's when you get the tsunami.

So we have the kind of the intersection of two faults here. We have the Cascadia subduction zone going out this way. And then we also have the San Andreas Fault there with a kind of meeting right there. And then there's some little fault that slightly connects them.

So at the time of the seven zero, no one really knew what was the strike slip or they -- just a vertical fault moving. We didn't know it at the time. So that's why the warning went out so quickly.

Plus, there was some very dangerous -- I don't even know what the word I want to say is. Some really concerning verbiage in that warning. Like there could be a significant inundation. It's like wow, this really could have been on a subduction zone area where there could have been a lot of water displaced, but there wasn't a lot of water displaced. The zones went back and forth rather than up and down.

So that's why we didn't get the big wave that was possible.

[15:10:02]

And I knew this was possible because we had some pictures earlier of boats going back into Crescent City and I knew when the boaters, the captains were going back into Crescent City that they knew already that this wasn't going to be a tsunami event. They got out of there when the tsunami warning came in, but they went right back in when they knew that the tsunami did not happen.

And it's still a big quake. We still have 2,000 customers without power. We've already seen damage. I've seen pools sloshing back and forth on land, and this was still a strong to almost major quake.

The good news is it was 50 miles off shore because had we been closer to land or closer to a city, we'd be having a completely different conversation. Now for 7.0 and greater, you know, there's 15 of these a year. So, one per month. But we typically don't get them this close to land.

SCIUTTO: Yeah. That's 15 per year around the world, right, and this close to land and this close to major cities, certainly unusual circumstances.

Well, Chad Myers, glad we are where we are and not where we thought we might be following this warning.

MYERS: Absolutely.

SCIUTTO: Thanks to you.

Please do stay with us. We'll be right back.

(COMMERCIAL BREAK)

SCIUTTO: Well, France is in something of a political earthquake following the first successful no confidence vote in nearly 60 years there, ousting the prime minister.

In the last hour, President Emmanuel Macron addressed the nation in a fiery address, calling for an entirely new era in politics.

(BEGIN VIDEO CLIP)

EMMANUEL MACRON, FRENCHE PRESIDENT (through translator): From today, it's a new era that starts. We must all work for France and we must build new compromises, because the planet is going forward. The challenges are numerous and we must be ambitious for France. We cannot allow ourselves the divisions or an immobile behavior.

(END VIDEO CLIP)

SCIUTTO: While Prime Minister Michel Barnier has resigned, he and his government are expected to serve in a caretaker capacity until President Macron appoints a new prime minister.

CNN's Jim Bittermann is in Paris.

Jim, a combative speech from the French president in which he blamed not only the far right of Marine Le Pen but also the far left, calling them an anti-Republican front. Does he have that right? Did they did they conspire here to bring down the prime minister?

JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, he certainly believes he has that right. I don't know that how well that's going to be accepted amongst the far right and the far left.

And I think one of the things that I think he'll be criticized about this speech was, is the fact that it sounded in some parts very patronizing and perhaps a little bit of a -- of a professorial tone that may not go down very well with the French.

One of the things that he said for example, he said, I'll never assume responsibility -- irresponsible -- I'll never assume the irresponsibility of others, especially the members of parliament who consciously chose to bring down France's budget and government. Just a few days before Christmas, the National Rally deputies chose to vote a motion of censure. They have simply chosen disorder. So he's very sharply critical. And to those people on both the right and the left who are calling for his resignation, it isn't going to happen. Here's the way he put it.

(BEGIN VIDEO CLIP)

MACRON: The mandate you have democratically entrusted to me is a five-year term, and I will exercise it to the full. My responsibility is to ensure the continuity of the state, the smooth running of our institutions, the independence of our country, and the protection of all of you.

(END VIDEO CLIP)

BITTERMANN: So he tried to be reassuring there. And I think, you know, one of the things he wants to be reassuring about is that this some kind of continuity and stability, especially in the face of market pressures that are out there, Jim.

