WEBVTT - Businessweek Extra - Cathie Wood 0:00:02.520 --> 0:00:06.400 This is Bloomberg Business Week from Bloomberg Radio. I'm Jason 0:00:06.440 --> 0:00:08.840 Kelly and I'm Carol Master. Welcome to the Bloomberg Business 0:00:08.880 --> 0:00:11.280 Week Extra. It's a weekly podcast bring you an in 0:00:11.320 --> 0:00:14.200 depth interview you will not hear anywhere else. This week 0:00:14.320 --> 0:00:17.960 it's Kathy Would, CEO and ce IO of Arc Investments. 0:00:17.960 --> 0:00:21.200 So from fintech to biotech, to Tesla and more. She 0:00:21.400 --> 0:00:24.560 breaks down by what's going in the markets. Yep, it's 0:00:24.600 --> 0:00:27.360 a troublesome thing and it's worrisome and it certainly has 0:00:27.360 --> 0:00:30.920 a human toll. But there's also when you see financial disruption, 0:00:31.160 --> 0:00:34.440 there's innovation and that means opportunities for investors well and 0:00:34.520 --> 0:00:38.280 her investors have made out very well with her calls 0:00:38.360 --> 0:00:40.320 over the past year. Is one of the top performing 0:00:40.720 --> 0:00:44.720 managers out there. Also incredibly thoughtful. She gave us a 0:00:44.760 --> 0:00:46.960 sense of the secret sauce. Check it out, so we 0:00:47.000 --> 0:00:49.360 are delighted to have back with us. Kathy Would. She's 0:00:49.360 --> 0:00:53.519 CEO at Ark Investment. They've got about eleven billion dollars 0:00:53.560 --> 0:00:56.920 in assets under manager. She's also Chief Investment Officer. She's 0:00:56.960 --> 0:00:59.200 back in our Bloomberg Interactive Broker Studio and I have 0:00:59.240 --> 0:01:02.000 to say first of all, welcome back. I know it's 0:01:02.120 --> 0:01:04.360 I know it's a busy time and I was looking 0:01:04.400 --> 0:01:06.640 at a bunch of your funds and they're still up 0:01:06.640 --> 0:01:09.960 this year. And what's been a really tough obviously as 0:01:09.959 --> 0:01:11.959 you know already market environment and where we've seen a 0:01:12.000 --> 0:01:14.840 broad based selling um Before we talk specifics, what do 0:01:14.920 --> 0:01:18.360 you how do you assess this market environment right now? Well, 0:01:18.440 --> 0:01:21.360 I think there clearly is a lot of fear. The 0:01:21.440 --> 0:01:24.440 VIX got up to sixty two, that's higher than it 0:01:24.520 --> 0:01:27.240 has for a number of years, So there is a 0:01:27.280 --> 0:01:29.600 lot of fear in the market. It has been stirred 0:01:29.600 --> 0:01:34.399 by the coronavirus. UH and UH. I think that a 0:01:34.520 --> 0:01:38.399 lot of whether it's hedge funds, are just managers within 0:01:38.560 --> 0:01:43.240 a negative bias having to do with debt and debt deflation, 0:01:43.920 --> 0:01:49.240 feel like this is the moment we capitulation or what 0:01:49.640 --> 0:01:52.000 well they feel like. And you can start with the 0:01:52.120 --> 0:01:56.760 energy sector. The energy sector, much of it is highly leveraged, 0:01:56.960 --> 0:02:00.560 right and UH, and we're seeing an in plosion of 0:02:00.760 --> 0:02:04.800 oil prices now shale, the shale gas and oil movement 0:02:05.160 --> 0:02:08.520 is going to stop. And what are they going to do? 0:02:08.560 --> 0:02:10.440 How are they going to service their debts? So we're 0:02:10.480 --> 0:02:13.720 getting you know, real to rest in that in that sector. 0:02:14.080 --> 0:02:18.080 This doesn't surprise us at ARC because we've seen a 0:02:18.120 --> 0:02:21.079 lot of companies, not just an energy but in many sectors. 0:02:21.080 --> 0:02:25.440 Even Apple has done this. They've leveraged up to buy 0:02:25.520 --> 0:02:29.360 back their shares over many years. Now. Apple is nowhere 0:02:29.360 --> 0:02:34.480 near any trouble. But the companies that were in cyclical, 0:02:34.600 --> 0:02:37.200 very cyclical areas of the market, they're going to be 0:02:37.200 --> 0:02:39.960 in trouble. So from that point of view, we agreed 0:02:40.080 --> 0:02:44.240 with the bears out there. Uh, but we're not participating 0:02:44.240 --> 0:02:47.960 in those spaces in the market. That's maybe one reason that. 0:02:48.080 --> 0:02:51.919 And I'll say until today most of our funds