June 28, 2025 • 23 mins
Earlier this month host Stephanie Flanders sat down with Cathie Wood, the founder, CEO and chief investment officer of ARK Investment Management, at the Founders Forum Global conference in Oxford. They were joined by Bloomberg Editor-in-Chief John Micklethwait and Bloomberg TV UK Correspondent Lizzy Burden.
Wood gives her take on the 'great rotation' out of US stocks, why she believes investors rebalancing their portfolios, moving away from safe-haven tech stocks and towards riskier investments, and how that's shaping her outlook for the US dollar.
The conversation was recorded on June 12, 2025.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
It's me Stephanie Flanders, host of Trumpanomics, and we're bringing
you a bonus episode this weekend. It's a conversation I
had earlier this month on June twelfth at the Founder's
Forum event held annually at the Soho Farmhouse in the
English Cotswolds. The conversation features Kathy Wood of ARC invest
and Editrian Chief of Bloomberg, John Mickelthwaite, and Lizzie Burden,
(00:23):
Bloomberg Television's UK correspondent. A lot has happened since we
recorded the conversation, but we discuss wider themes around investing
that I think are still timely and relevant. Kathy particularly
shared her thoughts on China's competitiveness, the UK's missed opportunities,
and whether we were looking at the end of US exceptionalism.
Speaker 2 (00:47):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 3 (00:52):
I do think there is some rebalancing of portfolios and
it makes a lot of sense.
Speaker 1 (01:07):
I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
and welcome to Trumpnomics, the podcast that looks at the
economic world of Donald Trump, how he's already shaped the
global economy and what on earth is going to happen next,
and we're recording this episode from Britain's most high end
tech event I like to think of it, Founders Forum.
(01:30):
Some of the biggest names in European tech, even some Americans,
have been cited here at SOHO Farmhouse, alongside politicians, former politicians,
and pioneering investors. But I am always interested in how
Trumpanomics is not only changing the global economy, which we
talk about a lot on this podcast, but changing the
way the world looks to people who make money and
(01:55):
manage money. That's going to be the focus today. You know,
there's been enormous focus on the trade war headlines, massive
volatility in the markets, definitely damaging for the global economy
short term. But if you actually step back and think,
you know what else has happened in the world as
a result of Donald Trump's economic policies since the start
(02:18):
of the year, Dollar's gone down quite a lot. The
rest of the world's assets have become, i would argue,
more attractive relative to the US than they were. And
if you'd asked a lot of people in the markets
in the last few years whether any of those things
were good, they would say yes, they would say they
were actually would be healthy things that we quite wanted
to see. We'd been hugely dependent on the US for
(02:40):
driving returns, for driving global economic growth. The dollar was
pretty strong for all that time, was potentially having a
distorting effect on many different trades. So I think you
can sort of step back from the hysteria and some
of the many things that people are worried about to say, Okay,
(03:01):
there's some good things here and maybe this is a
time where there is going to be more interest, more
focus on other markets, and particularly Europe and the UK.
That's the question we had for this episode. You know,
are we in a sell America world? And I guess
related to that, you know, what would it take to
buy Europe or you know, heaven forbid by the UK.
(03:23):
So to weigh in on this, we have Kathy wood Found,
a chief executive officer and chief investment officer of the
investment management firm ARC invest, and to be part of
the back and forth Lizzie Burden, anchor and UK correspondent
for Bloomberg TV, and John Nicklthwaite, editor in chief of Bloomberg.
(03:44):
So Kathy, we start with you, and you're well known
for always having a strong view not always the same
as everyone else's. Should we be selling America?
Speaker 3 (03:52):
Well, it's very interesting, and especially to be here for
the last week effectively and watching Blue of course, and
listening to how many people are asking and suggesting that
American exceptionalism is done. And I don't know the answer
to that, but here is what I will say. The
(04:14):
way they validate the observation is the dollar's going down.
And I understand that because the dollar is quite impactful
as the world's reserve currency.
Speaker 4 (04:25):
So if you.
Speaker 3 (04:26):
Look at the long term of the dollar, yes, we're
down ten percent, you're to date, But if you look
at where we started after eight oh nine, I think
we bottomed it seventy on the dollar tradeway to dollar
dxy and we're now we're at one hundred, so we're
still up forty percent. And if you put it in
the context of long term history, we're at the middle
(04:48):
to higher end of the range that has been in
place for years.
Speaker 4 (04:52):
So that's the first thing.
Speaker 3 (04:54):
I don't agree that the dollar is telegraphing that America
has lost its way? Do understand why there has been
a correction for all the reasons you say, it seems
like we're in utter chaos in the US with trade wars,
and you know, even closer to us the Trump Musk
(05:15):
drama that we've been through. I do think there is
some rebalancing of portfolios, and it makes a lot of sense.