SCIUTTO: No question. The markets do not like political turmoil for sure.

Jim Bittermann in Paris, thanks so much.

Here now to discuss further French journalist Christine Ockrent.

Good to -- good to have you. Thanks so much for taking the time tonight.

CHRISTINE OCKRENT, FRENCH JOURNALIST AND WRITER: Thank you for having me.

SCIUTTO: So I wonder your view of what led to this point as we just discussed, Macron is blaming the left and the right for coming together to bring down this government, do you agree with that assessment? And does that charge from the French president help him get out of this right as he assigns blame here?

OCKRENT: Well, the French president in our political system has the authority to actually name a new prime minister. And so, that's what he's going to do. Nobody knows who, nobody knows how many days.

But when he incriminated both extremes, the far right and the far left, to actually have concluded a kind of alliance to overthrow Barnier and the previous sort of center right government. It's a fact that both extremes, which by nature do not agree on anything, had a common interest in creating political chaos because what you have to understand is that the French are not used to parliamentary games the way other European countries are.

We have more of a presidential system, but usually our president has a comfortable majority in parliament. This time around, Macron lost his majority with that very stupid, useless snap up election last summer. So, you know, parliamentary games when everybody only thinks about the next presidential election, which is going to take place in three years, it all mixes things up and the French people are really tired of it.

SCIUTTO: Well, clearly, the Macron's approval rating, as I understand it, 23 percent. Let me ask you this because as you know during the parliamentary elections, the far right was quite strongly positioned and it took some political machinations to avoid them gaining a majority here. France has been trending towards the far right. And do you see this as an opportunity for Le Pen's party to gain the upper hand?

OCKRENT: I'm not sure, because I think they are constituencies do not -- not like disorder, and they don't quite understand the goal. You know, what is the short term goal? What is the long term goal?

[15:20:03]

Actually, it's the left which had the most votes in the last parliamentary elections and in fact, the left tells Macron, why don't you try someone from our ranks? Because that would be more democratic in a sense.

But again, you know, the French being what they are, the left do not agree together either between the far left and let's say the center left in the same bloc but they disagree on many issues. So it's a very fragmented landscape and actually very radicalized on both sides.

So the next prime minister is likely to come for the center from the center what kind of game will he be able to play and what kind of a program? He'll have pretty much the same issues and the same difficulties as Barnier, who had to resign yesterday.

SCIUTTO: This was -- the proximate cause of all this, of course, was a budget plan, trying to get a budget passed. And that budget includes cuts that are not popular in France. France like my own country has a debt problem. And there are discussions of budget cuts. But, of course, folks don't like to lose benefits. And I mean, in France we saw the protests over previous attempts, for instance, to raise the retirement age.

Is there some pain coming, economic pain coming regardless, right, of the political settlement here? I mean, is that the fundamental issue here, are cuts and folks don't want to see cuts?

OCKRENT: That's very true but, you know, the pain is already here, because obviously, the economic forecasts are rather gloomy, which means that unemployment and that was really, you know, one of the few successes of Macron. Unemployment has gone down in France, but it will go up again.

And of course, what people worry about, as you very correctly said is retirement age because the French have been used to, lets say a more comfortable system than any other European countries around and they don't understand why they should actually, you know, not enjoy that system anymore.

So it's very difficulties to deprive people of habits that they see as perfectly legitimate social contexts. So it's going to be rough. SCIUTTO: Before we go, Macron is hosting a number of world leaders for the reopening of the -- of the Notre Dame Cathedral, five years after it suffered that horrific fire. Among them, President-elect Donald Trump.

And I wonder, we saw in Trump's first term for a time, you know, the famous bromance between the two. Do you see the potential for this relationship being a good one?

