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Speaker 1: Please welcome to the stage. Founder and CEO of Citadel,

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Speaker 1: Ken Griffin, An editorial director of Bloomberg New Economy, Eric Jatster.

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Speaker 2: Good morning everyone, Ken, welcome back to the New Economy.

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Speaker 1: For him, it's great to be here.

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Speaker 2: It's great to have you here. I'm going to begin

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Speaker 2: with the word on everybody's lips, not only here in

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Speaker 2: Singapore but everywhere in business and finance across the globe geopolitics.

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Speaker 2: But the way I want to phrase this to you

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Speaker 2: is perhaps a little bit different, or at least in

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Speaker 2: search of something different than what we've heard from your

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Speaker 2: fellow speakers thus far. You and I and everyone here

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Speaker 2: grew up during an abrain period in world history. There

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Speaker 2: were no major wars, and we enjoyed the benefits of peace,

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Speaker 2: multilateral cooperation, scientific collaboration, the economic efficiencies of globalization and

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Speaker 2: free flowing capital, a massive reduction in poverty, moderate inflation,

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Speaker 2: and a mostly relentless upward trend in asset prices. Is

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Speaker 2: that era over?

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Speaker 1: I sure hope not, because it's been a really good

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Speaker 1: era for us, But regretfully, the peace dividence is clearly

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Speaker 1: at the end of the road. No matter what one

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Speaker 1: may dream to be reality. Reality is is there's two

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Speaker 1: wars in the world right here, right now, one of

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Speaker 1: which is in Europe. So there's no doubt that the

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Speaker 1: NATO countries are going to have to increase defense budgets

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Speaker 1: over the years ahead. That's going to come at a

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Speaker 1: point in time where governments around the world are already

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Speaker 1: struggling with the sizes of their deaths. And then when

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Speaker 1: it comes to globalization, I mean, we're in Singapore, we

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Speaker 1: are at one of the global nexus in the world

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Speaker 1: of trade, of finance. Many of us in this room

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Speaker 1: have been tremendous beneficiaries of globalization, and it hasn't been

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Speaker 1: great for everybody, to be clear, but for the world

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Speaker 1: as a whole, it's pulled a billion people out of poverty.

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Speaker 1: But now we're talking about deglobalization, We're talking about re

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Speaker 1: architecting supply chains. And some of this is rooted in

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Speaker 1: the behavior that we saw on the pandemic. We saw

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Speaker 1: countries hoarding personal safety equipment. We saw the tension around

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Speaker 1: the distribution of vaccines around the world. Countries are much

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Speaker 1: more sensitive to what do we want to have created

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Speaker 1: domestically so that we're not relying upon global trade and

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Speaker 1: then take that into the general geopolitical trends right here

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Speaker 1: right now. The war in the Ukraine has resulted in

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Speaker 1: Europe losing access to natural gas from Russia for all

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Speaker 1: intentsive purposes, Europe struggling to deal with how does it

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Speaker 1: maintain its economy having lost its cheap source of energy.

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Speaker 1: So there's many trends at play right now that are

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Speaker 1: pushing us towards deglobalization. And with that, it is almost

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Speaker 1: certainly a trend towards higher baseline inflation.

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Speaker 2: Over what period it could be for decades And the

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Speaker 2: implications of higher inflation might be obvious to some, but

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Speaker 2: I think we'd all like to hear it from Ken Griffin.

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Speaker 1: Well, it depends on where this baseline effect lands. If

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Speaker 1: we're looking at a two or three percent baseline effect,

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Speaker 1: in some sense, the central Bank will have a much

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Speaker 1: easier job. In the United States, the struggle over the

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Speaker 1: last twenty years has actually been to hit a two

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Speaker 1: percent target. And there's a variety of reasons that you

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Speaker 1: want a low level of background inflation. It helps to

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Speaker 1: lubricate the wheels of commerce. And that number the Fed

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Speaker 1: has committed to is being two percent. They're going to

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Speaker 1: fight pretty hard to keep that as the target for

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Speaker 1: a litany of good reasons. But it also means that

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Speaker 1: we're likely to see higher real rates, and we're likely

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Speaker 1: to see higher nominal rates, and that will have a

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Speaker 1: real implication on the cost of funding our enormous deficits.

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Speaker 1: The US has thirty three trillion dollars in debt outstanding.

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Speaker 1: We didn't plan for an era with higher nominal and

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Speaker 1: higher real rates when we went on the spending spree

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Speaker 1: that created a thirty three trillion dollar deficit.

