WEBVTT - Bloomberg Businessweek Weekend - March 8th, 2024 0:00:02.920 --> 0:00:07.280 Bloomberg Audio Studios, Podcasts, radio news. 0:00:09.080 --> 0:00:13.440 This is Bloomberg business Week inside from the reporters and 0:00:13.600 --> 0:00:17.160 editors who bring you America's most trusted business magazine, plus 0:00:17.239 --> 0:00:21.400 global business, finance and tech news. The Bloomberg Business Week 0:00:21.440 --> 0:00:26.520 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:27.800 --> 0:00:30.720 Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. 0:00:31.000 --> 0:00:33.879 Quite a week that included Super Tuesday's voting in fifteen 0:00:33.920 --> 0:00:38.360 states at as expected, prompted Republican presidential hopeful Nikki Haley 0:00:38.400 --> 0:00:41.600 to drop out and deliver definitive wins for both former 0:00:41.600 --> 0:00:44.600 President Donald Trump and President Joe Biden in an almost 0:00:44.640 --> 0:00:48.520 guaranteed rematch come November. As for President Biden, he also 0:00:48.560 --> 0:00:50.760 addressed the nation in his State of the Union speech 0:00:50.840 --> 0:00:54.280 this past week, announcing, among other initiatives, plans to raise 0:00:54.320 --> 0:00:55.760 taxes and corporations. 0:00:55.880 --> 0:00:58.560 On top of all that, we continue to digest us 0:00:58.680 --> 0:01:02.360 economic data on every from the services sector, factory activity, 0:01:02.440 --> 0:01:05.520 job openings, and on the overall health of the job market. 0:01:05.959 --> 0:01:08.360 This is Fedchair J. Powell spent two days up on 0:01:08.440 --> 0:01:11.400 Capitol Hill answering questions, as he does twice a year 0:01:11.800 --> 0:01:15.240 in his semi annual Monetary Policy testimony before the House 0:01:15.280 --> 0:01:18.960 Financial Services and Senate Banking Committees, the FED chair reiterated 0:01:18.959 --> 0:01:21.160 to lawmakers that the US Central Bank is in no 0:01:21.280 --> 0:01:24.360 rush to cut interest rates until policymakers are convinced that 0:01:24.400 --> 0:01:26.240 they have won their battle over inflation. 0:01:26.520 --> 0:01:28.640 A lot going on this week, and all the details 0:01:28.640 --> 0:01:30.360 on all of what Tim just talked about you can 0:01:30.400 --> 0:01:32.800 find at Bloomberg dot com or on the Bloomberg but 0:01:32.959 --> 0:01:34.880 that is our backdrop. We're going to spend a lot 0:01:34.920 --> 0:01:37.720 on the macro market and political backdrop. This hour with 0:01:37.880 --> 0:01:40.440 Kathy would have of ARC invest and what impact any of 0:01:40.480 --> 0:01:43.200 it might have on the market outlook. We'll also get 0:01:43.240 --> 0:01:45.960 Kathy Wood's take on everything from getting out of Nvidia 0:01:46.000 --> 0:01:48.920 before the stratospheric run up and what AI stock she 0:01:49.000 --> 0:01:50.440 might be buying instead. 0:01:50.240 --> 0:01:52.040 Also what she makes of the overall run up in 0:01:52.120 --> 0:01:55.639 stocks and whether she sees any signs of bubble, plus 0:01:55.640 --> 0:01:59.440 how things are going with her new spot Bitcoin etf Oh, Carol, hmmm, 0:02:00.000 --> 0:02:03.160 what about Elon too, of course, yeah, and what she's 0:02:03.160 --> 0:02:04.880 been adding to we're selling out of and. 0:02:05.160 --> 0:02:07.320 Why always lots to talk about when she joins us. 0:02:07.440 --> 0:02:09.400 Kathy Wood, by the way, part of an all star 0:02:09.440 --> 0:02:11.640 lineup of women over the next couple of hours, in 0:02:11.720 --> 0:02:14.639 light of March being Women's History Month and International Women's 0:02:14.680 --> 0:02:18.040 Day just this past Friday, and so also this hour, 0:02:18.360 --> 0:02:21.480 Capitol Group's head of Global Asset class Services, Matti Desner, 0:02:21.760 --> 0:02:24.280 she'll join us on the capital market assumptions for the 0:02:24.320 --> 0:02:25.400 next twenty years. 