November 7, 2024 • 23 mins
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Ark Invest CEO and CIO Cathie Wood discusses what a Trump administration could mean for her outlook and investment strategy. She also talks about Elon Musk's relationship with the president-elect and the state of cryptocurrencies.
Hosts: Tim Stenovec. Producer: Paul Brennan.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business
Week inside from the reporters and editors who bring you
America's most trusted business magazine, plus global business, finance and
tech news. The Bloomberg Business Week Podcast with Carol Messer
(00:23):
and Tim Stenebeck from Bloomberg Radio.
Speaker 2 (00:27):
You are very pleased to have Kathy would for her
first interview since the election of Donald Trump earlier this week.
Kathy shares of your flagship fund, the Archannivation ETF, surch
more than eight percent on Wednesday. It was the best
day in more than a year. Part of the risk
Entrade that we saw on optimism of a second term
for Donald Trump in the White House. And that's where
I want to start with you, because when you were
(00:49):
back on with us in October, you indicated, without actually
saying the former president's name, that you preferred a President
Trump over President Harris strictly from the standpoint of the
candidate who you saw would ease the regulatory environment. So
here we are. What does another Trump administration mean for
you and the companies that are convesting.
Speaker 3 (01:11):
Okay, well, thank you for having me on your show. Tim, Yes,
regulation critical. I think the regulations that have been creeping
into the system. Actually they started to creep in, they've
just flooded the system and really gummed it up. So
(01:33):
the first the biggest regulatory issues have been around the SEC,
especially when it comes to digital assets or crypto legislation
and the FTC as it relates to M and A activity.
I think both there are going to be big changes there,
(01:56):
and that is going to be the beginning. I think
of a lot of regulatory changes. In his first administration,
President Trump basically said for every regulation you want to
introduce anyone in my administration, you must get rid of too.
I think it's going to be maybe more dramatic than
(02:17):
that this time around. And I also think having Elon Musk,
who I think today announced that he'd like to name
a new department, the Department of Government Efficiency. Get that,
doge doje he. I think he's going to come into
(02:39):
the administration. I don't think he'll be a formal part
of the administration. He'll be more in an oversight role
as as I understand.
Speaker 2 (02:48):
Yeah, well, hey, Kathy, I want to jump in here
because you mentioned a few things that I want to
follow up on. One is Elon Musk. Have you talked
to Elon since the election?
Speaker 3 (02:57):
No, I have not talked to him since the election.
I did see on X that he was part of
the family as they were taking the picture around President
Trump's acceptance speech, So you know, I know he's obviously
had a tremendous impact on the election. I think he
(03:19):
had X made a big difference and his ideas around
government efficiency, which will revolve importantly around technology. Artificial intelligence
is doing wonders for the most bureaucratic organizations out there.
We know from Pallunteer that it is having a tremendous
(03:42):
impact on insurance companies, underwriting process timelines dropping from two
weeks to three hours. And even in the military Maven.
Pallenteers working on Maven with the DoD for targeting the enemy.
(04:02):
They have shrunk that department. They don't need as many people.
They've gone from twenty to twenty people, which it's pretty
amazing what's going on, and I think we'll see a
lot of attrition. Any employee leaving the government probably will
not be replaced. I don't think he'll yeah, I just
(04:23):
pick up. I don't think he'll do two trillion dollars
in government spending savings in one year that might be
a five to ten year and I think between technology
and attrition and lower regulations, maybe the abolition of certain
departments that they'll go a long way.
Speaker 2 (04:44):
So you don't see him serving a formal role, but
still overseeing some sort of department of government efficiency in
an informal way. Help me understand what you see him
doing and whether or not it could be some sort
of threat to you know, he's a very busy man.
Speaker 3 (05:00):
Yes, he's an unbelievable He's the inventor of our age.
I think I said that in two thousand and fifteen
for the first time when I was on your show
with Carol Masser. At the time, he is the inventor
of our age, and he comes into a problem, assesses
(05:22):
it with first principles thinking, doesn't care how things have
been done, and comes back with, you know, ingenious solutions
to big problems, whether it's autonomous mobility in the autonomous
taxi space.