OCKRENT: Well, certainly, the president elect paid some compliments to the French president, saying that Notre Dame is an extraordinary celebration and an extraordinary success, which is true -- it's an extraordinary success, you know, five years after the fire. Nevertheless, we have some memories of President Trump during the first term. So we know its going to be a very transactional presidency. And so, we in Europe and in France particularly, we are getting ready or trying to get ready for a new Trumpian experience.

But I guess Emmanuel Macron will try and play what he thinks his personal charm with the president-elect Saturday.

SCIUTTO: Well, both men, right, believe their personal charm can bring better deals and better relationships. We'll see. It'll be tested.

Christine Ockrent, thanks so much for joining.

OCKRENT: Thank you.

SCIUTTO: Well, to Syria now, where the front lines of what was a years old stalemate have once again dramatically shifted. Syria's rebel forces have captured a second major city in what is just a week- long lightning offensive. Government forces withdrew from Hama ceding what is a symbolic and strategically significant city. Rebels had been unable to capture the city since the Syrian civil war began more than a decade ago, in 2011.

They have vowed to continue their advance. Their eyes now set on Homs, another key city just 100 miles from Damascus.

CNN's Ben Wedeman has covered Syria for decades.

I wonder, as you see, these gains in short order, two major cities, Aleppo and now Hama captured in a little more than a week. And as you know better than others, it's a historic stronghold for the regime.

Is the regime itself in genuine danger now?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: I think it is. I mean, what we've seen in the space of a week is they've lost the control of Aleppo. The second largest city in Syria, and now, Hama, the fourth largest city in Syria and they've lost a long stretch of the M5 highway which links Aleppo in the north to Damascus in the south.

And what we're seeing is that unlike, for instance Aleppo, where it took the regime years to regain control of the entirety of the city from the rebels -- the rebels seem to be able to go into both Aleppo and Hama, with encountering relatively little resistance and at the same time, they are capturing large amounts of weaponry. Today, they took control of an airfield where, according to video we're seeing on social media, the runway was full of warplanes.

So it doesn't appear that the regime seems to have sort of the backbone at this point to really put up a fight. Why? I think it's years of corruption and incompetence and dependence on others, Russia, Iran and Hezbollah to prop up the regime. But since all of them seem to be have their attention elsewhere, it doesn't appear that anyone's coming to the rescue.

In fact, Dmitri Peskov, the chief Kremlin for the -- chief spokesman for the Kremlin, came out with a statement. He said that Moscow is monitoring the situation and remains in constant dialogue with Damascus, and will decide on military aid depending on how the situation evolves, where the situation is getting worse and worse by the hour for the regime in Damascus.

And really it is not the time for dawdling over coming to the rescue of an ally that Moscow has been propping up for decades -- Jim.

SCIUTTO: And, listen, it raises the question of whether Russia has the resources to, right, given that they've -- well, they're relying on North Korean troops to continue to fight their war in Ukraine.

Ben Wedeman, it must be fascinating to watch -- fascinating to watch this close up. Thanks for joining.

Back here in the U.S., the DOGE duo is making their debut today on Capitol Hill right now, billionaire Elon Musk and businessman Vivek Ramaswamy are speaking to Republicans about their vision for the Department of Government Efficiency.

A new outside of government panel tasked by President-elect Trump with making drastic cost cuts and slashing red tape, perhaps firing many thousands of federal workers.

Here to discuss, Musk's plans and his influence in the incoming administration is Teddy Schleifer. He covers Musk and billionaires for "The New York Times".

Teddy, thanks so much for joining.

TEDDY SCHLEIFER, REPORTER, THE NEW YORK TIMES: Sure thing.

SCIUTTO: So Musk likes to talk about being a man who is against government waste and so on. But he is -- has billions of dollars in government contracts. And not to mention government companies subjected to government investigations and companies that take reasonable advantage of government handouts, tax breaks, et cetera.

Can he be truly an independent arbiter of what is fair and responsible federal spending? SCHLEIFER: Well, I mean, Musk and Ramaswamy are sort of pledging to go under the hood here and look under every -- every table, every seat, every rug to try to find a few dollars here and there.