0:02:25.560 --> 0:02:27.840 We all should probably listen closely considering what the author 0:02:27.880 --> 0:02:30.680 of a new book has to say. Teresa Gilarducci is 0:02:30.760 --> 0:02:33.200 professor of economics at the New School, also the author 0:02:33.240 --> 0:02:36.400 of the new book Work Retire Repeat The Uncertainty of 0:02:36.440 --> 0:02:39.320 Retirement in the New Economy. It's a damning portrait of 0:02:39.360 --> 0:02:42.040 the dire realities of retirement here in the US. 0:02:41.880 --> 0:02:45.200 Which is done investing enough for our futures or our retirement. 0:02:45.440 --> 0:02:46.920 All right, all of that to come. We begin with 0:02:46.919 --> 0:02:48.880 a voice and perspective that gets a lot of attention 0:02:49.000 --> 0:02:52.880 on Wall Street and certainly in our Bloomberg world. Kathy 0:02:52.919 --> 0:02:56.079 Wood is the founder, CEO and CIO of ARC invest. 0:02:56.320 --> 0:02:59.160 Kathy joined us Friday to talk the macro environment and 0:02:59.240 --> 0:03:00.000 her micro investment. 0:03:00.800 --> 0:03:05.320 It looks like that corporations are losing pricing power, and 0:03:05.520 --> 0:03:09.000 we are now beginning to see the unemployment rate move up. 0:03:09.240 --> 0:03:11.320 It went up to three point nine percent in this 0:03:11.400 --> 0:03:14.760 latest report from a low of three point four percent, 0:03:14.840 --> 0:03:18.440 So undeniably it's on its way up now. And we 0:03:18.480 --> 0:03:22.560 do think it's because corporations are losing pricing power, their 0:03:22.560 --> 0:03:25.560 margins are getting hit. It's going to it's going to 0:03:25.560 --> 0:03:28.880 cause a couple of things. One, the labor hoarding that 0:03:28.919 --> 0:03:33.079 we've seen since COVID is going to diminish, and that 0:03:33.120 --> 0:03:36.360 will increase the unemployment rate. But then the second thing 0:03:36.520 --> 0:03:43.200 is it will accelerate the adoption of technologies. Innovation solves problems, 0:03:43.240 --> 0:03:46.760 and one of the things that it does is increase productivity, 0:03:46.880 --> 0:03:53.160 increase efficiency, and create new products and services. So we're 0:03:53.200 --> 0:03:57.800 pretty optimistic about our strategy in this environment because interest 0:03:57.880 --> 0:04:01.040 rates should come down. I think I think that the Fed, 0:04:01.120 --> 0:04:03.320 even the FED is going to be surprised at how 0:04:03.440 --> 0:04:05.360 low inflation goes. 0:04:05.400 --> 0:04:07.200 We think it could be negative this year. 0:04:07.320 --> 0:04:10.680 Well, so, Kathy, let me ask you, that's interesting. I mean, 0:04:11.040 --> 0:04:14.280 if the expectations, at least according to traders right now, 0:04:14.320 --> 0:04:16.839 is that the first rate comes in June, is that 0:04:17.640 --> 0:04:20.000 too late in your view for the Fed to start 0:04:20.040 --> 0:04:21.120 cutting rates? 0:04:21.920 --> 0:04:25.599 Well, I think the twenty fourfold increase in interest rates 0:04:25.600 --> 0:04:28.800 in little more than a year have shocked the system. 0:04:29.560 --> 0:04:34.360 We're beginning to see a reverberation of the regional bank issues. 0:04:35.200 --> 0:04:38.640 We don't think they are going away. Deposits are still 0:04:38.720 --> 0:04:44.200 outflowing broadly from the banking system. And there are increasing 0:04:44.279 --> 0:04:47.720 problems with commercial real estate. Most people know about the 0:04:47.800 --> 0:04:55.960 office problems, but multifamily units, multifamily apartments, We're beginning to 0:04:56.000 --> 0:05:00.640 see some distressed sales there as well. I think that 0:05:01.680 --> 0:05:06.560 that problem isn't as well understood I think, and it's 0:05:06.560 --> 0:05:09.080 going to cause the regional banks even more problems. 