Cathie Wood (2:56)

Sure. I think this is, I call this regulatory arbitrage. Other companies, countries should be looking at this as an opportunity to attract the best and the brightest. As I said, I don't Think this is long term for the United States, but seize the moment.

Bloomberg Host (3:15)

Hmm. Okay. That's interesting that this is. Jimmy, go ahead. Sorry.

Bloomberg Co-Host (3:19)

No, no, I just wanted to pivot back to macro. You know, earlier this year you mentioned in one of an interviews that you conducted that the US had just started to exit a rolling recession that started back in 2022 and was on the path to recovery. And of course the went on to cut interest rates. Only last week, in your opinion, were the Fed too late to cut interest rates.

Cathie Wood (3:42)

I think there have been signals that the Fed should cut interest rates for some time, but there's something else brewing. So this rolling recession we think is evolving into a rolling recovery. And you'll see weakness in employment. A lot of that is about productivity. Companies are harnessing a tools and substituting capital for labor. And I think a lot of people are going to think that, that, that this is another sign that we're heading into a deep recession. We do not think that's the case. We think that deregulation, lower taxes, I don't think people understand in the United States what has just happened to corporate tax rates. The rate itself has stayed at 21%. But when we incorporate accelerated depreciation on structures, equipment, DOM diagnostic R& D software, the effective corporate tax rate in the US could be now as low as 10%. So I hear a lot of talk about, you know, the dollar's demise and so forth. We actually think that the dollar will turn around because the return on invested capital in the US thanks to deregulation and tax policies is going to increase relative to the return on invested capital. Else. So a little contrarian point of view, but that's what we think. And we also think this rolling recovery will lead next year into an economic boom, a productivity driven economic boom. And I think this has been engineered by this administration. Get the bad news out of the way as quickly as possible because next year is the midterm elections.

Bloomberg Host (5:34)

So it's a tax cutting environment, deregulated environment, air environment that boosts productivity. And so I mean this, this is very much what, what President Trump and the Republican administration believes. Others are concerned about it triggering inflation. Are you not concerned about that issue.

Cathie Wood (5:54)

If productivity is the reason we're going to see accelerated growth? Not at all. In fact, productivity is one of the most potent anti inflationary forces. We would not be surprised to see inflation drop below 2% next year and head for zero because we think the productivity gains are that profound.

Bloomberg Host (6:18)

Hmm.

Bloomberg Co-Host (6:19)

Let me ask you about the huge capac spending plans that Many of the US hyperscalers have, you know, we're talking about the hundreds of billions of dollars a year and one company's investment is another company's revenue. As in the case of Nvidia. If there starts to be a marginal slowdown in just the scale of capex investment, would that not mark a turnaround in terms of just how much bullishness there is about the promises of artificial intelligence right now?

Cathie Wood (6:46)

Well, I'm, I like everyone else are very, I'm very surprised at how willing these companies are to spend massive amounts on in this space. But what, what, what, what we're not seeing is all the companies who were starting to move into this space and have capitulated and we're down to the big four. So OpenAI, Anthropic XAI and Gemini, which is Google and I think they are moving further ahead and those are the companies who are really spending the markets are, are not funding as freely the, the other competitors. I know here in, in Europe that there are a few, so there will be regional specific large language models as well. But in terms of the global large language models, I think we're down to and they are duking it out. That's why we're hearing so much about these capital spending plans. They're really talking to one another, you know, and willing to throw as much capital as possible to leapfrog one another. But if you'll notice the performance characteristics of these LMS, while OpenAI is still ahead on at the margin, the others are getting closer. And one we haven't talked about is Metta Platform. They are as you know, Mark Zuckerberg Berg is acqui hiring out of these companies that are not going to make it right. So he's attracting a lot of capital and is probably going to try and get back in the game with his open source strategy.

Bloomberg Host (8:36)

Hmm. What are the opportunities in China then? That's the other big story is around Deep Sea and the huge focus that China has on so much of the new technological world. But AI in particular, Deep Seek and others.

Cathie Wood (8:49)

Yes, I think President Xi Jinping directed the economy a couple of years ago to new productive forces. And that's all about technology and competing aggressively in the technology arena. And we think competition is a great thing as long as it's rational. And on that score, President Xi Jinping's discussion about or recent pronouncement and his team's pronouncement that they want to move away from involution, which means massive commoditization in, in areas like electric vehicles. That is very positive. So is he starting to focus on profitability because these companies have to spend so much? I think so, and that's a good thing.

Bloomberg Host (9:40)

Kathy, thank you so much for being with us. Really great to speak to you and hear your views on the H1B visa story as well as technological advances in China. Cathie W. Is CEO and founder of Ark Invest. This is Bloomberg.

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