WEBVTT - Ark's Cathie Wood Sees Many Regulatory Changes Under Trump

0:00:00.600 --> 0:00:10.719
<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business

0:00:10.720 --> 0:00:13.960
<v Speaker 1>Week inside from the reporters and editors who bring you

0:00:14.000 --> 0:00:18.360
<v Speaker 1>America's most trusted business magazine, plus global business, finance and

0:00:18.400 --> 0:00:22.840
<v Speaker 1>tech news. The Bloomberg Business Week Podcast with Carol Messer

0:00:23.040 --> 0:00:25.800
<v Speaker 1>and Tim Stenebeck from Bloomberg Radio.

0:00:27.160 --> 0:00:29.040
<v Speaker 2>You are very pleased to have Kathy would for her

0:00:29.080 --> 0:00:33.120
<v Speaker 2>first interview since the election of Donald Trump earlier this week.

0:00:33.520 --> 0:00:36.880
<v Speaker 2>Kathy shares of your flagship fund, the Archannivation ETF, surch

0:00:36.920 --> 0:00:39.360
<v Speaker 2>more than eight percent on Wednesday. It was the best

0:00:39.440 --> 0:00:41.120
<v Speaker 2>day in more than a year. Part of the risk

0:00:41.320 --> 0:00:44.240
<v Speaker 2>Entrade that we saw on optimism of a second term

0:00:44.320 --> 0:00:47.080
<v Speaker 2>for Donald Trump in the White House. And that's where

0:00:47.080 --> 0:00:49.559
<v Speaker 2>I want to start with you, because when you were

0:00:49.560 --> 0:00:53.000
<v Speaker 2>back on with us in October, you indicated, without actually

0:00:53.120 --> 0:00:56.440
<v Speaker 2>saying the former president's name, that you preferred a President

0:00:56.480 --> 0:00:59.520
<v Speaker 2>Trump over President Harris strictly from the standpoint of the

0:00:59.520 --> 0:01:03.640
<v Speaker 2>candidate who you saw would ease the regulatory environment. So

0:01:03.720 --> 0:01:06.920
<v Speaker 2>here we are. What does another Trump administration mean for

0:01:07.000 --> 0:01:09.400
<v Speaker 2>you and the companies that are convesting.

0:01:11.000 --> 0:01:15.839
<v Speaker 3>Okay, well, thank you for having me on your show. Tim, Yes,

0:01:16.760 --> 0:01:23.960
<v Speaker 3>regulation critical. I think the regulations that have been creeping

0:01:24.000 --> 0:01:27.840
<v Speaker 3>into the system. Actually they started to creep in, they've

0:01:27.880 --> 0:01:33.360
<v Speaker 3>just flooded the system and really gummed it up. So

0:01:33.959 --> 0:01:39.319
<v Speaker 3>the first the biggest regulatory issues have been around the SEC,

0:01:39.720 --> 0:01:45.040
<v Speaker 3>especially when it comes to digital assets or crypto legislation

0:01:46.160 --> 0:01:51.840
<v Speaker 3>and the FTC as it relates to M and A activity.

0:01:52.640 --> 0:01:55.520
<v Speaker 3>I think both there are going to be big changes there,

0:01:56.400 --> 0:01:59.600
<v Speaker 3>and that is going to be the beginning. I think

0:01:59.680 --> 0:02:04.800
<v Speaker 3>of a lot of regulatory changes. In his first administration,

0:02:05.000 --> 0:02:09.720
<v Speaker 3>President Trump basically said for every regulation you want to

0:02:09.800 --> 0:02:14.160
<v Speaker 3>introduce anyone in my administration, you must get rid of too.

0:02:14.320 --> 0:02:17.880
<v Speaker 3>I think it's going to be maybe more dramatic than

0:02:17.880 --> 0:02:23.680
<v Speaker 3>that this time around. And I also think having Elon Musk,

0:02:23.720 --> 0:02:26.960
<v Speaker 3>who I think today announced that he'd like to name

0:02:27.600 --> 0:02:32.160
<v Speaker 3>a new department, the Department of Government Efficiency. Get that,

0:02:32.400 --> 0:02:39.040
<v Speaker 3>doge doje he. I think he's going to come into

0:02:39.080 --> 0:02:42.160
<v Speaker 3>the administration. I don't think he'll be a formal part

0:02:42.160 --> 0:02:45.359
<v Speaker 3>of the administration. He'll be more in an oversight role

0:02:46.120 --> 0:02:47.800
<v Speaker 3>as as I understand.

0:02:48.320 --> 0:02:50.720
<v Speaker 2>Yeah, well, hey, Kathy, I want to jump in here

0:02:50.720 --> 0:02:52.079
<v Speaker 2>because you mentioned a few things that I want to

0:02:52.080 --> 0:02:54.760
<v Speaker 2>follow up on. One is Elon Musk. Have you talked

0:02:54.760 --> 0:02:56.440
<v Speaker 2>to Elon since the election?

