Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Well, despite the ongoing war, global stocks are rallying for
Speaker 2: a third day as investors seek signs of stability. We've
Speaker 2: been discussing the market reaction with Kathy Wood, the founder,
Speaker 2: CEO and CIO of ARC invest The prominent tech investor,
Speaker 2: also gave us her view on the use of artificial
Speaker 2: intelligence in warfare. In this part of the conversation, Kathy
Speaker 2: Wood tells us why she thinks the situation in the
Speaker 2: Middle East is a short term issue for markets.
Speaker 1: The Iran war is placing more bricks into the wall
Speaker 1: of worry that this ball market is climbing. In the
Speaker 1: eighties and nineties, which were the golden age for active
Speaker 1: equity management, it was the same kind of situation. There
Speaker 1: were fears all along the way until nineteen ninety nine.
Speaker 1: Nineteen ninety nine, no one seemed to have any fears
Speaker 1: about anything anymore. But for the rest of that ball market,
Speaker 1: it was one worry after the other. It was inflation,
Speaker 1: it was the SNL crisis, it was the several wars,
Speaker 1: but the market did continue to climb that wall of worry,
Speaker 1: and I do believe that we are in the same
Speaker 1: kind of ball market now.
Speaker 2: In terms of the short term, then the rate decisions,
Speaker 2: central buying decisions this week, how many cuts do you
Speaker 2: expect from the Fed given the war, the worries about inflation.
Speaker 1: Well, I don't think they're going to cut at this one.
Speaker 1: And one of the reasons is the core personal consumption
Speaker 1: deflator ticked back up on a year over year basis
Speaker 1: to three point one percent inflation, and that is one
Speaker 1: of the primary inflation measures they watch. We watch another
Speaker 1: measure called true inflation, and it's blockchain based. It's ten
Speaker 1: thousand items goods and services monitored twenty four to seven.
Speaker 1: That measure of inflation is at one and a half.
Speaker 1: And it's interesting during COVID it peaked at eleven to
Speaker 1: twelve percent, where's the CPI peaked at nine percent and
Speaker 1: it has tended to lead the CPI. Right now, we
Speaker 1: do have energy prices probably an upward pressure, but that
Speaker 1: is true for true inflation as well. So it's gone
Speaker 1: from it was lower than one percent to one point
Speaker 1: five percent. If that's if this is as high as
Speaker 1: it goes, I think the CPI by the end of
Speaker 1: this year will resolve below below that two to three
Speaker 1: percent range.
Speaker 2: In terms of the war and your investments, do you
Speaker 2: think that be should be limits to how the US
Speaker 2: uses AI in war. I know that you were talking
Speaker 2: earlier about the use of joining technology and your own
Speaker 2: experiences of understanding how joint technology is used by these
Speaker 2: cutting edge businesses.
Speaker 1: Yes, I think it's this is a question probably beyond
Speaker 1: Mike Ken, But I would say if if AI is
Speaker 1: limiting wartime because targets are hit directly and quickly, and
Speaker 1: you know, the war is over much more quickly than
Speaker 1: it might have been in the past. You know, I'm
Speaker 1: sure that the generals out there are saying, we are
Speaker 1: saving we are saving a lot of lives, certainly American lives,
Speaker 1: and unfortunately, and you know, when when Americans do go
Speaker 1: into war zone where there are civilians, they always warrant
Speaker 1: civilians to clear out. I think that has been the
Speaker 1: case for civilian parts of of economies in Iran. So
Speaker 1: you know, it's this is this is maybe a little
Speaker 1: bit beyond my investment orientation. But if if if AI
Speaker 1: helps bring wars to an end much more quickly than
Speaker 1: they have ended historically, I think everyone would agree that's
Speaker 1: a good thing.
Speaker 2: Just tell me broadly about where your expectation is now
Speaker 2: for your own investments by the end of the year.
Speaker 2: How optimistic are you about growth in the industry. I mean,
Speaker 2: you know, we've just been talking about and video hearing
Speaker 2: from Nvidia that they want a trillion dollars worth of
Speaker 2: sales over the next couple of years, and some people
Speaker 2: don't see that actually as very big, but there has
Speaker 2: been such growth in the industry. How optimistic are you
Speaker 2: about this year?
Speaker 1: Well, we monitor the revenue run rate, so you look
Speaker 1: at the revenues per month for some of these large
Speaker 1: language model companies, and we're astonished at what's happening. Anthropic,
Speaker 1: for example, was at a nine billion revenue run rate
Speaker 1: in December and it's already up to nineteen billion, so
Speaker 1: really justifying the investment that they're undertaking. Open Ai has
Speaker 1: gone from twenty to twenty five billion. This is in
Speaker 1: the span of a little more than two months. So
Speaker 1: I think what that's telling us is the impact on
Speaker 1: productivity of these tools is astonishing, and more and more
Speaker 1: people are willing to pay not just twenty dollars a month,
Speaker 1: but in our case two hundred dollars a month for
Speaker 1: the many seats that we have on open AI anthropic
Speaker 1: and we're even getting to the point where we can
Speaker 1: see justification for two thousand dollars a month. And what
Speaker 1: that means is we would not be hiring another research associate.
Speaker 1: We would be engaging these large language models to help
Speaker 1: us with our research. And it's the results we are getting,
Speaker 1: and we use both Palenteer and all of the large
Speaker 1: language models. The results we're getting are astonishing. And many
Speaker 1: times have we showcase all the breakthroughs during our morning meeting.
Speaker 1: It's just a fifteen minute business meeting, but on many
Speaker 1: days we're now having people from all parts of the organization,
Speaker 1: you know, show and tell, show what they're doing with
Speaker 1: AI that they could have never done before. They just
Speaker 1: couldn't do it before in terms of the kinds of
Speaker 1: and graphs and you know, iterations on some kind of uh,
Speaker 1: some kind of idea that we're throwing out there. Uh.
Speaker 1: They're taking us places where you know, we probably would
Speaker 1: have taken us I'm going to say, months before, and
Speaker 1: now we can do it in days.
Speaker 2: So that was Kathy would have aren't invested