FYI - For Your Innovation

On today’s episode of FYI we will be featuring last week’s episode of In The Know, a monthly video series in which ARK CEO and CIO Cathie Wood discusses Fiscal Policy, Monetary Policy, Economic and Market Indicators and Innovation. On this specific episode, Cathie Wood, weighs in on artificial intelligence (AI), Bitcoin, Fed Policy, electric vehicles, the discrepancy between GDP and GDI, bankruptcies, and the German and Chinese economies. Watch the video version here. Key Points From This Episode: Lagging and leading market indicators Rising bankruptcies The Fed’s policy, as indicated by the latest Fed meeting minutes The discrepancy between Gross Domestic Product (GDP) and Gross Domestic Income (GDI) The potential for a hard economic landing Bitcoin, and a potential spot Bitcoin ETF An apparent increase in demand for Electric Vehicles The current state of the German and Chinese economies The Artificial Intelligence Revolution Glossary of Terms “Fed” refers to the U.S. Federal Reserve, the central banking system of the United States. Fed Funds Rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight on an uncollateralized basis. M2 is the U.S. Federal Reserve’s estimate of the total money supply including all of the cash people have on hand plus all of the money deposited in checking accounts, savings accounts, and other short-term saving vehicles such as certificates of deposit (CDs). Yield Curve is a graphical representation of the interest rates on debt for a range of maturities. It shows the yield an investor is expecting to earn if they lend their money for a given period of time. An inverted curve appears when long-term yields fall below short-term yields. An inverted yield curve occurs due to the perception of long-term investors that interest rates will decline in the future. A Basis Point is equal to 1/100th of a percentage point (100 basis points = 1%). Gross Domestic Product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. Nominal GDP is a measure of economic output that uses current prices and does not adjust for inflation. “CPI” refers to the Consumer Price Index, which is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Core CPI excludes food and energy. “Magnificent 7” is a term adopted by the financial industry to describe the top seven technology companies currently investing heavily in artificial intelligence (AI). The seven companies are Meta Platforms, Alphabet, Apple, Amazon, Microsoft, Nvidia and Tesla. The previously used “FAANGs” acronym, coined in 2017, described the top technology companies at the time and included Meta Platforms (f/k/a Facebook), Apple, Amazon, Netflix and Google (now trading under its parent company, Alphabet). “Mega-caps” refers to companies with market capitalizations in excess of $200 billion. Market capitalization refers to the total dollar market value of a company’s outstanding shares of stock. The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. The Nasdaq-100 is a stock market index made up of 101 equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock exchange. “QQQs” refers to the Invesco QQQ Trust ETF which is a passive ETF that tracks the Nasdaq 100 Index and therefore is sometimes used as a proxy for the index in conversation.

If you know ARK, then you probably know about our long-term research projections, like estimating where we will be 5-10 years from now! But just because we are long-term investors, doesn’t mean we don’t have strong views and opinions on breaking news. In fact, we discuss and debate this every day. So now we’re sharing some of these internal discussions with you in our new video series, “The Brainstorm”, a co-production from ARK and Public.com. Tune in every week as we react to the latest in innovation. Here and there we’ll be joined by special guests, but ultimately this is our chance to join the conversation and share ARK’s quick takes on what’s going on in tech today. This week, Associate Portfolio Manager Nick Grous and Director of Research, Autonomous Tech & Robotics Sam Korus discuss Meta’s Threads platform, Tesla Autonomous Marketplace Dynamics and Declining Used Vehicle Prices.

