Gary Cohn & the Acquired Podcast Interview 7/16/25

0:00Bring in show music please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. To cut or not to cut, the U.S. economy is digesting middle-of-the-road inflation data. The president is taking on the Fed chair. And we're debating interest rates with the vice chairman of IBM and Trump 1.0 veteran Gary Cohn. If someone said, what would you personally do, Gary? I'd probably lower interest rates a little bit. I'd lower them 25 basis points and see what happens. And the Acquired podcast, three, four, seven-hour conversations on the ins and outs of the world's most influential companies. Interviews with CEOs like Howard Schultz and Jensen Huang.

0:41Host David Rosenthal on how it all began. We had a few hundred listeners and we were like, this is fun. And somehow it became this. And host Ben Gilbert on how they built a brand with a million listeners in episode and millions in revenue without marketing at first. When there's the right piece in the right publication with massive, massive reach, it's game changing. Nothing has ever changed our business the way that a Wall Street Journal piece had. Plus, New York's Democratic mayoral candidate Zorhan Mamdani is meeting with business leaders. Crypto legislation hit a snag in Congress. And could your 401k end up with private market holdings?

1:20What concerns me about it is just how educated 401k retail classes, which hopefully are watching our show. Hopefully you're watching our show because we think you're dummies. No, no, no, no, no. It's Wednesday, July 16th, 2025. Squawk Pod begins right now. Stand Becky by in 3, 2, 1. Cue it, please. Good morning, everybody, and welcome to Squawk Box right here on CNBC. We're live from the Nasdaq market site in Times Square. I'm Becky Quick along with Joe Kernan and Andrew Ross Sorkin. We did get a big pop in shares of NVIDIA, and that helped power the Nasdaq to yet another new high yesterday. But you did see both the S &P 500 and the Dow a little bit weaker yesterday.

2:04And the Dow Transports and the Russell 2000 had their worst day since May. Checking out what was happening in the Treasury yields yesterday, the 30-year and the 20-year both had hit their highest yields since May. In time, check out how Bitcoin and other cryptocurrencies are trading this morning. Let's show you what exactly is going on, because Bitcoin fell yesterday originally when the White House effectively was blocking prices of crypto legislation from coming to the floor. A group of Republicans and joining Democrats on the effort, which would have set the terms for the debate over the Genius Act.

2:37That bill, of course, meant to help regulate stable coins. Then later in the evening, President Trump posted on Truth Social that he was meeting with a group of lawmakers who he said had agreed to vote for the rule in the House. He said that House Speaker Mike Johnson, quote, looks forward to taking the vote as early as possible. And more NVIDIA news. The CEO, Jensen Wang, is in China for the second time in about three months. today praising the country's AI ecosystem. Speaking in Beijing, Wong called models from companies like Alibaba and DeepSeek World Class. This comes after NVIDIA said yesterday it expected to resume shipments of its H20 AI chip to China after getting assurances from the U.S.

3:20government. Wong said the U.S. is processing those licenses for Chinese customers right now. Here he is speaking about export controls. Export control are things that are outside of our control. And it can be quite disruptive to our business. It is our job only to inform the governments of the nature and the unintended consequences of the policies that they make. A few other key lines we're grasping here from Jensen Huang. He said he told President Trump about his trip to China, to which Trump replied, have a great trip.

4:06He also spoke with the Chinese vice premier, and it was a wonderful meeting. I don't know if you saw David Sachs yesterday on television and then made some other comments. It must have been a later show because we've begged him, and it's too early for him to get up to come on. David made an interesting point just about why the U.S. might be willing to do this, given the national security threat. I think it's pretty important that we actually compete and take market share away from Huawei in China. Otherwise, we're basically creating a huge subsidy for Huawei in China. We're giving them all of that market.