Our valuation levels in the United States are much higher
than elsewhere in the world. But there is another phenomenon
that I think in saying that the US was taking
all of the oxygen out of the room, that did
(05:38):
not take into account that really it was what we
ended up calling the mag six. So take Tesla out
the MAG six. We have never seen concentration like this before.
So yes, there's a rebalancing away from the MAG six.
Speaker 4 (05:56):
And why is that.
Speaker 3 (05:57):
It is because, you know, after building cash hoards, because
they weren't allowed to make any acquisitions under the last administration,
so they didn't need to compete with one another to
buy their companies. Now we're seeing a rush and we've
heard scale AI for meta platforms at a ten billion
(06:19):
dollar valuation, and we are seeing massive capital spending out
of these companies. The investor base in those companies they
were looking for safety. This doesn't feel as safe anymore,
so I think there's a rebalancing. Thank goodness, they're rebalancing
towards other exposures to innovation.
Speaker 1 (06:41):
Just to come back on that a bit, I guess
a lot of people be surprised that you're talking about
it as a sort of long overdue adjustment correction somewhat
in terms of the balance between the US and the
rest of the world, but also within the US market
where you identify those massive concentration. A lot of people
look at the US and say, look, there's a reason
(07:02):
it's been doing so well all this time. It's had
these underlying competitive advantages that you've seen even come through
post COVID in a way that a lot of other
countries haven't seen, which are being undermined by Donald Trump's policies.
Whether it's that you know, the research infrastructure and the
funding for basic research that we've seen slashed, the soft
(07:23):
power associated with the SeNSS of educational excellence, the openness
to foreign talent. You're untroubled by any of that.
Speaker 3 (07:32):
So I think there are puts and takes. So again
back to the dollar, I actually think the dollar is
going to move continue to move up. And the reason
I say that's.
Speaker 1 (07:43):
Mean start to move up, because it's been moving down well, I'm.
Speaker 3 (07:47):
Going to continue from that seventy right to one hundred,
to one hundred and ten back to one hundred. And
I think it is because there's a lot of controversy
and argument on this point. So returns on invested capital,
what will they do in the United States.
Speaker 4 (08:04):
Relative to the rest of the world.
Speaker 3 (08:07):
I think they're going to go up, but not one
hundred percent sure, because I think other countries have massive
opportunities now to capitalize on the biggest wave of innovation
in history. Five innovation platforms robotics, energy storage, artificial intelligence,
blockchain technology, and then multiomic sequencing in the life science space.
(08:31):
And this is open for all, and I love to
hear what I've heard here in the UK this week
about focus on getting into the game in a big way.
Your educational institutions here are incredible. Your AI stripes, I
mean deep Mind came out of the UK arm and others.
(08:54):
So what I love about this environment is the competition
is open.
Speaker 4 (08:58):
Let's see who wins.
Speaker 3 (08:59):
But I do know in the United States, why might
things get better for us? As I said, I don't
think they've been that great over the last four or
five years. And the reason is this concentration suggested to
me flight to safety cash and Okay, maybe they'll be
involved in this AI thing.
Speaker 4 (09:20):
That's what that was.
Speaker 3 (09:22):
Now I think there's more risk taking. Why is that
Number one deregulation? We've been strangled by regulation that is happening,
And the most provocative deregulation that we're seeing right now
is in healthcare, which is shocking. It's actually very exciting.
And I think tax cuts. Keeping the tax rates down
(09:44):
and getting the corporate tax rate effectively down from twenty
one percent to maybe fourteen percent by allowing full expensing
of capital spending in year one, I think will also
be very important. So I think that's good. I also
think that competition is really good for America from China,
(10:07):
from the UK, and from Europe. So I think this
will be a good thing. And we're at our best
when we're competing. And I think the last thing is
many of the cutbacks you're referring to are involved with
the public sector and deficit as a percent of GDP
six and a half percent. What they're trying to do
(10:29):
is stop the crowding out of the private sector. So
let's see what happens.
Speaker 4 (10:35):
There seem to be fasically.
Speaker 5 (10:37):
I think there's a lot of faith in those companies
that aren't in the Mag six or Mag seven. And
I just wondered, what kind of names are they? What
are the because everyone's made so much money historically by
being with matter and whatever. Now suddenly, if you're right
and those are being sidelined a little, what are the
(10:57):
sort of names that you would you would see in
the new wave of the rec innovation.
Speaker 3 (11:02):
Yes, well, one of the things that happened during the
last four years is we almost lost our crypto and
we should start saying digital assets a little bit more
to make it a little more understandable but to the
rest of the world, and it's coming back now. So
in the top ten of our flagship AARKK, we have
(11:24):
both Coinbase and Circle. So digital wallets I think are
going to be a huge opportunity because this digital asset
revolution has just started. So definitely crypto is a big wave.
