Ken Griffin, hedge fund billionaire and founder of Citadel, is reportedly increasing his focus on credit trading as he anticipates a potential recession.
“We’re much more cautious about 2024,” he told Bloomberg in an interview in Hong Kong, referring to his outlook for the United States. “We’ll look at the credit markets as a source of opportunity. Credit should be a meaningful contributor later this year,” he said.
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Griffin said Citadel is particularly focused on the high-yield credit market, with a mixture of long and short strategies. He expects the Federal Reserve to hike interest rates one more time this year and then pause for an extended period of time.
Wall Street cheered Tuesday’s inflation numbers with expectations about the Fed pausing its rate hiking cycle in June policy gaining momentum. The Nasdaq Composite closed 0.83% higher while the S&P 500 gained 0.69%. The SPDR S&P 500 ETF Trust SPY closed 0.66% higher on Tuesday while the Invesco QQQ Trust Series 1 QQQ rose 0.77%, according to Benzinga Pro.
Griffin also said it’s unbelievable how enthralled people are by generative AI. “Historically, technological innovation has led to the creation of more jobs. The issue is how will these technologies adversely impact certain sectors of the economy and certain types of jobs disproportionately,” he told Bloomberg.
On China: Griffin is optimistic about China as he expects the country’s economic growth to surpass the government’s targets. “There’s a general level of uncertainty as to the level of growth in China today,” he said. “We’re actually more constructive on growth and a bit north” of estimates for a 5% expansion, he said according to the report.
The billionaire investor also pointed out that Citadel remains interested in China for the long term. “Irrespective of who’s the U.S. president in the next cycle, I don’t think that’s going to change Citadel’s strategy” in China, he said. “The scale and scope of the Chinese equity market is incredibly attractive to us as investors.”
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