Gary Cohn: "The Fed Is Doing A Good Job"; Trump "Respects The Powers Of The Fed"

Former Goldman president, and current White House chief economic advisor - as well as the person who supposedly is engaged in a bitter fued with Peter Navarro over the shape of future US trade policy - Gary Cohn appeared on Fox News Sunday, and spoke at length to Chris Wallace about some of the key economic policy changes to be implemented.

First, he touched on Obamacare repeal, saying that the administration will do "whatever it takes" to get the bill passed, setting a high bar for expectations from Trump who is still expected to meet significant challenges from House and Senate republicans.

Cohn then touched on Trump's vision to protect the country, saying the Obama administration under-invested in the military the past eight years. "Unfortunately, we have no alternative but to reinvest in our military and make ourselves a military power once again," Cohn said. Cohn said Trump met over the last several weeks with generals from the Army, Navy, Air Force and Marines to talk about the military's preparedness. He said it has been disappointing to hear what these generals have had to say. Cohn conceded that if funds are used to reinvest in the military, cuts need to be made elsewhere in order ensure a balanced budget without creating a further deficit.

"It's no different than every other family in America that has to make the tough decision," Cohn said. "When they need to spend money somewhere, they have to cut it from somewhere else. These are tough decisions, but the president has shown he is ready, willing and able to make these tough decisions."

Finally, touching on a topic that until recently at least appeared to be dear to Trump's, Cohn - speaking in his best former Goldman COO voice - said that the Federal Reserve "has been doing a good job" and the Trump administration respects its independence, even if the U.S. central bank raises interest rates this week.

He said that Trump administration will keep working to reduce barriers to job creation no matter what the Fed does on interest rates.

"The Federal Reserve is an independent agency and they operate as such. They have their economic data, which they look at and they are trying to always modulate economic growth with inflation, with the work force," Cohn said. "I think the Federal Reserve has been doing a good job in doing that. The Fed will do what they need to do. And we respect the powers of the Fed."

It remains to be seen if he will also respect them after 2-3 rate hikes, when the market finally wakes up to the rate hike cycle and Yellen's realization she needs to hike in order to cut once the official recession begins, in the process slamming the stock market which both Trump and Cohn have previously confirmed is a "barometer" of the administration's policies. For now Trump has been happy to take credit for the all time highs in the S&P, but what will he say once stocks start sliding, the dollar surges crushing exports, and Trump finally realizes that he needs looser, not tighter, policies to implement his economic vision? We don't know, but a twitter Feud between @RealDonaldTrump and the @FederalReserve was certainly among our most vocal desires of things to see in 2017. It may soon come true.