Speaker 1 (05:40):
Or in.
Speaker 3 (05:42):
The healthcare space, neuralink, in the social network space X
in AI XAI, and a lot of people say and
SpaceX of course, the entire exploration going to Mars. I
think a lot of people are I can't believe he
(06:03):
can do this. But again, he cuts to the quick
first principles thinking and surrounds himself with brilliant people, people
who really want to solve the hardest problems in the world.
And that's part of the secret to his success. Very
high standards and people who want to be held accountable
to very high standards and want to really transform the world.
Speaker 2 (06:25):
Hey, we're going to get back to Elon and specifically
Tesla in a few minutes, but I want to go
back to something that you mentioned at the top of
our interview, Kathy, and that's the idea of some of
the regulatory challenges that you said have cropped up over
the last couple of years and during the Biden administration,
specifically with regard to the FTC and the SEC not
being present. In a second Trump administration, how do you
(06:46):
think the Trump regime will approach financial regulation given that
he's vound to replace SEC chair Gary Gensler. What does
that look like?
Speaker 3 (06:55):
Well, I think I think at first as as it
relates to crypto or digital asset regulation, they're going to
replace Gary Gensler with someone who is much more open minded,
I would say, and will let the legislative process, work
(07:17):
go to work, and the SEC is supposed to regulate
and force laws. They're not supposed to create laws by enforcement,
which is what Gary Gensler was doing. So I think
that's going to be important. I also think if you
look at the public equity markets, I think the number
(07:39):
of public companies out there right now has been cut
in half in the last fifteen twenty years. The regulatory
nightmare of being a public company has kept people, has
kept leaders of companies basically saying if I don't have
to go public, I am not going public. And so
(08:01):
I think we're going to see a lot more work
in that regard to give you know, the average investor
a shot at some of these moonshots. So I think
that's going to become very important. As far as the FTC,
you know, the the anti trust has has gone way
(08:22):
too far. You know, they they were denying mergers and
acquisitions that really they the companies were tangential to one another,
they weren't even really in the same market. So we're
seeing and and yet at the time, at the same time,
we've seen these megatech companies grow into you know, massive
(08:49):
organizations and dominating their markets. So they were denying mergers
and acquisitions for you know, think about Jet Blue and
Spirit Airlines. That was ridiculous. That was in the same industry,
but one is going bankrupt now because because they wouldn't
allow that m and A. They were just dogmatic about
(09:11):
it in in, you know, and didn't show to us
at least any common sense.
Speaker 2 (09:17):
So, you know, so let's jump in. I just want
to jump in because we don't have a ton of
time with you, and I want to make sure we
get to a lot, Kathy, So forgive me please. You
also mentioned last time you're on with us, you weren't
wild about the idea of tariffs, and you know, since
then President Trump said that tariff is the most beautiful
word in the dictionary. Do you think he will follow
through with his threat of broad tariffs? And how are
(09:38):
you preparing and changing your investment style given the threat
of tariffs.
Speaker 3 (09:43):
Yeah, I'd love to talk about that because we've got
more information. I think the way the president is looking
at this, that is, if he puts in place tariffs,
the other side of that will be income tax and
corporate tax cuts. And if you think about it, this
(10:08):
is how America started, you know, President George Washington. We
had no income tax back then. All the taxes were
in the form of tariffs. I do think that they're
not going to be, you know, crazy tariffs. They're going
to be much more thoughtful and really focused away from
(10:30):
our free trade agreement partners and towards those countries that
have not been really letting our companies play on a
level playing field within their countries. So I think there's
going to be a lot of negotiation around that really
really helping us. But I do think tax cuts are
(10:52):
tax personal and corporate tax cuts are going to be
much more important than tariffs in terms in terms of
the growth engine that this economy needs. I'll comment on
just a couple of other things. I know he wants
a week dollar, but if he puts in place the
deregulation and the tax cuts that we expect the dollars
(11:15):
probably going up. And this reminds me very much of
the early Reagan years. It's fascinating what's going on. Except
the first couple of years of the Reagan administration he
had to deal with back to back recessions because Vulker
was raising interest rates to fifteen percent plus. We've done that.
