Cathie Wood : ARK Invest’s Top Stocks as the Fed Crashes the Market

I do not think the market is pricing in the real possibility of another peak in inflation. Rents account for 32% of the CPI, don’t actually go down very often, and can lag the rest of the CPI by up to a year. Energy accounts for 7.5% of the CPI. We were been subsidizing energy costs almost all of 2022 with deployments from the strategic petroleum reserve. And now, Core CPI and jobs data have both come in way stronger than expected.

When all of these things make it into the data that Fed looks at over the next few months, Jerome Powell might surprise the market by raising interest rates higher than expected or keep them higher longer than expected, or both. That doesn’t mean another 75 basis point raise on interest rates right now. It could be a couple 25 basis point raises that turn into 50. Or a couple 50 basis point raises that turn into 75. Or that interest rates stay closer to 4% instead of 3.25 through 2025.