Gary Cohn Talks Fed Chair, US Economy

Summary

Bloomberg Talks: Gary Cohn Talks Fed Chair, US Economy

Date: January 20, 2026
Host: Bloomberg (Various Interviewers and Co-Host/Analyst)
Guest: Gary Cohn, IBM Vice Chairman, former NSC Director

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Episode Overview

This episode features Gary Cohn, former National Economic Council Director and current IBM Vice Chairman, discussing significant economic and political developments with Bloomberg hosts at the World Economic Forum in Davos. The conversation covers President Trump's push to acquire Greenland and its market repercussions, ongoing global geopolitical volatility, shifts in investment behavior, the Federal Reserve chair race, and the intersection of AI, interest rates, and capital spending. Cohn offers insider perspectives on the administration’s policy approaches, market sentiment, and the evolving structure of leadership at the U.S. Federal Reserve.

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Key Discussion Points & Insights

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1. Market Volatility and the "Greenland Gambit"

[00:44–02:03]

• Geopolitical Shockwaves: President Trump’s controversial attempt to acquire Greenland sparked fresh market volatility and investor uncertainty.
• Strategic Interests:
  • North Atlantic military presence and air defense expansion cited as U.S. interests.
  • Greenland’s rare earth resources highlighted as a key driver.
• Negotiation Tactics:
  • Cohn: “What we've seen evolve in the Trump presidency is this desire to negotiate and get a deal…This may all evolve in a place where the United States ends up in a very good strategic position.” (01:08)

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2. Market Reactions: The “Sell America” Narrative

[02:03–03:26]

• Divergent Global Reactions:
  • European and U.S. investors split: Europeans are more anxious, Americans more optimistic.
  • “Treasuries are selling off much more [in Europe]…the dollar was much lower. And as the US wakes up, people are coming in and buying.” (Co-Host/Analyst, 02:27)
• Reallocation, not Panic:
  • Cohn observes global funds trimming U.S. assets, but not “liquidating America.”
  • “It feels like we've got a trim around the edges in asset allocation models going on.” (02:44)
• Buy America Resilience:
  • Cohn: “That's Sell America till the light turns green and everyone has to Buy America…We've got one of the strongest economies in the world today. We're growing at five plus percent growth…when this geopolitical risk settles down, the market's probably going to take off again.” (03:26)

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3. Geopolitical Volatility and Historical Context

[03:55–04:32]

• Quick-Shifting Global Landscape:
  • Co-Host references the rapid transition from capturing Nicolas Maduro to Greenland tensions within two weeks.
• Big Picture Perspective:
  • “This too shall pass. We can go back in the last 8-12 years and there’s been periods…of highly volatile geopolitical moments.” (Cohn, 04:14)
  • Suggests Davos forum timing is relevant to market and policy tensions.

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4. The Federal Reserve Chair Race Inside View

[04:32–07:16]

• On Trump’s Selection Process:
  • President now “considerably more careful” and involved.
  • “The President clearly has a view on what interest rate policy should be…the opportunity with the Fed job is once he appoints someone…the Fed is an independent agency and he loses his day-to-day contact.” (Cohn, 04:45)
• Committee Dynamics:
  • Cohn points out the difficulty for any Chair to sway the committee:
    • “I'm not sure if the chairperson can ultimately sway the committee that far…You've got some very strong regional bank presidents, you've got some very strong governors.” (05:46)
• Fed’s Evolution & Track Record:
  • “Have they been a little bit late? Yeah…they've caught up…through the cycle, they end up getting to the right place.” (05:46)

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5. Who Will Lead the Fed? Deep Dive into Candidates

[07:16–08:14]

• Comparing Front-Runners:
  • Individual names discussed: Governor Chris Waller, Vice Chair Clarity, Kevin Warsh, and Kevin Hassett.
  • Warsh: “Kevin is highly qualified…Kevin was there during some of the toughest days of the Fed during the financial crisis. Without Kevin's wisdom, I'm not sure we would have ended up in the same place.” (Cohn, 07:30)
• On Alleged “Puppet” Appointments:
  • “Whoever gets appointed, there will be people…that will have negative things to say about him…there will be people to be very happy...” (08:14)

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6. AI Buildout and the Role of Monetary Policy

[08:29–09:41]

• AI & Rates: Not Fully Coupled:
  • “AI buildout is being built because there's demand…AI companies feel like they're behind the curve…The only question that rates have is what is the ultimate all-in cost to build these things.” (Cohn, 08:39)
  • Details the importance of long-term financing costs over short-term Fed rates.
  • “The Fed only controls fed funds...so fed funds could possibly go down and the interest rate to finance a data center could be unchanged.” (09:41)

