Cathie Wood said the large inventories now held by U.S. companies suggest inflation will fall.
“I’ve never seen an inventory surge like this in my career, and I’ve been around for a long time,” the head of Ark Investment Management said in an interview Wednesday. “This inventory issue underscores the cyclical reasons we’ve always thought inflation will subside.”
Major retailers that built up inventory last year amid soaring consumer demand and supply chain bottlenecks are now struggling with inventory bloat. On Tuesday, Target Corp. cut its profit forecast for the second time in three weeks amid a surge in inventories.
Inflation and the start of Fed rate hikes have put Ark’s innovative themed fund under pressure. The flagship Ark Innovations ETF (ticker ARKK) is down 50% this year. While investors have been concerned about inflation, “by far the bigger risk is deflation,” Wood said.
The interview took place at UP.Summit, a conference hosted by Walmart Inc. heirs and Up.Partners, a venture capital firm that invests in mobility startups that Wood personally backs.
One of Ark’s most famous bets is on Tesla Inc. After reducing its stake in Tesla for at least four consecutive quarters, Ark re-raised its holdings after its shares fell nearly 50%.
Tesla CEO Elon Musk has divided his time among several projects, including his pending Twitter deal. What’s important, Wood said, is that Tesla remains at Tesla and continues to oversee the development of autonomous driving — which her company predicts will be a $10 trillion market by 2030.
“He doesn’t need to stick with electric cars, he needs to stick with autonomous driving,” she said.
Wood also hinted that she was planning a new “crossover fund,” but said she could not disclose more information due to regulations.
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