were up. 0:02:52.840 --> 0:02:57.720 Today may have taken them below below positive And so Cathy, 0:02:57.760 --> 0:03:00.480 when when you come into a moment in the market 0:03:00.639 --> 0:03:04.160 like this, everybody you know likes to say, well, it's 0:03:04.200 --> 0:03:05.920 like this, And then there are other people, you know, 0:03:05.960 --> 0:03:08.760 like this other time, or it's like the financial crisis, 0:03:08.880 --> 0:03:10.880 or it's like the dot com bust or whatever. There 0:03:10.880 --> 0:03:14.000 are some people who subscribe to the this time it's 0:03:14.040 --> 0:03:17.960 different sort of narrative. What narrative do you like? What 0:03:18.040 --> 0:03:21.800 narrative do you bring to this? Yes, well, I wrote 0:03:21.840 --> 0:03:24.639 a piece for our website, and I only write usually 0:03:24.639 --> 0:03:29.400 when the markets down and under duress, so it's on 0:03:29.440 --> 0:03:33.360 our website. And basically, as I said there, you know, 0:03:33.800 --> 0:03:37.760 I have only seen three times during my career where 0:03:37.920 --> 0:03:42.000 all the policymakers throughout the world, both monetary and fiscal 0:03:42.240 --> 0:03:45.520 are have been all on the same page. Uh. The 0:03:45.640 --> 0:03:48.640 first was in the mid eighties. The dollar had gone 0:03:48.720 --> 0:03:53.960 up fifty and we were in a deflationary at the 0:03:54.040 --> 0:03:58.600 risk of deflation globally, especially in the emerging markets. The 0:03:58.600 --> 0:04:02.040 the Plaza A Corps is where the finance ministers came 0:04:02.080 --> 0:04:05.720 together and the monetary authorities cooperated as well. The second 0:04:06.000 --> 0:04:08.360 was oh eight o nine, and I remember after Lehman 0:04:08.400 --> 0:04:11.640 went under. I remember saying to my team, look, every 0:04:11.680 --> 0:04:14.720 policymaker in the world is focused on this problem, and 0:04:14.760 --> 0:04:17.520 they all want the same thing to happen. It's probably 0:04:17.560 --> 0:04:20.400 going to happen. And actually we started out performing in 0:04:20.440 --> 0:04:23.800 November of that year. And then uh, this is the 0:04:23.880 --> 0:04:27.200 third time. And of course the coronavirus is what has 0:04:28.120 --> 0:04:31.840 united everyone. We we uh, we want to control that 0:04:32.080 --> 0:04:35.760 and uh, and we've got the monetary and fiscal policy 0:04:35.800 --> 0:04:38.800 makers again all on the same page. So are we 0:04:38.839 --> 0:04:41.880 going to better get them against them. I'm not. I'm not. 0:04:42.839 --> 0:04:45.360 I guess what people are saying, Well, they can't control 0:04:45.480 --> 0:04:48.200 the coronavirus. And I do think there's a lot of 0:04:48.279 --> 0:04:52.360 hysteria out there around the coronavir virus. We're in much 0:04:52.480 --> 0:04:56.640 more of a social media, viral, networking world, and I 0:04:56.640 --> 0:05:00.200 think that's causing a lot of the hysteria. You know, 0:05:00.480 --> 0:05:02.560 as more and more people are doing their homework, they 0:05:03.080 --> 0:05:05.960 learn thirty to forty people a year in the United 0:05:06.000 --> 0:05:10.400 States die of the flu. Thirty to forty million, get it. 0:05:11.120 --> 0:05:13.200 I don't think we're going to see anything like those 0:05:13.279 --> 0:05:16.520 numbers from the coronavirus. So then, how quickly do you 0:05:16.560 --> 0:05:19.000 think Since there, it does look like we're moving towards 0:05:19.040 --> 0:05:22.880 a much more coordinated move among global policymakers, Cathy, So 0:05:23.240 --> 0:05:25.840 when we get to that point and what we have, 0:05:25.960 --> 0:05:28.200 I keep sit talking about parameters on this virus. When 0:05:28.200 --> 0:05:30.600 we know it's contained and we understand that there will 0:05:30.600 --> 0:05:32.920 be an end to this, how quickly does everything bounce back? 0:05:32.960 --> 0:05:35.279 In your view? Well, the way we're looking at this, 0:05:35.279 --> 0:05:38.400 this started in China. China is the leading indicator, and 0:05:38.440 --> 0:05:42.279 we know that the number of deaths now is below 0:05:42.480 --> 0:05:47.080 the number of recoveries, so that is that's the early 0:05:47.160 --> 0:05:49.760 sign of a turn. Now the fatality rate now in 0:05:49.920 --> 0:05:52.120 China is higher than we think it will be in 0:05:52.160 --> 0:05:54.240 the rest of the world. And the reason I've been 0:05:54.279 --> 0:05:58.920 in Wuhan Province. Uh, it's a chimney anyone anyone going there, 0:05:58.920 --> 0:06:03.240 whether it's smog or smoking both. Uh, it's like a chimney. 