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Speaker 2: You have been warning about the unsustainability of US debt,

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Speaker 2: and America, to be clear, is not the only developed

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Speaker 2: country that has a heavy debt load for quite a

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Speaker 2: long time. You would know better when you started to

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Speaker 2: talk about this than I do. But up to now

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Speaker 2: can it appears that nobody in the US government, at

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Speaker 2: the very least Republican or Democrat, has taken those warnings

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Speaker 2: to heart. And when I say nobody, of course there

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Speaker 2: are other people in government who say the same things,

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Speaker 2: but the government itself hasn't done anything about it. Is

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Speaker 2: this moment in time, when we've seen tenure treasury yields

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Speaker 2: hit five percent, they've backed off slightly but in that neighborhood,

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Speaker 2: is this the moment when everybody wakes up to the

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Speaker 2: the as you would put it, unsustainable realities of deficits

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Speaker 2: and debt.

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Speaker 1: So, first of all, I think there's an awakening taking place,

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Speaker 1: but it's gonna take time. It's gonna take time, and

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Speaker 1: nothing like mortgages at seven and eight percent to push

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Speaker 1: the body politic to start to wake up to the

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Speaker 1: consequences of the scale of the deficit we're currently running.

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Speaker 1: You know, there's no doubt that a big part of

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Speaker 1: the move and the tenure this year has been driven

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Speaker 1: by the realization we're in a full growth economy, full

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Speaker 1: employment economy, and we're gonna run almost a two trillion

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Speaker 1: dollar deficit this year. Like in some sense, you're supposed

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Speaker 1: to save in this moment in time for the rainy day,

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Speaker 1: and yet we're spending at the government level like a

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Speaker 1: drunken sailor. And the challenge with this is actually a

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Speaker 1: variety of different challenges. Number one is when you're spending

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Speaker 1: too much on your credit card, Like you feel really

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Speaker 1: good in the here and now, but in the back

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Speaker 1: of your mind there's that gnawing feeling that this isn't

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Speaker 1: going to end well, and I think that's part of

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Speaker 1: why the American consumer is just not as happy as

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Speaker 1: you'd expect them to be. They're seeing the impact of inflation,

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Speaker 1: they're seeing the impact of a dysfunctional set of reglatory policies,

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Speaker 1: and they know in the back of their mind that

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Speaker 1: we can't sustain this level of government spending. The amount

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Speaker 1: of economic malaise right now in America relative to where

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Speaker 1: unemployment is almost ten million open jobs is a stunning phenomena,

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Speaker 1: and I think the American people just understand deep down

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Speaker 1: that something's not quite right.

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Speaker 2: Do you think the risk free status of treasury debt?

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Speaker 2: Is it all in question?

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Speaker 1: Well? One thing to remember is that the United States

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Speaker 1: has the ability to always print dollars. Europe does not.

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Speaker 1: So in the European Union, you just can't print euros

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Speaker 1: as a member country. That's why Greece had its back

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Speaker 1: against the wall. They just couldn't print euros. That forced

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Speaker 1: or restructuring to take place. Now, to be clear, the

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Speaker 1: minute we start to print dollars to deal with the

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Speaker 1: possibility of default, our economy is in a deep tail spin.

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Speaker 1: So it's a theoretical possibility that we can go there,

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Speaker 1: but the economic consequences would be devastating. Big picture, though,

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Speaker 1: there's no IMF for America. If the United States came

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Speaker 1: off the rails with respect to its debt and its

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Speaker 1: ability to service its debt, the fact on the global economy,

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Speaker 1: not just the US economy, would be sunning. There is

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Speaker 1: no IMF for America.

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Speaker 2: The consensus so far among your fellow speakers is that

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Speaker 2: the world is unstable, that power, the distribution of global

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Speaker 2: power hasn't been this diffuse since the turn of the

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Speaker 2: twentieth century, and because of that, the risks to the

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Speaker 2: global economy are as great as they've been in decades.

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Speaker 1: Do you agree, Well, actually, I'm going to go back

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Speaker 1: to the last point for just a moment. Talking about

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Speaker 1: the deficit in America is something every business leader should do.

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Speaker 2: If we're in other words, while we're all talking about geopolitics,

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Speaker 2: we should be talking about the deficits.

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Speaker 1: We should, we should, We need to put America's fiscal

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Speaker 1: house in order, and until Washington hears it from enough people,

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Speaker 1: we're just going to keep using the credit card until

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Speaker 1: the day comes where no one's willing to pay for it.

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Speaker 1: If we can't have that conversation who's going to have it.

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Speaker 2: I don't want to go too far, so we can

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Speaker 2: much further down that rabbit hole. But up until now,

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Speaker 2: nobody's what's to say that that somebody will end up

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Speaker 2: holding the Treasury Department's feet to the fire hasn't happened yet.

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Speaker 1: So I was actually with or maybe.

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Speaker 2: Not since I was days of the bond vigilantes.