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7. Reflections: Trading Floor to the West Wing

[09:41–10:29]

• Trading Floor Nostalgia:
  • “Of course you miss the trading floor…That's when there really were trading floors. Like you actually stood up and talked on phones and spoke to each other.” (Cohn, 09:43)
  • Shift to automation: “Now it's machines.” (09:58)
• Skills Transfer:
  • “It did [prepare me for the West Wing]…the ability to be watching five different things going on at the same time and be listening in five places.” (Cohn, 10:02–10:06)

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Notable Quotes & Memorable Moments

• On U.S. Geopolitical Strategy:

  “I understand what the president's interest is…They also have rare earths, which is something that we in the United States can't supply to ourselves. So…is this a negotiating posture…to get more rares, to get a larger naval and air force presence?”
  (Gary Cohn, 01:08)

• On Market Cyclicality:

  “When this geopolitical risk settles down, the market's probably going to take off again. That's been the history of this pattern.”
  (Gary Cohn, 03:26)

• On the Challenge of Leading the Fed:

  “Once he appoints someone into that job, they're an independent agency and he loses his day-to-day contact with that person.”
  (Gary Cohn, 04:45)

• On Fed Committee Influence:

  “I'm not sure if the chairperson can ultimately sway the committee that far…It's going to be a tough group to persuade.”
  (Gary Cohn, 05:46)

• On Kevin Warsh:

  “Without Kevin's wisdom, I'm not sure we would have ended up in the same place. He's a highly qualified candidate.”
  (Gary Cohn, 07:30)

• On Fed Funds vs Real Economy Rates:

  “Fed funds could possibly go down and the interest rate to finance a data center could be unchanged.”
  (Gary Cohn, 09:41)

• On Wall Street Skills in Washington:

  “When you grow up in a trading floor and you grow up in a trading environment, your eyes and ears [have to be everywhere].”
  (Gary Cohn, 10:06)

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Timestamps for Key Segments

• [00:44] – Episode begins; stocks, Trump, and Greenland
• [01:08] – Cohn on Trump’s negotiation style and strategic view
• [02:44] – Cohn on “Sell America” and asset allocation shifts
• [03:26] – Resilience of U.S. markets despite geopolitical risk
• [04:14] – Cohn on volatility cycles and big moments in recent history
• [04:45] – Fed Chair race and Trump’s approach
• [05:46] – Can the Fed chair really sway the committee?
• [07:30] – Cohn’s high praise for Kevin Warsh
• [08:39] – AI buildout, capex, and interest rate dynamics
• [09:43] – Trading floor stories and skills transfer to White House

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Tone:
The conversation is businesslike, analytical, often candid, occasionally humorous when Cohn reminisces about trading floors, but maintains a clear, expert focus on present challenges in the global, political, and economic climate.

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For Listeners:
This episode is especially valuable for anyone interested in the intersection of global politics, U.S. policy, and financial markets. Cohn’s frank, insider take on both the White House and the Federal Reserve’s current state offers rare clarity amid the noise of market-moving headlines.

Transcript

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[Interviewer/Host]

Hour with stocks extending their sell off as President Donald Trump's push to take control of Greenland is sending fresh volatility into markets worldwide. The IBM vice chairman and former NSC director Gary Cohn joins us now for more. Gary, good to see you.

[Gary Cohn]

Thanks for having me.

[Interviewer/Host]

You heard the way we opened the program. There seemed to be a concrete ideology when you were along the president in his first term. How would you describe this moment? What is this all about?

[Gary Cohn]

You know, no one knows for sure, but I think what we've seen evolve in the Trump presidency is this desire to negotiate and get a deal. So ultimately, is Greenland all about getting a deal? We know that the North Atlantic is becoming much more of a sought after territory from a militaristic standpoint. So I understand the president's concern to have a military presence in protection of the North Atlantic, as if we want to expand, expand our air defenses. Greenland is a pretty strategic spot, so I understand what the president's interest is. They also have rare earths, which is something that we in the United States can't supply to ourselves. So the question is, is this a negotiating posture to get a deal with Greenland, to get more rares, to get a larger naval and air force presence? And it may be. It does seem like that's on the table and this may all evolve in a place where the United States ends up in a very good strategic position.

[Interviewer/Host]

Do you think that's the way the business world sees it coming into the World Economic Forum this week?

