Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Ken Griffin, thank you
Speaker 1: so much for joining us here in Doha. Eric, it
Speaker 1: is great to be here today. We have a lot
Speaker 1: to talk about as usual, folks.
Speaker 2: I have been fortunate enough to have a long standing
Speaker 2: relationship with Ken and have had the opportunity to interview
Speaker 2: him many times.
Speaker 1: I think of this as.
Speaker 2: An evolution in so many ways, Ken, of things that
Speaker 2: we've touched on in the past. One of those things,
Speaker 2: of course, is geopolitics, a subject.
Speaker 1: In order a graceful way to describe aging an.
Speaker 2: Evolution, geopolitics is a subject that has come up already
Speaker 2: many times on this stage.
Speaker 1: Ken.
Speaker 2: The world, as you know, is divided by conflicts. We
Speaker 2: have hot wars in Ukraine and Gaza, and a cold
Speaker 2: war you might say, between the United States and China,
Speaker 2: and increasingly these conflicts are forcing states to pick sides,
Speaker 2: and thus they're realigning global trade and investment. What we'd
Speaker 2: like here, Ken, is your perspective on the trajectory of
Speaker 2: these geopolitical trends and your ideas as to how they're
Speaker 2: shaping or perhaps reshaping the macroeconomic landscape. You have to
Speaker 2: navigate at your firm Citadel and citadel securities.
Speaker 3: So that's a great question because it was just a
Speaker 3: few years ago that I think most of us viewed
Speaker 3: the world as heading towards geopolitical stability.
Speaker 1: A better place in other words, yeah, yes.
Speaker 3: And a more integrated market, both financial flows of goods,
Speaker 3: flows of services, and.
Speaker 1: Even the integration of labor markets.
Speaker 3: And now with both the war and Europe, the tension
Speaker 3: between the United States and China, and then in a
Speaker 3: different way, what's on in the Middle East between Israel
Speaker 3: and Hamas, it's very clear we live in a different
Speaker 3: world than we had all experienced and fantasized about just
Speaker 3: a few years ago. Now, the upshot of this is
Speaker 3: that the traditional alliances post World War Two are regaining strength.
Speaker 3: You see the NATO countries coming together more tightly. You
Speaker 3: see the United States trying to pull its allies closer together,
Speaker 3: whether it's Australia in the Pacific or our allies in Europe.
Speaker 1: So there is definitely a reassertion.
Speaker 3: Of the importance of global institutions, and in particular the
Speaker 3: post World War two.
Speaker 1: Frameworks that are once again at play.
Speaker 3: As an investor, it's an interesting point in time because
Speaker 3: if you are in the United States, there's a sense
Speaker 3: that deploying capital in the markets of our clear.
Speaker 1: Allies is to say its path to go.
Speaker 3: In fact, you'll often hear American money managers, for example,
Speaker 3: say that China is uninvestable because of.
Speaker 1: The tension between the United States and China.
Speaker 3: That's on clear display. And yet if you're here in
Speaker 3: the Middle East, where China is an important importer of
Speaker 3: oil and other products from across the region, it's a
Speaker 3: very different story. China is clearly investible because of the
Speaker 3: closeness form between China and this part of the world.
Speaker 3: So you do see both the restrengthening of historical relationships,
Speaker 3: new ties being built, and capital follows.
Speaker 1: The flows of these geopolitical arrangements. Are you worried about
Speaker 1: the direction of the world is headed.
Speaker 3: Of course I am, and I'm willing to bet that
Speaker 3: you are.
Speaker 1: Also.
Speaker 3: This is not where we want to see the world
Speaker 3: head for just a number of obvious reasons. I mean,
Speaker 3: first of all, global trade, which had adverse consequences that
Speaker 3: we're learning about to this day, still unleashed an enormous
Speaker 3: amount of gain for humanity. And with the rise of
Speaker 3: global trade became the rise of information sharing, around the world,
Speaker 3: which rapidly accelerated the trajectory of mankind. I mean of
Speaker 3: note the Chinese, for example, our leaders in solar.
Speaker 1: Their leaders in EVS, their leaders in.