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Speaker 1: A number of the senior members of the House just

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Speaker 1: a week ago in the top three conversations, the deficit

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Speaker 1: was on every single person's lips. They're starting to get

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Speaker 1: the message. They get it from the family they can't

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Speaker 1: buy its first home. They're getting the message. But we

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Speaker 1: need to keep pushing that message as the business community,

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Speaker 1: as the financial community, to the American people who are

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Speaker 1: the American voters who will start to demand that we

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Speaker 1: put our house in order.

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Speaker 2: So allow me for a moment to go back to geopolitics,

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Speaker 2: because straight risk is something that you can predict up

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Speaker 2: to a point. Geopolitical risk is much harder to model.

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Speaker 2: How as arguably the world's most successful risk manager, you

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Speaker 2: have to be the world's most successful risk manager to

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Speaker 2: run the world's most successful hedge fund. Do you manage

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Speaker 2: geopolitical risk.

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Speaker 1: Well, I wish that statement were actually true.

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Speaker 2: I hate it when he attacks the premise of my question.

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Speaker 1: All right, And one of the things that we spend

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Speaker 1: a lot of time on is to try to be

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Speaker 1: a great risk manager. But there is a real art

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Speaker 1: to risk management, and unfortunately it's not until you have

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Speaker 1: the benefit of hindsight that you actually know how well

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Speaker 1: you were as a risk manager. All right, So just

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Speaker 1: first and foremost everybody who's in the business of managing money,

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Speaker 1: we're all learning to be better risk managers. But you

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Speaker 1: can't take that for granted. That's not like a god

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Speaker 1: given right. Because you've made money, you're a good risk manager. Now,

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Speaker 1: we look in our risk management, we look at a

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Speaker 1: variety of historical scenarios and how that impacts our portfolio.

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Speaker 1: And then we're always when there are events on the horizon,

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Speaker 1: there are events that are being talked about amongst geopolitical analysts,

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Speaker 1: we will start to run stress tests. If that happens,

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Speaker 1: what do we think it means for our portfolio. So,

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Speaker 1: before the war in the Ukraine started, obviously we could

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Speaker 1: see the amassy of the troops on the border. What

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Speaker 1: happens if a war breaks out, and we're thinking about

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Speaker 1: how do we reshape the portfolio in light of that possibility.

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Speaker 1: Right now, front and center is if we head into

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Speaker 1: recession in the United States sometime next year, what's that

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Speaker 1: mean for our portfolio? So you can think about all

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Speaker 1: the different scenarios that people talk about in the media

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Speaker 1: amongst the analyst community, and then you start to think

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Speaker 1: about what scenarios, how will that affect acid prices, and

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Speaker 1: how will our portfolio holistically perform if that unfolds.

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Speaker 2: So what kinds of those again are no knowns. The

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Speaker 2: possibility of a recession in the United States is a

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Speaker 2: no known It may not happen, but it's certainly within

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Speaker 2: the field of view. What about the left tail outcomes?

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Speaker 2: Certainly the kinds that you encounter in geopolitics are herder.

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Speaker 1: I mean model in the know and knowns is where

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Speaker 1: most people lose their firms. I mean just dismanaging the

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Speaker 1: no nons I still kind Valley bank. I mean, really,

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Speaker 1: you lost a depository with two hundred and some billion

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Speaker 1: dollars of deposits because you couldn't measure your interest rate

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Speaker 1: risk like that is. The basic core function of a

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Speaker 1: bank is asset liability management. And the management interest rate risk.

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Speaker 1: They didn't. They didn't go out of business because of

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Speaker 1: an ESO character RIVGIS portfolio. They aren't a business because

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Speaker 1: they borrowed short through the deposit base and put the

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Speaker 1: money into ten year bonds. So never underestimate the importance

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Speaker 1: of just block and tackle basic risk management.

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Speaker 2: Okay, so the root of almost all financial crises is

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Speaker 2: an asset liability mismatch, usually amplified by a considerable amount

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Speaker 2: of leverage.

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Speaker 1: So let just know that is the root of most

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Speaker 1: criseses in the banking system.

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Speaker 2: What about in the financial system beyond banking?

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Speaker 1: So the question is is is the capital that's been

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Speaker 1: deployed capital of a nature that can absorb the loss?

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Speaker 1: That's the question. So when people think about their equity allocation,

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Speaker 1: they do realize they could have a fifteen twenty thirty

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Speaker 1: percent draw down. That's part of their mental model when

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Speaker 1: they make that allocation. It's when capital is deployed in

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Speaker 1: a strategy where the capital doesn't have the ability to

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Speaker 1: absorb the loss that you see real shocks ripped through

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Speaker 1: the system. Whether it's the banking system highly levered, they're

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Speaker 1: funded with deposits and money market issuance. They don't have

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Speaker 1: the ability to absorb loss.

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Speaker 2: The reason, well, I'm glad you brought it up, and

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Speaker 2: the reason I want to go a little further in

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Speaker 2: this topic is because there's a lot of leverage in

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Speaker 2: the industry of which Citadel is a part, the multimanager

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Speaker 2: hedge fund industry. And again going back to the need

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Speaker 2: for risk management. You guys have done it well up

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Speaker 2: until now, may continue to do it well in the future.

