Citadel's Griffin Said Prolonged Trade War Will Slow Growth

(Bloomberg) -- Billionaire hedge fund manager Ken Griffin said tariffs are incredibly damning to consumers and companies and he hopes President Donald Trump is able to resolve the trade issues with China and other partners.

“The big picture is over the years we have generally left the table inferior to our trading counterparties and we need to address that,” Griffin said at the CNBC Institutional Investor Delivering Alpha Conference in New York on Wednesday. He said that he agreed with Trump that deals needed to be renegotiated but declined to comment on whether the president is following the right course of action.

Griffin, the founder of $30 billion Citadel, said that tariffs make it difficult for companies to understand where they should build their next factory and how much they should invest in their future, adding that a protracted trade war will slow global growth.

"This is not where we want to be for a prolonged period of time," Griffin said.

Griffin said that while risks to the economy are more to the downside compared with 18 months ago, he expects the U.S. to experience strong growth over the next six to nine months. He expects that the Federal Reserve will follow through on two interest rate increases for the year and then will slow down heading into 2019 to see the impact of tax cuts.

“I think the Fed’s going to be very considered in their decision to raise rates a third and fourth time,” Griffin said.

Griffin said former Fed Chairman Ben Bernanke, who works for Citadel as an adviser, is constantly speaking with the hedge fund about interest rates. "We aren’t seeing meaningful wage growth yet," Griffin said.

Italy Risk

The hedge fund manager said he and his senior leadership team are deciphering the biggest risks Citadel faces. He said his firm carefully controlled its exposures to Italy and southern Europe.

"Italy leaving the EU would be more than a speed bump, it’d be catastrophic," Griffin said.

As German Chancellor Angela Merkel’s power wanes, he said, it’s unclear how the question of Italy will be dealt with.

©2018 Bloomberg L.P.

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