Speaker 1: We are very pleased to have Kathy would for her
Speaker 1: first interview since the election of a Donald Trump. Earlier
Speaker 1: this week, Kathy shares of your flagship fund, the Ark
Speaker 1: Innovation ETF, surged more than eight percent on Wednesday, was
Speaker 1: the best day in more than a year. Part of
Speaker 1: the risk Entrade that we saw on optimism of a
Speaker 1: second term for Donald Trump in the White House. And
Speaker 1: that's where I want to start with you, because when
Speaker 1: you were back on with us in October, you indicated
Speaker 1: without actually saying the former president's name, that you preferred
Speaker 1: a President Trump over a President Harris strictly from the
Speaker 1: standpoint of the candidate who you saw would ease the
Speaker 1: regulatory environment. So here we are. What does another Trump
Speaker 1: administration mean for you and the companies that are convesting?
Speaker 2: Okay, well, thank you for having me on your show. Tim, Yes,
Speaker 2: regulation critical. I think the regulations that have been creeping
Speaker 2: into the system, actually they started to creep in, they've
Speaker 2: just flooded the system and really gummed it up. So
Speaker 2: the first that the biggest regular regulatory issues have been
Speaker 2: around the SEC, especially when it comes to digital assets
Speaker 2: or crypto legislation and the FTCs as it relates to
Speaker 2: M and A activity. I think both they are going
Speaker 2: to be big changes there, and that is going to
Speaker 2: be the beginning.
Speaker 3: I think of a lot of regulatory changes.
Speaker 2: In his first administration, President Trump basically said for every
Speaker 2: regulation you want to introduce, anyone in my administration, you must.
Speaker 3: Get rid of too.
Speaker 2: I think it's going to be maybe more dramatic than
Speaker 2: that this time around. And I also think having having
Speaker 2: Elon Musk, who I think today announced that he'd like
Speaker 2: to name a new department, the Department of Government Efficiency.
Speaker 2: Get that, Doge doje he. I think he's going to
Speaker 2: come into the administration. I don't think he'll be a
Speaker 2: formal part of the administration. He'll be more in an
Speaker 2: oversight roles as I understand.
Speaker 3: Yeah.
Speaker 1: Well, hey, Kathy, I want to jump in here because
Speaker 1: you mentioned a few things that I want to follow
Speaker 1: up on. One is Elon Musk. Have you talked to
Speaker 1: Elon since the election?
Speaker 3: No, I have not talked to him since the election.
Speaker 2: I did see on X that he was part of
Speaker 2: the family as they were taking the picture around President
Speaker 2: Trump's acceptance speech, So you know, I know he's obviously.
Speaker 3: Had a tremendous impact on the election.
Speaker 2: I think he had X made a big difference and
Speaker 2: his ideas around government efficiency, which will revolve importantly around technology.
Speaker 2: Artificial intelligence is doing wonders for the most bureaucratic organizations
Speaker 2: out there. We know from Pallunteer that it is having
Speaker 2: a tremendous impact on insurance companies, underwriting process timelines dropping
Speaker 2: from two weeks to three hours. And even in the
Speaker 2: military Maven pallunteers working on MAVEN with the DoD for
Speaker 2: targeting the enemy, they have shrunk that department. They don't
Speaker 2: need as many people. They've gone from twenty to twenty people,
Speaker 2: which it's pretty amazing what's going on. And I think
Speaker 2: we'll see a lot of attrition. Any employee leaving the
Speaker 2: government probably will not be replaced.
Speaker 3: I don't think he'll I just pick up.
Speaker 2: I don't think he'll do two trillion dollars in government
Speaker 2: spending savings in one year. That might be a five
Speaker 2: to ten year And I think between technology and attrition
Speaker 2: and lower regulations, maybe the abolition of certain departments that.
Speaker 3: They'll go a long way.
Speaker 1: So you don't see him serving a formal role, but
Speaker 1: still overseeing some sort of department of government efficiency in
Speaker 1: an informal way, help me understand what you see him
Speaker 1: doing and whether or not it could be some sort
Speaker 1: of threat to you know, he's a very busy man.