(11:39):
Trump does not have to face that we think that
the FED went too far. I think the Fed today
even says it's going to continue to unwind a restrictive
monetary policy. And I think it's important too, because what
we expect now is there will be a lot of
delayed activity as consumers and businesses trying to figure out, Okay,
(12:01):
how lower tax is going and how is the world
going to change? Am I going to get a better deal?
So we're going to need lower interest rates. However, if
we get the growth beyond that that tax cuts and
these other measures are going to cause, the dollar will
probably go up, and so I think that that will
(12:22):
be a surprise. But it's an anti inflationary force as well,
and we're seeing commodities react to the dollar going up
now in anticipation of these interesting policies. And then I'd
love to just say one other thing. A lot of
people talk about the deficit, and it is a big
(12:43):
deficit in the middle of it's a rolling recession. But
this deficit is worse than the worst deficit that Reagan
faced at five point five percent of GDP. How did
he get out of that? And Clinton following beyond him
more through growth? Not through tax increases, and you can
(13:07):
add on top of that government spending restraint. So you know,
this is this is going to be extremely healthy and
very important. I think for the stock market. The stock
market has gone through a period here of great concentration
towards a few stocks, and now we think, and we've
seen it in the last few days, there's going to
(13:27):
be a broadening out. We're very excited about something.
Speaker 2 (13:29):
Well, we'll talk about that in just a minute. If
you're just now joining us, we're joined by Kathy Woods.
She's a founder, CEO, and CIO of ARC and Vest.
She joins us from Saint Petersburg, Florida. Kathy, I want
to talk one more question on regulation and then we'll
get to a little more on Tesla and Elon and
you know, some of the big themes that you're seeing.
(13:50):
I'm wondering about from you, what you think, specifically in
terms of financial assets is being held back by regulators,
Like what financial assets do you think should be opened
up to the trading masses that haven't been.
Speaker 3 (14:04):
Well, it's interesting. We launched a venture fund and we
put it in we put it in an interval fund structure,
which is regulated by the sec and we've had access
to open AI and thropic data, Bricks, SpaceX, Epic Discord,
lots of companies that young people who don't need the
(14:28):
income or net worth thresholds that venture funds require, they
can get into our venture fund because it's in the
interval fund structure. I think we're going to see a
much more of a loosening up. You know why we
can offer our fund to retail investors for as little
(14:52):
as five hundred dollars, it's because we're not taking a
carry we're not charging carried interests twenty percent of profit.
We do charge a higher fee than you'd get with
public companies. And I think we're going to see the
democratization increasingly of private companies as well. I think this
(15:15):
administration will advocate for that, and we'll and will lower regulations,
whether it's Sarbine Oxley, but regulations that have you know,
tied companies and knots. It's very expensive to be a
public company now, and so for any company as the
(15:37):
digital world and the physical world converge, we think that's
a big theme going ahead. We're going to need the
kind of caval raising that the public markets can offer
over a long period of time, so I think more
and more of that's going to happen.
Speaker 2 (15:55):
So, speaking of the digital and physical worlds converging, we
got to talk crypto because bit coin at a new
record close to seventy seven thousand dollars per bitcoin. Update
your prediction for us of where you think bitcoin will
go and when? Now that Trump will serve another.
Speaker 3 (16:11):
Term, Yes, he's going to be very bitcoin friendly for sure,
including building a strategic reserve of bitcoin. Senator Lummis has
been at the forefront of advocating for that, so very
exciting there. Our price target hasn't changed, except perhaps we're
(16:33):
leaning more towards our bowl case. Our base case is
a million dollars by twenty thirty and if you go
into Big Ideas Big Ideas from twenty twenty three in
the bitcoinon section, you'll see how we get to that
million dollar, the building blocks of it. You know, it's
(16:53):
a substitute for gold, so it's digital gold. It is
going to be used as a new asset class. It
is a new asset class for institutional investors, a very
big idea starting with the spot Bitcoin ETFs launched earlier
(17:14):
this year. And of course we're very gratified that ARKB
was one of them, and it's going to be used
as an insurance policy, both in emerging markets and in
developed markets against confiscation of wealth, whether that means outright
confiscation of wealth by corruption and so forth, perhaps in
(17:35):
emerging markets, or by inflation. Inflation is a highly regressive text. Now,
we don't think inflation is going to be a problem
with this administration. In fact, we think that the floodgates
of innovation are going to open up and that we're
moving into a world tending towards deflation, but good deflation.
