Markets are going from strength to strength, boosted by the promise of AI and the enormous investments being plowed into the tech sector. Moreover, consumer spending is continuing to hold up despite sticky inflation and a weaker job market, providing a steady foundation for growing business confidence.
But Citadel founder and CEO Ken Griffin is warning this optimism may be synthetic, drawn from fiscal and monetary stimulus that is better suited to a shrinking economy than a growing one. The billionaire hedge fund manager said those policies may be good news for markets, but they are the kind of measures that would normally be expected during a recession.
U.S. businesses and consumers are waiting to feel the effects of President Trump’s “One Big Beautiful Bill Act,” which the White House has described as the “largest tax cut in history for middle- and working-class Americans.” In addition, the Oval Office has been pressuring the Federal Open Market Committee (FOMC) to cut the base rate significantly (despite inflation staying persistently above its 2% target) in the face of a slowing job market—saying the current rate of 4% to 4.25% is more restrictive than necessary. At its last meeting, the FOMC capitulated and axed interest by 25 basis points, creating cheaper borrowing for consumers, businesses, and the government itself.
