Ken Griffin says there will be U.S. recession, but it's a matter of when, how hard

Larry Busacca

Citadel Founder and CEO Ken Griffin believes there will be a recession in the U.S., though it's a question of when and how hard.

"We're very focused on the possibility of a recession," he said Wednesday at the CNBC Delivering Alpha Conference in New York City.

Bearing in mind its dual mandate of stable prices and full employment, the Federal Reserve, which is battling the highest level of inflation in 40 years, needs to "reassert its credibility" after it was partly lost when financial conditions loosened somewhat during the summer, Griffin said. Of note, the central bank wants growth to slow via tighter financial conditions as it seeks to bring demand and supply dynamics into better balance, though some believe its hawkish efforts will tip the economy into recession.

DoubleLine Capital CEO Jeffrey Gundlach, for instance, recently contended that the fed's interest-rate hiking marathon has become too aggressive in a move that will drive the economy into a downturn.

"It's important we don't let inflation expectations become unanchored," Griffin emphasized, noting that engineering a soft landing is "possible," though "it's a tough job" for the Fed to pull off.

He contended that the traditional 60-40 portfolio offers a "better value proposition" now with the 10-year Treasury yield (US10Y) hitting 4% earlier Wednesday - the highest level since the height of the great Financial Crisis - than when the 10-year changed hands at just 1% in 2020. Citadel's founder said the stock market is "looking pretty good compared with economic conditions" even with the S&P 500's (SP500) 23% slump year-to-date.

Earlier, Stanley Druckenmiller said he hopes the fed will "stick to its guns" with hawkish monetary policy.