WEBVTT - ARK Invest CEO Cathie Wood Talks AI Use in Warfare

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, Radio News.

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<v Speaker 2>Well, despite the ongoing war, global stocks are rallying for

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<v Speaker 2>a third day as investors seek signs of stability. We've

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<v Speaker 2>been discussing the market reaction with Kathy Wood, the founder,

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<v Speaker 2>CEO and CIO of ARC invest The prominent tech investor,

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<v Speaker 2>also gave us her view on the use of artificial

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<v Speaker 2>intelligence in warfare. In this part of the conversation, Kathy

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<v Speaker 2>Wood tells us why she thinks the situation in the

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<v Speaker 2>Middle East is a short term issue for markets.

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<v Speaker 1>The Iran war is placing more bricks into the wall

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<v Speaker 1>of worry that this ball market is climbing. In the

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<v Speaker 1>eighties and nineties, which were the golden age for active

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<v Speaker 1>equity management, it was the same kind of situation. There

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<v Speaker 1>were fears all along the way until nineteen ninety nine.

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<v Speaker 1>Nineteen ninety nine, no one seemed to have any fears

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<v Speaker 1>about anything anymore. But for the rest of that ball market,

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<v Speaker 1>it was one worry after the other. It was inflation,

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<v Speaker 1>it was the SNL crisis, it was the several wars,

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<v Speaker 1>but the market did continue to climb that wall of worry,

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<v Speaker 1>and I do believe that we are in the same

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<v Speaker 1>kind of ball market now.

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<v Speaker 2>In terms of the short term, then the rate decisions,

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<v Speaker 2>central buying decisions this week, how many cuts do you

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<v Speaker 2>expect from the Fed given the war, the worries about inflation.

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<v Speaker 1>Well, I don't think they're going to cut at this one.

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<v Speaker 1>And one of the reasons is the core personal consumption

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<v Speaker 1>deflator ticked back up on a year over year basis

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<v Speaker 1>to three point one percent inflation, and that is one

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<v Speaker 1>of the primary inflation measures they watch. We watch another

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<v Speaker 1>measure called true inflation, and it's blockchain based. It's ten

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<v Speaker 1>thousand items goods and services monitored twenty four to seven.

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<v Speaker 1>That measure of inflation is at one and a half.

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<v Speaker 1>And it's interesting during COVID it peaked at eleven to

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<v Speaker 1>twelve percent, where's the CPI peaked at nine percent and

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<v Speaker 1>it has tended to lead the CPI. Right now, we

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<v Speaker 1>do have energy prices probably an upward pressure, but that

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<v Speaker 1>is true for true inflation as well. So it's gone

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<v Speaker 1>from it was lower than one percent to one point

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<v Speaker 1>five percent. If that's if this is as high as

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<v Speaker 1>it goes, I think the CPI by the end of

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<v Speaker 1>this year will resolve below below that two to three

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<v Speaker 1>percent range.

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<v Speaker 2>In terms of the war and your investments, do you

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<v Speaker 2>think that be should be limits to how the US

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<v Speaker 2>uses AI in war. I know that you were talking

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<v Speaker 2>earlier about the use of joining technology and your own

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<v Speaker 2>experiences of understanding how joint technology is used by these

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<v Speaker 2>cutting edge businesses.

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<v Speaker 1>Yes, I think it's this is a question probably beyond

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<v Speaker 1>Mike Ken, But I would say if if AI is

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<v Speaker 1>limiting wartime because targets are hit directly and quickly, and

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<v Speaker 1>you know, the war is over much more quickly than

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<v Speaker 1>it might have been in the past. You know, I'm

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<v Speaker 1>sure that the generals out there are saying, we are

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<v Speaker 1>saving we are saving a lot of lives, certainly American lives,

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<v Speaker 1>and unfortunately, and you know, when when Americans do go

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<v Speaker 1>into war zone where there are civilians, they always warrant

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<v Speaker 1>civilians to clear out. I think that has been the

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<v Speaker 1>case for civilian parts of of economies in Iran. So

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<v Speaker 1>you know, it's this is this is maybe a little

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<v Speaker 1>bit beyond my investment orientation. But if if if AI

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<v Speaker 1>helps bring wars to an end much more quickly than

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<v Speaker 1>they have ended historically, I think everyone would agree that's

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<v Speaker 1>a good thing.

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<v Speaker 2>Just tell me broadly about where your expectation is now

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<v Speaker 2>for your own investments by the end of the year.

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<v Speaker 2>How optimistic are you about growth in the industry. I mean,

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<v Speaker 2>you know, we've just been talking about and video hearing

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<v Speaker 2>from Nvidia that they want a trillion dollars worth of

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<v Speaker 2>sales over the next couple of years, and some people

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<v Speaker 2>don't see that actually as very big, but there has

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<v Speaker 2>been such growth in the industry. How optimistic are you

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<v Speaker 2>about this year?

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<v Speaker 1>Well, we monitor the revenue run rate, so you look

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<v Speaker 1>at the revenues per month for some of these large

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<v Speaker 1>language model companies, and we're astonished at what's happening. Anthropic,

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<v Speaker 1>for example, was at a nine billion revenue run rate

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<v Speaker 1>in December and it's already up to nineteen billion, so

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<v Speaker 1>really justifying the investment that they're undertaking. Open Ai has

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<v Speaker 1>gone from twenty to twenty five billion. This is in

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<v Speaker 1>the span of a little more than two months. So

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<v Speaker 1>I think what that's telling us is the impact on

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<v Speaker 1>productivity of these tools is astonishing, and more and more

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<v Speaker 1>people are willing to pay not just twenty dollars a month,

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<v Speaker 1>but in our case two hundred dollars a month for

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<v Speaker 1>the many seats that we have on open AI anthropic

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<v Speaker 1>and we're even getting to the point where we can

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<v Speaker 1>see justification for two thousand dollars a month. And what

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<v Speaker 1>that means is we would not be hiring another research associate.

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<v Speaker 1>We would be engaging these large language models to help

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<v Speaker 1>us with our research. And it's the results we are getting,

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<v Speaker 1>and we use both Palenteer and all of the large

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<v Speaker 1>language models. The results we're getting are astonishing. And many

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<v Speaker 1>times have we showcase all the breakthroughs during our morning meeting.

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<v Speaker 1>It's just a fifteen minute business meeting, but on many

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<v Speaker 1>days we're now having people from all parts of the organization,

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<v Speaker 1>you know, show and tell, show what they're doing with

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<v Speaker 1>AI that they could have never done before. They just

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<v Speaker 1>couldn't do it before in terms of the kinds of

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<v Speaker 1>and graphs and you know, iterations on some kind of uh,

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<v Speaker 1>some kind of idea that we're throwing out there. Uh.

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<v Speaker 1>They're taking us places where you know, we probably would

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<v Speaker 1>have taken us I'm going to say, months before, and

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<v Speaker 1>now we can do it in days.

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<v Speaker 2>So that was Kathy would have aren't invested