Cathie Wood Says She Got Inflation Wrong, Continues Ark Strategy

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(Bloomberg) -- Cathie Wood connected Tuesday said she erred successful her prediction ostentation would unravel arsenic the prices of goods and services successful the US soared to 40-year highs.

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“We were incorrect connected 1 thing, and that was ostentation being arsenic sustained arsenic it has been,” Wood, laminitis and main enforcement serviceman of Ark Investment Management, told CNBC. “Supply concatenation -- I can’t judge it’s taken much than 2 years, and Russia’s penetration of Ukraine, of people we couldn’t person seen that. So ostentation has been a bigger problem. But I deliberation that it has acceptable america up for deflation.”

Inflation successful May surged to its highest since 1987, a motion that terms pressures are becoming entrenched successful the economy. Shelter, nutrient and state were the largest contributors. Russia’s ongoing warfare successful Ukraine arsenic good arsenic supply-chain bottlenecks exacerbated by the Covid-19 pandemic some contributed to higher prices for nutrient and energy. Wood cited the supply-chain issues that some Walmart Inc. and Target Corp. person faced, saying that it portends galore others could beryllium successful akin situations.

“The user is railing against these terms increases,” Wood said. “Many radical think, ‘oh, the dense spenders volition support this happening going.’ Consumer sentiment successful the highest-income groups is little than successful the lowest-income groups, and the second radical is being tormented by nutrient and vigor prices, which are truly a regressive taxation increase.”

Earlier this month, Wood said monolithic inventories held by US companies suggest that ostentation volition soften. Major companies successful the US, including Target, amassed stockpiles past twelvemonth amid soaring user demand.

Wood joins Treasury Secretary Janet Yellen successful admitting incorrect ostentation projections. Yellen successful May told CNN she was “wrong astir the way ostentation would take.”

Inflation and the commencement of Federal Reserve complaint hikes person enactment Ark’s innovation-themed funds nether pressure. The flagship Ark Innovation ETF (ticker ARKK) has fallen astir 53% this year. Still, the prima stock-picker maintains she is doubling down connected her strategy.

“The astir important happening we request to bash is instrumentality to our knitting. The worst happening that could hap is benignant drift,” Wood said. “When radical put successful Ark, they cognize they’re getting genuinely disruptive transformative innovation. That’s what we offer, and we don’t unreal to connection thing else.”

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