Speaker 3: A number of emerging technologies, and a world which is
Speaker 3: more splintered will see the gains that the Chinese have
Speaker 3: achieved in these important areas not shared by the Western countries.
Speaker 3: And conversely, the United States is a clear leader in
Speaker 3: Ai along with a number of the European countries, and
Speaker 3: those gains will not be shared with China and the
Speaker 3: countries in its sphere of influence.
Speaker 1: So it's a very.
Speaker 3: Clear cut loss for all of humanity when we have
Speaker 3: the severing of ties between our countries.
Speaker 2: On a practical level, is it getting harder to manage
Speaker 2: the risks you face?
Speaker 3: I think that one has to be aware that there
Speaker 3: are more tail risks that are harder to ultimately manage,
Speaker 3: and that goes with this rise in geopolitical complexity. So
Speaker 3: I think that's that's certainly true, that there are just
Speaker 3: larger tails today that didn't exist or we didn't perceive
Speaker 3: them to exist seven or eight or ten years ago.
Speaker 3: So that's that is intrinsic and money management today, and
Speaker 3: that's the wit we think about each and every day
Speaker 3: at Citadel is how do we mitigate the tail risks
Speaker 3: in this world?
Speaker 1: How do you mitigate the tail risks?
Speaker 3: Well, part of its sizing, so part of it is
Speaker 3: how much exposure you have to a strategy or to
Speaker 3: a particular sector of the economy or to a particular country.
Speaker 3: That's that is the go to playbook from manage in
Speaker 3: your tails is just what's the most you're willing to
Speaker 3: have exposed to a possible adverse event. And then the
Speaker 3: other strategies to look for correlated payoffs that will protect
Speaker 3: you in the event that.
Speaker 1: The tail scenario occurs.
Speaker 3: So those are two things that you do in your
Speaker 3: portfolio construction to manage against the.
Speaker 1: Tail risk in this environment.
Speaker 2: Ken moments ago, you mentioned China and EVS. As it
Speaker 2: happens today, the Biden administration is levying sweeping new tariffs
Speaker 2: on Chinese imports, including on electric vehicles.
Speaker 1: How does that change the picture.
Speaker 3: It's sort of a continuation of the incoherent economic policies
Speaker 3: of the Biden administration.
Speaker 1: We've seen this giant push.
Speaker 3: Towards green energy over the course of the last several years,
Speaker 3: and at the same time, a set of policies that
Speaker 3: run completely contrary to the stated goal of trying to
Speaker 3: head towards the zero carbon world, and placing enormous tariffs
Speaker 3: on Chinese evs, which are low cost, high quality, of
Speaker 3: great value to American consumers is yet another part of
Speaker 3: the incoherent bid economic strategy. The other part of the
Speaker 3: strategy that I scratched my head about is the US
Speaker 3: refusing to provide new LNG permits. Right, if you want
Speaker 3: the world to head towards a lower carbon footprint and
Speaker 3: move away from coal, access to LNG is a really
Speaker 3: important part of the equation, and yet the United States
Speaker 3: is refusing to permit new facilities in the foreseeable future.
Speaker 2: And also to sell LNG to countries with which the
Speaker 2: United States doesn't have a free trade agreement.
Speaker 1: That's a part of the equation.
Speaker 2: Also that I said, the United States amazingly is a
Speaker 2: bigger LG exporter than Kutar.
Speaker 1: We're and neck. We're neck and neck.
Speaker 3: And it's very important to understand that if you want
Speaker 3: a country to base its economy on natural gas, they're
Speaker 3: going to want two suppliers.
Speaker 1: It's not a wind lose is dynamic between the United
Speaker 1: States and Qatar. It's a win win.
Speaker 3: If you look at any good that is required on
Speaker 3: an existential basis, you're going to want dual source supply.
Speaker 3: And the rise of the United States is a major
Speaker 3: lergy exporter only strengthens the position of this region of
Speaker 3: the world in providing natural gas to other countries.
Speaker 2: Going back to China for a moment. We've talked about
Speaker 2: China in the past. You have what I would call
Speaker 2: a constructive view of China, certainly more constructive than many
Speaker 2: people with whom I've spoken. There is, however, strong hostility
Speaker 2: to China among both Republicans and Democrats. So how would
Speaker 2: you explain the way you look at the opportunity and
Speaker 2: the problem that China presents, particularly to the United States.
