Ark Invest CEO Cathie Wood said Tuesday that inflation will break down faster than most economists expect ahead of a key reading on price pressures. “This week CPI could be flat, or slightly down [compared with last month,]” Wood said in an investor webcast. “This could be the start of continuous surprises to the low side….It will unravel.” Investors are waiting for a new reading for the consumer price index, slated for release Wednesday. Headline CPI, which includes energy and food, is expected to increase 8.7% in July, slowing slightly from a 9.1% pace in June, according to Dow Jones. The innovation-focused investor pointed to a number of leading indicators that signaled inflation may have already peaked. She noted that gold, traditionally an inflation hedge, is moving below a two-year trading range. Wood also highlighted declining oil prices as well as long-term Treasury yields that are flashing signs of easing price pressures. She said the 10-year Treasury yield having trouble staying over 3% showed that inflation is not sustainable. “We will be talking about deflation being a greater risk in the next three to six months,” Wood said. “Innovation results in deflation. One of the metrics that have been very telling .. is long term Treasury yields… The bond market is expecting growth to surprise on the low side.” The popular investor also expects lower non-farm payrolls in the months ahead as companies realize they hired too many people amid labor shortages. Last week, a surprisingly strong monthly jobs report eased some recession fears, prompting traders to price in more aggressive rate hikes by the Federal Reserve. Wood said the Fed will be influenced by a worsening jobs market, along with easing inflation, to rethink about its tightening path.
Ark Invest's Cathie Wood says inflation will unravel faster than expected