Citadel's Ken Griffin Sees 18-to-24 Months Left in Market Rally

(Bloomberg) -- Ken Griffin, chief executive of hedge fund firm Citadel, said that there are at least 18-to-24 months left in the market rally, thanks to the "giant adrenaline shot" of the U.S. tax overhaul.

"We are in this debt-fueled buying binge," he said at the Bloomberg Global Business Forum in New York Wednesday. That’s laying the seeds of the next financial crisis, said Griffin.

Griffin cautioned that he’s managing his fund for the next economic downturn. “My position today is very much focused on managing the tail risks” for that, he said.

The hedge fund manager said his biggest concern is the European Union, because individual nations like Italy and Spain can’t print euros to rescue their own economies.

“Every crisis in the West for the last 50 years has been ultimately solved by intervention of governments,” he said. “There has been a huge sea change that has taken place, which is in the EU, the individual governments can no longer issue debt in their own currency.”

The ability of “those countries as sovereigns to rescue their financial system in the next crisis is greatly diminished or not even there,” he said.

Next Two Years

In a separate panel discussion, incoming Goldman Sachs Group Inc. CEO David Solomon said he also sees greater risks to the U.S. economy, not in the next 12 months but “as you get out to 24 months.”

“The chances go up materially -- now I don’t know what materially is -- is materially 50 to 60 percent? It’s definitely more,” he said.

Griffin said the U.S. economy is “running hot now” thanks to President Trump’s actions.

“The Trump policies, whether deregulation or tax reform, are certainly pushing corporate America to go, go, go,” he said, citing low unemployment and meaningful wage growth.

Other highlights from the panel at the forum include:

  • Mary Callahan Erdoes, head of JPMorgan Chase & Co.’s asset and wealth management business, said that currency prices and housing prices in certain parts of the world today are too good to be true.
  • Jim Coulter, co-CEO of private equity firm TPG, said the markets have been powered by an incredible tech boom and global trade. He’s thinking about the potential other side of both when positioning for the future.

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