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Cathie Wood disagrees with Jack Dorsey’s hyperinflation warning, saying prices will drop after the holidays

Catherine Wood, CEO of ARK Investment Management LLC, will speak at the Milken Institute Global Conference on Monday, October 18, 2021 in Beverly Hills, CA.

Kyle Grilot | Bloomberg | Getty Images

Innovation investor Cathie Wood refuted Twitter and Square founder Jack Dorsey’s theory of hyperinflation on Monday.

After Dorsey tweeted on Friday night, “Hyperinflation will change everything. It’s happening,” Ark Invest’s founder and CEO said her contrarian theory of deflation. I used Twitter to explain about. Wood estimates that her hypothesis will begin to be implemented sometime after the holidays.

“I thought inflation would start when the Fed began quantitative easing between 2008 and 2009. I was wrong. Instead, the rate (money turnover per year) slowed down. And the effects of inflation are gone. The rate is still slowing down. “

Many market participants are worried about rising prices, but hothand investors Deflation is expected With the collapse of commodity prices, corporate failures, corporate stockpiles and innovation trends that lag behind innovation have taken off.

“Currently, we believe that three causes of deflation will overcome inflation from the supply chain that is damaging the global economy. Two causes are long-term or long-term, and one is cyclical. Technology Deflation is the most powerful cause of innovation, “Wood said in a Twitter thread.

ARK Innovation Portfolio Manager noted that artificial intelligence training costs are declining by 40% to 70% annually. She believes this is a “record deflationary force.”

“When costs and prices go down, speed and disinflation continue, if not deflation. If consumers and businesses believe that prices will go down in the future, they wait for the purchase of goods and services and the speed of money. Push down, “she added. ..

Wood also said that S & P 500 companies that did not invest enough in the future could also be a deflationary force in the economy known as “creative destruction.”

“Since the tech and telecom bankruptcy of 2008-09 and the global financial crisis, many companies have responded to short-term shareholders who want profits / dividends. Now they are leveraging their balance sheet. We pay dividends, buy back shares and make “manufacturing” profits. Per share. They haven’t invested enough in innovation and will probably be forced to pay off their debt by selling outdated products at discounted prices, “she tweeted.

Wood calls these companies “value traps,” and previously said that the average of major stock markets is at risk because of them.

The final factor leading to deflation is the stockpile of goods due to pandemics and supply chain bottlenecks. Wood explained that many companies are overordering supplies and that as the economy opens, the economy is shifting to the service sector.

“The surge in commodity consumption during the coronavirus crisis has closed companies and crippled them, so they are still struggling to catch up, perhaps double and triple beyond their needs. I’m ordering, “she added.

“As a result, prices should fall as companies face oversupply after the holiday season. Prices for some commodities, such as wood and iron ore, have already fallen by 50%, partly because of China’s crackdown. Oil prices are unusual and psychologically important. “

Wood made a name for himself after the 2020 banner, when Ark Innovation returned nearly 150%. Funds fell 2% in 2021, but this year more than $ 5.7 billion has flowed in.

Cathie Wood disagrees with Jack Dorsey’s hyperinflation warning, saying prices will drop after the holidays

Source link Cathie Wood disagrees with Jack Dorsey’s hyperinflation warning, saying prices will drop after the holidays

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