Latest / Trumponomics / Bonus: Cathie Wood Says the Trump Era Is Reviving Corporate Risk Appetite

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Bonus: Cathie Wood Says the Trump Era Is Reviving Corporate Risk Appetite · Trumponomics

• 0:00
  Speaker 1: It's me Stephanie Flanders, host of Trumpanomics, and we're bringing
• 0:02
  Speaker 1: you a bonus episode this weekend. It's a conversation I
• 0:05
  Speaker 1: had earlier this month on June twelfth at the Founder's
• 0:09
  Speaker 1: Forum event held annually at the Soho Farmhouse in the
• 0:13
  Speaker 1: English Cotswolds. The conversation features Kathy Wood of ARC invest
• 0:18
  Speaker 1: and Editrian Chief of Bloomberg, John Mickelthwaite, and Lizzie Burden,
• 0:23
  Speaker 1: Bloomberg Television's UK correspondent. A lot has happened since we
• 0:27
  Speaker 1: recorded the conversation, but we discuss wider themes around investing
• 0:32
  Speaker 1: that I think are still timely and relevant. Kathy particularly
• 0:35
  Speaker 1: shared her thoughts on China's competitiveness, the UK's missed opportunities,
• 0:40
  Speaker 1: and whether we were looking at the end of US exceptionalism.
• 0:47
  Speaker 2: Bloomberg Audio Studios, Podcasts, Radio News.
• 0:52
  Speaker 3: I do think there is some rebalancing of portfolios and
• 0:57
  Speaker 3: it makes a lot of sense.
• 1:07
  Speaker 1: I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
• 1:10
  Speaker 1: and welcome to Trumpnomics, the podcast that looks at the
• 1:14
  Speaker 1: economic world of Donald Trump, how he's already shaped the
• 1:17
  Speaker 1: global economy and what on earth is going to happen next,
• 1:22
  Speaker 1: and we're recording this episode from Britain's most high end
• 1:26
  Speaker 1: tech event I like to think of it, Founders Forum.
• 1:30
  Speaker 1: Some of the biggest names in European tech, even some Americans,
• 1:33
  Speaker 1: have been cited here at SOHO Farmhouse, alongside politicians, former politicians,
• 1:39
  Speaker 1: and pioneering investors. But I am always interested in how
• 1:43
  Speaker 1: Trumpanomics is not only changing the global economy, which we
• 1:47
  Speaker 1: talk about a lot on this podcast, but changing the
• 1:50
  Speaker 1: way the world looks to people who make money and
• 1:55
  Speaker 1: manage money. That's going to be the focus today. You know,
• 1:59
  Speaker 1: there's been enormous focus on the trade war headlines, massive
• 2:04
  Speaker 1: volatility in the markets, definitely damaging for the global economy
• 2:08
  Speaker 1: short term. But if you actually step back and think,
• 2:10
  Speaker 1: you know what else has happened in the world as
• 2:14
  Speaker 1: a result of Donald Trump's economic policies since the start
• 2:18
  Speaker 1: of the year, Dollar's gone down quite a lot. The
• 2:20
  Speaker 1: rest of the world's assets have become, i would argue,
• 2:24
  Speaker 1: more attractive relative to the US than they were. And
• 2:29
  Speaker 1: if you'd asked a lot of people in the markets
• 2:31
  Speaker 1: in the last few years whether any of those things
• 2:33
  Speaker 1: were good, they would say yes, they would say they
• 2:34
  Speaker 1: were actually would be healthy things that we quite wanted
• 2:37
  Speaker 1: to see. We'd been hugely dependent on the US for
• 2:40
  Speaker 1: driving returns, for driving global economic growth. The dollar was
• 2:44
  Speaker 1: pretty strong for all that time, was potentially having a
• 2:48
  Speaker 1: distorting effect on many different trades. So I think you
• 2:55
  Speaker 1: can sort of step back from the hysteria and some
• 2:59
  Speaker 1: of the many things that people are worried about to say, Okay,
• 3:01
  Speaker 1: there's some good things here and maybe this is a
• 3:03
  Speaker 1: time where there is going to be more interest, more
• 3:07
  Speaker 1: focus on other markets, and particularly Europe and the UK.
