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Trump Nominates Kevin Warsh for Next Fed Chair; U.S. Government Shutdown Draws Near, No Deal Yet on Spending; U.S. Nationwide General Strike Underway Over I.C.E. Operations; Trump Threatens Tariffs on Countries Supplying Oil to Cuba; Lindsey Vonn Injured in Final Pre-Olympics Downhill Race. Aired 9-9:45a ET

Aired January 30, 2026 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[09:00:00]

ELENI GIOKOS, CNN HOST, CONNECT THE WORLD: Kevin Warsh, that is the person President Trump has chosen as his nominee for the next Federal Reserve

Chair. It is 09:00 a.m. in Washington, 06:00 p.m. here in Abu Dhabi, a Middle East programming hub. I'm Eleni Giokos, this is "Connect the World".

Also coming up, the Islamic Republic of Iran is ready to reenter the nuclear negotiations, says the country's foreign minister, as the standoff

between Tehran and Washington continues. And the Kremlin agrees to a personal request from the U.S. President to stop its strikes on Kyiv until

this Sunday.

And also breaking just moments ago, former anchor Don Lemon has been arrested. We are watching the story very closely, and we'll bring you the

latest as it develops. Right. We were 30 minutes to go before start of trade. And of course, there's only one story on Wall Street this morning,

President Trump announcing that nomination of a new Fed Chair.

I want to check in on those pre market moves, you've got the DOW down around half a percent, S&P and NASDAQ also firmly in the red. And

importantly, the market futures were actually also lower ahead of President Trump's announcement a little while ago of his nomination for the next

Federal Reserve Chair.

Now in a post on his social media websites, he named Kevin Warsh as his choice for the post. The two met at the White House on Thursday. The

president has remained harshly critical of current Fed Chair, Jerome Powell, who he nominated back in 2017 for not pushing the Fed board to

lower interest rates further.

The nomination happening as Mr. Trump tries to work a deal in the United States Senate to avoid government shutdown with Democratic leaders

demanding changes to I.C.E. tactics before approving a short-term spending bill. We've got Alayna Treene joining us from the White House.

What's up? Matt Egan, live in New York. Welcome to both of you. I mean, frankly, this is news that we've been waiting for. This was after a long

list of candidates. So Matt, give me a sense on you know, what was it about? Kevin Warsh, that ticked boxes for President Trump?

MATT EGAN, CNN SENIOR REPORTER: Yeah. Eleni, that's a great question. And then look Fed Chair. It's one of the most important hires that any

president gets to make, but especially this president who really ran on fixing the economy, but he's deeply under water on the economy and on the

cost of living.

And so, he ended up deciding on Kevin Warsh, who almost got the job during the president's first term. And in some ways, Warsh is kind of a

traditional pick for a Republican president, which is surprising, because President Trump is anything but a traditional Republican president.

But look Warsh is a fellow at the conservative leaning think tank, the Hoover Institution. He was an economist under George W. Bush. He's not a

newbie to the Fed. He was the youngest ever Fed Governor back in 2006 and Warsh, he does have some personal ties to the president, because Warsh's

father-in-law is the GOP megadonor Ronald Lauder.

Now here's the thing, though, one thing that the president has been so consistent on is that he wants lower interest rates, dramatically lower

interest rates, the lowest interest rates on the planet. The problem is that Warsh is not known as a low-interest rate guy. Sure, recently he's

been talking about low interest rates, but he's known as a hawk.

Arguably, he's the most hawkish of the candidates that the president was looking at for Fed chair. And some of the reaction we've gotten from

economist is telling right Anna Wong, the Chief Economist over at Bloomberg Economics. She said it on social media, if Trump wants someone easy on

inflation, he's got the wrong guy in Kevin Warsh.

Joe Brusuelas said to me his first instinct on Warsh, his first instinct is hawkish, and he rarely saw a potential rate hike he didn't like. And

Renaissance macroeconomics put out a note where they also said that they think that Warsh is talk about lowering interest rates. This dovish turn is

convenient.

