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ARK Invest’s Cathie Wood shrugs off inflation pressures

Yahoo Finance's Alexandra Semenova details Cathie Wood's affirmation of the ARK ETF's outlook as inflation and tech sell-offs are appearing to be the fund's biggest obstacles in early 2022.

Video Transcript

KARINA MITCHELL: We want to stay on the inflation story. Recent fears over the Fed's pace of rate hikes roiled big tech. And Cathie Wood's ARK ETF's once again took a big blow. But as tech tries to recover, she's dismissing inflationary concerns. And here with more is Yahoo Finance's Alexandra Semenova. Alexandra, she says she's focused on deflation.

ALEXANDRA SEMENOVA: That's right, Karina. So Cathie Wood and ARK Invest have been making headlines a lot recently. And rightfully so, given the downward trend that we've seen for her flagship ARK Innovation's strategy. Now, Wood leverages social media often to communicate with investors about some of the volatility in her fund. And just yesterday on a webcast, she addressed concerns around inflation, the concerns that have been causing this tech grab that we've seen that has really battered ARK as investors look ahead to possible interest rate hikes.

Now she actually said that she believed inflation will go down this year. This comes, of course, with today's CPI figure at 7%, which is the highest rate in 40 years. So even with that figure consistently going up over the past several months, Wood is dismissing some of those headline figures and says that she thinks that it's, indeed, transitory, kind of shrugging off the numbers that we've been seeing with price increases.

Now, she says that ARK Invest is actually focused on other measures about its assessment over inflation. And notably, she pointed to velocity, which is the ratio of GDP to money supply and has fallen since the worst of the COVID pandemic. Now take a look at what she says about inflation and the Fed.

CATHIE WOOD: There are going to be some Fed governors and Fed presidents who are looking at statistics and are citing some that are still on their way up. There are others who are going to be citing statistics that are on their way down. But they want to err on the side of hawkishness or being too tight right now, certainly, from a jawboning point of view. Because they don't want inflation to continue to escalate.

ALEXANDRA SEMENOVA: And, of course, other financial institutions don't seem to be sharing that sentiment and are acknowledging that inflation might linger around for a while and even adjusting their forecasts to price in possible rate hikes this year.

ALEXIS CHRISTOFOROUS: Alexandra, we know that tech stocks had a rough start to the year. They've been on a bit of a rebound over the past couple of sessions. And I'm wondering how ARK Innovation, which is, of course, tech heavy, it's all about tech, has been faring as a result.

ALEXANDRA SEMENOVA: So ARK bounced back briefly and modestly intraday trading in the past two days. But it's down about 2% today, according to my latest read. And it's lost about a half of its market value since its peak in February 2021. Also, new figures today showed that assets under management of her organization also have. So investors are running for the exits. And it's not doing well.

KARINA MITCHELL: All right, we will leave it there. Thank you so much, Alexandra Semenova.