Fed making a big mistake-Cathie Wood
2022.12.07 11:41
Fed making a big mistake-Cathie Wood
Budrigannews.com – Cathie Wood, CEO of ARK Invest, stated on Wednesday that the bond market is indicating that the Fed is committing a serious error.
“It appears that the bond market is indicating that the Fed is committing a serious error. “The yield curve is more inverted now than at any time since the early 1980s when double-digit inflation was entrenched,” Wood warned in a Wednesday Twitter thread. “The yield curve is more inverted now than at any time since the early 1980s.”
“Economists are not highlighting that an 80bp inversion in the Treasury yield curve today is much more of a red flag for the Fed today than it was in the early ’80s,” Wood further inquired.
She went on to say that “deflation is a much bigger risk than inflation” and that “as a percentage of the 3.5% 10 year Treasury yield, it is 23% today vs 5% of 15% in the ’80s.” In general, an inverted yield curve indicates a recession and/or lower than anticipated growth.
Wood cited the S&P energy sector (NYSE:) as evidence, stating, “Commodity prices and massive retail discounts are corroborating this point of view.” price.
“Despite the fact that the price of oil has decreased from $130 per barrel to $74, it is surprising that the price of the S&P energy sector (XLE) is not far from an all-time high. In the meantime, many early-stage innovation stocks that are pure plays have fallen below their coronavirus lows. “The truth will prevail,” the CEO of ARK Invest concluded.