[Gary Cohn]

You know, I think the business world split on it. You know, you've obvious got a European presence here and a US Presence here. I think the US Presence is a little bit more optimistic that this is going to end in the right place. And we've seen this before. I think the European contingency is a little more leery and say, look, you know, maybe you're confident this ends well. We don't like Being in the middle of this right now, which is a.

[Co-Host/Analyst]

Reason why in European hours, Treasuries are selling off much more. The dollar was much lower. And as the US Wakes up, people are coming in and buying it. How much is the Sell America trade real and how much is it a perception based on these moments, the ones that we saw in Liberation Day?

[Gary Cohn]

There is some Sell America going on right now. I've met with a couple of different asset managers this morning, said that global funds are reallocating a little bit out of the United States. So you see that, you know, interest rates are higher. So people selling bonds, rates go higher. People are repatriating currency back home. They're selling dollars to buy local currency, they're selling stock market, they've got to repatriate currency. So I think we're seeing a little bit of that. I don't think that's what's driving the over market right now. It doesn't feel like we've got to liquidate America. It feels like we've got a trim around the edges in asset allocation models going on.

[Co-Host/Analyst]

This goes back. This goes back to the wrestling match we were describing. On one side, you've got politics, on the other, and they're facing off and it's sort of Sell America until I rears its head, gets in the lead.

[Gary Cohn]

And that's Sell America till the light turns green and everyone has to Buy America. Because in the real reality, if you look at the US Economy, what's going on? We've got one of the strongest economies in the world today. You know, we're growing at five plus percent growth. You know, we've a pretty good tailwind going on behind us. I mean, right now the only thing stopping is all this geopolitical risk. If, if and when. And I say when this geopolitical risk settles down, the market's probably going to take off again. That's been the history of this pattern.

[Co-Host/Analyst]

Settled down. Gary, two and a half weeks ago we captured Nicolas Maduro. It feels like a decade ago.

[Chase Business Advertiser]

Now we're sitting in Davos talking about Greenland.

[Co-Host/Analyst]

You think geopolitics settle down under the administration?

[Gary Cohn]

Two weeks? Yeah, we're going to settle down. I think that there's a. There's a couple balls up in the air right now.

[Chase Business Advertiser]

A couple.

[Gary Cohn]

But, you know, this too shall pass. We can go back in the last 812 years and there's been periods of time where we've had these, you know, highly volatile geopolitical moments. We're in a highly volatile geopolitical moment right now. And by the way, I'm not sure it's a coincidence that Davos is right in the middle.

[Co-Host/Analyst]

All right, interesting. I want to ask you about the Fed chair race because you were in the room with the President in Trump won when he decided to go for Jay Powell. What kind of questions do you think he's lobbing at these individuals? And in the end, who do you think it's going to come down to?

[Gary Cohn]

Look, the President's in an enviable position right now. He's got what we know. He's got four really highly qualified candidates. Any one of those four could do a really good job in there. I think the President at this point is trying to understand the sort of mindset of the person he's going to put into the position. The President clearly has a view on what interest rate policy should be. The problem or the opportunity with the Fed job is once he appoints someone into that job, they're an independent agency and he loses his day to day contact with that person. So I think the President learned in the first administration that it's very important to who he puts in that job and that he should make sure that he's very comfortable with their policy mandate before he appoints them.

[Interviewer/Host]

Do you think it's become even more important now that that individual needs to have the ability to persuade the rest of the committee in a way that maybe a few years ago that wasn't as relevant? There's just a sense on Wall street that the President's approach in the last 12 months has galvanized the rest of the committee to dig in.

[Gary Cohn]

Look, I think the committee structure is going to be the committee structure. I'm not sure if the chairperson can ultimately sway the committee that far. Could they sway one vote or two votes? Potentially. But you've got some very strong regional bank presidents, you've got some very strong governors in the. I think the Fed ultimately, at the end of the day, is going to be a tough group to persuade. I think they'll come out in the right place. I mean, historically, the Fed has done a very good job. Have they been a little bit late? Yeah, they were late in the transitory inflationary problem of COVID but they've caught up. They've gotten to the right place. I think if you look at the Fed through the cycle, they end up getting to the right place.

[Interviewer/Host]

You were diplomatic about the four candidates. Can I just talk about some of them individually? You can. Governor Chris Waller. You can, too. Governor Chris Waller, I believe you were Part of that process. Right? Vice Chair, Clarity. You were part of that process too. What was the President's approach to that process back then? Was he as involved as he appears to be now?

