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Bloomberg Audio Studios. Podcasts , radio, news. Thank you so much for joining us tonight . Ken, thank you for the invitation. It is an honor to be here. Thank you so much for coming today . Now, this is the annual Citadel Securities Conference , and I think it's worth starting to recognize how much has changed since last year .
The world is now working on this technological advancement, which was once an experiment, and is now solving mathematical problems that were considered unsolvable 80 years ago . In a recent interview , I heard a story about someone who came home one Friday feeling depressed because AI can solve doctoral-level work in just a few hours .
I imagine this question is asked often, but how much has your perspective changed? However, things are changing very rapidly. Let's start with the future of work. How much have your views changed regarding the future of work and what AI can and cannot do? Therefore, after a year, it's certainly an astonishing change .
And that year, the progress in AI models was truly astonishing . And there is no doubt that AI is literally a game-changer in many fields . I gave a lecture at Stanford where I talked about how highly complex white-collar work, which used to take PhD or Master's degree holders four to six weeks to complete, can now be done by simply pressing a button on a keyboard and waiting a few hours to get the exact same answer .
And when I saw this and went home, it was Friday, but it was actually a very depressing moment . Because they see everything . We are seeing the threat to white-collar jobs become a reality . As a business owner, I've seen the competitive moat being bulldozed away . Yeah. And at the same time, I think this will be a golden age for entrepreneurs , a time for the formation of new businesses, and what a wonderful opportunity this will be for young entrepreneurs in this country .
Watching this rapid development unfold truly releases three emotions . And I believe all three of these things have real significance for our economy . For people building their careers in the sweet spot of what AI can do , the country needs to accept the risk of taking on those skills . For example, someone specializing in English-to-German translation has probably already lost their job .
And it's difficult to find a job that's almost a direct replacement for that work . That is precisely why risk-taking is necessary for the country . And it is needed in a very serious way. There has been discussion about it , but no action has been taken in that direction, right? For American companies , becoming more competitive means having to act faster .
We must innovate faster . We must create customer value faster . We need to find a way to reduce costs faster . However, in reality, all of these are very good for American consumers and the public . This force will compel American companies to make serious efforts , and as a result, American consumers will benefit.
And now, in this golden age of entrepreneurship, this is wonderful news for our country . This is because having people start small and medium-sized enterprises has a significant impact on employment . In particular, people with blemishes on their resumes have a real chance of landing a good job . Startups play a very important role in our country .
Startups hire people who are willing to work hard and who don't have perfect resumes . And for those who get the opportunity to join a startup, an entirely new path opens up for building their careers. This issue is not discussed enough in the United States . The importance of startups , especially how they can dramatically improve the careers of people with blemishes on their resumes , is not being adequately discussed .
And these startups will create a massive number of new products that none of us could have ever imagined . Ken, if you don't mind me saying that it sounds like your melancholy has turned into optimism. I think so, because our free market history has shown us to experience such transitions. And, frankly speaking, these transitions present real challenges for existing companies .
And while that may be difficult for people , ultimately it will make our lives better. There's no doubt that both you and I would rather live in 2026 than 1926 . They're not even comparable . And part of the story of how we write about 2126 will be about what happened at this moment, as told by AI .
As a business leader navigating these changes, could you tell us about some of the impacts these changes are having on you? About a year and a half ago, you said that AI cannot create or provide alpha . Has your opinion on that point changed? In short, ultimately, most of our business is based on fundamentals-driven investments.
In fact, I would argue that research is at the core of our business . It's similar to journalism . In other words, it's about whether you can tell the story correctly, or whether you can convey the narrative correctly . And trading is a way to monetize our research . Right? In other words , research is at the core of the business .
Do we understand the business model? Do you understand TAM? Do you understand unit economics ? Do you understand the incentives for management ? While fragments of AI can help to some extent in understanding things, ultimately, it is humans who construct the story. And how many times the future cash flow and future revenue should be allocated to that business?
How does this compare to other opportunities to invest capital? However, I still firmly believe that ultimately, the majority of the alpha we produce is a testament to the creativity, originality, and analytical skills of our team members who conduct outstanding research . And trading is a way to monetize it.
