Ken Griffin Talks Trump VP, Middle East Growth

Bloomberg Audio Studios, podcasts, radio news. Ken Griffin, thank you so much for joining us here in Doha. Eric, it is great to be here today. We have a lot to talk about as usual, folks.

I have been fortunate enough to have a long standing relationship with Ken and have had the opportunity to interview him many times.

I think of this as.

An evolution in so many ways, Ken, of things that we've touched on in the past. One of those things, of course, is geopolitics, a subject.

In order a graceful way to describe aging an.

Evolution, geopolitics is a subject that has come up already many times on this stage.

Ken.

The world, as you know, is divided by conflicts. We have hot wars in Ukraine and Gaza, and a cold war you might say, between the United States and China, and increasingly these conflicts are forcing states to pick sides, and thus they're realigning global trade and investment. What we'd like here, Ken, is your perspective on the trajectory of these geopolitical trends and your ideas as to how they're

So that's a great question because it was just a few years ago that I think most of us viewed the world as heading towards geopolitical stability.

A better place in other words, yeah, yes.

And a more integrated market, both financial flows of goods, flows of services, and.

Even the integration of labor markets.

And now with both the war and Europe, the tension between the United States and China, and then in a different way, what's on in the Middle East between Israel and Hamas, it's very clear we live in a different world than we had all experienced and fantasized about just a few years ago. Now, the upshot of this is that the traditional alliances post World War Two are regaining strength.

So there is definitely a reassertion.

Of the importance of global institutions, and in particular the post World War two.

Frameworks that are once again at play.

As an investor, it's an interesting point in time because if you are in the United States, there's a sense that deploying capital in the markets of our clear.

Allies is to say its path to go.

In fact, you'll often hear American money managers, for example, say that China is uninvestable because of.

The tension between the United States and China.

That's on clear display. And yet if you're here in the Middle East, where China is an important importer of oil and other products from across the region, it's a very different story. China is clearly investible because of the closeness form between China and this part of the world. So you do see both the restrengthening of historical relationships, new ties being built, and capital follows.

The flows of these geopolitical arrangements. Are you worried about the direction of the world is headed.

Of course I am, and I'm willing to bet that you are.

Also.

This is not where we want to see the world head for just a number of obvious reasons. I mean, first of all, global trade, which had adverse consequences that we're learning about to this day, still unleashed an enormous amount of gain for humanity. And with the rise of global trade became the rise of information sharing, around the world, which rapidly accelerated the trajectory of mankind. I mean of note the Chinese, for example, our leaders in solar.

Their leaders in EVS, their leaders in.

A number of emerging technologies, and a world which is more splintered will see the gains that the Chinese have achieved in these important areas not shared by the Western countries. And conversely, the United States is a clear leader in Ai along with a number of the European countries, and those gains will not be shared with China and the countries in its sphere of influence.

So it's a very.

Clear cut loss for all of humanity when we have the severing of ties between our countries.

On a practical level, is it getting harder to manage the risks you face?

I think that one has to be aware that there are more tail risks that are harder to ultimately manage, and that goes with this rise in geopolitical complexity. So I think that's that's certainly true, that there are just larger tails today that didn't exist or we didn't perceive them to exist seven or eight or ten years ago. So that's that is intrinsic and money management today, and that's the wit we think about each and every day at Citadel is how do we mitigate the tail risks in this world?

How do you mitigate the tail risks?

Well, part of its sizing, so part of it is how much exposure you have to a strategy or to a particular sector of the economy or to a particular country. That's that is the go to playbook from manage in your tails is just what's the most you're willing to have exposed to a possible adverse event. And then the other strategies to look for correlated payoffs that will protect you in the event that.

The tail scenario occurs.

So those are two things that you do in your portfolio construction to manage against the.

Tail risk in this environment.

Ken moments ago, you mentioned China and EVS. As it happens today, the Biden administration is levying sweeping new tariffs on Chinese imports, including on electric vehicles.

How does that change the picture.

It's sort of a continuation of the incoherent economic policies of the Biden administration.

We've seen this giant push.

Towards green energy over the course of the last several years, and at the same time, a set of policies that run completely contrary to the stated goal of trying to head towards the zero carbon world, and placing enormous tariffs on Chinese evs, which are low cost, high quality, of great value to American consumers is yet another part of the incoherent bid economic strategy. The other part of the strategy that I scratched my head about is the US

And also to sell LNG to countries with which the United States doesn't have a free trade agreement.