And they suggested that the president risk getting duped here. And one thing that has really been getting some new attention recently is some of

the comments that Warsh made during the Great Recession. Back in April 2009 he was on the Fed board, and the meeting minutes at the time show that

Warsh was more concerned about inflation overheating than he was about how low inflation was at the time.

And that's really telling, because we're talking about a point when, few months after Lehman Brothers, financial markets were in chaos, the

unemployment rate was skyrocketing, and Warsh was more worried about inflation.

[09:05:00]

And so, Eleni, I think you put all this together, and you got to wonder how long it takes if Warsh does get confirmed before the president potentially

gets frustrated with this pick like he was with his last one.

GIOKOS: Or is Warsh a changed man and now suddenly turned dovish? Time will tell, but we know he is going to be tested by the markets. Alayna, you

know, I was, you know, if you look at what's happening now, this is just a nomination, he still needs to get this confirmed, and it has to pass

through the Senate Finance Committee.

I was looking at Republican Senator Thom Tillis' post on social media just a short while ago, and he says my position has not changed. I will oppose

the confirmation of any Federal Reserve nominee, including the position of chairman, until the DOJ's inquiry into Chairman Powell is fully and

transparently resolved.

So, we still have a way to go before, you know, we have a new Federal Reserve Chairman at the end of the day.

ALAYNA TREENE, CNN WHITE HOUSE REPORTER: We do. And look, there are many people on both sides of the eyes you mentioned Thom Tillis, there a senator

is a Republican. I should note, though, of course, he is not running for reelection. So, he's actually one of few Republicans on Capitol Hill who's

willing to so publicly buck with President Trump.

But there are a lot of people concerned about the independence of the Fed, and there was a lot of concern as well about who the president was going to

select. Now, for all of the reasons that Matt just laid out, Eleni, I think a lot of people, especially a lot of conservatives, are going to be happy

with this pick.

Warsh is very well qualified, as Tillis noted in that post. He is someone who has worked as a Fed Governor. He's a Wall Street alum. He's known very

well by people on Wall Street. And I actually think part of the reason the president ended up choosing him is because of the people he has were

working with him in this building behind me.

People like the Treasury Secretary Scott Bessent, also someone who is, of course, very close with the top leaders in Wall Street. Now it is going to

be a fight, I mean, this Senate confirmation process because of this current investigation that the Justice Department is doing into the current

Fed Chair, Jerome Powell.

Many people worried about what that actually says about the level of separation that is supposed to exist between this White House and the

central bank, but I do think ultimately, you know, because Warsh is so well respected that he could have an easier time than some other people the

president may have chosen.

And I do want to get back to some of you know the relationship here that Warsh has had with Trump, because I do think it speaks very much to why he

was ultimately selected one. Warsh was actually passed over for the Fed Chairman role back in 2017 when Trump ultimately decided to go with Powell,

but Warsh was one of the people that he was considering very closely.

Trump also considered Warsh to be his treasury secretary when he was in the transition period for his second term. Of course, like I said, he

ultimately chose Bessent to fill that role. But this is a man who was very close with people in the president's orbit, and he has really kind of been

lobbying for this job, or at least a very high economic job, in the Trump Administration, for several years now, going back to the president's first

term.

So that's part of this. I will note as well, it was funny reading the president's post about this this morning, Eleni, because one of the things

he said, you know, he laid out all of Warsh's qualifications.

GIOKOS: Yeah.

TREENE: But one of the things he said is that he is central casting, I think that just completely, you know, speaks to how the president views a

lot of these decisions. So, keep that in mind. But yes, of course, a big question is going to be whether or not Trump actually, you know, believes

that Warsh is going to fulfill his request when he argues for lower interest rates, something, of course, was really the main sticking point

between the relationship between Powell and this White House.

GIOKOS: Yeah. Absolutely. I mean, I think President Trump has made it abundantly clear, Matt, that he wants to see lower interest rates. We know

that there are two interest rates that have been generally priced in for 2026, but the other thing that's been very interesting about Kevin Warsh as

we're talking about potential changes at the Federal Reserve.