And in fact , the transactional part of the work is the most automated and technologically advanced part . Because if you can successfully monetize your research, you can operate a larger position and extract more alpha from your ideas . A truly crucial part of a portfolio manager's job is how efficiently they can trade to maximize the return on their research .
Furthermore, Citadel Securities' trading volume continues to break its own records. One of the contributing factors is this volatility seen in the market . Ken, I'd like to hear your opinion on this. Over the past week, Semistock has recorded its largest and longest-lasting losses since the financial crisis .
There are concerns about the postponement of the IPO and the meaning of AI . Has this market undergone a reset , and if so, was that reset necessary ? Look, I think people are actually conducting research in this market . Right ? If you've been involved in a program over the past few years with the theme of "investing hundreds of billions of dollars, or even a trillion dollars, in data centers to build computing on an unprecedented scale," which company in that story would be the bottleneck in the supply chain, generating unusually high profit margins?
So, who will be the biggest winner in this transformation? Will Microsoft or AWS be the gatekeepers for the underlying model? In other words, who receives the economic rent? However, in a sense, I intend to acquire all of them. Yeah. We will acquire a hyperscaler . We will acquire a chip company . We are acquiring a company that makes things we had never even heard of five years ago .
In South Korea, Taiwan, and Japan. And now we've reached a stage where people are becoming more discerning. Right ? We also recognize that very high profit margins can be seen in areas where supply constraints actually exist, such as DRAM and MLCCs. However, people are now beginning to look two or three years ahead .
How long will this situation continue? I don't want to sound pessimistic , but GPUs have very low operating costs, much like an airline. For example, if you sell seats on an airline that isn't full for $20 each, you'll make a profit from those seats. One reason the airline industry is a nightmare is that prices plummet the moment there is an oversupply .
In fact, I witnessed this firsthand during the construction of the telecommunications infrastructure in 2000 . We built a lot of dark fiber. And as soon as we built more fibers than necessary, I'm sorry to say that they shouldn't have been dark fibers . It was never needed , so it was never put into operation .
We built more fiber optic cables than the demand demanded . And communication fees have dropped dramatically. Is that the direction we're heading now? Yes, that's the question mark. When the supply of GPUs exceeds the demand for GPUs , the marginal price actually plummets. Yeah. And that fundamentally overturns the assumptions behind all the investments people are making today.
That's the first problem. And the second problem is, I think people stop and ask, "What is the lifespan of a GPU?" For example, even at this very moment, there are people who are getting extremely high prices for GPUs that are five or six years old . It probably won't last another five or six years.
Therefore, there are growing concerns that the same capitalization rates and revenue models used for chips 12 months ago cannot be applied to chips in their 7th, 8th, and 9th years . Therefore, I think we are really struggling to figure out how far this demand will carry us in the market . And the second issue is that while we talked about all the benefits of AI in our first conversation , there's another important story to tell .
American companies vary greatly in their ability to extract value from AI models . And the most sophisticated companies in the U.S. are now able to determine in a very sophisticated way which parts of their business require them to pay a very high price for cutting-edge models like OpenAI and Anthropic, and which parts can be run at a lower cost with open-source models .
For example, when you look at companies that have achieved truly remarkable things using AI in-house , you'll see that they are extremely careful in order to maximize the return on their spending . And I think every company in America is looking at the invoices to Anthropic and OpenAI and thinking, "Okay, now we have to figure out how to make this productive." "That will be the case in many fields , but in some fields there is a lot of waste, and people have to change direction accordingly .
So, is there an inevitable tension in the idea that LLMs are spending huge amounts of money ? The Wall Street Journal reported that Antropic mentioned spending $750 billion in the coming S-1 . Their spending is increasing at the same time that American companies are looking to cut costs and try to curb spending .
Ken , is there an inevitability between these two ? Yes, there is . So, you're clearly answering the question exactly as I asked it, aren't you? It's almost like you're leading me . Sorry. Yes, it was leading me . Yes, it was . And the question is, how much market will Antropic penetrate, how much market will Antropic penetrate, that is, will Antropic make its model essential?