0:06:03.320 --> 0:06:06.640 So because this coronavirus, which by the way, we have 0:06:07.200 --> 0:06:11.120 two or three other coronavirus is making the rounds annually here. 0:06:11.920 --> 0:06:16.280 Because this coronavirus is focused primarily on those with compromised 0:06:16.640 --> 0:06:21.000 lungs for whatever reason, whether it's asthma or you know, 0:06:21.200 --> 0:06:25.640 elderly lung issues, smoking caused by smoking, or i'll say 0:06:25.720 --> 0:06:28.359 vaping as well. Uh. You know, those people have to 0:06:28.360 --> 0:06:31.640 be very careful. What's so interesting is this is not 0:06:31.880 --> 0:06:35.039 hitting the young. Now, maybe they have it and maybe 0:06:35.080 --> 0:06:39.719 they're spreading it, but they're a what doctors would call asymptomatic. 0:06:40.279 --> 0:06:44.240 So that's very interesting because that's another vulnerable part of 0:06:44.279 --> 0:06:48.000 the population. So at least we can isolate it to 0:06:48.680 --> 0:06:52.479 you know, those who are compromised when it comes to 0:06:52.520 --> 0:06:55.960 the lungs, right, I mean One of the arguments that's 0:06:56.000 --> 0:06:58.840 out there. One of the discussion points is that one 0:06:58.880 --> 0:07:04.800 of the reasons that we're seeinging this relatively quick reversal 0:07:05.040 --> 0:07:08.640 in China is because it's an authoritarian government. You know, 0:07:08.640 --> 0:07:11.080 they're able to sort of lock it down in a 0:07:11.160 --> 0:07:14.520 way that other countries, certainly not this country that we're 0:07:14.520 --> 0:07:17.560 sitting in, can do. How much do you worry about that, 0:07:17.720 --> 0:07:21.800 understanding the world as you do. Yeah, obviously they they 0:07:22.440 --> 0:07:25.800 did all they could and and then some in terms 0:07:25.800 --> 0:07:29.600 of because when says stay home, people stay home. Yes, yes, 0:07:29.960 --> 0:07:33.080 I think, you know, I think that all of us 0:07:33.120 --> 0:07:36.240 are taking precautions. I think one thing that I think 0:07:36.240 --> 0:07:41.000 will happen is that the traditional flu is probably not 0:07:41.040 --> 0:07:45.480 going to be as deadly or contagious because we've suddenly 0:07:45.520 --> 0:07:48.400 found all of these good hygiene habits. I mean, I'm 0:07:48.440 --> 0:07:51.400 seeing people talking about scrubbing their hands and doing the 0:07:51.400 --> 0:07:55.600 alphabet while they do it, you know, So I think 0:07:56.040 --> 0:07:59.800 I think that is also going viral, which is very good. Yeah. 0:08:00.200 --> 0:08:02.480 My favorite thing, sorry, just asn't aside, since we have 0:08:02.480 --> 0:08:04.840 a little time. My favorite thing that I found today 0:08:04.920 --> 0:08:07.240 is there's a website. I'll tweet it out and send 0:08:07.240 --> 0:08:09.600 it to Dave Wilson already that you can put in 0:08:10.000 --> 0:08:13.520 your favorite song and it will do it. It will 0:08:13.560 --> 0:08:15.920 put the lyrics against all the different steps of watching 0:08:15.960 --> 0:08:19.480 your hands. So whether it's Stairway to Heaven or Sweet Nome, Alabama, 0:08:20.000 --> 0:08:22.560 or whatever it is, you know all the different steps 0:08:22.560 --> 0:08:26.320 that it's useful baby shark for you, very shark for me, Kathy. 0:08:26.400 --> 0:08:28.559 What I do wonder and the conversation we keep having 0:08:28.720 --> 0:08:31.120 is what changes long term as a result of this. 0:08:31.240 --> 0:08:33.400 We've had such a I feel like a conversation of 0:08:33.720 --> 0:08:36.600 around supply chains coming off the US China trade war. 0:08:36.760 --> 0:08:38.800 You know, tech is your you know you look at disruption, 0:08:39.080 --> 0:08:42.400 you look at technology. Um you've been to like you 0:08:42.480 --> 0:08:45.960 understand this global supply chain? Does that change going forward? Well? 0:08:46.120 --> 0:08:49.200 What now you have to consider the source. But what 0:08:49.280 --> 0:08:52.600 I'm about to say, but what is true that during 0:08:53.200 --> 0:08:58.280 times of turbulence, innovation actually gains traction and market share. 