Trump's $100K Visa Move Threw Us, Says Cathie Wood

The recent announcement regarding new H-1B visa applications is viewed as part of a broader negotiation, particularly with India, and is not intended as a long-term policy. This development, coupled with other countries exploring "golden visa" options, presents an opportunity for them to attract high-skilled talent. The speaker anticipates a shift towards innovation and retaining talent within the U.S., driven by administration policies.

Economically, the U.S. is seen as transitioning from a rolling recession to a rolling recovery, marked by employment weakness due to the integration of AI and automation. Despite concerns about inflation, the speaker posits that productivity gains, fostered by deregulation and tax policies that effectively lower the corporate tax rate to as low as 10%, will act as a powerful anti-inflationary force. This is expected to lead to an economic boom driven by productivity, with inflation potentially dropping below 2% and heading towards zero.

The immense capital expenditure by hyperscalers on AI is noteworthy, with a concentration of investment and progress among the "big four" AI companies: OpenAI, Anthropic, XAI, and Gemini. Meta is also making a comeback with an open-source strategy. In China, a strong focus on technological advancement, particularly in AI, is evident, driven by a directive for "new productive forces" and a move away from involution and commoditization in sectors like electric vehicles, with a growing emphasis on profitability.

• The new H-1B visa fee policy is part of broader negotiations, particularly with India, and applies only to new applications.
• The U.S. is moving from a rolling recession to a rolling recovery, with AI and automation impacting employment and productivity.
• Deregulation and tax policies have significantly lowered the effective corporate tax rate in the U.S. to potentially 10%.
• Productivity gains are expected to drive an economic boom and act as a strong anti-inflationary force, potentially lowering inflation below 2%.
• Major AI development is concentrated among a few leading companies, with significant capital expenditure driving innovation and competition.

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H-1B Visa Policy and Negotiations [00:00]

• The recent announcement regarding H-1B visa fees is part of larger negotiations, with India being a key consideration.
• These negotiations are ongoing and are considered very important to India.
• Tech executives are aware that this is part of a broader negotiation strategy.
• The sudden announcement on a Friday and the initial lack of clarity caused confusion.
• The clarity now is that this policy applies only to new H-1B visas.
• The administration has expressed a long-term interest in bringing foreigners educated in the U.S. into the U.S. workforce.

This situation is seen as part of a broader negotiation strategy, particularly concerning India, and affects new H-1B visas, with a stated long-term interest in retaining U.S.-educated foreign talent.

The suddenness the Friday announcement and the lack of clarity uh threw a lot of people including us.

Economic Recovery and Inflationary Forces [02:07]

• The U.S. has begun to exit a rolling recession that started in 2022 and is on a recovery path.
• There have been signals for the Federal Reserve to cut interest rates for some time.
• The rolling recession is evolving into a rolling recovery, with expected weakness in employment.
• Companies are leveraging AI tools, substituting capital for labor, which may be misinterpreted as a sign of a deep recession.
• This is not believed to be the case; instead, deregulation, lower taxes, and AI are expected to drive economic growth.
• The effective corporate tax rate in the U.S. can be as low as 10% due to accelerated depreciation and other incentives, even though the nominal rate remains at 21%.
• The dollar is expected to strengthen due to increased returns on invested capital in the U.S. compared to other countries, driven by deregulation and tax policies.
• A productivity-driven economic boom is anticipated for the following year, engineered by the administration to preempt negative news before the midterm elections.
• The current environment is characterized by tax cuts, deregulation, and AI adoption that boosts productivity.
• Concerns about inflation are addressed by the argument that productivity is a potent anti-inflationary force.
• Inflation is predicted to drop below 2% next year and potentially head towards zero due to the profound productivity gains.

The U.S. is transitioning from a recession to a recovery, with AI and policy changes expected to foster an economic boom. Productivity is highlighted as a key driver, acting as a powerful force against inflation, with the effective corporate tax rate significantly reduced.

We think that deregulation lower taxes the I don't think people understand in the United States what has just happened to corporate tax rates.

AI Investment and Competition [05:05]

• Hyperscalers are making massive capital expenditure (capex) plans in the AI space, spending hundreds of billions of dollars annually.
• One company's investment translates to another's revenue, as seen with Nvidia.
• A marginal slowdown in capex investment could indicate a shift in bullishness regarding AI.
• Investment in AI is characterized by companies willing to spend massive amounts.
• A significant number of companies attempting to enter the AI space have already "capitulated."
• The market is currently dominated by the "big four" AI companies: OpenAI, Anthropic, XAI, and Gemini (Google).
• These leading companies are progressing rapidly and are the primary spenders.
• Funding for other competitors is becoming less readily available.
• There will likely be regionally specific large language models, but for global LLMs, the competition is primarily among the big four.
• The intense capital spending plans are a result of these companies "talking to one another" and vying to surpass each other.
• While OpenAI is currently leading in performance margins, others are closing the gap.
• Meta Platforms is also a significant player, with efforts to attract talent and re-enter the game through an open-source strategy.

Significant capital is being poured into AI by a select group of leading companies, driving intense competition and innovation in the large language model space.

They're really talking to one another, you know, and willing to u throw as much capital as possible to leapfrog one another.

China's Technological Focus [07:23]

• China is a significant player with a strong focus on the new technological world, especially AI.
• The economy was directed a couple of years ago towards "new productive forces," emphasizing aggressive technological competition.
• Competition is viewed positively as long as it is rational.
• Recent pronouncements from leadership indicate a desire to move away from "involution," which signifies massive commoditization in sectors like electric vehicles.
• This shift away from involution and towards profitability is seen as a positive development.

China's economic strategy emphasizes technological advancement and competition, with a notable move to shift focus from commoditization to profitability in key industries like electric vehicles.

Uh and that's all about technology and competing aggressively uh in the technology uh arena.