• 3:10
  Speaker 1: That's the question we had for this episode. You know,
• 3:14
  Speaker 1: are we in a sell America world? And I guess
• 3:17
  Speaker 1: related to that, you know, what would it take to
• 3:19
  Speaker 1: buy Europe or you know, heaven forbid by the UK.
• 3:23
  Speaker 1: So to weigh in on this, we have Kathy wood Found,
• 3:26
  Speaker 1: a chief executive officer and chief investment officer of the
• 3:29
  Speaker 1: investment management firm ARC invest, and to be part of
• 3:33
  Speaker 1: the back and forth Lizzie Burden, anchor and UK correspondent
• 3:37
  Speaker 1: for Bloomberg TV, and John Nicklthwaite, editor in chief of Bloomberg.
• 3:44
  Speaker 1: So Kathy, we start with you, and you're well known
• 3:47
  Speaker 1: for always having a strong view not always the same
• 3:49
  Speaker 1: as everyone else's. Should we be selling America?
• 3:52
  Speaker 3: Well, it's very interesting, and especially to be here for
• 3:55
  Speaker 3: the last week effectively and watching Blue of course, and
• 4:01
  Speaker 3: listening to how many people are asking and suggesting that
• 4:07
  Speaker 3: American exceptionalism is done. And I don't know the answer
• 4:12
  Speaker 3: to that, but here is what I will say. The
• 4:14
  Speaker 3: way they validate the observation is the dollar's going down.
• 4:19
  Speaker 3: And I understand that because the dollar is quite impactful
• 4:23
  Speaker 3: as the world's reserve currency.
• 4:25
  Speaker 4: So if you.
• 4:26
  Speaker 3: Look at the long term of the dollar, yes, we're
• 4:29
  Speaker 3: down ten percent, you're to date, But if you look
• 4:32
  Speaker 3: at where we started after eight oh nine, I think
• 4:36
  Speaker 3: we bottomed it seventy on the dollar tradeway to dollar
• 4:39
  Speaker 3: dxy and we're now we're at one hundred, so we're
• 4:42
  Speaker 3: still up forty percent. And if you put it in
• 4:45
  Speaker 3: the context of long term history, we're at the middle
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  Speaker 3: to higher end of the range that has been in
• 4:51
  Speaker 3: place for years.
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  Speaker 4: So that's the first thing.
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  Speaker 3: I don't agree that the dollar is telegraphing that America
• 4:58
  Speaker 3: has lost its way? Do understand why there has been
• 5:02
  Speaker 3: a correction for all the reasons you say, it seems
• 5:05
  Speaker 3: like we're in utter chaos in the US with trade wars,
• 5:10
  Speaker 3: and you know, even closer to us the Trump Musk
• 5:15
  Speaker 3: drama that we've been through. I do think there is
• 5:19
  Speaker 3: some rebalancing of portfolios, and it makes a lot of sense.
• 5:23
  Speaker 3: Our valuation levels in the United States are much higher
• 5:27
  Speaker 3: than elsewhere in the world. But there is another phenomenon
• 5:31
  Speaker 3: that I think in saying that the US was taking
• 5:35
  Speaker 3: all of the oxygen out of the room, that did
• 5:38
  Speaker 3: not take into account that really it was what we
• 5:43
  Speaker 3: ended up calling the mag six. So take Tesla out
• 5:47
  Speaker 3: the MAG six. We have never seen concentration like this before.
• 5:52
  Speaker 3: So yes, there's a rebalancing away from the MAG six.
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  Speaker 4: And why is that.
• 5:57
  Speaker 3: It is because, you know, after building cash hoards, because
• 6:02
  Speaker 3: they weren't allowed to make any acquisitions under the last administration,
• 6:07
  Speaker 3: so they didn't need to compete with one another to
• 6:10
  Speaker 3: buy their companies. Now we're seeing a rush and we've
• 6:14
  Speaker 3: heard scale AI for meta platforms at a ten billion
• 6:19
  Speaker 3: dollar valuation, and we are seeing massive capital spending out
• 6:24
  Speaker 3: of these companies. The investor base in those companies they
• 6:29
  Speaker 3: were looking for safety. This doesn't feel as safe anymore,
• 6:31
  Speaker 3: so I think there's a rebalancing. Thank goodness, they're rebalancing
• 6:36
  Speaker 3: towards other exposures to innovation.
