Citadel's Ken Griffin says the economy looks 'fairly damn good right now'

Ken Griffin, founder and chief govt officer, Citadel

David A. Grogan | CNBC

The market has managed to place behind the “financial nervousness” it confronted as just lately as the fourth quarter of 2023, based on Citadel CEO Ken Griffin. 

The hedge fund supervisor stated Tuesday {that a} gentle touchdown may occur this 12 months, with latest information indicating a stable labor market, wholesome GDP development and inflation moderating at a greater tempo than anticipated. Inflation may even fall into the low 2% vary by the finish of 2024, Griffin famous.

“The [Federal Reserve] can begin to minimize charges come this summer time, and we’ll see unemployment contact up somewhat bit. But the total economy looks fairly damn good right now,” Griffin instructed CNBC’s Leslie Picker on Tuesday at the MFA Network occasion in Miami. “This is an actual change in mindset from the place we have been September, October final 12 months.”

The Fed kicked off its first financial coverage of the 12 months earlier Tuesday. The central financial institution is anticipated to maintain charges unchanged, however the market is pricing in a number of price cuts later in 2024.

However, Griffin famous that the present degree of federal spending has created an economy that “feels actually good right now,” however may come at a value. “This authorities spending has acquired to get in examine. It’s creating [a] little bit of euphoria right now, however it’ll include a hangover,” stated Griffin. 

While the mixture of reducing charges and excessive ranges of presidency spending is inflationary, Griffin stated the power and meals worth shocks that occurred two years in the past are actually reversing, in addition to a slight pullback in hiring. He thinks this has helped create an “simpler setting” for the Fed to navigate in its battle in opposition to inflation. 

Taiwan issues

Griffin stays involved by the financial dangers of tensions between the U.S. and China, notably with regard to Taiwan. The island’s semiconductors are essential to many U.S. corporations, he stated. 

“If there have been a rupture round Taiwan, it might be catastrophic to each the Chinese and the American economy — and by catastrophic, I feel you are taking a look at Great Depression circumstances,” stated Griffin. 

The U.S. GDP may take successful of 8% to 10% if it misplaced entry to Taiwanese semiconductors, which means peace between Taiwan and China is “necessary as a matter of nationwide financial safety,” per Griffin.

Griffin’s remarks come as the S&P 500 hovers close to report highs together with the Dow Jones Industrial Average. The broad market index has gained 3% already, constructing on its 24% acquire from 2023. The Dow is up practically 2%.

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