Morning Wood: ARK’s Cathie Finally “Sees Recession”, Blames Performance On Fed And “Incredible” Shorting Activity

There’s likely no better signal that we’ve bottomed than Cathie Wood finally owning up to the fact that we’re on the verge of recession and blaming the Fed and short sellers for it.

And that’s exactly what happened this week. 

Wood said during a webinar on Tuesday of this week that the Fed’s plant to continue hiking rates was “too aggressive”, Reuters noted in an article that hilariously still referred to Wood as a “star stock picker”. 

Recall, just yesterday, we noted that this “star” was now underperforming the S&P 500. 

Wood said during the webinar: “There are a lot of indicators to us that we are in a bit of a bear market” because of the Fed’s expected plan to increase rates by 50 basis points at its June and July meetings. “The markets are speaking pretty loudly right now and seem to be calling into question the Fed’s strategy.”

And for the coup de grâce, Wood also blamed short sellers, stating that “innovative” companies are being subject to “incredible” shorting activity, according to Reuters. “If we are right, then shorts will be forced to cover and we are certainly looking forward to that time,” she continued.

We noted this week that ARKK plunged about 10% on Monday, which means that the fund’s total return since inception in 2014 is now 122%, compared to the S&P 500’s 128% return over the same period. ARKK’s continued collapse also comes after Wood took the time to take shots at passive investing last week. The fund plunged even further heading into Wednesday’s cash open after ARKK holdings Unity, Roblox and Coinbase all plunged on earnings.

“Passive funds prevented many investors from enjoying a 400-fold appreciation in $TSLA from a $1.6 billion market cap at its IPO in June 2010 to ~$650 billion when it entered the S&P 500 ten years later in December 2020,” Wood wrote on Twitter, responding to Elon Musk, who was critical in a Tweet of Vanguard and the late Jack Bogle. 

Despite the plunge, the report noted that Wood’s ETF has still posted net inflows this year despite falling more than 50% so far this year. The wood-chipper fund added another $41 million in inflows last Friday, Bloomberg noted. Reuters said ARKK took in $455.7 million in net inflows the week that ended May 4.