WEBVTT - Ark Invest's Wood Committed to Bitcoin 0:00:00.080 --> 0:00:01.480 We've got a great guest. I want to get right 0:00:01.480 --> 0:00:03.600 to her. Delighted to have back with us to talk 0:00:03.600 --> 0:00:06.280 about so many of the things that really preoccupied us 0:00:06.280 --> 0:00:08.680 over the last couple of weeks. Kathy Would is back 0:00:08.680 --> 0:00:11.240 with us. She's the founder, CEO, and chief investment officer 0:00:11.280 --> 0:00:14.320 of our invest joining us via zoom. Kathy, it is 0:00:14.360 --> 0:00:16.240 so great to have you here with Tim and myself 0:00:16.360 --> 0:00:19.720 alive on radio, TV, across all the Bloomberg platforms. How 0:00:19.760 --> 0:00:24.400 are you doing very well? It's been a very challenging 0:00:24.520 --> 0:00:27.760 few uh while I should say twenty months, but uh, 0:00:28.280 --> 0:00:32.360 you know, we're looking at our portfolios right now and um, 0:00:32.479 --> 0:00:35.760 we are back to where we were in terms of 0:00:36.120 --> 0:00:39.559 calling them deep value portfolios if you give us a 0:00:39.600 --> 0:00:43.680 five year investment time horizon, I mean, we're seeing incredible 0:00:43.760 --> 0:00:46.400 values for the kinds of growth, kind of growth that 0:00:46.400 --> 0:00:48.760 our portfolios are going to deliver. You know where I 0:00:48.800 --> 0:00:50.199 want to go. I gotta talk to you about the 0:00:50.200 --> 0:00:53.000 crypto space. You Um, you know, it's it's a world 0:00:53.080 --> 0:00:55.720 you know really well. We think about the ft X collapse, 0:00:55.800 --> 0:00:59.960 the bankruptcy proceedings today, the coming undone of Sam Makeman Free. 0:01:00.440 --> 0:01:02.560 You know you have been buying into some of the 0:01:02.560 --> 0:01:05.840 different names in the cryptos based coin Base, gray scale 0:01:06.160 --> 0:01:10.840 bitcoin trust. Why should investors trust crypto? Why do you 0:01:10.880 --> 0:01:15.400 trust crypto at this point? Yes, if you look at 0:01:16.280 --> 0:01:21.759 the block chains, let's let's use UH the Bitcoin blockchain 0:01:21.920 --> 0:01:26.679 and Ethereum, what you'll find is they have the infrastructure. 0:01:26.720 --> 0:01:31.800 The technology has not skipped a beat throughout this entire crisis. 0:01:31.840 --> 0:01:35.720 In fact, the hash rate, Bitcoin's hash rate is at 0:01:35.760 --> 0:01:39.560 an all time high, and that is a real indication 0:01:39.600 --> 0:01:44.240 of the security of the network. On Ethereum, we're seeing 0:01:44.640 --> 0:01:50.200 the total value uh staked at twenty four billion, that 0:01:50.440 --> 0:01:55.120 is an all time high. So we think the infrastructure 0:01:55.400 --> 0:02:00.440 is working beautifully. UM. As far as coin Base, this 0:02:00.560 --> 0:02:06.960 is an onshore regulated UH company and wanting to help 0:02:07.040 --> 0:02:12.320 shape regulations. Brian Armstrong, the CEO, and Alicia uh CFO 0:02:12.400 --> 0:02:16.320 have been leaning in into what's going on right now 0:02:16.480 --> 0:02:21.680 and saying, okay, regulators, we need more clarity in order 0:02:21.760 --> 0:02:27.400 to protect to protect investors, those who wanted to get 0:02:27.400 --> 0:02:31.520 involved with a certain types of crypto were forced off 0:02:31.560 --> 0:02:36.079 shore and look at what's happened. So UM, I I 0:02:36.120 --> 0:02:38.520 think that coin Base is going to come out here 0:02:39.440 --> 0:02:42.880 looking very very strong. It just lost a very big 0:02:42.919 --> 0:02:45.959 competitor in f t X. Well what is the market 0:02:45.960 --> 0:02:49.239 missing though, because you know, that could be one narrative, Cathy. 