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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amerie Hordern join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg
Terminal and the Bloomberg Business app. We begin this out 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 NEC director Gary Cohne joins us now for more carry good to see you, good, Thanks for having me. You heard
the way we open the program. There seem to be a concrete ideology when you were alongside the president in his first term or how would you describe this moment?
What is this all about?
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 presence concerned to have a military presence and protection of the North Atlantic
is if we want to expand our air defenses. Greenland is a pretty strategic spot, so I understand what the President's interest is.
They also have rarers, 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 rarers, 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.
Do you think that's the way the business world sees it coming into the world economy before in this week?
You know, I think the business world's split on it. You know, you've a these got a European presence here in the 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 leary 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 reason why in European hours, treasuries are selling off much more of 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 on.
Liberation Day, there is some sell America going on right now. I've met with a couple of different asset managers this morning, say, the 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 overall market right now. It doesn't feel like we've got a liquidate in America. It feels like we've got a trim around the edges in asset allocation models going on.
This goes back to the wrestling match we were describing AI on one side. You've got politics on the other, and they're facing off and sort of sell America until.
AI rears its head and get into the lead. And that's where it is.
Sell America until the light turns green and everyone has to buy America. Because in the real reality, if you look at the US economy and 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 and growth. We've got a pretty good tail wind going on behind US. I mean, right now, the only thing stopping is all this geopolitical risk. 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.
Settles down Gary. Two and a half weeks ago, we captured Nicholas Madora. It feels like a decade ago. Now we're sitting in Davos talking about Greenland. You think you to settle down under a.
Recadministry two weeks Yeah, we're going to settle down.
I think that there's a couple of balls up in the air right now.
But you know, this two show pass.
We can go back in the last eight twelve years, and there's been periods of time where we've had these, you know, highly.
Volatile geopolitical moments.
We're in a highly valuatible geopolitical.
Moment right now.
And by the way, I'm not sure as a coincidence that Davis is right in the middle.
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 J.
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.
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.
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 twelve months has galvanized the rest of the committee to dig in.
Look, I think the committee's 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 FED. 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.
He was diplomatic about the four candidates. Can I just talk about some of them individually? You can Governor Chris Waller? You can too, You can governor Chris Waller. I believe you were part of that process, right, Vice Chef 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?
He was not as involved then, But you 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. He knew he had to put someone into the FED chair's role, 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.
Ill asked you the question, Mike got even 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 you get the job last time? Look, Kevin is highly qualified, without doubt. Kevin has served in the FED without a doubt. 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 financials 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. It sounds like out of the thought that's who he'd like to see in the seat. Based on that strong defense of Kevin Wood.
I think Kevin Hasset's a great quality candidate. I worked with Kevin Hasse when I was in the White House. He was the CEA director. You thought Kevin Kevin Hasse was an excellent CEA.
Let me tell you what some people say about Kevin has said that if he's appointed, that's a puppet of the President of the United styce sit.
They're small and do whatever it takes.
Is that unfat 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 them. On the flip side, there will be people that'll be very happy with whoever one of those four gets appointed, and if it's if it's a fifth candiate we haven't seen yet, they'll be equally happy.
With that one.
There is a sense of whoever's going to be there, they're going to cut rates. How much is the entire buildout 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 easying policy.
No matter what the AI buildout in rates their link, 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 and 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 thirty year life, so you know the amount of interest you're going to pay to finance win these centers is important. So twenty five or fifty basis points has a lot to do 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 tenure, the ten years at four thirty 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. It's going to the combination of duration. FED funds is not going to affect that. So FED funds could possibly go down and the interest rate to finance a data setting could be unchanged.
Do you miss the trident floor?
Of course you missed the trading floor.
Yeah, if you missed the tread and floor, can you imagine how scary things were back at Goment back in the day. But that's when the first year round list. Gary's walking the trident floor.
Yeah, I think that he But John, that's when they really were trading floor us. Like he actually stood up and talked on phones and smoked each other.
And did it prepare now now it's machines. Now it's machines.
Did it prepare you for the West Wing?
I did it? Did it? Very much? Did?
In what way?
Gary?
Just they think the ability to be watching five different things going on at the same time and be listening in five places.
People in the White House 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 grew up in a trading floor, and you grew up in a trading environment, your eyes and ears have to see everything.
Stay with us more Bloomberg surveillance coming up after this. Joining us now in Dallas, Switzerland's Paul Ryan, the former House Speaker and now today Vice Chef Speaker.
Ryan, Good morning, good to.
See you, Good morning to see I had this question planned for a while. Does your party now have more in common with Senator Bernie Sanders than the one hundred and fourteenth and one hundred and fifteenth Congress that you ever saw?