Welcome to the Big Ideas Monday Miniseries, brought to you by the For Your Innovation Podcast. Big Ideas is meant to enlighten investors on the long-term impact of innovation. This annual research report seeks to highlight the technological breakthroughs evolving today and creating the potential for super-exponential growth tomorrow. We believe that innovation is taking off now, corroborating our original research and boosting our confidence that ARK’s strategies are on the right side of change. To learn more, view Big Ideas 2023. This week’s Big Ideas Monday Mini Episode focuses on Artificial Intelligence. Generative AI made waves this year, from DALL-E-2 to ChatGPT. These tools are improving the productivity of knowledge workers—~2x in the case of AI coding assistants. AI training cost declines continued at an annual rate of 70%, the cost to train a large language model to GPT-3 level performance collapsing from $4.6 million in 2020 to $450,000 in 2022. We expect cost declines to continue at a 70% rate through 2030. AI should increase the productivity of knowledge workers more than 4-fold by 2030. At 100% adoption, AI could increase global labor productivity ~$200 trillion, dwarfing the ~$32 trillion in total knowledge worker salaries. Watch the video version here. Sources: ARK Investment Management LLC, 2023. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

On this episode of FYI, our hosts and special guest Dr. Ann Marie Sastry dive into the intersection of artificial intelligence (AI) and education. They discuss the importance of engagement in education, the role of technology and generative AI, and the need to inspire learners in new ways. Dr. Sastry shares her experience founding two companies, Amesite and Sakti3, and her passion for innovating education. The conversation covers personalized teaching and how AI can help people leverage their strengths, the shift in gaming towards creator platforms, and the need for education to compete with other forms of entertainment. The speakers also share personal experiences with technology-integrated education and the importance of social media in engaging younger generations. Don’t miss this fascinating discussion about the future of education and AI’s role in it. “The average sixth grader will have a job that does not exist yet.” — @annmariesastry Key Points From This Episode: Bridging education and AI for innovative approaches to future learning. Shifting from education as a sorting function to cultivating individual talents. Education through innovation offers socioeconomically disadvantaged students life-changing opportunities. The Innovation Foundation’s age-appropriate research curriculum in Pinellas County offers personalized, innovative education, fostering a mindset change in students, and preparing them for future jobs. AI personalizes education, recognizing individual strengths in students, aiding teachers, and promoting creativity. AI integration enhances learning by providing relevant, contextual information and promoting user-friendly, innovative learning experiences. Integrating AI and social media into education encourages engagement, creativity, and economic relevance.

Welcome to the Big Ideas Monday Miniseries, brought to you by the For Your Innovation Podcast. Big Ideas is meant to enlighten investors on the long-term impact of innovation. This annual research report seeks to highlight the technological breakthroughs evolving today and creating the potential for super-exponential growth tomorrow. We believe that innovation is taking off now, corroborating our original research and boosting our confidence that ARK’s strategies are on the right side of change. To learn more, view Big Ideas 2023. This week’s Big Ideas Monday Mini Episode focuses on Digital Consumers. In 2022, digital leisure spending* totaled $6.6 trillion and, during the next eight years, should grow 17% at a compound annual rate to $22.5 trillion adjusted for inflation. Four trends should contribute to its growth: Connected TV (CTV): Roughly 85% of US households have access to at least one CTV, but the CTV ad market is only 23% the size of total US TV ad budgets. In our view, CTV is at an inflection point and will take share from both linear TV and other digital ad budgets. New Social Platforms: Nearly 40% of Gen Z consumers prefer to search on TikTok and Instagram over Google Search and Maps. Social platforms with the best recommendation engines should command the majority of ad budgets, with content-based social media likely outperforming follow-and-feed social media. Sports Betting: Despite macro headwinds, consumer demand for sports betting remains strong. Legalization of online/mobile sports betting should continue to catalyze growth. Gaming: The convergence of video games and social media should sustain gaming revenue growth. Video games should provide end-to-end virtual entertainment that rivals physical experiences. Watch the video version here. *We define digital leisure spending as the sum of consumer expenditures on leisure-related goods and services purchased online, NFTs, online sports betting, video game software and services, streamed video, and streamed audio. We only estimate online sports betting volume generated in Canada and the US. Sources: ARK Investment Management LLC, 2023. Altruda, C. 2022; Roblox, data as of 12/30/22; S&P Global Market Intelligence, data as of 01/25/23. The World Bank, data as of 12/30/22; Insider Intelligence, data as of 01/02/23; S&P Global Market Intelligence, data as of 01/25/23; Perez, S. 2022; Statista, data as of 01/25/23. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

