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Speaker 1: Kathy Wood, the founder of arc invest. Kathy, great to

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Speaker 1: have you on the program. Thanks for joining us. You

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Speaker 1: know you are also involved in You've got your own

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Speaker 1: filing for physical physically backed bitcoin ETF. Do you think

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Speaker 1: that the excitement there has driven up prices across crypto?

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Speaker 1: I mean, today is a down day, but we're still

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Speaker 1: looking at twenty nine thousand dollars for bitcoin.

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Speaker 2: Yes, I do think that.

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Speaker 3: In June, when Blackrock announced its filing, or when it

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Speaker 3: was announced that Blackrock had filed for bitcoin ETF, the

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Speaker 3: bitcoin price did shoot up, but has been fairly stable

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Speaker 3: since then, so I do think it's had an impact.

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Speaker 3: A bigger impact this year was the regional bank crisis.

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Speaker 3: It was very interesting to watch bitcoin go from nineteen

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Speaker 3: thousand to thirty thousand right in the middle of that

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Speaker 3: banking crisis, as regional banks were going bankrupt.

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Speaker 2: So it was a flight to safety. So I thought

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Speaker 2: that move was just as interesting.

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Speaker 1: And a flight to safety is buying bitcoin. Somehow, a

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Speaker 1: flight to safety isn't a little too volatile for that.

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Speaker 3: Well, if you think about it, bitcoin serves as two

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Speaker 3: kinds of hedges. One is a hedge against inflation and

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Speaker 3: outright confiscation of wealth. The other is against counterparty risk.

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Speaker 3: And you know, when the regional banks started going down

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Speaker 3: this fear sort of.

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Speaker 2: You know memory, our memories are fresh.

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Speaker 3: With nine, the counterparty risk became real, and so there

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Speaker 3: was this flight into Bitcoin, a completely decentralized, transparent network

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Speaker 3: which is not subject to counterparty risk.

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Speaker 4: Kathy, So you are this race. Let's talk about the

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Speaker 4: race a little bit. The first important deadline coming up

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Speaker 4: is August thirteenth, where the ARC filing. The SEC's either

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Speaker 4: going to delay it, which we think they'll probably delay it.

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Speaker 4: Then Blackrock is later. You file before Blackrock, but Blackrock

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Speaker 4: came in with the surveillance sharing agreement with coinbase that

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Speaker 4: was novel. Right now, we're looking in the future. There's

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Speaker 4: talk of a common clock where the SEC could approve

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Speaker 4: all a bunch of ETFs at once, putting you on

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Speaker 4: a level playing field with Blackrock and others. What's your

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Speaker 4: take on how this will play out given you filed earlier.

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Speaker 2: I think you're probably right that August.

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Speaker 3: Thirteenth will come and go, and I think I think

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Speaker 3: the SEC, if it's going to approve a Bitcoin ETF,

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Speaker 3: will approve more than one at once. So then again,

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Speaker 3: because most of these essentially will be the same, and

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Speaker 3: it will come down to marketing communicating the message.

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Speaker 2: You know, we've been.

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Speaker 3: Putting out our bitcoin monthly for the last year. We

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Speaker 3: are now starting a bitcoin brainstorming session.

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Speaker 2: Our first one we launched last Thursday.

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Speaker 3: So we're trying to get the word out there that

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Speaker 3: you know, our research is deep and we've been doing

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Speaker 3: it since twenty fifteen when we gained our first exposure

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Speaker 3: to GBTC. We were the first public asset manager to

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Speaker 3: gain exposure to bitcoin at all in twenty fifteen.

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Speaker 5: That's exactly where I want to go. The Grayscale Bitcoin Trust,

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Speaker 5: known by its ticker GBTC. If you look at ARCW

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Speaker 5: for example, your ARC next Generation Internet ETF, right now,

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Speaker 5: I see GBTC as the.

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Speaker 6: Third largest holding.

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Speaker 5: If we are in a situation where the SEC does

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Speaker 5: give its blessing for a spot bitcoin ETF, would you

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Speaker 5: plan to sell out of GBTC and buy one of

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Speaker 5: these physically backfunts.

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Speaker 3: I cannot talk about what we would and would not do,

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Speaker 3: and in fact, our compliance team is you know, giving

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Speaker 3: us marching orders not to talk very much about this

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Speaker 3: filing and it's aftermath at all. So, just the fact

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Speaker 3: that we filed with our partner twenty one shares is

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Speaker 3: as far as I can go, sir, Sorry, Katie.

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Speaker 6: Fair enough, now, I was expecting something along those lines.