0:02:49.320 --> 0:02:51.560 But at the same time, we haven't exactly seen shares 0:02:51.600 --> 0:02:54.680 of coin based rallies since FTX is collapsed. Do you 0:02:54.720 --> 0:02:57.960 think to you that represents potentially broader concern about just 0:02:58.120 --> 0:03:02.240 people's interest in crypto following f x's collapse. No, I 0:03:02.280 --> 0:03:05.760 think it's more fear. I think uh many people say, 0:03:05.760 --> 0:03:09.000 we don't know what we don't know? Uh and uh 0:03:09.200 --> 0:03:11.920 so what we do is we step back, you know, 0:03:12.000 --> 0:03:14.760 put a little perspective into the situation here and what 0:03:14.800 --> 0:03:19.360 do we have. So the entire crypto asset ecosystem is 0:03:19.400 --> 0:03:24.320 an eight hundred billion dollar ecosystem. Apple is three times 0:03:24.440 --> 0:03:28.600 larger in terms of market cap. So that's some perspective. 0:03:29.200 --> 0:03:32.280 Many people are saying, well, okay, is this another lehman? 0:03:32.400 --> 0:03:35.520 Could this be uh? You know, could could we see 0:03:35.600 --> 0:03:38.680 the domino effect here? I've just given you one reason 0:03:38.760 --> 0:03:43.560 why the banking system back in oh eight oh nine 0:03:43.880 --> 0:03:46.600 trillions and trillions of dollars and it was the global 0:03:46.680 --> 0:03:51.160 banking system. Right now we have it seems from f 0:03:51.320 --> 0:03:56.880 d X five to ten billion dollars in creditors. If 0:03:57.360 --> 0:04:01.400 as uh as f t X has filed bankruptcy, they 0:04:01.400 --> 0:04:04.720 will be making claims. If you look at Lehman, that 0:04:04.920 --> 0:04:09.160 was one point to trillion dollars in claims. So again 0:04:09.240 --> 0:04:12.800 just trying to put perspective, this is fraud. This is 0:04:12.920 --> 0:04:17.480 made off, made off with sixty four billion dollars in claims. 0:04:17.640 --> 0:04:21.560 Again f t X five to ten billion. Now, I 0:04:21.640 --> 0:04:26.159 know that crypto assets are you know, they attract a 0:04:26.160 --> 0:04:30.520 lot of attention. This is um you know, the three 0:04:30.560 --> 0:04:33.400 revolutions we talk about all the time. You know, a 0:04:33.400 --> 0:04:38.560 new monetary system in terms of the first global private 0:04:38.640 --> 0:04:44.680 meaning not government controlled, digital rules based monetary system. That's Bitcoin. 0:04:44.839 --> 0:04:48.200 A very big idea. Defy is a very big idea. 0:04:48.800 --> 0:04:53.640 And uh, while that has been thrown into question in 0:04:53.760 --> 0:04:57.799 terms of you know, shifting from one exchange to another, 0:04:58.600 --> 0:05:01.800 we've had a lot of shifting around. But I think, uh, 0:05:01.880 --> 0:05:06.560 I think Defy in terms of taking the middlemen out 0:05:06.600 --> 0:05:11.320 of financial services and and making the ecosystem much more 0:05:11.400 --> 0:05:16.120 transparent with much less counterparty risk, is going to take off. 0:05:16.160 --> 0:05:19.320 It will continue to move forward. We believe they think 0:05:19.320 --> 0:05:20.920 one of the things we're trying to figure out is 0:05:20.960 --> 0:05:23.960 how long that we think the industry will be feeling 0:05:24.000 --> 0:05:26.080 the ramifications of f t X. I mean, one thing 0:05:26.120 --> 0:05:28.880 we've learned right with SPF and f t X is 0:05:29.120 --> 0:05:31.520 what we didn't know. So how long do you think 0:05:31.560 --> 0:05:33.719 this goes on? Because you obviously have faith in it, 0:05:33.800 --> 0:05:35.760 You've been buying into it, and you think this is 0:05:35.800 --> 0:05:39.200 a good entry point at this point, whether it's gray Scale, 0:05:39.240 --> 0:05:41.919 whether it's coin base, But um, how long do you 0:05:41.920 --> 0:05:43.680 think we continue to feel the effect? And do you 0:05:43.680 --> 0:05:46.960 think there's more contagion to be felt? Um? Well, we 0:05:47.040 --> 0:05:50.720 always look for the whale, uh in in a situation 0:05:50.760 --> 0:05:53.320 like this, and if if there was a whale out there, 0:05:53.680 --> 0:05:56.960 it was f t X and and Sam Bankman freed, 0:05:57.440 --> 0:06:00.960 you know, King of the hill. Uh So I think 0:06:00.960 --> 0:06:04.720 we found the whale and uh you know, I'm sure 0:06:04.760 --> 0:06:07.080 they are going there's going to be more fallout, but 0:06:07.120 --> 0:06:10.440 we see how big the whale is. And yes, a 0:06:10.480 --> 0:06:12.640 lot of