Yes. For example, in the field of life sciences , Antropic is really figuring out how to treat cancer and other diseases. Will it reach a stage where it can contribute to life-threatening diseases? Will AI become completely indispensable to pharmaceutical companies worldwide , and will they be willing to pay exorbitant fees for its know-how and tools, which will be the key to unlocking the next century's medical treatments ?
In other words, what we do n't know is how high the fees will be as these models become more sophisticated and actually help solve problems that have plagued humanity for centuries . People don't know the answer , so it's often talked about as a bubble . Maybe it is a bubble. Ray Dalio thinks so. Howard Marks says he's watching the bubble .
BIS says there are echoes of the dot-com bubble . Is it worth noting whether this is a bubble or not ? What if this is a bubble, and at least a bubble that is about to burst in certain parts of various AI layers ? In other words, the big picture is that there is almost certainly a bubble in this field .
It's fleeting. And, Fundamental economic transformations are generally closely linked to bubbles . Got it? Remember 1999 and 2000. These were the metrics used to value internet companies . To be honest , some of these internet companies had pretty eccentric business models . But I think it would have been a good idea to have held onto Amazon stock back then.
The internet was a huge bubble, as you know, but is n't it more deeply ingrained in our daily lives today? I've told you this before , but a few years ago, I was updating my Xbox with my son . He was 13 at the time . He looked at me and said, " Dad, you lived before the internet existed ." I replied, "Yes , they were born after the dinosaurs went extinct ." "But there certainly was a life before the internet .
And now, it's like an idea that 20-year- olds can't understand . So, if I use that term, these bubbles often coincide with these massive technological transformations . Take railroads, for example . But, if I use that term , what remains after these bubbles is often something that changes the world.
And the companies on the other side of those bubbles become market leaders for decades to come . I think it's wonderful that despite everything you've done, you're still doing IT help from home and helping with Xbox updates. Well, a lot of people are looking at the sell-off happening in the market and saying, 'This is just hedge funds unleveraging their holdings.'" "Ken, you might know a little about it .
I want to know how you view this past week . How do you distinguish between a market reset, a fundamental difference, and someone having to liquidate, and a margin call somewhere ? And the common answer when everyone's losing money is that hedge funds are cutting their leverage . You know what? In fact, I've seen the entire industry cut its leverage to zero at least 10,000 times in the last 10 years .
I mean, every day someone calls and says, 'Oh yeah, hedge funds must be cutting their leverage.'" "Imagine what would happen if these hedge funds increased their leverage again ." Okay ? Therefore, the reason people prefer that answer is that it actually allows them to avoid responsibility. Yeah. Right?
The moment you start saying, "Oh, hedge funds are lowering their leverage," you can avoid responsibility . "No, no, wait a minute. Let's stop and think for a moment . Which prices are fluctuating , and why are they fluctuating ? What is it that we don't understand? What is it that we don't understand?
The moment I start making excuses , I stop learning . Right ? That's why I always want to put hedge fund deleveraging as the 10th answer on my answer list . And for 1 through 9, I want to think like this: "Okay, what is it that we do n't understand ? What do other people understand? What are the people at Capital, Fidelity, and Wellington thinking?" "What are the connections they've made that we're not aware of?" ” “ Yes.
Someone here knows the situation , and we don't. Let's find out . If we can't do that, if we've exhausted every conceivable means and still can't do it , then let's discuss who else might be doing debt reduction . But that would be the tenth option on the list, not the first. So, how does that perspective apply to what we saw with Situational Awareness this summer?
I think Situational Awareness was a fantastic move by any measure. According to all the reports , it was well-timed and sold in a rising market. Could you explain your thinking on how you would take risks when there's a clear moment of debt reduction and you're confident you'll jump in and be rewarded?
We've been involved in a lot of large-scale portfolio restructuring over the past 20 years. Like the Amaranth energy portfolio restructuring around 2006 and the Sowood restructuring in 2007. There are also several other deals that haven't received much attention or notoriety. However, as an asset manager and fiduciary, SituationalAwareness was in a situation where it needed to raise funds carefully .