0:08:58.600 --> 0:09:00.839 And I can give you two tangible examples from O 0:09:00.960 --> 0:09:03.360 eight oh nine, we thought the world was falling apart. 0:09:03.800 --> 0:09:09.520 Tech budgets were cut by right Salesforce. Dot COM's worst 0:09:09.679 --> 0:09:12.320 quarter from a revenue growth point of view, worst was 0:09:12.480 --> 0:09:20.360 up Amazon. Amazon's worst quarter was up four. So and 0:09:20.520 --> 0:09:25.800 in this particular crisis, we saw this sequencing of that virus, 0:09:25.800 --> 0:09:30.280 of the coronavirus COVID nineteen in two days. For Stars 0:09:30.360 --> 0:09:33.080 in two thousand three, it took I think it took 0:09:33.160 --> 0:09:37.120 five months before they could even figure out what it was. Right, 0:09:37.280 --> 0:09:40.000 we had two days and uh. And now, of course 0:09:40.040 --> 0:09:45.040 we're accelerating the timeline to trials for vaccines and then 0:09:45.960 --> 0:09:48.760 and then the scaling of vaccines. That's going to take 0:09:48.800 --> 0:09:51.680 time for sure, but I think we'll have a vaccine 0:09:51.720 --> 0:09:55.000 for the next flu season. How do you invest in 0:09:55.040 --> 0:10:00.120 a time like this. We concentrate our portfolios toward our 0:10:00.200 --> 0:10:05.319 highest conviction names and so and towards these names generally 0:10:05.520 --> 0:10:07.720 are going to be a part of the solution. So 0:10:07.760 --> 0:10:11.640 you talk about supply chain. Three D printing has taken 0:10:11.679 --> 0:10:14.480 a long time to take off. It's been, if you 0:10:14.520 --> 0:10:18.959 look at some other stocks, for six years. Okay. Now, 0:10:19.000 --> 0:10:21.080 remember we've talked about Tesla a lot in the past, 0:10:21.080 --> 0:10:23.360 and I always used to say, uh, you know, I 0:10:23.440 --> 0:10:25.800 look at a base like that, and that effectively is 0:10:25.800 --> 0:10:28.000 the bulls and their bears fighting each other. There's a 0:10:28.040 --> 0:10:32.920 big controversy, right, Uh, And bases either break out or 0:10:32.960 --> 0:10:35.839 they break down. In the case of Tesla, we're saying, 0:10:36.040 --> 0:10:37.920 watch out, there's a big base, this is going to 0:10:37.960 --> 0:10:40.520 be a big breakout. I would maintain the same for 0:10:40.600 --> 0:10:43.840 three D printing stocks. Now it's a little different because 0:10:43.840 --> 0:10:50.120 the industrial sector isn't as uh, it's more methodical. It 0:10:50.240 --> 0:10:55.280 isn't as quick as break things uh in the tech world. Right. 0:10:55.840 --> 0:10:59.480 Uh So, but we do know the aerospace world, which 0:10:59.520 --> 0:11:02.080 is is going to be in a world of trouble here. 0:11:02.360 --> 0:11:05.080 They've got to cut their costs. They got to cut 0:11:05.120 --> 0:11:07.559 their costs. And with three D printing, not only can 0:11:07.559 --> 0:11:10.560 you cut costs and they're they're printing engine parts now 0:11:11.360 --> 0:11:15.400 by you can cut cost by plus, but you're also 0:11:15.720 --> 0:11:18.520 shrinking the form factors, are lightening the weight of the 0:11:18.559 --> 0:11:21.760 planes as well, so bringing many more efficiencies. All right, 0:11:21.800 --> 0:11:23.720 just want to bring you a headline just crossing the 0:11:23.720 --> 0:11:26.400 Bloomberg Brazil stocks having their worst day in twenty one 0:11:26.520 --> 0:11:30.679 years and entering into a bear market. It's something that 0:11:30.720 --> 0:11:32.520 we're talking about a lot. We're talking with Dave Wilson. 