people have lost a lot of money around 0:06:13.360 --> 0:06:18.440 the crypto acid ecosystem, uh losing value here. But if 0:06:18.440 --> 0:06:22.799 we're right on the underlying technology and the underlying roles 0:06:22.960 --> 0:06:28.120 that bitcoin and ether ethereum are going to play in 0:06:28.160 --> 0:06:32.920 this new world. Uh. Then I think we're going to 0:06:33.000 --> 0:06:35.960 recover pretty quickly. You mentioned that f t X was 0:06:36.000 --> 0:06:38.320 a quote fraud. It's no lehman or no made off. 0:06:39.240 --> 0:06:42.599 Give us an understanding of what your interactions more like 0:06:42.720 --> 0:06:46.600 made off. Oh my gosh, so we'll give us. Give 0:06:46.680 --> 0:06:49.560 us an understanding of what your interactions were with Sam 0:06:49.560 --> 0:06:53.000 Bankman Freed before this followed. And have you spoken to him, 0:06:53.000 --> 0:06:54.800 because I know you were at Crypto Bahamas along with 0:06:54.880 --> 0:06:56.919 many other people earlier this year, the f t X 0:06:56.920 --> 0:07:01.640 Salt conference. Yes, I had a zoom my team and 0:07:01.680 --> 0:07:06.440 I had a zoom with Sam before that conference. I 0:07:06.480 --> 0:07:12.640 think they wanted to have us represented at the conference. Uh, 0:07:12.680 --> 0:07:15.280 and so I did. I did give a presentation there 0:07:15.400 --> 0:07:18.120 or I was on a panel. Um. But other than 0:07:18.160 --> 0:07:20.440 that one phone call just to set up, I have 0:07:20.600 --> 0:07:24.720 never talked to him. Um. And you know, he by 0:07:24.760 --> 0:07:26.960 the end of the phone call seemed to be distracted 0:07:27.720 --> 0:07:30.680 by whatever else he was doing. So that was my 0:07:30.720 --> 0:07:33.680 one exposure to him. Um. And you know, I think 0:07:33.720 --> 0:07:38.080 the thing that is shocking is how many people were 0:07:38.440 --> 0:07:42.960 very close to him, and one would have presumed looked 0:07:42.960 --> 0:07:45.520 at all of the documents and got a sense of 0:07:45.520 --> 0:07:49.680 the books Uh, the fact that so many people were 0:07:49.800 --> 0:07:56.360 completely fooled um is quite shocking. And you know, I 0:07:56.400 --> 0:08:00.440 think he had this aura around him or something that 0:08:01.440 --> 0:08:05.240 caused people to to to ask fewer questions than might 0:08:05.280 --> 0:08:07.960 otherwise have been the case. It's very hard to understand. 0:08:08.240 --> 0:08:09.960 Do you worry it all about as you buy into 0:08:09.960 --> 0:08:13.240 Gray Scale, Kathy, Um, you know the whole world of 0:08:13.280 --> 0:08:15.880 the Digital Currency Group and Barry Silver's company, I mean 0:08:16.080 --> 0:08:18.480 the various connections that kind of go back to f 0:08:18.560 --> 0:08:20.640 t X. Are you at all worried about a liquidation 0:08:20.760 --> 0:08:25.840 or anything. Well, we know that the Gray Scale investment 0:08:25.840 --> 0:08:29.160 trusts are the most valuable part of that company right 0:08:29.160 --> 0:08:32.920 now and uh, and they are revery their cash cows, 0:08:32.960 --> 0:08:37.679 their revenue generating. Um. We we do not think we 0:08:37.760 --> 0:08:39.959 think they're going to try and hold on to that 0:08:40.760 --> 0:08:45.560 uh if nothing else, so UM we are. We're looking 0:08:45.640 --> 0:08:50.080 at a forty one discount of this first relative to 0:08:51.120 --> 0:08:54.520 bitcoin today and so we actually think there's a lot 0:08:54.559 --> 0:08:57.920 of upside. Now. One of the things that we know 0:08:58.440 --> 0:09:01.840 that Gray Scale and Michael Son and Cheim a great 0:09:01.920 --> 0:09:06.640 Scale wanted was to convert this this trust into an 0:09:06.640 --> 0:09:10.679 e t F. I think what's happened with the fallout 0:09:10.800 --> 0:09:15.160 here might increase the probability that a bitcoin e t 0:09:15.400 --> 0:09:22.080 F will will be approved. I'm not saying immediately, but um, 0:09:22.559 --> 0:09:27.199 we know that. And even the newest SEC commissioner him 0:09:27.440 --> 0:09:30.319 Lizarraga I