Our highest position is Tesla. We think Tesla is the
largest AI project on Earth, and not just because of robotaxis,
(11:50):
but because of humanoid robots. And then I would point
to Tempa say I we think this could become the
hell care information backbone of the United States. And then
Chrisper Therapeutics, which actually technically is headquartered in Switzerland, is
(12:12):
now deriving revenue. Many people think what I'm about to
say is going to happen in five years. It's happening now.
It is deriving revenue from curing sickle cell disease and
beta valacimia.
Speaker 2 (12:27):
Let's just come yes, why you're talking about crypto. I'm
fascinating what your view is because I wondered when the
president is favoring crypto, is he hurting the dollar.
Speaker 4 (12:39):
I actually think.
Speaker 3 (12:40):
That bitcoin in particular will discipline our monetary authorities a
little a little bit like gold did during Chairman Vulkars
and Chairman Greenspands and maybe even Bernanke's time. But what's
also interesting is if you look at stable coins, which
(13:00):
are really the gateway or the on ramp into the
decentralized finance world or the internet financial system.
Speaker 4 (13:09):
What are they backed by.
Speaker 3 (13:11):
They're backed one percent by treasury securities in the case
of Circle, largely by treasury securities at Tether as well.
So that's a demand for dollar based assets that most
people didn't expect to be there. It's about two hundred
and fifty billion dollars now and it's just started.
Speaker 1 (13:33):
So let's get onto the Europe side of this, because,
in fact, Kathy mentioned that there's a potential for some
competition in some of these highly innovative fields and growing areas.
Do you feel all the UK has potential to do that.
Speaker 5 (13:48):
I think what has been noticeable so far is you
could see to some extent of America from a kind
of geoeconomic point of view, almost doing what you would
not want to do what it used to do to
other countries, where you sanction countries like Iran by stopping
them being able to import things, stopping people going there.
America is now to some extent doing it to itself
in the same way as Britain did with Brexit. If
(14:11):
you sanction yourself normally long term, that's not a great thing.
The interesting thing I think to me is that the
fact that Europe has not kind of picked up that challenge.
If you look at something like university graduates, for instance,
you would imagine at the moment the cream of graduates,
probably people in this audience, either them or their children.
Everyone wants to go to American universities. Stephanie Iron guitar
(14:34):
last week, suddenly everything is changed. People are scared of that.
And yet what's rather remarkable is if you look at
the European countries, you look at Britain, there hasn't been
a thing saying, for God's sake, come here, not in
the same kind of public way that you might expect
slightly more from Canada. And I think that's true of
various other things, especially within the European Union. You've still
(14:56):
got a variety of people arguing about whether you have
a bank union, which is most people would expect, is
the bare minimum. These are all things that kind of
people spent fifteen twenty years arguing about within Europe. So
I think people like me expected there to be a
wake up call to Europe, but it hasn't so far.
Outside military spending, it hasn't really come through.
Speaker 1 (15:17):
And you spent quite a lot of time as a
UK correspondent, you're I see you often standing in ten downing.
Speaker 4 (15:24):
Streets in the rain.
Speaker 1 (15:25):
This week and this week, you know, there's been these
kind of two quite distinctive kind of big, big events.
There's US hosting these trade talks that everyone was paying
attention to between the US and China, and then the
Chancellor having a big day yesterday with a spending review.
This government would say they're starting to address long for
(15:45):
festering structural problems, whether it's planning and things. They're also
staying quite a lot of at least there's been lots
of good music about investing in tech, infrastructure and just
energy capacity. Probably not enough. Do you feel when you're
sort of the does this feel like a country that's
kind of getting its act together on some.
Speaker 4 (16:03):
Of these fronts?
Speaker 3 (16:03):
Yeah?
Speaker 2 (16:04):
Is it nice mood music or is it just nice noises?
When you have the US China deal to go back
to that not deal, but you know it's not a decoupling,
but they've made up for now. There's always the chance
that they don't get on again and that this only
lasts for a few weeks. So we put that to
(16:24):
one side. Then we look at the UK. We're the
Prime Minister on day one of London Tech Week announcing
that billion pounds of spend on compute. Nick Claire gohlho
are on this stage just saying to me Microsoft spends
eighty billion dollars of the same thing in one fiscal year.
It's kind of chicken feed. When you look at the
ideas that are coming out from the government. In terms
(16:45):
of growth, yes, they're fiscally squeezed, but you've got a
lot of people saying they spent fourteen years in opposition,
could they not come up with anything more radical to
boost the economy, to get that growth, to get that investment.
So I think that there's a sense of disapp ointment actually,
but there is an effort to do the right thing.
I mean, kissed Armor, the globe trotting deal maker, first
(17:08):
in line actually at the White House to get this
trade packed with Donald Trump. But is it meaningful?
Speaker 1 (17:14):
I mean, Kathy, Yeah, you can see this that we have.
