Ark Invest's Cathie Wood thinks we could be heading for a commodities crash
(Kitco News) - Ark Invest's Cathie Wood has said that she believes that the commodities boom will quickly fade once economies reopen. We have currently seen bullish moves in the likes of lumber, copper, oil and many more as manufacturers and producers source products as we hit a growth period as the world starts to come out of the COVID-19 pandemic.
Wood said "The scramble is more today than what we've seen in any other cycle," predicting that "we will have a very serious correction in commodity prices" once the global economy fully reopens.
“Many consider what has happened in the last 3 months to be the equivalent of the tech and telecom bust. We do not believe that this is the case in the least,” she said.
The theory is that deflation, rather than inflation, will likely be the dominant theme in global markets in the years ahead due to technological innovation, Wood said. Yields for the benchmark 10-year Treasury will likely stay within a range between 1.5% and 3%, she said, while oil prices are unlikely to go above $70 per barrel.
Looking forward and working out how to position she stated while the investor rotation into value stocks has been "powerful," high-growth stocks remain attractive.
"Many consider what has happened in the last 3 months to be the equivalent of the tech and telecom bust. We do not believe that this is the case in the least," she said.
Wood, however, thinks that growth stocks such as Tesla Inc will continue to outperform over the next 5 years despite their recent declines. Noting "If I loved it up there and it's 35% less expensive it must be a steal," she said.
Below is the daily copper chart and you can see the price rise since 2020 has been pretty epic. At its lowest point in 2020, the price of copper futures hit $1.97/lb and today the price has hit $4.82/lb which is a 143% rise.