So we provided a comprehensive solution to meet their need to raise funds and protect their significant year-to-date gains. This was a significant victory for investors. Let's be clear . They have made substantial gains year-to-date . So, in the end, investors should be pleased that, despite some struggles and the turmoil they faced, they have made a profit year-to-date .
When we see situations like this , we try to understand what forces were at work to create what happened. And when SituationalAwareness finds itself in more difficult situations, many of the faster-acting asset management accounts in the market will undoubtedly start acting ahead of expectations. That's what SituationalAwareness and its peers do, isn't it?
It's like a classic strategy in finance . When you think someone is in trouble , you try to predict what they will do next. Whether it's a defensive or offensive decision , you start turning possibilities into concrete realities. Right? So even if all you know is, "People with long positions in AI themes are in trouble and are risk- averse, so I'll either not buy that stock or reduce my exposure, " you start turning possibilities into reality.
Yeah. And Situational, just to be on the safe side , found itself in a situation where it needed to raise cash again . Now, what we have discovered at such times is that when you acquire a portfolio in that market environment, once confidence is restored and concerns about the portfolio being hit by an unexpected sharp sell-off disappear, prices generally rebound quite sharply .
And in a sense, we invested capital based on that theory . And it went fairly well . It was okay. However, it was a complex portfolio to buy overnight. We executed the trade within 24 hours , but to manage the risk profile of that portfolio , we needed to trade in the market for several days . And that's one of our strengths .
We are very familiar with portfolio analysis . And how can we cost-effectively reduce the major risks of our portfolio? If you can cost-effectively identify the main risks in your portfolio, you can begin pairing out individual positions. And we have the systems, know-how, and in-house personnel to make such moves a reality on the chessboard .
Given the bubble-like characteristics of this market (if that's the right term), do you expect more such events to occur ? While this may not be the cause of the market sell-off , it's not uncommon to see moments like the following in the future . I agree. In my opinion, it's a bit surprising to see a moment like this happen again .
Yeah. As you know, they got caught up in a fairly large price drop triggered by both your announcement, other market rumors about the growth rate of the underlying model company, and several large pension funds that were rebuilding their portfolios at that very moment . They weren't caught in a perfect storm, but they were hit by three moderate storms .
And , obviously, they must have over-leveraged their portfolio at its peak , got caught in three moderate storms , were pushed quite hard in the market , and are now a little confused . I will not run my business in a way that would allow something like that to happen again in the near future . In other words, there are always some companies that find themselves in difficult situations .
In other words, Citadel found itself in a difficult situation in 2008. In the midst of the financial crisis. If Morgan Stanley had failed to raise funds from Japan and gone bankrupt, I wouldn't be standing on this stage today . If any company in the financial services industry survives long enough , a moment of despair will be etched into its history.
If they survive long enough, every financial institution will have a footnote in history detailing the time when they were on the brink of collapse . Ken, can we change the subject ? One of the major disruptions and market risks we face is AI. The other one will happen in two weeks. It's the midterm elections.
This election takes place amidst the rise of democratic socialist candidates and with the president 's approval rating plummeting to a record low of 33% . You have invested a large amount of money to support Republican candidates . How are you feeling right now? Are you still investing funds ? The previous conversation was better .
I think there's an AI perspective to be found in this political conversation. In fact, there's a significant AI perspective in this political conversation. First of all . Are you still continuing to spend money ? Are you optimistic that you can provide support in the final stretch ? Well, first of all, I think it's important to pause and think for a moment .
The U.S. political process in midterm elections is a system of checks and balances on the ruling party . May I ? Therefore, the Republican Party, President Trump, will almost certainly lose both the House and the Senate, or one of them . The House of Representatives is in a very difficult position, and the Senate race will also be very close.
May I? Let me get straight to the point . Yeah. And that's part of the normal political cycle . May I? There have been many House and Senate candidates I have supported in this election cycle . Many of them are candidates I have supported for many years . In other words, these are people who embody values that I believe are important for the future of our country .
And of course, there are candidates I'm not particularly enthusiastic about or do n't support . Let me be clear , as you know, this is not limited to Republicans . When I ran for mayor of Chicago, I was one of Lam Emmanuel's biggest supporters. I think Mr. Lamb did a wonderful job as mayor. During the election campaign, I was known as one of the few people responsible for fundraising for both parties .
