‘Only a query of when’: Citadel’s Ken Griffin predicts US recession

Billionaire investor Ken Griffin has warned there will likely be a recession within the US and mentioned the Federal Reserve must do extra to deliver down inflation, days after the central financial institution elevated its benchmark charge by 0.75 proportion factors for the third time in a row.

“All people likes to forecast recessions and there will likely be one,” he mentioned at CNBC’s Delivering Alpha convention in New York on Wednesday. “It’s only a query of when, and albeit, how exhausting.” A recession may occur as quickly as subsequent 12 months, he added.

The founding father of hedge fund Citadel and market maker Citadel Securities mentioned rising rates of interest was an “awkward instrument” to chill the economic system however acknowledged the Fed is proscribed in what it will probably do to curb inflation.

Griffin joins a rising refrain of voices predicting ache for the US economic system, together with Fed chair Jay Powell who final week mentioned there was not a “painless approach” to deliver inflation below management.

Regardless of the gloomy outlook, Griffin mentioned the Fed wanted to stay with its marketing campaign to tighten financial coverage. “We should always proceed on the trail that we’re on to guarantee that we re-anchor inflation expectations,” he mentioned, so folks don’t begin to deal with inflation of 5 or 6 per cent because the norm.

Earlier within the day, Stanley Druckenmiller, a veteran of the hedge fund business, adopted a fair gloomier stance. “We’re in serious trouble,” he mentioned, including that he can be “shocked” if the US doesn’t tip right into a recession subsequent 12 months.

Griffin drew a distinction between the US and Europe, which he believes may already be in a recession due to excessive fuel costs.

He mentioned former president Donald Trump had tried to wean the continent off of its dependency on Russian oil.

“Europe was prepared to belief Russia as its basic supplier of vitality,” Griffin mentioned. “In truth when it got here to Nord Stream the entire level that president Trump had about ‘no to Nord Stream’ was attempting to cut back European dependency upon the Russians for vitality. And guess what? [He] was proper.”

Griffin’s hedge fund has been among the many finest performing within the business this 12 months, with the flagship multi-strategy Wellington fund up greater than 28 per cent up to now in 2022, in accordance with a supply aware of the agency.