The global economy is in recession and the current market turmoil is a sign that investors believe that the Federal Reserve is too aggressive in hiking interest rates, said Cathie Wood.
Cathie Wood’s ARK Innovation ETF outperformed all other U.S. equity funds during the pandemic rally in 2000, said slowing economic growth will likely benefit the types of innovative companies that her fund invests in.
“There are a lot of indicators to us that we are in a bit of a bear market” because of the Fed’s expected plan to increase rates by 50 basis points at its June and July meetings, Wood said.
“The markets are speaking pretty loudly right now and seem to be calling into question the Fed’s strategy.”
The S&P 500 declined roughly 16% for the year to date.
At the same time, “innovative” companies are being subject to “incredible” shorting activity, Wood suggested, pushing stock prices lower.
“If we are right, then shorts will be forced to cover and we are certainly looking forward to that time,” Wood said.
Wood’s $7.9 billion ARK Innovation Fund gained 2% in Tuesday trading and is down by 57.6% for the year to date. According to Bloomberg’s data, the fund is now down nearly 75% from its record high in February 2021 and close to the low of $34.69 it touched in March 2020 at the start of the coronavirus pandemic.