WHEN: Today, Monday, September 18, 2023
WHERE: "CNBC Leaders: Ken Griffin"
Tonight, CNBC's Sara Eisen sits down exclusively with Citadel CEO & Founder Ken Griffin for a wide-ranging interview to discuss a variety of important, hard-hitting financial topics including the market & the Fed, whether Griffin will be backing Governor Ron DeSantis as a presidential candidate and his thoughts on the new movie, "Dumb Money," about the meme stock phenomenon. Following is an excerpt from the unofficial transcript of the interview and to see the full interview, watch "CNBC Leaders: Ken Griffin" tonight, Monday, September 18 at 8pm ET on CNBC.
All references must be sourced to CNBC.
SARA EISEN: We've been talking, Ken, a lot about the political landscape and bringing in leaders to address some of the priorities that you have, like education and the deficit. I think a lot of people are wondering if you're still backing Ron DeSantis. You did publicly but haven't spoken about it in a while.
KEN GRIFFIN: Well, I think if we go back, though, to what's important to me, education, I think education's important to almost every family in America. Ron DeSantis and the topic of education has done a great job in Florida. There's a foot fault in the last few months that I don't really care for. But overall, he has done a really good job of expanding access to charter schools in Florida, and in making it very clear in Florida we're going to focus on phonics, and reading, and mathematics. And we're going to keep ourselves outside of the culture wars that have consumed way too much air time, in my opinion, in way too many classrooms across the United States.
EISEN: So you backed him on the "Don't Say Gay" bill in Florida?
GRIFFIN: Well, so the first version of "Don't Say Gay," which was to keep the dialogue around sex out of the classroom for kindergarten through third grade, I think he got that right. And in fact, one of my closest friends is one of the largest supporters of gay rights in the United States. And I specifically asked him about this legislation. I was very curious. What would he say about this given his lifetime commitment to fighting for gay rights? And he felt the same way that I do, which is kindergarten children, they're interested in baseball and butterflies. We don't need to be exploring what sexual gender they identify with when they're five years old. Now, I said there was a misstep. The expansion of that legislation through high school I think was a grave mistake. I think as children age, these issues because very, I mean, they become very real. It's part of the passage into adulthood. And to have access to your teacher as a resource to discuss and debate these issues I think is incredibly important. And I have a huge, huge belief in the importance of freedom of speech. And any legislation that curtails freedom of speech in this context with an adolescent student I think is a mistake.
EISEN: What about going after Disney?
GRIFFIN: You know, what like, from my heart, Ron won that war out of the, out of the gate. He should have spiked the football and walked off the field and it should have ended there. The ongoing battle with Disney I think is pointless. In fact, it doesn't reflect well on the ethos of Florida. You know, the mayor of Miami-Dade is a Democrat. She's really exceptional. And you know what she talks about with me? How can we make this a great state to do business in? Ron needs to stay on that talking point. And in his words and in his actions, make it clear to the entire United States of America, Florida is open to companies that want to create jobs, that wants to create innovation, that wants to build a future in our nation. And the fight with Disney runs counter to that narrative.
EISEN: Absolutely. So do you support him for presidency?
GRIFFIN: So we're now through the first debate. And I'll tell you what, I'm still on the sidelines as to who to support in this election cycle. I'm still on the sidelines. And in fact, it probably doesn't matter. Donald Trump has been made the martyr by the legal system. He's right now the runaway favorite in the Republican primary. And interestingly enough, there's no real contender against Joe Biden, who, with all due respect, it's time for him to enjoy retirement.
EISEN: Biden?
GRIFFIN: Biden. I—
EISEN: You've also called Trump a three-time loser.
GRIFFIN: Look, if I had my dream, we'd have a great Republican candidate in the primary who is younger, of a different generation, with a different tone for America. And we'd have a younger person on the Democratic side in the primary who would have his message for our country. And we'd have a debate around ideas and principles and policies to make this a great nation. We're not having that dialogue right now. And that's really concerning to me.