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Speaker 2: Not every hedge fund is as good. One of your peers,

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Speaker 2: a firm called Schoenfeld, recently required a bailout by another

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Speaker 2: one of your peers. What if can that does become

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Speaker 2: a problem? What if there is a significant amount of

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Speaker 2: asset liability mismatch in the multi manager hedge fund industry

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Speaker 2: and things begin to go perish.

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Speaker 1: Well, let's think about the choice of wordshare. We'll say

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Speaker 1: everything Shoonfeld bailout. I think they're up for the year.

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Speaker 1: I literally think they're p and l is up for

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Speaker 1: the year. Like when you refer to an industry as

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Speaker 1: being in distressed when the investors have still made money,

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Speaker 1: that's a pretty good industry. That's a pretty good industry.

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Speaker 1: And I really think that drives home the point that

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Speaker 1: hedge funds almost never meet their demise in bankruptcy or receivership.

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Speaker 1: Like Silicon Valley Bank. They meet their demise because they

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Speaker 1: have mediocre performance for a period of time and investors

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Speaker 1: seek to withdraw their capital. Now shoon Field's had a

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Speaker 1: period here of weaker performance. It happens to It happens

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Speaker 1: to great firms, it happens to poor firms. You can't

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Speaker 1: you can't draw a conclusion based in eighteen months. In

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Speaker 1: my opinion, they've had some withdrawals and they're raising new

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Speaker 1: money like this is just the nature of how capital

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Speaker 1: flies through a system, and there'll be up to them

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Speaker 1: to prove to their current and future investors that they

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Speaker 1: can deliver. But if bailout is the word that we're

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Speaker 1: using for a firm that's up modestly, that's a pretty

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Speaker 1: good place to be from an industry perspective.

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Speaker 2: I'll rephrase the question, do you worry at all about

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Speaker 2: the amount of leverage in the multimanager hedge fund industry?

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Speaker 1: I worry more about the correlation of holdings between the firms.

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Speaker 1: So if I own a given stock, there's a higher

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Speaker 1: average that that stock is also owned by other multi

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Speaker 1: strategy managers, and that means that if one of us

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Speaker 1: is forced to liquidate that position for whatever reason, that

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Speaker 1: that will have cross effects across our holdings. We saw

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Speaker 1: the Standard community back in two thousand and seven, the

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Speaker 1: infamous quant quit. The Standard community generally speaking, has as

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Speaker 1: a variety of alphas based, many of them based on

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Speaker 1: academic research, many of them understood from very just clear

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Speaker 1: historical correlation patterns. And it's not surprising that if one

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Speaker 1: firm find it self facing an exagnous shock and they

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Speaker 1: start to liquidate risk, that that creates losses for competitors.

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Speaker 1: But losses against your equity capital base aren't aren't going

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Speaker 1: to put you out of business. In almost any scenario

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Speaker 1: with this type of crossholding phenomena, the losses relative your

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Speaker 1: equity capital based just are not expectationally going to be

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Speaker 1: that large. They're going to be painful. Don't get me wrong.

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Speaker 1: I hate losing money, but we're going to get through

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Speaker 1: those moments by and large, you and the rest of

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Speaker 1: your industry.

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Speaker 2: In other words, what you're if I interpret what you're

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Speaker 2: saying to me correctly, you don't see a systemic level

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Speaker 2: of risk there.

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Speaker 1: I definitely don't think the word systemic applies. I think

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Speaker 1: could you see the multimanagers hedge funds take a joint

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Speaker 1: ten fifteen to twenty percent hit to their equity. It's possible.

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Speaker 2: That's possible.

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Speaker 1: That's painful, but not systemic. Kent.

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Speaker 2: Last year we spoke at length about us Chinnel relations.

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Speaker 2: You said an I quotes exactly just.

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Speaker 1: To give you a you know, go back to the pandemic.

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Speaker 1: Go back to the first few weeks of the pandemic,

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Speaker 1: and you saw a number of multi strategy hedge fund

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Speaker 1: managers down somewhere between four and eight percent. So you

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Speaker 1: saw this playout like we actually have a real life

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Speaker 1: study of what that starts to look like in a

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Speaker 1: moment of panic.

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Speaker 2: Well, they're not just because of what was happening in

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Speaker 2: hedge funds, but that situation did require an unprecedented liquidity

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Speaker 2: injection from the Fed and central banks around the world.

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Speaker 2: That is, we don't want to go back there.

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Speaker 1: Well, so let's be clear, we needed a liquidity injection

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Speaker 1: to the system because people became unemployed overnight. You sent

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Speaker 1: home tens of millions of Americans from work, and I

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Speaker 1: was in the White House. We need to get checks

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Speaker 1: into the hands of American families that have no savings.