4:39We're giving them all that revenue to fund their R &D. And we're basically creating a developer ecosystem for them. So I think we don't want to sell China our latest, greatest technology. But I do think we at least want to make it a little bit difficult for Huawei here. We do want to sell them a deprecated chip so they don't run away with that huge part of the market. It was more that Huawei doesn't have chips yet that are nearly as good as NVIDIA's. However, what they have figured out how to do is effectively daisy chain their chips together so that they can create a sort of pseudo-competitive product, meaning the actual chips are not nearly as good as NVIDIA, but if you put them all on like a server rack together...

5:20Buy a hundred of them. You can sort of actually recreate what NVIDIA does or get closer to it. And that if they were allowed to continue to have success sort of approximating what NVIDIA can do, even though it's not as good unto itself, that they may actually be able to move the price of that so far down that they could then start selling that product. So they'd stop doing that if they could get elsewhere. It would be an actual competitor. They'd stop doing that if they could get NVIDIA. And the one thing we don't want to lose out on are chips and AI. We don't want to lose in that race to China, and that's been a pretty effective argument.

5:57Even though, you know, you can't have your cake and eat it too. Either China doesn't get good at AI or we help them get good at AI, and then we'll have to deal with that across that bridge when we come to it. Is there another? Can we mix that metaphor? Well, that's not a walk in the cake. Yeah, across that bridge. Across that cake when you walk through it. When you walk across that bridge. Reports say New York City mayoral candidate Zoran Mamdani told a group of business leaders he would begin to discourage the use of the phrase globalize the intifada. That's big of him. Which is he's going to now focus on from the river to the sea, which is seen by many as a call to violence against Jews.

6:41Momdami was reportedly pressed by Pfizer CEO Albert Bourla at a meeting at Rockefeller Center hosted by the Partnership for New York City. Interesting. Those two were didn't put those two names together. Momdami is expected to meet with more executives today. Reportedly in attendance were about 100 business leaders, including Lowe's Corporation chairman James Tisch, the father of the current New York City police commissioner, as well as related companies, Jeff Blau, Uber CEO, Dara Khashrashahi. People are now switching to Cuomo. I know all new people to Cuomo. The move towards Cuomo. So it's going to be very interesting to talk to them about it.

7:25Evidence of that, yeah. What's happening here, exactly. That's what we heard from Ken Langone yesterday. He has a better take from Ken yesterday and others. There's a real sort of a, I don't know, panic hasn't, I guess it is setting in. Well, no, I think within the business community, I think there's a true feeling of panic. More, though, I have to say, I think around some of the anxiety around the anti-Semitism piece, than even some of the sort of capitalistic or socialism pieces. Well, that's good. I mean, pick your poison. That's awful. But just the notion that anyone still thinks that policies that are that far down the socialist path are in any way going to help this city is not living in the real world.

8:14Just like Jamie said, you're living in some la-la land. If you think all that free stuff is going to help anyone in New York. When things are free, you can't get them. When things are free, you can't get them. Well, the question is whether he can do any of these things, as we discussed. He can't do them anyway. No, no, meaning... Does he have control over rent control? Because that's one of the things he was talking about. The rent control is one piece he does have control over. Okay, so the mares can't do anything? They don't think the blah, blah, blah was able to do anything bad in this city?

8:41He somehow found a way to totally ruin the city. Rent control, you have the amount of officers you're putting on the streets. Exactly. I think it's about police. No, I know. There's lots of things you can do. Around the edges, you can do plenty of damage. Well, even the rhetoric can determine who's going to the city and who's leaving. which is part of the issue. Okay, folks, I want to know what you guys think of this one. So the Trump administration now working on a plan, a proposal really, to make private market investments more available to Americans through their retirement plans. This is according to a report in the Journal, which says that an executive order could be signed as soon, really in the next couple of weeks, but details still being worked out on this.

9:22Success in the area would amount to a huge win for the private equity industry. shares of some of the key players, as you might imagine, rising on the back of this news. You've got Apollo up about 2 % this morning, KKR, Blackstone, also up areas management. And look, so much of the growth has come in private credit, also obviously in private equity. The question is, is this the bell for all of this stuff? I will say what concerns me about it is just how educated, unfortunately, the sort of 401k retail classes, which hopefully are watching our show. No, no. Hopefully you're watching our show because we think you're dummies.

