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• Investor said she had never seen such economic downturn in 45 years
Ark Invest CEO Cathie Wood on Tuesday said the US is already in an economic recession and admitted that she underestimated the severity and lasting power of inflation.
“We think we are in a recession,” Wood told CNBC. “We think a big problem out there is inventories... the increase of which I’ve never seen this large in my career. I’ve been around for 45 years.”
The innovation-focused investor said inflation has turned out to be hotter than expected due to supply chain disruptions and geopolitical tensions.
“We were wrong on one thing, and that was inflation being as sustained as it has been,” Wood said.
“Supply chain ... Can’t believe it’s taking more than two years and Russia’s invasion of Ukraine, of course, we couldn’t have seen that. Inflation has been a bigger problem, but it has set us up for deflation.”
Earlier this month, the Labor Department said inflation, which is measured by the consumer price index (CPI), jumped 8.6% in May compared to a year earlier, the biggest year-over-year increase since December 1981.
Wood said consumers are feeling a severe price pressure while pointing to the University of Michigan’s Surveys of Consumers, which showed a reading of 50 in June, the lowest level ever.
The famous investor is facing a tough time in 2022 as her disruptive technology funds have been among the biggest losers this year in the face of rising interest rates.
Her flagship active fund Ark Innovation ETF (ARKK), is down 52% year-to-date, falling 66% from its 52-week high.
Still, Wood said her clients are sticking with her, and inflows are happening as “our clients have been diversifying away from broad-based benchmarks like the Nasdaq 100.”
“We are dedicated completely to disruptive innovation. Innovation solves problems,” Wood told CNBC.
Picture Credit: CNBC
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