0:11:33.200 --> 0:11:36.080 Are stocks that are earlier about what a bear market, 0:11:36.280 --> 0:11:40.199 what that number is? Uh? Here in the United States, 0:11:40.240 --> 0:11:43.400 we're not there yet but getting close, and as Day 0:11:43.440 --> 0:11:46.319 pointed out, if we have another day like today, we 0:11:46.360 --> 0:11:48.319 will get there. Also want to bring you some headlines 0:11:48.360 --> 0:11:51.960 from stitch fix. It's a name well known to our audience. 0:11:52.000 --> 0:11:56.719 A lot of stitch fixers out there disappointing with their forecast. 0:11:57.200 --> 0:11:59.599 UH the stock following about the after I was this 0:11:59.679 --> 0:12:03.760 third quarter revenue, Uh, their view trailing its lowest estimate. 0:12:04.120 --> 0:12:06.760 The estimate had been for five six point three million. 0:12:07.160 --> 0:12:09.160 They said it will be in the range of four sixty. 0:12:10.559 --> 0:12:13.800 That's pretty big mess. So you asked what might turn 0:12:13.880 --> 0:12:18.560 this and uh, you know, Warren Buffett uh said, just 0:12:18.760 --> 0:12:20.600 a few weeks ago, or maybe it was last week, 0:12:20.920 --> 0:12:24.120 he said, when bond yields were at two percent, He said, 0:12:24.200 --> 0:12:26.600 do you know that's the that bonds are selling for 0:12:26.640 --> 0:12:30.800 fifty times earnings and their earnings are not going to increase. Well, 0:12:30.840 --> 0:12:34.400 think about what fifty basis points is, right, that's two 0:12:34.520 --> 0:12:38.280 hundred times earnings. Stocks are selling at seventeen times earnings, 0:12:38.400 --> 0:12:42.240 and the end on average, there's there's probably close to 0:12:42.280 --> 0:12:44.600 a two percent yield in stocks. Now, so you go 0:12:44.679 --> 0:12:48.040 back to that comparison, right, I mean, from the allocation 0:12:48.120 --> 0:12:52.560 point of view, Uh, stocks are becoming, um, you know, 0:12:53.760 --> 0:12:59.280 very attractive. You do have to aim away from heavily 0:12:59.440 --> 0:13:02.480 leveraged companies that have not been investing in their future. 0:13:02.720 --> 0:13:05.120 They've just been buying back their own stock. You are 0:13:05.160 --> 0:13:08.760 listening to Bloomberg this week Jason Kelly Carroll Masser streaming 0:13:08.800 --> 0:13:11.360 live on YouTube as well. Still with us, Kathy would 0:13:11.640 --> 0:13:13.840 We've captured her for the better part of an hour. 0:13:14.040 --> 0:13:17.760 CEO and chief investment officer of our invest looking after 0:13:17.960 --> 0:13:22.240 more than eleven billion dollars. So, Kathy, we just heard 0:13:22.679 --> 0:13:26.080 very much that first part of what would be a 0:13:26.200 --> 0:13:29.520 V or a you the downward part? Are we headed 0:13:29.559 --> 0:13:33.199 for a V shaped recovery here? Well, we think that 0:13:33.200 --> 0:13:36.600 that could be the biggest head fake coming out of this. Uh. 0:13:36.720 --> 0:13:39.480 And one of the reasons is if you look at 0:13:39.600 --> 0:13:42.920 consumer sentiment in spending both in the United States and 0:13:43.080 --> 0:13:46.199 China until perhaps mid February, we haven't gotten all those 0:13:46.280 --> 0:13:51.040 numbers yet. Uh. They those numbers were very strong, very firm, 0:13:51.400 --> 0:13:55.520 and consumer confidence was very high. In the United States especially, 0:13:55.600 --> 0:13:59.960 the consumer confidence was very high. Uh. And so consumer 0:14:00.000 --> 0:14:05.719 we're spending was was it was carrying on while businesses 0:14:06.360 --> 0:14:09.520 we're cutting back. They were they were worried about the 0:14:09.559 --> 0:14:12.440 China trade conflict, they were worried about the inverted deal curve. 0:14:12.559 --> 0:14:15.600 Last year they were there, they were negative from a 0:14:15.640 --> 0:14:19.400 sentiment point of view, they were turning quite negative, and 0:14:19.480 --> 0:14:23.800 so you had to disconnect consumption up and purchasing managers 0:14:23.840 --> 0:14:29.400 indexes around the world plunging. So we had been saying, well, okay, 0:14:29.880 --> 0:14:33.720 if the consumer keeps spending, businesses are going to have 0:14:33.960 --> 0:14:37.400 to have to start investing again, both in inventories and 0:14:37.440 --> 0:14:41.160 capital spending, uh to meet that demand. Right, otherwise they'll 0:14:41.160 --> 0:14:44.600 just lose business and they'll lose out competitively. Now we've 0:14:44.640 --> 0:14:48.240 had this crisis, and I believe that the reaction of 0:14:48.280 --> 0:14:52.880 businesses is even more dire than it is for consumers. 