And what those are going to look like. I mean, are we anticipating a change in the inflation target to not 2 percent which we haven't been at in such a

long time. Are we looking at the structure? Because at the end of the day, the Federal Reserve Chairman doesn't make a decision unilaterally to change

interest rates.

He's going to have to influence the FOMC, you know, to take his stance.

EGAN: Yeah, you're right, Eleni, and I think that's one of the frustrations that the president has had, is that it's not like the Fed Chair can just

announce something and make it happen. This is a very consensus driven institution, and yes, whoever gets confirmed here, if it's Warsh is going

to have to convince his other colleagues on the board to go along.

[09:10:00]

And recently, Warsh has been talking about how he thinks that the Fed can lower interest rates faster than they've been doing, and that's really for

two reasons. He thinks that the U.S. economy because it's getting more productive, in part because of AI and technology, that it can grow faster

without inflation, so that could free up the Fed to lower interest rates.

He also has been a big, big critic of the Fed's massive balance sheet, and he wants to rapidly shrink it, but shrinking the balance sheet, that's not

dovish, right? That's hawkish, that could actually lead to longer, higher, long-term interest rates for stuff like mortgages. So, I think the big

question here Eleni is, which Kevin Warsh is going to show up, right?

Is it the one who's been talking about lower interest rates, even though inflation has been stubbornly high? Or is it the one who, back during the

Great Recession, was more worried about inflation than unemployment? And I think that the president clearly thinks it's going to be the new Kevin

Warsh, the one who sounds a little bit more dovish some of the economists and investors I'm talking to, they're skeptical.

GIOKOS: Yeah, I mean, that's a really good point. What version of Kevin Warsh are we going to see? And, of course, you know whether the Fed is

still going to be 100 percent data driven and change, you know, their mandate. So, Alayna, I want you to jump in here, because we need to see.

I mean, one of the things the markets needs are any kind of stability, because that could cause issues with treasury yields. It could cause issues

with the way markets perform as well. And I'm sure President Trump and his team are very cognizant of that. Is the DOJ investigation going to be a

very big sticking point, from what you're hearing.

TREENE: We have to see, look, I think a lot of people in this administration when it all came out. And, I mean, you know, there was that

kind of remarkable video that the Fed Chair, Jerome Powell, had given a statement saying that he was, you know, admitting and publicly declaring

that he was being under -- he was under investigation by the Justice Department.

That was something that shocked a lot of people, and I do think it could ultimately be a sticking point for several members. But again, I think at

the end of the day, lawmakers in particular really want to see a qualified chairman and someone that they believe will not be swayed by Donald Trump.

They do not want someone who is going to pander to his every need. And I think this is where what Matt was saying is so important, and this idea as

well, what I've heard from some people in the aftermath of Warsh being selected was, you know, is he going to go with what Trump wants him to do,

or is he really going to be caring more about his legacy now that he's officially been given this role, or officially nominated, I should say, for

this role?

And that's going to be something crucial to watch as all of this unfolds. But again, at the end of the day, stability is what is needed with the Fed,

with these markets.

GIOKOS: Yeah.

TREENE: It's something I know very well. Bessent, who is the top person really, in Trump's ear on all of this is constantly, you know, pushing for.

GIOKOS: Yeah.

TREENE: And so, we have to really see where this where these leads?

GIOKOS: Yeah, super important. And I'm sure they're very aware Federal Reserve dictates what other central banks around the world do so. Very

important nomination that we saw today. Alayna Treene and Matt Egan, good to have you with us. Thank you so much.

All right, I want to take you now to another story, and protesters are expected to take to the streets today, from Minnesota to New York as well

as Atlanta denouncing the Trump Administration's deadly immigration crackdown. It's part of what's being called a national shutdown in the

United States.

Organizers are urging people not to go to work, show up for school or spend money in stores, in the wake of the fatal shootings of Alex Pretti and

Renee Good.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The entire country is shutting down. It's an economic blackout.