Speaker 3: So that's a treacherous question to have to answer. Let's
Speaker 3: take a huge step back. I think that my view
Speaker 3: towards China is rooted in respect. It is rooted in
Speaker 3: the respect of a country that has pulled more people
Speaker 3: out of poverty in the last forty years than than
Speaker 3: any country in the history of the world. It's a
Speaker 3: remarkable economic achievement that they've unleashed in China, and it
Speaker 3: was an economic achievement that the United States firmly supported.
Speaker 3: We believed in America that the rise of a free
Speaker 3: market economy would lead to the rise of a liberal democracy.
Speaker 3: It was an explicit calculation that happened in DC that
Speaker 3: didn't actually happen to happen in reality. So it's important
Speaker 3: to recognize that this was the goal of the United States,
Speaker 3: was to see the economic rise of China, hoping it
Speaker 3: would push it towards a liberal democracy.
Speaker 1: It didn't happen.
Speaker 3: The economy rose, did not become a liberal democracy. Having
Speaker 3: said that, today, China is a powerhouse in research and
Speaker 3: development in a broad number of fields, fields that are
Speaker 3: very important to the future of all of us around
Speaker 3: the world. And so long as we're able to maintain
Speaker 3: a constructive relationship and we can share the best technologies
Speaker 3: that are to countries and all the countries around the
Speaker 3: world develop and build, there's an.
Speaker 1: Opportunity for gain.
Speaker 3: Right now, we have in some sense a very muddled relationship,
Speaker 3: and it's almost as if we're trying to maximize the
Speaker 3: opportunities for mutual pain. And that's a difficult place to be.
Speaker 3: It makes the Chinese weary of trusting the United States.
Speaker 3: It makes the United States wary of trusting China, and
Speaker 3: there's just a lot lost in that equation.
Speaker 2: It would make sense if what the United States wants
Speaker 2: to do is make an enemy of China, but that's
Speaker 2: not clear.
Speaker 3: Well, you know, I don't want to make this a
Speaker 3: US only is going after China.
Speaker 1: It's a two way street.
Speaker 3: I mean, the Chinese for ample supporting Russia's ability to
Speaker 3: wage warn Ukraine doesn't play well in the United States
Speaker 3: of America. So there's room for both countries to take
Speaker 3: definitive acts to just turn the temperature down. And well,
Speaker 3: if it's a coal word, it's to turn the temperature up.
Speaker 3: I'm not sure what shoy you go. But to improve
Speaker 3: the relationships and the dynamic between our two countries, Ken
Speaker 3: Qatar is playing an instrumental role in the peace talks
Speaker 3: or the effort to create piece as it were, between
Speaker 3: the Israelis and the Palestinians and to resolve the situation
Speaker 3: in Gaza.
Speaker 2: And with respect to Hamas, you've been outspoken about the
Speaker 2: pro Palestinian protests back in the United States. They've royal
Speaker 2: university campuses. You've been particularly critical of your alma mater Harvard.
Speaker 2: Here's my question to you. When people here in the
Speaker 2: Gulf region and across the globe for that matter, see
Speaker 2: the chaos at Harvard or Columbia or USC or MIT
Speaker 2: and police and combat gear moving to clear accountments, how do.
Speaker 1: You think that shapes their view of America? Not well?
Speaker 1: Not well? And what is lost is that what's happening
Speaker 1: on campus is not is not free speech. It's anarchy.
Speaker 3: You know, in Columbia, when they storm a building, they
Speaker 3: vandalize a building, they're destroying property, and then they ask
Speaker 3: for humanitarian aid, which is the greatest of all ironies.
Speaker 3: It's just the wrong It is the wrong dynamic that
Speaker 3: we're seeing take place in American campuses. These are students.
Speaker 3: Most of these students on campuses are trying to learn.
