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00:00You heard the way we opened the program. There seemed to be a concrete ideology when you were
00:04alongside the president in his first term. How would you describe this moment? What is this all
00:09about? No one knows for sure. But I think what we've seen evolve in the Trump presidency is this
00:16desire to negotiate and get a deal. So ultimately, is Greenland all about getting a deal? We know
00:23that the North Atlantic is becoming much more of a sought after territory from a militaristic
00:28standpoint. So I understand the president's concern to have a military presence and protection
00:33of the North Atlantic. If we want to expand our air defenses, Greenland is a pretty strategic spot.
00:40So I understand what the president's interest is. They also have rare earths, which is something that
00:44we in the United States can't supply to ourselves. So the question is, is this a negotiating posture
00:51to get a deal with Greenland, to get more rare earths, to get a larger naval and air force presence?
00:57And it may be. It does seem like that's on the table. And this may all evolve in a place where
01:02the United States ends up in a very good strategic position. Do you think that's the way the business
01:06world sees it coming into the World Economic Forum this week? You know, I think the business world's
01:11split on it. You know, you've obviously got a European presence here and a U.S. presence here. I think
01:14the U.S. presence is a little bit more optimistic that this is going to end in the right place. And we've
01:19seen this before. I think the European contingency is a little more leery and say, look,
01:24you know, maybe you're confident this ends well. We don't like being in the middle of this right
01:28now. Which is a reason why in European hours, treasuries are selling off much more. The dollar
01:33was much lower. And as the U.S. wakes up, people are coming in and buying it. How much is the sell
01:39America trade real? And how much is it a perception based on these moments, the ones that we saw at
01:45Liberation Day? Look, there is some sell America going on right now. I've met with a couple of different
01:49asset managers this morning, said that global funds are reallocating a little bit out of the
01:55United States. So you see that, you know, interest rates are higher. So people selling bonds rates go
01:59higher. People are repatriating currency back home. They're selling dollars to buy local currency.
02:03They're selling stock market. They've got to repatriate currency. So I think we're seeing a little bit of
02:08that. I don't think that's what's driving the overall market right now. It doesn't feel like we've
02:13got to liquidate America. It feels like we've got to trim around the edges in asset allocation models going on.
02:18This goes back to the wrestling match we were describing. AI on one side, you've got politics
02:23on the other, and they're facing off and it's sort of sell America until AI rears its head and gets in
02:28the lead. And that's what we're doing. And it's sell America until the light turns green and everyone
02:31has to buy America again. Because in the real reality, if you look at the U.S. economy and what's
02:37going on, we've got one of the strongest economies in the world today. You know, we're growing at five
02:41plus percent growth. You know, we've got a pretty good tailwind going on behind us. I mean, right now,
02:46the only thing stopping is all this geopolitical risk. If and when, and I say when, this geopolitical
02:53risk settles down, the market's probably going to take off again. That's been the history of this
02:57pattern. Settled down? Gary, two and a half weeks ago, we captured Nicholas Maduro. It feels like a
03:02decade ago. Now we're sitting in Davos talking about Greenland. You think geopolitics will settle
03:07down under a Trump administration? Two weeks. Yeah, we're going to settle down. I think that there's
03:13a couple balls up in the air right now. Well, a couple. But, you know, this too shall pass.
03:19We can go back in the last eight, 12 years, and there's been periods of time where we've
03:24had these, you know, highly volatile geopolitical moments. We're in a highly volatile geopolitical
03:29moment right now. And by the way, I'm not sure it's a coincidence that Davos is right in the
03:33middle. All right. Interesting. I want to ask you about the Fed chair race, because you were
03:37in the room with the president in Trump one when he decided to go for Jay Powell. What kind of
03:42questions do you think he's lobbing at these individuals? And in the end, who do you think
03:46it's going to come down to? Look, the president's in an enviable position right now. He's got what we
03:50know. He's got four really highly qualified candidates. Any one of those four could do a
03:55really good job in there. I think the president at this point is trying to understand the sort of
04:02mindset of the person he's going to put into the position. The president clearly has a view
04:07on what interest rate policy should be. The problem or the opportunity with the Fed job is
04:12once he appoints someone into that job, they're an independent agency, and he loses his day-to-day
04:18contact with that person. So I think the president learned in the first administration that it's
04:23very important to who he puts in that job, and that he should make sure that he's very comfortable
04:28with their policy mandate before he appoints them. Do you think it's become even more important now
04:32that that individual needs to have the ability to persuade the rest of the committee in a way that
04:38maybe a few years ago that wasn't as relevant? There's just a sense on Wall Street that the
04:43president's approach in the last 12 months has galvanized the rest of the committee to dig in.