Immunotherapy has the potential to cure cancer. Today we are joined by a leading figure in cancer studies and research and one who has helped shape the immunotherapy landscape, Dr. Patrick Hwu. The internationally recognized Dr. Hwu previously applied his trade at the National Cancer Institute and is now the President and CEO of one of America’s leading cancer hospitals, the Moffitt Cancer Center. We tap into Dr. Hwu’s wealth of knowledge and experience as he explains what immunotherapy is, its benefits, and how it differs from other cancer treatments. We explore the recent advancements in immunotherapy and what the future of this treatment looks like, why the time to market for new technologies and therapies needs to improve and how the FDA fits in, how to get the right treatments to the right patients at the right time, and how Dr. Hwu and his team are impressing the industry with the way they use math, data aggregation, and large language models (LLMs) to problem-solve. We end with some heartfelt stories of triumph from Dr. Hwu’s career, the hand he’s played in building Florida’s formidable biotech ecosystem, and his words of inspiration for future scientists and a message of hope for families who are currently fighting through treatment. We have to, as a society, continue to shrink that time between the lab idea, the clinical trial, and the FDA approval for drugs that can really save lives.” — @PatrickHwuMD Key Points From This Episode: Joining us today is the President and CEO of Moffitt Cancer Center, Dr. Patrick Hwu. Background on Dr. Hwu’s professional career. What immunotherapy is, its benefits, and how it differs from traditional cancer treatments. How Dr. Hwu helped shaped the immunotherapy landscape: his ‘aha’ moments. Exciting advancements going on in his lab and immunotherapy in general. Dr. Hwu explains he’s having a lot of fun working with CRISPR for gene editing. Why FDA regulations need to be adjusted to accommodate new technologies and treatments. How to lower the costs of cell and other important therapies, and why this needs to happen. Why resources like ClinicalTrails.gov need to be more abundant. Examining why some patients respond better to gene therapy than others. How to improve the process of getting the right drug to the right patient at the right time. The impressive way that Dr. Hwu and his team utilize math, data aggregation, and LLMs. Assessing the challenge of persistence in immunotherapy. Inspirational stories of triumph from Dr. Hwu’s career. Revisiting more ways to shorten the time to market for new technologies and therapies. Playing piano for two bands, and other ways that Dr. Hwu lets off steam. How he’s contributed to building an impressive biotech ecosystem in Florida. Advice for potential immunotherapy scientists, and words of hope for families in therapy.

Welcome to the Big Ideas Monday Miniseries, brought to you by the For Your Innovation Podcast. Big Ideas is meant to enlighten investors on the long-term impact of innovation. This annual research report seeks to highlight the technological breakthroughs evolving today and creating the potential for super-exponential growth tomorrow. We believe that innovation is taking off now, corroborating our original research and boosting our confidence that ARK’s strategies are on the right side of change. To learn more, view Big Ideas 2023. This week’s Big Ideas Monday Mini Episode focuses on 3D Printing and Robotics. Robotics and 3D printing can collapse time from development to production, shorten supply chain footprints, reduce waste, and lower costs. ARK estimates that manufacturing robots and 3D printing could scale at a ~80% annual rate during the next eight years, from $70 billion in 2022 to ~$9 trillion by 2030. Watch the video version here. Sources: ARK Investment Management LLC, 2023. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