Apparently in economics, maybe the case is right on tariffs and on interest rate caps and things like that. Perhaps I'm a conservative. This is not conservative economics.
It's the space for that in your party.
Now, yeah, there is. Our party is a big ten party. It's got a lot of different factions.
The dominant faction right now is more of an economic populist faction.
That's the President's faction. That's MAGA.
I'm a conservative, I'm in the minority of my own party.
But that happens when John's talking about having this relationship, say the MAGA wing with Bernie Sanders.
We're seeing that with a ton of issues.
The president's talking about that the defense sector shouldn't have dividends or buybacks, credit card interest rate caps. Bernie Sanders literally wrote the bill. How do individuals in the minority of the Republican Party right now make their voices heard.
This is populism, but it's populism tethered to whatever people think is popular, not tethered to certain core principles like liberty, freedom, free enterprise, private property rights, et cetera, et cetera. So my wing of the party, which is the classical liberal conservative winging the free market wing of the party, is in the minority, and we just have to make our case for why we believe what we believe in why
we think people are better off. At the end of the day, the challenge is it's hard to defeat populism in sound bites, in emotion, and that's what can win the day, but it doesn't win the issue. It doesn't actually deliver the results. So the end of the day, I think results are what matter, and I think people voters vote for results. If they're going to vote for populism, that that that that speaks to their concerns and their grievances and their their and their frustrations.
That's one thing.
But if that populism doesn't deliver policies that actually solve problems, then they're going to look elsewhere and hopefully we can have a better discussion about what actually works. What principles that build our country, that make our economy strong. It's our private property rights, our deep liquid capital markets, our rule of law.
That's why America is America. That's why we've done so well.
We have to defend those principles, even if those principles aren't that popular.
You're a free market individual.
This administration is taking equity stakes in companies.
Is that state capitalism the way that Chinese do it, or say, like the Europeans in the seventies.
Yeah, it's more of Europeans more, it's more Japanese, it's more Europeans. It's it's not Chinese, it's it's it's not what conservatives are for. We don't believe in doing that. But this is more industrial policy, less, less communist dictatorship.
It's very different.
Your role right now is to advise companies, and you're coming at a time where companies have no clue what's going on at the White House or what might come out of it.
What do you tell them?
Yeah, I mean, we just did a survey actually of seven hundred and fifty CEOs that Tonayo just did, and frankly, a lot of them are pretty optimistic about.
M and A.
They're optimistic about economic growth. Where they're uncertain is tariffs. So they have to plan for resiliency. They're basically building resilience systems because they don't know what's going.
To happen on tariffs.
I actually think and I hope, that the Supreme Court may take away the IEP authority. I don't think that law was written for tariffs. It's a sanctions law. We'll find out and maybe even later today, I don't know when the court's going to rule, but that's a tool the president's been using far beyond Congress's intents.
In my that's my opinion.
But if that happens, then he'll have to go to other trade laws that aren't as easy to use, like the IEPA laws have been used, and so that takes away some uncertainty. But we're going to have trade uncertainty, tear if uncertainty. But there's good regulatory posture, we have good tax policy.
There's gonna be a lot of M and A.
So I think there's it's we're driving the car with two feet. We got one foot on the gas, one put on the brake, and that's what That's what CEOs are trying to plan for. How do they respond, how do they seize the opportunities and plan for the uncertainties.
We just had the head of General Atlantic on who said that resilience to him, means diversifying, and it means diversifying away from the United States.
This is the what if scenario.
In the meantime, businesses have to plan how much are the people you're talking to moving capital flows outside of the US in a way that concerns you.
I worry about that.
I worry more frankly about a long term debt posture and the fact that we're not doing anything to deal with our debt, which means our dollar.
So I think there.
Are things that are that are good that are happening, Say the stable coins being deployed.
That's good for the dollar. If we got our fiscal house in order, that'd be great for the dollar.
But I don't see the populist politics lending itself to doing those things. But we do have the best economy in the world. We have the deepest, most liquid capital markets, so I still think we're going to be there. We have better regulations than what we had in the last administration. We have good tax policy. But there's a lot of uncertainty. So yeah, it bothers me when I hear companies feel they need to diversify away from America because of the uncertainty.
But if we get this uncertainty dealt with, if the uncertainty tamps down, then I think we'll be back in business.
So overall, I think we're going to be okay. At the end of the day. I think our institutions stick.
Can we finish on the debt market you took us that there's a sale off in today's session. Look four thirty on a ten year bonb yeld. It's not a crisis. I'm not going to pretend it is. But the direction of travel is just to push more and push more. And it's not just America anymore, that's right, Abe, Japan is leaning in the same direction, and that'll loosened things up as well.
What do you think we're building up to?
What I worry about our auction failures.
They won't technically be a failure because they'll make the primary.