Speaker 3: They're trying to have an education, and the university should
Speaker 3: be really trying to encourage a constructive debate between the
Speaker 3: students of different backgrounds, whether they're from the Middle East,
Speaker 3: whether they're of Jewish origin. It's really important that the
Speaker 3: generation that will be the generation that runs the world
Speaker 3: in forty years I still learn from this horrible moment
Speaker 3: in history, and we're not fostering that environment on campuses today,
Speaker 3: and it's really it's a huge, huge disappointment that so
Speaker 3: much what we see on campus. You've seen the video
Speaker 3: footage of the kids interviewed, Why are you here? What
Speaker 3: are you protesting about? Often they can't even answer basic
Speaker 3: questions about what's happening in the region and why it's
Speaker 3: taking place?
Speaker 1: Can people here?
Speaker 2: And I suspect those watching us around the world are
Speaker 2: eager for your insights into what might happen during and
Speaker 2: after the US election.
Speaker 1: How might US.
Speaker 2: Foreign policy and defense policy change if Donald Trump were
Speaker 2: to return to the White House.
Speaker 3: So if President Trump returns to the White House, I
Speaker 3: think you'll see a global perception of a stronger America.
Speaker 1: Now.
Speaker 3: The Biden administration's form policies, the actual policies are generally
Speaker 3: speaking thoughtful, but to be blunt, America does not exude
Speaker 3: credibility or strength in its actions around the world today.
Speaker 3: That our positioning does not match the thoughtfulness of our policies.
Speaker 3: That's a very difficult place to be in a world
Speaker 3: which has the geopolitical cross currents that we spoke about earlier.
Speaker 3: And it means that those who are willing to push
Speaker 3: to see how far you can push America are willing
Speaker 3: to push harder than we want.
Speaker 1: To see happening.
Speaker 3: And I think that anybody who knows President Trump knows
Speaker 3: that is not somebody you just pushed to see what's
Speaker 3: going to happen. That's the wrong strategy with President Trump.
Speaker 3: And so I believe that President Trump will have very
Speaker 3: good people in foreign policy and in the Department of Defense.
Speaker 3: But I think he will exude a level of strength
Speaker 3: that will help to stabilize the world in this very,
Speaker 3: very trying times.
Speaker 2: There has been flagging support for aid to Ukraine. The
Speaker 2: publican party with Donald Trump abandoned Ukraine.
Speaker 1: No, he will not. You're certain of that. Well, this
Speaker 1: goes back to my earlier statement.
Speaker 3: You could never be certain about President Trump, and that's
Speaker 3: part of the reason that he is more intimidating to
Speaker 3: our adversaries. You never know exactly what the response is
Speaker 3: going to be. But knowing a number of people that
Speaker 3: he's close to, and having actually brought this topic up,
Speaker 3: I think that President Trump feels he can find an
Speaker 3: off ramp towards peace by reaching across to Putin and
Speaker 3: to the Ukrainian leadership. I believe he knows it's important
Speaker 3: to American interests, that we do not abandon the Ukrainian
Speaker 3: people at this very difficult moment, and that we keep
Speaker 3: Russian's territorial ambitions in check, and a strong pushback against
Speaker 3: Putin will be part of the equation if need be,
Speaker 3: to secure the peace in the Ukraine.
Speaker 1: What do you think he'll do with economic policy. It's
Speaker 1: difficult to know.
Speaker 3: So neither administration gives me comfort in terms of a
Speaker 3: willingness to reduce federal spending. But I have no doubt
Speaker 3: that a Trump administration would be far less oriented towards
Speaker 3: regulatory overreach and far more thoughtful about the role of
Speaker 3: the US government in the day to day US economy.
Speaker 3: One of the reasons that American voters are so unhappy
Speaker 3: right now is inflation is out of control, and inflation
Speaker 3: is out of control because of the expanse of government
Speaker 3: under the biod administration, the rate of spending, and the
Speaker 3: degree of intervention in the economy. It's causing energy prices
Speaker 3: to be higher, It's causing the cost of manufacturing to
Speaker 3: be higher. It's impacting every part of the economy in
Speaker 3: a way that the American voter is frustrated about. President
Speaker 3: Biden doesn't understand you need to break the back of
Speaker 3: inflation to give people the sense of economic security.