0:02:57.720 --> 0:02:59.680
<v Speaker 3>No, I have not talked to him since the election.

0:02:59.800 --> 0:03:04.960
<v Speaker 3>I did see on X that he was part of

0:03:05.000 --> 0:03:08.959
<v Speaker 3>the family as they were taking the picture around President

0:03:09.080 --> 0:03:13.600
<v Speaker 3>Trump's acceptance speech, So you know, I know he's obviously

0:03:14.680 --> 0:03:19.920
<v Speaker 3>had a tremendous impact on the election. I think he

0:03:19.960 --> 0:03:25.000
<v Speaker 3>had X made a big difference and his ideas around

0:03:25.080 --> 0:03:31.960
<v Speaker 3>government efficiency, which will revolve importantly around technology. Artificial intelligence

0:03:32.320 --> 0:03:37.520
<v Speaker 3>is doing wonders for the most bureaucratic organizations out there.

0:03:37.520 --> 0:03:42.320
<v Speaker 3>We know from Pallunteer that it is having a tremendous

0:03:42.320 --> 0:03:49.840
<v Speaker 3>impact on insurance companies, underwriting process timelines dropping from two

0:03:49.840 --> 0:03:55.520
<v Speaker 3>weeks to three hours. And even in the military Maven.

0:03:55.640 --> 0:04:02.840
<v Speaker 3>Pallenteers working on Maven with the DoD for targeting the enemy.

0:04:02.560 --> 0:04:07.000
<v Speaker 3>They have shrunk that department. They don't need as many people.

0:04:07.040 --> 0:04:11.240
<v Speaker 3>They've gone from twenty to twenty people, which it's pretty

0:04:11.280 --> 0:04:13.840
<v Speaker 3>amazing what's going on, and I think we'll see a

0:04:13.880 --> 0:04:20.160
<v Speaker 3>lot of attrition. Any employee leaving the government probably will

0:04:20.160 --> 0:04:23.440
<v Speaker 3>not be replaced. I don't think he'll yeah, I just

0:04:23.760 --> 0:04:27.839
<v Speaker 3>pick up. I don't think he'll do two trillion dollars

0:04:27.880 --> 0:04:32.000
<v Speaker 3>in government spending savings in one year that might be

0:04:32.440 --> 0:04:36.159
<v Speaker 3>a five to ten year and I think between technology

0:04:36.200 --> 0:04:41.119
<v Speaker 3>and attrition and lower regulations, maybe the abolition of certain

0:04:41.160 --> 0:04:44.719
<v Speaker 3>departments that they'll go a long way.

0:04:44.800 --> 0:04:47.159
<v Speaker 2>So you don't see him serving a formal role, but

0:04:47.279 --> 0:04:51.120
<v Speaker 2>still overseeing some sort of department of government efficiency in

0:04:51.120 --> 0:04:53.600
<v Speaker 2>an informal way. Help me understand what you see him

0:04:53.600 --> 0:04:55.760
<v Speaker 2>doing and whether or not it could be some sort

0:04:55.760 --> 0:04:58.120
<v Speaker 2>of threat to you know, he's a very busy man.

0:05:00.120 --> 0:05:05.520
<v Speaker 3>Yes, he's an unbelievable He's the inventor of our age.

0:05:05.560 --> 0:05:09.360
<v Speaker 3>I think I said that in two thousand and fifteen

0:05:09.480 --> 0:05:12.679
<v Speaker 3>for the first time when I was on your show

0:05:12.800 --> 0:05:16.640
<v Speaker 3>with Carol Masser. At the time, he is the inventor

0:05:16.800 --> 0:05:22.520
<v Speaker 3>of our age, and he comes into a problem, assesses

0:05:22.560 --> 0:05:26.719
<v Speaker 3>it with first principles thinking, doesn't care how things have

0:05:26.839 --> 0:05:32.200
<v Speaker 3>been done, and comes back with, you know, ingenious solutions

0:05:32.320 --> 0:05:37.760
<v Speaker 3>to big problems, whether it's autonomous mobility in the autonomous

0:05:37.760 --> 0:05:38.880
<v Speaker 3>taxi space.

0:05:40.200 --> 0:05:41.320
<v Speaker 1>Or in.

0:05:42.839 --> 0:05:50.880
<v Speaker 3>The healthcare space, neuralink, in the social network space X

0:05:51.800 --> 0:05:55.800
<v Speaker 3>in AI XAI, and a lot of people say and

0:05:55.880 --> 0:05:59.719
<v Speaker 3>SpaceX of course, the entire exploration going to Mars. I

0:05:59.720 --> 0:06:03.680
<v Speaker 3>think a lot of people are I can't believe he

0:06:03.720 --> 0:06:07.080
<v Speaker 3>can do this. But again, he cuts to the quick

0:06:08.240 --> 0:06:12.840
<v Speaker 3>first principles thinking and surrounds himself with brilliant people, people

0:06:12.880 --> 0:06:16.200
<v Speaker 3>who really want to solve the hardest problems in the world.