Dealers buy the paper.
But I worry if we see that an auction would have failed, that what the spike and yields will look like, and then what that does to our fiscal policy. So if we could get ahead of our fiscal policy problems by reforming our entitlement programs prospectively for the X generation on down, I think we could calm the bomb markets down and we could be the flight to quality. Again, We're not there and our politics aren't there yet, so because that's not anywhere near.
Being politically viable.
You have these kinds of things, then you have all this terarif uncertainty, all the things that are happening there that are going to spook to markets. I don't know if this is a Japan story today or if there's a denmarket. I don't know what this is about. But if we had our fiscal outs in order, I don't think you'd see these kinds of shocks.
Stay with us multiple impeg Savannah's coming up off to this, the President threatening to impose additional tariffs on some European allies supporting Denmark while he pursues Greenland. The Finland President Alexanders Stoop joins U snaffle moments the President, good to see it, nice to say, thanks for always making some
time for us. Look, I would never traditionally start a conversation like this with the head of state, but given the news flow and the headlines and the pictures of text we've seen over the past few days, I have to get a better understanding from you directly. I understand you were on an exchange with the President of the United States where the President almost explicitly linked his failure to win the Nobel Priest Prize with a more assertive stance on Greenland.
Did that actually happen?
Well, yeah, I mean we do message a lot with the President and sometimes I message together with the Prime Minister of Norway, you and US Guard Sturta. So yes, the response was as has been reported, and this is what frank diplomacy is all about.
This is quite.
Normal in our engagements behind the scenes, and it's good that we have these conversations.
You'd have to forgive me.
But for many people that don't feel that it's normal to connect the failure to win a prize with a more assertive stance over someone else's territory.
It is normal to have direct talks.
Of course, on the Greenland issue, I agree with the President. I think now what we need to do is to bring down the temperature. We need to find an off ramp and probably create some kind of a process which will.
Strengthen Arctic security.
And sort of at the end of the tunnel, I wish we could have a NATO summit in Ankara where we all agree on a new Arctic security structure.
I come from an Arctic country.
I come from a country which has one of the biggest militaries in Europe. I come from a country which has the best know how in Arctic defense. So these are the types of things that we need to work with the alliance, including the United States.
President Trump has been talking about Greenland since twenty nineteen. What makes it different this time? What does an off ramp actually look like.
I think there's a short term scenario here. This is a long term. Short term is to basically de escalate the language, and I hope we'll see some of that here in Davos, here today, tomorrow and the day after tomorrow. And then the second one is a long term strategic thinking on Okay, is this an issue of sovereignty or is it an issue of security? I hope that it is an issue of security, and then we start looking
at how we can beef up security in the Arctic region. Now, the latest conversations that I've had about this subject in the past two to three hours, this is how fast things are changing in the new foreign policy world. Gives me a little bit of hope that we'll find a way.
It feels like a live negotiation.
The President a lot of the time does come out with something very aggressive to get to an endpoint, which really is just a better deal.
I like this to NATO.
At one point there was reports you want to pull out NATO, but really, at the end of the day, you wanted Europe to spend more.
Is that how you view this through that lens.
Well, first of all, the president of the United States has a capacity to deal with the multiplicity of issues at the same time. I mean, you only look at what's happened this year Venezuela, Iran, Greenland, Gaza, the Peace Board, and many other things at the same time. And of course add on to that domestic issues on the NATO issue.
If someone would have told me at the seventy fifth anniversary of NATO in Washington, d C. In twenty twenty four, I think it was that we are looking at increasing our defense expenditure to five percent next year.
I please go and see a.
Doctor or consult the Foreign Affairs magazine because this.
Is not going to happen now.
If at the end of the day, after this what could be called rhetorical escalation, we come up with a stronger Arctic security, then that is good. And obviously we're seeing foreign policy done in a slightly different way from what we're used to.
But you know, I'm a finn.
I thought you'd ask the first question that you know, what do you do? I said, in these coins of situations, you take a deep breath, you go in the sauna and you take an ice bath, and that's what we're a missing.
That's what we're missing.
See sauna where they have had diplomatic dealings done.
Quite a scene. You can have the ice path right there. Look, then there's this.
Question, mister President, about why European nations were sending more troops to Greenland over the past couple of days in the past week. At first it was to beef up and show that they were serious about the security.
Not what it was about at all.
Okay, okay, So whether it was taken by President Trump was I.
Think there was probably a misunderstanding or not. Probably there was. So basically, let me explain. There is something called Arctic Endurance, which is basically a NATO training exercise.
That exercise has eight different.
Components, all of which the United States is present. We were asked by our allies to go and do a reconnaissance miss mission to check out the territory, the landscape, and how it's going to work out. This is completely normal procedure and obviously I can't talk about the specifics of that exercise, but trust me, it is not trying to protect anything westbound, it's more eastbound.