During the primary elections, we raised funds early for President Obama . He was a senator from Illinois and believed it was important for his team members to have the opportunity to meet someone who could potentially become the future President of the United States. He came and more than lived up to expectations .
Therefore, first and foremost, I want all of Sidley's colleagues to get involved in politics . I want all my colleagues to think about American politics . In my office, Democrats make up the majority , and Republicans are in the minority, but that's fine with me. It's wonderful to see healthy discussions taking place in the hallway, but it's certainly not a point of friction.
In other words , this is how I believe we should behave as citizens . We should have a healthy and productive discussion about who is the right person to run this country . Let me be clear: I sincerely hope that my fellow Democrats, in supporting the Democrats , will do what I do on the Republican side: support candidates who share the right values and perspectives, who put the country first, and who are concerned with issues we can all agree on, such as K-12 education, safe cities, strong national defense, and good alliances around the world .
I believe there are many areas where the two parties can find common ground that is important for the future of this country . Anyway, let's put that aside and talk about the midterm elections . The president will face several challenges here . Some aspects of his policies are very unattractive to the American people .
For example, the war in Iran is extremely unpopular. I think he's terrible at explaining why he's unpopular . I believe it's crucial for a world where Iran does not possess nuclear weapons to awaken to this reality. I believe this is a matter of life and death for our country . I do n't think the president has conveyed that message to the American people in a strong and meaningful way.
I think the way we deal with illegal immigrants is shameful. Those who came to our country during the period when the borders were open did not think they were breaking the law at that time , and entered the country along with millions of other people . Whether you're here with your family or alone , if you have a stable job and are working to provide a better life for your family, you need a way to stay in our country .
It may not be a path to citizenship , but it is a path to becoming a contributing member of society. And we need to grow the economy . This is something that's being lost in Washington. To properly implement social security, it is necessary to grow the economy through programs such as Medicare, Medicaid, and other benefits.
That's all there is to it . And hardworking people play a major role in achieving that. Furthermore, I think the tariff war with Canada, Europe, and our allies was a complete disaster. He has been talking about this since the beginning of his presidency . To be frank, and I don't want to say it , what I said was correct.
It fueled inflation and disrupted supply chains worldwide . Furthermore, our country cannot efficiently reindustrialize. The unemployment rate is in the low 4% range. Even if there is a dream of a reindustrialized America , first and foremost, most people don't want to make that dream a reality . I would n't want to work for Nike or in a factory that makes t-shirts.
I just want to wear it . Actually, this line was thought up by a comedian . We must show him respect. Let's acknowledge and praise those who deserve recognition for their achievements . And what we really need to do is embrace robotics. One of the reasons I recently donated $3 billion to Carnegie Mellon University is their leadership in robotics.
We want to reindustrialize America into a reindustrialized America where robots run the factories . This is a prescient way of thinking. By doing so , our country can secure greater independence from other countries around the world on matters important to our national interests . And of course, the things he did really well, like closing the borders, have long been forgotten, haven't they ?
However, I think most Americans would agree that closing the border, which had been said to be impossible for four years, was achieved almost overnight . This is a huge victory. In other words, opinions will be divided . There are midterm elections , and American citizens will vote . I hope they will consider their options carefully before voting.
I'm not too worried about the rise of socialists in the Democratic Party . Interestingly, I live in Miami. My friends who have ties to the South don't even use the word "South." So, this is like a bubble in New York. It's like a bubble in New York, Illinois, Michigan, and California. If you want to know where socialism is leading, take a look at France last weekend.
It's like a socialist dream . This country spends 60% of its GDP at the government level. Despite this, the city is in chaos . It breaks my heart. By the way, Paris in 2021 and 2022 was quite similar to Chicago . This is the place I wanted to go . Is n't France an isolated case ? In other words, they tried austerity measures, but the government could not survive .
