While Wall Street fears stagflation, Cathie Wood is reading a different script. The ARK Invest CEO argues US inflation is falling dramatically faster than consensus expects, with real-time data suggesting core inflation sits around 1%.
Wood points to Truflation, which tracks millions of data points, showing CPI at just 0.86% year-over-year. Core inflation, excluding food and energy, is roughly 1%. The housing market shows minimal price pressure.
Her thesis centers on AI-driven deflation. As AI tools embed across industries, they drive productivity gains that reduce costs. ARK's research puts productivity growth at 3% with capital expenditures at a 30-year high.
Wood predicts a potential resurgence of the US dollar, contingent on pro-growth policies. ARK's May 2026 update forecasts fiscal 2027 inflation below 5%, eventually declining to 3%.
ARK identifies a housing market gap: 1.4 million buyers versus 2 million sellers, tilting in buyers' favor. Housing is the largest CPI component; softening prices could confirm Wood's thesis.
Lower-than-expected inflation would likely accelerate Fed rate cuts, bullish for risk assets like equities and crypto. Growth stocks tend to outperform in falling-rate environments.
ARK's flagship fund took losses during the 2022 rate-hiking cycle. If lagging indicators catch down to real-time data, markets could reprice rapidly.