On Monday, Cathie Wood, the CEO of Ark Invest, wrote the Fed an open letter pleading with them to refrain from hiking interest rates. Before making a crucial policy mistake that will lead to deflation, the letter provides information for the Fed to take into account.
The letter focuses on the two factors—employment and headline inflation—on which it appears that the Federal Reserve bases its decisions. According to Wood’s letter, “Upstream in the phases of processing, commodity prices are leading indications.”
Consumers have noticed that the cost of several goods, including food, has increased recently. Obviously, this is a serious problem. The CEO of Ark Invest, however, maintains that the Fed’s 75-point increase in interest rates from last month is not the solution.
Without a doubt, food and energy costs are significant, but the Fed shouldn’t, in our opinion, be contributing to the global suffering brought on by the supply shock to agricultural and energy commodities brought on by Russia’s invasion of Ukraine, the letter states.
Consumers have noticed that the cost of several goods, including food, has increased recently. Obviously, this is a serious problem. The CEO of Ark Invest, however, maintains that the Fed’s 75-point increase in interest rates from last month is not the solution.
Without a doubt, food and energy costs are significant, but the Fed shouldn’t, in our opinion, be contributing to the global suffering brought on by the supply shock to agricultural and energy commodities brought on by Russia’s invasion of Ukraine, the letter states.
Wood presents a number of statistics to the Fed to support this claim. For instance, oil closed at 818 on April 29, 2022. The percentage change from the top closing price to the most recent close was -16%, while the YoY percentage change is +28%.
The CEO of Ark Invest also provides insight into how huge sectors’ stockpiles rise in tandem with inflation. The letter uses Nike as an illustration and makes the following point:
“In the face of single-digit sales growth, inventories at Walmart and Target increased 25.5% and 36.1%, respectively, during the most recent quarter. Nike’s recent quarterly results suggest that the inventory imbalances have worsened. Despite sales growth of only 3.6%, Nike’s inventories increased 44.2% globally. In North America and on ships in transit, its inventories increased 64.8% and 85.0%, respectively!”
Ark Invest CEO Cathie Wood
Wood presents a number of statistics to the Fed to support this claim. For instance, oil closed at 818 on April 29, 2022. The percentage change from the top closing price to the most recent close was -16%, while the YoY percentage change is +28%.
The CEO of Ark Invest also provides insight into how huge sectors’ stockpiles rise in tandem with inflation.