UNIDENTIFIED MALE: If you people can't stand for nothing, stand for this.

UNIDENTIFIED FEMALE: Shut it down is not just a slogan, but a tactic that we will continue exercising if our communities remain under attack.

(END VIDEO CLIP)

GIOKOS: Well, the planned demonstrations come as White House Border Czar Tom Homan attempts to restore calm in Minneapolis. He says he has ordered

authorities to work on a draw down plan for Federal Law Enforcement in the state. Meantime, President Trump has offered a conflicting statement.

He says his administration is not pulling back at all. Right, I'm taking you some breaking news now. Former CNN Anchor Don Lemon has been taken into

custody. He was with dozens of Anti-immigration and Customs Enforcement protesters as they interrupted a church service in Minnesota earlier this

month.

Lemon has said he was at the demonstration in his capacity as a journalist and not as a protestor. Our Chief Media Analyst, Brian Stelter, joins me

now. Brian, what more do we know about this arrest? And importantly, you know, Don Lemon saying that he was there as a journalist, does that hold up

from a legal standpoint?

[09:15:00]

BRIAN STELTER, CNN CHIEF MEDIA ANALYST: That's right. It's a disturbing escalation against reporting in the U.S., we know of two examples today of

independent journalists taken into custody at the direction of Attorney General Pam Bondi in relation to what happened at that church called Cities

Church in Minneapolis in St. Paul about two weeks ago.

This Don Lemon is one of those journalists. The other is by the name of Georgia Fort. She's a popular live streamer and reporter in Minnesota, both

these individuals were at the church when protesters entered and held a protest disrupting the house of worship, disrupting the congregation in the

middle of a worship service.

This really pits the First Amendment and the different dimensions of the First Amendment against one another. The First Amendment in the U.S.

protects the right to report. It also protects the right to peacefully assemble and worship. And the Trump Administration is going to argue is

that Don Lemon and this other independent journalist were interrupting, were impeding the right to worship.

The actual charges, though, are still under seal. They have not yet been released, and so we don't know exactly how Lemon has been charged. We know

there was a previous attempt to charge him in Minnesota last week, and a judge rejected that attempt. That was an early indication that there would

be a robust defense of Lemon's First Amendment Rights to be there as a reporter.

Now, Lemon's Attorney Abbe Lowell, who he hired once the Trump Administration started making noise about possibly arresting him, Abbe

Lowell said in a statement that Lemon was taken into custody last night in L.A. where he was covering the Grammy Awards.

Don has been a journalist for 30 years, and his constitutionally protected work in Minneapolis was no different than what he has always done. So, his

Attorney Abbe Lowell calling this an unprecedented attack on the First Amendment. Many press freedom groups saying the same, saying, this is very

alarming.

And we're going to hear, I think, from the Justice Department about this in the coming hours, there is a press conference scheduled from the Justice

Department. The topic has not been released, but there are some indications it might be about today's arrests. It is important to note the DOJ, the

Trump Administration, has been under tremendous pressure from the right to take these actions, to punish the protesters who entered that church, to

punish the journalists who were there filming the activity.

You can look all across social media, especially on X, a right-wing social networking site, you can see that MAGA media energy calling for the arrest

of someone like Don Lemon, who has been a thorn in Trump's side for many years, including the years that he was an anchor here at CNN.

So, you have a tug of war of sorts. You have on the right people saying, arrest him, punish him for doing this. And then you have many others saying

he was just doing his job. And I would actually urge everybody go watch the YouTube video that Lemon produced. He was live streaming from the church

that Sunday morning, and his coverage was really valuable.

GIOKOS: Yeah.

STELTER: As a viewer of it, I learned a lot. I was able to hear from the protesters, yes, but I was also able to hear from the worshipers. I had a

much better understanding of what happened in the church that day, thanks to Don Lemon's reporting. I hope that is front and center as we talk about

what he's been charged with, as we find out later today what he's been charged with and how he'll defend himself.