• 6:41
  Speaker 1: Just to come back on that a bit, I guess
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  Speaker 1: a lot of people be surprised that you're talking about
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  Speaker 1: it as a sort of long overdue adjustment correction somewhat
• 6:52
  Speaker 1: in terms of the balance between the US and the
• 6:54
  Speaker 1: rest of the world, but also within the US market
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  Speaker 1: where you identify those massive concentration. A lot of people
• 7:00
  Speaker 1: look at the US and say, look, there's a reason
• 7:02
  Speaker 1: it's been doing so well all this time. It's had
• 7:04
  Speaker 1: these underlying competitive advantages that you've seen even come through
• 7:08
  Speaker 1: post COVID in a way that a lot of other
• 7:10
  Speaker 1: countries haven't seen, which are being undermined by Donald Trump's policies.
• 7:16
  Speaker 1: Whether it's that you know, the research infrastructure and the
• 7:19
  Speaker 1: funding for basic research that we've seen slashed, the soft
• 7:23
  Speaker 1: power associated with the SeNSS of educational excellence, the openness
• 7:28
  Speaker 1: to foreign talent. You're untroubled by any of that.
• 7:32
  Speaker 3: So I think there are puts and takes. So again
• 7:35
  Speaker 3: back to the dollar, I actually think the dollar is
• 7:38
  Speaker 3: going to move continue to move up. And the reason
• 7:42
  Speaker 3: I say that's.
• 7:43
  Speaker 1: Mean start to move up, because it's been moving down well, I'm.
• 7:47
  Speaker 3: Going to continue from that seventy right to one hundred,
• 7:52
  Speaker 3: to one hundred and ten back to one hundred. And
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  Speaker 3: I think it is because there's a lot of controversy
• 7:57
  Speaker 3: and argument on this point. So returns on invested capital,
• 8:02
  Speaker 3: what will they do in the United States.
• 8:04
  Speaker 4: Relative to the rest of the world.
• 8:07
  Speaker 3: I think they're going to go up, but not one
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  Speaker 3: hundred percent sure, because I think other countries have massive
• 8:14
  Speaker 3: opportunities now to capitalize on the biggest wave of innovation
• 8:20
  Speaker 3: in history. Five innovation platforms robotics, energy storage, artificial intelligence,
• 8:26
  Speaker 3: blockchain technology, and then multiomic sequencing in the life science space.
• 8:31
  Speaker 3: And this is open for all, and I love to
• 8:34
  Speaker 3: hear what I've heard here in the UK this week
• 8:38
  Speaker 3: about focus on getting into the game in a big way.
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  Speaker 3: Your educational institutions here are incredible. Your AI stripes, I
• 8:49
  Speaker 3: mean deep Mind came out of the UK arm and others.
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  Speaker 3: So what I love about this environment is the competition
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  Speaker 3: is open.
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  Speaker 4: Let's see who wins.
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  Speaker 3: But I do know in the United States, why might
• 9:03
  Speaker 3: things get better for us? As I said, I don't
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  Speaker 3: think they've been that great over the last four or
• 9:10
  Speaker 3: five years. And the reason is this concentration suggested to
• 9:14
  Speaker 3: me flight to safety cash and Okay, maybe they'll be
• 9:18
  Speaker 3: involved in this AI thing.
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  Speaker 4: That's what that was.
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  Speaker 3: Now I think there's more risk taking. Why is that
• 9:25
  Speaker 3: Number one deregulation? We've been strangled by regulation that is happening,
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  Speaker 3: And the most provocative deregulation that we're seeing right now
• 9:36
  Speaker 3: is in healthcare, which is shocking. It's actually very exciting.
• 9:40
  Speaker 3: And I think tax cuts. Keeping the tax rates down
• 9:44
  Speaker 3: and getting the corporate tax rate effectively down from twenty
• 9:49
  Speaker 3: one percent to maybe fourteen percent by allowing full expensing
• 9:56
  Speaker 3: of capital spending in year one, I think will also
• 9:59
  Speaker 3: be very important. So I think that's good. I also
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  Speaker 3: think that competition is really good for America from China,
• 10:07
  Speaker 3: from the UK, and from Europe. So I think this
• 10:11
  Speaker 3: will be a good thing. And we're at our best
• 10:14
  Speaker 3: when we're competing. And I think the last thing is
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  Speaker 3: many of the cutbacks you're referring to are involved with
• 10:22
  Speaker 3: the public sector and deficit as a percent of GDP
• 10:26
  Speaker 3: six and a half percent. What they're trying to do
• 10:29
  Speaker 3: is stop the crowding out of the private sector. So
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  Speaker 3: let's see what happens.