0:05:09.279 --> 0:05:11.640 Kathy, how quickly do you think unemployment can go up 0:05:11.640 --> 0:05:13.680 this year? What are you forecasting over at ARC? 0:05:14.680 --> 0:05:19.000 Well, I wouldn't be surprised to see the unemployed employment 0:05:19.080 --> 0:05:23.360 rate go above five percent. Now, I'm saying that knowing 0:05:23.480 --> 0:05:27.840 that this is an election year and that this administration 0:05:28.240 --> 0:05:33.400 probably will try and spend more than is currently in 0:05:33.440 --> 0:05:38.560 the budgets through executive order or what have you, But 0:05:39.440 --> 0:05:41.840 above five percent would not surprise us. 0:05:44.240 --> 0:05:46.280 All right, So above five percent, well, that's interesting, all right, 0:05:46.320 --> 0:05:49.240 So we have a good idea of your economic and 0:05:49.279 --> 0:05:51.680 kind of macro backdrop. Having said that, so here we 0:05:51.720 --> 0:05:53.880 are sitting at a day where we're seeing a little 0:05:53.880 --> 0:05:55.760 bit of a pullback in stocks, but you're to date 0:05:55.760 --> 0:05:57.640 the S and P still lot more than seven percent. 0:05:57.920 --> 0:05:59.840 We're looking at a Nasdaq one hundred that's also got 0:05:59.880 --> 0:06:03.320 more than seven percent. You look at something like the 0:06:03.320 --> 0:06:05.800 socks is up around twenty percent year today, picking an 0:06:05.800 --> 0:06:08.479 individual name like an Nvidia more than eighty percent, and 0:06:08.520 --> 0:06:10.880 I could go on and on and on. There are 0:06:10.880 --> 0:06:13.599 many who talk about a bubble, some like in it 0:06:13.640 --> 0:06:16.800 back to ninety nine, two thousand, anything in today's equity 0:06:16.839 --> 0:06:18.040 trade that says bubble to you. 0:06:19.760 --> 0:06:22.880 We do not believe we're in a bubble anything like 0:06:23.080 --> 0:06:26.000 we were in the late nineties. I was there, and 0:06:26.240 --> 0:06:29.040 the technologies weren't ready, The costs were too high, too 0:06:29.120 --> 0:06:32.040 much capital chase, too few opportunities, too soon. 0:06:32.600 --> 0:06:33.960 The seeds for. 0:06:33.920 --> 0:06:37.720 What is happening now were planted during the twenty years 0:06:37.720 --> 0:06:40.000 that ended in the tech and telecom bubble, and they've 0:06:40.000 --> 0:06:44.360 been germinating for twenty five or thirty years. So we 0:06:45.240 --> 0:06:48.719 believe we're ready for primetime. The one place where we 0:06:48.800 --> 0:06:51.920 could see a correction, and it's just a correction. We're 0:06:51.920 --> 0:06:55.760 not calling at the end of this at all is 0:06:56.160 --> 0:06:57.640 in the chip space. 0:06:58.279 --> 0:06:59.520 Whenever I hear. 0:06:59.320 --> 0:07:03.480 The word shortage, and we started hearing about GPU shortages 0:07:04.440 --> 0:07:09.640 about this time last year as chat GPT was capturing 0:07:09.680 --> 0:07:13.560 the imagination of both businesses and consumers. 0:07:14.360 --> 0:07:16.120 So for about a year we've heard. 0:07:15.920 --> 0:07:20.000 That word and now we're seeing lead times we believe 0:07:20.160 --> 0:07:25.760 come down for GPUs for nvidians in particular from the 0:07:26.000 --> 0:07:29.240 eight to eleven month range to the three to four 0:07:29.720 --> 0:07:34.280 month range. So that is suggesting that there was probably 0:07:34.320 --> 0:07:38.160 a lot of double and triple ordering as the word 0:07:38.200 --> 0:07:42.040 shortage was making the rounds, and that those inventories will 0:07:42.040 --> 0:07:43.200 have to be digestivele Is that. 0:07:43.160 --> 0:07:45.400 Also because of an increase in supply in terms of 0:07:45.520 --> 0:07:48.240 output or is it because you think demand is going down? 0:07:48.280 --> 0:07:49.000 Which one is it? 0:07:49.880 --> 0:07:50.040 Oh? 0:07:50.080 --> 0:07:52.640 I don't think no, No, demand is not going down, 0:07:52.760 --> 0:07:56.000 though there is something we expect that I don't hear 0:07:56.040 --> 0:07:59.520 discussion very much. And it harkens back to the early 0:07:59.600 --> 0:08:02.960 days of the Internet. There was a moment when the 0:08:02.960 --> 0:08:06.679 Internet was taking off, when Cisco was all the rage, 0:08:07.040 --> 0:08:13.840 and then enterprises started thinking seriously about the need to 0:08:13.920 --> 0:08:18.080 spend aggressively on this new thing called the Internet, and 0:08:18.120 --> 0:08:23.360 the backbone and they paused as a lot of competitions 0:08:23.400 --> 0:08:27.400 started to make the rounds, and Cisco went down fifty 0:08:27.440 --> 0:08:32.480 percent plus as enterprises were pausing. Now, why are enterprises 0:08:33.200 --> 0:08:37.760 likely to pause or at least go through an assessment. 