Wood Sees Huge Inventories as Evidence Inflation Will Ebb

Cathie Wood says the massive inventories now held by US companies suggest that inflation will die down.

“I’ve never seen inventory surges like this in my career and I’ve been around for a long time,” the head of Ark Investment Management said in an interview with Bloomberg Television Wednesday. “This inventory issue highlights the cyclical reason we’ve been saying we think inflation will unravel.”

Major retailers that amassed stockpiles last year amid soaring consumer demand and supply chain bottlenecks are now struggling with bloated inventories. On Tuesday, Target Corp. cut its profit outlook for the second time in three weeks on an inventory surge.

Inflation and the start of Federal Reserve rate hikes have put Ark’s innovation-themed funds under pressure. The flagship Ark Innovation ETF (ticker ARKK) has fallen 50% this year. While investors have been gripped by the fear of inflation, “the greater risk by far is deflation,” Wood said.

The interview took place at UP.Summit, a conference on the future of mobility hosted by Walmart Inc. heirs and Up.Partners, a venture capital firm investing in mobility startups that Wood personally backs.