AI Certainty Clashes with Economic Uncertainty | ITK with Cathie Wood

On episode 45 of "In the Know," (July 7, 2023) ARK CEO/CIO, Cathie Wood, weighs in on artificial intelligence (AI), Bitcoin, Fed Policy, electric vehicles, the discrepancy between GDP and GDI, bankruptcies, and the German and Chinese economies.

As always, she discusses fiscal policy, monetary policy, market signals, economic indicators, and innovation. We hope you find this monthly series useful, especially during periods of heightened volatility. Stay Healthy. Stay Innovative.

00:00:00 - Intro
00:01:33 - Fiscal Policy
00:08:38 - Monetary Policy
00:14:07 - Economic Indicators
00:22:55 - Market Signals
00:28:21 - Innovation


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[Pikminiman]

Notes for my future reference:
Cathie discusses the likelihood of political gridlock in the upcoming election year, stating that this is generally beneficial for markets. She expresses concerns about the Federal Reserve's focus on inflation and employment, given the decrease in money supply. Noting mixed employment data, she predicts a deflationary shift and is skeptical about further increases in the Fed funds rate. Wood highlights concerns about rising bankruptcies in commercial real estate and the vulnerability of private equity due to adjustable-rate loans. She expects a recession in the near future, despite strong housing and auto sectors.
Cathie indicates that leading indicators have been negative for 14 months, and she anticipates negative GDP growth in the coming years, which may prompt a response from the Federal Reserve. She also warns about economic recessions in Germany and troubles in China, particularly related to debt and property issues. However, she points to the rise in the S&P in June as a sign of increased interest in AI and tech companies.
She suggests Bitcoin's rise represents its role as a hedge against inflation and deflation, and a flight-to-safety currency. She concludes by emphasizing the disruptive potential of AI, arguing that companies with visionary leaders and proprietary data will benefit most from this shift.

[jwcas]

1:40: 💼 Fiscal policy gridlock expected during election year, Fed focused on inflation and employment, mixed employment indicators, commodity prices still in a downtrend, leading indicators for inflation below target.

1:40: Fiscal policy gridlock expected during election year.

2:05: Fed focused on inflation and employment, not mentioning money supply.

2:59: Mixed employment indicators: non-farm payroll below expectations with downward revisions, average hourly earnings and work week slightly better than expected.

4:37: Commodity prices still in a downtrend, down roughly 12% compared to last year.

5:06: Leading indicators for inflation (commodity prices and PPI) below the Fed's 2% target.

5:50: 📉 Inflation is slowing down, but the Fed is still considering rate increases.

5:50: Consumer inflation measure is up 0.2% YoY, but down to 3% if compared to last year.

7:48: Rents are beginning to fall on a YoY basis in many parts of the U.S.

8:05: Trueflation, a daily measure, shows a YoY inflation rate of 2.2%.

9:19: The Fed is focused on lagging indicators and ignoring evidence of slowing inflation.

10:05: Rising bankruptcies due to increasing floating interest rates.

10:23: 📉 The increase in interest rates is causing financial stress in various sectors, including commercial real estate and regional banks.

10:23: Businesses and commercial real estate are struggling to afford loans due to the increase in interest rates.

11:32: Private equity firms have $3 trillion in adjustable rate unhedged loans, which could lead to further pain.

12:08: Regional banks are under stress and not experiencing a real recovery.

13:10: Companies may start responding to margin pressures, leading to decreased profits and potential layoffs.

14:10: Gross domestic product and gross domestic income are currently disagreeing with each other.

15:08: 📉 The economy is showing signs of a recession, with declining leading indicators, a decrease in gross domestic income, and a slowdown in money velocity.

15:08: Gross domestic income is down 0.8 percent on a year-over-year basis.

15:27: Leading indicators have declined for 14 consecutive months, indicating a recession.

16:04: Money velocity is slowing down due to the Regional Bank crisis and a shift from bank accounts to money market funds.

17:05: Housing and Autos have shown some strength, with new home sales and housing starts increasing.

18:01: Durable goods orders and non-defense capital goods orders are strong, driven by the excitement around artificial intelligence and reassurances from China.

19:53: 📉 The measure of leading indicators has been negative for 15 months, suggesting a possible recession and a need for the FED to change its stance.