You know, Musk does not obviously have much experience in federal government, nor, frankly, does Ramaswamy. I think what they do have is a mandate from Trump, and they clearly have, you know, some know how of their particular industries. You know, when you talk to people around Elon and around Vivek, you know, they're sort of portraying their lack of experience as a plus.

They're not kind of wedded to old ways of thinking. They can find, you know, ways to, to cut costs just by being, as they say in Silicon Valley, having a more first principles way of thinking.

But obviously, you know, that could go another direction. And their naivete could also be exposed.

SCIUTTO: Listen, I mean, that that loads of folks have come to Washington before saying I'm an outsider. Therefore, I can do what others can't do.

[15:30:02]

And many in Trump's first administration, including Trump himself said the same.

But you run into the running of government and these agencies here. So it's one thing, of course, to make the vow, and it's another to -- to deliver on it, but also deliver on in a way that makes sense.

I mean, for folks watching here, what confidence should they have that these two men know how government works, right, so that they could therefore accomplish what they're talking about.

SCHLEIFER: Yeah. Well, I mean, I think what's the trouble for the Trump administration and this DOGE effort is a lot of the things that Republicans want to cut are things that Trump specifically himself does not want to cut. That some, you know, maybe a Paul Ryan or a Mitt Romney would be happy to cut Social Security and Medicare.

Those are things that Trump has pledged to not cut. And those are huge percentage of the federal budget. You know, they're also enthusiastic about making cuts to the United States servicing of the federal debt. That's something that, you know, could have tons of repercussions for the market.

So the problem is like when you when you talk to budget experts who aren't really that many places that Trump, Elon and Vivek can kind of get these huge cash savings from, you know, they can get $100 million there. You know they'll I'm sure they'll highlight absurd federal spending that, you know, saves you $5 or $10 here and there.

But the challenge for them is so much of the federal budget is made up in things like Social Security and Medicare or defense budget which lots of Republicans increased spending on. SCIUTTO: Yeah, exactly. I mean, when you look at the pie chart of

government spending and you take out entitlements and defense -- there's not a lot left over right to cut from, I mean, even look there, Social Security, Medicare, VA benefits. I mean, these are big chunks of the budget plus defense.

I want to ask you now about conflicts of interest, inevitable ones, let's be frank. Last week, the Biden administration announced $6.6 billion in a conditional loan to Rivian. That is an EV startup that competes with Tesla. Ramaswamy said that loan would be, quote, high on the list of items that DOGE is going to look at.

To take away that loan would benefit Elon Musk's Tesla and its stock. How can Americans be confident in any way that that he would make such a decision in a way that wouldn't factor in his own interests?

SCHLEIFER: You know, I think obviously when you have someone like Elon Musk involved in this, you know, I think the conflicts are a given, you know, conflicts of interest are managed all the time. And, in government, I think what's unique about these conflicts is that Elon is going to be playing this role outside of the kind of normal, conflict of interest disclosure regime. You know, Musk is not going to be a federal government employee. It's -- the precise structure of DOGE is not really clear. It's not, you know, known what sort of disclosure other people who are working for DOGE are going to have to do.

You know, I think the way to maybe be Pollyannaish or optimistic about this is to say, of course, Elon Musk has conflicts like, like it -- duh, that, you know, that Rivian, would be something that Elon Musk would personally have an opinion about. But, yes, these are things are going to have to be managed. And, you know, were only talking now about Tesla and EV competitor. I mean, for instance, Musk's interest in China could be a big conflict down the line.

SCIUTTO: No question.

SCHLEIFER: Getting started here.

SCIUTTO: SpaceX -- I mean, we can't forget that. I mean, we have to also acknowledge that this breaks with how virtually everyone else in government has to operate. I mean, you go into government jobs, a lot of them you cant own any individual stocks. You got to own mutual funds.