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  Speaker 4: There seem to be fasically.
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  Speaker 5: I think there's a lot of faith in those companies
• 10:39
  Speaker 5: that aren't in the Mag six or Mag seven. And
• 10:42
  Speaker 5: I just wondered, what kind of names are they? What
• 10:44
  Speaker 5: are the because everyone's made so much money historically by
• 10:48
  Speaker 5: being with matter and whatever. Now suddenly, if you're right
• 10:52
  Speaker 5: and those are being sidelined a little, what are the
• 10:57
  Speaker 5: sort of names that you would you would see in
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  Speaker 5: the new wave of the rec innovation.
• 11:02
  Speaker 3: Yes, well, one of the things that happened during the
• 11:06
  Speaker 3: last four years is we almost lost our crypto and
• 11:11
  Speaker 3: we should start saying digital assets a little bit more
• 11:13
  Speaker 3: to make it a little more understandable but to the
• 11:17
  Speaker 3: rest of the world, and it's coming back now. So
• 11:20
  Speaker 3: in the top ten of our flagship AARKK, we have
• 11:24
  Speaker 3: both Coinbase and Circle. So digital wallets I think are
• 11:29
  Speaker 3: going to be a huge opportunity because this digital asset
• 11:33
  Speaker 3: revolution has just started. So definitely crypto is a big wave.
• 11:39
  Speaker 3: Our highest position is Tesla. We think Tesla is the
• 11:43
  Speaker 3: largest AI project on Earth, and not just because of robotaxis,
• 11:50
  Speaker 3: but because of humanoid robots. And then I would point
• 11:55
  Speaker 3: to Tempa say I we think this could become the
• 11:59
  Speaker 3: hell care information backbone of the United States. And then
• 12:04
  Speaker 3: Chrisper Therapeutics, which actually technically is headquartered in Switzerland, is
• 12:12
  Speaker 3: now deriving revenue. Many people think what I'm about to
• 12:16
  Speaker 3: say is going to happen in five years. It's happening now.
• 12:20
  Speaker 3: It is deriving revenue from curing sickle cell disease and
• 12:25
  Speaker 3: beta valacimia.
• 12:27
  Speaker 2: Let's just come yes, why you're talking about crypto. I'm
• 12:31
  Speaker 2: fascinating what your view is because I wondered when the
• 12:34
  Speaker 2: president is favoring crypto, is he hurting the dollar.
• 12:39
  Speaker 4: I actually think.
• 12:40
  Speaker 3: That bitcoin in particular will discipline our monetary authorities a
• 12:46
  Speaker 3: little a little bit like gold did during Chairman Vulkars
• 12:51
  Speaker 3: and Chairman Greenspands and maybe even Bernanke's time. But what's
• 12:55
  Speaker 3: also interesting is if you look at stable coins, which
• 13:00
  Speaker 3: are really the gateway or the on ramp into the
• 13:05
  Speaker 3: decentralized finance world or the internet financial system.
• 13:09
  Speaker 4: What are they backed by.
• 13:11
  Speaker 3: They're backed one percent by treasury securities in the case
• 13:15
  Speaker 3: of Circle, largely by treasury securities at Tether as well.
• 13:21
  Speaker 3: So that's a demand for dollar based assets that most
• 13:25
  Speaker 3: people didn't expect to be there. It's about two hundred
• 13:28
  Speaker 3: and fifty billion dollars now and it's just started.
• 13:33
  Speaker 1: So let's get onto the Europe side of this, because,
• 13:35
  Speaker 1: in fact, Kathy mentioned that there's a potential for some
• 13:38
  Speaker 1: competition in some of these highly innovative fields and growing areas.
• 13:44
  Speaker 1: Do you feel all the UK has potential to do that.
• 13:48
  Speaker 5: I think what has been noticeable so far is you
• 13:51
  Speaker 5: could see to some extent of America from a kind
• 13:53
  Speaker 5: of geoeconomic point of view, almost doing what you would
• 13:57
  Speaker 5: not want to do what it used to do to
• 13:59
  Speaker 5: other countries, where you sanction countries like Iran by stopping
• 14:03
  Speaker 5: them being able to import things, stopping people going there.
