Key Points:
- Wood claims that the present macroeconomic environment is nothing like the 2008/2009 recession.
- She expects that inflation will fall below the 2% target set by the Federal Reserve, forcing the Fed to abandon its restrictive monetary policies.
The CEO of investing firm ARK Invest, Cathie Wood believes the US Federal Reserve is likely to change its inflation approach, which she believes would aid the market’s recovery.
According to ARK Invest CEO Cathie Wood in a new business video, the US economy is likely in an “inventory recession” right now.
Wood claims that the present macroeconomic environment is nothing like the 2008/2009 recession, and she expects that inflation will fall below the 2% target set by the Federal Reserve, forcing the Fed to abandon its restrictive monetary policies.
As stated, they believe there are several indications pointing to reduced inflation, implying that the Fed should act quickly. Perhaps the most crucial is the bond market itself. Interestingly, bond investors, who are highly sensitive to inflation and seek to protect themselves from it, are stating, while expecting the Fed will shift.
What’s interesting about that is markets always lead the Fed. And in this case, long-term interest rates have dropped below short-term interest rates, and yet the Fed still is saying that it is going to raise interest rates. Long-term term interest rates are rarely below short-term interest rates unless we’re in a recession or unless inflation is going to surprise on the low side of expectations. And we think both of those are true.”
Wood goes on to predict that the Fed will not only pivot but may even exceed its target.
The problem is we believe it will overshoot and go below that 2%, maybe even into negative territory because money supply has been falling.
In the same video, Brett Winton, ARK Invest’s senior futurist, forecasts that public blockchains and crypto assets will become even more distinctive for their scarcity in an age of plenty.
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