10:01No, no, no, no, no. But I just, broadly speaking, I actually agree with you. Folks who, whether they understand, especially around these... I think the lockup periods are bigger. These semi, what they're described as semi-liquid instruments where... And that is the concern. For any private investment, you're locked up to some degree. Look at the trouble that Harvard and Yale and some of the other universities have gotten into. They've been locked up with some of these long-term holdings. You think that they soar in value, but you can't get out of them. Right, you get gated on this stuff, you can't get out.

10:28Having said that, if you have a child or you're in your 20s and it's a 401k with the plan to retire, hopefully in your 60s or 70s, the idea of being locked up shouldn't actually bother you at all. And maybe that's an opportunity. I mean, look, there's part of me that says that a well-rounded, diversified portfolio for most people should include private assets, should include real estate. I mean, you'd want people to have a diversified sort of piece of the puzzle. You're not supposed to be taking your money out willy-nilly. So there is something that's interesting about that. It depends on when your retirement heads.

11:00You can take it out anyway. But you can create these target date things if you want. The other question I have right now, specifically for private equity, is private equity has not been, and private equity and private credit have not, well, private credit's a little different, but private equity has not been returning money to people, in part because there's a real question about the valuations in the private market versus the public market. Nobody wants to sell to take down the marks. We've discussed all this. And so right now, this will be a boon to the private equity firms. And who's going to be buying this stuff?

11:31I mean, on the exit side. So you're worried about bag holders, but as an asset class, we always want to just say almost a cliche. We want to democratize the markets for everyone. And all asset classes go through, you know, bubble and, you know, they come in and out of favor and long term, it's probably something that should be available to. But I do appreciate your point of, is this a bell at the top? Right. At least temporarily. I mean, maybe not forever, but. There's more than $12 trillion in this 401k money, which is why they want access. I mean, I can remember times when like Apple went into the Dow.

12:08It's like, oh, now you're putting it into the Dow and then it It just tripled from there. Right. And it could be a brief, you know, a little bit of a shakeout. And I don't know. If really rich people love private markets and have done well, it's a good idea to try to open it up to everyone. But you made the timing. There are questions about the fees, too. The fee structure and what it means for it. But yes, if they've outperformed over the long time. Cheese will be next. Coming up next on Squawk Pod, Gary Cohn, the director of the National Economic Council in President Trump's first term, where he stands on tariffs, inflation and monetary policy, including whether the economy is ready for the Fed's next interest rate cut, whenever that may be.

12:56It feels like there is a decent argument to be made on either side of the equation.

13:07Welcome back to Squawk Pod from CNBC with Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Stand by Joe. Here's Mike. Here's Joe. About an hour away now from the release of the June producer price index. Joining us now, Gary Cohn, IBM vice chairman, former director of the National Economic Council, joins us on set, as he really should exclusively from time to time. Thank you. Joe, it's always nice to be here with you. Always good to see you. What an introduction. Yeah. You suck. I don't. Nice introduction. It's not nice to be wanted. No, it's not. It's not nice to be wanted. Did I want you here instead of somewhere else?

13:45It's not. Would you rather say, gosh, I wish you were on another show? No, you wouldn't. It's always good to be wanted. And you were watching Langone, Ken, yesterday. And the Journal has never liked tariffs, obviously. Wall Street Journal, they're classic conservatives. Ken does not like tariffs. But there's a feeling among a lot of classic conservatives that something needed to be done. And they've kind of been lulled into the idea that some of this is OK, almost accepting some of the tariff moves. This kind of threw me a little bit today because it's the president wouldn't like the results of what happened in those numbers yesterday.

14:22They weren't horrible, but real weekly wages fell, adjusted for inflation because of where inflation was. So inflation's up, wages are down. That's not what he wants. It's not what he was elected to do. And it's a reflection in large part from some of the tariffs, right? Correct. Correct. What would you advise the president to do with tariffs at this point? So, look, I think you made two really important points. Really? Yeah. Yeah, it's a pretty good start. I'm going to have to go back and watch the tape. Go ahead. So one point is there is a understanding or view in this country that we need to control certain parts of our essential supply chain.

