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Well, despite the ongoing war, global stocks are rallying for a third day as investors seek signs of stability. We've been discussing the market reaction with Kathy Wood, the founder, CEO and CIO of ARC invest The prominent tech investor, also gave us her view on the use of artificial intelligence in warfare. In this part of the conversation, Kathy Wood tells us why she thinks the situation in the Middle East is a short term issue for markets.
The Iran war is placing more bricks into the wall of worry that this ball market is climbing. In the eighties and nineties, which were the golden age for active equity management, it was the same kind of situation. There were fears all along the way until nineteen ninety nine. Nineteen ninety nine, no one seemed to have any fears about anything anymore. But for the rest of that ball market,
it was one worry after the other. It was inflation, it was the SNL crisis, it was the several wars, but the market did continue to climb that wall of worry, and I do believe that we are in the same kind of ball market now.
In terms of the short term, then the rate decisions, central buying decisions this week, how many cuts do you expect from the Fed given the war, the worries about inflation.
Well, I don't think they're going to cut at this one. And one of the reasons is the core personal consumption deflator ticked back up on a year over year basis to three point one percent inflation, and that is one of the primary inflation measures they watch. We watch another measure called true inflation, and it's blockchain based. It's ten thousand items goods and services monitored twenty four to seven. That measure of inflation is at one and a half.
And it's interesting during COVID it peaked at eleven to twelve percent, where's the CPI peaked at nine percent and it has tended to lead the CPI. Right now, we do have energy prices probably an upward pressure, but that is true for true inflation as well. So it's gone from it was lower than one percent to one point five percent. If that's if this is as high as it goes, I think the CPI by the end of this year will resolve below below that two to three percent range.
In terms of the war and your investments, do you think that be should be limits to how the US uses AI in war. I know that you were talking earlier about the use of joining technology and your own experiences of understanding how joint technology is used by these cutting edge businesses.
Yes, I think it's this is a question probably beyond Mike Ken, But I would say if if AI is limiting wartime because targets are hit directly and quickly, and you know, the war is over much more quickly than it might have been in the past. You know, I'm sure that the generals out there are saying, we are saving we are saving a lot of lives, certainly American lives, and unfortunately, and you know, when when Americans do go into war zone where there are civilians, they always warrant
civilians to clear out. I think that has been the case for civilian parts of of economies in Iran. So you know, it's this is this is maybe a little bit beyond my investment orientation. But if if if AI helps bring wars to an end much more quickly than they have ended historically, I think everyone would agree that's a good thing.
Just tell me broadly about where your expectation is now for your own investments by the end of the year. How optimistic are you about growth in the industry. I mean, you know, we've just been talking about and video hearing from Nvidia that they want a trillion dollars worth of sales over the next couple of years, and some people don't see that actually as very big, but there has been such growth in the industry. How optimistic are you about this year?
Well, we monitor the revenue run rate, so you look at the revenues per month for some of these large language model companies, and we're astonished at what's happening. Anthropic, for example, was at a nine billion revenue run rate in December and it's already up to nineteen billion, so really justifying the investment that they're undertaking. Open Ai has gone from twenty to twenty five billion. This is in
the span of a little more than two months. So I think what that's telling us is the impact on productivity of these tools is astonishing, and more and more people are willing to pay not just twenty dollars a month, but in our case two hundred dollars a month for the many seats that we have on open AI anthropic and we're even getting to the point where we can see justification for two thousand dollars a month. And what that means is we would not be hiring another research associate.
We would be engaging these large language models to help us with our research. And it's the results we are getting, and we use both Palenteer and all of the large language models. The results we're getting are astonishing. And many times have we showcase all the breakthroughs during our morning meeting. It's just a fifteen minute business meeting, but on many days we're now having people from all parts of the organization, you know, show and tell, show what they're doing with
AI that they could have never done before. They just couldn't do it before in terms of the kinds of and graphs and you know, iterations on some kind of uh, some kind of idea that we're throwing out there. Uh. They're taking us places where you know, we probably would have taken us I'm going to say, months before, and now we can do it in days.
So that was Kathy would have aren't invested