WEBVTT - Citadel CEO Ken Griffin Talks Tariff Turmoil

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, Radio News. I want to go

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<v Speaker 1>back to something you said a little bit earlier, this

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<v Speaker 1>notion that it's hard to see whether this is a

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<v Speaker 1>one time hit to inflation or whether it's more persistent. Ultimately,

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<v Speaker 1>what do you think? I mean?

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<v Speaker 2>Ultimately, any effort to force manufacturing back onshore into the

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<v Speaker 2>United States is going to be inflationary. There's no doubt

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<v Speaker 2>about it. And what frustrates me on this is that

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<v Speaker 2>one of the reasons that Trump won the election was

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<v Speaker 2>the American people had had enough inflation. They wanted a

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<v Speaker 2>break from seeing their standard of living deteriorated by the

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<v Speaker 2>ever increasing price of goods and services. And so I

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<v Speaker 2>really do think that the president needs to think long

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<v Speaker 2>and hard about the necessity of helping to protect the

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<v Speaker 2>standard of living of the American people by keeping the

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<v Speaker 2>inflation like. It's not a genie, it's like the inflation

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<v Speaker 2>devil in the bottle.

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<v Speaker 1>So what does this mean for FED chair Powell? How

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<v Speaker 1>difficult does this dynamic make his job? And do you

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<v Speaker 1>think his job is secure through May of twenty twenty six.

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<v Speaker 2>I gotta tell you, I'm really happy not to have

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<v Speaker 2>his job, but he is the biggest no win job

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<v Speaker 2>in the country because through the lens of hindsight, we

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<v Speaker 2>will always be able to second guess every single decision

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<v Speaker 2>he makes. Right here, right now, he's grappling with do

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<v Speaker 2>you cut rates as the labor market shows ever so

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<v Speaker 2>slightly signs of softening, or do you hold the course

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<v Speaker 2>because of the risk of an inflationary spite coming from

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<v Speaker 2>tariff increases. He's going to have to make that decision

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<v Speaker 2>based upon evolving policies over the weeks ahead. It's a

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<v Speaker 2>really tough predicament he is in right here, right now.

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<v Speaker 1>Ken, it sounds like you have doubts that the American

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<v Speaker 1>economy can be easily transitioned into a manufacturing one. What

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<v Speaker 1>are the chances of making that work? And do you

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<v Speaker 1>think that it's a realistic goal.

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<v Speaker 2>I mean, look, there's a great video clip from Dave

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<v Speaker 2>Chappelle and it goes something like Americans want to wear nikes,

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<v Speaker 2>not make nikes, And I think you spot on. I

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<v Speaker 2>don't understand why we think it's a virtue to bring

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<v Speaker 2>back to America low skilled jobs in manufacturing. I completely

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<v Speaker 2>agree with the President. We need the ability to ramp

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<v Speaker 2>up our manufacturing base to strengthen our national defense. Spot

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<v Speaker 2>on right. But I don't think the American people are

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<v Speaker 2>looking for a return to low skill, low pain manufacturing

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<v Speaker 2>jobs in our country. I don't think they want those jobs.

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<v Speaker 2>I think they want jobs where we are building high

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<v Speaker 2>value added products, successful businesses, building high value added products,

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<v Speaker 2>where you can create jobs in that factory floor that

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<v Speaker 2>are well paying jobs. Those are the jobs we should

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<v Speaker 2>aspire to create in our country, not jobs that right

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<v Speaker 2>now China is actually trying to move to other even

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<v Speaker 2>lower cost labor countries. Why do we want those jobs

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<v Speaker 2>here in America.

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<v Speaker 1>I'd love to see this from your position leading Citadel

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<v Speaker 1>and also your message to Citadel Securities employees, what do

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<v Speaker 1>you tell them to navigate all of this volatility?

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<v Speaker 2>So I will tell you that from my portfolio managers,

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<v Speaker 2>it has been it has been several really challenging weeks

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<v Speaker 2>because every couple of days there's another big headline M.

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<v Speaker 2>Bloomberg that we need to react to and we need

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<v Speaker 2>to reshape our portfolios with respect to It's been a

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<v Speaker 2>really difficult time for fundamental investors because so much of

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<v Speaker 2>the value the companies that we invest in is being

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<v Speaker 2>dictated by very quickly changing policies from Washington.

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<v Speaker 1>So your best way to navigate that.

