1 00:00:02,320 --> 00:00:07,240 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. I want to go 2 00:00:07,280 --> 00:00:09,520 Speaker 1: back to something you said a little bit earlier, this 3 00:00:09,680 --> 00:00:12,959 Speaker 1: notion that it's hard to see whether this is a 4 00:00:12,960 --> 00:00:17,560 Speaker 1: one time hit to inflation or whether it's more persistent. Ultimately, 5 00:00:17,560 --> 00:00:19,200 Speaker 1: what do you think? I mean? 6 00:00:19,280 --> 00:00:25,720 Speaker 2: Ultimately, any effort to force manufacturing back onshore into the 7 00:00:25,840 --> 00:00:28,960 Speaker 2: United States is going to be inflationary. There's no doubt 8 00:00:29,000 --> 00:00:33,040 Speaker 2: about it. And what frustrates me on this is that 9 00:00:33,080 --> 00:00:36,440 Speaker 2: one of the reasons that Trump won the election was 10 00:00:36,479 --> 00:00:41,040 Speaker 2: the American people had had enough inflation. They wanted a 11 00:00:41,080 --> 00:00:44,959 Speaker 2: break from seeing their standard of living deteriorated by the 12 00:00:45,000 --> 00:00:49,040 Speaker 2: ever increasing price of goods and services. And so I 13 00:00:49,080 --> 00:00:51,800 Speaker 2: really do think that the president needs to think long 14 00:00:51,840 --> 00:00:56,040 Speaker 2: and hard about the necessity of helping to protect the 15 00:00:56,080 --> 00:01:00,160 Speaker 2: standard of living of the American people by keeping the 16 00:01:00,240 --> 00:01:03,800 Speaker 2: inflation like. It's not a genie, it's like the inflation 17 00:01:03,960 --> 00:01:04,959 Speaker 2: devil in the bottle. 18 00:01:05,920 --> 00:01:08,720 Speaker 1: So what does this mean for FED chair Powell? How 19 00:01:08,760 --> 00:01:11,480 Speaker 1: difficult does this dynamic make his job? And do you 20 00:01:11,560 --> 00:01:14,440 Speaker 1: think his job is secure through May of twenty twenty six. 21 00:01:14,600 --> 00:01:17,120 Speaker 2: I gotta tell you, I'm really happy not to have 22 00:01:17,240 --> 00:01:20,679 Speaker 2: his job, but he is the biggest no win job 23 00:01:21,040 --> 00:01:26,480 Speaker 2: in the country because through the lens of hindsight, we 24 00:01:26,560 --> 00:01:29,319 Speaker 2: will always be able to second guess every single decision 25 00:01:29,360 --> 00:01:33,360 Speaker 2: he makes. Right here, right now, he's grappling with do 26 00:01:33,400 --> 00:01:37,160 Speaker 2: you cut rates as the labor market shows ever so 27 00:01:37,280 --> 00:01:41,679 Speaker 2: slightly signs of softening, or do you hold the course 28 00:01:41,880 --> 00:01:44,360 Speaker 2: because of the risk of an inflationary spite coming from 29 00:01:44,440 --> 00:01:47,960 Speaker 2: tariff increases. He's going to have to make that decision 30 00:01:48,560 --> 00:01:52,960 Speaker 2: based upon evolving policies over the weeks ahead. It's a 31 00:01:53,000 --> 00:01:55,360 Speaker 2: really tough predicament he is in right here, right now. 32 00:01:55,760 --> 00:01:58,760 Speaker 1: Ken, it sounds like you have doubts that the American 33 00:01:58,800 --> 00:02:03,360 Speaker 1: economy can be easily transitioned into a manufacturing one. What 34 00:02:03,440 --> 00:02:06,320 Speaker 1: are the chances of making that work? And do you 35 00:02:06,360 --> 00:02:07,720 Speaker 1: think that it's a realistic goal. 36 00:02:08,560 --> 00:02:11,440 Speaker 2: I mean, look, there's a great video clip from Dave 37 00:02:11,520 --> 00:02:15,600 Speaker 2: Chappelle and it goes something like Americans want to wear nikes, 38 00:02:15,639 --> 00:02:19,760 Speaker 2: not make nikes, And I think you spot on. I 39 00:02:20,000 --> 00:02:24,520 Speaker 2: don't understand why we think it's a virtue to bring 40 00:02:24,639 --> 00:02:30,480 Speaker 2: back to America low skilled jobs in manufacturing. I completely 41 00:02:30,520 --> 00:02:33,160 Speaker 2: agree with the President. We need the ability to ramp 42 00:02:33,280 --> 00:02:37,520 Speaker 2: up our manufacturing base to strengthen our national defense. Spot 43 00:02:37,560 --> 00:02:40,720 Speaker 2: on right. But I don't think the American people are 44 00:02:40,760 --> 00:02:46,040 Speaker 2: looking for a return to low skill, low pain manufacturing 45 00:02:46,120 --> 00:02:49,040 Speaker 2: jobs in our country. I don't think they want those jobs. 46 