0:06:16.440 --> 0:06:18.760
<v Speaker 3>And that's part of the secret to his success. Very

0:06:18.800 --> 0:06:22.000
<v Speaker 3>high standards and people who want to be held accountable

0:06:22.040 --> 0:06:25.360
<v Speaker 3>to very high standards and want to really transform the world.

0:06:25.680 --> 0:06:27.760
<v Speaker 2>Hey, we're going to get back to Elon and specifically

0:06:27.800 --> 0:06:29.159
<v Speaker 2>Tesla in a few minutes, but I want to go

0:06:29.200 --> 0:06:31.560
<v Speaker 2>back to something that you mentioned at the top of

0:06:31.600 --> 0:06:34.039
<v Speaker 2>our interview, Kathy, and that's the idea of some of

0:06:34.040 --> 0:06:37.000
<v Speaker 2>the regulatory challenges that you said have cropped up over

0:06:37.040 --> 0:06:39.240
<v Speaker 2>the last couple of years and during the Biden administration,

0:06:39.279 --> 0:06:42.760
<v Speaker 2>specifically with regard to the FTC and the SEC not

0:06:42.880 --> 0:06:46.200
<v Speaker 2>being present. In a second Trump administration, how do you

0:06:46.240 --> 0:06:49.800
<v Speaker 2>think the Trump regime will approach financial regulation given that

0:06:49.839 --> 0:06:53.480
<v Speaker 2>he's vound to replace SEC chair Gary Gensler. What does

0:06:53.520 --> 0:06:53.960
<v Speaker 2>that look like?

0:06:55.960 --> 0:07:00.320
<v Speaker 3>Well, I think I think at first as as it

0:07:00.400 --> 0:07:07.040
<v Speaker 3>relates to crypto or digital asset regulation, they're going to

0:07:07.080 --> 0:07:12.600
<v Speaker 3>replace Gary Gensler with someone who is much more open minded,

0:07:12.640 --> 0:07:16.679
<v Speaker 3>I would say, and will let the legislative process, work

0:07:17.920 --> 0:07:22.600
<v Speaker 3>go to work, and the SEC is supposed to regulate

0:07:22.800 --> 0:07:28.320
<v Speaker 3>and force laws. They're not supposed to create laws by enforcement,

0:07:28.440 --> 0:07:32.320
<v Speaker 3>which is what Gary Gensler was doing. So I think

0:07:32.800 --> 0:07:36.280
<v Speaker 3>that's going to be important. I also think if you

0:07:36.360 --> 0:07:39.880
<v Speaker 3>look at the public equity markets, I think the number

0:07:39.960 --> 0:07:43.360
<v Speaker 3>of public companies out there right now has been cut

0:07:43.360 --> 0:07:49.480
<v Speaker 3>in half in the last fifteen twenty years. The regulatory

0:07:50.160 --> 0:07:53.880
<v Speaker 3>nightmare of being a public company has kept people, has

0:07:53.960 --> 0:07:58.000
<v Speaker 3>kept leaders of companies basically saying if I don't have

0:07:58.040 --> 0:08:01.080
<v Speaker 3>to go public, I am not going public. And so

0:08:01.520 --> 0:08:05.440
<v Speaker 3>I think we're going to see a lot more work

0:08:05.680 --> 0:08:09.160
<v Speaker 3>in that regard to give you know, the average investor

0:08:10.360 --> 0:08:14.480
<v Speaker 3>a shot at some of these moonshots. So I think

0:08:14.680 --> 0:08:17.520
<v Speaker 3>that's going to become very important. As far as the FTC,

0:08:18.400 --> 0:08:22.680
<v Speaker 3>you know, the the anti trust has has gone way

0:08:22.720 --> 0:08:28.200
<v Speaker 3>too far. You know, they they were denying mergers and

0:08:28.320 --> 0:08:34.840
<v Speaker 3>acquisitions that really they the companies were tangential to one another,

0:08:34.880 --> 0:08:39.680
<v Speaker 3>they weren't even really in the same market. So we're

0:08:39.720 --> 0:08:42.360
<v Speaker 3>seeing and and yet at the time, at the same time,

0:08:42.400 --> 0:08:49.000
<v Speaker 3>we've seen these megatech companies grow into you know, massive

0:08:49.120 --> 0:08:55.240
<v Speaker 3>organizations and dominating their markets. So they were denying mergers

0:08:55.240 --> 0:08:58.520
<v Speaker 3>and acquisitions for you know, think about Jet Blue and

0:08:58.600 --> 0:09:02.640
<v Speaker 3>Spirit Airlines. That was ridiculous. That was in the same industry,

0:09:02.679 --> 0:09:06.439
<v Speaker 3>but one is going bankrupt now because because they wouldn't

0:09:06.480 --> 0:09:11.160
<v Speaker 3>allow that m and A. They were just dogmatic about

0:09:11.200 --> 0:09:15.079
<v Speaker 3>it in in, you know, and didn't show to us

0:09:15.120 --> 0:09:16.839
<v Speaker 3>at least any common sense.