• 14:06
  Speaker 5: America is now to some extent doing it to itself
• 14:08
  Speaker 5: in the same way as Britain did with Brexit. If
• 14:11
  Speaker 5: you sanction yourself normally long term, that's not a great thing.
• 14:14
  Speaker 5: The interesting thing I think to me is that the
• 14:16
  Speaker 5: fact that Europe has not kind of picked up that challenge.
• 14:19
  Speaker 5: If you look at something like university graduates, for instance,
• 14:23
  Speaker 5: you would imagine at the moment the cream of graduates,
• 14:27
  Speaker 5: probably people in this audience, either them or their children.
• 14:30
  Speaker 5: Everyone wants to go to American universities. Stephanie Iron guitar
• 14:34
  Speaker 5: last week, suddenly everything is changed. People are scared of that.
• 14:38
  Speaker 5: And yet what's rather remarkable is if you look at
• 14:40
  Speaker 5: the European countries, you look at Britain, there hasn't been
• 14:43
  Speaker 5: a thing saying, for God's sake, come here, not in
• 14:46
  Speaker 5: the same kind of public way that you might expect
• 14:49
  Speaker 5: slightly more from Canada. And I think that's true of
• 14:52
  Speaker 5: various other things, especially within the European Union. You've still
• 14:56
  Speaker 5: got a variety of people arguing about whether you have
• 14:59
  Speaker 5: a bank union, which is most people would expect, is
• 15:02
  Speaker 5: the bare minimum. These are all things that kind of
• 15:05
  Speaker 5: people spent fifteen twenty years arguing about within Europe. So
• 15:09
  Speaker 5: I think people like me expected there to be a
• 15:11
  Speaker 5: wake up call to Europe, but it hasn't so far.
• 15:14
  Speaker 5: Outside military spending, it hasn't really come through.
• 15:17
  Speaker 1: And you spent quite a lot of time as a
• 15:20
  Speaker 1: UK correspondent, you're I see you often standing in ten downing.
• 15:24
  Speaker 4: Streets in the rain.
• 15:25
  Speaker 1: This week and this week, you know, there's been these
• 15:27
  Speaker 1: kind of two quite distinctive kind of big, big events.
• 15:30
  Speaker 1: There's US hosting these trade talks that everyone was paying
• 15:33
  Speaker 1: attention to between the US and China, and then the
• 15:36
  Speaker 1: Chancellor having a big day yesterday with a spending review.
• 15:40
  Speaker 1: This government would say they're starting to address long for
• 15:45
  Speaker 1: festering structural problems, whether it's planning and things. They're also
• 15:49
  Speaker 1: staying quite a lot of at least there's been lots
• 15:51
  Speaker 1: of good music about investing in tech, infrastructure and just
• 15:56
  Speaker 1: energy capacity. Probably not enough. Do you feel when you're
• 15:59
  Speaker 1: sort of the does this feel like a country that's
• 16:01
  Speaker 1: kind of getting its act together on some.
• 16:03
  Speaker 4: Of these fronts?
• 16:03
  Speaker 3: Yeah?
• 16:04
  Speaker 2: Is it nice mood music or is it just nice noises?
• 16:07
  Speaker 2: When you have the US China deal to go back
• 16:12
  Speaker 2: to that not deal, but you know it's not a decoupling,
• 16:15
  Speaker 2: but they've made up for now. There's always the chance
• 16:17
  Speaker 2: that they don't get on again and that this only
• 16:21
  Speaker 2: lasts for a few weeks. So we put that to
• 16:24
  Speaker 2: one side. Then we look at the UK. We're the
• 16:26
  Speaker 2: Prime Minister on day one of London Tech Week announcing
• 16:29
  Speaker 2: that billion pounds of spend on compute. Nick Claire gohlho
• 16:32
  Speaker 2: are on this stage just saying to me Microsoft spends
• 16:35
  Speaker 2: eighty billion dollars of the same thing in one fiscal year.
• 16:38
  Speaker 2: It's kind of chicken feed. When you look at the
• 16:42
  Speaker 2: ideas that are coming out from the government. In terms
• 16:45
  Speaker 2: of growth, yes, they're fiscally squeezed, but you've got a
• 16:48
  Speaker 2: lot of people saying they spent fourteen years in opposition,
• 16:52
  Speaker 2: could they not come up with anything more radical to
• 16:54
  Speaker 2: boost the economy, to get that growth, to get that investment.