You know, we're very good at laying into the US.
But then actually we're also quite as some of said,
we feel sort of excitement about our own failings as well.
We like to we're very happy to dwell on our
bad weather and our bad failings, even as we point
hold in the Trump policies. So what was your what's
your response to this sort.
Speaker 5 (17:33):
Of wave of negative waves of negativity.
Speaker 3 (17:37):
Well, the first thing in terms of Europe, and then
we'll do I'll do UK, but Europe past. I don't
know if you've pronounced it Meeka or micah here in
you know, adding some clarity to crypto or digital assets regulation.
(17:57):
So I thought that was a very interesting and important
step in this world which is going to transform the
financial system.
Speaker 4 (18:07):
So that's good.
Speaker 3 (18:10):
And I also do believe that half of the solution
is understanding the problem. And as I go around Europe,
which I think regulation is a problem there.
Speaker 5 (18:23):
Just come back on that. Then yes, yes, you've like
Stephanie me, this is much younger to be wandering around
seeing European prime ministers for twenty years. If you drop
a list of the problems over regulation, no integration. They've
understood the problem for years. They've just been totally unable
to work out a way to deal with it and
get elected.
Speaker 3 (18:43):
And it is why a company like palent here has
said we're pulling our employees out of Europe because the
demand elsewhere is so great and they're tied up in knots,
you know, regulatory knots, and you know it's just not
going to productive. I do think, however, this move towards
(19:04):
increased defense spending, which involves massive technology, is going to
create a wave of innovation out of necessity, and I
think that's a very good thing and they're all united
on that, and I think Germany agreeing to what is
it three percent of GDP very important from a tech
(19:26):
point of view, which is my lens. In terms of
the UK, I must say I watched serendipitously the interview
between Prime Minister Starmer and Jensen Wong, and I found
it very interesting the way that your Prime minister started
with healthcare, which in the United States, you know, most
(19:48):
vcs have found that a very difficult place. Here you're
opening it up in.
Speaker 4 (19:54):
A very provocative way.
Speaker 3 (19:55):
And NHS is known for being progressed in terms of
longitudinal data, and data is the name of the game
in AI, so I am more optimistic.
Speaker 1 (20:07):
I did want to ask you. I've just got back
from Hong Kong and I talked to quite a lot
of investors and others, and it sort of strengthened something
that I'd been thinking over the previous few months, which
is when you ask people, and I did that. You
ask people what's the thing that's most surprised them in
the last few months or the last six months. And actually,
particularly there, it is not anything that Donald Trump has done.
(20:31):
It's what's happened in China. It's the breakthroughs, whether it's
deep sea or and the things underpinning that, and the
things that have followed in the wake of deep seek.
It's the breakthroughs in electric cars, the pace at which
under the surface Chinese key industries have developed. And it
sort of feels like the subtext almost everything that many
(20:52):
columns of many pieces being written about China, where on
any subject, the subtext is China's going to win.
Speaker 3 (20:58):
So it's interesting. We spend a lot of time. I
think the open source movement in China. Open source software
movement is very powerful now examining it though not though
I think it's great for competition around the world.
Speaker 4 (21:14):
We're using some of the deep seat breakthroughs.
Speaker 3 (21:17):
They distilled from our models, you know, we complimented them
very creative, so that's good. We can use those models
and we're doing some open source models as well.
Speaker 4 (21:29):
In China, nobody wants to pay.
Speaker 3 (21:32):
For anything, you know. I got a question from one
of the LM providers over there, CEOs. He said, how
is it that people are willing to pay twenty dollars
a month? I said, because they want to be able
to use it more instead of the limited time for free.
He says people won't pay here, And I'm thinking to myself,
(21:54):
you know, the question for all of us is commoditization.
Are they going to commoditize everything? Look at what's going
on with EV's. Thank goodness, Tesla is not an EV manufacturer.
People say that I just told you what I think
it is, but I know I asked. I did a
podcast there in Hong Kong just a couple of months ago,
and I said, okay, you have to use some of
(22:17):
these productivity gains. This is a a co CEO of
APEC for a large bank, actually it was HSBC. I
can say that here, right, and you've got to turn
around that productivity and we and so do we?
Speaker 4 (22:31):
What do you need to do with those productivity gains?
Speaker 3 (22:34):
You need to raise compensation because you need to drive
your consumer economy.
Speaker 4 (22:39):
What do we need to do in the United States?
Speaker 3 (22:41):
It compete more effectively against Japan, I mean China is
we need to use it to cut prices. That's why
we think there's going to be a deflationary pull in
the US economy more than people expect.
Speaker 1 (22:54):
Right now, All right, on that bombshell, we have covered
a lot of ground. We haven't done justice to any
of it, but I appreciate the Lizzie and John contributing.
