ARK’s Wood sees global recession, blames market sell-off on Fed’s hike plan

Cathie Wood, founder, CEO and CIO of ARK Invest, speaks at the Milken Institute 2022 Global Conference in Beverly Hills, California, U.S., May 2, 2022. REUTERS/David Swanson

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NEW YORK, May 10 (Reuters) – The global economy is in a recession and recent stock market volatility is a sign that investors believe the Federal Reserve’s plan to keep raising interest rates is too aggressive, it said. on Tuesday Cathie Wood, the main stock picker, in a webinar. .

Wood, whose ARK Innovation ETF (ARKK.P) outperformed all other US stock funds during the pandemic upturn in 2020, said slowing economic growth will likely benefit the kind of innovative companies in which invest the fund.

“There are a lot of indicators for us that we’re in a bit of a bear market” because of the Fed’s expected plan to raise rates by 50 basis points at its June and July meetings, Wood said. “The markets are talking quite loudly.” right now and they seem to be calling the Fed’s strategy into question.

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The benchmark S&P 500 index is down about 16% so far this year, close to the 20% drop that usually indicates a bear market.

At the same time, “innovative” companies are subject to “incredible” short-selling activity, Wood suggested, pushing share prices lower.

“If we’re correct then the shorts will be forced to cover and we’re certainly looking forward to that time,” Wood said.

The $7.9 billion ARK Innovation Fund, which gained 2% in trading on Tuesday, is down 57.6% year-to-date. Overall, the fund is now down nearly 75% from its all-time high in February 2021, and close to the $34.69 low it touched in March 2020 at the start of the coronavirus pandemic.

The fund added a position in General Motors Co (GM.N), largely due to signs it is “serious” about moving to electric vehicles, the company said during Tuesday’s webinar. Tesla Inc (TSLA.O) remains his largest overall position.

Despite its losses, ARK Innovation continues to attract investor interest. The fund has received positive net inflows over the past 4 weeks, including $455.7 million in net inflows the week ending May 4, according to Lipper data.

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Information from David Randall

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