0:09:17.080 --> 0:09:19.199
<v Speaker 2>So, you know, so let's jump in. I just want

0:09:19.200 --> 0:09:20.280
<v Speaker 2>to jump in because we don't have a ton of

0:09:20.280 --> 0:09:21.400
<v Speaker 2>time with you, and I want to make sure we

0:09:21.480 --> 0:09:24.760
<v Speaker 2>get to a lot, Kathy, So forgive me please. You

0:09:24.800 --> 0:09:26.440
<v Speaker 2>also mentioned last time you're on with us, you weren't

0:09:26.440 --> 0:09:29.720
<v Speaker 2>wild about the idea of tariffs, and you know, since

0:09:29.760 --> 0:09:32.199
<v Speaker 2>then President Trump said that tariff is the most beautiful

0:09:32.200 --> 0:09:35.200
<v Speaker 2>word in the dictionary. Do you think he will follow

0:09:35.280 --> 0:09:38.360
<v Speaker 2>through with his threat of broad tariffs? And how are

0:09:38.400 --> 0:09:41.960
<v Speaker 2>you preparing and changing your investment style given the threat

0:09:41.960 --> 0:09:42.480
<v Speaker 2>of tariffs.

0:09:43.440 --> 0:09:45.680
<v Speaker 3>Yeah, I'd love to talk about that because we've got

0:09:45.720 --> 0:09:50.280
<v Speaker 3>more information. I think the way the president is looking

0:09:50.840 --> 0:09:56.800
<v Speaker 3>at this, that is, if he puts in place tariffs,

0:09:58.160 --> 0:10:01.520
<v Speaker 3>the other side of that will be income tax and

0:10:01.600 --> 0:10:07.800
<v Speaker 3>corporate tax cuts. And if you think about it, this

0:10:08.120 --> 0:10:13.920
<v Speaker 3>is how America started, you know, President George Washington. We

0:10:13.960 --> 0:10:17.760
<v Speaker 3>had no income tax back then. All the taxes were

0:10:17.840 --> 0:10:21.760
<v Speaker 3>in the form of tariffs. I do think that they're

0:10:21.800 --> 0:10:26.320
<v Speaker 3>not going to be, you know, crazy tariffs. They're going

0:10:26.400 --> 0:10:30.360
<v Speaker 3>to be much more thoughtful and really focused away from

0:10:30.400 --> 0:10:35.800
<v Speaker 3>our free trade agreement partners and towards those countries that

0:10:35.920 --> 0:10:41.760
<v Speaker 3>have not been really letting our companies play on a

0:10:41.880 --> 0:10:45.680
<v Speaker 3>level playing field within their countries. So I think there's

0:10:45.720 --> 0:10:48.360
<v Speaker 3>going to be a lot of negotiation around that really

0:10:48.400 --> 0:10:52.400
<v Speaker 3>really helping us. But I do think tax cuts are

0:10:52.840 --> 0:10:55.880
<v Speaker 3>tax personal and corporate tax cuts are going to be

0:10:56.000 --> 0:11:00.480
<v Speaker 3>much more important than tariffs in terms in terms of

0:11:01.160 --> 0:11:05.120
<v Speaker 3>the growth engine that this economy needs. I'll comment on

0:11:05.200 --> 0:11:07.120
<v Speaker 3>just a couple of other things. I know he wants

0:11:07.120 --> 0:11:11.080
<v Speaker 3>a week dollar, but if he puts in place the

0:11:11.160 --> 0:11:15.400
<v Speaker 3>deregulation and the tax cuts that we expect the dollars

0:11:15.440 --> 0:11:18.920
<v Speaker 3>probably going up. And this reminds me very much of

0:11:19.000 --> 0:11:23.360
<v Speaker 3>the early Reagan years. It's fascinating what's going on. Except

0:11:23.800 --> 0:11:28.880
<v Speaker 3>the first couple of years of the Reagan administration he

0:11:28.960 --> 0:11:32.439
<v Speaker 3>had to deal with back to back recessions because Vulker

0:11:32.640 --> 0:11:39.120
<v Speaker 3>was raising interest rates to fifteen percent plus. We've done that.

