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In this illustration photo taken in Bordeaux, France, on March 30, 2016, a man points to a computer screen showing stock information. REUTERS/File Photo/Regis Duvignau Reuters, NEW YORK, July 13 – Despite the recent jump in consumer prices to 13-year highs, ace stockpicker Cathie Wood of Ark Invest warned in a webinar on Tuesday that deflation will likely become a stronger influence in financial markets in the coming year. According to the Labor Department, consumer prices in the United States jumped by the most in 13 years in June, owing in part to supply restrictions. find out more Wood, whose Ark Innovation ETF was Morningstar’s top-performing U.S. equities fund last year, believes technological innovation will continue to drive down prices. “The message we continue to pound the table on is that nominal GDP growth will be fairly low due to these deflationary dynamics,” Wood said. As a result, 10-year Treasury yields are expected to remain below 3% for the foreseeable future, pushing up the stock market’s overall valuation, she said. “I believe there is a bond market bubble,” Wood said, adding that “too many people are terrified of inflation,” which is a “killer” for stock market values. Any more rises in oil prices will almost certainly lead to a sharper sell-off in the future as demand dries up and more people opt for electric vehicles, according to Wood. Wood stated, “We would not be on the long side of oil.” The online betting market in the United States is expected to expand from $9.5 billion to $37 billion by 2025, according to ARK. DraftKings Inc (DKNG.O), which is up 7.2 percent year to date, is one of the fund’s holdings. Investors shifted away from growth and technology companies to more cyclical sectors such as financials and energy, causing Wood’s $23.6 billion ARK Innovation ETF to fall sharply earlier this year. However, when Treasury yields fall, it has gained 7.4% in the last month. According to Morningstar data, the fund has returned 0.2 percent this year, putting it in the bottom 98th percentile of 595 U.S. mid-cap growth funds. David Randall contributed reporting.
Sonya Hepinstall did the editing.
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