Since mid-February, US stocks have been declining, and investors' concerns about President Trump's high-pressure tariffs and layoff measures potentially leading to an economic recession have been growing. Wall Street economists have been raising their recession probability predictions, with some even believing the probability is around 50%.
ARK Invest buy the dips in cryptocurrency stocks and Tesla
In a recent Bloomberg interview, ARK Invest founder Cathie Wood expressed a pessimistic view of the short-term US economic outlook, but she expects the Federal Reserve and the Trump administration to intervene soon:
We believe this is a rolling recession, with different industries being impacted at different times. We may actually see a few quarters of negative growth, which is due to the rapid collapse of money circulation velocity.
Cathie Wood pointed out that Trump's tariff crackdown and layoff wave are forcing American families to tighten their belts. The fear of unemployment has caused savings rates to soar, and the consumption engine has suddenly stalled, which will lead to negative economic growth in the next one to two quarters. However, this situation will open up tax reduction opportunities for the Trump administration and provide reasons for the Federal Reserve to cut interest rates.
During the recent market downturn, Cathie Wood revealed that she continues to buy more Tesla stocks and cryptocurrency-related assets, such as Coinbase and Robinhood, firmly believing that "technological disruption will bring benign deflation".
Expecting 2-3 interest rate cuts this year
The Federal Reserve last week decided to maintain interest rates unchanged, but officials lowered their economic growth expectations for this year and raised inflation expectations against the backdrop of rising tariffs. However, policymakers still largely maintain their outlook for two interest rate cuts this year.
Federal Reserve Chairman Jerome Powell's dovish tone at the post-meeting press conference also provided some relief to some on Wall Street, who believe that the "Federal Reserve put option" is still effective, meaning that when the economy deteriorates, the Federal Reserve will intervene to rescue the market and cut interest rates.
Cathie Wood expects two to three, or even more, interest rate cuts this year, as inflation has continued to cool down, with food, gasoline, and rental prices in some areas already declining. Innovative technology is also bringing "benign deflation", further reducing price pressures:
We believe the policy flexibility the Federal Reserve will have in the second half of this year will be more than most people expect. We may see more than the two to three rate cuts I just mentioned.
