ARK Invest founder and CEO Cathie Wood thinks many of the market’s woes may be alleviated if Republicans win control of at least one chamber of Congress this midterm cycle.
The famed fund manager, whose speculative technology-focused funds have been battered by restrictive central bank policies, said in a webcast Tuesday that a Republican sweep of the House may usher in more welcome fiscal decision-making.
“I don’t think it will be because of the Republicans getting into office,” she clarified. “It’s because fiscal and monetary policies have been overdone in some respects.”
Wood, a vocal opponent of the Federal Reserve’s interest rate hikes to rein in decades-high inflation, has argued consistently that Fed officials have erred in tightening monetary conditions by using lagging economic indicators to dictate policy moves.
While the U.S. central bank communicates regularly with the presidential administration and Congress, it is an independent government agency.
Even as the Consumer Price Index (CPI) and Personal Consumption Expenditures Index (PCE) inflation readings have come in at historic highs, the ARK manager said in an open letter addressed to the Federal Reserve last month that rising interest rates “raised the risks of a deflationary bust.”
The latest CPI reading out Thursday is expected to show an annual 7.9% rise in prices in October, while core CPI, which strips out the volatile food and energy components from the measure, is projected to come in at 6.5%.
“What’s interesting about the political landscape out there is, traditionally, the market has done better under Democratic administrations,” Wood said, noting that the Republican response is generally that their party cleans up liberal control with fiscal and monetary austerity.
“It seems like we flipped here,” Wood added, lamenting that monetary policy has become overly stringent. “This is atypical of an election year but certainly of a Democratic administration.”
Meanwhile, the ARK Innovation ETF (ARKK), ARK Invest’s flagship investment vehicle, is down 63% year-to-date as of Tuesday’s close.
Wood predicted friendlier cryptocurrency policies under at least partial GOP control of Congress and said potential tax cuts would be “innovation-friendly.”
She also said that gridlock may benefit markets, while Republican support of “all-of-the-above” energy production may ease some inflationary pressures.
“There will be a shift from a regulatory point of view of Conservatives moving towards a policy of encouraging all kinds of energy production to get us out of the grip of inflation,” Wood said in a monthly webcast. She also noted that the Republican oil and gas agenda is favorable from a national security perspective due to less reliance on foreign countries, pointing to Europe’s energy crisis.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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Read More:Fed critic Cathie Wood counts on Republican midterm win for “friendlier” monetary policies
2022-11-08 23:23:27