In her most recent discussion, Cathie Wood explains that a rolling recession started with rate hikes in 2022, unemployment has troughed, and economists have only declared recessions retroactively. Yield inversion did indicate a recession, but we've actually gone through most of it and are on the last leg of it now
She talks about how this country used to be mainly funded by tariffs not income tax, with supporting graphs, and that it would make sense to realign with that
She mentions that there will a recession in the government sector for the first time in 30 years since Clinton & Gingrich reduced the size of govt to give us a budget surplus in the 90s. Based on business cycle analysis, anything that goes for 30 years without a correction or a shakeout gets more and more inneffecient over time, and very often there's bad behavior
She believes we are in the last phase of a rolling recession that began in 2022 when the FED started rate hikes. She supports that using unemployment statistics showing layoffs have tripled since the end of Covid, getting to 172k most recently, and in previous recessions we topped out at 240k, Covid being an outlier at 400k
She believes it's basically as bad it can get already, saying that business and consumer sentiment has fallen through the fears over the transition into this Administration and some feeling of chaos.... But federal govt workers make up less than 2% of the nation's work force while sttate+local govt workers combined make up over 20% of employment in the US
She thinks the measures this administration are taking will reduce govt deficit from the current -7.21% to their goal of -2.5%, "tax cuts and deregulation will turbocharge nombimal gdp growth. The best way to get out of a deficit is to grow at an accelerate with increasing productivity (like '90-2000 which gave us the last surplus)." She expects another surplus to be coming, if not during this administration then because of it
"Expected inflation rates 5-10 years ahead are, interestingly again, at the same level when Clinton and Gingrich were wrestling the government sector to the ground."
She expects a large rebound in small businesses in the next few years, and a productivity boom that takes us into "new orbit of global real GDP growth." 7.3% compared to 3% that we've been at for the last 125 years because AI is propelling every other tech
"Strongest bull market in history if we're right"
https://www.ark-invest.com/videos/market-commentary/march-2025-in-the-know-cathie-wood
I think Cathie Wood has underperformed in typical markets but is very good at timing bottoms (she was spot on during Corona and was way ahead of all of Wall St. in confidently predicting a rapid V shaped recovery). Her funds are specifically geared towards capturing maximum *future* growth, as opposed to maximum returns in the current year. In general, to me it seems she habitually puts out "best case" scenarios that haven't always been fully met, and it causes her funds to lag the indexes, but in the broad sense her arguments are usually right (even if some price targets are off)
This was Cathie Wood on March 30, 2020. 7 days after the market bottomed
>"The measures taken by the government will contribute to, what I don't think many people believe will happen, but we do believe - that a V shaped recovery has a much better opportunity of happening now because of these incentives to get back to work and the financial stimulus. . . We were talking about a V shaped recovery before this crisis even happened. Consumer consumption was going up, inventories were going down, and capital expenditure was falling. So we thought there was a rubber band stretching here, and it would at some point turn in a very strong way and we would have a V shaped recovery as businesses tried to catch up to consumers. . . If the policy measures the government put in place clear within a few weeks to a month, then I think we are looking at a V shaped recovery. . . We sequenced this virus in 2 days as opposed to the 5 months it took to sequence SARS, and we are now developing vaccines and anti-viral medications at breakneck speed."