NEW YORK, July 13 (Reuters) – Deflation is likely to become a bigger force in financial markets in the coming year despite the recent surge in consumer prices to 13-year highs, the storekeeper said on Tuesday. featured Cathie Wood of Ark Invest during a webinar.
Consumer prices in the United States rose the most in 13 years in June in part due to supply constraints, the Department of Labor said on Tuesday. Read more
Wood, for which Ark Innovation ETF was the top-performing U.S. equity fund followed by Morningstar last year, said technological innovation would continue to drive prices down significantly.
“The message we continue to hammer the table on is that nominal GDP growth, due to these deflationary forces, will be surprisingly low,” said Wood.
As a result, 10-year Treasury yields will likely stay below 3% for the foreseeable future, pushing up the overall valuation of the US stock market, she said.
“I think the bond market is in a bubble,” Wood said, adding that “too many people are afraid of inflation” which is a “killer” for stock valuations.
Any further rise in oil prices will likely lead to a larger sale in the future, as demand becomes scarce and more consumers switch to electric vehicles, Wood said.
“We wouldn’t be on the long side of oil,” said Wood.
ARK remains bullish on the online betting market and estimates that the US market will grow from $ 9.5 billion to $ 37 billion by 2025. The fund has a position in DraftKings Inc (DKNG.O), which is up 7.2% for the year to date.
Wood’s $ 23.6 billion ARK Innovation ETF suffered steep declines earlier this year as investors shifted away from growth and tech stocks to more cyclical sectors such as financials and energy. But it gained 7.4% over the past month as Treasury yields edged down.
The fund is up 0.2% for the year, a performance that puts it in the bottom 98th percentile of 595 US mid-cap growth funds, according to Morningstar data.
Reporting by David Randall Editing by Sonya Hepinstall
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