(17:58):
Technologically enabled in innovation is deflationary. So I think many
people are going to be really surprised at how low
inflation goes in the years ahead.
Speaker 2 (18:09):
Kathy, I want to talk performance and get an understanding
for where you see the future, because you've seen outflows
every month in the ARC Innovation ETF this year except
for this month, it's a year where you're underperforming the
S and P five hundred by a wide margin. The
RC Innovation ETF it's about flat, the S and P
five hundred up more than twenty five percent. What's your
(18:30):
message to investors who've lost money with you? And do
you worry that performance will lead to an extended period
where you won't attract money.
Speaker 3 (18:39):
Well, I think, as I've just described, innovation had quite
a few obstacles during the last few years, so that
speaks for itself. If you look at our performance, let's
break it down. You look at our ARKW, which is
our next generation Internet fund, very focused on AI and
digital assets. It's up more more than the market this year,
(19:02):
more than I think it's twenty seven to twenty eight percent.
If you look at ARKG, which is our Genomic Revolution portfolio,
it is down twenty two percent. And a big problem
for that portfolio has been the lack of M and A.
You know, the absence of M and A. This this group,
(19:24):
if any, needs those liquidity events because big companies, big
pharma companies, need the innovation that is coming out of
the smaller company companies. So we think that's going to change.
We also if you listen to now I don't know,
(19:44):
I don't think he'll be FDA commissioner, but Robert Kennedy,
you know he wants to clean up corruption in healthcare.
You know, they're a huge lobbying lobbying organizations for pharma.
They are not. They are not out there advocating for
the innovators. I think the most important thing he said
(20:09):
is this, we want to go back to the rich
tradition of the gold standard of evidenced, evidence based science
in terms of healthcare, and the tools are here for preventative, predictive, personalized,
and participatory behavior healthcare. So I think healthcare that the
(20:35):
convergence of healthcare sequencing technologies, DNA, RNA proteins sequencing technologies,
artificial intelligence, and Crisper gene.
Speaker 2 (20:47):
So I want to jump in here, and I'm glad
you brought in I'm glad you brought up RFK because
I had a question about that to you, Kathy, And
I'm afraid it's probably our last one, just because we're
running out of time. He's been a vaccine skeptic. You
mentioned RNA technology, mRNA technology, what the COVID vaccines, the
Newish COVID vaccines were based on. Are you concerned that
how he views public health is going to affect innovation
(21:11):
happening in the space.
Speaker 3 (21:13):
No, I'm not. If you read what he said very recently,
he sounds pretty libertarian about vaccinations. You know, there are
some people who really feel it's important, and others who don't,
and you live and let live. But one thing I'd
like to say is this past administration has been a
(21:37):
menace to what we're calling the multiomics revolution, which is
going to be the most profound application of artificial intelligence
and new technologies in history, going to cure disease. And
yet as I look at the traditional analyst response to
these drugs like Chrisper Therapeutics and Intellia that are starting
(22:02):
to cure disease, and how they think that's bad business
because they don't have an annuity keeping someone keeping someone's
symptoms under control. That's an annuity. They prefer that to
a cure. In our latest Monday newsletter, it's called Disrupt
(22:25):
arc Disrupt you can find it on Twitter. You'll see
that we believe that curing disease is going to make
the patents of the companies with those cures two to
twenty times more valuable than those other kinds. So I
think there's a complete misunderstanding of the dawn of the
(22:46):
new health age. And I am so excited, so excited
that the Trump administration is going to bring this new
world to life for us.
Speaker 2 (22:58):
Kathy, would we always want more time with you. Thank
you so much for spending a big part of your
afternoon with us. We do appreciate it. That's Kathy Wood,
the founder, CEO, and CIO over at Arcinvest, joining us
from Saint Petersburg, Florida.