0:08:38.520 --> 0:08:42.360 They have to integrate all of their data first, proprietary 0:08:42.520 --> 0:08:46.240 data is the secret to AI's success. And they have 0:08:46.360 --> 0:08:51.199 to map out in excruciating detail their workflows internally and 0:08:51.240 --> 0:08:55.760 with suppliers and customers and so forth. And this is 0:08:55.800 --> 0:08:59.280 going to take time. So we think this is this 0:08:59.360 --> 0:09:03.360 movement is real, is going to be massive, but we 0:09:03.480 --> 0:09:07.440 think there's been a little bit too much too soon. 0:09:07.679 --> 0:09:10.000 Well, it's interesting to hear you say that, Kathy, because 0:09:10.040 --> 0:09:13.719 you and at ARC were very early to acknowledge the 0:09:13.760 --> 0:09:18.079 impact of AI. Yet your flagship Ark Innovation ETF has 0:09:18.160 --> 0:09:22.600 not held shares of Nvidia in about a year. You 0:09:22.640 --> 0:09:24.840 do own some of it in your other ETFs. Do 0:09:24.840 --> 0:09:27.280 you have any regrets about not having held onto the 0:09:27.360 --> 0:09:30.760 stock or actually increasing your exposure in the last couple 0:09:30.800 --> 0:09:32.880 of years after more than five hundred and thirty percent 0:09:32.960 --> 0:09:35.360 gains since twenty twenty two since the end of twenty 0:09:35.360 --> 0:09:35.960 twenty two. 0:09:36.840 --> 0:09:41.160 Yes, so you're right, we were very early into Nvidia 0:09:41.240 --> 0:09:44.200 ten years ago when it was five dollars. Now it's 0:09:44.559 --> 0:09:50.080 roughly eight hundred dollars, and we wrote it most of 0:09:50.120 --> 0:09:51.920 the way up. But I'll tell you what we did, 0:09:51.960 --> 0:09:55.200 and this is as a portfolio manager. It's not one 0:09:55.280 --> 0:10:01.120 action but what it causes in terms of another action. 0:10:01.840 --> 0:10:07.240 Last year we sold in the flagship in Vidia and 0:10:07.280 --> 0:10:12.520 put it into Coinbase. Coinbase, I believe is up as 0:10:12.880 --> 0:10:16.880 at least as much as in VideA, and it is 0:10:17.400 --> 0:10:24.640 much less well understood. The whole crypto movement, the crypto 0:10:24.679 --> 0:10:27.600 asset movement, Bitcoin as a new asset class and so 0:10:27.640 --> 0:10:32.520 forth is not well understood or completely accepted out there. 0:10:32.559 --> 0:10:37.280 So we prefer to go where others are not traveling 0:10:37.320 --> 0:10:39.600 as much. And you know, as we were moving out 0:10:39.600 --> 0:10:43.800 of in Video, we were saying, okay, regulators are trying 0:10:43.840 --> 0:10:46.960 to crush coinbase here, and we were buying it on 0:10:47.040 --> 0:10:50.480 every dip. In Vidia happen to be one of the 0:10:50.520 --> 0:10:54.760 sources for that purchase. So it's not just what we 0:10:54.800 --> 0:10:56.679 do on the cell side, it is what we do 0:10:56.720 --> 0:10:59.920 on the buy side that you have to look at. 0:11:00.880 --> 0:11:04.360 And yes, we do hold it in the more specialized funds, 0:11:04.400 --> 0:11:07.840 but we've been taking profits there as well for reasons 0:11:07.880 --> 0:11:08.760 I just described. 0:11:09.160 --> 0:11:11.160 Yeah, And to be fair, you're right, Coinbase is up 0:11:11.160 --> 0:11:13.200 about six hundred and twenty percent since the end of 0:11:13.240 --> 0:11:15.760 twenty twenty two, so that compares with about five hundred 0:11:15.760 --> 0:11:18.680 and thirty percent gain in nvideo. Is there anything, though, 0:11:18.800 --> 0:11:22.640 Kathy in the n video story that would make you 0:11:22.720 --> 0:11:25.080 we think the name and want to become more aggressive 0:11:25.120 --> 0:11:25.360 on it. 0:11:26.640 --> 0:11:30.320 Yeah, if the price came down a lot, we would 0:11:30.800 --> 0:11:33.800 you know, the rate of return expectations or split? 