Why Ark's Cathie Wood Expects Innovation To Prevail As Fed Nears End Of 'Most Brutal Rate Hike Increase In History'

Ark Invest founder and CEO Cathie Wood is off to a quick start in 2023 with several high-growth names leading the rally to start the year. She expects many of the top holdings in the ARK Innovation ETF ARKK to continue to charge higher as the Federal Reserve nears the end of its rate hike onslaught.

What To Know: In 2022, "long-duration assets were creamed, including our innovation strategies and it was because of fears of inflation and higher interest rates," Wood said Monday on CNBC's "Squawk On The Street."

She told CNBC she's never seen markets so dislocated, but she expects that to come to an end sooner than most are anticipating as the "most brutal rate hike increase in history" comes to a close.

"We do think inflation is coming down now ... The Fed certainly is doing its part. Money supply growth is down — our estimate is roughly 3% on a year-over-year basis. We haven't seen a decline in money supply since The Great Depression," she emphasized. 

Wood noted the Fed has sounded more hawkish in recent weeks because it really wants to make sure it has done its job, and she believes the equity markets can see light at the end of the tunnel. 

"Maybe they go up another 25 basis points, maybe 50, I don't know, but I think we're just about there," Wood said.

The bond market doesn't seem to agree the Fed is nearing the end of its fight against historically high inflation. It's projecting the Fed will raise rates by a total of at least 0.75% over the next three meetings, per CME Group data. 

See Also: Stocks That Hit 52-Week Lows On Monday

Wood said she's aware of the projections, but she reminded viewers that in the 1980s, the market was in a similar position and "those who bet on lower inflation and interest rates long term were the winners."

From Last Week: Cathie Wood Chimes In On The Tesla Vs. BYD Debate: 'Charlie Munger And Many On Wall Street Do Not Understand...'

ARKK Price Action: The ARK Innovation fund is up more than 25% since the start of the year. It was last up 1.22% at $38.91 Monday afternoon, according to Benzinga Pro.

Photo: CityofStPete from Flickr.