Speaker 1 (23:11):
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Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business
Week inside from the reporters and editors who bring you
America's most trusted business magazine, plus global business, finance and
tech news. The Bloomberg Business Week Podcast with Carol Messer
(00:23):
and Tim Stenebeck from Bloomberg Radio.
Speaker 2 (00:27):
You are very pleased to have Kathy would for her
first interview since the election of Donald Trump earlier this week.
Kathy shares of your flagship fund, the Archannivation ETF, surch
more than eight percent on Wednesday. It was the best
day in more than a year. Part of the risk
Entrade that we saw on optimism of a second term
for Donald Trump in the White House. And that's where
I want to start with you, because when you were
(00:49):
back on with us in October, you indicated, without actually
saying the former president's name, that you preferred a President
Trump over President Harris strictly from the standpoint of the
candidate who you saw would ease the regulatory environment. So
here we are. What does another Trump administration mean for
you and the companies that are convesting.
Speaker 3 (01:11):
Okay, well, thank you for having me on your show. Tim, Yes,
regulation critical. I think the regulations that have been creeping
into the system. Actually they started to creep in, they've
just flooded the system and really gummed it up. So
(01:33):
the first the biggest regulatory issues have been around the SEC,
especially when it comes to digital assets or crypto legislation
and the FTC as it relates to M and A activity.
I think both there are going to be big changes there,
(01:56):
and that is going to be the beginning. I think
of a lot of regulatory changes. In his first administration,
President Trump basically said for every regulation you want to
introduce anyone in my administration, you must get rid of too.
I think it's going to be maybe more dramatic than
(02:17):
that this time around. And I also think having Elon Musk,
who I think today announced that he'd like to name
a new department, the Department of Government Efficiency. Get that,
doge doje he. I think he's going to come into
(02:39):
the administration. I don't think he'll be a formal part
of the administration. He'll be more in an oversight role
as as I understand.
Speaker 2 (02:48):
Yeah, well, hey, Kathy, I want to jump in here
because you mentioned a few things that I want to
follow up on. One is Elon Musk. Have you talked
to Elon since the election?
Speaker 3 (02:57):
No, I have not talked to him since the election.
I did see on X that he was part of
the family as they were taking the picture around President
Trump's acceptance speech, So you know, I know he's obviously
had a tremendous impact on the election. I think he
(03:19):
had X made a big difference and his ideas around
government efficiency, which will revolve importantly around technology. Artificial intelligence
is doing wonders for the most bureaucratic organizations out there.
We know from Pallunteer that it is having a tremendous
(03:42):
impact on insurance companies, underwriting process timelines dropping from two
weeks to three hours. And even in the military Maven.
Pallenteers working on Maven with the DoD for targeting the enemy.
(04:02):
They have shrunk that department. They don't need as many people.
They've gone from twenty to twenty people, which it's pretty
amazing what's going on, and I think we'll see a
lot of attrition. Any employee leaving the government probably will
not be replaced. I don't think he'll yeah, I just
(04:23):
pick up. I don't think he'll do two trillion dollars
in government spending savings in one year that might be
a five to ten year and I think between technology
and attrition and lower regulations, maybe the abolition of certain
departments that they'll go a long way.
Speaker 2 (04:44):
So you don't see him serving a formal role, but
still overseeing some sort of department of government efficiency in
an informal way. Help me understand what you see him
doing and whether or not it could be some sort
of threat to you know, he's a very busy man.
Speaker 3 (05:00):
Yes, he's an unbelievable He's the inventor of our age.
I think I said that in two thousand and fifteen
for the first time when I was on your show
with Carol Masser. At the time, he is the inventor
of our age, and he comes into a problem, assesses
(05:22):
it with first principles thinking, doesn't care how things have
been done, and comes back with, you know, ingenious solutions
to big problems, whether it's autonomous mobility in the autonomous
taxi space.
Speaker 1 (05:40):
Or in.
