Cathie Wood:"The Fed is Changing Their Tone, and the AI is..."|Cathie Wood's Latest interview

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01. what did you think of what we heard from Jay pal yesterday yes I think the most important thing he said was that he agreed with Lyle Brainerd who's saying we are not in the middle of a wage price spiral and that's code word I think for for saying we are not in a 70s style inflation which was the biggest risk uh that he was pointing to and I would also say that Larry Summers who seemed to be apoplectic uh earlier or or last year mid last year I would say saying this is a 70s style inflation and you've got to take interest rates up to six or seven percent or higher on the FED funds rate he has changed his tune he was saying maybe you shouldn't indicate anything about where interest rates are going so big change in tune there and I think also a big change in tune from uh treasury secretary Janet yell as well who I think last week said something like uh you know I think once we're through this inflation and it seems like she wasn't using the word transitory uh again uh but it sounded like it uh she's saying when we get through this we're probably going to be grappling with a very low inflation slow growth environment so uh big changes in Tunes from the advisors to the fed and uh and yet they voted unanimously to increase 25 basis points and when I wrote my open letter to the FED it was really about that you can't be unanimous in this call there are too many conflicting indicators but they are nonetheless they are changing their tone I'm I'm struck that the market is now leading the fed and when I say the market I'm really talking about the bond market so the bond a 10-year bond yield peaked in October at about 4 30 for 4.3 percent and is now down this morning I think to 3.35 percent uh so huge rally in bonds and effectively the bond market is saying uh we don't have an inflation problem and the FED is probably close to the end of this move last year we did have uh as you call them bear Market rallies and they were pretty powerful a few times during the year and uh and then after those bear Market rallies we had fed chairman Powell come out and and really slam uh Expectations by saying we are going up 75 basis points at a time we don't have inflation under control and really putting the markets all kinds of markets into a panic uh we had the long Bond last year the bond market delivered its worst return I I believe certainly through I think it was October uh the worst returned since the 1700s you have to go back that far and therefore that the risk of higher interest rates was killing long duration assets and of course Innovation is very long duration uh so I think something's changed I think their tune has changed I think they're less worried about inflation most importantly less worried about a wage price spiral which defined the 70s inflation do you think the FED has to start cutting rates perhaps sooner than it believes I think the Bond Market is suggesting that that uh that that is so yes I uh and and you know we've seen the deflation in the pipeline as as Julie mentioned it started with commodities and then uh during the holidays we saw a massive discounts uh we've seen used car prices I think they're down 14 year over year having peaked at up 55 year-over-year so some of the leading indicators that caused this the spike in inflation and we think it was primarily uh Supply or shock induced some of those are unwinding and and we think they're going to unwind continue to unwind faster than most people think I think the one little wrinkle here is we're seeing a backup in gold prices uh copper prices in anticipation of China coming back and driving up these prices we don't think that's going to be the case particularly with oil prices because we believe that China's been building inventories during uh during this time period especially in oil since it's been getting oil for a 40 percent discount from from Russia the leading indicator for what we're seeing in the private markets was what happened in the public markets in in the last two years Innovation was pummeled especially the uh the the the companies that won't be highly profitable for let's say five years they they were hit especially hard and of course in the private Market that's primarily what we have the private Market lagged the public market uh and now we're seeing stabilization in the public markets I think the idea that interest rates may be near their peaks certainly long-term rates seem to have peaked will be very reassuring to the both the public and the private markets so I think if you look at our big Ideas report we just published it uh two days ago Big Ideas it's on Ark Dash invest.com uh you will see Innovation opportunities the likes of which we have never seen before we believe that Innovation is priced in the markets both public and private at roughly 13 trillion dollars so that's roughly I'm going to say it's 10 of the total Market values out there and we believe that 13 trillion is going to scale at a 40 annualized rate over the next eight years to 200 trillion uh by 2030.

02. now the driver of this uh a powerful move is primarily our artificial intelligence it is catalyzing all kinds of changes in all kinds of Industries and I don't think that investors have done enough research on how profound this impact is going to be one of the reasons we give our research away is we want to help investors but not only investors we want to help you know parents and grandparents guide their children and grandchildren to the right side of change we want investors to get to the right side of change and you know we've been saying for quite some time that the right side of change is more in the Innovation space clearly given how much is taking place than it is in the benchmarks we we believe that the Innovation we're seeing today around multi-omics sequencing robotics energy storage artificial intelligence and blockchain technology is going to disrupt the traditional World Order and if we're right on what's going to happen here then the traditional benchmarks the broad-based benchmarks are probably not going to be a very productive place to invest a certainly relative to Innovation during the next five to ten years