The people didn't do that . They make a lot of noise, and they riot and protest against everything . Is this really the future America is aiming for ? This is the future I envisioned when I was living in Chicago . You can see the Dior store from the window. They were very efficient. They used a van to smash through the front glass, creating a huge opening, and 50 people rushed in , allowing them to empty the store in about 300 seconds .
Well, they might be more efficient than the French . Even looting. However, I think Paris should serve as a real wake-up call for all young Americans . France is a dream spoken of by the left. A liberal safety net , a safety net, a prosperous socialist Europe. And this is France. That dream is a nightmare I left behind in Chicago.
That dream is not suitable for our country. In other words, it's an economic society determined by how much you can take from others . They will first take away your property, and then they will take away your personal rights. That is not the society we want. The candidates we produce in our country .
Is what you're actually afraid of the fact that they're heading down that path? Oh, I mean, Governor J.B. Pritzker of Illinois , yes, 100%. 100 %. So, Ken, where is this conversation headed? What happens next if this is like a drum performance , and the number of these candidates you fear increases ?
What will the Republican Party do ? Does the president bear any responsibility ? In other words, when the strength of political parties is checked in the midterm elections , that's precisely when it happens . Let me be clear : the American people have voiced their opinions, and you absolutely must listen to them .
So what I hope for is that if Trump suffers a major defeat in the midterm elections, he won't become even more hardline , but rather take a step back and say, " What do I need to do to better reflect the voice of the American people?" "As you know, J.B. Pritzker introduced a tax increase bill in Illinois and tried to introduce a progressive tax system.
To give you a little background , before he became governor, I met with him and said, ' We both know that Illinois' pension system is out of control. It's a big problem for Illinois. Promises to public servants are simply not going to be fulfilled.' And I said, 'If you introduce a constitutional amendment to reform the pension system, I will publicly support the tax increase .' I was Illinois' largest taxpayer, and my company accounted for almost 2% of the state's income tax revenue .
He told me to 'drop dead.' Then he introduced a constitutional amendment to create a progressive tax system . He called it the Fair Taxation Amendment. And he lost. And he accepted that defeat and, instead of shifting in the direction that voters had made their voices heard, and that I needed to control costs and address the state's spending addiction, I They attacked it.
It's as if Governor Pritzker is missing the point of the story. He's missing the fact that voters have said, "Enough with Springfield's spending and corruption ." "Springfield's waste and corruption. Clean up your own mess first , then come back to talking about taxes . Whatever the message is in these midterm elections , I just hope that the leaders of the House, Senate, and White House will listen to the voice of the American people .
It's the Republicans who have significantly increased spending at the federal level. In fact, I think the Republicans have been the dirtier ones with the tax cuts and spending increases over the past two years. Yes. Yes. If you want to criticize this administration's economic policies , this is an interesting argument.
When he cut taxes around 2018, there was a view that it would reignite American productivity and entrepreneurship . And I think he was absolutely right. He put that strategy into practice a little over a year ago, but there's one big difference between 2018 and a year and a half ago. That is the pandemic It's wasteful.
Yes. The country has emerged from a difficult fiscal situation . And, though people tend to forget this, the amount spent during the pandemic, as a percentage of GDP , is roughly the same as the amount spent to win World War II. Yes. That was the price we paid for sitting on the couch . So, in my opinion , we didn't have the financial capacity to reopen tax cuts a little over a year ago .
And with a $40 trillion federal deficit, the crowding-out problem is once again in the spotlight. For example, why are mortgages so high? Why are 30-year bond yields so high ? There are multiple factors . Inflation is not under control . But our finances are clearly not healthy . And we need to make our finances healthy .
So, how can we make them healthy ? In Illinois , you said voters wanted spending cuts, but in most cases, politicians cut some program in order to raise taxes. They seem hesitant. If the reason is the competition for capital, does that mean the bond market is influencing it ? So, first and foremost, I think the country needs to do everything in its power to promote productivity improvement .
Yes. So, let's think about prioritizing . First, grow the economy. Grow the economy. By the way, in order to grow the economy, we also need to encourage economic growth in European countries . The tariff war with Europe has ended in failure. Because now is the time for us to utilize all our political capital .
