• Griffin shared hedge fund’s outlook in letter to investors
  • He said the firm predicts a ‘challenging’ economic landscape

Citadel founder Ken Griffin told investors he expects modest economic growth in upcoming quarters and cited US national debt as a “growing concern that cannot be overlooked.”

Griffin made the remarks in a letter to the hedge fund’s investors Monday.

In the letter, a copy of which was obtained by Bloomberg, Griffin said net interest spending is estimated to reach 3.1% of gross domestic product for 2023, citing Congressional Budget Office estimates.

That’s a percentage point more than the average from 1974 to 2023, the letter said.

“It is irresponsible for the US government to incur a deficit of 6.4% when unemployment is hovering around 3.75%,” Griffin said in the letter. “We must stop borrowing at the expense of future generations.”

Griffin said the firm projects that economic growth will fall below its potential in the next few quarters as the US Federal Reserve continues to battle inflation. But the firm contends consumers will benefit from an increase in real income owing to falling inflation and rising wages.

Citadel expects a challenging economic landscape in the medium-term, due to “both structural and cyclical factors,” he said. But the firm anticipates the fixed-income markets will improve as inflation eases, he added.

The firm’s flagship hedge fund gained 15.3% last year, with about $4 billion coming from commodities alone. It returned 38% in 2022. The multistrategy hedge fund has grown rapidly over the past few years and now manages about $59 billion, making it one of the world’s largest.

In the letter, Griffin said Citadel aims to create “the most formidable team in the history of hedge of funds.” The hedge fund and electronic trading firm Citadel Securities received more than 100,000 applications this year for internships and jobs between them — accepting less than 1%, according to the letter.

The Wall Street Journal reported details of Griffin’s letter earlier Monday.

Written by: @Bloomberg

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