Speaker 2: Yes, he's an unbelievable He's the inventor of our age.
Speaker 2: I think I said that in two thousand and fifteen
Speaker 2: for the first time when I was on your show
Speaker 2: with Carol Masser. At the time, he is the inventor
Speaker 2: of our age. And he comes into a problem, assesses
Speaker 2: it with first principles thinking, doesn't care how things have been,
Speaker 2: and comes back with, you know, ingenious solutions to big problems,
Speaker 2: whether it's autonomous mobility in the autonomous taxi space, or
Speaker 2: in the healthcare space, neuralink. He's in the in the
Speaker 2: social network space X in ai x ai. But and
Speaker 2: a lot of people say and space X of course,
Speaker 2: the entire exploration going to Mars. I think a lot
Speaker 2: of people are I can't believe.
Speaker 3: He can do this.
Speaker 2: But again he cuts to the quick, first principles thinking
Speaker 2: and surrounds himself with brilliant people, people who really want
Speaker 2: to solve the hardest problems in the world. And that's
Speaker 2: part of the secret to his success. Very high standards
Speaker 2: and people who want to be held accountable to very
Speaker 2: high standards and want to really transform the world.
Speaker 1: Hey, we're going to get back to Elon and specifically
Speaker 1: Tesla in a few minutes, but I want to go
Speaker 1: back to something that you mentioned at the top of
Speaker 1: our interview, Kathy, and that's the idea of some of
Speaker 1: the regulatory challenges that you said have cropped up over
Speaker 1: the last couple of years and during the Biden administration,
Speaker 1: specifically with regard to the FTC and the SEC not
Speaker 1: being present in a second Trump administration, how do you
Speaker 1: think the Trump regime will approach financial regulation given that
Speaker 1: he's bound to replace SEC Chair Gary Gensler. What does
Speaker 1: that look like?
Speaker 2: Well, I think I think at first, as it relates
Speaker 2: to crypto or digital asset regulation, they're going to replace
Speaker 2: Gary Gensler with someone who is much more open minded,
Speaker 2: I would say, and will let the legislative process work
Speaker 2: go to work. And you know, the SEC is supposed
Speaker 2: to regulate and force laws. They're not supposed to create
Speaker 2: laws by enforcement, which is what Gary Gensler was doing.
Speaker 2: So I think that's going to be important.
Speaker 3: I also think.
Speaker 2: If you look at the public equity markets, I think
Speaker 2: the number of public companies out there right now has
Speaker 2: been cut in half in the last fifteen twenty years.
Speaker 2: The regulatory nightmare of being a public company has kept people,
Speaker 2: has kept leaders of companies basically saying if I don't
Speaker 2: have to go public, I am not going public. And
Speaker 2: so I think we're going to see a lot more
Speaker 2: work in that regard to give you know, the average
Speaker 2: investor a shot at some of these moonshots. So I
Speaker 2: think that's going to become very important. As far as
Speaker 2: the FTC, you know, the anti trust has gone way
Speaker 2: too far. You know, they were denying mergers and acquisitions
Speaker 2: that really they the companies were tangential to one another.
Speaker 2: They weren't even really in the same market. So we're
Speaker 2: seeing and yet at the time at the same time,
Speaker 2: we've seen these megatech companies grow into you know, massive
Speaker 2: organizations and dominating their markets. So they were denying mergers
Speaker 2: and acquisitions for you know, think about Jet Blue and
Speaker 2: Spirit Airlines. That was ridiculous, that was in the same industry,
Speaker 2: but one is going bankrupt now because because they wouldn't.
Speaker 3: Allow that m and A.
Speaker 2: They were just dogmatic about it in in you know,
Speaker 2: and didn't show to us at least any common sense.
Speaker 1: So you know, so let's jump in. I just want
Speaker 1: to jump in because we don't have a ton of
Speaker 1: time with you, and I want to make sure we
Speaker 1: get to a lot, Kathy, So forgive me please. You
Speaker 1: also mentioned last time you're on with us, you weren't
Speaker 1: wild about the idea of tariffs, and you know, since
Speaker 1: then President Trump said that tariff is the most beautiful
Speaker 1: word in the dictionary. Do you think he will follow
Speaker 1: through with his threat of broad tariffs? And how are
Speaker 1: you preparing and changing your investment style given the threat
Speaker 1: of tariffs.