• 16:58
  Speaker 2: So I think that there's a sense of disapp ointment actually,
• 17:01
  Speaker 2: but there is an effort to do the right thing.
• 17:04
  Speaker 2: I mean, kissed Armor, the globe trotting deal maker, first
• 17:08
  Speaker 2: in line actually at the White House to get this
• 17:11
  Speaker 2: trade packed with Donald Trump. But is it meaningful?
• 17:14
  Speaker 1: I mean, Kathy, Yeah, you can see this that we have.
• 17:16
  Speaker 1: You know, we're very good at laying into the US.
• 17:18
  Speaker 1: But then actually we're also quite as some of said,
• 17:21
  Speaker 1: we feel sort of excitement about our own failings as well.
• 17:24
  Speaker 1: We like to we're very happy to dwell on our
• 17:26
  Speaker 1: bad weather and our bad failings, even as we point
• 17:29
  Speaker 1: hold in the Trump policies. So what was your what's
• 17:32
  Speaker 1: your response to this sort.
• 17:33
  Speaker 5: Of wave of negative waves of negativity.
• 17:37
  Speaker 3: Well, the first thing in terms of Europe, and then
• 17:39
  Speaker 3: we'll do I'll do UK, but Europe past. I don't
• 17:44
  Speaker 3: know if you've pronounced it Meeka or micah here in
• 17:50
  Speaker 3: you know, adding some clarity to crypto or digital assets regulation.
• 17:57
  Speaker 3: So I thought that was a very interesting and important
• 18:00
  Speaker 3: step in this world which is going to transform the
• 18:05
  Speaker 3: financial system.
• 18:07
  Speaker 4: So that's good.
• 18:10
  Speaker 3: And I also do believe that half of the solution
• 18:15
  Speaker 3: is understanding the problem. And as I go around Europe,
• 18:20
  Speaker 3: which I think regulation is a problem there.
• 18:23
  Speaker 5: Just come back on that. Then yes, yes, you've like
• 18:25
  Speaker 5: Stephanie me, this is much younger to be wandering around
• 18:28
  Speaker 5: seeing European prime ministers for twenty years. If you drop
• 18:31
  Speaker 5: a list of the problems over regulation, no integration. They've
• 18:36
  Speaker 5: understood the problem for years. They've just been totally unable
• 18:40
  Speaker 5: to work out a way to deal with it and
• 18:42
  Speaker 5: get elected.
• 18:43
  Speaker 3: And it is why a company like palent here has
• 18:46
  Speaker 3: said we're pulling our employees out of Europe because the
• 18:50
  Speaker 3: demand elsewhere is so great and they're tied up in knots,
• 18:56
  Speaker 3: you know, regulatory knots, and you know it's just not
• 18:59
  Speaker 3: going to productive. I do think, however, this move towards
• 19:04
  Speaker 3: increased defense spending, which involves massive technology, is going to
• 19:11
  Speaker 3: create a wave of innovation out of necessity, and I
• 19:15
  Speaker 3: think that's a very good thing and they're all united
• 19:17
  Speaker 3: on that, and I think Germany agreeing to what is
• 19:20
  Speaker 3: it three percent of GDP very important from a tech
• 19:26
  Speaker 3: point of view, which is my lens. In terms of
• 19:29
  Speaker 3: the UK, I must say I watched serendipitously the interview
• 19:35
  Speaker 3: between Prime Minister Starmer and Jensen Wong, and I found
• 19:40
  Speaker 3: it very interesting the way that your Prime minister started
• 19:44
  Speaker 3: with healthcare, which in the United States, you know, most
• 19:48
  Speaker 3: vcs have found that a very difficult place. Here you're
• 19:53
  Speaker 3: opening it up in.
• 19:54
  Speaker 4: A very provocative way.
• 19:55
  Speaker 3: And NHS is known for being progressed in terms of
• 20:00
  Speaker 3: longitudinal data, and data is the name of the game
• 20:04
  Speaker 3: in AI, so I am more optimistic.
