Bloomberg Audio Studios, Podcasts, Radio News. I want to go back to something you said a little bit earlier, this notion that it's hard to see whether this is a one time hit to inflation or whether it's more persistent. Ultimately, what do you think? I mean?
Ultimately, any effort to force manufacturing back onshore into the United States is going to be inflationary. There's no doubt about it. And what frustrates me on this is that one of the reasons that Trump won the election was the American people had had enough inflation. They wanted a break from seeing their standard of living deteriorated by the
ever increasing price of goods and services. And so I really do think that the president needs to think long and hard about the necessity of helping to protect the standard of living of the American people by keeping the inflation like. It's not a genie, it's like the inflation devil in the bottle.
So what does this mean for FED chair Powell? How difficult does this dynamic make his job? And do you think his job is secure through May of twenty twenty six.
I gotta tell you, I'm really happy not to have his job, but he is the biggest no win job in the country because through the lens of hindsight, we will always be able to second guess every single decision he makes. Right here, right now, he's grappling with do you cut rates as the labor market shows ever so slightly signs of softening, or do you hold the course because of the risk of an inflationary spite coming from tariff increases. He's going to have to make that decision
based upon evolving policies over the weeks ahead. It's a really tough predicament he is in right here, right now.
Ken, it sounds like you have doubts that the American economy can be easily transitioned into a manufacturing one. What are the chances of making that work? And do you think that it's a realistic goal.
I mean, look, there's a great video clip from Dave Chappelle and it goes something like Americans want to wear nikes, not make nikes, And I think you spot on. I don't understand why we think it's a virtue to bring back to America low skilled jobs in manufacturing. I completely agree with the President. We need the ability to ramp up our manufacturing base to strengthen our national defense. Spot
on right. But I don't think the American people are looking for a return to low skill, low pain manufacturing jobs in our country. I don't think they want those jobs. I think they want jobs where we are building high value added products, successful businesses, building high value added products, where you can create jobs in that factory floor that
are well paying jobs. Those are the jobs we should aspire to create in our country, not jobs that right now China is actually trying to move to other even lower cost labor countries. Why do we want those jobs here in America.
I'd love to see this from your position leading Citadel and also your message to Citadel Securities employees, what do you tell them to navigate all of this volatility?
So I will tell you that from my portfolio managers, it has been it has been several really challenging weeks because every couple of days there's another big headline M. Bloomberg that we need to react to and we need to reshape our portfolios with respect to It's been a really difficult time for fundamental investors because so much of the value the companies that we invest in is being dictated by very quickly changing policies from Washington.
So your best way to navigate that.
I think in retrospect, perhaps holding cash would have been the best way to navigate this. But that's so contrary to our culture of always trying to be on the offense, always trying to find ways to create value in the markets.
Is there something fundamental that's changing about the way you approach markets?
Look, I fundamentally believe that this period of instability that we're going through will come and go. Like fundamentally, I believe that as the Trump administration moves through time, as policies become solidified, the economic backdrop or against which one invests capital will become easier once again.
Now, when you look at the tax bill, it looks like the direction of travel is such that you have four trillion in tax reductions, but one point five billion here in spending required one from a trillion, very sorry trillion with the tea. How is that going to close the US deficit?
Well, I mean what's clear is that the numbers that we talk about in America are almost incomprehensible billions and trillions.
I mean, it's just unbelievable how big government in Washington has become and I think one of the areas that the Trump administration is focused on is how to reduce the scale and scope of spending here in the United States, whether it's the efforts at DOGE or the debates that are happening right here right now as we speak about, for example, medicaid and the cost of medicaid to the States. The Trump administration's really thinking about how do we help
to solve our nation's spending problem. And then at the same time they're grappling with what is the right tax policy that helps us to pay for the promises that we've made to the American people and yet ignite them a maximum amount of growth that we can achieve in our economy. Because when it's all said and done, the only way the United States will solve for the problems it's made to its people is for us to far more rapidly grow our economy.
What role is de regulation going to play in that?
Well, I mean, deregulation is clearly already in one of the huge accomplishments of the Trump administration. And why do I say that, Because the onslaught of new regulation has stopped that in and of itself has been incredibly powerful for corporate America, the ability to focus on growing your business again without worrying about what new rule it's going to be imposed upon you from Washington. Now, having said that, the efforts to do regulate are going to be more
slow because it takes time to re underwrite. Why was the regulation put in place to start with? How does this regulation serve the interest of the American people? It takes time to think awfully deregulate our economy.
Now your companies have a footprint all over the world. Are you seeing investors hedging against US instability, diversifying away from US stocks or even US treasuries given the changes and the uncertainties that still exist around them with the administration.
I think there's been two very strong realizations by investors around the world. First, there was a bit of a knee Jork reaction to pull back from the United States to be anxious spout investing in America given the stance and changing stance we took in areas light trade. But then there's also just a realization that no country in the world enjoys the rate of innovation and commercial development
that we enjoy here in America. And so you have these two competing arguments that investors around the world are grappling with, is the United States going to be a real, liable, ally and economic player in the world markets? And compare and contrast that with the reality that if you take a step back, no country in the world other than perhaps China, comes anywhere close to America in terms of the rate of innovation and creative energy that goes into growing our economy.