EISEN: So you're not, you're still on the sidelines listening to the debates. What, how are you assessing? How are you making that decision? What sort of issues are you listening for? Because it's not really clear what DeSantis's campaign strategy is.
GRIFFIN: I don't know his strategy. I, I'm in the same camp you are. It's not clear to me what voter base he is intending to appeal to. Factually, one of the best first-term governors in the history of the United States. Florida, under his leadership, crushed it during the pandemic. They've had just tremendous success. The last few months have been different. And sometimes success goes to people's head. Sometimes success means that the ecosystem that you live in changes. People no longer give you good feedback about the pros and cons of your policies. I don't know what happened in the DeSantis administration in Florida. I do know, first-term governor, just a phenomenal job. But that hasn't been how this last few months has played out.
EISEN: So which one do you worry more about, Trump or Biden?
GRIFFIN: I, you know, who do I worry more about?
EISEN: It sounds like you're not a fan of either.
GRIFFIN: I, both men have had important roles in American government. With Trump, we did beat the pandemic. And to his credit, a number of issues of national security, both defense and economically, he put front and center on the table. In fact, those issues have almost consumed both parties at this point in time, in terms of debate. But he did a lotta good things as president. But there were some dark, there are, you know, there are dark sides to that moment in American history too. I think it's time for him to move on. With Joe Biden, I don't know if the American voter wants to be deciding the president for 2026 and 2027 in the general election. And it may not be Joe Biden, given his health. So do you really want to go vote for Joe Biden when you, when you know deep down there's a really damn good chance he won't finish those four years as president? That's a very unusual place for the American voter to be, in making that decision to cast a ballot for somebody.
EISEN: I did want to ask you about China because I know you've been expanding the firm in Asia, and I think in China as well. There are questions about whether China's investable right now, given some of the geopolitical issues, the economy weakening, the debt problems. What do you think?
GRIFFIN: So we're at a moment in time where the two great superpowers of the world are far more distant from one another than they should be. We spoke earlier about the need for us to get our fiscal house in order. China has been a large buyer of U.S. treasuries over the years. Foreign countries fund our fiscal irresponsibility. We can't be in a geopolitical crisis with the Middle East, with China, with other countries that fund our debt, unless we're going to put our fiscal house in order. Now, to be clear, my first choice is to reduce dependency upon foreign capital to fund America. And we can get there by having better policies that encourage growth and productivity and higher real incomes for American families. Like, that's what the focus should be. But until we get there, we cannot destroy our relationships with those countries around the world that fund our economy. It's just, this is not the way to go.
EISEN: Are you investing in China?
GRIFFIN: We do invest in China. We've invested in that region for 30 some years. And there are some just incredible entrepreneurs in China. I mean, people who have been game changing, both in their economy and signaling to us in the West things that can be done. I mean, look at the incredible success that Alibaba had in payments. That's changed payments all over the world. And for emerging markets it's been an absolute home run in giving local merchants the ability to more readily sell their goods at a much lower cost point to their consumers. So a lotta really good things have come out of China's entrepreneurs. And I really do hope that we see, and this has been the trend, Xi continue to encourage that level of innovation within their economy.
EISEN: But there are questions about that. And now there are questions about just the economy in general, and whether they're facing something more serious on the debt side, credit event.
GRIFFIN: So they have challenges. Both of our countries have challenges. Both of our countries are dealing with an aging population. Their demographics are far more challenging than ours. He has to lead a nation that has had a one-child policy for a very long period of time which means that there are far fewer workers to support an ever-increasing number of retirees. Our country, because of immigration, doesn't suffer the same challenge to the same magnitude. Now, on that topic, though, it's really important that the immigrants who are coming to America get into the workforce as fast as possible. This idea that you could immigrate to America and then cannot be employed is utterly mind-blowing. Either secure the border or make sure that people who come here can support their families, find entry-level employment, and build careers. And if they build careers in America and they create value in America, that will help us deal with the retirement bill that we have coming due. And you and I both know the power of immigrants to this country has been profound. Almost half of all the companies in Silicon Valley were started by people where immigrated to the United States.