15:07I always say if COVID taught us nothing else, it surely taught us how vulnerable we are on essential parts of our supply chain. So the fact that we're trying to move some of our most vulnerable pieces of our supply chain that can shut down our U.S. economy and move them back to the United States, I think the vast majority of Americans and the vast majority of economists and the vast majority of business people all support that. And that wouldn't have happened with pure market forces? It would not have happened with pure market forces. So the good piece is we are starting to understand what are the essential things that need to be moved back to the United States to protect themselves.

15:43It might cost us something. So that's the point that I think is interesting. The other point is, you know, we are now at a point where we are collecting 30 to 40 billion dollars of tariff revenue a month. And everyone's boasting about, you know, the 30 to 40 billion dollars of tariff revenue a month. You know, the one thing I think we all will agree at is there's no free lunch. Someone's paying the 30 to 40 billion dollars. And ultimately, ultimately, it is going to end up being the consumer that pays that money. So for a short period of time, maybe the business is eating it. So if you're an importer and you're Nike or you're Apple, you may be eating it for a short period of time.

16:28If you're the importer, you may be eating it for a short period of time. But that's an unsustainable business model. And you've got your shareholders and you've got your banks and you've got your debt covenants. and you have to abide by all of the restrictions that you have. So ultimately, you're going to be forced to pass those tariffs down into the system. And unfortunately, the consumer is going to eat them. And I think yesterday's numbers gave us a little hint. And by the way, I never get too excited over one set of numbers. I always warn people, like, it's a set of numbers. It could be completely different next month.

17:01So we have to wait to see what the trend is. But when you see, you know, things that we know we're importing, like toys, like appliances, like paper products, all showing close to 2 percent inflationary pressures. We have a pretty good idea that the underlying product is probably not going. But the journal doesn't even argue that that that this the problem is inflation because it says it's probably a one shot deal. Doesn't necessarily go into services, doesn't necessarily. But it is a tax. It is a tax. And when you tax something, you get less of it, usually. Well, when you tax something, you get less of it.

17:41And it costs someone somewhere. You affect people's buying power. Yeah. And if you're on a fixed income, you have less disposable income to buy goods because those goods are more expensive. And we're therefore affecting the part of the population we least want to affect. Exactly. Which is the hardest working individuals. it's a very regressive tax that will force people to choose between what they're able to buy, what food can they put on their table, what can they do to improve their home or not. You're forcing consumers to make very difficult decisions as this gets packed. Here's the question.

18:18I think I was concerned in part because so many CEOs would come on and say they were concerned about the uncertainty of taxes and that the uncertainty was going to prevent them from making investments. The things that they wanted to do, they were going to sit on their hands and try to figure out what was going to happen, and then they'd wait. It does not appear, at least the way the economy is going thus far, unless it's, you know, we don't know the other side of it, that somehow people are stopping. You look at all of the AI investments that are taking place. You look at all, and there's just even some of the M &A activity that your former firm Goldman Sachs is reporting.

18:52Johnson & Johnson was on this morning talking about$55 billion in investments. Look, maybe there'd be an even greater tidal wave of investment if this uncertainty didn't exist. But how do you think about that? The uncertainty piece that we've all been talking about. So the uncertainty piece breaks down into a bunch of different silos. So we had the one big, beautiful bill, uncertainty piece. Now, the bigger uncertainty in that bill was really what was going to happen to the personal income taxes. The vast majority of the corporate taxes were law. They were not going to expire at the end of this year.

19:28But on the flip side, there were about$4.5 trillion of tax relief on the individual side, meaning that every taxpayer's rates would go up. Yes, we would bring back the standard deductions. We would bring back the itemized deduction. We would bring back all the complexity of filing tax returns. And I think that had a highly, a huge effect on the way people were thinking about what their after-tax spending would have been or could have been if Congress was not able to roll those rates forward. Not only did they roll those rates forward, they actually put back some of the stimulative for lower-income families that was in the original bill, which I think are very good and supportive.