Thanks for listening to Trump nomics from Bloomberg. It was
hosted by me Stephanie Flanders. I was joined by Ark
invest CEO Kathy Wood, Bloomberg TV UK correspondent Lizzie Burden,
and Bloomberg Editor in chief John Wick of Wake with
special thanks to the team at founders Forum.
Speaker 4 (23:16):
Thank you, thank you stuff
It's me Stephanie Flanders, host of Trumpanomics, and we're bringing
you a bonus episode this weekend. It's a conversation I
had earlier this month on June twelfth at the Founder's
Forum event held annually at the Soho Farmhouse in the
English Cotswolds. The conversation features Kathy Wood of ARC invest
and Editrian Chief of Bloomberg, John Mickelthwaite, and Lizzie Burden,
(00:23):
Bloomberg Television's UK correspondent. A lot has happened since we
recorded the conversation, but we discuss wider themes around investing
that I think are still timely and relevant. Kathy particularly
shared her thoughts on China's competitiveness, the UK's missed opportunities,
and whether we were looking at the end of US exceptionalism.
Speaker 2 (00:47):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 3 (00:52):
I do think there is some rebalancing of portfolios and
it makes a lot of sense.
Speaker 1 (01:07):
I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
and welcome to Trumpnomics, the podcast that looks at the
economic world of Donald Trump, how he's already shaped the
global economy and what on earth is going to happen next,
and we're recording this episode from Britain's most high end
tech event I like to think of it, Founders Forum.
(01:30):
Some of the biggest names in European tech, even some Americans,
have been cited here at SOHO Farmhouse, alongside politicians, former politicians,
and pioneering investors. But I am always interested in how
Trumpanomics is not only changing the global economy, which we
talk about a lot on this podcast, but changing the
way the world looks to people who make money and
(01:55):
manage money. That's going to be the focus today. You know,
there's been enormous focus on the trade war headlines, massive
volatility in the markets, definitely damaging for the global economy
short term. But if you actually step back and think,
you know what else has happened in the world as
a result of Donald Trump's economic policies since the start
(02:18):
of the year, Dollar's gone down quite a lot. The
rest of the world's assets have become, i would argue,
more attractive relative to the US than they were. And
if you'd asked a lot of people in the markets
in the last few years whether any of those things
were good, they would say yes, they would say they
were actually would be healthy things that we quite wanted
to see. We'd been hugely dependent on the US for
(02:40):
driving returns, for driving global economic growth. The dollar was
pretty strong for all that time, was potentially having a
distorting effect on many different trades. So I think you
can sort of step back from the hysteria and some
of the many things that people are worried about to say, Okay,
(03:01):
there's some good things here and maybe this is a
time where there is going to be more interest, more
focus on other markets, and particularly Europe and the UK.
That's the question we had for this episode. You know,
are we in a sell America world? And I guess
related to that, you know, what would it take to
buy Europe or you know, heaven forbid by the UK.
(03:23):
So to weigh in on this, we have Kathy wood Found,
a chief executive officer and chief investment officer of the
investment management firm ARC invest, and to be part of
the back and forth Lizzie Burden, anchor and UK correspondent
for Bloomberg TV, and John Nicklthwaite, editor in chief of Bloomberg.
(03:44):
So Kathy, we start with you, and you're well known
for always having a strong view not always the same
as everyone else's. Should we be selling America?
Speaker 3 (03:52):
Well, it's very interesting, and especially to be here for
the last week effectively and watching Blue of course, and
listening to how many people are asking and suggesting that
American exceptionalism is done. And I don't know the answer
to that, but here is what I will say. The
(04:14):
way they validate the observation is the dollar's going down.
And I understand that because the dollar is quite impactful
as the world's reserve currency.
Speaker 4 (04:25):
So if you.
Speaker 3 (04:26):
Look at the long term of the dollar, yes, we're
down ten percent, you're to date, But if you look
at where we started after eight oh nine, I think
we bottomed it seventy on the dollar tradeway to dollar
dxy and we're now we're at one hundred, so we're
still up forty percent. And if you put it in
the context of long term history, we're at the middle
(04:48):
to higher end of the range that has been in
place for years.
Speaker 4 (04:52):
So that's the first thing.
Speaker 3 (04:54):
I don't agree that the dollar is telegraphing that America
has lost its way? Do understand why there has been
a correction for all the reasons you say, it seems
like we're in utter chaos in the US with trade wars,
and you know, even closer to us the Trump Musk
(05:15):
drama that we've been through. I do think there is
some rebalancing of portfolios, and it makes a lot of sense.
Our valuation levels in the United States are much higher
than elsewhere in the world. But there is another phenomenon
that I think in saying that the US was taking
all of the oxygen out of the room, that did
(05:38):
not take into account that really it was what we
ended up calling the mag six. So take Tesla out
the MAG six. We have never seen concentration like this before.
So yes, there's a rebalancing away from the MAG six.