EISEN: So you're expanding Citadel, we talked about, in Asia a little bit. Also expanding it here in New York, in South Florida. Talk to me a little bit about the decisions that you're making when it comes to real estate because you're in building mode.
GRIFFIN: We are in building mode. But I think real estate is part of how we make sure that our teams have the best opportunity to collaborate together. The focus on New York, the focus on Miami, these are two cities in the United States that have a really important value proposition for young graduates from college. They want to be in New York City. They want to be in Miami. They want to be in these vibrant cities where they can be with friends, have a really good experience at work, and have a great life outside of work. And that's pulled us towards Miami, towards New York from other cities in America where the quality of life has deteriorated over the last several years on the back of a variety of issues that came out of the pandemic.
EISEN: Chicago.
GRIFFIN: Chicago in particular.
EISEN: You were worried about safety?
GRIFFIN: Safety in Chicago wasn't a worry. It was a reality. I had four colleagues mugged at gunpoint. I had a colleague stabbed a few hundred feet from our front door of our office. I had groups of kids rioting outside of our building and throwing shopping carts and items on passing cars. You can't run a world class financial institution in a city where anarchy exists. I mean, the building I live in, in Chicago, had 25 bullet holes in the ground floor. The store, the Dior store across the street, they'd drive a van through to help facilitate robbing it. That's anarchy. That's not crime. It's anarchy.
EISEN: You blame the local politicians?
GRIFFIN: Hundred, well, local, the governor, the mayor, 100%. The buck stops on their desk. When you're elected governor of Illinois, you're elected to keep the peace and he failed to do so.
EISEN: You think it's a better situation now in New York?
GRIFFIN: I think New York and Chicago are completely different today, 100%. New York, New York's at a interesting pivot point. Right now, things have clearly gotten worse. But I'll give Mayor Adams credit. There's a focus on fixing the problem. And there's an embracing of the importance of fixing the problem. In contrast to what I saw from J.B. Pritzker and Lori Lightfoot, which was in some sense just an acceptance of the issue, and almost a willingness to support that chaos and anarchy by reducing the ability for the men and women who served in the police department to just maintain safety on the streets. I mean, in Chicago, there was a game. It was a game. Could you hit somebody hard enough to knock them out cold on Michigan Avenue.
EISEN: That's terrifying.
GRIFFIN: That's terrifying. And you lost a third of the retailers in what McKinsey described as one of the five greatest shopping districts in the world.
EISEN: It's also a reflection, the buildings, of your strong views on people being at work. Folks at Citadel, they work in the office five days a week. And there are still CEOs that I talk to that are having trouble bringing their people back, especially in the technology sector, and that aren't requiring it.
GRIFFIN: You know, at this point, we've been back together for two years. People that don't want to be together have long since left. So I can't really use us as a talking point or model in the, for how other businesses should run. Because today, the people who are at Citadel have self-selected to being part of a community, which means that we have conference rooms full of people debating ideas and we have in person mentorship. And we have 100,000 college applicants. We have 100,000 men and women from the best universities in the United States and around the world who want to be in person. They want a career. They don't want a job. They want a career. They value mentorship. They value human engagement. And they're going to prosper with us. So I'm actually very optimistic about the generation that's coming into the job market today, that they have so much personal ambition to not only get ahead in life, but I give this generation credit, they want to leave a positive impact on the world that they're a part of.
EISEN: Being in person, but also, I think what would help that you are now the top earning hedge fund in history, surpassed Bridgewater last year, having another strong year, year-to-date I think the numbers were up almost 11%, outperforming other hedge funds. What is the, what is the secret sauce?