0:11:33.920 --> 0:11:35.800 Would a split do it? Because I know we've been 0:11:35.920 --> 0:11:36.600 never No, no. 0:11:36.679 --> 0:11:39.199 No, that wouldn't change. That wouldn't change anything. 0:11:39.480 --> 0:11:46.040 No, no, split adjusted than the price. So you know, 0:11:46.160 --> 0:11:49.160 if you look at our portfolio is what we're trying 0:11:49.200 --> 0:11:53.280 to capitalize on with a Palenteer for example. Are the 0:11:53.320 --> 0:11:58.800 next stages of this AI revolution? What we're seeing in 0:11:58.840 --> 0:12:02.880 the GPU side of things is Nvidia All praise to 0:12:02.960 --> 0:12:09.480 Jensen one. I mean, just unbelievable company execution, vision and 0:12:09.559 --> 0:12:10.160 so forth. 0:12:10.280 --> 0:12:11.600 And it's not over. 0:12:11.760 --> 0:12:14.720 It's going to last a long time, but there are 0:12:14.760 --> 0:12:18.760 going to be many other companies benefiting from AI. The 0:12:18.840 --> 0:12:23.040 productivity lift alone is going to be massive. The most 0:12:23.080 --> 0:12:27.320 massive productivity lift in history, we believe, and so this 0:12:27.480 --> 0:12:30.480 AI revolution is going to be broad based and is 0:12:30.520 --> 0:12:34.800 going to benefit a lot of companies. On the GPU side, 0:12:34.840 --> 0:12:38.640 of course, we have AMD as competition, but many people 0:12:38.679 --> 0:12:43.000 do not understand that there's a lot of other surreptitious 0:12:43.080 --> 0:12:49.439 competition evolving out there. Each of the hyperscalers is evolving its. 0:12:49.240 --> 0:12:50.440 Own chip strategy. 0:12:50.960 --> 0:12:55.560 You have a Tesla that has designed its own chip 0:12:55.880 --> 0:13:03.040 for AI, chip for the specialized, more specialized autonomous driving opportunity, 0:13:03.520 --> 0:13:05.400 and I think you're going to see a lot of 0:13:05.520 --> 0:13:10.920 companies developing more specialized chips. We know that Nvidia, of 0:13:10.960 --> 0:13:15.200 course will segment the market as well. So we just 0:13:15.280 --> 0:13:19.200 think that a lot of the assumptions for Nvidia, you 0:13:19.240 --> 0:13:22.120 know that this is in Nvidia's market, and it's alone 0:13:22.440 --> 0:13:23.440 that those are changing. 0:13:23.600 --> 0:13:26.040 Well, we're speaking with Kathy Wood if you're just joining us. 0:13:26.080 --> 0:13:29.280 She's the founder and CEO and chief investment officer of 0:13:29.400 --> 0:13:32.240 ARC invest. She joins us from Saint Petersburg, Florida. 0:13:32.400 --> 0:13:35.360 So it's interesting, Kathy two to you know, right, everybody 0:13:35.440 --> 0:13:37.400 seems to be out there making chips, and it's funny. 0:13:37.440 --> 0:13:41.200 We had a conversation yesterday with Chris Miller, who wrote 0:13:41.240 --> 0:13:44.400 the book Chip Wars, and we talked about TSMC that 0:13:44.679 --> 0:13:47.040 everybody can kind of design what they want, but ultimately, 0:13:47.120 --> 0:13:48.960 right now they've got to come back to TSMC as 0:13:48.960 --> 0:13:51.240 the fabricator to make them. So as you say that, 0:13:51.280 --> 0:13:53.080 I mean you guys, and one of your funds I 0:13:53.120 --> 0:13:57.480 think late last month was selling shares of TSMC. I 0:13:57.520 --> 0:14:00.439 am curious about then you're thinking around TSM. See there's 0:14:00.440 --> 0:14:03.200 a story today too about TSMC winning more than five 0:14:03.200 --> 0:14:06.160 billion in grants for their US chip plant, so money, 0:14:06.280 --> 0:14:10.360 you know, certainly being devoted to them. Why maybe pull 0:14:10.400 --> 0:14:12.439 back a little bit on TSMC or what is your 0:14:12.480 --> 0:14:14.280 case for TSMC in the long run. 0:14:15.200 --> 0:14:19.520 Well, the case for TSMC is, yes, it is the 0:14:19.520 --> 0:14:24.880 manufacturer of these merchant chips, so a very big story there. 