You think that's where we're going, though?

I, I hope not.

But look, we're, we seem to be evolving down a path where every state's looking at AI, looking at data centers through their own lens, not looking it through a global lens where we're in a global competition.

We're clearly in a competition with China on AI evolution.

The second point I would make is we do not wanna stifle creativity in this country.

We want an open playing field where small, medium-sized, lar- and large companies and startups today can get involved in the AI space and create products, whether it's a, a, a bot or an agent for you, or it's something that large corporations use.

And so we never wanna be in a position where we're regulating creativity.

Okay

Did it surprise you?

Not at all.

As you know, the Fed has a dual mandate.

Mandate number one is full employment.

And the chair came out and talked about how strong the employment was.

I just talked about how strong the employment picture in the United States is.

Point two that they deal with, the second part of their mandate, is something called stable prices.

But practically speaking, what will this hike do?

How do you think the politics of AI will play out in the midterms and the rising fears?

Well, I think they're starting to play out already.

Obviously, there's a huge fear, as I said, in the consumer.

I think there's an equal fear of what a data center means to my community.

I'm not sure it's all fact-based.

Data centers actually do not consume that much water.

They do consume a lot of electricity.

And now the debate is heated because this anthropic researcher quit after a few weeks and warned us that they don't know what they're doing.

I think the economic question is the difficult one to answer.

Chairman Warsh has gone out of his way.

I mean, he's literally gone out of his way to tell you he is an inflation fighter, that the stable price mandate and the 2% inflation guide is his bellwether, and he's going there.

He has limited tools to get there, as we know.

In fact, he has said in the speech, I have two tools.

to help us get there.

I can raise rates or I can sell down the balance sheet.

How fragile do you think the backdrop is?

I think the economic question is the difficult one to answer.

Look, Chairman Warsh is going out of his way.

I mean, he's literally going out of his way to tell you he is an inflation fighter, that, that the stable price mandate and the 2% inflation guide is his, is his bellwether, and he's going there.

He has limited tools to get there, as we know.

In fact, he has said in the speech, "I have two tools to help us get there.

I can raise rates, or I can sell down the balance sheet." Those are his two tools.

Raising rates, as we know, will affect the overnight rate, the Fed Fund.

How fragile do you think the backdrop is?

Vice Chairman Gary Cohn spoke to Squawk on the Street this morning about memory prices.

We see memory prices soaring.

We see the demand well, well outstrip production.

But memory historically has been a commodity-esque market.

You know, when there's no demand, there's way oversupply and people sort of start curtailing demand.

They cur- the, I'm sorry, they start curtailing production to equal demand.

So is that disruptive for the equity market?

I don't know if it's disruptive.

I don't think it's disruptive.

You have to couple that with everything else going on.

And I'll actually equate it to something else Kevin said.

He talked about the newfound supply-demand disruptions going on in the world.

He talked about electricity.

Is that what the market

And of course, he did a star part in Friends, which who can forget? Jennifer Aniston worked

for him.

Yes.

But think about what this man did.

He's selling heritage.

So as you know, Americans, what they're good at is selling things.

So what everything that we're going to talk about right now is what Americans did was they packaged it and sold it back to you, okay? I'm going to tell you that what Ralph Lauren did had already been invented, right? All he did was package it for you and made it more digestible and put an American flair to it.

And maybe a slightly nautical take on it.

Mm-hmm.

And he also understands that there's pressure on him to lower interest rates.

I think Kevin will remove himself from the political pressure, and he will do the right thing economically.

Kevin is, you know, this is not his first time in the Federal Reserve.

He was a Fed governor before.

I think Kevin will approach this a- as a very traditional Fed governor.

He will stay heavily involved in his lane in monetary policy.

Mm-hmm

Yeah.

But if you look at the JOLTS report, we brought on about an extra 750,000 new job openings last month.

So there's not a problem of, of work.

Our unemployment rate stays steady at, at about 4.2%, but there is work to be had in this country.

So to the extent the consumer needs to go out and consume, they can go out and work.

What's, what's troubling in those jobs numbers, and I don't wanna spend the whole morning on that, is our participation rate can... does not go back up.

We need more people to reenter the workforce.

[laughs]

And I just wonder how the shape of those conversations have changed when you think about the last five years.

It's changed dramatically.

So when I got to IBM, as you said, five and a half years ago, everyone in the world was convinced that the world was going to cloud, everything was going to be in a cloud, and every model was going to be a SaaS model.

You were going to basically pay for consumption.

Well, guess what? It didn't really work out that way.

a lot of things went to the cloud and people found out the cloud it has enormous amount of advantages but on-premise computing and the mainframe still is a vital important piece of equipment in the united states over 90 percent of financial transactions in the united states go through an ibm mainframe every day every minute of the day so this whole move that we're going to put everything in the cloud and the cloud is safe and the cloud is perfect It's not worked out that way.

Now we've got this hybrid architecture.

Do you see this as being a true accelerator of that? AI is a true

Well, how would you describe this moment? What is this all about?

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, a sought-after territory from a militaristic standpoint.

So I understand the president's concern to have a military presence and protection of the North Atlantic.

As if we wanna 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.

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 gonna be easing policy no matter what?

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 president's concern to have a military presence and protection of the North Atlantic.

If we want to expand our air defenses, Greenland is a pretty strategic spot.

So I understand what the president's interest is.

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 gonna be easing policy no matter what?