[Gary Cohn]

He was not as involved then. But remember he was a first term President who was an outsider to Washington. That was part of his mystique as he was an outsider to Washington and he knew he had to put someone into the Fed Fed chairs role and he, and he approached it. But I think now understanding the importance of interest rate policy and understanding his view of interest rate policy, he's taking considerably more time talking to the various candidates.

[Interviewer/Host]

I'll ask you the question, might get you in trouble. Is Kevin Wash a chameleon? Is he a hawk? Is he a dove? Is he whatever it takes to get the job? Why didn't he get the job last time?

[Gary Cohn]

Look, Kevin is highly qualified without having served in the Fed.

[Interviewer/Host]

Without a doubt.

[Gary Cohn]

Kevin was there during some of the toughest days of the Fed during the financial crisis. I personally was dealing with Kevin on an hourly basis as we were trying to figure out what was going on in the United States financial system. Kevin was an active participant in the outcome that we all benefited from. And without Kevin's wisdom, I'm not sure we would have ended up in the same place. He's a highly qualified candidate.

[Interviewer/Host]

It sounds like out of the four, that's who you'd like to see in the seat. Based on that strong defense of Kevin.

[Gary Cohn]

Walsh, I think, I think Kevin Hassett's a great candidate. I worked with Kevin Hassett when I was in the White House. He was the CEA Director.

[Interviewer/Host]

Share your thoughts on Kevin.

[Gary Cohn]

Kevin Hassan was an excellent CEO.

[Interviewer/Host]

Let me tell you what some people say about Kevin Hasset. That if he's appointed, that's a puppet of the President of the United States. He'll sit there, smile and do whatever it takes. Is that unfair?

[Gary Cohn]

You know, you and I both know whoever gets appointed, there will be people that are disappointed and will have negative things to say about him. On the flip side, there will be people to be very happy with whoever one of those four gets appointed. And if it's, if it's a fifth candidate we haven't seen yet, they'll be equally as happy with that one.

[Co-Host/Analyst]

There is a sense that whoever is going to be there, they're going to cut rates. How much is the entire build out of AI, which is what you spend most of your time talking about here based on the idea that the Fed is going to be easing policy no.

[Gary Cohn]

Matter what The AI build out in rates. They're linked but they're not in a strictly link. This AI buildout is being built because there's demand, there's forward demand and the AI companies feel like they are behind the curve in being able to facilitate the needs of their clients. They are going to build these data centers. The only question that rates have is what is the ultimate all in cost to build these things. And interest rates are going to be important. These are big huge capex expenditures with 30 year life. So you know the amount of interest you're going to pay to finance when these centers is important. So 25 or 50 basis points has a lot to do with, with these decisions. But I will caution you like I always do, the Fed only controls fed funds. They control overnight rates. You've been talking all morning about the 10 year, the 10 years at 430 where these, where these data centers are going to be financed. They're going to be financed to the medium to the long, to the very long end of the curve. So really a combination of duration fed funds is not going to affect that. So fed funds could possibly go down in the interest rate to finance a data center could be unchanged.

[Interviewer/Host]

Do you miss the trade in floor?

[Gary Cohn]

Of course you miss the trading floor.

[Interviewer/Host]

Yeah, I get you missed the trading floor. Can you imagine how scary things were back at Goldman back in the day? But that's when the first year analyst Gary's walking the trading floor.

[Co-Host/Analyst]

Yeah, I think that he would have done.

[Gary Cohn]

That's when there really were trading for us. Like you actually stood up and talked on phones and spoke to each other.

[Co-Host/Analyst]

And did it prepare?

[Gary Cohn]

Now it's, now it's machines. Now it's machines.

[Co-Host/Analyst]

Did it prepare you for the west wing?

[Gary Cohn]

It did, it did. It very much did.

[Interviewer/Host]

In what way Gary?

[Gary Cohn]

Just I think the, the ability to be watching five different things going on at the same time and be listening in five places. People in the, in White House. We were always amazed that I could be like having a conversation over here and talking to someone behind me because I heard them talking. But when you grow up in a trading floor and you grow up in a trading environment, your eyes and ears.

[Interviewer/Host]

Have to see everything with one eye. On JGBS this morning as well. Thank you. It's good to see you.

[Gary Cohn]

Thank you.

[Interviewer/Host]

Thanks for sharing some of your experience. That was Gary Cohn there, the IBM vice chairman.

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