Europe, do you want us to pay for your defense ? Listen, you guys get back to work . In France, there are strict limits on the number of working hours per week . Strict limits. Ridiculous . The French want America to take on the responsibility of defending Europe, and they don't want to work themselves .
This is unacceptable to the American people . Therefore , productivity must be improved . In other words, we need to support them . The AI revolution. We need to ensure that data centers are built within the United States. Yes , but we need more momentum . We need to focus more on nuclear fusion and fission.
We need to focus more on batteries. We need to focus more on robotics. We need to focus more on technologies that will unleash productivity for the next 20 years. From an economic policy standpoint, that should be the sole focus of the administration . Grow the economy and encourage our allies to work on meaningful reforms that will lead to economic growth .
The whole Western world is in the same boat. And we cannot get out of this sea by torturing each other . We can get out of this sea by making the pie bigger for all of us . That's first . Second, we need to reform education . In a country where schools are falling apart , we cannot expect the kind of prosperity we have enjoyed for the past 50 years .
Now, returning to Illinois, this is a simple point. A couple of years ago, 53 schools had not a single student with grade-level academic ability. Just think about it . 53 schools, grade-level academic ability There isn't a single student who has it . This doesn't work . So, what does work is a school like the Success Academy run by Eva Moskowitz here in New York .
I once walked into a high school senior classroom and , to be honest, it made me feel very humbled . Let's say you're in an art history class . Here's a painting. Who is the artist? What year was it made ? What country is it from? What were the social issues at the time ? I'm not very knowledgeable about art .
I don't even know the name of this painter . Then someone in the class raises their hand and says, "This is a work by so-and-so, from France, from such-and-such a year, and these were the social issues at the time ." That's very heartwarming and touching. Now , the third point is how to recreate Simpson Bowles .
How can we establish a hierarchical relationship? Let's vote on the necessary social security system reforms for our country. In particular, we must keep our promises to employees who are retiring or nearing retirement . However, a truly deep and thoughtful discussion is needed . The question is whether people should work for another year or two , or how to motivate them to work for two or three more years before receiving social security benefits .
And then there's the immigration issue. To be frank , I want all the talented people in the world to live in America . I want you to stay here. At our university, an elite institution, 15-20% of the students are international. Let's give you a degree . Let's give you a green card. I want them to stay in this country .
Ken, so does this mean that all of this means there's a way to get out of the red through growth ? Even if the bond market starts flashing yellow and red lights , is it correct to say that there's a way out, and that's due to growth, so there's no need to worry too much ? Is that the direction they're heading in ?
The only direction. That is the only direction. So, for example, you're not worried when you see bond yields at their highest levels in decades ? no. I'm worried. This is because voters will have the opportunity to voice their opinions to the House and Senate in a few weeks, and the bond markets are also speaking out quite loudly right now .
Don't you think so? The bond market is telling the House and Senate that fiscal reform is necessary . However, what the bond market is not clearly communicating is that improving productivity can lead to a healthier fiscal situation . I agree. that's right. In other words, every statement coming from Washington D.C.
should be about entrepreneurship, productivity, how to grow the economy, and how to create an economy where everyone feels they are moving forward . The bond market is speaking out, but do you think they're listening? Not yet. What would happen if they didn't listen? Well, we have higher inflation. The dollar will weaken, and living standards will decline .
Ken, you were talking about Governor Pritzker criticizing you , but don't you think you've been a punching bag for various politicians over the past few years ? Mayor Lightfoot, in particular , has been criticized quite frankly . Yes , he started it. that's right . Ken, I think everyone knows that, and I think everyone remembers the moment you called it "creepy" or "weird ." I think that's something many people will remember .
After that , he moved on to other issues and stopped mentioning your name in particular . I'm sure you'll be very happy about that . The taxi he proposed was rejected by the court . Is there any connection between you and the mayor ? What is the current situation? There is no connection whatsoever between the mayor and me .
That's fine . To put it bluntly , I live in Miami . I am not involved in Florida politics . I hope New York will elect a truly good leader , but I don't want to get involved in New York politics . May I? We have 2,500 employees here who are deeply involved in New York politics . I am deeply involved, and I encourage it.
