Wood Sees Tech Boom Crushing Inflation

ARK Invest CEO Cathie Wood has expressed her optimism about the tech boom's impact on inflation, downplaying fears of Fed rate hikes. According to Wood, technological innovation will crush inflation, rather than exacerbate it. She compared the current economic moment to the Industrial Revolution, pointing out that interest rates and equity markets rose simultaneously without triggering a catastrophic downturn.

Wood notes that US equities have pushed towards all-time highs despite the Fed's latest 25 basis point hike, which has taken the target range to 3.75-4%. She argues that this disconnect between rising rates and rising stocks is evidence of innovation-driven productivity driving growth.

Wood also points to alternative measures like Truflation, which she estimates currently sits between 0.5% and 1.5%, well below the Fed's 2% target. If her forecast holds true, it would mean that inflation has already been beaten, making the central bank's efforts redundant.

Wood expects innovation-driven productivity to push inflation down to a range of 0-1%, or potentially even lower, and sees real GDP growth exceeding the 2-3% range that has defined the US economy for decades. The engine behind this acceleration is the same cluster of technologies her funds are built around: AI, robotics, genomics, energy storage, and blockchain.