Why is Cathie Wood convinced that inflation will go down?

Cathie Wood Inflation Will Go Down
  • The investor said that US companies accumulated a large amount of inventory, so inflation will “fall apart”.
  • Despite this projection, Wood admitted that the big concern of the market is not inflation but what could come next: “deflation”.
  • On the other hand, the director of Ark bought Tesla shares again after almost a year and defended one of her biggest bets, Zoom.

Cathie Wood is convinced that inflation reached its highest point in March and that it will begin to fall more and more strongly. Her argument for it? She claims that US companies saw a big increase in their inventories.

“I’ve never seen inventory surges like this in my career and I’ve been here a long time. This inventory issue highlights the cyclical reason why we have been saying we think inflation will come crashing down.”

Wood in an interview with Bloomberg.

The big losers remain retailers like Target and Walmart, among others, as they faced a pandemic in the past, high inflation, supply chain bottlenecks and now large amounts of inventory. So much so that Target cut its earnings outlook for the second time in three weeks for this reason.

Although Wood noted that inflation was one of the biggest reasons her flagship Ark Innovation ETF fell 50%, the investor believes there is a bigger risk than inflation: “deflation.”

Cathie Wood’s bets

Wood’s preference for Tesla is public knowledge. However, she has been cutting his stake in the company for almost a year. A few days ago, however, she bought back shares of Elon Musk’s company and in large quantities.

Wood’s recommendation to Elon Musk is to develop autonomous driving, a mode of transportation that his company predicts will generate $10 trillion in revenue by 2030. ” He doesn’t need to stay on the EV side, he needs to stay on the autonomous side,” commented.

Finally, she confirmed her support for Zoom, after the company suffered a massive sale so far this year, with losses exceeding 37%.

“For institutional investors to write off Zoom when more than half of their revenue is now ventures is just telling me they’re not doing their research. They should know better.”

Wood closed.