However, I truly believe that New York, this great city, needs to find the leadership it needs on its own . New York is the greatest city in America. It is probably the greatest city in the world. And New York City deserves to be one of the greatest mayors in the world . Where do you think the center of gravity of a Citadel model is ?
You mentioned that you have a strong employee base here . They also have their headquarters in Miami . Ken, where is your center of gravity ? It's somewhere in the middle of the Atlantic Ocean. Our center of gravity is located somewhere between London, Miami, and New York, roughly in the middle of the Atlantic Ocean .
And I think that's the right place. As you know, it is a highly interconnected company across the entire Western world. The Western world primarily refers to Europe. And then there's the United States of America. It's interesting to look at some of the figures regarding the growth of financial professionals in Miami.
Between you and your competitors, there are approximately 20 to 50 investment professionals . In fact, it decreased last year . What are your thoughts on this ? Is there something missing when it comes to the growth of investment professionals in Miami ? Is it growing at the pace expected ? Yes, I think the history of a city is something that is written over decades .
It's not something that can be written overnight . And frankly speaking, that's a good thing. In other words , people put down roots, become part of a community, and become involved in that community. We do not want a nomadic nation . I long for a country where people can put down roots and call a place their home .
Therefore , the force that draws people to Miami is powerful. It offers an incredibly favorable environment for business, a very high quality of life, a safe city, good schools, and of course, challenges. Housing costs are soaring, and transportation is also a major challenge. So many people have moved to Miami in the last 10 years that the roads are really congested.
From a broader perspective , Miami has experienced phenomenal economic growth over the past 20 years. The city experienced a massive surge in wealth. It's just like California. It's as if all of California's billionaires have moved to Miami . That's the impression I get . And I think Miami is a city that embodies the best aspects of our country .
Frankly speaking, much of that is thanks to immigrants from Cuba . I've met many people whose parents came here and they never got to see them again . They came here with nothing . I came here to realize the American Dream . I came here and started a family . They have no intention of accepting socialism .
I have no intention of giving up my personal freedom . And that's ingrained in Miami's culture. I came here in pursuit of the American Dream . We resolutely reject anything that goes against the values on which this country was founded . Furthermore, I make sure my children receive a solid education and spare no effort in making the business a success.
We will also focus on creating safer cities . Miami's Cuban community is truly important to the spirit of this wonderful city . I am grateful for that. And we are witnessing the optimism of this city . I am confident that Carnegie Mellon University's expansion into Miami will further accelerate this trend .
Look at Pittsburgh . Pittsburgh is in the midst of the Second Industrial Revolution . This time, robotics is driving the development. There are 100 robotics companies located around the Carnegie Mellon University campus . People tend to forget , but Carnegie Mellon University is a world leader in robotics .
We are world leaders in computer science, AI, and cybersecurity . They are extraordinary. It's a wonderful community of students and faculty . Furthermore, building a campus in Miami that will house thousands of undergraduate and graduate students will significantly transform the city of Miami . Ken, we're running out of time , but lastly, I'd like to ask you about the community .
Within the culture of the Citadel, you have spoken very clearly about the community. For example, during COVID-19, you were one of the first leaders to say that it was important for people to be together. How would you approach the situation if the Citadel's center of gravity were located somewhere in the middle of the Atlantic Ocean?
How do you ensure team cohesion ? First and foremost , we try to keep the teams within the Citadel in the same geographical location as much as possible. When we look at the top level of our business , and then examine the various sectors of our operations , we find that these sectors are very geographically concentrated .
Because we believe it's extremely important for the team to work together physically whenever possible . Nothing beats a whiteboard and a good discussion. And when you enter my office , there's a large whiteboard . There are large whiteboards in every executive meeting room . Many office walls are writable.
All you have to do is stand up and write on the wall . Nothing compares to human interaction . And when it comes to nurturing the talents of young team members , we've found that nothing beats physical proximity—an immersive environment where they can be mentored by their superiors and colleagues who also act as mentors in many ways .
And I think that really creates a special place . I think this is a wonderful conclusion . Ken, thank you so much for your time . thank you very much. Let's all be grateful that Ken came here . Thank you so much .
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