think is his name, has come out and 0:09:30.360 --> 0:09:34.160 said we need more, We need as regulators to focus 0:09:34.200 --> 0:09:40.160 on decentralization and transparency. What is the most decentralized and 0:09:40.320 --> 0:09:45.920 transparent crypto asset in the world. It is bitcoin, and 0:09:46.040 --> 0:09:50.839 yet retail investors do not have easy access through a 0:09:50.920 --> 0:09:56.319 liquid asset like uh an e t F which which 0:09:56.679 --> 0:09:59.960 honestly I don't understand given that they approved a bitcoin 0:10:00.160 --> 0:10:04.560 futures and so you know, I think it might increase 0:10:04.600 --> 0:10:06.800 the odds we shall see. Well, and some of them 0:10:07.040 --> 0:10:09.559 been wondering whether or not you're playing the arbitrage um 0:10:09.559 --> 0:10:12.560 with GBTC right now? You know, is it that because 0:10:12.559 --> 0:10:14.800 of the trust deep discount at this point, is that 0:10:14.840 --> 0:10:17.640 the thinking for you to kind of be moving more 0:10:17.679 --> 0:10:20.400 money into this name, Well, it is one of the 0:10:20.440 --> 0:10:24.680 few securities we have to own securities in e t 0:10:24.880 --> 0:10:27.800 f s, so it is one of the few securities 0:10:27.880 --> 0:10:31.120 we can buy. And yes, it's at a very big discount. 0:10:31.760 --> 0:10:36.480 Uh so, so it is more attractive bitcoin um bitcoin 0:10:36.960 --> 0:10:40.400 if they were to even liquidate it. You know, we've 0:10:40.440 --> 0:10:46.360 got such a big discount relative to to bitcoin that um. Again, 0:10:46.400 --> 0:10:48.400 we don't think they're going to this is the most 0:10:48.480 --> 0:10:51.160 valuable property. I think they're going to hang onto it, 0:10:51.400 --> 0:10:54.320 and I think over time the discount will close. Don't 0:10:54.320 --> 0:10:57.520 know if it's because of a conversion to a bitcoin ETF. 0:10:58.160 --> 0:11:00.800 I'm sure the regulators will take a very close look 0:11:01.200 --> 0:11:06.440 at d c G and the Gray Scale Bitcoin Investment Trust. 0:11:06.559 --> 0:11:08.560 But we do know this is a grant or trust, 0:11:08.960 --> 0:11:12.760 highly regulated, highly regulated. I mean, we have to do 0:11:12.880 --> 0:11:16.000 our homework on it. And we know that all of 0:11:16.040 --> 0:11:22.120 the bitcoin behind g BTC is in cold storage at 0:11:22.120 --> 0:11:27.040 coin base, and coin base has confirmed this. Uh so uh, 0:11:27.080 --> 0:11:29.400 you know, we feel quite comfortable with it here, Kathy. 0:11:29.400 --> 0:11:33.040 We've talked coin Base, We've talked g BTC. Are there 0:11:33.040 --> 0:11:35.640 any other opportunities in crypto that you see right now 0:11:35.720 --> 0:11:38.320 in the wake of f t XS collapse as prices 0:11:38.360 --> 0:11:42.880 have been beaten up. Well again for our e t 0:11:43.040 --> 0:11:46.800 F s we uh we. As you mentioned on coin Base, 0:11:46.880 --> 0:11:50.800 we also owned Square and it is interesting that Jack 0:11:50.880 --> 0:11:57.040 Dorsey has chosen the most transparent, most decentralized crypto asset 0:11:57.840 --> 0:12:05.280 to center UH blocks crypto exposure too. And I realize 0:12:05.320 --> 0:12:08.640 he's trying to from a developer community point of view, 0:12:09.120 --> 0:12:12.400 leave them on their their own. But we do think 0:12:12.480 --> 0:12:16.440 bitcoin UH, and you can see through the behavior of 0:12:16.480 --> 0:12:20.680 the infrastructure hasn't skipped a beat, not one beat at 0:12:20.720 --> 0:12:23.719 more secure than it was yesterday, the day before, in 0:12:23.720 --> 0:12:26.400 the day before. So I have a feeling this is 0:12:26.440 --> 0:12:30.960 going to elevate Bitcoin in the eyes of not only 0:12:31.000 --> 0:12:35.120 the crypto world, but the investment world at large. And 0:12:35.160 --> 0:12:37.600 I have a feeling it's going to have more running 0:12:37.679 --> 0:12:39.960 room through the rest of the world. I think this 0:12:40.040 --> 0:12:43.760 is the way that this is blocked go to market UH, 0:12:43.920 --> 