Cathie Wood Predicts Fed Will Stop 'Rolling Recession' With Interest Rate Cuts: 'More Deflationary Forces Out There'

Investor Cathie Wood regularly shares her opinions on the macroeconomic environment and what could be ahead for stocks. On Tuesday, Wood doubled down on her belief in a deflationary environment in 2024.

What Happened: With the S&P 500 and technology stocks hitting record highs, Wood was asked about the valuations of companies and if she was considering different positions for her ETFs.

Wood said that there's a bit of a setback right now and a little fear, but reminded investors about what's happening with non-tech companies.

"Think about the numbers we're beginning to get out of the big macro-oriented companies," Wood said on CNBC. See the clip below.

"We think interest rates are going to fall sooner and faster than most expect…and that should be supportive of valuations," says @ARKinvest's @CathieDWood @MorganLBrennan $ARKK pic.twitter.com/yWlP5cUCzQ

— CNBCOvertime (@CNBCOvertime) January 23, 2024

Wood singled out 3M Co MMM and Texas Instruments TXN, who both reported quarterly earnings earlier in the week.

"We've been saying for quite some time that there are more deflationary forces out there."

Wood said a lot of the pressure is coming from China and some from Europe.

"I think here in the United States we won't escape that."

Wood added that the country has been in a "rolling recession" for two years.

Related Link: EXCLUSIVE – Cathie Wood Flips The Script, Warns Of Looming Deflation

What's Next: Wood doesn't believe things will get as bad as in 2008 and 2009, but sees interest rates needing to fall.

"We think interest rates are going to fall sooner and faster than most expect…and that should be supportive of valuations."

Wood said the Fed is going to find out that 5.25% to 5.5% "was just too high."

"The Fed will lower interest rates."

Outright price deflation in 2024 will happen according to Wood, with some of it good and some of it bad.

The comments from Wood come as her two key ETFs, the Ark Innovation ETF ARKK and Ark Next Generation Internet ETF ARKW have outperformed the SPDR S&P 500 ETF Trust SPY, which tracks the broad S&P 500 market index.

Here are the current one-year performances:

• ARKK: +25.0%
• ARKW: +53.3%
• SPY: +21.9%

Read Next: ‘Elon Musk Is A Visionary Leader, He’s Our Renaissance Man’: Cathie Wood Backs Tesla CEO’s Push For 25% Ownership