0:14:25.200 --> 0:14:29.880 But this is simply a cyclical call and it has 0:14:29.920 --> 0:14:33.480 to do with that word shortage and TSMC. For example, 0:14:33.480 --> 0:14:37.720 Broadcamcom reported last night I listened to that call. In 0:14:37.760 --> 0:14:41.760 the semiconductor solutions part of their business, they were up 0:14:41.760 --> 0:14:45.240 only four percent, AI up thirty five percent, but everything 0:14:45.240 --> 0:14:51.240 else down. So there there are some cyclical phenomenon out there, 0:14:51.240 --> 0:14:55.560 phenomena out there that we think are not they're not 0:14:55.600 --> 0:15:01.760 being integrated into the short term expectations for a number 0:15:01.800 --> 0:15:03.720 of stocks. 0:15:03.400 --> 0:15:05.600 Hey in counting including Yeah. 0:15:05.640 --> 0:15:07.520 So, Kathy, I want to move on to Tesla because 0:15:07.560 --> 0:15:10.680 you brought it up a moment ago. You've been a 0:15:10.720 --> 0:15:14.560 long time bull on Tesla. You have been buying shares 0:15:14.600 --> 0:15:18.240 recently after selling them for most of twenty twenty three. 0:15:18.560 --> 0:15:21.680 The stock down about thirty percent so far this year. 0:15:21.960 --> 0:15:24.240 We covered the news this week that shipments from tesla 0:15:24.320 --> 0:15:26.600 shang High factory sank to the lowest in over a 0:15:26.680 --> 0:15:29.960 year in February. The challenges facing the EV industry have 0:15:30.080 --> 0:15:33.280 been well documented. We've talked about those a lot. Why 0:15:33.280 --> 0:15:36.800 do you still like Tesla considering all of the challenges 0:15:36.800 --> 0:15:39.320 in the EV space and also what many critics would 0:15:39.320 --> 0:15:40.920 say are disappointing fundamentals. 0:15:42.520 --> 0:15:43.720 So, yes, you're right. 0:15:43.760 --> 0:15:46.600 We were selling last year as it was in the 0:15:46.680 --> 0:15:49.360 three hundred to four hundred dollars range. It's back to 0:15:49.440 --> 0:15:53.840 one seventy five. And this is what portfolio managers do. 0:15:53.880 --> 0:15:57.320 We have a five year investment time horizon for Tesla 0:15:57.520 --> 0:16:02.400 and our price expectations from here, I mean we see 0:16:03.120 --> 0:16:08.760 roughly a seven to tenfold increase. I know we're in 0:16:08.760 --> 0:16:12.560 the process of revising our model. So I'm not at 0:16:12.560 --> 0:16:14.080 liberty to give you the new number. 0:16:14.120 --> 0:16:16.680 But would that new number be higher or lower than two. 0:16:16.560 --> 0:16:19.680 Thousand, Well, we're pushing it out a year, and. 0:16:21.440 --> 0:16:25.479 Therefore it will be higher because the autonomous taxi platform 0:16:26.040 --> 0:16:29.840 opportunity will be in full force. We think and we 0:16:29.920 --> 0:16:33.440 believe that Tesla will get the lion's share of that 0:16:33.640 --> 0:16:38.320 market here in the US, if not elsewhere. Autonomous taxi 0:16:38.360 --> 0:16:44.320 platforms are sas models. Tesla's current gross margin is well, 0:16:44.320 --> 0:16:47.160 it's in the teens right now because it's been cutting prices, 0:16:47.240 --> 0:16:51.280 but we think normalized the ev margin is in the 0:16:51.360 --> 0:16:55.720 thirty percent range. Sas margins are in the eighty percent range. 0:16:56.240 --> 0:17:00.760 Most analysts focusing on the stock have nothing in their models, 0:17:00.760 --> 0:17:06.000 are very little for autonomous. Our confidence that autonomous is 0:17:07.280 --> 0:17:11.360 going to happen has increased because it has happened. We 0:17:11.400 --> 0:17:14.040 see way most successful. We see a lot of success 0:17:14.600 --> 0:17:18.280 and commercial success. That is in China. It can be done. 0:17:18.760 --> 0:17:23.120 We think Tesla will launch a national service and Tesla 0:17:23.160 --> 0:17:26.320 this is where AI comes in. Tesla has orders of 0:17:26.400 --> 0:17:29.840 magnitude more data than all of the other auto and 0:17:30.000 --> 0:17:35.760 tech company companies going after this market combined and what's 0:17:35.800 --> 0:17:39.080 important about that is that it has corner cases that 0:17:39.240 --> 0:17:45.280 nobody else has, rare, rare occurrences on the roads that 0:17:46.760 --> 0:17:50.119 it has recorded, and it is prepared for it, but 0:17:50.280 --> 0:17:50.840 others aren't. 0:17:51.200 --> 0:17:51.560 You just don't. 0:17:51.960 --> 0:17:53.399 I just want to jump in. It's kind of like 0:17:53.440 --> 0:17:56.560 a running joke with the Tesla community because Elon Musk 0:17:56.600 --> 0:18:00.600 says every year we're going to have this autonomous drive technology, 0:18:00.640 --> 0:18:03.720 and every year since he started saying it, what twenty seventeen, 0:18:03.760 --> 0:18:07.760 twenty eighteen, it has failed to materialize. Why are you 0:18:07.760 --> 0:18:09.920 so confident it's going to happen in the near future. 0:18:10.280 --> 0:18:13.680 Well, because it has happened, as I just said, and 0:18:14.000 --> 0:18:18.359 so it's not. It's not if it is when. That's 0:18:18.440 --> 0:18:23.680 the most important reason. Interestingly, in his last conference call, 0:18:23.720 --> 0:18:26.840 Tesla's last conference call, Elon said, yeah, I know I've 0:18:26.840 --> 0:18:28.120 been wrong about it, so I'm not. 0:18:28.119 --> 0:18:29.280 Even going to make a projection. 0:18:29.400 --> 0:18:31.439 I actually thought that was good and maybe I had 0:18:31.520 --> 0:18:34.639 has a better shot now and we're looking at some 0:18:34.680 --> 0:18:38.919 of their hiring and their job postings and seeing rumblings 0:18:38.960 --> 0:18:42.119 in different cities that they're starting to get ready. 0:18:42.200 --> 0:18:44.480 Hey, Kathy, something I know I've brought up this with 0:18:44.560 --> 0:18:46.760 you before. But I think back to are you and 0:18:47.000 --> 0:18:48.960 my first interview back in May of twenty fourteen, so 0:18:49.000 --> 0:18:51.600 almost ten years ago. But you brought up Elon Musk 0:18:51.640 --> 0:18:54.520 when he wasn't a household name or what his company 0:18:54.600 --> 0:18:57.600 was doing, and you likened him to Thomas Edison, And 0:18:57.640 --> 0:18:59.639 I guess what I want to ask you. You know this, 0:19:00.440 --> 0:19:02.399 you talk with him, you followed him obviously for a 0:19:02.440 --> 0:19:05.520 long time. Do you ever feel you know, do you 0:19:05.520 --> 0:19:08.240 feel that way still about him in terms of likening 0:19:08.280 --> 0:19:10.520 to someone like Thomas Edison? And how do you find 0:19:10.560 --> 0:19:13.439 clarity and feel comfort in some of the questionable and 0:19:13.520 --> 0:19:17.720 controversial things that that Elon comments on or that he says. 0:19:18.920 --> 0:19:26.399 Yes, well, we we're focused on the technology and we're 0:19:27.560 --> 0:19:29.240 as is he. 0:19:29.240 --> 0:19:31.439 He is the inventor of our age. 0:19:31.560 --> 0:19:35.480 And this age is a very special age because the 0:19:35.800 --> 0:19:39.760 five major innovation platforms around which we have centered our 0:19:39.800 --> 0:19:45.639 research are converging, and three of them he is helping 0:19:45.680 --> 0:19:51.080 to converge. This autonomous taxi platform opportunity is the convergence 0:19:51.119 --> 0:19:56.320 of robotics. Autonomous vehicles are robots, energy storage they will 0:19:56.359 --> 0:20:00.600 be electric right, and artificial intelligence. We're the at three 0:20:00.760 --> 0:20:05.879 separate s curves feeding each other and should lead to 0:20:05.920 --> 0:20:11.320 super exponential growth. He has understood this idea that technologies 0:20:11.840 --> 0:20:14.960 are going to converge with one another, and that is 0:20:15.000 --> 0:20:18.600 the way he's been thinking his first principles research. Just 0:20:18.640 --> 0:20:21.520 because something's been done one way for a very long time, 