GIOKOS: Yeah, a lot of questions, and I guess the video that we've seen where he was live streaming also telling a big part of that story.

STELTER: Yeah.

GIOKOS: Brian Stelter, so thank you so much for staying on top of the story for us.

STELTER: That's right.

GIOKOS: All right. We're going to a very short break. I'll be back with more "Connect the World" right after this. Stick with CNN.

(COMMERCIAL BREAK)

[09:20:00]

GIOKOS: Venezuela has approved a new law to open up its oil industry to foreign investments. The change came as the U.S. announced the easing of

some sanctions, making it easier for American companies to buy, sell and store Venezuela's oil. All that is Donald Trump signed an executive order

threatening new tariffs on countries that supply oil to Cuba.

The president saying the government in Havana constitutes an unusual and extraordinary threat to U.S. security. Now, in a moment, we'll have our

reporters, Patrick Oppmann, who standing by in Havana. We also have Stefano Pozzebon, who's following developments for us from Bogota.

Stefano, I want to start off with you. So, we've seen a raft of major policy shifts between the United States and Venezuela, not only on oil, but

also Donald Trump ordering the reopening of commercial airspace over Venezuela, saying American citizens will be very shortly, able to go to

Venezuela, and they'll be safe there. So, what's the reaction on the ground?

STEFANO POZZEBON, CNN CONTRIBUTOR: Well, the reaction on the ground is, seems to me that the new leadership of Venezuela, which is Delcy Rodriguez,

this acting president, who used to be Maduro's Deputy President, but has operated a ruthless, frankly, U-turn from Maduro's geopolitical stance.

She seems to be all too keen to keep Donald Trump happy and all too keen to find a new common ground with the United States, as you were saying. It's

interesting. I think the devil here is in the detail, and we need to pay very, very close attention, Eleni, to this new law that they passed down in

Caracas just yesterday.

Some of the reactions, I want to bring one to you. For example, one of the analysts that I was speaking with earlier today said that the modified

hydrocarbon law reads like an email that answers Woods conditions almost point by point. Wood's conditions were, of course, the ones that the CEO of

ExxonMobil, Darren Woods, gave out and laid out to Donald Trump when he met Donald Trump at the White House to tell him that Venezuela under the

previous regime was uninvestible.

Less than three weeks after that meeting, the Venezuela parliament passes a law that address all of the oil industry's concerns and allows for freer

and easier investment from U.S. companies into the oil sector in Venezuela. Seems that Delcy Rodriguez, who in the past, has been a harsh critic of

Washington.

GIOKOS: Yeah.

POZZEBON: Of course, she has been a theory rhetorical speaker when it came to Washington right now, seems very, very happy to keep the White House

even happier.

GIOKOS: Yeah.

POZZEBON: And find this new deal, frankly, with Washington and crack as previous allies Cuba, one of them are all the ones to lose.

GIOKOS: Yeah, exactly. And Patrick, on that note, President Trump has threatened more tariffs on countries selling oil to Cuba. So, give me a

sense of the worry on the ground.

PATRICK OPPMANN, CNN HAVANA BUREAU CHIEF: Well, let's not downplay this. He's talking about a choke hold on Cuba, absolutely strangling the energy

sector here that is already suffering. The Cuban Government is saying that the rationale for these tariffs on any ships or any country coming to

Cuba's rescue are illegal, that are based on lies.

But already we are seeing Cuba hurting towards the brink of an energy collapse.

(BEGIN VIDEOTAPE)

OPPMANN (voice-over): In the U.S. attack on Venezuela to capture Nicolas Maduro, over 100 people were killed. Among them, 32 Cuban soldiers,

including Maduro's closest bodyguards, operating there in secret. Now Cuba's closest ally and more importantly, its biggest oil supplier, appears

to be under de facto American control.

And this is sending a chill through Cuban society about what may be next.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: Cuba is really a nation that's very close to failure.

