Cathie Wood: Market Misjudging Inflation Trajectory, Inflation Data May Be Below Market Expectations

Cathie Wood, founder of ARK Invest, said on January 18: “Over the past few years, we’ve seen a clear trend of declining inflation—yet official reports show inflation has stagnated. With market valuations near historical highs, many are asking if this signals a coming pullback. Historically, from the 1990s through ~1997 and the early 2000s, the market delivered strong gains even as valuation multiples fell. We expect valuations to compress, and this expectation is baked into our bottom-up analysis of every company.” That said, we remain optimistic on inflation for three key reasons: oil prices, housing costs, and technology. KB Home has cut home prices by 7%, with peers following. Productivity is improving sharply, and unit labor costs are falling—creating multiple deflationary pressures. Our focus is solely on tech-driven innovation: robotics, energy storage, AI (in particular), blockchain, and multiomic sequencing in healthcare. We expect inflation data to come in below market expectations.