That's a part of the equation.

Also that I said, the United States amazingly is a bigger LG exporter than Kutar.

We're and neck. We're neck and neck.

And it's very important to understand that if you want a country to base its economy on natural gas, they're going to want two suppliers.

It's not a wind lose is dynamic between the United States and Qatar. It's a win win.

If you look at any good that is required on an existential basis, you're going to want dual source supply. And the rise of the United States is a major lergy exporter only strengthens the position of this region of the world in providing natural gas to other countries.

Going back to China for a moment. We've talked about China in the past. You have what I would call a constructive view of China, certainly more constructive than many people with whom I've spoken. There is, however, strong hostility to China among both Republicans and Democrats. So how would you explain the way you look at the opportunity and the problem that China presents, particularly to the United States.

So that's a treacherous question to have to answer. Let's take a huge step back. I think that my view towards China is rooted in respect. It is rooted in the respect of a country that has pulled more people out of poverty in the last forty years than than any country in the history of the world. It's a remarkable economic achievement that they've unleashed in China, and it was an economic achievement that the United States firmly supported.

It didn't happen.

The economy rose, did not become a liberal democracy. Having said that, today, China is a powerhouse in research and development in a broad number of fields, fields that are very important to the future of all of us around the world. And so long as we're able to maintain a constructive relationship and we can share the best technologies that are to countries and all the countries around the world develop and build, there's an.

Opportunity for gain.

Right now, we have in some sense a very muddled relationship, and it's almost as if we're trying to maximize the opportunities for mutual pain. And that's a difficult place to be. It makes the Chinese weary of trusting the United States. It makes the United States wary of trusting China, and there's just a lot lost in that equation.

It would make sense if what the United States wants to do is make an enemy of China, but that's not clear.

Well, you know, I don't want to make this a US only is going after China.

It's a two way street.

I mean, the Chinese for ample supporting Russia's ability to wage warn Ukraine doesn't play well in the United States of America. So there's room for both countries to take definitive acts to just turn the temperature down. And well, if it's a coal word, it's to turn the temperature up.

And with respect to Hamas, you've been outspoken about the pro Palestinian protests back in the United States. They've royal university campuses. You've been particularly critical of your alma mater Harvard. Here's my question to you. When people here in the Gulf region and across the globe for that matter, see the chaos at Harvard or Columbia or USC or MIT and police and combat gear moving to clear accountments, how do.

You think that shapes their view of America? Not well? Not well? And what is lost is that what's happening on campus is not is not free speech. It's anarchy.

You know, in Columbia, when they storm a building, they vandalize a building, they're destroying property, and then they ask for humanitarian aid, which is the greatest of all ironies. It's just the wrong It is the wrong dynamic that we're seeing take place in American campuses. These are students. Most of these students on campuses are trying to learn.

Can people here?

And I suspect those watching us around the world are eager for your insights into what might happen during and after the US election.

How might US.

Foreign policy and defense policy change if Donald Trump were to return to the White House.

So if President Trump returns to the White House, I think you'll see a global perception of a stronger America.

Now.

The Biden administration's form policies, the actual policies are generally speaking thoughtful, but to be blunt, America does not exude credibility or strength in its actions around the world today. That our positioning does not match the thoughtfulness of our policies. That's a very difficult place to be in a world which has the geopolitical cross currents that we spoke about earlier.

To see happening.

And I think that anybody who knows President Trump knows that is not somebody you just pushed to see what's going to happen. That's the wrong strategy with President Trump. And so I believe that President Trump will have very good people in foreign policy and in the Department of Defense. But I think he will exude a level of strength that will help to stabilize the world in this very, very trying times.

There has been flagging support for aid to Ukraine. The publican party with Donald Trump abandoned Ukraine.

No, he will not. You're certain of that. Well, this goes back to my earlier statement.

You could never be certain about President Trump, and that's part of the reason that he is more intimidating to our adversaries. You never know exactly what the response is going to be. But knowing a number of people that he's close to, and having actually brought this topic up, I think that President Trump feels he can find an off ramp towards peace by reaching across to Putin and

What do you think he'll do with economic policy. It's difficult to know.

So neither administration gives me comfort in terms of a willingness to reduce federal spending. But I have no doubt that a Trump administration would be far less oriented towards regulatory overreach and far more thoughtful about the role of the US government in the day to day US economy.