0:14:52.880 --> 0:14:56.560 If you think about consumers, they're hoarding, right. So so 0:14:56.640 --> 0:15:01.160 maybe consumers spending in some respects has gotten a booster 0:15:01.280 --> 0:15:04.400 here and we'll give way a little bit. But the 0:15:04.440 --> 0:15:08.280 inventories have to be depleting rapidly, and we know capital 0:15:08.320 --> 0:15:13.440 spending has gone nowhere in the last years except perhaps down. UH. 0:15:13.640 --> 0:15:17.080 So you know, you've had the largest part of the 0:15:17.200 --> 0:15:22.280 US economy moving forward and the business sector not playing ball. Uh. 0:15:22.320 --> 0:15:26.120 This will cause an interruption but I think if we're 0:15:26.200 --> 0:15:30.480 right and this is going to pass, We've got spring coming, 0:15:31.000 --> 0:15:35.600 and viruses don't like spring. Uh. If this is going 0:15:35.680 --> 0:15:39.240 to pass, and the and the fatality rate is nowhere 0:15:39.240 --> 0:15:42.320 near China's. In other words, we do start comparing this 0:15:42.480 --> 0:15:46.600 more not completely to the traditional flu. Uh, then I 0:15:46.640 --> 0:15:50.520 think the turn could be a very sharp v as 0:15:50.560 --> 0:15:54.680 businesses scramble to catch up. Pretty dramatic. Yes, all right, 0:15:54.920 --> 0:15:57.880 So I am curious then, because I know you know 0:15:57.920 --> 0:16:01.440 you you invest in these various disruptive spaces, and I 0:16:01.480 --> 0:16:04.520 do wonder, um, one of your funds is the genomic revolution? 0:16:04.720 --> 0:16:07.400 Is is there a healthcare? Is there a genomic play 0:16:07.560 --> 0:16:13.080 here for you? Because of the virus? Sure sequencing? So illumina? Uh? 0:16:13.280 --> 0:16:14.880 Do you have owned for a long time? We've owned 0:16:14.920 --> 0:16:17.640 it for a long time. It's been flagging recently. We 0:16:17.720 --> 0:16:21.440 understand why it has um there. They've launched a new 0:16:21.480 --> 0:16:23.880 product cycle and we think that's going to get it 0:16:23.920 --> 0:16:27.920 going again. But hearing news about the virus being sequenced 0:16:27.920 --> 0:16:30.400 in just two days, uh, and then we have to 0:16:30.480 --> 0:16:32.840 keep sequencing it because we need to know if it's 0:16:32.920 --> 0:16:38.720 mutating our right, So sequencing is critical. There have been 0:16:38.760 --> 0:16:41.920 a number of vaccine we did own, or we do 0:16:42.040 --> 0:16:46.440 own an Ovo, which has tripled, quadrupled now today it 0:16:46.520 --> 0:16:50.080 had a hit because Citron went after it. But you know, 0:16:50.160 --> 0:16:55.040 some of the vaccine UH makers are are benefiting nicely. 0:16:55.120 --> 0:16:57.920 Our Tourists is another one that has benefited. That is 0:16:57.960 --> 0:17:02.280 benefiting for the same reason, and pugen is UH is 0:17:02.320 --> 0:17:05.200 benefiting from for a different reason. It has not sold 0:17:05.200 --> 0:17:08.800 off at all, and that's because it has identified more 0:17:08.880 --> 0:17:12.720 targets from an immunotherapy point of view cancer immunotherapy than 0:17:12.960 --> 0:17:15.280 almost any other company. And it's just a very small 0:17:15.320 --> 0:17:18.120 company out of Israel. So it's held in very nicely, 0:17:18.240 --> 0:17:20.240 I have to say, and I looked at these numbers. 