0:12:46.320 to get into the rest of the world. And we 0:12:46.360 --> 0:12:48.280 think they're going to be very successful. So then I'm 0:12:48.320 --> 0:12:50.720 assuming Kathy that you're going to hold to your bitcoin 0:12:50.880 --> 0:12:54.120 forecast for what is it, a million per coin by 0:12:54.200 --> 0:12:57.200 that still feels good to you, yes, and you can 0:12:58.120 --> 0:13:00.720 you know, sometimes you need to bow old test. You 0:13:00.760 --> 0:13:04.440 need to go through crises UH to see UH, to 0:13:04.559 --> 0:13:08.480 see who the real um to see the survivors first 0:13:08.480 --> 0:13:12.280 of all, but really to test battle test the infrastructure 0:13:12.320 --> 0:13:17.520 and the thesis. And again, we think Bitcoin is coming 0:13:17.520 --> 0:13:21.680 out of this smelling like a rose because of what 0:13:21.760 --> 0:13:26.000 I have mentioned previously. And I do think that the 0:13:26.080 --> 0:13:30.720 one thing that will be delayed is um perhaps institutions 0:13:30.760 --> 0:13:34.200 stepping back and just saying, Okay, do we really understand this? 0:13:34.840 --> 0:13:37.920 Uh and once they actually do the homework and see 0:13:37.920 --> 0:13:41.040 what's happened here, I think they might be more comfortable 0:13:41.120 --> 0:13:47.840 moving into into bitcoin uh and and perhaps ether as 0:13:47.840 --> 0:13:51.240 a first stop, you know, as they'll understand it more. 0:13:51.440 --> 0:13:53.720 You mentioned Jack Dorsey. I want to switch gears if 0:13:53.720 --> 0:13:56.000 I can, And I was thinking about Twitter and Tesla. 0:13:56.120 --> 0:13:57.800 Like I said, there's so many things that are going 0:13:57.800 --> 0:13:59.240 on in our world right now that I feel like 0:13:59.280 --> 0:14:01.679 you are the person to comment on. How do you 0:14:02.600 --> 0:14:05.320 make sense of Elon Musk? So when you know you've 0:14:05.360 --> 0:14:07.920 talked to you've been investor in Tesla for a long time, 0:14:08.240 --> 0:14:12.000 are you comfortable with his actions around Twitter of firing 0:14:12.040 --> 0:14:15.200 people hiring them back? Um, you know the verified check 0:14:15.640 --> 0:14:18.080 talking about people paying for it and then taking that back. 0:14:18.679 --> 0:14:20.760 Do you feel comfortable with this name? And I should 0:14:20.760 --> 0:14:23.240 put out that right you own private shares of Twitter 0:14:23.280 --> 0:14:27.880 and have talked about wanting to own more yes, Um, 0:14:28.000 --> 0:14:32.200 yes we do. We we saw we owned Twitter for 0:14:32.320 --> 0:14:35.560 quite a while and we sold it into the rumors 0:14:35.600 --> 0:14:39.000 that Ellen was going to buy it because we knew 0:14:39.000 --> 0:14:41.960 there would be a lot of controversy around that. So 0:14:42.040 --> 0:14:43.880 it moved into the sixties. I think it got to 0:14:43.960 --> 0:14:49.480 seventy and we sold there and have been watching, Um, 0:14:49.840 --> 0:14:51.800 have been watching from the sidelines. But if you look 0:14:51.840 --> 0:14:55.800 at that model longer run, it has not delivered on 0:14:55.920 --> 0:15:00.960 the promise. And you know, I think opening uh the 0:15:01.080 --> 0:15:05.080 algorithms which we think he will do, and taking away 0:15:05.120 --> 0:15:09.800 the kind of human driven censorship and uh, and and 0:15:09.880 --> 0:15:13.200 allowing the transparency of the algorithms that they do put 0:15:13.360 --> 0:15:16.520 put out there, you know, allowing people to question them. 0:15:16.560 --> 0:15:18.760 I think it's going to be very healthy. If you 0:15:18.920 --> 0:15:23.560 look at the daily average users, I think the various 0:15:23.720 --> 0:15:26.640 metrics that you can count daily, they have been going 0:15:26.720 --> 0:15:30.320 up dramatically. So you know, if you I know a 0:15:30.360 --> 0:15:35.280 lot of people who you know, basically decided to quit 0:15:35.360 --> 0:15:39.920 Twitter because they didn't like the kind of censorship and 0:15:39.920 --> 0:15:42.120 so forth that was going on. So I actually