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Speaker 5: I am curious to get your take on the regulatory

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Speaker 5: temperature right now, because in addition to this rush of

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Speaker 5: spot bitcoin ETF filings that we've seen, there's also been

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Speaker 5: sort of a race that's unfolding for an ether futures ETF.

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Speaker 6: There's been a ton.

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Speaker 5: Of filings to that effect, and not specific to those funds,

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Speaker 5: but do you sense that the moon music around the

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Speaker 5: SEC and what their appetite to allow these products to

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Speaker 5: launch has changed in the last several months.

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Speaker 2: Well, I think that.

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Speaker 3: The two other branches of government, the judicial branch and

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Speaker 3: the legislative branch, are giving the SEC pause because the

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Speaker 3: SEC is using cases in court having to do with

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Speaker 3: its regulations around crypto, that's.

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Speaker 2: The first thing.

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Speaker 3: And there are bills that are making their way through

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Speaker 3: the House and are seeing some bipartisan support. So I

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Speaker 3: do believe that Gary Gensler, I guess last week or

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Speaker 3: ten days ago, said something like, well, you know, I'm

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Speaker 3: not the only one who makes this decision. There are

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Speaker 3: five Commissioners. Now, of course we know they're weighted towards

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Speaker 3: the Democrats, through Democrats to Republicans, and so one assumes

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Speaker 3: that the way that Gary votes is the way the

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Speaker 3: FCC will vote. But he seemed to be distancing himself

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Speaker 3: a little bit, and so maybe we can take that

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Speaker 3: as a bit of a clue.

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Speaker 4: We definitely did. We thought that was a good sign.

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Speaker 4: But you know, we're reading all kinds of tea leaves

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Speaker 4: in this. Let me ask you about coinbase because you

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Speaker 4: have increased your position in Coinbase. It's also who your

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Speaker 4: surveillance sharing agreement is with. Also, how much is it

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Speaker 4: how important is it that Coinbase is a bridge or

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Speaker 4: compliant enough for the SEC in terms of working with

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Speaker 4: traditional finance. Is your bullishness on this thought that they

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Speaker 4: are going to be sort of the traditional finance bridge

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Speaker 4: or is it other you know, you think people are

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Speaker 4: going to continue trading crypto on Coinbase?

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Speaker 2: No, well both.

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Speaker 3: We We think that it is the most regulatory compliant

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Speaker 3: exchange out there, and we've been very pleased with how

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Speaker 3: it's derivatives exchange in Bermuda has ramped in here.

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Speaker 2: It's very early days, but again.

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Speaker 3: Clearly a trusted partner, and we are also seeing that there's.

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Speaker 2: More turmoil out there. I guess PUBE.

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Speaker 3: I think that's how you say the name of the

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Speaker 3: exchange and tether and finance. There are still there are

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Speaker 3: rumblings out there that not as all all as well,

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Speaker 3: and so Coinbase is going to be the flight to

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Speaker 3: safety exchange, no doubt about it.

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Speaker 1: And do you think the surveillance agreements with coinbase are

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Speaker 1: going to be enough to deal with things like price

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Speaker 1: manipulation in this market? I mean that's been one of

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Speaker 1: the main concerns from the SEC lawyers with whom we've spoken.

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Speaker 3: Well, what I find so interesting still, and this is

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Speaker 3: why we believe that the SEC will lose the gray

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Speaker 3: scale case.

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Speaker 2: How can you approve a bitcoin.

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Speaker 3: Futures e t F and and not a bitcoin et

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Speaker 3: f uh and And in fact, if you're really thinking

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Speaker 3: about consumer protection, a futures ETF as swap space. So

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Speaker 3: there's counterparty risk there that you would not have with

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Speaker 3: a bitcoin e t F which is backed one to

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Speaker 3: one with bitcoin in coin basis colds storage.

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Speaker 2: It still confounds me and dot.

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Speaker 1: To mention that the point that Eric makes, which is

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Speaker 1: that if there had been an etf A lot of

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Speaker 1: people wouldn't have bought bigcoin at FTX and instead would

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Speaker 1: use her vehicle. Kathy, We're going to keep you with us.

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Speaker 1: I'm really glad we have you for the whole half hour. Kathy,

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Speaker 1: would the CEO and CIO of ARC and Vest we

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Speaker 1: write back with us on ETFIQ, this is Bloomberg.

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Speaker 7: Do you think there's much oil to be found in

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Speaker 7: the lower forty eight at this point, or even let's

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Speaker 7: say Alaska as well, or mostly we know where all

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Speaker 7: the oil is and there's no more big permium basing

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Speaker 7: kind of the posits anywhere.