0:17:20.240 --> 0:17:22.159 I think it was either around noon or one that 0:17:22.280 --> 0:17:24.360 fund is up twelve point four percent this year, so 0:17:24.520 --> 0:17:28.560 in a market back gave back a lot today. But 0:17:28.600 --> 0:17:30.960 I'm just saying, in a market environment where you can't 0:17:30.960 --> 0:17:34.040 really find any cover, you're still holding out of some game. Again, 0:17:34.119 --> 0:17:38.280 this is innovation gaining traction during difficult times because businesses 0:17:38.440 --> 0:17:42.240 and consumers are willing to think about doing things differently 0:17:42.280 --> 0:17:46.040 when they're afraid. Cathy Woods, CEO CIO of archivest here 0:17:46.240 --> 0:17:48.560 with us in our new York studio. So what's the 0:17:48.600 --> 0:17:52.720 mood like in your shop right now? Okay, Well, we 0:17:52.840 --> 0:17:56.320 have been through these ups and downs, risk on, risk 0:17:56.359 --> 0:18:00.000 off since we started in two thousand and fourteen, more 0:18:00.000 --> 0:18:03.320 than I ever have experienced in my career. And uh, 0:18:03.800 --> 0:18:08.520 the mantra in our at ARC is innovation gains traction 0:18:08.600 --> 0:18:14.520 during tumultuous times. So let's let's let's pick concentrate our 0:18:14.560 --> 0:18:18.320 portfolios towards those companies that are going to help solve 0:18:18.400 --> 0:18:21.800 these problems. And that's what we do. So it's I 0:18:21.800 --> 0:18:24.119 won't say it's exciting because we never like to see 0:18:24.480 --> 0:18:27.159 the market going down. But you know, the other thing 0:18:27.200 --> 0:18:29.760 that we do is sometimes we lose confidence in some 0:18:29.800 --> 0:18:32.639 stocks relative to others. This is a nice time to 0:18:32.680 --> 0:18:34.840 do some house cleaning, and what we do is generate 0:18:34.920 --> 0:18:38.040 losses that we can take games against in the future. 0:18:38.480 --> 0:18:41.440 So so you are cleaning out some names at this point. Yeah, 0:18:41.560 --> 0:18:44.439 we we have taken down some names. Yes, we have. 0:18:45.240 --> 0:18:49.080 We've sold names. Like you know, I always forget the 0:18:49.080 --> 0:18:53.040 ones we're so but out of sight, but by do 0:18:53.600 --> 0:18:58.040 is is one of them, mostly in in our Autonomous 0:18:58.080 --> 0:19:01.560 Technology and Robotics fund. We just don't we see a 0:19:01.640 --> 0:19:05.120 lot of disarray in the electric vehicle and autonomous vehicle 0:19:05.160 --> 0:19:08.320 space in China, and that's why, primarily why we owned 0:19:08.400 --> 0:19:11.960 that one, and so uh yeah, we we bought more 0:19:12.160 --> 0:19:17.240 more Tesla, of course, uh Tesla. Tesla one might think 0:19:17.359 --> 0:19:20.359 might be hurt by lower oil prices because of course 0:19:20.400 --> 0:19:24.760 internal commission. But we think that even with oil prices 0:19:24.800 --> 0:19:29.360 coming down, that the total cost of ownership of an 0:19:29.359 --> 0:19:34.399 electric vehicle today is lower than that of a gas 0:19:34.400 --> 0:19:37.000 powered car, and it's only going to get lower still 0:19:37.000 --> 0:19:40.520 with us Kathy Wood, CEO, and see io at our 0:19:40.640 --> 0:19:43.800 investment in our Bloomberg Interactive Broker studio, they have over 0:19:43.840 --> 0:19:47.000 eleven billion dollars in assets under management. So I'm gonna 0:19:47.000 --> 0:19:48.760 go through some names with you. We didn't. We did 0:19:49.040 --> 0:19:51.560 cheat a little bit about Tesla. You and I, Jason, 0:19:51.600 --> 0:19:54.679 we've all talked with you a lot about your position 0:19:54.680 --> 0:19:57.080 in Tesla. You're still very much a ball on it. Yeah, 0:19:57.080 --> 0:20:00.399 And we got some new information last week from g M. 0:20:00.520 --> 0:20:04.159 It had its Electric Vehicle Day and we took some 0:20:04.320 --> 0:20:08.320 of the specs they threw out there. They weren't too generous, 0:20:08.359 --> 0:20:10.359 but what with what we got, we were able to 0:20:10.440 --> 0:20:15.880 confirm that Tesla is three years ahead of GM on 0:20:16.400 --> 0:20:20.520 certainly battery technology. Uh. They also we're talking a lot 0:20:20.560 --> 0:20:24.720 about cobalt reducing that in the battery. Tesla's already there. 