Speaker 2: We have talked in the past about America's tendency should
Speaker 2: we say to spend more money than it generates in
Speaker 2: text revenue? And you have warned ken of some catastrophic
Speaker 2: consequences if deficit spending isn't brought under control. What is
Speaker 2: the catalyst for an American debt crisis going to be?
Speaker 3: So I don't know what that moment will be when
Speaker 3: there's an auction that goes awry, or when the markets
Speaker 3: become dislocated. Financial markets, generally speaking, work very well until
Speaker 3: they catastrophically come off the rails. You don't necessarily get
Speaker 3: a lot of warning that there's about to be a
Speaker 3: big event. The crash of eighty seven is a great
Speaker 3: case study. You know, that day I woke up, I
Speaker 3: was in my dorm room trading then, and the stories
Speaker 3: on the of the day were about a small scream
Speaker 3: to the Middle East of frankly no consequence, and the
Speaker 3: health of First Lady Nancy Reagan. And yet we an
Speaker 3: end of that day with the stock market down twenty
Speaker 3: percent and a number of American institutions literally on life support,
Speaker 3: and your death happened in one day, one day. There
Speaker 3: was no big story that morning that would make you
Speaker 3: think that that day might have been the end of
Speaker 3: the US.
Speaker 1: Capital markets as we knew them.
Speaker 3: There was no warning, And so I worry that the
Speaker 3: debt crisis may have a similar construct, that they'll simply
Speaker 3: be a day where a major auction fails and then
Speaker 3: you see a panic start to brew in the treasury market,
Speaker 3: and the question will be will be how fast will
Speaker 3: the Fed intervene?
Speaker 1: What panic will that induce?
Speaker 3: Because government intervention under duress often just creates more panic.
Speaker 1: And then do we see a flood of treasures.
Speaker 3: Coming back into the market from holders around the world's
Speaker 3: frightening respect, it is back to politics for a moment.
Speaker 1: You've been a prominent donor.
Speaker 2: I would say to Republican candidates, I'd like to know
Speaker 2: how are you going to spend your money? How are
Speaker 2: you already spending your money ahead of the election in November.
Speaker 3: So I have been a significant supporter of Republicans that
Speaker 3: stand for personal freedom, national security, and economic soundness.
Speaker 1: The United States.
Speaker 3: That has been a big focus of mine in this
Speaker 3: primary election or this primary cycle. I want to see
Speaker 3: people in the House and in the Senate that represent
Speaker 3: the best of American values and backgrounds.
Speaker 1: That prepare one to serve in public service.
Speaker 3: In the last election cycle, I supported a number of
Speaker 3: people who were veterans just and who are now serving
Speaker 3: our country in the House, and they do it with
Speaker 3: the pride that our country deserves, and they do it
Speaker 3: with the integrity that our country needs. So I've been
Speaker 3: very focused on finding candidate who I think represent the
Speaker 3: best of American values to be part of.
Speaker 1: The future of the Republican Party.
Speaker 2: People probably want to know, have you donated to Donald
Speaker 2: Trump's campaign, either directly or indirectly to a pack or
Speaker 2: a super pack?
Speaker 1: I have not, will you? I'm going to wait to
Speaker 1: see what he picks his VP candidate. Is there anyone
Speaker 1: whom you'd like to see him pick as his VP candidate?
Speaker 1: I know I don't. This is again like poking the bear.
Speaker 3: Not sure which way my recommendation goes in terms of
Speaker 3: helping that person's prospects.
Speaker 2: I think that's wise position to take. Before we finish
Speaker 2: ken This region is blessed with resource wealth and as
Speaker 2: a result, sovereign wealth, so much so that pretty much
Speaker 2: every major asset manager in the West sees the Gulf
Speaker 2: as something of a honeypot and is trying to raise
Speaker 2: money here. As someone who isn't raising money here, how
Speaker 2: would you advise the sovereign wealth funds in the Gulf
Speaker 2: region to maximize their negotiating leverage.
Speaker 3: So either I'm going to be excommunicated from the circle
Speaker 3: of my fellow money managers or never invited to come
Speaker 3: back to the Middle East again?
Speaker 1: Is that? Is that the position E're putting me in?
