Citadel CEO Ken Griffin: The Fed is making the right choice, higher for longer

Yeah. It’s a pleasure to be joined here by Ken Griffin. We just got off the stage, the CEO of Citadel. Thank you for doing this. It’s such a pleasure to be here. We, Tyler, was just talking about the market, the fixation on the Federal Reserve and what’s going to happen to the economy. I think one of the central questions right now, Ken, is how big of an inflation problem do we still have? What do you think? So we still have an inflation challenge in goods. Clearly the inflationary surge caused by the pandemic caused by supply chain challenges has peaked and dissipated. But now in services, there’s still a very steady level of inflation, right around 4% and a 4%. It’s a challenge for the Fed, which is why they’re staying the course, leaving rates on change for the foreseeable future. It’s the right policy path. They need to bring inflation down over time, right. The question is how challenging that will that be to get all the way back down to 2%. So we we don’t know, we don’t know how sticky inflation is going to be when it comes to services. With goods, it was really great to see that inflation did dissipate. Now with goods, there’s a there’s a bit of a back story that we need to worry about. With deglobalization, we’re likely to see the level of inflationary pressure in goods be higher than it was for the last 30 years. And the Fed has to know that they’re thinking about the fact that goods are likely to be a higher baseline effect for the foreseeable future. And service is still unacceptably high with where they’re running today, which is why Paul and the team, I think it’s made the right choice of staying higher for longer and looking to bring inflation down. And yet everybody here I’ve talked to, you know I’m talking to Bruce Blatt in at Brookfield about commercial real estate. They’re private equity players here. They’re excited about the prospect of get rates getting cut. Absolutely. If you borrow money, you want to pay less in interest. I mean who would not be excited about that? Are you excited about the prospect of that on the at the market catalyst and an economic catalyst? Look, the Fed has a very clear dual mandate, inflation 2%. It’s an unwritten rule. But that’s where the Fed’s heading and trying to maximize full employment. That’s the dual mandate of the Fed. They have to be independent in their decision making and their actions to best try to hit that dual mandate. And right now, with employment near full employment, inflation well above where it should be, they’ve got to stay with higher rates to bring inflation back in check. How does the overall equity market look to you? We can right now, given this kind of benign economic environment, a path toward rate cuts, AI tailwinds, that’s that’s what’s fueled us so far. I wonder how much more it has left to go. We’ll find out and that’s that’s the best you can ever do. Late in the cycle, we’ll see how much further this has to go. AI has really transformed the mindset of corporate America towards using technology again to really, really try to jump start productivity, and corporate America is rising to that moment. It’s been really exciting to see how many CC groups of executives are really focusing on how do we use machine learning, how do we use digitalization to drive up productivity. This really improves the quality of life for the average American and helps to keep our economy strong and robust.