Balance of Power – “Trump Presses NATO on Greenland at Davos”

Podcast: Bloomberg Balance of Power
Hosts: Joe Mathieu, Kailey Leinz (Bloomberg Correspondents)
Date: January 21, 2026

Episode Overview

This episode dissects major political and economic headlines from Davos, with a particular focus on President Trump’s controversial overtures towards Greenland, his skepticism about NATO unity, and remarks on the economy. The hosts connect these international maneuvers with critical domestic disputes: the Supreme Court’s ruling on Federal Reserve Board independence, the attempted ouster of Fed Governor Lisa Cook, and a criminal investigation into Fed Chair Jay Powell. In-depth analysis comes from guests including former Fed Vice Chair Lael Brainard, Canadian executive editor Derek de Kluet, and market expert Mike Regan.

Key Discussion Points and Insights

1. Supreme Court Arguments: Trump’s Attempt to Oust Fed Governor Lisa Cook

• Topic: The Supreme Court heard arguments regarding President Trump’s authority to fire Fed Governor Lisa Cook amid mortgage fraud allegations she denies.
• Nuances:
  • The administration seeks a stay of the injunction keeping Cook in office ([02:27]).
  • Justices focused on:
    • What counts as "sufficient cause" for firing a Governor.
    • Whether Cook received sufficient due process.
    • The possible impact on central bank independence.
• Notable Justice: Brett Kavanaugh emphasized the "real world, downstream effects" any precedent could set ([03:32]).
• Quote:
  "If a governor can be fired without any hearing, without any due process, without any real establishment of for cause, it really fundamentally means that the American economy can be in for higher inflation, less credibility on the part of the central bank, because that is what central bank independence is so important for."
  — Lael Brainard ([08:46])

2. Fed Independence and Political Pressure

• Guest: Kevin Hassett (Director of the National Economic Council, shortlisted for Fed Chair)
• Insight: Hassett argued that political interference threatens the foundation of the Fed.
• Concerns addressed:
  • The criminal investigation into Jay Powell, which could have unintended effects, like keeping Powell in his seat longer ([09:53]).
  • Warnings from finance leaders and Senate Banking members about punishing the Fed for politicized reasons.
• Quote:
  "Regrettably, the bank presidents and the Federal Reserve members seem to want to have an opinion about everything every day, not just monetary policy."
  — Kevin Hassett ([06:16])

3. President Trump at Davos: Economic Claims and Housing Policy

Economic Growth & Affordability

• Analysis: President Trump claimed inflation is defeated (~1.6% core) and growth is robust (~5.5% Q4).
• Lael Brainard’s View: She refutes these claims as implausible, noting:
  • "Inflation is still hovering close to 3%. Inflation is not defeated. There's more work to be done." ([11:00])
  • The supposed growth is overstated, especially after the government shutdown ([11:31]).
  • Growth has been "jobless," with weak job creation and consumer sentiment still "glum" ([11:31]).
• On SNAP/Food Stamps: The cited lift of millions from food stamps is attributed more to policy restrictions than economic progress ([12:52]).

Housing Market & Affordability

• Housing Policy: Trump proposed banning institutional buyers from the single-family home market and expressed concern about undercutting existing homeowners’ equity ([13:56]).
• Lael Brainard’s Response:
  "Most Americans... they’re hurting. Rent is too high. They want to own homes... The answer is more housing to be built. We are short 3 to 4 million units of housing at a minimum." ([14:27])

Interest Rates Outlook

• Brainard’s Perspective:
  "If the President continues to threaten the Fed's independence, interest rates will actually go up." ([15:47])

4. NATO and Greenland: Trump’s Bilateral with Secretary General Mark Rutte

Skepticism About NATO Unity

• Trump expressed doubt that NATO allies would defend the US if attacked, referencing their reluctance to support his overtures toward Greenland ([17:51]).
• Mark Rutte (NATO Secretary General) Response:
  "If ever the US will be under attack, your allies will be with you. Absolutely. There’s absolute guarantee." ([19:15])
• Trump responded ambiguously, adding,
  "When I see what's happening with Greenland, I wonder, because I want Greenland for security. I don't want it for anything else." ([20:32])

The Greenland Controversy

• Danish Foreign Minister rejected negotiations over selling Greenland.
• Trump remained evasive regarding consequences:
  "You'll have to figure that out for yourself. You're a smart guy." ([20:18])
• Trump linked Greenland’s strategic value and the construction of a “golden dome” for collective defense, pitching it as crucial for US/European security and rare earth access ([20:27]).