According to Dr. Arthur Laffer, since 1913, when the United States first imposed the income tax via constitutional amendment, the top rate of that tax has determined the fate of the American economy. When the top rate has been high, as in the late 1910s, the 1930s, 1940s, 1950s, and 1970s, the response of those with money and capital has been to curtail real economic activity in favor of protecting assets and income streams. Huge declines have come to the economy in these circumstances. On today’s podcast, ARK CEO, CIO and Founder Cathie Wood is again joined by Dr. Arthur Laffer, a famed economist, well-known for his creation of “The Laffer Curve,” so Dr. Laffer and Cathie can discuss Laffer’s book, Taxes Have Consequences, in which Dr. Laffer provides a history of taxes and their impact on the United States economy. Dr. Laffer explains why he believes that a low rate broad-based flat tax, spending restraint, sound money, minimal regulations, and free trade are the answers to most of our economic problems. “Low rate broad-based flat tax, spending restraint, sound money, minimal regulations, and free trade, and then get the hell out of the way and let markets solve it.” — Arthur Laffer Key Points From This Episode: An overview of Arthur Laffer’s new book, Taxes Have Consequences. How the government finances taxation. A history of income tax since 1913. Defining characteristics of the Roaring Twenties. The market collapse that occurred in 1929. Similarities between the environment in 1929 and today. How Art would structure the American tax system if he could. Why stimulus spending hurts the economy. Art’s thoughts on regulation. Why Art is a strong proponent of developing free trade agreements with countries that the US currently has issues with. What makes America different from the rest of the world. The correlation between tax hikes and economic performance. Why everyone benefits in a low rate broad-based flat tax system. The role of taxes in the Great Depression. Factors that Art attributes the high inflation levels to. The importance of acting fast when it comes to changing policies around taxes. How the pandemic has accelerated the migration to low tax states. Interesting statistics about states like Texas, Florida and Tennessee. Art’s thoughts on how to address poverty in the United States.

Welcome to the Big Ideas Monday Miniseries, brought to you by the For Your Innovation Podcast. Big Ideas is meant to enlighten investors on the long-term impact of innovation. This annual research report seeks to highlight the technological breakthroughs evolving today and creating the potential for super-exponential growth tomorrow. We believe that innovation is taking off now, corroborating our original research and boosting our confidence that ARK’s strategies are on the right side of change. To learn more, view Big Ideas 2023. This week’s Big Ideas Monday Mini Episode focuses on Digital Wallets. Having onboarded billions of consumers and millions of merchants, digital wallets could transform the economics associated with traditional payment transactions, saving them nearly $50 billion in costs. With 3.2 billion users, digital wallets have penetrated 40% of the global population. ARK research suggests that the number of digital wallet users will increase 8% at an annual rate, penetrating 65% of the global population by 2030. As consumers and merchants adopt digital wallets, the usage of traditional checking accounts, credit and debit cards, and direct merchant accounts should decline, disrupting traditional payment intermediaries. Cutting out middlemen, digital wallets could facilitate closed-loop transactions for more than 50% of their payment volumes, potentially adding $450 billion to the current $1 trillion in digital wallet enterprise value by 2030. Watch the video version here. Sources: ARK Investment Management LLC, 2023. Forecasts are inherently limited and cannot be relied upon. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results.

We are very excited to be joined today by one of the world’s leaders in scientific and biological research, Dr. Jonathan Weissman. After a breakdown of Jonathan’s professional background, we dive into CRISPR and how the genetic engineering tool can be used for drug development, disease discovery, and as a therapeutic treatment of its own. You’ll learn how our guest is using CRISPR in his lab and some of the solutions that he and his team have come up with for protein misfolding. Jonathan explains how his work has evolved beyond cancer, why he’s a fan of ex vivo lung perfusions (EVLPs), what needs to be done to bring new therapies and technologies to market quicker, and why he believes that there is no better time to be a young scientist than right now! “It’s an incredibly exciting time. Our fundamental understanding of biology, of who we are and where we came from is changing dramatically.” — Dr. Jonathan Weissman Key Points From This Episode: Introducing Dr. Jonathan Weissman and his professional background. The idea of programmable medicine and how CRISPR fits into drug development. Exploring the benefits and drawbacks of using CRISPR tools. How Jonathan has been implementing CRISPR in his lab. Why he thinks that his work is an important biological development. CRISPR as both a tool for discovery and a therapeutic treatment of its own. Our guest explains how we’ve evolved even beyond cancer. Some of the problems of protein misfolding (and Jonathan’s solutions). Taking a look at CRISPR delivery methods and how he sees these processes evolving. The ins and outs of EVLPs and why our guest is excited by this topic. What needs to be done to reduce the time to market for new therapies and technologies. Why scientific outreach is important and why it’s an exciting time to be a young scientist. Jonathan’s advice for future science leaders.