Speaker 4 (05:56):
And why is that.
Speaker 3 (05:57):
It is because, you know, after building cash hoards, because
they weren't allowed to make any acquisitions under the last administration,
so they didn't need to compete with one another to
buy their companies. Now we're seeing a rush and we've
heard scale AI for meta platforms at a ten billion
(06:19):
dollar valuation, and we are seeing massive capital spending out
of these companies. The investor base in those companies they
were looking for safety. This doesn't feel as safe anymore,
so I think there's a rebalancing. Thank goodness, they're rebalancing
towards other exposures to innovation.
Speaker 1 (06:41):
Just to come back on that a bit, I guess
a lot of people be surprised that you're talking about
it as a sort of long overdue adjustment correction somewhat
in terms of the balance between the US and the
rest of the world, but also within the US market
where you identify those massive concentration. A lot of people
look at the US and say, look, there's a reason
(07:02):
it's been doing so well all this time. It's had
these underlying competitive advantages that you've seen even come through
post COVID in a way that a lot of other
countries haven't seen, which are being undermined by Donald Trump's policies.
Whether it's that you know, the research infrastructure and the
funding for basic research that we've seen slashed, the soft
(07:23):
power associated with the SeNSS of educational excellence, the openness
to foreign talent. You're untroubled by any of that.
Speaker 3 (07:32):
So I think there are puts and takes. So again
back to the dollar, I actually think the dollar is
going to move continue to move up. And the reason
I say that's.
Speaker 1 (07:43):
Mean start to move up, because it's been moving down well, I'm.
Speaker 3 (07:47):
Going to continue from that seventy right to one hundred,
to one hundred and ten back to one hundred. And
I think it is because there's a lot of controversy
and argument on this point. So returns on invested capital,
what will they do in the United States.
Speaker 4 (08:04):
Relative to the rest of the world.
Speaker 3 (08:07):
I think they're going to go up, but not one
hundred percent sure, because I think other countries have massive
opportunities now to capitalize on the biggest wave of innovation
in history. Five innovation platforms robotics, energy storage, artificial intelligence,
blockchain technology, and then multiomic sequencing in the life science space.
(08:31):
And this is open for all, and I love to
hear what I've heard here in the UK this week
about focus on getting into the game in a big way.
Your educational institutions here are incredible. Your AI stripes, I
mean deep Mind came out of the UK arm and others.
(08:54):
So what I love about this environment is the competition
is open.
Speaker 4 (08:58):
Let's see who wins.
Speaker 3 (08:59):
But I do know in the United States, why might
things get better for us? As I said, I don't
think they've been that great over the last four or
five years. And the reason is this concentration suggested to
me flight to safety cash and Okay, maybe they'll be
involved in this AI thing.
Speaker 4 (09:20):
That's what that was.
Speaker 3 (09:22):
Now I think there's more risk taking. Why is that
Number one deregulation? We've been strangled by regulation that is happening,
And the most provocative deregulation that we're seeing right now
is in healthcare, which is shocking. It's actually very exciting.
And I think tax cuts. Keeping the tax rates down
(09:44):
and getting the corporate tax rate effectively down from twenty
one percent to maybe fourteen percent by allowing full expensing
of capital spending in year one, I think will also
be very important. So I think that's good. I also
think that competition is really good for America from China,
(10:07):
from the UK, and from Europe. So I think this
will be a good thing. And we're at our best
when we're competing. And I think the last thing is
many of the cutbacks you're referring to are involved with
the public sector and deficit as a percent of GDP
six and a half percent. What they're trying to do
(10:29):
is stop the crowding out of the private sector. So
let's see what happens.
Speaker 4 (10:35):
There seem to be fasically.
Speaker 5 (10:37):
I think there's a lot of faith in those companies
that aren't in the Mag six or Mag seven. And
I just wondered, what kind of names are they? What
are the because everyone's made so much money historically by
being with matter and whatever. Now suddenly, if you're right
and those are being sidelined a little, what are the
(10:57):
sort of names that you would you would see in
the new wave of the rec innovation.
Speaker 3 (11:02):
Yes, well, one of the things that happened during the
last four years is we almost lost our crypto and
we should start saying digital assets a little bit more
to make it a little more understandable but to the
rest of the world, and it's coming back now. So
in the top ten of our flagship AARKK, we have
(11:24):
both Coinbase and Circle. So digital wallets I think are
going to be a huge opportunity because this digital asset
revolution has just started. So definitely crypto is a big wave.
Our highest position is Tesla. We think Tesla is the
largest AI project on Earth, and not just because of robotaxis,
(11:50):
but because of humanoid robots. And then I would point
to Tempa say I we think this could become the
hell care information backbone of the United States. And then
Chrisper Therapeutics, which actually technically is headquartered in Switzerland, is
(12:12):
now deriving revenue. Many people think what I'm about to
say is going to happen in five years. It's happening now.