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Speaker 8: People have said that over time, and then we've always

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Speaker 8: been surprised, and so the US is explored more than

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Speaker 8: any other other place in the world. I think the

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Speaker 8: industry has a good idea, but technology allows you sometimes

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Speaker 8: to recover things that you haven't been able to before.

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Speaker 8: That's the story of shale. The other one that continues

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Speaker 8: to be a positive story is deep water Gulf of Mexico,

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Speaker 8: where we'll go out and drill in a mile or

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Speaker 8: more of water depth and then go down several more

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Speaker 8: miles and find large, large fields. And the Gulf of

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Speaker 8: Mexico is still relatively under explored compared to the Onshore,

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Speaker 8: so I think there's still room for more discoveries.

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Speaker 6: Welcome back to Bloomberg e c F i Q. I'm

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Speaker 6: Katie Greifeld. Let's get back now to our invest CEO.

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Speaker 5: And CEO, Kathy would Kathy is great to have you

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Speaker 5: here already, more so because we got some interesting news

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Speaker 5: out of Tesla this morning, of course, Tesla being one

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Speaker 5: of your biggest holdings for a long time. That news

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Speaker 5: being that Tesla CFO Zachary Kirkhorn, is stepping down after

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Speaker 5: more than thirteen years at Tesla.

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Speaker 6: Curious to hear.

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Speaker 5: Your reaction, given how long you've been involved in the stock,

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Speaker 5: how long he's been there, does this give you any pause?

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Speaker 3: Well, we loved Zach and love Zach and think he

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Speaker 3: will do very well wherever he goes. I know there

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Speaker 3: are rumors out that there are some CEO positions out

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Speaker 3: there which he might like to take.

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Speaker 2: So we will miss him.

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Speaker 3: But his successor has been with Tesla right underneath him

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Speaker 3: since twenty eighteen, so he was put through the fires.

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Speaker 3: Remember in twenty eighteen, nineteen, many many analysts were saying

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Speaker 3: that Tesla was going bankrupt, so he's been there, he's

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Speaker 3: gone through the fire, and.

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Speaker 2: You know, it's a tough job. It's a tough, tough job.

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Speaker 3: So I guess thirteen years was a really good run

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Speaker 3: for Zach And can't say enough good things about him

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Speaker 3: and what he did for Tesla, but I think he

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Speaker 3: trained his successor.

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Speaker 6: Well, that's great to hear.

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Speaker 1: Do you expect Tesla to build two million vehicles this year?

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Speaker 1: I think it's incredible how they've grown production and it

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Speaker 1: looks like they can do that. What are your expectations

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Speaker 1: for their growth from here on out?

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Speaker 3: Well, as you know, we have a five year investment

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Speaker 3: time horizon, and we do think this cycle for autos

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Speaker 3: is going to get tougher in here generally. But we

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Speaker 3: think just like last year when electric vehicles were of

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Speaker 3: sixty nine percent or sixty five percent something like that

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Speaker 3: and gas powered vehicles down seven percent globally, we think

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Speaker 3: we're going to continue to see that share shift accelerateuse.

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Speaker 2: Electric vehicle prices.

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Speaker 3: Are going to follow their costs down in a way

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Speaker 3: that gas powered cars cannot. So we think that electric

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Speaker 3: vehicles will be less expensive, and they are better cars

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Speaker 3: than gas powered vehicles, so we think they're going to.

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Speaker 2: Take tremendous share.

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Speaker 3: And even if the auto market relapses in here, which

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Speaker 3: we think it could, we don't think electric vehicles will

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Speaker 3: rule relapse.

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Speaker 2: So we think the one point eight.

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Speaker 3: Millions for this year, which was Elon said one point

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Speaker 3: eight to two million, they're going to have some shutdowns

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Speaker 3: in the third quarter for maintenance and upgrades, and so

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Speaker 3: he lowered. He lowered his expectation to the lower end

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Speaker 3: of that range. I think he likes to lower expectations

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Speaker 3: and then beat, so I wouldn't be surprised if it's

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Speaker 3: higher than that.

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Speaker 1: Being at Bloomberg Economy Forum has voice concerns about the

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Speaker 1: availability of you know, cobalt and lithium and is there

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Speaker 1: enough to continue making electric cars for the masses as

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Speaker 1: some producers like GM are building, you know, massive two

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Speaker 1: hundred kilowatt batteries for their trucks. Is that a concern

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Speaker 1: for you at all? Do you think Tesla has the

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Speaker 1: production locked in?

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Speaker 3: Well, I know very early on they said to their suppliers,

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Speaker 3: you know, if you will build it, we will buy it.

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Speaker 3: So yes, they've been in a preferred position and probably

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Speaker 3: still are. They're also very smart. Tesla's engineers are very smart.

