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Ark's Wood Expects Big Regulatory Changes, Praises Musk

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Bloomberg Nov 8 10:00 · 14.7k Views

Cathie Wood, founder and CEO of Ark Investment Management, expects big changes coming for federal regulators during President-elect Donald Trump's second term.

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Transcript

  • 00:00 Kathy, shares of your flagship fund, the ARC Innovation ETF, surged more than 8% on Wednesday.
  • 00:05 It was the best day in more than a year, part of the risk on trade that we saw
  • 00:09 on optimism of a second
  • 00:10 term for Donald Trump in the White House.
  • 00:13 And that's where I want to start with you, because when you were back on with us in October, you indicated, without actually saying the former president's name,
  • 00:21 that you preferred a President Trump over President Harris strictly from the standpoint
  • 00:26 of the candidate who you saw
  • 00:27 would ease the regulatory environment.
  • 00:30 So here we are.
  • 00:31 What does another Trump administration mean for you
  • 00:34 and the companies that ARC invest in?
  • 00:37 OK, Well, thank you
  • 00:39 for having me on
  • 00:40 your show, Tim.
  • 00:42 Yes,
  • 00:43 regulation critical.
  • 00:45 I think
  • 00:46 the
  • 00:47 the
  • 00:47 the regulations that have been creeping into the system,
  • 00:52 actually, they started to creep in.
  • 00:54 They've just flooded the system
  • 00:56 and and really gummed it up.
  • 00:59 So
  • 01:00 the
  • 01:01 first, the the biggest regulatory issues have been around the SEC especially when it comes to
  • 01:08 digital assets or crypto legislation
  • 01:12 and the FTC
  • 01:15 as as it relates to M&A activity.
  • 01:19 I think both there are going to be big changes there
  • 01:23 and that is is going to be the beginning, I think of a lot of regulatory changes
  • 01:29 in his first administration, President Trump
  • 01:33 basically said for every regulation you want to introduce anyone in my administration, you must get rid of two.
  • 01:41 I think it's going to be
  • 01:43 maybe more dramatic than that this time around.
  • 01:45 And I,
  • 01:46 I also think having,
  • 01:49 having Elon Musk, who I think today announced that he'd like to name
  • 01:54 a new department, the Department of Government efficiency,
  • 01:58 get that DOGE, Doge.
  • 02:02 He, I think he's going to come to into the
  • 02:06 administration.
  • 02:07 I don't think he'll be a formal part of the administration.
  • 02:09 He'll be
  • 02:10 more in an oversight role.
  • 02:12 The more that as,
  • 02:13 as I understand,
  • 02:15 yeah.
  • 02:15 Well,
  • 02:16 hey, Kathy, I want to jump in here because you mentioned a few things that I want to follow up on.
  • 02:19 One is, is Elon Musk.
  • 02:20 Have you talked to Elon since the election?
  • 02:24 No, I have not talked to him since the election.
  • 02:26 I I did see
  • 02:28 on X that
  • 02:30 he was part of the family
  • 02:33 as they were taking the picture around President Trump's
  • 02:36 acceptance speech.
  • 02:37 So,
  • 02:38 you know, I know he's obviously
  • 02:41 had a, a tremendous impact on, on,
  • 02:45 on the election.
  • 02:46 I think he had
  • 02:47 X made a big difference and
  • 02:50 and his ideas around government efficiency, which will revolve
  • 02:54 importantly around
  • 02:56 technology.
  • 02:57 Artificial intelligence is
  • 03:00 is doing wonders for the most bureaucratic organisations out there.
  • 03:04 We know from Palantir
  • 03:06 that
  • 03:07 it is having a tremendous impact on insurance companies.
  • 03:11 Underwriting process timelines
  • 03:15 dropping from two weeks to three hours.
  • 03:18 And
  • 03:19 even in the military,
  • 03:21 Maven, Palantir's
  • 03:23 working on Maven with the DoD
  • 03:27 for, for targeting the enemy.
  • 03:29 They, they have
  • 03:30 shrunk that department.
  • 03:31 They've don't need as many people.
  • 03:33 They've gone from 2000 to 20 people,
  • 03:37 which it's pretty amazing what's going on.
  • 03:39 And I think we'll see a lot of
  • 03:41 attrition.
  • 03:42 Any, any
  • 03:43 employee leaving the government probably will not be replaced, I don't think,
  • 03:49 yeah, I just,
  • 03:51 I don't think he'll do
  • 03:52 $2 trillion
  • 03:54 in government spending savings in one year.
  • 03:57 That might be
  • 03:59 a 5 to 10 year.
  • 04:00 And I,
  • 04:01 I think between technology and attrition