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<v Speaker 2>I think in retrospect, perhaps holding cash would have been

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<v Speaker 2>the best way to navigate this. But that's so contrary

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<v Speaker 2>to our culture of always trying to be on the offense,

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<v Speaker 2>always trying to find ways to create value in the markets.

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<v Speaker 1>Is there something fundamental that's changing about the way you

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<v Speaker 1>approach markets?

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<v Speaker 2>Look, I fundamentally believe that this period of instability that

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<v Speaker 2>we're going through will come and go. Like fundamentally, I

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<v Speaker 2>believe that as the Trump administration moves through time, as

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<v Speaker 2>policies become solidified, the economic backdrop or against which one

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<v Speaker 2>invests capital will become easier once again.

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<v Speaker 1>Now, when you look at the tax bill, it looks

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<v Speaker 1>like the direction of travel is such that you have

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<v Speaker 1>four trillion in tax reductions, but one point five billion

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<v Speaker 1>here in spending required one from a trillion, very sorry

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<v Speaker 1>trillion with the tea. How is that going to close

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<v Speaker 1>the US deficit?

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<v Speaker 2>Well, I mean what's clear is that the numbers that

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<v Speaker 2>we talk about in America are almost incomprehensible billions and trillions.

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<v Speaker 2>I mean, it's just unbelievable how big government in Washington

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<v Speaker 2>has become and I think one of the areas that

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<v Speaker 2>the Trump administration is focused on is how to reduce

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<v Speaker 2>the scale and scope of spending here in the United States,

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<v Speaker 2>whether it's the efforts at DOGE or the debates that

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<v Speaker 2>are happening right here right now as we speak about,

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<v Speaker 2>for example, medicaid and the cost of medicaid to the States.

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<v Speaker 2>The Trump administration's really thinking about how do we help

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<v Speaker 2>to solve our nation's spending problem. And then at the

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<v Speaker 2>same time they're grappling with what is the right tax

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<v Speaker 2>policy that helps us to pay for the promises that

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<v Speaker 2>we've made to the American people and yet ignite them

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<v Speaker 2>a maximum amount of growth that we can achieve in

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<v Speaker 2>our economy. Because when it's all said and done, the

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<v Speaker 2>only way the United States will solve for the problems

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<v Speaker 2>it's made to its people is for us to far

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<v Speaker 2>more rapidly grow our economy.

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<v Speaker 1>What role is de regulation going to play in that?

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<v Speaker 2>Well, I mean, deregulation is clearly already in one of

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<v Speaker 2>the huge accomplishments of the Trump administration. And why do

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<v Speaker 2>I say that, Because the onslaught of new regulation has

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<v Speaker 2>stopped that in and of itself has been incredibly powerful

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<v Speaker 2>for corporate America, the ability to focus on growing your

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<v Speaker 2>business again without worrying about what new rule it's going

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<v Speaker 2>to be imposed upon you from Washington. Now, having said that,

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<v Speaker 2>the efforts to do regulate are going to be more

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<v Speaker 2>slow because it takes time to re underwrite. Why was

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<v Speaker 2>the regulation put in place to start with? How does

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<v Speaker 2>this regulation serve the interest of the American people? It

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<v Speaker 2>takes time to think awfully deregulate our economy.

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<v Speaker 1>Now your companies have a footprint all over the world.

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<v Speaker 1>Are you seeing investors hedging against US instability, diversifying away

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<v Speaker 1>from US stocks or even US treasuries given the changes

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<v Speaker 1>and the uncertainties that still exist around them with the administration.

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<v Speaker 2>I think there's been two very strong realizations by investors

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<v Speaker 2>around the world. First, there was a bit of a

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<v Speaker 2>knee Jork reaction to pull back from the United States

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<v Speaker 2>to be anxious spout investing in America given the stance

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<v Speaker 2>and changing stance we took in areas light trade. But

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<v Speaker 2>then there's also just a realization that no country in

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<v Speaker 2>the world enjoys the rate of innovation and commercial development

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<v Speaker 2>that we enjoy here in America. And so you have

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<v Speaker 2>these two competing arguments that investors around the world are

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<v Speaker 2>grappling with, is the United States going to be a real, liable,

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<v Speaker 2>ally and economic player in the world markets? And compare

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<v Speaker 2>and contrast that with the reality that if you take

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<v Speaker 2>a step back, no country in the world other than

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<v Speaker 2>perhaps China, comes anywhere close to America in terms of

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<v Speaker 2>the rate of innovation and creative energy that goes into

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<v Speaker 2>growing our economy.