GRIFFIN: Well, I think that you talked about one of them already which is our team works together in a business where the flow of information and the debate and dialogue that goes around ideas happens in person is a firm that's very well-positioned from a competitive advantage perspective.
EISEN: And it's multi-strategy, which a lotta people don't understand.
GRIFFIN: Yes. it's a catch-all phrase today. We trade equities, good, old-fashioned stock picking. We trade fixed income securities, bonds, and currencies. And we trade commodities. That's what we do at Citadel day in and day out. We also lend money to corporate America and to companies around the world. So that's the pinnacle or the, not the pinnacle, but the foundation upon which we run the business. And then Citadel Securities is one of the largest market makers in the world. So we provide liquidity to retail and institutional investors across a broad array of products. And that team working together is a big part of our success story.
EISEN: Is there a strategy or an asset class that you're particularly excited about right now? I know commodities were a big hit last year, for instance.
GRIFFIN: Commodities have been really interesting for the last couple of years. And as the world undergoes an energy transformation, there are going to be a number of moments where the pricing of commodities will be in new territory. And firms that do better research, that have better insight will be better positioned to take advantage of those moments in time, to allocate capital more thoughtfully and more efficiently. So we're very excited about commodities. I'm really excited today about the fact that Arm is going public. Hopefully, this opens the floodgates to more of the unicorns going public where a lot of value creation opportunities exist for investors in our public markets. So today is a really important day. I hope this deal goes exceedingly well both for Arm, for SoftBank, for the underwriters, and for the investment community as a whole.
EISEN: Which is not to say that that you would invest or tell people to invest in Arm, just the idea that we're that we have opened the floodgates.
GRIFFIN: Yes, 100%. You know, one of the, one of the great, why is the United States so much stronger than most of the western world? It's that vibrancy in our capital markets from whether it's the investor at home, to your largest mutual funds like Fidelity, making independent judgments on the prospects for the businesses that will define the future of our country. And our capital markets is where these, this debate of ideas comes to rest in the form of liquidity and price formation. That's what happens in our capital markets. And it's the reason why after the great financial crisis, it's one of the key reasons the United States was able to put that dark moment behind us so quickly in contrast to Europe. It's also part of the culture that encourages so much new enterprise formation. We could talk about great American technology stories. It's a much more difficult conversation if we were in Europe to have. They don't have the Microsofts, the Nvidias, the Facebooks of the world. They don't have a culture of risk takers that has been so important to job creation and improving the quality of our lives here in America, or for that matter, around the world.
EISEN: "Dumb Money" comes out this week and you are played, there's a character that is Ken Griffin. This is about the GameStop saga. First of all, have you seen the movie?
GRIFFIN: I, I have yet to see the movie. It was the GameStop saga. Saga is the operative word.
EISEN: You lived through that. You've talked a lot about it. There's reports that you're not happy with your portrayal in the movie. Is that true?
GRIFFIN: I haven't seen the movie, so I can't really comment on that. I have a small vignette according to one of my friends who saw it and about 90 seconds of film time. Look, it's a story. I hope they produced a great movie. I will absolutely see it. And I hope that it has a lot of important lessons for American investors in it. You know, you want to be part of making the call on the right business that's going to be defining tomorrow. You want to be the investor in Nvidia. You want to be the investor in Apple when Jobs returned. You don't want to be the investor in a speculative bubble that eventually bursts. That's not where you want to be.
EISEN: GameStop or AMC.
GRIFFIN: GameStop. AMC. That's, I mean, the amount of money lost there by people who'd, who didn't have that money to lose is really sad.
EISEN: But there's also some questions about whether you're taking legal action, anything like that against the movie.
GRIFFIN: We're not doing, I have other things to do with my life.
EISEN: But I know you're upset about the actor who played you. I knew you were–
GRIFFIN: Nick Offerman?
EISEN: Yeah. You were hoping for—
GRIFFIN: I mean, like, look, if I could get Daniel Craig, you know, I'd prefer that. But, you know, Nick works great.