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Speaker 3: They are engineering cobalt out.

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Speaker 2: Of the cars. They're doing it for a few reasons.

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Speaker 3: The supply is uncertain, and it's very focused in I

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Speaker 3: guess the Congo, where there are a lot of environmental

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Speaker 3: and governments and social concerns.

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Speaker 2: So they're engineering it.

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Speaker 3: Out and they're moving into and you should say on lithium. Actually,

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Speaker 3: if you look at the price, it went up tenfold

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Speaker 3: in two years and now.

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Speaker 2: It's down about forty from that peak.

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Speaker 3: I think lithium is one of the most pervasive minerals

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Speaker 3: out there, so we don't think lithium is an issue

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Speaker 3: at all, especially now that the Chinese and the Koreans

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Speaker 3: and all of the usoems are basically telling lithium minors.

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Speaker 2: Just build it and we will take it.

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Speaker 3: So and then the other interesting thing is again this

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Speaker 3: is Tesla leading the charge so to speak, in this

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Speaker 3: category lithium iron phosphate, so taking out the nickel and

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Speaker 3: other metals that may end up in short supply, especially

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Speaker 3: if we get into very strong cycles, and the lithium

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Speaker 3: iron phosphate is a much lower priced or will lead

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Speaker 3: to a much lower priced car as well.

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Speaker 4: Kathy real quick, I wanted to get in the superconductor.

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Speaker 4: This is something that's been in our team's getting obsessed about.

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Speaker 4: You are at Innovation Fund, I'm guessing you're looking at this.

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Speaker 6: How much of this is hype.

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Speaker 4: And hope versus a potential legit reality and how do

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Speaker 4: you play it well?

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Speaker 3: It was interesting when the news broke a little more

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Speaker 3: than a week ago. Many people just thought it was

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Speaker 3: a fraud, but our chief futurist Brett Wynton said, wait

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Speaker 3: a minute, this is not a fraud. It can't be

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Speaker 3: a fraud because it's so simple. You can buy from

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Speaker 3: you can buy, you can buy phosphorus copper.

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Speaker 2: And there was one other ingredient there.

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Speaker 3: And you could actually follow their instructions and duplicate this.

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Speaker 3: We're going to find out pretty quickly. And what it

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Speaker 3: does seem is that it is possible. So we went

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Speaker 3: from thinking Friday a week ago, oh maybe ten to

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Speaker 3: fifteen percent chance to now, while the markets, the betting

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Speaker 3: markets are at forty percent, I think we are more

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Speaker 3: in the sixty percent plus range.

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Speaker 2: So and you know, it could.

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Speaker 3: It could be the breakthrough we need for quantum computing,

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Speaker 3: or at least bringing it into reality from a commercialization

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Speaker 3: point of view.

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Speaker 2: Sooner than expected, or the high speed trains.

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Speaker 3: It could change so many things, and particularly our electric

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Speaker 3: system where you know we lose so much heat and

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Speaker 3: data centers where we lose so much energy because of

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Speaker 3: the inefficiencies associated with current electricity.

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Speaker 5: All right, Kathy, we got to take a break, but

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Speaker 5: you're sticking with us, and I think we're going to

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Speaker 5: go to Florida next So stay tuned.

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Speaker 6: This is ETFIQ on Bloomberg.

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Speaker 7: Okay, so you're moving in on me quick, distracting me

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Speaker 7: with your fancy hands.

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Speaker 6: I'm going to deal with your night because he's really.

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Speaker 1: Bothering me.

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Speaker 4: Night.

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Speaker 7: Yeah, he's a troublemaker.

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Speaker 8: What did you get up to this weekend?

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Speaker 6: You know, just robot stuff, A lot of chess I was.

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Speaker 2: Practicing for for you. I know you're pretty good.

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Speaker 6: Oh I don't like that.

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Speaker 2: I will take this.

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Speaker 8: Put it over here.

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Speaker 1: Not cool?

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Speaker 2: Not cool?

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Speaker 8: All right, I will I will concede.

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Speaker 6: I can see.

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Speaker 9: Got me beat.

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Speaker 2: Very good game, well played, Thank.

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Speaker 1: You, sir. Thank you.

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Speaker 9: From the beating hearts of global finance, economics, and politics

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Speaker 9: and wherever newsmakers are using markets, Bloomberg brings you conversations

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Speaker 9: that allow for deep discussions and important insights. How has

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Speaker 9: that shaped your strategy for the bank? Is this meaning normal?

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Speaker 6: Is this like a catalyst?

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Speaker 9: Do you think we're in a new phase for dividend

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Speaker 9: policy overall?