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Speaker 1: I mean, can you imagine being a waitress and literally

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Speaker 1: it's like we're going to put the now closed sign

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Speaker 1: on the restaurant, and I don't know when we opened

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Speaker 1: back up. So the move by the Trump administration to

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Speaker 1: get those checks into the hands of the American people,

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Speaker 1: and we saw various permutation of this around the world

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Speaker 1: was unprecedented and necessary.

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Speaker 2: I was getting into China because I think we need

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Speaker 2: to talk about it, and I was about to quote

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Speaker 2: you directly. This is from last year. Ken said, structurally,

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Speaker 2: the trade war with China is a huge loss for humanity.

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Speaker 2: And we also talked about the US led restrictions on

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Speaker 2: Chinese access to advanced semiconductors, and you warned about a

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Speaker 2: bifurcation of the global tech stack and the possibility that

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Speaker 2: it could inspire President she to perhaps attack Taiwan. And

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Speaker 2: I bring this up because since then, the evidence has

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Speaker 2: mounted that China is using these chips for military and

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Speaker 2: intelligence purposes as part of a campaign to challenge the

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Speaker 2: United States internationally, undermine US security, and weakend US democracy.

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Speaker 2: And Christopher Ray, the FBI director, put it this way,

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Speaker 2: no country represents a broader, more severe threat to our ideas,

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Speaker 2: our innovation, our economic security than China. So I'm curious,

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Speaker 2: given the twelve months have past and we now know

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Speaker 2: some of these things, if your thoughts, your opinion on

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Speaker 2: the value of trading with investing in maybe even trusting

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Speaker 2: China with our technology has changed it.

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Speaker 1: All well, So this comes down to competing interests. Do

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Speaker 1: we want a world of cleaner energy? China leads, and evs,

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Speaker 1: China leads and solar. China's one of the few countries

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Speaker 1: making a huge investment in nuclear again, and we desperately

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Speaker 1: need nuclear in the West. We need a way to

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Speaker 1: have baseload power that's cost effective and clean. So it's

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Speaker 1: a series of trade offs. And when we chose to

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Speaker 1: deprive China of access to semiconductors, I made the point.

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Speaker 1: I don't know if it was here or in other forms.

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Speaker 1: We're just going to inspire them to double down on

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Speaker 1: their research and development.

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Speaker 2: No, you said it here, I remember, all right, And.

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Speaker 1: Huawei did just that. They cracked the code of how

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Speaker 1: to create a competitive five G phone that competes with

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Speaker 1: all the best of the West, and they did it

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Speaker 1: frankly a blink of an eye. So it's going to

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Speaker 1: be hard to just sever. If we could just snap

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Speaker 1: our fingers and sever our relationship with China, do you

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Speaker 1: think we really come out ahead?

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Speaker 2: That's the question.

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Speaker 1: And I think they have one point four billion people

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Speaker 1: who are going to prove to us that we were wrong.

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Speaker 1: They graduate far more stem graduates every year. The Australians recently,

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Speaker 1: at one of their Top Things Tanks did an analysis

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Speaker 1: of the thing was the forty four most important developing

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Speaker 1: technologies in the world. China leads in thirty seven. So,

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Speaker 1: in spite of what so I believe the US strategy

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Speaker 1: needs to be, how do we become better at being

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Speaker 1: a competitor, How do we improve K throughout twelve education,

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Speaker 1: How do we improve our university education to focus more

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Speaker 1: in steamed degrees. How do we strengthen American business and

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Speaker 1: American innovation to beat the Chinese on a global stage.

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Speaker 2: And it's okay to continue selling China you know, three

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Speaker 2: and animeter lithography equipment.

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Speaker 1: So I think that's a really interesting debate. If it's

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Speaker 1: we're going to withhold but not put our house in order,

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Speaker 1: that's a huge mistake because once they catch us, they're

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Speaker 1: gonna lap us. So if we're gonna go there, it

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Speaker 1: should be tied to a set of domestic policies around

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Speaker 1: creating long term American competitiveness. And we haven't done the

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Speaker 1: second part of the equation.

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Speaker 2: The battleground is no longer just in technology. Recently, the

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Speaker 2: United States imposed some a very small number of restrictions

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Speaker 2: on the flow of capital to Chinese venture capital and

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Speaker 2: specifically startups that are engaged in military research. What if

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Speaker 2: capital becomes a tool of economic state craft?

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Speaker 1: What if? Yes, I mean it has been for well

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Speaker 1: if it's been that way for a very long time.

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Speaker 2: But in these terms, if countries start to prevent to

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Speaker 2: a much greater degree, the flow of capital took places

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Speaker 2: like China for example.