  • 04:04 and lower regulations, maybe the abolition of certain departments, that
  • 04:10 that they'll go a long way.
  • 04:11 So you don't see him serving a, a formal role, but still overseeing some sort of department of government efficiency in an informal way.
  • 04:18 Help help me understand what you see him doing and whether or not that could be some sort of threat to
  • 04:23 you know, he's a very busy man.
  • 04:26 Yes,
  • 04:27 I think he's an unbelievable.
  • 04:30 He's the inventor of our age.
  • 04:32 I think I I said that in 2015 for the first time when I was on
  • 04:38 your show with Carol, Carol Massar at the time.
  • 04:42 He is the inventor of our age, and
  • 04:45 he is
  • 04:46 He comes into a problem,
  • 04:48 assesses it with first principles thinking,
  • 04:51 doesn't care how things have been done,
  • 04:54 and
  • 04:55 comes back with,
  • 04:56 you know, ingenious solutions to to big.
  • 05:00 Problems
  • 05:01 whether it's autonomous mobility in the autonomous taxi space
  • 05:06 or
  • 05:07 in
  • 05:09 in the
  • 05:10 healthcare space Neuralink
  • 05:12 he's he in the
  • 05:14 in the
  • 05:14 social network SpaceX
  • 05:18 in AIXAI
  • 05:20 but
  • 05:21 and a lot of people say and SpaceX, of course, the entire exploration going to Mars.
  • 05:26 I think a lot of people are
  • 05:29 can't believe if he can do this.
  • 05:31 But again,
  • 05:32 he cuts to the quick
  • 05:34 first principles thinking and surrounds himself with brilliant people, people who really want to solve the hardest problems in the world.
  • 05:43 And that's part of the secret to his success.
  • 05:45 Very high standards and people who want to be held accountable to very high standards and want to really transform the world.
  • 05:52 Hey, we're going to get back to Elon and specifically Tesla in a few minutes.
  • 05:55 But I want to go back to something that you mentioned at the top of our interview, Kathy.
  • 05:59 And that's the idea of
  • 06:00 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
  • 06:08 and the SEC not being present in a second Trump administration.
  • 06:12 How do you think the Trump regime
  • 06:14 will approach financial regulation given that he's vowed to replace
  • 06:17 SEC Chair
  • 06:19 Gary Gensler?
  • 06:19 What does that look like?
  • 06:22 Well, I, I think,
  • 06:24 I think at first as, as it relates to crypto or digital asset regulation,
  • 06:32 the, they're, they're going to replace Gary Gensler with someone who is
  • 06:38 much more open minded, I would say.
  • 06:39 And, and we'll let the legislative process
  • 06:43 work,
  • 06:44 go to work.
  • 06:45 And
  • 06:46 you know, the SEC is supposed to regulate, enforce laws.
  • 06:51 They're not supposed to
  • 06:52 create laws by enforcement, which is what
  • 06:56 Gary Gensler was doing.
  • 06:58 So I think
  • 06:59 that's going to be
  • 07:01 important.
  • 07:01 I also think if you look at the public equity markets,
  • 07:05 I think the number of public
  • 07:08 companies out there right now has been cut in half
  • 07:11 in the last 1520 years.
  • 07:15 The regulatory nightmare of being a public company has kept people as as kept
  • 07:21 leaders of companies basically saying if I don't have to go public, I am not going public.
  • 07:27 And so I think we're going to see
  • 07:30 a lot more work in that regard to give,
  • 07:34 you know, the average investment
  • 07:37 a shot at some of these moon shots.
  • 07:40 So I think that's going to become very important.
  • 07:43 As far as the FTC,
  • 07:45 you know, the, the
  • 07:46 antitrust has has gone way too far.
  • 07:50 And you know, they, they were denying
  • 07:54 mergers and acquisitions that
  • 07:57 really that they, the,
  • 07:59 the companies were tangential to one another.
  • 08:01 They weren't even really in the same market.
  • 08:04 So
  • 08:06 we're seeing and and yet at the time, at the same time, we've seen
  • 08:10 these
  • 08:11 megatech companies
  • 08:13 grow into, you know, massive organizations and dominating their market.
  • 08:18 So
  • 08:19 they were denying mergers and acquisitions for, you know, think about JetBlue and Spirit Air Airlines.
  • 08:26 That was ridiculous.
  • 08:27 That was in the same industry, but one is going bankrupt now because
  • 08:32 because they wouldn't allow that.
  • 08:34 They were just
  • 08:36 dogmatic about it in in,
  • 08:39 you know, and didn't show to, to us at least, any common sense.