We have talked in the past about America's tendency should we say to spend more money than it generates in text revenue? And you have warned ken of some catastrophic consequences if deficit spending isn't brought under control. What is the catalyst for an American debt crisis going to be?

So I don't know what that moment will be when there's an auction that goes awry, or when the markets become dislocated. Financial markets, generally speaking, work very well until they catastrophically come off the rails. You don't necessarily get a lot of warning that there's about to be a big event. The crash of eighty seven is a great

Capital markets as we knew them.

There was no warning, And so I worry that the debt crisis may have a similar construct, that they'll simply be a day where a major auction fails and then you see a panic start to brew in the treasury market, and the question will be will be how fast will the Fed intervene?

What panic will that induce?

Because government intervention under duress often just creates more panic.

And then do we see a flood of treasures.

Coming back into the market from holders around the world's frightening respect, it is back to politics for a moment.

You've been a prominent donor.

I would say to Republican candidates, I'd like to know how are you going to spend your money? How are you already spending your money ahead of the election in November.

So I have been a significant supporter of Republicans that stand for personal freedom, national security, and economic soundness.

The United States.

That has been a big focus of mine in this primary election or this primary cycle. I want to see people in the House and in the Senate that represent the best of American values and backgrounds.

That prepare one to serve in public service.

In the last election cycle, I supported a number of people who were veterans just and who are now serving our country in the House, and they do it with the pride that our country deserves, and they do it with the integrity that our country needs. So I've been very focused on finding candidate who I think represent the best of American values to be part of.

The future of the Republican Party.

People probably want to know, have you donated to Donald Trump's campaign, either directly or indirectly to a pack or a super pack?

I have not, will you? I'm going to wait to see what he picks his VP candidate. Is there anyone whom you'd like to see him pick as his VP candidate? I know I don't. This is again like poking the bear.

Not sure which way my recommendation goes in terms of helping that person's prospects.

I think that's wise position to take. Before we finish ken This region is blessed with resource wealth and as a result, sovereign wealth, so much so that pretty much every major asset manager in the West sees the Gulf as something of a honeypot and is trying to raise money here. As someone who isn't raising money here, how would you advise the sovereign wealth funds in the Gulf region to maximize their negotiating leverage.

So either I'm going to be excommunicated from the circle of my fellow money managers or never invited to come back to the Middle East again?

Is that? Is that the position E're putting me in?

So look, here's what I think is important to think about. I think alignment between the interests of the money manager and the sopoire well fund are very important. And I think it's more important to have your money and trusted with the firm that is going to act continuously in your best interest as an investor than it is to try to pick somebody who simply has the lowest fees or some other superficial demarcation of being open and transparent.

How aligned are.

They with me and in both in the good moments and the bad moments.

Are they going to put themselves.

In the shoes of their clients and make the right decision by their clients.

It's citing. I take great pride that almost over.

Twenty percent of the capital in our hedge funds is the capital the partners and the team members at Citadel. We wake up every single day as co investors with our capital providers, and I think that symbolizes what I would think about looking for if I were a member of the soccern wealth community here in the Middle East.

One last thing among the men, any distinctive qualities that citadels.

Just by the way, when you're going to pick a brain search, did you find the doctor.

With the lowest feet? That's not what I would do.

No, Right, So you want to find somebody who actually has pricing power because other people perceive them to be good, it says something.

Yet there's something to be said for that.

I was just going to say, because I think it would certainly interest people in this room and elsewhere in this part of the world. One of the things that Citadel is known for is how seriously you and your colleagues take the search for extraordinary talent. A number of investment firms have opened offices in this part of the world, whether it's in Doha, whether it's in Abu Dhabi, Dubai for example, or Riad.

Have you thought about expanding here?

Well, we actually just recently did an analysis of our competitor's footprints in a number of these cities as we try to think about what is our strategy here in the Middle.

East, and you landed on the right issue. It's about talent.

And when we think about our Middle East strategy, we're going to think about where are we going to draw the greatest amount of talent, both from the domestic country and from the international community. Too often countries try to attract talent by having very attractive tax attributes. That tends to draw in a handful of senior pms, but doesn't draw in the analysts and the associates who do the day to day work that's required to be successful in

The whole team is here and successful as a team. It explains a lot. Ken, thank you very much.

Ladies and gentlemen, please join me in thanking Ken Griffin, thank you.