Cathie Wood Maintains Inflation To Prove Temporary, Says 'Cracks' In Commodity Markets Evident

Cathie Wood on Monday maintained she’s not concerned about inflation and rising interests as much as the cracks in the commodity markets, which could pose a bigger risk.

What Happened: The Ark Investment Management CEO said "cracks" in the commodity markets are becoming evident. Wood cites how in the past six weeks lumber prices have dropped more than 46% to $897.90 per thousand board feet while copper prices have dropped roughly 12.78% to $4.16.

“We believe oil prices will not be far behind, despite the significant cutbacks in energy-related capital spending, particularly if drivers in the ride-sharing space take advantage of the lower total cost of EV ownership,” Wood wrote in a note.

See Also: Why Cramer Sees Cathie Wood's Top Tech Picks Heading Further Lower

Wood said a V-shaped recovery over the past nine months has moved the global equity markets value stocks from growth, adding that she believes fears of inflation and higher interest rates were boosted by rising commodity prices. 

“While others extrapolated those trends into the future, Ark has maintained that inflation would prove temporary thanks both to the base effects caused by the price collapses last year and to supply chain bottlenecks that will cause double- and triple-ordering of supplies, a massive inventory overhang, and a commodity price collapse,” Wood said.

Why It Matters: Mad Money host and former hedge fund manager Jim Cramer had last month warned rising inflation is taking a toll on tech stocks, and tech-heavy investors such as Wood could see more pain in the near future.

He had then suggested investors in technology stocks should either brace up for more pain or cut losses on the next sharp move up as turbo-charged growth stocks are getting hit in the current inflationary environment where bond yields are on the rise as well which in turn makes the future earnings from stocks less attractive.

Ark counts Tesla Inc TSLA, Teladoc Health TDOC and Roku Inc ROK as its largest holdings.

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Posted In: Analyst ColorNewsEconomicsAnalyst RatingsARK Investment ManagementCathie WoodDeflationGrowth stocksInflationJim Cramervalue stocks
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