Speaker 3 (05:42):
The healthcare space, neuralink, in the social network space X
in AI XAI, and a lot of people say and
SpaceX of course, the entire exploration going to Mars. I
think a lot of people are I can't believe he
(06:03):
can do this. But again, he cuts to the quick
first principles thinking and surrounds himself with brilliant people, people
who really want to solve the hardest problems in the world.
And that's part of the secret to his success. Very
high standards and people who want to be held accountable
to very high standards and want to really transform the world.
Speaker 2 (06:25):
Hey, we're going to get back to Elon and specifically
Tesla in a few minutes, but I want to go
back to something that you mentioned at the top of
our interview, Kathy, and that's the idea of some of
the regulatory challenges that you said have cropped up over
the last couple of years and during the Biden administration,
specifically with regard to the FTC and the SEC not
being present. In a second Trump administration, how do you
(06:46):
think the Trump regime will approach financial regulation given that
he's vound to replace SEC chair Gary Gensler. What does
that look like?
Speaker 3 (06:55):
Well, I think I think at first as as it
relates to crypto or digital asset regulation, they're going to
replace Gary Gensler with someone who is much more open minded,
I would say, and will let the legislative process, work
(07:17):
go to work, and the SEC is supposed to regulate
and force laws. They're not supposed to create laws by enforcement,
which is what Gary Gensler was doing. So I think
that's going to be important. I also think if you
look at the public equity markets, I think the number
(07:39):
of public companies out there right now has been cut
in half in the last fifteen twenty years. The regulatory
nightmare of being a public company has kept people, has
kept leaders of companies basically saying if I don't have
to go public, I am not going public. And so
(08:01):
I think we're going to see a lot more work
in that regard to give you know, the average investor
a shot at some of these moonshots. So I think
that's going to become very important. As far as the FTC,
you know, the the anti trust has has gone way
(08:22):
too far. You know, they they were denying mergers and
acquisitions that really they the companies were tangential to one another,
they weren't even really in the same market. So we're
seeing and and yet at the time, at the same time,
we've seen these megatech companies grow into you know, massive
(08:49):
organizations and dominating their markets. So they were denying mergers
and acquisitions for you know, think about Jet Blue and
Spirit Airlines. That was ridiculous. That was in the same industry,
but one is going bankrupt now because because they wouldn't
allow that m and A. They were just dogmatic about
(09:11):
it in in, you know, and didn't show to us
at least any common sense.
Speaker 2 (09:17):
So, you know, so let's jump in. I just want
to jump in because we don't have a ton of
time with you, and I want to make sure we
get to a lot, Kathy, So forgive me please. You
also mentioned last time you're on with us, you weren't
wild about the idea of tariffs, and you know, since
then President Trump said that tariff is the most beautiful
word in the dictionary. Do you think he will follow
through with his threat of broad tariffs? And how are
(09:38):
you preparing and changing your investment style given the threat
of tariffs.
Speaker 3 (09:43):
Yeah, I'd love to talk about that because we've got
more information. I think the way the president is looking
at this, that is, if he puts in place tariffs,
the other side of that will be income tax and
corporate tax cuts. And if you think about it, this
(10:08):
is how America started, you know, President George Washington. We
had no income tax back then. All the taxes were
in the form of tariffs. I do think that they're
not going to be, you know, crazy tariffs. They're going
to be much more thoughtful and really focused away from
(10:30):
our free trade agreement partners and towards those countries that
have not been really letting our companies play on a
level playing field within their countries. So I think there's
going to be a lot of negotiation around that really
really helping us. But I do think tax cuts are
(10:52):
tax personal and corporate tax cuts are going to be
much more important than tariffs in terms in terms of
the growth engine that this economy needs. I'll comment on
just a couple of other things. I know he wants
a week dollar, but if he puts in place the
deregulation and the tax cuts that we expect the dollars
(11:15):
probably going up. And this reminds me very much of
the early Reagan years. It's fascinating what's going on. Except
the first couple of years of the Reagan administration he
had to deal with back to back recessions because Vulker
was raising interest rates to fifteen percent plus. We've done that.