like 0:15:42.200 --> 0:15:44.200 what he's doing. It seems interestingly enough, though, that a 0:15:44.200 --> 0:15:46.320 lot of brands don't like what he's doing Kathy, and 0:15:46.320 --> 0:15:48.960 we've seen some prominent companies pull back or at least 0:15:49.000 --> 0:15:52.360 pause advertising on the plant photo. Of course, I mean 0:15:52.360 --> 0:15:54.280 that makes sense if you know, you don't necessarily want 0:15:54.280 --> 0:15:56.160 to support the guy who owns Tesla, if you're making 0:15:56.480 --> 0:16:01.600 you know, competitive competitive competitive vehicles Tesla, but bigger brands 0:16:01.600 --> 0:16:04.480 that are worried about brand safety. And I'm wondering, you know, 0:16:05.400 --> 0:16:07.160 I don't know what you're seeing in your Twitter timeline, 0:16:07.160 --> 0:16:09.920 but I'm seeing ads that are what not relevant to 0:16:09.960 --> 0:16:13.000 me anymore not relevant to me now and aren't actually 0:16:13.080 --> 0:16:15.040 ads that are for companies. They're more like ads for 0:16:15.080 --> 0:16:18.720 influencers these days. It doesn't seem like it's necessarily moving 0:16:18.720 --> 0:16:21.840 in the direction of increasing revenue from an advertorial perspective 0:16:21.920 --> 0:16:25.800 right now. Well, I do think that this is not uh, 0:16:26.360 --> 0:16:28.960 this is not just an advertising vehicle. In fact, this 0:16:29.040 --> 0:16:33.120 is that probably might diminish quite significantly in terms of 0:16:33.280 --> 0:16:37.840 its important longer run. You'll you'll remember that Ellen started 0:16:38.880 --> 0:16:45.600 his entrepreneurial pursuits UM in UH with a precursor to PayPal. 0:16:46.200 --> 0:16:49.160 So he very a very long time ago had this 0:16:49.600 --> 0:16:53.880 idea of a digital wallet, a super app like what's 0:16:54.000 --> 0:16:58.600 app um in mind and of course took a big 0:16:58.640 --> 0:17:02.120 detour into another passion of his. Um. We know he 0:17:02.160 --> 0:17:06.840 knows a lot about this world. And I think if 0:17:06.880 --> 0:17:10.560 anyone in the US can do this, I think I 0:17:10.600 --> 0:17:13.119 think he can. I think he'll surround himself by the 0:17:13.240 --> 0:17:16.280 right business leaders. He's not going to do this himself. 0:17:16.320 --> 0:17:19.320 If you look at Tesla, he's not. You know, if 0:17:19.320 --> 0:17:22.639 you look at many people say, aren't you worried about Tesla, No, 0:17:22.760 --> 0:17:27.520 we're not. Because of our work on electric vehicles. They are. 0:17:27.560 --> 0:17:31.560 They are are grabbing a disproportionate share and will continue 0:17:31.600 --> 0:17:34.159 to do so of a market that we think by 0:17:35.760 --> 0:17:40.479 will account for eighty five to of all cars sold 0:17:40.480 --> 0:17:44.439 in in the world. Uh So that's on automatic pilot. 0:17:44.760 --> 0:17:48.080 He's now working on autonomous, which we think is uh 0:17:48.280 --> 0:17:51.000 is going to work. In fact, I just have the 0:17:51.040 --> 0:17:55.600 pleasure of riding in a Cruise car in San Francisco, 0:17:55.680 --> 0:18:01.240 an autonomous car GM uh US wanted to see, wanted 0:18:01.280 --> 0:18:03.520 to check it out, and I have to tell you 0:18:03.560 --> 0:18:07.119 I love the ride. And uh, I know autonomous is 0:18:07.160 --> 0:18:10.000 possible because Cruz and WEIMO are doing it, and we 0:18:10.040 --> 0:18:12.720 think Tesla is going to do it in a much 0:18:12.760 --> 0:18:17.240 bigger way. So that's Tesla, but onto Twitter, it really 0:18:17.280 --> 0:18:21.360 needed to be shaken up. I think think he can 0:18:21.400 --> 0:18:24.800 make it be a great business and very profitable. And 0:18:24.840 --> 0:18:29.560 if so, how I do think about the amount of 0:18:29.680 --> 0:18:34.800 data that Twitter has UH and it's proprietary data, and 0:18:34.920 --> 0:18:39.200 think about the combination of that and artificial intelligence. Remember 0:18:39.520 --> 0:18:42.720 he has AI expertise and experts. I know he brought 0:18:42.800 --> 0:18:46.240 in some