Speaker 2: Yeah, I'd love to talk about that because we've got
Speaker 2: more information. I think the way the President is looking
Speaker 2: at this, that is, if he puts in place tariffs,
Speaker 2: the other side of that will be income tax and
Speaker 2: corporate tax cuts. And if you think about it, this
Speaker 2: is how America started, you know, President George Washington, we
Speaker 2: had no income tax back then. All the taxes were
Speaker 2: in the form of tariffs. I do think that they're
Speaker 2: not going to be you know, crazy tariffs. They're going
Speaker 2: to be much moreful and really focused away from our
Speaker 2: free trade agreement partners and towards those countries that have
Speaker 2: not been really letting our companies play on a level
Speaker 2: playing field within their countries.
Speaker 3: So I think there's going to be a lot of.
Speaker 2: Negotiation around that really helping us. But I do think
Speaker 2: tax cuts are tax personal and corporate tax cuts are
Speaker 2: going to be much more important than tariffs in terms
Speaker 2: of the growth engine that this economy needs. I'll comment
Speaker 2: on just a couple of other things. I know he
Speaker 2: wants a week dollar, but if he puts in place
Speaker 2: the deregulation and the tax cuts that we expect the
Speaker 2: dollars probably going up. And this reminds me very much
Speaker 2: of the early Reagan years. It's fascinating what's going on.
Speaker 2: Except the first couple of years of the Reagan administration
Speaker 2: he had to deal with back to back recessions because
Speaker 2: Vulker was raising interest rates to fifteen percent plus. We've
Speaker 2: done that. Trump does not have to face that we
Speaker 2: think that the Fed went too far. I think the
Speaker 2: Fed today even says it's going to continue to unwind
Speaker 2: a restrictive monetary policy. And I think it's important too,
Speaker 2: because what we expect now is there will be a
Speaker 2: lot of delayed activity as consumers and businesses try and
Speaker 2: figure out, Okay, how lower tax is going and how
Speaker 2: is the world going to change? Am I going to
Speaker 2: get a better deal? So we're going to need lower
Speaker 2: interest rates. However, if we get the growth beyond that
Speaker 2: that tax cuts and these other measures are going to
Speaker 2: cause the dollar will probably go up, and so I
Speaker 2: think that will be a surprise. But it's an anti
Speaker 2: inflationary force as well. And we're seeing commodities react to
Speaker 2: the dollar going up now in anticipation of these of
Speaker 2: these interesting policies. And then I'd love to just say
Speaker 2: one other thing. A lot of people talk about the deficit,
Speaker 2: and it is a big deficit in the middle of
Speaker 2: it's a rolling recession. But this deficit is worse than
Speaker 2: the worst deficit that Reagan faced at five point five
Speaker 2: percent of GDP. How did he get out of that?
Speaker 2: And Clinton following beyond him more through growth, not through
Speaker 2: tax increases. Uh. And you can add on top of
Speaker 2: that government spending restraints. So you know, this is this
Speaker 2: is going to be extremely healthy and very important.
Speaker 3: I think for the stock market.
Speaker 2: The stock market has gone through a period here of
Speaker 2: great concentration towards a few stocks, and now we think
Speaker 2: and we've seen it in the last few days, there's
Speaker 2: going to be a broadening out we're very excited about.
Speaker 1: So well, we'll talk about that in just a minute.
Speaker 1: If you're just now joining us, we're joined by Kathy Wood.
Speaker 1: She's a founder, CEO, and CIO of ARC and Vest.
Speaker 1: She joins us from Saint Petersburg, Florida. Kathy, I want
Speaker 1: to talk one more question on regulation and then we'll
Speaker 1: get to a little more on Tesla and Elon and
Speaker 1: you know, some of the big themes that you're seeing.