So that you -- and I'm talking about owning like $1,000 in your 401K in a company, as opposed to many tens of billions of dollars in one that has business before the government and therefore having and then having influence over those decisions.

But we should note, right, it's not confined to Elon Musk. I mean, you look at Jeff Bezos, his Blue Origin has the potential for enormous government contracts and there are a lot of folks at "The Washington Post" when "The Post" did not endorse in this election who theorized that that decision was because Bezos and perhaps others did not want to get on the wrong side of this president in terms of their business. I mean, is that -- is that an undue concern for those -- for those

businesses?

SCHLEIFER: You know, yesterday I was at the DealBook Conference in New York city where lots of business leaders were asked this very question about, you know, Elon Musk has -- has competitors. He has friends. And, you know, Musk is suddenly going to be in a position where he can punish competitors or possibly reward friends.

And you know, that that is a concern for anybody who has any, you know, interactions with Elon Musk either today or 20 years from now or, you know, 20 years ago, whether or not their personal relationship with this individual business leader is going to have a massive impact on their ability to get contracts or, you know just frankly, have friendly relations with the incoming administration.

[15:35:12]

So, look, I mean when you talk to Trumps people, this is -- this is the precise reason they want Elon involved in the first place, right? It's not as if, you know, they want him involved because he is an enormously successful business leader. And this sort of comes with the territory, I suppose, right? If you have that person, who's enormously successful and you put him in a government like there are conflicts.

I think what you're getting at, Jim, which is different, is that this is not like Hank Paulson, you know, the former CEO of Goldman Sachs, being secretary of treasury. And, you know, then he is no longer involved in Goldman Sachs, right? Now, you have this part time job where he's still going to be running Tesla and SpaceX and X and you know, he's going to be doing that at the same time as his involvement.

SCIUTTO: Well, and Trump himself, when you hear the rules that his businesses are going to operate under, they're going to keep doing business and even foreign deals, apparently. One by one, the norms go away.

Teddy Schleifer, thanks so much for joining.

SCHLEIFER: You bet.

SCIUTTO: Staying on Capitol Hill and the other Trump cohort making the rounds today, that is Pete Hegseth, Trump's choice for defense secretary. He's been a fixture of the halls of Congress this week, though it remains unclear if he can weather mounting scandal.

Among the concerns, allegations of alcohol abuse, which Hegseth denies, but is, of course, a concern for a national security role, a senior one that could mean getting called into the Situation Room at all hours of the night, those 3:00 a.m. phone calls.

So far, Trump team reports the president elect is standing behind his choice but CNN chief congressional correspondent Manu Raju has more for us on Hegseth's chances on the Hill -- Manu.

(BEGIN VIDEOTAPE) MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Jim, it is unclear whether or not Pete Hegseth can get the votes to become the next secretary of defense. It's unclear if Donald Trump will continue to stand behind him and for how long. And one big reason why is that there are a lot of Republican senators who simply are just noncommittal. Not just Senator Joni Ernst, a critical swing vote who met with him yesterday, but others as well, people who want to hear about all the allegations of misconduct from the past. They want to make sure that there are no other allegations that are forthcoming, and they want to see how he would do in a confirmation hearing and if it takes place that would be early next year.

Now, he is still meeting with key Republican senators, including Senator Mike Rounds, who's a member of the Senate Armed Services Committee after he met with Hegseth today, Rounds came out and sounded positive about the nomination. But he indicated there's still more work as he said, more work to do.

SEN. MIKE ROUNDS (R-SD): I really do see a path forward for him to be successful in being accepted by the Senate for this position, but he's got more work to do. I think he's capable of doing that. And I think the open hearings will help so that he can respond publicly to the allegations that have been made. And as near as I can tell, the vast majority of them anonymously.