20:13There's enhanced child care credits. There's enhanced credits for families. So, look, we end up in a place from the tax standpoint, from the income tax standpoint, where I think that variable is off the table. We know what it is. It's baked. It's signed. Nothing's going to change. And people cannot say, I don't understand what's going on with taxes at this point. And in fact, on the business side, there was more incentive in there to go out and manufacture and build in the United States. You got enhanced depreciation. You got enhanced R &D credits. So all of the things that you would want or need to manufacture and build in the United States were included in the tax bill.

20:53So now we get to the point where I think we were starting with Joe is, okay, if I'm going to go build and I'm going to manufacture in the United States, okay, I'm starting maybe to understand the cost of manufacturing the facility. Once I manufacture a facility, I've got two inputs. I've got to bring labor into the facility, and I'm not sure what my labor costs are going to be. And I have to be raw materials in the facility. And a lot of those raw materials are not manufactured here in the United States. And even if we say we will manufacture those here in the United States, realistically, that's a five-plus-year project.

21:31And what we're seeing on some of these deals where we're making deals to manufacturing things in the United States, like magnets, the price is dramatically different than where the current clearing price of a magnet is today. So am I going to build a factory? Am I going to go borrow? Do you think these announcements aren't real then? Things are real, but the question is, am I going to go borrow a billion dollars plus to build a factory if one of my major input costs just doubled? So you have to assume my final good has to sell for dramatically higher. Or you have to figure that it's cheaper still to manufacture it here, given the tariffs that are going to be imposed on anything in manufacturing.

22:11You have to make that rule. You have to make that adjustment in your mind. But knowing that that manufacturing is five years forward from now and predicting what the tariff is when it's not law. Right. When it's not been law, it's not gone through the Congress. That's a tough thing. And as a board of a director, as a board would sit there and say, is this a prudent thing to do for our shareholders? Does the market make sense at these highs? Do you think that momentum can continue? Because we've had a lot of people over the last few days who say, hey, the market can grow into this and continue to push even higher.

22:47Right now, we are seeing the vast majority of spending in what I call the AI-related and ancillary spaces. We're seeing it in the power. power grid, power formation, power generation. We're seeing it in the warehousing of CPUs, GPUs. We're seeing it in the building of these massive buildings. So, look, the AI wave right now and the demand for compute power is extraordinary. And it's really important in the U.S. economy. And that piece of sort of demand itself, which seems insatiable at this point, seems like we cannot build enough data centers fast enough, which we can talk about at some other point because we've never seen a period in time where we don't overbuild at the end.

23:35That demand for AI infrastructure today is having a dramatic impact on sort of the construction market, on the labor market, on the goods and services that need to go in to continue to build out that industry, which will be very important for the United States. Gary, so I'm still back to this. So it's not necessarily inflationary, but it is a tax. So would you cut? Right. I mean, taxes are they cause a slowdown. And if it's not inflationary, do you think that Trump's on to something with the cut or do you think the Fed's in the right position? So, look, when you talk about the inflationary side, there's always an argument here.

24:19if you take a product that costs X and put a 100 % tariff on it, and now costs 2X, but you only do it once, there's a price change. Price change, but not inflation. Price change. It's not going up month after month after month after month. Right. So the way inflation data is calculated, we could argue if this is right, you will see a bump in one month. But the next month, there will be no inflation in that product. So yes, you'd cut? So there would be no inflation in that product. So you have to understand the price of the good and the amount of disposable income that people would have would go down.

24:59It would go down because they'd be paying the higher price. So when you get to the Fed and you get to the Fed policy, I think ultimately you're looking at data. You're looking at inflation. I mean, they've got their dual mandate. They have a very clear dual mandate, which is, you know, stable prices. We interpret stable prices to be 2 % inflation. And we look at full employment. Right now, one could argue that we are at stable prices. You know, you could argue that they were more stable two days ago before we got yesterday's data. We'll get a little bit more data today. But still, even with yesterday's data and CPI 2.7 percent, like I said, it's one number.