Speaker 1: I'm wondering about from you what you think specifically in
Speaker 1: terms of financial assets is being held back by regulators,
Speaker 1: Like what financial assets do you think should be opened
Speaker 1: up to the trading masses that haven't been well.
Speaker 3: It's interesting.
Speaker 2: We launched a venture fund and we put it in
Speaker 2: We put it in an interval fund structure, which is
Speaker 2: regulated by the SEC, and we've had access to open
Speaker 2: AI and thropic data, Bricks, SpaceX, Epic, discord, lots of
Speaker 2: companies that young people who don't meet the income or
Speaker 2: net worth thresholds that venture funds require, they can get
Speaker 2: into our venture fund because it's in the interval fund structure.
Speaker 2: I think we're going to see a much more of
Speaker 2: a loosening up. You know why we can offer our
Speaker 2: fund to retail investors for as little as five hundred dollars,
Speaker 2: it's because we're not taking a carry, we're not charging
Speaker 2: carried interests twenty percent of profits. We do charge a
Speaker 2: higher fee than you'd get with public companies. And I
Speaker 2: think we're going to see the democratization increasingly of private
Speaker 2: companies as well. I think this administration will advocate for
Speaker 2: that and well and will lower regulations, whether it's Sarbine Oxley,
Speaker 2: but regulations that have tied companies and knots. It's very
Speaker 2: expensive to be a public company now, and so for
Speaker 2: any company. As the digital world and the physical world converge,
Speaker 2: we think that's a big theme going ahead. We're going
Speaker 2: to need the kind of caval raising that the public
Speaker 2: markets can offer over a long period of time. So
Speaker 2: I think more and more of that that's going to happen.
Speaker 1: So, speaking of the digital and physical worlds converging, we
Speaker 1: got to talk crypto because bitcoin at a new record
Speaker 1: close to seventy seven thousand dollars per bitcoin. Update your
Speaker 1: prediction for us of where you think bitcoin will go
Speaker 1: and when now that Trump will serve another term.
Speaker 2: Yes, he's going to be very bitcoin friendly for sure,
Speaker 2: including building a strategic reserve of bitcoin. Senator Lummis has
Speaker 2: been at the forefront of advocating for that, so very
Speaker 2: exciting there. Our price target hasn't changed, except perhaps we're
Speaker 2: leaning more towards our bowl case. Our base case is
Speaker 2: a million dollars by twenty thirty and if you go
Speaker 2: into Big Ideas Big Ideas from twenty twenty three in
Speaker 2: the Bitcoin section, you'll see how we get to that
Speaker 2: million dollar, the building blocks of it. You know, it's
Speaker 2: a substitute for gold, so it's digital gold. It is
Speaker 2: going to be used as a new asset class. It
Speaker 2: is a new asset class for institutional investors, a very
Speaker 2: big idea starting with the spot Bitcoin ETFs launched earlier
Speaker 2: this year, and of course we're very gratified that ARKB
Speaker 2: was one of them. And it's going to be used
Speaker 2: as an insurance policy both in emerging markets and in
Speaker 2: the markets against confiscation of wealth, whether that means outright
Speaker 2: confiscation of wealth by corruption and so forth, perhaps in
Speaker 2: emerging markets or by inflation. Inflation is a highly regressive text.
Speaker 2: Now we don't think inflation is going to be a
Speaker 2: problem with this administration. In fact, we think that the
Speaker 2: floodgates of innovation are going to open up and that
Speaker 2: we're moving into a world tending towards deflation, but good deflation.
Speaker 2: Technologically enabled innovation is deflationary. So I think many people
Speaker 2: are going to be really surprised at how low inflation
Speaker 2: goes in the years ahead.
Speaker 1: Kathy, I want to talk performance and get an understanding
Speaker 1: for where you see the future. Because you've seen outflows
Speaker 1: every month in the ARK Innovation ETF this year except
Speaker 1: for this month, it's a year where you're underperforming the
Speaker 1: S and P five hundred by a wide margin. The
Speaker 1: ARK Innovation ETF it's about flat five hundred, more than
Speaker 1: twenty five percent. What's your message to investors who've lost
Speaker 1: money with you, and do you worry that performance will
Speaker 1: lead to an extended period where you won't attract money.