of his engineers UH and they are going 0:18:46.320 --> 0:18:50.560 to I think surprise and delight heading for a super 0:18:50.600 --> 0:18:54.720 app kind of product. And you know, by our estimates 0:18:54.760 --> 0:18:56.720 and you'll find this in our big ideas. I think 0:18:56.720 --> 0:19:01.639 it was um the vale all you of each customer 0:19:02.359 --> 0:19:06.359 in a digital wallet UH should be And when I 0:19:06.400 --> 0:19:10.400 say that the market cap associated UH should be in 0:19:10.480 --> 0:19:14.040 the twenty thousand plus range, because it's not just for 0:19:14.160 --> 0:19:18.320 financial services, it will ultimately be for for commerce and 0:19:18.480 --> 0:19:21.040 AI is the glue that's going to pull this all 0:19:21.080 --> 0:19:24.919 together and the data that they have, the data is 0:19:25.000 --> 0:19:28.200 the new oil. You've heard that this is absolutely true 0:19:28.280 --> 0:19:30.520 in the case of Twitter. Well, Kathy, I mean the 0:19:30.560 --> 0:19:33.439 currency Twitter as a currency has worked really well for you. 0:19:33.440 --> 0:19:36.440 You've got one point five million followers on the platform. 0:19:36.480 --> 0:19:39.960 A lot of people see what you tweet. We saw 0:19:40.119 --> 0:19:43.520 eulogies last week being written for Twitter. It didn't end 0:19:43.600 --> 0:19:46.439 up dying as many people thought it would. But what 0:19:46.520 --> 0:19:49.040 would happen if Twitter went away? And are you concerned 0:19:49.080 --> 0:19:53.600 about that? You know it's been and and yes, we 0:19:53.640 --> 0:19:59.320 speak from experience. This is an extremely productive social network 0:19:59.440 --> 0:20:03.320 for us, is our most productive and uh, you know 0:20:03.520 --> 0:20:09.119 it truly is the global public town square. You know 0:20:09.560 --> 0:20:13.919 I can write an open letter to the FED and 0:20:14.040 --> 0:20:16.639 put it out over Twitter. Now do I think the 0:20:16.680 --> 0:20:20.199 Fed's going to listen to me? No, I don't, but 0:20:20.600 --> 0:20:24.080 that they may listen, That the FED board members may 0:20:24.200 --> 0:20:29.000 listen to someone who might think that I have something 0:20:29.040 --> 0:20:32.560 to say, which is simply a question. Wait a minute, 0:20:32.760 --> 0:20:36.000 how can you be unanimous seventy five basis points at 0:20:36.000 --> 0:20:39.320 a time? How can you be unanimous when there is 0:20:39.400 --> 0:20:44.000 so much conflicting data out there, including an inverted yield curve? 0:20:44.080 --> 0:20:48.040 Now at seventy five basis points, that's crazy. I think 0:20:48.200 --> 0:20:50.800 we're going to look back in history and say, what 0:20:50.840 --> 0:20:56.000 were they thinking unanimous? Commodity prices are falling. You've got 0:20:56.000 --> 0:20:59.200 excess inventories all over the place. We're seeing massive discounting. 0:20:59.359 --> 0:21:01.880 I think we're gonna see deflation and then they'll make 0:21:01.920 --> 0:21:04.679 a move in the opposite direction. But we need, you know, 0:21:04.800 --> 0:21:07.919 we need a steadier hand than that. So when Kathy 0:21:07.920 --> 0:21:09.679 went to you, because you've argued this and you and 0:21:09.720 --> 0:21:12.639 you put this out there in terms of FED policy, 0:21:12.720 --> 0:21:14.800 in terms of deflation, when do you think it will come? 0:21:15.760 --> 0:21:18.320 I think we're seeing it. I think if you look 0:21:18.359 --> 0:21:20.840 at a lot of commodity prices, not only are they 0:21:20.880 --> 0:21:24.600 down thirty two some of them from their peaks, they're 0:21:24.600 --> 0:21:27.480 down on a year over year basis. In fact, oil 0:21:27.640 --> 0:21:31.240 itself is almost down on a year over year basis. 