5. Panel Reactions: Is NATO Splitting? Trump's Cultural Rhetoric

NATO and Alliance Trust

• Jeanne Shan Zaino:
  "I think we're seeing a rupture in NATO... They are starting to say they don't think they can trust the US to be there for them. I'm not so sure that Donald Trump is wrong when he says they may not be there for us. But... this is of his own doing." ([23:22])
• Rick Davis:
  "Trump spent a good part of his first term lobbying Europe, more like lobbing bombs at Europe. ...Europe was not investing in their lethality. Now it's a much more lethal enterprise in NATO than it has ever been." ([24:17])

Trump’s Cultural Message

• Trump’s address labeled prosperity as stemming from “our very special culture... [that] built the west” ([26:24]).
• Rick Davis explained this as a dog whistle to the MAGA base, referencing Judeo-Christian values, and pointed out the likely authorship of Stephen Miller for such rhetoric ([29:01]).

6. Canada’s Reaction to Trump’s Tough Talk

• Trump:
  "Canada gets a lot of freebies from us... Canada lives because of the United States. Remember that, Mark, the next time you make your statements." ([33:31])
• Derek de Kluet (Bloomberg, Toronto): Carney’s speech (Canadian PM) is seen as a new foreign policy doctrine, signaling that Canada and its allies can't expect the previous global order to return. Canadians resent Trump's rhetoric, especially given their military sacrifices post-9/11 ([35:11]).
• On rumors of Canada planning for a US invasion, de Kluet downplays it as routine scenario planning without popular support ([37:04]).

7. Market Impact: Davos Rhetoric Sends Markets Rolling

• Mike Regan (Bloomberg): The market was shaken by Trump’s weekend rhetoric about Greenland and the potential for kinetic action, with a modest recovery sparked by his statement ruling out military action ([38:31]).
• Market fragility is underscored by speculation over “weaponization” of US assets if diplomatic tensions escalate further.
• Rotation in equities remains, especially away from tech/data center-heavy “Mag 7” stocks toward “quality, real, and sustainable” sectors ([41:22]).

Notable Quotes & Moments with Timestamps

• "I am thinking about the real world, downstream effects, and any precedent that this could set, not just for the future of the Trump administration, but any administration down the line." — Justice Brett Kavanaugh (paraphrased by Tyler Kendall, [03:32])

• "Inflation is not defeated. Inflation close to 3% is not close to the Fed’s target. There’s more work to be done there." — Lael Brainard ([11:00])

• "I don't want [Greenland] for anything else. We have so much rare earth, we don't know what to do with it. ...This is security we're talking about." — President Donald Trump ([20:32])

• "Canada lives because of the United States. Remember that, Mark, the next time you make your statements." — President Donald Trump ([33:31])

• "Anytime the word 'culture' comes out of Donald Trump's mouth, especially written in a speech, you can pretty much rest assured that that's coming from...the ideological center of the White House, which is Stephen Miller." — Rick Davis ([29:01])

Timestamps for Important Segments

• 00:36–04:39: Supreme Court/Trump’s bid to fire Lisa Cook
• 05:07–09:37: Fed independence, Powell investigation, Hassett’s analysis
• 10:28–15:20: Lael Brainard on the economy, inflation, and housing
• 17:33–22:13: Trump & NATO Secretary General Rutte: Greenland, NATO unity
• 23:22–29:01: Analyst panel on NATO, Trump’s rhetoric, underlying cultural messages
• 33:31–37:49: Canada’s view: Carney speech, Trump’s barbs, Canadian scenario planning
• 38:31–42:13: Mike Regan’s market update: Greenland’s effect on equities

Overall Tone and Takeaways

• The discussion is urgent, skeptical, and at times incredulous — especially regarding Trump’s statements on NATO, Greenland, and economic figures.
• Guests and analysts repeatedly question the accuracy and wisdom of Trump’s claims, with a pragmatic focus on policy substance and market stability.
• The episode balances fast-paced breaking news updates with deeper dives into structural issues facing US institutions and alliances.

For listeners pressed for time, key moments include:

• [03:32] — Kavanaugh’s Supreme Court skepticism & implications for Fed independence
• [08:46] — Lael Brainard on the existential threat to central bank credibility
• [17:51] — Trump’s live exchange with NATO’s Secretary General
• [20:32] — Greenland, security, and rare earths
• [23:22] — Analysts on ruptures in NATO
• [33:31] — Trump’s pointed remarks towards Canada, followed by Canadian perspectives