It is deriving revenue from curing sickle cell disease and
beta valacimia.
Speaker 2 (12:27):
Let's just come yes, why you're talking about crypto. I'm
fascinating what your view is because I wondered when the
president is favoring crypto, is he hurting the dollar.
Speaker 4 (12:39):
I actually think.
Speaker 3 (12:40):
That bitcoin in particular will discipline our monetary authorities a
little a little bit like gold did during Chairman Vulkars
and Chairman Greenspands and maybe even Bernanke's time. But what's
also interesting is if you look at stable coins, which
(13:00):
are really the gateway or the on ramp into the
decentralized finance world or the internet financial system.
Speaker 4 (13:09):
What are they backed by.
Speaker 3 (13:11):
They're backed one percent by treasury securities in the case
of Circle, largely by treasury securities at Tether as well.
So that's a demand for dollar based assets that most
people didn't expect to be there. It's about two hundred
and fifty billion dollars now and it's just started.
Speaker 1 (13:33):
So let's get onto the Europe side of this, because,
in fact, Kathy mentioned that there's a potential for some
competition in some of these highly innovative fields and growing areas.
Do you feel all the UK has potential to do that.
Speaker 5 (13:48):
I think what has been noticeable so far is you
could see to some extent of America from a kind
of geoeconomic point of view, almost doing what you would
not want to do what it used to do to
other countries, where you sanction countries like Iran by stopping
them being able to import things, stopping people going there.
America is now to some extent doing it to itself
in the same way as Britain did with Brexit. If
(14:11):
you sanction yourself normally long term, that's not a great thing.
The interesting thing I think to me is that the
fact that Europe has not kind of picked up that challenge.
If you look at something like university graduates, for instance,
you would imagine at the moment the cream of graduates,
probably people in this audience, either them or their children.
Everyone wants to go to American universities. Stephanie Iron guitar
(14:34):
last week, suddenly everything is changed. People are scared of that.
And yet what's rather remarkable is if you look at
the European countries, you look at Britain, there hasn't been
a thing saying, for God's sake, come here, not in
the same kind of public way that you might expect
slightly more from Canada. And I think that's true of
various other things, especially within the European Union. You've still
(14:56):
got a variety of people arguing about whether you have
a bank union, which is most people would expect, is
the bare minimum. These are all things that kind of
people spent fifteen twenty years arguing about within Europe. So
I think people like me expected there to be a
wake up call to Europe, but it hasn't so far.
Outside military spending, it hasn't really come through.
Speaker 1 (15:17):
And you spent quite a lot of time as a
UK correspondent, you're I see you often standing in ten downing.
Speaker 4 (15:24):
Streets in the rain.
Speaker 1 (15:25):
This week and this week, you know, there's been these
kind of two quite distinctive kind of big, big events.
There's US hosting these trade talks that everyone was paying
attention to between the US and China, and then the
Chancellor having a big day yesterday with a spending review.
This government would say they're starting to address long for
(15:45):
festering structural problems, whether it's planning and things. They're also
staying quite a lot of at least there's been lots
of good music about investing in tech, infrastructure and just
energy capacity. Probably not enough. Do you feel when you're
sort of the does this feel like a country that's
kind of getting its act together on some.
Speaker 4 (16:03):
Of these fronts?
Speaker 3 (16:03):
Yeah?
Speaker 2 (16:04):
Is it nice mood music or is it just nice noises?
When you have the US China deal to go back
to that not deal, but you know it's not a decoupling,
but they've made up for now. There's always the chance
that they don't get on again and that this only
lasts for a few weeks. So we put that to
(16:24):
one side. Then we look at the UK. We're the
Prime Minister on day one of London Tech Week announcing
that billion pounds of spend on compute. Nick Claire gohlho
are on this stage just saying to me Microsoft spends
eighty billion dollars of the same thing in one fiscal year.
It's kind of chicken feed. When you look at the
ideas that are coming out from the government. In terms
(16:45):
of growth, yes, they're fiscally squeezed, but you've got a
lot of people saying they spent fourteen years in opposition,
could they not come up with anything more radical to
boost the economy, to get that growth, to get that investment.
So I think that there's a sense of disapp ointment actually,
but there is an effort to do the right thing.
I mean, kissed Armor, the globe trotting deal maker, first
(17:08):
in line actually at the White House to get this
trade packed with Donald Trump. But is it meaningful?
Speaker 1 (17:14):
I mean, Kathy, Yeah, you can see this that we have.
You know, we're very good at laying into the US.
But then actually we're also quite as some of said,
we feel sort of excitement about our own failings as well.
We like to we're very happy to dwell on our
bad weather and our bad failings, even as we point
hold in the Trump policies. So what was your what's
your response to this sort.
Speaker 5 (17:33):
Of wave of negative waves of negativity.