0:11:39.960 --> 0:11:42.800
<v Speaker 3>Trump does not have to face that we think that

0:11:42.880 --> 0:11:45.000
<v Speaker 3>the FED went too far. I think the Fed today

0:11:45.040 --> 0:11:48.800
<v Speaker 3>even says it's going to continue to unwind a restrictive

0:11:48.880 --> 0:11:52.880
<v Speaker 3>monetary policy. And I think it's important too, because what

0:11:52.920 --> 0:11:55.920
<v Speaker 3>we expect now is there will be a lot of

0:11:56.000 --> 0:12:00.840
<v Speaker 3>delayed activity as consumers and businesses trying to figure out, Okay,

0:12:01.080 --> 0:12:04.360
<v Speaker 3>how lower tax is going and how is the world

0:12:04.400 --> 0:12:06.400
<v Speaker 3>going to change? Am I going to get a better deal?

0:12:06.440 --> 0:12:09.679
<v Speaker 3>So we're going to need lower interest rates. However, if

0:12:09.760 --> 0:12:13.120
<v Speaker 3>we get the growth beyond that that tax cuts and

0:12:13.200 --> 0:12:16.080
<v Speaker 3>these other measures are going to cause, the dollar will

0:12:16.120 --> 0:12:22.320
<v Speaker 3>probably go up, and so I think that that will

0:12:22.320 --> 0:12:27.280
<v Speaker 3>be a surprise. But it's an anti inflationary force as well,

0:12:28.040 --> 0:12:32.199
<v Speaker 3>and we're seeing commodities react to the dollar going up

0:12:32.240 --> 0:12:37.840
<v Speaker 3>now in anticipation of these interesting policies. And then I'd

0:12:37.880 --> 0:12:40.000
<v Speaker 3>love to just say one other thing. A lot of

0:12:40.040 --> 0:12:43.720
<v Speaker 3>people talk about the deficit, and it is a big

0:12:43.760 --> 0:12:48.600
<v Speaker 3>deficit in the middle of it's a rolling recession. But

0:12:49.080 --> 0:12:53.280
<v Speaker 3>this deficit is worse than the worst deficit that Reagan

0:12:53.360 --> 0:12:56.680
<v Speaker 3>faced at five point five percent of GDP. How did

0:12:56.720 --> 0:13:00.360
<v Speaker 3>he get out of that? And Clinton following beyond him

0:13:01.160 --> 0:13:07.000
<v Speaker 3>more through growth? Not through tax increases, and you can

0:13:07.000 --> 0:13:10.719
<v Speaker 3>add on top of that government spending restraint. So you know,

0:13:10.840 --> 0:13:14.160
<v Speaker 3>this is this is going to be extremely healthy and

0:13:14.480 --> 0:13:18.920
<v Speaker 3>very important. I think for the stock market. The stock

0:13:19.000 --> 0:13:22.160
<v Speaker 3>market has gone through a period here of great concentration

0:13:22.280 --> 0:13:25.000
<v Speaker 3>towards a few stocks, and now we think, and we've

0:13:25.040 --> 0:13:27.400
<v Speaker 3>seen it in the last few days, there's going to

0:13:27.440 --> 0:13:29.880
<v Speaker 3>be a broadening out. We're very excited about something.

0:13:29.960 --> 0:13:31.840
<v Speaker 2>Well, we'll talk about that in just a minute. If

0:13:31.880 --> 0:13:33.959
<v Speaker 2>you're just now joining us, we're joined by Kathy Woods.

0:13:34.000 --> 0:13:36.600
<v Speaker 2>She's a founder, CEO, and CIO of ARC and Vest.

0:13:36.640 --> 0:13:40.800
<v Speaker 2>She joins us from Saint Petersburg, Florida. Kathy, I want

0:13:40.840 --> 0:13:43.880
<v Speaker 2>to talk one more question on regulation and then we'll

0:13:43.920 --> 0:13:46.320
<v Speaker 2>get to a little more on Tesla and Elon and

0:13:46.440 --> 0:13:48.800
<v Speaker 2>you know, some of the big themes that you're seeing.

0:13:50.160 --> 0:13:53.560
<v Speaker 2>I'm wondering about from you, what you think, specifically in

0:13:53.640 --> 0:13:57.679
<v Speaker 2>terms of financial assets is being held back by regulators,

0:13:57.720 --> 0:14:00.400
<v Speaker 2>Like what financial assets do you think should be opened

0:14:00.480 --> 0:14:02.800
<v Speaker 2>up to the trading masses that haven't been.

0:14:04.480 --> 0:14:08.400
<v Speaker 3>Well, it's interesting. We launched a venture fund and we

0:14:08.480 --> 0:14:11.960
<v Speaker 3>put it in we put it in an interval fund structure,

0:14:12.800 --> 0:14:17.600
<v Speaker 3>which is regulated by the sec and we've had access

0:14:17.720 --> 0:14:23.320
<v Speaker 3>to open AI and thropic data, Bricks, SpaceX, Epic Discord,

0:14:23.880 --> 0:14:28.200
<v Speaker 3>lots of companies that young people who don't need the

0:14:28.360 --> 0:14:34.800
<v Speaker 3>income or net worth thresholds that venture funds require, they

0:14:34.840 --> 0:14:38.600
<v Speaker 3>can get into our venture fund because it's in the

0:14:38.600 --> 0:14:42.800
<v Speaker 3>interval fund structure. I think we're going to see a

0:14:42.920 --> 0:14:46.640
<v Speaker 3>much more of a loosening up. You know why we

0:14:46.800 --> 0:14:52.440
<v Speaker 3>can offer our fund to retail investors for as little

0:14:52.480 --> 0:14:55.920
<v Speaker 3>as five hundred dollars, it's because we're not taking a

0:14:56.000 --> 0:15:00.000
<v Speaker 3>carry we're not charging carried interests twenty percent of profit.