RAJU: But there still are so many senators who are uncertain how they would come down. Senator Susan Collins, for one, is a perennial swing vote in the Senate who says that she wants a full FBI background check, wants to review that before she would take a position on this nomination. She is expected to meet with him next week, as is Senator Lisa Murkowski, another key swing vote, plans to talk to him about all the allegations of sexual assault allegations, which he denies, misconduct which he denies. The allegations that he has a drinking problem. He says he does not have a drinking problem, something that he's been discussing in these private meetings.

Will that be enough to alleviate those senators concerns? That remains an open question, but on Capitol Hill, really, so many people are waiting for another shoe potentially to drop. If it does drop, how does that impact Hegseth's nomination? And whether Trump continues to stand behind him?

But, Jim, as of now, Donald Trump is telling Hegseth to fight on. Hegseth told reporters on the way in this morning that indeed, that Trump is behind him. The question, of course, Jim, is for how long?

(END VIDEOTAPE)

SCIUTTO: We'll see. Thanks to Manu Raju.

As we go to break, we want to remind you that we are continuing to follow a 7.0 magnitude earthquake that hit just off the coast of northern California. We're watching for potential aftershocks as well as signs of damage there. Do stay with us.

(COMMERCIAL BREAK) [15:42:38]

SCIUTTO: We are watching closely for the potential aftershocks in California following a powerful 7.0 magnitude earthquake just off the coast. The epicenter some 50 miles southwest of Eureka, hitting around 11:00 a.m. local time, close to 2:00 p.m. Eastern. A tsunami warning was quickly issued it has since, though, been canceled more than 1,000 homes have lost power in Humboldt County. That is the closest county to the epicenter. Other reports of some damage.

CNN's Natasha Chen has been following that from Los Angeles.

I know you've been speaking to people in the area. What are they telling you?

CHEN: Well, Jim, the good news is that there's not significant damage, it seems, in that area of Eureka that you just mentioned. The city manager there described it as a long period of shaking, but not as violent as the shaking. They've seen in other events in the recent past. We also heard from one resident there that it was about a 30s of shaking, and it felt like a rolling motion that almost made him seasick. And so, that's the type of experience they were having up there. It could be felt as far south as the San Francisco Bay Area, where my family is, just some shaking going on there as well.

But again, no significant damage. And it is great news that the tsunami warning was canceled. And we're learning now from the U.S. Geological Society that the reason for that could be that it seems the motion of this quake was more horizontal slipping of the plates, and that is less likely to cause a tsunami than vertical action on those plates on the ocean floor, Jim.

SCIUTTO: Expert from Yale had mentioned just that possibility earlier in the hour. Well, a relief certainly for the residents there.

Natasha Chen, thanks for bringing us up to date.

CHEN: Thanks.

SCIUTTO: Coming up, what is next for cryptocurrency after for the first time, bitcoin has topped $100,000 each and President Trump is taking credit?

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[15:47:38]

SCIUTTO: The world's priciest cryptocurrency, bitcoin, hit a major milestone. It passed US$100,000 for the first time, though its now back to around $99,000. The surge came the same day President-elect Donald Trump announced his plans to nominate Paul Atkins to lead the Securities and Exchange Commission.

Atkins is a big supporter of crypto. He's a former SEC commissioner. He is expected to take a lighter approach to regulating cryptocurrency compared to the current SEC chair. CNN's business editor at large, Richard Quest, joining us to discuss.

Can I ask you just a very basic question, does bitcoin and others like it have any intrinsic value or is it fundamentally just a bet like Dutch tulips?

RICHARD QUEST, CNN BUSINESS EDITOR AT LARGE: Oh, you know, the answer to that, before you ask the question. Let me rephrase it. Does gold out of the ground have any intrinsic? I mean, it's all to do with scarcity limited bitcoin perhaps. Is it -- is it a valid asset class? That's the thing that really people talk about.

Yes. At one level, but it is a risky speculative class, bearing in mind if you think its 100,000 now, all it would require is a bit of regulation and it could drop down to 60, 70, 90, 80, whatever thousand.