0:21:31.280 --> 0:21:35.120 Now the big pushbacks on this call we get our 0:21:35.640 --> 0:21:41.520 wages and rents. We're seeing rent inflation reverse quite suddenly 0:21:41.640 --> 0:21:45.520 and dramatically. So what I think we will look back 0:21:45.560 --> 0:21:51.160 in history and say this inflation shock was the function 0:21:51.280 --> 0:21:57.560 of a supply shock caused by COVID, supply chain problems afterwards, 0:21:57.680 --> 0:22:02.760 and even more problems after Russia's invasion of Ukraine. Um, 0:22:02.800 --> 0:22:05.080 if I can just take one second, I would like 0:22:05.280 --> 0:22:10.960 to give uh an analogy to the late nineteen teens. 0:22:11.760 --> 0:22:14.359 We were in the middle of the massive, you know, 0:22:14.800 --> 0:22:19.000 most massive innovation the history of the world had seen. Telephone, electricity, 0:22:19.040 --> 0:22:22.800 and automobile all at the same time. But we had 0:22:22.840 --> 0:22:25.560 World War One and we had the Spanish flu sound 0:22:25.640 --> 0:22:29.040 familiar now, That was much worse than what we've gone through. 0:22:29.160 --> 0:22:31.600 We've gone through nothing like that, But there were massive 0:22:31.640 --> 0:22:35.680 supply chain problems back then, and inflation peaked at twenty 0:22:35.720 --> 0:22:41.680 four percent right in June. In June, and by June 0:22:42.880 --> 0:22:47.400 it was minus fifteen percent. So I think that our 0:22:47.600 --> 0:22:50.520 eight to ten percent inflation, which is where it was 0:22:50.760 --> 0:22:53.520 at the peak, is going to turn around and we're 0:22:53.520 --> 0:22:56.640 going to see some very big surprises on the inflation front. 0:22:56.680 --> 0:22:59.320 And you know who agrees with us, the bond market. 0:22:59.560 --> 0:23:05.200 Look at the bond market is doing now then three yeah, 0:23:05.320 --> 0:23:09.840 three sev inverted. That's telling us that the bond market 0:23:09.880 --> 0:23:14.240 is saying recession and or big surprises on the low 0:23:14.320 --> 0:23:19.280 side of inflation expectations. So and it's probably both. Kathy, unfortunately, 0:23:19.280 --> 0:23:20.639 have a couple of minutes left here. One thing we 0:23:20.640 --> 0:23:22.800 did want to squeeze in um. We've been talking about 0:23:22.800 --> 0:23:26.040 in the newsroom that Alliance Bernstein is getting ready to 0:23:26.200 --> 0:23:29.680 launch actively managed disrupted disruptor e t F. And from 0:23:29.680 --> 0:23:33.560 what I understand you pitched them. You know years ago. Um, 0:23:33.600 --> 0:23:35.879 how does that make you feel? And you know, to 0:23:36.080 --> 0:23:39.119 see a firm from that you worked at kind of 0:23:39.119 --> 0:23:43.440 doing a very similar thing or looking to do something similar. Yes, well, um, 0:23:43.640 --> 0:23:49.919 Alliance Bernstein I believe got the first fully active, fully 0:23:49.960 --> 0:23:53.800 transparent e t F in I think it was early. 0:23:54.080 --> 0:23:58.919 It got the approved in early two thousand thirteen. So 0:23:58.960 --> 0:24:00.880 that's when I put my hand up and said I'll 0:24:00.880 --> 0:24:05.480 do that. And um uh, there were there was a 0:24:05.560 --> 0:24:10.960 belief that e t f s were not safe or 0:24:11.440 --> 0:24:13.280 you know, there were a lot of arguments against it. 0:24:13.680 --> 0:24:17.560 Probably the biggest one was mutual funds, which are much 0:24:17.600 --> 0:24:21.439 more profitable. I would say the economics there are higher 0:24:21.480 --> 0:24:24.080 than e t f s. How does it make me feel? 0:24:24.480 --> 0:24:28.360 You know, I'm the more the merrier. I think this 0:24:28.440 --> 0:24:33.920 is a fantastic rapper for the end consumer. It's fully liquid, 0:24:34.040 --> 0:24:35.760 unlike mutual funds you have to wait till the end 0:24:35.800 --> 0:24:40.159 of the day. Transparent, fully transparent, that's what that's what 0:24:40.240 --> 0:24:44.880 investors want. Uh. It is more tax effective, much more 0:24:44.960 --> 0:24:48.439 tax effective. We're seeing mutual funds that are down thirty 0:24:48.440 --> 0:24:53.320 percent this year, but they're slapping their investors with thirty 0:24:54.400 --> 0:24:59.080 uh in capital tax gains uh and then finally, it's 0:24:59.119 --> 0:25:02.199 more cost of active when you because all of the 0:25:02.560 --> 0:25:04.560