0:15:01.000 --> 0:15:05.000
<v Speaker 3>We do charge a higher fee than you'd get with

0:15:05.160 --> 0:15:09.520
<v Speaker 3>public companies. And I think we're going to see the

0:15:09.560 --> 0:15:15.840
<v Speaker 3>democratization increasingly of private companies as well. I think this

0:15:15.960 --> 0:15:23.720
<v Speaker 3>administration will advocate for that, and we'll and will lower regulations,

0:15:23.760 --> 0:15:29.760
<v Speaker 3>whether it's Sarbine Oxley, but regulations that have you know,

0:15:30.280 --> 0:15:33.080
<v Speaker 3>tied companies and knots. It's very expensive to be a

0:15:33.120 --> 0:15:37.640
<v Speaker 3>public company now, and so for any company as the

0:15:37.720 --> 0:15:41.840
<v Speaker 3>digital world and the physical world converge, we think that's

0:15:41.840 --> 0:15:45.920
<v Speaker 3>a big theme going ahead. We're going to need the

0:15:46.440 --> 0:15:51.440
<v Speaker 3>kind of caval raising that the public markets can offer

0:15:51.600 --> 0:15:54.480
<v Speaker 3>over a long period of time, so I think more

0:15:54.480 --> 0:15:55.680
<v Speaker 3>and more of that's going to happen.

0:15:55.720 --> 0:15:58.320
<v Speaker 2>So, speaking of the digital and physical worlds converging, we

0:15:58.400 --> 0:16:01.200
<v Speaker 2>got to talk crypto because bit coin at a new

0:16:01.240 --> 0:16:05.440
<v Speaker 2>record close to seventy seven thousand dollars per bitcoin. Update

0:16:05.520 --> 0:16:08.280
<v Speaker 2>your prediction for us of where you think bitcoin will

0:16:08.320 --> 0:16:11.440
<v Speaker 2>go and when? Now that Trump will serve another.

0:16:11.280 --> 0:16:17.160
<v Speaker 3>Term, Yes, he's going to be very bitcoin friendly for sure,

0:16:17.360 --> 0:16:23.120
<v Speaker 3>including building a strategic reserve of bitcoin. Senator Lummis has

0:16:23.160 --> 0:16:26.440
<v Speaker 3>been at the forefront of advocating for that, so very

0:16:26.480 --> 0:16:33.160
<v Speaker 3>exciting there. Our price target hasn't changed, except perhaps we're

0:16:33.240 --> 0:16:36.440
<v Speaker 3>leaning more towards our bowl case. Our base case is

0:16:36.480 --> 0:16:41.720
<v Speaker 3>a million dollars by twenty thirty and if you go

0:16:41.840 --> 0:16:46.760
<v Speaker 3>into Big Ideas Big Ideas from twenty twenty three in

0:16:46.800 --> 0:16:50.280
<v Speaker 3>the bitcoinon section, you'll see how we get to that

0:16:50.400 --> 0:16:53.680
<v Speaker 3>million dollar, the building blocks of it. You know, it's

0:16:53.720 --> 0:17:00.080
<v Speaker 3>a substitute for gold, so it's digital gold. It is

0:17:00.120 --> 0:17:04.280
<v Speaker 3>going to be used as a new asset class. It

0:17:04.440 --> 0:17:08.120
<v Speaker 3>is a new asset class for institutional investors, a very

0:17:08.200 --> 0:17:14.600
<v Speaker 3>big idea starting with the spot Bitcoin ETFs launched earlier

0:17:14.600 --> 0:17:18.840
<v Speaker 3>this year. And of course we're very gratified that ARKB

0:17:19.240 --> 0:17:22.720
<v Speaker 3>was one of them, and it's going to be used

0:17:22.720 --> 0:17:26.840
<v Speaker 3>as an insurance policy, both in emerging markets and in

0:17:26.960 --> 0:17:31.680
<v Speaker 3>developed markets against confiscation of wealth, whether that means outright

0:17:31.760 --> 0:17:35.119
<v Speaker 3>confiscation of wealth by corruption and so forth, perhaps in

0:17:35.200 --> 0:17:41.520
<v Speaker 3>emerging markets, or by inflation. Inflation is a highly regressive text. Now,

0:17:41.520 --> 0:17:44.280
<v Speaker 3>we don't think inflation is going to be a problem

0:17:44.400 --> 0:17:49.080
<v Speaker 3>with this administration. In fact, we think that the floodgates

0:17:49.080 --> 0:17:51.720
<v Speaker 3>of innovation are going to open up and that we're

0:17:51.760 --> 0:17:57.600
<v Speaker 3>moving into a world tending towards deflation, but good deflation.