I think what this is, is nuance. Any idea that Paul Atkins is suddenly going to be off to the races and sort of have a free for all Wild West on crypto is absolute rubbish. The man is an experienced market -- a speculative speculator and participant, but it's going to be nuanced in terms of regulation.

It will be less there will be more opportunities. There will be less restrictions. And that's what pushed bitcoin further and faster than it has before.

SCIUTTO: Okay. So Donald Trump, though he touted cryptocurrency quite loudly during the campaign, he was once a big skeptic. He himself in 2019 called it not money. Highly volatile based on thin air.

Now he is singing its praises. And I wonder do you understand what led to that change? I mean, we should note, there were a lot of major crypto billionaires and millionaires who were donors to his campaign.

QUEST: There was that and also he's got some interest in some various crypto investments and crypto coins of one sort or another.

[15:50:05]

So there's a certain healthy or unhealthy, I should say conflict of interest issue there at one level, and you have Elon Musk, Elon Musk, the president whisperer, now sitting at the table with DOGE, DOGE, their crypto token.

And it all creates an environment where there is a legitimate role for crypto. Don't get me wrong, Jim. There's a little legitimate role for all of this. But what that role is at the moment is not entirely clear and certainly it's about to be corrupted with a small C by the close relationship of, say Musk and president and crypto and president.

SCIUTTO: I mean, that's a problem if you're an investor, right? Because you -- I mean, you have two problems.

One -- one, the conflict of interest in that, in that people in government can make decisions that benefit themselves, right their own businesses, but also that that they're talking it up because they -- they get money, they make money from doing so. That's not necessarily in your interest or investors' interest, right? Because they could be left holding the bag right.

QUEST: There is a reason why the SEC and the FCC and every regulatory authority has spent decades putting in place transparency rules, regulations, all sorts of boring things. And it is to make sure that you reduce to a minimum. Of course, its there but you reduce to a minimum the potential for conflict and nefarious dealings.

What we are seeing is a lack of transparency, a lack of discussion and some people love it. Some people think this is just storing up trouble for the future. But there is a reason why these rules were there. Lose them at your peril.

And by the way, I noticed that 401Ks. Did you see that story? 401Ks jumped by some 9.5 percent, the number of 401K millionaires. That's because the markets been boosting and it's likely to continue in the first days of the Trump administration.

SCIUTTO: Listen, it's been -- well, it was setting records already the last four years. I mean, it's -- that's another question we could talk about in the next show about whether the markets currently in bubble territory.

Richard Quest, thank you.

QUEST: Thank you.

SCIUTTO: You can catch more, of course, of Richard at the top of the hour on "QUEST MEANS BUSINESS", and we'll be right back.

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[15:55:05]

SCIUTTO: Well, the Eras Tour might be ending, but the era of Taylor Swift seems to reign on her 11th studio album, the "Tortured Poets Department". The song we just played is on that record was Spotify, says its most streamed album of 2024. With that, Spotify named Swift, the top global artist of the year for the second year in a row. Her music was streamed on the app more than 26.6 billion times this year, 26.6 billion.

After Swift Spotify's most streamed artist were The Weeknd, Bad Bunny, Drake and Billie Eilish.

And finally at the age of 74, most of us are well into retirement. But the world's oldest known bird is apparently ready to become a parent again. Wisdom, a 74-year-old albatross who lives on a wildlife refuge in Hawaii has taken a new partner and produced an egg. Biologists at the refuge say they are optimistic that the egg will hatch and Wisdom will raise a new chick. It is believed that Wisdom has something like 30 chicks in her lifetime.

Most albatross live just about 40 years. Scientists are eager to learn why Wisdom is still able to procreate at her very advanced age. Wow. About twice as long as most people live. That's like you and me living to 160. Amazing.

Thanks so much for joining me today. I'm Jim Sciutto.

"QUEST MEANS BUSINESS" is up next.