Deflation will overcome hyperinflation says Wood

Deflationary forces will overcome the supply-chain induced price pressures buffeting the world economy, Ark Investment Management founder Cathie Wood said in a tweet after a Jack Dorsey post on hyperinflation.

"Three sources of deflation will overcome the supply chain-induced inflation that is wreaking havoc on the global economy," Wood said in a thread yesterday.

She was replying to an October 23 post from Twitter chief executive Dorsey proclaiming hyperinflation "is going to change everything" and is "happening."

The three sources of deflation Wood flagged are: The impact of technological advances like artificial intelligence; creative destruction from disruptive innovation that pushes down the price of obsolete goods; and cyclical factors due to the pandemic whereby firms ramped up orders to meet reviving demand and will eventually be left with excess supply and unwinding prices after the holiday season.

Enduring supply-chain snarls are stoking inflation expectations and shaking up markets. Higher Treasury yields have led to questions about whether valuations for the kind of technology investments Wood is identified with are too stretched.

The flagship Ark Innovation ETF is down 25 percent from a February peak.