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Speaker 1: I mean, look at the history of Europe for several

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Speaker 1: hundred years. The country that had the goal was the

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Speaker 1: country that had the military was the country that won

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Speaker 1: the war. This is not new in the history of humanity.

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Speaker 1: And our national secure already comes down to our economic vibrancy,

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Speaker 1: and that sometimes seems to be lost in Washington. If

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Speaker 1: we want to have a very strong national defense and

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Speaker 1: national security posture, kidney a really strong economy as a

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Speaker 1: baseline starting point.

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Speaker 2: The rise of artificial intelligence is both exciting and too

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Speaker 2: many people terrifying. Citadel has been experimenting with and incorporating

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Speaker 2: AI into its businesses for years. What have you learned?

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Speaker 1: So? Machine learning was first developed in roughly the nineteen nineties,

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Speaker 1: and Google pulled this body of knowledge out of the

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Speaker 1: almost the dust bins of academia and applied it in

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Speaker 1: a massive way to improve search optimization. And when they

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Speaker 1: open sourced that body of knowledge as TensorFlow, it changed

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Speaker 1: the world because the power of machine learning was lost

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Speaker 1: upon us in the nineteen nineties because we didn't have

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Speaker 1: the computational power to fit a modern neural network. And

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Speaker 1: Google made the unprecedented investment to build enough computational power

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Speaker 1: to solve a really important machine learning problem, which was

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Speaker 1: search optimization. The rest of us had been in the

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Speaker 1: wake of that great success ever since. At Citadel, we

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Speaker 1: looked at TensorFlow literally within a day or two announcement

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Speaker 1: and a small group of my colleagues said, we're going

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Speaker 1: to see what we can do with this, and we

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Speaker 1: had a foul up meeting about two or three weeks later.

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Speaker 1: I said, well, what are our initial thoughts? It was

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Speaker 1: already in production. We were already using that branch of

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Speaker 1: technology to impact how we priced and traded securities. And

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Speaker 1: it was backgroundbreaking that I had colleagues that literally worked

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Speaker 1: like practically twenty four hours a day for ten days

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Speaker 1: in a row to make it happen. They were just

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Speaker 1: that excited about it. Now, generative AI is the next

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Speaker 1: new thing in machine learning. And part of the reason

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Speaker 1: I think it captivates humans so much is it produces

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Speaker 1: written words. It produces images that we can see and

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Speaker 1: understand and appreciate. In contrast to what we did ten

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Speaker 1: years ago, where you would just get a vector of numbers.

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Speaker 1: It just be like gobblygook to the human eye. But

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Speaker 1: when you produce written word, you produce an image that's

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Speaker 1: something that you go wow. Now, this branch of machine

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Speaker 1: learning will have real impact on Hollywood, on creating content,

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Speaker 1: on managing call centers, on helping to summarize research, on

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Speaker 1: helping to automate routine and repetitive tasks. It's going to

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Speaker 1: be a big impact on the economy, and it will

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Speaker 1: help to spur the next cycle of investment in technology,

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Speaker 1: even if that technology only makes an ancillary use of

438
00:27:05,640 --> 00:27:08,120
Speaker 1: this new set of tools. I think that's an important

439
00:27:08,119 --> 00:27:10,119
Speaker 1: point to make, like this will be another wake up

440
00:27:10,160 --> 00:27:13,840
Speaker 1: call for corporate America to focus on how to create

441
00:27:13,840 --> 00:27:14,840
Speaker 1: productivity gains.

442
00:27:17,080 --> 00:27:19,360
Speaker 2: Any lessons from Citadel's experience.

443
00:27:22,520 --> 00:27:26,000
Speaker 1: With respect to generative AI, I think we're in the

444
00:27:26,040 --> 00:27:30,000
Speaker 1: early Indians. I mean there are clear wings. We already

445
00:27:30,119 --> 00:27:35,040
Speaker 1: use Microsoft's co pilot tools. It increases our productivity of

446
00:27:35,040 --> 00:27:38,480
Speaker 1: our developers by roughly ten percent. When you've got about

447
00:27:38,480 --> 00:27:42,160
Speaker 1: fifteen hundred software engineers, that's like one hundred and fifty

448
00:27:42,160 --> 00:27:45,000
Speaker 1: people show up for work every day and they don't

449
00:27:45,000 --> 00:27:50,040
Speaker 1: demand benefits. And that's really important because that gives us

450
00:27:50,080 --> 00:27:52,480
Speaker 1: the ability to take on a whole variety of new

451
00:27:52,480 --> 00:27:55,360
Speaker 1: projects that we just didn't have the resources for six

452
00:27:55,520 --> 00:27:58,679
Speaker 1: or twelve months ago. So we're seeing clear per activity

453
00:27:58,720 --> 00:28:03,879
Speaker 1: gains there. We see it in the manipulation of data

454
00:28:04,040 --> 00:28:07,199
Speaker 1: that was done by people like taking data, a variety

455
00:28:07,200 --> 00:28:10,440
Speaker 1: of low level tasks, and we like to automate those jobs.