Speaker 2: Well, I think, as I've just described, innovation had quite
Speaker 2: a few obstacles during the last few years, so that
Speaker 2: speaks for itself. If you look at our performance, let's
Speaker 2: break it down. You look at our ARKW which is
Speaker 2: our next generation Internet fund, very focused on AI and
Speaker 2: digital assets. It's up more than the market this year,
Speaker 2: more than I think it's twenty seven to twenty eight percent.
Speaker 2: If you look at ARKG, which is our Genomic Revolution portfolio,
Speaker 2: it is down twenty two percent. And a big problem
Speaker 2: for that portfolio has been the lack of M and A.
Speaker 3: You know, the absence of M and A.
Speaker 2: This this group, if any, needs those liquidity events because
Speaker 2: big companies, big pharma companies, need the innovation that is
Speaker 2: coming out of the smaller company companies. So we think
Speaker 2: that's going to change. We also if you listen to
Speaker 2: now I don't know, I don't think he'll be FDA commissioner,
Speaker 2: but Robert Kennedy, you know he wants to clean up
Speaker 2: corruption in healthcare. You know they're huge lobbying lobbying organizations
Speaker 2: for pharma. They are not they are not out there
Speaker 2: advocating for the the innovators. I think the most important
Speaker 2: thing he said is is this, we want to go
Speaker 2: back to the rich tradition of the gold standard of evidenced,
Speaker 2: evidence based science in terms of healthcare. And the tools
Speaker 2: are here for preventative, predictive, personalized, and participatory behavior healthcare.
Speaker 2: So I think healthcare that the convergence of healthcare sequencing technologies, DNA, RNA,
Speaker 2: proteins sequencing technologies, artificial intelligence, and Crisper gene.
Speaker 1: Okay, so I want to jump in here, and I'm
Speaker 1: glad you brought in I'm glad you brought up RFK
Speaker 1: because I had a question about that to you, Kathy,
Speaker 1: And I'm afraid it's probably our last one, just because
Speaker 1: we're running out of time. He's been a vaccine skeptic.
Speaker 1: You mentioned RNA technology, mRNA technology, what the COVID vaccines,
Speaker 1: the Newish COVID vaccines were based on. Are you concerned
Speaker 1: that how he views public health is going to affect
Speaker 1: innovation happening in the space.
Speaker 3: No, I'm not.
Speaker 2: If you read what he said very recently, he sounds
Speaker 2: pretty libertarian about vaccinations. You know, there are some people
Speaker 2: who really feel it's important and others who don't, and
Speaker 2: you know, live and let live. But one thing I'd
Speaker 2: like to say is this past administration has been a
Speaker 2: menace to what we're calling the multiomics revolution, which is
Speaker 2: going to be the most profound application of artificial intelligence
Speaker 2: and new technologies in history, going to cure disease. And
Speaker 2: yet as I look at the traditional analyst response to
Speaker 2: these drugs like Chrisper Therapeutics and Intellia that are starting
Speaker 2: to cure disease, and how they think that's bad business
Speaker 2: because they don't have an annuity keeping someone keeping someone's
Speaker 2: symptoms under control. That's an annuity. Uh, they prefer that
Speaker 2: to a cure. In our latest Monday newsletter, it's called
Speaker 2: Disrupt ARC Disrupt you can find it on Twitter. You'll
Speaker 2: see that we believe that curing disease is going to
Speaker 2: make the patents of the companies with those cures two
Speaker 2: to twenty times more valuable than those other kinds. So
Speaker 2: I think there's a complete misunderstanding of the dawn of
Speaker 2: the new health age. And I am so excited, so
Speaker 2: excited that the Trump administration is going to bring this
Speaker 2: new world.
Speaker 3: To life for us.
Speaker 1: Kathy, would we always want more time with you. Thank
Speaker 1: you so much for spending a big part of your
Speaker 1: afternoon with us. We do appreciate it. That's Kathy Wood,
Speaker 1: the founder, CEO, and CIO over at ARC invest joining
Speaker 1: us from Saint Petersburg, Florida.