04:48Look, I think the committee structure is going to be the committee structure. I'm not sure if the
04:53chairperson can ultimately sway the committee that far. Could they sway one vote or two votes
04:59potentially? But you've got some very strong regional bank presidents. You've got some very strong
05:04governors in the Fed. I think the Fed ultimately, at the end of the day, is going to be a tough group
05:10to persuade. I think they'll come out in the right place. I mean, historically, the Fed has done
05:15a very good job. Have they been a little bit late? Yeah, they were late in the transitory
05:19inflationary problem of COVID. But they've caught up. They've gotten to the right place. And I think
05:25if you look at the Fed through the cycle, they end up getting to the right place. You were diplomatic
05:29about the four candidates. Can I just talk about some of them individually? You can. Governor Chris
05:35Waller. You can, too. Yeah, you can. Governor Chris Waller, I believe you were part of that process,
05:40right? Vice Chair Clarity, you were part of that process, too. What was the president's approach to that
05:46process back then? Was he as involved as he appears to be now? He was not as involved then.
05:53But remember, he was a first-term president who was an outsider to Washington. That was part of his
05:59mystique, is he was an outsider to Washington. He knew he had to put someone into the Fed chair's role,
06:05and he approached it. But I think now, understanding the importance of interest rate policy
06:11and understanding his view of interest rate policy, he's taking considerably more time talking to the
06:17various candidates. I'll ask you the question that might get you in trouble. Is Kevin Walsh a
06:21chameleon? Is he a hawk? Is he a dove? Is he whatever it takes to get the job? Why didn't he get the
06:27job last time? Look, Kevin is highly qualified. Without a doubt. Kevin has served in the Fed.
06:31Without a doubt. Kevin was there during some of the toughest days of the Fed during the financial
06:36crisis. I personally was dealing with Kevin on an hourly basis as we were trying to figure out what
06:42was going on in the United States financial system. Kevin was an active participant in the outcome that
06:47we all benefited from. And without Kevin's wisdom, I'm not sure we would have ended up in the same
06:52place. He's a highly qualified candidate. It sounds like out of the four, that's who you'd like to see
06:56in the seat, based on that strong defense of Kevin Walsh. I think Kevin Hassett's a great candidate.
07:01I worked with Kevin Hassett when I was in the White House. He was the CEA director.
07:04Share your thoughts on Kevin Hassett. Kevin Hassett was an excellent CEA director.
07:07Let me tell you what some people say about Kevin Hassett, that if he's appointed, that's a puppet
07:11of the President of the United States. He'll sit there, smile, and do whatever it takes.
07:15Is that unfair? You know, you and I both know, whoever gets appointed, there will be people that
07:20are disappointed and will have negative things to say about him. On the flip side, there will be
07:24people that will be very happy with whoever one of those four gets appointed. And if it's a fifth candidate
07:28we haven't seen yet, they'll be equally as happy with that one. There is a sense that whoever's going to be
07:33there, they're going to cut rates. How much is the entire build out of AI, which is what you spend
07:36most of your time talking about here, based on the idea that the Fed is going to be easing policy
07:41no matter what? Look, the AI build out in rates, they're linked, but they're not inextricably linked.
07:47This AI build out is being built because there's demand, there's forward demand, and the AI companies
07:53feel like they are behind the curve in being able to facilitate the needs of their clients.
07:58They are going to build these data centers. The only question that rates have is what is the
08:01ultimate all-in cost to build these things. And interest rates are going to be important. These
08:05are big, huge CapEx expenditures with 30-year life. So the amount of interest you're going to pay to
08:11finance one of these centers is important. So 25 or 50 basis points has a lot to do with these
08:16decisions. But I will caution you, like I always do, the Fed only controls Fed funds. They control
08:22overnight rates. You've been talking all morning about the 10-year, the 10-year is at 430,
08:27where these data centers are going to be financed. They're going to be financed to the medium,
08:31to the long, to the very long end of the curve. It's really a combination of duration. Fed funds is
08:37not going to affect that. So Fed funds could possibly go down and the interest rate to finance a data
08:42center could be unchanged. Do you miss the trading floor? Of course you miss the trading floor. Yeah,
08:46I get the feeling you miss the trading floor. Can you imagine how scary things were back at Goldman,
08:49back in the day? First year-round list, Gary's walking the trading floor. Yeah, I think that he would have
08:54But John, that's when there really were trading floors. Like you actually stood up and talked on
08:58phones and spoke to each other. Did it prepare you for the West Wing? Now it's machines. Now it's
09:02machines. Did it prepare you for the West Wing? It did. It did. It very much did. In what way, Gary?
09:08Just I think the ability to be watching five different things going on at the same time and
09:13be listening in five places. People in the White House were always amazed that I could be like
09:19having a conversation over here and talking to someone behind me because I heard them talking.
09:22But when you grow up in a trading floor and you grow up in a trading environment,
09:26your eyes and ears have to see everything.
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