00:02:49,680 --> 00:02:52,959 Speaker 2: I think they want jobs where we are building high 47 00:02:53,080 --> 00:02:58,200 Speaker 2: value added products, successful businesses, building high value added products, 48 00:02:58,560 --> 00:03:01,800 Speaker 2: where you can create jobs in that factory floor that 49 00:03:01,840 --> 00:03:05,080 Speaker 2: are well paying jobs. Those are the jobs we should 50 00:03:05,120 --> 00:03:08,959 Speaker 2: aspire to create in our country, not jobs that right 51 00:03:09,000 --> 00:03:12,720 Speaker 2: now China is actually trying to move to other even 52 00:03:12,880 --> 00:03:16,440 Speaker 2: lower cost labor countries. Why do we want those jobs 53 00:03:16,440 --> 00:03:17,160 Speaker 2: here in America. 54 00:03:18,520 --> 00:03:22,519 Speaker 1: I'd love to see this from your position leading Citadel 55 00:03:22,560 --> 00:03:26,400 Speaker 1: and also your message to Citadel Securities employees, what do 56 00:03:26,480 --> 00:03:29,079 Speaker 1: you tell them to navigate all of this volatility? 57 00:03:30,960 --> 00:03:34,840 Speaker 2: So I will tell you that from my portfolio managers, 58 00:03:35,080 --> 00:03:40,320 Speaker 2: it has been it has been several really challenging weeks 59 00:03:41,120 --> 00:03:46,600 Speaker 2: because every couple of days there's another big headline M. 60 00:03:46,680 --> 00:03:50,680 Speaker 2: Bloomberg that we need to react to and we need 61 00:03:50,720 --> 00:03:53,960 Speaker 2: to reshape our portfolios with respect to It's been a 62 00:03:54,080 --> 00:03:58,640 Speaker 2: really difficult time for fundamental investors because so much of 63 00:03:58,680 --> 00:04:01,880 Speaker 2: the value the companies that we invest in is being 64 00:04:02,040 --> 00:04:07,520 Speaker 2: dictated by very quickly changing policies from Washington. 65 00:04:08,320 --> 00:04:10,040 Speaker 1: So your best way to navigate that. 66 00:04:11,920 --> 00:04:15,000 Speaker 2: I think in retrospect, perhaps holding cash would have been 67 00:04:15,000 --> 00:04:18,160 Speaker 2: the best way to navigate this. But that's so contrary 68 00:04:18,160 --> 00:04:21,360 Speaker 2: to our culture of always trying to be on the offense, 69 00:04:21,560 --> 00:04:25,080 Speaker 2: always trying to find ways to create value in the markets. 70 00:04:25,600 --> 00:04:28,159 Speaker 1: Is there something fundamental that's changing about the way you 71 00:04:28,200 --> 00:04:29,080 Speaker 1: approach markets? 72 00:04:29,560 --> 00:04:32,960 Speaker 2: Look, I fundamentally believe that this period of instability that 73 00:04:33,000 --> 00:04:37,440 Speaker 2: we're going through will come and go. Like fundamentally, I 74 00:04:37,560 --> 00:04:41,880 Speaker 2: believe that as the Trump administration moves through time, as 75 00:04:42,000 --> 00:04:46,800 Speaker 2: policies become solidified, the economic backdrop or against which one 76 00:04:46,839 --> 00:04:49,279 Speaker 2: invests capital will become easier once again. 77 00:04:49,640 --> 00:04:52,159 Speaker 1: Now, when you look at the tax bill, it looks 78 00:04:52,440 --> 00:04:54,919 Speaker 1: like the direction of travel is such that you have 79 00:04:55,080 --> 00:04:59,440 Speaker 1: four trillion in tax reductions, but one point five billion 80 00:04:59,760 --> 00:05:03,400 Speaker 1: here in spending required one from a trillion, very sorry 81 00:05:03,640 --> 00:05:06,159 Speaker 1: trillion with the tea. How is that going to close 82 00:05:06,200 --> 00:05:07,000 Speaker 1: the US deficit? 83 00:05:07,320 --> 00:05:10,159 Speaker 2: Well, I mean what's clear is that the numbers that 84 00:05:10,160 --> 00:05:14,400 Speaker 2: we talk about in America are almost incomprehensible billions and trillions. 85 00:05:14,440 --> 00:05:17,760 Speaker 2: I mean, it's just unbelievable how big government in Washington 86 00:05:17,760 --> 00:05:20,240 Speaker 2: has become and I think one of the areas that 87 00:05:20,240 --> 00:05:24,040 Speaker 2: the Trump administration is focused on is how to reduce 88 00:05:24,880 --> 00:05:29,120 Speaker 2: the scale and scope of spending here in the United States, 89 00:05:29,680 --> 00:05:33,000 Speaker 2: whether it's the efforts at DOGE or the debates that 90 00:05:33,040 --> 00:05:36,480 Speaker 2: are happening right here right now as we speak about, 91 00:05:36,520 --> 00:05:39,880 Speaker 2: for example, medicaid and the cost of medicaid to the States. 