0:17:58.359 --> 0:18:04.600
<v Speaker 3>Technologically enabled in innovation is deflationary. So I think many

0:18:04.600 --> 0:18:07.520
<v Speaker 3>people are going to be really surprised at how low

0:18:07.640 --> 0:18:09.399
<v Speaker 3>inflation goes in the years ahead.

0:18:09.520 --> 0:18:11.800
<v Speaker 2>Kathy, I want to talk performance and get an understanding

0:18:11.840 --> 0:18:16.040
<v Speaker 2>for where you see the future, because you've seen outflows

0:18:16.080 --> 0:18:19.320
<v Speaker 2>every month in the ARC Innovation ETF this year except

0:18:19.359 --> 0:18:22.119
<v Speaker 2>for this month, it's a year where you're underperforming the

0:18:22.200 --> 0:18:24.520
<v Speaker 2>S and P five hundred by a wide margin. The

0:18:24.800 --> 0:18:27.200
<v Speaker 2>RC Innovation ETF it's about flat, the S and P

0:18:27.240 --> 0:18:30.000
<v Speaker 2>five hundred up more than twenty five percent. What's your

0:18:30.000 --> 0:18:33.480
<v Speaker 2>message to investors who've lost money with you? And do

0:18:33.520 --> 0:18:35.880
<v Speaker 2>you worry that performance will lead to an extended period

0:18:36.280 --> 0:18:37.760
<v Speaker 2>where you won't attract money.

0:18:39.240 --> 0:18:42.680
<v Speaker 3>Well, I think, as I've just described, innovation had quite

0:18:42.680 --> 0:18:47.280
<v Speaker 3>a few obstacles during the last few years, so that

0:18:47.359 --> 0:18:51.280
<v Speaker 3>speaks for itself. If you look at our performance, let's

0:18:51.280 --> 0:18:54.240
<v Speaker 3>break it down. You look at our ARKW, which is

0:18:54.280 --> 0:18:57.919
<v Speaker 3>our next generation Internet fund, very focused on AI and

0:18:57.960 --> 0:19:02.120
<v Speaker 3>digital assets. It's up more more than the market this year,

0:19:02.560 --> 0:19:05.200
<v Speaker 3>more than I think it's twenty seven to twenty eight percent.

0:19:06.680 --> 0:19:12.200
<v Speaker 3>If you look at ARKG, which is our Genomic Revolution portfolio,

0:19:12.720 --> 0:19:16.800
<v Speaker 3>it is down twenty two percent. And a big problem

0:19:16.920 --> 0:19:20.920
<v Speaker 3>for that portfolio has been the lack of M and A.

0:19:21.560 --> 0:19:24.560
<v Speaker 3>You know, the absence of M and A. This this group,

0:19:24.640 --> 0:19:29.760
<v Speaker 3>if any, needs those liquidity events because big companies, big

0:19:29.800 --> 0:19:34.240
<v Speaker 3>pharma companies, need the innovation that is coming out of

0:19:34.280 --> 0:19:39.600
<v Speaker 3>the smaller company companies. So we think that's going to change.

0:19:39.840 --> 0:19:44.399
<v Speaker 3>We also if you listen to now I don't know,

0:19:44.720 --> 0:19:48.480
<v Speaker 3>I don't think he'll be FDA commissioner, but Robert Kennedy,

0:19:48.840 --> 0:19:51.680
<v Speaker 3>you know he wants to clean up corruption in healthcare.

0:19:51.760 --> 0:19:58.600
<v Speaker 3>You know, they're a huge lobbying lobbying organizations for pharma.

0:19:58.960 --> 0:20:03.159
<v Speaker 3>They are not. They are not out there advocating for

0:20:03.480 --> 0:20:08.679
<v Speaker 3>the innovators. I think the most important thing he said

0:20:09.280 --> 0:20:13.200
<v Speaker 3>is this, we want to go back to the rich

0:20:13.320 --> 0:20:20.520
<v Speaker 3>tradition of the gold standard of evidenced, evidence based science

0:20:21.160 --> 0:20:28.080
<v Speaker 3>in terms of healthcare, and the tools are here for preventative, predictive, personalized,

0:20:28.119 --> 0:20:35.720
<v Speaker 3>and participatory behavior healthcare. So I think healthcare that the

0:20:35.800 --> 0:20:43.120
<v Speaker 3>convergence of healthcare sequencing technologies, DNA, RNA proteins sequencing technologies,

0:20:43.320 --> 0:20:47.040
<v Speaker 3>artificial intelligence, and Crisper gene.