(11:39):
Trump does not have to face that we think that
the FED went too far. I think the Fed today
even says it's going to continue to unwind a restrictive
monetary policy. And I think it's important too, because what
we expect now is there will be a lot of
delayed activity as consumers and businesses trying to figure out, Okay,
(12:01):
how lower tax is going and how is the world
going to change? Am I going to get a better deal?
So we're going to need lower interest rates. However, if
we get the growth beyond that that tax cuts and
these other measures are going to cause, the dollar will
probably go up, and so I think that that will
(12:22):
be a surprise. But it's an anti inflationary force as well,
and we're seeing commodities react to the dollar going up
now in anticipation of these interesting policies. And then I'd
love to just say one other thing. A lot of
people talk about the deficit, and it is a big
(12:43):
deficit in the middle of it's a rolling recession. But
this deficit is worse than the worst deficit that Reagan
faced at five point five percent of GDP. How did
he get out of that? And Clinton following beyond him
more through growth? Not through tax increases, and you can
(13:07):
add on top of that government spending restraint. So you know,
this is this is going to be extremely healthy and
very important. I think for the stock market. The stock
market has gone through a period here of great concentration
towards a few stocks, and now we think, and we've
seen it in the last few days, there's going to
(13:27):
be a broadening out. We're very excited about something.
Speaker 2 (13:29):
Well, we'll talk about that in just a minute. If
you're just now joining us, we're joined by Kathy Woods.
She's a founder, CEO, and CIO of ARC and Vest.
She joins us from Saint Petersburg, Florida. Kathy, I want
to talk one more question on regulation and then we'll
get to a little more on Tesla and Elon and
you know, some of the big themes that you're seeing.
(13:50):
I'm wondering about from you, what you think, specifically in
terms of financial assets is being held back by regulators,
Like what financial assets do you think should be opened
up to the trading masses that haven't been.
Speaker 3 (14:04):
Well, it's interesting. We launched a venture fund and we
put it in we put it in an interval fund structure,
which is regulated by the sec and we've had access
to open AI and thropic data, Bricks, SpaceX, Epic Discord,
lots of companies that young people who don't need the
(14:28):
income or net worth thresholds that venture funds require, they
can get into our venture fund because it's in the
interval fund structure. I think we're going to see a
much more of a loosening up. You know why we
can offer our fund to retail investors for as little
(14:52):
as five hundred dollars, it's because we're not taking a
carry we're not charging carried interests twenty percent of profit.
We do charge a higher fee than you'd get with
public companies. And I think we're going to see the
democratization increasingly of private companies as well. I think this
(15:15):
administration will advocate for that, and we'll and will lower regulations,
whether it's Sarbine Oxley, but regulations that have you know,
tied companies and knots. It's very expensive to be a
public company now, and so for any company as the
(15:37):
digital world and the physical world converge, we think that's
a big theme going ahead. We're going to need the
kind of caval raising that the public markets can offer
over a long period of time, so I think more
and more of that's going to happen.
Speaker 2 (15:55):
So, speaking of the digital and physical worlds converging, we
got to talk crypto because bit coin at a new
record close to seventy seven thousand dollars per bitcoin. Update
your prediction for us of where you think bitcoin will
go and when? Now that Trump will serve another.
Speaker 3 (16:11):
Term, Yes, he's going to be very bitcoin friendly for sure,
including building a strategic reserve of bitcoin. Senator Lummis has
been at the forefront of advocating for that, so very
exciting there. Our price target hasn't changed, except perhaps we're
(16:33):
leaning more towards our bowl case. Our base case is
a million dollars by twenty thirty and if you go
into Big Ideas Big Ideas from twenty twenty three in
the bitcoinon section, you'll see how we get to that
million dollar, the building blocks of it. You know, it's
(16:53):
a substitute for gold, so it's digital gold. It is
going to be used as a new asset class. It
is a new asset class for institutional investors, a very
big idea starting with the spot Bitcoin ETFs launched earlier
(17:14):
this year. And of course we're very gratified that ARKB
was one of them, and it's going to be used
as an insurance policy, both in emerging markets and in
developed markets against confiscation of wealth, whether that means outright
confiscation of wealth by corruption and so forth, perhaps in
(17:35):
emerging markets, or by inflation. Inflation is a highly regressive text. Now,
we don't think inflation is going to be a problem
with this administration. In fact, we think that the floodgates
of innovation are going to open up and that we're
moving into a world tending towards deflation, but good deflation.
