Ask Ken Griffin Anything

If I could make one observation about Ken Griffin, it’s that he moves at a breakneck speed. Whisked into a greenroom about six minutes before we went live on global television, he said, “Ask me anything.” And then we were shepherded into a room full of luminaries, and I did.

In a one-hour sit-down at the inaugural Citadel Securities Global Macro Conference, we touched on everything from the volatility in Treasury markets, his ideas about what a recession could look like, the future of work and financial centers, and his feelings about former South Carolina Governor Nikki Haley taking on Donald Trump on the Republican presidential debate stage.

Griffin started trading out of his dorm room as a freshman at Harvard University and founded Citadel, now the world’s most profitable hedge fund, four years after that. But there’s a separate corner of his financial empire that’s increasingly catching the fascination of Wall Street.

In 2002, he and his partners started Citadel Securities, the market-making firm that now handles a stunning amount of trading volume in the equity and fixed income world for its age. It’s aggressively taken on Goldman Sachs and Citigroup in winning trading clients and bringing on board the industry’s top traders. And it’s clearly setting the groundwork for even greater ambitions.

During this week’s event, the halls of the Four Seasons in Miami were filled with the likes of a former president of the World Bank, ex-governors of the central banks of England, India and Japan, and top traders from the world’s biggest hedge funds. With currencies and interest rates whipsawing, macro is the frontier of finance capturing the most attention now. It’s the money-making opportunity of a lifetime for many investors.

Here are some of Griffin’s takes:

• Cold War II: He said anxiety is rising and he’s yearning for what the world felt like three years ago. When asked how he would advise President Joe Biden in his interactions with China’s Xi Jinping, Griffin said: “We need to turn the mutual temperature down on the military touchpoints around Taiwan and in the greater China seas. There is no room for an accident to take place.” It was a theme echoed by historian Niall Ferguson, a Bloomberg Opinion columnist who spoke in a separate panel about the idea of a second Cold War with China as the main adversary now. (The CEO of Citadel Securities, Peng Zhao, attended a dinner with Biden and Xi this week, so the comments were especially relevant.)
• The American workforce: “What worries me in a hybrid work environment or work-from-home environment, the cultural or social contract that holds people together in a company is unquestionably weaker,” he said. “That worries me in terms of willingness of corporate America to make cuts in the workforce.” He said it’s become easier to fire people on Zoom calls, and that makes it a wild card how high the unemployment rate will rise.
• Miami as the “future of America”: Although he said New York is still the epicenter of “thoughtful people passionately engaged in their careers,” he posited that one day South Florida could overtake it as the world’s financial center. “We’ll see how big Wall Street South becomes,” he said. Citadel’s Miami offices are on Brickell Bay, “and maybe in 50 years it will be Brickell Bay North how we refer to New York in finance.”
• 2024 presidential election: “I think the American public needs to see, can Donald Trump hold his own with Nikki Haley?” he said. “I’d like to see a battle of ideas rather than a battle of name-calling.” He said he’s close to deciding whether he’ll financially back Haley. Of Trump, he said, “You can’t run the largest economy in the world as a name-calling bully.”
• Globalization: “The cost to the world of delinking is too high to even imagine,” Griffin said. “What’s getting lost is the cost of a delinked world is a world in which we’re all profoundly poor. And we’re poor in a moment of time where we—almost everywhere in the Western world—have aging societies, large structural both deficits and debts, and we need to have economies that are growing and creating for the future.”
• The Federal Reserve: “The Fed needs to have the message that they will put the inflation genie back in the bottle,” he said. “If they cut too soon, I think they risk losing credibility around their commitment to a 2% inflation target.”

Finally, I asked Griffin about the circumstances in which he’d accept a call to be Treasury secretary. Griffin, who’s given harsh critiques of US fiscal policy, studied government in college and now owns a first-edition copy of the US Constitution. “I have no fantasy of being in Treasury, I’ve got a great day job,” he said. But, there’s a scenario in which he’d say yes.

“If there were a financial crisis, of course I’d serve our country in a heartbeat. Of course. But right here, right now, I don’t think that being secretary of Treasury would create the opportunity to change our country for the better in a way that would be profound enough for me to walk away from my lifetime work in building Citadel and my three kids, who are all basically teenagers right now.”

You can watch my full interview with Griffin here.

To read this newsletter online in its entirety, with some more information on the hedge fund industry, you can find it here. And here's where you can sign up for Bw Daily, for which I write every Friday. I am so looking forward to next week, with Thanksgiving being my favorite holiday. And in what was an extraordinarily difficult year for so many people, I ask: What are you most grateful for? Send me your thoughts: [email protected].