Citadel's Griffin says U.S. rally not over, inflation a worry: CNBC

[June 08, 2017]  NEW YORK (Reuters) - Ken Griffin, founder and chief executive of hedge fund firm Citadel LLC, said on Wednesday that the run-up in the U.S. stock market was not over but that investors should be worried about rising inflation.

"I think this business cycle has further to go. I think the stock market is going to go with that, but what’s worrisome is, the firepower that we have to address the next downturn is somewhat constrained," Griffin told cable television network CNBC.

Griffin, who is also the founder of market-maker Citadel Securities, said he was particularly concerned given the high degree of easy monetary policy.

“If we look at history, we’re not yet at the end of this business cycle. What’s somewhat disturbing, though, is ... we’re getting closer to that moment in time with yet an enormous amount of accommodative monetary policy, which means that the degrees of freedom to navigate the next downturn are going to be constrained," he said.

Griffin said investors should be most concerned about rising inflation and cited the low U.S. unemployment rate and increases in U.S. minimum wages. The U.S. Labor Department reported last Friday that the unemployment rate fell to a 16-year low of 4.3 percent in May.

"We need to start to worry about inflation raising its head," Griffin said. "I’m not saying it’s going to happen, but the complacency about inflation is really I think the one area investors should be most worried about."

Ken Griffin, Founder and Chief Executive Officer of Citadel, speaks during the Milken Institute Global Conference in Beverly Hills, California, U.S., May 1, 2017. REUTERS/Lucy Nicholson

Griffin, who has said in the past that he supports breaking up the largest U.S. banks, said he was in favor of bringing back Glass-Steagall. The Depression-era Glass-Steagall Act separated commercial lending from investment banking.

U.S. President Donald Trump pledged during his campaign to restore Glass-Steagall, and Bloomberg Television reported last month that Trump said he was actively considering breaking up big banks.

Griffin also told CNBC that he worried about the cost of healthcare, saying, “we need to start to change the cost trajectory of healthcare."

(Reporting by Sam Forgione; Editing by Lisa Shumaker and Steve Orlofsky)

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