Citadel CEO Ken Griffin speaks at the MFA Network Miami conference — 1/30/2024

Introduction to the conversation with Ken Griffin

• Leslie thanks Ken for the conversation
• Ken discusses the choice of music for the event
• Ken thanks MFA and Brian for hosting the conversation
• Ken mentions that it is a good day to have this conversation, as the S&P 500 is at a record high

The state of the markets and economic outlook

• Ken believes that the economic anxiety from Q4 of the previous year has been put behind and the overall economy looks good
• Inflation is moderating at a better-than-expected pace, which may allow the Fed to cut rates in the summer
• Unemployment may rise slightly, but the overall economy looks strong
• Ken thinks that a recession may be necessary for the Fed to cut rates

The impact of federal spending on the economy

• Ken believes that the reckless level of federal spending is creating a different backdrop for the economy
• The federal deficit is high, creating a sense of euphoria in the economy, but it will come with a hangover and affect future generations

Potential inflationary effects of rate cuts and government spending

• While rate cuts and high government spending are inflationary, many of the shocks that caused inflation to rise in the past are reversing
• The energy and food price shocks from two years ago are helping to create a more favorable environment for the Fed to navigate

Geopolitical tensions and their impact on markets

• Ken sees the tension between America and China as the bigger issue, rather than specific events like the liquidation of Evergrand or China's growth slowdown
• He emphasizes the importance of maintaining a constructive tone in the relationship between the two countries to avoid catastrophic consequences, such as a rupture around Taiwan

American competitiveness with China

• Ken acknowledges China's competitiveness in areas like EVs, solar energy, and consumer electronics
• He suggests that the West needs to grapple with this challenge and determine if buying Chinese vehicles is the most cost-effective way to achieve their goals
• Ken raises the question of how fast the drive towards EVs should be accelerated and highlights the opportunity for Tesla to create the software platform for the future of automobiles with self-driving cars

Political outlook and the 2020 presidential election

• Ken discusses his support for Nikki Haley and his preference for a candidate of a younger generation
• He recognizes Trump's success as president and the sense of global security that came with it, but also acknowledges the political polarization and controversies surrounding Trump
• Ken expresses concerns about the current state of American democracy and the need for a candidate who can maintain peace in the world while prioritizing American interests

Philanthropy and support for universities

• Ken discusses his disappointment with Harvard's handling of certain issues and anti-Semitism
• He expresses a desire for Harvard to focus on educating young American leaders and problem solvers, rather than getting caught up in microaggressions and identity politics
• Ken emphasizes the importance of supporting American universities and the venture capital industry, which drives innovation and economic growth

Hedge fund industry and regulation

• Ken talks about Citadel's ability to pivot and adapt quickly, which has contributed to their success
• He highlights the importance of having the right people and talent in the firm
• Ken discusses the use of artificial intelligence (AI) at Citadel and its value in various aspects of their business, as well as the broader potential for AI in small businesses
• He expresses concerns about the impact of regulations on the ability of companies to go public and the decline in IPOs, which hampers the magic cycle of entrepreneurship and innovation
• Ken believes that regulations should focus on encouraging American business formation and competitiveness, rather than making it more difficult and expensive to be in the financial industry or run a business

Systemic risks and fiscal sustainability

• Ken mentions that the biggest systemic risk is the US government's failure to put its spending back on track, which could lead to a loss of confidence in the country's creditworthiness in the future
• He believes that leadership and tough decisions are necessary to address the unsustainable level of deficit spending

Conclusion and call for good regulation

• Ken emphasizes the importance of good regulation in job creation, American competitiveness, and national prosperity
• He calls for a course correction at the SEC to focus on protecting American competitiveness and prosperity