OPPMANN (voice-over): It is a prediction many U.S. Presidents have made, but the revolution founded by Fidel Castro, has endured. I've been a

foreign correspondent in Cuba for 14 years, a country that suddenly feels very different to me, and I want to find out what the operation in Caracas

means for the future of 9 million Cubans who live in this island nation.

The Cuban government received the remains of their fallen soldiers from Venezuela with a hero's welcome after decades of denying their presence

there. Thousands of people lined the streets that day and waited hours to pay their respects.

[09:25:00]

OPPMANN: This direct confrontation between the U.S. and human soldiers, that's not something we've seen for decades, and it's left many people here

wondering the loss of their ally in Venezuela. How is it going to impact them.

OPPMANN (voice-over): Outside in the line I meet Iliana Medrano.

OPPMANN: What would happen if there was an invasion of Cuba by U.S. troops?

ILIANA MEDRANO, CUBA RESIDENT: We would confront whatever comes. We don't know what will happen, but we are willing to die.

OPPMANN (voice-over): Cubans are no strangers to economic hardship. Since Fidel Castro's 1959 revolution, they have weathered America's embargo and

their own government's disastrous economic missteps. After the Soviet Union collapsed, Venezuela emerged to Havana's lifeline.

Here's how the agreement worked. Cuba sent thousands of doctors, teachers, sports trainers as well as military and intelligence officials to Venezuela

in return for oil.

OPPMANN: Now with Maduro and -- and out of the picture, it's not clear if Venezuela can or will continue the oil shipments that the Trump

Administration has vowed to block.

OPPMANN (voice-over): To make matters worse, Havana's second largest oil supplier, Mexico, has also reportedly suspended oil shipments. Already we

are witnessing the impacts. It can take weeks to get a spot in a gas line using an online system. Gerardo (ph) tells me he's waited 29 days.

UNIDENTIFIED MALE: Things are going to get tough. I'm glad I was selected today, because I don't know if I will be next time.

OPPMANN (voice-over): As night falls, many here will be left in the dark. And so longer and longer -- blackouts are becoming the new normal. In many

parts of the island, the power is off more hours a day than it is on. Some people tell us they are Fed up, but they're too scared to speak to us on

camera.

Others, like Anhill (ph) who sells his coconut sweets on the street, say they are resigned to a worsening power situation.

UNIDENTIFIED MALE: We Cubans adapt to everything, to any circumstances. But one adapts. What else can we do?

OPPMANN (voice-over): The Trump Administration vows the pressure will continue on Cuba. For now, the Cuban government is defiant, calling for one

of the largest demonstrations outside the U.S. embassy in Havana in years.

UNIDENTIFIED MALE: Cuba does not have to make any political concessions.

OPPMANN (voice-over): Even some of the younger people in the crowd, like Ivan say they feel the mood in the country has changed.

OPPMANN: When you saw bombs falling on Caracas, how did that make you personally feel?

IVAN ERNESTO BARRETO LOPEZ, CUBA RESIDENT: In the 21st century seeing these kinds of actions violating totally the international law, acting

unilaterally. That's something very worried.

OPPMANN (voice-over): For those of us who covered the normalization of diplomatic ties between the U.S. and Cuba under the Obama Administration,

there's a sense of whiplash.

OPPMANN: I've even heard from a U.S. Embassy source that diplomats there have been advised to, quote, have their bags packed as a Trump

Administration explores new ways to stabilize the communist -- government.

(END VIDEOTAPE)

OPPMANN (on camera): And the U.S. Embassy is not making any plans to evacuate, we are told. But certainly, many expats here, many other foreign

institutions here, are beginning to look at what they do if the power begins to be off full time. According to energy analysts, they only have

here enough oil for several more weeks.

So, running very low on the life blood of this economy, we are starting to see an entire economy essentially come to a grinding halt. These are the

highest tensions between Cuba and the U.S. since, probably the Cuban missile crisis. So, it's quite remarkable to be here at this time, and very

concerning, because of course, this will have an impact on regular Cubans.