(17:58):
Technologically enabled in innovation is deflationary. So I think many
people are going to be really surprised at how low
inflation goes in the years ahead.
Speaker 2 (18:09):
Kathy, I want to talk performance and get an understanding
for where you see the future, because you've seen outflows
every month in the ARC Innovation ETF this year except
for this month, it's a year where you're underperforming the
S and P five hundred by a wide margin. The
RC Innovation ETF it's about flat, the S and P
five hundred up more than twenty five percent. What's your
(18:30):
message to investors who've lost money with you? And do
you worry that performance will lead to an extended period
where you won't attract money.
Speaker 3 (18:39):
Well, I think, as I've just described, innovation had quite
a few obstacles during the last few years, so that
speaks for itself. If you look at our performance, let's
break it down. You look at our ARKW, which is
our next generation Internet fund, very focused on AI and
digital assets. It's up more more than the market this year,
(19:02):
more than I think it's twenty seven to twenty eight percent.
If you look at ARKG, which is our Genomic Revolution portfolio,
it is down twenty two percent. And a big problem
for that portfolio has been the lack of M and A.
You know, the absence of M and A. This this group,
(19:24):
if any, needs those liquidity events because big companies, big
pharma companies, need the innovation that is coming out of
the smaller company companies. So we think that's going to change.
We also if you listen to now I don't know,
(19:44):
I don't think he'll be FDA commissioner, but Robert Kennedy,
you know he wants to clean up corruption in healthcare.
You know, they're a huge lobbying lobbying organizations for pharma.
They are not. They are not out there advocating for
the innovators. I think the most important thing he said
(20:09):
is this, we want to go back to the rich
tradition of the gold standard of evidenced, evidence based science
in terms of healthcare, and the tools are here for preventative, predictive, personalized,
and participatory behavior healthcare. So I think healthcare that the
(20:35):
convergence of healthcare sequencing technologies, DNA, RNA proteins sequencing technologies,
artificial intelligence, and Crisper gene.
Speaker 2 (20:47):
So I want to jump in here, and I'm glad
you brought in I'm glad you brought up RFK because
I had a question about that to you, Kathy, And
I'm afraid it's probably our last one, just because we're
running out of time. He's been a vaccine skeptic. You
mentioned RNA technology, mRNA technology, what the COVID vaccines, the
Newish COVID vaccines were based on. Are you concerned that
how he views public health is going to affect innovation
(21:11):
happening in the space.
Speaker 3 (21:13):
No, I'm not. If you read what he said very recently,
he sounds pretty libertarian about vaccinations. You know, there are
some people who really feel it's important, and others who don't,
and you live and let live. But one thing I'd
like to say is this past administration has been a
(21:37):
menace to what we're calling the multiomics revolution, which is
going to be the most profound application of artificial intelligence
and new technologies in history, going to cure disease. And
yet as I look at the traditional analyst response to
these drugs like Chrisper Therapeutics and Intellia that are starting
(22:02):
to cure disease, and how they think that's bad business
because they don't have an annuity keeping someone keeping someone's
symptoms under control. That's an annuity. They prefer that to
a cure. In our latest Monday newsletter, it's called Disrupt
(22:25):
arc Disrupt you can find it on Twitter. You'll see
that we believe that curing disease is going to make
the patents of the companies with those cures two to
twenty times more valuable than those other kinds. So I
think there's a complete misunderstanding of the dawn of the
(22:46):
new health age. And I am so excited, so excited
that the Trump administration is going to bring this new
world to life for us.
Speaker 2 (22:58):
Kathy, would we always want more time with you. Thank
you so much for spending a big part of your
afternoon with us. We do appreciate it. That's Kathy Wood,
the founder, CEO, and CIO over at Arcinvest, joining us
from Saint Petersburg, Florida.
Speaker 1 (23:11):
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