0:20:25.119 --> 0:20:30.120 So you know, it was very interesting illuminating. Yes, it's 0:20:30.119 --> 0:20:32.959 a big gap, and Tesla's good. Three years from now 0:20:33.000 --> 0:20:35.560 will be in a completely different place. Did that did 0:20:35.600 --> 0:20:38.040 three years surprise you? Did you think they have been 0:20:38.119 --> 0:20:40.520 We had no, no, no, no, we we had been 0:20:40.560 --> 0:20:45.240 saying three to four years when it comes to autonomous 0:20:45.359 --> 0:20:50.640 vehicles and artificial intelligence chips than most automakers are four 0:20:50.720 --> 0:20:53.600 years behind Tesla. We believe Kathy is GM the one 0:20:53.640 --> 0:20:55.800 though to fault, Like I wonder is it more like 0:20:55.920 --> 0:20:58.560 Mercedes or one of the years? Like who is the 0:20:58.640 --> 0:21:02.840 automaker that's maybe potentially closer to nipping at Tesla's heel 0:21:03.000 --> 0:21:06.320 in interesting uh. Elon Musk has said he he would 0:21:06.320 --> 0:21:11.199 not take any manufacturer seriously until they vertically integrated and 0:21:11.240 --> 0:21:15.639 build out their own battery plant. Volkswagen's doing that, interestingly. 0:21:15.720 --> 0:21:18.560 Now they're having a heap of trouble with their software though, 0:21:19.119 --> 0:21:23.119 and so so you know, this is a completely different 0:21:23.200 --> 0:21:27.679 dynamic from traditional auto manufacturing. So they have mountains to 0:21:27.800 --> 0:21:30.879 climb right, and uh, we think it's going to be 0:21:30.880 --> 0:21:34.280 a very tough lift for them. Way Mo is the 0:21:34.320 --> 0:21:39.639 one most people would point to. Very interesting Google now 0:21:40.280 --> 0:21:43.560 is using outside funding for Waymo. They don't want to 0:21:43.600 --> 0:21:47.360 put all, you know, their investment dollars into these moon shots, 0:21:47.720 --> 0:21:50.840 and we're wondering if they're getting ready to spin it. 0:21:50.880 --> 0:21:54.040 We have no idea, but they've certainly distanced themselves to 0:21:54.240 --> 0:21:57.760 some extent. They don't want to, uh to take all 0:21:57.800 --> 0:22:01.320 the risk, uh when it comes to the autonomous vehicle fronds. 0:22:01.359 --> 0:22:04.119 So talk to us about the last year eighteen months, 0:22:04.200 --> 0:22:07.920 especially when it comes to Tesla. Not always easy to 0:22:08.440 --> 0:22:11.879 be to be a bull, certainly amid all of the 0:22:12.160 --> 0:22:14.480 you know, we talked a lot about narratives today, amid 0:22:14.560 --> 0:22:18.280 all the loud narratives, especially from the Bears, that obviously 0:22:18.359 --> 0:22:20.800 is quite a down a lot over the past six months. 0:22:20.800 --> 0:22:24.400 Because but do you ever have any moments of doubt 0:22:24.440 --> 0:22:27.800 on that one? So I'm probably the most trolled portfolio 0:22:27.840 --> 0:22:34.360 manager on Twitter because of Twitter and bitcoin and uh no, actually, um, 0:22:34.960 --> 0:22:39.040 a Wall Street Journal reporter on Twitter, I didn't even 0:22:39.040 --> 0:22:41.679 know it was a reporter said, so, Cathy, would how 0:22:41.760 --> 0:22:44.800 do you feel losing all your your clients all this 0:22:44.920 --> 0:22:47.480 money in Tesla. This was April May of last year 0:22:47.520 --> 0:22:50.680 when it was in the one nineties one eighties, and 0:22:51.000 --> 0:22:53.440 I didn't know who, And I rarely respond to those things. 0:22:53.560 --> 0:22:57.639 I said, I don't feel any regret or doubt in 0:22:57.680 --> 0:23:00.440 the least. In fact, our conviction has gone up during 0:23:00.600 --> 0:23:04.439 down times for stocks. We double down on our soul searching. 0:23:04.480 --> 0:23:09.280 Of course, that's when some of our most interesting insights 0:23:09.280 --> 0:23:13.359 occur again because we're digging deeper and deeper. Uh so 0:23:13.560 --> 0:23:18.760 we we actually our conviction in Tesla increase during that downturn. 0:23:18.840 --> 0:23:21.800 Do you sell the like at all? When like it? 0:23:21.880 --> 0:23:23.480 Because I thought I looked at as at the end 0:23:23.520 --> 0:23:24.960 of last year that you guys had paired back a 0:23:24.960 --> 0:23:28.320 little bit. Well, if you look at the page on 0:23:28.400 --> 0:23:32.160 Bloomberg you would see that, but we have it has 0:23:32.200 --> 0:23:35.240 stayed our top position in the flagship funds. So it 0:23:35.320 --> 0:23:38.120 would have been a twenty five percent position. We've kept 0:23:38.119 --> 0:23:40.520 it at ten percent. So we did sell a lot, 0:23:41.040 --> 0:23:44.480 But that's what a portfolio manager does when a stock quadruples, 0:23:44.520 --> 0:23:49.120