Cathie Wood of ARK Invest turns his eyes from rising consumer prices to deflation Reuters

David Randall

New York (Reuters)-Despite the recent surge in consumer prices to 13-year highs, deflation may become a greater force in financial markets in the coming year. Ark Invest’s star stock picker Cathie Wood discussed on the Internet on Tuesday Said at the meeting.

The US Department of Labor said on Tuesday that US consumer prices rose the most in 13 years in June, partly due to tight supply.

Wood’s Ark Innovation ETF, the best-performing US equity fund tracked by Morningstar last year, said that technological innovation will continue to significantly drive down prices.

“The message we continue to discuss is that due to these deflationary forces, nominal GDP growth will be surprisingly low,” Wood said.

Therefore, in the foreseeable future, the 10-year US Treasury bond yield may remain below 3%, thereby pushing up the overall valuation of the US stock market, she said.

“I believe the bond market is in a bubble,” Wood said, adding that “too many people are afraid of inflation,” which is a “killer” of stock market valuations.

Wood said that as demand shrinks and more and more consumers choose electric vehicles, any further increase in oil prices may lead to a larger sell-off in the future.

“We will not do more oil,” Wood said.

ARK is still optimistic about the online gaming market and estimates that the US market will grow from US$9.5 billion to US$37 billion by 2025. The fund holds a position in DraftKings (NASDAQ:) Inc, which has risen 7.2% so far this year.

As investors shifted from growth and technology stocks to more cyclical industries such as finance and energy, Wood’s $23.6 billion ARK Innovation ETF fell sharply earlier this year. But as the U.S. Treasury yield fell slightly, it rose 7.4% last month.

According to Morningstar’s data, the fund has risen by 0.2% this year, a performance that makes it the 98th percentile from the bottom among 595 mid-sized US growth funds.