19:53: The measure of leading indicators has been negative for 15 months.

20:28: Regression analyzes point towards negative GDP in the second half of this year and beyond.

21:36: Germany and Europe are more dependent on China, which is struggling economically.

22:59: The market has seen a positive trend in the mega Tech category and the Magnificent Seven companies.

23:28: Other areas of the market, including health care, may also benefit from the shift towards artificial intelligence.

25:18: 📉 Long-term interest rates are decreasing, signaling potential economic weakness and deflation.

25:18: Long-term interest rates have moved down from 4.8% to 4.3%, indicating lower highs.

25:51: The speaker believes long rates will continue to decrease due to weakening economy, decreasing inflation, and potential deflation.

26:53: The Bloomberg commodity price index is still in a downtrend.

27:00: The yield curve is currently inverted and may signal future crises.

27:26: Bitcoin is seen as a flight to safety currency and a hedge against inflation and deflation.

30:20: 📈 Companies with visionary leaders and proprietary data will benefit the most from AI innovation, leading to increased productivity and lower labor costs.

30:20: Companies with visionary leaders and proprietary data will benefit the most from AI innovation.

30:59: Innovation and AI will solve problems and help corporations facing margin pressures.

31:31: Investors must consider the disruptive impact of innovation platforms like multi-omic sequencing, robotics, energy storage, artificial intelligence, and blockchain technology.

31:56: The convergence of these technologies will lead to super exponential growth for some and creative destruction for others.

Recap by Tammy AI

[chahalpawanpreet]

Always look forward to listening to these, Cathie. You're amazing regardless of the haters; there too are lovers

[amyniemann]

Thank you so much Cathy for your very informative “In the Know “ talks. I for one appreciate it very much. I’m a home maker, all in TSLA bull and a Boomer so your take on this crazy world of finance is very helpful. Thx 😊

[kimberly]

Thank you for taking the time to do this summary, and continue to do them. I really look forward to Cathy's video every month. She's accurate, insightful and honest. Thank you!

[郭家銘-zc]

Dear Cathy, your bet on TSM is right, in the future, these big tech will heavily rely on TSM for advanced AI chips made by TSM

[jeetjoshi]

Ahh! Absolutely enjoy hearing Cathie speak. What a blessing she is!

[robertgrosserode]

Your opinions are always interesting. Keep it up!

[robertw]

Thanks, Cathy these corner side chats help to bring clarity to all the moving parts of Government monetary policy.

[winnersofchampions]

I could listen to Cathie all day long.

[bpo]

I've always loved your analysis. Sadly, I've lost 65% of the money I invested with ARKK. Still have some in, but could really use a phenomenal year.

[georgemclaughlin]

A graphic representation of the numbers while being discussed would be a useful enhancement to these talks! Please consider! Thanks!

[harrychu]

In Cathie Wood we trust. We're with you Cathie.

[suzannemarieclinton]

Your shared knowledge and insight is so very much appreciated.

[jerissac]

Rents are not dropping in Las Vegas NV actually my rent just went from $2500 for a 1400 sqft apartment to $2800 for same apartment

[michaeldarmody]

Cathie, you are one of the smartest (and of highest integrity) analysts I follow, so you must KNOW Fed policies are surreptitiously intended to set up conditions for a forced CBDC. Your data is correct. Time to blatantly call the Fed out on it, no?

[hiatuz]

$ARKK has nail the deflation thesis since 2020

[roberttillotson]

New home builders are able to work numbers with buyers to lower financing, extras, etc to offset interest rate.

[Daniel]

I love love Cathy's monthly brief, always on point. I caught her on The Compound with Josh Brown couple of weeks back, great talk BTW if you haven't seen it, check it out.. Keep up the great work, I'm 100% on board and aligned with your views on AI, bockchain , BITCOIN, gene editing, autonomous driving, robotics, exponential growth curve . Keep the faith and thanks for sharing your research and knowledge for free. u take a lot of abuse especially on CNBC with one presenter in particular whom i wont name.You're definitely one of the best and genuine wealth managers out there. It's so nice to see, wishing u nothing but the best.

[fjcscbs]

I followed Truflation 2 months ago, gladly Cathie is mentioning it here!