People who are not able to get to work, able to get to school, we're not able to cook their food as we've seen already people in the countryside

cooking with charcoal because they don't have gas or electricity. So, it is beginning to feel like living in another century.

GIOKOS: Wow. Really fantastic reporting. Patrick, thank you so much. Patrick Oppmann for us as well as Stefano Pozzebon. Right, we have a

fascinating read on CNN Digital explaining how Donald Trump has pushed away his right-wing allies in Europe with his threats to next Greenland.

It comes down to something the European right holds sacred national sovereignty that is only on CNN across all of your digital devices. All

right. We're a few seconds to go before the start of trade in New York. And we'll take a look at how investors are reacting, of course, to President

Trump's pick for the next Federal Reserve Chairman.

Futures pointing to a negative start. As you can see, DOW down three tenths of a percent. NASDAQ taking quite a big hit today, around seven tenths of a

percent.

[09:30:00]

And of course, importantly, we're watching to see how the overall markets are going to be responding to this nomination of Kevin Warsh, whether he's

going to take a hawkish or dovish approach. There you go. That's the start of trade in New York. We're going to short break. We'll be back right after

this.

(COMMERCIAL BREAK)

GIOKOS: All right, we are couple of minutes into the south trade in New York. I want to quickly check in on those numbers. As you can see, we read

all round, DOW is down two tenths of a percent. S&P down four tenths of a percent. So, on social media earlier today, U.S. President Donald Trump

named Kevin Warsh as his choice for the next Federal Reserve Chairman is one of the big stories that is hitting the markets today and very highly

anticipated, I must say.

I want to bring in economist and friend of the show, Mohamed El-Erian. Mohamed, great to have you with us. I was checking to see your reaction,

and you posted this on social media, and you say this, you congratulate him, importantly, but then you also go on to say that his commitment to

reforming and modernizing the Fed bodes well for enhancing policy effectiveness and protecting the institution's political independence.

So, let me ask you this, what version of Kevin Warsh do you think we'll get the dove or the hawk?

MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER AT ALLIANZ: I think we'll get the version that understands what's going on and, most importantly, has a view

of the future that is strategic in nature. Kevin has been very clear. He, like others like me, believes that we are on the cusp of a productivity

boom of AI, and if we get adoption right, the safe speed limit for the U.S. economy, meaning the non-inflationary growth that goes up, and therefore

you can bring interest rates down.

So, I think that's you're going to get a much more strategic Chair of the Fed, and one who's also committed to reforming the institution to make it

stronger and therefore less vulnerable to political interference.

GIOKOS: OK, so this is interesting. I want to get into political interference in just a bit. When you say you're expecting some kind of

changes in the Federal Reserve, there's been a big question around whether the 2 percent inflation target is still relevant today, and given the fact

that inflation is above 2 percent right now. Do you think that's one thing he's going to tackle?

EL-ERIAN: Yes. I mean, inflation has been above 2 percent for five years.

GIOKOS: Yeah.

EL-ERIAN: And even the Fed's own projection suggests that it will stay above for another two years, that's seven years.

[09:35:00]

I don't think that Kevin Warsh will change the inflation target. In fact, one of the criticisms against him is that it may be too hawkish. So, I

don't think he will change that, but he's going to look at other aspects of the Fed, the use of the balance sheet. He really does want to have a theory

for the use of the balance sheet we don't have one right now, better communication to make the Fed more effective and also countering mission

creep.

So, I don't think he will touch inflation target, but he will look into these other areas.

GIOKOS: Yeah. So, I mean, he wants to, of course, you know, diminish the balance sheet in some way, that's a very hawkish stance, but President

Trump is talking about lowering interest rates. We know that there are two more interest rates that are priced into the market this year.

You know, I just want you to give me a bit of an understanding of the independence of the Federal Reserve and whether it can be maintained with a

president that is aggressively and vocally and publicly said he wants to see a different interest rates environment.