456
00:28:10,520 --> 00:28:13,959
Speaker 1: You have to Citadel, it's very important that our value

457
00:28:13,960 --> 00:28:18,680
Speaker 1: proposition to our employees is about a career. So every

458
00:28:18,800 --> 00:28:21,879
Speaker 1: chance we have to eliminate jobs, we take that. We

459
00:28:22,000 --> 00:28:25,080
Speaker 1: want to create careers for people that come to Citadel.

460
00:28:26,760 --> 00:28:29,000
Speaker 2: I have to spend a couple of minutes on this topic.

461
00:28:30,200 --> 00:28:32,240
Speaker 2: The United States is twelve months away from an election,

462
00:28:33,200 --> 00:28:37,080
Speaker 2: arguably a very consequential election. Who are you rooting for?

463
00:28:40,800 --> 00:28:42,720
Speaker 1: Well, right now there's a debate taking place.

464
00:28:42,840 --> 00:28:49,200
Speaker 2: Yes, Lately you've been saying approving things about Nikki Haley,

465
00:28:49,200 --> 00:28:52,920
Speaker 2: in particular her foreign policy position. What should we read

466
00:28:52,960 --> 00:28:53,280
Speaker 2: into that?

467
00:28:53,600 --> 00:28:56,800
Speaker 1: Look, I hope she has a great night tonight, I

468
00:28:56,880 --> 00:28:57,360
Speaker 1: really do.

469
00:28:57,440 --> 00:28:58,160
Speaker 2: And if she does.

470
00:28:58,520 --> 00:29:01,080
Speaker 1: If she does, I think that could be a galvanizing

471
00:29:01,160 --> 00:29:02,160
Speaker 1: moment for her campaign.

472
00:29:03,760 --> 00:29:06,040
Speaker 2: Can she bread Trump in a primary?

473
00:29:06,280 --> 00:29:06,920
Speaker 1: We'll find out.

474
00:29:08,440 --> 00:29:10,880
Speaker 2: We will find out, and I find it in your opinion.

475
00:29:12,760 --> 00:29:16,320
Speaker 1: It's gonna come down to how does the American public

476
00:29:17,360 --> 00:29:23,560
Speaker 1: incorporate the legal morass that former President Trump's Immeshton, There's

477
00:29:23,680 --> 00:29:27,600
Speaker 1: no doubt a huge portion of this legal morass is

478
00:29:27,600 --> 00:29:33,200
Speaker 1: the political, the politalization of our judiciary.

479
00:29:33,320 --> 00:29:36,240
Speaker 2: There's no doubt you believe that he's being politically persecuted,

480
00:29:38,080 --> 00:29:39,720
Speaker 2: that the charges against him are flimsy.

481
00:29:40,200 --> 00:29:44,080
Speaker 1: I think a number of these charges are really flimsy.

482
00:29:44,200 --> 00:29:48,760
Speaker 1: Which ones How much time do we have here today?

483
00:29:49,000 --> 00:29:50,720
Speaker 2: There aren't that many charges.

484
00:29:51,080 --> 00:29:53,040
Speaker 1: No, I think it's somewhere like ninety.

485
00:29:52,880 --> 00:29:55,520
Speaker 2: Or which case in particular do you think is most suspect.

486
00:29:55,880 --> 00:29:59,080
Speaker 1: Well, okay, let's go to Georgia for a moment, and

487
00:29:59,120 --> 00:30:02,280
Speaker 1: I'm really curious to see where this lands. But when

488
00:30:02,320 --> 00:30:07,880
Speaker 1: you argue there's this great conspiracy to deprive the American

489
00:30:07,920 --> 00:30:13,120
Speaker 1: people of a democracy and then you allow people to

490
00:30:13,600 --> 00:30:17,920
Speaker 1: agree to testify on behalf of the government and the

491
00:30:18,080 --> 00:30:21,200
Speaker 1: ramnifications for the crime that they committed as part of

492
00:30:21,240 --> 00:30:26,640
Speaker 1: this great conspiracy to destroy democracy in America is borderline

493
00:30:26,680 --> 00:30:27,560
Speaker 1: community service.

494
00:30:31,400 --> 00:30:36,560
Speaker 2: So the sweetheart deal effectively that the government has struck

495
00:30:36,760 --> 00:30:40,600
Speaker 2: with these defendants who have pleaded guilty is enough to

496
00:30:40,640 --> 00:30:42,600
Speaker 2: make that case point.

497
00:30:42,840 --> 00:30:45,320
Speaker 1: You know, it feels pretty flimsy at that point in time.

498
00:30:45,720 --> 00:30:48,880
Speaker 2: Okay, what about the insurrection case Jack Smith's prosecution.