Speaker 3 (17:37):
Well, the first thing in terms of Europe, and then
we'll do I'll do UK, but Europe past. I don't
know if you've pronounced it Meeka or micah here in
you know, adding some clarity to crypto or digital assets regulation.
(17:57):
So I thought that was a very interesting and important
step in this world which is going to transform the
financial system.
Speaker 4 (18:07):
So that's good.
Speaker 3 (18:10):
And I also do believe that half of the solution
is understanding the problem. And as I go around Europe,
which I think regulation is a problem there.
Speaker 5 (18:23):
Just come back on that. Then yes, yes, you've like
Stephanie me, this is much younger to be wandering around
seeing European prime ministers for twenty years. If you drop
a list of the problems over regulation, no integration. They've
understood the problem for years. They've just been totally unable
to work out a way to deal with it and
get elected.
Speaker 3 (18:43):
And it is why a company like palent here has
said we're pulling our employees out of Europe because the
demand elsewhere is so great and they're tied up in knots,
you know, regulatory knots, and you know it's just not
going to productive. I do think, however, this move towards
(19:04):
increased defense spending, which involves massive technology, is going to
create a wave of innovation out of necessity, and I
think that's a very good thing and they're all united
on that, and I think Germany agreeing to what is
it three percent of GDP very important from a tech
(19:26):
point of view, which is my lens. In terms of
the UK, I must say I watched serendipitously the interview
between Prime Minister Starmer and Jensen Wong, and I found
it very interesting the way that your Prime minister started
with healthcare, which in the United States, you know, most
(19:48):
vcs have found that a very difficult place. Here you're
opening it up in.
Speaker 4 (19:54):
A very provocative way.
Speaker 3 (19:55):
And NHS is known for being progressed in terms of
longitudinal data, and data is the name of the game
in AI, so I am more optimistic.
Speaker 1 (20:07):
I did want to ask you. I've just got back
from Hong Kong and I talked to quite a lot
of investors and others, and it sort of strengthened something
that I'd been thinking over the previous few months, which
is when you ask people, and I did that. You
ask people what's the thing that's most surprised them in
the last few months or the last six months. And actually,
particularly there, it is not anything that Donald Trump has done.
(20:31):
It's what's happened in China. It's the breakthroughs, whether it's
deep sea or and the things underpinning that, and the
things that have followed in the wake of deep seek.
It's the breakthroughs in electric cars, the pace at which
under the surface Chinese key industries have developed. And it
sort of feels like the subtext almost everything that many
(20:52):
columns of many pieces being written about China, where on
any subject, the subtext is China's going to win.
Speaker 3 (20:58):
So it's interesting. We spend a lot of time. I
think the open source movement in China. Open source software
movement is very powerful now examining it though not though
I think it's great for competition around the world.
Speaker 4 (21:14):
We're using some of the deep seat breakthroughs.
Speaker 3 (21:17):
They distilled from our models, you know, we complimented them
very creative, so that's good. We can use those models
and we're doing some open source models as well.
Speaker 4 (21:29):
In China, nobody wants to pay.
Speaker 3 (21:32):
For anything, you know. I got a question from one
of the LM providers over there, CEOs. He said, how
is it that people are willing to pay twenty dollars
a month? I said, because they want to be able
to use it more instead of the limited time for free.
He says people won't pay here, And I'm thinking to myself,
(21:54):
you know, the question for all of us is commoditization.
Are they going to commoditize everything? Look at what's going
on with EV's. Thank goodness, Tesla is not an EV manufacturer.
People say that I just told you what I think
it is, but I know I asked. I did a
podcast there in Hong Kong just a couple of months ago,
and I said, okay, you have to use some of
(22:17):
these productivity gains. This is a a co CEO of
APEC for a large bank, actually it was HSBC. I
can say that here, right, and you've got to turn
around that productivity and we and so do we?
Speaker 4 (22:31):
What do you need to do with those productivity gains?
Speaker 3 (22:34):
You need to raise compensation because you need to drive
your consumer economy.
Speaker 4 (22:39):
What do we need to do in the United States?
Speaker 3 (22:41):
It compete more effectively against Japan, I mean China is
we need to use it to cut prices. That's why
we think there's going to be a deflationary pull in
the US economy more than people expect.
Speaker 1 (22:54):
Right now, All right, on that bombshell, we have covered
a lot of ground. We haven't done justice to any
of it, but I appreciate the Lizzie and John contributing.
Thanks for listening to Trump nomics from Bloomberg. It was
hosted by me Stephanie Flanders. I was joined by Ark
invest CEO Kathy Wood, Bloomberg TV UK correspondent Lizzie Burden,
and Bloomberg Editor in chief John Wick of Wake with
special thanks to the team at founders Forum.
Speaker 4 (23:16):
Thank you, thank you stuff
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