0:20:47.640 --> 0:20:49.120
<v Speaker 2>So I want to jump in here, and I'm glad

0:20:49.160 --> 0:20:51.240
<v Speaker 2>you brought in I'm glad you brought up RFK because

0:20:51.240 --> 0:20:52.840
<v Speaker 2>I had a question about that to you, Kathy, And

0:20:52.840 --> 0:20:54.520
<v Speaker 2>I'm afraid it's probably our last one, just because we're

0:20:54.560 --> 0:20:57.760
<v Speaker 2>running out of time. He's been a vaccine skeptic. You

0:20:57.800 --> 0:21:02.720
<v Speaker 2>mentioned RNA technology, mRNA technology, what the COVID vaccines, the

0:21:02.760 --> 0:21:06.920
<v Speaker 2>Newish COVID vaccines were based on. Are you concerned that

0:21:07.280 --> 0:21:10.880
<v Speaker 2>how he views public health is going to affect innovation

0:21:11.040 --> 0:21:12.359
<v Speaker 2>happening in the space.

0:21:13.920 --> 0:21:17.080
<v Speaker 3>No, I'm not. If you read what he said very recently,

0:21:17.680 --> 0:21:22.240
<v Speaker 3>he sounds pretty libertarian about vaccinations. You know, there are

0:21:22.280 --> 0:21:27.200
<v Speaker 3>some people who really feel it's important, and others who don't,

0:21:27.240 --> 0:21:31.639
<v Speaker 3>and you live and let live. But one thing I'd

0:21:31.640 --> 0:21:37.040
<v Speaker 3>like to say is this past administration has been a

0:21:37.119 --> 0:21:41.520
<v Speaker 3>menace to what we're calling the multiomics revolution, which is

0:21:41.560 --> 0:21:45.760
<v Speaker 3>going to be the most profound application of artificial intelligence

0:21:45.840 --> 0:21:50.920
<v Speaker 3>and new technologies in history, going to cure disease. And

0:21:51.359 --> 0:21:55.920
<v Speaker 3>yet as I look at the traditional analyst response to

0:21:57.000 --> 0:22:02.879
<v Speaker 3>these drugs like Chrisper Therapeutics and Intellia that are starting

0:22:02.920 --> 0:22:07.520
<v Speaker 3>to cure disease, and how they think that's bad business

0:22:07.880 --> 0:22:13.000
<v Speaker 3>because they don't have an annuity keeping someone keeping someone's

0:22:13.040 --> 0:22:17.600
<v Speaker 3>symptoms under control. That's an annuity. They prefer that to

0:22:17.720 --> 0:22:24.480
<v Speaker 3>a cure. In our latest Monday newsletter, it's called Disrupt

0:22:25.119 --> 0:22:28.919
<v Speaker 3>arc Disrupt you can find it on Twitter. You'll see

0:22:28.960 --> 0:22:33.360
<v Speaker 3>that we believe that curing disease is going to make

0:22:33.400 --> 0:22:37.159
<v Speaker 3>the patents of the companies with those cures two to

0:22:37.400 --> 0:22:41.879
<v Speaker 3>twenty times more valuable than those other kinds. So I

0:22:41.880 --> 0:22:46.280
<v Speaker 3>think there's a complete misunderstanding of the dawn of the

0:22:46.359 --> 0:22:50.680
<v Speaker 3>new health age. And I am so excited, so excited

0:22:51.200 --> 0:22:55.880
<v Speaker 3>that the Trump administration is going to bring this new

0:22:55.880 --> 0:22:57.720
<v Speaker 3>world to life for us.

0:22:58.080 --> 0:23:00.320
<v Speaker 2>Kathy, would we always want more time with you. Thank

0:23:00.359 --> 0:23:02.800
<v Speaker 2>you so much for spending a big part of your

0:23:02.800 --> 0:23:05.119
<v Speaker 2>afternoon with us. We do appreciate it. That's Kathy Wood,

0:23:05.240 --> 0:23:09.000
<v Speaker 2>the founder, CEO, and CIO over at Arcinvest, joining us

0:23:09.000 --> 0:23:10.680
<v Speaker 2>from Saint Petersburg, Florida.

0:23:11.320 --> 0:23:15.959
<v Speaker 1>This is the Bloomberg Business Week podcast, available on Apple, Spotify,

0:23:16.119 --> 0:23:19.800
<v Speaker 1>and anywhere else you get your podcast. Listen live weekday

0:23:19.840 --> 0:23:23.479
<v Speaker 1>afternoons from two to five pm Eastern on Bloomberg dot com,

0:23:23.520 --> 0:23:26.840
<v Speaker 1>the iHeartRadio app tune In, and the Bloomberg Business App.

0:23:26.880 --> 0:23:29.960
<v Speaker 1>You can also watch us live every weekday on YouTube

0:23:30.040 --> 0:23:32.040
<v Speaker 1>and always on the Bloomberg Jerminal