Ark Invest’s Cathie Wood says lower prices and rates will ‘activate coiled equities’

Ark Invest CEO Cathie Wood believes stocks are ready to spring upward with easing price pressures and lower interest rates on the horizon. “In the fourth quarter, as the Fed’s dot plot began pointing to much lower interest rates, the bull market in equities broadened dramatically,” Wood said in an X post on Thursday evening. “This far this year, the opposite has happened. In our view, more price deflation and lower interest rates will activate coiled equities.” The innovation-focused investor has been calling deflation since mid-2022 when the Federal Reserve was still in the middle of its aggressive tightening cycle to fight inflation. She noted then that inflation was caused by temporary inventory problems caused by the pandemic. There have been some incremental signs of progress on inflation lately, as the consumer price index for April showed inflation running at a 3.4% annual rate, slightly below the March level. Excluding food and energy, the core CPI came in at 3.6%, the lowest since April 2021. Wood’s performance has been disappointing over the past few years. Her flagship Ark Innovation ETF tumbled 67% in 2022. Then it rebounded by nearly 68% in 2023. Year to date, the fund is down about 17%. She said investors have been flocking to safe havens and cash at a dramatic pace last seen during the 1930s. “In our view, the search for cash and safety in the equity markets today is as intense as that during the Great Depression in the early 1930s,” Wood said in the X post. “When fear dissipated, the market broadened out and rewarded risk-taking once again.”

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