At what point do.
You feel like you're just fielding calls because you thought of as a Trump whisperer. I mean, what are you telling your colleagues and other European nations how to deal with mister.
Well, I think you know diplomacy.
A lot of times when people analyze diplomacy, they look at it on a state to state relations. You know, what's the values, interests, power, culture, history, geography, But they forget that a lot of it is actually about person to person engagement and the fact that I'm able to communicate directly with the president puts me as president of filling into good position. But I have no illusions about being a Trump whisperer. You know, he's the President of
the United States. He decides completely for himself. I throw out a couple of ideas, sometimes he likes them, sometimes he doesn't, and then I throw ideas to our other European allies and friends.
That's what diplomacy is about. Last week, Oh, we spoke.
It was a collective phone call I think in Paris on the fifth of December or Berly, I forget when it was.
But the president yeah, yeah, But that was sort of a collective.
And the last message with each other was in the last time I.
Think it's been made public. That was the last time you spoke. That's the last time message. Ye.
The reason I asked this is I'm trying to engage whether there was a misunderstanding. It certainly seems like you perceive there was a misunderstand.
My perception is that it was a misunderstanding.
So now we need to, you know, sit down, discuss, get an off ramp and at the end of the day, we need more Arctic security and with European and American presence.
This is clearly played out very publicly, and you've been transparent about how frank things are.
Often behind the scenes.
But given how publicly this has played out, what kind of a message you think this is sending to the Russians at the moment, the way this is playing.
Out, well, any time there is a diplomatic issue, to put it diplomatically between us the Transatlantic partners. I'm sure that the Kremlin is enjoying it, I mean, and they will use it as they best can, as we saw, you know, I mean, for a Minister of Russia, love Rov puts out a tweet and saying that for the US, Greenland is what Crimea is for Russia. And obviously, you
know that's an insult and we all understand that. So we always have to be careful with the Russians because they will use any moment and any possibility for good old information warfare and propaganda.
The unintended consequences just creates more of a positive attitude towards Russia and China and divides the Transatlantic relationship.
How may a.
Concern is that, especially as we just saw Mark Karney go over to Beijing and say.
They have this new strategic partnership.
Yeah, I mean I think you know, I'm very pro European, I'm very pro American, and I'm a transatlanticist. So it is in my interests and also based on my values that we have a closer relationship with the United States. That's why I'm also very pragmatic. I understand that the United States is the number one superpower and what we need to avoid, of course, is a certain disengagement. At the same time, I have to say that Europe needs
to use this moment as well. You know, it needs to beef up its defense, it needs to get stronger economically, and I think, you know, my big ceasis is that it's going to be the global South that decides the new world order. So that means that we need to engage more with the likes of India. I really like the free trade agreement that the EU forged with Mercosur, and I think people will start looking a little bit elsewhere, but I really still want to contain and bring back the US as best we can on.
Top of Russia.
On that conversation, I've been told those discussions are going very well between the United States and Ukrainians, the United States and the Russians. Krauel Dimitriev reportedly is here having a conversation with Steve Wikoff today. How much longer do you think it will take to get that deal done? Do you think Putin even wants a deal?
Okay, So two observations on this. The first one is that I'm afraid that the Greenland issue will take all the oxygen here in Davos from the Ukraine dossier, which I still think is fundamentally important acute.
But the second point is good news.
I think ever since Jared Kushnaier came into the game, actually in Geneva right after the g twenty summit, and we had another meeting in Berlin and then in Paris. We have a lot of more practicality, so we basically have depends on how you count six documents or two or two plus five documents. The good news is that Ukraine, the United States, and the Coalision of the Willing or Europe we're on the same page. The big question is
are the Russians. I'm quite skeptical about that. I think we might get a deal on security arrangements, we might get a deal on territory. Certainly on the prosperity package. I'm quite hope that will get something here this week. But then the Russians will say and yet, well, if.
Russer continues to drag the United States along, do you have a sense of what Trump's red line is with Putin.
I'm not going to start interpreting the red lines of the President of the United States, but I have to say that I really like what he did on Luke Oil and Rosneft, on the sanctions, and to be honest, I mean putin light to President Trump about the drones hitting his dutcha they fired ballistic missiles. So this is something that certainly will shorten the fuse of the President of the United States. And it of course depends on how much carrot do you put before you hit with the big stick.
Just to find a question, we often ask our guests for forecasts the World Economic Forum. I'm not going to ask for a long term one. Where do you think will be at the end of this week?
I think we will have defused the Greenland issue. I think we will have made progress on Ukraine, and I am one hundred percent sure that the world will not be finished by that.
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