92 00:05:40,240 --> 00:05:44,200 Speaker 2: The Trump administration's really thinking about how do we help 93 00:05:44,279 --> 00:05:47,880 Speaker 2: to solve our nation's spending problem. And then at the 94 00:05:47,920 --> 00:05:51,640 Speaker 2: same time they're grappling with what is the right tax 95 00:05:51,720 --> 00:05:55,440 Speaker 2: policy that helps us to pay for the promises that 96 00:05:55,440 --> 00:05:59,960 Speaker 2: we've made to the American people and yet ignite them 97 00:06:00,000 --> 00:06:03,000 Speaker 2: a maximum amount of growth that we can achieve in 98 00:06:03,040 --> 00:06:07,159 Speaker 2: our economy. Because when it's all said and done, the 99 00:06:07,279 --> 00:06:11,320 Speaker 2: only way the United States will solve for the problems 100 00:06:11,360 --> 00:06:14,080 Speaker 2: it's made to its people is for us to far 101 00:06:14,200 --> 00:06:15,719 Speaker 2: more rapidly grow our economy. 102 00:06:16,400 --> 00:06:18,880 Speaker 1: What role is de regulation going to play in that? 103 00:06:19,160 --> 00:06:22,680 Speaker 2: Well, I mean, deregulation is clearly already in one of 104 00:06:22,680 --> 00:06:25,320 Speaker 2: the huge accomplishments of the Trump administration. And why do 105 00:06:25,360 --> 00:06:29,080 Speaker 2: I say that, Because the onslaught of new regulation has 106 00:06:29,160 --> 00:06:34,160 Speaker 2: stopped that in and of itself has been incredibly powerful 107 00:06:34,560 --> 00:06:38,120 Speaker 2: for corporate America, the ability to focus on growing your 108 00:06:38,160 --> 00:06:41,839 Speaker 2: business again without worrying about what new rule it's going 109 00:06:41,880 --> 00:06:45,520 Speaker 2: to be imposed upon you from Washington. Now, having said that, 110 00:06:46,040 --> 00:06:48,320 Speaker 2: the efforts to do regulate are going to be more 111 00:06:48,400 --> 00:06:52,479 Speaker 2: slow because it takes time to re underwrite. Why was 112 00:06:52,520 --> 00:06:55,440 Speaker 2: the regulation put in place to start with? How does 113 00:06:55,480 --> 00:06:58,880 Speaker 2: this regulation serve the interest of the American people? It 114 00:06:58,920 --> 00:07:02,680 Speaker 2: takes time to think awfully deregulate our economy. 115 00:07:02,960 --> 00:07:05,120 Speaker 1: Now your companies have a footprint all over the world. 116 00:07:05,240 --> 00:07:10,760 Speaker 1: Are you seeing investors hedging against US instability, diversifying away 117 00:07:10,760 --> 00:07:14,080 Speaker 1: from US stocks or even US treasuries given the changes 118 00:07:14,080 --> 00:07:17,240 Speaker 1: and the uncertainties that still exist around them with the administration. 119 00:07:18,040 --> 00:07:23,400 Speaker 2: I think there's been two very strong realizations by investors 120 00:07:23,480 --> 00:07:26,320 Speaker 2: around the world. First, there was a bit of a 121 00:07:26,360 --> 00:07:29,880 Speaker 2: knee Jork reaction to pull back from the United States 122 00:07:30,400 --> 00:07:34,520 Speaker 2: to be anxious spout investing in America given the stance 123 00:07:34,560 --> 00:07:38,560 Speaker 2: and changing stance we took in areas light trade. But 124 00:07:38,640 --> 00:07:43,120 Speaker 2: then there's also just a realization that no country in 125 00:07:43,160 --> 00:07:47,880 Speaker 2: the world enjoys the rate of innovation and commercial development 126 00:07:47,880 --> 00:07:50,520 Speaker 2: that we enjoy here in America. And so you have 127 00:07:50,600 --> 00:07:53,840 Speaker 2: these two competing arguments that investors around the world are 128 00:07:53,880 --> 00:08:00,640 Speaker 2: grappling with, is the United States going to be a real, liable, 129 00:08:00,760 --> 00:08:07,160 Speaker 2: ally and economic player in the world markets? And compare 130 00:08:07,200 --> 00:08:10,240 Speaker 2: and contrast that with the reality that if you take 131 00:08:10,280 --> 00:08:14,360 Speaker 2: a step back, no country in the world other than 132 00:08:14,400 --> 00:08:19,120 Speaker 2: perhaps China, comes anywhere close to America in terms of 133 00:08:19,160 --> 00:08:24,120 Speaker 2: the rate of innovation and creative energy that goes into 134 00:08:24,120 --> 00:08:25,040 Speaker 2: growing our economy.