‘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 price by 0.75 proportion factors for the third time in a row.

“Everyone 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 growing rates of interest was an “awkward device” to chill the economic system however acknowledged the Fed is proscribed in what it may possibly 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 underneath management.

Regardless of the gloomy outlook, Griffin mentioned the Fed wanted to stay with its marketing campaign to tighten financial coverage. “We must always proceed on the trail that we’re on to be sure that we re-anchor inflation expectations,” he mentioned, so individuals 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 elementary supplier of power,” Griffin mentioned. “In truth when it got here to Nord Stream the entire level that president Trump had about ‘no to Nord Stream’ was making an attempt to cut back European dependency upon the Russians for power. And guess what? [He] was proper.”

Griffin’s hedge fund has been among the many greatest performing within the business this 12 months, with the flagship multi-strategy Wellington fund up greater than 28 per cent to this point in 2022, based on a supply conversant in the agency.