499
00:30:49,520 --> 00:30:51,560
Speaker 1: We'll see what he has in the way of facts there.

500
00:30:52,000 --> 00:30:52,360
Speaker 2: Okay.

501
00:30:53,120 --> 00:30:56,000
Speaker 1: I mean one of the questions is what did Trump

502
00:30:56,120 --> 00:30:56,760
Speaker 1: know him believe?

503
00:30:57,880 --> 00:31:00,600
Speaker 2: That is most definitely one of the most important questions.

504
00:31:00,600 --> 00:31:02,960
Speaker 1: All right, And so President Biden was very happy to

505
00:31:03,000 --> 00:31:05,040
Speaker 1: tell millions of Americans that he was going to forgive

506
00:31:05,040 --> 00:31:08,880
Speaker 1: their student loans. The DJ the government told me you

507
00:31:08,920 --> 00:31:11,920
Speaker 1: can't do this. It didn't stop him from making that statement.

508
00:31:13,800 --> 00:31:15,560
Speaker 2: It did ultimately stop it from happening.

509
00:31:16,240 --> 00:31:20,800
Speaker 1: And to be clear, President Biden's president the United States

510
00:31:20,840 --> 00:31:21,320
Speaker 1: of America.

511
00:31:21,840 --> 00:31:25,840
Speaker 2: If the election were held today, knowing what you know

512
00:31:27,040 --> 00:31:29,800
Speaker 2: about both Joe Biden and Donald Trump, who is of

513
00:31:29,840 --> 00:31:34,840
Speaker 2: course leading the polls as the potential Republican nominee, who'd

514
00:31:34,840 --> 00:31:35,280
Speaker 2: you vote for?

515
00:31:38,840 --> 00:31:39,959
Speaker 1: What am I writing choices?

516
00:31:41,560 --> 00:31:43,440
Speaker 2: You're choosing between Joe Biden and Donald Trump?

517
00:31:45,360 --> 00:31:48,080
Speaker 1: Well, I mean, I'll be right to the point. It's

518
00:31:48,120 --> 00:31:51,640
Speaker 1: twelve months further out. What is each of these individuals

519
00:31:51,760 --> 00:31:52,800
Speaker 1: state and mental health?

520
00:32:00,560 --> 00:32:02,520
Speaker 2: This is an excellent question, one that of course I

521
00:32:02,600 --> 00:32:03,200
Speaker 2: can answer.

522
00:32:05,000 --> 00:32:07,880
Speaker 1: No. I think it's an important question of guys. We're

523
00:32:07,920 --> 00:32:11,320
Speaker 1: in two wars right now in the world. Okay, the

524
00:32:11,440 --> 00:32:15,920
Speaker 1: United States is on the periphery but instrumental to supporting

525
00:32:15,920 --> 00:32:21,080
Speaker 1: the Ukraine right now. And if Ukraine falls, the next

526
00:32:21,200 --> 00:32:27,280
Speaker 1: border is NATO. Oh, I think all right, So we

527
00:32:27,360 --> 00:32:31,040
Speaker 1: get the pick, so of sound mind will be really

528
00:32:31,080 --> 00:32:34,400
Speaker 1: important when it comes time to pick who's going to

529
00:32:34,440 --> 00:32:35,040
Speaker 1: be president.

530
00:32:37,000 --> 00:32:38,680
Speaker 2: So as I say, if it were today, who would

531
00:32:38,680 --> 00:32:38,960
Speaker 2: you pick?

532
00:32:39,080 --> 00:32:40,640
Speaker 1: I'm going to wait for twelve months. I'm going to

533
00:32:40,680 --> 00:32:44,479
Speaker 1: see where people spent the capacity is ken I always

534
00:32:44,760 --> 00:32:47,600
Speaker 1: let's be clear, There's another talking point that I've been

535
00:32:47,640 --> 00:32:52,480
Speaker 1: on NonStop. I would love to see two candidates from

536
00:32:52,560 --> 00:32:57,040
Speaker 1: each party who are each twenty years younger. Like that's

537
00:32:57,080 --> 00:32:59,360
Speaker 1: the heartbreaking part of the story.

538
00:33:01,040 --> 00:33:03,240
Speaker 2: Well, as you point out, the Republican debate that is

539
00:33:03,280 --> 00:33:07,640
Speaker 2: happening more or less right now. Donald Trump is in participating,

540
00:33:08,120 --> 00:33:12,000
Speaker 2: Nikky Hales, Rhonda Sentences, other potential nominees for the Republican

541
00:33:12,040 --> 00:33:15,400
Speaker 2: Party are We'll see how they do. Ken, it's always

542
00:33:15,400 --> 00:33:17,080
Speaker 2: a pleasure. Thank you for joining us the New Economy

543
00:33:17,080 --> 00:33:17,360
Speaker 2: for m