0:20:21.600 --> 0:20:25.159 think autos, doesn't mean it is going to remain that way. 0:20:25.600 --> 0:20:26.760 And that's why he's going to win. 0:20:26.840 --> 0:20:29.399 Do you ever feel though that he gets distracted or 0:20:30.040 --> 0:20:30.960 or candidate to it. 0:20:31.480 --> 0:20:38.760 Yeah, he is so laser focused on technology. And in 0:20:38.800 --> 0:20:41.439 the case of Tessela, the electric vehicle side that is 0:20:41.480 --> 0:20:44.800 on automatic pilot, they are just scaling and what he 0:20:44.960 --> 0:20:50.159 is doing is becoming, you know, the manufacturer of factories. 0:20:51.119 --> 0:20:54.320 He's trying to figure out how to automate and continue 0:20:54.359 --> 0:20:57.399 to drive down the costs there. His focus is on 0:20:57.480 --> 0:21:02.159 autonomous now certainly, and of course you can say on 0:21:02.600 --> 0:21:05.560 x's distracted, but he's really more focused on the innovation. 0:21:05.760 --> 0:21:09.920 How can I go back to the future where I started, 0:21:10.040 --> 0:21:13.280 which was in the payments app Space sold to PayPal. 0:21:14.240 --> 0:21:18.359 How can I turn this into not only a payments app, 0:21:19.359 --> 0:21:22.400 but an everything app? And I think he's hard at 0:21:22.440 --> 0:21:24.920 work doing that in ways that we don't know yet. 0:21:25.040 --> 0:21:27.200 We are, of course talking with Kathy Woods. She's the CEO, 0:21:27.320 --> 0:21:30.000 CIO and of course founder of ARC invest joining us 0:21:30.000 --> 0:21:30.640 from Florida. 0:21:30.760 --> 0:21:33.600 Hey, Kathy, you're talking about the future of transportation. We 0:21:33.680 --> 0:21:36.040 got to talk about Archer Aviation. One of the most 0:21:36.080 --> 0:21:38.920 read stories today is about the company that you've been 0:21:38.920 --> 0:21:42.320 buying up. It's a developer of air taxis, Archer Aviation. 0:21:42.440 --> 0:21:45.639 Your stake around ten percent across several of your ETFs. 0:21:46.400 --> 0:21:49.560 You're the third largest investor in the name. We should 0:21:49.600 --> 0:21:52.200 note shares down roughly thirty percent so far this year. 0:21:52.200 --> 0:21:54.640 As our own Sam Potter writes today, you are once 0:21:54.640 --> 0:21:56.960 again on the other side of a short call made 0:21:57.040 --> 0:21:59.200 by Grizzly Research. Last time you were in a similar 0:21:59.200 --> 0:22:01.919 spot regarding differ name Too Simple. You lost a lot 0:22:02.000 --> 0:22:04.679 and eventually sold most of your position. So talk to 0:22:04.720 --> 0:22:07.679 us about why you believe in Archer and does it 0:22:07.680 --> 0:22:10.399 ever worry you to go against the short sellers. 0:22:12.720 --> 0:22:20.720 So our investment process is centered around research and original research. 0:22:21.840 --> 0:22:26.199 I'll start with Too Simple. We sold Too Simple after 0:22:26.960 --> 0:22:34.239 the CEO, who was the technology visionary, left and so 0:22:34.840 --> 0:22:38.120 Grizzly got that right. I don't think for the right reasons. 0:22:38.480 --> 0:22:41.240 Although we were in the teeth of a massive bear 0:22:41.359 --> 0:22:45.080 market as well. If that CEO had not left, I 0:22:45.119 --> 0:22:47.480 don't think we would have sold that stock. In the 0:22:47.480 --> 0:22:51.000 case of Archer, we have a high degree of confidence 0:22:51.080 --> 0:22:54.320 in Archer. One thing to understand about ARC is we 0:22:54.400 --> 0:22:57.040 are the closest ARC is the closest you'll find to 0:22:57.080 --> 0:23:01.919 a venture capital company in the public ech markets, and 0:23:02.320 --> 0:23:07.199 we tread where others in the traditional asset management world 0:23:07.400 --> 0:23:09.800 will not go, at least on the public side. 0:23:10.560 --> 0:23:12.280 When we see a real opportunity. 0:23:12.600 --> 0:23:17.480 As we're doing our work on autonomous vehicles, we concluded 0:23:18.080 --> 0:23:21.320 that the cost is going to drop so much that 0:23:21.480 --> 0:23:25.000