Speaker 3: So look, here's what I think is important to think about.
Speaker 3: I think alignment between the interests of the money manager
Speaker 3: and the sopoire well fund are very important. And I
Speaker 3: think it's more important to have your money and trusted
Speaker 3: with the firm that is going to act continuously in
Speaker 3: your best interest as an investor than it is to
Speaker 3: try to pick somebody who simply has the lowest fees
Speaker 3: or some other superficial demarcation of being open and transparent.
Speaker 3: I mean, let's be clear, your money managers who have
Speaker 3: really important intellectual property aren't going to be unduly transparent.
Speaker 3: They're trying to protect their very intellectual property that they'll
Speaker 3: share the benefits with you of with the client. Simply put,
Speaker 3: Coca Cola doesn't publish its recipe on the web. So
Speaker 3: I think it's very important when you find a money manager,
Speaker 3: you're really asking what's their competitive advantage, what's their culture?
Speaker 1: How aligned are.
Speaker 3: They with me and in both in the good moments
Speaker 3: and the bad moments.
Speaker 1: Are they going to put themselves.
Speaker 3: In the shoes of their clients and make the right
Speaker 3: decision by their clients.
Speaker 1: It's citing. I take great pride that almost over.
Speaker 3: Twenty percent of the capital in our hedge funds is
Speaker 3: the capital the partners and the team members at Citadel.
Speaker 3: We wake up every single day as co investors with
Speaker 3: our capital providers, and I think that symbolizes what I
Speaker 3: would think about looking for if I were a member
Speaker 3: of the soccern wealth community here in the Middle East.
Speaker 2: One last thing among the men, any distinctive qualities that citadels.
Speaker 3: Just by the way, when you're going to pick a
Speaker 3: brain search, did you find the doctor.
Speaker 1: With the lowest feet? That's not what I would do.
Speaker 3: No, Right, So you want to find somebody who actually
Speaker 3: has pricing power because other people perceive them to be good,
Speaker 3: it says something.
Speaker 1: Yet there's something to be said for that.
Speaker 2: I was just going to say, because I think it
Speaker 2: would certainly interest people in this room and elsewhere in
Speaker 2: this part of the world. One of the things that
Speaker 2: Citadel is known for is how seriously you and your
Speaker 2: colleagues take the search for extraordinary talent. A number of
Speaker 2: investment firms have opened offices in this part of the world,
Speaker 2: whether it's in Doha, whether it's in Abu Dhabi, Dubai
Speaker 2: for example, or Riad.
Speaker 1: Have you thought about expanding here?
Speaker 3: Well, we actually just recently did an analysis of our
Speaker 3: competitor's footprints in a number of these cities as we
Speaker 3: try to think about what is our strategy here in
Speaker 3: the Middle.
Speaker 1: East, and you landed on the right issue. It's about talent.
Speaker 3: And when we think about our Middle East strategy, we're
Speaker 3: going to think about where are we going to draw
Speaker 3: the greatest amount of talent, both from the domestic country
Speaker 3: and from the international community. Too often countries try to
Speaker 3: attract talent by having very attractive tax attributes. That tends
Speaker 3: to draw in a handful of senior pms, but doesn't
Speaker 3: draw in the analysts and the associates who do the
Speaker 3: day to day work that's required to be successful in
Speaker 3: the markets. One of the reasons that I think CDELL
Speaker 3: has been so successful is the intense collaboration that we
Speaker 3: have within our four walls. A PM working side by
Speaker 3: side with an analyst, with an associate working through a problem,
Speaker 3: Having a PM located in a low tax jurisdiction on
Speaker 3: Zoom intermittently with a team back in London. That's not
Speaker 3: a winning formula. So when we think about where we're
Speaker 3: going to be in the Middle East in terms of
Speaker 3: our footprint for human cap it's going to be about
Speaker 3: a holistic solution where we've got people who are in
Speaker 3: the region, integrated tightly with pms who are here.
Speaker 1: The whole team is here and successful as a team.
Speaker 1: It explains a lot. Ken, thank you very much.
Speaker 2: Ladies and gentlemen, please join me in thanking Ken Griffin,
Speaker 2: thank you.