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Speaker 2: That's a great question.

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Speaker 9: I'm Francin Lacklaw and this is the Pulse every weekday

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Speaker 9: at nine am only on Bloomberg.

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Speaker 10: On the David Rubenstein Show. Here to pear conversations, I

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Speaker 10: uncover the untold stories of the world's most successful leaders.

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Speaker 10: Watch Wednesdays on Bloomberg Television.

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Speaker 2: One of the biggest names in business. Choose Bloomberg gat questions, great.

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Speaker 6: Question, great question, best question.

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Speaker 2: I get all n Lumberg top experts, great questions.

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Speaker 5: Let's get back to our conversation out with Kathy Wood.

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Speaker 5: And Kathy, I promised Florida, but I actually want to

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Speaker 5: start in China and get your current views on what

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Speaker 5: the stock market there looks like.

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Speaker 6: Because a few years.

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Speaker 5: Ago you were out and I think you came back

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Speaker 5: a little bit in JD dot Com. What's your current

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Speaker 5: thinking around the equity market in China and what opportunities are.

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Speaker 6: There or not?

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Speaker 3: Well, we are maintaining our position. Really common prosperity suggests

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Speaker 3: that the government is aiming for companies not to be

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Speaker 3: too profitable, but to really help the country to expand

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Speaker 3: and make the lives of everyone better, which is noble.

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Speaker 3: That's what we all want, is to shrink the divide

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Speaker 3: between the rich and the poor.

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Speaker 2: We are focused on a few things there.

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Speaker 3: We're focused on the fact that China is exporting deflation.

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Speaker 3: It's PPI down five point four percent, and it is

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Speaker 3: one reason that we think that the world is going

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Speaker 3: to face more of a deflationary period here than I

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Speaker 3: think most people think.

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Speaker 2: It's also very interesting to watch the yuan.

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Speaker 3: I think that the government would be stimulating more aggressively

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Speaker 3: if the yen we're a little stronger, and it has

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Speaker 3: been weakening, and they're very careful about their currency. So

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Speaker 3: I don't think they're going to be able to stimulate

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Speaker 3: as much as many people might like or expect, because

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Speaker 3: the yuan is showing some fundamental weakness here.

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Speaker 2: And you know what's so interesting about that.

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Speaker 3: Sorry, I just want to exclamation point here the fact

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Speaker 3: that they're exporting defel uh and there the yuan is down.

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Speaker 2: That's that's a double whammy.

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Speaker 3: That is that from from UH, from China's point of view,

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Speaker 3: you know, the fact to see deflation as their currency

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Speaker 3: is down. Normally, when a currency is down, you see inflation.

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Speaker 4: So, Kathy, we we know you moved to Florida from

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Speaker 4: New York City. I believe you were in the Chelsea neighborhood.

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Speaker 4: I visited your office way.

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Speaker 6: Back in the day. Yes, you're now down to Florida.

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Speaker 6: A lot of asset managers, a.

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Speaker 4: Lot of people who watch Bloomberg TV are considering moves

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Speaker 4: like this. How has it changed your investing process, if

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Speaker 4: at all? Being there are there pros and cons to

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Speaker 4: being in Florida versus in New York City.

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Speaker 2: I guess the bit.

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Speaker 3: There's for us no change in our investment process. COVID

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Speaker 3: told us we could work remotely, and so we have

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Speaker 3: a hybrid setup. But we do have rotations of all

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Speaker 3: of the teams through Saint Petersburg, Florida, and uh even

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Speaker 3: more so during the winter, I might add. So that's

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Speaker 3: working out. But you know, I think it's been a

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Speaker 3: wonderful place for us, and it's great to have everyone

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Speaker 3: come together, either in various teams or all together like reunion.

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Speaker 2: So it's working pretty well for us.

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Speaker 1: We only have a few seconds left, so I'll just

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Speaker 1: ask a short question elon Musk and Zuckerberg may have

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Speaker 1: a cage match fight, do you have do you take

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Speaker 1: a side in that in that fight?

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Speaker 6: Do you think a Mosk is off the task.

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Speaker 3: Whenever he puts his mind to something, I wouldn't I

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Speaker 3: wouldn't bet against him, That's what I'll say. But I

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Speaker 3: did read this morning that he's saying that or tweeting

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Speaker 3: that he has to probably go for a back operation

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Speaker 3: first for something to having to do with his discs,

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Speaker 3: So I would I would hope that he would wait

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Speaker 3: until he's completely on the mend.

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Speaker 1: All right, Kathy, great to spend some time with you.

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Speaker 1: That is ARC invest CEO and c IO. Kathy would