• 20:07
  Speaker 1: I did want to ask you. I've just got back
• 20:09
  Speaker 1: from Hong Kong and I talked to quite a lot
• 20:11
  Speaker 1: of investors and others, and it sort of strengthened something
• 20:15
  Speaker 1: that I'd been thinking over the previous few months, which
• 20:18
  Speaker 1: is when you ask people, and I did that. You
• 20:21
  Speaker 1: ask people what's the thing that's most surprised them in
• 20:23
  Speaker 1: the last few months or the last six months. And actually,
• 20:26
  Speaker 1: particularly there, it is not anything that Donald Trump has done.
• 20:31
  Speaker 1: It's what's happened in China. It's the breakthroughs, whether it's
• 20:34
  Speaker 1: deep sea or and the things underpinning that, and the
• 20:37
  Speaker 1: things that have followed in the wake of deep seek.
• 20:39
  Speaker 1: It's the breakthroughs in electric cars, the pace at which
• 20:44
  Speaker 1: under the surface Chinese key industries have developed. And it
• 20:49
  Speaker 1: sort of feels like the subtext almost everything that many
• 20:52
  Speaker 1: columns of many pieces being written about China, where on
• 20:54
  Speaker 1: any subject, the subtext is China's going to win.
• 20:58
  Speaker 3: So it's interesting. We spend a lot of time. I
• 21:01
  Speaker 3: think the open source movement in China. Open source software
• 21:04
  Speaker 3: movement is very powerful now examining it though not though
• 21:11
  Speaker 3: I think it's great for competition around the world.
• 21:14
  Speaker 4: We're using some of the deep seat breakthroughs.
• 21:17
  Speaker 3: They distilled from our models, you know, we complimented them
• 21:21
  Speaker 3: very creative, so that's good. We can use those models
• 21:25
  Speaker 3: and we're doing some open source models as well.
• 21:29
  Speaker 4: In China, nobody wants to pay.
• 21:32
  Speaker 3: For anything, you know. I got a question from one
• 21:35
  Speaker 3: of the LM providers over there, CEOs. He said, how
• 21:41
  Speaker 3: is it that people are willing to pay twenty dollars
• 21:44
  Speaker 3: a month? I said, because they want to be able
• 21:47
  Speaker 3: to use it more instead of the limited time for free.
• 21:50
  Speaker 3: He says people won't pay here, And I'm thinking to myself,
• 21:54
  Speaker 3: you know, the question for all of us is commoditization.
• 21:58
  Speaker 3: Are they going to commoditize everything? Look at what's going
• 22:01
  Speaker 3: on with EV's. Thank goodness, Tesla is not an EV manufacturer.
• 22:05
  Speaker 3: People say that I just told you what I think
• 22:06
  Speaker 3: it is, but I know I asked. I did a
• 22:11
  Speaker 3: podcast there in Hong Kong just a couple of months ago,
• 22:14
  Speaker 3: and I said, okay, you have to use some of
• 22:17
  Speaker 3: these productivity gains. This is a a co CEO of
• 22:20
  Speaker 3: APEC for a large bank, actually it was HSBC. I
• 22:24
  Speaker 3: can say that here, right, and you've got to turn
• 22:28
  Speaker 3: around that productivity and we and so do we?
• 22:31
  Speaker 4: What do you need to do with those productivity gains?
• 22:34
  Speaker 3: You need to raise compensation because you need to drive
• 22:38
  Speaker 3: your consumer economy.
• 22:39
  Speaker 4: What do we need to do in the United States?
• 22:41
  Speaker 3: It compete more effectively against Japan, I mean China is
• 22:45
  Speaker 3: we need to use it to cut prices. That's why
• 22:48
  Speaker 3: we think there's going to be a deflationary pull in
• 22:52
  Speaker 3: the US economy more than people expect.
• 22:54
  Speaker 1: Right now, All right, on that bombshell, we have covered
• 22:56
  Speaker 1: a lot of ground. We haven't done justice to any
• 22:57
  Speaker 1: of it, but I appreciate the Lizzie and John contributing.
• 23:02
  Speaker 1: Thanks for listening to Trump nomics from Bloomberg. It was
• 23:04
  Speaker 1: hosted by me Stephanie Flanders. I was joined by Ark
• 23:07
  Speaker 1: invest CEO Kathy Wood, Bloomberg TV UK correspondent Lizzie Burden,
• 23:11
  Speaker 1: and Bloomberg Editor in chief John Wick of Wake with
• 23:14
  Speaker 1: special thanks to the team at founders Forum.
• 23:16
  Speaker 4: Thank you, thank you stuff