EL-ERIAN: Yes, it can be maintained, and if I may out go one step further, it will be maintained. The reason why we got into this mess is because the

Fed made big mistakes. The affordability crisis in the U.S. today is closely related to an inflation that went up to over 9 percent in 2022 and

hasn't come down fast enough to 2 percent.

Today, we got the PPI numbers, this is the purchasing index, and they were above what was expected, and they short inflation rate of about 3 percent,

so there is an inflation issue. The hope is that productivity will help us, because the way the global system is fragmenting is adding to inflationary

pressures.

GIOKOS: Yeah. All right, so the Federal Reserve isn't just one man. I mean, clearly, it's a committee. You've got the FOMC. He's going to have to

instill some kind of influence. And do you think he can get it done or do you believe that it's not a flexible scenario that he's going to be facing?

EL-ERIAN: And you point to something very important. He will inherit a deeply divided committee. We saw that in terms of the dissents, in terms of

the different views being expressed. It will also inherit a committee that's on the defensive, that wants to fight against political

interference.

And he'll also inherit a committee that's overly data dependent, that has been conditioned for too long just to look backwards and not forward. So,

it's not an easy job. It will take him time to assert his authority over such a committee, and the best way he can do that is by getting them to

coalesce on a forward-looking view of the economy.

GIOKOS: Yeah. OK, so Mohamed, I have to ask you this. I mean, in terms of gold and silver, you know, performance, it seems there's been a de risking

out of the U.S. dollar and move into safe haven. Does President Trump want to see a weaker U.S. dollar? What's your assessment of what we're seeing?

And of course, gold is down almost 4.5 percent today, and silver down 13 percent I mean, this is a big move.

EL-ERIAN: It is a big move, but we shouldn't forget that even with these big move this month alone, gold is up 17 percent and silver is up 37

percent. So, what we're seeing is speculators cashing out that had an amazing -- and they've had amazing January, and this is what we're going to

see.

We're going to see more volatile precious metal prices. As to President Trump, I mean, he's made it clear he is comfortable with a weaker dollar,

and he's comfortable for weaker dollar for two reasons. One is it makes you as goods more competitive. And two, it makes it easier to attract foreign

investment into the U.S.

So, unlike the past, where all you heard was strong dollar, there is now a president that seems, judging from his word, can to be more comfortable

with a weaker dollar.

GIOKOS: All right. Mohamed El-Erian, great to have you with us. Thank you so much. All right, Lindsey Vonn crashed out of the final world cup

downhill, leaving the American skiing greats future in doubt for next week's Olympic Games. We'll be back right after the break with more sports.

Stick with CNN.

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[09:40:00]

GIOKOS: Right. We're just a week away from the opening ceremony of the Olympic Games, where Vonn skiing greats participation may be now in doubt.

Lindsey Vonn crashing out in her final downhill tune up before the Winter Games. Andy Scholes is here with us to tell us what happened. Such bad

news.

ANDY SCHOLES, CNN SPORTS CORRESPONDENT: Yeah, it certainly is, Eleni, you know, Lindsey Vonn's comeback story at these Olympics is one of the best

stories we have heading into the Milan Cortina Games. And you know, opening ceremony is just one week from today.

So, for this to happen now, it's just potentially devastating news for Lindsey Vonn. You know, she's 41 years old now. She has not competed in the

Olympics since 2018. She decided to make the comeback last year, and it's been going wonderfully. She was winning World Cup races.

She's the oldest woman ever to win a World Cup race, just back in December, and then she was here at this event in Switzerland, you know, it's her

final tune up for the Olympics, and she fell. She slid into the safety net. She got up, and then was really favoring her left knee.

Her right knee is the one that she's had a lot of surgeries on previously. So, we're certainly waiting to hear what kind of news she gets after some

further testing. Fingers crossed. It's not going to be serious. We'll have more on what happened coming up on "World Sports".

GIOKOS: Yeah. Fingers crossed.

SCHOLES: Yeah.

GIOKOS: All right, Andy, I'll see you right after this. I'll be back at the top of the hour. Stick with CNN.

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[09:45:00]

(WORLD SPORT)

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